[Senate Hearing 113-124]
[From the U.S. Government Publishing Office]
S. Hrg. 113-124
NOMINATION OF DANIEL M. TANGHERLINI
=======================================================================
HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
NOMINATION OF DANIEL M. TANGHERLINI, TO BE ADMINISTRATOR U.S. GENERAL
SERVICES ADMINISTRATION
__________
JUNE 18, 2013
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota
Richard J. Kessler, Staff Director
John P. Kilvington, Deputy Staff Director
Troy H. Cribb, Chief Counsel for Governmental Affairs
Deirdre G. Armstrong, Professional Staff Member
Keith B. Ashdown, Minority Staff Director
Christopher J. Barkley, Minority Deputy Staff Director
Sara Beth Groshart, Minority Counsel
Trina D. Shiffman, Chief Clerk
Laura W. Kilbride, Hearing Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Carper............................................... 1
Senator Coburn............................................... 3
Senator Ayotte............................................... 10
Senator McCaskill............................................ 14
Prepared statements:
Senator Carper............................................... 27
Senator Coburn............................................... 30
WITNESSES
Tuesday, June 18, 2013
Daniel M. Tangherlini, to be Administrator, U.S. General Services
Administration
Testimony.................................................... 5
Prepared statement........................................... 32
Biographical and financial information....................... 36
Letter from the Office of Government Ethics.................. 55
Responses to pre-hearing questions........................... 58
Responses to post-hearing questions.......................... 94
Prepared Statement of Paul Strauss, U.S. Shadow Senator, District
of Columbia.................................................... 112
NOMINATION OF DANIEL M. TANGHERLINI,
TO BE ADMINISTRATOR, U.S. GENERAL SERVICES ADMINISTRATION
----------
JUNE 18, 2013
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:33 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Thomas R.
Carper, Chairman of the Committee, presiding.
Present: Senators Carper, McCaskill, Heitkamp, Coburn, and
Ayotte.
OPENING STATEMENT OF CHAIRMAN CARPER
Chairman Carper. The hearing will come to order. Daniel,
welcome to you and your family and our other guests. We are
happy that you are willing to assume these responsibilities if
confirmed.
For decades, it has been said that there are two letters, a
couple of Chinese words, one for danger and one for
opportunity. I am told that the symbol for those is pretty much
the same. Some metrics on the Chinese language, I would point
out that this is an overly simplistic interpretation of the
word, but I think that out of popularity, the axiom that crisis
brings opportunity persists because there is a large dose of
truth. I oftentimes quote Albert Einstein who says, in
adversity lies opportunity. I do not know if it was Chinese,
but you get the drift.
Last spring a crisis unfolded at the General Services
Administration (GSA) when a report of GSA Inspector General
(IG) detailed a reckless, wasteful, and in some instances,
illegal spending of some employees of GSA's Public Building
Service at a lavish conference. These employees used public
resources to reward themselves with catered parties, team-
building exercises that involved building bicycles, and
conference souvenirs.
Unfortunately, this particular conference was not an
isolated instance of bad judgment. In looking into GSA's
spending practices, Congress learned of other wasteful
spending, extravagant travel, misuse of government charge
cards, questionable employee awards programs, and another
conference where taxpayers paid for GSA employees to beat on
drums. These are just a few examples.
These scandals all shook the trust of Congress in GSA--the
agency whose primary purpose is to make our Federal Government
more efficient and more frugal in spending taxpayer dollars.
Taking over as the Acting Director of GSA last April, Dan
Tangherlini understood that this moment of crisis afforded an
opportunity to make GSA a better agency. And to his credit, he
did not approach the job with a view to do the minimal amount
necessary to sweep the scandal under the rug. Rather, he
undertook what he called a top-to-bottom review of the whole
agency.
Mr. Tangherlini has put in stronger controls over spending
within GSA. He has consolidated activities related to financial
management, human resources, information technology (IT),
acquisition, and other administrative functions. These changes
should make GSA a leaner agency that is better focused on its
core functions of helping other agencies make smarter choices
in managing their property in acquiring goods and services.
Longstanding challenges with both of these areas, property
management and procurement, combined with the current fiscal
crisis, increase the urgency of making sure that GSA is a go-to
place for agencies to be able to do more with less. GSA can and
should be at the center of our government's efforts to resolve
our major management challenges.
The management of real property has been on the Government
Accountability Office's (GAOs) high-risk list of troubled
problems for about a decade. Our government has tens of
thousands of properties that are either no longer needed or
only partially used. But we also lack accurate, comprehensive
data that would enable better decisions about how agencies use
their property. Our government also relies too much on costly
leases, when the cheaper option over the long run would be to
own the property. Additionally, the Federal Government has a
backlog of a billions of dollars in needed repairs and
maintenance which, if unaddressed, will increase the cost of
maintaining the property in the long run.
In the area of acquisition, GSA plays an important role
with about 10 percent, roughly $50 billion--of total Federal
spending flowing through GSA's contracts and other services.
But there is much room for improvement. For example, GAO has
done several studies showing that there is enormous potential
for the government to save billions of dollars each year
through strategically sourcing commonly used goods and services
through governmentwide contracts that fully leverage the buying
power of the Federal Government, much like large companies do
for themselves.
GSA deserves a leader who understands the complexity of
these management challenges and who could work well with the
heads of other agencies to help them meet their needs, and I
think they will have such a leader now in Dan Tangherlini, if
he is confirmed by the Senate.
Mr. Tangherlini's service as Acting Administrator of GSA,
in and of itself, shows he is the logical choice to be
confirmed as Administrator, but he also brings a wealth of
other experience in public sector administration. He served, as
you may know, for 6 years at the Office of Management and
Budget (OMB) early in his career, has a strong understanding of
the budget process, as well as program planning and financial
management. He then served a year in the Policy Office of the
U.S. Department of Transportation (DOT). He went on to a string
of impressive jobs at the local level: Chief Financial Officer
of the District of Columbia Metropolitan Police Department,
Interim General Manager of the Washington Metropolitan Area
Transit Authority, Director of the District of Columbia's
Department of Transportation, and finally, City Administrator
and Deputy Mayor of the District of Columbia.
In 2009, President Obama nominated and the Senate
confirmed, Mr. Tangherlini as the Assistant Secretary for
Management at the Treasury Department, where he served until he
was named Acting Administrator of GSA.
Mr. Tangherlini's confirmation will also bring badly needed
stability to the helm of GSA. As my colleagues know, I am a
firm believer in the power of leadership. Leadership is an
important and often undervalued asset that can determine
whether or not an organization of any size or scale can
effectively accomplish its mission. Leadership is particularly
important to turning around struggling organizations and
steering through a crisis.
One of GSA's main problems over the last decade has been a
lack of stable leadership, which is, unfortunately, a problem
throughout the Executive Branch. GSA has had eight different
leaders over the last 8 years, all but two of them in an acting
capacity. The last two confirmed leaders of GSA, unfortunately,
each resigned following scandals.
Mr. Tangherlini has a well-deserved reputation of being
someone who knows how to get a job done and who never stops
looking for ways to do the job better, and that is exactly what
we need at GSA. I look forward to your testimony. I have read
it. Look forward to hearing it today, the opportunity to
discuss with you and all of us your priorities for GSA.
Thank you for your willingness to do this, and to your
family, especially your wife, your children. Thank you for your
willingness to share your husband and your father. And to your
dad, who is sitting out there, a spry man of 89. He just told
us, Dr. Coburn and I, he ran the Rock-and-Roll Marathon at the
age of 89. Whatever you are eating and drinking, we want to
have some of it, so great to see you.
Dr. Coburn.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. Well, welcome. I am going to put my
statement in the record. Enjoyed our visit in my office. Eight
years ago next month, Tom Carper and I had a hearing on GSA and
I would tell you nothing has essentially happened in 8 years.
We had a frank discussion in my office about the problems. I
believe you have the capability to actually turn this around.
And I am going to have a lot of questions for the record. I am
not going to be able to stay through the full hearing.
But one of the things is the recent IG report, which has to
be the most demoralizing thing for your contracting officers.
Where we have contracting officers doing the right thing and
their management, through complaints of the well-connected,
override good decisions, and the result of that is undermining
the capability of the very people we depend on to make your
agency viable and effective.
So I know you were not pleased with that report. I guess
the thing that I would ask for Senator Carper and myself is for
you to have good communications on your progress as you try to
turn this around, how you are solving the problems. I do not
want you to have to come up here all the time and give us a
report. But we can make that happen if, in fact, we do not get
great communication.
So I hope you would view us as a partner in enabling you to
carry out what you need to do to make sure--the Federal
Government is the largest buyer of everything in the world and
there should not be one instance that we do not get the best
price and the best value for everything that we do, whether it
is buildings, whether it is pencils and erasers, whether it is
computers, whether it is stuff. I do not care what it is. There
should not be one thing. And that ought to be GSA's goal.
I would just tell you, when we look at sequester, the
gentleman sitting before us today could save us a third of that
every year if GSA was highly effective. And so, some of the
pains being experienced by other Federal employees today would
not necessarily have to be there if we had really made some
progress from 8 years ago when we sat in this Committee and
went through all the problems at GSA.
And unfortunately, they are still there. And what that
means, as Senator Carper alluded to the fact that the average
length of tenure is less than 2 years for confirmed managers of
GSA. Leadership really makes a difference. I think you have the
qualities, the background, the history, and the experience to
do that, and my hope is that you will take the charge, not just
to run the GSA, but be responsible for us, with us, in terms of
eliminating the excesses, the waste, and the poor pricing that
we get on so many things.
So I thank you for being here. I welcome your family. These
are family commitments. This job is going to own Dan for a long
time, hopefully, and so, what that means is you all will make a
sacrifice as he does the very important work that he is called
on to do. So I welcome you. I am going to vote for your
confirmation. Hopefully, we do not have to have a vote.
Hopefully, we can unanimous consent (UC) it and we can get you
in there with the full power of being not the Acting Director,
but the Director. Thank you for being here.
Chairman Carper. Thank you, Dr. Coburn. I am going to just
do a brief introduction of Dan and then we will ask him
questions, ask him to give any oaths and let him go at it. Dan
Tangherlini has filed responses to a biographical and financial
questionnaire. He has answered pre-hearing questions submitted
by the Committee, and had his financial statements reviewed by
the Office of Government Ethics. Without objection, this
information will be made part of the hearing record with the
exception of the financial data which are on file, available
for public inspection, in the Committee office.
The Committee rules require that all witnesses at
confirmation hearings give their testimony under oath. Mr.
Tangherlini, I am going to ask you to stand and raise your
right hand.
Do you swear that the testimony you are about to give the
Committee will be the truth, the whole truth, and nothing but
the truth, so help you, God?
Mr. Tangherlini. I do.
Chairman Carper. Please be seated. You are welcome to
proceed with your statement. Feel free to introduce your
family, others in the audience that you would like to, and
again, we are delighted that you are all here. Thank you.
TESTIMONY OF HON. DANIEL M. TANGHERLINI, TO BE ADMINISTRATOR,
U.S. GENERAL SERVICES ADMINISTRATION
Mr. Tangherlini. Thank you very much. Good morning,
Chairman Carper, Dr. Coburn, and Members and staff of the
Committee. I want to thank you for inviting me to appear before
you today. I am honored to have been asked by the President to
serve as the Administrator of the U.S. General Services
Administration.
I am pleased to be joined here today by my wife, Theresa, a
pediatric nurse practitioner; my oldest daughter, Cassandra, a
hard-working student; my parents-in-law, Angelo and Connie
Picillo; and my father, Frank, my inspiration for public
service, a veteran of the Second World War who served in the
101st Airborne at the Battle of the Bulge.
All of the challenges that we face as a Nation and, I hope,
should I be confirmed, to face as a leader of GSA, pale in
comparison to what my father and his generation faced when they
defended the world against hatred and tyranny. He challenged me
and my brothers to volunteer, to serve, and to work every day
to leave the world a better place than the one we were given.
Thanks, Dad.
My younger daughter, Francesca, is unable to be here today
because she is with a friend and her family in Disney World. My
mother, Jane Kjems, a small business owner, also could not
attend today.
Just over one year ago, President Obama appointed me as the
Acting Administrator of GSA during a very challenging time for
the agency. From my first day at the office, I have worked with
the women and men of GSA to restore the trust of the American
people and to ensure that the agency provides them and the
government with the best value in real estate, acquisition, and
technology services.
I am very proud of what we have been able to accomplish at
GSA over the past year. Since April 2012, we have worked
closely with our Inspector General, Brian Miller, to ensure
that our entire agency is living up to the highest standards of
public service.
To that end, GSA has engaged in a comprehensive, top-to-
bottom review of the agency, gathering input from individuals
at every level of the organization, as well as from our
partners in the Federal Government and the private sector. This
process has helped us cultivate a culture of continuous
evaluation and improvement throughout GSA.
More importantly, this has led to concrete results,
transforming GSA into an improved organization, one that offers
common sense, business-like solutions to our Federal partners.
During the past Fiscal Year, we reduced our spending on travel,
IT devices and printing, to end the year 43 percent lower than
our Fiscal Year 2010 baseline for those items.
In travel alone, we saved $28 million by revising our
internal travel and conference policies. Last year, we reduced
bonuses throughout GSA by 64 percent, including the elimination
of all bonuses within the Administrator's office. This change
was accompanied by a targeted hiring freeze designed to ensure
that any new hires were aligned with the outcomes of our
ongoing review.
In addition, we created more than $5 million in savings as
a result of implementing suggestions offered by GSA employees
during our Great Ideas Hunt. We have also begun the process of
consolidating key administrative service functions to eliminate
unnecessary redundancy and better align internal operations. We
expect this effort not only to help us become a more efficient
and effective agency, but also to save $200 million over the
next 10 years.
I am proud of the work that we have done together since
April 2012, and I am excited at the prospect of helping to
shape GSA's future. Everyone at GSA is working to ensure that
we provide even more savings to our partner agencies. I believe
that one of our most critical strategies in this effort is the
expansion of our market share of Federal spending. By assuming
more of the government's acquisition market share, we will not
increase savings, but enable better, more consistent management
of our resources.
Simultaneously, we are developing common sense solutions to
help agencies across the government shrink the Federal
footprint and find ways to dispose of unneeded or unused
Federal properties, which can, in turn, contribute to local
economies. We are working with the real estate industry through
public-private partnerships to explore the possibility of
exchanging outdated Federal properties for the construction of
new facilities that meet the needs of these agencies today.
GSA is also developing new, more efficient ways to utilize
Federal office space. Our own historic headquarters is a test
bed for this approach. We are transforming what was traditional
office space into a collaborative, flexible work environment
designed to facilitate cooperation, mobility, and improve
productivity. Those changes will make it possible for us to
eliminate more than $24 million in annual lease payments.
We are hoping to take the lessons we have learned from the
transformation of our workplace and make them available to the
entire Federal Government. At the same time, President Obama's
Fiscal Year 2014 Budget will enable us to make a significant
investment in America's Federal building infrastructure. This
budget restores GSA's authority to fully use incoming rent
funds to make a significant $1.3 billion reinvestment in the
repair and maintenance of GSA's inventory.
All of us at GSA understand that every taxpayer dollar
counts and that its stewardship is our most significant
responsibility. We know that by providing services that offer
both savings and results we help agencies focus on their own
important missions. That is why we are evaluating and re-
evaluating our internal processes and making necessary changes
to ensure measurable outcomes.
I am honored to have served with this agency over the last
14 months, and with your approval, I hope to have the
opportunity to continue working with the women and men of GSA
to accomplish our important mission. Thank you very much.
Chairman Carper. Thanks for that. Let me just say, Dr.
Coburn has another engagement. Do you want to just take a
minute and just ask a question or two?
Senator Coburn. No. I actually have a very well-thought out
list of questions that I am going to give Dan the time to think
about and answer. And then I will visit with him by phone
afterwards.
Mr. Tangherlini. Great, thank you.
Chairman Carper. Thank you. One of the first things I
remember doing with a newly elected Senator, Tom Coburn, was
actually going out to Chicago and visiting an old Postal
building which had been vacant for years, and talking about
that building and other buildings like that around the country.
That building was owned by, I guess, the Federal Government, by
the Postal Service. But as you know, we have a lot of
buildings--I alluded to them in my statement--that are
underutilized and, in some cases, not utilized.
But he and I have worked on this for over a half-a-dozen
years, and I think the Administration has tried in recent years
to do something about it, with some success, but we still have,
as you know, too many properties that we are not utilizing or
we do not need. We maintain, we provide utilities, we provide
security. It is just foolhardy.
One of my great frustrations in the 12 years I have been
here is our inability to develop a comprehensive approach to
dealing with this issue. The Administration suggested that we
create a Base Closure and Realignment Commission (BRAC)-like
process to identify buildings and they would send us a list and
if we did not vote them down, then those would be closed or
auctioned off or sold.
We have worked to change the current process, and now as
you know, now when Federal properties are unutilized,
underutilized, they need to be made available, under law and
the McKinney-Vento Act, they need to be made available to
homeless groups. And if you will look at the number of
properties over the last 20 years that ended up being turned
over to homeless groups, it is a meager list and it grows more
meager by the year. I think maybe in the last year there was
one property.
What we suggested or what some of us put together in the
legislation--I think it was Dr. Coburn's part of it, I think,
Senator Portman and myself--was an approach that said, why do
we not, rather than just turning over these properties to the
homeless groups, why do we not allow them to be sold and some
percentage of the sales, the money from the sales proceeds,
would be turned over to the homeless groups? And the homeless
groups were afraid if that happened, then their appropriations
would be cut back dollar-for-dollar for the allocation that
would come out of the sales proceeds. But we are just not
getting where we need to go.
The other problem, maybe just as big a problem, is we have
the incentives from this line with respect to agencies either
leasing space or buying space. We had a great example presented
the other day, I think from the Nuclear Regulatory Commission
(NRC), for whom a new building was built, large building was
built, making three buildings.
And the idea was we are going to build all these new
nuclear power plants, we are going to build like dozens of new
nuclear power plants, and the hundred or so that we have, a
bunch of them are coming up for license renewal, so there is a
lot going on at the NRC and they needed space for that.
Now we find out that we are not going to have dozens of new
nuclear power plants, not anytime soon. We are going to have
four under construction right now, but the level of activity is
down, the need for the NRC staff is down, and how do we meet
the need? But I remember looking at the cost per square foot
for the new building and a couple of the existing buildings.
Of the buildings that were listed, the one that was the
cheapest was the one they owned. It was like half price in
terms of the overall cost, the life cycle cost for the NRC. So
these are two. I just want to lay this on the table. Let us
have a good discussion. This is going to be my only question in
the first round here. But just think out loud for us.
What can we do together with the Administration, with GSA,
working with GAO, others, what can we do?
Mr. Tangherlini. I appreciate the question, Chairman
Carper. We have had----
Chairman Carper. Before you do that.
Mr. Tangherlini. Oh, I am very sorry.
Chairman Carper. I am supposed to ask you three standard
questions.
Mr. Tangherlini. Oh, yes, sir.
Chairman Carper. These are like easy questions, like a
warm-up.
Mr. Tangherlini. OK.
Chairman Carper. So I will go ahead and ask those. You have
heard these questions before. Is there anything you are aware
of in your background that might present a conflict of interest
with the duties of the office to which you have been nominated?
Mr. Tangherlini. No, sir, I am not.
Chairman Carper. OK. Do you know of anything, personal or
otherwise, that would in any way prevent you from fully and
honorable discharging the responsibility of the office to which
you have been nominated?
Mr. Tangherlini. No, I do not.
Chairman Carper. OK. Do you agree, without reservation, to
respond to any reasonable summons to appear and testify before
any duly constituted committee of Congress, if you are
confirmed?
Mr. Tangherlini. Yes, I do.
Chairman Carper. Good, thank you. All right.
Mr. Tangherlini. Thank you.
Chairman Carper. The easy one is out of the way.
Mr. Tangherlini. Now the hard one.
Chairman Carper. Yes, please.
Mr. Tangherlini. I appreciate your continued interest in
the subject. We have had a number of conversations, even
including with Secretary Donovan from the Department of Housing
and Urban Development (HUD), as well as important policy
officials from OMB. And as I have said before on this issue, I
think the three ingredients you need to cook anything up in
Washington are there. You have a proposal from the
Administration, you have a version of a bill from the House,
and you have your own version of a bill here in the Senate.
So the question is, can we work together going forward to
coalesce around some basic principles. I think we all share the
view that we need to more efficiently and effectively use these
Federal assets. We need to not only ensure that we are fully
utilizing the assets we have under our control, but that we are
realizing the most value from them and disposing of them
quickly when we do not need them anymore.
The disposal process is complicated, in part, because you
want to make sure, before you get rid of an asset and you lose
it forever, in essence, to the Federal Government, that you
have made sure you have checked with everyone who may have an
interest or a need for that asset. In addition, there are
strong public policy concerns associated with the legislation
that you referred to, McKinney-Vento, that suggest that we need
to make sure that we are also providing opportunity for the
homeless to potentially use it.
However, as you also point out, the number of times that it
is actually used for that is very low. So I know our past
discussions have been, how can you create a mechanism by which
you address the needs and interests and issues associated
with--the homeless advocacy groups? At the same time, how do
you move the process forward quickly?
And I think that is why the legislation is continued, we
continue to work on it. In the meantime, I think that there is
an awful lot of work that GSA can do under current authorities
to move more quickly and more thoughtfully in terms of
disposing the assets, at least the ones that we have under our
control.
So we have been working very closely with agencies to try
to help them use authorities that we have, such as out-leasing
or even an exchange authority that we are exploring that would
allow us to quickly move the asset out and have the agency get
something back in return. So, for example, we just issued a
Request for Proposal for interested parties in cooperation with
NASA to have an out-lease of something called Hangar One on the
Moffett Federal Airfield that would exchange----
Chairman Carper. Did you say the Moffett?
Mr. Tangherlini. Moffett Federal Airfield out in----
Chairman Carper. Hangar One where I was trained to be a
Naval flight officer.
Mr. Tangherlini. Oh.
Chairman Carper. It is a small world, is it not? Small
world.
Mr. Tangherlini. Exactly right.
Chairman Carper. I go back to Moffett Field to Hangar Two,
which is we had the Navy P3 world, what we used, the P3
aircraft, in the Hunt for Red October.
Mr. Tangherlini. Right.
Chairman Carper. It was either Hangar Two or Hangar Three.
They are huge flight hangars that you find all the memories on
the walls of the squadrons there, which are now empty, of a
patrol squadron, the Marlin Men. That was my squad. If you
actually look through there, my name used to appear on that
wall.
Mr. Tangherlini. I think the California Air National Guard
still----
Chairman Carper. Yes, they were there. They are holding it
down.
Mr. Tangherlini. But Hangar One, which is this historic
property that needed to have some environmental remediation
that required unskinning it or deskinning it, we have asked to
see if there is anyone out there who will trade the use and
occupancy of the airfield in exchange for the historic
renovation of Hangar One.
So here we are taking an asset that we cannot afford to do
the next bit of maintenance on that is not fully utilized, and
we are asking the private sector if they could partner with us
to get the historic preservation investment made, and in
exchange, then, to have access, limited access to the use of
their airfield.
Similarly, we suggested in our request for information
(RFI) for the Federal Bureau of Investigations (FBI)
headquarters, the idea of partnering with private sector
entities to explore the possibility of exchanging the existing
FBI headquarters, which no longer meets the need of the FBI,
for a new FBI headquarters, or some part of a new FBI
headquarters nearby, that does actually meet the needs and
would be more efficient and effective and sustainable in terms
of both financially and environmentally of managing the
property for the FBI.
So we think that we have a number of authorities that if we
work closely with Congress and we are creative, that maybe we
can move on the margins more of these properties out, create
better incentives for the agencies to participate, and at the
same time, then, give us room to have the conversations we need
to have between the two branches, the Congress and the
Administration, to push forward some kind of legislation to
make our asset disposal process more efficient.
Chairman Carper. Before I turn it over to Senator Ayotte,
let me say that if you are confirmed, and I am encouraged that
you will be, a month after you are confirmed, I just want you
to come over, sit down with Dr. Coburn and myself, Senator
Portman and others who are interested in this, and let us just
figure out what we can do. I appreciate what you are trying to
do under your own authority, but what we need to do to enhance
your abilities, to facilitate what you are trying to do.
I do not want to be here 6 years from now and saying, We
still have X thousands of unused properties, surplus properties
that we ought to sell, we ought to get rid of. What are we
going to do about it? I want it to be for us to have dealt with
this issue in a smart way. Thank you. Senator Ayotte.
OPENING STATEMENT OF SENATOR AYOTTE
Senator Ayotte. Thank you, Mr. Chairman. I want to thank
you for being here today and for your willingness to serve as
head of the agency, and thank your family for being here as
well. I wanted to ask about the recent June IG report, which
Senator Coburn referenced in his opening statement, that is
very troubling. Their conclusion that the management improperly
intervened in the award and extension of multiple award
schedule (MAS) contracts and resulted in the contracts being
inflated, pricing, unfavorable contracting terms and
extensions.
If you look at it, to have the GSA contracting officers
tell the Office of Inspector General (OIG) that they feared for
their jobs because they were trying to do the right thing and
protect taxpayer interests; yet, companies were able to go
above their head, either get rid of them to get a more
favorable contracting officer or put pressure on them to change
a decision that was in the best interest of the taxpayers.
This is really troubling in terms of culture. And we want
the contracting officers, obviously, to feel empowered. We want
everyone in the GSA to be focused on saving taxpayer dollars.
So what are you going to do to change this culture? And what
will you do to hold the people accountable that improperly
overrode the decisions of the contracting officers so that
management understands that this is unacceptable within the
agency?
Mr. Tangherlini. I appreciate that, Senator. I share your
concern. In fact, let me just start by saying we have already
taken some personnel action directly related to an individual
named in that report. We are going to continue to pursue and
explore any other action we need to take directly related to
the evidence or the issues raised in the report.
But like you, I am more concerned, or I am equally
concerned, about the broader issues suggested in the report,
that our contracting officers are not given the control and the
authority, and frankly, the support by the organization that
they need.
So what I have done over the last 14 months to try to
change the view within the organization about who has the
authority and how can people relate with each other? I started
in the first week by sending out a joint letter with our
Inspector General, Brian Miller, telling everyone within the
organization, if they see something that they are uncomfortable
with, they think is wrong, suggestive of waste, fraud and
abuse, it is imperative that they raise their concern with
their co-workers, their supervisors, and equally importantly,
with the Inspector General.
The Inspector General and I share a common desire to have
the best, most honest process that we possibly can have for
running the organization. When this report came out, our new
head of the Federal Acquisition Service (FAS)--and I have
appointed in the last couple of months, a new head of the
Federal Acquisition Service, a person who has not only
experience in the public sector working in several agencies,
but also quite substantial experience in the acquisition
environment in the private sector as well. He sent out a memo
to his entire staff including the IG report stating that the
behavior described in this report is unacceptable. He wants
every contracting officer to feel empowered to raise their
concerns to him and/or the IG, whoever they feel more
comfortable with, in the minute they feel any sense of any of
the kind of behavior that was described in the report.
I followed Tom's memo to the FAS staff with another memo to
the entire contracting officer staff of GSA and said, If this
exists anywhere else in GSA, we want to know about it. We want
to support you in reporting it. And so, hopefully what we can
do is begin to build a sense within the entire organization
that the entire organization has each other's back for getting
the highest quality outcome, the best results, and the lowest
cost, because if we want to grow the market share of GSA, if we
really do want to achieve what we were set up to achieve, then
people have to just really have trust and faith that they are
getting the best outcome when they take the GSA route.
Senator Ayotte. Let me just say, I know you cannot talk
about personnel actions here, but probably one of the most
effective things you can do is to hold the people who have done
this accountable so that other managers in this situation see
that, If I go down this road, it is going to have a consequence
to my job. I think that--I appreciate--I know you cannot talk
about that here, but that will set a culture, along with the
culture that you are trying to set from the top, so that is
part of how people are judged.
And so, I appreciate that. And I think this is a very
serious issue for the challenges that you face in this
organization. And with respect to those challenges, I think we
all know that you have talked about this issue at length, but
it really struck the American people when they heard about the
conference, the spending of the $822,000 at the conference to
celebrate, share, and showcase the diverse professional
personal talents that obviously sent a shockwave through your
organization.
You have testified that last year GSA eliminated 50
conferences and saved more than $28 million. I commend you for
that. But the American people are still very suspicious and
they are feeling that this conference and the abuses we saw
there with their money really sent a shockwave as to what the
GSA was doing with taxpayer dollars.
And so, I wanted to just ask you, the fact that you could
eliminate 50 conferences and save $28 million, and the fact
that this hugely egregious conference occurred, what is it that
was within the organization, the culture, that thought that was
an appropriate use of spending of money, and how do you see
yourself changing that culture?
And I think it goes hand-in-hand with the other issue I
just asked you of empowering people that their job is to save
taxpayer dollars, not to find ways to spend them in
irresponsible ways as that conference was?
Mr. Tangherlini. I think you described in the question my
challenge for the last 14 months, almost from the first day I
was there. I can tell you one of the things that very much
reassured me that there was hope for us, actually, making a
substantial difference in the organization; that some of the
angriest people I have encountered about what took place at
that conference were GSA employees, people who have committed
decades of their life and their public service careers to an
organization that is really built around the idea that if we
leverage the scale and the scope of the Federal Government, if
we do it once and we do it well, we can drive down costs and
push up results.
What happened there was the exact opposite of everything
that folks had committed to doing in their public service
careers. So what we have tried to do is reinforce the core
principles of what the agency is and is about, and it starts
with some kind of management 101 stuff. We rewrote the mission
statement so you actually know what the agency does.
We want to provide the best value in real estate
acquisition and technology services to Federal agencies and the
American people. Before, you did not exactly know what the
agency was doing, so it is kind of hard to then focus on great
outcomes.
We then established six priorities and those priorities,
chief among them, is to provide the best value, and that means
get the best price, reduce the long-term costs, find ways to
help agencies deliver their services more efficiently. And then
we have done something to try to empower everyone within the
organization to participate.
The Great Ideas Hunt, which I referred to in my testimony,
was leveraging some social media technology we have within GSA
to ask everyone in GSA, what are their great ideas for reducing
costs? We got over 600 ideas, but more importantly, we got over
20,000 comments. People across GSA were engaged in a
conversation that was not just within their stovepipe, but
across the enterprise and came up with great ideas, ideas that
have saved us, just in the last year, over $5 million.
We want to keep that dialogue going and we really want to
build a sense of accomplishment that comes from driving down
the costs and driving up the value, and not some sense of
accomplishment that comes from a celebration.
Senator Ayotte. Well, I thank you for what you are doing.
Your job and this job is very important. You have already taken
over in very difficult times and are asked to serve, to change
a culture which is not easy in an organization, but you are the
taxpayer watchdog.
Mr. Tangherlini. Right.
Senator Ayotte. And we are here to support you with that.
And so, whether it is the Federal property issue or other
issues that you are trying to address, we want to work with
you. It is a tough job, but the organization needs strong
leadership and consistent leadership on this issue so that they
view their role as the taxpayer watchdog, and I appreciate you
being here. Thank you.
Mr. Tangherlini. Thank you, Senator.
Chairman Carper. I would just say as a follow-on to Senator
Ayotte's excellent line of questioning. One of the things we
have tried to do here in this Committee is to provide some
leadership, just like the kind of leadership that I think Dan
is trying to provide at GSA, leadership to change the culture
within the Federal Government. We cannot do it by ourselves. He
cannot do it by himself. GSA cannot do it by themselves. OMB
cannot do it by themselves. GAO cannot do it by themselves. All
the Inspector Generals cannot do it by themselves.
But if we somehow can figure out how to pull together and
pull in the same direction, we could have a huge impact. I am
encouraged with what you are doing at GSA and what else you
might be able to do if we actually got you confirmed. Although
we have a bad experience. The only two confirmed
Administrators, Senator McCaskill will know, in 2 years ended
up having to step down. So maybe----
Senator McCaskill. Third time is the charm.
Mr. Tangherlini. Thank you.
Chairman Carper. We hope so.
Mr. Tangherlini. I took a look into that history before I
got here.
Chairman Carper. All right. Senator McCaskill.
OPENING STATEMENT OF SENATOR MCCASKILL
Senator McCaskill. Thank you. I am not surprised that no
one has gotten into the weeds on this subject, so bear with me
while I get into the weeds on one of my favorite subjects. And
maybe my focus on this will give you more ability to move
mountains in this regard at GSA.
In 2009, there were no fewer than five different agencies,
eight different contractors, and dozens of databases containing
information that was relevant to good business practices around
government contracting.
The Subcommittee that I worked on at the time did some work
around this issue, these Federal databases and how worthless,
frankly, they were at getting at the idea that there should be
a single portal where somebody who is contracting something to
buy for the Federal Government can get the information
necessary about problem contractors, about cost, price, scope,
all of the things that we duplicate over and over and over
again many different ways, many different times across the
Federal Government.
At the time, I expressed great concerns about how well this
would go, that it was a massive undertaking, and that there
were all kinds of land mines along the way. This is one of
those times I hate to say that I was right, but it appears that
I was in that GAO has now recommended reassessing is the system
for award management (SAM) and either terminating the SAM
development entirely, maintaining the current acquisition
approach, which is not good, or pursuing a whole different
acquisition strategy for this system for award management.
I want to ask you about that. In your questionnaire
response, you said that the Federal Acquisition Service and the
chief information officer are conducting an in-depth analysis
of SAM. First, let me ask you, when do you expect that analysis
to be complete?
Mr. Tangherlini. I think we will actually have some results
that we can work through the entire acquisition community this
summer.
Senator McCaskill. OK, good. We will anxiously await that
and hopefully you will share that with us so that we can,
together, figure out the best way to move this ball. It also
appears, cost containment, cost growth and resource constraints
have happened at the same time.
Mr. Tangherlini. Right.
Senator McCaskill. So you sought $53 million for SAM, but
only received $7 million. Right now, the timeline has slipped.
According to GAO's 2012 report, under the current schedule, the
final phase we had hoped for early 2014. Now it has slipped to
2015. As we slip this timeline, it is robbing Peter to pay Paul
because the underlying legacy systems have to be maintained and
that is just wasted money down the drain.
So let me ask you, how realistic do you think the current
timeline for implementation of SAM is, the 2015 timeline?
Mr. Tangherlini. Well, and I think that the timeline is
directly related to those options that we are working closely
with OMB and the acquisition community to develop. So the
bigger point really has to be, what lessons did we learn from
SAM? And I think you were right in both instances. I think you
were right that we needed to reform the acquisition systems and
create a new, modern, integrated acquisition environment.
I think you were also right that it was very challenging
and it was going to be very hard for us to pull off. We
demonstrated the latter part, frankly, in our first version
that came out of SAM last summer. I will say, though, at the
same time, we have made certain progress because of the
integration of those systems. We have gone from the number of
vendors with actual representations and certifications, filed
representations and certifications from less than a third to
more than two-thirds.
So even with the problems we have had with the system, we
have been able to improve the quality of the data that resides
in the system. I think we have also learned some incredibly
valuable lessons within GSA, how we should manage information
technology development programs, and giving it to our policy
shop, the Office of Governmentwide Policy was a big mistake.
Senator McCaskill. Yes.
Mr. Tangherlini. We have moved it over to be jointly
managed by the Federal Acquisition Service because this is an
acquisition system after all. These are the folks who are
actually going to have to use it.
Senator McCaskill. And the tech guys.
Mr. Tangherlini. And the tech guys, right, working with the
IT folks. So I think what we owe you is a better set of answers
of how we are going to move forward, how we are going to ensure
that we are making progress consistently along the way, some
kind of continual reporting of what that timeline really is.
And I think we should be realistic about the timeline
because this is a very complicated area. However, if we can
really get a handle on creating an integrated acquisition
environment, I think that is a big key to us figuring out a way
to reduce the cost of contracting, the amount of duplication
within contracting, and even helping us get better value and
lower prices.
Senator McCaskill. Well, and the oversight.
Mr. Tangherlini. Exactly, right.
Senator McCaskill. I mean, the biggest problem--frankly, we
have been able to enter government contracts without a lot of
problems. The issue is how well have we monitored those
contracts for performance and have we gotten value out of those
contracts. There has been an awful lot of siloed responsibility
around contracting and contract management, and people who wash
their hands of it once the ink was dry, and it was not easy
from that point forward, doing the monitoring that was
necessary.
We have seen this across government, not just in the
Department of Defense, which is the biggest offender, has
traditionally been the biggest offender, but certainly across
government. So I really care about this. I would love your time
at GSA.
I think the whip cream and cherry on top of the sundae for
your time at GSA would be for you to leave there with an
integrated, close to single portal system for contract
acquisition and management and oversight, and I think it is
possible, in the next 2 or 3 years, to get that done. We will
depend on you to come to this Committee for whatever support
you need.
I also wanted to briefly bring up with you the GSA IG
report that happened just a few weeks ago detailing improper
management intervention resulting in inflated pricing and
unfavorable terms for certain IT multiple award schedule
contracts.
And it cited that there were people who had undermined the
authority of contracting officers. The IG identified numerous
instances where the Federal Acquisition Service management
overrode contracting officer determinations without proper
justification, pressured contracting officers to extend or
award contracts, and reassigned contracts to different
contracting officers, giving the appearance they were not
getting what they wanted out of one contract office, so they
were going to move it somewhere else to get what they wanted.
I would like to know, and if you are not prepared to do it
today, in writing, what steps you have been taking to hold the
individuals and management accountable for this obvious
overstep that was cited by the IG in this recent report.
Mr. Tangherlini. No, I agree with you. What the IG report
detailed in terms of activity was completely unacceptable. And
as I mentioned to Senator Ayotte, we actually took immediate
personnel action against one person named in that report. We
also have undertaken a broader top-to-bottom review of
contracting within the organization.
I have put my new head of the Federal Acquisition Service,
Tom Sharpe, in partnership with our new Chief Acquisition
Officer, Anne Rung, and asked them to go look at the entire
structure of how we engage in contracting within GSA, top-to-
bottom, to make sure that we have the appropriate oversight,
that people have the ability to raise concerns, and that we are
doing what we are expected to do there, because if I am going
to go to agencies and say, use GSA, they need to be able to
count on that they are going to get the best and the highest
quality of contracting activities with the highest integrity.
Right after the report came out, Tom sent to all his
contracting officers a copy of the report. Said, Read the
report. What happened in there was unacceptable. You should not
be put under the kind of pressure that contracting officer was,
or at least was suggested in the report. If you have concerns,
raise it through the supervisory chain to me and/or call the
IG.
I then distributed an equivalent note to all contracting
officers within GSA and said, Just because it happened in FAS
does not mean it cannot happen to you, too. We want you to know
that we have your back and you have our support to do the right
thing on behalf of the taxpayers.
Senator McCaskill. That is terrific. I also want to
compliment you for the steps you have taken on Senior Executive
Service (SES) bonuses. My first encounter with GSA on the bonus
front was when we were looking into improper contracting
practices in Kansas City. This was several years ago. And one
of the supervisors in GSA basically came in front of our
Committee and, to be most gracious, committed sins of omission.
I will not say that she was not truthful, although I can
probably say that, but she certainly committed sins of
omission.
Then imagine my surprise when we checked later that she had
gotten her performance bonus for that year, which clearly was
misnamed. And when I looked into it, they said, Well, everybody
gets it. It is just a matter of entitlement. Everyone gets
these bonuses at GSA. There was no assessment.
And I know you have taken bold and probably controversial
and unpopular steps to end bonuses as a right, an entitlement,
and turned them into something that they would be in the
private sector, and that is only acknowledgment for work well
done, and certainly not in this sequester environment.
So I know that you have, I think, the figure is 85 percent
that you have diminished the bonus-giving at GSA, and I just
want to compliment you for swimming upstream on that, because I
know it probably does not make you the most popular guy around
where you work. And I just want to make sure that--you are
going to come in front of this Committee and we are going to
holler at you a lot--I want to make sure that we also tell you
that we know that some of the work you are doing is hard to do,
but you are changing a culture and we appreciate it very much.
Mr. Tangherlini. Thank you, Senator.
Senator McCaskill. Thank you, Mr. Chairman.
Chairman Carper. Let me just followup on something that
Senator McCaskill said. We talked about the IG report. You
raised it, Senator Ayotte raised it as well. And the Senator
asked a question, the word ``pressure'' was used.
Mr. Tangherlini. Right.
Chairman Carper. Pressure on contracting officers, pressure
brought by management in some cases. Senator McCaskill did the
same thing. You have mentioned it. Pressure from whom?
Mr. Tangherlini. In this instance, there was a sense that
there was pressure from the vendor, theoretical pressure
potentially from Congress.
Chairman Carper. Let us talk about that.
Mr. Tangherlini. OK.
Chairman Carper. Let us talk about it. Sometimes people in
our jobs are looking out for our constituents, our companies in
our States are not disinclined to go to bat for them. And
sometimes it can be appropriate, sometimes it is not. Can you
just talk a little bit more about what might be appropriate or
not? Because it sounds like here, what we are doing, we are
just saying, are pressures being brought in part by people who
do the job, the jobs that we have, and they walk away from
this?
In other cases, the contracting officers and the managers
get, in some cases, disciplined or they lose their job. I want
to make sure that, to the extent that our colleagues, whether
in the House or the Senate, are doing things that are
inappropriate. We know about that as well.
Mr. Tangherlini. Well, I think what was really
inappropriate was the suggestion that there was this pressure
coming from the Congress that would then suggest that we would
take an action that was not in the best interest of the
American people, because we have a fiduciary responsibility,
Congress has a fiduciary responsibility under the Constitution,
essentially the ultimate one.
So what I have told my folks is, we have an Office of
Congressional Affairs. That is where the correspondence should
be managed, that is how it should be handled, that is how it
should be tracked so that we can make sure that we followup
with Congress immediately, we address issues, but that we do
not allow there to be kind of some sub-hierarchal or
organizational nebulous, undefined pressure that is being
applied to get some outcome.
We need to be able to explain, justify, support, and defend
any outcome, because what I have said is the standard is the
one that I am operating under right here, and that is the
standard of being able to explain it under oath in a
congressional committee.
And so, what we want to do is make sure that our people at
the front lines know that yes, they have a responsibility to
make sure we can provide information, respond to Congress, but
that we do have formal processes for doing that. So that we do
not have what feels like undue pressure decisions.
Now, I think the real pressure was, as described in the IG
report, from the supervisor to the contracting officer. Both of
those folks know what their job is and that supervisor should
recognize that their job is not to pressure the contracting
officer to do something that they do not think is in the best
interest of the American people.
Chairman Carper. I am going to yield back to Senator
McCaskill. Let me just mention this. I think it is appropriate
for a Member of Congress to go to bat for a constituent firm
who is able to provide a better service at a better price than
maybe another option. I do not see anything wrong with that.
But the idea that somebody, a Member of Congress going to
bat on behalf of a constituent who provides a good or a service
that is not more cost effective, that is another kettle of
fish. Senator McCaskill.
Senator McCaskill. Well, I was just going to say, maybe
this is something we ought to talk about, Mr. Chairman, but it
seems to me that sunshine solves a whole lot of problems. Maybe
we should talk about it. Maybe this is something you would not
want to do unilaterally, which I would understand, but maybe we
should talk about a requirement that any letters from Congress
advocating on behalf of certain vendors, that they immediately
be posted on a public website and that calls be logged and
posted on a public website.
It takes a lot of nerve, frankly. I do not disagree with
the Chairman's characterization. It is one thing to write a
letter saying, This company exists, this company, I believe,
does good work, give them every lawful consideration with
obviously best price being determinative. I mean, that is one
thing.
It is another thing to make phone calls and say, Hey, did
you know I am on your appropriations committee and, or write
the kind of letter that would make people believe that there
was going to be a negative consequence of not doing what this
Congress person, woman or man, House or Senator, would do.
So, I assume every letter I have written is going to be on
the front page of the paper. And so, our letters that we have
ever written are carefully crafted so that we would never give
anyone the impression that we were trying to influence how
something was going to turn out.
Maybe that is something we ought to talk about, because, it
would not surprise me if some of the people writing
inappropriate letters and making the inappropriate phone calls
are the same ones having press conferences about the conference
in Las Vegas. That would not be a shock to me.
Chairman Carper. Nor to me. All right. I want to followup
and talk about a first cousin to some of the contracting issues
Senator McCaskill was raising, and she has been like a dog with
a bone on this issue and we have been happy to be there to urge
her on and to support her with this. But I want to talk a
little bit about strategic sourcing.
Mr. Tangherlini. Right.
Chairman Carper. There is, as you know, widespread
agreement among procurement experts that the Federal Government
could save a ton of money through strategic sourcing, which is
really a fancy way of saying that the government should do a
better job of buying in bulk. You also have expressed strong
support for this concept.
GAO has done two reports for this Committee over the last
year on strategic sourcing. I think the report last fall showed
that leading companies in the private sector manage about 90
percent of their spread through strategic sourcing. But the
agencies that GAO reviewed, Federal agencies that GAO reviewed,
managed only about 5 percent through strategic sourcing.
In the report released, I think this April, GAO estimated
that in Fiscal Year 2012, the Federal Government could have
saved about $12 billion dollars--had it followed the strategic
sourcing practices of several large companies that GAO
examined.
I realize that major companies, they do not buy the same
stuff that the Federal Government buys. They are not buying
submarines.
Mr. Tangherlini. Right.
Chairman Carper. They are not buying advanced radar
systems, they are not buying F-35 fighters, so they buy
different kinds of things. But there is a fair amount of
overlap here, there is a fair amount of overlap, and we can
certainly learn from what they are doing in many instances. But
what specific steps do you have planned to increase the
opportunities for agencies to participate in strategic
sourcing, please?
Mr. Tangherlini. I appreciate the question. And actually we
went out and talked to a number of large companies to ask them,
How do you handle acquisitions? And what we found over and over
is the large high-quality companies are really focused on
trying to leverage their scale and scope and try to buy it once
in a while. They really are trying to find strategic sourcing
opportunities.
In one particular case, a company we visited in Silicon
Valley, their equivalent to GSA was doing 90 percent of the
buying of the organization, and since they were so focused on
doing so much of the sourcing for the organization, they were
able to change the nature of the discussion they had every year
with their sub-components from, How much are you going to buy
next year, to, How much do you need to save next year?
And I think that if we can find ways that we can begin to
leverage the scale of the organization and build stronger
relationships with our vendors, give some visibility into what
we are buying, when we are buying it, how much we have paid and
are willing to pay, I think that we have the ability to drive
down prices while also pushing up value and reducing the cost,
actually, of making the acquisition.
We think since 2010, and working closely in partnership
with OMB and other agencies, we have saved over $300 million in
strategic sourcing across the Federal Government. But as you
pointed out, we think that is just the tip of the iceberg.
We have five new strategic sourcing initiatives we are
entering into this year. We just announced the wireless
strategic sourcing contract. Now, the ironic thing about this
is the Tangherlini family has done a better job buying our
wireless service than the Federal Government has. We have one
plan and one price. We share minutes.
Chairman Carper. And that includes your wife?
Mr. Tangherlini. Yes, it does.
Chairman Carper. And it includes your two daughters?
Mr. Tangherlini. Yes.
Chairman Carper. And yourself?
Mr. Tangherlini. Cassie, at one point, got expensive but we
resolved that. But the Federal Government, though----
Chairman Carper. You changed the culture a little bit in
your family.
Mr. Tangherlini. Well, we tweaked the plan. But the Federal
Government had over 4,000 contracts, that we know of, and over
800 different plans. So what we have been able to do is
coalesce around one contract, one plan that can be shared
across agencies and drive down the cost. The Gartner Group,
which assesses the performance of IT organizations, thinks that
we can cut between a third and a half of our price by
coalescing around strategic sourcing.
So we want to bring good, common sense, business-like
solutions to agencies, demonstrate the savings to them, and
then sign them up. We want to come up with new ways, new ideas.
We are pursuing a janitorial and sanitation supply strategic
sourcing initiative. So the things you buy associated with
cleaning products and toilet paper, that kind of stuff where
you can really get the benefit of volume, we should go in and
buy that at volume with the Federal Government.
At the same time, we need to be very attentive to small
business and make sure we protect the ability for small
businesses to compete. In our office supply contract, we were
able to drive down prices as much as 13 percent across the
market basket, but we have also been able to expand small
business participation in office supplies from about 65 percent
to more than 75 percent.
Why? Because the small businesses are able to move more
quickly, they are able to compete more aggressively, they have
lower overhead, they are closer to the end users. So we are
actually able to leverage small businesses through strategic
sourcing to not only expand opportunity, but drive down costs.
That is a win-win and we need to figure out ways that we can
pursue that more aggressively across the entire acquisition
landscape.
Chairman Carper. Good. Well, those are some encouraging
words. I am going to continue to followup on this just a little
bit. But when you look at agencies that are not anxious to--
Senator McCaskill, thanks for all your good work here. But when
you look at the agencies that are not buying goods and services
through the Federal strategic sourcing initiatives, what are
some of the main obstacles to their actually doing that?
Mr. Tangherlini. Well, it is a great question. I think a
lot of it is just understanding that those vehicles are
available, understanding what the value proposition is. That is
why Joe Jordan, the Administrator of the Office of Federal
Procurement Policy, chairs a strategic sourcing leadership
council, brings together acquisition professionals across all
the agencies, as well as GSA.
We have tried to divide up the water front of what we are
going to pursue in terms of strategic source initiatives. And
we try then to use that as an opportunity to share best
practices and market the solutions across the agencies.
So I think it is my job to be, in part, the educator and
sales person in G-funds strategic sourcing. I have been going
from agency to agency talking with secretaries or deputy
secretaries, trying to give them some ways that we think we can
help them save money, and among them is their percentage of
participation in existing strategic sourced vehicles such as
office supplies.
Where that percentage is low, we show them and encourage
them to push it up. What I think is what is measured is
managed, and so by bringing that data to agencies, that can
create some leadership pressure to actually make people move on
it.
Chairman Carper. Well, every Cabinet Secretary has a
problem with trying to comply with sequestration----
Mr. Tangherlini. Right.
Chairman Carper [continuing]. Looking for ways to save
money, and bingo, you have a solution to help them.
Mr. Tangherlini. Right.
Chairman Carper. So this is a great opportunity. I
mentioned Einstein earlier. In adversity lies opportunity.
There is plenty of adversity through sequestration, but as it
turns out, there is some opportunity as well.
Let me see if--there may be another question or two here.
Sort of another question on acquisition, and I am told that
about 10 percent of all Federal spending on contracts--that is
about $50 billion--goes through GSA. One reason that we see so
much duplication in contracts across the government is that
agencies do not have good data on the prices that they can get
under governmentwide contracts such as GSA contracts.
We hear that having better priced data would enable
agencies to demand the lowest price possible. Just tell me
again, you have spoken to this in part, but what steps, further
steps, is GSA planning to take to help agencies just get access
to the pricing data?
Mr. Tangherlini. So we are working very closely with OMB to
develop something called the Prices Paid Portal that will allow
agencies to input the prices that they have paid for various
items into a common and shared environment that other agency
contracting officials can see to test whether they are getting
a good price or not.
The other thing we are doing is bringing to agencies'
attention the cost associated, in terms of time, effort,
energy; and therefore, resources in not using, as a jumping off
point, the already competed GSA schedules. So within the GSA
schedule environment, you are able to take vendors that are on
the schedule and compete them against each other for your
particular need.
By jumping to that step, using agency acquisition timeline
data, we think we can save between a third and a half of the
time that contracting officers have to put into going and
getting an open market outcome. We think that time can then be
used at getting better prices or doing better contract
administration or just, frankly, reducing the cost of
acquisition across government.
So what we are trying to do is get around to the agencies,
as I go from meeting to meeting, and demonstrate for them the
value they are leaving on the table by starting from scratch.
When we do get the agencies kind of coalescing around common
vehicles such as the office supply strategic source initiative,
we get a wealth of data that we are then able to use to
negotiate even better deals with the vendors.
And so, I think there is a virtuous cycle we can start
here, but the trick will be getting the systems by which we can
share that information and just doing a better job of getting
out there and teaching the agencies what they are leaving on
the table in terms of cost and price.
Chairman Carper. All right. Good. And the last thing I want
to do is just to go back to the issue of real property and
space that we occupy. I mentioned the Nuclear Regulatory
Commission, a new building that is being built. I think they
are going to lease it for a multi-year period of time.
Mr. Tangherlini. Right.
Chairman Carper. And the cheapest of the three buildings is
the one that they own.
Mr. Tangherlini. Right.
Chairman Carper. I mentioned earlier that we have mis-
aligned the incentives for agencies. If they enter into a long-
term lease, the Congressional Budget Office (CBO) scores every
year on that agency's budget however much the lease costs. If,
however, they buy something, and it may be the same building,
they buy it for a particular cost, and it might be cheaper, way
cheaper, over time, but CBO scores it so that we have to
allocate the money for that agency in the first year.
Mr. Tangherlini. Right.
Chairman Carper. How do we change that? Do we need to pass
a law? How do we change that so that CBO--what we are doing is
just so cost ineffective.
Mr. Tangherlini. It gets to a number of issues, as we have
discussed, with the way the Federal Buildings Fund is
structured and the way the scoring rules interact with it. The
structure of the fund is pretty sound. The idea is you charge
market-based rents for use and occupancy of Federal space, and
we then also fund the market-based rents that we pay from
facilities that we lease. So agencies pay roughly the same
amount based on market analysis for occupying other leased or
owned property.
The problem happens on the other side when it comes time to
start paying for things. On the leases, we pay the leases
directly because it is a contract. On the buildings that we
own, that money is reflected as revenue to the Appropriations
Committee and is either spent to the buildings or counts as
credit to the Appropriations Committee for other expenditures.
So for the last 3 years, that money has been used to pay
for things outside of maintaining our Federal assets. This year
in the President's budget, Fiscal Year budget, he has proposed
full funding, so when all the rent money comes in, it either
goes to pay lease rent or it goes to maintain, operate, and
improve our buildings.
But then we get to this issue if we do want to go and buy a
building so we can replace a long-term lease commitment, which
we would pay as an operating expense every year, we have to
have the full up-front cost of that building in the first year,
which makes it very hard to then go and buy or build buildings.
I think what we have to do is really explore the way the
scoring conventions work. I think we have to work with CBO and
OMB and try to understand what the first principles are, what
we are trying to protect in terms of the flexibility of the
President and the Congress to make spending decisions, but also
take a good hard look at long-term costs so that we know what
impact we are having in later budget years, as well as make
sure that we are reinvesting in our assets so that we are not
pushing subsequent investments off on other generations for
them to pay for.
Chairman Carper. All right. Thank you. One last question.
If confirmed, what policies would you implement to assist
agencies in assessing utilization levels and identifying
opportunities to save on leasing costs by consolidating office
space?
Mr. Tangherlini. Well, already we are working very closely
with OMB and interested agency partners to try to help them
understand what their portfolio space looks like, what the
opportunities for savings are. We think the immediate
opportunities happen with every lease expiration for agencies
to begin to reconsider what their space needs are.
But I have been challenging the staff of the Public
Building Service to look at lease expirations that are not
happening in the next year, but look at them happening in the
next 5 or 7 years, begin to challenge the agencies what their
actual space needs are, and see if we can begin to build some
intermediate term plan that will allow us to substantially
reduce our footprint.
Because as we have demonstrated in our own headquarters
building, you can get nearly twice as many people into a
standard Federal office building by implementing more modern
mobile office approaches. So reducing the number of single
occupancy, individual offices, using more collaborative space.
We are using ``hoteling,'' which means that 80 percent of
the people within the building do not even have an assigned
desk. They book one in advance. They make a reservation. And we
have substantially reduced the footprint. We are down to about
140 square feet per person, but because the space is open and
wide and light, it does not feel like you are in a tiny, little
space.
Chairman Carper. Good. All right. We gave you the
opportunity to give an opening statement and you have been good
to respond to our questions. We will want to followup. There
are going to be some questions in writing, as you know.
Anything you want to say, just kind of sum up here as we
prepare to wrap it up?
Mr. Tangherlini. Well, I can say that I really appreciate
the opportunity to come before you today. I appreciate the
opportunity to sit before this Committee in nomination for this
important job. I particularly appreciate the tremendous support
I have gotten from the women and men in GSA over the last 14
months, helping us make possible some of the improvements that
I was able to present to you today that are suggestive of the
kind of work we can do to make GSA a fantastic agency, an even
better agency than it already is, and use it to support Federal
agencies in driving down their costs of delivering their
incredibly important services to the American people. So thank
you very much.
Chairman Carper. You are quite welcome. I want to close
with some thank you's as well, to Cassandra, who I understand
is 15, older sister to, who is it, Francesca, age 13. The work
that your dad is doing, the leadership he is providing, is one
of many things that we need. It is a very important thing, but
we need to do it in this country to make sure we do not
shoulder you and your sister and your friend with an enormous
burden of debt, to carry for the rest of your life.
We have to figure out how to get better results for less
money, and that is a big part of what your dad will do if
confirmed to lead the General Services Administration. And I
want to say especially to your mom for your willingness to
share with us this man. You have been sharing him for quite a
while in a variety of capacities, but we probably do not say
thank you enough, but I want to say thank you.
And I would say to your dad, the young 89-year-old
marathoner sitting right behind you, that--I run half
marathons. I do not run marathons, I run half marathons. I used
to say Delaware is too small for a marathon. But actually we
now have a marathon, so I cannot say that anymore.
But I usually say, I just do not want to lose to the 8-
year-old kids. I do not want to have any 8-year-old kids beat
me across the finish line in a half marathon. And now I am
going to have to think about those 89-year-old men. I do not
want to lose to anybody as young as 8 years old or 89. But you
obviously are doing something right in your life, and you
obviously did something right in raising this guy. So we thank
you for that, too.
And to Theresa's parents, I think you all work a little
around here somewhere, do you not, in Maryland? Not too far
away. We are happy that you are here and able to join us as
well.
Now, I am told by Trina over here in the corner that the
hearing record will remain open until noon tomorrow--that is
June 19--until 12 p.m. for the submission of statements and
questions for the record. We would ask our colleagues to try to
meet that deadline. I know it is a short deadline, but we ask
them to try to meet that. And if you do have questions, we
would ask that you just respond to them very promptly and we
will see how quickly we can try to move this nomination along.
With that having been said, we thank you and this hearing
is adjourned.
[Whereupon, at 11:49 a.m., the hearing was adjourned.]
A P P E N D I X
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