Their hopes are expressed in an editorial which the head of one of the unions representing GSA employees sent to his members. The editorial addressed to me said:

"We admire you for asserting leadership

you and the agency are unques

"The

tionably entitled to the loyalty and support of all sincere employees. union message closed by pleading "Don't let us and the Agency down, Mr. Solo

mon."

This leaves me with the firm belief that we can work together to finish cleaning up this mess and correcting the faulty system that allowed it to exist for so long.

I suppose if a charge can be leveled at me, it is for being too tolerant during my early days in the agency. But tolerance must give way to an even sterner, loftier, ideal justice. Justice for the "whistleblowers" who are unfairly wronged, and justice for the corrupt who are under investigation.

Nothing illustrates more dramatically the new course we have charted than the reinstatement of the whistleblowers.

GSA made history by being the first Federal agency voluntarily to reinstate persons who "blew the whistle" on wrongdoing and mismanagement. Senator Patrick Leahy wisely said of the action, "the final beneficiary will be the American people."

By providing Federal employees with a mechanism to help identify and isolate problems of mismanagement and corruption, we are truly responding to a mandate from the people. That mandate requires that we provide better Government. We are also telling people we can keep our own house clean and that we will do it publicly and in a manner which will be worthy of their trust.

Mr. Chairman, one note of caution, GSA is today in exile like a wounded animal. It is surrounded by the vigilant media, the disgruntled, the corrupters, and by turf conscious bureaucrats from other agencies. These bureaucrats would like to put an end to the cost-effective concept of centralized administrative services, as was envisioned by the Hoover Commission in creating GSA. I do not wish to belabor the accomplishments of GSA in the past 88 days, although I am quite cautiously proud and cautiously pleased with our progress. I do want to highlight a few major changes in procedure and personnel which I believe will have a lasting impact.

1. When I came to GSA, there was no policy of commitment regarding the reinstatement of those people who were unfairly demoted or dismissed because of their willingness to speak up and tell the truth about problems in GSA. I have changed all that. Now people should feel free to report questionable practices at GSA without punishment, and I urge them to do so.

2. When I came to GSA, there were no firm procedural guidelines restricting sole source procurement. Today, these procedures exist, and sole source procurement has been substantially reduced. Exceptions can only be made at the Regional Administrator level.

3. When I came to GSA, there was no centralization of its budget function. Since 1968, GSA has functioned with a weak financial structure. This has now been changed. I have created an office of the Controller-Director of Administration which has responsibility for centralization of all budget functions of this agency.

Furthermore, I have directed the Controller-Director of Administration to develop a comprehensive financial management improve

ment plan with an accompanying timetable for immediate implementation.

4. When I came to GSA, there was no Special Counsel or Office of the Inspector General. We now have a Special Counsel and are creating an Office of Inspector General. This office will consist of an Inspector General, appointed by the President and approved by the Senatepending approval of legislation by the Congress which I support an Office of Audits, an Office of Investigations, and new Offices of Inspection and Complaints. The request for increased staffing has been submitted to OMB.

5. When I came to GSA, there was no mechanism for review of all GSA procurement practices, nor was there an Office of Acquisition Policy. This has now been changed. We now have an Office of Acquisition Policy, which will develop and issue acquisition policies. It will prescribe and monitor development of specific plans for the accomplishment of major contracts, and review the entire procurement process of GSA. It will also be responsible for the implementation of OMB Circulars A-109 and A-76. Lastly, but most importantly, it will arrange for our Office of Audits to conduct preaudit and postaudit services on GSA contracts.

6. When I came to GSA, reports of major audits conducted both internally and by GAO were given cursory attention by the management of this agency. Many times these reports were put on a shelf to gather dust. Now this has been changed. I have instructed the Director of Audits to prepare a quarterly briefing on all open audit reports to inform me as to what corrective actions have been recommended.

7. When I came to GSA, the delegation of authority system presented serious problems. Authority was neither controlled nor standardized. Low level employees had unilateral authority to commit GSA to multimillion dollar transactions on the one hand, while in another branch of GSA, the proposed sale of a specific type of surplus personal property valued at only $100 required the approval of a Commissioner. This has now been changed. A study was undertaken and recommendations from the study have been implemented to create a consistent system of delegated authority with stringent restrictions.

8. When I came to GSA, I found that unlike the Defense Logistics Agency, there had been little mobility of procurement and contracting officers. I have made major personnel realinements, both within my immediate office and within the GSA's biggest region here in Washington. In the past several weeks, 80 employees have been reassigned in this region alone. They are either buildings management employees or were connected with the self-service store operation.

9. When I came to GSA, I found that several significant studies that were critical of GSA's actions, and that presented excellent recommendations for improvement, had been put high upon the shelf. This is now changed. I have taken these studies down off the shelf, blown the dust off of them, and am now implementing many of the recommendations in the area of space management, financial management, and procurement. These reports were done by such experts as Peat, Marwick, Mitchell & Co. and Don Sowell Associates, Inc. These studies, whose recommendations were previously ignored, have provided many of the solutions to the problems that have been identified at GSA.

10. When I came to GSA, there had not been conducted a study of administrative costs and general overhead of our two biggest servicesthe Public Buildings Service and the Federal Supply Service. Although this study is still in draft form, it bears out my deepest suspicions that exceptional amounts of manpower have been devoted to administrative trivia. Meanwhile, program needs such as procurement review and review of architectural drawings are not adequately staffed.

11. When I came to GSA, the certification of contracting officers was poor. This has now been changed. We plan to train over 9,000 individuals in the last quarter of fiscal year 1978 and in fiscal year 1979.

12. When I came to GSA, discipline within the ranks at this agency was noticeably poor. This has now been changed. I have instructed the Director of Personnel to enforce vigorously our present guidelines for dealing with employees who break the laws or regulations or fail to do their jobs competently.

13. When I came to GSA, there were no adequate inspection teams. to stop defalcation and other deficiencies. This has now been changed. I established a contract assurance task force in the Public Buildings Service, not only in the central office but in each of our 10 regional offices.

14. When I came to GSA, there were two separate staffs in the Office of the Administrator and the Deputy Administrator. This I have changed. There is now one staff which provides unity in agency command, eliminates confusion, and reduces total staff requirements.

15. When I came to GSA, the function of disposal of real and personal property and stockpile materials was spread through three different services within GSA. This has now been changed. I have created the Federal Property Resources Service. This action will improve oversight and allow the Commissioners of Public Buildings Service and Federal Supply Service to concentrate on their primary functions.

16. When I came to GSA, we were disposing of stockpile materials based on procedures which had evolved over the years without review. This has now been changed. I established a stockpile advisory panel comprised of businessmen, experts from universities, and many other people. This panel met in August to recommend improved methods for handling stockpile materials. A report will be provided this committee within the next several weeks. Pending completion of this report, I have suspended the sale of stockpile materials, except by competitive invitation for bid.

17. When I came to GSA, I had heard all the horror stories about the roof at the Kennedy Center and yet there was no provision for full-time roofing inspection. This has now been changed. I have directed that all roofing projects should have the service of qualified roofing inspectors from initial design to final acceptance.

18. When I came to GSA, there was no retainage of payment due to contractors on construction contracts. This has now been changed. I have instituted a common business practice of retaining 5 percent of the estimated amount due on construction contracts until all the work is substantially completed.

19. When I came to GSA, there was no procedure to review current leases to insure that the terms of the leases were being followed. I have instituted a procedure to review current leases. In the short time this

procedure has been in operation, we have issued three letters through which we expect to recover over $200,000 for the taxpayers. Another 40 cases are under scrutiny. I expect to take more action in the next 30 days.

Future actions will include: A thorough review of multiple award schedules; the application of the "account executive" concept to delivery of GSA space; the structural reorganization of the Agency for maximum effectiveness and management control and accountability; a continuing review of delegated authorities, employee standards of ethics, and conflict of interest; a vigorous exercise of GSA's oversight responsibilities; manpower utilization studies; and development of strong, reliable information systems.

These examples illustrate rather dramatically the intense state of change that has characterized life at GSA during the 3 months since I first appeared before this committee. I must sincerely thank this committee for bringing many of these problems into focus for me, and more importantly for providing a forum of dignity in which these things can be aired.

Quite frankly, I have had to move boldly and swiftly to cope with the problems, which are still enormous. It hasn't been easy and I know the road ahead is a long and treacherous one.

Day after day the uncovering of scandal stretching back many years into GSA's young life may represent only the tip of a gigantic iceberg yet to descend upon us. The fraud, the corruption, the thievery, the mismanagement, and downright abuse of the public trust that have been exposed to this date are only the beginning. The ugly and disgusting saga will further unfold during the days ahead at GSA. And the actions I have taken to date to deal with these problems, likewise, are only a beginning.

In conclusion, Mr. Chairman, the constructive spirit of the Hoover Commission must not die here. It must not be abandoned as unmanageable. I hope, Mr. Chairman, that GSA can be recognized as an agency which understands its problems, which is acting on its problems, and which is not taking the "business as usual" easiest way out of sweeping its problems under the rug.

Given the full support of Congress and the executive branch and the Nation's citizens, we will be able to set our own house in order without having to burn it down. When the Klieg lights die, there is the stark reality of the staggering responsibility for the management and direction of 36,000 employees.

I'm Jay Solomon, a businessman from Chattanooga, Tenn., who is Administrator of General Services. President Carter gave me this responsibility. I cannot promise you miraculous solutions with the stroke of a pen, but I can promise you hard work, and backbreaking effort to bring to this agency the realization of President Jimmy Carter's highest aspiration for an honest, decent, and efficient Government. Mr. Chairman, that concludes my prepared statement. I would be happy to answer any questions you might have.

Senator CHILES. Thank you, Mr. Solomon, and I think it is a very impressive list of accomplishments that you are citing to us of reforms that you have been able to put in this place.

I think it has been a little over a year since you first came to Washington. I guess you have been here long enough to know that one of Newton's law of physics that doesn't work around here; that law that

says an object or body in motion will continue to stay in motion. I don't think that one works around here and I think your finding that out, that it takes the lash and whip and everything else to get something to move around here and to get it to stay in motion.

And I know that you have heard many times the old Greek chorus that you just don't understand that we have tried that before or that doesn't work here or we can't do it that way; and I think you have worked hard to overcome that.

But there's another one of Newton's laws that does hold forth very strongly around here and that is a body at rest tends to stay at rest. And we know that that one does work and I'm sure that you are trying to comply with that.

Mr. SOLOMON. Mr. Chairman, I hate to interrupt you, but I've been before you several times and you always present to me a stack of GSA specifications. So I'm going to present to you for the record, a stack of changes which we have made. This book may not be as thick as the specifications you showed us, but I think it's pretty good for us in just 3 months. I'm presenting this book to you as backup material for the statements made by me here today.

Senator CHILES. And these are changes that you have made?

Mr. SOLOMON. Yes, sir, that I outlined in my speech; this is backup material.

Senator CHILES. Fine. We will be happy to include those in our appendix.

Mr. SOLOMON. Thank you, sir.

Senator CHILES. I know you hear all of the stories and I've got one for you. It's one of those stories where there's good news and there is bad news.

The good news is that one of Mr. Davia's auditors has found a store in New York where he was looking for some used furniture and he's found GSA files, Art Metal files still in the packing cases that are for sale at half price, half of what GSA is selling them for.

And I guess the bad news is that somebody is stealing the files. But if you need any files, I can get them for you wholesale in New York. Mr. SOLOMON. Mr. Chairman, nothing surprises me.

Senator CHILES. Yes, sir. I'm sure it doesn't, and I make no levity about the point that I'm very impressed with what you and Mr. Alto have been trying to do under trying circumstances. I concur that GSA is an agency under seige and that this is a time in which the bureaucracy will try to work their will, as will all of the other agencies, that would like to be able to purchase their own materials or rent their own buildings or do anything else that they would like to do in making their moves.

I also believe that the Federal Government should be able to avail itself of some proper central purchasing and everything else that GSA as the housekeeper of the Federal Government should do and we ought to be able to put this agency back on track.

I also now have the GSA report that tells me what I already knew, and you did, too, that what we're dealing with at GSA is discovered fraud and it's all going on in the other agencies too. It's just that it hasn't, perhaps, been discovered yet.

I am tremendously concerned with what Comptroller Staats says is part of our problem, and I think it certainly was a problem for GSA. It is a service-oriented agency. I said this before. The order of