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91–176 PDF 2015

S. Hrg. 113–706 

NOMINATION OF ANNE E. RUNG 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

NOMINATION OF ANNE E. RUNG TO BE ADMINISTRATOR 

OFFICE OF FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT 

AND BUDGET 

JULY 24, 2014 

Available via the World Wide Web: http://www.fdsys.gov/ 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

THOMAS R. CARPER, Delaware Chairman 

CARL LEVIN, Michigan 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

GABRIELLE A. BATKIN, Staff Director 

JOHN P. KILVINGTON, Deputy Staff Director 

TROY H. CRIBB, Chief Counsel for Governmental Affairs 

DEIRDRE G. ARMSTRONG, Professional Staff Member 

KEITH B. ASHDOWN, Minority Staff Director 

CHRISTOPHER J. BARKLEY, Minority Deputy Staff Director 

ANDREW C. DOCKHAM, Minority Chief Counsel 

KATHRYN M. EDELMAN, Minority Senior Investigator 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN M. CORCORAN, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator McCaskill ............................................................................................ 1 

Senator Coburn ................................................................................................. 2 

Senator Levin .................................................................................................... 12 

Senator Ayotte .................................................................................................. 16 

Prepared statement: 

Senator McCaskill ............................................................................................ 19 

WITNESSES 

THURSDAY, JULY 24, 2014 

Anne E. Rung, Nominee to be Administrator Office of Federal Procurement 

Policy, Office of Management and Budget 

Testimony .......................................................................................................... 3 

Prepared statement .......................................................................................... 22 

Biographical and financial information .......................................................... 25 

Letter from the Office of Government Ethics ................................................. 41 

Responses to pre-hearing questions ................................................................ 43 

Responses to post-hearing questions .............................................................. 65 

Letter of support from IT Alliance for Public Sector ..................................... 66 

(1) 

NOMINATION OF ANNE E. RUNG 

THURSDAY, JULY 24, 2014 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:33 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Claire McCaskill, 

presiding. 

Present: Senators McCaskill, Levin, Coburn, and Ayotte. 

OPENING STATEMENT OF SENATOR McCASKILL 

Senator MCCASKILL. We convene this hearing today to consider 

the nomination of Anne Rung to be Administrator for the Office of 

Federal Procurement Policy (OFPP), within the Office of Management and Budget (OMB). It has been almost 8 months since Joe 

Jordan, the previous OFPP Administrator, left the office, and this 

is not the first time that OFPP has been without an Administrator 

for an extended period of time. The position was vacant for 6 

months from November 2011 until Joe Jordan was confirmed in 

May 2012, and the Administration failed to nominate someone for 

the first 10 months of its first term. 

The absence of leadership in this office has been a source of great 

frustration to me as there have been several occasions when OFPP 

has been unable to provide a witness for my Subcommittee hearings because of these vacancies. 

So it is with a sense of urgency that I welcome Ms. Rung here 

today. I want to thank Dr. Coburn, Senator Johnson, and Chairman Carper for moving so quickly after the White House sent Ms. 

Rung’s nomination to the Committee. 

As a former State auditor and Chairman of the Subcommittee on 

Financial and Contracting Oversight, I have great appreciation for 

the importance of OFPP, its potential to save taxpayers a lot of 

money with the right policies and the right leadership, and I believe that Ms. Rung is well qualified to become its Administrator. 

While our Federal Government continues to grow to meet the 

needs of a complicated world, the total number of Federal personnel has, in fact, actually fallen. According to data collected by 

the Office of Personnel Management, there are fewer Federal employees now than there were in 1962. To fill the growing gap between the falling number of Federal employees and the needs of 

this country, the Government increasingly has relied on contractors. 

Last year, the Federal Government spent approximately $460 

billion contracting for a wide range of goods and services. In many 

cases, the work of contractors is indistinguishable from the work 
2 

being performed by Federal employees. Contractors sit side by side 

with their Federal counterparts, undistinguishable other than the 

difference in their salaries and potentially the difference in their 

benefits. Yet all too often, little or no analysis is done to determine 

what is the most cost-effective way to meet the needs of various 

agencies of the Federal Government. 

Most Federal agencies still do not do a cost-benefit analysis when 

deciding whether to hire a Federal employee or a contractor. Our 

contracting oversight workforce is overstretched and underfunded. 

The data they rely on to look at contractor past performance is difficult to use and incomplete. And the contracting process itself is 

cumbersome and time-consuming. 

To its credit, OFPP has taken on these challenges. Most recently, 

the Office of Federal Procurement on July 10th issued guidance to 

assist contracting officers in making better use of contractor past 

performance information. And the Administration has set lofty 

goals for the continued use of strategic sourcing. However, as I 

have seen throughout the Federal Government, it is one thing to 

issue policies and set goals. It is quite another thing to see that 

those policies are actually implemented and that the goals are met. 

In reviewing Ms. Rung’s work, it is my belief she is the kind of 

leader who will see that these and other policies are actually implemented, not just words on a paper. Ms. Rung is currently serving 

as a senior adviser at OMB, and previously she served at the General Services Administration (GSA), in various positions, most recently as Associate Administrator of Governmentwide Policy. 

Prior to GSA, Ms. Rung was a Senior Director of Administration 

at the U.S. Department of Commerce from 2010 to 2012, where she 

won an award for the work she did to eliminate waste and inefficiency through the agency’s Cost Reduction Project. Her work resulted in reduced wireless costs, better printing management, and 

strategic sourcing for seven principal commodity purchases, including computers. She also created an agencywide network of strategic 

sourcing experts from each of Commerce’s major bureaus, where 

her efforts yielded millions in savings of taxpayer dollars. 

It gives me great confidence to know Ms. Rung has actually accomplished on a single-agency scale that which we need to accomplish across the entire Federal Government. There are still millions, if not billions, of dollars in low-hanging fruit in the form of 

savings we can find in our Federal contracting system, and Dr. 

Coburn, who is here with me today, is an expert on all of the lowhanging fruit that exists throughout the government where we can 

save money. But we have to have the right policies and, more importantly, we have to have strong leadership. 

We can start to see some really significant savings and improvement in our Federal procurement efforts with strong leadership. 

Ms. Rung, I look forward to your testimony today, and I hope 

that the full Senate can consider your nomination as quickly as 

possible. Thank you. 

Dr. Coburn. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Thank you, Chairman McCaskill, and I thank 

Senator Carper for expeditiously having this hearing. I think it is 
3 

1The prepared statement of Ms. Rung appears in the Appendix on page 22. 

important that we allow the President the staff to meet the demands that are placed upon him. And I want to thank you for your 

years of service and also being willing to take this one. 

I would note that the low-hanging fruit is easy. What we have 

not seen is leadership to do the hard stuff. And I would just note 

that even though Federal spending in total in terms of discretionary spending has declined, the percentage that is not competed 

for has not declined at all. It is still at 30 percent. 

We just had this recent USIS contract out of the Department 

Homeland Security (DHS) to a company that the government is 

suing right now, but we are giving them a non-compete contract for 

$192 million. It makes no sense. It does not make sense to the 

American people. It does not make sense to anybody that has ever 

done anything in the private sector. 

So I welcome you. I look forward to your testimony. I also have 

asked my staff to arrange for a period of time for you and I to visit 

next week so that I can actually get a better feel and show you 

some things I would like for you to see that we have been working 

on. 

As the Chairman noted, leadership is important. What you have 

done for Mr. Tangherlini has been great. And I have been really 

supportive of GSA and OMB in the last couple of years, and I hope 

you will bring that vigor that we are seeing at GSA and the vigor 

that we are seeing at OMB to a new level that will actually make 

a difference. 

Senator MCCASKILL. We welcome your testimony, Ms. Rung. 

Ms. RUNG. Thank you, Chairman McCaskill, Ranking Member 

Coburn, and Members—— 

Senator MCCASKILL. Oh, excuse me. It is the custom of this Committee to swear in our witnesses, so if you would stand. Do you solemnly swear that the testimony you give before this Committee 

today will be the truth, the whole truth, and nothing but the truth, 

so help you, God? 

Ms. RUNG. I do. 

Senator MCCASKILL. Thank you. Sorry I forgot. Thank you, Dr. 

Coburn, for reminding me. 

TESTIMONY OF ANNE E. RUNG,1 NOMINEE TO BE ADMINISTRATOR, OFFICE OF FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET 

Ms. RUNG. Thank you, Chairman McCaskill, Ranking Member 

Coburn, and Members of the Committee, for inviting me here 

today. I am honored to be here before you as the President’s nominee to serve as the Administrator for Federal Procurement Policy, 

in the Office of Management and Budget. 

I am touched to be surrounded by so many family and friends 

today. My friends include old colleagues from Pennsylvania, incredible people from GSA and the Department of Commerce, and college friends going back 30 years. I am really happy to have my 

family here as well, including my father, Don Rung, a retired math 

professor from Penn State University, and his wife, Katie, and my 

cousin Kristin Clay. 
4 

I want to thank my incredible mother, Elizabeth Rung, who at 

83 years old jumped on a bus last night from Tennessee, along with 

my brother Don, his wife Lisa, and my niece and nephew, Diana 

and Aden, to make the 9-hour trek to Washington, DC. 

I also want to acknowledge my other brothers and sisters, Kevin, 

Lisa, Margaret, and Sean, who were not able to be here today, but 

are watching at home. 

My large family, who are teachers, former military, career government, and small business owners, live their lives with integrity, 

a commitment to public service, and an understanding of the value 

of hard work. I have always tried to do the same. 

I want to thank President Obama for nominating me to this position. And I want to thank the Deputy Directors of OMB, Brian 

Deese and Beth Cobert, for their support and encouragement. It 

has been an honor to work with them in my brief time at OMB. 

A key pillar of the President’s Management Agenda is improving 

government performance. I have had the privilege of dedicating the 

last 20 years of my life to this same goal. Whether I was serving 

as Deputy Secretary of Procurement in the Commonwealth of 

Pennsylvania’s Department of General Services, leading an acquisition reform project at the U.S. Department of Commerce, or serving 

as the Chief Acquisition Officer (CAO) at the General Services Administration, I have had a singular focus on making the government work better for the people it serves. 

Over the past 4 years, Federal agencies, working together with 

Congress, have realized solid improvements in Federal contracting. 

Contract spending is down by $80 billion, there are now more than 

two dozen strategic sourcing solutions underway, and the Government Accountability Office (GAO) removed interagency contracting 

from its high-risk list in 2013. The Administration is proud of this 

progress, but more work remains to be done. 

If confirmed as Administrator, I intend to work with Congress, 

agencies, and industry to improve Federal contracting by focusing 

on three main priorities. 

First, if confirmed, I want to work with Federal agencies to better manage the billions of dollars spent each year on commonly 

purchased items. Shifting the Federal Government from managing 

individual purchases to managing entire categories of commonly 

purchased items can drive greater transparency, significantly reduce duplication, increase competition, improve oversight, and, in 

the end, drive savings and deliver better value. Strategic sourcing, 

or leveraging the government’s vast buying power to get better 

prices and faster delivery, is one effective approach under this 

broader strategy of category management. In Pennsylvania, where 

I served as Deputy Secretary of Procurement, we aggressively and 

routinely undertook strategic sourcing to generate over $140 million a year in savings, for more than $300 million in total savings. 

My second priority, should I be confirmed, will be helping to 

drive greater innovation in acquisitions. While I was at the General 

Services Administration, we recognized the importance of identifying barriers to innovation and worked to speed up the registration time for companies and make it easier for businesses to search 

for Federal contracting opportunities. If confirmed, I will work 

hand in hand with the Federal chief information officer, the Fed-
5 

eral chief technology officer, and other key government leaders to 

streamline the acquisition process for agencies and industry, particularly small businesses, and break down the barriers that can 

keep innovation out of Federal Government procurement. In the 

end, the goal is to make it easier for the Federal Government to 

do business with companies that offer the best value to the taxpayers, drive the most innovative solutions, and meet the highest 

level of business and ethical standards. 

Finally, the key to any acquisition success is ensuring that the 

Federal acquisition workforce has the support, skills, and resources 

they need to be successful. During my time in the Federal Government, it has been a privilege to work with, and learn from, these 

bright, hard-working, and dedicated professionals. At the Department of Commerce, I assembled a team of over 100 program managers and contracting officials from the bureaus to tackle the issue 

of how to improve our acquisition process. I saw firsthand their incredible dedication to the goal of making our acquisition system 

work better for the taxpayers. In many ways, they have a thankless job, rarely receiving the recognition and praise they deserve for 

executing the countless successful acquisitions that save valuable 

taxpayer money. If confirmed, I want to dedicate myself to making 

sure that I support these professionals, while making sure that 

they have the skills to meet not only today’s acquisition challenges 

but tomorrow’s as well. 

Once again, I want to thank you for the opportunity to appear 

before you today. If confirmed, I look forward to working closely 

with this Committee to deliver greater value to the taxpayer. 

I am pleased to answer any questions you may have. 

Senator MCCASKILL. Thank you very much. 

I need to start with some required questions that need to go into 

the record. These are the standard three questions that we ask of 

all nominees. 

Is there anything that you are aware of in your background that 

might present a conflict of interest with the duties of the office to 

which you have been nominated? 

Ms. RUNG. No. 

Senator MCCASKILL. Do you know of any reason, personal or otherwise, that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you have 

been nominated? 

Ms. RUNG. No. 

Senator MCCASKILL. Do you know of any reason, personal or otherwise, that would in any way prevent you from serving the full 

term for the office to which you have been nominated? 

Ms. RUNG. No. 

Senator MCCASKILL. OK. And let me, before I ask another question, say I like an 83-year-old mother that jumps on the bus. 

[Laughter.] 

Ms. RUNG. She will also tell you it was $50 round trip. 

Senator MCCASKILL. Yes. She sounds like my mother, who had 

some of her roots not far from where your mother came from. And 

all of your family is welcome today. We are pleased that you are 

all here, and it is a great tribute to the nominee that she has so 

many friends and family that are here to support her. 
6 

Ms. RUNG. Thank you. 

Senator MCCASKILL. Let me start with something that has been 

really frustrating, and that is this policy that you have at the Office of Federal Procurement to not allow senior executives or career 

civil servants to testify before Congress. There are no political appointees, it is my understanding, at OFPP besides the Administrator. So when there is no confirmed Administrator in place, there 

is literally no one from the office that you will send that can testify 

at hearings. That is a huge problem for those of us who are trying 

to do our job under the Constitution of Congressional oversight. 

Can you talk about that policy and whether or not you would 

make a commitment to change that policy so that—first of all, 

there are some hearings that we do not need the Administrator. 

And you have a lot of work to do. The notion that you are the only 

one that can testify is to me nonsensical. Can you speak to that? 

Ms. RUNG. Thank you, Senator. It is my understanding that this 

policy is the position of the Executive Office of the President, but 

I am happy, if confirmed, to take your views back to my colleagues. 

Senator MCCASKILL. So you think the President is—this is his 

policy? Who is making this policy? Who above you should I talk to? 

Ms. RUNG. Senator, it is my understanding that this policy is the 

position of the Executive Office of the President. I am not sure 

which individual. 

Senator MCCASKILL. OK. Well, we have had this problem more 

often with this part of what I call the ‘‘business side of the Federal 

Government,’’ and I want to get to the bottom of it and get it fixed. 

In March, my Subcommittee held a hearing on the Federal contractor past performance databases. We identified a number of 

issues with the past performance databases: a 2-year credit, as I 

mentioned earlier. You issued new guidance, OFPP did, to Chief 

Acquisition Officers and senior procurement executives regarding 

better use of contractor performance information. Yet we did not 

get any notification of that even though we have been yelling at 

you guys forever about it. You did not even notify Chairman Carper’s staff. That does not help with the Congressional relationship 

that needs to be in place for us to have the give and take that oversight requires. 

Would you look and review at your offices outreach and coordination efforts with this Committee in your new position? 

Ms. RUNG. Absolutely, Senator. And if confirmed, I look forward 

to working closely with you and ensuring that we do have strong 

communications. 

Senator MCCASKILL. That is terrific. 

Earlier this year, we had a hearing on whistleblower protection 

at the Department of Energy’s Hanford nuclear site. I was troubled 

to learn that the Department has spent millions of dollars to reimburse contractors’ litigation expenses at law firms charging thousands of dollars an hour in fighting whistleblowers at Hanford. We 

are basically paying to fight the very whistleblowers that are trying 

to save us money. 

Can you speak to this? And will you commit to issuing guidance 

prohibiting reimbursements for legal costs associated with whistleblower retaliation claims? 
7 

Ms. RUNG. Senator, this issue is not one that I am intimately familiar with, but if confirmed, I will look into this matter. 

Senator MCCASKILL. That would be terrific. And we would love 

to hear back from you after you are confirmed about your view on 

this and what you can do from your important position to make 

sure that our contractors understand that we do not want to fund 

their lawsuits as it relates to retaliation against whistleblowers. 

I have been very active in wartime contracting reform, and we 

passed in 2013 overdue wartime contracting reforms that changed 

how the government does business in contingency operations. 

There is probably no better poster child of contractor waste than 

the contracting that went on particularly in Iraq during the first 

5 to 6 years of that conflict. 

Specifically, we are waiting on a final rule on requirements for 

the justification on pass-through contracts and a final rule to ensure that the Federal Awardee Performance and Integrity Information System (FAPIIS), includes information on parent, subsidiary, 

and successor contracts. 

As you know, as somebody who is very familiar in this area, part 

of the problem we have here with past performance of contractors 

and performance awards for contractors is that when somebody behaves badly, they switch the work to a subsidiary—and it is very 

difficult for us to track—that is exactly the same corporate structure, they have just renamed it. 

Will you make this final rule on requirements for justification of 

pass-through so we know who we are doing business with? And, 

second, the final rule for FAPIIS, which helps us track who actually is doing the work, will you give us an expected completion date 

on those rules once you are confirmed? 

Ms. RUNG. Senator, if I am confirmed, I will look into both of 

those issues. And I will say that I realize there are significant challenges across the government, but in particular in the area of Department of Defense (DOD) and acquisitions. But if confirmed, I 

look forward to sitting down with the Department of Defense and 

talking to them about ways we can help support them. 

Senator MCCASKILL. They are better, but we have a long way to 

go. 

Ms. RUNG. The great news is, Senator, that there is a terrific 

team and terrific leadership at the Department of Defense, particularly under Frank Kendall and Dick Ginman. 

Senator MCCASKILL. OK. Dr. Coburn. 

Senator COBURN. Just to talk a little bit about your work at 

Commerce, my perception is that our biggest problem with contracting is that we really do not know what we want when we go 

to contract for it. And an example comes from some of the things 

you all did in Commerce in 2010. You had a $346,000 contract to 

help you—a consultant firm to help you figure out your contracting. 

And there is nothing inappropriate about that. I do not have any 

criticism. But following that was another $800,000, or almost 

$800,000, on a non-competed, sole-source contract for a followup. 

So my question to you is: One, what kind of signal does that send 

to everybody else? Because you obviously did not know what you 

wanted with the first contract or you would not have had a solesource followup on the second one. And what kind of signal does 
8 

it send when we are trying to improve contracting, and the person 

that is helping us contract gets a sole-source, non-competed contract? So it goes really back to the first issue. It is big in the Defense Department because—especially on weapons systems. They 

are buying things they do not know exactly what they want. How 

do we change that culture? 

Ms. RUNG. Senator, I think you touched on several important 

issues—one, the issue of competition. Competition is the cornerstone of the acquisitions system and process. 

In the State of Pennsylvania, ensuring that we had competition 

was a keen area of focus for us, and, in fact, we reduced sole-source 

requests by 50 percent. 

You also touched on the issue of ensuring that we have strong 

requirements and we know exactly what we need to buy. I came 

into the Department of Commerce in the wake of several high-profile acquisitions that had gone over budget and over schedule, and 

one of the areas that we focused on in our acquisition improvement 

project was around the area of the acquisition process before you 

go out to market, what they refer to as the ‘‘big A’’ in acquisitions. 

What Commerce did, and has since developed, is an impressive 

new project management structure where there is an integrated 

team that oversees and monitors the acquisition leading up to the 

purchase. And they ensure that they have strong agency leadership 

and their eyes on each key milestone leading up to going out to the 

market. And they ask questions like, from the very beginning, do 

we even need to buy this? That is the very first question. If they 

do need to buy it, what is the best way to buy it? And the most 

important question is: What exactly do we need to buy? 

And agencies struggle with that, and we found that at the Department of Commerce, and it really requires rigorous oversight 

and continuous monitoring and integrated project teams with their 

eyes on it from the very beginning of the process. 

Senator COBURN. Well, to me it would not be from the beginning 

of the process, you need to know what you need. But more importantly is you need to know what you do not need. And we will just 

take, for example, purchasing of information technology (IT) in the 

Federal Government last year, $84 billion; $40 billion of it was 

poured down the drain. And I am sure those projects at Commerce 

were probably IT-related. Were they or were they not? 

Ms. RUNG. Yes, several were. 

Senator COBURN. Yes, and so here is the problem: We do not 

have people knowledgeable in the Federal Government that know 

how to buy IT. And Big Business—by the way, this is not just a 

government problem. Big Business struggles with this as well, because they have difficulty knowing what they need. The question 

to me is, nobody should put a contract out unless we have the 

knowledgeable people hired within—Federal employees, not contractors, Federal employees who know here is the deficit that we 

are trying to fill in terms of the hole in our management or in our 

needs, here are the requirements, here is what it should cost by 

taking a look across the—and I will give you another example. 

Four and a half years ago, I contested in a Back in Black report 

an Air Force contract. They spent another $1 billion on that, and 

when they finished, finally canceling the program, they ended up 
9 

paying the contractor money. There was never a lawsuit against 

the contractor for non-performance, which there was non-performance. So there was no accountability in the contracting. 

So I guess what I am wanting to hear from you is Federal procurement, there ought to be certain goals and standards. No. 1, if 

somebody is not fulfilling a contract, let us hold them accountable. 

And I am talking about contractors. Hold them accountable to do 

what they said they were going to do, and put it into the contract, 

and give us walk-away rights when they are not performing, not 

paying to get out of the contract on something that they absolutely—and part of that comes from not knowing what we want to 

buy. So I hope we will see a lot on that. 

One of the things, strategic sourcing, which is really setting goals 

and measuring progress, and I know we have done some improvement at GSA on that, and I know you were intimately involved 

with this. Two years ago, the GAO recommended we do the same 

thing at the Office of Federal Procurement Policy and issue the 

guidance to save the money, improve the performance. It has not 

happened. That was 2 years ago. GAO made that recommendation. 

That has not happened. 

Is it going to happen under your watch? 

Ms. RUNG. Thank you, Dr. Coburn. Strategic sourcing will be a 

top priority for me, and to me it is one of the key strategies under 

better managing and organizing the items that we buy in common. 

I will acknowledge, though, that the strategic sourcing effort has 

made great progress in the last several years. The creation of the 

Strategic Sourcing Leadership Council, comprised of the seven largest spending agencies, has given it incredible momentum and focus. 

When I joined GSA, there were only three or four solutions in 

place. Now we have over 24 underway in various stages of implementation. 

But there is a lot of opportunity out there, and it is important 

that we are buying smarter and saving dollars and improving services, and strategic sourcing will achieve all of those. 

Senator COBURN. So where do you direct that? Right now the 

plan—and what we have seen at GSA is the easy stuff. But what 

business does with strategic sourcing that I have not seen government do yet is they go where the dollars are. They use the Willie 

Sutton rule. We are going to use strategic sourcing. We are going 

where the biggest dollars are spent. 

Do you have any plans to try to implement that? 

Ms. RUNG. Yes, Dr. Coburn, services is indeed the biggest area 

of spend, and right now the Strategic Sourcing Leadership Council 

has one team stood up around human resources training services. 

Because we spend so much money in this area, it is important that 

we are buying it smartly. And it is a huge area of opportunity. If 

confirmed, I would like to bring this under the umbrella of the 

Strategic Sourcing Leadership Council, and I think there are a 

number of ways to tackle it. It may not be using the same strategies that we use for commonly purchased commodities. For those 

items, it is easy to buy in bulk, and that generates significant savings and delivers greater services. 

Something like a more complex professional services, there are 

different strategies and strategic sourcing that you can use for 
10 

that. To me, one of the greatest things you can do by bringing it 

under the umbrella of the Strategic Sourcing Leadership Council is 

giving greater transparency and visibility into what we are buying 

and who we are buying it from, which we have very little visibility 

today. And by having that kind of transparency into our complex 

professional services, we can create common practices. We can ensure that we have teams that have the expertise in these areas. We 

can drive greater competition. 

To me, there are a lot of strategies you can use under strategic 

sourcing that may not be the same that we use for the simplified 

commodities, but it is a huge area of opportunity. And if confirmed, 

I would like to make some progress in this area. 

Senator COBURN. I just have one followup, and then I will be 

through. I would imagine that if you would take and look at the 

services contract given to the Federal Government and compare 

both the earnings before interest, taxes, depreciation and amortization (EBITDA) and the return on invested equity of the firms that 

are running those businesses and then compare it to the average 

EBITDA and return on equity in every other corporation in America, what you are going to see is about a 21⁄2 times rate, which 

means the profitability for selling those services to the Federal 

Government is super high, which means the potential for savings 

is super great if you can really get competition into it. 

And so, I would just suggest you take one agency and go look at 

their contracting for services, and then go look at the EBITDAs on 

the companies and the internal rate of returns on invested assets 

and then compare that, and your eyes will open wide at how lucrative the services business is in terms of contracting with the Federal Government, which to me says there is plenty of room to 

knock those costs way down through competition or just say—do 

not give it to them, just say, ‘‘Not good enough yet,’’ and show them 

their profit and loss statements and their published data, because 

it is—if I were a young man leaving here, the first thing I would 

do is contracting services to the Federal Government, because it 

the best way to make millions of dollars. 

Thank you. 

Ms. RUNG. Thank you. 

Senator MCCASKILL. Thank you, Dr. Coburn. 

And on that, I had a small businessman who came to my Missouri coffee event this morning, and he pulled me aside and said, 

‘‘I just want to tell you that the work you are doing is making a 

difference.’’ He sells things to the Federal Government, and he says 

his profit margin has declined every year over the last 4 years because we are tightening the screws on buying stuff. But I think Dr. 

Coburn is right. While we have gotten better at tightening the 

screws on buying things, maybe other than hardware and software, 

we have not figured out the cost of contracting in terms of services. 

And on that note, I am trying to figure out why OMB has declined to provide guidance to Federal agencies about cost-benefit 

analysis on services. In July 2012, we were told that you were 

going to issue guidance then. In followup questions in March 2014 

by this Committee, I asked Beth Cobert why OMB had still not 

issued guidance on cost-benefit on contractors, and she said, ‘‘At 

this time we think the best approach is to allow agencies to gain 
11 

additional experience to evaluate what additional governmentwide 

guidance may be needed to support smart and fair use of cost comparisons.’’ 

Well, that sounds like to me, ‘‘We would rather not go there, and 

we have decided not to go there.’’ 

We know that there has been success at DHS. They have saved $28 million by converting 2,600 jobs from contractors to Federal civilians. We know the Army has reduced expenditures on service 

contracts from $50 billion in fiscal year (FY) 2008 to $32 billion in 

fiscal year 2009. That was 5 years ago. So we have had some success in some of these agencies. 

If you leave it up to these agencies, it is not going to happen, Ms. 

Rung. If they do not get stronger guidance from OMB about a 

cost—I cannot tell you how many times on this Committee we have 

asked, ‘‘Was there a cost-benefit analysis of contractors versus employees?’’ And almost never do they say yes. And they are not sure 

what to do, so it is easier not to do anything, and it appears you 

guys are not sure what guidance to give, so nobody is doing anything. 

So help me with this. Can you advocate and actually—I mean, 

something is better than nothing. Let us not make the perfect the 

enemy of the good. Can we get some guidance from OMB about 

performance-based cost-benefit analysis on these service contracts? 

Ms. RUNG. Senator, all the issues surrounding the multisector 

workforce are extremely important, and I do understand that OMB 

has made some progress in this area. My predecessor I know met 

with industry and other stakeholders to get their input. I know 

OMB has met with Department of Defense and Department of 

Homeland Security to better understand what they are doing in 

this area, and they did convene a meeting with other agencies to 

have them share those experiences, and OMB wants to use that experience to help inform them about what tools agencies need to do 

better in this area. 

If I am confirmed, I am happy to come back to you to discuss this 

in greater detail. 

Senator MCCASKILL. Well, I think it is really important. I think 

if you do not have additional guidance in this area, especially— 

there are so many agencies that, frankly, do not have the lift to figure out what cost-benefit analysis they should be doing. So I think 

it is really important that you provide the guidance, and I will look 

forward to hearing from you about that. 

Let us talk about intergovernment contracting. This is in some 

ways—I have been shocked at times when I have figured out the 

intergovernment contracting, and yesterday was a good example of 

it. We had a hearing on National Technical Information Service 

(NTIS), which I assume you are familiar with since you came from 

Commerce, and this is a great example where we have an agency 

whose mission is no longer as relevant because most of the stuff 

they provide to the public, the public can get for free through an 

Internet search. And, clearly, I think the public is going to figure 

out that they are being taken if they are paying for it through the 

NTIS portal. So they have decided they are going to start selling 

services to Federal agencies, and they are not going by the Federal 

Acquisition Regulation (FAR). And they are calling it ‘‘joint part-
12 

nerships,’’ but they have 101 employees. That is not a joint venture. That is a pass-through contract. Private industry is doing 

these contracts. 

So how does this happen? And how did they get to go outside of 

FAR? And why in the world—I mean, there is no way it can be less 

expensive, and we are going to drill down now on some of their bigger contracts, because there is no way it is less expensive. I mean, 

these agencies are gravitating toward NTIS because they do not 

have to go through FAR. So talk to me about how you are going 

to help us shut down NTIS. 

Ms. RUNG. Senator, thank you for the question. I am not familiar 

with the specifics of the NTIS situation, but if confirmed, I am 

happy to look into it further and to keep you apprised of anything 

that I find. 

Senator MCCASKILL. I mean, there are other examples. We found 

examples where they were—one agency is actually advertising to 

get other agencies to buy from them. This is going on. Are you familiar with how much this is going on, this interagency contracting, where somebody is glomming on to somebody else’s contract and they are out there actually advertising as if they are a 

private business charging another part of government so they can 

make more money, so they cannot be as dependent on appropriations? 

Ms. RUNG. Senator, to me this speaks to the entire issue of trying to get greater transparency into our acquisition operations. 

There is a lot of activity that we do not have our eyes on. We need 

better data and better information to be making better decisions. 

Senator MCCASKILL. Yes, like I do not even know how NTIS, how 

this—I mean, there is nothing they do that the Government Printing Office and GSA does not do. Nothing. And so one of two things 

is happening. If they are getting business, they are doing it better 

and smarter, and we should do it the way they are doing it—if, in 

fact, it is cheaper. My guess is we are going to find out it is not 

cheaper. My guess is we are going to find out that the agencies did 

not care whether it was cheaper or not, and maybe like Dr. Coburn 

said, they did know what they wanted and it was salesmanship, because that is what happens a lot in this space: ‘‘You may not know 

what you need, but we know what you need, and hire us and we 

will show you what you need.’’ And that is a seductive siren call 

to many people in positions of leadership in government. 

I have a few more, but I am thrilled that Senator Levin is here— 

no, go ahead—and thank you, Senator Levin, for being here, and 

we will give you an opportunity to ask questions. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Well, thank you very much, Madam Chairman. 

And that last item you raise as a matter of fact has been a subject 

of hearings, investigations, both on this Committee and over at the 

Armed Services Committee. And so if you want to learn more about 

the abuses of interagency contracting, there are a lot of folks here 

that can help you and your staff. There are a lot of folks in the 

Armed Services Committee that can help you on that issue. We 

have tried to do some things. There is an awful lot more to be done. 
13 

We have a situation where the requirements are being circumvented in order to avoid requirements for competition, for instance, and it is a big problem. So we hope you will get into that 

if you are confirmed. It is one of the issues that I wanted to raise. 

One of the other issues has to do with the acquisition workforce. 

On the Armed Services Committee, we have tried to address problems in defense procurement for the last 10 years, and one of the 

things that we hear over and over again was the need to address 

shortcomings in the acquisition workforce—short-staffed, undervalued, insufficiently trained. And so what we did was we require 

kind of comprehensive workforce development planning, and we established the Defense Acquisition Workforce Development Fund actually to support that. 

Do you see similar shortcomings in the acquisition workforce of 

civilian agencies? And if so, what plans do you have to address the 

problem? 

Ms. RUNG. Thank you, Senator. When I served as Chief Acquisition Officer at GSA, I had oversight of the Federal Acquisition Institute, which is the civilian equivalent of the Defense Acquisition 

University. They have made great progress, but if confirmed, I look 

forward to making this an area of focus for me. 

There are a few areas where I think we can move forward more 

aggressively. I would like to look, if confirmed, at new, innovative 

ways we can train our workforce. I would like to get industry input 

on the ways that they think there are smart practices out there 

and we can do this better. 

The Federal Acquisition Institute has recently created a new, 

specialized Core Plus training where they take the acquisition 

workforce and focus their skills on just IT, IT project management. 

This is an area I think we can do more in. I like the idea of creating specialized areas within the acquisition workforce. You gain 

a real expertise in that area. 

When I came to the Commonwealth of Pennsylvania, we had a 

very fragmented, decentralized organizational structure, and what 

we found was our acquisition professionals might one day be buying a vehicle and the next day be buying pens and papers and the 

next day a complex IT service. So we created a centralized shared 

services operation, borrowing from the private sector, and out of 

that we created specialized teams around each commodity area. 

And to me, we could do something at the Federal level where we 

really train our workforce and have them specialize in certain 

areas so they gain that expertise, they know the market, and they 

know what is available to them, and they can really ensure that 

we are delivering the best value in those areas. 

Senator LEVIN. Let me change topics to a subject that a number 

of us have been involved in very heavily recently, and that is a 

loophole in our Tax Code which allows U.S. corporations to move 

their tax addresses overseas in order to avoid paying U.S. taxes. 

They kind of have two addresses: One is the real world where they 

operate, and the other one is for tax purposes. It is an alarming 

trend. There are many causes for it, but, nonetheless, it is a problem which we have tried to deal with actually over the last 10 

years. 
14 

This Committee took action about 10 years ago to try to stop our 

contracts from going to inverted corporations, and under the leadership of Senators Collins, Lieberman, and Grassley—and Senator 

Wellstone was very much involved—we put a provision in the 

Homeland Security Act of 2002 which was intended to stop contracts to corporations that move their addresses for tax purposes 

out of the country to dodge our tax system. 

We expanded that provision in 2006 by including in a larger appropriations bill, and in every year since 2008, it has been included 

as a governmentwide provision in annual appropriations bills. But 

the FAR Council, which, if confirmed, you will be the head of, published a regulation that was supposed to implement the provision, 

but it included a glaring loophole, and the regulation says that the 

contracting restriction does not apply when a continuing resolution 

(CR) is in effect, which is exactly the opposite of what the rules are 

for continuing resolutions. 

So the problem is that companies which are inverted or thinking 

about inverting will see the language of the rule as a free pass to 

ignore our appropriations law and then bid for Federal contracts. 

And when Federal contracting officers see that the regulations 

have that language in it, they then conclude that the ban does not 

apply, for instance, to fiscal year 2011 funds. 

Now, that view is not correct, but, nonetheless, it is in that regulation, according to some, and the question is whether you will update that regulation, whether you are going to look at it and correct it to reflect Congressional intent and what the rules are relative to continuing resolutions. 

Ms. RUNG. Thank you, Senator. I have recently been made aware 

of this issue, and it is critically important that we have clear guidance in this area to our acquisition workforce and that we are fully 

implementing the intent of the law. So if confirmed, I look forward 

to keeping you apprised of our progress in that area. 

Senator LEVIN. OK. Thank you. 

Thank you very much, Madam Chairman. 

Senator MCCASKILL. Senator Coburn. 

Senator COBURN. I would note for my colleague in friendly jest, 

the practice of medicine is about finding out what the real problem 

is. The real problem is that corporate tax rates in this country, corporate plus local, are twice what they are in the average of the rest 

of the world. Inversion is a response to fixing that. 

The second point I would say kind of in jest is if we did not have 

CRs, we would not be having that problem. We should be doing our 

work. And I know he has tried to do that, so it is not a dig at you. 

One final question from me. You espouse transparency here. How 

do we help the agencies get the data they need to know when a 

contractor is charging different rates for the exact same thing and 

the same service to different agencies? And do we need a regulation 

that says if you get a contract at one agency but you have four 

other contracts at four other agencies, we are going to pay you the 

lowest rate? How do we get that transparency going? 

Ms. RUNG. Dr. Coburn, I really appreciate that question. When 

we came to the Commonwealth of Pennsylvania and we began our 

strategic sourcing effort, we began with data analytics, and it 

showed us that we had a huge variance in what we were paying. 
15 

One example, we had a State hospital paying $23 for a case of ketchup, and we had another State prison paying $12 for the exact 

same case of ketchup. That kind of price variance goes on across 

government. 

I think there are a couple positive steps we are making in this 

area: The good work of this Committee to move forward on prices 

paid. GSA has just launched a first prices-paid portal where we 

have information at the transactional level and the actual prices 

paid for specific commodities. 

If confirmed, I would like to ensure that we continue to put good 

data and additional information into that tool and we are using it. 

We have shown that when we have that kind of data, we can negotiate pricing down significantly with the vendors. 

I think the strategic sourcing effort is another way we can get 

great data. Strategic sourcing is all about using data to make the 

right decisions. 

So I think there are a number of tools in place to help us with 

this effort. The benchmarking initiative is another one where we 

are tracking agency performance at the bureau level across various 

functional areas. 

So if confirmed, this will be a strong area of focus for me. 

Senator COBURN. All right. Thank you. 

Senator MCCASKILL. Thank you, Dr. Coburn. 

On that note, not only price paid but past performance of contractors, I mentioned this in my opening statement, but I want to 

go back to it before we let you go. 

Did you have any role in the development of FAPIIS when you 

were at GSA? 

Ms. RUNG. I did not. That resided within the Federal Acquisition 

Service led by the Commissioner who reported directly to the Administrator. But certainly as Chief Acquisition Officer, I played an 

advisory role on acquisition issues in general. 

Senator MCCASKILL. Well, you know the problems we have. I 

mean, it is just a mess. We have reliability and data quality issues. 

We have duplicate entries. We have a lack of consistency and detailed information and technical malfunctions, like not being able 

to use the backlink. If you are not accessing FAPIIS through Internet Explorer, the backlink does not work. I mean, stuff like that, 

it is no wonder that we cannot rely on it because it is frustrating 

to use. And when something is frustrating, I mean, I know what 

I adopt in my daily technology is the stuff that is easy. And this 

is something we are going to have to make obviously easier. 

Getting this right is a huge component of your work, not only 

making sure everybody knows what we are paying for stuff other 

places, but making sure if you are about to contract with someone 

who has had real integrity and performance problems. And, in fact, 

it is the same company that had problems even though it is calling 

itself something different. 

So if you are confirmed, I would like a commitment from you 

today that you would provide us with updated numbers on the percentage of past performance contractor evaluations that have been 

completed and, second, the annual goals for the completion of information in FAPIIS governmentwide so that we can track the 

progress of the use of this database. 
16 

So two things: How many of the evaluations, what percentage of 

them have actually been done? And, second, what is the adoptive 

use of FAPIIS? Is it being used across the board? You all are in 

a position to track that, and I think if we start setting annual goals 

and we start reporting on those annual goals, it will drive everyone 

toward the right result. 

Ms. RUNG. Senator, thank you for the question, and let me just 

reinforce that ensuring that our contracting officers have access to 

timely, accurate, relevant information is critically important to 

making the best contracting decisions. 

We have made great progress in this area. OMB has tracked the 

progress of agencies with past performance and FAPIIS use. When 

I served as Chief Acquisition Officer, past performance metrics 

were in my performance plan, and they were in the plan of my senior procurement executive. 

As I understand, the data is currently being scrubbed and reviewed by the agencies, but I am happy to take that back to my 

colleagues and get back to you on that issue. 

Senator MCCASKILL. That is great. 

Ms. RUNG. Thanks. 

Senator MCCASKILL. Senator Ayotte. 

OPENING STATEMENT OF SENATOR AYOTTE 

Senator AYOTTE. I want to thank the Chairman. 

I wanted to ask you about an issue about insider threats. This 

is an issue that we have seen some very damaging breaches to our 

national security workforce safety that have come as a result of actions of contractors. And the examples that come to mind, of 

course, are Edward Snowden and Aaron Alexis, both of whom were 

working in a contract capacity. 

This obviously is an important issue, just thinking about safety, 

security of data, all the things that those two individuals have 

done. So on this note, as I understand it, in February the White 

House actually had issued a report—I believe it was the White 

House or it was the Office of Procurement Policy—that said that 

your position will work with the Office of Federal Procurement Policy to propose a change to the Federal Acquisition Regulations to 

impose those applicable reporting requirements on contractors and 

ensure that enforcement and accountability mechanisms are in 

place. And this was in reaction to some of these events. 

So I wanted to ask you, what thoughts do you have on Federal 

oversight over contractors given those incidences? How do we ensure that not only are we addressing oversight within employment 

within the government, but also thinking about those that we contract with? 

Ms. RUNG. Yes, thank you, Senator. It is important that we have 

rigorous oversight of our contractors, and OMB’s role is to be the 

agency which ensures that we are keeping our eyes on it and we 

are working with other agencies to track their progress. And if I 

am confirmed, I will commit to playing that role, both with the contracting community and our Federal employees as well. 

Senator AYOTTE. Do you have any particular thoughts on that 

process? For example, to the extent that we are using contractors 

and they are in positions like someone like Edward Snowden, for 
17 

1The biographical and financial questionnaire for Ms. Rung appears in the Appendix on page 

25. 

example, how we can have a more rigorous evaluation process in 

those instances with the contracting firms themselves? Because he 

is the most high profile, but we have had other examples of it. 

Ms. RUNG. Senator, the issue of the multisector workforce is an 

important one. It is not one that I have great familiarity with. But 

I understand it is important, and if I am confirmed, I will look into 

this area. 

Senator AYOTTE. And I came here a little late, but what will be 

your biggest priority in this position? 

Ms. RUNG. Thank you. There are three main priorities for me, 

Senator which are: 

One around better managing those things that we buy in common called ‘‘category management,’’ and strategic sourcing will certainly be a strategy we use under category management. 

The second area of priority would be driving greater innovation 

in our acquisitions. 

And the third area would be focusing on the workforce and ensuring that our workforce has the tools they need to meet today’s 

challenges as well as tomorrow’s. 

Senator AYOTTE. I thank you very much for your willingness to 

serve in this position. 

Ms. RUNG. Thank you. 

Senator MCCASKILL. Well, I will call this hearing to a close before anybody else gets in under the gun. [Laughter.] 

There were others that said they were going to be here, but we 

have been at this for an hour, and I think that is sufficient. 

We have some to-do’s after you get confirmed, which I am hopeful you will quickly so that you can get to work. You have an incredibly important responsibility. People do not realize how many 

strong, capable, and professional people are working in the Federal 

Government trying to do the right thing every day. And you are 

someone who is experienced in the frustrations of this area of our 

government, that is, the accountability for how money is spent and 

how we buy things. And it is very important. I wish more people 

were interested in it, because I think the more eyes we have on 

this, the better all of us can do at spending taxpayer money very 

wisely and providing the goods and services that we should be providing as a Federal Government. 

Senator AYOTTE. Before we wrap up, I would be remiss if I did 

not mention one thing. The Chair has been excellent in her focus 

on these issues, but it is also her birthday today, so happy birthday. 

Senator MCCASKILL. Thank you, Kelly. Thank you very much. 

And we do not like to dwell on that at my age, so I will move right 

along. 

I would like to thank you for appearing before the Committee 

today. The nominee has filed responses to biographical and financial questionnaires. Without objection, this information will be 

made part of the hearing record1 with the exception of the financial 

data, which are on file and available for public inspection in the 

Committee offices. 
18 

Without objection, the record will be kept open until noon tomorrow for the submission of any written questions or statements for 

the record. And this hearing is adjourned. Best of luck. 

Ms. RUNG. Thank you, Senator. 

[Whereupon, at 11:29 a.m., the Committee was adjourned.] 
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