GSA Fraud Cost Taxpayers Millions

The General Services Administration (GSA) is the landlord and procurement agent for the federal government. Recent disclosures indicate that the agency seems to believe it can spend taxpayer dollars any way it wants in any amounts it so chooses and not be held accountable for its actions.

Do you remember when reports surfaced in November 2010 that the General Services Administration had spent $823,000 on a Las Vegas conference? Congress’ House Oversight and Government Reform Committee held hearings on the matter in April 2012, and called the GSA action indicative of a “culture of wasteful spending.”

Rep. Darrell Issa (R-CA), chairman of the House committee, and Rep. Elijah Cummings (D-MD.), the committee's ranking member, led the panel in grilling current and former GSA officials. Rep. Mike Turner (R-OH) held up souvenirs from the conference, including customized blackjack dealers' vests, books on the history of Las Vegas, commemorative coins and a directory assigning attendees to play roles such as Cher, Sammy Davis Jr., Elvis and Celine Dion.

"How is it that this type of money could be laying around so that it could be used in this slush-fund manner?" Turner asked.

"Mr. Congressman, I'm just as appalled as you are by those examples of expenditures," said Martha Johnson, who had been GSA administrator since 2010 until her resignation over the scandal. She testified that she directed a deputy administrator to begin investigating the conference. Well, at least she didn’t say to Congress that she thought what happened in Vegas, stayed in Vegas.

Given the ethical blindness of the GSA with respect to the Vegas conference, it is ironic that the Office of Government Ethics (OGE), designed to oversee ethics programs for all executive branch agencies, evaluated GSA when it was planning the 2010 conference and failed to spot the ethical lapses. OGE’s June 2010 investigation ended with a letter praising GSA for its ethics policies and practices and described the agency’s ethics program as “employing a number of what OGE [considered] model practices.”

The matter was investigated by Cause of Action, a nonpartisan government accountability organization in Washington, DC. Interesting questions were asked including: “If the officers charged with monitoring ethics compliance are nonexistent or spending their time on other endeavors, why did OGE not intervene? Did OGE inform GSA Inspector General Brian Miller immediately? And, as House Oversight Committee Chairman Darrell Issa pointed out, why didn’t Miller inform Congress about the misfeasance earlier? Lastly, of what value is OGE in overseeing agency ethics? Inefficiency in oversight by OGE is a classic example of how government bureaucracy fails to solve problems.”

The ethics in GSA are a matter of national concern. On August 2, 2012, Congressional lawmakers began an investigation into potential taxpayer abuse carried out by the agency that is being probed for 77 conferences and award ceremonies over the years as new information came to light about an exorbitant one-day event in Crystal City, Virginia. Overall, the GSA spent more than $6.7 million on these conferences according to GSA Inspector General Brian Miller.

Miller said that his preliminary investigation into the one-day ceremony in Crystal City shows it cost taxpayers at least $268,732. His findings bring back memories of $6,000 shower curtains and $15,000 dog umbrella stands at the lavish home of now-imprisoned Tyco CEO, Dennis Kozlowski, and a $1 million birthday party for his wife on the Italian island of Sardinia with entertainment provided by Jimmy Buffet.

 Among the findings by Miller are:   

• $34,073 for the Crystal Gateway Marriott event, including $20,738 in catering charges;
• $7,697 for the Key Bridge Marriott reception, which included hors d'oeuvres, a violinist and guitarist;
• $140,464 for "coordination and logistical management" by a firm called Gallagher & Gallagher Inc., which included $104,484 for management services, $20,578 for 4,000 drumsticks given to attendees, $5,390 for five buses, two mini-buses, and a van, and $10,010 for entertainment by "Mission Possible Agent X" management;
• $28,364 for 4,000 "time temperature picture frames" provided by Small Wonders;
• $7,810 for 68 shadowbox frames by Award Crafters;
• $8,588 for something called "Agent X appearance" by JDG Communications, Inc.;
• $41,735 for travel for 49 attendees.

The documents found that several GSA conferences have no financial records, and that a lack of receipts makes it impossible to account for the exorbitant costs of travel and event spending.

Ethical standards are of no value unless the people charged with overseeing compliance instill an ethical culture in their organizations. The tone at the top must be one that ethical lapses will be dealt with swiftly and sternly. A message must be sent to the leaders of government agencies like GSA that enough is enough.

OGE is statutorily mandated to conduct ethics audits. However, given its failures in the past the question now is who should have authority over the standards of ethical conduct in government? I believe the OGE should be incorporated into The U.S. Government Accountability Office (GAO), an independent, nonpartisan agency that works for Congress. Often called the "congressional watchdog," GAO investigates how the federal government spends taxpayer dollars.

The GAO website lists its core values as: accountability, integrity, and reliability, and they operate under strict professional standards of review and referencing; all facts and analyses in their work are thoroughly checked for accuracy. The key point here is standards of ethical conduct need to be combined with the audit function, as they are for publicly-owned company audits.

The ethical standards for executive branch employees that are supposed to be the purview of OGE are fine but meaningless unless they are linked to specific programmatic activities. We don’t need another bureaucracy that appears to be incapable or unwilling to carry out its legislative mandate. There are ample oversight mechanisms in place through the GAO.

We need ethical people in government. As a nation we no longer can stand idly by while billions are lost on Medicare fraud, millions are spent on wasteful, inappropriate agency activities, and all too many in government and Congress abuse their powers, engage in self-serving behavior, and no longer see their mandate to serve we, the people.

Blog posted by Steven Mintz, aka Ethics Sage, on August 18, 2012