Semiannual Report to Congress
October 1, 1998 through March 31, 1999

• TRANSMITTAL LETTER
• FOREWORD
• REPORTING REQUIREMENTS
• INSPECTOR GENERAL SUMMARY
• SECTION 1: SIGNIFICANT PROBLEMS, ABUSES AND DEFICIENCIES
  AND DESCRIPTION OF OIG RECOMMENDATIONS FOR CORRECTIVE ACTION
• SECTION 2: MATTERS REFERRED TO PROSECUTIVE AUTHORITIES AND
  RESULTANT PROSECUTIONS AND CONVICTIONS
• SECTION 3: SUMMARY OF RESTITUTION MADE AS A RESULT OF CIVIL AND
   CRIMINAL INVESTIGATIONS AND/OR AUDITS
• SECTION 4: SUMMARY OF EACH REPORT TO ESTABLISHMENT HEAD CONCERNING
   INFORMATION OR ASSISTANCE UNREASONABLY REFUSED OR NOT PROVIDED
• SECTION 5: LIST OF EACH AUDIT REPORT ISSUED
• SECTION 6: SUMMARY OF EACH SIGNIFICANT AUDIT REPORT
• SECTION 7: STATISTICAL TABLES SHOWING TOTAL NUMBER OF AUDIT REPORTS
  AND TOTAL DOLLAR VALUE OF QUESTIONED AND UNSUPPORTED COSTS
• SECTION 8: STATISTICAL TABLES SHOWING TOTAL NUMBER OF AUDIT REPORTS
  AND DOLLAR VALUE OF RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE

April 30, 1999

Honorable John C. Truesdale, Chairman
National Labor Relations Board
1099 14^th Street, NW, Room 11100
Washington, DC 20570

Honorable Frederick L. Feinstein, General Counsel
National Labor Relations Board
1099 14^th Street, NW, Room 10100
Washington, DC 20570

Dear Chairman Truesdale and General Counsel Feinstein:

This is the nineteenth Semiannual Report (SAR) for the Office of Inspector General (OIG). This SAR is prepared in accordance with Section 5 of the Inspector General Act and covers the period October 1, 1998 through March 31, 1999.

This will also serve as a reminder that, pursuant to Section 5(b) of the Inspector General Act of 1978, as amended, this report "shall be transmitted by [the Agency head] … to the appropriate committees or subcommittees of the Congress within thirty days after receipt of the report, together with a report by the head of the establishment…."

Very truly yours,

Aileen Armstrong
Inspector General

The National Labor Relations Board (Agency or NLRB), which employs almost 1,900 employees and, for Fiscal Year 1998, had funding of about $175,000,000, is an independent agency which was established in 1935 to administer the principal labor relations law of the United States - - the National Labor Relations Act. The provisions of the National Labor Relations Act are generally applied to all enterprises engaged in, or to activities affecting, interstate commerce, including the United States Postal Service, but excluding other Governmental entities, as well as the railroad and airline industries. The Agency protects the public interest: (1) by conducting secret ballot elections to determine if a group of employees wishes to be represented for collective bargaining purposes by a labor organization, and (2) by preventing and/or remedying unfair labor practices committed by employers and unions.

The Chairman, four Board Members and a General Counsel are appointed by the President with the advice and consent of the Senate. The Chairman and Board Members have staggered terms of 5 years each and the General Counsel has a 4-year term. The Agency, headquartered in Washington, DC, has 33 Regional Offices, some of which have Subregional and/or Resident Offices. This far-flung organization has handled unfair labor practice cases affecting hundreds of thousands of persons and has conducted representation elections in which millions of employees have decided whether they wished to be represented by a labor organization for collective bargaining purposes.

The mission of the Office of Inspector General (OIG) is to promote integrity, efficiency, and effectiveness by conducting audits and investigations in an independent manner and objectively reporting to the Chairman, the General Counsel and the Congress. The OIG Table of Organization provides for an Inspector General, an Assistant Inspector General for Audits, two Auditors, a Chief Counsel to the Inspector General/Assistant Inspector General for Investigations, a Deputy Assistant Inspector General for Investigations and a Staff Assistant.

  INSPECTOR GENERAL SUMMARY

• We completed our audit relating to the Agency's efforts in identifying Year 2000 problems and the actions taken or planned to ensure that mission critical systems will function in the new millennium. Our audit report is discussed in Section 6 of this Semiannual Report.
• We completed our audit which evaluated three new procedures adopted by the Division of Judges to expedite the resolution of unfair labor practice cases. The three procedures adopted consist of: (1) using settlement judges to affect settlements prior to formal hearings; (2) granting judges the authority to ask for oral argument in lieu of briefs and issue bench decisions at the close of hearings; and (3) establish time targets for the issuance of Administrative Law Judges' decisions. Our audit report is discussed in Section 6 of this Semiannual Report.
• We continue to audit the timeliness of casehandling by the Board. This audit is focused on unfair labor practice cases adjudicated before the Board.
• The Office of Inspector General has contracted to review the Case Activity Tracking System (CATS) project. The CATS is a multi-year project to replace several existing information systems with one integrated information system. The review will assess the design, development, implementation, and related management of CATS.

• Three cases were opened and continue under active investigation.
• Two cases were opened and investigated to closure.
•  Four cases previously opened were investigated to closure during this reporting period.
• Several joint investigations with other law enforcement agencies continued.
• Twenty-four "HOTLINE" calls were received and screened. A large number of these calls related to Agency operations and appropriate follow-up and referrals were made.

• The OIG has continued a self initiated extensive review of potential fraudulent Federal Employees Compensation Act claims against the Agency.
• Twenty-four cases previously initiated remain open and under active investigation by the OIG.
• Three new cases are under active investigation by the OIG.
• A joint investigation is continuing with the FBI and multiple other Federal law enforcement agencies.

DESCRIPTION OF SIGNIFICANT PROBLEMS, ABUSES AND DEFICIENCIES RELATING TO ADMINISTRATION OF PROGRAMS AND OPERATIONS AND DESCRIPTION OF OIG RECOMMENDATIONS FOR CORRECTIVE ACTION (MANDATED BY SECTION 5 (a) (1) AND (2) OF THE ACT)

The following investigations were completed and/or referred for action during this reporting period:

Allegation of Subornation of Perjury by Union Official

An NLRB/DOL OIG Investigation Disclosed That ... There was insufficient evidence to support an allegation that a union official had suborned perjury.

The OIG was provided with an affidavit of a union member by a member of the management bar in support of an allegation that a union official had sought his false testimony in exchange for specific remunerations.

The OIG interviewed the affiant in the matter and the OIG found no substantial evidence to support the allegations.

The matter was reviewed by a United States Attorney's office which concurred in the OIG determination and the case was declined for criminal prosecution.

Action Taken ... The Regional Director with jurisdiction was advised of the outcome of the investigation, and the original NLRB charge brought by the union was withdrawn by the union.

OIG Case Closed After Agency Failed to Act

An OIG Investigation Disclosed That ... A staff employee of a Regional Office had incurred several hundred dollars in government telephone billings for personal purposes.

In August of 1996, the matter was referred to the General Counsel for review for administrative action.

In April of 1997 the OIG requested an update on the status of the matter from the General Counsel.

In October of 1997 the General Counsel advised the OIG that the Agency hoped for a prompt conclusion.

In August of 1998 the OIG requested an update on the status of the matter from the General Counsel.

Action Taken ... In December of 1998, having had no further response or action on the matter the Inspector General closed the OIG case.

Mail Fraud

Impersonating a Federal Officer

An OIG Investigation Disclosed That ... The CEO of a New Jersey firm received a letter in the mail, purportedly sent by a member of the National Labor Relations Board, in which it was alleged that charges against the firm and certain members of management were pending an investigation.

Attached to this letter was additional correspondence which described the procedure that the NLRB would follow when an unfair labor practice charge was filed.

It was determined that the subject correspondence was in fact false.

Action Taken: A detailed on-site investigation was conducted, including the interview of management and company employees, however no information was developed which could lead to the identity of the author/sender of these letters and the investigation was terminated.

Agency Participation in Improper Influence by Contractor on SBA Official

An OIG Investigation Disclosed That … A letter from an official at the Small Business Administration (SBA) was sent to influence this Agency's decision on a contracting issue. The investigation disclosed that this Agency was presented with a letter prepared for the signature of the SBA official but unsigned and on plain non-letterhead paper from the interested contractor. Thereafter, a letter from the SBA official identical in substance to the one previously presented by the contractor but on SBA letterhead and signed by the official was received by the Agency. This matter was referred to the SBA OIG to investigate any improprieties. The SBA OIG investigated and determined that the letter was written by the contractor, transferred to SBA letterhead, and submitted to the official for signature. While that procedure was inappropriate, the SBA OIG did not find any other evidence of an improper relationship between the contractor and the SBA official.

Action Taken … The SBA was satisfied that no further investigation was necessary and closed its case. Accordingly the OIG closed its case alleging Agency participation in the contractor's improper activity at SBA.

Whistleblower Activity by Contractor's Employee

An OIG Investigation Disclosed That … A contractor's employee did not qualify for whistleblower protection because no new information about contractor non-performance or false claims was presented.

Action Taken … The investigation of charges of retaliation against a contractor's employee because of his whistleblowing activities was closed.

SUMMARY OF MATTERS REFERRED TO PROSECUTIVE AUTHORITIES AND RESULTANT PROSECUTIONS AND CONVICTIONS (MANDATED BY SECTION 5 (a) (4) OF THE ACT)

The following matters were: (1) referred for prosecution during earlier reporting periods and remain pending, (2) referred for prosecution during this reporting period, (3) acted upon by prosecutive authorities during the reporting period with the noted results, and/or (4) had administrative action taken after a declination of prosecution:

A matter involving violation of 18 U.S.C. 1622 was referred to a United States Attorney and declined for criminal prosecution.

A matter involving False Claims against the government in a contract matter is pending criminal and civil action with the Department of Justice.

SUMMARY OF RESTITUTION MADE OR FINES PAID AS A RESULT OF CIVIL OR CRIMINAL INVESTIGATIONS AND/OR AUDITS (NOT MANDATED BY THE ACT)

Although not mandated by any provision of the Act, this section serves as a statistical summary of all amounts repaid or fines paid to the government as a result of investigations, both criminal and civil, or audits.

None.

SUMMARY OF EACH REPORT TO ESTABLISHMENT HEAD CONCERNING INFORMATION OR ASSISTANCE UNREASONABLY REFUSED OR NOT PROVIDED (MANDATED BY SECTION 5 (a) (5) AND 6(b)(2) OF THE ACT)

A member of the Senior Executive Service was scheduled to attend an investigatory interview. At the interview the official refused to answer basic questions unless given certain and specific rights. Upon the OIG's advice that cooperation could not be conditioned, that non-cooperation could result in discipline including discharge, and that the asserted rights did not exist, the official persisted in refusing to answer questions. The matter was referred to the head of the Agency for administrative action on March 31, 1999.

LIST OF EACH AUDIT REPORT ISSUED (MANDATED BY SECTION 5(a)(6) OF THE ACT

Dollar Value (in thousands of $)

SUMMARY OF EACH SIGNIFICANT AUDIT REPORT (MANDATED
BY SECTION 5(a)(7) OF THE ACT)

This audit evaluated the National Labor Relations Board's efforts in identifying Year 2000 (Y2K) problems and the actions taken or planned to ensure that mission critical systems (MCS) will function in the new millennium. Our audit reviewed: the methodology used to determine whether mission critical systems were Y2K compliant; budget requests relating to correcting Y2K problems; efforts taken or planned to correct and validate that MCS and Y2K are compliant; and contingency plans relating to systems that have not been fixed. Our audit did not assess whether systems identified by the Agency as MCS were mission critical, but limited our work to verifying that the identified systems were Y2K compliant. Our audit scope included all efforts made by the Agency to identify and repair Y2K problems through the period ending March 16, 1998.

During the audit we identified and reviewed requirements and guidance provided by the Office of Management and Budget and the General Accounting Office in order to identify Agency responsibilities and best practices for managing the Y2K problem. We reviewed documents, met with Agency officials responsible for managing and implementing Y2K efforts, and met with program officials from "end user" offices in order to assess Y2K compliance and to review actions planned by the Agency to ensure Y2K compliance.

The Agency identified 33 mission critical systems (MCS). We verified that the software for 20 of the 33 systems was Y2K compliant. Agency officials reported that 7 systems were made compliant after we completed our audit fieldwork, and 5 more were scheduled for completion by March 31, 1999. The Financial Management Information Accounting System (FMIAS) is scheduled to be compliant by May 1999. FMIAS is the Agency's accounting system which is used to process and report budget and financial transactions. Actions needed to bring FMIAS into compliance include upgrading its compiler and changing the source code of several program modules. The Agency's contingency plan includes using either the Microcomputer Accounting Data Entry (MADE) system or the Backpay system, both of which are Y2K compliant, to process vendor payments. The MADE is the PC based front end of FMIAS. The Backpay System is an automated system used to process payments to discriminatees in unfair labor practice cases.

Agency-wide compliance is contingent on making applicable computer hardware Y2K compliant. We have reviewed the Agency's action plan to upgrade hardware and finish programming remaining systems and conclude that their goal is attainable.

This audit evaluated three procedures adopted by the Division of Judges to expedite the resolution of unfair labor practice cases. First, a settlement judge process was implemented to affect settlements prior to formal hearings. Second, judges were granted the authority to ask for oral argument in lieu of briefs and issue bench decisions at the close of hearings. Third, time targets were established for the issuance of Administrative Law Judges' decisions. Our review assessed whether the intended results were being achieved. We also determined whether the information system used by the Division of Judges accurately reported the judges' performance. The scope of our audit was Fiscal Years 1996 and 1997. The Division of Judges issued 925 decisions and settled 1,436 cases during those years.

The OIG ascertained policies applicable to the Division of Judges by reviewing pertinent sections of the Agency's Rules and Regulations and Statement of Procedures. We also interviewed officials from the Division of Judges, selected regional offices, and the Division of Administration. These officials explained and clarified Agency procedures. We reviewed reports on the Judges' performance and examined source documentation that supported these reports. We generated a statistically valid random sample of 40 cases for review and determined the accuracy of performance data. The statistical methodologies used allow us to draw conclusions regarding all cases in Fiscal Years 1996 and 1997.

The Division of Judges has successfully implemented the aforementioned procedures. The judges were achieving a higher number of settlements thus avoiding the costs and the delay required by a formal hearing. One key performance indicator related to the number of elapsed days between the date a judge received the case briefs and the date the judge issued a decision. The median number of days, from receipt of briefs to issuance of decisions, has been reduced each of the last several years. Our review also determined that the data relating to the Division of Judges' performance was reliable.

STATISTICAL TABLES SHOWING TOTAL NUMBER OF AUDIT REPORTS AND TOTAL DOLLAR VALUE OF QUESTIONED AND UNSUPPORTED COSTS (MANDATED BY SECTION 5 (a) (8) OF THE ACT

STATISTICAL TABLES SHOWING TOTAL NUMBER OF AUDIT REPORTS AND DOLLAR VALUE OF RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE (MANDATED BY SECTION 5 (a) (9) OF THE ACT)