DARRELL E. ISSA. CALIFORNIA CHAIRMAN JOHN L. MICA, FLORIDA MICHAEL R. TURNER. OHIO JOHN J. DUNCAN. JFL. TENNESSEE PATRICK T. MCHENRY, NORTH CAROLINA JIM JORDAN, OHIO JASON CHAFFETZ, UTAH TIM WALBERG. MICHIGAN JAMES LANKFORD. OKLAHOMA JUSTIN AMASH. MICHIGAN PAUL A. GOSAFI, ARIZONA PATRICK MEEHAN, SCOTT DESJARLAIS, TENNESSEE TREY GOWOY. SOUTH CAROLINA BLAKE FARENTHOLD. TEXAS DOC HASTINGS. WASHINGTON M. LUMMI3. WYOMING ROB WOODALL, GEORGIA THOMAS MASSIE. KENTUCKY DOUG COLLINS. GEORGIA MARK MEADOWS, NORTH CAROLINA KERRY L. BENTIVOLIO, MICHIGAN RON DESANTIS, FLORIDA LAWRENCE J. BRADY STAFF DIRECTOR ONE HUNDRED THIRTEENTH CONGRESS Qtungressa' at the flilniteh States of Representatives COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 2157 RAYBURN HOUSE OFFICE BUILDING WASHINGTON, DC 20515-6143 1| 1 [2 225-SUN (202) 225-BEIT4 MINOI-II I (2021 225-5051 http:/ioversig hI.house.gov November 13, 2013 ELIJAH E. CUMMINGS. MARYLAND RANKING MINORITY MEMBER CAROLYN B. MALONEY. NEW YORK ELEANOR HOLMES NORTON. DISTRICT OF COLUMBIA JOHN F. TIERNEY, MASSACHUSETTS WM. LACY CLAY. MISSOURI STEPHEN F. MASSACHUSETTS JIM COOPER, TENNESSEE GERALD E. CONNOLLY, VIRGINIA JACKIE SPEIER. CALIFORNIA MATTHEW A. CAFITWRIGHT, MARK POCAN, WISCONSIN L. TAMMY DUCKWORTI-I, ILLINOIS ROBIN L, KELLY, ILLINOIS DANNY K. DAVIS, ILLINOIS PETER WELCH, VERMONT TONY CARDENAS. CALIFORNIA STEVEN A. HORSFORD. NEVADA MICHELLE LUJAN GRISHAM. NEW MEXICO The Honorable George H. Cohen Director Federal Mediation and Conciliation Service 2100 Street, NW Washington, D.C. 20427 Dear Mr. Cohen: The Committee on Oversight and Government Reform is conducting an investigation into allegations of excessive spending, improper use of govemment purchase cards, conflicts of interest, contracting irregularities, and retaliation against whistleblowers at the Federal Mediation and Conciliation Service. Beginning on October 1, 2013, the Washington Examiner published a five-part series of first entitled "Bureaucrats at Tiny Federal Agency FMCS Buy Legions of Luxuries with Purchase Cards"--that described various instances of misconduct at the FMCS.I To assist the Committee's investigation of these matters, I am writing to request related documents and information. According to the Examiner series, FMCS managers allowed the rampant use of govemment purchase cards (GPCS) for personal expenses. In one case, taxpayers picked up the tab for an employee's leased Lincoln MKS luxury sedan2 and vehicle service charges at facilities such as BMW of Fairfax.3 Employees effectively used the agency's GPC account as a slush filnd, drawing money to pay holiday bonuses and other expenses. When several administrative employees with access to financial records began to speak up about the situation, FMCS management sought to terminate their employment.' Misuse of Government Purchase Cards According to the Examiner, FMCS employees purchased many items for their personal use with their GPCS. In addition to leasing a vehicle and service charges, these items included I Luke Rosiak, Bureaucrats at Tiny Federal Agency FMCS Buy Legions of Luxuries with Purchase Cards, WASH. EXAMINER, Oct. 1, 2013[hereinafter Rosiak, Oct. 1, 2013]. 2 Sean Reilly, Whistle-Blower on Leave; Culprits 0flScot--Free, FED. TIMES, June 23, 2013. 3 Rosiak, Oct. 1,2013. 4 Luke Rosialc, Wounded Vet Blew Whistle on FMCS, Rewarded with Pink Slip, Harassment, WASH. EXAMINER, Oct. 7, 2013[hereinafter Rosialc, Oct. 7, 2013]. The Honorable George H. Cohen November 13, 2013 Page 2 cell phones for family members, high-end cable and intemet packages for home use, furniture for a home office, a Bose stereo system, two high-definition televisions, bluetooth earpieces, leather- bound Kindle e-readers, $200 table lamps, coat racks costing almost $400, air purifiers, a television cabinet costing $2,300, thumb drives that cost $500 each, and $30,000 worth of picture fi'ames over two years.5 The Oversight and Government Reform Committee has a long track record of examining wasteful spending and mismanagement at federal agencies. For example, during the Committee's April 16, 2012, hearing on the 2010 GSA conference in Las Vegas, Members from both sides of the aisle agreed that a number of egregious examples of waste occurred there-- including the hiring of a mind reader, a clown, a $31,000 reception, and a team-building exercise that cost $75,000.f' Although, GSA's budget far exceeds that of MCS, which is an agency with 230 employees and an annual budget of $50 million, similar gaps in internal agency controls seem to exist. Like at GSA, there appears to be a culture of waste and mismanagement at FMCS. The FMCS spent several thousands of dollars on unnecessary and frivolous items from a company called Image Pointe that provided, among other things, towels with the FMCS logo, coasters, hats, and lights.8 Spending taxpayer dollars on unnecessary items is reminiscent of the IRS Small Business/Self-Employed Division's 2010 Anaheim, Califomia conference, for which the agency purchased thousands of dollars worth of goodie bags and plastic squirting fish.9 Congress has highlighted these egregious examples of out-of-control agency spending in an effort to encourage all departments and agencies to curb reckless behavior and act responsibly. Likewise, in November 201 1, the President delivered an instruction to the Executive Branch to stop wasting taxpayer dollars on items that are entirely unrelated to the agencies' respective missions") Executive Order 13589 directs agencies to cut spending on "extraneous promotional items."" The items purchased from Image Pointe, such as leather-bound Kindle e-readers, certainly fall into this category. The Inspector General of the National Labor Relations Board has confirmed many of the FMCS spending abuses. In a February 6, 2013, letter to you, Inspector General David Berry verified that the allegations have merit. He stated: 5 Rosiak, Oct. 1, 2013. 6 Addressing GSA 's Culture of Wasteful Spending: Hearing Before H. Comm. On Oversight and Gov Reform, 112th Cong. (Apr. 16, 2012). 7 Rosiak, Oct. 7, 2013. 8 Rosiak, Oct. 1, 2013. 9 Treasury Inspector General for Tax Administration, Review of the August 2010 Small Business/Self-Employed Division's Conference in Anaheim, California, Reference no. 2013-10-037, May 31, 2013. Exec. Order No. 13589, 76 Fed. Reg. 7086] (Nov. 9, 2011). Id. The Honorable George H. Cohen November 13, 2013 Page 3 I determined the allegations reported to you were generally substantiated in that there had been inappropriate use of the purchase card and that FMCS lacked the necessary internal controls to prevent waste and abuse. '2 The specific instances of misuse of the purchase cards outlined in the Inspector General's letter are extremely serious. For example, FMCS emplo ees "used [the to circumvent procurement process and other intemal controls?" The MCS is required to abide by govemment-wide contracting regulations set forth in the Federal Acquisition Regulation (FAR). The purpose of the FAR is twofold. First, the FAR is designed to ensure there is a level playing field during competition for government contracts. Furthermore, the FAR seeks to make sure the government and the taxpayer get the best possible deal. Unfortunately, this Committee is not confident that the FMCS is implementing either of these objectives. Conflicts of Interest in Awarding Contracts According to the Washington Examiner, the FMCS had a practice of improperly awarding contracts to recently retired employees." Shortly after his retirement from FMCS in late 2007 or early 2008, Charles Burton established a corporation called The Paper's Edge. 15 The MCS paid this corporation $85,000 over two years for information technology call center services.l6 According to the Examiner, however, this IT company lacks a website or phone that is operational during normal business hours." In addition, the FMCS failed to request bids from other companies offering similar services. [8 It also appears there was no signed contract in place between the FMCS and The Paper's Edge." Without considering the failure to properly compete the contract and the lack of a fonnalized contract, doing business with a recent retiree likely violates conflict of interest provisions of the It is unclear from media reports or the Inspector General's letter whether the FMCS has addressed these improprieties. In fact, it appears that FMCS managers may have unlawfully retaliated against whistleblowers that raised concerns about waste and abuse at the agency. Retaliation against Whistleblowers This Committee relies on whistleblowers to bring to light the waste, fraud, mismanagement, and abuse occurring in the federal government. Without whistleblowers, this Committee would not have uncovered the gross misconduct that occurred at the Department of '2 Letter from Hon. David Berry, Inspector General, Nat'l Labor Relations Board, to Hon, George H. Cohen, Rirector, Fed. Mediation Conciliation Serv. (Feb. 6, 2012). Id. '4 Luke Rosiak, Reckless Spending Goes Straight to the Top at FMCS, WASH. EXAMINER, Oct. 2, 20l3[hereinafter Rosiak, Oct. 2, 2013Federal Acquisition Reg., Part 3, available at The Honorable George H. Cohen November 13, 2013 Page 4 Justice and the Bureau of Alcohol, Tobacco, and Firearms related to Operation Fast and Furious. Likewise, GSA's now-infamous 2010 Western Regions Conference in Las Vegas would not have come to light without whistleblower complaints to that agency's inspector general. With that in mind, the Committee takes any allegation of retaliation against a whistleblower very seriously. According to the Washington Examinersilence any criticism of the agency, referring to critics as "disgruntled FMCS employees."2 At least four current or former employees--Berkina Porter, Carol Booth, Mike Colandria, and Tanya raised concems about the frivolous and improper spending at the FMCS. Porter told the Examiner: Cohen, who was appointed by President Obama in October 2009, also used the fund [a fund referred to as the 'recreation and reception fund'] to purchase artwork by his wife, whose painting are sold through the Torpedo Factory Art Center in Virginia." In addition, she relayed that Cohen, Frances L. Leonard, chief financial officer of the FMCS, and two deputies have "full private bathrooms in their offices, where one would smoke cigarettes and another would often be 'in the shower' when employees sought to discuss business."2 At one point, when GSA attempted to move the FMCS to a smaller, more efficient office space, agency officials engaged in an elaborate scheme to maintain the current upscale location.24 Even before the Inspector General's review was complete, the agency placed Porter on administrative leave "as a prelude to her planned dismissal." 5 According to the Federal Times, FMCS ultimately entered into a settlement with Porter. The agency will pay her salary for up to one year while she seeks new employment, cover her attomey fees, and pay her an annuity totaling $72,500 for the next 15 years and four months.26 Although neither party admitted wrongdoing, one party clearly benefitted from this settlement. According to a letter from the U.S. Office of Special Counsel (OSC), the agency charged with investigating allegations of retaliation against whistleblowers, FMCS officials did indeed retaliate against Porter." OSC's letter stated FMCS officials "took and proposed personnel action at least in part because of your protected activity."28 Porter is not the only FMCS employee to face retaliation. The final installment of the Washington Examiner series states: 2' Rosiak, Oct. 1, 2013. 22 Rosiak, Oct. 2, 2013. 23 Id. 34 Id. 3: Sean Reilly, Whistle-Blower on Leave; Cuiprits FED. TIMES, June 23, 2013. 2" Id. The Honorable George H. Cohen November 13, 2013 Page 5 Weeks after Tanya Pelcher-Herring told oversight bodies that the Federal Mediation and Conciliation Service was breaking federal contracting rules and wasting tax dollars, the agency terminated her employment for not reporting to work." The FMCS hired Peleher-Herring, a retired Army veteran with a doctoral degree, as a contracting officer. She quickly noticed the contracting irregularities and improprieties. After reporting the issue to her supervisors and seeing no action taken, she contacted OSC. According to the Examiner, this infuriated FMCS officials. Because she was hospitalized, although still communicating with the agency, they "wasted no time placing her on In June 2012, FMCS's deputy director proposed that Pelcher-Herring be separated from the govemment. According to the Examiner, FMCS has offered to pay to settle Hen-ing's EEOC complaint, but she refuses to accept." Other FMCS whistleblowers were spared retaliation because of their impending retirement. Carol Booth, a now-retired FMCS employee, contacted GSA to raise concerns about weaknesses in the agency's acquisition policies. According to the Examiner, you directed Booth to retract her e-mail to GSA. Then, days later, another FMCS staff person, Mike Colandria, "wrote to the GSA that, because several colleagues raised issues to that agency, they have 'been under constant harassment by the Senior Executive Staff (Directors Office) and . . . had disciplinary action taken against several."32 The retaliation described in Colandria's e-mail is totally unacceptable. In order for the Committee to understand the full extent of wrongdoing occurring at the FMCS, I request that the agency provide the following documents and information, for the time period January 1, 2008, to the present, as soon as possible, but by no later than noon on November 27, 2013: 1. All documents and communications referring or relating to the use of govemment purchase cards. 2. All documents and communications referring or relating to The Paper's Edge, a corporation. 3. All documents and communications referring or relating to the employment status of the following individuals: Berkina Porter, Carol Booth, Mike Colandria, and Tanya Pelcher-Herring. 4. All documents and communications referring or relating to the following GPC purchases: home television or internet, the Golf Channel, any vehicular leases or 29 Luke Rosiak, Part Five: Wounded Vet Blew Whistle on FMCS, Rewarded With Pink Slip, Harassment, WASH. EXAMINER, Oct. 7, 2013. 3? Id. 31 Id. 32 Luke Rosiak, Part Three: FMCS Executives Forced Whistlebfower to Retract Fraud Complaint, WASH. EXAMINER, Oct. 3, 2013. The Honorable George H. Cohen November 13, 2013 Page 6 purchases, service for vehicles, warehousing leases, artwork, electronics, office filrniture, jewelry, watches, clocks, picture frames, office supplies with the MCS logo, food or beverage items, items from Framing, also known as in Warrenton, Virginia, and items from Barnes and Noble and Crate and Barrel. All documents provided to the Office of Special Counsel or the General Services Administration referring or relating to the allegation described herein. All documents and communications referring or relating to training services provided to MCS, including but not limited to those involving a corporation known as Allmond and Co. All documents and communications referring or relating to employees permitted to telework or maintain an alternate work schedule. All documents and communications referring or relating to bonuses, employee incentive programs, and any other cash awards to employees of MCS. The Committee on Oversight and Govemment Reform is the principal oversight committee of the House of Representatives and has broad authority to investigate "any matter" at "any time" under House Rule X. An attachment to this letter provides additional information about responding to the Committee's request. When producing documents to the Committee, please deliver production sets to the Majority Staff in Room 2157 of the Raybum House Office Building and the Minority Staff in Room 2471 of the Rayburn House Office Building. The Committee prefers to receive all documents in electronic format. If you have any questions about this request, please contact Ashley Callen of the Committee staff at (202) 225-5074. Thank you for your prompt attention to this important matter. Enclosure CC: . "Darrell Issa Chairman The Honorable Elijah E. Cummings, Ranking Minority Member I L. I ONE DH I: THIP I ll-I of tilt ?avtatcs' iI)nus't of COMMITTEE on AND REFORM 7'15? Omar Bun DC 2051 5-l.-H43 Responding to Committee Document Requests 1. In complying with this request, you are required to produce all responsive documents that are in your possession, custody, or control, whether held by you or your past or present agents, employees, and representatives acting on your behalf. You should also produce documents that you have a legal right to obtain, that you have a right to copy or to which you have access, as well as documents that you have placed in the temporary possession, custody, or control of any third party. Requested records, documents, data or information should not be destroyed, modified, removed, transferred or otherwise made inaccessible to the Committee. 2. In the event that any entity, organization or individual denoted in this request has been, or is also known by any other name than that herein denoted, the request shall be read also to include that altemative identification. 3. The Committee's preference is to receive documents in electronic form CD, memory stick, or thumb drive) in lieu of paper productions. 4. Documents produced in electronic format should also be organized, identified, and indexed electronically. 5. Electronic document productions should be prepared according to the following standards: The production should consist of single page Tagged Image File files accompanied by a Concordance-format load file, an Opticon reference file, and a file defining the fields and character of the load file. Document numbers in the load file should match document Bates numbers and TIF file names. If the production is completed through a series of multiple partial productions, field names and file order in all load files should match. All electronic documents produced to the Committee should include the following fields of metadata specific to each document; BEGDOC, ENDDOC, TEXT, BEGATTACH, ENDATTACH, DATE, TIME, SENTDATE, SENTTIME, BEGINDATE, BEGINTIME, ENDDATE, ENDTIME, AUTHOR, FROM, 1 10. ll. 12. 13. I4. 15. 16. CC, TO, BCC, SUBJECT, TITLE, FILENAME, FILEEXT, FILESIZE, DATECREATED, TIMECREATED, DATELASTMOD, TIMELASTMOD, NATIVELINK, INTFILPATH, EXCEPTION, BEGATTACH. Documents produced to the Committee should include an index describing the contents of the production. To the extent more than one CD, hard drive, memory stick, thumb drive, box or folder is produced, each CD, hard drive, memory stick, thumb drive, box or folder should contain an index describing its contents. Documents produced in response to this request shall be produced together with copies of file labels, dividers or identifying markers with which they were associated when the request was served. When you produce documents, you should identify the paragraph in the Committee's schedule to which the documents respond. It shall not be a basis for refusal to produce documents that any other person or entity also possesses non--identical or identical copies of the same documents. If any of the requested information is only reasonably available in machine--readable form (such as on a computer server, hard drive, or computer backup tape), you should consult with the Committee staff to determine the appropriate format in which to produce the information. If compliance with the request cannot be made in full by the specified return date, compliance shall be made to the extent possible by that date. An explanation of why full compliance is not possible shall be provided along with any partial production. In the event that a document is withheld on the basis of privilege, provide a privilege log containing the following information conceming any such document: the privilege asserted; the type of document; the general subject matter; the date, author and addressee; and the relationship of the author and addressee to each other. If any document responsive to this request was, but no longer is, in your possession, custody, or control, identify the document (stating its date, author, subject and recipients) and explain the circumstances under which the document ceased to be in your possession, custody, or control. If a date or other descriptive detail set forth in this request referring to a document is inaccurate, but the actual date or other descriptive detail is known to you or is otherwise apparent from the context of the request, you are required to produce all documents which would be responsive as if the date or other descriptive detail were correct. Unless otherwise specified, the time period covered by this request is from January 1, 2009 to the present. This request is continuing in nature and applies to any newly-discovered information. Any record, document, compilation of data or information, not produced because it has not been 17. 18. 19. located or discovered by the return date, shall be produced immediately upon subsequent location or discovery. All documents shall be Bates-stamped sequentially and produced sequentially. Two sets of documents shall be delivered, one set to the Majority Staff and one set to the Minority Staff. When documents are produced to the Committee, production sets shall be delivered to the Majority Staff in Room 2157 of the Rayburn House Office Building and the Minority Staff in Room 2471 of the Rayburn House Office Building. Upon completion of the document production, you should submit a written certification, signed by you or your counsel, stating that: (1) a diligent search has been completed of all documents in your possession, custody, or control which reasonably could contain responsive documents; and (2) all documents located during the search that are responsive have been produced to the Committee. Schedule Definitions The term "document" means any written, recorded, or graphic matter of any nature whatsoever, regardless of how recorded, and whether original or copy, including, but not limited to, the following: memoranda, reports, expense reports, books, manuals, instructions, financial reports, working papers, records, notes, letters, notices, confirmations, telegrams, receipts, appraisals, pamphlets, magazines, newspapers, prospectuses, inter-office and intra- office communications, electronic mail (e--mail), contracts, cables, notations of any type of conversation, telephone call, meeting or other communication, bulletins, printed matter, computer printouts, teletypes, invoices, transcripts, diaries, analyses, retums, summaries, minutes, bills, accounts, estimates, projections, comparisons, messages, correspondence, press releases, circulars, financial statements, reviews, opinions, offers, studies and investigations, questionnaires and surveys, and work sheets (and all drafts, preliminary versions, alterations, modifications, revisions, changes, and amendments of any of the foregoing, as well as any attachments or appendices thereto), and graphic or oral records or representations of any kind (including without limitation, photographs, charts, graphs, microfiche, microfilm, Videotape, recordings and motion pictures), and electronic, mechanical, and electric records or representations of any kind (including, without limitation, tapes, cassettes, disks, and recordings) and other written, printed, typed, or other graphic or recorded matter of any kind or nature, however produced or reproduced, and whether preserved in writing, film, tape, disk, videotape or otherwise. A document bearing any notation not a part of the original text is to be considered a separate document. A draft or non-identical copy is a separate document within the meaning of this tenn. The term "communication" means each manner or means of disclosure or exchange of information, regardless of means utilized, whether oral, electronic, by document or otherwise, and whether in a meeting, by telephone, facsimile, email (desktop or mobile device), text message, instant message, MMS or SMS message, regular mail, telexes, releases, or otherwise. The terms "and" and "or" shall be construed broadly and either conjunctively or disjunctively to bring within the scope of this request any information which might otherwise be construed to be outside its scope. The singular includes plural number, and vice versa. The masculine includes the feminine and neuter genders. The terms "person" or "persons" mean natural persons, firms, partnerships, associations, corporations, subsidiaries, divisions, departments, joint ventures, proprietorships, syndicates, or other legal, business or government entities, and all subsidiaries, affiliates, divisions, departments, branches, or other units thereof. The term "identify," when used in a question about individuals, means to provide the following information: the individual's complete name and title; and the individual's business address and phone number. The term "referring or relating," with respect to any given subject, means anything that constitutes, contains, embodies, reflects, identifies, states, refers to, deals with or is pertinent to that subject in any manner whatsoever. The term "employee" means agent, borrowed employee, casual employee, consultant, contractor, de facto employee, independent contractor, joint adventurer, loaned employee, part--time employee, permanent employee, provisional employee, subcontractor, or any other type of service provider.