Inspectors General and the Implementation of the Infrastructure Investment and Jobs Act

INSIGHTi

Inspectors General and the Implementation of
the Infrastructure Investment and Jobs Act
May 23, 2022
The COVID-19 pandemic brought increased attention to the risk of fraud and waste in large federal
spending programs. Congress created substantial oversight for pandemic programs, but many Members
have expressed concern with reports of fraud in some programs. As the Biden Administration implements
the bipartisan infrastructure bill (the Infrastructure Investment and Jobs Act [IIJA]; P.L. 117-58), which
provides over $500 billion in new infrastructure spending, it has announced a more proactive approach to
addressing potential fraud and waste. This approach includes an emphasis on risk management and
increased engagement with inspectors general (IGs) to identify and address potential risks before they
arise.
On April 29, 2022, the Office of Management and Budget (OMB) issued a guidance memorandum to
executive branch agencies on IIJA implementation. The guidance directs agencies to work with IGs and
OMB to evaluate their program implementation plans and to adopt a “risk-based approach” to
implementation that may “reduce the need for costly, after-the-fact remediation.”
This strategy is a form of enterprise risk management, which can reduce waste and fraud and increase
effectiveness of programs by “identifying, assessing, and managing risks” in order to “eliminate the
potential for disruptive events.” Enterprise risk management is not new in the federal government, but its
effectiveness here may be instructive for future policy implementation.
This Insight begins with a brief summary of the new guidance memorandum as it relates to IGs, followed
by discussion of its broader link to enterprise risk management. Finally, the Insight identifies aspects of
this issue that congressional stakeholders may wish to monitor.
OMB’s Guidance on Implementation of the Infrastructure and Jobs Act
OMB’s guidance on the IIJA (Advancing Effective Stewardship of Taxpayer Resources and Outcomes in
the Implementation of the Infrastructure Investment and Jobs Act) includes specific instructions for
agencies implementing the law and follows from broader implementation principles laid out in Executive
Order 14052 (Implementation of the Infrastructure Investment and Jobs Act). Among other things, the
memorandum provides specific direction on engagement between agencies and their IGs.
Congressional Research Service
https://crsreports.congress.gov
IN11933
CRS INSIGHT
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Section II.B of the memorandum requires agencies to engage “proactively” with their IGs to identify
“major cross-cutting risks” in the implementation of the IIJA. It also requires agencies to meet with their
IGs and OMB to work on risk mitigation strategies. Such meetings are intended to help IGs provide
agencies with well-informed recommendations on programs earlier in the implementation process.
This meeting requirement builds on a December 2021 OMB memo titled “Promoting Accountability
Through Cooperation Among Agencies and Inspectors General.” The memorandum, which was
developed in consultation with the IG community, calls for agencies to work more closely with their IGs
to mitigate risk in policy implementation.
This strategy could improve program implementation by taking advantage of the expertise of IGs.
OMB, Enterprise Risk Management, and IGs
The Biden Administration has indicated that the emphasis on enterprise risk management for IIJA
implementation reflects lessons learned from the implementation of the federal government’s response to
the COVID-19 pandemic. Specifically, the Administration says it has learned the “benefits of proactive
and transparent engagement among agencies, IG offices, and the Pandemic Response Accountability
Committee” early in the program implementation process. This early engagement can help agencies
identify and resolve design issues that could reduce the effectiveness and efficiency of programs.
This strategy is a form of enterprise risk management. As defined by OMB in 2016, enterprise risk
management is an agency-wide approach to “identifying, assessing, and managing risks” in order to
“concentrate efforts towards key points of failure and reduce or eliminate the potential for disruptive
events.” OMB has been working with agencies for decades to improve accountability and establish robust
program controls, including enterprise risk management.
Additionally, the IG community has integrated risk management into oversight activities in recent years,
including forming the Enterprise Risk Management Working Group to promote enterprise risk
management principles “in accordance with OMB Circular A-123 within the offices of the Inspectors
General community.” Similarly, some IG offices issue “management alerts,” which are flash reports that
frequently identify issues with ongoing agency activities that may be correctable. Congress endorsed this
approach in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136) by
directing the Pandemic Response Accountability Committee to issue such alerts as appropriate.
The Biden Administration’s new guidance indicates an even stronger move toward enterprise risk
management and a new focus on how IGs can improve program implementation that builds on work
many IG offices are already doing.
Considerations for Congress
Effect of IG Engagement with Agencies
Congress may wish to monitor several aspects of the Administration’s implementation strategy as it
matures, including:
 The effectiveness of this implementation strategy and any lessons it may provide for
future legislation;
 Any new procedures established by the IG community to manage this work and to ensure
the integrity of their audits and investigations; and
 Any changes to the relationships among IGs, their agencies, and Congress and how such
changes might affect Congress’s mission for IGs.

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IG Capacity
Congress may also wish to monitor whether IG offices have sufficient resources, including funding and
personnel, to fulfill this new role and maintain their core audit and investigation functions. It is not clear
yet how resource intensive this activity will be for IGs, but Congress may be asked to provide additional
funding for this purpose in the future either in annual appropriations or other major legislation.

Author Information

Ben Wilhelm

Analyst in Government Organization and Management




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