02:58 - Source: CNN
Bipartisan outrage over GSA scandal

Story highlights

NEW: The management structure of the GSA comes under scrutiny

A House committee holds a second hearing on the GSA spending scandal

The panel's Republican chairman says the problem may be systemic

A GSA official declines to appear, based on his right against self-incrimination

Washington CNN —  

After a preliminary report last year that detailed spending and travel abuses, and even after a final report in February that showed Jeff Neely may have illegally wasted government funds, no one stopped him from taking more trips on the federal dime.

The failure to prevent the General Services Administration official from squandering more government money before finally putting him on administrative leave in March was a central focus of a House committee hearing Tuesday on overspending at the federal procurement agency.

Neely declined to show up for Tuesday’s session of the House Transportation Committee, claiming his Fifth Amendment right against self-incrimination in the investigation of a 2010 conference he organized at a Las Vegas casino for the GSA’s Western Region that cost more than $800,000, as well as other abuses.

The controversy, which includes allegations by an inspector general of personal travel under the thin guise of government business and an employee award program that exceeded spending limits, so far has focused on one region of the massive GSA – an agency with a multibillion-dollar budget and thousands of employees.

Coming in an election year, the scandal has become a political focal point, with Republicans seeking to frame it as a reflection of big government abuse while Democrats say the problem involved a few bad players rather than a rotten system.

Either way, the lasting image from Tuesday’s hearing, which lasted more than five hours, was past and present GSA officials trying to explain a complex management structure that proved unable to respond quickly to misconduct cited by the inspector general’s report.

For example, the panel heard that the GSA’s chief financial officer lacked direct oversight of spending by the agency’s regional structures. It also learned that Neely reported to two supervisors at the time of his alleged misconduct – one of them himself, as Neely was holding the post on an interim basis.

“This is an agency whose structure makes no sense,” said the committee’s ranking Democrat, Eleanor Holmes Norton, the delegate to Congress from the District of Columbia.

Neely’s other supervisor, Robert Peck, was fired April 2 after the inspector general’s report came out. At Tuesday’s hearing, Peck came under tough questioning over his stated lack of awareness of the spending excesses at the Las Vegas conference, which he attended, as well as his recommendation of a bonus for Neely after the conference.

Later, the GSA administrator who resigned April 2 due to the controversy told how she held several meetings at the White House in the last two weeks of March to discuss the problem.

Asked if she received guidance or orders at those meetings on how to proceed, Martha Johnson said she was explaining to White House officials how the GSA works.

“The meetings were about helping them understand what Mrs. Norton is so concerned about,” Johnson said. “… They don’t understand the internal workings of GSA.”

Committee Chairman Jeff Denham, a freshman Republican from California, opened Tuesday’s hearing by asserting that the inappropriate actions cited by the inspector general’s report may go well beyond the GSA.

“The purpose of this committee is to talk about the systemic problem: how deep it goes, the corruption, the fraud, the waste,” Denham said. “It is not within the Western Region but within GSA as a whole and possibly within other agencies.”

However, the GSA inspector general whose report set off the controversy said the only serious wrongdoing uncovered so far was in the region that held the Las Vegas conference organized by Neely.

At the same time, Inspector General Brian Miller said his team is looking at possible problems in other areas.

The GSA official who first raised questions about overspending at the Las Vegas conference said she supported the findings of the government investigation and the steps taken in response to the controversy.

“I share your anger and disappointment in GSA’s conduct,” said Susan Brita, a GSA deputy administrator.

Norton said that as bad as the problem was, the system designed to uncover such wrongdoing worked as intended, as shown by the inspector general’s report and the hearing.

“I am perhaps more shocked and saddened than most because I’ve sat on the subcommittee for more than 20 years and by and large have found GSA appointed officials and civil servants alike … to be among the most dedicated federal employees,” she said.

Denham, however, described the matter as involving “the distrust of the American public and its government.”

“This is about the waste of taxpayer dollars, and if you can sense my anger and frustration, you should see it at home, where we have got double-digit unemployment, the highest foreclosure rate in the nation, people out of work – twice the national average,” Denham said, accusing the GSA of stonewalling congressional investigators in an effort to hide the issue from the public.

At a similar hearing Monday before the House Oversight Committee, Neely claimed his Fifth Amendment rights in refusing to answer questions. He declined to appear at Tuesday’s hearing on the same grounds, Denham said.

The controversy involving a normally obscure federal agency has become politically toxic after reports and video clips of the lavish 2010 conference in Las Vegas were released. The revelation has prompted taxpayer indignation, embarrassed the administration and put a spotlight on wasteful spending by the GSA, which handles government real estate and other non-military procurement.

Much of the committee focus on Tuesday involved the management structure of the GSA, with panel members expressing frustration over a lack of clarity and accountability.

One exchange between Denham and Miller highlighted the ways that Neely, and presumably others, avoided strictures against supplying food at government work conferences such as the Las Vegas event by creating joke awards in order to hold ceremonies at which food was allowed.

“To get around the administration’s rule of not having food, they got around it by having an awards ceremony at every conference or every day of a conference?” Denham asked.

Miller responded: “According to witnesses that we’ve interviewed, it was a running joke in Region 9 that in order to get food, you had to give out awards – and many of these awards were silly awards.”

“One of our witnesses characterized them, I guess, as fake awards, jackass awards and things of that nature,” Miller said. “Now, getting back to the Western Region’s conference – they gave out awards for theatrical performances. We do not consider that a proper award. The award has to be for contributions to the work of the agency. “

Miller’s report listed the multiple excesses – more than $6,000 for commemorative coins for conference attendees, $75,000 for a team-building exercise to construct 24 bicycles for underprivileged children, the hiring of a mind reader as entertainment – as well as bypassing a staff event planner to pay outsiders to prepare the conference and repeated “scouting visits” to Las Vegas by officials and family members.

Denham repeatedly hammered Johnson, the former administrator who resigned earlier this month, over how Neely could have been allowed to continue to travel for his job after Miller first alerted her of potential problems in May 2011, and even after Miller’s final report arrived in February.

“I think it’s absurd,” the chairman said at one point of Johnson’s assertion that she took immediate action including putting Neely on administrative leave in March and then firing two top aides and resigning herself on April 2. Neely remains on administrative leave, drawing his salary, but could face criminal charges.

Johnson responded that she had to follow due process concerning personnel matters, but her answers provided little satisfaction to Denham, who repeated his questions several times in an apparent effort to trip her up.

Other questions involved a culture of intimidation allegedly created by Neely against underlings who complained. Peck said that he heard Neely was intolerant of being challenged and that the two discussed the issue more than once, but he was unaware of the intimidation alleged, such as poor performance reviews and threats of relocation.

On Monday, House Oversight Committee Chairman Rep. Darrell Issa asked why a former congressional aide to President Barack Obama remained in his top job at the GSA when he probably knew of the wrongdoing – or should have.

In later tough questioning of that official, GSA Chief of Staff Mike Robertson, Issa determined that a lawyer in the White House counsel’s office knew of the ongoing investigation of the GSA in the middle of 2011, nine months before the earliest time acknowledged by the administration.

However, Robertson later issued a statement to clarify his testimony to the committee, saying: “I only mentioned in passing the existence of an (inspector general) investigation as I bumped into a White House staffer that I regularly worked with on GSA issues. This was in late May or June of 2011.”

On Tuesday, Johnson said she received no orders from the White House on how to respond to the controversy, and Miller said he had no contact with the White House on the issue.

Johnson also repeated her opening statement from Monday, in which she said she found a badly managed GSA when she took over in 2010 after more than two years of interim leadership.

She added that the Western Region conference at the heart of the problem had become a “raucous, extravagant, arrogant, self-congratulatory event that ultimately belittled federal workers.”

Among videos of the conference that have surfaced is one of David Foley, a deputy commissioner of the Public Buildings Service, an arm of the GSA, appearing to mock congressional oversight. In it, he gave a talent show award to an employee whose video featured a rap about spending too much and joking about avoiding investigation.

Additional videos included one that seemed to make fun of President Barack Obama, as well as a fake red carpet ceremony with Neely boasting that his goal was to make the conference “over the top.”

Details also emerged of the employee incentive program, which violated limits on awards or gifts.

Monday’s hearing included several harsh exchanges, including when Issa questioned Robertson, a former staffer for Obama in the Senate, about when he first told anyone in the White House of the investigation of GSA.

After a long back-and-forth, Robertson eventually said it was within a few weeks after GSA officials were first notified by the inspector general of a problem in May that he told a person in the White House counsel’s office, whom he identified as Kim Harris.

White House salary disclosures for 2011 list a Kimberley D. Harris as a deputy assistant to the president and deputy counsel to the president.

Previously, a senior administration official told CNN that the White House was notified by GSA about the final inspector general’s report shortly before it was released last month, more than nine months after Robertson said he told Harris about the ongoing investigation.

Issa acknowledged that over-the-top GSA spending existed during the preceding Bush administration, though he disputes figures released by Obama officials that show a 102% increase from 2006 to 2008. However, information provided by his staff on Monday showed the increase from 2006 to 2008 approached that figure.

“Wasteful spending is a problem that transcends multiple administrations,” he said, adding that it is up to the current administration to halt it now.