[Senate Hearing 112-]
[From the U.S. Government Publishing Office]



 
  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2013

                              ----------                              


                       WEDNESDAY, APRIL 18, 2012

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:33 p.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Richard J. Durbin (chairman) 
presiding.
    Present: Senators Durbin and Moran.

                    GENERAL SERVICES ADMINISTRATION

STATEMENT OF DANIEL M. TANGHERLINI, ACTING 
            ADMINISTRATOR

             OPENING STATEMENT OF SENATOR RICHARD J. DURBIN

    Senator Durbin. Good afternoon. Today, we convene the 
hearing of the Appropriations Subcommittee on Financial 
Services and General Government, to discuss the report of the 
Inspector General of the General Services Administration (GSA), 
as well as budget issues facing the GSA.
    I welcome my colleague, Senator Jerry Moran of Kansas, the 
ranking member. I also welcome the Acting Administrator, Daniel 
M. Tangherlini. Did I pronounce that right, Dan? Thank you. And 
GSA Inspector General Brian D. Miller.
    Earlier this year, I made decisions about which of the many 
agencies under our jurisdiction--and we have quite a few of 
them--would actually appear for a formal public hearing for the 
fiscal year 2013 funding needs. GSA was 1 of the 4 that I 
designated, and we started preparing for this hearing some time 
ago.
    The inspector general's recent release of disturbing 
findings disclosing serious mismanagement deficiencies related 
to an internal conference have added a new dimension to this 
hearing. Today, we'll attempt to gain a clear understanding of 
what transpired and what is being done to change it.
    I was outraged and embarrassed to learn about the spending 
that occurred as a result of that conference, and I'm eager to 
hear how GSA will ensure that it never happens again.
    We'll also examine GSA's ability to fulfill its program 
obligations and the future space needs of Federal agencies 
during a time of debt reduction.
    Recently, the Office of Inspector General of GSA issued a 
management-deficiency report detailing an array of highly 
troubling findings resulting from the investigation into a 4-
day internal staff conference held in October 2010. The report 
describes how a host of Federal contracting rules were skirted, 
ignored, or violated in the planning and execution of this 
event.
    Issuance of the report on April 2 sparked the immediate 
resignation of the GSA Administrator and two other key agency 
officials and the imposition of other personnel decisions for 
five other high-level regional management staff.
    It also has generated a flurry of attention here in the 
Congress. I think we're the fourth of four hearings in 4 days 
on this issue.
    Some of the more appalling lapses are not necessarily the 
activities that have caught a lot of media attention, some of 
the sensational events, such as renting a clown costume or a 
session featuring a mentalist.
    What's baffling to me is that there were apparently 
numerous examples of excessive spending and improper adherence 
to contracting rules, brazen finagling of event sessions to 
justify food and other expenditures, multiple occurrences of 
advance long-distance travel to the site and appalling lack of 
adherence to longstanding Federal law about holding Federal 
events in lodging facilities that meet fire-safety 
specifications.
    It's also mind-boggling that somewhere along the way during 
the year of planning for this conference that someone didn't 
say, ``Wait a minute. Isn't this going overboard?''
    What is most regrettable is that incidents such as this 
tarnish the public perception of the workings of the entire 
Federal Government, the services delivered by an otherwise 
dedicated workforce and the stewardship of precious Federal 
funds, taxpayers' dollars.
    In fact, the investigation began because the Deputy 
Administrator of the GSA asked the inspector general to examine 
the matter as soon as two employees mentioned to her activities 
that sounded improper. I expect action to be taken swiftly to 
ensure that all rules are explicitly followed in the future.
    This all contributes to my dismay as to how all of this was 
allowed to happen. And I look forward to hearing from the 
Acting Administrator and the inspector general about the 
situation that led up to these findings and corrective actions.
    While this fiasco in the western regions of the Public 
Buildings Service (PBS) deserves attention it's been receiving, 
and corrective measures, as I've mentioned, there are other 
issues relating to the GSA of importance as well. Those include 
the ability of GSA to fulfill its statutory responsibility and 
to meet the needs of Federal agencies across the board that 
depend on good management.
    Most GSA annual spending comes from a large revolving fund, 
the Federal Buildings Fund (FBF), which finances real property 
management of the U.S. Government. Through this account, GSA 
operates, maintains, and repairs federally owned and leased 
buildings and constructs Federal buildings, courthouses, and 
border stations. It is financed largely through proceeds from 
rental payments from other agencies.
    Prior to fiscal year 2010, typically between 10 and 20 
major construction and repair projects were requested by the 
President and funded. Most of the balance is used for rent 
payments to private landlords and building operations.
    Once debt-reduction efforts hit in fiscal year 2010, those 
accounts were dramatically reduced in order to stay within the 
subcommittee funding allocation.
    As GSA examines where it can spend less, certain bills, 
such as rent and utility charges, must be paid, and those have 
continued to increase.
    The FBF has two contractually obligated bills which 
continue to increase substantially. The biggest and fastest 
growing is the rental of space account and, to a lesser degree, 
the building operations account.
    When GSA does not receive full funding for these accounts 
to meet its contraction obligations, it is legally liable for 
default. Reductions within the FBF also impact other Federal 
agencies.
    I'm going to put the rest of my remarks in the record, but 
I'm going to be asking questions along the lines of what has 
been the impact of these budget and appropriations decisions on 
ongoing building projects that have been stopped or delayed. 
Will it cost us more when we resume? Are we actually saving any 
money by putting off the completion of some of these 
construction projects?

                           PREPARED STATEMENT

    In addition to the requested increases this year, the 
fiscal year 2013 request reduces spending by $16.2 million, 20-
percent less than the fiscal year 2010 levels for certain 
administrative expenses and to keep consulting and advisory 
contract spending levels on GSA operations at $32.8 million (or 
15 percent) less than fiscal year 2010 levels.
    [The statement follows:]

            Prepared Statement of Senator Richard J. Durbin

    Good afternoon. Today, we convene this hearing of the 
Appropriations Subcommittee on Financial Services and General 
Government to discuss the report of the Inspector General (IG) of the 
General Services Administration (GSA) as well as budget issues of the 
GSA.
    I welcome Senator Jerry Moran, the ranking member, and other 
colleagues who have joined me on the dais today. I also welcome GSA 
Acting Administrator Daniel M. Tangherlini and GSA IG Brian D. Miller 
to the hearing.
    Earlier this year, I made decisions about which of the many 
agencies under the jurisdiction of this subcommittee should appear for 
a formal public hearing relating to their fiscal year 2013 funding 
needs. GSA was 1 of the 4 I designated, and my staff have been 
preparing for this hearing for a few months. The IG's recent release of 
disturbing findings disclosing serious management deficiencies relating 
to an internal conference have added a new dimension to our discussion.
    Today, we'll attempt to gain a clear understanding of what 
transpired with regard to the conference held a year-and-a-half ago by 
the western regions of the Public Buildings Service (PBS).
    I was outraged to learn about the spending that occurred as a 
result of that conference and I am eager to hear how GSA will ensure 
that it never happens again. We'll also examine GSA's ability to 
fulfill its program obligations and the future space needs of Federal 
agencies during a time of debt reduction.

GENERAL SERVICES ADMINISTRATION INSPECTOR GENERAL REPORT ON THE WESTERN 
                           REGIONS CONFERENCE

    Recently, the GSA IG issued a management deficiency report 
detailing an array of highly troubling findings as a result of an 
investigation into a 4-day internal staff conference held in October 
2010. The report describes how a host of Federal contracting rules were 
skirted in the planning and execution of this event.
    Issuance of this report on April 2 sparked the immediate 
resignations of the GSA Administrator and two other key agency 
officials, and the imposition of other personnel decisions for five 
other high-level regional management staff. It also has generated a 
flurry of attention here in the Congress with at least four hearings 
this week alone and others perhaps in the offing.
    Some of the more appalling lapses are not necessarily the 
activities that are garnering some of the sensationalized media 
attention such as the rental of a clown costume for a skit or a session 
featuring a mentalist. What is baffling to me is that there were 
apparently:
  --numerous examples of excessive spending and improper adherence to 
        contracting rules;
  --brazen finagling of event sessions to justify the provision of 
        food;
  --multiple occurrences of advance long-distance travel to the site; 
        and
  --an appalling lack of adherence to long-standing Federal law about 
        holding Federal events in lodging facilities that meet fire-
        safety specifications.
    It is also mind-boggling that somewhere along the way during the 
year of planning for this conference someone didn't say, ``Wait. Stop. 
This is out-of-line. This does not look right.''
    What is most regrettable is that incidents such as this tarnish the 
public perception of the workings of the entire Federal Government, the 
services delivered by its dedicated workforce, and the stewardship of 
precious Federal funds. In fact, the investigation began because the 
Deputy Administrator of the GSA asked the IG to examine the matter as 
soon as two employees mentioned to her activities that sounded 
improper. I expect actions will be taken swiftly to ensure that all 
rules are explicitly followed in the future and that proper oversight 
mechanisms are established.
    This all contributes to my dismay as to how all of this was allowed 
to happen, and I look forward to hearing from Acting Administrator 
Tangherlini and IG Miller today about the situation that led to the 
management deficiency findings and the forecast for corrective actions.
    While this fiasco in the western regions of the PBS deserves the 
attention it has been receiving, along with corrective measures to 
address it, there are other issues that deserve our attention as well. 
And those include GSA's ability to fulfill its program obligations and 
the future space needs of Federal agencies during a time of debt 
reduction.

                       THE FEDERAL BUILDINGS FUND

    Most GSA annual spending comes from a large revolving fund--the 
Federal Buildings Fund (FBF)--which finances real property management 
for the Federal Government. Through this account, GSA operates, 
maintains, and repairs federally owned and leased buildings and 
constructs Federal buildings, courthouses, and border stations. It is 
financed largely through proceeds from rental payments from other 
agencies (using appropriated funds).
    Prior to fiscal year 2010, typically, between 10 and 20 major 
construction and repair projects were requested in the President's 
budget and funded. Most of the balance is used for rent payments to 
private landlords and building operations. Once debt reduction efforts 
hit in fiscal year 2010, those accounts were drastically reduced in 
order to stay within the subcommittee's funding allocation, which 
couldn't provide for all the priority needs.
    As GSA examines where it can spend less, certain bills, such as 
rent and utility charges, must be paid and those have continued to 
increase.

                    WE MUST PAY THE OBLIGATORY BILLS

    The FBF has two contractually obligated bills which continue to 
increase substantially. The biggest and fastest growing is the rental 
of space account (the leasing of privately owned buildings) and, to a 
lesser degree, the building operations account (the cleaning, 
utilities, and maintenance expenses of leased and Government-owned 
space). When GSA does not receive full funding for these accounts to 
meet its contractual obligations, GSA is legally liable for default.
    Reductions within the FBF also impact other Federal agencies.
  effects of little construction and of no major repairs to buildings
    The construction and repair accounts have been drastically reduced, 
significantly impacting Federal agencies' abilities to operate 
efficiently.
    The near-elimination of construction projects also makes these 
projects more expensive by delaying them. It will have the effect of 
requiring more leasing of Federal buildings, which is more expensive 
over the long-term than federally owned space. A good example of this 
is the Department of Homeland Security (DHS) St. Elizabeths 
headquarters consolidation project, which has slowed to a crawl, 
prompting fears that not all Department elements will move and costing 
the Government more than planned as DHS agencies stay in leased space.
    The complete elimination of major repair projects for the past 2 
years has put some current projects on hold, such as the Daniel Patrick 
Moynihan U.S. Courthouse in New York, which is a top priority of the 
Federal judiciary. This Courthouse is one of the buildings housing the 
Southern District of New York--the busiest and largest Federal court in 
the country. Also, this has meant no funding for the requested main 
Interior Department building (currently under refurbishment, including 
hazardous material abatement) or the requested final phase of the State 
Department building (Truman Building).
    The American Recovery and Reinvestment Act allowed GSA to begin to 
reduce the backlog of $8.4 billion in buildings needing repairs or 
alterations by $1.4 billion, while creating more than 60,000 jobs in 
the process. Now, that backlog is growing again and how long that will 
continue is anyone's guess.
    I recognize that all agencies need to do their part to address our 
current economic situation, but we need to do it in a way that makes 
sense; not this drastic approach that leaves our agencies in 
substandard facilities or ill-equipped to carry out their missions 
efficiently, often costing the Government more money in the long run.
    Now, we turn to GSA's fiscal year 2013 budget request.

                    FISCAL YEAR 2013 BUDGET REQUEST

    The fiscal year 2013 request for GSA's appropriated accounts is a 
net increase of $33 million from the fiscal year 2012 enacted level, 
the majority of which ($21 million) is for modernization, upgrades, and 
continued operation of a Governmentwide information system. This new 
system will improve contract and grant award management and reporting.
    In addition to the requests increases, the fiscal year 2013 request 
reduces spending $16.2 million, 20-percent less than fiscal year 2010 
levels, for certain administrative expenses and keep consulting and 
advisory contract spending levels on GSA operations, at $32.8 million 
(or 15 percent) less than fiscal year 2010 levels.
    I now turn to my Ranking Member, Senator Moran, for any remarks 
that he would like to make.

    Senator Durbin. I'm now going to turn the floor over to my 
ranking member and friend, Senator Moran, for any remarks he'd 
like to make.

                    STATEMENT OF SENATOR JERRY MORAN

    Senator Moran. Chairman Durbin, thank you very much for 
conducting this hearing. As members of the Senate 
Appropriations Committee, our oversight of spending by Federal 
agencies, in my view, is our most-critical responsibility.
    I was appalled, as you said you were, to read the accounts 
of the inappropriate actions of some GSA employees outlined in 
the inspector general's report of abuses connected to a 
regional conference held in 2010.
    I have since learned that this was not an isolated incident 
of abuse of taxpayer dollars and that other questionable 
expenditures have come to light as a result of the inspector 
general's investigation.
    I would also add that it reminds me of the value of 
inspector generals and the investigations that they conduct on 
behalf of seeing that the right is wrong, that wrong is 
altered.
    This conduct on the part of these few Federal employees is 
an unacceptable abuse of the American taxpayers' trust. It is 
unconscionable that, at a time when our national debt stands at 
more than $15 trillion, individuals within the Federal 
Government completely ignore our country's fiscal reality and 
behave in ways that reflect an attitude that the funding of 
their particular agency belongs to them rather than to the 
American taxpayer.
    This is the kind of behavior that exacerbates opposition to 
Federal spending, even where that spending is legitimate. It is 
also important to note that every dollar misspent by GSA was 
funding that could have been used to fund other critical 
Federal programs.
    If Americans lack faith in the Federal Government as a 
responsible steward of taxpayer dollars, why would they ever 
support decisions related to Federal spending?
    I welcome this opportunity to ask our witnesses today for 
answers to how this type of conduct could happen. How can an 
agency responsible for providing guidance to the rest of the 
Federal Government on correct use of taxpayer dollars tolerate 
a lack of accountability?
    Those responsible should be held accountable. An agency 
culture which allowed such behavior to flourish must be 
altered.
    I hope that this is just not the tip of the iceberg. 
Billions in taxpayer dollars have been spent on Government 
conferences. We must have safeguards in place to ensure that 
this conduct, this spending pattern never happens again at GSA 
or any other Federal agency.
    I welcome the opportunity to work with my colleagues to 
determine whether legislative action is necessary to institute 
more stringent safeguards to ensure appropriate spending on 
legitimate Government functions, transparency and 
accountability.
    All Federal agencies have a duty to act as careful stewards 
of the taxpayer dollar, and those who disregard that duty 
should and will be held accountable.
    Senator Moran. Thank you, Mr. Chairman.
    Senator Durbin. Thank you, Senator Moran.
    Mr. Tangherlini, the floor is yours.

               SUMMARY STATEMENT OF DANIEL M. TANGHERLINI

    Mr. Tangherlini. Thank you, Chairman Durbin, and thank you, 
Ranking Member Moran and members of the subcommittee.
    My name is Daniel M. Tangherlini and I'm the Acting 
Administrator of GSA.
    I appreciate the opportunity to come before the 
subcommittee today to discuss the GSA inspector general's 
report as well as the GSA fiscal year 2013 budget request.
    First and foremost, I want to state that the waste and 
abuse outlined in the inspector general's report is an outrage 
and completely antithetical to the goals of this 
administration.
    The report details violations of travel rules, acquisition 
rules, and good conduct. But, just as importantly, those 
responsible violated rules of common sense, the spirit of 
public service and the trust that the American taxpayers have 
placed in all of us.
    I speak for the overwhelming majority of GSA staff when I 
say that we are as shocked, appalled, and deeply disappointed 
by these indefensible actions as you are.
    We've taken strong action against those officials who are 
responsible and will continue to do so where appropriate. I 
intend to uphold the highest ethical standards at this agency, 
including referring any criminal activity to appropriate law 
enforcement officials and taking any action that is necessary 
and appropriate.
    If we find any irregularities, I will immediately engage 
GSA's Inspector General, Brian D. Miller, and, as indicated in 
the joint letter that the inspector general and I sent to all 
GSA staff, we expect an employee who sees waste, fraud, or 
abuse to report it. We want to build a partnership with the 
inspector general, while respecting their independence, that 
will ensure that nothing like this will ever happen again.
    There'll be no tolerance for employees who violate or in 
any way disregard these rules. I believe this is critical, not 
only because we owe it to the American taxpayers, but also 
because we owe it to the many GSA employees who work hard, who 
follow the rules and deserve to be proud of the agency that 
they serve.
    We have also taken steps to improve internal controls and 
oversight to ensure this never happens again. Already, I have 
cancelled all future Western Regions Conferences (WRC). I have 
also cancelled 35 previously planned conferences, saving nearly 
$1 million in taxpayer expenses.
    I've suspended the Hats Off stores and have already 
demanded reimbursement from Mr. Bob Peck, Mr. Robert Sheppard, 
and Mr. Jeff Neely for private, in-room parties.
    I've cancelled most travel through the end of the fiscal 
year GSA-wide, and I am centralizing budget authority and have 
already centralized procurement oversight for regional offices 
to make them more directly accountable.
    I look forward to working in partnership with this 
subcommittee to ensure that there's full accountability for 
these activities, so that we can begin to restore the trust of 
the American people.
    I hope that in so doing GSA can refocus on its core 
mission, saving taxpayers money by efficiently procuring 
supplies, services, and real estate and effectively disposing 
of unneeded property.
    We believe that there has seldom been a time of greater 
need for these services and the savings they bring to the 
Government and the taxpayer.
    There's a powerful value proposition to a single agency 
dedicated to this work, especially in these austere fiscal 
times. We need to ensure we get back to basics and conduct this 
work better than ever. And at GSA our commitment is to service, 
to duty, and to our Nation and not to conferences, awards, or 
parties.
    The unacceptable, inappropriate, and possibly illegal 
activities at the WRC stand in direct contradiction to the 
express goals of this agency and the administration. And I'm 
committed to ensuring that we take whatever steps are necessary 
to hold responsible parties accountable and to make sure that 
this never happens again.
    We need to refocus this agency and get back to the basics, 
streamlining the administrative work of the Federal Government 
to save taxpayers money. The goal is supported by the GSA 
fiscal year 2013 budget request. This will help to deliver a 
more effective and efficient Government.

                           PREPARED STATEMENT

    To conclude, I look forward to working with this 
subcommittee moving forward, and I welcome the opportunity to 
take any questions.
    Senator Durbin. Thank you.
    [The statement follows:]

              Prepared Statement of Daniel M. Tangherlini

    Chairman Durbin, Ranking Member Moran, and distinguished members of 
the subcommittee: My name is Daniel M. Tangherlini, and I am the Acting 
Administrator of the General Services Administration (GSA). Thank you 
for inviting me to appear before you today to discuss the GSA Inspector 
General's (IG) report as well as the GSA fiscal year 2013 budget 
request.
    First and foremost, I want to state my agreement with the President 
that the waste and abuse outlined in the IG report is an outrage and 
completely antithetical to the goals and directives of this 
administration. We have taken strong action against those officials who 
are responsible and will continue to do so where appropriate. We are 
taking steps to improve internal controls and oversight to ensure this 
never happens again. I look forward to working in partnership with this 
subcommittee to ensure there is full accountability for these 
activities so that we can begin to restore the trust of the American 
people.
    At the same time I am committed to renewing GSA's focus on its core 
mission: saving taxpayers' money by efficiently procuring supplies, 
services, and real estate, and effectively disposing of unneeded 
Government property. There is a powerful value proposition to a single 
agency dedicated to this work, especially in these fiscal times, and we 
need to ensure we get back to basics and conduct this work better than 
ever.

                PROMOTING EFFICIENCY AND REDUCING COSTS

    The shocking activities and violations outlined in the IG report 
run counter to every goal of this administration. The administration 
makes cutting costs and improving the efficiency of the Federal 
Government a top priority. On June 13, 2011, the President issued 
Executive Order 13576, ``Delivering an Efficient, Effective, and 
Accountable Government''. This Executive order emphasized the 
importance of eliminating waste and improving efficiency, establishing 
the Government Accountability and Transparency Board to enhance 
transparency of Federal spending and advance efforts to detect and 
remediate fraud, waste, and abuse.
    The President further established the goals of this administration 
in Executive Order 13589, ``Promoting Efficient Spending'', which set 
clear reduction targets for travel, employee information technology 
(IT) devices, printing, executive fleets, promotional items, and other 
areas. The President's fiscal year 2013 budget request for GSA would 
achieve $49 million in savings under this Executive order, including 
$9.7 million in travel.

                     HOLDING OFFICIALS RESPONSIBLE

    It is important that those responsible for the abuses outlined in 
the IG's report be held accountable. We are taking aggressive action to 
address this issue and to ensure that such egregious actions will never 
occur again. We have taken a series of personnel actions, including the 
removal of two senior political appointees. We have also placed 10 
career employees on administrative leave, including 5 senior officials.
    I intend to uphold the highest ethical standards at this agency and 
take any action that is necessary and appropriate. If we find any 
irregularities, I will immediately engage the IG. As I indicated in my 
joint letter with GSA's IG, I intend to set a standard that complacency 
will not be tolerated, and waste, fraud, or abuse must be reported.
    I believe this commitment is critical, not only because we owe it 
to the American taxpayers, but also because we owe it to the many GSA 
employees who conform to the highest ethical standards and deserve to 
be proud of the agency for which they work.

                             TAKING ACTION

    I have taken a number of steps since I began my tenure on April 3, 
2012, to ensure this never happens again. GSA has consolidated 
conference oversight in the new Office of Administrative Services, 
which is now responsible for:
  --Oversight of contracting for conference space, related activities, 
        and amenities;
  --Review and approval of proposed conferences for relation to GSA 
        mission;
  --Review and approval of any awards ceremonies where food is provided 
        by the Federal Government;
  --Review and approval of conference budgets as well as changes to 
        those budgets;
  --Oversight and coordination with GSA conference/event planners and 
        contracting officers on conference planning;
  --Review of travel and accommodations related to conference planning 
        and execution;
  --Handling of procurement for all internal GSA conferences; and
  --Development of mandatory annual training for all employees 
        regarding conference planning and attendance.
    Additionally, we have cancelled the 2012 Western Regions Conference 
(WRC) as well as a number of other conferences that only or primarily 
involved internal staff. To date, I have cancelled 35 conferences,\1\ 
saving taxpayers $995,686. As we put in place greater controls and 
oversight, we are reviewing each event to make sure that any travel is 
justified by a mission requirement.
---------------------------------------------------------------------------
    \1\ A conference is ``a symposium, seminar, workshop, or other 
organized or formal meeting lasting portions of 1 or more days where 
people assemble to exchange information and views or explore or clarify 
a defined subject, problem or area of knowledge.''
---------------------------------------------------------------------------
    We have also begun review of employee relocations at Government 
expense, and will require all future relocations to be approved 
centrally by both the Chief People Officer and the Chief Financial 
Officer.
    To strengthen internal controls, we are bringing in all Public 
Buildings Service regional budgets under the direct authority of GSA's 
Chief Financial Officer. The autonomy of regional budget allocations 
is, in part, what led to this gross misuse of taxpayer funds on both 
the regional conference and the employee rewards program known as 
``Hats Off''. The additional approvals and centralized oversight are 
intended to mitigate the risk of these problems.
    In response to concerns over spending on employee rewards programs, 
I have eliminated the ``Hats Off'' store that was operating in the 
Pacific Rim region, as well as all similar GSA programs.
    I am moving aggressively to recapture wasted taxpayer funds. As a 
first step, on April 13, I directed that letters be sent to Bob Peck, 
Jeff Neely, and Robert Shepard demanding reimbursement for private, in-
room receptions at the WRC. I will pursue other fund recovery 
opportunities.
    I am engaged in a top-to-bottom review of this agency. I will 
continue to pursue every initiative necessary to ensure this never 
happens again and to restore the trust of American taxpayers.

                    FISCAL YEAR 2013 BUDGET REQUEST

    The GSA fiscal year 2013 budget proposal aligns with our value 
proposition: GSA helps agencies deliver more for their missions.
    Across a range of program areas including the move to cloud email, 
developing one-stop shop IT security protocols through Federal Risk and 
Authorization Management Program (FedRAMP), leveraging the bulk 
cooperative buying power of the Government with Federal Strategic 
Sourcing opportunities, and using the latest in real estate portfolio 
planning, GSA brings expertise and efficiency to the table in service 
of our customers and the taxpayer.

          COST SAVINGS AT THE GENERAL SERVICES ADMINISTRATION

    In accordance with Executive Order 13589, ``Promoting Efficient 
Spending'', our fiscal year 2013 budget would achieve $49 million in 
savings, including $9.7 million in travel. In addition, GSA will 
maintain consulting and advisory contract spending at $32.8 million 
less than fiscal year 2010 levels.

            TARGETED INVESTMENTS IN CRITICAL INFRASTRUCTURE

Federal Buildings Fund
    Our fiscal year 2013 budget requests $8.6 billion in New 
Obligational Authority (NOA) for the FBF associated with $9.7 billion 
in estimated fiscal year 2013 revenue. This request includes a capital 
investment program of $551 million. GSA is not requesting an 
appropriation to the FBF, and would fund the fiscal year 2013 new 
obligation authority request from balances in the FBF. This year we are 
requesting a very limited amount of funding to support exigent need and 
high return on investment capital projects. Over the longer term, we 
will need to work with the Congress to ensure adequate investment in 
the capital program to ensure the Federal buildings portfolio does not 
deteriorate, and we complete critical construction projects already 
initiated such as the Department of Homeland Security consolidation at 
St. Elizabeths.
    Our request for $56 million in NOA for new construction and 
acquisition would allow GSA to acquire, through existing purchase 
options, two buildings under lease to the Federal Government in 
Martinsburg, West Virginia, and Riverdale, Maryland. The Government has 
the option to purchase both buildings at a set price prior to the lease 
expirations. Both facilities are fully utilized by the Federal 
Government, specifically the Internal Revenue Service in Martinsburg, 
West Virginia and USDA in Riverdale, Maryland--and both locations have 
been identified as a long-term Federal need. The execution of these 
purchase options would eliminate costly lease obligations and result in 
millions of dollars in out-year cost avoidance to the Government.
    GSA requests NOA of $495 million for repairs and alterations to 
Federal buildings. Our proposed repairs and alteration program 
includes:
  --Exigent needs projects in 20 Federal buildings to repair critical 
        building and safety systems including elevators; fire and life 
        safety, electrical, and heating and ventilation systems; and 
        repairing structural deficiencies ($123 million);
  --Nonprospectus repairs and alterations projects ($341 million);
  --Energy and water retrofit and conservation measures ($15 million); 
        and
  --Consolidation activities to alter interior space in the Daniel 
        Patrick Moynihan Courthouse, New York, New York, and Peachtree 
        Summit Federal Building, Atlanta, Georgia, to consolidate 
        various agencies from lease space into federally owned space 
        ($16 million).
    Like the lease purchase options outlined above, consolidation of 
Federal activities from leased to owned space will result in millions 
of dollars in annual cost avoidance.
    In addition to our capital program, GSA requests NOA for our 
operating program, in the amount of:
  --$5.5 billion for the Rental of Space program, which will provide 
        for 199 million rentable square feet of leased space;
  --$2.4 billion for the Building Operations program; and
  --$120 million for the Installment Acquisition Payments program.
    We intend to assure PBS dollars will be spent on cost-effective 
projects and services that advance our customer's missions. We will not 
fund projects or services that have questionable returns or excessive 
overhead expenses.
General Services Administration Operating Appropriations
    The GSA fiscal year 2013 budget requests $272 million for our 
operating appropriations that provide for the Office of Governmentwide 
Policy, the governmentwide programs of the Operating Expenses account, 
the GSA IG, the Electronic Government Fund, the pensions and office 
staffs of former Presidents, the Federal Citizen Services Fund, and, if 
needed, Presidential transition.
    Our budget requests an additional $23 million more than the fiscal 
year 2012 level for the Governmentwide policy appropriation, including 
$21 million for the continued modernization of the Integrated 
Acquisition Environment (IAE) investment in the Systems for Awards 
Management (SAM) project and $2 million for Information Sharing and 
Identity Management (ISIM). GSA is the program manager for the IAE, an 
Electronic Government (EGov) program. On behalf of all Federal 
agencies, GSA is managing 10 outdated, separate systems which will be 
consolidated into a single, integrated platform to support Federal 
acquisition, grants, and loans management. The first phase of the 
ongoing consolidation effort will launch May 2012. For fiscal year 
2013, GSA is requesting SAM investment funding to further consolidate 
and simplify the disparate systems. Further consolidation will improve 
Governmentwide reporting on how Federal tax dollars are spent, reduce 
redundancy and the burden on all businesses--in particular on small 
businesses who do work for the Federal Government, significantly 
improve data quality as well as the exchange of information across the 
acquisition, financial, grants, and loan communities.
    The ISIM program is providing the civilian agencies with standards 
for the Federal information-sharing environment. ISIM will establish 
capabilities for sharing information--grant, financial, acquisition, 
and other data--within and across Federal departments using secure, 
common standards. This investment is critical to allow Federal agencies 
to share and rapidly access secure information that supports mission 
delivery. GSA will develop common data standards or attributes in 
collaboration with agencies that complement our responsibilities for 
the Federal Identity and Access Management program and ensure security, 
privacy, and interoperability best practices.
    We have requested an increase of $4.3 million for the Electronic 
Government Fund to improve citizen engagement with the Government 
through innovative technologies and to improve delivery of Government 
services to the public. The additional funding will support expanded 
efforts to improve Government service by providing other agencies with 
technology and expertise to improve their interactions with the public. 
GSA will continue to build governmentwide capability to engage citizens 
in dialogues and challenges to solve complex issues directly impacting 
the public.
    In accordance with the Presidential Transition Act of 1963, as 
amended, GSA requests $8.9 million for an orderly transfer of Executive 
power in connection with the expiration of the term of office of the 
President and the Inauguration of a new President. This funding is 
required only in the event of a change in administration.
    GSA requests an additional $1 million for the IG. The request also 
includes $0.3 million for the fiscal year 2013 Federal pay raise and 
$0.1 million for benefits and contract support for former Presidents.
    The proposed fiscal year 2013 increases are offset by net 
administrative cost reductions of $2.1 million in operating expenses 
and $2.3 million in the Federal Citizen Services Fund.

                           SUMMARY STATEMENT

    The unacceptable and inappropriate activities at the WRC stand in 
direct contradiction to the express goals of this agency and the 
administration, and I am committed to ensuring that we take whatever 
steps are necessary to hold those responsible accountable and to make 
sure that this never happens again. At the same time, I believe that 
the need for a high-quality GSA is more acute today than in any time in 
its history. We need to refocus this agency and get back to the basics: 
streamlining the administrative work of the Federal Government to save 
taxpayers money.
    With that said, this goal is directly supported by the GSA fiscal 
year 2013 budget request as it will help to deliver a more effective 
and efficient Government.

                           CLOSING STATEMENT

    Mr. Chairman, this concludes my formal statement. I look forward to 
continuing this discussion on the GSA IG report and our fiscal year 
2013 budget request with you and the members of the subcommittee.

    Senator Durbin. Inspector General Miller, the floor is 
yours.

STATEMENT OF BRIAN D. MILLER, INSPECTOR GENERAL
    Mr. Miller. Good afternoon, Chairman Durbin, Ranking Member 
Moran. Thank you for inviting me here to testify about our 
report.
    While my report details what went wrong at GSA in 
connection with the WRC, I want to take a moment to focus on 
what went right.
    The system worked. The excesses of the conference were 
reported to my office by a high-ranking political appointee, 
and our investigation ensued. Not one person prevented us from 
conducting that investigation or obstructed what turns out to 
be a lengthy investigation.
    As each layer of evidence was peeled back, we discovered 
that there was more to look into. So our investigation 
continued independently.
    While some have suggested that the investigation took too 
long to produce the final report, anyone familiar with law 
enforcement investigations understands that when you turn over 
one stone you often find more stones that need to be turned 
over as well.
    Most people also understand the need to be careful and 
certain before making public allegations such as those 
contained in the report, because careers and reputations are on 
the line, and my office does not take that lightly.
    Moreover, the then GSA Administrator ultimately had control 
over the date on which this report was released because it was 
the Administrator's response to the final report that triggered 
its public release.
    Finally, the system has been strengthened by the release of 
the report and by the public attention it has received in the 
media and from both chambers of the Congress.
    While not one of the many career employees and political 
appointees who were involved in the WRC came forward and 
reported the waste, fraud, and abuse that occurred there, 
perhaps for fear of reprisal, GSA's honest and hard-working 
employees now have been empowered to bring issues to our 
attention and they are doing so. We have more work than ever.
    And I'd like to take this opportunity to thank the numerous 
dedicated professionals from throughout the Office of Inspector 
General that worked so many long hours to ensure that the 
report was accurate and fair and drew no conclusions beyond 
those fully supported by the evidence. They do great work.

                           PREPARED STATEMENT

    And I would like to thank all the special agents, forensic 
auditors, and lawyers that worked on it.
    Thank you. I ask that you make my written statement and the 
report part of the record. Thank you.
    Senator Durbin. Without objection.
    [The statement follows:]

                 Prepared Statement of Brian D. Miller

    Chairman Durbin, Ranking Member Moran, and members of the 
subcommittee, I thank you for inviting me to testify here today. As you 
know, on April 2, 2012, the General Services Administration Office of 
Inspector General (GSA OIG) published a report regarding GSA 
mismanagement of its Western Regions Conference (WRC) in the fall of 
2010.
    It may be very difficult to find among all the bad news and 
repugnant conduct, but there is at least a glimmer of good news. The 
oversight system worked. My office aggressively investigated, audited, 
interviewed witnesses, and issued a report. No one stopped us from 
writing the report and making it public. Based on the final report, 
swift action has been taken, hearings have been scheduled, and the 
whole ugly event now lay bare for all to see. Justice Brandeis said 
that sunlight is said to be the best of disinfectants.
    Almost every Federal agency has an inspector general, someone 
watching and reporting fraud, waste, and abuse of taxpayer dollars. The 
Congress recently strengthened offices of inspectors general so that we 
can better perform our oversight work. We are often the last resort for 
protecting taxpayer dollars--unfortunately catching the fraud, waste, 
and abuse after the money is spent. More needs to be done to establish 
early warning systems. This is why Acting Administrator Daniel M. 
Tangherlini and I recently reminded GSA employees to alert us as soon 
as they see anything wrong. The WRC could only occur in an environment 
where the best lack all conviction while the worst skirt the rules.
    Benjamin Franklin warned us at our Nation's founding: ``There is no 
kind of dishonesty into which otherwise good people more easily and 
frequently fall than that of defrauding the Government.'' Those tempted 
to engage in fraud, waste, and abuse need to know they will be caught. 
The ultimate deterrence against fraud, waste, and abuse is criminal 
prosecution. We frequently partner with the Department of Justice in 
civil and criminal cases.
    The GSA OIG has about 300 employees to oversee an agency of more 
than 12,000 employees, who are responsible for almost $50 billion in 
civilian contracts, most Federal buildings, and the Federal automotive 
fleet. Despite the ratio of OIG personnel to GSA personnel, our office 
has achieved more than $6.5 billion in savings to the taxpayer since 
2005. In 2008, GAO found that the GSA OIG had an average return of $19 
per $1 budgeted (GAO Report 09-88, 2008).
    Our special agents, forensic auditors, and lawyers deserve the 
recognition for this report. But our office and other offices of 
inspectors general produce great work like this day after day. My own 
office has issued numerous audit reports relating to GSA's construction 
and renovation contracts under the American Recovery and Reinvestment 
Act. We discovered and investigated 11 Federal property managers and 
contractors taking bribes and kickbacks. All 11 are now convicted. 
Criminals selling counterfeit IT products were caught and convicted, 
and are now serving time in Federal prison, because of the work of our 
office and other law enforcement agencies. Federal contractors have 
paid back hundreds of millions of dollars, because of our audits. Most 
recently, Oracle paid $199.5 million to settle False Claims Act 
allegations.
    The core mission of GSA is to provide low-cost goods and services. 
When GSA wastes its own money, how can other agencies trust it to 
handle the taxpayer dollars given to them? GSA also has the sole 
responsibility for the Federal travel regulation, which governs travel 
and conference planning by agencies across the executive branch. 5 
U.S.C. 5707(a)(1). As detailed in my office's report, in putting on the 
WRC, GSA committed numerous violations of contracting regulations and 
policies, and of the Federal travel regulation. This is of special 
concern because other Federal agencies need to be able to look to GSA 
as a model of how to conduct their contracting and procurement efforts, 
and manage their travel and conference planning.
    In attempting to model the entrepreneurial spirit of a private 
business, some in the public buildings service seemed to have forgotten 
that they have a special responsibility to the taxpayers to spend their 
money wisely and economically. While a private business may use its 
profits to reward employees in a lavish fashion, a Government agency 
may not. Even so, this report should not obscure the fact that 
thousands of GSA employees work hard and do a great job for the 
American taxpayers. It is only a minority of employees that are 
responsible for this debacle.
    In preparing the WRC report, numerous dedicated professionals from 
throughout the OIG worked long hours to ensure that the report was 
accurate and that it drew no conclusions beyond those fully supported 
by the evidence. My office continued to receive documents relating to 
this report as late as this January. We are still receiving documents 
relating to ongoing investigations. It is my hope that these efforts 
will enable GSA to improve its contracting and conference planning 
practices in the future, so that GSA may not only be a better steward 
of taxpayer dollars, but act as a leader within the Federal Government 
in efficient procurement and conference planning.
    I thank you for an opportunity to discuss this important work of 
the OIG with the subcommittee. I request that the attached report and 
this statement be made part of the record, and I welcome your 
questions.

                      WESTERN REGIONAL CONFERENCE

    Senator Durbin. Mr. Tangherlini, far be it for me to 
suggest that people sitting on this side of the podium, in our 
profession, have not been guilty of bad judgment. It's 
happened. It's been recorded. It's been acknowledged.
    Some of us feel that maybe we had the right teachers in 
life along the way, and I was lucky to work for a number of 
people who I thought were as honest as could be, and I tried my 
best to follow their example.
    There was always this basic standard before you made a 
decision, how will it look on the front page of tomorrow's 
paper. And that has, in many ways, I think, brought me back 
down to Earth for something that wouldn't have looked very good 
at all. We decided we're not going there.
    My question is when it gets to this conference in region 9 
here, it appeared to be a much different mentality. It was, you 
know, we'll take care of our own. We'll keep quiet. And if it 
wasn't for the whistleblower sometime later, it appears that 
this pattern of regional conferences might have just continued.
    What have you found since you've been at the agency about 
that region or that experience or that attitude?
    Mr. Tangherlini. We're working very closely with the 
inspector general. We've learned that there is more than just 
this conference in this region we should be concerned about. 
And there are other issues that we should be concerned about 
across the agency.
    In fact, in the first week, after I had met with the 
inspector general, I did that on the first day, and we 
subsequently had other follow-up meetings.
    We agreed to do a joint letter to all 13,000, roughly 
13,000, GSA employees, asking them, in the future, to please, 
if you see something you suspect is wrong to talk to your 
fellow employees, talk to your supervisor, talk to your 
supervisor's supervisor, and/or, certainly, if you see waste, 
fraud, and/or abuse, call the inspector general. Reach out to 
the inspector general through their FraudNet Hotline.
    And then I think both of us are discouraged by the fact 
that there were 300 attendees that saw what was intentionally 
designed to be over the top and didn't raise a concern up to 
the inspector general.
    Senator Durbin. So how do you explain that after this 
occurred, after this event occurred, this Mr. Neely got more 
than $11,000 in bonuses? It was almost, not just a seal of 
approval, but it was congratulations, job-well-done bonuses.
    Tell me how the sequence of his decisionmaking didn't come 
to the attention of those higher up when they're deciding 
whether he should get even more taxpayers dollars for his 
malfeasance?
    Mr. Tangherlini. I regret, Mr. Chairman, I'm not sure I'm 
able to describe what happened. I have been there a short time. 
What I've learned I've simply learned through the hearings over 
the last several days, what I heard through the inspector 
general's report.
    So what I can say, though, is as we look at the agency, we 
go top-to-bottom. I think the performance appraisal system is 
one place that we have to start and make sure that we have 
strong controls in our performance evaluation system that 
emphasize integrity in our senior leaders, because, to your 
earlier comment, I think that people watch what their leaders 
are doing and they model that behavior.

                           INTERN CONFERENCE

    Senator Durbin. So what about this interns conference in 
Palm Springs? I mean, I love my interns. I started off as an 
intern in a Senate office. They do a great job. They don't get 
paid for it. So why would you hold or why would they hold an 
interns conference in Palm Springs, California?
    Mr. Tangherlini. I have no ability to explain what they 
were thinking in having that conference. I know my experience 
as an intern had really been about hard work, late hours, low 
or no pay----
    Senator Durbin. An occasional slice of pizza.
    Mr. Tangherlini. Which I bought. So, you know, I understand 
the value of interns. I'm just concerned that a conference like 
this was almost trying to implicate people from the beginning 
in this approach to that work.
    Senator Durbin. And the other thing that seemed, I mean, 
we're aware of advance teams with Presidential candidates and 
others. The advance work that was being done for these 
conferences involved lengthy trips, many employees being 
treated, you know, in kind of lavish circumstances. Was that a 
standard just in this region or did you find it to apply to 
other regions as well?
    Mr. Tangherlini. Again, we haven't had a chance to dig into 
other regions. What I understand was that certainly was a 
culture to the approach of this leader within that region.
    But I think what it really tells us is we need to look at 
the way we've structured ourselves, so that other people have a 
chance to raise the alarm if they see this kind of thing 
happening.
    And so, last week, I asked that all the regional offices' 
financial staff report up to our Chief Financial Officer (CFO), 
Alison Doone. In the past, they had been given a budget 
allocation and they were allowed, within the region, to work 
within that allocation entirely autonomously.

                      WESTERN REGIONAL CONFERENCE

    Senator Durbin. So, Mr. Miller, as I understand it, two 
people who attended the conference came forward to a GSA 
employee who had worked on Capitol Hill, and she, in turn, 
notified your office--if that sequence is accurate. I guess my 
question to you is the environment where a whistleblower feels 
safe enough to come forward with that kind of information is 
critically important.
    Mr. Miller. It is.
    Senator Durbin. For us to have oversight on taxpayer 
spending. What has been your experience before and after this 
particular investigation?
    Mr. Miller. Well, Mr. Chairman, the Deputy Administrator, 
Susan Brita, who did work on Capitol Hill, came to our office 
in December 2010. I believe she overheard conversations. I'm 
not aware of specific individuals coming to her to complain 
about it. But she came forward to our office.
    We immediately investigated and found a whole string of 
problems, not only with the WRC, but with other conferences, 
such as the intern conference and other conferences.
    Having whistleblowers is invaluable to our investigations. 
We rely on the good, hardworking, honest GSA employees who come 
forward and tell us that things are wrong. That often starts 
our investigation.
    Senator Durbin. I'm asking you if, before this event was 
reported to you, and since, can you tell me what the 
environment is? Do whistleblowers feel that they can come to 
you?
    Mr. Miller. We have been receiving a lot of whistleblower 
complaints since this report was released. It has gotten 
tremendously better in terms of complaints in terms of 
whistleblowers.
    The witnesses we interviewed in connection with this 
investigation reported an atmosphere where people were not 
encouraged to speak up. One witness said that when someone 
spoke up, they were ``squashed like a bug''.
    Others said that the regional commissioner had a way of 
putting people down in a very uncomfortable way when they would 
raise concerns about expenditures. And it came forward from a 
number of witnesses that there was an environment where people 
were discouraged from coming forward, raising questions, 
calling into question expenditures.
    And, as a result, there are a number of over-the-top 
conferences, not just the WRC, but the intern conference that 
you brought up, where they had a team-building exercise focused 
on a jeep tour and many other events.
    Senator Durbin. Senator Moran.
    Senator Moran. Mr. Chairman, thank you.

                  OFFICE OF INSPECTOR GENERAL REPORTS

    First of all, let me ask Mr. Miller, you have issued the 
inspector general's report dated April 2, 2012.
    Mr. Miller. Correct.
    Senator Moran. What is the extent of the problem that this, 
at GSA, that this report covers? Is this the sum total of the 
problems that you see at this agency or is this more the 
proverbial tip of the iceberg?
    Mr. Miller. Senator, it is one event. As an inspector 
general, we produce reports that we can verify every which way, 
and it's totally accurate. We did the report on the WRC. We 
have a number of ongoing investigations. We have not produced 
reports yet on the number of ongoing investigations, and there 
are many other ongoing investigations.
    Senator Moran. Can you quantify that, the magnitude of the 
investigations that you are now conducting?
    Mr. Miller. It's a little difficult because, as I said in 
my opening statement, every time we turn over a stone, we find 
50 more, and, you know, we find other instances.
    You know, even today we found out that the wife of the 
regional commissioner had a parking space throughout the entire 
year of 2012 at the Federal building. And, you know, we just 
find one thing after another, and it's difficult for me, even 
now, to quantify it.
    Senator Moran. Would we expect additional inspector general 
reports in the near future?
    Mr. Miller. Well, we are doing investigations. Our normal 
course would be to complete the investigation and then refer it 
for criminal prosecution, if it's merited.
    Civil liability, under the False Claims Act or under 
another civil statute or for administrative action, we 
sometimes will do the report, give it to the Administrator to 
take administrative action against individuals.

                           REGIONAL OVERSIGHT

    Senator Moran. Mr. Tangherlini indicated about the 
autonomous nature of the management policy, style, and conduct 
in this region. Mr. Miller, was that unique to that region?
    And I prefer to call you Dan, because I will struggle with 
your last name, but perhaps Dan would like to answer this 
question as well.
    And is that something that was new at GSA? You indicated 
now that you've centralized the process, that the CFO now is 
involved in the decision about paying bills as compared to 
relegating that authority to somebody in the field. Is that 
unique to this region, to GSA? And when did that begin? Is that 
something that occurred in Dan's predecessor's tenure?
    Mr. Miller. Well, there's a number of levels to the answer 
to that question. With region 9, the regional commissioner for 
PBS was also the acting regional administrator in charge of the 
entire region, because that is normally a political appointment 
and that was vacant. So he was acting regional administrator 
for the whole region.
    So, in that sense, region 9 was a little bit different. The 
other acting regional administrators had a shorter tenure 
because political appointments were made.
    But, generally, regions have a somewhat awkward 
relationship with the central office. They always have. That 
was exacerbated when Acting Administrator Paul Prouty, when he 
was acting during the interim before Martha Johnson was 
confirmed, he was a PBS regional commissioner for region 8, I 
believe, and he became Acting Administrator.
    One of the orders he put into place was to lower the 
regional administrator from a political appointment of an 
Senior Executive Service employee down to the equivalent of a 
GS-15 political appointment and restrict the duties of the 
regional administrator.
    The result was the regional commissioner for PBS had more 
authority within the region and the regional commissioner for 
the Federal Acquisition Service had more authority within the 
region. But, Dan, perhaps you'd like to----
    Senator Moran. Let me follow up before you respond. That 
would be a change in policy at GSA.
    Mr. Miller. Correct.
    Senator Moran. And that would have been at what point in 
time?
    Mr. Miller. It was before Martha Johnson was confirmed. I 
would say about 6 months prior, maybe 8 months prior.
    Senator Moran. Thank you.
    Mr. Miller. I can find the exact date.
    [The information follows:]

    The exact date was September 15, 2009.

    Mr. Tangherlini. My understanding of the timeline is as the 
inspector general described. But it gets to a bigger problem 
that we had allowed the regions to become almost fully 
autonomous to the purposes of budget authority and acquisition 
authority.
    One of the steps we've already taken is to centralize the 
CFO function and make all the regional CFOs, our financial 
management employees, report up the chain through the central 
CFO.
    We've also required, for conferences and for travel, our 
chief administrative officer, our Office of the Chief 
Administrative Officer, in headquarters, to review and approve 
justifications for conferences and conference travel.

                           REGIONAL OVERSIGHT

    Senator Moran. Is that because it's the best management 
practice, regardless of the evidence that you discovered how 
poorly things were managed, the problems that the inspector 
general determined?
    If you had come to this agency without the inspector 
general's report describing what had happened in this region, 
would this be the same policy that you would want to put in 
place as a new manager, regardless of the facts that the 
inspector general demonstrated?
    Mr. Tangherlini. The ability at a senior level to have 
visibility straight down into expenditures at the field level, 
at the ground level I think is key to any----
    Senator Moran. So you, as a manager, would have put those 
policies in place even if we didn't know about what went on in 
this region?
    Mr. Tangherlini. I don't know if we would have put the 
exact ones we put in place. Right now, we're trying to make 
sure that we get a handle on any kind of travel, any kind of 
conferencing, get a sense of what the expenditures are.
    But I believe that having good central office oversight 
into the expenditures and operations of a regional office is, 
frankly, just good, basic best practices management, yes.
    Senator Moran. I have additional questions, but I assume--
--
    Mr. Miller. With the indulgence of the chairman, the year 
was 2009 that the order was entered changing the structure.
    Senator Moran. Thank you very much.

                      WESTERN REGIONAL CONFERENCE

    Senator Durbin. Mr. Miller, I don't know if this is for you 
or Mr. Tangherlini, but what's next? Are we going to get any 
taxpayers' money back from this fiasco? And, second, what's 
going to happen to the people who were responsible for it?
    Mr. Miller. Well, when Dan was appointed, we met 
immediately, and one of our first conversations was about 
sending demand letters to the officials that had parties in 
their room and for the excesses at the conference. And I'll let 
Dan tell you more about that.
    Mr. Tangherlini. As I mentioned in my testimony, we sent 
demand letters to three individuals who had inappropriate 
parties in their rooms.
    We also have, using the inspector general's report, started 
going through to try to identify those activities, extensions 
of activities, related activities for which we can very easily, 
well, very clearly seek reimbursement to the Federal 
Government, and we're working on that right now.
    Senator Durbin. Has there been a determination made as to 
whether what you've found so far merits review by the 
Department of Justice (DOJ) for criminal action?
    Mr. Miller. Mr. Chairman, we have met with DOJ, and we've 
made a criminal referral.
    Senator Durbin. I won't go into any further. I'm sure you 
can't either.
    Mr. Miller. Thank you.

                              CONSTRUCTION

    Senator Durbin. Let me ask about some other issues related 
to the GSA as an agency. For many years, typically, GSA would 
spend about $700 to $900 million annually from the FBF to build 
buildings to house Federal agencies. Because of cutbacks in 
Federal spending, that funding reached a new low last year of 
$50 million, compared to the $700 to $900 million in previous 
years.
    I'm trying to establish what I mentioned at the opening. 
What do you believe is the real cost of delayed construction to 
specific projects? And I can get into those, the Department of 
Homeland Security (DHS), the Food and Drug Administration (FDA) 
and others. And what is the general impact on cost to the 
Federal Government, realizing that leased space is usually more 
expensive than an owned building?
    Mr. Tangherlini. Given that I have just come to this job 
very recently and have been working very much on the earlier 
issue we were discussing, I don't know if I'm best equipped to 
answer those questions fully today, but I would like to work 
with you and your staff.
    I will say, though, the fact that we have reduced our 
expenditures to the level we have has some concern about this 
incredibly large and valuable asset that we maintain. And 
that's something that, collectively, we have to work on to make 
sure that we are actually investing sufficiently to maintain 
the quality of those facilities.
    Building things, delaying construction can cost additional 
money, just through the sheer power of inflation and the costs 
of raw materials, and so that's an additional concern.
    Senator Durbin. I'm going to ask you, when you get back to 
me, if you would look specifically at the DHS project at St. 
Elizabeths here in Washington.
    The $3 billion project began in 2009 and now is limping 
along with limited funding. What will be the impact on the cost 
of this project to not bring it to conclusion and the cost to 
the Federal Government of delaying the expenditure?
    Same thing is happening in Denver, the Denver Federal 
Center, where there's substantial evidence of hazardous 
materials. And a remediation effort was underway, a protective 
effort, that I understand has either been slowed down or 
suspended as a result of budgetary issues.
    And the FDA--White Oak Campus. That's been going on for as 
long as I can remember. Definitely overdue, with FDA agencies 
spread around in many different leased buildings.
    So if you would get on those three, I would appreciate that 
very much.
    Mr. Tangherlini. Yes, Sir.
    [The information follows:]

    St. Elizabeths and the Denver Federal Center will be addressed in 
the questions submitted for the record.
    With regard to the Food and Drug Administration White Oak campus, 
General Services Administration (GSA) revised and reduced the project 
scope to accomplish portions of the campus with fewer funds. GSA 
originally requested funding for a parking structure on the campus in 
fiscal year 2012, but changed the plan to instead offer surface 
parking. The surface parking will provide approximately 1,600 fewer 
parking spaces than the original plan of a parking structure.
    Additionally, GSA will not be able to construct a distribution 
building that was included in the master plan in order to complete the 
project within the funding level provided. With the exception of this 
distribution building and the change in parking, the 2006 master plan 
will be complete in December 2013.

                   FEDERAL TRADE COMMISSION BUILDING

    Senator Durbin. This is kind of parochial, but it happens 
to relate to Capitol Hill and our Appropriations Committee.
    There has been a proposal from a Member of Congress to move 
or to acquire the Federal Trade Commission (FTC) building, 
which can be seen from the Capitol Complex here, and that it be 
given to the National Gallery of Art as an annex or a new 
facility. And, clearly, that suggestion comes with some 
controversy.
    Recently, the Commissioners at FTC sent us a statement--a 
bipartisan, unanimous statement--that stated serious concerns 
about the significant and unnecessary cost to the American 
taxpayer if the historic FTC building is given away to the 
National Gallery of Art.
    I happen to agree with the Commissioners in this regard. As 
I understand, the proposal is that FTC would be removed from 
this building, where I believe they started, and sent to some 
other location. Are you familiar with where that location might 
be or whether there is a Federal building currently vacant that 
could accommodate this agency?
    Mr. Tangherlini. I have met with a number of 
representatives from the FTC just to gain some initial 
awareness of this issue. I will actually be meeting with the 
interested Member of Congress tomorrow to hear that side.
    I'm not exactly sure what the proposal is for where the 
entirety of the FTC would go, because I haven't heard that 
version yet. But I do know that there is concern on the FTC 
side about moving out of the Apex Building.
    Senator Durbin. And the Federal Government owns the FTC's 
current headquarters?
    Mr. Tangherlini. Yes.
    Senator Durbin. And any replacement building, unless we 
have a vacant one ready to be moved into that the Federal 
Government owns, will be a lease expense, at whatever the costs 
of the lease may be?
    Mr. Tangherlini. From what I understand, one proposal 
that's being discussed would be a leased building.
    Senator Durbin. And there would typically be a cost in 
moving, physically moving the FTC? We have testimony from them 
that they believe that will be between $70 and $83 million.
    Mr. Tangherlini. Yes, that's what they told me. A large 
part of that, I gather, has to do with some high-tech equipment 
associated with the headquarters facility.
    Senator Durbin. It's my understanding they have forensic 
labs and a sophisticated information technology system that 
would have to be moved, relocated at considerable expense to 
the taxpayers.
    There's also this notion that if the National Gallery of 
Art moves into this building it will cost about $150 million to 
bring it up to whatever standards they expect to use the space.
    And the suggestion is that there would be a solicitation of 
charitable contributions to the Federal Government to the 
National Gallery of Art for that purpose, at least that is the 
proposal.
    I look out my window and look down the Mall and notice that 
there's some construction at the National Gallery of Art Annex. 
Are you familiar with that construction?
    Mr. Tangherlini. I am familiar with that construction.
    Senator Durbin. And they're replacing the marble veneer on 
the building.
    Mr. Tangherlini. Right.
    Senator Durbin. And I asked my staff to check how much was 
being paid for by charitable donations, and the answer is nada, 
nothing. This is all at taxpayers' expense.
    So the idea of tens, hundreds of millions of dollars 
flowing into the National Gallery of Art to renovate the FTC 
building seems to me to be speculative at least.
    So this notion of FTC leaving its traditional place at 
considerable expense, moving to another space at taxpayers' 
expense, and then the National Gallery of Art moving into the 
FTC building and remodeling it seems fairly inconsistent with 
the notion of a national deficit that has been motivating a lot 
of our budget decisions recently. You don't have to comment on 
that.
    I will just add that I understand work has been done at the 
FTC building recently, in terms of plumbing, electrical and 
such, and that it is in fairly good shape for a building of its 
vintage to continue to serve the FTC as is. Is that your 
understanding?
    Mr. Tangherlini. That's what I've heard from the FTC.
    Senator Durbin. Thank you.
    Senator Moran.

                      WESTERN REGIONAL CONFERENCE

    Senator Moran. Chairman, thank you.
    Mr. Miller, you indicated that there's been a referral to 
DOJ. Do you expect other referrals?
    Mr. Miller. We're working with DOJ every day. We're working 
very closely with them. When I say referral, I'm specifically 
being nonspecific. I think I've said everything I can say about 
it.
    We've met with DOJ. Our special agents are working closely 
with DOJ lawyers.
    Senator Moran. So when you say a referral, that doesn't 
necessarily mean an individual is under consideration for 
criminal charges by DOJ. It could be something broader than 
that.
    Mr. Miller. Well, let me----
    Senator Moran. Tell me what you mean by the word 
``referral''.
    Mr. Miller. Okay. I will tell you what happens in the 
normal course, and that is that when we do an investigation 
generally, we will have a matter, we may have one individual. 
We may have a number of individuals, and they may be related. 
It may be a scheme. It may be a conspiracy. They may be related 
in many different ways.
    We bring the entire matter to DOJ or to the U.S. Attorney's 
Office, and DOJ will either accept or decline the case, and 
then we will do further investigation.
    And what we hope will come out of it is indictments against 
individuals, an individual or more than one individual, as a 
result of the criminal conduct that is the highest criminal 
charge that is the most readily provable by the evidence.
    Senator Moran. That answers my question for purposes of 
what you can answer.
    Mr. Miller. Thank you.

                  WESTERN REGIONAL CONFERENCE PER DIEM

    Senator Moran. I don't understand how, for example, Mr. 
Miller, the rooms got paid for. There's a per diem that I 
assume every Federal employee would be able to utilize when 
traveling, including to this location. I can't imagine that the 
per diem is sufficient to cover the cost of what the hotel 
rooms or at least some of those hotel rooms would cost.
    In fact, I understand when the inquiry was made of the M 
Resort, they indicated that some of the rooms that were 
utilized in this conference were reserved for their, ``high 
rollers'' in the casino.
    How is it that a Federal employee is able to be reimbursed 
for the room? How does the per diem that they receive cover the 
costs that they incurred?
    Mr. Miller. Okay. The per diem for Las Vegas, at that time, 
was $93. And the hotel then would, what they say is they comp 
the room. They will give an upgrade, theoretically, for free.
    And so what they did was instead of a regular room, they 
gave an upgraded room. And these rooms were upgraded to the 
very highest, which was a two-story loft room that normally 
goes for more than $1,100 a night. And so they were giving 
these loft rooms.
    Now, the hotel can afford to do that because they expect to 
do catering. And it's part of the overall negotiation with the 
hotel that the Government has with the hotel to try and get the 
lowest, theoretically, try and get the lowest price for the 
taxpayer.
    Senator Moran. Were any of the rooms available for $93 a 
night?
    Mr. Miller. Yes. Yes.
    Senator Moran. Okay. So some of them were within the per 
diem.
    Mr. Miller. Correct.
    Senator Moran. Others paid the per diem, other employees 
received the $93 and paid the hotel that $93, but they got 
better rooms than what a normal $93 room would be as a result 
of the inducement by the hotel to have the conference there?
    Mr. Miller. Correct. It was part of the negotiation. 
Certain upgrades were included. And the upgrades would be 
charged at the per-diem rate of $93. So even though it was a 
two-story loft, it was charged $93.
    Senator Moran. Did you discover in your investigation any 
inappropriate relationship between the vendors, the hotel or 
the caterers, the folks that GSA contracted with to provide 
services for this conference? Anything inappropriate between 
the vendor, any vendor and anybody at GSA in arranging for the 
conference to occur here and for the entertainment, et cetera 
to occur? No better word, is there some kind of kickback or 
inappropriate payment, inappropriate illegal gift provided to 
the folks who were organizing the conference?
    Mr. Miller. That is under investigation. As we talked about 
before, we have a criminal referral.
    Senator Moran. Thank you.
    Any suggestion in your investigation, when you talk to GSA 
employees or the management in the region, was there a defense 
that kind of this goes on everywhere all the time kind of 
thing, either within GSA or outside the agency?
    Mr. Miller. Yes. Many of the witnesses we talked to said 
that this conference was similar to previous WRC, and they 
cited a number of them that occurred in Oklahoma, New Orleans, 
and Lake Tahoe.
    And the witnesses we talked to said this was along the same 
lines, that each of the so-called hosts for the conference 
tried to outdo one another, and the regional commissioner for 
region 9 for this one said, ``I want this to be over the top. I 
want this to be the best and most lavish sort of conference.''
    Senator Moran. In your investigation, did people say, Well, 
this goes on at other Government agencies, not just the GSA?
    Mr. Miller. Not that I know of, but I'll check the 
transcripts of the interviews.

           TRANSITION AT THE GENERAL SERVICES ADMINISTRATION

    Senator Moran. And then, finally, this may be for you, Mr. 
Tangherlini. I've been practicing while I've been sitting here. 
Tell me about Ms. Johnson's resignation. What precipitated 
that? Was she asked to resign? Was this on her own volition? 
How did this vacancy occur and then you take that position, at 
least acting or interim?
    Mr. Tangherlini. And, Senator, Dan is fine.
    Senator Moran. Thank you.
    Mr. Tangherlini. But I can only speak to what I've heard 
former Administrator Johnson say at other hearings that I've 
participated in over the last couple of days. And from what I 
understand is that she made the choice herself to resign as a 
way to allow the agency to move forward.
    I was asked by the White House to step in the weekend 
before her resignation and began my job Tuesday. I guess that 
would be April 3.
    Senator Moran. So the White House was aware of her pending 
resignation and had come to you to ask if you would serve in 
that capacity, and then she ultimately resigned?
    Mr. Tangherlini. That's what I understand what led them to 
ask me over the weekend.
    Senator Moran. And do you have any understanding as to 
whether or not she was asked by the White House or 
administration officials to resign?
    Mr. Tangherlini. From what I understand, and this was based 
on what I heard at these other hearings, was that she made the 
choice herself.
    Senator Moran. Mr. Chairman, thank you.

                  CIVILIAN PROPERTY REALIGNMENT BOARD

    Senator Durbin. Mr. Tangherlini, one of the issues proposed 
by the administration is the Civilian Property Realignment 
Board. Are you familiar with that concept?
    Mr. Tangherlini. I'm familiar with it.
    Senator Durbin. Best I understand it, it's something like a 
base closure commission, where we'd find a way to sell unneeded 
Federal property. And there have been versions that have 
originated in the House, now, in the Senate with Senators 
Carper and Portman. So what is GSA's view of these bills?
    Mr. Tangherlini. So as far as I know, the GSA view is that 
the proposal that the administration put forward is our 
preferred approach, that it is the most-aggressive proposal. 
It's the one that will raise the most funds.
    I'm not familiar with the Senate draft, but I would be 
happy to work with my staff to come back and find out what our 
position is.
    [The information follows:]

  General Services Administration Position on Pending Legislation on 
                     Civilian Property Realignment

    General Services Administration (GSA) supports the administration's 
proposal, which addresses the key challenges that exist in the current 
process and should streamline and accelerate the disposal process. With 
respect to the current bills being discussed in the Congress, GSA 
supports legislation that provides additional realty tools and 
incentives that encourage sound management of real estate portfolios. 
GSA supports, for example, retention of proceeds by individual agencies 
and their reinvestment in agency portfolios. Retention of sales 
proceeds allows landholding agencies to direct equity from unneeded 
assets to needed assets. Such incentives will foster portfolio 
management as opposed to individual asset management.

                  CIVILIAN PROPERTY REALIGNMENT BOARD

    Senator Durbin. As I understand it, and I may be wrong, and 
this is just a press report, that what they are suggesting is 
an alternative that would basically eliminate the board. I 
think our experience with BRAC has us a little shellshocked.
    Mr. Tangherlini. Okay.
    Senator Durbin. These boards that are supposed to be 
apolitical and turn out to be totally political, and that may 
be their motivation. I can't speak for them.
    But what are the safeguards that you think need to be 
maintained when we talk about the disposal of Federal property?
    Mr. Tangherlini. Again, that's an issue I'm going to have 
to get much further into, but I think one of the things we just 
need to make sure is that we have gone through a thorough and 
thoughtful process, so that we're not disposing of property 
merely to maximize revenue, but also thinking about the long-
term needs of the Federal Government.
    Senator Durbin. And I hope also take into consideration the 
state of the real estate market at the time that this is taken 
into consideration.
    Mr. Tangherlini. Fair enough.
    Senator Durbin. Fair enough.
    I don't have any further questions. Do you, Senator Moran?
    Senator Moran. Mr. Chairman, I do not have any further 
questions.
    I just would compliment Mr. Miller and his staff, as he did 
in his opening statement. It appears to me that you've done a 
good and thorough job. I thank you for your service to the 
public.
    Mr. Miller. Thank you.
    Senator Moran. And, Mr. Tangherlini, I welcome you to the 
GSA at very difficult times. It's pleasing to me that there are 
individuals who are willing to step forward and perform public 
service. And I wish you well in your new position at what 
obviously is a very difficult time.
    Mr. Tangherlini. Thank you.
    Senator Moran. And I thank you both for your testimony 
today.
    Mr. Tangherlini. Thank you.
    Senator Durbin. And let me echo that sentiment, and also 
note the subcommittee has received a prepared statement for the 
record signed by all five members of the bipartisan FTC 
expressing serious concern about the significant cost to 
taxpayers resulting from proposals to gift FTC headquarters to 
the National Gallery of Art, and without objection, the 
statement will be placed in the record.
    [The statement follows:]

           Prepared Statement of the Federal Trade Commission

    At the subcommittee's invitation, we write as the five members of 
the bipartisan Federal Trade Commission (FTC)--Jon Leibowitz, J. Thomas 
Rosch, Edith Ramirez, Julie Brill, and Maureen Ohlhausen--to voice our 
serious concerns about the significant and unnecessary costs to the 
American taxpayer if the historic FTC building is given away to the 
National Gallery of Art and the FTC is forced to move into commercial 
leased space.
    Instead of saving the Government money, the proposed transfer would 
needlessly forfeit a valuable Federal building and could initially cost 
well more than $100 million, with substantial additional costs incurred 
for years to come. Such an unprecedented giveaway would be contrary to 
the interests of American taxpayers, especially in this time of fiscal 
austerity.
    First, under proposals in the House of Representatives, the Federal 
Government would simply give away a Federal building that was recently 
appraised at $92 to $95 million. In addition, appropriated funds still 
would be required to pay for the maintenance of the FTC building if 
given to the National Gallery of Art. Although the National Gallery of 
Art's East and West Buildings were acquired with private money, their 
maintenance and operations fall to taxpayers under the National Gallery 
of Art's charter. For example, over the past several years, the 
Congress has appropriated more than $80 million just for repairs to the 
marble facade of the East Building. More troubling, in its fiscal year 
2013 congressional budget justification, the National Gallery of Art 
identified $45 million in additional critical maintenance and repair 
needs for its East and West Buildings. Although the National Gallery of 
Art purports to have the ability to raise hundreds of millions of 
dollars to repurpose the FTC building, if this building is given to the 
National Gallery of Art, taxpayers would be responsible for paying to 
maintain and operate it.
    Second, American taxpayers would incur $70 to $83 million in 
estimated costs to move the FTC out of its headquarters building. 
Moving the FTC headquarters would require the replication of the FTC's 
sophisticated Internet and forensic labs, litigation support 
technology, and pre-merger filing databases, as well as the 
Commission's data center.
    The costs to move would represent about one-quarter of the FTC's 
annual appropriation. We would be extremely concerned if any of these 
costs had to be taken out of FTC's operational budget, and the 
Commission had to cut back on its critical work on behalf of American 
consumers. As this subcommittee knows, FTC has consumer protection and 
competition jurisdiction over broad sectors of the economy, including 
healthcare, privacy, technology, and energy. FTC is also working to 
protect consumers struggling with the economic downturn against all 
manner of schemes--bogus job opportunities, sham debt relief, and 
fraudulent mortgage modification plans. At a time when all Federal 
agencies face budget cuts, FTC is particularly concerned that the 
Commission might have to bear the wholly unnecessary cost of being 
moved out of the FTC building and into commercial space.
    Third, the latest proposal to transfer the FTC building to the 
National Gallery of Art would move FTC into privately owned space. To 
occupy its headquarters, FTC currently pays $6 million annually to the 
Federal Building Fund (FBF) in lieu of rent. If FTC headquarters were 
moved to commercial space and the FTC building given to the National 
Gallery of Art, the FBF would lose that revenue, and more of the FTC's 
appropriation would be needed to pay a substantially higher rent to a 
commercial landlord. Moreover, the move out of a Federal building into 
commercial space could mean that FTC costs to move, including the costs 
to replicate its technology systems, could recur periodically. 
Additional appropriations could be needed every 10 years or so as 
leases expire and are replaced, through the competitive bidding 
procurement process, with new leases.
    Finally, the facts do not support claims that the proposed FTC 
building giveaway would save taxpayers hundreds of millions of dollars 
in building repair expenses because the National Gallery of Art would 
pay them with private funds. The FTC building is in excellent condition 
and needs no significant renovation, repair, or maintenance. In 
particular, the 75-year-old building has up-to-date electrical, 
plumbing, and HVAC systems, which are in excellent working order. The 
General Services Administration has listed no major projects on its 5-
year maintenance and renovation schedule for the FTC building.
    Any money that would be privately raised to pay for hundreds of 
millions of dollars in renovations to the FTC building apparently 
represents the costs of repurposing the FTC building to suit the 
specifications of the National Gallery of Art. This constitutes no 
savings to taxpayers, but is an estimate of the costs associated with 
remodeling the building for a completely different purpose than the one 
for which it was designed and built.
    We believe the most cost-effective plan for housing the FTC 
headquarters is the status quo--keep the FTC in the FTC building. There 
is no need to appropriate significant additional funds to move the FTC 
headquarters now and every 10 years or so--and there is no reason the 
Federal taxpayer should give away a valuable asset. The historic 
headquarters building was designed and built for the FTC,\1\ has been 
adapted to meet its evolving needs, and well supports the FTC's mission 
into the 21st century.
---------------------------------------------------------------------------
    \1\ When laying the cornerstone for the FTC building on July 12, 
1937, President Franklin Roosevelt stated: ``May this permanent home of 
the Federal Trade Commission stand for all time as a symbol of the 
purpose of the Government to insist on a greater application of the 
Golden Rule to the conduct of corporation and business enterprises in 
their relationship to the body politic.''
---------------------------------------------------------------------------

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Durbin. The record of the hearing will remain open 
for a period of 1 week, until noon on Wednesday, April 25, for 
subcommittee members if they wish to submit statements and/or 
questions.
    [The following questions were not asked at the hearing, but 
were submitted to the Administration for response subsequent to 
the hearing:]

            Questions Submitted by Senator Richard J. Durbin
              Questions Submitted to Daniel M. Tangherlini

             WAS TRAINING TO ENHANCE JOB SKILLS CONDUCTED?

    Question. There is a long-standing Governmentwide general provision 
carried in the Financial Services and General Government appropriations 
bill relating to funds permitted to be expended for training.\1\
---------------------------------------------------------------------------
    \1\ FSGG bill language:

    Sec. 714. (a) None of the funds made available in this or any other 
Act may be obligated or expended for any employee training that--
        (1) does not meet identified needs for knowledge, skills, and 
abilities bearing directly upon the performance of official duties;
        (2) contains elements likely to induce high levels of emotional 
response or psychological stress in some participants;
        (3) does not require prior employee notification of the content 
and methods to be used in the training and written end of course 
evaluation;
        (4) contains any methods or content associated with religious 
or quasi-religious belief systems or ``new age'' belief systems as 
defined in Equal Employment Opportunity Commission Notice N-915.022, 
dated September 2, 1988; or
        (5) is offensive to, or designed to change, participants' 
personal values or lifestyle outside the workplace.
    (b) Nothing in this section shall prohibit, restrict, or otherwise 
preclude an Agency from conducting training bearing directly upon the 
performance of official duties.
---------------------------------------------------------------------------
    To what extent did the General Services Administration (GSA) take 
this funding limitation into account in planning the Western Region 
Conference (WRC) for 2010, with respect to ensuring that training met 
identified needs for knowledge, skills, and abilities bearing directly 
upon the performance of official duties?
    Answer. GSA is aware of funding limitations listed in the Financial 
Services and General Government appropriations bill which outlines how 
funds can be expended for training. In light of what happened at the 
2010 WRC, Acting Administrator Daniel M. Tangherlini has taken a number 
of steps to ensure that training addresses identified needs for 
knowledge, skills, and abilities that are directly related to the 
performance of official duties since beginning his tenure on April 3, 
2012. The individuals responsible for the 2010 WRC conference are no 
longer employed by GSA, and GSA does not know whether or to what extent 
these limitations were taken into account.
    GSA has consolidated conference oversight in the Office of 
Administrative Services (OAS), which is now responsible for:
  --Oversight of contracting for conference space, related activities, 
        and amenities.
  --Review and approval of proposed conferences for relation to GSA 
        mission.
  --Review and approval of any awards ceremonies where food is provided 
        by the GSA.
  --Federal Government.
  --Review and approval of conference budgets as well as changes to 
        those budgets.
  --Oversight and coordination with GSA conference/event planners and 
        contracting officers on conference planning.
  --Review of travel and accommodations related to conference planning 
        and execution.
  --Handling of procurement for all internal GSA conferences.
  --Development of mandatory annual training for all employees 
        regarding conference planning and attendance.
    Additionally, we have cancelled the 2012 WRC as well as a number of 
other conferences that only or primarily involved internal staff, 
saving taxpayers $995,686.

          GENERAL SERVICES ADMINISTRATION'S CORRECTIVE ACTIONS

    Question. On April 2, 2010, then Administrator Martha Johnson 
issued her response to the Inspector General's (OIG) February 12, 2010 
draft ``Management Deficiency Report.'' (As part of that response, 
Martha Johnson states how on August 9, 2011, she established OAS to 
provide greater oversight and accountability for all administrative 
functions of the agency.) How long do you expect it will take for GSA 
to determine whether it can recover funds improperly expended for 
nonemployee meals?
    Answer. We have formally initiated collection actions for some of 
the improper expenses incurred at the WRC, including the cost of food 
provided during in-room parties. We continue to review the invoices and 
records of the conference to determine whether additional actions are 
appropriate. GSA is required to conduct debt collection in accordance 
with the Debt Collection Improvement Act and 41 CFR parts 105-55 and 
105-56. These authorities require us to give individuals a minimum of 
30 days to examine documents and the right to request hearings 
regarding GSA's claims. If hearings are requested, it could be several 
months before the process is complete, and GSA is able to recover 
funds.
    Question. How long do you expect it will take the Senior 
Procurement Executive to determine whether any of the payment to Royal 
Productions (the conference A/V firm) can be recouped as a result of 
double-payment of the lodging charges?
    Answer. Royal Productions has already reimbursed GSA for lodging 
charges by check for $1,962 on April 17, 2012.
    Question. What are the procedures and processes that are underway 
internally within GSA to address disciplinary action against the 10 
officials that were placed on administrative leave following the 
publication of the OIG's report?
    Answer. Requirements for taking an adverse action against an 
employee are outlined in 5 CFR part 752, to which GSA is adhering. GSA 
placed individuals on paid administrative leave while the agency has 
been conducting internal reviews and following specified processes. 
Disciplinary actions have been proposed and employees have due process 
rights under applicable statutes and regulations.
    Question. When do you expect the new OAS to have fully functioning 
oversight of contracting for conference planning?
    Answer. Fully functioning oversight by OAS began as of April 15, 
2012.

                          IMPROPER CONTRACTING

    Question. What system or processes are currently in place to ensure 
that required contract terms are expressly included in documents 
executed by GSA?
    Answer. GSA currently uses two primary systems to ensure that 
required terms are included in its contracts. The Federal Acquisition 
Service uses the Solicitation Writing System to automatically insert 
required contract clauses in its Multiple Awards Schedules Program. 
GSA's Public Buildings Service (PBS) uses an acquisition system called 
Comprizon, in which contract clauses are added manually, using existing 
clause databases and templates. Comprizon is expected to be replaced by 
a new acquisition system starting in the second quarter of fiscal year 
2013. The new system will have automatic clause insertion capability 
and, as a result, will better ensure that PBS contracts contain all 
required clauses and provisions. The clauses and provisions will be 
maintained in the system to ensure that they are current at the time 
the solicitation is issued.
    Question. As you evaluate the omission of mandatory contract 
clauses, would a spot review in the approval chain or other checklist 
help flag this to avoid future incidents of this nature?
    Answer. Yes, spot reviews and checklists would serve to flag 
incidents. Moving forward, GSA will enhance information technology (IT) 
system capabilities to better manage the contract clause process. GSA 
is set to test a Web-based clause engine already developed by the 
Department of Defense's (DOD) Defense Procurement and Acquisition 
Policy organization. The Clause Logic Service is a centralized tool 
that will enable increased efficiency, consistency, and accuracy of 
clause selection in contracts. The use of this system will alleviate 
the need to develop and maintain similar systems for each service and/
or office. The system will automatically include clauses and provisions 
in contract documents based on their particular prescriptions, and 
input from the contracting officer on contract attributes. The 
application of this system will reduce risk to the Government by 
ensuring all applicable clauses are included in each contract. GSA will 
work with DOD to add GSA-specific clauses to Clause Logic and commence 
system testing of the Graphic User Interface feature in October 2012. 
In the interim, GSA will take steps to strengthen management review of 
acquisitions to include a focus on contract clauses.

                      LOST CONFERENCE SURVEY FORMS

    Question. In the investigative interviews conducted by agents of 
the OIG, it is disclosed that the conference survey forms completed by 
the attendees at the final general session at the 2010 WRC to be boxed 
and shipped back for review cannot be accounted for, have never been 
found, and are apparently declared ``lost''. What procedures are in 
place to prevent future situations where valuable information including 
training evaluations can be safeguarded from loss?
    In general, GSA's National Records Program (NRP) establishes 
procedures, from a recordkeeping perspective, to safeguard agency 
information. Record maintenance and disposition procedures are 
documented in GSA Order CIO P 1820.1 (June 8, 2007). Within that 
directive, several key requirements for the successful execution of 
GSA's records program include:
  --Each Service and Staff Office (SSO) and each region is responsible 
        for implementing and operating an effective records management 
        program.
  --Heads of SSOs and Regional Administrators must designate a 
        qualified records officer to operate the records management 
        program within their area of jurisdiction.
  --Records officers are responsible for ensuring proper records 
        maintenance and disposition within their program and for 
        training, or arranging training for, associates. GSA's National 
        Records Officer is responsible for planning, developing, 
        administering, and providing oversight of records management 
        agency-wide.
    During approximately the past 18 months, and continuing today, GSA 
is on a path to improving our NRP. Specifically, GSA is currently:
  --Modernizing our records management policies by updating them to 
        take advantage of National Archives and Record Administration 
        (NARA) bulletins and incorporating cloud computing.
  --Updating GSA's records schedules to take advantage of the NARA 
        general records schedules and GSA's new cloud-based 
        applications.
  --Rebuilding our records management program infrastructure.
  --Supporting GSA's increased usage of electronic documents.
    To accomplish these goals, GSA has:
  --Contracted with the NARA for expert assistance;
  --Requested all SSOs and regions ensure proper personnel are placed 
        in Records Officer roles; and
  --Contracted with the Government Printing Office for digitization 
        support to facilitate GSA's move to increased use of electronic 
        documents.
    GSA understands the need for safeguarding agency records and 
information from improper destruction and loss. In addition to the 
remedial steps noted above, GSA conducts annual records officer 
training. GSA also conducts records management training for employees 
online at GSA Online University. GSA's goal this year is for all 
employees to have taken this training by September 30, 2012.

                           INTERNS CONFERENCE

    Question. What was the purpose of the conference held near Palm 
Springs for interns?
    Answer. GSA has determined that the conference for interns that was 
planned by then Acting Regional Commissioner Jeff Neely does not 
reflect the current priorities for GSA. Mr. Neely is no longer employed 
as GSA and the agency does not know what his purpose was.
    Question. Why would an off-site conference be held for interns?
    Answer. The conference was planned by then Acting Regional 
Commissioner Jeff Neely and does not reflect the current goals and 
priorities for GSA. As previously stated, Mr. Neely is no longer 
employed by GSA and the agency does not know what his purpose was. As a 
part of the Acting Administrator's top-to-bottom review of GSA 
operations, we concluded that all upcoming conferences should be 
reviewed in light of new controls over conferences and travel. Many 
conferences and meetings were cancelled as part of this review. All 
upcoming conferences must meet the new requirements which became 
effective on April 15, 2012.
    Question. Did the Region 9 Commissioner make that decision?
    Answer. Yes. The then Acting Region 9 Commissioner, Jeff Neely, 
made the decision to have the conference.
    Question. Have there been intern conferences before?
    Answer. To the best of our knowledge after a review of our records 
we have not found any evidence of other intern conferences in region 9 
or any other region or GSA central office.
       region 9 commissioner--history of excessive expenditures?
    Question. In one of the many documents from the OIG provided to the 
subcommittee, a special agent of the OIG asserts that the Region 9 
Commissioner's travel for almost 5 years is almost $250,000. What 
should the budget be for a regional commissioner for 5 years?
    It appears there may have been additional examples of region 9 
excessive expenditures:
  --``Interns Conference'' in Palm Springs at a cost of $60,000;
  --35 off-site visits conducted in 2010;
  --Episodes of lengthy travel while minimal work conducted (e.g., in 
        connection with a ribbon-cutting and site visits); and
  --Spouse attended a GSA conference with registration paid by GSA.
    Answer. PBS headquarters budget office provides a funding 
limitation to each region for its building operations and maintenance 
budget. Within that amount, regional management makes decisions about 
funding priorities within the region, including travel and other budget 
items. Although the regions and PBS headquarters offices were issued 
targets for travel obligations starting in fiscal year 2011 in response 
to Executive Order 13589 ``Promoting Efficient Spending'', PBS does not 
set specific travel budgets for each office of the Regional 
Commissioners.
    The amount of necessary travel for a Regional Commissioner during 
the last 5 years would be dependent on various factors, including:
  --geographic composition of the specific region;
  --the number and type of construction or major leasing projects;
  --the number and type of initiatives or issues with customer 
        agencies;
  --responsibilities with national initiatives or teams; and
  --the number of management meetings that they attended.
    Question. Apparently, the Chief Financial Officer (CFO) for PBS did 
not review the region's expenditures prior to expenditure. Which GSA 
official(s) should and will be responsible for catching excessive 
expenditures like this in the future?
    Answer. The GSA CFO is responsible for the expenditure of all 
funds, including travel costs, for PBS. In addition, the Acting GSA 
Administrator instituted several layers of review and approval for 
conferences and travel, including Head of Services or Staff Offices, 
Regional Administrators, Regional Commissioners, the Chief 
Administrative Services Officer, and CFO. Travel by a Regional 
Commissioner for normal business travel would be approved by the 
Regional Administrator.
    Question. How are we going to ensure that this never happens again?
    Answer. GSA is realigning financial overview and operations from 
PBS to the Office of the GSA CFO. GSA is working on the formal 
restructuring of this organization to achieve the additional levels of 
control to ensure that there is more oversight over budgeting and 
expenditures and prevent this type of spending.
    One of the first changes we made was to implement measures to catch 
excessive spending. Importantly, the Acting Administrator consolidated 
all PBS financial operations into GSA's Office of the Chief Financial 
Officer, which will ensure that there is more oversight over budgeting 
and expenditures. As soon as feasible, all GSA financial operations 
will be consolidated into the CFO's office.
    As of April 15, 2012, the Acting Administrator implemented new 
controls over travel and conferences. Under this policy, all travel is 
suspended unless it meets certain criteria. Only travel for designated 
GSA operational mission-related activities is permitted upon approval 
of the Regional Administrator or other approving office. Travel may 
also occur for an approved conference. Travel may be incurred for a 
routine management meeting upon waiver by the Deputy Administrator or 
Acting Administrator. Travel must be justified and approved, prior to 
the departure date, by the Head of Service or Staff Office. In 
addition, conferences must be approved by the Head of Service or Staff 
Office, Regional Administrator, the Chief Administrative Services 
Officer, and the CFO before any procurement activity takes place or 
cost is incurred by the organization sponsoring the event.
    GSA continues to work on our top-to-bottom review of its 
operations. As GSA goes through this review, it is deliberately looking 
for additional control mechanisms to implement so it can catch 
excessive spending, save taxpayer dollars, and ensure the most 
efficient delivery of services to GSA's customer agencies.

            PROBLEMS AT PUBLIC BUILDINGS SERVICE--SYSTEMIC?

    Question. Clearly, there has there been a culture of excessiveness 
and lax accountability within PBS, region 9, and perhaps even in some 
of the other regions. To what degree might this be a problem in other 
parts of GSA?
    Answer. GSA is committed to renewing our focus on our core mission. 
GSA currently is conducting a top-to-bottom review of the agency and is 
pursuing every initiative necessary to ensure this type of excessive 
spending does not occur in GSA. In the meantime we have taken the 
following steps to improve internal controls and oversight to ensure 
this type of excessive spending and lax accountability never happens 
again:
  --Established an OAS responsible for oversight and accountability of 
        all administrative functions;
  --Require mandatory annual training for all employees regarding 
        conference planning and attendance;
  --Canceled or reduced 35 conferences;
  --Suspended internal travel unless it is mission-critical;
  --Begun to move PBS regional budget under the direct authority of 
        GSA's CFO;
  --Implemented new controls over travel and conferences as described 
        above in response to question 14 (How are we going to ensure 
        that this never happens again?); and
  --Realigned reporting lines for Regional Administrators directly to 
        Deputy Administrator.
    In addition, GSA's Acting Administrator Daniel M. Tangherlini made 
it one of his priorities to ensure that there is a culture of integrity 
and responsibility at all levels of the agency and that any 
questionable activity be reported, investigated, and any appropriate 
disciplinary action taken. In a joint notice signed by himself and GSA 
Inspector General Brian D. Miller on April 11, 2012, he instructed all 
GSA employees that if they suspect any wrongdoing by any employee of 
the agency, they discuss it with their colleagues, supervisors, or 
higher levels in the organization. In addition, the notice stated that 
GSA will not tolerate retaliatory actions against anyone who raises 
concerns.

  EFFECT OF REDUCED SPENDING ON THE GENERAL SERVICES ADMINISTRATION'S 
        ABILITY TO PAY BILLS AND THE EFFECT ON FEDERAL AGENCIES

    Question. In recent years, the amount of funding that the Congress 
has allowed GSA to spend (particularly with regard to amounts allowed 
from the Federal Buildings Fund [FBF]) has been drastically reduced 
from the budget requests. How have you been able to pay your 
contractually obligated bills such as rental of space and building 
operations, and what effect has this had on building projects, and 
Federal agencies?
    Answer. The administration directed agencies to make additional 
reductions in travel, administrative support, and contracts. To meet 
the goals of this Administrative Cost Savings Initiative GSA PBS began 
making reductions in fiscal year 2011 and continues to do so into 
fiscal year 2012. These efforts have made it possible for GSA to 
reallocate funds within our Building Operations account to maintain all 
essential services at current levels and avoid reductions to the number 
of Federal employees.
    In addition, through the joint efforts of GSA and our customer 
agencies to focus on consolidating current occupancies and curtail new 
space and expansions, where possible, GSA has been able to operate the 
Rental of Space program at the appropriated funding level.

                      EFFECT ON BUILDING PROJECTS

    While GSA has been able to pay our contractual obligations, the 
reduced funding in our Building Operations account has curbed our 
ability to make necessary and prudent investments in our buildings. 
Reduced funding in both the Building Operations and Minor Repairs and 
Alterations accounts have limited our ability to lead efforts to reduce 
space, which requires up-front costs associated with planning and 
delivering the optimal portfolio plan.
    The reduced funding in our capital program limits our ability to 
build out vacant or underutilized Federal space that could be used to 
consolidate agencies, assist agencies in reducing their overall space 
utilization, reduce the amount of costly leased space, and maximize the 
efficiency of our existing Federal assets. Reduced funding for repairs 
and alterations could also result in Federal agencies needing to move 
out of Federal buildings if they are unable to carry out their mission 
due to the repair and reinvestment needs of that building.

                       EFFECT ON FEDERAL AGENCIES

    Consecutive years of reduced levels of funding prevent GSA from 
reducing repair and alteration liabilities and could lead to major 
equipment failures and a need to conduct emergency repairs and 
replacements, which cost more than conducting ongoing repairs and 
maintenance. Emergency repair and alterations cost more than conducting 
ongoing repairs and maintenance. This could disrupt customer agency 
operations and potentially impede them from carrying out their 
missions.
    GSA's fiscal year 2012 Major Capital Program request included 
repairs at seven Federal buildings throughout the United States and was 
submitted in support of the operations and missions of several customer 
agencies including the operations for the Headquarter Offices for the 
Departments of Agriculture, State and the Interior, the Veterans 
Benefits Administration, the Federal Bureau of Investigation, and 
numerous other Federal agencies. The scope of work involved in these 
projects included space consolidations and interior construction, 
exterior renovations, roof replacements, mechanical, electrical, 
heating, ventilation, and air conditioning systems (HVAC) repairs, fire 
and life-safety upgrades, entrance screening security upgrades, and 
hazardous materials abatement. In addition to the impact to our minor 
and major building repairs and alterations, GSA is unable to undertake 
major life-safety and fire protection, energy and water conservation, 
and wellness projects in Federal buildings throughout the country.
    Finally, GSA will not be able to provide sufficient alterations to 
owned space to meet agency changing requirements; facilitate 
consolidation efforts on behalf of our customer agencies to reduce 
vacant Federal space, and reduce leased space needs, which is more 
expensive to the taxpayer.
    Question. What will be the effect, if this trend continues for 
long?
    Answer. Consecutive years of reduced levels of funding will prevent 
GSA from being able to fully fund those activities that are essential 
to our mission and to improving our financial performance. If this 
trend continues GSA will be unable to make needed repairs and 
alterations, which can lead to major equipment failures and a need to 
conduct emergency repairs and replacements, at a greater cost to the 
taxpayer than conducting ongoing repairs and maintenance. Making 
necessary investments in facilities extends the life of the equipment 
and buildings, while also improving overall customer satisfaction.
    The reductions in funding in recent years for both new construction 
and modernization projects prevents the Federal Government from being 
able to take advantage of the favorable pricing conditions of the 
current market. This will lead to increased costs as agencies are 
forced to remain in more costly leased space and higher costs when 
modernization projects are ultimately executed in the out years.
    In addition, GSA's inability to undertake construction and 
expansion projects at our land ports of entry (LPOE) is a critical 
concern and impacts both pedestrian and vehicular traffic at our 
Nation's borders. A majority of the Nation's LPOE facilities currently 
in operation were designed to accomplish legacy missions from decades 
ago and require significant refurbishment or replacement to function 
effectively. Some of these facilities were built more than 70 years ago 
and cannot fulfill today's increased traffic demands and additional 
safety requirements resulting from the 1994 North American Free Trade 
Agreement, the increasing security requirements after September 11, 
2001, and the increasing need for 24-hour operations.
    If this trend continues it will greatly affect GSA's ability to 
fund our Building Operations allocation. We need to invest in energy 
studies and equipment upgrades, such as advanced meters in order to 
identify ways to save utility costs and implement changes that will pay 
for themselves through utility savings. While travel costs have been 
greatly reduced, there is still a need for mission-critical travel, 
including that for inspectors to visit construction and repair sites to 
ensure that contractors are complying with contracts and regulations; 
inadequate oversight could lead to waste, fraud, and abuse. In 
addition, it is necessary for GSA to train our personnel in order to 
ensure all staff remains current on applicable laws, regulations, and 
policies.
    Substantial reductions in funding could also impact GSA's ability 
to meet contractual obligations in our Rental of Space account, of 
which approximately 98 percent is associated with existing contractual 
obligations for current leased space that require payment on a monthly 
basis.
    Question. What has GSA done to help lower costs?
    Answer. GSA is closely managing and monitoring spending with the 
goal of increasing efficiency and reducing costs.
    PBS has already achieved significant reductions in travel spending 
in fiscal year 2011, meeting a GSA-established 25-percent travel 
reduction goal based on the fiscal year 2010 level. GSA will continue 
to reduce travel in fiscal year 2012 with a cumulative reduction of 30 
percent in fiscal year 2013, in accordance with Office of Management 
and Budget (OMB) Memorandum M-12-12. The reductions have been and will 
continue to be achieved through implementing new GSA-wide travel 
approval procedures, leveraging technology where it makes sense, and 
limiting travel to that which is necessary to support of mission-
critical needs of the agency and customer needs.
    PBS has taken an active role in reducing management support 
contracts. In early fiscal year 2012, PBS issued both guidance and 
reduction targets to the regions and units within the headquarters, and 
we will continue to monitor the progress toward meeting those targets. 
In addition, the PBS IT Governance Board currently reviews all IT 
expenses to ensure that they are meeting the PBS mission in the most 
cost-efficient manner. Systems reviews have targeted systems for 
migration or elimination as a means of streamlining business 
information and reducing operations and maintenance costs.
    PBS is looking at cost-savings measures in cleaning, maintenance, 
and utilities. For cleaning and maintenance, we are reviewing and re-
evaluating current contract requirements and models to gain 
efficiencies and drive costs down. PBS is engaging industry partners 
and the vendor community to calibrate PBS practices against those used 
by private industry. We are placing a stronger emphasis on operational 
audits to ensure that buildings are running at optimum efficiency and 
that contract services are scoped properly.
    PBS is also achieving significant savings in its utility and 
operational budgets through energy and water reductions. Energy 
Independence and Security Act 2007 requires Federal agencies to reduce 
energy consumption by 3 percent per year in British Thermal Units (Btu) 
per gross square foot (gsf) compared to a baseline of fiscal year 2003, 
to reach a total of 30-percent reduction in fiscal year 2015. 
Additionally agencies are required under Executive Order 13423 to 
reduce water consumption on a gallon per gsf basis by 2-percent per 
year over a baseline of fiscal year 2007 to achieve an end result of 
16-percent reduction by 2015. Reducing agency's energy by the mandated 
3-percent Btu/gsf per year would result in approximately 425,230 mmBtus 
and $11.1 million savings annually. Additionally for each 2-percent 
reduction in gallons/gsf in water consumption, GSA will save an 
estimated $440,000 and 49.6 million gallons of water annually.
    GSA requested $40 million for Energy and Water line item project 
funding in the fiscal year 2012 budget request. If fully funded, GSA 
would realize an estimated annual savings of 400,000 million Btus and 
$6.4 million. The average payback for these projects is 6.25 years.
    PBS is also achieving savings through the energy reverse auction 
program, which provides a framework and a mechanism to assist more than 
300 Federal facilities to purchase natural gas. This real-time auction 
process allows PBS to receive bids for multiple-term lengths and 
pricing products in a matter of minutes as each auction only takes 5 
minutes in total while providing significant reductions in costs from 
the 2003 baseline. Based on the auctions held to date, GSA estimates 
$9.3 million in annual cost reductions comparing old contract rates to 
new contract rates, and $17 million over the full term of these 
contracts. From a percentage perspective, rates have decreased by 25 
percent comparing the old contract rate of $5.85 per decatherm (dth) to 
$4.40 per dth for fiscal year 2012 awards.
    Question. How does GSA determine agencies' rental costs?
    Answer. GSA's Fair Annual Rent (FAR) process establishes the rates 
Federal tenants pay for occupancy in federally owned (GSA) space. In 
federally owned space, rent is based on a rent appraisal specific to 
the building
    FAR appraisals are developed by independent professional appraisers 
with local market expertise, based on FAR appraisal instructions 
provided by GSA. They are intended to reflect rental rates that would 
be realized for occupancy in GSA buildings, from a private sector 
perspective, and account for characteristics of the building and its 
market. As markets are dynamic, GSA has the rental rates in every 
building appraised at least every 5 years. Every appraisal, developed 
and reported by independent professionals with local market expertise, 
is subject to a thorough, four-level review process, involving Regional 
and Central Office appraisers.
    For leased space, rent is a pass-through of the underlying lease 
contract rent, plus any standard operating costs not performed through 
the lease, the PBS lease fee (7 percent of the lease contract), and 
security charges.
    Question. I am hearing from some of the other agencies funded by 
this subcommittee, that they are being asked by GSA to ``improve 
utilization of their space'' or to reduce their rental space. But even 
reducing space has costs associated with it. Would you please discuss 
how improving space utilization can have costs?
    Answer. Improving utilization requires agencies to reduce their 
real estate footprint and possibly move to a mobile workplace 
environment, which necessitates up-front investments in up-to-date 
information technology, furniture solutions, and retrofitting of 
current Federal space at times. The entire Federal community must find 
ways to finance the investments needed to improve utilization and 
produce long-term savings.

      REDUCED FEDERAL BUILDING CONSTRUCTION AND EFFECT ON AGENCIES

    Question. For years, typically in a given year, we allowed GSA to 
spend about $700 to $900 million from the FBF in order to construct 
buildings to house Federal agencies. In the past 2 years, that funding 
has been drastically reduced, to a new low last year of only $50 
million. Will this result in agencies being required to move to leased 
space, which is more expensive for the Federal Government, and is 
contrary to OMB policy and Government Accountability Office (GAO) 
recommendations?
    Answer. In markets where no other suitable federally owned space 
exists and a Federal agency has a long-term space requirement, reduced 
funding in our construction budget could lead to increased occupancy of 
leased space, often times at a higher cost to the taxpayer.
    The reduction in repair and alterations funding also limits our 
ability to build out vacant or underutilized Federal space that could 
be used to consolidate agencies out of costly leased space, assist 
agencies in reducing their overall space utilization, and maximize the 
efficiency of existing Federal assets.
    Question. Aren't we being short-sighted by not doing Federal 
construction since the market is competitive now, resulting in lower 
costs than at other times, and projects will only get more expensive in 
the future?
    Answer. It always is preferable to house our tenants in federally 
owned space for long-term housing needs, as it is the best value 
overall to the Government and the taxpayer.
    GSA has realized significant savings during this competitive 
bidding climate, particularly through the American Recovery and 
Reinvestment Act (ARRA), which allowed GSA to fund needed new 
construction and renovation projects at a time when construction costs 
were at an all-time low. Building materials costs were rapidly 
escalating when GSA began identifying projects for ARRA funding. 
However, market conditions changed and GSA realized lower construction 
bid estimates, resulting in approximately $565 million in immediate 
savings from awarding contracts in this bidding climate. GSA's 
preliminary analysis reports that larger projects were awarded at 8-10-
percent less than estimated cost.
    With the construction market still favorable, GSA could award 
additional modernization and new construction projects previously 
approved for design by the Congress, if construction funding became 
available. These projects are either fully or partially designed and 
could be procured for construction quickly. The work would support 
specific systems and modern workplace needs while creating new and 
durable jobs in a hard-hit sector of the economy.
    Question. Apart from some of the giant Federal department 
consolidations (such as the Department of Homeland Security's (DHS) St. 
Elizabeths campus and the Federal Drug Administration's White Oak 
campus), some of the larger Federal building construction projects have 
been courthouses. In recent years, through design guide requirements 
and courtroom-sharing policies, courthouse construction projects are 
now smaller. How else have you been working with the courts to reduce 
costs?
    Answer. GSA and the Administrative Office of the U.S. Courts 
(AOUSC) have taken numerous steps to reduce courthouse costs. After the 
Judiciary declared a moratorium on courthouse construction in 2004, the 
AOUSC, with GSA's participation, began an Asset Planning Process to re-
examine all of the projects that previously were on the 5-year plan. 
The new process redefined the selection criteria used by the Courts to 
select projects for inclusion in the 5-year plan and has eliminated 
many projects that previously were on the 5-year plan for new 
construction.
    GSA and the AOUSC are reviewing projects to reduce scope and costs 
and discussing other ways to save on courthouse construction costs, 
including reducing the size of all projects currently in design or 
planned for design in the Courts' 5-year plan by eliminating courtrooms 
and chambers for future projected judges. Courtroom sharing among 
senior district, magistrate, and bankruptcy judges has dramatically 
reduced the cost of new courthouses. In addition, the AOUSC is 
considering limiting raised access flooring to the well of the 
courtroom, and introduction of flexible office environments where 
appropriate.

      EFFECTS OF SLOWING DOWN THE DEPARTMENT OF HOMELAND SECURITY 
           HEADQUARTERS CONSTRUCTION PROJECT (ST. ELIZABETHS)

    Question. The consolidation of the DHS headquarters at St. 
Elizabeths has been the highest-priority construction project of this 
and the previous administration's, and is a $3 billion project that 
will consolidate DHS offices in the Washington area, many of which are 
in leased space.
    Construction began in July 2009, and typically, construction 
funding requests amounted to a significant investment. Now, this 
project is limping along, due to the reduced amount of funding the 
Congress is able to provide for GSA construction due to funding 
constraints. What are the effects of slowing down this huge project?
    Answer. Completion of the consolidated DHS headquarters project was 
projected for 2016, but curtailed funding of both GSA and DHS has 
delayed completion by at least 5 years. The Congress has appropriated 
$1.36 billion to the project through fiscal year 2012, and GSA and DHS 
will seek remaining appropriations in the coming fiscal years.
    GSA and DHS are working collaboratively to update the original 
project plan to reflect appropriations to date and the impact on cost 
and schedule for completion. GSA anticipates finalizing the revised 
project plans this summer and will provide the Congress with the 
revised plan once finalized.
    The effects of the schedule slowdown include increases in total 
project cost due to escalation, lack of project integration, inability 
to take advantage of bulk purchases, and continued lease payments in 
high rental rate submarkets in Washington, DC. For example, there is 
approximately 1.5 million square feet of leased space in the East End 
and another 1.9 million square feet in southwest D.C., two submarkets 
with the highest average rental rates in the Washington, DC area.
    The slowdown also affects DHS housing requirements. The DHS 
National Capital Region Housing Master Plan and the DHS Consolidation 
Headquarters Collocation Plan provide the mission and operational needs 
for headquarters campus. DHS is better able to answer questions about 
specific implications for DHS's mission.
    Question. What changes are you considering to the project as a 
result of construction funding levels?
    Answer. Due to the reduced fiscal year 2011 and fiscal year 2012 
funding levels for St. Elizabeths, GSA and DHS are working to finalize 
a revised project schedule. GSA and DHS currently are evaluating the 
overall consolidation program, including mission support within the 
national capital region and St. Elizabeths, in order to more 
efficiently utilize the space at St. Elizabeths.

                   DENVER FEDERAL CENTER REMEDIATION

    Question. Most of the buildings on the Federal Center were 
constructed in 1941 for the Denver Ordnance Plant that produced 
ammunition in support of World War II. The site has since been used by 
more than 27 different Federal agencies for more than 67 years.
    Since fiscal year 2004, GSA has received $39 million over 6 years 
in requested construction funds for remediation of the Denver Federal 
Center, a 640-acre secured Federal facility located west of Denver in 
the city of Lakewood, Colorado. GSA has identified more than 600 areas 
on the site that could be impacted by hazardous materials, so the 
Federal Government must conduct remediation under three Colorado State 
consent orders. Is GSA on track to meet the requirements of the consent 
orders and what will happen if GSA does not receive the funding?
    Answer. The $3 million identified in the fiscal year 2012 the 
reprogramming request that accompanied the fiscal year 2012 spend plan 
submitted to the Congress was adequate for GSA to continue to comply 
with the consent decree through fiscal year 2013 and until such time 
that future funds can be secured. Based on the consent order, no 
punitive action will occur if GSA requests funding from the Congress. 
However, if GSA cannot demonstrate that funding has been requested, the 
Colorado Department of Public Health and Safety can fine GSA $25,000 
per day per incident under the Resource Conservation and Recovery Act.
    Question. When do you expect the project to be finished?
    Answer. The original project schedule was fiscal year 2008 through 
fiscal year 2012. This schedule assumed all fiscal year 2012 funds 
would be provided in full. Due to the limited availability of funding 
in fiscal year 2012, GSA determined that a lower level of funding could 
be dedicated to continue the remediation and still adhere to the terms 
of the consent decress. GSA will need to request additional funds in a 
future fiscal year to complete the remediation efforts. We anticipate 
completion of the project 2 years after receipt of necessary funding, 
assuming that no new, unanticipated issues are discovered on-site 
during excavation for ongoing remediation.
    It is important to note that as investigation and remediation 
continue, the estimate of future needs may change as we may identify 
better defined areas requiring remediation as well as the volume of 
waste and/or contaminated soil.

                    REDUCED FEDERAL BUILDING REPAIRS

    Question. Prior to the enactment of ARRA, GSA had a backlog of $8.4 
billion in buildings needing repairs or alterations. Through ARRA, GSA 
has been able to reduce that backlog by $1.4 billion, while improving 
the energy-efficiency in 257 of the Nation's buildings, and creating 
60,326 jobs. However, for the past 3 years, we have not been able to 
meet the requested levels for repair projects. In fact, for the past 2 
years, no funding has been allowed for major repair projects. How has 
that affected the backlog and what is the effect on the health, safety, 
and mission of Federal agencies?
    Answer. Prior to the enactment of ARRA, GSA had identified $8.4 
billion in its 10-year investment liability, which is the funding GSA 
should invest in their buildings over the next 10 years. GSA's 
financial statements did not record a deferred maintenance backlog. In 
fiscal year 2012, GSA did not have the funds for major modernizations 
as we needed the allocated funds for minor repairs and alterations in 
order to maintain our buildings at a basic level. Consecutive years of 
reduced levels of funding prevent GSA from being able to reduce our 
current repairs and alterations investment liability of an estimated 
$4.7 billion, which will continue to increase without adequate funding. 
GAO has issued audit reports discussing the impacts and concerns over 
this large backlog estimate. While ARRA has helped, the pool of these 
needed repairs is still significant with an average age of buildings 
totaling 47 years. The inability to fund these needed repairs will lead 
to major equipment failures and a need to conduct emergency repairs and 
replacements, costing taxpayers more than conducting ongoing repairs 
and maintenance. These emergency repairs could disrupt customer 
operations and potentially impede them from carrying out their mission.
    Question. What are some of the critical repair projects not able to 
be addressed?
    Answer. GSA's nonprospectus basic repairs and alterations program 
funds alterations in 1,599 Federal buildings nationwide. Enacted 
budgets cut GSA's minor repair and alterations budget request by nearly 
20 percent in fiscal year 2011 and approximately 35 percent in fiscal 
year 2012, limiting our ability to do necessary upkeep to maintain the 
condition of GSA PBS's portfolio.
    GSA's fiscal year 2011 Major Capital Program request included 
repairs at eight Federal buildings throughout the United States and was 
submitted in support of the operations and missions of such Federal 
agencies as the Department of State, the Internal Revenue Service, the 
Social Security Administration, the U.S. Courts, Federal Bureau of 
Investigation (FBI), and Immigration and Customs Enforcement. The scope 
of work for these projects included space consolidations and interior 
construction; exterior renovations; roof replacements; repairs to 
mechanical, electrical, and HVAC; fire and life-safety upgrades; 
entrance screening security upgrades; and abatement of hazardous 
materials.
    In addition to preventing GSA from making minor and major building 
repairs and alterations, these cuts affected our ability to undertake 
major life-safety and fire protection, energy and water conservation, 
and wellness projects in Federal buildings throughout the country.
    For example, the proposed but unfunded fiscal year 2012 project at 
the Major General Emmett J. Bean Federal Center in Indianapolis, 
Indiana provides for security upgrades to bring the complex into 
compliance with the DOD's Unified Facilities Criteria standards which 
is necessary in order for DOD's continued occupancy of the Federal 
Complex. The project includes important security features such as the 
introduction of a setback, the installation of blast-resistant windows, 
the relocation of the loading dock and mailroom, and protection of air 
intakes. Additionally, the project would remedy drainage deficiencies 
that plague the complex through the installation of an underground 
storm water drainage system. GSA has utilized stop-gap measures to 
address the problem, but prospectus level funding is required to 
resolve the root cause of the problem. This project is critical to 
ensure the Bean Federal Center remains occupied by DOD as a safe, well 
maintained asset within the GSA portfolio.

                GSA'S SPEND PLAN BASED ON ENACTED LEVELS
                        [In thousands of dollars]
------------------------------------------------------------------------
                                            President's
          Repair and alteration               budget       Enacted level
------------------------------------------------------------------------
Nonprospectus basic repairs and                  335,297         271,724
 alterations............................
Indianapolis, Indiana--Major General              65,813  ..............
 Emmett J. Bean Federal Center..........
Van Nuys, California--James C. Corman             11,039  ..............
 Federal Building.......................
New York, New York--Daniel Patrick                28,000           2,031
 Moynihan U.S. Courthouse \1\...........
Richmond, California--Frank Hagel                113,620  ..............
 Federal Building.......................
Washington, District of Columbia--West             6,245           6,245
 Wing Design Phase II...................
Los Angeles, California--Federal                  51,217  ..............
 Building/Parking Garage [FBI]..........
San Diego, California--Edward J.                  22,336  ..............
 Schwartz U.S. Courthouse and Federal
 Building [ICE].........................
Washington, District of Columbia--E.              22,900  ..............
 Barrett Prettyman U.S. Courthouse......
Energy and water retrofit and                     20,000  ..............
 conservation measures..................
Fire Prevention Program.................          20,000  ..............
Wellness and fitness program............           7,000  ..............
Washington, District of Columbia--West    ..............          46,000
 Wing/East Wing Infrastructure Systems
 Replacement \2\........................
NOA repairs and alterations.............         703,467         326,000
------------------------------------------------------------------------
\1\ Design only
\2\ Reprogrammed funds

    GSA's fiscal year 2012 Major Capital Program request included 
repairs at seven Federal buildings in support of operations and 
missions of the Department of Agriculture, the headquarters operations 
for the Departments of State and the Interior, the Veterans Benefit 
Administration, the FBI, and numerous other agencies. The scope of work 
for these projects included space consolidations and interior 
construction; exterior renovations; roof replacements; repairs to 
mechanical, electrical, and HVAC systems; fire and life-safety 
upgrades; entrance screening security upgrades; and abatement of 
hazardous materials.
    In addition to preventing GSA from making minor and major building 
repairs and alterations, these cuts affected our ability to undertake 
major life-safety and fire protection, energy and water conservation, 
and wellness projects in Federal buildings throughout the country.

          GSA'S FISCAL YEAR 2012 REPAIR AND ALTERATIONS PROGRAM
                        [In thousands of dollars]
------------------------------------------------------------------------
                                            President's
          Repair and alteration               budget       Enacted level
------------------------------------------------------------------------
Non-Prospectus Basic Repairs and                 402,388         260,000
 Alterations............................
Washington, District of Columbia--Main            50,400  ..............
 Interior Building......................
Washington, District of Columbia--Harry           11,039  ..............
 S Truman Building......................
Honolulu, Hawaii--Prince J. Kuhio                198,650  ..............
 Kalanianaole Federal Building and
 Courthouse.............................
San Francisco, California--Phillip                49,900  ..............
 Burton FBI Consolidation...............
Overland, Missouri--Prevedel Federal              24,386  ..............
 Building...............................
Washington, District of Columbia--                17,000  ..............
 Eisenhower Executive Office Building
 Pennsylvania Avenue screening facility.
Los Angeles, California--Federal                   9,478  ..............
 Building [ICE] Design..................
Energy and water retrofit and                     40,000  ..............
 conservation measures..................
Fire prevention program.................          15,000  ..............
Wellness and fitness program............           7,000  ..............
Judiciary capital security program......  ..............          20,000
NOA repairs and alterations.............         868,902         280,000
------------------------------------------------------------------------

  PROPOSAL TO MOVE THE FEDERAL TRADE COMMISSION FROM ITS HEADQUARTERS 
                                BUILDING

    Question. H.R. 2844 would require GSA to transfer ownership of the 
current headquarters of Federal Trade Commission (FTC) to the National 
Gallery of Art. Please provide a status update on the condition of the 
FTC headquarters building, including the most recent upgrades and the 
cost of such upgrades. Please include specific detail on the following:
  --the electrical system;
  --the plumbing system;
  --the HVAC systems;
  --the roof;
  --the windows; and
  --any other items GSA deems critical for proper maintenance of the 
        building.
    Answer. The administration opposes legislation that would require 
GSA to transfer ownership of the current headquarters of the FTC to the 
National Gallery of Art. The FTC headquarters is fully utilized and 
does not require significant renovation. Investment in FTC headquarters 
by both FTC and GSA has exceeded $30 million over the last decade. This 
work entailed capital improvements to the building such as a new roof, 
a new chiller plant, repairs to the air handling system, new security 
windows, a new energy management and control system, and upgrades to 
the building's fire alarm system. This also includes sizable 
information technology investments made by FTC in its data center and 
technology labs. Repairs to building plumbing and electrical systems 
have been minor.
    Question. Does GSA have any major projects on its 5-year 
maintenance and renovation schedule for FTC headquarters?
    Answer. GSA has no major projects on its 5-year maintenance and 
renovation schedule for FTC headquarters building.
    Question. Does the current FTC headquarters space fit the needs of 
FTC, now and in the future?
    Answer. Yes. FTC is very satisfied with their current headquarters 
space and it fits their requirements, including special space and 
hearing rooms. Currently, the building is in relatively good condition 
and is therefore not included in GSA's 5-year plan for renovation.
    Question. FTC Commissioners submitted unanimous testimony for the 
record stating that physically moving FTC headquarters operation would 
cost $70 to $83 million. Are these costs in line with typical moving 
costs for agencies? What other costs are associated with physically 
moving an agency?
    Answer. Based on FTC's requirements to relocate headquarters 
components and associated special space (including their data center, 
technology laboratories, and hearing rooms), these costs are within the 
average range for agency moving costs.
    The cost of physically moving an agency may include moving 
services, tenant fit-outs, furniture, fixtures and equipment, 
information technology, and telephone needs. If the agency is moving 
from federally owned to leased space, the rent revenue flows to a 
third-party lessor rather than another Government agency. Finally, 
there may be additional costs if the moving agency is displacing a 
current or intended occupant as a result of the move.
    Question. GAO, Congressional Budget Office, and OMB have found that 
it is more cost-effective to house agencies in federally owned space 
rather than leased space. Does GSA concur with this assessment?
    Answer. Yes. Ideally, GSA would use Federal construction to meet 
all long-term Federal agency space needs, as leasing is the most 
expensive form of space acquisition for long-term requirements. GSA 
relies on the FBF to operate, maintain, and reinvest in all of its 
owned assets in the Federal inventory, to meet all current lease 
commitments, and to fund the acquisition of new leased or owned assets. 
Funds to acquire new assets for emerging Federal agency space 
requirements are limited to the FBF resources that remain available 
after GSA meets all existing commitments for its owned and leased 
assets. The long-term cost advantages of ownership are preferable to 
leasing.
    Question. If the FTC headquarters building is given to the National 
Gallery of Art, is there vacant federally owned space for the FTC to 
occupy, or, would GSA be forced to move the agency into leased space? 
Would this impose an increased cost on the taxpayer?
    Answer. There is no vacant federally owned space available and 
suitable for housing FTC. In order to accommodate FTC in Federal space, 
another Federal agency would be forced to move out of the space, and 
this would be a significant increase in the cost to taxpayers.
    Question. Given these findings, what does GSA believe is the best 
use for the FTC headquarters building?
    Answer. GSA believes the taxpayer is best served by maintaining the 
FTC headquarters' current location. A forced move of FTC would increase 
the net amount of Government leased space and incur relocation costs 
and rent, both of which would occur if the building was given to a 
quasi-governmental entity such as the National Gallery of Art.
    Additionally, whenever a federally owned property is transferred to 
a quasi-Governmental entity, existing laws and regulations require that 
entity to compensate the Federal Government for the full value of the 
property involved. In this instance, the value of the FTC headquarters' 
current location is $92.8 million. Thus the Federal Government risks 
the potential loss of the building, plus relocation expenses and 
dislocation costs, if any.
    Given the overall negative impact to the American taxpayer, the 
administration opposes proposed legislation that would direct the 
transfer of the FTC headquarters.

                  FISCAL YEAR 2013 BUDGET FOR THE FBF

    Question. Your request for rental of space is a $338.4 million or a 
6.5-percent increase. What will you do if forced to be on a continuing 
resolution of significant duration?
    Answer. Typically, obligations for rental of space are higher in 
the second half of the fiscal year as leases are renewed. Over the last 
4 years, obligations through March have only amounted to 47.7 percent 
of the annual obligations. Unobligated balances and recoveries of prior 
year obligations, along with the timing of the obligations will allow 
the Rental of Space account to operate for several months while on a 
continuing resolution.
    Question. Last year, you requested almost $470 million for seven 
construction projects and this year, you are requesting $56 million for 
two acquisition (building purchase) projects. Does this represent a 
shift in your thinking?
    Answer. GSA has proposed a responsible budget reflective of the 
current budget climate. We are prioritizing our existing financial 
obligations and the most critical and exigent investment needs in our 
inventory. While there remain additional valuable investments in 
consolidations like the acquisition of the currently leased buildings 
in Martinsburg, West Virginia, and Riverdale, Maryland, we must 
acknowledge the reality of the budget climate.
    Question. How much funding do you expect to save with the 
acquisition of these buildings?
    Answer. Purchasing the two buildings at Martinsburg, West Virginia, 
and Riverdale, Maryland, will eliminate costly lease obligations and 
result in millions in out year cost avoidance to the Government. The 
purchase of Riverdale alone could save the Federal Government more than 
$10 million in annual rent. For Martinsburg, the Congress authorized 
the appropriations for acquisition, through an existing purchase 
option, of this building as part of the fiscal year 2011 Capital 
Investment and Leasing Program. GSA has continued to lease the building 
and since fiscal year 2011 has spent more than $6 million in rental 
payments. The current lease expires in 2015, and if it is allowed to 
expire GSA will lose the purchase option. If GSA is required to extend 
the lease versus purchasing the building it is anticipated that the 
rental rate for continued occupancy will be as much as $6 million, or 
approximately double the current rent rate.
    Question. In a departure from your typical requests for major 
Federal building repair projects, instead, this year you are requesting 
$123 million for ``Exigent Needs'' at 16 Federal buildings. Can you 
give us a few examples of the highest-priority and most-critical needs?
    Answer. GSA considers all of the projects requested in the fiscal 
year 2013 Exigent Needs program to be of high priority and a critical 
need. GSA is requesting a limited amount of funding to support exigent 
need projects in 20 Federal buildings to repair and update critical 
building and safety systems including elevators; fire and life-safety, 
electrical, and heating and ventilation systems; and to repair 
structural deficiencies.
    The program addresses such essential work items as fire alarm 
system replacements on antiquated and irreparable systems that could 
jeopardize the safety of occupants and the building if left 
unaddressed. The program also intends to secure the facade and parking 
structure at two facilities that could pose hazards to building 
occupants and the general public if unrepaired, and remove hazardous 
materials at two other locations. Upgrades and repairs to electrical 
and elevator systems are designed to ensure continued operations of 
several Government-owned facilities and prevent disruption to agency 
missions and service to the American taxpayer.
    Question. Do you expect that these types of acquisition and repair 
projects will become a trend in the short-term (in lieu of construction 
and major repair projects)?
    Answer. GSA will continue to assess and prioritize the conditions 
and needs of our assets, as well as the needs of our Federal tenant 
agencies. We will work with OMB to discuss these needs in relation to 
competing priorities from other executive branch agencies. GSA's budget 
requests for FBF obligational authority will reflect efforts to balance 
our needs with those of other agencies within the overall Federal 
budget framework.

                         COST-CUTTING MEASURES

Buyouts
    Question. Of the buyouts GSA is offering, what percentage of 
employees do you believe will accept them and what will be the effect 
on the agency?
    Answer. GSA implemented a buyout program in March 2012 with an 18-
percent take rate. GSA is considering additional requests for Voluntary 
Early Retirement Authority/Voluntary Separation Incentive Payment 
authority. If that authority is granted, GSA expects the take rate to 
be in the same 18-percent range. The agency will be able to reduce the 
workforce commensurate with the decline in the workload. Also, where 
the nature of the work has shifted and requires new skills due to 
process improvements, technology and changing business delivery models, 
GSA intends to recruit and hire people with the skills required to 
accomplish the mission.
    Question. How will you avoid or mitigate the loss of knowledge when 
workforce reductions occur?
    Answer. The buyout is targeted and focused on specific 
organizational components or occupations across the enterprise. GSA 
balanced the need to acquire different skills with the need to avoid or 
mitigate the loss of knowledge by offering buyouts to a percentage of 
the organization/population, not the organization/population as a 
whole.
Effort To Streamline Acquisitions and Reduce Costs
    Question. In 2001, OMB established a Governmentwide initiative, to 
be carried out by GSA, to bring together different acquisition data 
systems in a unified and fully integrated manner. This effort, called 
the Integrated Acquisition Environment (IAE), will enable Federal 
agencies to share data and make informed decisions, make it easier for 
contractors to do business with the Government, and result in cost 
savings to the taxpayer. In 2008, GSA began consolidating its own 
portfolio of 10 stove-piped systems with different contractors into one 
integrated system called the System for Award Management (SAM), under 
IAE.
    GSA has requested various levels of funding for the past 3 years 
for IAE.\2\ While some costs have increased due to lack of funding in 
fiscal year 2012, since 2009, development costs for the System for 
Award Management have increased significantly. Why is this?
---------------------------------------------------------------------------
    \2\ Fiscal year 2013 request of $21 million; fiscal year 2012 
request of $38 million (received zero); and fiscal year 2011 request of 
$15 million (received $7 million).
---------------------------------------------------------------------------
    Answer. The SAM program encompasses a range of activities beyond 
just the specific development of the SAM application itself. These 
activities include requirements definition, architecture and technical 
design, consolidation of help desk support, transition planning, 
coordination, and execution for the legacy IAE systems, interface 
design, and associated support services.
    The projected development costs remain substantially the same; 
however, the overall program costs have increased. For example, GSA has 
needed to expand the scope and level of support services to meet the 
needs of the Federal grants and loans communities and incorporate new 
requirements that were not anticipated at the onset of the SAM planning 
and costs have increased as a result of needing to incorporate changes 
to the Federal Acquisition Regulations (FAR) and other legislative 
changes. Funding limitations have also delayed GSA's ability to meet 
the originally scheduled objectives, which has resulted in the need to 
retain contract support longer than anticipated for our legacy systems, 
as well as for SAM program management and integration support. In 
addition, several contracts were inflexibly structured and payments for 
services were not well-aligned to the actual work being performed and 
delivered. GSA is presently taking corrective action to address this.
    Question. Do you believe that your current acquisition strategy is 
the most cost-effective alternative or have you reassessed your plans--
where does this stand?
    Answer. GSA is actively reassessing its plans, including the 
acquisition strategy. A GSA conducted ``TechStat'' to review the 
current project management and governance structure to determine what 
additional oversight or change in direction might be needed, in light 
of the GAO findings. The TechStat validated the findings of the GAO and 
identified gaps in governance. As a result, GSA established an 
Integrated Project Team (IPT), comprised of technical, legal, program, 
and acquisition experts, to assess and ensure a more comprehensive, 
objective, and transparent understanding of current needs and 
challenges and to develop options and recommendations on the best way 
to move ahead. The IPT is in the process of further assessing program 
and project management, the SAM architecture, performance reporting, 
cost drivers and corresponding budget requirements, and other control 
processes.
    GSA management is committed to ensuring improved overall management 
of IAE/SAM. The objective is to develop a new executable vision of IAE/
SAM that comprehensively addresses governance, business, technology, 
program and project management, contracting, and funding requirements.
    Question. While the subcommittee is supportive of initiatives that 
will enable agencies to share data, make it easier to conduct business 
with the Federal Government, and save taxpayer dollars, there is often 
an upfront cost as well as annual maintenance costs, as is the case 
here. You are requesting $21 million, but apparently, we need to fund 
all of it--it can't be broken into smaller funding amounts?
    Answer. The amount of funding that GSA receives directly impacts 
the schedule and scope of continuing to implement SAM, as well as GSA's 
ability to retire the legacy systems associated with the functionality 
that is incorporated into SAM. (For example, Phase One of SAM is 
focused on ``Entity Management'' functionality and, once in production, 
will allow GSA to decommission the Central Contractor Registration 
system, the Online Representations and Certifications Application 
system, and the Excluded Parties List System).
    That said, GSA is prepared to implement SAM in phases and revise 
its project schedules as necessary. However, implementing SAM in phases 
will extend the amount of time that GSA must continue to maintain 
parallel legacy. Operations and support services for the remaining IAE 
systems. In addition to increasing costs over the long-term, a phased 
implementation of SAM would:
  --result in the need to revise acquisition plans;
  --hamper GSA's ability to readily and more cost-effectively 
        incorporate legislative and FAR changes;
  --negatively impact the acquisition workforce's ability to 
        efficiently perform their duties due to the need to access 
        multiple systems; and
  --limit how quickly we can move forward on improving data quality and 
        transparency objectives.

                  CIVILIAN PROPERTY REALIGNMENT BOARD

    Question. The administration has proposed an independent entity--
the Civilian Property Realignment Board, modeled after the Base 
Realignment and Closure (BRAC) process--which would sell unneeded 
Federal property in a streamlined manner. The funding requested for the 
Board and the Revolving Fund totals $57 million for fiscal year 2013. 
The House has passed two bills relating to Federal real property 
disposal and the Senate has introduced a bill on the topic. None of 
these matches exactly the administration's proposal. What is GSA's view 
of these various bills (please discuss each one)?
    Answer. GSA supports the administration's proposal, which addresses 
the key challenges that exist in the current process and should 
streamline and accelerate the disposal process. With respect to the 
current bills being discussed in the Congress, GSA supports legislation 
that provides additional realty tools and incentives that encourage 
sound management of real estate portfolios. GSA defers to OMB to 
address the administration's position on the various bills drafted.
    Question. What are the safeguards that must be maintained if an 
expedited disposal process is authorized?
    Answer. There are four important safeguards that must be maintained 
as part of the development of an expedited disposal process:
  --A process to ensure that disposals are authorized as a consolidated 
        package, as opposed to one-by-one;
  --Methods to evaluate which assets are mission-critical and which 
        assets are not;
  --Utilization of authorities, resources, and expertise available 
        within the Federal Government to achieve asset repositioning 
        objectives; and
  --Incentives such as retention or reinvestment of proceeds from the 
        sale of real estate assets for all landholding agencies to 
        promote broader portfolio management.
    Question. For several years, the figure of $15 billion in savings 
has been stated as the savings that could be achieved by ridding the 
Government's property inventory. Do you really believe that figure is 
still accurate?
    Answer. From fiscal year 2005 to the end of fiscal year 2011, PBS 
has disposed of approximately 286 assets, consisting of more than 13 
million rentable square feet of unneeded real estate. Proceeds from 
fiscal year 2005 to fiscal year 2011 were approximately $244 million. 
PBS estimates that through these disposals, the agency avoided 
approximately $298 million in reinvestment needs and liabilities during 
this time period.
                                 ______
                                 
                Questions Submitted by Senator Mark Kirk

    Question. At a House Oversight and Government Reform Hearing on 
April 16, 2012, you testified: ``Well, I think we definitely had a 
cultural problem in region 9. Probably tied to a leadership problem. 
But I can't say that I know enough--enough about General Services 
Administration (GSA) to say whether we do or do not have a cultural 
problem across the organization when it comes to these issues.'' In 
your testimony for this subcommittee you said, ``. . . I am committed 
to renewing GSA's focus on its core mission: saving taxpayers' money by 
efficiently procuring supplies, services, and real estate, and 
effectively disposing of unneeded Government property.''
    The ``Mission, Vision and Goals'' of GSA, as listed on the Web 
site, use the word ``green'' three times and some variant of the word 
``sustainable'' three times. However, the words ``budget'' and ``cost'' 
never appear, nor does any variant of the word ``spending''. The word 
``waste'' appears, but in the context of environmental waste, not 
wasted tax dollars. There are passing mentions of efficiency, but it is 
unclear if this refers to the environment or efficient use of tax 
dollars.
    Do you believe the failure of the ``Mission, Vision, and Goals'' of 
the GSA to clearly make cost efficiency or low spending the top 
priority is indicative of a broader ``cultural problem'' or 
``leadership failure''? I recommend that you begin at the top, and 
rewrite your ``Mission, Vision, and Goals'' statement so that cost 
efficiency is your top priority.
    Answer. GSA is currently conducting a top-to-bottom review of our 
operations and goals with the objectives of streamlining the way we do 
our business, saving taxpayer dollars, and ensuring the most-efficient 
delivery of services to our customer agencies and American citizens. We 
are continuing to pursue every initiative necessary to restore the 
trust of the American taxpayer.
    Question. In the wake of the scandal surrounding the 2010 Western 
Regions Conference (WRC), you canceled all GSA conferences, creating 
fairly substantial cost savings. Why were these conferences approved in 
the first place if they were nonessential enough to be canceled and 
could create substantial cost-savings?
    Answer. As part of the top-to-bottom review of GSA operations, it 
was determined that all upcoming conferences should be reviewed in 
light of new controls over conferences and travel. Many, but not all, 
previously scheduled conferences and meetings were cancelled as a 
result of this review, saving $995,000. The conferences that were 
cancelled either did not meet the new standards or were cancelled 
because we did not have adequate time to conduct the review. All 
upcoming conferences must meet the new requirements which became 
effective on April 15, 2012.
    Question. What is the oversight protocol for compliance with the 
terms of Blanket Purchase Agreements (BPAs)? Specifically, what actions 
does GSA take to ensure that purchases from vendors under BPAs are made 
at prices matching the bid prices? What protocol is followed if a 
payment to a BPA vendor substantially in excess of the bid price is 
reported to the GSA? What, if any, enforcement measures have been taken 
against BPA vendors whom have charged in excess of their bid prices?
    Answer. GSA has risk-management controls in place to ensure that 
the prices contractors propose when establishing BPAs or placing task 
and delivery orders are at or below the GSA Multiple Award Schedule 
(MAS) price. Specifically, Acquisition Management has the Supplier 
Management Division which has approximately 100 Industrial Operation 
Analysts (IOAs) who perform contract-compliance reviews of MAS 
contracts every 2-3 years through the life of the contract. One of the 
areas the IOAs review for compliance is adherence to GSA schedule 
pricing. These reviews are performed by taking a sample of the BPA or 
order information. Review findings are documented in a report that is 
sent to the Contracting Officer (CO) and Administrative Contracting 
Officer (ACO) to take action, if necessary as appropriate. The possible 
actions the CO or ACO can take in response to findings of mischarging 
could include requesting a postaward audit from the GSA Office of 
Inspector General (OIG), requiring the vendor to perform a self-audit 
and develop an action plan to take corrective action measure, and 
seeking recoveries of overcharges and sending it back to customer 
agencies or the Treasury.
    As an example, GSA recently issued an instructional letter (IL 
2011-07) entitled ``Procedures for Reviewing Contractor Compliance with 
prompt Payment Discount (PPD) Terms on Federal Supply Schedules (FSS) 
contracts''. This IL specifically addresses noncompliance with prompt 
payment discount terms as a result of a GSA audit. The same process 
will be followed for overcharges to the GSA schedule price.
    Question. In a March report, OIG found that some cost-reimbursement 
contracts entered into by GSA were not in compliance with regulations 
and that such contracts provide no incentive for contractors to control 
costs. What does GSA estimate the excess cost of such contracts have 
been over the past several years? What steps is GSA taking to 
transition to more cost-effective and regulation compliant contracting 
processes?
    Answer. As a result of the OIG findings, GSA will continue to take 
steps to ensure that proper incentives are in place to control costs 
for current and future contracts. The OIG audit did not identify any 
estimate of excess costs for these types of contracts.
    In addition, the July 2009 Office of Management and Budget (OMB) 
Memorandum M-09-25, ``Improving Government Acquisition'' and the Office 
of Federal Procurement Policy's (OFPP) October 27, 2009 guidance, 
``Increasing Competition and Structuring Contracts for the Best 
Results'' called for heightened management attention on agency use of 
various types of high-risk contracts and provided strategies for 
reducing their use. OFPP defined high-risk contracts as those that are 
awarded noncompetitively, received only one bid in response to a 
competitive solicitation, are cost-reimbursement awards, and/or are 
time and material labor awards.
    To date, GSA has taken a number of actions to comply with the OMB 
and OFPP guidance and ensure more cost-effective and regulation-
compliant contracting processes, which include:
  --Developed a Governmentwide working group team (AcqStat) comprised 
        of representatives from GSA's Office of Governmentwide Policy, 
        Public Buildings Service (PBS) and Federal Acquisition Service 
        (FAS), which has been meeting regularly since fiscal year 2010.
  --Conducted quarterly Federal Procurement Data System reporting, 
        which is reviewed by FAS and PBS and discusses high-risk 
        reduction and any specific areas that require attention or 
        training emphasis.
  --Established FAS and PBS action plans, which are updated based on 
        quarterly reviews.
  --Developed a yearly Competition Advocate report, which summarizes a 
        variety of best practices, lessons learned, and necessary 
        actions.
  --Issued an Acquisition Alert (2012-01), which increases awareness 
        among the Acquisition community.
  --Developed a training webinar for the acquisition workforce.
  --Continued review of high-risk action plans by the Procurement 
        Management Review (PMR).
  --Releasing an Acquisition Planning Wizard to aid execution of the 
        acquisition planning process.
  --Established a FAS ``ask competition advocate'' link that allows and 
        encourages contracting professionals to ask questions related 
        to increasing competition and reducing high risk.
  --Issued a FAS IL (July 27, 2011), regarding the reduction of high-
        risk contracting. The instructional letter was intended to 
        provide directions to acquisition personnel for adhering to the 
        new FAR rule on managing cost reimbursement activities--to 
        include requiring documentation on why a contract type was 
        selected, how it will manage and mitigate risk, whether 
        consideration was given to firm-fixed price, and sets rules for 
        appropriate approval and staffing of the contract.
  --Continued training to the workforce on high-risk contracting 
        through FAS Acquisition Industry Days.
  --Implemented a BPA for strategic sourcing aimed to provide 
        efficiency, lower costs, and reduced environmental impact, 
        while improving competition and reducing high-risk contracting.
  --Continued emphasis on proper acquisition planning as outlined in 
        the (OFPP Myth Busting memorandum), to include:
    --early engagement with industry;
    --development of sound requirements packages;
    --ensuring sufficient time for proposals/quote responses;
    --challenging brand name specifications;
    --limiting period of performance on sole-source/noncompetitive 
            awards;
    --encouraging industry days to communicate requirements; and,
    --releasing requests for information and proposals, through GSA 
            eBuy and FedBizOpps, as appropriate.
    Question. I am encouraged to see that GSA has moved to dispose of 
excess Federal buildings, a step that will raise revenues and encourage 
more efficient use of high-cost buildings. What congressional actions 
could expedite the sale of excess buildings?
    Answer. Based on our experience, we believe that a reform to real 
property asset management must address these central challenges:
  --Incentivizing disposals by enabling agencies to realize the 
        benefits of proceeds.
  --Addressing the upfront costs associated with disposals and 
        consolidations.
  --Resolving competing stakeholder interests that can slow down or 
        prevent good asset management decisions.
    To address these challenges the President proposed a bill last year 
that would usher in a new approach to Federal real estate. The 
President's proposal would create an independent board of experts to 
identify opportunities to consolidate, reduce, and realign the Federal 
civilian real estate footprint as well as expedite the disposal of 
properties.
    This proposal would utilize bundled recommendations, a fast-track 
congressional procedure, streamlined disposal and consolidation 
authorities, and a revolving fund replenished by proceeds to provide 
logistical and financial support to agencies in their disposal of high-
value properties. It would serve as a comprehensive solution to key 
obstacles that hinder the Federal Government's progress on improving 
real estate management decisions. The proposal expands upon the June 
2010 Presidential Memorandum that directed Federal civilian agencies to 
increase efforts to dispose of unneeded Federal real estate and to 
maximize the utilization of the current inventory to achieve billions 
in savings.
    GSA supports the administration's goals and those of this 
subcommittee and other Members of Congress to dispose of unneeded 
Federal real property and streamline the current disposal process.
    The administration's efforts anticipate working with the Congress 
to create a successful program, and GSA welcomes the efforts of this 
subcommittee and other Members of Congress to successfully reform and 
improve Federal real property management.
    Question. According to OIG's report on the 2010 WRC, there were 
multiple violations of contracting regulations resulting in wasted 
taxpayer dollars. Given the GSA's central role in the procurement 
process for the Government as a whole, it is very troubling that 
oversight and controls did not prevent these violations, which included 
disclosing a competitor's proposal price to a favored contractor, 
contracting to a large business in violations of small-business set-
asides and disclosing to a contractor GSA's maximum budget for 1 day of 
training, then agreeing to pay the contractor that amount.
    What steps is GSA taking, both internally and Governmentwide, to 
ensure these types of violations do not happen going forward? 
Specifically, what changes are going to be made to improve contracting 
oversight, ensure access to contracts for small business and prevent 
overpayments?
    Answer. Internally, GSA has taken corrective action to ensure these 
violations do not happen going forward. To improve contracting 
oversight, small business, and overpayment concerns GSA will take the 
following steps:
  --Increase resources devoted to the PMR function to assess the 
        effectiveness of oversight measures and to mandate corrective 
        action where needed.
  --Explore changes to the GSA Head of Contracting Activity structure.
  --Provide refresher training to Heads of Contracting Activities on 
        key roles and responsibilities.
  --Conduct training on ethics and procurement integrity, conference 
        planning, and contracting.
  --Continue to encourage employees to report waste, fraud, and abuse.
  --Redouble efforts to ensure that small-business set-aside protocols 
        are followed.
  --Realign management of Chief Financial Officer (CFO) regional 
        functions to report to the GSA Central Office CFO to provide 
        greater ability to detect and prevent improper payments.
  --Centralizing oversight of GSA internal travel activities in the 
        Office of Administration.
                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin
                 Questions Submitted to Brian D. Miller

             WAS TRAINING TO ENHANCE JOB SKILLS CONDUCTED?

    Question. Based on your year-long probe of this event, can you 
identify any specific seminars or sessions from the Western Regional 
Conference (WRC) that had the objective of enhancing job skills for the 
attendees?
    Answer. We made the decision not to assess the quality or substance 
of the training seminars or sessions held at the WRC, but instead 
focused our investigation on the excessive costs and impermissible 
contracting actions associated with the planning and execution of the 
WRC.

                          IMPROPER CONTRACTING

    Question. In your report, you describe the circumstances 
surrounding the execution of the original agreement with M Resort as 
the conference site. You state that, among the weaknesses, ``the 
agreement was missing many clauses that statutes and regulations 
required to be included in contracts with the Federal Government.'' Can 
you elaborate on what particular necessary contract terms were omitted?
    Answer. Our investigation revealed that the WRC event planner 
simply signed and returned the M Resort's standard-form contract as 
opposed to a Government standard-form contract, which would have 
included the Federal Acquisition Regulation (FAR 12.301) and the 
General Services Administration Acquisition Regulation (GSAR 512.301 
and 552.212-71) clauses (or equivalents) required for the acquisition 
of commercial items by the Government. The original agreement with the 
M Resort also failed to include a clause that should per diem rates 
change for the selected site, the hotel will honor the Government's 
prevailing per diem rate. The inclusion of such a clause, while not 
required by the FAR, would be necessary to preserve the Government's 
interest, because, as GSA should be well aware the per diem rates are 
subject to change.
    Question. What problems arise as a result of omitting required 
clauses?
    Answer. These clauses are intended to protect the United States 
Government. For example, FAR 52.212-4, one of the required clauses, 
states the Government's rights under a termination for convenience, 
sets forth the terms of payment, and requires the contractor to keep 
its Central Contractor Registration entry up to date, which 
correspondingly binds the contractor to those representations. It does 
not appear that GSA needed to use these particular provisions. If, 
however, GSA had needed to terminate the contract, or had encountered a 
dispute regarding timely payment, it would have lacked the protection 
of these clauses. As you are aware, GSA did encounter problems with a 
change in the Government per diem rate. Had GSA included a clause to 
anticipate this problem, it might not have felt a need to increase 
catering in order to cover the ``loss'' to the M Resort.
    Question. Were you able to determine whether omission of the 
required clauses was negligent or was it deliberate/intentional?
    Answer. We do not have sufficient evidence to make a determination 
as to whether the omission of the required clauses and the use of the 
hotel's standard contract were negligent or willful.
    Question. Based on your experience, was this omission an unusual 
aberration or have you detected any similar omissions and cited the GSA 
for them?
    Answer. We are currently reviewing other conferences on a case-by-
case basis and will examine whether these clauses have been omitted in 
other contracts with conference vendors.

                   NONCOMPLIANCE WITH FIRE SAFETY ACT

    Question. You also explain that ``Federal conferences may only be 
held at a hotel that is on FEMA's list of Fire Safety Act-approved 
accommodations.'' You note that the GSA conference site--the M Resort--
is not on that list. While the requirement may be waived, you find no 
evidence in the contract documents indicating that a waiver was 
granted. Does the curriculum for contracting officers include a 
discussion of this? If not, shouldn't it?
    Answer. The provision of the Fire Safety Act which mandates that 
Federal conferences be held at a hotel that is on FEMA 's list of 
approved accommodations is in section 301-11.11 of the Federal Travel 
Regulation. We do not believe this requirement is discussed in the 
curriculum for contracting officers. We also believe, however, that 
this provision should be known to contracting officers and event 
planners responsible for selecting a hotel.

            PROBLEMS AT PUBLIC BUILDINGS SERVICE--SYSTEMIC?

    Question. Clearly, there has there been a culture of excessiveness 
and lax accountability within the Public Buildings Service (PBS) Region 
9, and perhaps even in some of the other regions. To what degree might 
this be a problem in other parts of GSA?
    Answer. Since the release of the WRC report, our Office of 
Investigations has seen a noteworthy increase in hotline tips and 
complaints, and our agents are diligently looking into these. Our 
office is also looking into other conferences. We would not want to 
make generalizations about other regions or components without the 
necessary supporting facts. We do note, however, that systemic changes 
can be put into place to eliminate opportunities for excessive, 
impermissible, and unchecked spending in the future. We have proposed 
that the Chief Financial Officer's (CFO) office be centralized to 
assure that the CFO has direct authority over all regional and service 
budget offices as well as visibility into all agency budgeting, down to 
the dollar level. In his testimony before the Subcommittee on Financial 
Services and General Government, Acting Administrator Daniel M. 
Tangherlini stated his intention to pursue these reforms. We also 
believe that the agency should separate the contracting function from 
the program function--a contracting officer should not report to the 
program officer. We believe that, if implemented, these steps could 
produce the necessary checks and balances to ensure top-down 
accountability in GSA's financial operations.

             ``HATS OFF'' PROGRAM--EMPLOYEE REWARDS PROGRAM

    Question. PBS Region 9 developed an awards program store known as 
the ``Hats Off Store'' in 2001. The Hats Off program initially 
maintained items of nominal value such as mugs, mouse pads, and 
backpacks, labeled with GSA logos or insignia. However, over time, 
high-value items such as iPods, digital cameras, GPS devices, and other 
electronics were introduced into the program. The budget for this 
program went from $45,000 in fiscal year 2007 to $212,000 in fiscal 
year 2009 and the Inspector General found significant control 
weaknesses, plus the loss of $20,000 worth of Apple iPods. What began 
with nominal reward items and gift cards turned into high-value items, 
and store and restaurant gift cards. Did anyone other than in region 9 
have oversight over this program?
    Answer. Our investigation identified a serious lack of oversight 
over this program. In fact, our major concerns with the Hats Off 
program were the lack of oversight of the inventory and on the exchange 
of awards between employees. The abuse of the Hats Off employee award 
store is another example of the importance of a centralized CFO. If 
GSA's CFO has greater visibility into regional spending, down to the 
dollar level, these types of abuses might not occur as easily.
    Question. What did you find with regard to the employees who 
received the awards--how many and what types benefited from the 
program?
    Answer. We identified many problems with the exchange of awards. 
First of all, employees appeared to ``swap'' awards, meaning that 
within minutes of one employee receiving award cards, the employee 
returns the same or nearly the same number of award cards back to the 
original employee. This occurred no fewer than 300 times. Second, we 
found that on at least one occasion, a supervisor accepted an award 
from a subordinate. Additionally, we found that some of the top 
receivers of awards were actually involved with the awards store 
administration.
    Question. Did you examine what types of actions employees performed 
to receive awards?
    Answer. Exhibit 9 of our Hats Off Report of Investigation lists 
some of the reasons or justifications for points-swapping, including 
``taking charge'', ``promoting fun in the workplace'', and ``thrilling 
the customer''. We question the value and substance of these 
justifications, particularly because of the ``swapping'' patterns we 
found between employees.
                                 ______
                                 
                Questions Submitted by Senator Mark Kirk

    Question. At a House Oversight and Government Reform Hearing on 
April 16, 2012, Acting Administrator Daniel M. Tangherlini testified: 
``Well, I think we definitely had a cultural problem in region 9. 
Probably tied to a leadership problem. But I can't say that I know 
enough--enough about GSA to say whether we do or do not have a cultural 
problem across the organization when it comes to these issues.''
    In your experience as Inspector General at the General Services 
Administration (GSA), and in light of the events surrounding the 2010 
Western Regions Conference (WRC), would you say the GSA has a cultural 
problem across the organization? Do you believe any such problems are 
tied to a leadership problem?
    Answer. We hesitate to make generalizations about other regions or 
components without the necessary supporting facts and sufficient 
evidence. We do note, however, that systemic changes can be put into 
place to eliminate the opportunities for excessive, impermissible, and 
unchecked spending in the future that were abused by some in region 9. 
We have proposed that the Chief Financial Officer's (CFO) office be 
centralized to assure that the CFO has direct authority over all 
regional and service budget offices as well as visibility into all 
agency budgeting, down to the dollar level. In his testimony before the 
Subcommittee on Financial Services and General Government, Acting 
Administrator Daniel M. Tangherlini stated his intention to pursue 
these reforms. We believe, if implemented, these steps could produce 
the necessary checks and balances to ensure top-down accountability in 
GSA's financial operations.
    Question. In your testimony, you mentioned numerous investigations 
of Federal property managers and contractors taking bribes and 
kickbacks under the American Recovery and Reinvestment Act (ARRA), 
specifically saying, ``My own office has issued numerous audit reports 
relating to GSA's construction and renovation contracts under the 
American Recovery and Reinvestment Act. We discovered and investigated 
eleven Federal property managers and contractors taking bribes and 
kickbacks.'' Did the rapid manner in which projects under ARRA were 
selected and funded increase the likelihood of malfeasance and corrupt 
practices?
    Answer. ARRA provided GSA with $5.5 billion to convert Federal 
buildings into ``High Performance Green Buildings'' as well as to 
construct Federal buildings, courthouses, and land ports of entry. As 
you know, ARRA mandated that $5 billion of the funds be obligated by 
the end of fiscal year 2010, with the remaining $0.5 billion obligated 
by the end of fiscal year 2011. This short timeframe strained the 
capabilities of project teams, even with the addition of contract 
support staff, and forced the acceleration of planning and executing 
multiple large-scale projects simultaneously. This resulted in 
contracting irregularities, Federal Acquisition Regulation and 
Competition in Contracting Act (CICA) requirement violations, and 
improper negotiations. Our Offices of Audits and Investigations are 
currently conducting oversight activities related to ARRA-funded 
projects. We anticipate these activities will continue for the next 
several fiscal years.
    Question. In your testimony you mentioned, ``The core mission of 
GSA is to provide low-cost goods and services. When GSA wastes its own 
money, how can other agencies trust it to handle the taxpayer dollars 
given to them?'' Do you think that GSA's current statement of 
``Mission, Vision, and Goals'' is consistent with a core mission of 
providing low-cost goods and services or does it provide greater 
emphasis on other priorities? Do you think this is indicative of a 
larger culture of departing from cost efficiency as a central mission 
and instead focusing on parochial or political priorities?
    Answer. We believe that GSA should get back to basics and align its 
programmatic activities and strategic goals with the core mission of 
providing low-cost goods and services, as stated by the Acting 
Administrator. During our WRC investigation, we found that many agency 
contracting personnel did not fully understand fiscal law or the 
Federal Travel Regulation, or were unaware of the existence of agency 
policies that directly governed their daily work. We also believe that 
the accountability requirement associated with the Anti-Deficiency Act 
(ADA) should be applied to CICA. Currently, agencies that violate the 
ADA must ``report immediately to the President and Congress'', as well 
as the Comptroller General, the facts surrounding each violation and 
the actions taken to remedy the program (31 U.S.C. 1517(b)). If 
agencies fail to ``obtain full and open competition through the use of 
competitive procedures'' as mandated by CICA, they should be held to 
the same accountability standards for violating the ADA. An emphasis on 
contracting knowledge and the implementation of these accountability 
standards could achieve greater cost savings. Additionally, GSA must 
separate its contracting function from its program functions--a 
contracting officer should not report to the program officer. 
Furthermore, as mentioned earlier, centralizing the CFO's office could 
produce the necessary checks and balances to ensure top-down 
accountability in GSA's financial operations. These steps, and a 
continued emphasis by the Acting Administrator on cost savings, would 
help bring GSA back to its core mission.

                          SUBCOMMITTEE RECESS

    Senator Durbin. At this point, the hearing stands recessed. 
Thank you.
    [Whereupon, at 3:23 p.m., Wednesday, April 18, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]


              MATERIAL SUBMITTED SUBSEQUENT TO THE HEARING

    [Clerk's Note.--The following testimony was received 
subsequent to the hearing for inclusion in the record.]

                    Addendum on Agency Improvements

    To build on a familiar General Services Administration (GSA) theme 
as emphasized by previous Administrators, the Administration needs to 
become ``One GSA.'' One GSA, with top-to-bottom control and 
accountability should replace a system of diffused ``matrix'' 
management that has led to fiefdoms and feudal kingdoms. No 
Administrator should have to plead ignorance or weakness when the 
public trust is being abused. If GSA's senior leaders are going to be 
held accountable for the work of the agency--and they will be as recent 
events show--leadership must have the authority and tools for carrying 
out their responsibility. As it is, with senior regional leadership 
having two supervisors, accountability becomes divided and diffused. 
The supervisory matrix really becomes a sieve through which oversight 
is lost. This is the problem with a weak Chief Financial Officer's 
(CFO) structure. One GSA accountable to the Administrator, as the 
Western Regions Conference failures attest, also requires One CFO. When 
financial responsibilities are so dispersed they fall beyond the 
control of the CFO, there is no CFO--and the Administrator is deprived 
of one of an agency head's lead reins to control spending and provide 
leadership over agency programs. A theme of a unified GSA leads to a 
unified CFO and a unified CIO. Diffused information systems lead to 
redundancies, cost, and barriers that are inimical to the concept of 
accountability and transparency.

                CENTRALIZE PROGRAM AND BUDGET MANAGEMENT

    GSA's CFO testimony before the Subcommittee on Economic 
Development, Public Buildings and Emergency Management of the House 
Committee on Transportation and Infrastructure indicated that the CFO 
is essentially a figurehead.
    The CFO should have direct authority over all regional and service 
budget offices (and should be the only employee with the title 
``CFO''). The CFO should have visibility into all agency budgeting, 
down to the dollar level.

                CENTRALIZE AGENCY INFORMATION MANAGEMENT

    Likewise, the Office of the Chief Information Officer (OCIO) should 
have control over all agency information systems. Currently, it is not 
clear that the OCIO is even aware of the full list of the agency 
information systems that exist. The OCIO should have final authority to 
access and manage all systems.
    Despite the Inspector General Act's requirement that the Office of 
Inspector General (OIG) is authorized ``to have access to all records'' 
of the agency that relate to the OIG's responsibilities, currently 
requests by the OIG for read-only access to agency information systems 
are often met with extraordinary delays (sometimes more than a year) or 
are never fulfilled. GSA systems ``owners'' who fail to provide access 
to the OIG within 14 days should be required to make an explanation of 
that failure to the Administrator, with a copy to the Inspector 
General, by the end of the 14-day period.

                           GET BACK TO BASICS

    As the Acting Administrator has stated, GSA needs to re-focus on 
its core missions--procurement and building operations. We found that 
many agency contracting personnel did not understand fiscal law or the 
Federal Travel Regulation, or were unaware of the existence of agency 
policies that directly governed their daily work. This is unacceptable.
    The agency must separate its contracting function from its program 
functions. That is, the Contracting Officer should not report to the 
program officer.

                       GET OUT OF THE ``MATRIX''

    As the former GSA Administrator testified, GSA employee supervision 
is not presently linear; it is a ``matrix''. Because many high-level 
personnel report to two supervisors, each supervisor can deflect 
supervisory responsibility onto the other, or claim to. The matrix is 
really a sieve.

                   REQUIRE PROCUREMENT ACCOUNTABILITY

    Currently, agencies that violate the Anti-Deficiency Act must 
``report immediately to the President and Congress'', as well as the 
Comptroller General, the facts surrounding each violation and the 
actions taken to remedy the problem (31 U.S.C. 1517(b)). This same 
accountability requirement should be added to the Competition in 
Contracting Act, which requires that agencies ``obtain full and open 
competition through the use of competitive procedures in accordance 
with the requirements of (CICA) and the Federal Acquisition 
Regulation.'' (41 U.S.C. 3301(a)(1)). This accountability would 
indicate that the agency takes seriously the concerns of businesses, 
particularly small businesses, that have not received a full and fair 
opportunity to compete for Federal contracts.
