GSA under threat as lawmakers look into ‘appalling’ spending

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Updated at 1:24 p.m. ET: At a congressional oversight hearing Tuesday, Rep. Jeff Denham, R-Calif., said he was prepared to systematically pull apart the General Services Administration to the point where “we will make it a question to the American public whether the GSA is needed at all.”

“I’m here to tell you the buck stops here,” said Denham, who heads the Transportation subcommittee on Economic Development, Public Buildings and Emergency Management. “Where crimes have been committed, people will go to jail.”

The hearing focused on the GSA’s use of taxpayer money after revelations of lavish spending for a Las Vegas conference in 2010 that cost $823,000. It was the second day of hearings in the matter.

Rep. John Mica, R-Fla., chairman of the Transportation and Infrastructure Committee, said that while the GSA’s wasteful spending in Las Vegas is “appalling,” it is only the tip of the iceberg.

Mica added that he and Denham have been discussing whether the GSA’s culture of squandering can be purged or whether the agency — “our government’s landlord” — should be replaced.

Del. Eleanor Holmes Norton, a Democrat who represents the District of Columbia, disagreed with Denham and Mica, saying, “GSA serves an indispensable function.”

That’s what makes the investigation “such a difficult matter,” said Norton, who was lampooned in a widely circulated video the GSA made at the conference.

The GSA, which manages federal properties, is also being investigated for how resources were spent on other outings and conferences, including trips to Hawaii, Atlanta and Napa, Calif., and an interns’ conference in Palm Springs, Calif., attended by 150 people.

Ex-GSA head apologizes for $823,000 Las Vegas spending spree

In his opening statement, Bob Peck, former head of the agency’s public building department, said the Las Vegas conference was an “aberration” and that most conferences he attended weren’t lavish. He said he paid for some food out of his pocket in Las Vegas.

Peck also offered a personal apology and said he wouldn’t shirk responsibility.

Martha Johnson, who resigned this month as head of the GSA, apologized Monday in a different oversight hearing for the way the money was spent. Five other officials were placed on administrative leave after GSA Inspector General Brian Miller reported that lavish spending was an accepted part of the agency’s culture.

The official at the center of the scandal, Region 9 Public Building Regional Commissioner Jeffrey Neely, wasn’t present at Tuesday’s hearing. On Monday, Neely repeatedly invoked his Fifth Amendment right to remain silent before the House Oversight and Government Reform Committee.

“Mr. Neely is not with us today. … We had requested that he be with us,” Mica said. “I guess the only way we’ll get to see him is in a video in the hot tub” — referring to a photo showing Neely relaxing in his hotel room during the Las Vegas conference.

Subcommittee member Timothy Walz, D-Minn., later added: “This guy set up a fiefdom.”

In a memo included in the inspector general’s report, Neely — who hosted a $2,700 party at the conference — allegedly wrote, “I know I’m bad … but why not enjoy it while we can? It ain’t gonna last forever.”

Miller, the inspector general, told the subcommittee that the daily spending allowance per person in Las Vegas was $71 for meals, with $12 intended for breakfast. The report revealed that more than $40 per person was spent on breakfast, the subcommittee said. Employees got around spending limits by staging “fake awards,” for which costly foods were purchased, Miller said. These awards were a “running joke” in the agency, he added.

“We smelled a rat, and we asked for data,” Mica said, adding that the subcommittee’s previous attempts to investigate the GSA were delayed and “got stonewalled time and time again.”

The subcommittee commended GSA Deputy Administrator Susan Brita, who asked Miller to investigate the 2010 conference.

“It could have been swept under the table had it not been for one person,” Mica said.

In an email to Peck last year, Brita said conference expenses for a clown suit, for bicycles used for a team-building exercise and for a mind-reader, among other things, weren’t justifiable.

Brita told the subcommittee it isn’t clear whether the excessive spending culture spread to the entire agency beyond Region 9. The GSA is made up of 11 regions.

Walz said: “The culture of an organization is where it all starts. That is the piece that needs to be changed. I think we’d be very naive not to see this in other regions,” Walz said.

The hearing revealed a lack of oversight for Neely, who also served as acting regional administrator. His only direct supervisor was Peck.

More than three hours into the hearing, Denham said investigations will continue into what he called a “culture of fraud, waste, corruption, cover-ups.”

NBC News’ Stacey Klein and msnbc.com’s M. Alex Johnson contributed to this report.

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