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76–067 PDF 2012

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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 

( 

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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

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 

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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 

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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 topto-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 

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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 ne- gotiates 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 

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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.’’ 

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4 

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 teambuilding 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. 

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5 

eral 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 headshaking 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 

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1The letters referenced by Chairman Lieberman appear in the Appendix on page 72. 

2The prepared statement of Mr. Tangherlini appears in the Appendix on page 37. 

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. 

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. 

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 

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sure 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 oneon-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 

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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. 

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1The prepared statement of Mr. Miller appears in the Appendix on page 43. 

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. 

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 

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10 

ministrative 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. 

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11 

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 

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12 

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 

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13 

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 

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14 

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 

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15 

ture 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 

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16 

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 

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17 

1The letter submitted by Senator Johnson appears in the Appendix on page 70. 

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. 

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 takH605-41331-79W7 with DISTILLER

18 

ing 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 ReH605-41331-79W7 with DISTILLER

19 

gional 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 

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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 

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21 

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. 

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22 

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 

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23 

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 servH605-41331-79W7 with DISTILLER

24 

ice, 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 

H605-41331-79W7 with DISTILLER

25 

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 ReH605-41331-79W7 with DISTILLER

26 

covery 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.] 

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76067.141
168 

H605-41331-79W7 with DISTILLER


76067.142
169 

H605-41331-79W7 with DISTILLER


76067.143
170 

H605-41331-79W7 with DISTILLER


76067.144
171 

H605-41331-79W7 with DISTILLER


76067.145
172 

H605-41331-79W7 with DISTILLER


76067.146
173 

H605-41331-79W7 with DISTILLER


76067.147
174 

H605-41331-79W7 with DISTILLER


76067.148
175 

H605-41331-79W7 with DISTILLER


76067.149
176 

H605-41331-79W7 with DISTILLER


76067.150
177 

H605-41331-79W7 with DISTILLER


76067.151
178 

H605-41331-79W7 with DISTILLER


76067.152
179 

H605-41331-79W7 with DISTILLER


76067.153
180 

H605-41331-79W7 with DISTILLER


76067.154
181 

H605-41331-79W7 with DISTILLER


76067.155
182 

Æ 

H605-41331-79W7 with DISTILLER


76067.156