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This magazine is an archived publication and may contain dated technical, contact, and link information.
|Publication Number: FHWA-HRT-09-002 Date: Jan/Feb 2009|
Publication Number: FHWA-HRT-09-002
Issue No: Vol. 72 No. 4
Date: Jan/Feb 2009
Establishing and maintaining strong moral standards in the workplace are essential to building public trust and delivering the transportation program effectively.
|Shown here is the postcrash scene in the I-90 tunnel in Boston after a ceiling tile dislodged and fell onto the roadway, crushing a car and killing one of the occupants. The open area in the ceiling is the original location of the concrete panels. Investigations revealed significant failures in both construction and oversight.|
In a report released in January 2008, the nonprofit Ethics Resource Center (ERC) revealed that 52 percent of Federal, 57 percent of State, and 63 percent of local government respondents witnessed violations of ethical standards, policies, or laws in their workplaces. The report, National Government Ethics Survey: An Inside View of Public Sector Ethics , further stated that a similar trend is occurring in the private and nonprofit sectors. For government agencies, as with businesses and nonprofits, ethics are vital to conducting business — with agency efficiency, effectiveness, and public trust on the line.
Consider what happens when employees leave work early or stay out for extended lunches without making up the time. Although extra-long lunches might seem trivial at first glance, the cumulative impact across an organization can be dramatic. Take, for example, an organization with 5,000 employees who earn $50,000 per year on average. If each employee takes a lunch break and reports back to work 15 to 30 minutes late one time per month, the financial impact on the organization is anywhere from $360,000 to $720,000 per year. Put another way, the money paid for lost work equals the salaries of 7.5 to 15 full-time employees.
For management, lost productivity due to employees missing work clearly can have quantifiable ramifications for the efficiency and effectiveness of service delivery . And at the individual level, employees should be aware that the actions described in this scenario constitute timecard fraud.
Within the transportation community, when someone makes the wrong ethical choice, the effects can be especially severe given that available fiscal resources are unable to meet growing demands. All transportation professionals represent the first line of defense in ensuring program integrity and upholding public trust. These professionals include contracting officers and their technical representatives, cooperative agreements and grants administrators, construction managers, compliance officers, contractor representatives, and others who carry out vital programs involving construction and maintenance of the Nation's roadways.
"Across the spectrum of highway finance, from purchasing to contracting, to general oversight responsibilities directed at improving public safety and protecting the public trust, the most important element of America's infrastructure is the public's confidence in it and in those responsible for it," says Federal Highway Administrator Thomas J. Madison, Jr., "The actions of those charged with directing America's infrastructure — from capacity enhancements to bridge inspections to megaprojects from coast to coast — must be ethical and worthy of the public's trust."
ERC's President Patricia J. Harned agrees: "The most important asset of government is public trust. Citizens believe that elected officials, political appointees, and career public servants are acting in their best interest. When public trust erodes, government effectiveness is hindered."
The U.S. Department of Transportation's (USDOT) Office of Inspector General (OIG) views trust as the cornerstone of public service. Fraud and abuse harm Federal, State, and local efforts to provide the safe and efficient transportation systems essential to the Nation's economic vitality, ability to compete in a global economy, and, most important, each citizen's quality of life. Fraud and abuse also hinder efforts to fulfill the Federal Highway Administration's mission to improve mobility on U.S. highways through national leadership, innovation, and program delivery.
OIG serves the USDOT mission and the public primarily by conducting audits and investigations. However, another tool is its fraud awareness outreach efforts, which include educating members of the transportation community about basic ethical principles and standards and how they can foster a culture of high ethical standards.
From the perspective of the U.S. Department of Transportation's (USDOT) Office of Inspector General (OIG), having a strong culture of ethics in the workplace is central to promoting program effectiveness and preventing or stopping fraud, waste, abuse, and other irregularities. An effective ethics program and culture is needed to combat potential issues before they cause harm to agencies, their public images, or the important services they provide. Effective internal controls and oversight mechanisms must be in place to detect and reduce instances of fraud that prohibit the transportation community from accomplishing its goals. The issue comes down to this: Everyone is responsible for maintaining program integrity and, in turn, the public trust.
Merriam-Webster's Online Dictionary defines ethics as "the discipline dealing with what is good and bad and with moral duty and obligation," and, "the principles of conduct governing an individual or a group."
|Shown here is the forfeited home of one of two university professors who embezzled nearly $1 million in FHWA cooperative agreement funds.|
In the Federal Government, employees swear an oath to the American people to conduct themselves in an ethical manner. In fact, title 5 of the Code of Federal Regulations, part 2635, sets the standards of ethical conduct for employees of the executive branch. The first sentence reads, "Public service is a public trust. Each employee has a responsibility to the United States Government and its citizens to place loyalty to the Constitution, laws, and ethical principles above private gain." Similar requirements exist at the State and local levels, and for many private organizations.
At the Federal level, two core concepts underlie ethical principles and standards. Executive branch employees, including those in OIG, hold their positions as a public trust. They fulfill that trust by adhering to general principles of ethical conduct and specific ethical standards. These principles broadly define the obligations of public service and relate to issues such as maintaining financial responsibility, soliciting or accepting gifts, and engaging in outside employment.
Underlying these principles are two core concepts: Employees shall not use public office for private gain, and employees shall act impartially and not give preferential treatment to any private organization or individual.
In addition, employees must strive to avoid any action that would create even the appearance that they are violating the law or ethical standards. By observing these general principles and specific standards, agency employees help ensure that U.S. citizens can have confidence in the integrity of Government programs and operations.
Ethical lapses by individuals in critical positions do occur, sometimes resulting in scandals that significantly undermine public confidence in the Government. An example of this that still reverberates is the 2004 conflict-of-interest conviction of a former top Air Force procurement officer and a Boeing executive, involving a major U.S. Department of Defense (DoD) contract for tanker aircraft.
|TDOT reimbursed FHWA for $20 million used to construct this parking garage near FedExForum Arena in Memphis after OIG discovered that a contractor associated with the Memphis Grizzlies was operating the garage for profit rather than providing free or discounted parking for transit customers.|
In 2003, the media reported that a DoD official had helped negotiate a plan to lease Boeing 767 commercial jets to the Air Force for use as aerial refueling tankers. The DoD official and Boeing's former chief financial officer were fired after internal investigations found they had violated DoD and company policies, respectively. The Boeing executive had communicated with the DoD official about possible employment with Boeing while the official still worked for the Air Force and before she recused herself from involvement with Boeing contracts. Both tried to conceal their misconduct.
USDOT also has seen its share of cases involving conflicts of interest, fraud, improper financial activities, and other ethical lapses. Although the following examples are not government employee ethical issues, the examples do point to making the wrong ethical choices when doing business with the Government. Regardless of whether government employees or contractors make the wrong ethical choices, the backlash can affect public confidence in Government.
For example, in one case investigated by OIG, two university engineering professors embezzled nearly $1 million in Federal Highway Administration (FHWA) cooperative agreement funds for a program administered by the university. The 4-year embezzlement scheme was uncovered after a university official became suspicious about invoices they submitted for payment. The university official identified a potential conflict of interest in contracting with a firm controlled and partially owned by one of the professors and brought these discrepancies to the attention of FHWA, which referred the matter to OIG for investigation.
The professors had been entrusted as directors to manage the program on behalf of the university; therefore, contracting with the aforementioned firm was an ethical violation and a conflict of interest. In the end, the university agreed to reimburse the Government more than $1.8 million for the overcharges plus penalties. The professors pled guilty to the embezzlement charges, were sentenced to 43 months in prison, and had to pay restitution of nearly $1 million.
|This photo from 2004 shows vehicles rushing along the I-90 underground tunnel in Boston, part of the Central Artery/Tunnel Project. In 2007, an epoxy adhesive failure caused ceiling tiles to dislodge and fall in the tunnel, killing a motorist and initiating an OIG investigation.|
In another case, OIG, in concert with the Tennessee Department of Transportation (TDOT) Office of Internal Audit, investigated the construction and operation of a 1,700-space parking garage sponsored by the city of Memphis and built with TDOT oversight. The facility was constructed using $20 million in Federal funds near the FedExForum Arena in Memphis, home of the National Basketball Association's Grizzlies basketball team. The FHWA-approved plan called for using the garage to provide free or discounted parking for transit passengers, with the proceeds helping to manage and maintain the garage. Instead, OIG found that a contractor associated with the Grizzlies was using the garage for profit. Subsequently, TDOT reimbursed FHWA for its $20 million.
OIG investigations also have revealed ethical lapses involving construction of the Central Artery/Tunnel Project in Boston, known as the Big Dig. These investigations, in collaboration with FHWA, the Federal Bureau of Investigation (FBI), U.S. Attorneys Office, Massachusetts State Police, and Massachusetts Office of the Attorney General, not only touched on misrepresentation and lapses in judgment but the ultimate effects of such actions — the compromise of the traveling public's safety.
Four long-running cases were recently settled when several Big Dig contractors, including the project's contract management consultant and 24 section design consultants (and their insurers), agreed to pay more than $500 million to resolve certain criminal and civil liabilities in conjunction with the investigations. In part, these liabilities include a ceiling tile collapse in the I-90 connector tunnel that killed a motorist and injured her husband, and defects in the slurry walls in the I-93 Thomas P. "Tip" O'Neill, Jr. Tunnel, which caused a severe leak breach that allowed water and sand to flow into the tunnel at 300 gallons per minute, significantly impeding traffic. In addition to the monetary penalty, the settlement agreement holds the management consultant accountable for any future catastrophic events occurring in the next 10 years and requires it to enact corporate compliance programs designed to prevent similar conduct on public construction projects.
OIG also has investigated cases that, though not criminal, pose serious administrative implications for both USDOT employees and the Department. For example, in one USDOT agency, a senior executive attended social functions paid for by a contractor that was the executive's previous employer. Employees perceived the executive as pressuring subordinates to award more than $1.1 million in contract task orders to the contractor for a strategic plan and marketing-related services. The executive was disciplined and no longer works for USDOT.
|Shown here is the ceiling of the I-90 tunnel, part of Boston's Central Artery/ Tunnel Project, after an epoxy bolt adhesive failure.|
|This anchor bolt dislodged from the ceiling of the I-90 tunnel when the epoxy adhesive failed.|
In another case, a program manager steered a $465,000 subcontract for financial analysis-related services to a firm owned and controlled by a household member. The manager resigned her USDOT position without any rights of appeal after being served with a notice of proposed removal citing violations of conflict of interest and misuse of Government position standards. The manager's senior executive (an associate administrator) was subsequently reprimanded for failing to ensure that a conflict of interest was avoided or cured, neglecting to take appropriate actions, and failing to notify ethics officials after becoming aware of the conflict of interest violations.
"The OIG enters the picture after unethical conduct has occurred in cases like this," says USDOT Inspector General Calvin L. Scovel. "We assist by investigating the allegations and reporting the facts to decisionmakers so they can determine what action to take. While dealing properly with allegations is imperative, taking steps to prevent unethical conduct is critical, and management must lead by example."
Such situations can occur in any organization. Although the preceding examples highlight cases where the wrong choices were made, many examples exist where USDOT employees and others have made the right choices to uphold the public trust by demonstrating high ethical standards.
|A construction defect in slurry wall panel E0-45 in the I-93 northbound tunnel of the Central Artery/Tunnel Project led to this major water infiltration.|
For instance, an inspector with the Missouri Department of Transportation alerted a resident engineer that the supervisors of a paving crew were switching asphalt cores to fraudulently earn quality bonuses under at least two Federal-aid contracts in St. Louis. After corroborating the allegation by surreptitiously marking quality control core locations with special paint, the engineer, materials supervisor, and district engineer referred the matter through their headquarters to OIG. The investigation resulted in payment of a $200,000 civil settlement and firing of the paving crew chief and supervisor responsible for the misconduct.
Another example of making the right choice includes a Connecticut Department of Transportation (ConnDOT) inspector and resident engineer assigned to a reconstruction project on I-95 in Bridgeport. The inspector noted that a concrete supplier had delivered precast concrete catch basins only a day after ConnDOT had approved the custom design, including a framework of reinforcing steel. Precast concrete structures normally must cure for at least a week before shipment.
|Shown here are asphalt core samples that OIG special agents seized as evidence from a project on Page Avenue in St. Louis, MO. The double-marked cores (top left) were from the job site, whereas the nondouble-marked cores (lower right) were allegedly substituted.|
The inspector reported the discrepancy to the resident engineer, who noted handwritten markings on one of the catch basins indicating that it was standard stock, not a custom product. The engineer directed destructive testing on one of the catch basins and found no reinforcing steel. After twice blaming the matter on truckers who "mistakenly" loaded the wrong stock, the concrete supplier finally admitted his company had falsely certified that it provided materials meeting contract specifications. The supplier was suspended from the State's prequalification program, had to identify and replace deficient structures at a substantial cost, and paid $500,000 in criminal and civil penalties. This case also illustrates concerns that can arise about safety of the traveling public and the service life of transportation facilities when taxpayers do not get what they pay for as a result of unethical behavior.
First and foremost, OIG encourages reporting unethical conduct to help foster high ethical standards. Cases involving choices on both ends of the ethical spectrum clearly exist, yet OIG experience reveals that individuals who are aware of misconduct often do not report it because they believe no corrective action will be taken, worry about confidentiality, fear retaliation by supervisors and coworkers, or are uncertain about whom to contact.
Managers and supervisors need to be aware of and address these reasons for not reporting unethical conduct. For example, all transportation staff should know how and to whom to report allegations of fraud, waste, abuse, and other irregularities. But knowledge or awareness is not enough. Agencies need to continually promote and reinforce ethical standards to help safeguard against lapses in integrity across the myriad of transportation programs and activities. To its credit, in June 2008, USDOT responded to this challenge by instituting enhanced annual ethics training programs for all acquisition and grants management personnel across the Department. When announcing this new program, USDOT Deputy Secretary Thomas J. Barrett said, "As good stewards of the taxpayers' dollar, we must strive daily to conduct the Department's business in a manner that promotes the integrity of the acquisition and grants management activities processes and in a manner that is above ethical reproach."
Experts agree that prevention and deterrence of ethical lapses in any organization depend on the effectiveness of internal controls and oversight and a robust ethics awareness and training program. However, no ethics program will be a panacea; ethical conduct ultimately derives from individual moral judgment. Yet it is imperative that government employees, grantees, and contractors alike actively foster a culture of ethical behavior.
Fostering an ethical environment starts with the tone at the top. Management must lead by personal example and recognize that building and maintaining an ethics-oriented culture involves more than simply requiring employees to submit annual financial disclosure reports and certify that they have completed briefings on standards of ethical conduct. To further instill ethical values and expectations through heightened awareness, ethics programs need to be multifaceted, with increased attention given to employees involved in awarding and administering contracts, cooperative agreements, and grants — the areas where OIG has found that fraud and ethical misconduct are most likely to occur.
How to Create an Ethical Workforce Culture
In addition to the U.S. Office of Government Ethics regulations (5 CFR Part 2635, et seq.), agencies might consider the following in their ethics programs:
|A State inspector destructively tests a precast concrete catch basin to determine whether it meets contract specifications for a reconstruction project on I-95 in Bridgeport, CT.|
Computer and Web-based ethics training, especially interactive courses including questionnaires with automated feedback, is beneficial and efficient but not a substitute for personal interaction between agency ethics officials and employees. Moreover, ethics officials should routinely consult with their ethics advisers — for the Federal level, this is the Office of Government Ethics — as a resource for training, best practices, advisory opinions, and updates on statutory and other requirements.
In addition to enhancing ethics awareness and training, working with OIG and other transportation oversight providers can help strengthen internal ethics programs and improve fraud detection and prevention. Organizations should invest time and resources to prevent and detect fraud and misconduct proactively; establish and use trusted reporting methods, such as anonymous hotlines; and mandate antifraud and ethics training and reward employees not only for meeting financial goals but for displaying outstanding ethical behavior.
Government agencies, grantees, and contractors should pursue suspected ethics violations aggressively, whether potentially criminal, civil, or administrative, and refer them quickly to the appropriate authority for possible investigation. This approach includes allegations of fraud related to false claims, false statements, cost mischargings, kickbacks, and bribes and gratuities. Many cases involve aberrant behavior by employees who deceive both the Government and their companies. Problem behavior should be addressed immediately.
Finally, to heighten deterrence, managers need to take strong disciplinary and other actions when ethical lapses occur and also do the following:
Methods for Reporting Possible Ethics Violations
USDOT and OIG learn about ethical lapses in a variety of ways but most often through tips. To report situations that could result in fraud, waste, abuse, or other irregularities to the OIG, use one of the following methods:
USDOT and OIG encourage those who contact the hotline to identify themselves in case questions arise as the allegations are evaluated; however, anonymous tips also are welcome.
USDOT employees and employees of USDOT contractors who report fraud are typically entitled by Federal law to whistleblower protection from employer attempts at reprisal. Many States provide similar protections. For more information, see the U.S. Office of Special Counsel's Web site at www.osc.gov.
Note: The OIG Hotline is obligated to expeditiously forward all safety-related complaints to USDOT's safety regulatory agencies for action, as appropriate.
The consequences of ethical lapses and fraud can be grave: project delays, increased costs, loss of public trust, and loss of life and injuries when safety is involved. Everyone associated with the transportation community is responsible for ensuring the integrity of the Nation's transportation programs and activities. Vigilance and effective internal controls and oversight are essential to mitigating the extent to which fraud and abuse involving transportation programs cheat U.S. taxpayers and erode public confidence in the transportation system. Strong ethical awareness is the cornerstone of effective vigilance and oversight.
Most professionals in the transportation community — government employees, grantees, and contractors alike — behave ethically and work diligently to ensure taxpayers have the best transportation system possible for their tax dollars. OIG investigations, however, have consistently demonstrated the need for continual reinforcement of ethical standards to prevent breaches of integrity that result from government and private sector employees losing their ethical compass. Vigilance is critical. What are you doing to promote an ethical culture in your workplace?
|State inspectors noticed handwritten markings on this concrete catch basin indicating that it was standard stock, not a custom product as required by the contract.|
Jim H. Crumpacker is OIG's director for National Investigative Programs and Operations. He leads a staff responsible for monitoring contract procurement and grant fraud and safety-related investigative efforts, and for supporting criminal and civil investigative operations nationwide. He also manages OIG's Computer Crimes Unit. He previously served as a director in OIG's surface transportation and maritime audit group (2003-2005) and as the Inspector General's representative to the U.S. Department of Homeland Security to handle relief and recovery oversight following the 2005 gulf coast hurricanes. Prior to joining USDOT, he worked for the U.S. Postal Service OIG and U.S. Air Force Audit Agency. He is a colonel in the U.S. Air Force Reserve and has been a federally credentialed special agent with the U.S. Air Force Office of Special Investigations for more than 16 years. Crumpacker holds a bachelor's degree in business administration in finance and a master's degree in public administration. He is also a Certified Internal Auditor® and Certified Fraud Examiner.