GSA Order on October 2, and the first order of business was to be the determination of requirements. Thereafter it has been brought to my attention that we are about to embark on various furniture procurements without having completed a market analysis or made a basic determination of agency needs, and the alternatives available to meet the needs. Without such a study and the results thereof, we would be embarking in a program that could be a significant waste of Government funds. I therefore direct you to cancel all current solicitations for all classes of furniture and go back to all customer agencies and require them to revalidate their needs for furniture in the context of what is available nationwide through the Government's excess channels. The validation of agency requirements is essential to the acquisition process in Government supply and that is one of the prime reasons I established the commodity center concept for furniture. In light of the foregoing, you are again directed to pursue your market analysis research with this principle in mind. I intend to pursue this course of action over the course of the next year with respect to all commodities which we purchase for other agencies and I want you to begin this process with furniture. R. G. FREEMAN III, Administrator. Senator CHILES. We will now hear from William Lynch, the Chief of the Department of Justice's GSA task force. TESTIMONY OF WILLIAM S. LYNCH, SENIOR COUNSEL FOR Mr. Chairman and Senator Pryor, I appreciate this opportunity to appear before the Subcommittee on Federal Spending Practices and Open Government to describe the efforts of the Department of Justice directed toward allegations of criminality involving the General Services Administration and the results achieved to date. Since this subcommittee spearheaded the airing of abusive practices and criminal improprieties, it is particularly appropriate that I give you a résumé of the results of prosecutions undertaken by the Department of Justice in connection with these matters. When the then-Deputy Attorney General, presently Attorney General Civiletti, appeared before this subcommittee on September 18, 1978, he advised you, among other things, that several U.S. attorneys' offices and the Department of Justice had even then become deeply involved in a number of investigations of improprieties and fraud involving GSA. Since Mr. Civiletti's testimony, 78 individuals and 3 corporations have been charged with a variety of Federal crimes involving fraud and corruption perpetrated in connection with GSA activities. Three corporations and 69 individuals have either pleaded or been found guilty. One individual was acquitted. Of the individuals indicted or convicted, 39 were employees of GSA and 11 were employees of other Government agencies. The bulk of the GSA employees who have been convicted have been GSA store managers, assistant store managers, building managers, or related maintenance people. However, also included in those indicted or convicted have been a regional chief of retail operations, a supervisory quality assurance specialist, and the head of a GSA regional laboratory. Unfortunately, the recitation of cold statistics does not reflect accurately the difficult and extensive efforts by the Department of Justice, the U.S. attorneys' offices, Federal grand juries, and an untold number of agents of the Federal Bureau of Investigation, auditors, investigators, and technical specialists from the General Services Administration, all laboring diligently and effectively in Maryland, the District of Columbia, Virginia, Missouri, and Texas. Let me touch briefly on the GSA task force within the Department of Justice since its genesis was so intertwined with the revelations attendant upon the 1978 hearings of this subcommittee. This task force was established at the end of September 1978, with directions that it would take over certain investigations then pending at GSA, monitor the several current investigations then pending in several U.S. attorneys' offices-some of which had been underway for a number of months-and assure that the investigations were completed thoroughly and professionally. There are now 5 prosecutors, 19 FBI special agents, 8 GSA auditors, 3 GSA special agents, and 1 special agent of the Internal Revenue Service assigned to investigations undertaken by the task force. In addition, we have been fortunate to have had the interested cooperation of other Government agencies, and in one instance have asked for and received substantial services of an expert consultant from the National Bureau of Standards. The matters we are investigating range across the activities of several of the major divisions of GSA. However, the investigations which have been undertaken are focused and particular, and the task force has not attempted a sweep or survey investigation of GSA as a whole, which is more an internal administration-investigative task rather than an activity appropriate to a prosecution oriented group such as the GSA task force. All the investigations now pending in the task force are complex, require extensive document review, analysis, interview, and knowledge of agency practices and procedures. One of the task force investigations into improprieties within the Federal Supply Service of the GSA has resulted in an indictment of three individuals and the guilty plea of one of them for what was essentially a conspiracy to accept bribes, together with the plea of nolo contendere from the corporate defendant in that investigation. The task force's focus is primarily the headquarters components of the General Services Administration and allegations of improprieties and possible Federal criminal law violation involving approximately one-half dozen either present or former high-ranking or middle-ranking GSA officials. Until all leads and possible followup investigations of pending matters and cases are completed, it is impossible to give a prognosis of what evidence can and will be gathered, or whether that evidence will be sufficient to bring charges against any of the individuals whom we now have under active investigations. Since it would be grossly unfair, unprofessional, and improper to furnish the names and/or positions of those who are under investigations, I can only assure this committee that the task force is vitally interested in pursuing allegations of fraud and criminally wherever they may lead. However, our criminal justice system demands the marshaling of evidence sufficient to convince a jury of the guilt of those charged beyond a reasonable doubt, and bare allegations are grossly insufficient predicate for the bringing of criminal charges. In addition, some of the practices we have come across-such as the free lunching by Government procurement or other personne! at the expense of those who are doing business with the Government and profiting from the actions of the same Government employees whose lunch and dinner bills are being picked up-raise questions of propriety and appearance but do not generally provide a basis for Federal criminal charges. Most of these matters are more appropriately addressed in terms of agency leadership, direction, and discipline, rather than by the criminal justice system. I have attempted to briefly outline for this subcommittee investigative and prosecutive effort undertaken by the Department of Justice in connection with the GSA scandal. I do not mean to give the impression that all the problems of GSA-related fraud and corruption violations of the criminal laws have been addressed and excised. Some of the investigations which led to the above-recited indictments and convictions are continuing, and indeed have spawned other investigations which are being pursued vigorously. Additional indictments are expected. I do think that the results to date are reflective of the seriousness with which the Department of Justice has viewed the problem and are a concrete redemption of the pledge made to the subcommittee by Mr. Civiletti that the efforts of the Department of Justice would be "aggressive and complete." Thank you, Mr. Chairman. If you have any questions, I would certainly appreciate having the opportunity to answer them. Senator CHILES. Thank you, Mr. Lynch. It is clearly apparent that the bulk of the cases which have arisen to date from the GSA scandal are involved in two areas; corruption in self-service stores in Baltimore and Washington, and corruption with repair and alteration contracts in the Washington area. Mr. LYNCH. That's correct. Senator CHILES. To date the U.S attorney's office in Baltimore has been successful in convicting at least 39 corrupt contractors and GSA employees. But in Washington, it appears to be a different story. We read in the newspaper that persons whom we know have defrauded the Government out of thousands of dollars, even millions of dollars, have been permitted to plead guilty to one or two counts of fraud in minor amounts. The result is modest sentences, little or no jail time and small fines. Who is in charge of conducting these prosecutions? Mr. LYNCH. The U.S. attorney's office and the particular assistant who has these matters under his jurisdiction. Senator CHILES. What is his name? Mr. LYNCH. William Bloch. However, I would like to point out, as the chairman probably already knows, that there is no set piece method of proceeding in one of these investigations. A lot of the calls that are made in the course of the development of an investigation and the development and marshaling of evidence sufficient to advance the investigation are judgment calls. Senator CHILES. Well, I can't understand why there is a need for all of this plea bargaining. The exact amount of the fraud is clearly laid out in the GSA documents. It took Bob Lowry, a contractor who first started reporting this about 2 hours to show me how to read those documents. If I could read them in 2 hours I know any prosecutor ought to be able to and any judge ought to be able to understand where it says walls are supposed to have been painted once a week and you look at the wall and see it only has one coat of paint, you don't have to plea bargain too far to get that kind of evidence into court. Mr. LYNCH. There are an infinite variety of facts that you deal with in the whole area of maintenance and the repair programs in PBS that have been the subject of investigation of the U.S. attorney's office in the District of Columbia. It is true that the documents are-and many of them are patently on their face, falsebut it is also true as I understand it from both the agency involved in this investigation as well as from the prosecutor who has been involved in this investigation that it sometimes is not all that simple. Quite frequently in the area of maintenance and work orders they have trade-off arrangements where in fact they say they are going to do the painting of a wall and, in fact, the tradeoff was that he would do some sort of a partition. I am not countenancing the propriety of that kind of evasion of the normal regulations and the processes of how to get this work done, but that has been the fact in a number of these investigations. Senator CHILES. I understand that as an attorney it is very easy for me to sit up here and second guess. If it was a question of looking at one case or two cases then I think I would have little right to second guess. But when you look at a large number of cases and you look at the very light sentencing and the very small fines, it seems to me it would be better to run the risk of going to trial with some of those instances and see if you can get a conviction. What does it say for the future when someone who literally rips the Government off for hundreds of thousands of dollars and then end up with a slap on the wrist, no jail sentence or some kind of weekend kind of arrangement, and very little in the way of fines? That is what disturbs me about plea bargaining. We can add to the number of convictions, but when you see the light penalties it disturbs me. Mr. LYNCH. You know, Mr. Chairman, that the sentencing is within the province of the judge who accepts the plea. Senator CHILES. I understand that. Mr. LYNCH. To the extent that it has been disappointing to you I think you can say that it has been disappointing to the Department of Justice, certainly to the U.S. attorney's office. You may recall that they made a public protest concerning the initial sentences that had been levied by the concerned judge in those early matters. Senator CHILES. I do recall hearing that, and I can understand the frustration of those prosecutors. I understand. We had tesimony here today about the contractor who sort of talked his way out of an indictment and now applies for reinstatement as a GSÅ contractor. I wonder what that does to the morale of GSA employees and other contractors who played it straight? Mr. LYNCH. Well, I accept the fact that the Inspector General and his deputy are going to vigorously protest, and hopefully prevent that individual from reacquiring contracts with General Services Administration. Senator CHILES. Does the Attorney General, or you, or your strike force, or anyone else have any authority to say to an assistant U.S. attorney: "We don't think you should be doing all this plea bargaining," or, "we should have some better results from these cases?" Mr. LYNCH. To answer your question directly, Mr. Chairman, yes. The question is in a particular sentence, a particular proceeding, whether or not the judgment calls that have been made in the course of the investigation that led up to the acquisition of the evidence to bring those charges was appropriate. I may have differed or you may differ because different people will approach the same set of facts and the same investigation from different perspectives, but again you are Monday morning quarterbacking. I think the U.S. attorney's office the prosecutor directly in charge of this case is fully aware that the sentences that have been levied haven't been greeted with acclamation either in his own office or by the Department of Justice or, indeed, by this subcommittee. To the extent that it was possible to bring to the judge's attention that the U.S. attorney's office was dissatisfied with the sentences, which are indeed the province of the sentencing judge, not the U.S. attorney's office, I think that has been done. Senator CHILES. Well, I hope you will take back one more case of Wednesday morning and afternoon quarterbacking from up here. I still feel that we are not getting sufficient sentencing. Mr. LYNCH. Yes. Senator CHILES. Can you tell me approximately how many cases have been referred to the task force since you began work and how many have been referred since Mr. Muellenberg came onboard in May this year? Mr. LYNCH. Prior to Mr. Muellenberg's ascension to the office there were approximately seven matters referred from GSA to the task force. Since Mr. Muellenberg has been in office, I counted another seven. I understand that he said this morining 10, but I think there are a couple of Davis-Bacon cases that quite frankly we have not been accepting or requesting routing through this task force. Senator CHILES. How many GSA related investigations have been referred to the grand jury since you began in September 1978, and then how many since May 1979? Mr. LYNCH. Approximately four prior to May 1979, and three others since then. Senator CHILES. I understand you currently have active investigations in Boston, San Antonio, Salt Lake City, in Oklahoma, New Jersey, Maryland, Washington, and in Florida. Mr. LYNCH. Yes. Senator CHILES. Can you tell us some idea of what these cases are involved with? Again, I am not trying to get into details and hurt your prosecution at all. Mr. LYNCH. Everything ranging from fraud in connection with heavy equipment service contracts not involving GSA personnel, to corruption of quality assurance specialists, which definitely does involve GSA personnel. They run in terms of the matters that have been referred over the last several months to fraud in the course of |