workpapers, I doubt if you would have realized that they had the makings of what could have been a case of concealment here. How can we try to make sure that this doesn't happen in the future? Mr. BRUH. From the day I arrived, Senator, I received word that one of the items that needed improvement was, as you indicated in your earlier talk, a closer working relationship between not only the Office of Investigations and the Office of Audit but with many other functions within GSA and I am taking a number of steps to improve that kind of relationship specifically with the Office of Audits to include traveling around the country, meeting with various field directors of audits, meeting with my own special agents in charge, meeting with individual personnel to try to encourage them to cooperate in the working relationship.

I have also asked my counterpart in the Office of Audits, Mr. Davia, for copies of all audit reports from now on to be issued directly to each of my special agents in charge so we could at least read them, keep involved in it.

I also submitted documents to him which he has indicated to me that he is totally in favor of, of working out a smoother and better working relationship between the two functions, items like we talked about here today would not be missed.

In addition to that, we started training programs. We are starting a-fraud-awareness type detection program which some of my people are working on right now so as to give training to auditors, inspectors, various other people such as contracting officers in GSA.

Senator CHILES. That would be training so that they would sort of know what they are looking for in cases of fraud and they would be on alert and they would highlight that when they find it?

Mr. BRUH. To look for fraud indicators. That is correct. When they have such fraud indicators, they make contact with the special agents or managerial people up to my level in the Office of Investigations.

Senator CHILES. How can we build some disincentives into the program to discourage contracts from taking advantage of the Government in this way? What would you recommend?

Mr. BRUH. I think, first of all-

Senator CHILES. What I am saying is under the old practice, and we didn't have enough auditors, if chances of being audited were so infrequent as the odds that I was mentioning here, and if you got audited, you know, maybe you had to pay something back that you negotiate after what even you owed, and then pay back some percentage of that, there is not much disincentive; in fact, all of the incentives are sort of the other way, to make off with as much as you can, as long as you can.

Mr. BRUH. I think there are a number of things, Senator. Frankly, thanks to you, we have increased the number of auditors in the Office of Audits and we have been able to increase the number of special agents that we were authorized to hire. Therefore, there will be a greater number of both audits and criminal investigations of fraudulent-type situations. Those people that do try to defraud the Government, hopefully we will catch them, and if we catch them, hopefully they will be prosecuted and the publicity should

offe: deterrence to others. There are also civil penalties, as I am sure you are aware.

I think if there is a greater investigative effort by all parties, with investigations, audits, and there is a greater awareness on the part of the GSA operational people, which I think they are becoming more aware of, it should help to deter unscrupulous contrac

tors.

Senator CHILES. I think all of those steps would be very necessary. The civil penalties, some disbarments, criminal prosecutions, if they are warranted; the publicity, all of that, and right at this stage, of course, I need to say that a number of the recent audits have shown that the contractors did indeed keep their work and that the Government was not overcharged.

So we are not talking about all of the contractors out there trying to rip off the Government. I am sure that most of the contractors honor their word and honor their discount procedures and want to do that. And we applaud them for that.

Mr. BRUH. I think that is true of GSA employees, also, sir. Senator CHILES. I am sure that is. Certainly we have some good work here from some contracting officers and some auditors, but still an effort to protect the Government from that percentage that will take advantage and that percentage I am afraid grows if the word gets out there that "Everyone else is doing it, and you had better do it, too, and you are not going to get caught, and there is not going to be any penalties as a result of it."

So we have noted before that a large number of your investigations, the investigators, perhaps the majority have little or no training in white collar fraud cases. Is that still the case?

Mr. BRUH. I think it is becoming a decreasing type problem. As we are looking for people with those kinds of backgrounds, we were fortunate in that we still had openings and we try to hire people who have financial and investigative type backgrounds.

In addition to that, both the Inspector General and the Deputy Inspector General, from the day I arrived, have been after me to start a training program for special agents, and we are heavily involved in three training program areas. We are putting in a lot of resources in trying to develop a bribery awareness program, a fraud detection program, and a financial investigative program for our own special agents.

So I think it is becoming a decreasing problem as we hire more and more people and the other ones that were onboard that might not have the background are learning from them.

Senator CHILES. Have you had time-I am asking you about your general overall job as opposed to the specific questions I have been asking you before. Have you had time to review the case files and form an opinion about the quality of your investigative portfolio? Again, we know that we still had a lot of files open at the time of the first charges were made. Many of those files, as I understand it, are still open. We still can't say what was the extent of the overall fraud and people keep asking me when is the GSA investigation going to be over? I don't know how to answer that.

Mr. BRUH. I have some opinions on something like that. We are talking about 38,000 people that work for the GSA. We are talking about thousands of contractors that do business with GSA. We are

talking about billions of dollars in logistical supplies that we control, thousands of office buildings.

I am not sure that we are ever going to totally eliminate the problems within GSA. I think we have to try to hire the kind of people, agencywide, that have good backgrounds, that show integrity and I think there has always to be the deterrent force of an Öffice of Investigations and an Office of Audit, and so forth, so that the wrongdoers will be eliminated by being fired or prosecuted. But there will be problems.

Senator CHILES. I understand that. More specifically to the files that are there, the opinion cases that were there when you got there, what do you find is the quality of those files and what are we going to do about disposing of those cases?

Mr. BRUH. We have been, again, since day 1, going around the country and trying to eliminate the type of investigations that frankly are not properly using special agent resources. More properly, they probably should be looked into by management people within GSA proper. I think that our inventory has improved substantially. I think every day that goes by is a plus toward doing the kind of work that we should be doing.

Senator CHILES. What did you find the principal problems in regard to the pending cases of files that you reviewed?

Mr. BRUH. I just think there are a number of problems. There were not a large number of special agents onboard for a long time. There were not many financial investigators.

Senator CHILES. You have already said a number of the minor cases should be sent back and handled by management.

Mr. BRUH. I don't think case selection was good in terms of the resources. I am not sure that there was the overall skill to find and do productive type of probes into areas where GSA may be vulnerable to fraud and corruption.

Senator CHILES. Let me add to your troubles a little. There is supposed to be this great scandal at GSA, the largest scandal that the Government has ever known, characterized by a number of people. If that is true, a lot of the big fish haven't been caught yet, and constantly we are asked about that.

I know how hard that is. We put a lot into our particular investigative cases and while we think we came close, we didn't get the last 2 inches and with our investigative staff of four, of course we have turned our files over to the task force that was appointed to prosecute in this. How soon will we be able to know what the magnitude of the GSA scandal is, and how soon are we going to be able to say, "We now have come to grips with it," and it only went to a certain level, or if it went higher than that, we cannot prove it? When will we be able to get some kind of understanding of that? It has been going on now for a number of years.

Mr. BRUH. You know, that question is a very difficult question, Senator. All I can ever promise anybody is that we are going to look for wrongdoing to the best of our ability. Whether or not I will ever know the magnitude of fraud would mean that I would have to have all the information and knowledge of what is going on inside.

I think we can reach a point, and I think that when we become professional enough and have the agents fully trained and develop

the kind of awareness and cooperation agencywide along GSA employees, for reporting wrongdoing, be it theft, or fraud, or bribery, that we could eliminate 95 percent of our problems. Whether or not I could ever say, "I doubt if the Internal Revenue could right now say that they know the magnitude of fraud in the United States," and I don't know if I could, sir.

Senator CHILES. How long is it going to take to get the files straightened out? I am told that the Special Projects Division and your investigators both have files in the same topic, both with different numbers, neither division knowing what is in the other file. Are we going to be able to come to grips with that?

Mr. BRUH. Yes, sir. I think the Director of Special Projects and myself have a good working relationship. I know of nothing that he is not advising me about. The file situation is one that we are straightening out. We do have thousands of files that we have to get organized.

Senator CHILES. Instead of working 250 cases at the same time, wouldn't it be more reasonable to select 10 of the most promising cases and give special attention, enough manpower, enough management, enough special agents to really go through and determine, hit those top 10 cases?

Mr. BRUH. We are doing that, sir. We are working cases by priority, not by chronological assignment. We are trying to work the kind of cases that have the greatest influence, negative type of influence on GSA. And be it high-ranking officials or fraudulent type situations, or thefts, we are trying to put the resources on those particular things.

Senator CHILES. Mr. Bruh, you have been at GSA 10 weeks now, and you have come with distinguished credentials from your service in the Internal Revenue Service. There have been changes that there has been a coverup going on at GSA. Do you have any evidence or any opinion as to whether a coverup has been going on at GSA in regard to not bringing to light these charges?

Mr. BRUH. Absolutely not.

Senator CHILES. Has Kurt Muellenberg, or anyone else at GSA given you any instructions or made any suggestion which in your opinion would in any way impede, restrict, or slow down any investigation?

Mr. BRUH. No, sir.

Senator CHILES. If the taxpayers are ever going to be convinced that the scandal at GSA has been properly investigated and you and/or the Justice Department are either going to have to produce some heads, or you are going to have to show, and this will probably be a more difficult job if you can't do that, that you carefully have done a professional job of looking into each and every allegation, that you have run down every lead of major wrongdoing; and that you followed the string all the way.

I think only if we are able to do that are we going to be able to sort of be able to say at some stage, not that the wrongdoing isn't going on. You have already mentioned how many millions of dollars are purchased and how many people are employed, how many contracting officers, how many private contractors, there are certainly going to be problems. But I am talking about what we sort of call the past scandal that is there, only sort of by being able to

show that we have run down all of these leads and/or we produce some good cases are we going to be able to convince the public that we have handled that investigation properly and that there has not been a coverup.

Mr. BRUH. I agree with you, sir.

Senator CHILES. I constantly seem to be up here in one of these hearings talking to somebody new that has come onboard and we are constantly saying, you know, we know that you have got to have a little time. Now, of course, we have Mr. Muellenberg and he came in as the Inspector General. Now we find that we have got to have a head, Chief of Investigations under the Inspector General. So now we are dealing with you. We are dealing years, now, plural, years after we started off with this. I know that you are still living out of the suitcase; all of the turmoil that the Inspector General's Office has gone through in the past is not any of your doing. I am very used to people, senior officials saying, "I haven't taken my coat off yet, I need some time, just give me some time. "But I hope you realize that time is running out, that the public and the Congress have been waiting for 22 years to sort of find out "who done it", and the first chapters were tremendously exciting and everybody was waiting on, just seeing how far it was going to go. We know that it was going into the towers of power. It was a question of just who it was going to be. Now, every day that passes with no results I think threatens the credibility, certainly, of GSA, but also the credibility of Government in general a little bit more. I certainly wish you well in your job.

Mr. BRUH. Thank you, sir.

Senator CHILES. We look forward to seeing you some more.

Mr. BRUH. Thank you for your support, too, sir.

Senator CHILES. Our next witness will be Mr. Walton Sheley, of the General Accounting Office.

Mr. Sheley, will you raise your right hand, and anyone else that is going to testify.

Do you swear the testimony you are about to give before the subcommittee will be truth, the whole truth, and nothing but the truth, so help you God?

Mr. SHELEY. I do.
Mr. BOGAR. I do.

Mr. ENGEL. I do.

TESTIMONY OF WALTON H. SHELEY, JR., ACTING DIRECTOR, PROCUREMENT AND SYSTEMS ACQUISITION DIVISION, ACCOMPANIED BY CARL BOGAR, GROUP DIRECTOR, PROCUREMENT AND SYSTEMS ACQUISITION DIVISION, IN CHARGE OF GSA, AND WILLIAM ENGEL, EVALUATOR, PROCUREMENT AND SYSTEMS ACQUISITION DIVISION, ALL OF THE GENERAL ACCOUNTING OFFICE

Senator CHILES. Would you identify your associates?

Mr. SHELEY. On my right is Mr. Carl Bogar, our Group Director in charge of GSA. On my left, William Engel, who was responsible for managing the work which we will be talking about today.

Senator CHILES. If you would summarize your statement for us, we will put your report of August 22 on the multiple award pro