congressional oversight. as i said yesterday i want to apologize to this committee and congresswoman norton. have i the utmost respect for her and this committee. you have always been strong advocates for gsa and its programs while holding us accountable as an agency. i did not mean to belittle you or your role in any way. i attempted to make a joke in the context after talent celebration i perceived similar to a comedic roast. as the deputy commissioner i should have taken the stage to stress that we have a serious job and responsibility as stewards of taxpayer funds. i missed a real opportunity to address the nearly 300 people in my organization and stress the importance of the work we do. during my presentation at the awards ceremony i told the award recipient i was making his dreams come true by making him commissioner for the rest of the day. obviously that was a joke, i was not seriously delegating any authority to awardee. i also joked about some of the obligations of being commissioner.

my understanding at the time was that the commissioner was paying for the charges associated with the after hours party on tuesday evening, tried to use that in a humorous way and suggest the awardee would have to pay for the party and the hotel. finally i said the acting commissioner would have to answer for his proposed pay increases in the video. my intent was to point out the commissioner has a lot of responsibilities and has to answer to a lot of people in the administration and congress. not to mock the various oversight roles. my remarks were wrong and i take full responsibility for what i said. i understand the outrage about this conference. my comments and how they have inflamed all of the issues surrounding this event. i preface the rest of my statement by saying i have only seen a draft of the i.g. report that appears to be the same as what has been released publicly. i have not seen any of the supporting documents and was not questioned or briefed by the i.g. during the investigation. so i do not know all of the details. this represents my understanding based upon what i remember from almost two years ago.

concerning my role in the western regions conference, again i want to start by personally apologizing. while i was not directly involved in the planning for the conference or any of the contracting irregularities identified in the inspector general's report, i did attend 2 1/2 days of the conference. there were things that seemed over the top but i believed they were not being paid for with government funds. in past conferences items like the tuxedos and the after hour parties were paid for by individuals, not the taxpayer. had i known what has been revealed i would have been concerned and reported it. because of the regional reporting structure in our agency, i did not have supervisory control or authority over how the regional budget was spent, procurement activities 0 or any of the employees in the western regions. the regional commissioners and staff reported directly to their regional administrators with input from the commissioner, who report in turn to the administrator's office. my primary role as the deputy commissioner is dealing with the office of management and budget,

congress, and other federal agencies on critical projects and policy issues. i am not a contracting officer and i do not have a warrant to approve expenditures. i have spent the last 15 years of my career working for gsa and i believe strongly in the agency's mission and the values it provides to other agencies and our country. i am truly sorry for my comments and apologize to this committee, the administration, my fellow gsa employees, and most importantly the american taxpayers. at this point i'm willing to take any questions you may have. >> thank you. let me start, mr. tangherlini. i know there's going to be a number of questions about what you're implementing today and the reassurances you can give to the american public that you have put the safeguards in place to address this. i want to just touch on before we get started with the questions. what is being done on

transparency? you heard -- i've been asking this committee has been asking for quite some time for a budget for the last five years. i assume that is something that you have readily available today. how long will it take to you get that to this committee? >> i have your letter of april 13th, you have given us an april 25th deadline. i intend to meet that deadline. >> five-year budget? full details. full disclosure. >> all of the information we can get. as you heard today, there are serious concerns about the way the data has been managed within the regional structure. but i'll get you everything i can. >> you are also doing an internal audit right now? the i.g. is still doing an audit or investigation. what do you anticipate -- what are you looking for in the audit that you are not going to get in the i.g. report? >> well, i want to do a top to bottom review of the organization, how it's set up,

how it spends its money. i want to see what i get out of that. i want to see if there are issues of how we can better structure it. already we've taken a move to bring the financial offices, the regional financial offices and the service financial offices under our cfo, we've done -- taken some action to centralize oversight of procurement authority and that's just the start. >> when do you expect to be done with the audit? >> i want to take as much time as necessary to get a great picture of the status of the organization. that having been said, if there are ideas that come out of our review, we're going to implement them immediately. >> audit take months, weeks, years? >> we would like to do it as part of the budget development process, which culminates in submitting the 2014 budget in september. that having been said f there's anything that needs to be

changed immediately we're going to change it. >> this committee would request not only the immediate changes that are being done in detail, but we'd request a copy of that audit. do you think it will take as long as september to receive a copy of the audit? >> i would call it more of a top to bottom review than audit. an audit is a very specific activity. but that having been said i need -- any details we'll be happy to share with the committee. >> thank you. mr. miller, you referred a number of things to the department of justice, criminal action, some of the sweetheart deals. can you -- what can you share with this committee on the reference to d.o.j.? >> very little, unfortunately. i can state that we made the referral and that's about it.

>> miss johnson, the timeline that i went through -- first of all, let me start with the first timeline that i discussed with mr. peck. ultimate i hold him accountable for not sharing or ignoring or stonewalling this committee on the budget, obviously there was a great deal to hide. but over our dozen requests to have a copy of that budget over the last year and a half we requested and submitted a letter to you. is there any reason why you failed to permit us or failed to give us a copy of the budget? >> i am sorry if there was a request in to me to supply you information that i did not acknowledge or respond to. i do not have a memory of this at this time. >> thank you. let me go into the timeline of

the different travels that we've seen here. i would assume when we see the further investigation that it's going to result in a number of other trips. i think this committee, i think the american public is probably prepared for the worst after seeing what we have. nevertheless let me start with may of 2010 where we had the nine trips for the preplanning. a lot has been talked about about las vegas. you endured a lot of that yesterday with $1 million spent on the vegas trip. my concern is the pattern here. and what happened after the fact. miss brita went to the i.g. in novemb november, in may the i.g. came back with the recommendation to

you advised to you, to get a handle on the regional conferences travel. this is may of last year. in june, the chief of staff, your chief of staff, michael robertson, informed the white house, he was formerly the liaison to the white house, let kimberly harris, white house counsels know about active i.g. investigation regarding fraud and wasteful spending related to the western regions conference. in august, felt it was important enough to put ruth cox, regional administrator for region 9 -- let me stop there. did you put ruth cox in as the new regional administrator? >> yes, we appointed ruth cox as the regional administrator. >> why? >> we needed to fill the regional administrator's position, it had been double filled by jeff neely for quite a

while. i felt it was -- well, i had been working hard to get regional administrators in all of the regions. this was the one that was still outstanding and i was eager to get it filled. for a number of reasons, not the least of which is that the regional administrator is an important person in the line of -- in the chain of command, in the line of authority, over the regions and you know, i'm the administrator of the whole organization. the regional administrator is in the regions. it's important to have that presence there. >> you advised the new regional administrator ruth cox to get a handle on the regional commissioner neely's travel? >>dy not personally advise her to get a handle on his regional travel. >> thank you. my time has expired. i'm come back to that. miss norton. >> thank you very much.

mr. foley, i heard your testimony yesterday and as i was of course in the cloak room and as i said yesterday, even members of the oversight committee know the difference between a joke and corruption. so i recognize that that was a joke. the problem with the joke is that what nobody knew at the time was there was some honest to goodness, perhaps not as the joke indicated, but some honor tooes goodness nefarious dealings that have come out since. and as i reported to you, lest you feel i took umbrage at the joke i took the opposite since the joke had you or somebody had me already on the phone with a conference call questioning some of the excesses.

so that really wasn't the problem. the problem was that it turned out that this whole affair was no joke. i must say, i don't understand your title. you have the title of deputy public building service commissioner. >> deputy commissioner, yes. >> does -- do the commissioners report in the regions, do the commissioners, the building service commissioners report to you? >> no. >> so, what is your function? >> as i said in my opening statement my primary function is dealing with the office of management and budget, congressional committees, and other agencies on critical projects, policy issues and initiatives. >> so you are basically a policy person, not a person in the line, in the chain of command for the public service commissionners? >> correct. i have one direct report.

>> why did you go to nevada? >> i gave a presentation on the afternoon of my arrival on tuesday on our performance results, key initiatives and outlook on the capital budget for fiscal year 2011. i also stayed until the end for the award ceremony. >> i see. mr. miller, the notion of hats off will have no meaning to the general public, no meaning to me. as i understand it's supposed to award employees for meritorious work. would you please describe the hats off program. >> the hats off program was one of many programs at gsa, each program had a different name, in region 9 it was known as hats off. >> was it only in region 9? >> no. it was in other regions except for region 2. all of the other regions had a similar program. the idea was if an employee

performed well, they would get a certain number of points. >> who would give the points, mr. mill center. >> they could be given by a co-worker, they could be given by a supervisor. >> mr. miller, just a second. they could be given by a co-worker? >> correct. so one co-worker could give points to another co-worker, and the other co-worker -- >> based on what? is hats off for the purpose of awarding something at the end after a number of points? >> yes. >> have been reached. >> you collect the points, you can trade the points in for a prize. under gsa regulation, the prizes could not exceed $99. in region 9 they did exceed $99. they included ipods, digital cameras, and similar electronic items. >> what is to keep -- i don't understand the point system. i have a friend, i need points,

how does one have to justify giving point >> we found a rampant abuse of the point system and the program and we recommended shutting it down. so i believe that the administrator johnson had a review by the cfo who was on the first panel, she did a review of all of the programs across the country. we were told that in september of 2011, that region 9 was shutting down its hats off program. >> i'm going to have to come back to this. 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 in -- >> supervisors could not receive. >> correct. but in region 9 i believe there were some supervisors receiving some awards. >> 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 federal -- the public building service. the public building service budgets were allocated out of this central public building service office to the regions and so that portion of the regional budget was managed by the region and reported back up into the federal -- the central office of the public building vfrls. 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 highly centralized. >> how do you approve the budget? >> 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 a budget request, all of that was related to me and we met and discussed. 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?

commissioner's 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 grow 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 to over $800,000, almost a million. >> when i received the final report from the i.g. delineating these expenses and 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 -- let me finish my understanding how your operation worked. mr. neely and the other public building service regional commissioners, who were they accountable to. mr. peck? >> gsa is a matrix organization. i know congressman north season concerned with this. it's a matrix organization in that the regional commissioners, both the acquisition 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 not an easy one. it's not command and control like a military services.

it is a matrix. and so -- >> i assume you think that's a problem. >> it was difficult to >> it was difficult to manage. it's always difficult to manage a matrix. >> or changing the matrix? mr. tingerlini? >> we're going to look 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 i.g. last may. why did you allow mr. neely 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 i.g. in may alerted me to how serious this investigation was. i have a lot of respect for the i.g. 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 -- >> i.g. -- 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. neely'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. neely's travel. when i talked to administrator johnson, i told her directly that i thought mr. neely 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 in 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 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. i do believe the best of my remembrance and 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