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Patent office workers bilked the government of millions by playing hooky, watchdog finds

Thousands of employees who review patents for the federal government potentially cheated taxpayers out of at least $18.3 million as they billed the U.S. Patent and Trademark Office for almost 300,000 hours they never worked, according to a new investigation. The Post's Lisa Rein tells you more. (Video: Monica Akhtar/The Washington Post)
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Thousands of employees who review patents for the federal government cheated taxpayers out of at least $18.3 million as they billed the U.S. Patent and Trademark Office for almost 300,000 hours they never worked, according to a new investigation by the agency’s watchdog.

The report released Wednesday determined that the full scale of fraud is probably double those numbers. Investigators said they interpreted the data they gathered conservatively, often giving employees the benefit of the doubt for the time they reportedly worked.

The data showed that, among other patterns of fraud, more than 400 patent examiners were paid but did not show up for work at least one day every other week — and more than 50 of these employees were not working an average of three days.

[Patent office filters out worst telework abuses in report to its watchdog]

The “minute-by-minute review” looked at the work culture of the gatekeepers to a crucial sector of the U.S. economy by analyzing billions of agency computer records covering 15 months in late 2014 and 2015.

The investigation, conducted by the inspector general for the Commerce Department, the patent office’s parent agency, was prompted by a 2014 Washington Post report that documented a cover-up of time and attendance fraud by top Patent and Trademark Office officials.

The cheated hours could have helped the patent office reduce by 16,000 cases a backlog it has struggled for years to shrink, the report said. The pending applications stood at about 550,000 as of April 2016. Reviews take 16 to 26 months to complete.

The report puts hard numbers to what had been anecdotal evidence and isolated cases of a lapse in accountability among the 8,400 experts who decide whether innovators should have the sole right to their inventions.

[Read the full report here]

Using records of turnstile badge swipes, computer logins and remote connections from examiners’ homes to federal computer systems, investigators looked for discrepancies between the time employees reported working and the hours they actually put in.

[He billed the government for four months of work he never did — and his teleworking boss never noticed]

Deputy Inspector General David Smith’s office found a gap of 288,480 hours covering not only employees with permission to work independently from home but also examiners assigned to the agency’s Alexandria, Va., headquarters who were gaming the system.

Patrick Ross, the Patent and Trademark Office’s communications chief, said late Tuesday that the agency “continues to focus on time and attendance compliance among [its] employees.” He called the report a “resource in our ongoing efforts to improve.”

[Patent and Trademark Office doesn’t know if employees are doing their jobs, watchdog says]

He noted, however, that the fraud cited by investigators represents just 2 percent of the total hours claimed by patent examiners over the 15 months, a ratio he said has shrunk with new policies to tighten oversight of employees.

“There may be many reasons for the lack of a digital footprint and [the agency] is committed to analyzing the recommendations offered by the [inspector general’s office], continuing to conduct our own review, and, if needed, improving the already extensive measures already implemented,” Ross said.

Two prominent members of Congress who oversee the patent office said they were troubled by the inspector general’s findings.

[After no-show employee bilks U.S. out of four months’ pay, agency chief vows zero tolerance]

“The amount of wasted man-hours that could have been spent reducing the patent backlog is astounding, not to mention the millions of taxpayer dollars that were wasted paying employees for work they were not doing,” House Judiciary Committee Chairman Bob Goodlatte (R-Va.) said in an email.

Senate Judiciary Committee Chairman Charles E. Grassley (R-Iowa) said, “The government failed to receive millions of dollars in work product that would have reduced the patent application backlog by thousands of cases. This is a conservative accounting, according to the report, and things could be even worse.”

[U.S. patent office: ‘We are committed’ to addressing telework fraud]

The patent office, while relatively small, plays a big role in supporting the nation’s economic development by determining whether innovators’ new products should be given sole rights to exclude competitors from making or selling their invention. The government issued 326,000 patents last year. 

The watchdog’s findings will not result in repercussions for any no-show employees. Investigators did not recommend that patent officials pursue administrative or criminal action against any individual examiner because the inspector general is prohibited under federal privacy laws from disclosing their names.

The lapses were not just by patent examiners. The report faults agency leaders for failing to give managers crucial tools to prevent and detect time and attendance abuse despite ample evidence that it occurs.

“The sheer volume of unsupported hours suggests that the [agency’s] internal control system used to monitor and prevent time and attendance abuse remains deficient,” the report says.

The Washington Post reported in August 2014 that an internal investigation of suspected time and attendance fraud led by the Patent and Trademark Office found that some patent examiners — of whom more than half work from home full time and another 3,000 telework part time — repeatedly lied about the hours they were putting in, and many received bonuses for work they didn’t do.

But patent officials removed the probe’s most damaging conclusions from a final report to then-Inspector General Todd Zinser, who had asked the agency to investigate the issue after receiving multiple whistleblower complaints.

At the time, Director Michelle Lee and her staff told concerned members of Congress that the abuse was limited to a few bad apples. She pledged zero tolerance for time and attendance fraud. But that apparently did not happen. Lee, through a spokesman, declined an interview request.

Investigators have now determined that poor performers are not the ones gaming the system.

[House hearing probes alleged telework abuses at U.S. Patent and Trademark Office]

On the contrary, the worst offenders identified by the analysis received above-average performance reviews and took home generous bonuses as they were falsifying their time sheets.

Patent officials have said they have taken steps to improve oversight of their employees, by expanding training and requiring fewer levels of approval for managers to get access to computer records when they suspect an employee is abusing the rules, for example.

But the agency has won few concessions from its unions to give managers more authority to monitor their staffs to prevent the abuse cited by the inspector general.

The Patent and Trademark Office has an unusually close relationship with its unions. Under its labor contracts, the agency does not require employees who work from home to log in to their computers if they do not telework full time. It allows them to take up to 24 hours to respond to a call or email from their boss. It requires only poor performers to provide the boss with their work schedule for the following day.

Eight years ago, the agency stopped requiring employees to swipe their badges when they leave the headquarters building. This is only required when they go into work.

And the number of patents that examiners are required to review is unusually low, the inspector general found. The agency’s production goals were last set in 1976, before the Internet made it possible to determine the state of the art in a particular field in a short time.

The outdated requirements are one reason that more than a quarter of the hours not worked identified by investigators were paid in overtime. Many examiners complete their work faster than they are expected to, letting them take advantage of low performance expectations to claim overtime they did not work, the report concluded.

“Patent examiners now have additional time to meet their production goals for the same amount of work, despite technological improvements that facilitate patent review,” it says.

But instead of demanding more from examiners, patent officials recently gave them two-and-a half hours more on average to review each application, the inspector general noted, recommending changes to production goals the report called “out of date.”

The watchdog reported last year that an examiner with a history of poor performance who was never disciplined racked up more than 18 weeks of pay for not working. But his manager, who worked from home, only noticed when he received an anonymous letter calling out the employee.

Investigators also found widespread time and attendance abuse at another Commerce agency, the U.S. Census Bureau, where employees in the small hiring office overcharged the government for thousands of hours of time they never worked. The fraud, also carried out by supervisors, involved 40 employees, more than half of the staff of the small office.

Until Smith’s office shared its findings with patent officials this summer, they were planning to expand telework privileges to a wide number of first-line managers, about 20 percent of whom now work from home.

According to individuals familiar with the agency’s thinking, that plan is now on hold.

Read the full report below.