Competitive bidding drives GSA inquiry

April 15, 2012

The senior government executive at the center of the General Services Administration spending scandal told investigators that he believed it was all right not to get competitive bids because he was paying for quality.

He flew more than 50 managers to the luxury hotel that hosted the Las Vegas conference that has become Washington’s latest symbol of waste. He called it a “scouting trip,” but the event was a quarterly meeting of his leadership group, according to transcripts of interviews conducted by the agency’s inspector general and reviewed by The Washington Post.

And the official, Jeffrey E. Neely, told investigators that a private party he threw in his Las Vegas hotel suite for $2,717 was an employee-awards event.

Neely’s conduct as the organizer of a four-day team-building event that cost $823,000 will be under scrutiny on Capitol Hill starting Monday, when the first of four back-to-back congressional hearings is scheduled.

Neely, a career civil servant who coordinated the “Western Regions” conference for the GSA’s Public Buildings Service, emerges in the transcripts as a competitive, innovative manager in a federal agency that prides itself on a private-sector sensibility.

But critics say Neely and his deputies went too far and made questionable expenditures of taxpayer dollars.

The transcripts provide evidence of a freewheeling spending culture in the offices of the four Pacific Rim states where Neely oversaw federal real estate and government purchasing.

“What this guy did was try to use private business practices to justify spending that is out of line with the private sector,” said Sen. Claire McCaskill (D-Mo.), one of numerous lawmakers asking how things spun out of control with no oversight from Washington.

“This notion that you can have over-the-top conferences with all kind of bells and whistles because you’re emulating the private sector is nonsense,” said McCaskill, who reprimanded GSA leaders in another region last year for spending on a no-bid public-relations campaign to manage publicity over potential environmental contamination at a federal office complex in Kansas City, Mo. “They thought they were above scrutiny,” she said of Neely and his staff.

During his final interview with Neely in March, an investigator said it appeared that the GSA needed a “culture change.”

Neely, 57, who has been subpoenaed, is expected to invoke his Fifth Amendment right not to incriminate himself before the House Committee on Oversight and Government Reform on Monday. His attorney, Preston Burton, declined to comment Sunday.

Agency shake-up

The interviews of Neely and other GSA officials were the basis for the inspector general’s scathing report released earlier this month.

Inspector General Brian D. Miller last week asked the Department of Justice to investigate contract improprieties and other matters surrounding the conference for 300 employees at the M Resort Spa Casino. The tab came to almost $600,000 over the event budget, according to the transcripts. Miller has also asked that Neely be investigated for his personal use of electronic items designated for an employee reward program.

The scandal prompted Administrator Martha N. Johnson to resign, two of her top deputies to be fired and five regional commissioners, including Neely, to be placed on administrative leave pending further disciplinary action. It has become an election-year flash point in the debate over government spending.

In a long career in government, Neely has prided himself on thinking big and out of the box.

A pedestrian-friendly courthouse and an understated border security complex that were built on his watch won two design awards for best new federal buildings. He motivated staff by showing off iPods and cameras they could win for good performance through a rewards program that once doled out coffee mugs and T-shirts. He called the visits to the regional offices “Neely’s road shows,” according to the transcripts.

About his staff’s agreement to pay $75,000 for a single-day bike-building exercise without seeking competitive bids, Neely told investigators that the event company was “expensive. But they are also very, very good.”

As commissioner for the agency’s Pacific Rim region, Neely controlled his budget with minimal oversight. An accounts payable employee at GSA’s Washington headquarters was the first to question the Las Vegas conference charges.

Conference travel was common among Pacific Rim staff members, from senior managers to interns. Many conferences were held at luxury hotels, a practice reflected in the buildings service’s rising travel budget, GSA budget figures show. Generous mementos were routine, and motivational speakers the norm. The las Vegas conference featured a mind reader, commemorative coins for attendees and a clown.

Most of the contracts at the Las Vegas conference — including $59,000 to an audio-visual firm, a $12,500 commission to an outside event planner — were not competed, and some were duplicated by services provided by the hotel, according to the inspector general’s report. Neely told investigators the expenses ensured the best quality.

He acknowledged that he rarely sought legal advice from government lawyers in writing because it would slow down business. He also told investigators: “You put it in writing [and] it’s discoverable for [Freedom of Information Act] purposes, or lawsuit purposes, and so on and on and on. So to be blunt, I think there is a reluctance to do that.”

‘Take chances’

GSA manages all federal property. It competes with other agencies to buy goods and services they need, overseeing $66 billion in spending every year. The agency’s strategic goals, according to its fiscal 2013 budget request, are to “take chances that other [agencies] are not positioned to take” and “be an innovation engine for the government.”

A career civil servant, Neely joined GSA in the late 1970s, rising to management roles in a number of regional outposts. He was named public buildings chief for the Pacific Rim in 2003, overseeing 35 million square feet of federal property. He became administrator in 2009, overseeing the buildings service and acquisition side.

Two months into running the Pacific Rim region, Neely began planning the Western Regions Conference for 2010. It was his turn to host. The last one, held in New Orleans in 2008, had cost more than $600,000. “Every time every region tries to raise the bar on the quality and content of the events,” he told the inspector general investigator.

He reveled in the details, authorizing $9,000 to a printing company for color-themed tags and programs with the conference agenda. “It wasn’t like just running down to Kinkos,” he said in the transcript.

Among the excesses cited by the inspector general were multiple scouting and pre-planning trips taken by the conference organizers.

Neely told the investigators that the pre-conference trip he took to the M hotel with more than 50 of his managers was “trying a resort on for size, if that makes sense.”

The cost was $54,000.

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