OTR Interviews

Inside GSA's 'Hats Off' to government excess and waste

As details of abuse of employee awards program emerge, GSA head issues an apology. Is it too little, too late?


This is a rush transcript from "On the Record," April 10, 2012. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: The outrageous GSA spending spree in Vegas on your dime didn't stay in Vegas. Back at the office GSA workers also went wild with your money thanks to an employee award program. The inspector general finding rampant abuse with the so-called GSA "Hats Off" program, costing you hundreds of thousands of dollars. So how did an incentive program end up encouraging bad behavior? Ed O'Keefe of the "Washington Post" joins us. Nice to see you, Ed. What is this GSA "Hats Off," and what in the world happened?

ED O'KEEFE, REPORTER, "WASHINGTON POST": It's essentially a rewards program that if the employees had certain threshold they would get points that could be redeemed if you will for digital cameras, iPods, gift cards to different retailers. And it was a program used in the west coast in the ninth region, as it's called in the GSA. And it turns out in the end the folks who were administrating the program ended up reaping most of the benefit of it. A lot of this is going on while most weren't watching.

VAN SUSTEREN: It's like the honor system in school. The one that get the A's and you hear the stories. They rewarded themselves the prize.

O'KEEFE: It appeared that was part of it, yes. Perhaps the most egregious thing is the fact you had $211,000 spent on the program in 2009, bout $134,000 in fiscal 2010. And by 2011, after this watchdog report came out, they only spent $800 on the program. They realize they had been caught and started cutting back spending.

VAN SUSTEREN: It's in addition to the lavish cost of the parties we talk about, right?

O'KEEFE: This is a separate program.

VAN SUSTEREN: It's one of my favorite GSA becoming a nighttime thing is Congressman John Mica released report that said the GSA party the lavish conference in Las Vegas one official was there for three nights at $93 a night, the government rate, but decided to stay an extra night in the suite. I don't know why they had a suite. And it cost $1,000 per night for the fourth night, and we got to pay for that.

O'KEEFE: The various committees who are looking into this, and at this point there is four, have all been briefed by the watchdog, the inspector general that looked into this. Every day they seem to be dripping out more information ahead of what are going to be at least four hearings next week on Capitol Hill where they have invited all of the actors involved in this, the former administrator, the former head of the public building service, this guy Jeff Neely who authorized and pushed for this big conference. I suspect over the course of those four hearings we will learn more and a lot of the dots will be connected.

At this point really I think the bigger question is GSA officials first learned that the investigation in the big Las Vegas affair was going on last May. Why between May and mid-March when the White House was alerted to this did they not do something sooner? Did they not bring it to people at the White House? Why did they not --

VAN SUSTEREN: Why didn't the White House didn't know? I'm not sure. The way I understand it from the former GSA administrator that when there are investigations you are supposed to report up the chain of command.

O'KEEFE: You would think.

VAN SUSTEREN: I don't know if it happened, but that is curious.

O'KEEFE: Yes. We don't know for certain. White house sticks to the timeline when they were first informed about in March.

VAN SUSTEREN: I guess the White House should say the White House is letting the investigation go forward. Once the money has been spent and wasted, if the White House, there is nothing the White House can do.

I'm curious, is there any way the inspector general could have caught this before these expenditures. Somebody okayed this money being spent. Someone signed the dotted line. So who did that? And could the inspector general stop that?

O'KEEFE: It's unclear if he could have stopped it, but he certainly has a very good reputation of learning about these types of fraudulent activities of this agency. He caught a lot of waste during the Bush administration as well.

VAN SUSTEREN: After it happened or was it happening before it happened?

O'KEEFE: That is not clear. He very well could have learned about it as it was happening. We learned of another incident, or another event that was held last April, much more modest. But we were actually, you know, a worker flagged it for me in March a few weeks before it happened. He worked it up to the agency and said it's a meeting held and paid for properly. It's copacetic. We're going to go through with it. The inspector general was alerted about it around the same time. We didn't think my of it at the time, but I did my due diligence at the tie and it appeared to be fine. In hindsight with the other spending going on, perhaps it wasn't proper. And we know the inspector general continues to investigate the allegations of what went on at all sort of different things.

VAN SUSTEREN: Do have all these agencies in Washington have parties?

O'KEEFE: No. That is important to remember. The Pentagon isn't throwing parties like this. The Treasury Department isn't throwing parties like this. GSA is the government's purchaser. It has a lot of interaction with the corporate America, with businesses that do work for and with the government. It's a huge agency with offices all over the country. A lot of this is rooted in the idea the offices are so far from Washington that they thought they wouldn't get caught. They have been caught. And the result of it is you are probably going to see less of this type of spending across the government for good or worse.

VAN SUSTEREN: Ed, thank you.

O'KEEFE: Good to see you.