Senator CHILES. Our next witness will be Mr. Thomas McBride, Inspector General of the Department of Agriculture.

Do you swear the testimony you are about to give will be the truth, the whole truth, and nothing but the truth, so help you God? Mr. MCBRIDE. I do.

Mr. MILLER. I do.

Senator CHILES. Mr. McBride, we will place your statement in full into the record. It is a perfectly fine statement. I have to tell you it doesn't completely address my concerns.

My concerns are that the General Accounting Office and GSA auditors and my subcommittee agree that except for the Department of Labor, which didn't submit a report, the Department of Agriculture report is the least acceptable of any of the reports turned in by the agencies.

The whole question of waste and misuse of Government furniture which is costing the taxpayers over $200 million a year really started when the local newspapers began running articles about things being thrown away at Agriculture which led Senator Danforth to ask me to use the subcommittee to look into what was going on.

We did, and of course, we found that you had an attic and cellar full of unaccounted furniture and it later turned out, so does everyone else.

We look to you to go the whole 9 yards and be the lead agency, and I know that you did step forward as one of the lead agencies in the task force, but at some stage it looks like that doesn't exactly follow through.

I can't tell whether your report is deficient because your people didn't do the work or because they did the work and the report isn't written very well, but your statement seems to me to have more data than your response to GSA, and I find that incomprehensible.

If we start with your cover letter, in the main you seem to blame almost all of Agriculture's problems on GSA. It isn't GSA's fault that the Department of Agriculture didn't keep track of their property. They didn't even have an inventory, that Agriculture had not counted their desks. GSA has got a lot of fault and if I look at the answers to the GSA audit guide questions, one question is very simple-how much excess furniture do you have? Your answer in the report is, "Whether excess furniture is to be used is subject to the description of the applicable agency. Most property officers told us the items in storage will be used at an undetermined later date."

That seems to say to me they can do whatever they want and horde as much furniture as they can get their hands on. The one thing it doesn't seem to tell me is how much excess furniture Agriculture has.

The next question, when are they going to use their stocks, and the answer is the agency claimed the furniture would be used, but were unable to give specific dates.

That sounds to me like they haven't the faintest idea. It sounds also like the auditor wrote that down and walked away from the question. That doesn't hit me as what an auditor is supposed to be doing.

How much furniture does the agency have? Your agency doesn't keep track of most furniture. Thus you assumed that all those items recorded had employees using them.

How can we assume that? Isn't that what an audit is all about, to determine whether or not-and to go on, the question is do top agency officials follow agency standards? Your answer was yes, they do, but they don't, and you wrote your standards are in accordance with what the top officials want at any given time, and the officials are limited by budgetary restraints.

That seems to me they can spend anything they can get their hands on as long as there is some money.

Another audit question, does the agency have a procedure for replacing wornout furniture and does the agency follow it? Your answer was, "Our limited record review neither supported nor denied any infraction of this procedure."

What kind of an answer is that?

Mr. MCBRIDE. May I address the entire topic, Mr. Chairman?
Senator CHILES. Yes.

TESTIMONY OF THOMAS F. MCBRIDE, INSPECTOR GENERAL, U.S. DEPARTMENT OF AGRICULTURE, ACCOMPANIED BY ROBERT MILLER, DEPARTMENT OF AGRICULTURE

Mr. MCBRIDE. I did not personally review the response. It was transmitted by the head of the headquarters audit division who supervised the audit work, worked with Mr. Fox and the GSA team, and transmitted the responses that you have quoted, to the GSA audit guide.

Mr. Miller who is with me is director of the Headquarters Audit Division. I had not originally intended to have him sit with me, but I thought it might be a valuable step in his career development to appear at the witness table this morning.

I had reviewed the earlier audit report and I had been heavily involved particularly in the early stages with regard to the immediate corrective action in the Department of Agriculture. Those actions are reflected in the statement which presents the facts as I know them.

If I can recount briefly the chronology and then describe where we are going from here and how to remedy any particular deficiencies in the audit work to date. We were the agency initially singled out in the Washington Post stories. I read the newspaper at 7 that morning and by 7:30 was on the phone marshaling the audit staff to begin to look into these things. That same morning I talked to Kurt Muellenberg and suggested the initiation of this GSA-led interagency audit, as suggestion which Kurt was most receptive to. That was on September 12. We immediately took a look at what we had in the Washington, D.C., complex of the Department of Agriculture, particularly in the largest single building, the South Building as it is called, on Independence Avenue.

We found, one, that there were many caches of excess furniture; two, that the agencies generally had no inventory records of what they had in use or in surplus; and three, they had no specific record of excess furniture.

This was symptomatic of a larger problem which is that, in the many subagencies of the Department of Agriculture, furniture ac

quisition and management has largely been delegated to these agencies. Some of them may do a fair job and some of them may do a poor job. Our audit has not turned up any that do a good job. We actually did, ourselves, a physical count of what was in those excess property pools because we could not get that data from anywhere within the Department. My own auditors went and we counted, for the five sub-agencies covered some 2,000 items of excess furniture. We provided that list of furniture to Mr. Grenetta of this committee's staff.

We were naturally concerned that good stuff was being thrown out, which was the original story, and in despair at the immediate inability of the Department to get a handle on that, I assigned the OIG staff, physically, on the loading dock to make sure that we looked at what was going into the dumpster, and while we didn't find any furniture during the period of surveillance, we found a lot of other fairly valuable stuff-cases of hard-bound books. Ironically that case of books was the Opinions of the Comptroller General of the United States, unopened, costing $12 or $15 a volume.

Within a few days of that I actually displayed these items to the Secretary at a staff meeting and the Secretary and Deputy Secretary Williams read the riot act to the top management of the Department. At that point, that was about early October, maybe October 4, a memo went out from the Secretary's office to the Assistant Secretary for Administration describing some immediate procedures that they were to take to monitor the disposal areas, to assume central receiving and shipping responsibility, and most importantly, to require all new purchases of furniture to go through the Office of Operations and Finance. That is the central administrative office of the Department, for review and determination that there was no excess property anywhere else within the Department or within any reasonable geographic reach that could be used.

I was arguing at that point for a total freeze, and that memo directed at least a semi-freeze or a de facto freeze, my view being that while there were long-term corrective actions that had to be taken, one quick fix was to simply stop new buying, and if people couldn't buy new furniture, the incentive to repaint, repair and reuse excess furniture would be great.

I understand that purchases of furniture for the Washington, D.C., area have dropped very, very substantially. The figures I have gotten from Mr. Miller last Friday showed $100,000 in new purchases since October, and that compares with comparable prior periods of several millions of dollars of purchases.

If I am somewhat vague in the specific figure and data it is because we have had extraordinary trouble in finding specific fig

ures.

Senator CHILES. Speaking to specifics, I have got a computer printout here that has 23 pages to it, and it is 23 pages of furniture requirements that your agency has revalidated.

In fact when the freeze came, as I understand it, GSA said we put a freeze on, any of those orders that were in before the freeze, send those back for revalidation. We are not going to fill those orders until they are revalidated. They sent back 23 pages, computer printout pages of orders to Agriculture, and every one of them

except about 4 items have been stamped revalidated and sent back in.

Mr. MCBRIDE. I saw that list this morning for the first time, Mr. Chairman. I don't know what those items are since they are all in code numbers. I was told that $38,000 of the $100,000 purchased since October in the Washington, D.C., area, was one large procurement unit which involved word-processing equipment for one of the subagencies within Agriculture, and most of the others involved early October approvals.

On the pages you refer to, some contain one item. It is hard to tell whether the item is a $20 chair or a $500 executive desk. I really don't know, and until we go through that list and decode it, I can't give you any dollar figure.

Senator CHILES. Obviously we don't have any handle, or you don't, if you only saw the list this morning, and if Agriculture has revalidated furniture orders and are sending them back. They are supposed to have looked at when we have a freeze, an agency that supposedly had the first problem that came to light, and as you said you found out they had no inventory control, no other processes, do they have those in being now? Is there inventory control that somebody can look at one of these items and say is that item in stock? Do we have that item? Can we look here and see whether there is a used piece of furniture or a piece of furniture we can rehabilitate? Can we look for that?

Mr. MCBRIDE. There is no inventory of all furniture and equipment.

Senator CHILES. What in the world-

Mr. MCBRIDE. If I may continue a moment, Senator, as a result of our report to the Secretary and the orders to the Assistant Secretary for Administration, the subagencies did do an inventory of all excess furniture as of about December 1979. That was excess furniture in the Washington, D.C., area.

The lists that were submitted by the subagency as their head count of excess furniture was transmitted to the Committee prior to the December 19 hearing. That list has been circulated to the various subagencies of the Department of Agriculture with instructions that if they need a new item or need an item and it is on that excess list they should check that first before ordering new furniture.

I should note that I cannot, in terms of my time and my responsibilities within the Department, manage day-in, day-out the furniture procurement responsibility. Nor do I think I should be placed in the position of validating every item of purchase for the Department.

Senator CHILES. You are the auditor, Inspector General. What I want to know from you, and what we looked for in your reports and all, is does Agriculture have a procedure whereby they can look before they order any new furniture and determine is the furniture needed? Is there a procedure to say how we should go about ordering it, whether this is for a new department, for new employees, or whether this is some guy wanting to refurbish his office or his desk or those kinds of procedures? Do they look and see do we have something like this in the warehouse? Is it availa

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ble? If we can fix or repair a piece of furniture is it necessary to go buy a new piece of furniture?

Mr. MCBRIDE. Those procedures are in effect now, and they are in effect as a result of the Deputy Secretary's October 4 memorandum, which required central clearance through the Office of Operations and Finance. That is the central administrative procurement unit of the Department.

Senator CHILES. You can't tell me whether this list went through that, whether it cleared those procedures?

Mr. MCBRIDE. I'm sure it did.

Senator CHILES. You don't know whether there is in place now the kind of inventory for what is in the warehouse that would give them the answer?

Mr. MCBRIDE. I know that there was as of December.
Senator CHILES. I can't tell that from your report to GSA.

Mr. MCBRIDE. What you are putting your finger on is the problem that we found in the past. We did an audit long before I came to the Department of Agriculture in 1972, found some of these same problems, some of the same recommendations.

One of the major recommendations, which has begun to be implemented, was a property management information system. That is all capitalized items over x dollars, say $200, would be included in a computerized information system covering the many hundreds of field offices of the Department of Agriculture.

What we found in looking back at that 1972 audit is the corrective actions were all there on paper. The new regulations were issued, the new instructions. The design of new systems was begun, but over time things lapsed, so by the time we looked at it again in 1979, it really was no better and perhaps worse than when we looked at it in 1972.

What that suggests to me, in my principal role as guardian of the taxpayer's dollar, is to make sure that these corrective actions are taken, which I have done, and to make sure they continue to work. Most of our audit effort since December has been expended on monitoring the follow-up action.

For example, the property management information system initiated in 1975 is still not operating. That is the basic inventory system. I am told that the real property aspect of it will be implemented in 6 months.

Senator CHILES. If it is not operating, how can you say that they can revalidate an order in that it has met the requirements?

Mr. MCBRIDE. They did it as an ad hoc measure, and at our insistence, the subagencies did a one-time count as of December of what was in the excess property pools, so they do have that December base, which is fairly recent.

What we need now is to work on the central administrative people to make sure they immediately have a continuing inventory of excess furniture, and in the longer haul, a continuing inventory of all furniture, used or excess.

Senator CHILES. Excess furniture is what they are willing to give you, what the Agency says they don't need. That is not what they say we have got in storage that we are going to use sometime.

Mr. MCBRIDE. I think actually the inventory of all furniture that is not actually in use, and while the large majority of that is