TWO SENATORS MADE BRIEF OPENING STATEMENTS, AND A PAINTING CONTRACTOR, THE ACTING INSPECTOR GENERAL FOR GSA, THE DIRECTOR OF AUDITS, AND CHIEF OF THE CRIMINAL DIVISION DESCRIBED TYPES OF FRAUD WHICH HAD BEEN OCCURRING IN GSA FOR MANY YEARS. THESE ACTIVITIES INCLUDED PAYING SEVERAL CONTRACTORS FOR THE SAME JOB, PURCHASING SECURITY SYSTEMS FROM A COMPANY WITH ORGANIZED CRIME CONNECTIONS, MISUSING GOVERNMENT CREDIT CARDS, AND ABUSING MOTOR POOLS. THE ACTING INSPECTOR GENERAL NOTED THAT IT WAS NECESSARY TO ESTABLISH CONTROLS IN GSA'S PROCUREMENT SYSTEM, AS WELL AS TO APPREHEND EMPLOYEES ENGAGED IN FRAUD. IN THE SECOND DAY OF HEARINGS, A SENATOR COMMENTED THAT GSA MANAGERS DISREGARDED GOVERNMENT REGULATIONS, PARTICULARLY THE OFFICE OF MANAGEMENT AND BUDGET (OMB) CIRCULAR A-109, WHICH REQUIRES THAT MANAGEMENT FOLLOW A SPECIFIC PROCEDURE TO DETERMINE NEED BEFORE PURCHASING ANYTHING. THE NEW ADMINISTRATOR OF GSA CONCLUDED THE SECOND DAY BY DESCRIBING THE ABUSES HE HAD ENCOUNTERED AND MEASURES BEING TAKEN TO CLEAN UP THE AGENCY. THE FOLLOWING DAY'S HEARINGS FOCUSED ON EXTRAORDINARY MEASURES BEING TAKEN TO DETECT AND PROSECUTE GSA FRAUD. THE U.S. ATTORNEY GENERAL DESCRIBED THE FORMATION OF A SPECIAL STRIKE FORCE COMPOSED OF REPRESENTATIVES FROM SEVERAL AGENCIES WHICH WOULD INVESTIGATE GSA WITH ITS ADMINISTRATOR'S COOPERATION. THE U.S. COMPTROLLER GENERAL DISCUSSED HIS REPORT ON METHODS TO COMBAT FRAUD IN GOVERNMENT PROGRAMS. THE HEARINGS CONCLUDED WITH ADDITIONAL TESTIMONY FROM CONTRACTORS AND GSA EMPLOYEES ON FRAUDULENT PRACTICES. THE APPENDIXES CONTAIN THE FOLLOWING: MATERIALS SUBMITTED TO THE COMMITTEE BY GSA ON MOTOR POOL AUDITS AND THE PUBLIC BUILDINGS SERVICE YEAR-END SPENDING FOR FY 1977, RECENT GSA MANAGEMENT ACTIONS, COMPTROLLER GENERAL'S REPORT ON IMPROVEMENTS NEEDED IN GSA PRACTICES FOR ALTERING LEASED BUILDINGS, GSA REPORT ON BUILDINGS MANAGEMENT PROCUREMENTS, STATEMENTS BY THE DIRECTOR OF GSA'S PROCUREMENT AND SYSTEMS ACQUISITION DIVISION, COMPTROLLER GENERAL'S REPORT ON SETTLEMENT OF CONTRACTOR CLAIMS FOR CONSTRUCTION OF A FEDERAL BUILDING IN HAWAII, MULTIPLE AWARD SCHEDULE CONTRACTS, STATEMENTS OF WITNESSES, AND CORRESPONDENCE BETWEEN THE COMMITTEE AND THE GSA ADMINISTRATOR. (MJM)