[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 Available via the World Wide Web: http://www.fdsys.gov/ Printed for the use of the Committee on Homeland Security and Governmental Affairs [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] U.S. GOVERNMENT PRINTING OFFICE 82-453 PDF WASHINGTON : 2014 ----------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 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 ---------- [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]