Semiannual Report to Congress
October 1, 2001 through March 31, 2002


INSPECTOR GENERAL

NATIONAL LABOR RELATIONS BOARD

WASHINGTON, DC 20570

I hereby submit this Semiannual Report: October 1, 2001 - March 31, 2002, which summarizes the major activities and accomplishments of the Office of Inspector General (OIG) of the National Labor Relations Board (NLRB or Agency). The submission of this report is in accordance with the Inspector General Act of 1978, as amended (IG Act). Section 5 of the IG Act requires that the Chairman transmit this report to the appropriate committees or subcommittees of the Congress within 30 days of its receipt.

OIG issued one audit report, two inspection reports, one issue alert, and two responses to Congress. In the investigations program, OIG processed 198 contacts, initiated 18 cases, and closed 3 cases. The investigations resulted in one conviction this period. We reviewed eight pieces of legislation, one regulation, and one policy document. Details on these accomplishments can be found in the body of this report.

Misuse of Government issued travel and purchase cards was reported at various agencies this period. We initiated several efforts to determine whether cards at NLRB were being misused. These efforts included reviewing 6 months of travel card transactions that identified numerous questionable charges. As a result, we initiated 15 investigations involving 58 employees, and we began an audit of travel and purchase card use. We also responded to a request from the Senate Committee on Finance for information on employees disciplined for misusing their Government travel card.

In conducting a computer penetration test, we found that the password complexity was not in conformance with applicable guidelines for the 5 external and 18 internal NLRB systems that were scanned. Many user identifications were found to have the same identification and password or no password at all. This is perhaps the greatest exposure identified on the NLRB network.

I appreciate the support of all Agency employees in achieving the accomplishments set forth in this report.

Jane E. Altenhofen
April 30, 2002


AGENCY PROFILE

The National Labor Relations Board (NLRB or Agency) is an independent Federal agency established in 1935 to administer the National Labor Relations Act (NLRA). The NLRA is the principal labor relations law of the United States, and its provisions generally apply to private sector enterprises engaged in, or to activities affecting, interstate commerce. NLRB jurisdiction includes the U.S. Postal Service (other government entities, railroads, and airlines are not within NLRB's jurisdiction.)

The NLRB seeks to serve the public interest by reducing interruptions in commerce caused by industrial strife. It does this by providing orderly processes for protecting and implementing the respective rights of employees, employers, and unions in their relations with one another. The NLRB has two principal functions: (1) to determine and implement, through secret ballot elections, the free democratic choice by employees as to whether they wish to be represented by a union in dealing with their employers and, if so, by which union; and (2) to prevent and remedy unlawful acts, called unfair fair labor practices, by either employers, unions, or both.

NLRB authority is divided by law and delegation. The five-member Board primarily acts as a quasi-judicial body in deciding cases on formal records. The General Counsel investigates and prosecutes unfair labor practices before administrative law judges, whose decisions may be appealed to the Board; and, on behalf of the Board, conducts secret ballot elections to determine whether employees wish to be represented by a union.

The Board consists of the Chairman and four members who are appointed by the President with the advice and consent of the Senate. Board Members serve staggered terms of five years each. The General Counsel is also appointed by the President with the advice and consent of the Senate and serves a four-year term.

With the adjournment of Congress on December 20, 2001, the recess appointment of Board Member Dennis P. Walsh expired.

The Board was without a quorum until January 22, 2002, when President Bush made two recess appointments to the Board. Michael J. Bartlett and William B. Cowen were appointed to serve as Board Members and are currently filling these positions.

Peter J. Hurtgen, who received a recess appointment on August 31, 2001, continues to serve as Chairman. Wilma B. Liebman, whose term expires in December 2002, continues to serve as Board Member.

NLRB received an appropriation of $226,438,000 for Fiscal Year (FY) 2002, to fund 1,985 full-time equivalents. NLRB Headquarters is at 1099 14th Street, NW, Washington, DC.

In addition to the Headquarters building, employees are located in 51 field offices throughout the country. Three satellite offices for the Administrative Law Judges are located in Atlanta, San Francisco, and New York. As of October 2, 2000, field offices included 32 Regional Offices, 16 Resident Offices, and 3 Subregional Offices.

Additional information about NLRB can be found on the Web site www.NLRB.gov.


OFFICE OF INSPECTOR GENERAL

The NLRB established the Office of Inspector General (OIG) pursuant to the 1988 amendments to the Inspector General Act of 1978 (IG Act).

Resources

The FY 2002 OIG budget is $801,100 for operations, of which $60,500 is for contract services. In addition to the Inspector General, the OIG consists of a Counsel/Assistant Inspector General for Investigations, Assistant Inspector General for Audits, a criminal investigator, two auditors, and a staff assistant.

Kathryn A. Jones entered on duty as a criminal investigator on December 31, 2001. Joyce N. Werking joined the OIG staff as an auditor on January 14, 2002.

Judith A. Richter, staff assistant, retired on April 1, 2002, after 32 years of government service. She was with the OIG since February 4, 1990, providing support to five inspectors general.

The Inspector General is to provide policy direction for and is to conduct, supervise, and coordinate audits relating to program operations of the Agency. OIG issued one audit report, two inspection reports, one issue alert, and two responses to Congress.


AUDIT PROGRAM

The Inspector General is to provide policy direction for and is to conduct, supervise, and coordinate audits relating to program operations of the Agency. OIG issued one audit report, two inspection reports, one issue alert, and two responses to Congress.

Reports Issued

We issued Audit Report OIG-AMR-34-02-01, Audit of Monitoring the Computer Maintenance Contract, on March 21, 2002. This review was conducted to ascertain whether the services specified in the computer maintenance contract were performed satisfactorily at NLRB.

Help Desk services included providing technical support for all hardware and software calls received. The contractor did not complete hardware repairs or provide replacements or loaner equipment within the time periods stipulated in the agreement. Help Desk calls not resolved within 16 hours were not consistently escalated to NLRB officials as required by the contract. The other mandatory and optional services were performed satisfactorily.

The response rate to the user satisfaction surveys was 19 percent. The customer response was within a reasonable range experienced at other organizations, but improvements that may provide financial benefits to the Agency are attainable.

The Agency overpaid nearly $9,300 for services, $3,900 identified in our report and nearly $5,400 identified in response to our recommendations to verify prior period payments.

We made recommendations to the Director of Administration. These included evaluating the survey methodology used to measure customer satisfaction, reviewing the reasonableness of Help Desk response times, collecting overpayments, reviewing prior payments, and implementing a payment review process.

The Director accepted the recommendations except for evaluating the survey methodology.

We issued Inspection Report OIG-INS-17-02-01, Review of Agency Procedures for the Collection of Non-tax Delinquent Debt, on February 13, 2002. The objective of this review was to evaluate the adequacy of Agency policies and procedures to collect debt owed to the Federal government.

Accounts receivable monitoring needs to be strengthened in the following ways. Increase coordination between the Personnel and Finance Branches regarding amounts owed by current and former employees. Develop internal procedures for employees to challenge debt. Implement regulations and delegations of authority for compromising uncollectable receivables and a full cross-servicing program.

Debt collection activities also need to be strengthened. NLRB should notify debtors of the due date for repayment of debt, and charge interest, penalties, and fees associated with the collection of delinquent debts.

We issued Inspection Report OIG-INS-20-02-02, Computer Penetration Test, on March 25, 2002. The objective of this testing was to determine whether sufficient protections exist to prevent intrusions into the NLRB's computer systems, including those between the offices of the Board and General Counsel.

The password complexity was not in conformance with applicable guidelines for the 5 external and 18 internal systems that were scanned. Many user identifications were found to have the same identification and password or no password at all. This is perhaps the greatest exposure identified on the NLRB network.

Other than the password complexity, we found the NLRB network controls were well designed and prohibited unauthorized access to the Board or General Counsel systems externally from the Internet. A number of vulnerabilities were identified within the internal network that could lead to unauthorized access between the Board and the General Counsel.

Other vulnerabilities identified were:

- Anonymous logons were allowed;
- System configurations were not standardized;
- Banner pages were not present at all portals; and
- Manufacturer default software installations contained system access vulnerabilities.

We made multiple suggestions to the Chief Information Officer. These were: Prohibit the use of anonymous logons; Implement a password policy that is in accordance with Federal guidelines; Develop and implement a standard system configuration policy; Place a banner page, mirroring the one used for normal sign-on, at every system entry point; Examine Web page access compromised through software installation; and, Remove Web pages when not needed for system operations.

We issued Issue Alert OIG-IA-02-01, Drug-free Workplace, on March 13, 2002. The Agency is not in compliance with the random drug-screening tests that is part of its Drug-free Workplace Plan, dated November 1995. The Plan provides that the Agency will annually administer a drug-screening test, on a random basis, to 10 percent of the employees in "Testing Designated Positions." No random drug-screening tests have been administered.

The Agency is in the process of remedying this situation. Subsequent to our report, arrangements were made through the Public Health Service to begin random drug testing at the Department of Housing and Urban Development. The Agency must first, however, complete consultations/ negotiations with its unions and issue a 60-day notice to employees.

At the request of the Senate Committee on Finance, we provided information regarding the NLRB's programs involving the Government purchase and travel charge cards.

We reported that Agency managers had recently disciplined three employees, and were in the process of disciplining two additional employees, for misusing their Government travel card. Prior to these cases coming to the attention of Agency managers, the Agency issued an Administrative Policy Circular addressing the mandatory use of the Government travel card for official travel. We also reported that our office was in the process of initiating an Agency-wide review of these programs that would include both an audit and investigations.

Pursuant to Section 647 of Public Law 107-67, November 12, 2001, we provided a report to the Committee on Appropriations. We described the procedures in place at the NLRB to give first priority to the location of new offices and other facilities in rural areas, as directed by the Rural Development Act of 1972. The Agency does not have a written policy giving first priority to location of new offices in rural areas.

The Agency's field office placement practice is based on analyzing case filings to achieve the most efficient means of getting quickly to labor disputes. Typically, this results in having field offices in locations that are more likely to have labor unrest, such as in and around major cities or industrial areas. Agricultural laborers and their labor disputes are excluded from the NLRB's jurisdiction.

When a labor dispute arises in an area that is not located near a field office, NLRB sends a field agent to that area to conduct an investigation and hearings at a location near the witnesses. When the NLRB conducts an election, the election is held at the location of the employer.

Agency managers believe that the current practice is the most cost-effective means of office placement.

Audit Follow-up

Agreed upon actions were not completed within one year on one audit report, Review of Information Systems Security, OIG-AMR-30-00-03, September 29, 2000. Action is reportedly completed on 7 of the 15 recommendations, including the 4 recommendations that were identified in the previous semiannual report as being significant.

We reviewed actions taken on these four recommendations and concur that the agreed upon actions were completed. Management is working to implement the remaining recommendations.

Ongoing Reviews

As of March 31, 2002, the ongoing reviews were of the Compliance Actions, Travel and Purchase Card Use, and Consistency in Serving Suspensions.


INVESTIGATIONS PROGRAM

The Inspector General is to provide policy direction for and is to conduct, supervise, and coordinate investigations relating to the programs and operations of the Agency. OIG processed 198 contacts, initiated 18 cases, and closed 3 cases. The investigations resulted in 1 conviction.

Case Workload   Contacts Processed
Open (10/01/2001) 6   Received 198
Initiated 18   Initiated Investigation 2
Closed 3   Opened Case -- Referred to Agency 0
Open (3/31/2002) 21   Non-Investigative Disposition 196

Contract Fraud. As previously reported, OIG received information from an employee in the NLRB Division of Administration that indicated that a government contractor might be overcharging the Agency for relocation expenses of an Agency employee. OIG determined that the billing documents submitted by a subcontractor were fraudulent. Further investigation by the OIG determined that the subcontractor had defrauded other Government agencies and private citizens using similar methods. A joint investigation with several other Federal inspectors general and the Federal Bureau of Investigation developed evidence indicating potential wide-ranging fraud in both Government and other third party payee moves. The U.S. Attorney referred the case to the Criminal Division of the Department of Justice (DOJ) in August 1999. During this reporting period, one of the subjects pled guilty to mail fraud in violation of 18 U.S.C. 1341, and the subject who pled guilty to mail fraud during the previous reporting period was sentenced to 5 years probation and to pay restitution. (OIG-I-207)

Prohibited Political Activity. As previously reported, the OIG determined that an employee may have engaged in prohibited political activity in violation of the Hatch Act. OIG subsequently forwarded the case to the Office of Special Counsel (OSC) for investigation.

During this reporting period, OSC completed its investigation and charged the employee with violating the Hatch Act. The violations were participating in political activities while in any room or building occupied in the discharge of official duties or while on duty, using official authority or influence for the purpose of interfering with or affecting the results of an election, and knowingly soliciting or discouraging the political participation of certain persons. This case is scheduled for a hearing before an administrative law judge for the Merit Systems Protection Board in June 2002. (OIG-I-252(R))

Misuse of Resources and Time. OIG received an allegation that a Senior Executive Service employee was "funneling" information to outsiders.

Although our investigation did not substantiate that the subject was releasing non-public information, it did provide evidence that the subject violated Government ethics regulations. These were using the Agency's telecommunication resources and official time to advance the interest of potential Board Members, to work against the nomination of a sitting Board Member, and to advance the interest of non-governmental organizations.

After we issued our investigative report, the subject submitted a request for early retirement. Agency management decided that further action was not warranted. (OIG-I-289)

Conflict of Interest. As previously reported, OIG received an allegation that an attorney was engaged in a romantic relationship with a person who was a union official and a witness in litigation pending before the Agency. The subject acknowledged the relationship and agreed to step down from the supervisory/management position.

Although the subject did not violate Federal government ethics regulations, we referred this matter to the subject's State Bar as a possible violation of the State rules of professional responsibility. During this period, the State Bar determined that there was an insufficient basis for a finding that the subject engaged in professional misconduct. (OIG-I-284(R))

Misuse of Position. OIG received a complaint alleging an Agency manager abused her position by inviting subordinate employees to a party that she hosted in her home for the purpose of marketing candles and candle-related accessories. It was also alleged that the subordinate employees felt compelled to attend the party. We found that, although the subject did not intend to use her position for personal gain, that was the appearance. We issued a report to the Director of the Division of Operations-Management who is considering appropriate administrative action. (OIG-I-295)

Hotline

Employees and members of the public with information on fraud, waste, and abuse are encouraged to contact OIG. A log of calls to a nationwide toll free number or the office numbers and a log of mail and facsimile messages are maintained. All information received, regardless of the method used, is referred to as HOTLINE contacts.

The information received over the hotline is the basis for the initial review for potential investigations. The information is analyzed to determine if further inquiry is warranted. Most HOTLINE contacts are calls from members of the public seeking help on an employment related problem or issues outside OIG and/or Agency jurisdiction. As appropriate, OIG refers these callers to the NLRB office; local, state, or Federal agency; or private resource to provide assistance.

To further publicize the hotline to Agency employees, the OIG designed and produced a poster that was distributed to all Agency Field Offices on February 12, 2002. The poster is reproduced on the inside back cover of this report.

During this reporting period, OIG received 198 hotline contacts, of which 88 were telephone calls and 110 were in writing. Two contacts resulted in OIG investigative cases.


LEGISLATION, REGULATIONS, AND POLICY

The Inspector General is to review existing and proposed legislation and regulations relating to programs and operations of the Agency and is to make recommendations concerning the impact of such legislation or regulations. Similarly, we review Agency and OIG policy. We reviewed eight pieces of legislation, one regulation, and one policy document.

Legislation

We reviewed the following legislation and provided input when appropriate.

P.L. 106-544, the Presidential Threat Protection Act of 2000. DOJ was required to conduct a study surveying the administrative subpoena authorities of the executive branch agencies. We provided information regarding inspector general subpoena authority for inclusion in the Agency's response to DOJ.

P.L. 107-56, the Provide Appropriate Tools Required to Intercept and Obstruct Terrorism (PATRIOT) Act of 2001. This Act is to deter and punish terrorist acts in the United States and around the world, and to enhance law enforcement investigatory tools. Several of the enhanced law enforcement investigatory tools relate to computer crime and electronic evidence.

Section 647 of P.L. 107-67, Treasury and General Government Appropriations Act, 2002. The inspectors general were required to report to the Committee on Appropriations. The report was to detail what policies and procedures are in place to give first priority to the location of new offices and other facilities in rural areas, as directed by the Rural Development Act of 1972. Our report summary can be found on page 7.

P.L. 107-107, the Department of Defense Authorization Act for FY 2002. This Act included a provision that requires agencies to initiate audits for the recovery of improper payments, commonly known as "Recovery Audits." The Act also includes language that the requirement that an agency engage in Recovery Audits did not impair the authority of the agency's inspector general under the IG Act.

H.R. 3002, the Freedom to be a Patriot Act of 2002. This legislation would prohibit any agency from transferring funds to any individual or entity that prohibits the display of the flag of the United States.

H.R. 3778, the Federal Government Water and Sanitary Sewer Billing Act of 2002. This legislation would authorize the District of Columbia to directly bill any Federal agency for water and sewer services provided to the agency. The legislation also requires the inspectors general to report quarterly to Congress on the promptness of payment by their agency.

H.R. 3844, the Federal Information Security Management Act of 2002. This legislation would require inspectors general to conduct annual evaluations of their agency's information security program and practices.

Chapter 11 of title 18. In response to a request from the U.S. Office of Government Ethics (OGE), we provided comments concerning the criminal conflict of interest statutes. OGE has undertaken a review of these statutes to determine whether they can be simplified or otherwise improved. Our comments focused on updating the statutes to reflect the changes in the Government structure and the relationships that are more prevalent in our society.

Regulations

The Counsel to the Inspector General is an advisory member of the Agency's Rules Revision Committee that develops changes to Agency procedural regulations. During this reporting period, the Rules Revision Committee recommended that the Agency adopt rules allowing for the electronic filing of documents with the Agency when those documents are provided to the general public on the Agency's Web site.

Policy

We provided comments to the General Accounting Office (GAO) on its exposure draft, GAO's Agency Protocols. The agency protocols will provide an institutional framework for GAO's interaction with Federal departments and agencies.

We commented that, overall, the protocols provide an adequate framework for meaningful communication and interaction between GAO and agencies.

We suggested that the agency's inspector general be included in the interaction between the agency's managers and GAO. This would include receiving notification letters, being informed of oral notifications, being afforded the opportunity to attend meetings, and receiving a copy of draft and final reports.


LIAISON ACTIVITIES

The Inspector General is to recommend policies for, and is to conduct, supervise, or coordinate relationships between the Agency and other Federal agencies, state and local governmental agencies, and non-governmental entities. The Inspector General is to give particular regard to the activities of the Comptroller General of the United States, as head of GAO. Similarly, we encourage OIG staff members to participate in Agency programs and activities. OIG staff members are active in the inspector general community and agency activities.

Inspector General Community

The Inspector General is a member of the Executive Council on Integrity and Efficiency (ECIE), which consists primarily of the inspectors general at the Federal entities designated in the 1988 amendments to the IG Act. She participated in activities sponsored by the President's Council on Integrity and Efficiency (PCIE), which consists primarily of the Presidentially-appointed inspectors general. She is Co-chair of the PCIE/ECIE Annual Conference to be held in April 2002.

The Assistant Inspector General for Audits participated in the PCIE Results Act Group. Both auditors participated in the IDEA Users Group.

The Counsel participated in the Council of Counsels to Inspectors General. He is also a member of a committee reviewing the Quality Standards for Federal Offices of Inspector General.

Agency Activities

OIG continues to be involved in the Agency's implementation of the Results Act. OIG submitted comments on the Agency's FY 2001 Performance Report and FY 2003 Performance Plan.

The Counsel is an advisory member of the Government Paperwork Elimination Act Committee. This committee was formed to ensure that the Agency meets the October 2003 deadline of providing a means for electronic transactions with the public as a substitute for paper. The committee recommended that the Agency focus its efforts on forms used by the public to initiate actions with a Regional Office.

General Accounting Office

The IG Act states that each inspector general shall give particular regard to the activities of the Comptroller General of the United States with a view toward avoiding duplication and ensuring effective coordination and cooperation.

The Chairman, House Subcommittee on Government Management, Information, and Technology, requested a study on July 24, 2000. This study is to determine the extent to which Federal agencies have contracted with companies that have violated Federal labor, environmental, or tax laws, including the nature and extent of such violations. A report is expected in July 2002.

The Chairman, House Committee on Government Reform, requested a study on March 5, 2001. This study is to explore improvements to the offices of inspectors general that address overall effectiveness and enhancements to their independence. The OIG provided input on June 7, 2001. A draft report for comment is expected in the spring 2002. GAO conducted a survey of Federal agencies' enterprise architecture efforts to gauge progress towards meeting Clinger-Cohen Act and OMB requirements and to identify successes. The Agency responded to the survey in July 2001. GAO issued INFORMATION TECHNOLOGY Enterprise Architecture Use across the Federal Government Can Be Improved, GAO-02-06, on February 19, 2002.

Enterprise architecture is a blueprint to transform an entity's operational and technological environment. The blueprints should include descriptive models to aid decision-makers in understanding the complexities around how the entity operates and how it wants to operate in the future.

GAO surveyed 116 Federal agencies and found that only 5 (about 4 percent) reported that they satisfied the management practices that, in their view, are necessary to be an effective enterprise architecture manager. The NLRB was among 56 agencies reported as being in Stage 1 of the enterprise architecture maturity model. Stage 1 is characterized by either no plan to develop and use an enterprise architecture, or plans and actions that do not yet demonstrate an awareness of the value of having or using one.

In August 2001, GAO initiated a review of selected agencies, including NLRB, related to whether financial statement audit requirements should be expanded to certain agencies that are not required to have annual financial statement audits under the Chief Financial Officers (CFO) Act or other laws. GAO issued

Survey Results of Selected Non-CFO Act Agencies' Views on Having Audited Financial Statements, GAO-02-281R, on December 14, 2001.

Overall, the 26 surveyed agencies reported that they either achieved significant benefits or would anticipate achieving such benefits from having audited financial statements. Twenty-one of the 26 agencies reported that Federal agencies, in general, should have their financial statements audited. NLRB was one of the five agencies that said its financial statements should not be audited.


INFORMATION REQUIRED BY THE ACT

Certain information and statistics based on the activities accomplished during this period are required by section 5(a) of the IG Act to be included in the semiannual reports. These are set forth below:

Section 5(a)

(1),(2),(7) OIG did not identify any significant problems, abuses or deficiencies relating to the administration of programs. For the purpose of this section, we used the definition of significant as set forth in the Federal Managers' Financial Integrity Act.
(3) Corrective action has been completed on all significant recommendations that were described in the previous semiannual reports.
(4) No matters were referred to prosecutorial authorities. There were no prosecutions. There was one conviction.
(5) No reports were made to the Chairman that information or assistance requested by the Inspector General was unreasonably refused or not provided.
(6) A listing by subject matter is located on page 20.
(8),(9) One audit report issued during this period had arecommendation on questioned costs. The audit report did not identify any funds that could be put to better use. See Tables 1 and 2.
(10) There are no audit reports issued before the commencement of the reporting period for which no management decision has been made by the end of the reporting period.
(11) No significant revised management decisions were made during the reporting period.
(12) There were no significant management decisions with which I am in disagreement.


AUDIT REPORTS BY SUBJECT MATTER

Report Title and Number Questioned
Costs
Unsupported
Costs
Ineligible
Costs
Funds To
Be Put To
Better Use
ADMINISTRATION
Audit of Monitoring the Computer Maintenance Contract, OIG-AMR-34-02-01 $9,263 0 $9,263 0


Table 1 -- REPORTS WITH QUESTIONED COSTS

  Dollar Value
  Number of
Reports
Questioned
Costs
Unsupported
Costs
A. For which no management decision has been made by the commencement of the period 0 0 0
B. Which were issued during the reporting period 1 $9,263 0
     Subtotals (A+B) 1 $9,263 0
C. For which a management decision was made during the reporting period 1 $9,263 0
(i) Dollar value of disallowed costs 1 $9,263 0
(ii) Dollar value of costs not disallowed 0 0 0
D. For which no management decision has been made by the end of the reporting period 0 0 0
     Reports for which no management decision was made within six months of issuance 0 0 0


Table 2 -- REPORTS WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE

  Number of
Reports
Questioned
Costs
A. For which no management decision has been made by the commencement of the period 0 0
B. Which were issued during the reporting period 0 0
     Subtotals (A+B) 0 0
C. For which a management decision was made during the reporting period 0 0
(i) Dollar value of disallowed costs 0 0
(ii) Dollar value of costs not disallowed 0 0
D. For which no management decision has been made by the end of the reporting period 0 0
     Reports for which no management decision was made within six months of issuance 0 0


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