Lessons from an ‘Over-the-Top’ Scandal

As the storm over the GSA’s lavish Vegas conference grips Washington, public managers at all levels of government have important questions to ask.

The General Services Administration inspector general's report on the conduct of GSA managers responsible for more than $800,000 in spending on the agency's 2010 Western Regions Conference in Las Vegas is a chilling read. It is hard not to be disheartened, even outraged, by the picture that emerges in the report. Although no malfeasance is proven yet, given the care with which federal IGs do their work it is likely that the findings are largely accurate. The planning and implementation of the conference reflects a breathtaking array of potential ethical and legal violations, not to mention a lot of just plain poor judgment. The most egregious include:

• Seven off-site "scouting trips" and planning meetings — and one "dry run" — occurred between March 2009 and October 2010. These meetings were attended by an average of 15 GSA employees at a total cost to taxpayers of $130,000.

• In contravention of common sense and federal procurement standards, the GSA apparently disclosed a budget ceiling for a team-building exercise to a sole-source contractor, and subsequently awarded that precise amount ($75,000) to that same firm.

• GSA employees provided information concerning a competitor's bid to a winning audio-visual contract bidder (which, by the way, was a large business receiving a set-aside contract intended for small businesses).

Beyond the immediate damage to — and fallout for — GSA, there are some implications for all public-sector managers. First, the contracting irregularities uncovered contribute to the impression that "this is just the way government operates" — putting public managers, no matter how upstanding and effective, on the defensive. And because the GSA conference was categorized as "training," it may reinforce a counterproductive view that government training and development activities are somehow inherently wasteful or discretionary.

All public-sector managers can use this unfortunate debacle to ask: What happened here? The short answer is that leaders allowed a culture in which exercise of fiduciary due diligence was not a priority. All of the alleged infractions and questionable expenditures occurred within GSA's Public Buildings Service, under a manager who communicated a goal of making the conference "over the top." There is no way this message can be reconciled with federal regulations stating that planners "must minimize all conference costs." In fact, the IG concluded that GSA's actions were "incompatible with its obligation to be a responsible steward of the public's money."

I think this unfortunate and highly visible fiasco within a federal agency provides managers at all levels of government with an opportunity to visit (or revisit) fiduciary due-diligence standards and review (and update, if necessary) standards and practices for spending human-capital-development dollars. Each is a big topic, so I will address the first here and return to the second in a later column.

To me, the GSA scandal suggests four reminders about managing government money. I suggest public managers ensure that all in their organizations understand these basics:

1. It's taxpayer money; the fiduciary obligation public managers have to make the most of those dollars should be taken seriously.

2. Procurement laws and regulations aren't just red tape; they exist for a reason: to protect public workers as well as taxpayers. More specifically, before engaging in sole-source contracts, make sure one key question is clearly answered: Is there really only one possible provider or is this just a matter of convenience (or worse, cronyism)?

3. Know and articulate objectives for all activities; require a cogent justification for expenditures. If it wouldn't look good in the media, it probably shouldn't be done. It is hard to imagine that GSA employees would have engaged in some of the allegedly improper conduct if they had thought, "What would this look like reported in the Washington Post?"

4. Managers are responsible for organizational culture and exercise of due diligence. Things you don't know can hurt you. Not all of the higher-level GSA officials who lost their jobs over this scandal made expenditure decisions, but they paid a high price for their apparent failures to monitor conduct within their purview.

No fewer than four congressional committees are holding hearings on the GSA scandal. We can only hope the hearings do not unfairly tar all public employees. Public managers, however, can treat this as an opportunity to refresh and reinforce organizational culture to prevent what happened at GSA from happening to them.