[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
THE SMITHSONIAN IN TRANSITION
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MEETING
before the
COMMITTEE ON HOUSE ADMINISTRATION
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
MEETING HELD IN WASHINGTON, DC, AUGUST 1, 2007
__________
Printed for the use of the Committee on House Administration
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COMMITTEE ON HOUSE ADMINISTRATION
ROBERT A. BRADY, PENNSYLVANIA, Chairman
ZOE LOFGREN, California VERNON J. EHLERS, Michigan
Vice-Chairwoman Ranking Minority Member
MICHAEL E. CAPUANO, Massachusetts DANIEL E. LUNGREN, California
CHARLES A. GONZALEZ, Texas KEVIN McCARTHY, California
SUSAN A. DAVIS, California
ARTUR DAVIS, Alabama
S. Elizabeth Birnbaum, Staff Director
Will Plaster, Minority Staff Director
THE SMITHSONIAN IN TRANSITION
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WEDNESDAY, AUGUST 1, 2007
House of Representatives,
Committee on House Administration,
Washington, DC.
The Committee met, pursuant to call, at 11:13 a.m., in room
1310, Longworth House Office Building, Hon. Robert A. Brady
(chairman of the Committee) presiding.
Present: Representatives Brady, Capuano, Davis of
California and Ehlers.
Staff present: Liz Birnbaum, Staff Director; Matt Pinkus,
Professional Staff/Parliamentarian; Diana Rodriguez,
Professional Staff; Kristin McCowan, Chief Legislative Clerk;
Ryan McClafferty, Intern; Bryan T. Dorsey, Minority
Professional Staff; Fred Hay, Minority General Counsel.
The Chairman. Good morning, everyone. Unfortunately, we
have a vote on the floor. We will try to get this done as
quickly as possible. I thank you, and I ask for your patience,
and we will get through this. It may take some time, but we
will get through this. Thank you again.
We are in recess. Thank you.
[Recess.]
The Chairman. Thank you for your patience.
I will call this hearing to order. I do have an opening
statement, but for the sake of time factors, we do not know
when we are going to run out; I am just going to ask unanimous
consent to insert that into the record.
[The statement of the Chairman follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. I do want to thank Mr. Bowsher and Ms. Doris
Matsui for being here. I have had meetings with her, and we
have had many discussions, and I thank you for your energetic
participation and interest in the Smithsonian Institution. You
have a good set of fresh eyes. You are there and are extremely
knowledgeable, and I am extremely confident that, as long as
you are there, we are there, and things will be on the right
track. So I do appreciate your being here, and I appreciate
your testifying with all of the other witnesses.
With that, I will recognize the Ranking Member for whatever
statement he would like to make.
Mr. Ehlers. Thank you, Mr. Chairman. Thank you for holding
this hearing. I have a written statement I will submit for the
record. I will try to shorten it because we do not know what
might happen to our schedule.
I certainly appreciate your efforts, Mr. Chairman, to
maintain vigorous oversight of the Smithsonian and of its
operations. As you know, I have long been in support of
conducting activities, such as today's proceeding, to assure
the American public that the ``Nation's attic'' is not being
looted by those who would put personal gain above the interests
of the Institution. In the last Congress, this Committee
conducted an oversight hearing into Smithsonian Business
Ventures in what would turn out to be a prophetic concern about
the museum's financial operations.
I am most pleased to see that, although the gavel may have
changed hands since that time, the committee remains steadfast
in its resolve to increase its oversight of the Institution.
While it would be easy to go through the laundry list of
past excesses and abuses of power that were widely reported to
have taken place within the museum, instead I would like to use
today's hearing to begin refocusing on the future of the
Smithsonian. We have already seen evidence of the positive
steps being made toward a stronger governance by the Board of
Regents into the museum's operations. The Board's increasingly
``hands-on'' role in these matters is an important line of
defense in safeguarding the Institution and a crucial first
step towards fully restoring the museum's health. I am just
absolutely delighted with the efforts that the Board has made
in the reexamination of itself and in the steps it has taken.
That does not resolve all of my concerns, but I will get to
that in just a moment. They are to be commended for the
tremendous amount of work, and good work, that the Board has
done in self-examination and in its examination of the role of
the Institution.
I also want to commend Congresswoman Matsui, who has done
yeoman's work on this. When she reported to us informally last
month, I was in complete accord with what she was saying
because it is exactly what we had been finding out and saying
last year. It is unfortunate that it had to come to that
impasse before the period in the press when everyone got all
excited about it and before everyone woke up, but we have made
very good, strong, positive progress.
In addition to the increased oversight activities of the
Board, I have been pleased with the Smithsonian's Inspector
General, Sprightley Ryan, who, I think, has again done yeoman's
work or yeowoman's work in conducting a number of audits into
various facets of the museum's operations. I appreciate that.
This is a very good step forward and has been enormously
effective in providing increased transparency.
What I am interested in hearing today and what I would like
to hear from our witnesses today is what part they believe this
Committee may play in restoring public trust in the Smithsonian
and in its leadership. In other words, you have done a good job
to try to restore public trust. What can we do to help you?
What role should we play in helping you restore that public
trust? I think we are a long ways from being ready.
Also, I want to make it very clear that I still have
continuing concerns, not about the Board and its structure, but
about the internal operations of the Smithsonian. In other
words, if you regard the structure as a pyramid, which we
frequently do in the government and in the corporate world, we
have done a good job of taking care of the top and of the peak
of the pyramid. The Board is perhaps the peak of the pyramid.
There are a lot of operations below that, I think, need
inspection and clarification. In particular, I hope the
Inspector General will vigorously pursue those activities.
There was a hearing last year and extensive study about the
Smithsonian Business Ventures. One of the reasons given for the
need for Smithsonian Business Ventures is that the Board and
the management were too busy to deal with all of the details,
so they needed something else to run it properly. I was very
skeptical of that to begin with, particularly the way it was
structured. It turned out that my misgivings were well placed
because the Smithsonian Business Ventures did not really
improve the operations at the lower levels as far as I could
tell.
So I hope that Ms. Ryan and the Board will continue to
pursue all facets of the operations of the Smithsonian. We want
a squeaky clean, shiny, well-running operation from the top of
the pyramid to the bottom. I think a crucial part of that is
that the Inspector General now reports directly to the
administration and to the Board and works with them. That is a
good step forward, so that the employees all the way up and
down the chain know that the Inspector General speaks from the
top level of the administration of the Smithsonian.
So I commend you. Though I still have concern, and I am
sure that factor will be addressed, but I am anxious to hear
the remainder of the testimony.
Thank you again, Mr. Chairman, for calling this hearing.
[The statement of Mr. Ehlers follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you. You are welcome.
Mrs. Davis, we thank you for being here. Do you have any
opening remarks? Thank you.
Today, we will start discussing the recommendation to
reform committees and discussing where we go from here. I am
pleased to have two of the prime movers in the Smithsonian
reform with us today. Our colleague, Doris Matsui, is one of
six Congressional Regents. She has taken a leading role with
the Regents in recommending revisions to the Institution's
governance procedures. I have spent time with Ms. Matsui,
learning about these issues. She cares enormously about this
Institution, and she has taken her work here very seriously,
with good results. I am confident that the Smithsonian will be
stronger because of her service.
Charles Bowsher was Comptroller General of the United
States from 1981 to 1996. He ran the GAO, Congress's chief
investigative and auditing arm. He was asked by the Regents to
form the Independent Review Committee. Their report reviewed
the controversy surrounding former Secretary Small, and it also
made numerous recommendations to reform the Institution.
We welcome you both. The full text of your written
testimony will be attached and inserted into the record. I
thank you again.
We will begin with Congresswoman Matsui.
STATEMENT OF THE HON. DORIS O. MATSUI, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Matsui. Thank you, Mr. Chairman.
Thank you, Ranking Member Ehlers and distinguished members
of the Committee.
It really is an honor for me to represent a historical
institution such as the Smithsonian, often revered as a
national treasure during this important phase of transition.
This transition will result in a new secretary, an improved
governance structure and a stronger relationship with Congress
and the American people.
I am pleased to serve as a representative of the Board of
Regents in front of my colleagues. My fellow Regents and I have
done an immense amount of work to ensure that the Institution
operates as a public trust, following only the highest ethical
standards, and conducts its business with an increased ethos of
transparency. I know there is a lot to discuss, and I will make
my remarks brief.
Although I am a new member to the Smithsonian Board of
Regents, I was asked to be a part of the newly formed
Governance Committee because of my experience. I have served in
the Federal Government as both an elected and as an appointed
official. I also bring expertise from the nonprofit sector
having served on numerous boards such as that of a public
television station in Sacramento, California. Here in D.C., I
have sat on the boards of Meridian International Center, the
Woodrow Wilson Center and the Arena Stage.
The Governance Committee was vigorous and thorough in its
investigation. We reviewed the Smithsonian Institute's
governance practices, compared them to best practices of
similar institutions and provided recommendations based on the
shortcomings we found. We were also informed by leaders and
experts in the nonprofit sector.
During 12 weeks of extensive factfinding, discussion and
deliberation, the Governance Committee scrutinized the inner
workings of the Regents and their oversight functions at the
Smithsonian. In addition to weekly meetings, we spent countless
hours reviewing documents and materials on best practices and
landscape analysis of comparable institutions. We then compared
these to the current Smithsonian policies.
These 3 months of intense efforts culminated into 25
recommendations that were adopted by the Board of Regents on
June 18th. In our opinion, each is a critical part in
revitalizing and reforming Smithsonian's Board as well as the
senior management to ensure effective oversight, accountability
and transparency. Let me take a moment to list several key
proposals explicitly, most of which have already been
implemented.
Our report recommended a new policy that prohibits senior
staff from serving on corporate boards. We have also
recommended that Smithsonian formalize its observance of the
Freedom of Information Act. Other changes included adopting a
Smithsonian-wide leave policy and strengthening direct access
to the Regents for the Institution's gatekeepers--the Inspector
General, the General Counsel and the Chief Financial Officer.
We have created a Web site, a real Web site, that makes
available the Board's meetings, agendas and minutes. We have
also recommended that the Smithsonian convene a public forum
each year. The Board is also undertaking an audit of Mr.
Small's expenses as well as analyzing criteria for making
future nominations to the Board.
Our report also recommends that the Board review its
composition and size, executive compensation policies,
committee structure and underlying charters by early 2008.
Finally, we have recommended and the Acting Secretary has begun
the process of reviewing the Smithsonian Business Ventures'
charter structure and options for the future.
These recommendations are but a start. We are working
closely with the Smithsonian staff, Members of Congress and the
public toward this goal. In fact, since our report was
released, we have been working toward implementing our
recommendations and have created a scorecard that is publicly
available on our Web site. It outlines the work we have
accomplished and the schedules of work that is in progress.
In addition, at our most recent meeting, the Governance
Committee adopted changes to our bylaws that will allow for the
election of our first chair to the Board at the September 17
Board meeting. This was both the recommendation from the
Independent Review Committee and from the Governance Committee.
The Independent Review Committee, headed by Chuck Bowsher, who
is seated next to me, released their report on June 18, 2007.
Both reports have since been used as momentum for future action
to resolve governance problems at the Smithsonian and to
restore the public's trust in this valuable institution.
Mr. Chairman and Ranking Member Ehlers, allow me to close
with the following quote from Helen Keller:
``character cannot be developed in ease and quiet. Only
through experiences of trial and suffering can the soul be
strengthened, vision cleared, ambition inspired, and success
achieved.''
While I do not think she was specifically speaking of an
institution such as the Smithsonian, it is certainly fitting.
The Smithsonian has a life of its own, replete with stories of
America's past and visions for its future. This experience has
strengthened the Board of Regents' resolve to preserve and to
promote the mission of Smithsonian into the 21st Century, and I
believe that we are actively moving in that direction.
I thank you very much.
[The statement of Ms. Matsui follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. I thank the gentlelady, and I thank you for
your diligence and for your hard work, and I feel extremely
safe that you are overseeing and that you are right there on
that Board of Regents. Thank you.
Ms. Matsui. Thank you.
The Chairman. Mr. Charles Bowsher, we have a 10-minute call
before we go for a vote. That gives you a good 5 minutes, if
you think you can do that, and then we will come back for
questions. If not, we will give you a full 10 minutes, whatever
you think you want to do with it.
Mr. Bowsher. You would like me to summarize in 5 minutes?
The Chairman. That would be nice.
Mr. Bowsher. Yes, I will do it.
The Chairman. Thank you.
STATEMENT OF CHARLES A. BOWSHER, CHAIRMAN, INDEPENDENT REVIEW
COMMITTEE, SMITHSONIAN INSTITUTION
Mr. Bowsher. Okay. I just would like to say that I am
pleased to be here. The Independent Review Committee came to
its task with a deep affection for the Smithsonian Institution,
and it is our hope that our report will help the leadership of
the Smithsonian, both the management and the Board of Regents,
to become more effective than they have been in the past.
I think that the problems of Mr. Small's compensation and
his expenses have been well-documented, and I am not going to
go into a lot of detail, but they were actually quite
excessive. We also found that Mr. Small and his deputy spent a
lot of time away from the Institution. We certainly think the
deputy was a very hardworking woman but you have to have some
management people there when you need decisions to be made, and
we really do believe that this was a problem.
We think the oversight by the Board was antiquated. It was
not up to what current organizations are expecting, but we
think this can be improved. In other words, there is no reason
why the problems in the oversight by the Board and also by the
management cannot be changed, and we are very pleased by the
positive reaction of the Board. We also had a meeting even just
this morning with the Acting Secretary, and I think things are
moving ahead.
Adding to what Congresswoman Matsui has said here, I think
things really are moving in the right direction, and they
certainly accepted our recommendations as we presented them to
the Board of Regents. So we are optimistic that things are
going to move in the right direction.
To go back to the issue that the ranking member raised, I
think it is up to your Committee to periodically have hearings
like this to find out how things are really going and to make
sure that progress is being made on the recommendations of the
Governance Committee and the Board of Regents and as the new
management takes over and provide new leadership.
So, with that, I will stop, and I would be willing to
answer any questions.
[The statement of Mr. Bowsher follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you so much.
Again, we apologize, but we must go to the floor for a
vote. If you can indulge us and stay a little while, we will
have some questions when we return.
Mr. Bowsher. Sure.
The Chairman. With that, we will recess.
[Recess.]
The Chairman. I would like to call the hearing back to
order. We will now proceed with questions for our panelists.
Thank you again for being here.
Congresswoman Matsui, in asking this Committee and the
Congress to change the law to implement the recommendations of
the Governance Committee and of the IRC and of any other
reforms the Board of Regents wants to make, on which subjects
and recommendations do you foresee coming back to us with in
order to prepare us a little bit?
Ms. Matsui. What I would like to tell you is that we are
trying to move forward as quickly as possible, and of those
recommendations that we have had out there that we can handle
administratively, we are doing that, and we are changing some
bylaws in order to accommodate some of this.
I must say that a lot of the other things that we are
talking about, such as Board composition structure, would take
deeper study, consulting with constitutional people and
historians about the real purpose of how the charter was
developed. James Smithson endowed us with the money to create
the Smithsonian Institution in 1829, and then, in 1846,
Congress established the Smithsonian Institution and really
designated the Board of Regents and the secretary to oversee
it. So there is a lot of history and purpose that was developed
here. So we are taking the time, not a lot of time, but enough
time so that, by the end of the year, we can make
recommendations.
In order to do some of the changes that we believe are
appropriate, we will need to change the charter, and that would
mean like if we wanted to add a couple more Regents or to
change, for instance, the size of committees, and we do not
believe we should do that piecemeal. So, therefore, we believe
what will happen is that we will go through our studies so
that, by the end of the year, we can come back by the beginning
of the year, perhaps with some recommendations to the Congress,
so that would be, therefore, to your Committee.
The Chairman. Thank you.
One last question regarding the Smithsonian Business
Ventures. What is your feeling on that?
Ms. Matsui. Well, my feeling on that, as you will hear from
the Inspector General, who is here, is it is something where we
believe and where we have found that there were some gross
problems there, and it was certainly--I would like to call it a
``misadventure'' to a certain degree, and it was allowed to
operate on its own.
What we have decided to do, as one of our recommendations,
is to bring it back under the umbrella of the Smithsonian and
to establish that they will have to adhere to our Smithsonian
policies widely held. So, therefore--the Acting Secretary will
be coming up and explaining what he will be doing here--we are
taking a good, hard look at this, but we are not stopping at
the same time. We have a new acting CEO who will be taking over
as of today, who will be moving forward and will be working
with the secretary on the changes that will have to be done.
The Chairman. Thank you.
Mr. Bowsher, thank you for all you have done in oversight.
We need your help and your input.
Are there any recommendations that you have received any
resistance to?
Mr. Bowsher. No. We were very pleased. We briefed the Board
of Regents at a half-a-day meeting, and even at that initial
meeting--and that was before we even released the report--we
found a great deal of acceptance, and then when we saw the
recommendations of their Governance Committee, we saw that it
was moving in the same direction as many of ours were. So we
have been very pleased with the acceptance of our
recommendations by the Board of Regents and by the Acting
Secretary. I think that is a big plus because, when you do a
review like this, sometimes you do run into resistance, and we
did not, not so far in this case.
The Chairman. Thank you.
Are there any skills that you think ought to be added to
the Board that they may be lacking? Are there any people with
certain skills that you think should be added to the Board?
Mr. Bowsher. Yes. In other words, one of the things that we
think is lacking is the fact that--you know, in the corporate
world, one of the things that was lacking big time was that the
people who were serving on the audit committees were not really
qualified. The Sarbanes-Oxley legislation changed that by
requiring that there be a financial management expert among the
board members serving on the audit committee. That is the kind
of expertise that we think is needed on the Board of Regents.
Also, we do believe there are two or three areas, like in
construction and areas like that, and background in museums is
needed. You have got to get the right mix today on your Board
of Regents just like in the corporate world. We think that, as
the openings come to the Board, this is something that the
remaining Board of Regents has to give a lot of consideration.
The Chairman. Thank you. Thank you for your participation.
Mr. Ehlers.
Mr. Ehlers. Thank you. Yes, I have several questions.
First, Representative Matsui, I thank you, again, as I did
earlier, for your excellent service and for all of this work.
You described a minute ago, in response to the chairman's
question, the possible need for statutory changes. Are you
proposing to prepare those and to present them to us, or do you
want this to be a cooperative project where we work together
with you to develop these statutory changes? What are you
envisioning on that?
Ms. Matsui. Mr. Ehlers, what I envision on this is that
what we find today is a more transparent way of operating
amongst the Board of Regents, certainly, and we feel it is
really important to inform the Congress about the direction we
feel we would like to go. Now, we are going to be reaching out
to Congress, to our stakeholders and to experts in the
nonprofit world to look forward to see what is necessary to
change. So, definitely, these will not be recommendations that
you will be surprised with at all. We will be consulting with
you along the way also.
Mr. Ehlers. All right. I think that will be good simply not
because we are trying to run the show but because it will ease
the legislative process if we simply work together on it.
Do you have a timetable set up? Do you have any idea when
you will be coming forward with some ideas?
Ms. Matsui. Well, we feel that we will take the rest of the
year to formulate our recommendations and to do our outreach on
many of these tougher items, and we hope that, by the beginning
of the year, we will be ready. In some of these cases, we
believe we can handle them administratively with the bylaws
process, but if, in fact, we do feel like we need to--we have
17 members on the Board of Regents, for example. If we want to
expand it by two or three more, we will have to come back to
you. The executive committee right now is three people. We
believe that is too small. Now, we can expand it informally,
but we might feel that, if, in fact, we have to go and change
the charter, we might look at everything that we may feel needs
to be changed so we can do it in one fell swoop. So I believe
that, by the beginning of next year, we will have some
recommendations, and we will certainly work with you as we move
forward if need be.
Mr. Ehlers. Thank you. Thank you also for your emphasis on
transparency, which is sort of a code word these days. Everyone
is using it. I was appalled last year when I was chairing this
Committee. I simply asked for a look at the SBV charter and
contract, and they would not give it to us. We literally had to
browbeat them just to get the parts of the contract and it was
heavily redacted. In the government, everything has to be
transparent.
Ms. Matsui. That is exactly my message.
Mr. Ehlers. That is the rule we work by. I could not begin
to understand how the Smithsonian Secretary thought that he
could avoid that.
You mentioned the Smithsonian Business Ventures and a new
role for them. My question is, why have them at all? I was very
suspicious about the setup. When it was described to us and we
saw the contract, it looked like it was being set up primarily
to avoid government regulations. There were so many things they
wanted to do and wanted to be able to pay the employees more
than they normally would be paid in government positions. I
could not find a useful purpose for this group that could not
be accomplished by the Smithsonian itself running its business
properly.
I am not objecting to contracting out for concessions and
things of that sort, but to set up a separate business arm
seems, to me, as an unnecessary duplication. I am not aware of
other government agencies that do that. For example, NASA, I do
not think sets up a separate business for all of the ventures
they have in the operation of the Space Center for tourists and
things of that sort. These are things that can be contracted
out.
Can you make a good case for even keeping the Smithsonian
Business Ventures?
Ms. Matsui. Well, Mr. Ehlers, certainly the acting
secretary is doing a very sensitive study about this.
My feeling about this is that the Smithsonian is composed,
as you know, of a wide number of institutions--museums, the zoo
and research institutions--and I think it was an attempt to
bring the revenue portion of the private side under one
umbrella. Now, there are different ways to structure that, and
I believe that there were mistakes made, and I have, certainly,
heard much criticism from the Board of Regents, itself.
So, therefore, I am not yet convinced of what needs to be
done there at all. I do know, though, we need to look at it. We
may have to pull it apart and put it together again in a much
more reasonable way, and that is something that the Board of
Regents is going to be very, very much involved with. The
Smithsonian Business Ventures has been allowed to sort of
operate on its own. No longer will that be true. We will have
oversight over it.
Mr. Ehlers. Well, at the very least, change the name. I do
not want that heritage living with it.
Ms. Matsui. Exactly.
Mr. Ehlers. I would encourage the Board, as they go through
this, to just start de novo and ask the simple question, Do we
even need it? The even more important first question is, What
do we need?
Ms. Matsui. Right.
Mr. Ehlers. So throw Smithsonian Business Ventures out the
door and say we are going to start over. Maybe you will end up
with something similar to it. Maybe you will end up with
something quite different. Maybe you will end up with nothing
like it. That is fine. Given all of the problems of its
conception and its founding and its history, I would certainly
think you would be well advised to just get rid of it and to do
a study of what you really need there. Do that, and get away
from another one of the many mistakes of the past.
Mr. Bowsher, as I said to you earlier in the hallway, I
deeply appreciate your interest, your time, and your
willingness to work on this. I appreciate the contributions
that you have made. I believe the Board has begun implementing
all of the Governance Committee's report recommendations by
Congressional hearings and so forth. It is a lot of activity, a
lot of good activity.
Do you think anything else needs to be done?
Mr. Bowsher. No. As to the recommendations that we have in
our report of what their Governance Committee has, I think if
those are properly executed and implemented and done.
So, by early next year, I hope there will be a lot of
progress, and those are the issues that we have in the report.
We did not hold anything back, when we issued this report.
Mr. Ehlers. Well, I think it is a very good report, and I
am pleased with the progress that has been made. I do not have
any specific question. I have, perhaps, I guess, just one
public relations question.
Do you think that all of this activity--and do you have any
evidence for this--has restored the public's trust?
Mr. Bowsher. Do I think it will restore it?
Mr. Ehlers. Or that it has.
Mr. Bowsher. Oh, I think it has started to restore the
public trust, but I think, in the final analysis, only if you
successfully carry out the reforms will you be able to do it.
So I think that we have to wait, and I think that is the role
of the Congress, to hold hearings next January or February to
just see how things have worked out.
Mr. Ehlers. Okay.
Mr. Bowsher. I am very hopeful at this point in time. Yes.
Mr. Ehlers. Just another question. I commented earlier
about the need to continue the investigation down the rest of
the pyramid. You have been in the business for many years.
Do you concur with that?
Mr. Bowsher. Yes, I think there are areas, and I think the
acting secretary, in some of our discussions with him, is
thinking of that in certain other areas. There are certain
areas that need further review, and we did not review the
Smithsonian Business Ventures, but we did say in our report
that we had heard that there were a lot of problems over there,
that we thought there was a problem with the oversight. I think
that the report that has just come out yesterday, it is a good
area that, of course, is an illustration of an area that needs
to be fixed.
Mr. Ehlers. I truly think it was an attempt, and I do not
normally assign ulterior motives to people, but I truly think
there was an attempt to keep a lot of it away from the Board,
and that it was set up specifically to do that. Just the fact
that the Board was not even given a full opportunity to review
and to approve the contract is evidence of that.
Thank you very much. Both of you have done a marvelous job.
I yield back.
The Chairman. Thank you.
Again, I thank both of you for your dedication, and I thank
you for your participation on this important issue and
important matter. Thank you.
Ms. Matsui. Thank you.
Mr. Bowsher. Thank you very much.
The Chairman. This concludes our first panel.
We would like to hear now from our second panel.
STATEMENT OF CRISTIAN SAMPER, ACTING SECRETARY, SMITHSONIAN
INSTITUTION; AND ANNE SPRIGHTLEY RYAN, INSPECTOR GENERAL,
SMITHSONIAN INSTITUTION
The Chairman. Dr. Cristian Samper was appointed acting
secretary in March of this year by the Board of Regents after 6
years at the Smithsonian.
Sprightley Ryan has worked at the Smithsonian since 2003.
She was appointed Inspector General in 2007.
We welcome you both. The full text of your written
statements will be attached and will be inserted into the
record.
We would like to begin with Secretary Samper.
STATEMENT OF CRISTIAN SAMPER
Mr. Samper. Thank you very much, Mr. Chairman and Mr.
Ehlers. Thank you for the opportunity to testify before this
committee.
I want to assure the Committee and the public that the
Smithsonian is moving forward with a thorough and a vigorous
agenda, as you have heard, and in my sense, we have definitely
turned a corner, and there is no turning back, and the
transition, as the title of this hearing implies, is well
underway.
But we clearly have a lot of work ahead of us, so I would
like to explain a few of the things that we are doing and
reassure you that I am confident the Smithsonian will emerge as
a stronger institution as a result of this process.
Ever since I became acting secretary 4 months ago, I have
focused on three main priorities. The first one is
strengthening the public trust in the Institution, as Mr.
Ehlers was suggesting. The second is working with our Regents
to improve the governance, communications and accountability of
the Smithsonian, including transparency. The third is making
sure that we continue furthering our mission through our work
and through our research and museums and education programs.
As you just heard and as you know, the Board of Regents has
adopted 25 recommendations for governance, and they are very
much in sync with the recommendations of the Independent Review
Committee. The majority of the work is well underway. Of the 25
recommendations, we have already fully implemented 5. We
estimate we will have completed about 17 by September and all
but one of them by the end of the year, so we have a very
aggressive movement forward. I have established a task force
with Smithsonian staff from both central administration and
from the museums to help us move forward and to make sure we
get everything done. And we are keeping a public monthly
scorecard of our progress on every one of those 25
recommendations. That is available on our Web site.
The Inspector General has also been working on issues
relating to Smithsonian Business Ventures, and that is one of
the areas that I have started to take a closer look at.
Effective today, Smithsonian Business Ventures has a new
leader, and I have appointed Tom Ott, who is the president and
the publisher of the Smithsonian Magazine Group, as the acting
CEO of Smithsonian Ventures. I am doing this in parallel with
having established a task force that is reviewing the broader
strategic issues about Smithsonian Business Ventures and its
activities. We can discuss more about this.
Our overall goal is much more than just to fix some of the
past problems. Our goal is to make sure that we become a leader
in good governance and that we have a stronger institution for
the future for our children and for our grandchildren.
Throughout this transition period, thanks to our dedicated
staff and to our volunteers, the vital work, the mission of the
Smithsonian, has continued forward. I just want to mention a
few, Mr. Chairman, because it is important not to lose sight of
them, with just three examples.
The scientists at the National Zoo have been monitoring the
populations of birds on the eastern coast of the United States
and have identified, having long-term data, a sharp decline in
populations of many of them. And we have now tied that with the
introduction of the West Nile virus.
The National Museum of Natural History has announced a
partnership to launch an online Encyclopedia of Life, which
will produce a Web page for every species we know on the planet
that will be available for free to every student across America
and to the world.
The renovations at the National Museum of American History,
including the glorious new home for the Star-Spangled Banner
and the plans for the National Museum of African American
History and Culture, are moving well ahead.
Unfortunately, in this process, one of the problems that we
have faced is the facilities maintenance problem, and this is
one issue that we have clearly identified. And it is
fundamental for us to look at our collections, our visitors and
our research.
The Smithsonian owns or leases more than 700 buildings or
other structures. Some of these buildings are new, and some of
them are 150 years old or many decades old, and both the
National Academy of Public Administration and the GAO have
looked into this matter and have underscored its seriousness.
As you know from prior reports, the GAO has said that the
current funding levels are insufficient to provide what we
estimate to be a $2.5 billion backlog that is really required
to fix and to maintain the Institution's facilities over the
course of the next years. Given the current funding for
facilities' upgrades and maintenance, which is about $150
million a year, what we are looking for are ways to come up
with an additional $100 million a year beyond the current base.
As you know, we had to close the Arts and Industries
building last year because of the decline in condition and
because of the fact that it actually represented health hazards
and safety hazards for some of our visitors and staff. We are
working diligently in trying to explore options related to the
Arts and Industries building, but we estimate it would cost
somewhere on the order of $70 million just to upgrade the
building, the roof and the systems to get it to where it should
be.
I would welcome your comments regarding the future of this,
and as you and your committee know, one of the options that we
are considering at this point is issuing a request for
qualifications of a public-private partnership that would allow
us to secure the funding to do this in a way that would be
fully compatible with our mission.
The Smithsonian tells the story of what it means to be an
American, and it also provides a picture of America to the rest
of the world. In cooperation with the Congress, the Smithsonian
will move ahead with its ambitious plans and continue to
safeguard America's treasures, to lead the pioneering research
and to provide new educational experiences, and as we do, we
must also look to the future and contemplate how this great
institution will serve our country and the world and the
generations ahead of us.
Thank you very much, Mr. Chairman, and I look forward to
answering your questions.
[The statement of Mr. Samper follows:]
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The Chairman. Thank you.
Inspector General Ryan.
STATEMENT OF ANNE SPRIGHTLEY RYAN
Ms. Ryan. Thank you. Good morning. I appreciate this
opportunity to give you my views on the recommendations of the
Smithsonian Board of Regents' Governance Committee and the
Independent Review Committee, or IRC, as they affect the
operations of my office.
In April, I testified to your counterparts in the Senate
about governance issues, including impediments to effective
oversight and the need to improve accountability. I questioned
whether the Regents had adequate information for meaningful
oversight, and I questioned whether the Institution adequately
considered its fiduciary duty when spending Smithsonian funds.
Since that time, the Governance Committee and the IRC have
explored these and other governance issues in-depth. We
strongly endorse their conclusions and recommendations. Indeed,
some of the IRC's report is based on data we generated and
reported in our two audits of executive compensation and in our
review of the secretary's expenses. I would also note that the
Government Accountability Office has studied Smithsonian
governance as well at the request of the Senate Rules
Committee.
The Smithsonian Regents and management have taken
significant steps to address the critical weaknesses in
oversight and accountability. While I think it is premature to
judge this work in progress, I can report on the
recommendations relating to my office, which cover access,
compliance reviews and the level of our resources.
In the first area, the Governance Committee's
recommendations recognize the important role the Office of the
Inspector General plays in oversight and accountability. The
Regents have committed to strengthening our office, welcoming
unfettered communication on any matter we deem appropriate. At
the Regents' Audit and Review Committee meeting in early
September, we will be working to formalize the reporting
relationship of our office to the Board so that our role is
embedded more firmly in the governance structure.
I am pleased to report that our office will be moved back
downtown, likely by year's end, easing our access not only to
management but also to core facilities and employees.
The recommendations also ask that we conduct regular
reviews to monitor compliance with new policies such as those
on executives' and Regents' travel and business expenses. We
will also try to examine the policies themselves, which are
still evolving, to make sure that they appropriately safeguard
the Institution's limited resources and reflect its nonprofit
status.
Finally, the Governance Committee directed the Audit and
Review Committee to determine whether our resources are
adequate. As the IRC noted and as we have long maintained, they
are not. Our staff, which is currently authorized at 16
positions, has declined from a high of 24 in the mid-1990s,
although the Institution's appropriations and number of museums
has increased during that time.
Currently, in addition to the new requests under the
committee's recommendations, we are required to oversee the
annual financial statement audits of the Institution and IT
security reviews under the Federal Information Security
Management Act. We are about to issue audit reports on retail
operations at the zoo and how the Institution has handled
employee relocation expenses, and we are working on an audit of
revenue contracts with Smithsonian Business Ventures, and we
are beginning one on workers' compensation at the Institution.
There are additional high-risk areas that we need to
address, such as the multi-million dollar capital projects that
are going on, financial reporting systems and internal
controls--and that goes back to what the ranking member was
saying as to going below the top level of management--
facilities maintenance, and following up on animal care issues
at the zoo, to name a few, and that does not even include our
investigative work.
Nonetheless, we are more optimistic now that our resources
will begin to match the Institution's oversight needs. Just
last week, we learned that management had agreed to forward our
request for five new positions for fiscal year 2009. Of course,
much will depend on OMB and congressional appropriators.
In sum, governance reform has begun in earnest, and the
signs are encouraging. The real benefits will come with the
comprehensive implementation of the committee's
recommendations, as Mr. Bowsher noted. The strengthening of our
office promises better oversight of and therefore more
confidence in the Institution. We look forward to providing you
with further updates on this progress.
Thank you.
[The statement of Ms. Ryan follows:]
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The Chairman. Thank you.
I have a question for the Secretary.
As to the Arts and Industries building, you are currently
considering entering a redevelopment with a private-public
partnership. Who would occupy it? Who would be leasing it? What
would happen when that lease is up?
Mr. Samper. Well, that is precisely one of the issues that
we want to look at, Mr. Chairman.
There are a number of activities for which the building
could be used, and it will depend on possible interest. One of
the original designs was to strengthen the visitors' service
for the whole Smithsonian and to expand some of the facilities.
The question is, we could either do it entirely with Federal
funding in getting it there, which will be a fairly expensive
proposition, but it is one of the possibilities. The
alternative is to see if there is some compatible partnership
that would allow us to secure private funding to do it in a way
that we could occupy and maybe enhance some of the visitor
experiences. Our proposal specifically is to go ahead and, as
discussed and approved by the Regents, to issue a request for
qualifications, not a full request for proposal, but to see who
is interested and what kind of projects will be most
interesting and would be relevant and consistent with the
mission.
So that is our proposal. We have provided your staff with
the full text of the proposal, and we would welcome any
feedback you have in terms of that so that we could move ahead,
and of course, we would be letting you know as we get the
results of that before we proceed with any activities or
partnerships.
The Chairman. We would appreciate that very much.
Mr. Samper. Absolutely.
The Chairman. Fees. Where are your thoughts on fees? I
think you know where mine are. I do not want to charge people
to go to the Smithsonian.
Mr. Samper. I think one of the things that makes the
Smithsonian a great institution has been the fact that it
belongs to every American. We acknowledge that it is supported
by Federal taxes, and therefore, we have provided free
admission. In my view, that is one of the things that makes the
Smithsonian a very important institution. So, clearly, my
preference is to have no fees.
We have, on an occasional basis in the past, charged fees
for particular special exhibitions, and that is something that
we do sometimes regarding particular exhibitions that come from
outside whose particular projects may have very high
maintenance costs. So it is something that we are looking at,
and unfortunately, we have had to look at some of those because
of some of the constraints we have had on our budget for these
exhibitions. That is where I am, Mr. Chairman, and I hope we
are on the same page.
The Chairman. When you say you will not charge anybody, we
are on the same page.
Mr. Samper. Okay.
The Chairman. I appreciate that.
Mr. Ehlers, any questions?
Mr. Ehlers. Thank you. I am sorry that I had to step out
for a moment. The first question relates to both of you.
I appreciated your comment, Ms. Ryan, about your offices
being relocated to the main administration building. I did not
even know you were not. Obviously, there is an advantage to
being there, not just administratively but for little clues you
pick up from people you meet in the hallway.
Now, the recommendations have been made. This is directed
to you, Mr. Samper. The crucial part is how the information
gets from the Inspector General to you and what you do with it.
As you know, I have an academic background. I remember a
college president who told me once that, when he took office,
the first thing he did was walk over to the I.G.'s office and
say, ``I do not care what you find. If it is wrong. Whatever it
is, you come to me before you talk to anyone else.'' He wanted
absolute, direct, immediate communication with the I.G. It
served him well. It turned out, because one of the chief
financial officers was doing some hanky-panky with the money,
and the I.G. went right to him and addressed the whole issue.
If they had not had that structure, it would have been in the
newspapers for a week. I am not saying you have to do that, but
it is very important for you to be in direct communication even
though you are also under the spyglass as well.
Also, I am wondering what you are going to set up to handle
the recommendations of the Governance Committee, IRC, and the
IG, because a lot of these things involve long-term
recommendations and actions. What processes will you use to
deal with that?
Mr. Samper. Thank you, Mr. Ehlers.
You are absolutely right, and I am happy to report that I
am in regular communication with the Inspector General. We
actually have a regular monthly meeting, and then, on
particular studies, we will be in contact about how they are
evolving. I certainly find that it has been helpful, and one of
the things I decided when I became acting secretary was to go
over to the Inspector General's office in Crystal City and meet
with her and learn a little bit more about particular concerns
I had with regard to Smithsonian Business Ventures and other
areas. So I think we do have that communication. As you know,
with the change in reporting, the Inspector General is
reporting now directly to the Board of Regents, and she meets
with them in executive session when any issues come up. So I
think we have got that--that is my sense--and I will certainly
look at that going forward.
In terms of tracking the recommendations--because you are
absolutely correct; some of the recommendations are fairly
straightforward and simple to implement, and others will take
longer to implement. We have a tracking system for all of the
open recommendations that we monitor quarterly, and we see
exactly where we are with those, and we have closed many of
them, but some of them will be there for a number of years.
Just to mention one I am familiar with from my previous role as
director of the Natural History Museum, improving the
collections care for the National Museum of Natural History is
something that is contingent on the funding and will take many
years to complete. Therefore, that recommendation will remain
open for several years. So we are doing that. I think, overall,
it is working well from my point of view.
Mr. Ehlers. All right. I am very concerned about your $2.5
billion facilities maintenance backlog. Unfortunately, that
frequently happens in government. When I was in the State
legislature, I was convinced that most of the universities did
that deliberately when they wanted a new building. Of course,
when the legislature did not want to give it to them, they
would just stop maintaining the old one until it was ready to
collapse. Then the government would come in and proclaim an
emergency and give them $1 billion for a new building.
I am not accusing you of that, but the pattern is too
familiar. In the public sector, we tend not to take care of our
properties and maintain them the way we should. I do not know
how you are going to address that, but that is a crucial issue.
Your board is going to have to be active in fundraising, and we
are going to have to do our part, too.
You have just completed a review of the compensation and
expenses of the CEO of the Business Ventures. What are the
findings? Can you put them into context for us with regard to
your other work on this SBV operations?
Mr. Samper. Mr. Ehlers, in terms of mentioning the finding
and the report you are referring to, which was done by the
Inspector General, maybe we could ask her to provide the
report, and I would be happy to report the management response
to that if that would work for you.
Mr. Ehlers. That would be fine.
Ms. Ryan. Thank you.
We found, summarizing very quickly, as far as the numbers
were concerned, that of the CEO's business expenses for the
period of fiscal year 2001 to 2005--we are going to go back and
do 2006 to the present later this fall--that almost 60 percent
of his expenses did not have sufficient supporting
documentation; 13 percent had virtually none; and 16 percent of
his expenses were unauthorized; which leaves about 20 percent
of his business expenses that were fully authorized and fully
documented to the level required by the IRS to deduct those
business expenses.
So we made a number of recommendations, all of which with
minor tweaking, that the Board of Regents through the Audit and
Review Committee accepted. We asked that the CEO reimburse the
Institution for certain expenses, about $26,000, that he be
taxed on certain amounts for the last 3 years because expenses
that are not supported have to be treated as taxable income
under IRS rules. We also recommended that the Institution
strengthen some of its policies regarding the use of car
service, for example, and regarding the use of what is called
``actual expenses'' rather than ``per diem'' or ``traveling.''
I would consider these to be sort of luxury travel expenses.
The final thing is we asked that the CEO reimburse the
Institution for some outstanding personal expenses on his card
because he used his card for personal expenses when he should
not have.
Now, turning to more general issues, we made a number of
observations about the internal controls, or the lack thereof,
at SBV having to do with the business expenses of the CEO.
There was terribly lax recordkeeping. There were no written
policies and procedures until 2006 about business expenses at
this business even though it had been founded in 1999 and even
though you can pull a business expense policy off the Web very
simply. There was a lack of compliance with travel card
policies, and the Institution, itself, did not engage in
sufficient oversight. People were aware that individuals in SBV
were not using their travel cards properly, people in other
parts of the Institution, but it was allowed to continue. So
those were my final notes.
Mr. Samper. Thank you, Congressman. We have read the report
from the inspector general, and the report went to the Audit
and Review Committee of the Regents, which held a meeting, a
conference call, last Friday. Bottom line is, the Board of
Regents has accepted the recommendations, as have I, and we are
going ahead and following the recommendations in terms of
reimbursements, in terms of taxable income and the others,
immediately.
But I do think that some of the broader issues and some of
the problems that we have had in this area have had to do with
policies and controls. So I have instructed the chief financial
officer to review the existing travel handbook and the policies
to make sure that the Smithsonian Business Venture's travel
policies conform with the Smithsonian's policies.
As you heard from Congresswoman Matsui, one of the things
that has been challenging is that Smithsonian Business Ventures
has had an independent set of policies since it was created in
1999 that don't always match the ones of the Smithsonian; and
we are taking steps to review all of them and to bring them in
line with ours, and any exceptions will be approved by the
Board of Regents directly. So we are moving ahead with that
swiftly.
I think what I would like to stress is that the good news
in terms of the report is that we did not find that any of the
expenditures violated the law or were used for personal gain--
that is the good news--but it clearly revealed problems with
the policies and problems with management. And I am confident
now that with new leadership, with their recommendations and
others', we will start gearing back to have a stronger activity
in that area.
Mr. Ehlers. Well, I guess my problem is, we keep talking
about policies, et cetera. Virtually all of the offenses that
you have described, in many of the institutions I have worked
for, both public and private--and I suspect this is true of the
chairman, that if he did that, those are immediate firing
offenses. And, likely, some of them are illegal.
That is part of my problem; by having an offshoot like that
that can even go wild--where did this come from in the first
place, and why in the world do we want it to continue? Why have
an army that can set its own policies, and particularly if
people are hired? I mean, it is just common sense that if you
have a business expense, you keep the receipt. You keep your
expenses small; you have limits on it. And if the director
doesn't put that up, no employee is going to follow it either.
It just blows me away that any agency like this could
possibly have done that.
Mr. Samper. I don't disagree, Mr. Chairman. And that is
precisely why one of the first steps I took when I became
Acting Secretary was to undertake a comprehensive review not
just of the policies, but of the concept of Business Ventures.
In my view, having a semiautonomous kind of organization within
the Smithsonian has not worked as well as what was expected,
based on what I can read throughout the documents.
So what I have done is, I have appointed a task force,
including several members from the advisory boards of the
museums and some of our staff, to look at the fundamental
questions about this, including what is the role of these
business kinds of activities within the institution? Which of
those makes sense to run directly or outsource? How do you deal
with the revenue-sharing work in museums? And what kind of
governance and oversight should they have?
Our goal is to have that report by the Regents meeting in
November, and it will ask exactly those kinds of fundamental
questions in a way that will help us and guide us forward.
Mr. Ehlers. Well, this seems to me--and I am not going to
ask you to kill Ventures, or force you to do it, but it just
seems to me exceedingly strange to have that type of setup.
Again, my preference, if I were in charge, I would want the
person running that to be in the office next to me so I knew
exactly what was going on all the time. Hire a very capable
business person to run it so that it is run like a business,
but not something autonomous that can go wild as this one has
done.
I think, Mr. Chairman, that is the end of my sermons for
today. Thank you very much for holding this hearing. And I
yield back.
The Chairman. Thank you.
We will be issuing additional questions in writing, and we
will hold the record open for your response. Thank you for
being here.
I know you have had a tough couple years behind you; and
for lack of a better word, you were left with some residue that
you have to clean up. We want you to know that we appreciate
the work you are doing, and we will be here to help you do that
and make sure that we can move forward and make this the gem it
once was.
And I think, and my family thinks, that I have a
conversation with you, and you tell them it is the three
generations--it is the children, the mothers; the grandchildren
and then the grandfathers, you know. And I am reaching that
stage. So we want to make this the gem that I know it is and it
should continue to be.
So I thank you.
Mr. Ranking Member.
Mr. Ehlers. Thanks.
The Chairman. Thank you. This hearing is adjourned.
[Whereupon, at 1:03 p.m., the committee was adjourned.]
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