[Senate Hearing 112-613]
[From the U.S. Government Publishing Office]
Hrg. 112-613
MOVING FROM SCANDAL TO STRATEGY:
THE FUTURE OF THE GENERAL SERVICES
ADMINISTRATION
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 12, 2012
__________
Available via the World Wide Web: http://www.fdsys.gov/
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PRINTING OFFICE
76-067 PDF WASHINGTON : 2012
______________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing Office,
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-mail, [email protected].
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska JERRY MORAN, Kansas
Michael L. Alexander, Staff Director
Troy H. Cribb, Senior Counsel
Jonathan M. Kraden, Counsel
Carly A. Covieo, Professional Staff Member
Nicholas A. Rossi, Minority Staff Director
J. Kathryn French, Minority Deputy Staff Director
Jennifer L. Tarr, Minority Counsel
Trina Driessnack Tyrer, Chief Clerk
Patricia R. Hogan, Publications Clerk
Laura W. Kilbride, Hearing Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Lieberman............................................ 1
Senator Collins.............................................. 3
Senator Johnson.............................................. 14
Senator McCaskill............................................ 17
Prepared statements:
Senator Lieberman............................................ 27
Senator Collins with attachments............................. 31
WITNESSES
Wednesday, September 12, 2012
Hon. Daniel M. Tangherlini, Acting Administrator, U.S. General
Services Administration........................................ 6
Hon. Brian D. Miller, Inspector General, U.S. General Services
Administration................................................. 9
Alphabetical List of Witnesses
Miller, Hon. Brian D.:
Testimony.................................................... 9
Prepared statement........................................... 43
Tangherlini, Hon. Daniel M.:
Testimony.................................................... 6
Prepared statement........................................... 37
APPENDIX
Management Deficiency Report: General Services Administration,
Public Buildings Service, 2010 Western Regions Conference,
April 2, 2012, submitted for the Record by Mr. Miller.......... 47
Letter submitted for the Record to Mr. Tangherlini from Senator
Ron Johnson, dated April 30, 2012.............................. 70
Letter submitted for the Record to Mr. Miller from Senators
Lieberman and Collins, dated May 10, 2012...................... 72
Letter submitted for the Record from Mr. Miller to Senators
Lieberman and Collins, dated May 30, 2012...................... 74
Letter submitted for the Record from Mr. Miller to Senators
Lieberman and Collins, dated July 19, 2012..................... 79
Letter submitted for the Record to Mr. Tangherlini from Senators
Lieberman and Collins, dated May 10, 2012...................... 81
Letter submitted for the Record from Mr. Tangherlini to Senators
Lieberman and Collins, dated June 20, 2012, with an attachment. 90
Letter submitted for the Record to Regional Administrators,
General Services Administration, from Senators Lieberman and
Collins, dated May 17, 2012.................................... 120
Letter submitted for the Record from Regional Administrators,
General Services Administration, to Senators Lieberman and
Collins, dated August 16, 2012, with enclosures................ 123
Response to post-hearing questions for the Record:
Mr. Tangherlini.............................................. 157
MOVING FROM SCANDAL TO STRATEGY:
THE FUTURE OF THE GENERAL SERVICES
ADMINISTRATION
----------
WEDNESDAY, SEPTEMBER 12, 2012
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:03 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Joseph I.
Lieberman, Chairman of the Committee, presiding.
Present: Senators Lieberman, McCaskill, Collins, and
Johnson.
OPENING STATEMENT OF CHAIRMAN LIEBERMAN
Chairman Lieberman. The hearing will come to order. Good
morning and welcome. This morning our focus is on what the
General Services Administration (GSA) is doing to move beyond
the scandals that have recently dominated its activities and
the public's impression of it and get back to saving the
taxpayers money, which is its function, of course, through the
efficient acquisition of goods and services and smart
management of government property.
The agency's mission has been sadly compromised by these
scandals involving a minority of employees at the agency, but
unfortunately, that is the reality.
Former Administrator Martha Johnson stepped down in April,
after the Inspector General (IG) reported truly outrageous and
offensive spending on a GSA Western Regions Conference (WRC)
that cost over $800,000. Her replacement, Acting Administrator
Daniel Tangherlini, is with us today to discuss what he has
done since then and where the agency goes from here.
I want to say that I have been impressed by your efforts,
Mr. Tangherlini, to curb irresponsible spending and to conduct
a top-to-bottom review of GSA policies and operations to
determine if there are other areas where the agency has been a
careless steward of taxpayer dollars.
The Committee's interest in this subject is based on our
jurisdiction over government operations generally. Sometimes
people focus on the homeland security part of our jurisdiction,
but the traditional, longstanding jurisdiction is governmental
affairs. And we have specific jurisdiction over the GSA.
To most Americans, the General Services Administration is
probably unknown or is an obscure Federal agency, but its
purpose could not be more important to the way our government
spends their taxpayer dollars. I think GSA's history is
relevant and interesting. I just want to touch on it briefly.
In 1947, Congress established a Commission on Organization
of the Executive Branch of the Government to recommend ways to
streamline the government while spending ``the lowest amount
consistent with the efficient performance of essential
services.'' The Commission recommended creation of a separate
agency to purchase goods and services and maintain public
property across the government as a way to eliminate
duplication, streamline operations, limit government spending,
and help other agencies be more efficient. In other words, the
status quo then was that the agencies were all doing this
themselves.
In its final report, the Commission said, ``To the general
public, the housekeeping activities . . . are little known, but
unless they are properly administered, the Executive Branch
cannot be effectively managed.''
The words of the Commission ring as true today as they did
in 1947, in some ways even more loudly because of the period of
economic stress we are in and because of the unprecedented,
enormous debt that the Federal Government is running. So we
have to do more with less, and GSA is one of the lead agencies
that can help us do that.
It actually has an enormous portfolio of responsibilities.
GSA negotiates contracts worth more than $40 billion a year,
manages $500 billion in assets, mostly real estate, and owns or
leases 9,600 buildings around the country. That is a big
operation.
The agency is critical to the maintenance, for instance, of
our courthouses, ports of entry, and Social Security offices.
It makes sure that Federal workers have what they need to
perform their jobs, from office supplies to information
technology (IT) services. It takes care of what the 1947
Commission called ``housekeeping'' matters so that the agencies
of the Federal Government can focus more exclusively on their
missions, and it leverages the purchasing power of the entire
Federal Government to get the best deal possible for the
taxpayer.
We know that most GSA employees go to work every day with
one overriding goal, and that is, to serve their country, not
themselves. But obviously, we also now know that some GSA
employees were falling very far below that standard--eight
trips by GSA employees to plan for a Las Vegas conference and
awards ceremony that cost the taxpayers $822,000. Conference
organizers spent over $146,000 on food, $75,000 for a team-
building exercise that involved building bicycles, thousands of
dollars more on after-hours parties, and over $6,000 on
commemorative coins.
We have heard that litany of irresponsibility before, but
it bears repetition as we consider what has happened since
those disclosures and what will happen going forward.
Unfortunately, the Las Vegas conference was not an isolated
instance of bad judgment. We now know from the work of the IG
and other work that has been done, and some evidence that our
own Committee has collected, that there was what I would call a
culture of abuse and irresponsibility in GSA's Region 9, with
all of that extravagant travel, misuse of government purchase
cards, and a very poorly run awards program that allowed
employees to treat themselves to iPods and DVD players.
We found questionable, to say the least, bonuses awarded
throughout the agency, thousands of dollars spent on cooking
classes for employees in the Kansas City region, and a $270,000
awards ceremony where taxpayers paid for GSA employees to beat
on drums. I mean, really, in too many parts, GSA had become an
agency out of control.
Acting Administrator Tangherlini has shown he understands
this and agrees and has instituted new procedures directly for
the approval of conferences and has canceled 47 conferences
that he determined to be questionable. These changes have saved
the taxpayers over $11 million. He has also strengthened the
Chief Financial Officer's authority over GSA's regional
offices, which I strongly endorse, and has cut 85 percent of
Senior Executive Service (SES) bonuses. Today Mr. Tangherlini
will report on his review of GSA to get the agency back on
track to fulfill its core mission, as I have described it.
GSA Inspector General Brian Miller is also here with us
today. He is a real hero in this story, his work having
uncovered the flagrant and inexcusable spending by some GSA
employees. Today he will help us understand how these scandals
fit into the agency's overarching management problems.
I was struck by the enormous award to the whistleblower of
over $100 million for uncovering the tax fraud that was going
on, and I do not think we can award you that sum of money this
morning, Mr. Miller, but you have our invaluable, I hope, and
really quite sincere gratitude for your work that uncovered
this mess.
Bottom line, we have to go forward together--the GSA,
Congress, and the Administration--to ensure that spending
abuses like those uncovered at the agency are never repeated
and to help GSA return to the fundamentals of helping our
government do more with less. Of course, I hope that our
hearing today helps to keep that process in motion. Senator
Collins.
OPENING STATEMENT OF SENATOR COLLINS
Senator Collins. Thank you, Mr. Chairman. First of all, I
want to thank you for holding this important oversight hearing
on the GSA, the agency that is the Nation's landlord for
Federal agencies and is supposed to be the Federal Government's
leader in procurement and administrative services.
Let me begin my remarks today by sharing with you the
following excerpt from a Fortune magazine article that
describes some of the problems at GSA.
``The new Administrator claims that there have been
improvements in GSA . . . GSA is, nevertheless, the most
durable mess in Washington. . . . The story involves great U.S.
corporations and marginal operators . . . Chicago politicians;
Washington influence peddlers and fixers . . . and, above all,
time-serving bureaucrats who are . . . just job holders,
glowing with contempt for the U.S. taxpayer. Happily, the cast
also includes some honest, capable, GSA employees . . .
harried, half underground, and hoping for better days.''
I, too, am hoping for better days, but my hope is tempered
by the fact that these words were written in 1955, and yet here
we are again.
In April of this year, we learned about the inexcusable
waste of taxpayer money at the 2010 Western Regions Conference
where GSA employees, as the Chairman has indicated, spent more
than $800,000 for a Las Vegas conference and eight off-site
planning meetings in advance of the real meeting. The Inspector
General has found that GSA violated numerous contracting
regulations and policies, including the Federal Travel
Regulation, in connection with this conference. The IG also
said that this situation raises ``special concern'' because
GSA, as the Federal Government's manager of acquisition policy,
should be a ``model'' in contracting and managing travel and
conference costs. He has underscored that ``the absence of
agency financial controls and top-down accountability allowed
the 2010 (Las Vegas conference) expenditures to occur
unchecked.'' But that is not all.
Since then, our Committee's investigation has uncovered a
2012 leadership conference in Napa Valley costing $40,000
before accounting for travel costs, $300,000 in relocation
compensation for an employee who left the agency after just 1
year, 5- to 6-day trips to Hawaii for a one-hour ribbon-cutting
ceremony, and questionable monetary awards and bonuses for some
of the very same people involved in planning the Las Vegas
conference.
Now, GSA employees knew that this was wrong. One admitted
to the IG, ``I never tell my friends what I spend . . . because
they are all out of work . . . and they would say, `Are you
kidding me?' ''
Undoubtedly, I would say to our witnesses and our Committee
Members, that is the reaction of all taxpayers footing the
bill.
All of this tells me that there is not just an inexcusable
lack of financial controls and accountability at GSA. There is
also a culture problem that says that this is OK, that this is
acceptable, but just do not talk about it.
After the Las Vegas conference scandal broke, some tried to
claim that the problem was isolated to the Western Regions or
even only Region 9 based in San Francisco. But additional facts
suggest otherwise. We have read press reports about GSA
spending $20,000 for cooking classes for employees in Kansas
City for team-building exercises. GSA also threw a 1-day award
celebration in November 2010 at a cost of nearly $269,000. This
is the event that the Chairman mentioned at which GSA employees
received drumsticks so that they could all drum together. The
cost of this drumming exercise with each employee having their
own GSA-purchased drumsticks was almost $30,000.
In light of these continuing revelations, this Committee
has sought explanations from the IG, the Acting Administrator,
and all 11 Regional Administrators. Their responses highlighted
the importance of the top-to-bottom review, which I want to
commend the new Acting Administrator for undertaking, as well
as the urgent need to implement organizational change and
improve accountability.
The Regional Administrators were not able to answer even
basic questions about the budgets and spending in their own
regions. They reported that the Public Buildings Service (PBS)
and the Federal Acquisition Service (FAS) ``operate with
separate budgets and with separate reporting structures.'' But
here is what is most troubling. The fact is that no one in the
agency has been able to provide detailed information on
conference spending and related contracts within the regions
because there has been no system to track such basic
expenditures. Consequently, the top leadership in each region
had little to no authority over the regional activities and
spending of PBS and FAS. The convoluted configuration makes no
sense and does not promote accountability.
GSA also appears to have an extremely generous award policy
that has little correlation with excellent performance by
recipients, and let me make clear that I recognize there are
some top-notch employees at GSA. I have had some of them
detailed to my Committee staff, and some of them have
extraordinary competence and dedication.
But we learned that 50 people involved in planning the Las
Vegas conference received awards totaling $35,500. And what was
the outstanding performance for which these employees were
being rewarded? For most, it was solely their role in planning
this conference. An employee who led the Las Vegas conference
planning received an award of $16,500, and this award was given
after GSA leadership was informed of the IG's initial findings
related to the conference scandal. Other executives involved in
the conference received similarly generous awards ranging from
$15,800 to a head-shaking total of $54,640.
This was not just related to officials who planned the
Western Regions Conference. One Federal Acquisition Service
executive received awards totaling $79,000. This is outrageous
and particularly so in the midst of what is supposed to be a
freeze on pay in the Federal Government, a bad economy, and
high unemployment.
I very much appreciate that the Acting Administrator has
recognized this problem as well during the course of his review
and found that there are ``clear deficiencies in the area of
performance awards'' and has frozen awards pending further
review.
The top-to-bottom review must result in lasting,
sustainable reforms. Not one more dollar at this agency can
afford to be wasted. The time for patiently hoping for better
days is over.
I am encouraged by the Acting Administrator's actions so
far, but aggressive congressional oversight must continue
because, to quote from that 1955 article, GSA seems to be ``the
most durable mess in Washington.''
Thank you, Mr. Chairman.
Chairman Lieberman. Thank you, Senator Collins. It is
interesting that we both separately went back decades, both to
the founding of GSA and then only 7 or 8 years later it had
already become a durable mess. So eternal vigilance is the
price of efficiency in this case.
Before I introduce our two witnesses, I want to thank both
of them for their answers to the oversight letters that Senator
Collins and I sent following the Western Regions Conference
scandal.
Acting Administrator Tangherlini and every GSA Regional
Administrator was asked a series of detailed questions about
the financial management of GSA, the organizational structure
of the agency, conference and travel expenses, and a range of
contracting issues. We also offered our thoughts to the IG on
ways that his continued oversight might be helpful to our
Committee, and he responded quite positively.
I want to note that these letters, as well as the
responses, are all posted on our Committee's Web site for
public view, and we will also include them in the record of
this hearing.\1\ And I think it is an indication that this
Committee, which will be under new leadership, at least in
part, next year, intends to continue the oversight of GSA.
---------------------------------------------------------------------------
\1\ The letters referenced by Chairman Lieberman appear in the
Appendix on page 72.
---------------------------------------------------------------------------
With that, I will call on the Acting Administrator of GSA,
Dan Tangherlini.
TESTIMONY OF HON. DANIEL M. TANGHERLINI,\2\ ACTING
ADMINISTRATOR, U.S. GENERAL SERVICES ADMINISTRATION
Mr. Tangherlini. Good morning, Chairman Lieberman, Senator
Collins, Members, and staff of the Committee. Thank you very
much for having me here this morning.
---------------------------------------------------------------------------
\2\ The prepared statement of Mr. Tangherlini appears in the
Appendix on page 37.
---------------------------------------------------------------------------
I want to start by thanking the Members of this Committee.
Your responsible and thorough oversight brought many of the
issues that we have investigated in recent months to our
attention. I would also like to thank our Inspector General,
Brian Miller, and his staff, who joins me here today. From my
first day in this position, I made it a priority to build a
constructive relationship with him and his entire team. Along
the way, he has contributed many important recommendations for
reform.
Five months ago, I was ordered by President Obama to assume
the role of Acting Administrator of the General Services
Administration in the wake of an investigation into the 2010
GSA Western Regions Conference. What happened at that
conference was a complete waste of the taxpayers' money and an
unacceptable breach of their trust. This event was the result
of a pattern of misjudgments at GSA that took place over
several years and multiple administrations. This pattern has no
place in any Federal agency, but it is particularly at odds
with the priorities of this Administration and the mission of
GSA.
Since we were founded in the wake of World War II, our
mission has been to deliver value for the taxpayers as well as
consistent and responsive services to the agencies of the
Federal Government. In this time of shrinking budgets, our
mission has never been more important, and it is critical that
we find a way to make every last taxpayer dollar count.
Refocusing GSA on this core mission has been the driving force
behind every action we have taken since I have arrived.
As Acting Administrator, I immediately moved to build
systems to prevent this kind of waste and abuse. I instituted a
series of reforms that centralized the review of proposed
conferences and cut back on employee travel. This resulted in
the elimination of nearly 50 conferences and reduced travel
budgets. These actions have already saved more than $11 million
in taxpayer funds. We have also created mandatory online
training on conference attendance to ensure that every employee
at GSA understands our expectations of what is acceptable at
conferences.
My next step was to put together a team of experts from
both outside and inside GSA that spent the next 5 months
conducting a top-to-bottom review of this agency. Our task was
to examine how GSA operated and what reforms could be
implemented to help the agency better accomplish its mission.
The top-to-bottom review has been conducted along several
simultaneous tracks. We conducted interviews and meetings with
agency employees, both one-on-one and with the leadership of
two dozen major operating units within GSA, to discuss
strategy, operations, and human capital.
Through the ``Great Ideas Hunt,'' GSA employees across the
country sent in their ideas for saving money and other reforms,
generating more than 600 ideas and thousands of comments. So
far, the ideas implemented from this effort have already
generated nearly $6 million in potential savings.
We also looked beyond the Federal Government and met with
business leaders in procurement and real estate to find best
practices from comparable private sector business models. At
the same time, we performed exhaustive analysis of financial
and performance data within the agency as well as studied
Inspector General and Government Accountability Office (GAO)
reports.
Finally, we held more than a dozen meetings with other
Federal agencies for feedback and to identify areas where GSA
can provide greater savings.
Through this review, GSA has instituted reforms addressing
the problems that exist within the agency while also enabling
us to better serve the American people and other agencies in
the future.
To start with, I issued an order to consolidate all budget,
finance, and accounting personnel under the Chief Financial
Officer. By placing the responsibility for all spending and
budgeting decisions in this position, we will be able to
increase transparency, accountability, and oversight on GSA
spending, giving Congress and taxpayers a better understanding
of how and where their funds are being used.
One of the key findings of our top-to-bottom review was
that the consolidation of the Chief Information Officer (CIO)
functions provides an opportunity to improve the performance
and cost-effectiveness of GSA's IT portfolio. Previously, the
CIO had limited authority over project development, budgets,
and performance. This week, I will be notifying Congress of my
intent to consolidate all information technology personnel,
budgets, and systems under the CIO.
By creating a central authority over the development and
maintenance of information systems, GSA will streamline its IT
investments while also increasing access to agency data.
GSA will also be notifying Congress of our intent to
consolidate hiring responsibilities and human capital
management personnel and operations under the Chief People
Officer to eliminate multiple redundant layers of dispersed
human resources activities and functions.
Another area within GSA where we found a need for reform
was performance awards. It is imperative that we never forget
that the quality of the work we do must not be dependent on
rewards and bonuses. The quality of our work should be based on
our pride in our mission and in serving our fellow citizens to
the very best of our ability. Going forward, this will be the
bar we set for ourselves.
To this end, we have already cut bonuses substantially,
with senior executive performance awards being reduced by 85
percent this year and the suspension of all performance awards
given out in the Administrator's office. But we will go further
by reducing the budget for all performance awards across the
agency. I believe that these awards should be issued for
notable service that goes above and beyond the basic expected
level of performance.
In the future, GSA will refocus our awards program by
integrating cost savings and efficiency goals--the core
elements of our mission--into every employee's
responsibilities. It will be by those standards--standards
which define our agency--that our employees will be judged and
rewarded.
Moving forward, I have instituted a targeted hiring freeze
across the agency. As we examine how GSA is structured and what
is the most efficient and effective compensation process for
our employees, we must ensure that any new hires are aligned
with the outcomes of our ongoing review.
Last week, we filled an important leadership position at
GSA by naming Dr. Dorothy Robyn as the agency's new
Commissioner for the Public Buildings Service, and we are
working on finding a new Federal Acquisition Service
Commissioner as well. These leaders will help return GSA to its
core mission of saving taxpayer dollars and reinvigorating
GSA's two main business lines.
Finally, as part of our mission to deliver value as well as
President Obama's campaign to cut waste, we also examined
multiple ways that GSA could better save taxpayer money. For
example, we found that many of the fees assessed on other
agencies for use of GSA schedules or other services have not
been reviewed or adjusted in many years. Based on our review,
we will be proposing the reduction of targeted fees from our
Federal Acquisition Service. This will result in savings across
the government of millions of dollars.
We are also convening an interagency working group to
review and develop recommendations on the overall fee structure
for the schedules, and we will be reporting back to Congress on
those findings.
Over the past 5 months, we have already made significant
progress toward building a better GSA. This agency is filled
with talented individuals who do outstanding work on behalf of
the people of this country every day. This review has helped us
begin to transform GSA into an organization that can utilize
those talents to their fullest potential.
I am confident that, with the support of Congress, we can
accomplish these reforms and create a culture of continuous
evaluation and improvement at GSA. That is the kind of culture
we need to restore the trust of the American people and refocus
this agency on providing the highest level of value and service
to this country.
I welcome the opportunity to be here today and answer any
questions that you may have. Thank you.
Chairman Lieberman. Thank you very much, Acting
Administrator Tangherlini.
Mr. Miller, thanks again for your good work, and we welcome
your testimony now.
TESTIMONY OF HON. BRIAN D. MILLER,\1\ INSPECTOR GENERAL, U.S.
GENERAL SERVICES ADMINISTRATION
Mr. Miller. Chairman Lieberman, Senator Collins, and
Members of the Committee, thank you for the opportunity to
testify at today's hearing. We have several ongoing
investigations involving conferences, and we have an ongoing
audit of conferences held between October 2011 and April 2012.
We expect that the issues we have identified thus far will be
remedied with the changes Acting Administrator Tangherlini has
begun to implement. We look forward to advising the Committee
when we complete those reviews and have definitive conclusions.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Miller appears in the Appendix on
page 43.
---------------------------------------------------------------------------
Our audits of contracting practices at GSA also continue,
and we have issued three reports recently that are available on
our Web site. Those reports found, among other things, that the
Federal Acquisition Service's Network Services Division,
Pacific Rim, lacks written procedures and management controls
over contract administration, and the contract file
documentation for FAS Blanket Purchase Agreements did not
support award decisions or provide a complete history of the
acquisition. Management concurred with the findings and
recommendations in those reports.
With regard to purchase cards, our Office of Forensic
Auditing and our Office of Investigations continue to conduct
reviews and investigations of suspicious transactions across
the charge card program. These ongoing reviews have recovered
over $1.9 million in government charge card cases through
forfeitures, restitutions, fines, seizures, recoveries, and
penalties since 2009.
We report on significant management challenges at GSA each
year. Our audits and investigations are structured around these
challenges and focus on high-dollar contracts and Federal
buildings. We will continue to update Congress and work with
the agency on any serious challenges we uncover within its
programs and operations.
Finally, I would like to briefly address the steps being
taken to reduce fraud, waste, and abuse at GSA. I am encouraged
by the steps Acting Administrator Tangherlini has undertaken to
make sure that something like the 2010 Western Regions
Conference could never occur again at GSA. The first step in
stopping waste is to identify it, and to accomplish that,
employees need to be willing to come forward when they learn of
questionable activities. The Acting Administrator and I
conducted town hall meetings throughout the regions to
reiterate the valuable role GSA employees have as the first
line of defense against fraud, waste, and abuse. In the month
following the report's release, the number of incoming hotline
tips more than doubled, and I believe that we are seeing
improvement in employees' willingness to raise concerns. I
would also note that GSA has responded to each recommendation
made in the Western Regions Conference report and, among other
things, GSA has moved to centralize the Office of the Chief
Financial Officer and other offices. It is also my
understanding that the Office of Administrative Services is
implementing controls over conferences, including spending and
procurement, to ensure top-down accountability, and 47
conferences have been canceled. Additionally, GSA has
introduced a new online training session on conference
attendance that is mandatory for every employee.
Thank you again for the opportunity to testify. I would be
happy to answer any questions the Committee may have. Thank
you.
Chairman Lieberman. Thanks very much, Mr. Miller.
We will begin with a 7-minute round of questions from the
Members.
Mr. Miller, as you know, on May 10, 2012, Senator Collins
and I sent you a letter asking that you conduct additional
investigations into conference and travel expenses at GSA so we
could have a fuller understanding of the scope of the problems
at GSA.
Since that time, I know that the Acting Administrator has
also referred other questionable activities to you to
investigate, including that $270,000 awards ceremony held by
the Federal Acquisition Service that we have referred to.
I know these are ongoing, but I wonder whether it is
possible for you to give us an update on whether you have seen
further evidence of the scope of the management problems--in
other words, beyond the Western Regions.
Mr. Miller. Senator, as you know, with ongoing reviews, it
is difficult to reveal a lot. I will tell you the parameters of
the audit. We are looking at conferences that occurred in
fiscal years 2011 and 2012 that have over 25 employees
attending and are over $10,000. And so we are looking at those
conferences. We are identifying the high-risk conferences, that
is, conferences where the price per attendee is over the
average price for attendees. So we are identifying them in
terms of high risk.
In terms of the scope, we are looking at similar problems
that occurred at WRC, and there are many problems that
occurred----
Chairman Lieberman. Similar problems within----
Mr. Miller. That occurred in the WRC. In the WRC report.
Chairman Lieberman. Western Regions, right.
Mr. Miller. Western Regions Conference. There were many
problems that were identified. There were problems with the
event planners, and we are looking to see if that is unusual or
not. There were problems with following contracting procedures.
We are looking to see if those problems are unusual or not, and
unusual expenditures, and we will continue to look at that. We
are focusing on those sorts of issues. As far as we can tell,
we have an example in the Western Regions Conference of
problems, and Acting Administrator Tangherlini has put into
place some controls to address those problems. And we are
looking at the recent conferences to see if there are any other
problems outside of those.
Chairman Lieberman. Right.
Mr. Miller. And, certainly, if we find some, we will report
them as soon as possible. But Acting Administrator Tangherlini
has put into place some controls that prevent problems like WRC
from happening again, and I am not sure how many examples the
Committee needs to support the fact that these controls are
needed.
Chairman Lieberman. So at this point you are not prepared
to say more than that because your investigation, in response
to our letter and independently, is ongoing.
Mr. Miller. It is ongoing, Mr. Chairman. I would love to
tell you more. I do not want speed to in any way inhibit
accuracy, and I would rather be fully accurate in what I tell
you.
Chairman Lieberman. Good enough. I appreciate it.
Mr. Tangherlini, I welcome the statement in your testimony
that you are going to revisit the level of fees that GSA
charges other agencies for use of its contracts under its
Multiple Award Schedules program. The fee, I would say for the
benefit of others, which is expressed as a percentage of the
dollar value of orders placed under the contracts, has remained
stable--that is, the same--at 0.75 percent since fiscal year
2004.
In recent years, the fees have generated well over $250
million a year. Both GAO and the IG have questioned whether the
fee could be lowered to save the agencies money, and of course,
we welcome that. But the reason is an important one, which is
that the fees have now generated more than is needed to
actually run the Schedules program. IG Miller's audit of the
fee program earlier this year found that as of September 2009,
the revolving fund where the fees are deposited had reserves of
over $687 million--a considerable amount of money.
Mr. Miller, is there an update from September 2009 about
how much is in that fund at this time?
Mr. Miller. I do not have an update right now on the amount
in the fund, but you are correct about our audit findings.
Chairman Lieberman. To the extent that you have a more
recent number or can come up with one, I would welcome you to
submit it to the Committee for our record.
Let me come back to you, Mr. Tangherlini. As the IG had
pointed out in his audit, the fees can be used, interestingly,
to fund administrative costs of the Schedules program or to
help fund other programs run by the Federal Acquisition
Service, or excess funds can actually be returned to the
Treasury. But it seems that the decisionmaking process for what
happens to these reserve funds is effectively a black box at
this point.
So I want to ask you two questions. One is whether you have
thought about what you would recommend be done with the excess
funds. And second, are you prepared to do something that will
make the process of handling these funds, which are, after all,
public money, more transparent?
Mr. Tangherlini. Thank you very much, Mr. Chairman. To
answer your second question because that is the easier one, the
answer is yes. We need to increase the transparency of all
these processes, particularly when they involve agency and, by
extension, taxpayer monies so that people know they are getting
the best value for the resources that they put in.
I do want you to know that it was really the IG report and
the GAO reports that were foundational for us taking a look at
the way we charge these fees, the way we build these reserve
balances, what those balances are for. And there are some very
strong and important business reasons why Congress gave the
authority to FAS to reserve these funds so that they can make
sure that they can continue to provide services.
But that having been said, we do not think that they have
been substantially revisited in quite some time, and we think
that it is worthy of a good deep dive and inspection and a
better understanding of what should be the right level for
reserve and how can we provide a more transparent process so
people can see what is going on within FAS. And at the same
time, we think that there is already an opportunity for us to
reduce fees. We have a surcharge on the Federal Strategic
Sourcing Initiative contracts right now that in many ways
discourages agencies from doing the right thing and using the
strategic-sourced contracts. And we want to take away that fee.
We want to reduce some other fees, and we really want to kick
off a broader discussion with our agency partners and say,
``What is the right structure for these fees going forward,''
recognizing the analysis done by the IG and the GAO.
Chairman Lieberman. I welcome that response. So I agree
with you that there was a reason for establishing the reserve
fund, so we do not want to eliminate the reserve fund. But on
the other hand, this is clearly a time in our Federal
Government where every dollar counts, and you have millions of
dollars, I would guess, in excess in this reserve fund. So I
urge you to go forward to figure out both how to reduce the
fees to the agencies so in turn that will reduce pressure to
raise those dollars by taxes, but also to figure out,
presumably with the Office of Management and Budget (OMB), how
best to use the excess funds there now to help us in your own
small way to get back toward balance.
My time is up. Senator Collins.
Senator Collins. Thank you, Mr. Chairman.
Mr. Tangherlini, I want to talk to you about the
compensation for GSA employees and in particular about employee
awards, incentives, and bonuses. The data that we have looked
at surprise me. It told us that more than 40 percent of GSA
employees received compensation in excess of $100,000, that 14
GSA employees received compensation exceeding $200,000, with a
high of $279,352.
Now, in some cases, this may be warranted. For example, a
GSA procurement officer who is deployed to a war zone in Iraq
or Afghanistan clearly gets additional funds, additional
compensation. There did seem to be a pattern of extraordinary
and uncontrolled overtime of employees working in one city but
responsible for activities in another city and incurring
incredible travel costs and per diem costs. And all of that is
cause for concern to me and something I want to explore with
you. But today, I want to talk to you specifically about some
of the employee awards.
Now, it is my understanding that for fiscal year 2011, 159
GSA employees received multiple awards that totaled $10,000 or
more. Now, here is what is interesting about this. The Office
of Personnel Management (OPM) has a process that says that each
agency head may authorize payment of a cash award up to
$10,000. It then says that awards over $10,000 are ``quite
rare'' and that if an employee's performance is significant
enough to warrant a cash award of over $10,000, the agency must
submit a request to OPM.
We went to OPM and we asked, did OPM receive any request
from GSA to approve for any of these 159 employees the awards
that totaled $10,000 or more, and the answer was that OPM did
not.
When we further examined this, it looked like GSA
circumvented the rules by giving multiple awards smaller than
$10,000 rather than one-time awards that were $10,000 or more.
Do you believe that giving multiple awards that eventually
total $10,000 or more in the fiscal year circumvents the OPM
approval process?
Mr. Tangherlini. I certainly do not believe it is in the
spirit of what was intended by the OPM approval process. Now, I
would want to point out, there is one exception, and it is a
pretty significant one: SES performance awards in excess of
$10,000 do not require OPM approval. So putting aside that,
which is a pretty sizable group of that number, but also
another area that we have identified as being in need of some
substantial review, and that is why we cut the SES bonus budget
by 85 percent.
But in our top-to-bottom review, we also identified that
there are 15 different award categories within GSA that people
are eligible for, and because we did not have the clear
transparency and accountability straight down to the field
level in our Finance Office and our Human Capital Office, it
was possible for people to get one of these awards at some
level within the organization.
So I am not in any way going to try to explain or defend
what happened before. I am going to say going forward that we
are building systems and structures that will prevent that from
happening, and we are cutting back the budgets because we are
reminding folks that their salary compensation is really what
is there to pay them for doing the work and that awards should
really be reserved for very special and exemplary service, and
it should be easily explained and completely justifiable.
Senator Collins. Well, you are correct that there is an
exemption for SES, but I will tell you that our initial
analysis is that these 159 employees are not just SES
employees, and I think you would agree with that.
Mr. Tangherlini. I do.
Senator Collins. But let us go to an SES employee. How
could the Region 8 Pubic Buildings Service Administrator
receive a bonus of almost $55,000, which appears to have been
awarded for planning the Western Regions Conference? I mean,
how could that happen?
Mr. Tangherlini. I do not know the specifics of that
particular individual. I do know that there were a number of
individuals who won the Presidential Rank Awards. That is a
statutory award that requires third-party review of the
submission, and those awards are quite substantial. They are
from 20 to 35 percent of pay. So if you have an SES employee--
the top end of the SES range is $179,000--you can get to some
pretty sizable awards if you win one of those very significant
and special awards.
I think in the case of the individual you are speaking
about, he won one of those Presidential Rank Awards, but I do
not know or understand the justification of that particular
one.
Senator Collins. And would it not trouble you that anyone
who was involved in planning the Western Regions Conference
that was so extravagant and was such a waste of taxpayer
dollars received any kind of bonus?
Mr. Tangherlini. Well, that is why we think we have to
really take a good, hard look at the performance system within
the organization and recognize one of the ways that we should
judge performance is not just meeting numbers but also
providing leadership and accountability. A step in that
direction that we are taking is we want to institute a 360-
degree review process for all leaders within the organization
so that they can be assessed not simply by their superiors, but
also by their peers and by their employees so that we can get a
sense of where we need to develop further the leadership skills
of our employees.
Senator Collins. I want to also point out that if a
recommended award is in excess of $25,000, which many of these
awards that we have reviewed were, the Director of OPM reviews
the nomination, and the President's approval is actually
required.
Mr. Tangherlini. Right.
Senator Collins. My point is that it is not as if there are
not systems in place to try to put a check on excessive awards
to individuals who have not warranted that kind of recognition.
But it sure looks to me like GSA ignored those checks and
circumvented the safeguards in order to give extraordinary
awards to many employees. And in many cases--not all, and I
want to be clear on that--the awards do not seem to have been
justified. Would you agree with that based on your review so
far?
Mr. Tangherlini. Based on our review, I think our actions
speak to our analysis, the fact that we cut the budget for
these awards by 85 percent and said back to our folks that,
listen, this is going to be something you get for really
special, exemplary, extremely justifiable acts for which,
frankly, the test is going to be, can I explain it at a Senate
hearing.
Senator Collins. That is always a good test. Thank you, Mr.
Chairman.
Chairman Lieberman. Thanks, Senator Collins. Senator
Johnson, good morning.
OPENING STATEMENT OF SENATOR JOHNSON
Senator Johnson. Good morning. Thank you, Mr. Chairman, and
thank you for holding this hearing. I have always felt the best
disinfectant is the light of day, and I would say having to
explain in front of a Senate hearing is probably a pretty good
benchmark.
Senator Collins, it is interesting. As I was looking
through some of the briefing materials, the thing that jumped
out at me was the drumsticks, close to $30,000. Have you seen
the video, by any chance?
Senator Collins. No.
Senator Johnson. I viewed that yesterday, and Inspector
General, I appreciate the fact that your staff now has agreed
to let us release that video because I think it is important.
Although we are not talking billions of dollars here, I think
those anecdotal examples of just outrageous spending by the
Federal Government are extremely important. And it is important
to note that this is not just one conference. The drumstick
incident occurred at an awards ceremony in 2010 where $30,000
was also spent on time/temperature picture frames that were
apparently handed out to the participants. So, again, I
appreciate that and look forward to that video being publicly
released because I think the American people need to see that
type of abuse.
Mr. Tangherlini, you have canceled 47 conferences. Can you
tell me what the purposes of those conferences were and why
they were ever scheduled in the first place?
Mr. Tangherlini. Well, that was part of the reason why we
canceled them. Every conference now has to come through with an
explanation. It has to detail what the benefit to the taxpayer
is and the results we will get out of it. And in some cases, a
valuable conference--the GovEnergy conference, there were just
so many flaws in the way it was constructed that we referred it
to the Inspector General for additional analysis. We had our
legal team look at it. And while we thought that there was
value to the conference, we did not think we could explain or
justify the mechanism by which the conference was put together.
Other conferences, frankly, we just did not feel that there
was sufficient justification for us to use taxpayer money to
send people to them.
Senator Johnson. Can you describe what some of those things
were about? Because my guess would be those have been going on
for decades, and they are going on today in other agencies. So
I just want to get an explanation of what some of these
government conferences are all about.
Mr. Tangherlini. Well, I think the primary focus is to
bring people together and to improve their training
opportunities, to exchange ideas, to build connections and
relations. And so there is nothing in principle wrong with a
conference. The question is, are there other ways to do it? Are
there other means of making those connections? Are there other
events such as our annual Expo event where people could do it
instead? And so that has really been our test, to really push
back on the organization and say, listen, it is very important
that we recognize the limitation we are facing with these
resources, and it is important that we look at different ways
for us to get whatever value they thought they were going to
get out of that event.
Senator Johnson. Well, the conferences that you are going
to allow to go forward, what are those about?
Mr. Tangherlini. Those are about training, and those are
about connections between vendors, particularly small
businesses and the agencies they serve. They are things like
the Expo conference, during which we brought together thousands
of vendors. We brought together thousands of government
contracting officers. We provided hundreds of hours of
training. We made sure, though, that when people got there,
they recognized that they were going to a government training
conference and it was going to look every bit the way that
sounds, and that meant that it was going to be austere, it was
going to be focused, and it was going to be mission oriented.
And if people did not have business to do there, they needed to
(a) not come or (b) leave once they were done.
Senator Johnson. Now, both you gentlemen have worked for
other government departments, correct? I think you were with
the Department of Treasury, and you were with the Department of
Justice.
Mr. Miller. Yes.
Senator Johnson. Without ratting them out, but I guess I am
asking you to rat them out, is it a similar type of process in
terms of having 50-60 conferences a year? I will start with
you, Mr. Tangherlini.
Mr. Tangherlini. Well, I came from the Treasury Department
where I know that from the Secretary on down, we took very
seriously our stewardship of taxpayer resources. So certainly
in the 3 years I was there, I never saw anything like that.
Senator Johnson. Mr. Miller.
Mr. Miller. Neither have I. I did not see that at the
Department of Justice.
Senator Johnson. So GSA is the only one that is holding
conferences? I mean, we are hearing about judicial conferences
and----
Mr. Miller. They would have conferences, usually training,
and it would be at the National Advocacy Center in South
Carolina. And they would train Assistant U.S. Attorneys and
trial attorneys, those types of conferences, and they would
have a heavy agenda of substantive training.
Senator Johnson. What would those conferences typically
cost? Was a typical budget hundreds of thousands of dollars?
Mr. Miller. I would doubt that very much.
Senator Johnson. Speaking of budgets, in my briefing
materials, I have listed that GSA's budget is about a quarter
of a billion dollars, which, unfortunately, in our government
is a rounding error. That is not your full budget, though,
correct?
Mr. Tangherlini. No.
Senator Johnson. What is the total amount flowing through
GSA in terms of your fees?
Mr. Tangherlini. The best number to use for the GSA budget
is about $23 billion. There are about another $40 billion, as
the Chairman pointed out, that flow through our vehicles, but
not directly through GSA.
Senator Johnson. As a business person, when you see some
department that is really out of control, you either eliminate
it or you drastically cut its budget. I am highly skeptical,
when you see the comments going back decades about how out of
control this agency has been, that we are going to be able, as
phenomenal as you may be in terms of managerial abilities, to
get this under control. I really do believe in many cases these
agencies just have to be cut. What percent cut in terms of the
budget could the GSA live with? And would that not be really
the best way to force efficiencies?
Mr. Tangherlini. Well, I would be concerned about doing any
kind of across-the-board cut. I think the really important
thing is to look at the mission that the GSA supports.
Senator Johnson. But have not people been doing that for
decades and simply not been able to get control over it?
Mr. Tangherlini. Well, I think part of the concern is, for
instance, on the Federal facilities side, we need to make sure
that we are not cutting the budget so badly that we cannot take
care of the facilities. The big issue here is: Are we applying
the resources that we have been given in the way that they are
meant to be applied? Are we applying them to repairing
buildings? Are we applying them to providing the most efficient
acquisition services? And I think that is what makes people
really upset, is if you have $800,000 spent on a conference
that could have gone into building a better heating or
ventilation system for a building that saved taxpayer money by
reducing energy, that is incredibly unfortunate, and that is
where it is abusive.
Senator Johnson. Just quickly on another subject, I just
want to get your response. I sent a letter on April 30, 2012,
about the U.S. Green Building Council's Leadership in Energy
and Environmental Design program.
Mr. Tangherlini. Right.
Senator Johnson. The 2012 program is a pretty drastic
departure. I am highly concerned about products not being able
to be utilized in government buildings anymore that will cost
jobs. Are you working actively on that? Are we going to put a
stop to utilization of that, or are we going to start costing
jobs?
Mr. Tangherlini. We are looking at those standards, and we
want to make sure that there is a fair, open process for those
standards. I do not know where we are in responding yet to the
rulemaking, so I want to be careful that I do not upset that
very complicated legal process. But I will say that we have
heard many of those concerns and others, and we are trying to
reflect them in the way we handle that going forward.
Senator Johnson. I will enter this letter in the record,\1\
and I would really like to work with your staff to get some
answers on where we are in moving on that process. Thank you,
Mr. Chairman.
---------------------------------------------------------------------------
\1\ The letter submitted by Senator Johnson appears in the Appendix
on page 70.
---------------------------------------------------------------------------
Chairman Lieberman. Thanks very much, Senator Johnson.
Senator McCaskill, thanks for being here. Good morning.
OPENING STATEMENT OF SENATOR MCCASKILL
Senator McCaskill. Good morning. It is good to be here this
morning, and I want to start first with Mr. Miller.
Mr. Miller, I have a very vivid memory of the two of us
sitting in an office in the GSA building in Kansas City going
over one of your audits, and I remember as a former auditor,
you said some things to me in that meeting that went in my hard
drive, and this was way back before the conference ever saw the
light of day in Las Vegas. This was all about what I found in
terms of a public relations contract that had been given out in
Kansas City without a bid that seemed to be terribly wasteful
and, frankly, without much in the way of results. And I
remember you communicating to me in that meeting that you as a
wizened auditor in government were surprised and, frankly,
deeply concerned over some of the responses you had received to
some of your audit findings. And that is when I began to
realize that there was a really rotten problem at the very top
of GSA.
I also have a vivid recollection of talking to the head of
the Public Buildings Service on my cell phone--I even remember
where I was standing--when I was complaining to him that he was
not taking aggressive action against the woman who had misled
this Committee at a hearing about that contract and that you
had documented that she had misled this Committee.
Mr. Miller. Yes.
Senator McCaskill. And I remember talking to him and
saying, ``What are you going to do?'' And he basically said,
``Nobody reads that stuff.'' And that was the moment when I
understood how big a problem we had at GSA because he was just
dismissing the IG's findings. And then I found out later they
had given her a bonus. She had made a huge mistake in judgment.
She had violated procurement. She was a regional boss, and she
had misled this Committee, and you had documented that. And
they gave her a bonus.
So I just want to compliment you for your doggedness. I
want to compliment you for what you do. I am hopeful that we
can get our GAO Improvement Act passed. It is being held right
now. It is on the floor but being held, and we are going to try
to call out the secret holds because the more we empower the
auditors, the more we make sure that you are doing your job,
the more likely it is that we are going to be able to clean up
messes like this.
Now, Mr. Tangherlini, I think you are trying very hard. I
have great respect for the bold moves you have made. And if
anybody does not think what you have done is bold, they do not
understand SES. They do not understand the SES service in the
Federal Government if they do not understand that when you cut
the bonus budget by 85 percent, that is an earthquake in SES
world. There are a lot of nodding heads in the room because a
lot of people in this room understand the calcified power of
SES in the Federal Government. And that is one of the questions
I want to ask you about. And I know there are arguments on both
sides, but in a very tricky move between the transitions of
Administrations, the SES and GSA basically took the political
appointments from these different areas in the country and
removed all of their power. When no one was watching between
the Bush Administration and the Clinton Administration, they
took the regional political appointments that are the eyes and
ears of Congress into this agency, and they basically put them
out to pasture and took away all of their power.
Nobody ever said anything. No one ever realized this
happened until all of a sudden, when the new people were put in
place, they found they had an office with nobody reporting to
them, they had no authority to do anything, so this woman in
GSA in Kansas City basically did not have to listen to the
Regional Administrators that had been appointed through the
political process whatsoever. No power.
So is that a good idea? And why did no one ever say
anything about that? Because all it did was, in fact, muscle up
the calcified middle management of this agency at the expense
of congressional oversight.
Mr. Tangherlini. I will take the first stab at it. I
actually agree with you that there were substantial problems
with the way that those organizational changes have been made,
and that is why I have done everything I can to reverse them
and clarify the role of the Regional Administrator. Some of
those changes are going to require some additional work on what
is the long-term role of the Regional Administrator, how does
the region fit within the organization. Those are bigger
questions. But in the meantime, I do not want Regional
Administrators out there who feel that they are not empowered
to call out waste or abuse or concerns and say that they do not
have power to resolve them.
And so we have done a couple of things. We have given them
the head of contracting authority so that they are the ones who
get to determine whether things can be bought. They work
closely with our Senior Procurement Executive to determine who
has warrants and, frankly, who does not have them anymore to
obligate the Federal Government. We have a weekly phone call
with the Regional Administrators and with our Deputy
Administrator. If there is any concern, if there is any
problem, if someone is not listening to them, I have told them
that if they cannot resolve it, bring it to the Deputy
Administrator, bring it to me, call me, or email me. Because if
someone does not think that they report to the Regional
Administrator, I certainly hope they do not think they do not
report to me. And so that is what we have been doing to try to
make sure that we have clarity of role and responsibility in
the organization.
Senator McCaskill. Well, you understand when the Regional
Administrator in Kansas City tried to impact this situation, he
was called to Washington and asked to sign a loyalty oath,
which was, frankly, shocking to me that would occur. He was
trying to point out some of the problems, and he was called on
the carpet. And I then began a mission to see if we could
rattle the very top cages in GSA. I am glad that Las Vegas came
along because that toppled the entire structure, which needed
to go. And as time went on and I became more and more familiar
with some of the decisions that were being made, I was more and
more surprised at some of the judgment calls that were being
made.
Inspector General, do you have any comments on this
calcification in middle management at GSA that really began to
pull the curtains on aggressive oversight by removing the power
of the Regional Administrators to have any kind of supervisory
authority whatsoever?
Mr. Miller. Well, Senator, I think we found two data
points: One with Kansas City where there was an out-of-control
regional commissioner and many problems that you uncovered in
your hearings; and another data point obviously is the Western
Regions Conference, where we had a regional commissioner,
again, who was out of control so that structure was not
working.
Ultimately, how an agency organizes itself and how it
chooses to manage itself is an agency function, and it is not
really the job of the Inspector General to tell them how to
organize themselves. I feel like it is a bit out of my lane.
Senator McCaskill. Well, I just want the Chairman to know
that this happened, and it was almost as if they waited in the
confusion of the transfer of Administrations, knowing that no
one was going to be paying close attention, and they moved
quickly and cleanly to change the supervisory authority of the
appointments in which Congress has a role. And I think the
reason Congress has a role in those appointments is that it
augments and enhances the oversight capacity of Congress. And
so far, I will tell you, I am a big fan of the Acting
Commissioner. I think he has taken really aggressive steps that
are hard to do in government to clean up this mess, and I do
not think we can keep flaying the horse when the horse is
trying very hard to clean up everything. But I do think it is
something that we ought to take a look at as to exactly when
and how this happened because I think it is really problematic
that they had enough nerve to do this when no one was looking.
Chairman Lieberman. Thanks, Senator McCaskill. I agree with
you, and we will take a further look at it. Thanks for bringing
that to light.
I have a few more questions so we will go to another round.
I wanted to talk with you about purchase card abuse. A
longstanding concern of our Committee has been whether agencies
generally exercise proper controls over purchase cards, which
are government charge cards given to employees for making small
procurements.
Overall, it needs to be said, use of these purchase cards
saves the government money because it helps eliminate
paperwork. The numbers are really remarkable, and again, it
shows how large the Federal Government has become. Federal
employees spend over $30 billion annually using these purchase
cards, and this generates, it is a pleasure to say,
approximately $2 billion in rebates to agencies from the credit
card companies. But obviously, we have to guard against abuses
by those who use the charge cards for illegal or fraudulent
purposes.
I will add here, shamelessly but I think constructively,
that it is my strong hope that before Congress adjourns this
session that we give final passage to a bill sponsored by
Senators Collins, Grassley, and me, which is S. 300, to require
agencies to adopt better internal controls over the purchase
cards.
GSA, as you well know, Mr. Tangherlini, is the agency that
negotiates the contracts with the major credit card companies
for the charge cards that Federal employees use. So, obviously,
we would hope that GSA would see itself as having a special
responsibility for being a good steward of charge cards, and
that is why it added insult to injury when we learned that in
Region 9, Jeff Neely's deputy was arrested in 2010 and pleaded
guilty for embezzling taxpayer money for personal use on items
such as luxury hotels, meals, and spa treatments.
One of the things that was interesting to me that I learned
in your responses to the questions that Senator Collins and I
posed in our letters was that there have been very few
disciplinary actions at GSA for purchase card abuse in the last
5 years--only one action in 2007, one in 2008, and none at all
for years 2009 through 2011. Now, maybe that is because there
is no purchase card abuse. On the other hand, when we see some
of the other irresponsible behavior, you have to wonder. And I,
therefore, wanted to ask you, going forward, are you either
looking into whether there have been abuses that should have
led to disciplinary action or are you taking proactive steps
now to make sure that there are no, to the best of your
ability, abuses of the use of these purchase cards?
Mr. Tangherlini. Well, the answer to both questions is yes.
On the retrospective work, we will work closely with the
Inspector General as we go through and look at particularly
these conferences and other spending, and spending in areas
where we saw a pattern of abuse, and go and reconcile a past
purchase card or travel card to see if we can find anything
there.
But going forward, I think it is important that we create
the same kind of systems and oversight that make it impossible
for people to hide behind the organizational complexity and
raises our visibility into how people are spending taxpayer
money within GSA. So we are doing a couple of things.
One, we have reduced the number of purchase cards within
the organization by nearly 15 percent with just simply taking
back a bunch of the cards.
The other thing we are going to do starting in the next
fiscal year is we are going to buy a set of analytical tools so
that we can really look at the purchase card volume through GSA
and try to find patterns and try to discern information. This
is something that the purchase card companies provide as an
extra service, and we are going to avail ourselves to it so we
get better data, more transparency, more visibility, so we can
actually see what is going on in the field.
Chairman Lieberman. I appreciate that.
Mr. Miller, do you want to comment on the use of purchase
cards in the agency?
Mr. Miller. Yes. We have ongoing reviews of purchase cards,
and since 2009, we have recovered $1.9 million in purchase card
cases. I highlighted that in my opening statement. We continue
to analyze them. Our Office of Forensic Auditing analyzes the
data and makes referrals to our Office of Investigations, and
we currently have criminal investigations going regarding abuse
of purchase cards.
Chairman Lieberman. That is important. So it does not
really seem accurate or adequate that there were only two
disciplinary actions in the last 5 years at the agency for
improper use of purchase cards. Do you agree?
Mr. Miller. I cannot dispute that figure. I do not have
information about disciplinary actions taken against holders of
purchase cards. I do note in one case that is ongoing, the
purchase card authority was reduced.
Chairman Lieberman. Yes.
Mr. Miller. So that did occur. Now, of course, a criminal
prosecution is not a disciplinary action. That is a criminal
prosecution. The person is usually fired as a result.
Chairman Lieberman. Right. Is that one going on now?
Mr. Miller. Criminal investigation?
Chairman Lieberman. Yes.
Mr. Miller. I believe we have more than one.
Chairman Lieberman. Yes. And outside the Western Region.
Mr. Miller. Yes, at least one of them is outside. We have
others going, too.
Chairman Lieberman. OK.
Mr. Miller. Yes, they are all outside of Western Region,
but we also have criminal investigations in Region 9 as well.
Chairman Lieberman. Right. Well, that is important and
certainly says, Administrator Tangherlini, that what you are
doing to try to curb the possibility of purchase card fraud by
employees of GSA is totally justified. So I thank you for that.
I want to just pick up on a couple of the questions that
Senator McCaskill was asking about the GSA regions because
obviously we have talked a lot about how important it is to get
the regions under control from the central or headquarters
operation. But I think there are other questions to ask about
the regions as well, and I will start with you with a broader
question, Mr. Tangherlini. GSA now has 11 regions--the National
Capital Region office and 10 other offices--and I wanted to ask
you whether you have thought about the baseline question of
whether this is too many regions, whether GSA really needs that
many regions.
Mr. Tangherlini. Actually, that has been the first question
we asked in each one of the top-to-bottom discussions we had
with each of the regions. And by the 11th time I asked the
question, I will point out, they got much better at answering
it. But the fact is that what we do has such a retail component
to it, if you will. We actually manage over 9,000, close to
10,000 individual facilities, and those facilities, leased or
government-owned, have specific local needs, and they have
specific local requirements. We do contracting work with
agencies that are spread throughout the entire country, and so
there are specific needs that those agencies have.
The big question we have to ask ourselves, though, is: How
do we structure those regions? And do we need redundant and
duplicative systems in those regions? And how do we overcome
some of the challenges that have faced the organization since
that piece in 1955, the ability to have transparency and
visibility into what is happening at the local level and making
sure that there is consistency in the way the services are
delivered?
One of the things that was very striking to me and really
supported our decision to move forward with consolidating our
IT function is that we have 11 different building management
systems. Each region has its own IT system for managing
building operations.
Chairman Lieberman. Right.
Mr. Tangherlini. And buildings, yes, they are different,
each one is different, but there is not that kind of variation.
And so as a result, we do not have as much visibility into the
way these buildings are operated, the expenditures. We make Mr.
Miller and his team's job even harder. And as a result, we do
not have the best control, management, and oversight of our
resources.
So we need to untangle that web of reporting of
transparency, and then I think we have to ask ourselves the
bigger question, the question that has not really been asked
since we were founded in the late 1940s, early 1950s: What is
the best way for us to cover the map, if you will, and deliver
services?
Chairman Lieberman. So your answer today is that you are
considering the question of whether the 11 regions are
appropriate or too many?
Mr. Tangherlini. I think that is fair to say, that is a
broader discussion that we want to have as part of the budget
process. We want to continue to have it within the
organization. In the meanwhile, though, that is not a reason
for us not to make sure that the Regional Administrators do not
have the power, the resources, and the accountability they need
to oversee those functions. It is a big country, lots of
buildings, lots of transactions, so we are going to need some
regional infrastructure. What does it look like? How does it
work? I think it is reasonable for us to keep asking those
questions.
Chairman Lieberman. I would just ask for Senator Collins'
patience for one more question on this subject, which Senator
McCaskill touched on in a way, too. Do you think we need a
political appointee over each region, or should this rather be
a civil service person?
Mr. Miller. Mr. Chairman, that is, I think, really out of
my lane to opine on that. Obviously, there is a sense in which
the Regional Administrators are the eyes and ears of the Senate
because they have a great deal of input into the political
appointments.
On the other hand, I have always been a career employee, so
I have a great deal of faith in career employees, too.
It really is not up to me to make this sort of a call. I
have seen abuses each way.
Chairman Lieberman. Sure. Mr. Tangherlini, do you want to
step into that thicket?
Mr. Tangherlini. I was actually hoping he would answer for
me. [Laughter.]
But since he did not, I have to keep going with it, I
guess. I think that is also one of those baseline questions we
have to ask ourselves. So how do we structure ourselves, and
then how do we make sure that we have the right level of
accountability within the organization? You heard Senator
McCaskill make a very good point about the need to make sure
that we do not install a group of folks who sit there for so
long that they do not feel that they need to report to anyone.
That having been said, it is hard on a continual political
replacement cycle to find that many high-quality people to
consistently do those jobs.
Chairman Lieberman. Exactly.
Mr. Tangherlini. That is the balance we have to strike. We
have the budget process. We have started this review. These
questions are being asked. We do have a constitutional event
happening in November that will allow us then to rejigger, term
to term or Administration to Administration, and so I think it
is the right time to be asking those questions.
Chairman Lieberman. Very good. Thank you. Senator Collins.
Senator Collins. Thank you, Mr. Chairman. I am going to
pick up where you left off because Mr. Tangherlini and I had
the same discussion when we were talking on the phone.
I think this is a difficult issue. How do you ensure
accountability and appropriate authority and in whom should it
be vested? I served as a Regional Administrator of the Small
Business Administration for New England in the final year of
the first President Bush's Administration. I loved the job. I
felt we made a real difference at a time when New England was
going through a lot of bank failures. But I also heard from the
employees, with whom I was privileged to work, about previous
Regional Administrators in some previous Administrations who,
how shall I say it, did not take the job as diligently as I
did.
So I think this is a difficult call because these are
short-term political appointees. Some of them are terrific,
believe in public service, are excellent managers, and have
terrific skills. Some of them, frankly, are being rewarded for
helping the President be elected, and they may not have the
skills that are necessary.
I do not know the answer to this question. I truly do not.
And I think it is something we need to talk more about.
Clearly, there is an absence of authority and accountability,
and that must be solved. But I do not know how we solve it
because it depends so much on the person who is appointed.
Mr. Tangherlini. So I feel the need to put in a plug for
the Regional Administrators we have. We have a great team. They
are committed, they are engaged, and they are involved.
I think one of the big problems that has not been resolved
since that Fortune article from 1955, which I also read and was
amused to see how many similarities there were, is that we
really have not built the strong accountability and
transparency systems, the real visibility down to the field
level of work. And so what happens is we have kind of
bureaucratic cloud cover that prevents us from really seeing
what is going on in those organizations, and because we do not
have the commonality of the systems, it is very hard for us to
compare the data.
The Chairman pointed out the fact that we simply could not
say how much we had spent on conferences because we did not
collect the data in that way and we did not have a central
repository for recording that kind of expenditure. We need to
have that, and that is what we think will help us maybe solve
some of the problems that we had not been able to solve up to
this point.
Senator Collins. Staying with the theme of accountability,
Mr. Miller, you mentioned the recoveries for improper use of
purchase cards, and I think you said that there have been
recoveries of $1.9 million, which is a considerable amount. Is
there an effort underway to get costs recovered from the
improper expenditures related to the private parties at the
Western Regions Conference that were charged to the taxpayer? I
understand there was a $120 birthday cake, that an employee's
spouse allegedly impersonated a GSA employee in order to get
into certain events, that per diem meal charges were submitted
even though meals were provided as part of the conference. Is
there an effort to recover those costs?
Mr. Miller. That was one of the first conversations I had
with Mr. Tangherlini, and I will let him tell you how he has
actually submitted bills to these employees.
Mr. Tangherlini. With the assistance of the Inspector
General and his team helping us review the expenditures, we
actually have submitted bills to a number of the employees. We
have received reimbursement from a number of employees who were
involved in some of those questionable activities. We have
withheld final payments of severance or other benefits for some
of the employees who are no longer with GSA. And in one case,
we received reimbursement from a contractor that had provided
ineligible expenses on their voucher to us.
So working very closely with the Inspector General, I will
commit to you, if there is a dollar we can get back, I am going
to try to get it.
Senator Collins. I am glad to hear that. That is part of
accountability, and it also serves as deterrence. And it does
not substitute for disciplinary action that should be taken,
but it should be part of the attempts to make the taxpayers
whole, and I am pleased that you are being aggressive on that.
I also want to follow up on the Chairman's questions about
purchase cards. You mentioned that you had reduced the number
of people who had access to purchase cards, and I think that is
a step in the right direction. I am wondering if you have also
considered putting a limit on how much can be charged to a
purchase card. For example, our investigation revealed that an
employee used a single purchase card for purchases totaling
over $1 million during a 7-month period, and some purchases
were from a vendor that was paid $104,000 when the purchase
orders appeared to only authorize $55,000.
But this raises a bigger issue in my mind, and that is, do
we really want a single employee to be able to charge in excess
of $1 million over just 7 months?
Mr. Tangherlini. Well, I think the question is, what kind
of controls are in place and what kind of additional
authorizations are required. If the employee is a buyer and is
using the purchase card for how it is set up to be used, as the
Chairman pointed out, to save considerably on the amount of
paperwork and the amount of back-shop work, you could have a
position where it is perfectly reasonable or fine for someone
to spend that kind of money. Is there appropriate oversight?
Are there controls? Are other people signing off? Or do they
have the singular ability to spend that kind of money? If it is
the latter, that is deeply concerning.
Senator Collins. And I would mention that many of the
purchases were related to that 1-day Federal Acquisition
Service awards ceremony that has been so troubling to us as
well.
Mr. Tangherlini. I would just like to add that it was
actually our review, working with the Inspector General and at
the request of Congress, of prior conferences that led me to
refer that particular conference to the Inspector General
because we saw enough problems with it that we really wanted
their additional insight into whether there was something more
than just problematic, something more than just inappropriate
about it, whether there was anything actually illegal.
Senator Collins. I have a final question for Mr. Miller. I
worked on Capitol Hill when the Competition in Contracting Act
was passed, and as I read through the materials, I saw a
notable disregard for the requirements to seek out competition
in the award of Federal contracts by GSA in order to ensure
that we are getting the lowest price at the best quality.
This to me is extraordinary because GSA is supposed to set
the standard. GSA, as you have said, is supposed to be the
model. I believe the contract to the resort at which the
infamous conference was held was a sole-source contract,
despite the fact that there were clearly many hotels that would
have been happy to bid on that conference.
Could you talk to us a bit about the violations of the
competition requirement that you found so far as parts of your
audits?
Mr. Miller. Senator, you are exactly right. There are many
violations, unfortunately, of the Competition in Contracting
Act. We have uncovered a number of those violations in
connection with Recovery Act projects, and I have testified on
those violations in other committees. We have submitted a
proposal that would require GSA to report a violation of the
Competition in Contracting Act to their oversight committees,
much like the Anti-Deficiency Act, because currently we
identify the violations but there is no remedy. And so we do
have plenty of audits that have that as a finding, that they
did not have adequate competition, they violated the act, and
unfortunately, it is not isolated. It occurs a lot.
Senator Collins. Thank you. In many ways, those are the
hidden costs.
Mr. Miller. Yes.
Senator Collins. Because we do not know how much would have
been saved if the service or good had been put out to a bid.
And we will probably never know how much additional lost
taxpayer money was involved. So I do think that is important,
and I like your suggestion of the report to Congress. That is
something I think we will follow up on with you.
Thank you both for your testimony. Again, I want to thank
you both for taking on this task in such a serious manner. We
do have to get this straightened out. There is nothing that
erodes the confidence of taxpayers more than reading of these
scandalous examples of wasted dollars at a time when the public
is struggling to put food on the table. Thank you.
Chairman Lieberman. Thanks, Senator Collins. Obviously, I
could not agree with you more, and Mr. Miller, I thank you for
being a real steward of public trust and by your work, in some
sense, making the public angry, but also putting the agency
under pressure to get better.
Human nature being what it is, probably at this time the
prospect of a repeat of the outrageous behavior at the Las
Vegas conference and the other things that were happening in
Western Region 9 are slight. In other words, people understand
that GSA is under the klieg lights now. But what I appreciate
that both of you are doing, and I thank you particularly as
Acting Administrator, Mr. Tangherlini, is that this is the
moment to try to put into place systems that will stop a
repetition of the infuriating behavior of GSA employees when
the memory of what happened in Western Region 9 is gone, which
is another part, unfortunately, of human nature and history in
organizations that repeats itself. So I think you are well on
the way to doing that. It does require constant oversight and
strong leadership--strong leadership in the agency and constant
oversight by Congress. And certainly I know this Committee will
continue to do that.
The record of this hearing will remain open for 15 days for
additional questions and statements by yourself and others, if
you would like. With that, I thank you again very much and
adjourn the hearing.
Mr. Tangherlini. Thank you.
Mr. Miller. Thank you.
[Whereupon, at 11:38 a.m., the Committee was adjourned.]
A P P E N D I X
----------
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]