we were told in september 2011, that region nine was shutting down its hats off program. >> i'm going to have to come back to this. but i've got to understand how a co-worker could help you get points. but go ahead. >> that's part of the problem that we identified. >> because it's supposed to be for work-related matters. >> correct. >> normally work is judged by a supervisor of some kind. >> correct. and supervisors technically were not supposed to receive rewards on the basis of this. but -- >> supervisors themselves could not receive -- >> correct. but in region nine, i believe there were some supervisors receiving some rewards. >> thank you, mr. chairman. >> miss johnson, what restrictions were on the regions to confine their spending to approved budget levels? >> restrictions by the regions. the regions are made up of the two divisions, the federal

acquisition service and the public buildings service. the public building service budgets were allocated out of the central public building service office to the regions and so that portion of the regional budget was managed by the region and reported back into the federal -- the central office of public building service. the federal acquisition service has a different process. they have a different fund that they work from, and their reporting structures are highly centralized and are -- are highly centralized. >> so how do you approve the budgets? >> i approve the budgets -- i met with the commissioners weekly and on a quarterly basis we reviewed their financial performance. in terms of approving their budgets, as we went through the budget cycle every year, thinking about what was -- well, in the public building service,

there was going to be a budget request. all of that was related to me and we met and discussed it. on the acquisition side, it was a different kind of conversation because it was based on the acquisition fund that yielded their -- essentially revenue and then how they spent it. they reviewed that with me quite carefully. >> so how did the budget triple, pbs commissioners budget triple from 2009 to 2011? >> congressman, i'm sorry, i don't know about those numbers and i am not able to research them -- >> how did it go up by $50 million for the pbs headquarters? >> i don't understand that and i don't know. >> how did it go up by $80 million, $83 million, for the regional offices?

>> i don't understand that and i have no knowledge about that that's useful right now. >> so then you certainly wouldn't know how a budget for these conferences would balloon from $250,000 they had budgeted to more than $800,000, almost $1 million? >> congressman, when i received the final report from the ig delineating these expenses and these abuses, i was appalled and i pulled the disciplinary levers that i could pull immediately. i then removed the two senior officials in the chain of command and i resigned. >> i want to come back to that but let me finish with understanding how your operation worked. >> okay. >> mr. kenneally and the other public building service regional commissioners, who are they accountable to? was it mr. peck? >> gsa is a matrix organization. i know congressman norton is also concerned with this. it's a nate trix organization in

that the regional commissioners, both the fast acquisition service and pbs service, reported in two ways. they reported to their regional administrator, who was the immediate representative of me in the region, and then they reported functionally to the commissioners. because that's where they received their budgets and their strategic direction. it is a matrix like a corporation. it is a -- not an easy one. it is not command and control like a military services. it is a matrix. and so -- >> i assume you think that's a problem this. >> it was difficult to manage. it's always difficult to manage a matrix. >> or changing the matrix? mr. tingerlini? >> we're looking at the matrix. clearly this form or structure created some issues and we're concerned about what it could create going forward. >> you were briefed by the ig

last may. why did you allow mr. kenneally and others to continue their trips and off-site meetings up until just a couple of weeks ago? >> congressman, this is -- the conversation that we had with the ig in may alerted me to how serious this investigation was. i have a lot of respect for the ig and what an investigation entails. i immediately began some activities with respect to the controls and the immediate leadership in the region, but i have to say i respected the investigation and i did not want to act on inconclusive material. it was not the final report. and until i got the complete and final report, i did not feel i would be doing anything but interrupting what was an investigation which my deputy had requested. so the fact that it took an initial nine months was not what

i was expecting at that point. and i -- that was a wrinkle in this problem that was very difficult to manage around. i did -- >> ig -- an investigation is a very serious thing, is it not? >> a very serious thing, and the initial report indicated a number of things that were very concerning. it was an inconclusive report -- >> inconclusive but you have the inspector general here -- mr. miller, did you inform mrs. johnson about the -- this potential fraud, waste and abuse, and did you tell her to get a handle on mr. kenneally's travel? on the entire regional conference's travel? >> okay. we went through the power point very clearly -- >> did you tell her to get a handle on it? we went through a lot of this already. i want to know whether you told her to get a handle on it or not. >> i told the regional

administrator in august to get a handle on mr. kenneally's travel. when i talked to administrator johnson, i told her directly that i thought mr. kenneally needed to be candid with our special agents because in the interview, he said some things that we thought were less than candid. and i thought that was not appropriate for a senior executive service official. >> miss johnson, you say you took immediate action. you took immediate action a few days ago. this is a pretty scary report. >> i agree. >> yes. certainly you want to see the overall findings. but to see that they spent $1 million in las vegas is right here. to see what they spent it on, to see the pictures of the 2,200 square foot rooms, to see that they went well over their budget, we have a completely separate investigation going on now because you failed to take action.

has it here in this initial report, may of last year, that they had nine different trips. it certainly has, while inconclusive, at least the initial appearance that laws have been broken. criminal acts have been committed. i guess the very simple question is, if you took this serious, why did you not act? why didn't you stop all travel? why didn't you make serious adjustments? why didn't you make the budget -- bring the budget out then and allow this committee at the very minimum to see what was happening in the budget? >> at the time, as i said, i highly respected that the ig was undertaking a very serious investigation to -- to preclude what would be the conclusions of

that investigation, i was concerned, would in some way taint the ability we would have to discipline. i took it very seriously, congressman. i can only say that i took it so seriously, i gave up my public service career. >> a year and a half later. during this time, nobody was fired, nobody was put on administrative leave. you had a report back last may that showed all of these trips, that showed how much over budget they went. you may not have very good controls over your budget, which i find appalling. but that report last may shows you that -- the numbers. if you didn't have control of your own budgets, the inspector general is now telling you what is in your budget. how much over budget they went. some of the egregious acts and some of the criminal action. and you took no action during that time.

>> i did take some action -- >> was anybody fired? >> i appointed a regional administrator. i set up a centralized office to oversee gsa travel, conferences, procurement. and we continued what had been a very strenuous effort around disciplining and streamlining conferences. which i can go into detail about. >> i want to make sure we draw a line between what might have been mixed in the chairman's questions. on one hand, he talks about people fired and administrative leave. on the other hand, he raises a serious question about expenditures. and what could have been done. now, the reason i raise that is because of a e-mail i have from mr. miller's deputy which --

this is on may 3rd, 2011. i'm sorry. on july 25th, 2011. indicating that the may 3rd report was an interim report. and i'm quoting the e-mail. our purpose in issuing the interim report was to alert gsa to potential waste and abuse. so gsa could take steps to avoid future issues. so that speaks to the first part of the chairman's question about reining in spending. the second part warns, please be advised that the investigation is ongoing and no personnel action should be taken until you have received the final report. i read that to read that you could not have put people on

administrative leave and you could not have fired people until the final report. is that true, mr. miller? >> i think the point of the last part is, adverse personnel action, and that is firing someone. if they wanted to restrict travel, that was fine. if they wanted to restrict conference planning, that was fine. they also had the final hats off report that implicated misconduct on the part of the regional commissioner. if they wanted to take action on that report, that was fine. if they wanted to fire or put on administrative leave, all that would have been fine. >> so i think the chairman's question, if we can leave aside what mr. miller's deputy had warned you about, which is taking personnel actions, and that would have meant putting people on administrative leave, that would have been firing people. the deputy does seem to say,

indeed almost seems to encourage, because he uses the word alert. alert gsa to potential waste and abuse so gsa could take steps to avoid future issues. that's why i want to give you every opportunity to outline whether or not you took that as a warning that you should move ahead on the spending and expenditure issues even though you could not take the action you ultimately took with respect to administrative leave and discharging employees. >> i believed upon hearing the report, and about knowing about the hats off situation, that we had a number of issues -- >> did you do anything about the hats off at that point? >> i -- deputy administrator susan britta and steve leeds were briefing me on it.

again, i don't have any of my material so bear with me on that and i can try to check it out if i need to. but they were updating me on the status of the hats off investigation. the cfo was doing a report about the various regional -- >> did you ultimately, before you left, did you ultimately eliminate hats off in that region? >> i understood that we had, yes. the -- >> you understood that we had? whose job was it -- >> i was being briefed by steve leeds and susan britta, deputy administrator, senior counselor, both of whom had been involved with those activities, both of whom had met with the ig more than i had been able to meet. she was the chief operating officer and we have processes by which we're formally interacting with the ig -- >> ms. johnson, in retrospect, if you had to do it all over again, would you have taken more

affirmative steps to rein in the spending and to get a foothold on the excesses and spending and conduct that were reported that you might have done something about? >> hindsight is always much better than current vision. i believe i was working from the best understanding i could make of what my -- of what the situation was. there were a number of levers that i was pulling, putting leadership into the region, as i believe allison dune mentioned. she or maybe it was bob peck -- >> you don't believe -- you don't believe other actions, given what you knew at the time, should have been taken? >> i believe other action should have been taken. i believe -- i believed other actions were being taken. i dealt -- i tasked my

commissioners and my senior staff with various issues and responsibilities. i assumed that they were managing accordingly. they were -- they were part of this. my deputy, my senior staff, my senior counselor and the commissioner and i was hearing that things were moving. so i was assuming it was going on. i did not review in a line item way all of these things with each one of them all of the time. i do want to go to the point about the financial controls. the cfo, bob peck, and i had met and were beginning to move in the direction of consolidating the financial reporting structure that you asked about earlier. and i am heartily in agreement with the need to pull a much more -- much more of that reporting structure into the central office of the public building service.

>> thank you, mr. chairman. >> to get back to this timeline here in a minute, but -- you're an administrative appointee. you're appointed by the president. >> yes, i was, and approved by the senate. >> you were approved by the senate when? when did your confirmation -- >> in february -- in february 2010. >> commander in chief appoints you to a position, i assume that you follow his directives? >> i certainly tried to. >> december 22nd, 2010. executive order 13561, adjustments of certain rates of pay. executive order was given by the president in december 2010, prior to you being confirmed as an appointee.

why would you not follow that directive by the president? >> i -- i'm not sure i can speak to that substantively. i assumed that directives from the president about salaries and so on flowed through opm and we received them in our human services offices and responded. >> were you giving raises? >> i believe that there are -- when -- i believe the raises that were allowed were within a grade. but i don't have a lot of detailed knowledge about that nor substantive memory of it right now. >> did you give bonuses? >> we did give bonuses to the senior executives, yes. >> did you give a bonus to mr. kenneally? >> we did give a bonus to mr. kenneally. >> why? >> the recommendation from the performance review board chaired

by ms. pritta was to give him a three. i asked ms. britta if they had discussed in the review the ig report and where it was. she said there was virtually no mention of it in the meeting. i can't remember exact words. but she said that they did not consider that in their deliberations of recommending a three. the buildings commissioner recommended a four. he said that based on mr. kenneally's performance with respect to the leasing portfolio was the strongest across the country and that fit with a four recommendation. i appreciate the issues between conduct and performance, but both recommendations given to me were based on these performance measures and i accepted the commissi commissioner's recommendation. >> you have a report that's been

issued by the ig. the ig -- i got to say, if the ig called my office, i think everybody in our office would snap to attention. i mean, the fbi comes into your business, you bet you bet peopl attention. now if the fbi came back to a business and issued a preliminary report, do you think that -- let me back up. mr. miller, when you go into somebody's office and you issue a preliminary report, what happens? >> people pay attention to the report. they read it. >> they pay attention. they take the recommendations you give serious? >> yes. >> you gave some recommendations in this case. >> it was an interim report. so we went through the interim report and -- >> you gave the top execs a heads up. >> yes. >> there's a problem here.

i want to let you know we're going to dig deeper. >> yes. and there's a big problem. >> mr. neily is mentioned several times by name all over this report. >> yes, sir. >> ms. brit ta comes back and says he should not be approved for a bonus. the president issues an executive order december 22nd of 2010. so between the president's executive order to his appointed secretary and ms. brit ta coming back and saying he should not be recommended for a bonus and your ig report that shows at a

minimum egregious behavior, but probably some criminal action. obviously the doj, we're not going to name names, but the doj have been alerted of criminal action. >> yes. and she also had a final report that identified bad behavior on the part of the regional commissioner. >> so if you're taking the commander in chief, the president who appointed you, serious and you follow the direction and he issued an executive order and your own committee staff said that this is not a good idea, why did you move forward? >> the performance review board was recommend iing bonuses. i don't believe they were covered by the president's executive order. we were encouraged and we were reducing the amount of the bonuses substantially.

the performance review board made a recommendation to me of a three, which could have carried a bonus. i just -- they recommended the three. the commissioner recommended a four. and i accepted the four. >> if the fbi came to my business and said they were investigating several individuals, i can tell you those individuals would not be traveling. those individuals would not be getting raises or bonuses. and you had the equivalent of that, the inspector general, saying there's an issue. not only saying there's an issue, a heads up there's an investigation going on, but they gave you documentation back that you then shared with other people in your agency. is that customary to share that information? >> i did not share that information with anyone else? >> you didn't give it to

anybody? >> no, i did not. >> how did mr. neily get it? >> michael robertson and i discussed the entire matter together in a meeting. it was a meeting in which we reviewed what was happening. we agreed it was agregregious, was of high concern -- >> who? >> the deputy administrator, the chief of staff, the commissioner, the senior counselor, and myself. >> mr. robertson, mr. pek, ms. brit ta -- >> mr. leads and myself. and we discussed this report and we agreed it was egregious and we were eager to get the final report so we could act. it took nine months before we were able to receive a final report. i will say that had i had had that report earlier, i felt i

could have moved much more strongly with respect to -- >> we will come deeper into those details. mr. walls? >> thank you, mr. chairman. and ms. johnson, i want to make sure i avoid generalizations and myself and this committee as a whole the interest is not for grand standing and while the loss of your career is personally tragic to you, i have to tell you if you will excuse e me, my concern relies with the taxpayers today. i don't doubt your sincerity that you're sorry this happened, but i hope you recognize the magnitude of how this reaches. it's just incredibly difficult for me to imagine that this happened having worked in different organizations and seen it. i think your analysis was very honest with your matrix design whatever, but first your gara graduate students can do a gap

analysis and see there were problems here. and it doesn't appear that that was done in waiting for -- i'm not going to pass judgment other than what we have seen here. there's certainly some problems. i want to turn a little bit here, mr. tanker leany to you. how did you get this job? >> i was asked by the white house to step in. >> what were you doing prior to this? >> i was the assistant secretary for management and chief financial officer in the treasury. >> do things in treasury work the same in a gsa? >> based on what i have seen just through this report and the little i have seen, no, they do not. >> i have a question. you made a command decision. you cancelled 34 conferences. what was your criteria to determine those were wasteful? conferences for personal and professional employees isn't necessarily a bad thing. if they are done correctly and that internal personal development i see it in myself as a teacher, while we didn't go

off staff and why we had coffee somebody made in the back room, that gathering together was certainly valuable. i would make in the long run they were improved by those. how did you determine those 34 weren't going to live up to the standards of development? >> we cancelled those actions pe pending the outcome of people providing us an explanation of the value of those. there was no program by which people would explain in detail the value of the activity they are undertaking. and i'm not saying there's no value. >> there was no approach to this? we had standards that said this is what our community was going to do during the school year. here was our july meeting and they were measurable by performance reviews and outcomes that were metrics. were any of those available? >> i'm not sure about these in particular, but there's a combination of the conferencing and the formal training. the training does have those kind of metrics and we're doing

whatever we can to preserve those trainings. however, we're also asking the employees of the agency to see if there are nontravel based approaches we can use to get that traini ingtraining, to get activity. >> i would assume in house is they are following best practices. what a waste of time. it's like pulling teeth to get money for professional development in any organization let alone governmental organizations. didn't somebody say this is going to kill -- you know this, ms. johnson. when's the next time we're going to get meaning conferences in gsa? not in our lifetime. that's the destructive outcome. i ask you. this mr. neily, i wish he was here today. this guy set up a system. is what it appears like.

here's what i would tell you. these ses folks, i have seen some of the most dedicated professional public servants that i have ever come across in private and public sector in my life. and i have seen some of the worse. how are you going to deal? these folks have an attitude. they will outlive you. the next president will come and you will be gone. and they will continue. this guy has been around forever. he outlasted ms. johnson. whether he outlasts you or not. how are you going to address that? >> i think that's a great question, congressman. that's part of what we have to look at in our top to bottom review is what kind of performance system do we have in the general services administration, how do we create a system that measures conduct as well as performance. and then how do we hold people accountable to it. i look forward to working with you on it. >> the services we could provide, there are comparable people tharv