Interview transcript

Terry Gerton We’re going to talk about one of everybody’s favorite topics, FedRAMP. It’s been around for years, but agencies are still struggling to get modern tools. So from your perspective, why is the process so hard for software and service companies to get through?

Irina Denisenko  It’s a great question. Why is it so hard to get through FedRAMP? It is so hard to get through FedRAMP because at the end of the day, what is FedRAMP really here to do? It’s here to secure cloud software, to secure government data sitting in cloud software. You have to remember this all came together almost 15 years ago, which if you remember 15 years ago, 20 years ago, was kind of early days of all of us interacting with the internet. And we were still even, in some cases, scared to enter our credit card details onto an online website. Fast forward to today, we pay with our face when we get on our phone. We’ve come a long way. But the reality is cloud security hasn’t always been the, of course, it’s secure. In fact, it has been the opposite. Of course, its unsecure and it’s the internet and that’s where you go to lose all your data and all your information. And so long story short, you have to understand that’s were the government is coming from. We need to lock everything down in order to make sure that whether it’s VA patient data, IRS data on our taxpayers, obviously anything in the DoW, any sort of information data there, all of that stays secure. And so that’s why there are hundreds of controls that are applied to cloud environments in order make sure and double sure and triple sure that that data is secure.

Terry Gerton You lived the challenge first-hand with your own company. What most surprised you about the certification process when you tackled it yourself? What most surprise me?

Irina Denisenko  When we tackled FedRAMP ourselves for the first time was that even if you have the resources and specifically if you $3 million to spend, you know, $3 million burning a hole in your pocket doesn’t happen often, but even if have that and you have staff on the U.S. Soil and you have the willingness to invest all of that for a three-year process to get certified, that is still not enough. What you need on top of that is an agency to say yes to sponsoring you. And when they say yes, to sponsoring you what they are saying yes to you is to take on your cyber risk. And specifically what they’re saying yes to is to spend half a million dollars of taxpayer money of agency budget, typically using contractors, to do an initial security review of your application. And then to basically get married to you and do something called continuous monitoring, which is a monthly meeting that they’re going to have with you forever. They, that agency is going to be your accountability partner and ultimately the risk bearer of you, the software provider, to make sure you are burning down all of the vulnerabilities, all of these CVEs, every finding in your cloud environment on the timeline that you’re supposed to do that. And that ends up costing an agency about $250,000 a year, again, in the form of contractors, tooling, etc. That was the most surprising to me, that again, even as a cloud service provider, who’s already doing business with JP Morgan and Chase, you know, healthcare systems, you name it, even that’s not enough, you need an agency sponsor, because at the end of the day, it’s the agency’s data and they have to protect it. And so they have do that triple assurance of, yes, you said you’re doing the security stuff, but let us confirm that you’re doing the the security stuff. That was the most surprising to me. And why, really, ultimately, we started Knox Systems, because what we do at Knox is we enable the inheritance model. So we are doing all of that with our sponsoring agencies, of which we have 15. Knox runs the largest FedRAMP managed cloud. And what that means is we host the production environment of our customers inside of our FedRAMP environment across AWS, Azure, and GCP. And our customers inherit our sponsors. So they inherit the authorization from the treasury, from the VA, from the Marines, etc., Which means that the Marines, the Treasury, the VA, didn’t have to spend an extra half a million upfront and $250k ongoing with every new application that was authorized. They are able to get huge bang for their buck by just investing that authorization, that sponsorship into the Knox boundary. And then Knox does the work and the hard work to ensure the security and ongoing authorization and compliance of all of the applications that we bring into our environment.

Terry Gerton I’m speaking with Irina Denisenko. She’s the CEO of Knox Systems. So it sounds like you found a way through the maze that was shorter, simpler, less expensive. Is FedRAMP 20X helping to normalize that kind of approach? How do you see it playing out?

Irina Denisenko  Great question. FedRAMP 20X is a phenomenal initiative coming out of OMB-GSA. And really the crux of that is all about machine-readable and continuous authorization. Today, when I talked about continuous monitoring, that’s a monthly meeting that happens. And I kid you not, we, as a cloud service provider, again, we secure Adobe’s environment and many others, we come with a spreadsheet, an actual spreadsheet that has all of the vulnerabilities listed from all the scans we’ve done over the last month, and anything that is still open from anything prior months. And we review that spreadsheet, that actual Excel document, and then after the meet with our agencies and then, after that meeting, we upload that spreadsheet into a system called USDA on the FedCiv side, eMass, DOW side, DISA side. And then they, on their side, download that spreadsheet and they put it into other systems. And I mean, that’s the process. I think no one is confused, or no one would argue that surely there’s a better way. And a better would be a machine readable way, whether that’s over an API, using a standard language like OSCAL. There’s lots of ways to standardize, but it doesn’t have to be basically the equivalent of a clipboard and a pencil. And that’s what FedRAMP 20X is doing. It’s automating that information flow so that not only is it bringing down the amount of just human labor that needs to be done to do all this tracking, but more importantly, this is cloud security. Just because you’re secure one second doesn’t mean you’re secure five seconds from now, right? You need to be actively monitoring this, actively reporting this. And if it’s taking you 30 days to let an agency know that you have a critical vulnerability, that’s crazy. You, you got to tell them in, you know, five minutes after you find out or, you know to put a respectable buffer, a responsible buffer to allow you to mitigate remediate before you notify more parties, maybe it’s a four day buffer but it’s certainly not 30 days. That’s what FedRAMP20X is doing. We’re super excited about it. We are very supportive of it and have been actively involved in phase I and all subsequent phases.

Terry Gerton Right, so phase II is scheduled to start shortly in 2026. What are you expecting to see as a result?

Irina Denisenko  Well, phase I was all about FedRAMP low, phase II is all about FedRAMP moderate. And we expect that, you know, it’s going to really — FedRAMP moderate is realistically where most cloud service offerings sit, FedRAMP moderate and high. And so that’s really the one that the FedRAMP needs to get right. What we expect to see and hope to see is to have agencies actually authorized off of these new frameworks. The key is really going to be what shape does FedRAMP 20x take in terms of machine readable reporting on the security posture of any cloud environment? And then of course, the industry will standardize around that. So we’re excited to see what that looks like. And also how much AI does the agency, the GSA, OMB and ultimately FedRAMP leverage because there is a tremendous amount of productivity, but also security that AI can provide. It can also introduce a lot of risks. And so we’re all collaborating with that agency, as well as we’re excited to see what, you know, where they draw the bright red lines and where they embrace AI.

Terry Gerton So phase II is only gonna incorporate 10 companies, right? So for the rest of the world who’s waiting on these results, what advice do you have for them in the meantime? How can companies prepare better or how can companies who want to get FedRAMP certified now best proceed?

Irina Denisenko  I think the end of the day the inheritance model that Knox provides — and, you know, we’re not the only ones, actually there’s two key players.; it’s ourselves and Palantir. There’s a reason hat large companies like Celonis like OutSystems like BigID like Armis who was just bought by ServiceNow for almost $8 billion. There’s reason that all those guys choose Knox and there’s a reason Anthropic chose Palantir and Grafana chose Palantir, because regardless, FedRAMP 20X, Rev 5, doesn’t matter, there is a massive, massive premium put on getting innovative technology in the hands of our government faster. We have a window right now with the current administration prioritizing innovative technology and commercial off-the-shelf. You know, take the best out of Silicon Valley and use it in the government or out of Europe, out of Israel, you name it, rather than build it yourself, customize it until you’re blue in the face and still get an inferior product. Just use the best and breed, right? But you need it to be secure. And we have this window as a country. We have a window as country for the next few years here to get these technologies in. It takes a while to adopt new technologies. It takes awhile to do a quantum leap, but I’ll give you a perfect example. Celonis, since becoming FedRAMPed on August 19th with Knox — they had been trying to get FedRAMPed for five years — since getting FedRAMPed on august 19th, has implemented three agencies. And what do they do? They do process mining and intelligence. They’re an $800 million company that’s 20 years old that competes, by the way, head on with Palantir’s core product, Foundry and Gotham and so on. They’ve implemented three agencies already to drive efficiency, to drive visibility, to drive process mining, to driving intelligence, to drive AI-powered decision-making. And that’s during the holidays, during a government shutdown, it’s speed that we’ve never seen before. If you want outcomes, you need to get these technologies into the hands of our agencies today. And so that’s why, you know, we’re such big proponents of this model, and also why, our agencies, our federal advisory board, which includes the DHS CISO, the DOW CIO, the VA CIO are also supportive of this because ultimately it’s about serving the mission and doing it now. Rather than waiting for some time in the future.

The post FedRAMP is getting faster, new automation and pilots promise approvals in months, not years first appeared on Federal News Network.

Interview transcript

Terry Gerton We’re going to talk about this case, Siemens Government Technologies. But before we dive into the case and the court’s decision, walk us through the basic premise here, which is about energy savings performance contracts. How do they work?

Zach Prince Sure, so the government, you know, it has a lot of facilities around the country and around the world. Many of those facilities are a little dated, let’s put it nicely, where they waste huge amounts of energy just because the infrastructure is built decades and decades and decades ago. So as part of a way to try to modernize and save energy, they’ve developed two different mechanisms that are the real workhorses of modernizing in this regard. There are what we’re dealing with here, which are energy savings performance contracts, and then their utility energy savings contracts, or UESCs. This is more of the former, not the latter, but those are really the two mechanisms. So the way that these work is there’s an IDIQ that will be held by a number of energy savings companies. Here Siemens is one of them. The interested agency will go out and ask for quotes to put together a preliminary audit, or a preliminary assessment rather, which is really a high level review of the federal facility and suggestion of ways that the government can save money and the cost of doing it. This always has to be not just cost neutral, but has to have an actual savings to the government. And that savings is passed on then to the contractor. The preliminary assessment is itself an expensive process, but it’s not nearly as expensive as the next part of this, which is if the government is interested in the preliminary assessment, they’ll ask for an investment grade audit or IGA, which is part of the task order award for the work itself. That can be millions of dollars. I mean, it takes tons of engineering time and real work from the contractor. And work that sometimes doesn’t always get compensated if there’s no ultimate award.

Terry Gerton So it sounds like there are a lot of ways that these projects could get derailed. What specifically went wrong in the Siemens case?

Zach Prince Well, it’s hard to tell reading just from the court’s decision, but it appeared that DLA, which was administering this large project at the Goodfellow Air Force Base in San Angelo, Texas, changed some requirements after that they had already received the first round of the investment grade audit from Siemens. They seemingly changed a ton of the assumptions that were used by Siemens to calculate the actual cost savings. And, as Siemens put it, required a full scale investment grade audit to be conducted again with a number of iterations that ended up costing somewhere north of $2 million.

Terry Gerton That change in assumptions is interesting, because as I read the case, it was almost two years from the initial request to Siemens’ submission of their audit. And so many things could have changed. Does that make these kinds of projects a risky proposition?

Zach Prince They make them complicated. And the agency really needs to be focused on getting these projects done, getting the investment grade audit to be based on facts, not things that could rapidly change, which is I think what happened here, so that they understand what they’re getting or what they might be getting and can execute the project.

Terry Gerton So Siemens brought the case in the Court of Federal Claims. What was their argument?

Zach Prince So as sort of the background to this, the IGA often is not compensated when there’s not a task order and companies know that this is a risk that they’re taking. The preliminary assessment is almost never compensated unless there’s a task order. So they know it’s a risk, but this is an unusual case because of how many iterations they went through with DLA just to then have the project totally canceled with nothing. So, they brought some pretty interesting challenges here. They frame this as a bid protest, primarily, as well as a breach of contract. So there was a contract, this IDIQ, with a task order for the preliminary assessment. That’s where they brought a contract claim under. They said the government breached its obligations to administer a task order for the work itself under that IDIQ, so that’s a contract dispute. They also said this was an improper administration of a task order award process where the government breached implied obligations to proceed in good faith and breached a variety of other statutes that really weren’t discussed in the case. But they framed it as both contract disputes and a bid protest.

Terry Gerton Speaking with Zach Prince, he’s a partner at Haynes Boone. How did the government respond to those allegations?

Zach Prince Well, the government just asked for the whole thing to be dismissed, which it often does. The bid protest issues are the ones that they really focused on and I thought were of particular interest for this case because it was really a novel approach to try to get compensation by Siemens. The government argued that there can’t be a bid protest here under the court’s bid protest jurisdiction because of what’s known as the FASA task order bar. It is, there is some limit to the jurisdiction of the Court of Federal Claims to hear disputes, bid protest disputes involving task orders. They either have no jurisdiction anywhere to have such bid protests or they have to go to GAO. But that limit has been hotly disputed and the subject of several Federal Circuit decisions and the government lost that claim here.

Terry Gerton And what else did the court have to say about Siemen’s creativity?

Zach Prince The court was more focused on the government’s attempt to trap Siemens by saying that either, if there’s a contract, an express contract, then they can’t bring an implied in fact contract, which is one of their arguments they had brought as a bid protest, essentially. But also the government said there is no express contract that gives rise to relief. So as the court put it, it’s heads, I win, tails you lose-type argument the government’s trying to make and it wasn’t going to pass muster here at least. The government might ultimately prevail, but this is a very preliminary stage and the court was not willing to dismiss here.

Terry Gerton So as you look at this case, what lessons do you draw for agencies and contractors around these kinds of projects?

Zach Prince Yeah, it’s really tricky and I’ve dealt with several of these contracts before. The contracting agencies often just don’t have money to fund the preliminary assessment and maybe don’t money to fund the investment grade audit either, hoping, everybody’s hoping together, that it will ultimately turn into a task order for the work. And these task orders might be massive, $50, $100+ million. We’re talking about multi-year projects for modernizing large, large facilities. But you can’t just proceed on hope. It always makes me as outside counsel nervous, but you as a government contractor or as a government agency, you have to have a good relationship with your contracted counterparts. And those relationships can really carry the day to get folks compensated when they otherwise might not have. You find money at the end of a fiscal year and you come up with some mods and make the contractor whole because you know you have to do business with them again. And you appreciate the fairness of it. On the contractor side, you have to recognize that there is risk here. And if you’re not gonna get an actual written commitment from the government, and not just the government of course, the authorized person from the government, to fund one of these projects, you might be left holding the bag. So they can be lucrative projects for sure, but there is risks. And, as always, the government has to proceed in good faith, which is Siemens’ primary argument here is, the government just kept shifting around requirements, ignoring the fact that it was going to cost millions to do that, and then tried to leave Siemens with nothing. But you have to proceed with these projects with eyes wide open.

Terry Gerton You mentioned risk there, especially for the bidders, but it seems like there’s risk for all the parties and it’s not always clear that the potential revenue down the line will offset some of that risk. Is there a better way to structure these kinds of projects that would help everybody in the long run?

Zach Prince That’s a great question. And I’m not just stalling because it’s really complicated and I don’t know the right answer. This is a really interesting mechanism to fund these types of projects. And the government likes it because they’re not really left paying for anything. If they save money and those savings pay the contractor ultimately, and even in the utility version of these types contracts where it’s structured a bit differently, it’s still not coming out of present appropriations generally. It is a savings that the government’s getting ultimately on its energy bills, and that’s being passed on to pay for the project. That’s a great way to do business. If the government doesn’t have to actually pay for anything, they’re not subject to ongoing appropriation problems, and they still can get what they need, that’s fantastic. The problem is just at the outset of these projects, there are all sorts of complications that really need to be considered carefully by all parties.

The post An interesting case at the Court of Federal Claims could shape future energy savings performance contracts first appeared on Federal News Network.

Interview transcript

Terry Gerton Let’s do first things first. Tell us about the Air and Space Forces Aid Society. What do you do?

Ed Thomas The bottom line, Terry, is we take care of airmen, guardians, and their families. We’ve been doing it since 1942, as World War II started to ramp up, all of the services have an organization like this. It is the official relief society of that service. Army emergency relief takes care of soldiers. Navy Marine Corps relief takes of marines and sailors. Coast Guard Mutual Assistance takes care of coasties. We take care in the Air and Space Forces, now the Air and Space Force’s Aid Society, we take care of airmen, guardians, and their families when they need us most.

Terry Gerton And what sort of format does that aid take?

Ed Thomas We do several things. At the most basic level we provide two basic forms of assistance. The first is grants, lots. We did $4.5 million in scholarships last year, we did almost $5 million dollars in disaster relief when hurricanes Helene and Milton and other natural disasters hit parts of the United States where we had our service member stationed. So we do grants we also do zero interest loans. Now we’re not a bank but the reason we do zero interest loans is in some cases, it prevents our young, particularly our most junior enlisted folks from going to a payday loan organization that’s going to charge them 30%, 39% interest. And we want to avoid that.

Terry Gerton Well, the big news for us in this conversation is that you’ve added Space Force to the organization’s name and logo. Tell us about why and what message you wanna send with that.

Ed Thomas Yeah, well, I would say, Terry, it is overdue that finally we have rebranded, renamed ourselves the Air and Space Forces Aid Society. You know, I was on the Air staff with Gen. Goldfein, Gen. Raymond, Secretary Wilson in 2019 on December 20th, when we stood up the Space Force and it wasn’t like a five-year planning ramp to create this new service. On day one, when President Trump signed the NDAA out of Andrews Air Force Base, we had a space force. It was a Space Force of one, Gen. Raymond, but now it’s ramped up to about 10,000 people. They’re going to be ramping up to almost three times that size in the out years, and we need to recognize as the official aid organization of the Department of the Air Force, who we serve. And we’ve been serving guardians since day one, but we just wanna make sure that we’re connecting with those people that we’re charged to help take care of and that airmen, guardians, and their families know that we were here for them.

Terry Gerton As you’ve built a support mechanism for guardians, are you finding that that force has needs that are different in scale or scope from airmen in general?

Ed Thomas No, I would say for the most part, the needs are very, very similar. You know, most of our support is focused on our most junior enlisted, E1s to E4s. And the kinds of difficulties that our young service members are experiencing, whether they’re Air Force, Space Force, Army, Navy, Marine Corps, they look very similar, It’s simple things like not having any savings in their account when a financial crisis hits. Their Hyundai Santa Fe, they lose their engine on their 8-year-old car. Very expensive to fix. Maybe one car for a family and they just don’t have the financial reserves. That’s where we come in, help them get them back on their feet. Hopefully they’ll never need us again, but we want to be there for these families, Space Force, Air Force, when they need us.

Terry Gerton Is there something about this group of service members that you think most Americans don’t understand? You’ve just mentioned some real significant financial challenges.

Ed Thomas Yeah, Terry, thanks. I think there are several things, but you know, I used to work for the Chairman of the Joint Chiefs, Martin Dempsey, Gen. Dempsey, one of my favorite people in the world. And he would very often say, our people are called to lead uncommon lives. And they are uncommon lives. I mean, you take an 18, a 20, a 22-year-old, they move away from their family, sometimes to the other side of the world. They leave their community, they leave their support, sources of support. Often they end up with all the change happening at once that adds a lot of financial stress, often adds a lot of mental or emotional stress, and all things people learn to deal with. I spent 33 years on active duty in the military, plus four years as a cadet, and I grew up in an army family. I was kind of used to this. But we have a lot of people that are plucked out of their families and their homes across America thrown into this military life across the country, across the world. And there’s a lot unique challenges and stressors that they just might not be prepared for.

Terry Gerton I’m speaking with retired Air Force Maj. Gen. Ed Thomas, who leads the Air and Space Forces Aid Society. Are there particular needs in the Air Force and the Guardians that you’re meeting right now?

Ed Thomas Absolutely. Some of the biggest needs that we meet on a day-to-day basis, and we’re often doing them very quietly, is just basic living expenses. It’s those airmen or guardians or their families that meet an unexpected financial crisis, and they just don’t have the reserves to deal with it. Sometimes it’s rent, sometimes it’s mortgage, particularly in high cost living areas like New York or L.A. Where we’re asking people to go relocate to. Sometimes it is auto repair. So there’s a lot of those things that we’re doing. And then one of the other things that we do that people don’t often realize is just helping young airmen and guardians get back for emergencies. Let’s say they’re stationed in Kunsan, Korea, you know, an hour, hour and a from soul. And they lose a family member, they have a family that’s terminally ill. Our U.S. Government policies, while they’re great and they help take care of our people, they don’t pay for all of those things. So for a young airman to be able to … take off and travel from one of the side of the world to the other to get there for a family emergency, they often need help and they often need support. We’ll do that, we’ll work with them, we work with the Red Cross. We’ll pay for their flights, we’ll get them home and make sure they’re there when they need to be there. Or, in unfortunate cases, at least be there to say goodbye.

Terry Gerton As you look forward to 2026, what are the priorities? Beyond the name change, are there new programs or outreach initiatives or partnerships you’re really excited about?

Ed Thomas No, thanks. Yes to all of those things. We have probably made the biggest changes in the last, say, six or seven months that we’ve probably made in decades to the way we deliver our programs. And I’ll tie that to our number one strategic priority, and that’s just awareness. That’s just making sure that we create and enhance the awareness across the force, so when airmen, especially people who are relatively new to the force, hit a snag, they know who to turn to. So some of the things that we’ve done is we’ve dramatically increased our childcare support, money that goes to these young families to be able to help take care of children when they’re deployed, when they are doing a permanent change of station from one assignment to another. Car seats is another one. We buy car seats for every E1 to E5 when they have a new child. It’s $250 that gets Zelled straight into their account so that they can go get that car seat. We also just finished a program called Home for the Holidays, where we just spent more than a quarter million dollars getting young, single airmen from their location back to home to spend it with family and loved ones over the holidays. So that travel program is one of the things that we’re really proud of, and we wanna make sure that we can reunite our service members with their families, particularly at times like this.

Terry Gerton As we wrap up here, I wanna give you the opportunity to make a call to action. What can the public or industry do to help you move the needle?

Ed Thomas Well, the first thing I’d say, Terry, is the awareness piece. We, while we need funds and we need to fundraise, we want to make sure that all of our service members know that we’re here to help them. That’s where my passion is. And that’s where I want to make sure people know how to come to us in times of need. It’s not only good for those service members and their families, but it’s good for the readiness of the nation. Now, also, I’ll never turn down an opportunity for help. AFAS.org, If people go there, they can either click a button that says ‘hey I need help’ or click a button that ‘I want to support.’ There are certainly a lot of young junior airmen and guardians of their families that we can use with your help. So thank you Terry.

The post An organization’s new name signals a broader mission to support both Airmen and Guardians first appeared on Federal News Network.

Terry Gerton The IRS Criminal Investigations Division just published your 2025 annual report, and there’s some really interesting statistics in here, including $10.6 billion in identified financial crimes. And that’s a big leap up from the 2024 numbers. What do you think is going on? What factors contributed to that increase?

Justin Campbell Well, IRS criminal investigation has approximately 3,000 employees. We hover around that number annually. The key difference this year that we’ve noticed is we brought in a large number of new special agents. So we brought, we graduated 14 different classes this year through our academy. That means those are agents that are hitting the field and opening up new cases and detecting fraud. That has a large impact on our measurables, such as fraud identified. I think that’s a big piece of it. The other piece of is there’s a lot of fraud out there and we are the best in the world at identifying it. And the folks we’re hiring are coming to us from all kinds of backgrounds, well suited for this kind of work in the finance field and legal field. And so when our agents do hit the ground from training, they are well equipped from their prior background as well as their training we give them at the academy to quickly identify that fraud.

Terry Gerton You mentioned a lot of fraud. One of the other numbers that jumps out at me is the seizure of 2.3 petabytes of digital data. So not only is fraud happening, but it sounds like a lot it is happening digitally. In addition to the extra agents, are there new tools that you’ve used or new methods that you have of detecting that fraud and indicting it?

Justin Campbell Well, what we’re learning is all law enforcement agencies are dealing with is, more and more, our society is becoming paperless. And so even on what we would consider more traditional fraud cases, more data is being pulled digitally as opposed to from filing cabinets. When I was an agent, we would plan to seize filing cabinets full of records. And nowadays, professionals, business professionals, third-party money launderers in some cases, others that are committing criminal violations, are really good at scanning evidence, right? And a lot of us do that, a lot of legitimate people do that. I do that in my own personal life. I try to keep as much digital records as possible. What the challenge that presents for us though is, as you saw, we have petabytes of data we seize now. And so when we do these enforcement operations, we do search warrants or search subpoenas for records. A lot of times they are digital in nature. One thing we’re doing is trying to lean into artificial intelligence, large language models to help us more quickly identify fraud and to be more efficient with it. One example of that is we modeled a program this year called our case viability model. And essentially what it does is it looks across the data from our case management system for the past decade plus and says, hey, what is the likelihood success on this case. And it uses large language model technology to give the decision makers some view into the likelihood of success on a given case based on the inputs. So yeah, we are using data or technology, I should say to our advantage. And we are also grappling with the increased use of digitized data by taxpayers on our investigations.

Terry Gerton In addition to your annual report, you’ve also just released your top 10 cases list. It’s the season for top 10 lists. But I was struck in relation to what you just described by a statement that says financial trails are the criminal’s downfall relating to your data comment there. When you think of the top 10 lists, are there one or two that really caught your attention?

Justin Campbell Yeah, there’s two of them in particular that really highlight our skill set. I’ll start with one that’s in the news right now, the Feeding Our Future Investigation based out of Minneapolis. That’s over $250 million in fraud. Our agents have been at the table since day one, along with the FBI and U.S. Postal Inspection Service identifying that fraud. We are very proud of the work that our agents have done on that case. It’s been going on for a number of years now, and it really highlights where our agents can impact program fraud in particular. Another case that I think really speaks to something that only CI can do effectively is large investigations involving financial institutions. This past year, TD Bank was subject to a $670 million investigation related to failure to maintain the anti-money laundering program, and they pleaded guilty, or agreed, I should say, to pay a record-breaking $1.8 billion in penalties associated with that case. That’s a very large, complex case that I think speaks to the work that CI can do. And then the last point I’ll make, a case that really gets my attention in the role I’m in now, and it should catch the attention of taxpayers because these types of cases compound and this is an unscrupulous return preparer. We had an individual by the name of Rafael Alvarez in the Bronx, New York, submitted false tax returns on behalf of his clients to the tune of $145 million in fraud. And that particular case was sentenced this year. Mr. Alvarez was sentenced to prison and he helped his company generate approximately $12 million in fraudulent proceeds over the duration of the fraud. So, you know, those kinds of cases really do have a big impact on taxpayers because that comes out of the treasury, it comes out of the taxes that they paid in, and it really gets our attention.

Terry Gerton I’m speaking with Justin Campbell. He’s the acting deputy chief of IRS Criminal Investigations. Well, speaking of tax fraud, I mean, this administration has made the uncovering of waste, fraud, and abuse one of its key tentpoles in policy and programs. Your report says you identified $4.5 billion in tax fraud in 2025. Are there trends that are driving that increase?

Justin Campbell I wouldn’t say a trend that we have detected that, we would say has caused an uptick in fraud. Look, fraud’s there. It’s always going to be there. As much as many of us are frustrated by that, we are very accustomed to it at the IRS. As I stated earlier, I think the uptick in-part is related to the number of agents that hit the ground running in fiscal year ’25. That enables us to identify fraud quicker. And I think there’s also the fact that the agents that we are hiring are really sophisticated. I’ve been really impressed with their backgrounds when they start. So we aren’t training someone with no background in finance, for example, or law. These are very sophisticated individuals that come on board with us. So I would attribute the uptick primarily to the agents onboarding in fiscal year ’25. I couldn’t necessarily point to a specific trend. Now, we all know that we’re seeing a lot of program fraud reference in the news. There’s been a number of program of fraud cases brought related to COVID, different COVID programs. That could be driving some of that up, but we haven’t necessarily detected what we would point to as a specific trend on a specific type of fraud.

Terry Gerton That helps clarify the background here. I want to shift gears just a little bit because your annual report also talks about some new partnerships initiatives that IRS Criminal Investigations is undertaking, both with global partners and with financial institutions. Can you tell us a little about how those partnerships work and how they impact the findings that your agents make.

Justin Campbell Yeah, one of the partnerships that we’re really proud of is, we call it CI First, and it’s a program with banks where we work closely with them to provide them feedback on their regulatory responsibility to report certain types of transactions. And we have found over the years and working with our partners at the financial institutions that they are seeking feedback. They want to comply with the law, but they also want to know how well they’re doing in certain areas. And so we have a specific effort called CI First that provides feedback to them to ensure that they’re getting the feedback they need, and it ensures we get a high quality product from the banks as a result of their contributions.

Terry Gerton And how does that help amplify your reach, your enforcement reach?

Justin Campbell When we get strong relationships with financial institutions, we get great results. I’ll give you an example. So as an agent, I had personal relationships with certain bankers after years of conducting financial investigations. And they knew I was an IRS special agent. And so when someone walks into their bank and one of their lobbies and says, hey, I have a six-figure treasury check, I want to cash, their spide-y senses went up, right? And they called me directly and said, hey, this doesn’t seem right. Can you look into this? We’re filing an SAR on this. This doesn’t seem right, so anyway, that’s the kind of example I think that I would point to, strong relationships result in better cooperation from the banks.

Terry Gerton You’ve described a pretty busy environment with your agents and the level of fraud. As you look towards 2026, are there any particular trends or areas that are on your radar for enforcement?

Justin Campbell Well, we want to focus heavily on tax gap efforts. What I mean by tax gap is at the IRS, we know that there’s a certain amount of taxes owed as opposed to what is actually paid. And so that difference is what we call the tax gap. And some percentage of that is criminal in nature. We of course would never investigate someone for an unintentional failure to report income, but when there’s intentional failure to report income and intentional filing of a fraudulent return, that’s when an IRS criminal investigation is absolutely going to get involved. And so one of our big efforts this year is to look at where we can impact the tax gap more effectively. We are looking at high income non-filing, particularly. We would really want to focus in on that, as well as a few other case program areas, I should say that we have noted in the past, require constant policing. Employment tax fraud is another great example of an area that is subject to fraud based on our experience and we’ll continue our efforts this year in policing employment tax fraud.

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Interview transcript

Terry Gerton You have done some analysis looking at the pattern of senior military officers being relieved with very little explanation from the Department of Defense. We’ve all read some of the headlines, but what is it about this issue that concerns you?

Virginia Burger For me, the biggest concern was that, like you said, there’s little to no justification for many of these firings. Or if we get any, it’s very oblique references in tweets from senior leaders like Secretary Hegseth, and we’re never provided any follow-up or any true validation that the relief was actually warranted. And for me, that is a red flag because it seems like we’re probably politicizing a organization that is meant to be apolitical, right? The military was always supposed to be an apolitical body, it’s not supposed to serve a party, it is supposed to serve the people, and if we are firing the most senior leaders of that organization for overtly political reasons, which is what we are left to surmise, given lack of any other information, that should be a serious point of pause for all Americans.

Terry Gerton As I mentioned, we’ve seen some headlines, but we may not know about all of the reliefs. Can you talk about how widespread this has become?

Virginia Burger So obviously I think the ones that everyone’s probably most familiar with were right away, the chairman of the Joint Chiefs, General C.Q. Brown, was relieved and then the chief of naval operations, Admiral Lisa Franchetti, were both relieved. They were probably the two biggest ones that everyone saw. And again, Hegseth characterized it very generally as cleaning house. I need new leadership, new generation for context. Neither of them were due to be turned over at that point in time, they were both still, well — had several years left in their tenure in those positions. And everyone sort of was left to guess, well, maybe they relieved General Brown because he was African-American and maybe they relieved Admiral Franchetti because she was a woman. I don’t have a ton of familiarization with General Brown, but I know a lot of friends in the Navy who were incredibly proud [of] and respected Admiral Françhetti. She was considered the pick for CNO and so her relief was quite shocking to a lot of people because she was by far and way, if we’re gonna talk about merit for positions, she was the person for that position. Some other ones that have maybe not gone as noticed are in some lower, more subordinate commands, but certainly still across the board, there were several women relieved in the Air Force and the Army that were senior leaders, and also notably the head of the NSA was relieved, and that position was gapped for several months. In fact, the replacement was only announced in the last few weeks, and that was both concerning for, why was the person relieved, but also from a strategic decision. If the NSA doesn’t have a leader, that’s a hugely powerful arm of national security. That was a big bipartisan concern as well that many senators and representatives expressed concern over.

Terry Gerton Let’s follow that because you also documented some patterns about gaps in leadership and transition and readiness. Tell us more about that.

Virginia Burger So when a senior leader is relieved, and it’s not on the normal timeline, because most of these positions you hold for a period of usually two to three years, that’s the typical timeline for command, especially at those senior leader levels of lieutenant generals and vice admirals, generals and admirals. When one of those positions is relieved suddenly, you do not have a replacement lined up. And for a lot of these senior leaders the replacement has to be confirmed by Congress, right? For combatant commanders, for service chiefs, that person has to nominated, they have to be reviewed by the Senate Armed Services Committee, and then voted on by the Senate. If you fire someone off timeline, that position is going to be gapped, and these are our most senior military leaders who are in the positions that are making the most pivotal decisions for our national strategy, and who are making the decisions that America’s sons and daughters in service are going to have to execute. And so when they’re fired very suddenly, that position is empty and there is a power vacuum, there is a void and naturally the executive officer, the deputy is going to step up and do their best and maybe they’ll rush to put in someone who’s acting. But you know, an acting person in that position does not have the same legal authorities. They don’t have the same authorities for command and it’s just going to cause headaches and issues that will roll all the way down the chain. And it can be very, very difficult for a unit to run. And then when we’re talking about people in positions of such amount of power, that’s going to have a lot of ramifications on national security, morale, and making sure our service members are well taken care of.

Terry Gerton So, Virginia, these positions that have been relieved have been at the top of chains of command. Have you heard any response from within the military or within DoD about the impact?

Virginia Burger I can only speak to like anecdotes I’ve been given from people I know. I haven’t seen any significant reports or anything from the DoD officially because they aren’t releasing any information like that, right? Like, Secretary Hegseth has not come out and said, hey, here’s a survey or here’s an investigation we did to see if the very dramatic relief of Admiral Franchetti had negative impacts to naval readiness. He’s not doing that kind of work or if he is, he’s not going to publish it. What I can say, and what I’ve heard, like I said, I spoke to several peers and friends of mine who are in the Navy, and it was quite a morale blow when she was relieved. I know many women in service, as a veteran myself, I still have many friends on active duty, and they have watched as many of those relieved look like them. They are women, and they’re sort of questioning, is there a future for me in this organization? I have friends who have sort of passed the 10-year mark, they’re trying to make it to 20, and they are looking to see, is that even really an option? Will I be able to continue to dedicate my life to this service that I’ve chosen? And that’s going to have ripple effects across the force and that’s not gonna have great implications when it comes to readiness, morale, etc.

Terry Gerton I’m speaking with Virginia Burger. She’s the senior defense policy analyst for the Center for Defense Information at the Project on Government Oversight. Virginia, in your paper, you talk about some opportunities that Congress might have to have some more say in this. Walk us through your suggestions.

Virginia Burger Like I said earlier, Congress has to review these nominees for the senior positions, right? And we’re talking specifically about the highest ranking officers. These are three and four-star generals and admirals. So those are the positions that have to go before Congress, they have to be cleared by SASC, Senate Armed Services Committee, and then voted on before they can take their seat in that position. And so Congress, and specifically the Senate, exists in that advisory capacity to the president’s nomination. And that’s written in law. That’s in Title 10, which is the section of U.S. Code that governs the United States military. There is a specific section, Section 601, that talks about the appointment of these officers, and it also talks about the removal and the replacement of them in some level of detail, but without any mention of Congress’ role, because there isn’t one in law for their removal. My suggestion is that we actually amend Section 601, so that there is some official oversight. Now, granted, Congress has avenues for oversight over these decisions now, right? The Senate, congress, they have the ability to conduct hearings, open investigations. If they wanted to, they could open an investigation into the relief of General Brown or Admiral Franchetti and subpoena them or subpoena Secretary Hegseth and have them come in and answer questions about that incident. The Senate could do that tomorrow. Politics aside, with all of that, there are things they could do to change the law. So my recommendations would be that they include explicit requirements for formal congressional notification, right? So when a senior leader, one of these three or four stars, is relieved, within 24 hours, it should be in the law, within twenty four hours, Congress must be formally notified of that decision. Right? Because again, these are the people whose relief is going to have the biggest impact to our national security. Our legislative body should be told that. That is something that I think would be a no-brainer to include, in my opinion. Another one is make sure that the DoD has to show their work, right? There should be a full investigative report. You and I have both been executive officers, I think you, for a very large battalion. You’re aware that the military loves to investigate everything. Someone sneezes in the wrong direction and an investigation is triggered. My guess is there’s probably investigations when these reliefs happen, I would hope there is, at the very least. If there isn’t, that’s maybe another question that we need to also pull the thread on. But at the least, I think Congress should be in receipt of that investigative material. Whatever investigation was done at that command level for the relief of that general or admiral should be provided to them, along with a statement from either the service secretary or the secretary of defense as to the justification for the relief and an optional response from the relieved officer stating their perspective. And that, I believe, should be included in 601 as a requirement to be given to Congress following the relief of one of these officers within 30 days. That way, Congress has this information. Does it need to be public? Maybe not. You could argue if someone is relieved for maybe personal misconduct that they don’t want in the public eye, sure, then the Senate or Congress can handle that with discretion, but at the very least, those legislators need that information so that they can make sure that the Secretary of Defense, the service secretaries, are not engaging in overt politicization in the removal of these officers.

Terry Gerton Virginia, I want to push on that a little bit because those proposals would give Congress oversight, but it still doesn’t address the issue of remediation or reinstatement that Congress might have that authority, if they were to receive all of that information and find that, in fact, in their opinion, that individual should continue on active duty. How do we get to a corrective measure that might help address this problem, or are you thinking that the additional oversight is its own deterrent?

Virginia Burger I think the oversight would be a deterrent in its own right because, you know, my guess is the secretary of defense does not want to be hauled in front of the Senate Armed Services Committee to answer for these should the Senate read the report and realize that the decision was overtly political. But there are, you now, like you said, ways that we could do it. They could impeach the service secretary or the secretary of defense if they feel like they are making these political decisions. That’s available to them now. I believe articles of impeachment for Secretary Hegseth were put forward in the House I think last week in light of Venezuela, I think one of the representatives did. I don’t think they went anywhere, but it’s something that they could do any day of the week if they feel like they are inappropriately handling their position, right? So that’s something they could to enforce this. Unfortunately, a lot of the rules governing the appointment of officers are established through case precedence. It’s not necessarily reflective explicitly in Title 10 or in the Constitution. So, a lot of the limitations that say the president is the one who should be appointing officers comes from case law, specifically before the Supreme Court. So that gets a little bit murky when it comes into the reinstatement of officers. But certainly, in my opinion, the easiest way would be if we believe a secretary of defense is mishandling their position by relieving officers for political reasons. If you impeach them, potentially the next secretary could then reinstate them. And then it’s very clean because it’s the secretary and the president who are then reinstating them.

The post Quiet firings with big consequences, why the lack of transparency when relieving military leaders matters first appeared on Federal News Network.

Interview transcript

Terry Gerton You’ve published some interesting analysis lately. You looked at stock closing prices from January 21st to November 25th for the 100 largest publicly traded federal vendors. Why? What were you looking for?

Paul Murphy Well, what we wanted to do was get an indication of whether all the procurement changes and budget turmoil that occurred during President Trump’s first year affected the attractiveness of the large publicly traded vendors as investments. So what I did was I used Bloomberg’s contracts database, which I’m in every day, I use it to rank all the vendors by their fiscal 2024 obligations, and then I merged this list with Bloomberg’s terminal data. To assign company tickers and pull the historic trading price data to compare closing stock prices in January and December. Then we assign each company to their GICS market. GICs is an acronym for Global Industry Classification Standard. It’s not like the government to define markets like category management or product service code. Wall Street uses its own market definitions. And that’s how we analyze the price differences. We included stocks traded domestically and overseas, and we used the terminal data to convert prices into US dollars. It’s been a crazy year, as you know, for companies. And the last year, we’ve seen spending pauses, agency closures, contract terminations, clawbacks and consolidations, big markets like consulting targeted for reductions, various efficiency initiatives, particularly at GSA and DOD. There’s been an year-long CR and an extended shutdown, even tariffs. So we wondered, you know what’s the impact of all these events on investors?

Terry Gerton Pretty hard to do market planning and business modeling with that kind of turmoil. What’s the big headline? What were the big trends that you found as you looked at the data?

Paul Murphy Well, among the top companies, as you read, the average stock price went up, but let me back up a second and say, even though we have all this data, it’s important to keep in mind that federal contracts are just one indicator of a company’s financial health and its desirability as an investment. Many factors, as you know, contribute to stock price fluctuations, such as state and local contracts, commercial sales, earnings, profitability, debt load, interest rates. So the trend we wrote about broadly aligns with the Trump administration’s prioritization of big defense contracts and cuts to certain civilian agencies. And so what we’re seeing from our year end data, which we have in hand now, and we’re about to come out with a new year end analysis, is despite all of this financial turmoil, fiscal 2025 will go down as a strong year for contract spending. Certain parts of professional and IT services have taken hits, but there’s been steady spending, let me say, across a broad range of sectors, including defense aircraft, shipbuilding, missiles, satellites and surveillance, as well as strong spending by the VA, DOE, NASA, and DHS. So, we don’t want to go into too much detail to give away what we’re about to come out with, but, yeah, it’s been a strong spending year, and it’s not surprising to me that stock prices reflect that.

Terry Gerton It looked like about two-thirds of the vendors that you analyzed averaged returns of 23%, which is significantly higher than the broader market. When you look at the details, kind of, who came out on top as the big winners?

Paul Murphy Well, I think the companies that did the best, kind of looking at it from a broad lens, the companies that did the best were the ones that benefited from these numerous executive orders and directives that we’ve seen, as well as through actual contract spending. I mean, there is multi-year spending that sustains companies year to year without having to endure the ups and downs of the annual appropriations process. But the Trump administration has sent numerous signals to industry, which companies might be attractive as investment targets. For instance, January’s executive order to remove barriers to the deployment of AI, a June executive order to relax cyber mandates, the July triple directive AI action plan to remove regulatory barriers all send signals that companies like Palantir, Oracle, and Microsoft are in the mix for having a strong year. The April executive order about restoring America’s maritime dominance. And the recently successful review of the AUKUS security agreement with Australia and the UK sends signals that companies like General Dynamics, Huntington Ingalls, and even Fincantieri, although that’s an interesting company, are, you know, in the mix again for strong spending. But again, it’s important to keep in mind that contract revenue is just one indicator of a company’s investment attractiveness. And a government spending fundamentally is a political decision. So, you know, there’s risks, even as companies are doing well, there’re risks there that, you know, the seats in Congress or the presidency can change, policy and spending priorities can change as a result. So, these equity returns can change quickly, but this has been the snapshot since from January to December.

Terry Gerton I’m speaking with Paul Murphy. He’s a senior contracts analyst with Bloomberg Government. Paul, you mentioned Fincantieri. Talk to us a little bit more about the shipbuilding sector broadly and what’s going on particularly with that company.

Paul Murphy I think what’s happening broadly in the shipbuilding sector is that there’s a kind of a fundamental shift going on in national security strategy from one focused on land-based war fighting in Europe and the Middle East to a more naval focus covering the broad expanse of the Pacific Ocean in order to counter especially China and the Far East. And so you see the U.S. building relationships with countries like Australia and strengthening alliances with Japan and the Philippines. And there’s been big buildouts of base infrastructure at Guam. So companies in the shipbuilding sector, in the sectors that support shipbuilding, you know satellite surveillance, C2, uncrewed drones, there’s a big shift going on in the Navy’s dependence on heavy ships, you know, which can be disabled through the swarms of drones. I mean, there’s a real fundamental shift going on in their thinking. And, so I think companies in these sectors are — you’re seeing spending going there.

Terry Gerton You talked a little bit about the upside, companies that did really, really well. What’s your takeaway from folks who may be underperformed?

Paul Murphy Well, it’s interesting, even in periods of spending growth, and even when you have big companies, you can have, you know, underperforming contracts. I think it helps to be able to dig deep into, you know, company financials and, you know, descriptions of contract performance. And one company, obviously, that stands out as Lockheed. Their stock was down 10.5 percent from January to December. After flagging sales and lower profits mid-year, they were working on the big upgrade, what’s called the F-35, their big fighter contract, the big F- 35 Block 4 upgrade. And they were years behind schedule. They were experiencing difficulties upgrading and integrating the software. And so a pause was initiated in April and Lockheed attributed the decline in stock in part to this pause in F-35 spending. And they worked out a phased modernization approach with DoD and F-35 spending has picked back up as of December. So we may see a reversal of this trend. But even in periods of growth, you can see big companies struggle. And again, you know, with Fincantieri, similar kind of a story, except in shipbuilding. They had four of the six planned Constellation class frigates canceled after they experienced up to three years of delay. And they were three years behind on the second frigate in this six-boat contract. And so the Navy announced it was pulling the plug on the remaining four boats. And so Fincantieri’s stock late in the year plunged in double digits. And interestingly, they blamed their delays and problems in part in the inability to hire enough trained shipyard workers. So I think that’s actually an area, I think, of potential growth, training the workforce in advanced technology, both in shipbuilding but also in other technologies as well.

Terry Gerton Well, your analysis of 2025 is pretty deep as you turn your eyes toward 2026. What will you be watching for?

Paul Murphy Well, of course, we’re going to be watching defense and national security. I think shipbuilding, shipyard infrastructure, related training services, command and control modernization, drones, uncoupled vehicles, satellite communications, you know, they’re trying to build an integrated defense capability that will span  particularly the Pacific — but we’re not going to end relations with Europe, but it’s, it’s going to change fundamentally and I think they’re going try and rely on a lot more advanced technology to interconnect the services and tie more closely to the allies. President Trump just announced he was seeking a big increase in the fiscal 2027 budget, so we’ll see if he’s able to implement that if Congress goes along. Enterprise IT, and cybersecurity, still very resilient. Big emphasis on AI, zero trust, and secure cloud. Expect continued consolidation, I think, in the software licensing under OneGov, and GSA has this big OneGove initiative, and they’re one by one, they’re negotiating enterprise agreements with the big IT companies. And that will, you know, spread their software across the government. And civilian agencies, I think watch for Veterans Health Services, continued strong spending with Veterans Health Service. The VA has reinitiated the electronic health records deployment, Oracle’s big software contract. Space commercialization, we’re seeing in our top 20 every couple of weeks, you know, new elements of NASA’s commercialization of near space and deep space. Moving ahead, there’s, you know, energy plants, mobile energy plants going to be deployed on the moon. So that’s going to involve not only space companies, but energy companies and so there’s a lot of prototyping going on. There’s the national big national airspace modernization initiative by FAA. Right now they’re involved in a huge procurement to replace 600 radars across the country to better protect towers and airports. Border security, obviously a big area of spending. There’s a lot going on, not just in defense. I think it’s important to emphasize that the civilian sector continues to show strong spend signals.

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Interview transcript:

Terry Gerton A couple of months ago, we covered your first report in this disaster assistance high-risk series where you looked at the federal response workforce. You’re back with report number two, looking at state and local response capabilities. Talk to us about the headlines.

Chris Currie The headline for this report is that the capabilities of state and local governments across the country vary drastically for a disaster or other type of event. You know, what we did is we actually look at data that the states prepare and provide to FEMA as part of their justification for federal preparedness grants. It’s meant to be a very, very honest self-assessment of capabilities. And for that reason, we actually don’t provide states individually, we sort of roll it up and wrap it up anonymously because some of that information, as you imagine, could be sensitive. We looked at states that have been involved in major disasters over the last two to three years, and some of these states are very experienced, large states, and even they vary in terms of their capabilities. There’s actually 32 capabilities that FEMA sets in the National Preparedness System that you want to achieve to be prepared to respond for a disaster or a large event. And states vary. Some of the areas, they were less than 10% prepared — met less than 10% of those capabilities — and others, they were much more. So the reason that’s important right now is to understand that if you were to change the support that FEMA and the federal government provide to states quickly, then they’re going to have capability gaps that are going to have to get filled.

Terry Gerton Let’s talk about some of the support that FEMA does provide. One of the ways that they support the states is through preparedness grants, and those help build local capacity. What did you find as you dug into the preparedness grants?

Chris Currie Those preparedness grants started after 9/11, and since 9/11, there’s been over $60 billion provided to states. It’s the main way that the federal government transfers funds to state and local governments to get them ready to handle something bad that could happen, not just a natural disaster, but it could be a terrorist attack. And those grants have built capabilities tremendously over the years. But those capabilities change over time, and we identify through real-world events and exercises the gaps that still need to be addressed. So I’ll give you a great example. After Hurricane Helene and after other disasters, housing for disaster survivors is always a perennial challenge. Housing is a capability area that is assessed and we want to build up through these preparedness grants. It’s an area that states, even very experienced disaster states, still fall short of in terms of their capabilities. And the federal government kind of comes in after a disaster and provides a lot of that support because states don’t. So if the federal governments not going to provide it, then someone else is going to have to provide it. And that’s going to be someone at the state or local level.

Terry Gerton Talk to me about the flexibility and the allocation framework for these grants. Is it meeting requirements? Does it seem to be focused on the places that have the greatest need?

Chris Currie There’s a couple different ways they’re given out. There’s a portion of the grants that are supposed to go towards certain national priorities, and FEMA sets those targets. So think about things like election security or other national priorities. But then a large part of the grant, they’re discretionary, and the states can use them and they’re supposed to use them in the areas where they assess they have gaps. And that’s the data I was talking about earlier that we provided. For example, certain states may have gaps in their ability to handle a mass casualty situation or may struggle to house disaster survivors because they don’t have a lot of housing stock or rental. So those are things they’re supposed to identify and then target those grants towards those specific areas, which makes sense. You want to close your gaps so you’re ready to go when something happens.

Terry Gerton FEMA also provides a great deal of training and technical assistance. How effective has that been in helping states be ready?

Chris Currie This is, I think, one of the biggest success stories since Hurricane Katrina. If you remember Hurricane Katrina, the issue was the role of various levels of government was not clear, and thus, nobody stepped up and was proactive in responding to that event. And people lost their lives. Since that time, the National Preparedness System and FEMA leading that has been extremely effective through exercises, through training, through just regional relationships in taking care of a lot of those problems. So today we are way more proactive and responsive to disasters than we were 20 years ago in Hurricane Katrina. So that’s a huge success story. Having said that, a disaster is a disaster. There’s always going to be things that happen that you don’t expect. And there’s areas where states still have major gaps and require resources and people to address those. And the federal government comes in fills a lot of those gaps. Here’s a great example. Hurricane Helene happened and devastated a very remote part of our country in places like rural Tennessee and North Carolina and Virginia. States and localities don’t have the search and rescue assets for such a large swath of that kind of terrain. Federal government provided a lot of that. They provided a lot of the air support, the land support, the temporary bridges — Army Corps of Engineers. You know, the federal government really kicks in when something’s too big for a state or locality to handle.

Terry Gerton I’m speaking with Chris Currie. He’s director, Homeland Security and Justice at GAO. So Chris, all of this begs the question. This administration has been very clear that it wants states and localities to pick up more of the disaster response mission and that it wants a much smaller FEMA. Given what you found in your first study about the federal response workforce and the impacts of downsizing there, and now the variability in state and local readiness, what are the implications for national disaster response?

Chris Currie I want to make one thing really clear, because all I know is what we know now and the data that we’ve looked at. And I want it to be clear that nothing has changed in terms of FEMA’s responsibilities today. There’s been a lot of talk about it. There’s the president’s council that studied it. But there has been no change so far. So FEMA is still responsible for what it was responsible for two years ago. They have lost some staff. We looked at that in our first report, as you mentioned. They have lost about 1,000 staff, and maybe a little bit more than that, at this point, but they haven’t been cut drastically or cut in half as has been discussed. So they still have the same responsibilities and they’re still performing the same functions on disasters throughout the country, even though last year we didn’t have a huge land-falling hurricane. So what’s important about that is that everybody’s waiting to hear what the next steps are going to be and what’s going to happen to FEMA. One of the things we wanted to do in this report is we wanted to provide a comprehensive picture of preparedness to show what’s going to be necessary if that FEMA support is pulled back or FEMA is made smaller. And the bottom line is that states and localities are going to have to do more. However, it’s going to be critical that they have the time to prepare for that. For example, a lot of the assistance that’s provided to individual survivors, like cash payments and housing, that comes from the federal government. It does not come from the state or local government. So if FEMA is not going to be providing that, the state of the locality is going to have to fill that need. And that requires a lot of money and a lot preparation and planning that you can’t just turn on in a heartbeat. You don’t want to start figuring out programs to help people after a disaster happens.

Terry Gerton You bring up a good point on that time to prepare. As you did the survey, you talked to lots of state and local response officials. What did they tell you, beyond time to prepare, that they were going to need to be effective?

Chris Currie Very simple: Just tell us what we need to do. Tell us what were going to expect from you, the federal government. Nobody knows right now. The FEMA Council has not finished its work. There has been reform legislation introduced in the House and in the Senate, but nothing has passed yet. So the key message is, tell us what the roles and responsibilities are going to be so we know what to prepare for, so we don’t get caught flat-footed in the case of something really bad happening. One of my fears is that last year, like I said, we didn’t have a large land-falling hurricane. It was the first year in a long time we did not. We did not have a catastrophic disaster, other than Los Angeles fires early in the year. So my fear is that folks are going to look at last year and say, hey, things have gone pretty well. We don’t need to be thinking about it. And that is an absolute mistake. Because we’ve seen in years like 2017, 2018, 2024 — my fear is we’re going to have another situation this year or next with multiple concurrent disasters, and we’re just not going to the resources to deal with them.

Terry Gerton So what will you be watching for in the next few months to see if Congress and the federal government and the states have taken your recommendations on board?

Chris Currie Well, when the FEMA Council report comes out, I would like to see, in whatever the execution is for FEMA reform or the changes in how the system works now, an understanding of how this needs to be rolled out so states and localities can prepare and have as clear roles and responsibilities as possible. We’d also like to see them address many of the problems that we’ve pointed out. And to be clear, we’ve pointed out a number of issues with FEMA, particularly in the frustrating recovery phase. I want to see that they’re making sure that we don’t break what’s not broken and we fix the issues that are broken. And there are a number those things.

The post Readiness gaps may leave communities vulnerable when the next disaster strikes first appeared on Federal News Network.

Interview transcript:

Terry Gerton Deltek has a new report out that’s looking ahead for federal contractor intelligence for 2026. But before we look forward, I want to look back a little bit. When you think of everything that happened in the contracting space in 2025, what stands out for you as the biggest trends?

Kevin Plexico Well, chaos reigns supreme this past year, for sure. And what I find just super interesting is that some companies happen to find themselves in really good places and align to the goals of the new administration and did really well. And others that happened to be in sort of the wrong place at the wrong time had profound impact. I think 2025 was a year where companies had to really take stock of the organizations that they’re selling to and their offerings to make sure they’re aligned to the goals of the administration and the mission that the government agencies have been asked to take on by that administration. That’s probably, to me, the biggest change. There’s been so much movement of money, in some cases money coming out of certain agencies. We’ve all heard about Agency for International Development and Department of State and Education. But then you look at organizations like the VA, DHS, and DoD that have continued to do really well. So, a lot of haves and have-nots this year, and I think for companies it’s just trying to figure out, based on this new administration, where should we really be aiming to be able to capitalize on it going forward?

Terry Gerton Every administration comes in with different priorities, but it seems like this one was able to make the pendulum swing really fast, and that may have caught companies off guard. What are some of the hard conversations that had to happen inside those boardrooms?

Kevin Plexico Well, early on, it was all about DOGE and the DOGE organization really putting some unprecedented pressure on some vendors. I mean, some of the letters I saw sent to professional services companies and some of demands that were made of value-added resellers were not anything I’ve seen a federal agency communicate to a vendor that was otherwise performing to the jobs that they were asked to do. And I think it’s, in some respects, a bit surreal that the administration was asking companies to identify wasteful spending. It’s just an awkward situation to be in if you have a customer, and the customer already hired you to do the work, and you’re now being asked to identify where there’s wasteful spending in that and sort of serve up cuts. So I think that was the early part of the year. We did see that start to sunset a bit and fade as we got into the summertime. But then all of a sudden, all eyes were turning to appropriations and funding for 2026. And we all know where that’s landed, which it hasn’t. We’re still waiting for full-year 2026, with just a couple agency exceptions. We bought some time ending the shutdown, which was, as you know, the longest on record. But there’s nothing to say that we might not have another shutdown here at the end of January. I still think where there’s that bit of uncertainty, the one silver lining this past year for the contracting community is the One Big Beautiful Bill, just because it had so much opportunity in it for contractors that really cut across the gamut of aerospace, defense, professional services, training, architecture, engineering, construction. There was literally something in there for everybody, but it does require really an honest assessment by a company to figure out, okay, how do we get after this? Because that might not be in the agencies that they’re used to doing business in.

Terry Gerton Right. And a lot of those funds haven’t been dispersed yet. So they’re still maybe in the RFP or RFQ stage. This unpredictability of funding flows is something you don’t normally see in government contracts. Everything from stop-work orders and termination notices earlier in the year to unpaid bills at the end of the fiscal year and the CR. Has that caused the GovCon community to sort of re-evaluate and re-adjust their planning for predictable cash flows?

Kevin Plexico I think this year, while it was a record-setting shutdown, is not an unusual year in that we don’t have a line of sight on what line appropriations are going to get done. I think industry has become used to that scenario. And while shutdowns are certainly not good for anyone, they’re usually relatively short-lived because of what happens. The pain gets so severe that finally Congress is like, we’re inflicting a lot of pain on rank-and-file Americans, we need to resolve this. I’m hoping that cooler heads will prevail the next time that this comes around. What I think is perhaps different this time versus what we’ve seen, say, the last decade or so is we’ve always had a bipartisan budget agreement or resolution that sort of set the top line that appropriators were negotiating towards. I think we’ve had that literally for about a decade, since back during the Budget Control Act, and we don’t have that for ’26. So there was no goalpost that Congress was working towards on a bipartisan basis that that they agreed on previously. And I think that’s the same for 2027. That’s what’s unique about this, is there’s nothing that says, here’s the goal that we’re working towards, and then how do we allocate it by the different appropriations bills that are negotiated?

Terry Gerton Kevin Plexico is senior vice president of information solutions at Deltek. Kevin, let’s turn our attention to the windshield and not the rear-view mirror now. With all of that disruption in 2025, what is at the top of Deltek’s intelligence report for 2026?

Kevin Plexico Well, I think 2026 is going to be a better year than 2025, thanks primarily to the One Big Beautiful Bill. As you pointed out, it’s not a single-year appropriation. The funding in that legislation lasts through, I think it has to be committed in contracts essentially by the end of 2029; then expenditures can take longer. So that gives us a bit of time and it certainly doesn’t mean that it has get rushed out the door like we’ve seen — some emergency supplemental appropriations have had that shape. And so that provides some longer-term opportunity and ability for companies to reposition, to get after some of that money. The biggest challenge on the base-level appropriations, we’ve got this ambitious goal of growing defense spending, paid for by significant cuts in civilian spending, and we saw that under the prior Trump administration. But they were never able to get appropriators to buy off on that. And I think that’s the dynamic that we have in the Senate, where it has to get 60 votes to get past the filibuster. It does really need a bipartisan-level agreement to get appropriations done. That’s particularly challenging in these contentious times, but I do think it helps prevent those draconian cuts that could be put in place for some civilian agencies that we’ve seen this and the prior Trump administration ask for that usually have not been enacted.

Terry Gerton One of the sectors that’s really struggled this past year is small businesses. What do you see in the future for them?

Kevin Plexico This is an interesting one, because on the one hand, the government has done a really good job of spending money with small business. But if you look at the level of participation in terms of prime contracts, it’s going down. The number of small businesses I think has declined by close to 30% over the last several years in terms of prime contracting. And I think that’s a problem that the administration really has to take a look at. Unfortunately, some of the things that we’re seeing them do around relying on best-in-class contracts, don’t create a new contract if there’s already an existing contract that you can place a task or delivery order under — those really favor the companies that already have those prime contracts. I think it makes it challenging for small businesses to enter the market. On the research and development side, we’re still waiting for Congress to extend the SBIR and STTR programs, which are Small Business Innovative Research-related work. So it’s a challenging market for all companies, but in particular for small businesses. They’re dependent on cash flow; shutdowns particularly impact small businesses. The rule changes that are being made in the FAR overhaul are pretty profound in terms of their impact on small business. I think it’s unpredictable to understand how much is it going to affect a service-disabled veteran-owned business versus an 8(a) company versus a women-owned business. It seems like they’re gravitating more towards a preference of just small business set-asides and trying to get away from sole-source awards. And that’s a big change for the small business community for sure. So I think getting smart about the new rules and how they’re going to be applied agency by agency is going to be super important for small businesses.

Terry Gerton Well, speaking about the FAR overhaul, let’s talk about GSA for a minute. They’ve really worked over this last year to centralize a lot of buying strategies, centralize lot of contracts. They’ve updated the OASIS contract. What are you seeing and what should contractors be expecting to hear from GSA?

Kevin Plexico Well, I think the thing that’s created a lot of confusion is the way they’re rolling it out. Usually when FAR changes are rolled out, they go through a rulemaking process, they issue drafts, take comments and then go to a final rule or interim rule. What they’ve done in this particular situation is instead of approaching it in that traditional way, they’ve rolled out the revised FAR and basically said that agencies can adopt it if they get a class deviation. So, you have to literally go to the FAR overhaul website and see which agencies have adopted these FAR clauses. And right now you basically have different agencies using different versions of the FAR. The DoD is still using the traditional FAR and DFAR. They don’t have any class deviations that I’m aware of, but many civilian agencies do. So it just puts a lot of onus on the contracting community to really be mindful of what regulations are being followed by the agency you’re selling to, because it’s not the same as everybody’s following the FAR anymore. Which version of the FAR? Is it this class deviation or is it the traditional FAR? And that’s just an example of the chaos that we talked about.

Terry Gerton If you could give contractors one piece of advice as they’re trying to put their 2026 business strategies together, what would it be?

Kevin Plexico I go to what we call the four Cs. Customers: Who are the right customers that you’re going to be focused on selling to? Contracts: What vehicles are they going to be using to get access to those providers? Compliance: What do you need to be able to comply with, and I know the CMMC is a big one, but even with all the FAR overhaul changes, I haven’t seen what I would call a deregulation of compliance requirements. There’s pressure on agencies to use more fixed-price; that would potentially take away some of the accounting requirements that come along with a cost-plus contract. I think I might have missed a C in that, but you get the gist of it, right? It’s really just being more strategic and being more thoughtful about how you’re going to go to market. You can’t just afford to live off the agencies you’ve been doing business with, because they might be starving for money going forward. So you really have to take an honest assessment of where you are today, where you want to play, and how are you going to position yourself to get there? Because it’s not a quick pivot by any stretch.

The post New year, new opportunities? Here’s where contractors should focus in 2026 first appeared on Federal News Network.

Interview transcript:

Terry Gerton Last time we spoke, we were talking about the potential of a patchwork of state laws that might stifle AI innovation. Now we don’t have a federal law, but we have an executive order from the president that creates a federal preemption framework and a task force that will specifically challenge those state laws. Last time we talked, we were worried about constitutionality. What do you think about this new construct?

Kevin Frazier Yeah, so this construct really tries to set forth a path for Congress to step up. I think everyone across the board at the state level in the White House is asking Congress to take action. And this, in many ways, is meant to smooth that path and ease the way forward for Congress to finally set forth a national framework. And by virtue of establishing an AI Litigation Task Force, the president is trying to make sure that Congress has a clear path to move forward. This AI Litigation Task Force is essentially charging the Department of Justice under the Attorney General to challenge state AI laws that may be unconstitutional or otherwise unlawful. Now, critically, this is not saying that states do not have the authority to regulate AI in certain domains, but merely giving and encouraging the AG to have a more focused regulatory agenda, focusing their litigation challenges on state AI laws that may have extra-territorial ramifications, that may violate the First Amendment, other things that the DOJ has always had the authority to do.

Terry Gerton Where do you think, then, that this sets the balance between innovation and state autonomy and federal authority?

Kevin Frazier So the balance is constantly being weighed here, Terry. I’d say that this is trying to strike a happy middle ground. We see that in the executive order, there’s explicit recognition that in many ways there may be state laws that actually do empower and encourage innovation. We know that in 2026, we’re going to see Texas, my home state, develop a regulatory sandbox that allows for AI companies to deploy their tools under fewer regulations, but with increased oversight. Utah has explored a similar approach. And so those sorts of state laws that are very much operating within their own borders, that are regulating the end uses of AI, or as specified in the executive order, things like data center locations, things like child safety protections and things like state government use of AI, those are all cordoned off and recognized by the EO as the proper domain of states. And now, the EO is really encouraging Congress to say, look, we’re trying to do our best to make sure that states aren’t regulating things like the frontier of AI, imposing obligations on AI development, but Congress, you need to step up because it is you, after all, that has the authority under the Constitution to regulate interstate commerce.

Terry Gerton Let’s go back to those sandboxes that you talked about, because we talked about those before and you talked about them as a smart way of creating a trial and error space for AI governance. Does this EO then align with those and do you expect more states to move in that direction?

Kevin Frazier Yes, so this EO very much encourages and welcomes state regulations that, again, aren’t running afoul of the Constitution, aren’t otherwise running afoul of federal laws or regulations that may preempt certain regulatory postures by the states. If you’re not doing something unconstitutional, if you’re trying to violate the Supremacy Clause, there’s a wide range for states to occupy with respect to AI governance. And here, those sorts of sandboxes are the sort of innovation-friendly approaches that I think the White House and members of Congress and many state legislators would like to see spread and continue to be developed. And these are really the sorts of approaches that allow us to get used to and start acclimating to what I like to refer to as boring AI. The fact of the matter is most AI isn’t something that’s going to threaten humanity. It’s not something that’s going to destroy the economy tomorrow, so on and so forth. Most AI, Terry, is really boring. It’s things like improving our ability to detect diseases, improving our ability to direct the transmission of energy. And these sorts of positive, admittedly boring, uses of AI are the very sorts of things we should be trying to experiment with at the state level.

Terry Gerton I’m speaking with Dr. Kevin Frazier. He is the AI innovation and law fellow at the University of Texas School of Law. Kevin, one of the other things we’ve talked about is that the uncertainty around AI laws and regulations really creates a barrier to entry for innovators or startups or small businesses in the AI space. How do you think the EO affects that concern?

Kevin Frazier So the EO is very attentive to what I would refer to, not only as a patchwork, but increasingly what’s looking like a Tower of Babel approach that we’re seeing at the state level. So most recently in New York, we saw that the governor signed legislation that looks a lot like SB 53. Now for folks who aren’t spending all of their waking hours thinking about AI, SB 53 was a bill passed in California that regulates the frontier AI companies and imposes various transparency requirements on them. Now, New York in some ways copy and pasted that legislation. Folks may say, oh, this is great, states are trying to copy one another to make sure that there is some sort of harmony with respect to AI regulation. Well, the problem is how states end up interpreting those same provisions, what it means for example, to have a reasonable model or what it means to adhere to certain transparency requirements, that may vary in terms of state-by-state enforcement. And so that’s really where there is concern among the White House with respect to extra-territorial laws, because if suddenly we see that a AI company in Utah or Texas feels compelled or is compelled to comply with New York laws or California laws, that’s where we start to see that concern about a patchwork.

Terry Gerton And what does that mean for innovators who may want to scale up? They may get a great start in Utah, for example, but how do they scale up nationwide if there is that patchwork?

Kevin Frazier Terry, this is a really important question because there’s an argument to be made that bills like SB 53 or the RAISE Act in New York include carve-outs for smaller AI labs. And some folks will say, hey, look, it says if you’re not building a model of this size or with this much money, or if you don’t have this many users, then great, you don’t to comply with this specific regulation. Well, the problem is, Terry, I have yet to meet a startup founder who says, I can’t wait to build this new AI tool, but the second I hit 999,000 users, I’m just going to stop building. Or the second that I want to build a model that’s just one order of magnitude more powerful in terms of compute, I’m just going to turn it off, I’m going to throw in the towel. And so even when there are carve-outs, we see that startups have to begin to think about when they’re going to run into those regulatory burdens. And so even with carve-outs applied across the patchwork approach, we’re going to see that startups find it harder and harder to convince venture capitalists, to convince institutions, to bet and gamble on them. And that’s a real problem if we want to be the leaders in AI innovation.

Terry Gerton So let’s go back then to the DOJ’s litigation task force. How might that play into this confusion? Will it clarify it? Will it add more complexity? What’s your prognostication?

Kevin Frazier Yes, I always love to prognosticate, and I think that here we’re going to see some positive litigation be brought forward that allows some of these really important, difficult debates to finally be litigated. There’s questions about what it means to regulate interstate commerce in the AI domain. We need experts to have honest and frank conversations about this, and litigation can be a very valuable forcing mechanism for having folks suddenly say, hey, if you regulate this aspect of AI, then from a technical standpoint, it may not pose any issues. But if you calculate this aspect, now we’re starting to see that labs would have to change their behavior. And so litigation can be a very positive step that sends the signals to state legislators, hey, here are the areas where it’s clear for you to proceed and here are areas where the constitution says, whoa, that’s Congress’s domain. And so I’m optimistic that under the leadership of the attorney general and seeing folks like David Sacks, the AI and crypto czar, lend their expertise to these challenges as well, that we’re going to get the sort of information we need at the state and federal level for both parties to be more thoughtful about the sorts of regulations they should impose.

Terry Gerton All right, Kevin, underlying all of the things you’ve just talked about is the concern you raised at the beginning. Will Congress step up and enact national legislation? What should be at the top of their list if they’re going to move forward on this?

Kevin Frazier So the thing at the top of Congress’s list, in my opinion, has to be novel approaches, number one, to AI research. We just need to understand better how AI works, things like that black box concept we talk about frequently with respect to AI, and things like making sure that if AI ends up in the hands of bad actors, we know how to respond. Congress can really put a lot of energy behind those important AI research initiatives. We also need Congress to help make sure we have more data be available to more researchers and startups so that we don’t find ourselves just operating under the AI world of OpenAI, Microsoft and Anthropic. But we want to see real competition in this space. And Congress can make sure that the essential inputs to AI development are more broadly available. And finally, I think Congress can do a lot of work with respect to improving the amount of information we’re receiving from AI companies. So SB 53, for example, is a great example of a state bill that’s trying to garner more information from AI labs that can then lead to smarter, better regulation down the road. But the best approach is for Congress to take the lead on imposing those requirements, not states.

The post With a new executive order clearing the path for federal AI standards, the question now is whether Congress will finish the job first appeared on Federal News Network.

Interview transcript:

Terry Gerton There’s a lot to talk about, but it strikes me as strange that here we are two weeks before all of the continuing resolutions expire. The Senate is out this week. The House is planning to be out next week. Are they going to finish in time?

Loren Duggan There’s a path for them to do so and unlike other deadlines, when they’re approaching, everyone’s hair on fire — we haven’t felt that dynamic on this one. The House and Senate appropriators, they’re reaching deals, releasing packages, processing them through the House in the Senate, and there’s a way to get this all done by Jan. 30, or if they need a week or something, appropriators are already saying we could do another short-term. But there’s not a panic about this deadline that’s only two weeks away or so.

Terry Gerton Well, let’s recap, which bills are through and who would you say are the big winners in those bills?

Loren Duggan So we had the three bills go through last year. We’ve had another three-bill package get through both chambers this year. The House sent another two-bill package over to the Senate, who can deal with that when they come back. And then there’s this four-bill package, the remaining outstanding ones that they still need to tackle and get through both chambers. So there’s a lot of progress there. The last one’s big — Defense, Labor, HHS — and thorny in the case of the Homeland Security Department, given everything that’s going on there with ICE in Minnesota and concerns about lawmaker oversight there.

Terry Gerton Well, Homeland and Defense both got big chunks of money in the summer that they’re continuing to operate. So does it feel like maybe there’s a little less urgency around those bills?

Loren Duggan A little less urgency on the Defense side, where I think if you put that together with the reconciliation bill, it’s like $1 trillion. Of course, the president wants to take that to $1.5 trillion next year. We can deal with that another time. And Homeland, that extra pool of money has helped. They’ve used that to hire staff, to open centers. But there was a little controversy because DHS said if an ICE facility is funded with the reconciliation dollars, some of the oversight is different there than if it was regular appropriations. So we’ve seen a distinction made there. But definitely having that money earlier, locking that in for the administration, was really key to their plans for the year.

Terry Gerton What are the big controversies that are still on the table that are going to have to be hashed out before that last bill package gets through?

Loren Duggan DHS has been the sticking point. That was initially supposed to be in the last package; it ended up only being two bills instead of three as they worked through some of these discussions. And you could see a deal being made there and getting that through, maybe both chambers. But there could be a fight on that one in either chamber, depending on what you need. What we have seen are very bipartisan packages where the votes have been widespread, some opposition obviously, but they’ve gotten through very comfortably after all the fights that we went through ahead of this point in time.

Terry Gerton It does also seem, at least on the bills that have gotten through so far, that Congress has largely rejected the cuts that the administration proposed for 50% reductions are higher. Most of the reductions are very minor. So since agencies have already been downsized in many cases, what does this mean? How will relative increases, I guess, compared to where they’re operating today — how will that come into effect?

Loren Duggan In some cases, it’s less than they had last year, but still more than the administration wanted and more than House Republicans wanted in their initial versions. So we’re seeing a classic compromise being hashed out here between the House and the Senate, enough money for Democrats to support these bills, not the drastic cuts. And they’ve hastened to say “no poison pills” when they’ve released these different packages. But we’ll see how the agencies respond to more money. That’s been a fight over the course of the administration, where they’ve wanted to impound funds, rescind them, but if you put them back out there the agencies can use them. And even something like foreign aid is going to the State Department now, rather than USAID, after USAID was disestablished by the administration.

Terry Gerton I’m speaking with Loren Duggan. He’s deputy news director for Bloomberg Government. Loren, outside of the appropriations, what other sorts of legislative discussions are taking place on the Hill these days? ACA subsidies still on top?

Loren Duggan ACA subsidies has been a big driver of discussion. We are now at the end of open enrollment without an answer to what to do with these credits, if they’ll be extended. I assume the senators are still talking this week and when they come back. Donald Trump’s proposal last week didn’t necessarily change the dynamic too much. But one thing that might: We’re going to see insurance company executives brought to the Hill before two different House committees this week. They’ll have to answer some tough questions. Probably get a little beaten up by both sides in this case, because both parties have some concerns with them. So we’ll see how that plays out. The ACA, that’s now a deadline that’s passed; they’re still trying to figure out how to resolve that debate.

Terry Gerton There was also a lot of news last week about the crypto bill in the Senate. Tell us what’s going on there.

Loren Duggan There were markups that had been scheduled in two committees, and then they got pulled back as they continue to work through the issues and deal with the industry feedback. I think it was the Coinbase CEO who was up there weighing in pretty directly with lawmakers. So they pulled back, didn’t move forward, and they’re going to recalibrate the bill. This is the market structure bill, not to be confused with the stablecoin legislation, which is part of the crypto universe. This is a broader market structure bill, who has regulatory authority. I assume they’ll rejoin that debate when they return next week, if they’re not working up while they’re gone. But there’s big interest, big money, big stakes in this legislation.

Terry Gerton All of the things we’ve talked about so far are sort of normal order: appropriations bills, although late, getting through other sorts of legislative activities. Let’s talk about Greenland for a minute, because it seems like it has the potential to really upend all kinds of conversations and agreements that are going on. President Trump made tariff threats over the weekend. We have a congressional delegation on the ground in Denmark. What does this all mean when it comes back to domestic politics?

Loren Duggan We’ll have to see, there hasn’t been a ground swell against this. There are some members of Congress who concede it might be a good idea if Greenland was part of the United States, given its geostrategic importance. But then there’s other members of Congress who have said, maybe we’ll have to impeach Trump if he goes too far on this, so there’s not a consensus. There’s definitely a lot of range of opinions on this one. And it’s something that Donald Trump’s going to hear directly from other world leaders when he goes to Davos, Switzerland, this week and he’ll be side-by-side with some of the people who he’s threatened to tariff or have strong opinions on this, given their proximity to Denmark.

Terry Gerton We usually focus here on domestic politics, but this seems like it will flow over into lots of conversations. What are you expecting to hear out of Davos as that conversation gets started?

Loren Duggan Well, we had expected a domestic announcement with the president talking about his home ownership plan, maybe taking money from 401(k)s to make a down payment, part of his broader affordability discussion, home ownership discussion. So that’s a domestic thing, but we’re definitely going to hear the global things. Not just Greenland, but his “Board of Peace” that he’s talked about, where he wants world leaders to chip in money and be part of this arrangement. I’m sure those discussions will continue and there’ll be lots of feedback, given the compact nature of Davos and everyone who will be there. There’s a little bit of domestic, but it’s more of a foreign play given who’s there. It is the World Economic Forum after all, and the world will be there and talking to Donald Trump directly.

Terry Gerton When everybody gets back, what will you be watching for on the Hill?

Loren Duggan We’ll see if they can wrap up the spending debate and then they’ll be turning to February and eventually the fiscal ’27 process is right there. We’ll just get done with this one and really have to turn the page pretty quickly.

The post Crypto overhaul, Greenland, ACA subsidies, spending bills: Lawmakers’ January juggling acts first appeared on Federal News Network.

Interview transcript:

Terry Gerton I want to start with Secretary Hegseth’s Arsenal of Freedom tour. He’s taking his pitch on the road and recently spoke at the Lockheed Martin Air Force plant in Fort Worth, Texas. I know you’ve been following this, the developments in defense procurement for quite a while. What are you hearing at this point?

Stephanie Kostro So Terry, this “Arsenal of Freedom” is a month-long tour, and it really is Secretary Hegseth going around to various places. He started out in Newport News, here in Virginia, talking with shipbuilders about what it means to be part of the team, right? Being part of the arsenal of freedom and in making things faster, more efficiently, etc. He then went out to California and spoke with folks, and then most recently, just last week in Texas, visiting Lockheed Martin as you mentioned, but also SpaceX. And so talking to folks about, what does it mean to be part of the arsenal of freedom? This is building on his November 7th Arsenal of Freedom speech that he gave here at Fort McNair in the D.C. area. And it is really about reviving this team mentality of, “we are in this together.” Against that backdrop, of course, we have recent activity in acquisition transformation, but also an executive order that came out earlier this month about limiting executive compensation for defense contractors, limiting dividends and also share repurchases or stock buybacks. And so this is a very interesting time to be in the defense industry.

Terry Gerton Stephanie, with all of the changes in the FAR and the DFAR and now the Defense Appropriation Act that’s in law, do you think that DoD has the policy tools it needs and wants to accomplish its transformation?

Stephanie Kostro There are two elements of the answer here. One is, with the fiscal year 2026 National Defense Authorization Act, which was just signed into law last month, they received a lot of new authorities, a lot of a sense from Congress about the ways in which this should be tackled. There is language there about technical data rights and intellectual property. There were things in there about how to define a nontraditional defense company, etc. But I don’t think that was sufficient; we still have work to do. And so does the department have all of the authorities and resources it needs to move forward? I think we’re going to see a lot of legislative proposals come out of the department for this next round of the NDAA, the fiscal year ’27 NDAA. And I think we’ll see things about acquisition workforce. We’re going to see things about working outside of the Federal Acquisition Regulation way of doing contracts. That is code for things like Other Transaction Authority or commercial solutions openings, etc. I don’t think they have everything they need. Part of the Arsenal of Freedom tour and the rollout of this acquisition transformation is to look at how the department can buy things more effectively and more efficiently. That’s time, not having cost overruns, etc. And so all of this is sort of coming together, in a way, to ultimately really transform the way the department buys. And I’m very excited to be part of this.

Terry Gerton Having the rules and authorities is only one piece. What’s your sense of whether the acquisition culture and workforce are aligned to actually accomplish the goals?

Stephanie Kostro Culture is the hardest element of any kind of transformation, right? I do think they’re trying to empower contracting officers and other key members of the acquisition workforce, program managers, contracting officer representatives, etc. This is a longer-term issue, and I think they are trying to tackle it through training programs, etc., letting folks know tools are at their disposal and giving them the authority to go ahead and use those tools. Now, folks don’t get into acquisition within the civil service because they’re risk-loving. A lot of times they get into it because they want to do things very smartly, very efficiently and oftentimes they look back on precedent to see how things were done before. Layer over that, Terry, the fact that we lost a lot of contracting personnel through deferred resignation programs, voluntary early retirement programs and reductions in force. So we are trying to rebuild the workforce in numbers as well as in training. I don’t think they’re there yet; I do think there’s a path to get them there. I’m eager for industry to work with the Department of War and others about how to train effectively and to let industry folks sit in the same training as the government folks, so everyone’s hearing the same thing.

Terry Gerton Stephanie, before we leave this topic, you touched on the executive order about defense contractors and compensation and buybacks. There’s a lot of unknowns still in how that will play out, but what are you hearing from your members?

Stephanie Kostro Our members were very eager to hear how the Professional Services Council would summarize that EO. So we did put out — based on the fact sheet from the White House, based from some interactions we’ve had with administration officials — our interpretation of it. That said, we’ve also asked our member companies, and we have 400 member companies and the majority of them do business with the Department of War and the intelligence community, “hey, what questions for clarification would you like us to ask?” And that list is growing. It is very long. It’s things like, is this really just for publicly traded companies? What about privately owned, or S corps and LLCs? The reason I mentioned that, Terry, is S corps and LLCs will often pay out a dividend to an executive at the company so that executive can pay taxes. They pay out of dividend, so it’s not only a dividend payment, it’s executive compensation, but it’s really just to go ahead and pay federal taxes. What do people do in that regard? How do they explain this? If they have a parent company that is overseas in Europe or elsewhere, how do they explain this executive order to those folks? And that executive compensation, there’s a limit if the company is underperforming, and all of this is predicated on the company’s underperforming — either cost overruns or schedule overruns. How do they explain this to folks? And is it really just about government contracts, or what if you’re a commercial and a government company and your executive compensation is based usually on both elements, commercial and government? So how do you go ahead and limit compensation there? This is a fascinating area to be engaged with the government on. We are all learning this together.

Terry Gerton As Secretary Hegseth tries to walk this tightrope between encouraging defense contractors to be on the team and work with us, and at the same time kind of tightening the screws on enforcement and compensation, the president has said he wants to spend $1.5 trillion on defense next year. That’s a lot of money. How is that going to get spent, do you think?

Stephanie Kostro Oh, it is an eye-catching number, right? $1.5 trillion when we are roughly $1 trillion now are just under, and it is a huge increase. Now, we’ve had large increases in the defense budget in other times in U.S. history. In the early 1950s with the Korean War, the Reagan buildup that some of us remember from the ’80s. Some of us who are listening may not remember it. They may not have been born yet, and that’s okay too. You know, there is some precedent for huge increases in the defense spend. The question here becomes, if the department and the military services are going for commercial-first mentality to prioritize speed of award and innovation, etc., they certainly can spend that money throughout the defense ecosystem. The question that we have is really, what is the organizing construct for this? What would we be spending the money on? Would it be shipbuilding, combat aircraft, the logistics piece, which always tends to be an issue? We also know operations and maintenance accounts are sometimes used and reprogrammed away if they’re not spent by a certain time, because it’s one-year money at the department, it gets reprogramed away. It’s going to be an interesting mathematical problem to tackle. In addition, I would mention, we had the reconciliation bill, the One Big, Beautiful Bill Act that passed and was signed into law last July. That infused a bunch of cash into both the Department of Defense and the Department of Homeland Security. I understand some of that money hasn’t been apportioned and provided to the departments yet, but we are now at this point in January of 2026 talking about, what would a reconciliation bill look like for 2026? Congress can pass one per fiscal year. The one that was passed last July was the one for fiscal ’25. What happens this year? There are a lot of different mechanisms to get that money through Congress and over to the government to apportion to the department.

Terry Gerton Well, speaking of 2026 appropriations, it looks like Homeland Security and Defense will be two of the last bills out, hopefully before the end of this month. What are you hearing from folks on the Hill?

Stephanie Kostro I’m hearing that they’re trying really, really hard to avert a shutdown. And I think we’re going to get there. I’m not a betting person, Terry, you know, I’ve talked about that in the past. And I’m not in this case, either. The chance for a shutdown is never zero. That said, the experience that we all had back in October and November last year would indicate that there really is no appetite for a shutdown this year. The National Defense Appropriations Act and the DHS [bill] I think are probably the last because they want to get everything done before they tackle those. Those are the two departments that received the lion’s share of the money from the reconciliation bill, One Big Beautiful Bill Act last year, and they are looking to get more money in a reconciliation bill this year. So I’m not surprised to hear that those are last, but I actually don’t think that indicates that they’re very far apart on the numbers.

Terry Gerton And on those two departments, PSC is sponsoring a trip in January to the border to do some on-site research. Tell us about that plan.

Stephanie Kostro I am so excited about this. PSC has not typically done this. I do know other entities have done this, I used to be at a think tank where we would do things like this. We are bringing almost 30 different companies out to California next week, Jan. 28 and 29, to do a behind-the-scenes access with the Customs and Border Protection folks who are out there. And the ports of LA and Long Beach, the ports at entry, the land ones over at San Ysidro and Otay Mesa, really talking with folks on the ground there about what their requirements are. This is really focused on technology. How do we use technology and the art of the possible to protect our borders? Now, I would hasten to add, Terry, border security is not a partisan issue in many, many ways. The Biden administration, the Obama administration, the previous Trump administration all focused on border issues in different ways. Our companies really want to mention to folks on the ground, here is technology that you may not have experience with that is up-and-coming. How can we leverage it to better secure our borders? Talking about cargo screening, etc. I think this is a really good opportunity for companies to sit down with folks who are in the field and hear about what they need.

The post Can key visits to cities anchoring U.S. national security spur a new American “arsenal”? first appeared on Federal News Network.

Interview transcript: 

Terry Gerton There’s been a lot of controversy around polygraphs in government over the past few months. So let’s start with some of the basics. Why do agencies like CISA and DoD continue to rely on polygraphs for certain positions?

Dan Meyer So that’s a great starting point. The first thing we have to recognize is that polygraph technology is so questionable that it’s generally not admissible in courts. So as evidence, it’s pretty thin, and that’s been a generational trend. It used to be accepted far more back in the 1930s and 40s than it is now. So we use polygraphs in the United States for counterintelligence. That’s what it’s for, reliability of the workforce. We want to be able to test and employ statements, various questions against some empirical basis of truth. The challenge with the polygraph is that it measures not truth, but physiology. It measures the way the body reacts. And science, over the years, has started to show that women and men, for instance, don’t react the same. They don’t have the same physiology. That’s why we have to do different types of medical research now, because women were traditionally ignored, because we always thought that men were the baseline, and everybody would be the same as men. Well, that turned out not to be true. The same situation exists with polygraphs, and there can be differences across the board which polygraphers can never accept, and they can’t accept because that starts to undermine their position within the professional community. So that’s the challenge, is that it measures physiology and not actual truth or veracity of the individual. At some point we’ll be out of this problem because we’ll have a tool that’s better than the polygraph and I do think that artificial intelligence will create it, but we in the United States use the polygraph to catch spies, other countries don’t. And that’s our only tool we really have. We’re not good at actually doing assessment of human potential from other types of analysis. So we’re stuck with it. It’s the only tool that we’ve got and it’s the one we use. And if you’re in the intelligence community or if you are in law enforcement, the chances are you’re going to be under a polygraph at some point in your career, if not your entire career.

Terry Gerton There was a recent controversy around the acting CISA director’s failure of a polygraph test. Can you fill us in a little bit on what went on there?

Dan Meyer I’m not privvy to the exact details of his particular case, but the alarming part of that is it was CISA. CISA is the heart of our cyber defense, and for much of the Biden administration, it was under very, very close scrutiny from a variety of congressional oversight authorities. Senator Grassley, at one point, was doing an inquiry. So there was concerns that CISA was being used politically. So on top of that concerns, the Trump administration came in with a commitment to reform it. And then you have this problem. And the problem seems to have developed around two questions. One is, did the individual fail a polygraph? You really don’t fail a polygraph, either there’s a detection or a non-detection. It’s really not like a test you can fail. But clearly did not pass, to use the vernacular, according to the reports. And then there’s the open question about whether that individual should have been under a polygraph, and there’s this allegation out there in the press that somehow he was set up. And so those are the two concerns there. The second one is kind of unique in that polygraphs are given based on the position and what’s called the criticality of the position. So it’s really about the classification of one’s job that determines whether you get a polygraph. So there really should be no question as to whether a person should have a polygraph or not have a polygraph, so if there was an open question, that should have been elevated to the appropriate authority to decide that. My understanding is that’s the DNI, is the DNI is in charge of reliability issues, security clearance issues across the board for the president in her capacity as the DNI, but not as the spymaster in the United States. It’s a collateral duty. That should have been resolved and it should not be at the point now where employees are being accused and somebody who’s now being seen as a victim of a wrongful polygraph process, that’s ugly. We should have never gotten to that point. That should have been raised and clarified before the polygraph went forward. The second use goes back to my original comment about physiology. People can fail polygraphs for a variety of reasons. There’s the famous guilt-grabber complex, which is that an individual is very at attention in their thoughts, very self-reflective, very self-aware. People who are that way about events in their lives may start to have feelings of guilt. Feelings of guilt can trigger physiology. And sometimes your feeling of guilt that you didn’t feed the cat on time this morning can bleed over into a question that when you were asked whether you committed an act of terrorism against the United States. Well, let’s put it this way. If you’re a sociopath, the chances are you’re going to pass a polygraph because the way you’re constructed in your behavioral mental health diagnosis is ideally suited to not triggering the physiology cues that exist for the polygraph. But if you’re a deeply religious person or spiritual person, it’s in the community, this is known as the Jewish and Catholic issue. People who are Jewish and Catholic all had a Jewish or a Catholic mother. You were taught to always think you were doing something wrong. I’m laughing because I was raised by a Catholic mother, and so I was always looking at my behavior and always questioning my behavior. That can be a disaster on a polygraph.

Terry Gerton I’m speaking with Dan Meyer, he’s an equity partner at Tully Rinckey. With all of the challenges with the polygraph that you’ve just articulated for us, if an employee or a contractor is facing one for their position, what are the best practices to prepare and protect themselves?

Dan Meyer Okay, so on the big picture, let’s talk about from the administration perspective. We ought not to have separate rules for separate people about polygraphs, we’ve got to stick with the structure. If the position requires it, it has to be performed. There should not be special exceptions. I know you always want to have special exceptions, but that’s a bad idea. For the individual, the first thing you do is do not watch videos and do not study the polygraph because you are going to be asked questions that ask you if you did that, and then you’re going to be in the awkward situation of trying to explain whether you adopted countermeasures to make it look like you’re telling the truth when you’re not telling the truth. Do not try to game the polygraph because if the polygraph has trouble figuring out truth or falsity, it does not have trouble figuring it out whether you’re gaming it, and that’s a huge reason why people fail polygraphs. It’s good to retain a law firm to get advice on your security profile to help you understand where your liabilities are and how to accurately report them. The whole key to the security paradigm is you’ve got to be comfortable with the way you resolve the issues in your life so that when you talk to security officials and you talk about those issues, you’re open and candid and there’s a complete and transparent flow of information between those people about that situation. Then you won’t fail the polygraph, then you’re going to do fine on your security review. The challenge we have in American culture at this point in time is everybody thinks you have to withhold information to game the process. Game the process in our commercial lives as consumers, game the process in our private lives as family members. This is an evil that has drifted into American culture, and it really is harmful on the polygraph. So you’ve got to think through about whether you’re open and honest about your life, and you’ve got to incorporate that principle into your job application.

The post Why agencies still use polygraphs and what a recent failure means for trust and reform first appeared on Federal News Network.

Interview transcript:

Terry Gerton Gartner’s just done a new survey that’s very interesting around how citizens perceive how they should share data with the government. Give us a little bit of background on why you did the survey.

Mike Shevlin We’re always looking at, and talk to people about, doing some “voice of the customer,” those kinds of things as [government agencies] do development. This was an opportunity for us to get a fairly large sample voice-of-the-customer response around some of the things we see driving digital services.

Terry Gerton There’s some pretty interesting data that comes out of this. It says 61% of citizens rank secure data handling as extremely important, but only 41% trust the government to protect their personal information. What’s driving that gap?

Mike Shevlin To some extent, we have to separate trust in government with the security pieces. You know, if we looked strictly at the, “do citizens expect us to secure their data?” You know, that’s up in the 90% range. So we’re really looking at something a little bit different with this. We’re looking at, and I think one of the big points that came out of the survey, is citizens’ trust in how government is using their data. To think of this, you have to think about kind of the big data. So big data is all about taking a particular dataset and then enriching it with data from other datasets. And as a result, you can form some pretty interesting pictures about people. One of the things that jumps to mind for me, and again, more on the state and local level, is automated license plate readers. What can government learn about citizens through the use of automated license plates readers? Well, you know, it depends on how we use them, right? So if we’re using it and we’re keeping that data in perpetuity, we can probably get a pretty good track on where you are, where you’ve been, the places that you visit. But that’s something that citizens are, of course, concerned about their privacy on. So I think that the drop is not between, are you doing the right things to secure my data while you’re using it, but more about, okay, are you using it for the right purposes? How do I know that? How do you explain it to me?

Terry Gerton It seems to me like the average person probably trusts their search engine more than they trust the government to keep that kind of data separate and secure. But this is really important as the government tries to deliver easier front-facing interfaces for folks, especially consumers of human services programs like SNAP and homeless assistance and those kinds of things. So how important is transparency in this government use of data? And how can the government meet that expectation while still perhaps being able to enrich this data to make the consumer experience even easier?

Mike Shevlin When I come into a service, I want you to know who I am. I want to know that you’re providing me a particular service, that it’s customized. You know, you mentioned the search engine. Does Google or Amazon know you very well? Yeah, I’d say they probably know you better than the government knows you. So my expectation is partly driven out of my experience with the private sector. But at the same time, particularly since all the craze around generative AI, citizens are now much more aware of what else data can do, and as a result, they’re looking for much more control around their own privacy. If you look at, for example in Europe with the GDPR, they’ve got some semblance of control. I can opt out. I can have my data removed. The U.S. has an awful lot of privacy legislation, but nothing as overarching as that. We’ve got HIPAA. We’ve got protections around personally identifiable information. But we don’t have something as overarching as that in Spain. In Spain, if I deal with the government, I can say yes, I only want this one agency to use my data and I don’t want it going anywhere else. We don’t have that in the U.S. I think it’s something that is an opportunity for government digital services to begin to make some promises to citizens and then fulfill those promises or prove that they’re fulfilling those promises.

Terry Gerton I’m speaking with Mike Shevlin. He’s senior director analyst at Gartner Research. Well, Mike, you introduced AI to the conversation, so I’m going to grab that and privacy. How does AI complicate trust and what role does explainable AI play here, in terms of building citizen trust that their privacy will be protected?

Mike Shevlin I think AI complicates trust in part from generative AI and in part from our kind of mistrust in computers as a whole, as entities, as we start to see these things become more human-like. And that’s really, I think, the big thing that generative AI did to us — now we can talk to a computer and get a result. The importance of the explainable AI is because what we’ve seen is these answers aren’t right from generative AI. But that’s not what it’s built for. It’s built to make something that sounds like a human. I think the explainable AI part is particularly important for government because I want to know as a citizen, if you’re using my data, if you’re then running it through an AI model and coming back with a result that affects my life, my liberty, my prosperity, how do I know that that was the right answer? And that’s where the explainable AI pieces really come into play.  Generative AI is not going to do that, at least not right now, they’re working on it. But it’s not, because it builds its decision tree as it evaluates the question, unlike some of the more traditional AI models, the machine learning or graph AI, where those decision trees are pre-built. So it’s much easier to follow back through and say, this is why we got the answer we did. You can’t really do that right now with gen AI.

Terry Gerton We’re talking to folks in federal agencies every day who are looking for ways to deploy AI, to streamline their backlogs, to integrate considerations, to flag applications where there may be actions that need to be taken, or pass through others that look like they’re clear. From the government’s perspective, how much of that needs to be explained or disclosed to citizens?

Mike Shevlin That’s one of the things I really like about the GDPR: It lays out some pretty simple rules around what’s the risk level associated with this. So for example, if the government is using AI to summarize a document, but then someone is reviewing that summary and making a decision on it, I have less concern than I have if that summary becomes the decision. So I think that’s the piece to really focus on as we look at this and some of the opportunities. Gartner recommends combining AI models, and this will become even more important as we move into the next era of agentic AI or AI agents, because now we’re really going to start having the machines do things for us. And I think that explainability becomes really appropriate.

Terry Gerton What does this mean for contractors who are building these digital services? How can they think about security certifications or transparency features as they’re putting these new tools together?

Mike Shevlin The transparency features are incumbent upon government to ask for. The security pieces, you know, we’ve got FedRAMP, we got some of the other pieces. But if you look at the executive orders on AI, transparency and explainability are one of the pillars that are in those executive orders. So, certainly, government entities should be asking for some of those things. I’m pulling from some law enforcement examples, because that’s usually my specific area of focus. But when I look at some of the Drone as a First Responder programs, and I think it was San Francisco that just released their “here’s all the drone flights that we did, here’s why we did them,” so that people can understand: Hey, yeah, this is some AI that’s involved in this, this is some remote gathering, but here’s what we did and why. And that kind of an audit into the system is huge for citizen confidence. I think those are the kinds of things that government should be thinking about and asking for in their solicitations. How do we prove to citizens that we’re really doing the right thing? How can we show them that if we say we’re going to delete this data after 30 days, we’re actually doing that?

Terry Gerton So Mike, what’s your big takeaway from the survey results that you would want to make sure that federal agencies keep in mind as they go into 2026 and they’re really moving forward in these customer-facing services?

Mike Shevlin So my big takeaway is absolutely around transparency. There’s a lot to be said for efficiency, there’s lot to be said for personalization. But I think the biggest thing that came from this survey for me was, we all know security is important. We’ve known that for a long time. Several administrations have talked about it as a big factor. And we have policies and standards around that. But the transparency pieces, I think, we’re starting to get into that. We need to get in to that a little faster. I think that’s probably one of the quickest wins for government if we can do that.

The post Federal CIOs want AI-improved CX; customers want assured security first appeared on Federal News Network.

Interview transcript

Terry Gerton You’ve got a new project coming out, and we’ll talk about it in detail, to protect war fighters from gamma radiation. I have to say, when I think of gamma radiation, I think of the Incredible Hulk. So tell us a little bit more before we get started about what gamma radiation is, where it comes from, and why we need protection from it.

Terry Thiem Sure. Gamma radiation is a result of radioactive decay of elements. It can be either natural or produced through a nuclear explosion. Gamma radiation is a form of radiation that is very penetrating and therefore when our warfighters have the potentiality of being exposed to it on the battlefield, they need to be able to be protected from it. So If I look at Gamma radiation and why are we doing this research and what the threat is, this program will address two of the five strategic goals of the assistant secretary of war for nuclear deterrence and chemical and biological defense who is funding this research. And that is, one, to enable the joint force freedom of maneuver in a chemical, biological, and radiological environment, as well as develop capabilities to counter these threats and respond to and manage the consequences of a weapons of mass destruction event where gamma radiation may be present.

Terry Gerton So we’re worried about deploying soldiers into a nuclear contaminated battlefield.

Terry Thiem That is correct. Or we could also be exposing them to a dirty bomb, where a radiological material is dispersed by a high explosive and spread radioactive contamination as well.

Terry Gerton And so what is your team hoping to achieve with this project? We’ll get into the specifics of it in a minute, but what’s the big goal?

Terry Thiem The big goal is to be able to provide a level of protection to our war fighters from gamma radiation. Currently, the war fighters have what’s known as a JSLIST, a Joint Service Lightweight Integrated Suit Technology that provides them absolutely outstanding protection against chemical, biological, and alpha and beta radiation. But unfortunately, because of the penetrating effects of gamma radiation. That suit is not adequate to protect them in a nuclear environment. So what we’re looking at doing here is looking at what is the state of the science in this particular field? Where is the next generation of this suit going to be coming out? Where can we include some of these new materials that are being developed throughout the world, really, to incorporate into this suit to provide additional protection for our warfighters.

Terry Gerton Talk us through some of those scientific developments that you’re expecting might have impact in this study.

Terry Thiem Traditionally, for gamma radiation, the ways to protect a person from gamma radiation are time, distance, and shielding. Unfortunately for the commanders on the battlefield, a lot of times they don’t have the luxury of having time or distance because of the operational environment that they’re in. So they are very dependent on the shielding. Traditional shielding for gamma radiation is lead shielding. Lead has great ability to shield, but unfortunately lead also has some toxicity issues. So a lot of the work that’s currently being done in this field is looking at alternatives to lead for gamma protection. That includes materials such as bismuth, barium, and tungsten, which are also very, very good at doing it. They are just a little bit more expensive than lead is.

Terry Gerton I’m speaking with Dr. Terry Thiem. He’s the director of medical countermeasures at the National Strategic Research Institute at the University of Nebraska. As I just said there in the title, you’ve also got medical countermeasures in your focus area. How are you thinking about the combination of both shielding protection, but also medical treatment if someone isn’t affected?

Terry Thiem That’s a great point, Terry. What we wanna do is we wanna create some trade space for the commander in the field. So task one of this project is the development of or evaluation of new materials for personal protective equipment. Task two focuses on what we can do in combination with that personal protective equipment and prophylactic and therapeutic medical countermeasures that are in development. This is where NSRI and the University of Nebraska’s expertise in drug development is extremely valuable. Instead of a war fighter having to wear 60 pounds of radiation shielding, we could maybe reduce that to a significantly lower amount and provide them with a prophylactic medical countermeasure. This potentially provides a fourth option to the commander to reduce the effects of radiation exposure. Time, distance, shielding, and then also medical count measures to enhance the safety of our warfighters.

Terry Gerton When you say a prophylactic medical countermeasure, talk us through what that might be, some kind of pill that they would take in advance of deployment.

Terry Thiem That is correct. It would be a pill or a subcutaneous injection that would be given to the warfighter prior to them, the possibility of them being exposed to a radiological event.

Terry Gerton And you just talked about the weight of the suit. I’ve worn a JSLIST and I can testify that it is heavy. You do not want to have to move far in it. Are there other advances in material science that can help make that?

Terry Thiem Absolutely. I think everybody out there has been to the dentist office and has gotten bite wing x-rays and it’s had a lead apron put on top of them. That is for x-ray. X-rays are a step down in energy level from gamma radiation. So the need for gamma radiation protection actually would be thicker and heavier than that. So there are a lot of really good materials that are out there. Polymers, some new polymers that have come out that offer some lightweight ability to do shielding, as well as the bismuth, tungsten, and barium are also all less dense or less heavier than lead components would be. So all those would offer some ability to reduce the weight of the shielding that is required to reduce the radiation effects of gamma radiation.

Terry Gerton What sort of criteria will you use to determine whether or not these materials and or the medical countermeasures are ready to be developed?

Terry Thiem I think that, again, looking at manufacturability of materials is going to be critical. The ability to put these materials, incorporate them into the fibers is something that the University of Nebraska is already working on at the University of Nebraska Omaha, incorporating levels of these high atomic weight materials such as bismuth and tungsten into materials already and then spinning those into fabrics that can be used for making a protective equipment that our warfighters can actually wear.

Terry Gerton Right, so that manufacturability is its own separate challenge, right? What are the obstacles or the opportunities if you’re optimistic of getting from materials to actual suits?

Terry Thiem I think we’re very, very close already. Looking at some of the work that’s already been done at the University of Nebraska Omaha, we have already produced sections of materials that will be usable, and we’ve already started testing those against gamma radiation sources to see how protective they are. One of the things about radiation that’s different than chemical or biological threats, chemical and biological threats, I think we are at 100% protection. I’ve been through the live agent training at Fort Leonard Wood, we’re in the JSLIST where we’ve been exposed to nerve agent and the suit protects you absolutely 100%. Unfortunately with gamma radiation, I don’t think we’ll ever get there. It would require too heavy of a suit and too thick of suit. It would operationally degrade the ability of our warfighters to do their mission. So that’s where we’re looking at that combination of personal protective equipment and medical countermeasures to, one, reduce the amount with the personal protective equipment, but then provide another layer of protection to the warfighter with that medical countermeasure as well.

Terry Gerton So once your study is complete, what are the next steps? Will that influence the Department of Defense’s production strategy or acquisition strategy?

Terry Thiem It should. We will provide our assessment of the current state of the science and then a list of materials that we feel are the most, the highest technology readiness level that is available to them to start manufacturing materials from. So again, I think that there’s an incredible amount of research that’s going on out there. I’ve reviewed over 250 articles so far. On different materials, different concepts for doing shielding for both X-ray and gamma radiation. So I think that the ability to do it is out there. It is just the manufacturability and a couple other things that need to be worked out before we can get to a final product that will be able to be purchased commercially by our Department of War.

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Interview transcript:

Terry Gerton Fors March has studied military recruiting for years. And I think we’re at a point now of saying, let’s look at national service more broadly, not just military service, but civilian federal service, for example, or volunteer programs. What are you seeing in the space? What are the trends that you’re watching?

Brian Griepentrog Oh, wow. Big, big, big question, right? I think anytime we start talking about public service, national service, military service, I focus in on the second word there, the service part, right. And it truly is, it’s a, what are some of the associations that job prospects have with this kind of umbrella term of service? And I think we’ve done a lot of our own research. We are good consumers of research from monitoring the future to other types of important federal surveys that ultimately show that as we talk about the associations that applicants, prospects have about, frankly, federal and public service, there’s a lot of misperceptions there and those attitudes, they’re strong, they are resilient. And I think for us, it has provided a real significant challenge, which is how do you combat that without just masses of money that, frankly, on the public side don’t seem to be there.

Terry Gerton Are there differences in age? And I’m thinking, we often talk about recruiting recent college grads, but there’s a lot of talk about permeability of the workforce in the military and on the civilian side, people being in the private sector coming into the public sector going back. Do the attitudes about public service change as people age?

Brian Griepentrog Well, one of the things that I think is really important that you hit upon is just that the window of employability, what I might say is as we’ve matured our understanding over the past 25 years, we see some societal changes. And frankly, what that means is that the idea of young adults, whether it be getting a full-time job, moving out of their parents’ home, getting married, having kids, kind of solidifying their life. Those have all shifted to the right. That’s very well known. What that means for a lot of employers, frankly, is that that window at which you are recruiting, that also shifts to the, you talk about the permeability. I would also say that that just means that the focus can’t be just on a college graduate or a high school graduate. We understand that those individuals are not landing that long time first job. And we see that over 50% of young adults and that kind of that age group of 16 to 24 and sometimes 16 to 28, they tend to have multiple jobs. And that’s not always the case that they’re wanting that, that’s something that, the gig economy is something that they have control over. Yes, there’s a desire for flexibility. Yes, There’s a desire for comfort, but it’s well recognized that over half of these young adults frankly feel as though they’re in great financial hardship.

Terry Gerton We’ve been hearing that sort of younger Americans really are motivated to service, to community service or helping each other, and yet you mentioned that we’re having a hard time translating the message of national service into this generation. What are some of the things that you’ve looked at that would help the federal government maybe shape its message better or find different channels to reach these folks?

Brian Griepentrog I think that’s a really important point here, right? It’s when we ask young adults, what are the factors that are most important to them as they’re making a decision? Maybe that’s during high school and they’re make a decision after high school or that’s individuals in that college age and what do you plan to do after? It’s fairly consistent in some of the answers that they provide. And I think we hit upon some of those, right. I kind of mentioned a work-life balance and flexibility. This idea of kind of lifestyle, comfort, safety, the ideas of, frankly, of purpose and of kind of career growth and stability, those are pretty consistent. But I will say that the idea of wanting to provide for and wanting to engage in national service, it’s usually about 40% of young adults are kind of endorsing that. And that has dropped over the past 25 years. One of the big misperceptions, and I hit upon this at the top, is the service element, which is service doesn’t have to mean sacrifice. And I think when it does, it really is challenging, because frankly, that idea of fear of missing out, the idea of putting your life on hold, stepping aside, that’s the language that we get to hear from young adults. And frankly, that becomes a huge limiter for national service, public service, and military service that ultimately do see themselves as providing career acceleration, purpose, passion, connection. So that’s one of those that comes out. And it’s not just the military service, also the work that we’ve done with AmeriCorps, that we done with DHS, that we have done with some of the DOD civilian agencies. It’s a common thread.

Terry Gerton I’m speaking with Dr. Brian Griepentrog. He’s the president of research and advisory services at Fors Marsh. Brian, I wanna follow on with that because you mentioned some of the civilian agencies and we’re seeing groups like the DOD cyber workforce or the National Park Police or Customs and Border Protection offering huge signup bonuses. You’ve done a lot of research with the military who’s very practiced in the idea of enlistment bonuses. What do you expect the outcome of these incentive programs to be? Are more people going to take them and say, yes, I want to serve in the National Park Police?

Brian Griepentrog I can answer that from both the research that I am aware of, as well as from some of our own experiences, right? That’s Fors Marsh. And it’s first to note that when we look at this mix of kind of levers that you have in terms of, one, should we spend resources identifying who to target? Right? Who? Who should we be really trying to bring into our organization? Who do we want to make sure that they know our story, that they knew our message, right? That’s one aspect and it’s kind of the marketing element. Then we have the element of, how do we wanna induce them? What are the incentives? And we can also talk about some of those elements of frankly, some of our recruiting, our sales force, not to mention how efficient all of those are. And what I’ve seen time and again is that the element of the inducements of the incentives are the least cost efficient of those three. And frankly, the focus of resources on those individuals who might be most interested and who might to be qualified, that and then in tandem with a strong handoff to a sales force that can follow up on that, I’ve seen has tended to be the most effective route because. ultimately. we’ve also, and I’ve been a part of some of this research as well, with my colleague, Jen Gibson and Sean Marsh, where we’ve seen that some of those, frankly, some of these transactional job characteristics, something like job pay and incentive, those individuals tend to not re-up, re-enlist, stay for longer periods of time. So it might address a short-term need, but it might also have, from a labor force projection, a challenging multi-year outlook.

Terry Gerton That’s really helpful insight because 2025 has been a tough year for the federal workforce and lots of people have left and there’s been a federal hiring freeze in place for most of the year. But now the agencies have submitted their workforce plans, OPM is looking at that and expectations are that hiring may open up. So what advice would you have for OPM and the federal agencies with all the things that we’ve just covered. What should they be looking for? What processes should they have in place that would really help motivate the best hires going forward?

Brian Griepentrog Another great question, Terry. I think having some caution, going into this with some caution, that the idea of flipping the switch is not necessarily expectation of having this just a windfall of candidates, right? I think that’s number one. I think number two is that some of the same challenges that existed two years ago are gonna exist in two weeks. So as we start thinking through who’s interested, who’s motivated, who’s qualified, what is the experience of the candidate? I think all of those elements, I mean, they’re, they’re still working in very much a competitive landscape with a lot of private sector organizations that also want the most talented individuals. And frankly, I would suggest that the past year has not been the greatest from a branding and association for those individuals to come in with the motivation element to this. And so I do think that a lot of attention should be given to how are we communicating our brand, our story, and what it looks like as an employer.

The post National service struggles to connect with younger Americans — the problem may be both message and messenger first appeared on Federal News Network.

Terry Gerton The industrial base and supply chains are getting a lot of attention these days, whether it’s from tariffs or recovery still from the pandemic. You’ve got a recent report out that suggests we need a better definition of the national defense and national security industrial base. What do you see as the problem with the current definition?

Michael O’Hanlon Hi, Terry. Well, thanks for the question. And my co-authors, Marta Wosinska and Mark Muro and Tom Wright, what we wanted to do was to look at areas where the country’s basic functioning and basic safety of its people could be threatened, even if the military or the military’s manufacturing base per se was not. So we define national security to be something that could threaten the basic functioning of the country or its territory or large numbers of its people in a physical way, real, you know, real acute danger and so we try to make that definition broader than just defense but also fairly tight we didn’t want everything to be labeled national security. For example, I don’t think it’s that important where my flat screen television is made that’s not national security. And I don’t even think it’s that important that we dominate every single industry because unless being denied access to foreign goods could quickly put Americans, large numbers of Americans, at acute risk and unless there is a single potentially hostile foreign supplier that dominates, I don’t think we have to use the term national security to deal with that concern. There may be other reasons to want to promote a certain industry or certain part of our economy, but not for national security. So we’re trying to broaden it, but within reason. And so that led us to a certain specific methodology.

Terry Gerton It sounds like you might say that things both like shipbuilding and pharmaceutical manufacturing would be included there.

Michael O’Hanlon Yeah, those are good examples. So for shipbuilding, I don’t really think that it matters that much where the United States gets its commercially traded goods from and what ships are carrying those goods and where they’re built. But in the event of a prolonged conflict or even deterrence of conflict, like right now, when we’re trying to build more ships than we currently own and the size and capability and capacity of the ship building base is one of the constraints on our ability to, let’s say, build more attack submarines, then yes, I do think the shipbuilding manufacturing sector should be considered part of the national security industrial base. Commercial shipbuilding can sort of be your backup, your latent capability that you can transform into military shipbuilding in the event of prolonged need. And therefore, even commercial shipbuilding can be encompassed within this definition of a national security industrial base. With pharmaceuticals, it sort of all depends, you know, in the sense that if the medications are made, we buy them from abroad and they’re crucial to keeping Americans alive, let’s say antibiotics, and they are made in Germany or Canada, I don’t have any concern that we’re going to be cut off in a crisis. But if large numbers are either made in China or depend on precursor chemicals made in China, then we could be in trouble. As my colleague, Marta Wosinska, who’s really an expert on this stuff — she really did the hard work for us and taught the rest of us, as well as, you know, authoring the key part of the paper on this subject — and China indeed is the source of a lot of generic medications because it’s good at making things at low cost. And actually, it produces a lot of the precursor chemicals. Often, the final medications are produced in India or someplace else, but China is still potentially the bottleneck if they chose to be. And some people might say, well, would China really ever cut off medications or chemicals for medications upon which millions of American lives depend? Let’s say, again, antibiotics being a good example. And I think in a war, they might. I mean, in a war, we bombed cities in World War II. In war, as the saying goes, all the rules are off. There are no rules in love and war. And if you’re really pitted in an existential struggle of two countries duking it out — heaven forbid we ever have that conflict with China — but of course, here we’re thinking about deterrence and being a credible way to deter the war as our goal. There’s no reason to think China would supply those medications just out of the goodness of its heart. So I think that’s a vulnerability. Maybe not for Excedrin or aspirin or things that, you know, are really medications of convenience. I mean, sure, they’re important to keeping people comfortable. But I’m talking more about medications that keep people alive. And on those, I don’t think we want too many foreign dependencies when it involves a country like China.

Terry Gerton Your paper talks about three specific criteria for identifying critical supply chains. Walk us through those and how they fit together.

Michael O’Hanlon Well, we say that, and this builds on what you and I have been discussing, are large numbers of lives potentially at risk? Is there a dependence on foreign supply where one potentially hostile foreign supplier in particular could choose to cut off supply? And then could we react quickly and find alternatives, substitutes, or build up our own manufacturing capacity within the relevant time scale to avoid serious harm? And if you can’t do that, and you do have a dependency on a potentially hostile foreign actor and a put-off or an interruption of the supply could lead to many thousands or even millions of Americans lives being at risk or the economy breaking down or the military being non-functional, then you’ve got a problem. So if those three criteria give you sort of the wrong answer on each point you need to take remedial action for your own manufacturing base and your alternative sources of supply right now rather than wait for the crisis

Terry Gerton I’m speaking with Michael O’Hanlon. He’s a senior fellow and director of research and foreign policy at the Brookings Institution. You looked at 16 critical infrastructure sectors, which emerged as perhaps most vulnerable.

Michael O’Hanlon Yeah, well, the Department of Homeland Security helped us out here, specifically the Cybersecurity and Infrastructure Security Agency, CISA, because they had created this framework of 16 areas of critical infrastructure, basically the same kind of criteria being used to develop that that we use. Where are their large numbers of lives potentially at risk from damage to that infrastructure? Where could the economy become nonfunctional or the military become nonfunctional, or the country be vulnerable? So we went through, and there are some areas, let me just give a couple examples, like for example, stadiums and gathering places. You know, no one really cares in terms of national security if, let’s say, you’ve got a dependence on China for huge flat-screen TVs for, you know, the Washington Commander Stadium, and then that’s cut off in a crisis. Well, heaven forbid, you know. We don’t have to see as many replays of our beloved commanders losing for a few months. I’m being a little facetious, but you see my point. The reason why that kind of a category is established is because terrorists could strike it and a lot of lives could be quickly lost and that’s why it’s critical infrastructure. But it’s not the supply chain, it’s not the manufacturing or the sourcing of key equipment that’s going to potentially be interrupted and therefore put the nation’s security at risk. But an example of where you could have that kind of a vulnerability beyond pharmaceuticals or military manufacturing that we’ve already discussed might be, let’s say, agriculture. If you really depend on foreign suppliers for fertilizer, insecticide, pesticide, etc., and then that was cut off, you might not have people starving the next day, but within a few months, fundamental disruption could occur to crop production here in the United States and you could have big shortages. Now maybe there are ways to substitute potatoes for corn or what have you, but you need to do some detailed analysis because if there are certain chemicals upon which we depend heavily on China’s manufacturing base and then if you can then determine that those chemicals, if cut off, the absence of them would produce a crisis in food production within months, that’s pretty serious. And that’s, by the way, an example where there’s nuance and shades of gray, and we don’t claim to have definitively answered that question in our study. We didn’t have the capacity to do that with the four of us. But we did say there do seem to be some chemicals, especially with some insecticides, pesticides, where we have a high dependence on China. And we probably need to do some more work to see, in a hypothetical scenario, what would result if China cut off those pesticides and insecticides due to a national security crisis. How fast could we build alternative supply? How could we do crop rotation or substitution so that we didn’t depend as much on those chemicals, etc.? So that’s an example of where there probably is some excessive dependency. Maybe not enormous, but worth looking at.

Terry Gerton Your report suggests some action steps. Can you walk us through those and who would be responsible for them?

Michael O’Hanlon Well I think you would do it a little bit sector by sector and so I just mentioned agriculture. I would think the Department of Agriculture would know how to assess, you know, these kinds of hypothetical disruptions to supply chains much better than I would, as a more traditional national security analyst, for example. The Pentagon already does its own assessments, and they’ve gotten much better at the assessments. I’m not sure they fixed all the problems, but they’ve done much better with the assessments in the last few years. Of course, we’ve had big national debates in recent years on semiconductor production, and I think that’s been led by a number of agencies, probably the National Science Foundation and probably the Department of Energy and places that have some expertise in this kind of manufacturing and this kind of high precision, you know, technology. And so with that one, and maybe National Institutes of Standards and Technology. So there might be three or four. And with health and pharmaceuticals, it might be HHS, you might be CDC, NIH. So for each one, you would designate a lead agency within the federal government and try to work through, starting with this broad framing approach that we suggested or something similar, sort of narrow down your realm of more detailed investigation and then try to look through and see where you’ve got these dependencies that really could put national security at some risk. And then you use a common — if you find something you’ve gotta fix, you use combination of subsidies and various inducements and maybe direct regulation to try to change that situation and create alternative sources of supply, either here in the United States or from friendly nations. And that’s sort of the toolkit.

Terry Gerton Is this all an administrative approach in the executive branch or would you need the legislative branch to get involved here too and create some statutory frameworks?

Michael O’Hanlon I think you certainly need resources from the legislative branch, so you need appropriations. And you also would want state and local governments to help out in thinking about certain kinds of either vulnerabilities to their manufacturing sector or places where they could contribute to helping create new capability. And by the way, we’re looking at supply chain interruption. There are two other big ways in which critical infrastructure could be threatened — at least two, but one would be cyber attack. Whether you got the technology from abroad or not, if a foreign actor is able to access the technology through the internet, as we know China has with its Volt Typhoon malware that it’s implanted in a lot of infrastructure, you got to worry about that vulnerability too. So states can look into where they might have those sorts of vulnerabilities and could improve their resilience. And then, so you’ve got cyber, and then you’ve supply chain, and then, you’ve the possibility of physical damage either from natural catastrophe or from terrorist attack, so let’s say a dam or a single production facility where we make a lot of our IV fluid, for example, has happened during one of the hurricanes in 2024 in a facility I think in North Carolina was rendered incapable of producing that and it accounted for more than half the country’s total supply. So states and localities and the private sector can look into where they might have vulnerabilities of one of those types. Again, not the main focus of our paper, but you want to look at this all together and try to develop a national strategy for greater resilience in supply chains as well as against catastrophe or attack.

The post Resilient supply chains start with knowing what really matters, and what doesn’t first appeared on Federal News Network.

Interview transcript

Terry Gerton We’re talking about something that might be a little esoteric, but is certainly in the air these days, agency investigations that enforce various statutes. The Supreme Court has had some things to say about it recently, and you’ve recently written a paper. Before we dig into the details of your recommendations, just kind of give us an overview of how agencies are taking on administrative investigations.

Aram gavoor Fair, well, administrative investigations, which would be agency non-criminal information gathering procedures, are the bedrock of any forthcoming action that would be an enforcement action. And they’re actually one of the most unregulated spaces in federal government enforcement. There is no one statute that actually controls how those should be conducted. So it’s based on each agency having very general, broad authorities, then deciding how to apply those authorities on an individual basis. And then the target of those information collection processes, usually compulsory ones, doesn’t have a lot of leeway to indicate, oh, this is unfair, you’re going too far, etc.

Terry Gerton Your report says that these investigations often lack transparency and predictability, which is some of what you’ve just described. What are the biggest weaknesses, you mentioned variability as well, in how agencies handle these kinds of cases?

Aram gavoor So, the way that our federal government is set up, and the way Congress regulates the federal government as well as the courts, is that it’s premised on affirmative procedures, usually enunciated in statute or self-imposed by the agency, a level of transparency that’s reasonably high so that members of the regulated public know what’s happening and how their government is regulating upon them, and then a level of that transparency then flowing through to judicial review, usually in the federal court system, usually in the context of review under a statute called the Administrative Procedure Act, where the court determines whether the ultimate agency action is arbitrary and capricious. However, here, the challenge is that the federal government needs to be able to collect information, usually compulsorily, to be able to decide whether to enforce or in furtherance of an enforcement. And there’s very, very few guardrails to stop that. So agency investigations are necessary for our government to do all of the things that our Congress has charged our government to do and that our president, you know, through our election is enforcing and taking care that the laws are faithfully executed. So, that can be everything from an audit, a subpoena, a civil investigative demand, it can really range, it can range from a door knock of government investigators themselves, people with badges.

Terry Gerton Your report describes that these investigations are sometimes idiosyncratic. So without transparency, without predictability, without a standard approach, what does that mean for the people or the organizations that might be under investigation?

Aram gavoor So, what that means is that the target of an investigation has relatively few tools besides complying with the investigation or capitulation to participate in that compulsory information gathering process. There is a Supreme Court case recently that provided an ability of a target of agency investigation or action to be able to challenge it constitutionally. Let’s be pretty clear, 99.9% of targets of agency investigations do not have a direct constitutional challenge of the agency’s authority to be able to investigate or engage in the enforcement. So, what happens in practice is that there’s a lot of pressure on the investigated target. They typically need to hire a lawyer, depending on the size of the company and subject matter as well as the agency that’s doing the investigating, they may need some level of highly specialized legal services. So, for example, if it’s the SEC doing an investigation, that’s a totally different animal from the wage and hour division simply responding to a complaint made by a single employee.

Terry Gerton I’m speaking with Professor Aram Gavoor. He’s the Associate Dean for Academic Affairs and Associate Professor of Law at George Washington University. So your paper and the Administrative Conference of the United States have made some recommendations that agencies could take on that would improve this process. Walk us through what you suggest.

Aram gavoor So first, the Administrative Conference of the United States is this lovely agency, of which I’m actually now a public voting member, that exists to engage in meaningful, nonpartisan, rigorous studies of how to make your government and the executive branch function better. And the study that I was commissioned to deliver, which I did and resulted in a favorable recommendation was how to improve agency investigative procedures for the benefit of the government, but for all Americans as well. And the big themes that my report and the ultimate recommendation concluded was that there needs to be improvements in disclosure and transparency, better improvements with initial investigations, initiating them, how to decide and what process there is for that, the methods of those investigations, you know, the scope, the general nature of the investigation, the potential violations of statutes and regulations being investigated, etc., determining the appropriate course of action following an investigation and then lastly, the negotiation and settlement procedures in the event that an investigation leads the agency to conclude that there was a violation of law or statute within its authority.

Terry Gerton Could agencies just adopt these on their own, or do they require statutory direction to move forward?

Aram gavoor So the great news is that agencies have the ability to adopt these. And also, if we’re just looking at presidential actions, the Trump administration, certainly in the first term, you know, we don’t have a very large data set for the second term, was actually quite serious about providing more transparency for investigations, as well as compulsory information collections government-wide. And I would say that in this administration, with President Trump signing an executive order creating a greater degree of White House control over so-called independent agencies, the ability of the White House to cause behavioral change or agencies themselves to cause their own behavioral change through self-policing is 100% there. It does not require a statute for an agency to be more transparent, to restrain itself somewhat more, to have more rigor with its procedures, higher levels of approval before it reaches out.

Terry Gerton Would you have any concern that an increase in transparency might conflict with confidentiality or privacy protections?

Aram gavoor Well, I would say this. Transparency, as it is understood for the executive branch, has built-in protections for privacy and for confidentiality. Even if you look at the Freedom of Information Act, which is a sub-statute of the Administrative Procedure Act, there are a variety of ways in which, in the broader domain of transparency, there are distinct and significant and important protections to be able to restrain the disclosure of just those things, Terry. And what I would say with regard to all of this is there are going to be a number of sensitive investigations, maybe a civil investigation that could then turn into a criminal referral where it is not in the interest of public policy, it’s not in interest of the executive branch or the American people for even the existence of those and those compulsory information collections at a relatively early level to be publicly revealed. So, for example, if you’re a drug company, there’s a variety of circumstances under which it is strongly in the interest of the drug company for a FDA investigation not to be fully public, because just a hint that there could be something wrong can turn markets. And it’s really about a balance. At what point does public interest in knowing what the government is doing, you know, prevail? I think that’s the baseline that should exist and then what is the rights obviously of the investigated party because they have very important rights right? And it’s very easy if we’re talking about something, generally, but if the government is investigating you, Terry, you know, if you’re getting an IRS audit for tax year 2023, you probably want that to be private. The nature of that information contains large amounts of taxpayer secrecy information under 26 U.S. Code Section 60103. It’s a very good example of something that shouldn’t be public. At the same extent, let’s say that EPA is knocking on your door because you’re violating the lead paint rule, and there’s some kids getting sick because they’re eating paint chips, that might make more sense for it to be publicly known. And of course, Terry, I’m sure you comply with all laws all the time.

Terry Gerton I try my best. So let’s just imagine that all of the agencies have your paper and they’ve read it and they want to move forward on it. What would the first steps look like and how would you know that transparency is improving?

Aram gavoor So it’s a multi-step process. The good part is the report and the recommendation is essentially a recipe for how to bake the cake. And the agency has to decide how that recipe applies to their statute, their mission, their goals, because obviously the federal government’s very broad. So that exists. I’m also infrequently making myself available just for this public service, right? I’m happy to have any conversation with any agency, and I do frequently, on these types of questions. But the good evidence that you might be able to see is, for example, if there is all of a sudden a published enforcement manual, first one is created, second it is published, and third it is available to you so you can actually understand how the agency is doing what it does if it comes knocking on your door. That’s something that’s very simple. Or for you to understand based on public disclosures, how the agency decides how to investigate, what to investigate when to stop an investigation. So you can have some level of understanding besides a black box on the other side of what you’re dealing with.

The post Authorized investigations shouldn’t mean unpredictability, why transparency and clear deadlines matter for agency fairness first appeared on Federal News Network.

Interview transcript

Terry Gerton The Office of Inspector General there at the U.S. Postal Service issued a recent report where you flagged excess and underutilized space across USPS facilities. First of all, tell us what initiated the study.

Joshua Bartzen Well, I will say that in terms of, there’s been an overall focus by the federal government on making sure that space is utilized all throughout agencies throughout the federal government. And with the Postal Service having the facility footprint that it has, over 34,000 facilities across the country, varying in size from pretty small post offices to larger processing plants, we figured it was a great time to start a project like this.

Terry Gerton And so as you went through it, what did you uncover about how much space is sitting idle or underutilized?

Joshua Bartzen Terry, it’s a great question. And for us, the first step that we took was try to understand what data is out there to kind of assess this network. So we went into the network and we were pleased at first when we saw that the Postal Services National Facility Database had information on fields that related to excess space or underutilized space or vacant space. So we’re like, okay, we viewed that as a good sign. However, once we started looking at some of the data that was associated and located in that system, I’ll say from an auditor’s perspective, our ears started to perk up a little, our eyes opened up a little and we’re like, okay, there seems to be some reliability, some things, outliers that we’re looking at. So then the crux of our audit, then we started really flushing out and kind of started peeling the layers of the onion back on that data. And we found some pretty concerning reliability issues.

Terry Gerton Well, let’s talk about reliability issues then, especially as it relates to the data. What did you find?

Joshua Bartzen So in terms of the data, some of the things we looked at were, they had incorrect inputs, where some of formulas like in Excel, they weren’t working as properly. They were incorrectly coded, where some space was office space, but it was coded as vacant land or some of the data was inconsistent between some of this system modules. Then we also noted that in certain instances, the data wasn’t even in there. So one of the key findings we had was that over 63% of the properties have not had a kind of data reliability assessment performed, on record. So that was concerning to us because at some point, going out collecting this data and then checking out it periodically, just that lack of data was very concerning for us.

Terry Gerton Whose job is it to keep the data up to date?

Joshua Bartzen Terry, it’s a great question. And honestly, that was kind of one of the things we’re talking with Postal about. Obviously, the Postal Service is a very big organization. There’s different functions. We were dealing primarily with the facilities group, but also the retail group, the processing group, the delivery group, they all have input into this because they’re aware of the day-to-day operations. We kind of attributed it to facilities because they were the kind of, as far as from our view, they were the overseers of this entire facility database and what was in their postal service facilities. Folks may have a little different perspective on that, but from our perspective, that’s where we landed.

Terry Gerton What’s the impact to postal service management of not having good data about the usage of its various kinds of facilities?

Joshua Bartzen But Terry, great question. And we reported that the lack of visibility into this data really, it hinders your ability to drive financially beneficial alternatives, such as if you can repurpose the space, if you can rent it, if you dispose it. So all those types of things, we found that the data issues that we found really hindered anything going forward because at that point, it’s limiting your decision making. And we even highlighted a couple examples in the report in terms of the COVID test kits, when they came out, at some point, you’re trying to find facilities where there can be some space where you can store them and process them, and Postal Service eventually was able to do it. But the data wasn’t as readily available because they had to go ask and kind of re-engineer it going from step one. Similarly, lately, there’s been some increases in packages at certain locations, so much so that they’ve had to put exterior tents outside to kind of store the packages while they’re waiting to be processed. So we were saying, well, this is also another opportunity where if you knew where some available space was in nearby adjacent facilities that could help you out. The third part is there’s a revenue component to this too. And I think this aligns with a lot of the other things from the federal government that we discussed earlier is that, are there ways to either rent the space or dispose of it that can save you money? And in terms of that, we saw some instances where space was coded differently and that limited your ability to rent that, potentially rent that space. So again, financial operational impacts definitely arose from the lack of quality data.

Terry Gerton I’m speaking with Joshua Bartzen. He’s an audit director at the U.S. Postal Service Office of the Inspector General. So we talked a little bit about the finding around insufficient or inaccurate data. What was your second finding here?

Joshua Bartzen The second finding, the second part of that finding had to do with the overall broader strategy related to excess and underutilized space. And we were curious from the Postal Service perspective, did they have a strategy for reducing it or at least for managing it? Because the one reality we do know with the Postal Service is that the operational demands vary throughout the year. Like right now it’s holiday time, so we know that there’s a lot more packages going through the network, so you know you need more space. Do you need that space maybe in the middle of January? Maybe not. But that space can be used then for maybe something else. So the network and the volume variability is what they call it in terms of workflows, ebb and flow. Just being aware of it, having that data and that overall strategy can help you manage those kind of ebbs and flows throughout the year.

Terry Gerton You also noticed that the Postal Service hadn’t been meeting its congressional reporting requirements about facility space.

Joshua Bartzen That’s correct as well. So again, the GAO has placed federal real property management on its high risk list for over 20 years. And some of that continued work decades ago resulted in the passage of one of the federal real property laws that’s out there. We found the Postal Service hadn’t been complying with some of the reporting requirements of that. The Postal service said they weren’t aware of it. And again, they thought maybe it was a one-time reporting requirement, but again, with the move towards a federal government making more and more attention on this we thought it was, you know, us noting that compliance issue, and the Postal Service has agreed with that recommendation related to that compliance.

Terry Gerton You made a total of seven recommendations. How did the Postal Service respond across the board?

Joshua Bartzen I’ll say mixed, they agreed with two of them, and they disagreed with five. And in terms of the five that they disagreed with, most of those all pertain to the data or the strategy issues that we had discussed earlier. From our perspective, the Postal Service had some comments in there about who’s going to be responsible and who should be — and Terry, it’s funny that you mentioned who’s in charge of this — when the Post Service was talking about who is in charge this from an earlier point, Terry, there’s some difference of opinions. From our perspectives, though, At some point, we are auditors and we’re not consultants. So we’re going to tell you what to do, but we’re going to point out the issue. So we are less concerned with what entity within the Postal Service solves, corrects the issues that we brought up, but we noted for those five disagreed recommendations, we still think that they’re very important and they should be resolved.

Terry Gerton What do you think will happen now that you’ve raised awareness of this within the Postal Service? Are you seeing that they’re moving forward to take action, or what do you expect?

Joshua Bartzen We expect, at least from, I’ll go two-fold, just from the recommendation perspective, how those get handled is we have a resolution process with the Postal Service and we work to try to resolve those. So there’s some common agreement because I think collectively, between us and the Postal Service, we want these recommendations to be resolved. From a more global perspective, our report focusing on excess underutilized property is going to be one of many, I’m sure over these next couple of years, the federal focus is not going away, either by us, by GAO, by other federal stakeholders, so at some point, we’re envisioning that emphasis and that priority, the spotlight’s gonna stay. So I think it’s gonna have to be something that they’re gonna have to kind of make sure they’re managing. And to their credit, they’re creating a new data system to help manage some of these properties. Now with us, it’s becoming, hey, let’s make this a priority, make sure we’re doing this on an ongoing basis. Because again, that spotlight’s only gonna shine brighter.

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Interview transcript:

Terry Gerton I suspect that most people don’t know that Medicare funds graduate medical education. This is a topic you’ve looked into quite a bit at GAO. Give us an overview of this situation first.

Leslie Gordon Medicare is the biggest funder of graduate medical education. There are a number of federal programs that fund graduate medical education, but Medicare is the primary funder, funding about $22 billion in 2023. We’ve been looking at it over a course of years, because that’s a chunk of change to look at and understand if it’s being effective. Over the course of our work in 2017, 2018, we’ve noticed that there’s a misalignment; there’s an unevenness in how medical residency is distributed across the country and where those graduate medical education dollars go.

Terry Gerton How’s it supposed to work?

Leslie Gordon Well, the impetus behind funding for graduate medical education is to ensure we have a well-trained workforce. And indeed, it should be distributed across the country so that people have access to services. And Medicare cares about having trained providers to care for all the Medicare beneficiaries across the country.

Terry Gerton So the Consolidated Appropriations Act of 2021, if we can take our minds back that far, put in some provisions maybe to try to address this misallocation of graduate medical education, and you’ve just published a report on that. Tell us about what you found in terms of the first three years of this program.

Leslie Gordon Our report is an interim report. The Consolidated Appropriations Act of ’21 funded 1,000 new residency positions. That’s in a framework of over 163,000 medical residents. So it’s not a lot of positions, but it’s designed to alleviate situations where hospitals would like to expand, or smaller hospitals would like to open new medical residency programs, and to direct some attention to underserved communities.

Terry Gerton And as you looked at the distribution of those thousand positions, what did you find?

Leslie Gordon We found that awarded hospitals were very similar to those that applied who were not awarded. So we did a comparison to look at, were there any biases in how these positions were being distributed when CMS was distributing them? Or, did they follow the rules and the categories set out in the CAA? And generally, the awardees and those that were not awarded were similar in nature. There was an effort and an impetus to focus on underserved areas, particularly rural areas, as we noted earlier. And while there wasn’t a redistribution of a majority of positions going to rural areas, there was an emphasis and a success in funding the rural hospitals that applied. Ten rural hospitals applied, nine were awarded. That’s different from about 50% of urban hospitals that applied that were awarded.

Terry Gerton Sounds like this really didn’t get to the crux of putting more residents in urban hospitals.

Leslie Gordon It didn’t put more residents necessarily in urban hospitals. It put more residents everywhere, let me say that. It emphasized and allowed for more residency positions and programs in rural and underserved areas. But with a small portion of residencies that were being awarded, it’s a big pile to redistribute and only have a thousand pieces with which to do that.

Terry Gerton I’m speaking with Leslie Gordon. She’s director for Medicare at GAO. Are there particular issues that the smaller or rural hospitals faced in terms of applying for this program or really making the best use of the resources that could potentially be available?

Leslie Gordon In the course of our work, we talked to representatives from hospitals in all kinds of areas, including rural hospitals. We talked to some hospitals and we talked to hospital associations. We heard that CMS’s use of the health professional shortage area as the primary criterion for distributing and allocating prioritization of who would be awarded got in the way for some smaller communities and those that might be training in rural areas or serving rural residents that traveled out of their local area to seek care. The way in which it didn’t quite land for rural areas is that the HPSA score is based on a population-to-provider ratio. And if you add one new doctor to population of a thousand people, that can really change the score a lot, as opposed to adding one new doctor to a population of 200,000 people. In that way, it wasn’t quite aligned with the goal of focusing on rural areas.

Terry Gerton And so, are there changes that CMS could make to this distribution model in the last couple of years of this program to help address those shortcomings?

Leslie Gordon We provided this feedback and other feedback to CMS as a part of the course of our work. They have two more rounds to distribute. And one of the things we also learned about is that hospitals needed other funding to make good use of these additional spots, these additional residency spots. I think being more aware of upfront costs, the need to maintain accreditation, and some of the challenges that we highlight in our report will help CMS, perhaps, and those who apply.

Terry Gerton If CMS does adjust the criteria or support, are there metrics that they should track to make sure that the changes are working?

Leslie Gordon CMS is tracking the metrics that were set out in the Consolidated Appropriations Act, and we will be looking at and reporting again in 2027.

Terry Gerton So when you think about this over the next couple of years, are there things that Congress, or educators, or other folks should watch to gauge whether or not these new slots are meeting workforce goals? Are they helping advance the accreditation or the certification of young medical students?

Leslie Gordon I think the experience of awarding these positions helps highlight that it’s not just funding that will solve the problem in terms of distribution of medical residency. There’s a support infrastructure that needs to be there in terms staffing, in terms equipment, in terms considering the types of experiences that medical residents need to have to be fully trained. So we cover all these things in our report and I think that this experience with the allocation of the thousand positions helps highlight all the infrastructure that’s needed to support medical residency training.

Terry Gerton Are there companion programs designed to address those infrastructure shortcomings?

Leslie Gordon The federal government actually has 72 programs. Yes, there’s a lot of programs and there are 72 health care workforce programs. And we have open recommendations from our prior work that HHS needs to examine the gaps in the workforce and take action to address those gaps and needs to communicate around them. We have other open recommendations that they don’t have the information necessary to identify and evaluate the cost effectiveness of those 72 programs. So we do have open work, not directly related to this report, but we have open recommendations that focus in on the need to have better information and truly evaluate the effectiveness of all of the Work First programs in a comprehensive way.

Terry Gerton And do you have a sense that CMS and HHS are taking on that task to sort of harmonize all of these programs so that they make sense and they are optimized for best outcomes?

Leslie Gordon They are making progress on our recommendations and we will continue to follow up to see how they progress.

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Interview transcript:

 

Terry Gerton Your office has recently published the results of your audit on the homeless screening clinical reminder process in the Veterans Health Administration. Let’s start by having you explain what that process is and how it’s supposed to work, and what difference it makes for veterans who are perhaps experiencing housing instability.

Steve Bracci First, I do want to acknowledge that VA has prioritized ending veteran homelessness. There are several programs to help veterans who are homeless or at risk of becoming homeless. The homeless screening clinical reminder process really is an outreach effort. During health care visits, the screening tool, which is a series of questions, is used as a proactive way for VA to identify and help veterans who are either homeless or concerned about their housing stability. And this is really important because veterans may be unaware of the programs and assistance VA has to offer, or they might be reluctant to ask for help. So the screening tool prompts clinical staff to ask veterans if they have any housing concerns that they want help with. This then allows the clinician to make a referral to a social worker who can then connect with the veteran to discuss options and provide them with the assistance they need. This is, again, really important because it can have a major impact on veterans’ housing stability and their overall health and wellbeing.

Terry Gerton And VHA has established a target timeframe for that follow-up, right? Will you walk us through that?

Steve Bracci When a veteran says they want help, they are supposed to acknowledge that and act on it within seven days, but the goal is to actually resolve and have a conversation with the veteran within 30 days. But of course they recognize that it’s important to do it as quickly as possible.

Terry Gerton And so I guess the big finding, as you did your audit, was that in cases where the medical centers used both VistA and the Oracle Health System, almost 61% of veterans didn’t receive appropriate follow-up. What exactly is going wrong there?

Steve Bracci First, I want to clarify the 61%. That only refers to the veterans we were able to review at the VistA sites. The issues we saw at the Oracle sites were more focused on the lack of reliable data, which prevented our team and actually prevents VA from being able to view veterans’ cases and make sure that they’re being followed up on. So the 61% does refer to the VistA site. I just wanted to make that clear. But to answer your question about what went wrong, there were two key breakdowns that we saw in the process. First, the staff that screened the veterans, the clinicians, did not always refer veterans to social workers. Facilities have different ways of doing this and the processes varied across the sites we reviewed. For example, some facilities do a formal referral through the electronic health record using the consult process, while others use more informal methods, like sending an instant message to social workers. That’s an example. But we did find instances where these referrals just weren’t made. And as a result, no one reached out to the veterans to provide them with the assistance they needed. So that was the first part. The second part is the staff who received the referrals didn’t always follow their local procedures for conducting outreach with respect to how they tried to reach the veterans or how many attempts they made to reach the veterans. The intent of a follow-up is for social workers to have an actual interaction with the veteran and to have a conversation, identify their needs, and then they can provide the appropriate intervention. But we found instances where there was no interaction at all and it was just a letter was sent, or an email. So there was no way to ensure that the veterans’ needs were actually being met.

Terry Gerton Homeless veterans can be amongst some of the toughest folks to actually contact. They may not have a reliable mailing address. They may have a predictable phone number. What are the contact mechanisms that the referral team is supposed to use to reach them?

Steve Bracci Whatever method possible. They try to reach them using a telephone number. They try email. They try text messages. I think that’s not something we really touched on too much in our report, but it does show the importance of trying multiple times to reach a veteran before closing out that referral.

Terry Gerton I’m speaking with Steve Bracci. He is a deputy assistant inspector general for the Office of Audits and Evaluations at the Department of Veterans Affairs. So you mentioned the 61% with VistA cases, but you also said with the Oracle Health System, they have unreliable data. I’m interested — it seems like two different IT systems, but I’m presuming they have sort of the same SOPs across the network, regardless of what IT system they’re using. What makes the difference in terms of reliable follow-up reports, or root causes?

Steve Bracci I think it’s just a matter of how reliable that follow-up report is. We found with the VistA sites that the report was accurate as far as identifying the actual veterans who screened positive and wanted help. It was the actual follow-up part of that that was missing, whether or not the veteran had actually been reached and whether or not the follow-up had been completed. So that was the piece that was missing with the VistA sites. With the Oracle sites, we just found that it wasn’t accurate at all. The actual report was somewhat unusable with identifying whether or not veterans had actually screened positive and then any sort of follow-up had been done. So, that was a distinction there.

Terry Gerton So you’ve got really two fundamentally different, systemic problems. Talk us through your recommendations. How do you want VA to tackle this issue?

Steve Bracci That’s a challenge for VA is when you have two systems — anytime you have IT systems and there need to be updates, that is a challenge. I think it’s just a matter of doing what they need to do to make sure that the systems are accurately capturing the data and reporting the veterans who need help so that that follow-up can be taken.

Terry Gerton How did VA respond to these recommendations, and who’s responsible for fixing the problem?

Steve Bracci I do want to acknowledge that VA concurred with our recommendations and they developed a responsive action plan for each one. So that’s important. Carrying out the action plans will require significant effort because not only are we dealing with two different systems, but we’re dealing with many VA medical facilities and each facility can do things a little bit differently. So identifying what works and taking steps to standardize that process across the system will take some effort. So that’s an important piece. Like I said, the recommendation about ensuring reliable reports could require additional coordination because we are dealing with VistA sites and Oracle sites, and it will require significant communication and collaboration across program offices and VA stakeholders to get the reports where they need to be. So ultimately responsible, you know, I mean the VA secretary is ultimately responsible for everything within VA. But you have many different program offices that are relevant in this case, and you have many different VA leaders also.

Terry Gerton Does VA have, say, a task force lead for this project?

Steve Bracci Not that I’m aware of.

Terry Gerton Let’s assume that they figure out how they’re going to orchestrate all of those different pieces that need to respond to this. What do you want veterans to know about how this might change their interaction or their service when they’re screened for homelessness or housing insecurity?

Steve Bracci I want veterans to know that they can expect to see improvements to the process. That’s why the OIG is so important: Our oversight focuses on topics and programs and services that are important to veterans. Our team does a really good job. When we conduct an audit, our team does really good job communicating with the different program offices and with VA leadership throughout the project. So when our report is issued, it doesn’t come as a surprise. So that communication, I think, is really important and it gives VA the opportunity to start making improvements and corrective actions immediately. And we’ve found that that is the case, that they take those meetings and they take our findings and our recommendations seriously. So I want veterans to know that. And, you know, I think VA as part of their response to our report, they have planned corrective actions that should be implemented by August of 2026. So if they follow through and they take action and they complete those plans, then veterans will see improvements to this process.

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