A long-term vacancy at the Office of Management and Budget will remain unfilled for longer than expected, at a time when the Biden administration is overseeing massive infrastructure and COVID-19 spending.
The White House last week announced President Biden withdrew his nomination for Laurel Blatchford, former chief of staff at the Department of Housing and Urban Development, to serve as OMB controller.
The position, which has been without a permanent officeholder for more than five years, sets financial management policy for the rest of the federal government,
Former OMB controllers said last year that their successor would face a unique opportunity to oversee agencies spending trillions in COVID-19 pandemic spending, as well as infrastructure spending and managing the federal government’s real estate footprint.
The Senate Homeland Security and Governmental Affairs Committee advanced Blatchford’s nomination last December, but it failed to receive a Senate floor vote.
Blatchford told the HSGAC last November that, if confirmed, she would crack down on improper payments, given the Biden administration’s infrastructure and COVID-19 relief spending, and ensure that these “considerable financial resources and investments are being deployed, tracked, and spent as well as possible.”
“Moving money quickly into communities in these moments is very important, but it’s got to be balanced with a focus on payment integrity. The best way to do that, in particular, is to focus on prevention, the reduction at the beginning of the payment cycle,” Blatchford said during her November 2021 confirmation hearing.
HSGAC Ranking Member Rob Portman repeatedly raised concerns about Blatchford’s qualifications for the role, saying her background didn’t match the requirements outlined in the 1990 CFO Act.
The CFO Act requires the OMB controller have practical experience in accounting, financial management and financial systems, as well as “extensive practical experience in financial management in large governmental or business entities.”
“I found Ms. Blatchford to be a talented person, certainly qualified for other roles, including perhaps a good role at HUD or other entities. But I do not believe, based on her conversations with me, and her testimony before the committee, that she possesses the necessary skills the controller position requires,” Portman said during the committee’s December 2021 markup hearing.
The last permanent OMB controller, Dave Mader, now the civilian sector chief strategy officer at Deloitte, said in an interview that OMB controllers aren’t required to be certified public accountants. Mader said he was never a CPA, although his deputy, Mark Reger, a career official, had that background.
“My experience was more in financial management from an executive and operational perspective,” Mader said. “It was unfortunate, if, in fact, the Senate was saying, ‘We need a CPA,’ because I don’t think that’s a mandatory requirement. The role really is much broader than just the financial standards and the annual financial statements.”
Blatchford told the committee she doesn’t have training in accounting, but has a background in financial management. She also served as a former executive director of HUD’s Hurricane Sandy Task Force, which guided the implementation of disaster resilience funding across New York and New Jersey.
“As an experienced nonprofit and government leader of large teams, I have, by definition and by necessity, deeply involved myself in financial management — everything from budget development and execution, financial management of systems, enterprise risk management, auditing,” Blatchford said.
Mader said Blatchford’s background would have been a natural fit to lead the Office of Federal Financial Management, which covers everything from federal real estate, to improper payments, to grants management.
“As controller, what you’re looking for, as an appointee, is a seasoned executive who has the ability to be successful across the breadth of those programs, and not just narrowly focused on the annual financial audit of agencies,” Mader said.
John Pasquantino, a career official, currently serves as the acting OMB controller. But Mader said several major COVID and infrastructure spending bills — the CARES Act, American Rescue Plan, Bipartisan Infrastructure Law and now the Inflation Reduction Act — require an all-hands-on-deck response from OMB.
“It has really expanded many, many times the responsibilities for the Office of Federal Financial Management. Having only one person try to do a job that really is meant for two, it puts a burden on the one individual trying to do both of those jobs,” Mader said.
OMB went without a permanent controller for the entirety of the Trump administration.
The Trump administration nominated Fred Nutt in September 2017 to serve as OMB controller and received a confirmation hearing a year later, but his nomination never received a floor vote in the Senate.
Portman, a former OMB director under the George W. Bush administration, said lawmakers during the Trump administration refused to move forward on Nutt’s nomination, “because they believed he was not qualified, based on these qualifications that are in statute.”
“I think this is an incredibly important position, the controller in the Office of Federal Management at OMB. I think it’s one of the most important positions in the federal government as the federal government addresses the significant economic and other issues that face our country,” Portman said.
In addition to overseeing COVID and infrastructure spending, the OMB controller is tasked with implementing the 2019 Payment Integrity Information Act, which looks to reduce federal improper payments.
Blatchford said she would have made implementing the legislation a top priority if confirmed.
She said improper payments are “an incredibly important topic, given the amount of money that’s being currently invested in supporting our recovery from this pandemic.”
“My guess is because of the size of the investment that we are making collectively, there are real areas to strengthen and to focus,” Blatchford said.
Blatchford also told the HSGAC that she, like other senior executives, “learned to rely on the expertise of those around me,” to supplement her own experience.
“Most leaders know that you don’t have every technical skill in your toolkit, but often you can rely on your team for the areas that you might not have or that you need to complement. And everything I’ve heard about the OMB and OFFM teams is that they’re extraordinary and would be supportive in that particular area,” she said.
Blatchford said she would have also improved cooperation and communication between chief information officers and chief financial officers to modernize legacy financial IT systems.
“Those legacy systems pose enormous risks to effective service delivery, good customer experience, and of course, to security,” she said.
The long-term OMB controller vacancy underscores how many presidentially appointed, Senate-confirmed positions remain without a permanent officeholder.
The Associated Press reports the Senate confirmed 41% of Biden’s nominations in his first year in office. In comparison, 75% of George W. Bush’s nominees were confirmed in his first year, compared with 69% for Barack Obama and 57% for Donald Trump.
Mader said the Biden administration and Congress have spent most of their political capital passing major legislation, but have spent less time on fast-tracking political nominees through the Senate.
“They’ve been very busy with legislation, and their agenda, as well as the president’s agenda and getting significant legislation through both the Senate and the House, and getting it signed by the president,” Mader said. “They’ve been spending a significant amount of time on that.”