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U.S. Office of Special Counsel

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STATEMENT OF ELAINE KAPLAN SPECIAL COUNSEL U.S. OFFICE OF SPECIAL COUNSEL PRESS CONFERENCE DECEMBER 6, 2000


FOR IMMEDIATE RELEASE  12/6/00
CONTACT: JANE MCFARLAND
(202) 653-7984

Good morning and thank you all for coming.

    My name is Elaine Kaplan, and I am the head of the U.S. Office of Special Counsel. OSC is an independent agency whose responsibilities include, among other things, receiving and analyzing whistleblower disclosures by federal employees. By law, when I find that an employee has provided information creating a substantial likelihood that violations of law, gross mismanagement, or a gross waste of funds has occurred, I am required to refer those allegations to the head of the federal agency at issue, and the agency head is required to conduct an internal investigation and report his or her findings back to me. Thereafter, the law provides that I am to permit the whistleblower to comment upon the report. Then, I am to review the report myself and determine whether the findings appear reasonable and whether the report contains all of the information the law requires. Finally, I am instructed to transmit the agency’s report, along with my own comments and recommendations to the President and appropriate oversight committees, for such action as they consider appropriate.

    I am here today to announce our transmittal of a report from the DOD concerning allegations made by Dr. Donald Sweeney, an economist with the St. Louis District of the Army Corps of Engineers. Last February, Dr. Sweeney, who is here with us today at my invitation, provided OSC with a detailed affidavit and supporting documentation which he alleged showed that Army Corps of Engineers officials had exerted improper influence and manipulated a cost-benefit analysis for purposes of obtaining approval to undertake a navigation improvement project on the Upper Mississippi River and Illinois Waterway. The project involved the expansion of locks along the Upper Mississippi at an estimated cost of between 750 million and 1.1 billion dollars.
 
    We determined that the information that Dr. Sweeney provided established a substantial likelihood that Corps officials and employees had violated applicable laws, rules and regulations governing the conduct of such cost-benefit analyses, and that a gross waste of funds would occur as a result of these violations. Therefore, on February 24, 2000, we referred Dr. Sweeney’s disclosures to DOD Secretary William Cohen for an investigation. Secretary Cohen, in turn, directed the Secretary of the Army to conduct an investigation. Secretary Calderra assigned that task to the Army’s Office of Inspector General.

    We have now received from Secretary Cohen, the IG’s report into Dr. Sweeney’s allegations. We have also received comments on that report from Dr. Sweeney. I am today transmitting the DOD report, Dr. Sweeney’s comments, and my own comments and recommendations, to the President and to appropriate Congressional oversight committees for their consideration and any possible follow up.

Briefly—the major findings of the report are as follows:

    --The DAIG confirmed Dr. Sweeney’s allegation that Corps officials manipulated the economic analyses of the feasibility study being conducted on the Upper Mississippi lock expansion project in order to steer the study to a specific outcome—namely, the approval of the project.

    --The report found that Major General Fuhrman, the Corps’ former Director of Civil Works, and Major General Anderson, Mississippi Valley Division Commander, created a climate within the Corps that led to the manipulation of the cost-benefit analysis.

    --The report found that Colonel Mudd, the District Engineer assigned to the project, directed a specific value for a key parameter of the cost-benefit analysis when he knew it was mathematically flawed and contrary to the recommendations of Corps economists. The report found that he did so in order to produce a favored outcome, that is, large-scale construction.

    --The report found that Major General Anderson improperly gave preferential treatment to the barge industry, potentially the direct beneficiaries of a decision to implement large-scale construction, by allowing industry representatives to become direct participants in the economic analysis.

    --The report also concluded that an institutional bias for large-scale construction projects may exist throughout the Corps, which created an atmosphere where objectivity in the economic analysis here was placed in jeopardy. The report identified three primary factors potentially responsible for the bias.

    First: Major General Fuhrman’s guidance in which he characterized the Corps’ role as “advocate” for the inland waterways. The report found that the dissemination of this guidance constituted a pivotal event in the study, in that “[i]t provided the impetus for manipulation of the study results.” Witnesses expressed concern that the advocacy role was a departure from the Corps’ responsibility to be an “honest broker” in the study process, rather than advocate.

    Second: The Army IG identified the Corps’ “Grow the Program” initiative as an initiative which had potential to affect future feasibility studies. According to the report, compelling evidence indicated that a key element of the program was encouragement of grass roots lobbying for projects. The IG observed that the initiative placed “immense pressure” on the Corps’ divisions to produce projects.

    Third: The report concluded that the Corps’ reliance on external funding creates a conflict with the Corps’ “honest broker” role. The Districts are dependent upon project funding to maintain their staffs. The continued vitality of the Districts was, therefore, dependent on producing study results that favored construction projects. Although senior Corps officials believed that the professionalism of its employees was sufficient to overcome the conflict, the report found that use of the “advocacy guidance” and customer service model offered strong indications to the contrary.

    --Finally, the report observed that there was a widespread perception of bias among the Corps employees interviewed. This bias related to the view that the Corps held an inherent preference for large-scale construction projects. In conclusion, the report stated that the overall impression conveyed by testimony of Corps employees was that “some of them had no confidence in the integrity of the Corps’ study processes.”

    I have reviewed the report and have found that its findings appear reasonable with respect in their substantiation of Dr. Sweeney’s essential contention—that Corps officials and employees exerted improper influence over the economic study at issue and manipulated a cost-benefit analysis in order to justify the expensive extension of locks along the Upper Mississippi River and Illinois Waterway. In fact, while it was technically beyond the scope of our referral, DOD and the Army IG should be commended for expanding the investigation to attempt to determine the root causes of these actions, and for identifying institutional biases at the Army Corps which the President or Congress may wish to address.

    On the other hand, I have concluded that DOD’s response does not include some of the important information that the statute requires it to provide. In particular, DOD has not specified what actions it intends to take in response to the investigatory findings, either with respect to this particular project, or generally. It has referred those issues to the Army for consideration. 

    In that regard, I note that Dr. Sweeney himself has made a number of interesting recommendations. In his comments, he suggests that systemic reforms should be instituted, including independent peer review for projects developed in recent years under the influence of the Program Growth Initiative; organizational independence for project evaluators; and improved methods for analyzing the demand for navigation projects. Given Dr. Sweeney’s expertise in this area, as well as his considerable efforts to bring this problem to light, we assume that his recommendations will be taken into consideration by the Secretary of the Army.

    Last, the IG Report does not appear to comprehensively address some of Dr. Sweeney’s contentions regarding the manipulation of variables in the economic study. We understand that these issues will be addressed by the National Academy of Sciences, in a report that it is preparing for the Secretary of the Army. Rather than delay our action pending receipt of that report, I have decided to transmit the matter on to the President and Congress, with a recommendation that they conduct whatever follow-up they deem appropriate, on these and other concerns.

    Finally, let me take this opportunity to thank Dr. Sweeney for bringing this matter to the public’s attention. I would also like to thank Dr. Sweeney’s colleagues, who provided testimony to the Army’s IG in its investigation. It takes great courage and perseverance to come forward as Dr. Sweeney did, and to provide an honest perspective to investigators, as Dr. Sweeney’s colleagues did, in cases where higher level officials and supervisors are accused of serious misconduct. Dr. Sweeney’s disclosures have contributed to the public interest and he deserves great credit for his efforts.

    I will now turn the podium over to Dr. Sweeney for any remarks that he may wish to make before we take questions.

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