COVINGTON & BURLING LLP MEMORANDUM TO BOARD OF DIRECTORS OF THE LEGAL SERVICES CORPORATION July 28, 2006 Re: Response to Coogan Memorandum Regarding Authority of LSC Board of SUMMARY INTRODUCTION This memorandum responds to a June 26, 2006 memorandum entitled "LSC Board of Directors Rating Inspector General Performance" that was prepared by Thomas D. Coogan, acting as Special Counsel to Kirt West, LSC's Inspector General (hereinafter referred to as the "Coogan memorandum" or the "Memorandum"). Mr. West forwarded a copy of the Memorandum to Lillian BeVier, in her capacity as Chair of the LSC Board's Performance Review Committee. In addition, in his transmittal memo to Ms. BeVier, Mr. West informed the Board that he had shared the Memorandum "with the LSC's Congressional authorities and appropriators as well as the committees with jurisdiction over the Inspector General Act." You have asked us to make an assessment of the legal reasoning presented in the Coogan memorandum. The principal conclusions appear to be that the LSC Board lacks legal authority to conduct performance reviews of the Inspector General (the "IG") and that, in any event, it would be inappropriate to proceed with a performance review of the IG at this time because the Office of Inspector General (“OIG”) is currently investigating allegations relating to activities of the Board. Mem." When cited for quotations, the Coogan memorandum will be referred to as "Coogan COVINGTON & BURLING LLP Our assessment is that the Coogan memorandum fails to support its principal conclusions for several reasons. First, as will be explained in detail, the Coogan memorandum is replete with conclusory legal assertions that are unsupported by relevant case law, statutes or regulations. Most significant in this regard is the absence of any reference to the one Supreme Court decision that bears most directly on the subject of the Coogan memorandum – namely, the extent to which the IG is subject to the general supervisory authority of the head of the agency, which, at LSC, is the Board of Directors. The omitted case is NASA v. Fed. Labor Relations Authority, 527 U.S. 229 (1999), where the Supreme Court specifically ruled that "each Inspector General has no supervising authority - except the head of the agency of which the OIG is a part." Id. at 240 (emphasis added). The reasoning of the Coogan memorandum is also unpersuasive because it fails to take proper account of (i) the statutory language that expressly provides for "general supervision" of the LSC IG by the LSC Board of Directors and (ii) the Office of Management and Budget's (OMB's) official guidance which expressly interprets this authority as including performance reviews of the IG. See 5 U.S.C. App. 3 § 8G(d); Memorandum For Heads of Designated Federal Entities, M-93-01, dated November 13, 1992, at 4. The credibility of the Coogan memorandum is also weakened by the extensive reliance on factual information and characterizations provided by the IG, without reference to documents or sources that would independently corroborate those facts. In addition, the Coogan memorandum lacks persuasiveness because its stated conclusions are both contradictory and confusing. The Memorandum argues, on the one hand, that the Board lacks legal authority to proceed with its existing procedures for an annual performance review of the IG; yet, on the other hand, the Memorandum repeatedly endorses the idea that the Board can and should provide COVINGTON & BURLING LLP "feedback" to the IG regarding his job performance. The Memorandum does not explain why "feedback" on performance does not involve the Board's conveying the same type of information to the IG as a formal performance review or rating. Lastly, the Coogan memorandum is deficient because it concludes that the decision to conduct a performance review of the IG is a “political decision” that requires consultation with the Congress. The relevant statutory provisions and the applicable OMB guidance strongly support the view that the Board's performance-review authority stems from sound management principles, not a "political decision" to be negotiated with the Congress. ANALYSIS I. The Board Has a Legal Basis for Conducting Annual Performance Evaluations of the Inspector General A. The Inspector General Act Affirmatively Establishes the Board's Authority and Responsibility for Conducting Performance Evaluations of the Inspector General In the Coogan memorandum, the OIG contends that the Board's current evaluation process is "not legally necessary," relying primarily on the following arguments: (1) the Board is not "legally responsible" for evaluating the IG; and (2) the Board is not "expressly authorized" to evaluate the IG. (Coogan Mem. at 10-11.) The OIG's reasoning is flawed on multiple grounds. As a threshold point, in making these assertions, the OIG fails to demonstrate how the question of whether annual performance evaluations are "legally necessary" is even relevant to the dispositive issue here - whether the Board is "authorized" as a legal matter to conduct such evaluations of the IG. Moreover, the Inspector General Act of 1978, as amended, (“IGA") clearly provides the Board with the power to exercise "general supervision" over the IG. Nevertheless, the OIG discounts this express-authorization language from the IGA, without providing any COVINGTON & BURLING LLP legally supportable basis for doing so. Most notably, the OIG also does not take into account the holding of U.S. Supreme Court precedent concerning the issue of whether an OIG should be treated as a "representative" of the agency that it has been tasked to audit and investigate. As explained below, the "general supervision" provision of the IGA - particularly when viewed in conjunction with the relevant case law regarding OIG personnel as "representatives" of their affiliated agencies - gives the LSC Board both the statutory authority and a legal duty to supervise the IG. The Board's performance evaluations of the IG fall squarely within this scope. 1. The Board Has Statutory Authority to Exercise “General The IGA provides that each Inspector General ("IG") of a "designated federal entity" ("DFE”) – including LSC - "shall report to and be under the general supervision of the head" of that DFE. 5 U.S.C. App. 3 § 8G(a)(2), (d) (emphasis added); see also Wilkinson v. Legal Services Corp., 27 F. Supp. 2d 32, 37 (D.D.C. 1998). In short, the IGA provides explicit statutory authority for the LSC Board to exercise “general supervision" of the IG. The Board's "general supervision" of the IG in this context includes performance evaluations. Specifically, the Office of Management and Budget ("OMB") has interpreted this "general supervision" provision of the IGA to comprise the following: “(i) developing a performance plan (including critical performance elements and performance. standards) for the IC, in consultation with the IG; (ii) conducting the annual performance evaluation of the IG; and (iii) making decisions on IG budget proposals." Memorandum For Heads of Designated Federal Entities, M-93-01, dated November 13, 1992, at 4 (emphasis added). According to this OMB guidance, the IG also should "keep the entity head generally informed as to the OIG's plans, activities, and accomplishments." Id. COVINGTON & BURLING LLP In the Coogan memorandum, the OIG cites an article by James Naughton as support for its view that the Board "is not expressly authorized to evaluate" the IG. (Coogan Mem. at 10-11.) Naughton himself, however, explicitly acknowledges that an agency head "may review and criticize an Inspector General's performance." James R. Naughton, "The Inspector General Act: The Meaning of 'General Supervision,"" The Journal of Public Inquiry at 23 (Spring/Summer 1998). The OIG contends that this ability to "review and criticize" an IG's performance is "a far cry from conducting a formal performance evaluation based on management input that may affect current or future employment prospects of an Inspector General." (Coogan Mem. at 10-11.) However, the OIG does not explain how the Board's conducting an annual performance evaluation for the IG would be a “far cry" from the Board's recognized ability to "review and criticize" the IG's performance. The "far cry" language has rhetorical flair, but it is not based on any case law or other applicable legal authority. Moreover, Naughton himself recognizes that agency heads may, in addition to "review[ing] and criticiz[ing]" an IG's performance, also "ask for an investigation of an IG's activities or even request the President to remove the Inspector General." Naughton at 23. The concept of the Board's conducting an annual performance evaluation of the IG appears to be wholly consistent with Naughton's interpretation of the "general supervision" provision in the IGA.2 2 In the Coogan memorandum, the OIG also contends that the Board lacks authority to supervise the IG because the IG "gets no authorities from the Board...." (Coogan Mem. at 6.) In making this circular argument, the OIG overlooks a key point - whether the Board has legal authority to conduct performance evaluations of the IG is not dependent on whether the IG "derives authority" from the agency head. Rather, the Board's authority to do so is derived from the IGA statute itself. See supra at pp. 3-5. |