Semiannual Report to Congress
April 1, 1999 through September 30, 1999

• Inspector General Letter
• Agency Profile
• Office of Inspector General
• Audit Program
• Investigations Program
• Legislation, Regulations, and Policy
• Liaison Activities
• Information Required by the Act
• Audit Reports by Subject Matter
• Reports with Questioned Costs
• Reports with Recommendations that Funds be put to Better Use

National Labor Relations Board

Washington, DC 20570

I hereby submit this Semiannual Report: April 1 - September 30, 1999, which summarizes the major activities and accomplishments of the Office of Inspector General (OIG) of the National Labor Relations Board. The submission of this report is in accordance with the Inspector General Act of 1978, as amended (IG Act). Section 5 of the IG Act requires that the Chairman transmit this report to the appropriate committees or subcommittees of the Congress within 30 days of its receipt.

This is my first semiannual report since becoming Inspector General at the NLRB in June 1999. In the four months that I have been here, the OIG staff has made a tremendous effort to work with me to revise office policies and procedures, while continuing with the normal workload of audits and investigations. Significant administrative accomplishments included completion of a memorandum of understanding for agency support services, becoming involved in the agency process to develop regulations, assisting in the designation of two Audit Follow-up Officials, updating office policy on record retention, and purging ten years of files. OIG has attempted to become more open in its dealings with the Agency by sharing draft documents, posting memoranda on the internal electronic bulletin board, visiting field sites, and meeting monthly with the Chairman and General Counsel.

While doing these new activities, the "meat and potatoes" work continued. In the investigations program, OIG processed 58 contacts, initiated 11 cases, and closed 18 cases. The investigations resulted in four referrals for prosecution, five personnel actions, and $177,645 in funds put to better use or recovered. OIG also issued one audit report, one inspection memorandum, and completed a significantly revised Annual Audit Plan. Details on these accomplishments can be found in the body of this report.

I appreciate the support of the Agency in making many of these changes, not the least of which was improving the appearance of the office. I look forward to the next period when we intend to continue our outreach efforts by finalizing brochures on OIG operations, and developing a web page as part of the Agency's official web site.

s/Jane E. Altenhofen

October 31, 1999

AGENCY PROFILE

The National Labor Relations Board (NLRB or Agency) is an independent federal agency established in 1935 to administer the National Labor Relations Act (NLRA). The NLRA is the principal labor relations law of the United States, and its provisions generally apply to private sector enterprises engaged in, or to activities affecting, interstate commerce. NLRB jurisdiction includes health care institutions and the U.S. Postal Service (other government entities, railroads and airlines are not within the NLRB’s jurisdiction.)

The NLRB seeks to serve the public interest by reducing interruptions in commerce caused by industrial strife. It does this by providing orderly processes for protecting and implementing the respective rights of employees, employers, and unions in their relations with one another. The NLRB has two principal functions: (1) to determine and implement, through secret ballot elections, the free democratic choice by employees as to whether they wish to be represented by a union in dealing with their employers and, if so, by which union; and (2) to prevent and remedy unlawful acts, called unfair fair labor practices, by either employers or unions or both.

NLRB authority is divided by law and delegation. The five-member Board primarily acts as a quasi-judicial body in deciding cases on formal records. The General Counsel investigates and prosecutes unfair labor practices before administrative law judges, whose decisions may be appealed to the Board; and, on behalf of the Board, conducts secret ballot elections to determine whether employees wish to be represented by a labor organization.

The NLRB Board consists of the Chairman and four members who are appointed by the President with the advice and consent of the Senate. The Board Members serve staggered terms of five years each. The General Counsel is also appointed by the President with the advice and consent of the Senate and serves a four-year term. The present Board Members and General Counsel have served throughout this reporting period.

The NLRB received an appropriation of $184,451,000 for Fiscal Year (FY) 1999, of which $221,000 was rescinded, to fund 1,880 full-time equivalents. On July 30, 1999, the NLRB received an additional $348,000 for analysis and testing of telephone equipment, and replacing equipment to prepare for the year 2000.

NLRB Headquarters is at 1099 14^th Street, NW Washington, DC. In addition to the Headquarters building, employees are located in 51 field offices throughout the country. The field offices include 33 regional offices, 16 resident offices, and 2 sub-regional offices. Three satellite offices for the Administrative Law Judges are located in Atlanta, San Francisco, and New York.

Additional information about NLRB can be found on the web site www.NLRB.gov.

The NLRB established the Office of Inspector General (OIG) pursuant to the 1988 amendments to the Inspector General Act of 1978 (IG Act).

The FY 1999 OIG budget was $707,200 for operations, of which $20,600 was for contract services. In addition to the Inspector General, the OIG consists of a Counsel/Assistant Inspector General for Investigations, Assistant Inspector General for Audits, Special Agent, two Auditors, and a Staff Assistant. One of the auditor positions was vacant the entire semiannual reporting period.

In August 1999, the OIG hosted a student volunteer for one week. This government-wide program was designed to give participating agencies the opportunity to promote public service careers and to better prepare students for eventual entry into the workplace. The Greater Washington Urban League Summer Youth Program and the Office of Personnel Management sponsored the program. The student assigned to OIG searched the web sites of nearly 60 federal OIGs for Privacy Act statements and drafted a Privacy Act statement for the NLRB OIG web site currently being developed. She also updated several chapters of the OIG Audit Manual to reflect changes made in policy and procedures.

The IG Act provides for independent contracting and personnel authority for inspectors general and requires agencies to provide resources supporting OIG operations. Larger OIGs have their own personnel, contracting, and support services. The size of the NLRB OIG does not justify allocating dedicated resources for these functions, which have previously been supplied by the Agency without a formal agreement clearly defining OIG authority.

The Inspector General developed a Memorandum of Understanding (MOU) which provides for the furnishing of such services by the Agency in a manner that preserves OIG integrity and independence. The Inspector General, Chairman, and General Counsel signed the MOU on August 16, 1999.

The Assistant Inspector General for Investigations and Special Agent were presented an Award for Excellence by the Inspector General community. The award recognizes these individuals for an outstanding investigation into time and attendance abuse, where the documented pattern of abuse resulted in $168,000 being put to better use. It was particularly noteworthy since the nature of the finding allowed for the Agency's utilization of the funds during the budget year.

An employee of NLRB's Finance Branch received a Special Act award from the Inspector General in April 1999 for providing information regarding fraudulent billing by a government contractor who supplied relocation services to NLRB and other Federal agencies.

An employee of the Appellate Court Branch received a Special Act award for serving as special counsel for the OIG in a case involving union representation.

AUDIT PROGRAM

The Inspector General is to provide policy direction for and to conduct, supervise, and coordinate audits relating to program operations of the Agency. We issued one audit report, one inspection memorandum, completed the Annual Audit Plan , and assisted in the designation of two Audit Follow-up Officials.

We issued Audit Report OIG-AMR-28, Review of the Case Activity Tracking System, on September 15, 1999. The OIG reviewed the status of and conditions affecting the development and implementation of a comprehensive information management system for mission operations. The review covered the initial deployment of the Case Activity Tracking System (CATS) at eleven field offices.

Feedback from field offices where CATS had been installed was encouraging and positive. Personnel appreciated productivity benefits that CATS provides because the features are tailored to field office functions. The implementation of CATS, however, has not been without challenges. We found inadequate long-range planning, data inaccuracies in using the new system, and that methodologies to produce required reports had not been developed.

CATS was designed to replace multiple systems, both manual and electronic, used to collect and compile case handling data. CATS is also intended to reengineer and standardize business processes, and serve as the vehicle by which the Agency is implementing an enterprise-wide computing and telecommunications infrastructure to serve Headquarters and all field offices. The NLRB has invested approximately $7.6 million on CATS design, development, and deployment in FYs 1995 through 1999.

A long-range plan that addressed deployment, transition, and maintenance, and identified the resources needed to provide the supporting hardware, software, and communications infrastructure had not been developed and adopted. As part of the budget submission, a five-year plan for CATS was prepared. In reality, plans were developed and executed on a year-to-year basis to reflect the amount of funds available, which varied greatly. This negatively impacted the ability to establish and maintain direction for the project and the contract to support it.

A significant number of errors were made during the initial entry of case data into CATS. Employees from field offices and Information Technology Branch have reported problems and made suggestions to improve CATS operations and accuracy. Due to a lack of resources, the Agency decided to concentrate modifications on improving data accuracy before continuing with future enhancements and development.

The capability to merge data from the Case Handling Information Processing System (CHIPS) and CATS to produce the Monthly Election Reports and the statutorily required Annual Report had not been developed. Until full field office deployment of CATS, Monthly Election Reports and the Annual Report will require the merging of data from CATS and CHIPS, which CATS is replacing.

OIG recommended that the Chief Information Officer prepare and implement an integrated management plan to bring CATS to completion, identify transition assistance needed by field offices to ensure data accuracy and integrity, and design programs to combine CATS and CHIPS data for the Monthly Election Reports and the Annual Report. The Chief Information Officer submitted written comments on the draft report that stated he did not disagree with the findings and recommendations.

Subsequent to the review, the Agency created and implemented a process to review the procedures and data of each region before that region is allowed to convert to the new system. Also, a task force was created to review the reports and recommend changes to the new system. That task force completed the analysis that will result in changes to the system reports during the year on October 22, 1999. Further, a process to merge the data from CHIPS and CATS to prepare the Monthly Election Report had been defined, developed, tested, and placed into production on August 30, 1999.

We issued a memorandum on the NLRB Performance Plan for FY 2000 on April 26, 1999. We informed management that the performance plan needed improvement in three areas. First, the Agency should streamline the report by focusing goals on program areas. Second, performance measures that were not objective, measurable, and verifiable should be reconsidered. Third, the plan should provide additional information on how the Agency intends to verify and validate performance data.

Significant changes to the performance plan would necessitate a revision of the Agency's strategic plan. The Agency is currently preparing a Revised Strategic Plan to cover Fiscal Years 2000 - 2005. The Plan is scheduled to be submitted to Congress in March 2000.

As of September 30, 1999, ongoing audits included:

Audit of Casehandling by Board Members; and

Evaluation of Time and Attendance Practices.

OIG made significant changes in developing the FY 2000 Audit Work Plan. The Audit Universe, which identifies each organization, program, function, and/or activity subject to audit, was revised to reflect the Agency budget, staffing levels, results of the Agency's review in accordance with the Federal Managers' Financial Integrity Act, and prior audit work. We solicited management's input in developing the Annual Audit Work Plan. Management responses were considered in conjunction with other factors such as: statutory and regulatory requirements; financial impact; audit experience and frequency; and sensitivity, newness, or changed conditions in developing the final plan.

The Inspector General coordinated with the Chairman and the General Counsel to designate Audit Follow-up Officials as required by Office of Management and Budget Circular No. A-50. The Chairman designated the Executive Secretary and the General Counsel designated the Deputy General Counsel as Audit Follow-up Officials for the Board and the General Counsel sides of the Agency respectively. The Audit Follow-up Officials are responsible for ensuring that: systems of audit follow-up, resolution, and corrective action are documented and in place; timely responses are made to all audit reports; and corrective actions are actually taken.

No audit recommendations were made in prior periods which have not been implemented.

INVESTIGATIONS PROGRAM

The Inspector General is to provide policy direction for and to conduct, supervise, and coordinate investigations relating to the programs and operations of the Agency. OIG processed 58 contacts, initiated 11 cases, and closed 18 cases. The investigations resulted in four referrals for prosecution, two that occurred this period and two that occurred in prior periods that have not been previously reported, five personnel actions, and $177,645 in funds put to better use or recovered.

Contract Fraud Information from an employee in the NLRB Division of Administration indicated that a government contractor might be overcharging the Agency for relocation expenses of an Agency employee. OIG determined that the billing documents submitted by a subcontractor were fraudulent. The prime contractor agreed to reduce the final billing from $13,000 to $4,000, a $9,000 saving to the Agency.

Further investigation by the OIG determined that the sub-contractor had defrauded other government agencies using similar methods. A joint investigation with several other federal inspectors general and the Federal Bureau of Investigation developed evidence indicating potential wide ranging fraud in both government and other third party payee moves.

In August 1998, OIG referred this case to the U. S. Attorney for civil action. The U.S. Attorney referred the case to the Criminal Division of the Department of Justice in August 1999. OIG-I-207

Threat to Board Agent OIG was informed that a Board Agent had been threatened with bodily harm by a company president who was a respondent in an unfair labor practice case before the Agency. The Board Agent was attempting to review a list of subpoenaed documents at the company facility, when the company president became upset. We interviewed regional office and company employees, and concluded the company president's actions constituted obstructing a Board Agent, an action that is prohibited by the NLRA.

We referred this case to the U.S. Attorney for prosecution in August 1999. The U.S. Attorney withheld an opinion on prosecution pending completion of the Board's case. No further incidents occurred. OIG-I-247

Workers' Compensation Fraud Information was reported to the OIG that a Board field attorney had fraudulently received workers' compensation benefits over a two-year period while also conducting a business. Due to a previous workers' compensation claim, the attorney was required to file a form showing all sources of income, self-employment, and/or ownership interest in any business. The attorney filed the form every six months as required, showing no outside employment or ownership/interest in any business. An investigation with the Department of Labor (DOL) OIG found the attorney was a co-owner or primary officer in at least four corporations.

In September 1997, we referred this case to the U.S. Attorney for prosecution. The U.S. Attorney issued a pre-indictment letter, but later declined to prosecute. We monitored the case through September 1999, but no further activity occurred to warrant action. OIG-I-139

Perjury Information was reported to OIG that perjury had possibly been committed in an unfair labor practice case pending in a regional office. An individual provided an affidavit to the Agency indicating that he had witnessed actions related to unfair labor practices by his employer. The individual provided subsequent affidavits that his prior testimony was false, and that the false testimony had been sought by a union official in order to bring a case against the company. Our investigation determined that the union official had taken no action to influence the testimony. The individual failed to appear for appointments scheduled to obtain an explanation of the conflicts in his sworn affidavits.

In February 1998, we referred this case to the U.S. Attorney for prosecution, but the case was declined. OIG-I-209

Funds Put to Better Use or Recovered

Leave Abuse OIG was informed that a senior agency employee was utilizing extensive work time in the middle of the day for personal purposes. The employee had an unusual work schedule starting at a very early hour in order to accommodate time off during the workday. An OIG investigation determined that the early morning hours of the workday were being used for personal purposes rather than government duties. Annual leave had not been charged for approximately 2800 hours when the employee was not present for duty as required. As a result, the employee had accumulated an extensive leave balance that would be paid out at retirement.

After being informed of the findings of the investigation, the employee requested a leave adjustment of 2800 hours, representing a dollar saving of $168,000. The employee also retired from the Agency. We contacted the Department of Justice concerning prosecution, but the Department deferred to the Agency’s action as an adequate remedy. OIG-I-234

Improper Payment Information was reported to the OIG that an Agency employee who was receiving worker’s compensation had changed doctors even though DOL had denied authorization to do so. An OIG investigation found that the employee had been treated by the unauthorized doctor who had received $645.32 in payment.

We notified DOL of these findings. DOL issued a charge back to the employee in the amount of $645.32. The employee had retired before DOL made the final ruling, so administrative action was not possible. OIG-I-199

Travel Fraud Information was received by the OIG that an Agency attorney was defrauding the government while in official travel status. An OIG investigation substantiated the charges.

In December 1998, OIG referred this case to the Department of Justice, Criminal Division. The attorney made restitution for the entire amount claimed and was allowed to plead guilty to a criminal conflict offense as part of a plea agreement made with the Department of Justice. The attorney was terminated from federal service by the Agency in May 1999. The employee filed a grievance regarding the termination, which will eventually be heard by an arbitrator.

In July 1998, we referred this case to the Department of Justice, Civil Division, to recover civil penalties for the travel claim addressed by the Criminal Division and additional claims from a prior period of official travel. OIG-I-140

Ethics Violation The OIG was told that a firm had hired an Agency employee to provide information related to government business. The firm is a private entity that provides services to companies opposing union organizing campaigns. In prior periods, OIG determined that the firm hired NLRB employees.

After completion and disposition of the cases against NLRB employees, the OIG continued to assist the Department of Transportation OIG and internal investigation units of the Treasury Department in investigations of their employees who were also hired by this same firm. The OIG was advised this period that administrative action was taken against two employees of the Treasury Department and two employees of the Department of Transportation. OIG-I-157, 158, 159

The prior Inspector General referred a matter to the Chairman on March 31, 1999, and subsequently issued a report of flagrant and serious refusal to cooperate with an investigation on April 9, 1999. The Chairman responded in a letter to the appropriate Congressional committees on April 16, 1999. The response sufficiently addressed this matter.

The information or assistance requested appeared to be related to a matter that had been referred to and was under investigation by the Office of Special Counsel (OSC). We forwarded documentary evidence given to OIG to OSC. We deferred gathering additional information through interviews pending completion of the OSC investigation.

Employees and members of the public with information on fraud, waste and abuse are encouraged to contact the OIG. A log of telephone contacts, either on a nationwide toll free number or the regular office numbers, has traditionally been maintained. Beginning in June 1999, OIG also began to track information received via mail and facsimile. All information received, regardless of the method used, is collectively referred to as HOTLINE contacts.

The information received over the hotline is the basis for the initial review for potential investigations. The information is analyzed to determine if further inquiry is warranted. Most HOTLINE contacts are calls from members of the public seeking help on an employment related problem or issues outside OIG and/or Agency jurisdiction. As appropriate, we refer these callers to the appropriate NLRB office, local, state or federal agency, or private resource that is able to provide assistance.

During this reporting, OIG received 55 hotline contacts, of which 30 were telephone calls and 25 were in writing. Nine contacts resulted in OIG investigations and one issue was referred to the Agency for action.

To further publicize the hotline to Agency employees, the Inspector General designed and produced a poster that was distributed to all Agency field offices. The poster is reproduced on the inside back cover of this report.

LEGISLATION, REGULATIONS, AND POLICY

The Inspector General is to review existing and proposed legislation and regulations relating to programs and operations of the Agency and to make recommendations concerning the impact of such legislation or regulations. Similarly, we review Agency and OIG policy. We reviewed four bills introduced this period, reviewed one Agency regulation, and revised OIG policy on union representation and record retention.

The following bills were reviewed:

S. 870 Inspector General Act Amendments of 1999. A bill to amend the IG Act to increase the efficiency and accountability of OIGs within Federal departments. April 22, 1999.

S. 886 Foreign Relations Authorization Act, fiscal years 2000 and 2001. Amendment 690 No. 690 to transfer authority for criminal investigations from State Department Inspector General to Diplomatic Security Service. Amendment No. 727 to ensure that investigations and reports of investigations, of the Inspector General of the Department of State and the Foreign Service are thorough and accurate. June 22, 1999.

H.R. 1827 Government Waste Corrections Act of 1999. A bill to improve the economy and efficiency of Government operations by requiring the use of recovery audits by Federal agencies. May 17, 1999.

H.R. 2013 Amendments to the Inspector General Act of 1978 to provide for the appointment of the Inspector General of federal entities by the President of the United States. June 7, 1999.

Within the NLRB, the Rules Revision Committee develops changes to Agency procedural regulations. The Counsel to the Inspector General joined the Committee in September 1999 in order to provide OIG input into the regulation development.

The Agency developed extensive proposed changes to its existing regulations implementing the Freedom of Information Act (FOIA) to incorporate mandated changes for electronic communications. OIG reviewed the proposed changes, and found the regulation was consistent with the requirements of the law.

The proposed changes also clarified how FOIA requests to the Inspector General or for OIG documents are processed. OIG recommended a number of changes relating to FOIA access to records generated by or under the control of the Inspector General. As a result of these recommendations, the proposed regulation places initial responsibility for access and denial with the Inspector General, with an appeal authority vested in the Chairman.

OIG modified its practice concerning union representation pursuant to a U.S. Supreme Court decision. In a prior period, an Administrative law Judge of the Federal Labor Relations Authority (FLRA) found the NLRB violated an employee's rights when union representation was allegedly denied during an investigative interview. This case was pending appellate review by FLRA when the U.S. Supreme Court issued a related decision.

The Court found that under federal law the inspector general was considered to be a representative of the agency for purposes of the Weingarten rule. Generally, the Federal Weingarten rule gives an employee the right to request union representation during any agency interview in which the employee has a reasonable belief that the interview will result in disciplinary action.

OIG modified its practices in accordance with the Supreme Court decision, and communicated this to the FLRA. On September 23, 1999, FLRA remanded the case to the Regional Director for action consistent with the settlement agreement.

In December 1998, the National Archives and Records Administration (NARA) withdrew General Records Schedule 22, Inspector General Records, which authorized the disposal of the Inspector General files. OIG drafted a records schedule in August 1999 in accordance with new guidance from NARA. The draft was submitted to the Agency records management officer who is coordinating an update of the Agency schedules with NARA.

We also initiated a major review of OIG files in accordance with the revised schedule and Agency policy. Six boxes of audit files for the years 1984 through 1991 were destroyed by on-site shredding, and four boxes were prepared for off-site storage.

LIAISON ACTIVITIES

The Inspector General is to recommend policies for, and to conduct, supervise, or coordinate relationships between the Agency and other Federal agencies, State and local governmental agencies, and nongovernmental entities. The Inspector General is to give particular regard to the activities of the Comptroller General of the United States, as head of the General Accounting Office (GAO). Similarly, we encourage OIG staff members to participate in Agency programs and activities. OIG staff members are active in the inspector general community and agency activities. OIG reviewed and commented on two GAO documents.

Inspector General Community

The Inspector General is a member of the Executive Council on Integrity and Efficiency (ECIE), which consists primarily of the inspectors general at the Federal entities designated in the 1988 amendments to the IG Act. She also participates in activities sponsored by the President's Council on Integrity and Efficiency (PCIE), which consists primarily of the Presidentially-appointed inspectors general. The Inspector General is a member of an ECIE ad hoc committee addressing issues on auditor independence.

The Counsel participates fully in the Council of Counsels to Inspectors General and the National Association of Bar Counsel. As Assistant Inspector General for Investigations, he is active in the Association of Inspectors General for Investigations, and is one of two ECIE representatives on the PCIE Investigations Advisory Subcommittee of the Investigations Committee. He is the chair of a working group on developing the Qualitative Assessment Process for Investigations, a process similar to audit peer review. Additionally, he is an instructor for the Government Training Institute and participated in a three-day conference to develop a curriculum for the Inspector General Criminal Investigator Academy.

The OIG Special Agent, as the Deputy Assistant Inspector General for Investigations, is the principal liaison officer to the federal law enforcement community. He is a member of the Liaison Officers Association, and currently serves on its executive board. This Association is composed of designated liaison officers of all federal law enforcement agencies as well as foreign police attaches. He is a member of the working group on Affirmative Civil Enforcement organized by the U. S. Attorneys Office in Baltimore.

In May 1999, we reviewed a draft report that summarized opinions of the inspectors general on semiannual reports. The views on semiannual reports in the GAO report represented those of the prior NLRB Inspector General. Comments were submitted on broader issues, such as how the inspectors general were characterized in the report and survey results compiled. The final report, Inspectors General: Views on Semiannual Reports (GAO/AIMD-99-203) was issued on August 25, 1999.

We also reviewed the May 1999 exposure draft Standards for Internal Control in the Federal Government. Our response stated that the document was clear and concise, and effectively addressed issues that have evolved over the past several years such as the increased use of computer technology and management initiatives relating to the Government Performance and Results Act.

The OIG Auditor is the NLRB Recreation and Welfare Association Treasurer. The Association sponsors a variety of social and philanthropic activities for Agency employees. In addition to serving as the financial administrator, he helped coordinate activities including a food drive, a fishing trip to the Chesapeake Bay, a trip to Atlantic City, and the annual golf tournament.

Certain information and statistics based on the activities accomplished during this period are required by section 5(a) of the IG Act to be included in the semiannual reports. These are set forth below:

(1),(2),(7) OIG did not identify any significant problems, abuses or deficiencies relating to the administration of programs. For the purpose of this section, we used the definition of significant as set forth in the Federal Managers' Financial Integrity Act.

(3) Corrective action has been completed on all significant recommendations which were described in the previous semiannual reports.

(4) Four matters were referred to prosecutorial authorities. There were no prosecutions or convictions.

(5) One report was made to the Chairman that information or assistance requested by the Inspector General was unreasonably refused or not provided. See page 13.

(6) A listing by subject matter is located on page 21.

(8),(9) One audit report was issued during this period; the report had no recommendations on questioned costs or funds that could be put to better use. See Tables 1 and 2.

(10) There are no audit reports issued before the commencement of the reporting period for which no management decision has been made by the end of the reporting period.

(11) No significant revised management decisions were made during the reporting period.

(12) There were no significant management decisions with which I am in disagreement.

Table 2 REPORTS WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE