the system also worked in that people responsible for the conduct detailed in my report are being held accountable. it is my understanding that after the white house received the final report, the administration took swift action. a new acting administrator was appointed. senior officials were fired, and one resigned. finally, the system has been strengthened by the release of the report. the public attention it received in the media and from both houses of congress and the strong commitment to our efforts demonstrated by the acting administrator dan tangherlini while not one of many career employees and political appointees who were involved in the western region's conference ever came forward and reported the waste and abuse that occurred, perhaps for fear of reprisal, gsa's honest, hard-working employees now have been empowered to bring issues

to our attention and they are doing so. we have more work than ever. i look forward to answering all of your questions. thank you. >> thank you so much, mr. miller. mr. tangherlini. >> good morning, chairman boxer, ranking member inhofe, members of the committee. my name is tangherlini, the acting administrator of the u.s. general services administration. i appreciate the opportunity to come before the committee today. first and foremost, i want to state that the waste and abuse outlined in the inspector general's report is an outrage and completely antithetical to the goals of the administration. the report details violations of travel rules, acquisition rules, and good conduct. just as importantly, those responsible violated rules of common sense, the spirit of public service, and the trust america's taxpayers have placed in us. i speak for the overwhelming majority of gsa saf when i say that we are shocked, appalled

and deeply disappointed by these indefensible actions as you are. we've taken strong action against those officials who are responsible and will continue to do so where appropriate. i intend to uphold the highest ethical standards at this agency including referring any criminal activity to the appropriate law enforcement officials and taking any action that is necessary and appropriate if we find irregularities. i also immediately engage gsa's inspector general as indicated in the joint letter that the inspector general brian miller and i sent to all staff, we expect an people who sees waste, fraud or an beautibuse to repor. we can't to build an partnership with the ig while insuring their flpd to ensure nothing like this will happen again. there will be no tolerance for employees who violate or disregard these rules. i believe this is critical not only because we owe it to the american taxpayers but also because we owe it to the many gsa employees who work hard,

follow the rules, and deserve to be proud of the agency for which they work. we will have also taken steps to improve internal controls and oversight to ensure this never happens again. already, i have canceled all western regions conferences. i've also canceled 35 previously planned conferences saving nearly a million dollars in taxpayers expense. i've suspended the hats off stores and demanded reimbursement from mr. peck, mr. robert shepherd and mr. neely for private inroom parties. i've canceled most travel through the end of the fiscal year agency wide and centralizing budget authority and vin already trawlized procurement oversight for regional offices to make them more directly accountable. i look forwarded to working in partnership with this committee to ensure there's full accountability for these activities so that we can beginton restore the trust of the american people. i hope that in so doing, gsa can refocus on its core mission saving taxpayers money by

efficiently procuring supplies, services and real estate and effectively disposing of unneeded government property. we believe that there is seldom been a time of greater need for these services and the savings they bring to the government and the taxpayer. there is a powerful value proposition to a single agency dedicate odd this work, especially in these austere fiscal times. we need to insure we get back to the basics, conduct this work better than ever. at gsa, our commitment is our service, our duty and our nation, not to conferences, awards or parties. the unacceptable inappropriate and possibly illegal activities at the western regions conference stand in direct contradiction to the express goals of this agency and the administration. and i'm committed to ensuring that we take whatever steps are necessary to hold responsible parties accountable and to make sure that this never happens again. we need to refocus this agency and get back to the basics,

streamlining the administrative work of the federal government to save taxpayers money. i look forwarded to working with committee, moving forward and i welcome the opportunity to take any questions at this time. thank you. >> thank you both very much. as senator inhofe said, you are the good guys in all of this, and susan is a good gal. susan brita who came forward as a political appointee to blow the whistle and it resulted in the president's administrator resigning as she should have and two people being fired. again, i say to miss brita thank you for your courage. this is not easy. i've done a lot of work on whistleblower protection and i know, you got to move the clock here, and i note how hard it is. and the scorn that is oftentimes heaped on those who have the currently to step forward. and you did it for your country. and we appreciate it at this committee. you know, as i researched this and i realized how many scandals

there have been involving gsa, it really shakes you up. because when you look back in the president carter thought he cleaned up the mess way back in the '70s. and they put people in jail for bribery and fraud. and they put in whistleblower protection and all of that, so now you move forward, then you see two scandals under george bush and now this horrible scandal under president obama. so this is decades long. so i guess the question i have for you, and i don't expect you to have a pinpointed answer, but what is it about the structure of the gsa that leads us to back to these scandals after this -- in other words, the expression sgs fool me once, you know, okay. but again and again? four scandals? three administrations, so is it, do you think, as i read your recommendations, i say the inspector general and i ask

mr. tangherlini as well, is it the fact that there hasn't been a centralized check and balance so that you've got these regional offices gone wild here if they have the wrong leadership? and is that what we need to fix? how many regional offices, regions do we have in gsa, mr. miller, and are you enforcing a more of a centralized at this point checks and balance system right away for all of the regions or have you just gone after the western region? >> madame chair, there are ten regions of gsa, plus the district of columbia. so essentially 11 regions. the western conveniently made up of seven, eight, nine, and ten. and it's an informal -- they informally call themselves the western region and they have this conference. there is no eastern region, northern region, southern region. they don't as far as i know have these conferences.

as you identified -- >> i don't want to just dwell on the conferences because if there's people who are cheaters and people who were bad actors they're going to figure out another way to steal. >> right. >> forget the conferences. so my point is, you're telling me there's ten regions plus d.c. i understand there's 12,000 employees. is that correct? >> over 12,000. and i guess willy sutton was asked what, do you rob banks? he said that's where the money is. part of the reason there's a lot of crime and fraud, waste and abuse at gsa is a lot of money flows through gsa. you know, it handles money on behalf of other agencies. it has millions of dollars flowing through it. and it has over 12,000 employees. in any town that you have in the united states of 12,000 or more, you always have a jail. so that you will always have

people doing criminal things and dumb things and silly things. and it's no different, unfortunately, in the federal workforce, have you people doing criminal things and dumb things and that's why you need inspectors general to monitor for fraud, waste and abuse. >> i agree. what i'm trying to say is have you looked at this notion, have you looked at this notion of more centralization and checks and balances. have you done that for every region or have you just now done this for the western areas because of this problem? i mean, obviously, a lot of us i think this is a systemic problem. so i'm asking you if these reforms are going to go forward. are you recommending to mr. tanker lee me that he have centralized most of the operation? >>. >> well, as you can tell from my supplemental statement, that is the direction we think gsa should go, but how gs app is

managed is essentially an agency function and is at the discretion of the administrator. it's a little out of my lane. >> i'm going to ask. so given the recommendations of the inspector general that there be more chicago and balances and more centralization, what's your take on it at this point, mr. tangherlini. >> i already with only a couple of weeks of experience with the organization already have strong indication that we need to centralize certain functions. late last week is, i took steps administrative steps to centralize the finance function so that our chief financial officer of the general services administration actually served in that will capacity straight out to the regions is, as well. from what i understood, the regions had some autonomous ability to once their budgets were allocated spend within those allocations. so one of our initial moves is to make sure that that chief financial officer actually has visibility straight down into the expenditures at the regional

level. there's a lot of work we have to do to bid the systems necessary to have visibility into the regional expenditures. we've also taken steps to consolidate the procurement oversight function, as well. and what we think we can doing is continue to have some level autonomy so that there's innovation and that the regions can reflect the needs of the local area. but we need to have clear accountability. >> uh-huh. >> now, we're going to look at the entire structure of the agency top to bottom. we're going to undertake a process we're already involved in that to look at the way the system is you can have toured so we can ask ourselves the kind of clean sheet of paper type questions how should it be structured. >> i want to say this and i'll hold for my next round but you know, senator inhofe alluded to this as did others. we're going to need to have more oversight. so how many months do you think it will take you before you're ready to put these new systems

in place because we would like to have you back to give us a progress report. >> well, i think we've already started making changes. so that's part of what i'm here to report on today. we have the good fortune of having the budget process, the 2014 budget development process. we're entering into that now. so i think we're going to use our 2014 budget development process which col minnates to recommendations to omb in september and a budget in february. we're going to use that process to start delving into this but that doesn't mean we're going to wait till the outcome of that process to make necessary changes. >> good. let me just say i will discuss this further with my ranking member whom i respect so much and i think around september, perhaps late september, we ought to have you come in to talk about this because we got to stay on this. you in one sense you're fortunate because you're coming in on the heels of this and everyone's going to give you the latitude. and you know, don't listen to those voices who say we can't

change. senator inhofe. >> thank you, madame chairman. senator johanns has an ag commitment he needs to get to and i don't so i'd like to have you go ahead of me in line here. >> thank you very much. that's very kind of you. i appreciate the courtesy. plif miller, l plif -- mr. miller, let me start with you. i have to assume that will with everything that has happened that has transpired that you are also looking at other areas within the gp subpoena app. as you have gone through you this in your thinking about what happened and going forward, what thoughts would you have, what recommendations would you have you in terms of how the gsa just better manages what's happening? because this is beyond normally

what an inspector general would run into. i think everybody would agree on that. how do we stop this? how do we put the right structures in place to empower the leadership at gsa to make sure we're not back here again? >> thank you for the question. we have to deter others from committing criminal acts from committing fraud, waste and abuse. we had a region and a regional commissioner that was doing all sorts of things that are documented in our report. and we produced to senate committees and house committees. but the ultimate deterrent is criminal prosecution. and we are doing all that we can to identify those committing fraud and crimes and referring them to the department of justice for prosecution. we are doing all that we can to hold them accountable for civil

liability not just in terms of employee misconduct but people who do business with the gsa. oracle paid $199 million back recently because of the work of our auditors. and so we are doing our best to hold people accountability. en i know mr. tangherlini has some ideas about changes. you've heard my general recommendation ta we need to have a strong system where people are held accountable. regional people need to be held accountable and people need to manage. you can't legislate good management and good judgment. but you can try and put into place some systems where people do manage. and i'll let mr. tangherlini speak more about that. >> go ahead, offer your thoughts. >> thank you very much, senator. i think the inspector general described it very well. i think we need to look at the

way we've structured the organization, look at their reporting lines of authority, and ask ourselves, is this structure that will ensure clear accountability. again, autonomy allows for the opportunity for a certain amount of innovation. the point though is that that innovation has to happen within the constraints of accountability so we know what's taking place. we have a shared view of what's taking place, that there are appropriate checks and balances so that nothing like this can happen again. >> let me ask both of you, mr. miller, something you said triggered this thought. is this based upon what you've seen so far, is this a regional issue, or is this a systemwide gsa issue that you're facing? or is this just simple mr. i a situation where the regional leadership was so lax, so

whatever, that this just spun totally out of control? what's your thoughts on that? >> well, i'm a former prosecutor. i tend to see misconduct in a lot of places. i would say yes to all of the above. obviously, there is misconduct on the part of regional officials. but there was a national central office official, the commissioner of pbs that threw a party in his loft suite and charged the taxpayers 1,000 -- over $1,9h00 for food. that's a senior office high ranking senior official. so i think that there is a problem throughout. but you know, as an ig, we do reports based on specifics. we've done a report specifically on the western region's conference. i'm reluctant to make generalizations but i do throw those particular facts out to you about the party and you can

draw your own general conclusions. >> okay. >> i think the events in the western region conference speak for themselves, that clearly a leadership ip issue happening particular out out there in region nine at the time that the this conference was planned and certainly undertaken. i haven't been there long enough to really get a sense organizationally whether this is a broader cultural problem or not. that's why we want to look top to bottom at the organization and ask ourselves the clean sheet of paper type questions. are we structured in such a way, have we built ourselves a culture in such a way that it encourages this kind of activity although i don't think there's any evidence beyond what we've seen in region nine and what happened with this particular leader in this is endemic but we're open to that possibility and work very closely with the ig. i think equally important, frankly, is making sure we build

a system with him appropriate accountability, appropriate checks and balances, appropriate visibility into the actions that people will have opportunities to stop this kind of thing before it happens. >> i don't want to abuse my privilege here by extending this because i'm out of time. but i do want to just offer a thought. it would seem to me that an auditing process of some kind either wasn't working if it was in place or in the alternative, if it's not in place, it needs to be. you would think just a regular auditing process would have picked out these issues and said whoa, wait a second. time-out here. you're heading off in a wrong direction. for whatever reason, that didn't seem to happen here, which i find very, very surprising. so maybe a fix going forward is to fix whatever is there that wasn't working or in the alternative, put in place an auditing process to catch these

things. so thanks. >> do you want to go ahead? >> okay. mr. . . trying to put this into perspective, the event took place in october 2010. this interim report came in may 2011, i understand. and so then you had another 11 months. if you had been in the position of miss johnson at that time, the position you're acting in right now, what would you have -- what would you have done when that interim report came out? how would you have handled that? >> it's very hard to conceive of the response to such a hypothetical. however, it's also easy to use 20/20 hindsight. i think the -- i think going forward, the best thing to do is

build the kind of relationship that i tried to start on day one with our inspector general. my first day off -- into the office, i came in, met with brian and his team. we subsequently had a one on one in which i sat with his entire leadership team and worked with them to try to understand what are the big challenges. i would like to build the kind of relationship where we have continued and direct communication and, as a result of that communication, we have swift and immediate action on the part of the administration. >> it's my understanding that -- maybe you can clarify this, mr. miller. it was after the interim, that may of 2011, that mr. neely actually went on several trips after that report came out. i'm talking about two trips to hawaii, saigon, trip to guam, napa valley and several other places. is that correct? >> that is correct, unfortunately. >> that is -- all right.

mr. tangherlini, the -- you talk about a total, i guess, of 11 regions, if you count washington. and this was seven, eight, nine -- or eight, nine, ten and 11, i guess. are you aware of in the other areas, any other ongoing investigations that you would feel comfortable talking about? do you know of any others that are taking place, other regions other than this? is this an isolated case for right now? >> so let me just, if you don't mind, reiterate it's seven, eight, nine, ten. region 11 is the national capital region. >> i see. that's fine. >> but as far as ongoing investigations, i think it's actually better if the inspector general speaks to that. >> okay. that's fine. >> senator, yes, there are ongoing investigations. some involving other regions. >> okay. and were they stimulated because

of this problem coming up? or were they already under investigation? >> some were stimulated because of this. i would have to check on exactly how many. as i said in my opening statement, the result of this -- the release of this report is that people are coming forward now. they are calling the hotline. and as a result of administrator tangherlini and my joint appearance before gsa, encouraging people to come forward to my office, people are coming forward and reporting things. >> okay. i understand you had a letter that went to -- you, mr. tangherlini, that went to the oneely, shepherd and i guess peck was the other one, requesting return of funds that should not have been spent. is that correct? and are they complying with that? >> it was acting public buildings commissioner linda charo who sent the letter to

those three individuals demanding return of funds associated with those events. we've also begun the process, using the inspector general's report to go down the list of other places where we believe the federal government and the federal taxpayers inappropriately paid for ineligible items. >> let me just conclude by kind of backing up the chairman in this case. because we've had so many circumstances where oversight has been neglected. and perhaps we were in neglect for not doing more. wooem ki we'll kind of serve notices that there will be more oversight not just with gsa but other organizations within the jurisdiction of this huge committee. thank you, chairman. >> thank you very much. senator brasso? >> thank you, madame chairman. the issue continues to arise, should there be a termination, additional people suspended in response to the inspector general's report, the administrator has resigned. we talked about officials that

have been fired. we get into senior executive service employees that can only be removed from civil service or suspended for more than 14 days, quote, only for misconduct, neglect of duty, malfeasance, failure, to accept a company reassignment or transfer. as an administrator looking at this, you mentioned taking strong action. have these procedures to remove an employee been set in motion to terminate jeff neely? >> i think i want to try to avoid anything i would say that could impact the ability for us to see through the administrative actions against those accountable all the way to completion, because the personnel rules are rather strong, the privacy act also is implicated in discussing these items. i want you to know, though -- i would like the committee to know that we do have a team of folks from our human capital office, our deputy human capital person

and from our legal office pursuing the full measure against all those responsible for planning this event and undertaking this event and leading this event. >> thank you. it's interesting. you look at some of the policies we have with regard to credit card and contracting policies and learn a number of gsa employees had their credit card privileges temporarily terminated, related specifically to this conference back in 2009. and then just two weeks later, the privileges were reinstated. you scratch your head and say what exactly has happened here? and is that something you're going to look into as well? >> actually, i took action over this weekend to vest the authority in our senior procurement for removal and reinstatement. in the past, that was another delegated authority out to the regional areas where people

could provide that warrant authority, remove the warrant authority. they could reprovide the warrant authority. all of that needs to go through our senior procurement office now and all of it needs to be justified. >> looking at this as a prosecutor, as you said you do, are the things that we should expect in the next few weeks or months that we're going to learn more, additional things or is this pretty well complete? are you continuing an on dgoing investigation? >> senator, we are continuing ongoing investigations. and, you know, as i said in my opening statement, every time we turn over a proverbial stone, we find 50 more and we find things fr crawling out from under them. and, you know, i don't know what we're going to find. but it has not been pretty. >> just having gone through a number of -- the documents and the depositions, the invoices, looking through this. it does look like you question how certain vendors were chosen, when it would be a lot easier to choose others.

p potential allegations of illegal relationships between vendors and those during the procuring. is that the sort of thing you're referring to? >> we're looking at all those things. yes, senator. >> there was a mention made of finding some individuals, making them reimburse for money spent already. it's interesting how you look through some of these hotel bills and even though someone may have stayed a little longer and paid the $93 bills mr. neely did, the cost of the room that night -- kind of a high roller suite, would have been over $1,000. we'll just add that additional money to the overall invoice for the overall convention. that's come out in deposition. >> taxpayers paid for that. >> because that's an extra thousand $1,050 for additional time. >> yeah. >> you look at this and it makes you wonder, because chairman boxer mentioned both under

republicans and democrats there has been abuse through the gsa over a number of decades. would it not be fair to ask has gsa outlived its usefulness? is this something that should be done in a private sector rather than a government sector since there were so many challenges here for the gsa? >> if you want these activities to happen, if you want fleet management, building management -- in fact, most of the work we do is actually provided to the private sector. and what we simply do is act as an intermediary. the appropriate sets of checks and balances, appropriate sets of oversight systems, clear lines of accountability to make sure that this kind of thing can't happen again. that having been said, having a single accountable agency that can aggregate the expenses of the government and use the scale of the government to get the best possible price for the government, i think h