GSA will be responsible for monitoring agency furniture procurement against the approved plan.

Please let me know if you have any problems with this approach.

Senator CHILES. Our last witness will be Admiral Freeman, the Administrator of GSA. Admiral, will you raise your hand? Do you swear the testimony you are going to give before the subcommittee will be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. FREEMAN. I do, sir.

Senator CHILES. Admiral, would you like to proceed with some prepared remarks?

Mr. FREEMAN. No, sir. I am here to respond to your questions, sir.

Senator CHILES. All right, sir. I understand you have got a time constraint?

Mr. FREEMAN. That's all right.

Senator CHILES. If you reach that point-we hope to be quicker and further along than we are right now.

Admiral, 2 years ago J. Solomon came before the subcommittee to tell us about a couple of problems on a building that GSA had constructed. We asked him about Gateway Building in Philadelphia which seems to be slowly sinking and which may be a couple of feet shorter by now.

We talked to him about the Federal courthouse in Honolulu which has a part of the Pacific Ocean in its basement. We talked about some of the other buildings and at that time he promised to hire a soil engineer and he did, a Mr. DeToven I think his name was, and I don't know what the problem was, but I understand that Mr. DeToven is no longer with us.

I know we are still constructing buildings and I suspect 3 or 4 years from now somebody might be up here discussing some additional buildings that are sinking or are being flooded.

Have you looked at that situation as to whether they should have a soil engineer?

TESTIMONY OF ROWLAND G. FREEMAN III, ADMINISTRATOR, U.S. GENERAL SERVICES ADMINISTRATION

Mr. FREEMAN. The soil engineer you mentioned was hired on July 10, 1978. He resigned that position effective June 15, 1979, and we took action to fill that position. We made a selection in December 1979, and we have a new geotechnical engineer filling that position effective January 13 of 1980.

Senator CHILES. So you do have somebody?

Mr. FREEMAN. Yes.

Senator CHILES. I wanted to ask you on the Martinsburg, W. Va., building-I understand that we are now paying $1,250 a day for rent of that building. My understanding is that 19 years ago we leased the building for Internal Revenue Service for their computer center, and some 3 years later, when they needed more space, GSA told the landlord to extend the building so now we have one long building with two leases.

In 1975 they needed additional space, so they had the landlord add on again. I suspect that back there somebody-somebody was trying to get around filing of a prospectus with the Public Works Committee, but that is just my suspicion. I don't know that, but anyway, last September the contractor completed his work, 9 months late, and the building is turned over to GSA and the lease

began. The lease was for $456,910 a year for 20 years for a total of $9,138,200, or $38,075 a month, or $1,250 a day.

For whatever reasons, which are not entirely clear, there was not any utilities connected to the building. There was no electricity, no water, no flushing toilets, and so it was cold and dark. The IRS people tell us that they have arranged some temporary heat and electricity and can use about a quarter of the space, mostly for storage, but it will be next winter by GSA's estimate, a year and a half by the IRS estimate, before the building can be occupied, and yet we are paying this $1,250 a day.

In addition, my understanding is GSA just let a $4.2-million contract to connect the utilities in somebody else's building, and that IRS has spent $120,000 to lease other space for 5 months because theirs isn't ready.

Other contracts have been let to furnish the outside of the building and to fix the landscape. I don't know whether our facts and figures are correct, but how do we get into something like this? How did GSA get into this?

Mr. FREEMAN. It was bad, Senator. I will be the first to admit it. It wasn't done well. I think I can recite the circumstances as they occurred and some of the things which have been done which I hope in the future may prevent things of this nature.

The national computer center at Martinsburg links some 10 Internal Revenue Service offices. We did have two leases. A third lease was then awarded for 16,000 square feet at the rental you have mentioned. It does have a purchase option, and provided for deferral of the original lease termination and purchase option until May 1989, which coincides with the termination of the second lease.

The lease contract did not require the lessor to do anything outside of the four exterior walls-landscaping, walkways, parking areas; and didn't require connection of the utilities. The existing utility system, by the way, did not have the capacity to serve the new addition without extensive upgrading. There was a decision made, as near as I can find out in going through the background of this, in 1978 that precluded contracting with the lessor for alteration of the leased building. This decision has since been changed. We will contract where it is most efficient and effective to get the job done. So we did in fact contract for a building without the necessary utilities. We are going forward with a $4.2-million repair and alteration to correct these problems-to provide the updating, to provide for utilities. The reason that this work is to be done without a prospectus is due to the fact that under present law, a prospectus is not required for alterations to leased facilities. I am now discussing with the Public Works Committee of the Senate ways in which we can correct this.

Senator CHILES. You mentioned that we are trying to do something to see that we have some control here. One of the things that we were missing, are we not, is a lease acquisition policy, some kind of policy, basic policy on leases?

Mr. FREEMAN. Not really, Senator; we have had a leasing policy for a number of years. We operate in accordance with chapter 4 of the GSA policy manual. These policies have been supplemented by

a comprehensive set of guidelines incorporated into the GSA leasing handbook. Senator CHILES. Obviously it isn't working if we have a building like this.

Mr. FREEMAN. We are going to make mistakes, but the problem wasn't due to the leasing handbook. It was a change in policy that said you didn't contract with the lessor, and that wasn't very bright. We did a wrong thing and we have got to correct it. I believe that these types of problems will be corrected under Mr. Marschall's regime, so that when we do look at these things we look at them on a systems basis.

Senator CHILES. I have looked at Bert Berube's appraisal of how we get into acquisition policy directives and his timetable for that, and showing the task areas that should be completed in 1978, and I think they are good task forces that he has got, but I find A-76, A109, systems acquisition review, suspension and debarment policy, all of that is objectives, and then I see down the things that will not be able to be done are develop lease acquisition regulation, and that is not scheduled for any time during 1980.

Mr. FREEMAN. That is not so. Mr. Berube is in error if he so stated that. I was not aware he stated that. We have had a handbook on leasing in existence since 1964, which was later updated in 1977; the next update is planned for 1980.

I have tasked my acquisition director with completing the integration of that in the very near future. One of the problems we have with the regulations in GSA is each service has had them. They have to be integrated, but they can't be integrated outside of the Federal Acquisition Regulations which come under the cognizance of OFPP. We have to keep in sync with those.

I made the decision early on that we would have one set of GSA regulations. The leasing regulations will be incorporated into those. They also have to interface with the Federal Acquisition Regulations which are the big set of documents we have to look to, but this will be accomplished.

Senator CHILES. I would like to give you this copy which is, as I understand it, sort of his contract.

Mr. FREEMAN. That is a supervisory contract with his supervisor-Mr. McBride. Here is the GSA roadmap. It has milestone starts on every single initiative. This is the posture statement which was published over a month ago. These are the goals I have established. As far as I am concerned, that sheet is something Mr. Berube has with his supervisor. I have my agreement with Mr. McBride, and I think I know where I am going. I am going to try to do my best to get there.

Senator CHILES. I am delighted with that, but I think you better check with Mr. McBride.

Mr. FREEMAN. I have checked with him. That thing is not in date because we have extended the rating period until May. That is an appraisal sheet which states goals and objectives. It isn't a contract per se. It is used to evaluate an employee's performance. The fact that one employee doesn't necessarily achieve one goal is not necessarily meaningful until we come to the appraisal area. Those are appraisal sheets. They are not these directives which I signed myself. Those aren't directives. They relate to actions of an individ

ual who is one piece of a total acquisition policy area. He is one individual in one shop.

The leasing regulations come under the general jurisdiction of the Public Building Service, and overall regulations come under the Acquisition Policy staffs. We will tie these in with the other Federal agencies that are involved.

Senator CHILES. I don't know what those policy statements are good for when they are approved by the supervisor if they are not following your plans.

Mr. FREEMAN. They are not policy statements. These are the basis for a discussion which is had with the employee once a year. They are an appraisal form, which has never been found in Civil Service before the Senior Executive Service. He sits with his supervisor and talks about the goals and objectives, the things that are needed. They are personnel related only. They can change in a day as the situation changes within his organization.

I recognize you asked for these forms. We sent you up a number of them. I have certain goals and objectives myself, things I would like to achieve, and they are all listed here. There are about 300 of them, and I don't expect to be able to achieve all those. I would hope to, because they are commitments I have made.

Senator CHILES. One of the things that I haven't seen anything on is the drafting of a commercial product policy. Do you have something on that?

Mr. FREEMAN. We are making progress on that. I think you are aware of some of the efforts we have made. Development in the commercial spec area has been very slow within the Agency. I have asked Mr. Morris to accelerate the building of the commercial item description area. I believe that within the Federal Supply Service that we have a commodity management implementation program, and I was looking here to see if we had a specific date when we should get through with this. We are looking in the long term at the multiple award schedule, and the commercial item descriptions. It is our goal to substantially improve the number of those we have out this year.

Senator CHILES. I note that the GSA report that we have dated January 1980, says that GSA has failed to implement the commercial product policy.

Mr. FREEMAN. They are right.

Senator CHILES. Reading from their report-due to lack of leadership and commitment from top management; GSA was directed to come up with a model furnished procurement system in 1977 by OMB, by November of 1978. The plan has undergone five revisions. Due to inner disagreements, the project was eventually cancelled. Federal Supply never submitted the management plan to OMB. Some Federal Supply officials declined to perform assigned tasks. They would not coordinate their work as required and requested changes in the assignments which had traditionally been under their control.

The Office of Management and Budget directed GSA to form a task force on, among other things, multiple award contracts. The task force has not met since 1978, and its objectives have not been accomplished.