it really shakes you up. because when you look back, 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 is 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 region is made up of seven, eight a, 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. >> i know. >> because if there are people who are cheaters and there are people who are bad actors, they're going to figure out another way to steal. forget the conferences. >> right. >> so my point is, you're telling me there is 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 why 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 -- you have looked at this notion of more centralization and a check 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. tangherlini 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 gsa 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 check 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 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 capacity straight out to the renals as well. from what i understood, the regions had some autonomous ability to once their budgets were allocated spend within those allocations. and 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 to build 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 do 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 structured so we can ask ourselves the clean sheet of paper type questions how should it be structured. >> good. i want to say this, and i'll hold for my next round, but 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 culminates 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. mr. miller, let me start with you. i have to assume that with everything that has happened that has transpired that you are also looking at other area as within the gsa. as you have gone through you this and you're thinking about what happened and are going forward, what thoughts would you have? what recommendations would you have 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 accountable. and i know mr. tangherlini has some ideas about changes. you've heard my general recommendation that 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 a 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 simply 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 $1,900 for food. that's a central 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 issue happening particularly out there in region 9 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 9 and what happened with this particular leader that this is endemic. but we're open toe that possibility. we'll 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. tangherlini, to kind of putting this in a perspective, the event took place in october of 2010. this interim report came in may of 2011, i understand. and so then you had another 11 month and then you had another 11 months. if you had been in that position, 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 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 into the office i came in. i met with brian and a 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 was my understanding, maybe you can clarify this, mr. miller, it was after that 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, a trip to saigon, a trip to guam, a trip to napa valley and several other places. that correct? that. >> is correct, unfortunately. senator. >> all right.

the -- mr. tangherlini, there are a total i guess of 11 regions if you count washington. and this was 7 -- or 8, 9, 10, or 11, i guess. are you aware of in the other areas, in the other ongoing investigations that you would feel comfortable talking about, do you know of any others that are taking place of other regions other than this? is this an isolated case for right now. >> so let me just, if you don't mind, let me reiterate that it's 7, 8, 9, 10. region 11 is actually the national regional, d.c. >> oh, i see. >> as far as the ongoing investigations, i think it's 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'd have to check on exactly how many. as i said in my opening statement, the result of 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, it had been you, mr. tangherlini, that went to the o'neally, shepherd, and i guess peck was the other one requesting return of funds that should not have been spent. that correct? and are they complying with that? >> it was act aing public buildings commission erlinda cher sent a letter to those three individuals demanding

return of funds associated with those events. well also have 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 have had so many experiences where oversight has a just been neglected. i think perhaps we were in neglect for not doing more of them. so we'll kind of serve notice there are going to be a lot more oversight hearings, not just with gsa, but other areas in this huge jurisdiction of this committee. thank you, madam chairman. >> thank you very much. yes, senator barrasso. >> thank you, madam chairman. the issue continues to arise should there be a termination of additional people suspended in response to the inspector general's report, the administrators resigned. we talked about officials who

had been fired. when we get into senior executive service employees that can only be removed from the civil service or suspended for more than 14 day, quote, only for misconduct, neglect of duty, malfeasance or failure to accept a directed reassignment or to accompany a reposition in the transfer of function. as a new administrator, you looked at this. you mentioned taking strong action. have these procedures to remove an employee been set in motion to remove jeff neely? >> i think i want 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 a undertaking this event and a leading this event. >> thank you. because it's interesting. 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. so, you know, 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 executive 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. >> i'd ask you, mr. miller, 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 ongoing 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 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 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 $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 that has value today as much as it did back when the hoover commission first proposed it and president truman set up the gsa. >> if you go back to the goal to provide superior value to the american taxpayer. we have fallen so far away from that that the taxpayers of this country are just appalled. thank you. thank you, madame chairman. >> thank you, madame chair. mr. miller, the -- what were some of the red flags that were overlooked in regard to this? this stuff is pretty blatant. what was there that people didn't pick up that they should have picked up? >> almost everything, senator. when you have a select number of individuals invited to a party where food is paid for by the taxpayer, somebody somewhere should have -- some red flag should have popped up and said, oops. this isn't right. that didn't happen. and we have some of our highest ranking officials attend these

networking parties. and private receptions in these rooms. >> and so was that -- i mean, was that budgeted? were there receipts? were those things falsified or -- >> we went through all the receipts. it was billed to the federal government. it took a long time to find because some of the bills are on purchase cards, credit cards. some of the bills are in budget for the conference. some of the bills came out of the operating fund for the public buildings. they were all over the place. >> so who -- >> forensic auditors and special agents for finding these. >> within the agency, who is responsible for saying, you know, there's something amiss here? >> dan, do you want to take that? >> i think, actually, that is part of the problem. and that was part of our concern, was that we didn't have a strong centralized management organization that could see

these things beginning to start coming through the system and start raising questions. it was all held within the region. and that region was being led by this individual, who is the main leader of this activity. so, that we identify very quickly as an issue, coming out of the inspector general's report, taken immediate action to begin to change that structure. but we think that that's just the beginning and why we need to take a good look, top to bottom, the way we structure organize and operate this agency. >> somebody was approving the travel vouchers for those people traveling to this conference. so there's responsibility all throughout gsa. >> i guess -- i don't mean to interrupt, but as you've unturned these stones, are you finding is this more an individual thing or is this the culture of gsa? >> we're finding a lot of

things. >> cultural thing or has this been going on so long that it's just business as usual or -- >> as an inspector general, i am reluctant to make generalizations without having facts to support them. i will say that when we uncover things, we disclose them. i gave the administrator an interim report because we had investigations and it got so bad that we thought we have to tell the administrator so they can stop this abuse. normally we don't do that when we're investigating. we put together this interim report. i briefed the administrator in may of 2011 about the abuse. we had a problem with the employee rewards store, the hats off store, we gave her a draft of that, too. we gave the managers information so that they could stop this. i don't know what actions were

taken. i'll let the administrator talk about that. we were trying to get people to stop this. in august, there was a new regional administrator sworn in, in region nine. i personally met with her, went through the interim report with her and asked her to get a handle on the regional commissioner's travel. i even suggested perhaps she could have her cfo take a look at past trips and then we're faced with a three-week trip of the regional commissioner t saipan. we were like, what's going on? do you know he's about to take another trip? she contacted the regional administrator and the result was he went on the trip. >> so, that is kind of cultural? >> i'll let you draw the generalization. >> exactly.

the gsa, obviously, is a very troubled agency. >> can you -- are there -- what is the -- do you know perhaps what some of the better agencies, you know -- our leadership has been here a while, mentioned we have these recurring things going on at gsa. what are some of the agencies, what can we use as a model within government to try to model this after so that we don't have this in the future? some of the agencies seem to function without these problems. is there one that comes to your -- >> well, i would say i just want to -- if you don't mind -- add quickly to the ig's, mr. miller's comments about culture. at the same time i've received dozens and dozens of e-mails from gsa employees who are as outraged and horrified and disappointed and disgusted and, fran e