oversight

Comptroller General's Annual Report 1976

Published by the Government Accountability Office on 1977-04-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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COMPTROLLER G'UNERAL
OF THE UNITED ST4~!'ES
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               COMPTROLLER GENERAL OF THE UNITED STATE S
                         wwsl9,-   . o_c, 20518




B-119600                                          April 30, 197 7




The President of the Senat e
The Speaker of the House of Representative s

Dear Sirs :

     In accordance with section 312(a) of the Budget an d

Accounting Act of 1921, I respectfully submit the annual re -

port on the activities of the United States Genera l, Accounting

Office during the 15-month period ended September 30, 1976 ,




                                    Z.C4             // ~~J/
                                                    ~ ♦i
                                      Comptroller Genera l
                                      of the United States
      The General Accounting Office is under the control and direction of the Comp -
 troller General of the United States. There is also a Deputy Comptroller General o f
 the United States t who performs such duties as may be assigned to him by the Comp -
 troller General and who acts as Comptroller General during the absence or incapacity
 of the Comptroller General or during a vacancy in that office . The Comptroller
 General and the Deputy Comptroller General are appointed by the President wit h
 the advice and consent of the Senate for terms of 15 years .



                   Comptrollers General          John R . McCarl
                    of the United States           July 1, 1921—June 30, 193 6
                                                 Fred H. Brow n
                                                   April 11, 1939June 19, 1940
                                                 Lindsay C. Warren
                                                   November 1, 1940—April 30, 1954
                                                 Joseph Campbell
                                                   December 14, 1954—July 31, 1965
                                                 Elmer B . Staats
                                                   Marc', 8, 1966



     Assistant Comptrollers General              Lurtin R. Gin n
                of the United States               July 1, 1921—November 11, 1930
                                                 Richard N . Elliott
                                                   March 9, 1931—April 30, 194 3
                                                 Frank L. Yates
                                                   May 1, 1943 June 29, 1953
                                                 Frank H . Weitzel
                                                   October 12, 1953 January 17, 1969



        Deputy Comptrollers General              Robert F . Kelle r
                of the United States               October 3, 1969

    t Public Law 92—51 (approved July 9, 1971) changed the title Assistant Comptroller Genera l
to Deputy Comptroller General .
                                CONTENTS


CHAPTER ONE—Highlights of Activities
                                                                           Page
   200 years of accountability	                                               1
   Direct assistance to the Congress 	                                        2
   Legal services and decisions	                                              6
   Auditing	                                                                  6
   Settlement of claims	                                                      9
   Financial management improvement 	                                         9
   Savings and other accomplishments	                                        10
   Operating expenses	                                                       10
   Staffing	                                                                 10
   Proposed legislation to revise and restate certain GAO functions an d
     duties	                                                                 10


CHAPTER TWO—Legislative Recommendation s

   Legislative recommendations acted on by the Congress during th e
     15-month period ended September 30, 1976	                               12
   Open legislative recommendations made during the 15-month perio d
     ended September 30, 1976	                                               17
   Open legislative recommendations from prior years 	                       22


CHAPTER THREE—Financial Savings and Other Benefits

   Collections	                                                              27
   Other measurable financial savings 	                                      27
   Additional financial savings not fully or readily measurable 	            36
   Other benefits	                                                           44


CHAPTER FOUR—Legal Services

   Highlights	                                                                52
   General government matters	                                                53
   Procurement law	                                                           54
   Personnel law	                                                             56
   Transportation lave	                                                       58
   Special studies and analysis 	                                             58
   Legal information and reference service	                                   59
     CONTENTS

                 CHAPTER FIVE—Financial and General Management Studies
                                                                                               Png s

                    Responsibilities	                                                            60
                    Approval of agency accounting systems	                                       60
                    Reviewing accounting systems in operation 	                                  61
                    Automatic data processing 	                                                  68
                    Technical assistance services	                                               70
                    Audit standards	                                                             70
                    Securities and Exchange Commission 	                                         71
                    Joint Financial D4anagement Improvement Program	                             72

                 CHAPTER SIX—Energy and Materials
                    Responsibilities	                                                            74
                    Energy	                                                                      74
                    Materials	                                                                   81

                CHAPTER SEVEN—Program Analysi s
                    Responsibilities	                                                            85
                    Program and economic analysis	                                               90
                    Program information responsibilities	                                        90
                    Program evaluation responsibilities	                                         92
                    Evaluating Federal programs	                                                 95

                CHAPTER EIGHT—Logistics and Communicatio n
                   Responsibilities	                                                            96
                   Reports	                                                                     96
                   Manufacturing technology 	                                                   96
                   Materiel management	                                                         98
                   Military readiness	                                                         100
                   Requirements	                                                               10 1
                   Maintenance, repair, and overhaul 	                                         10 2
                   Weapon system support	                                                      103
                   Stock fund management	                                                      103
                   Acquiring and managing facilities	                                          104
                   Communications	                                                             105
                   Data processing	                                                            106
                   Records management 	                                                        107
                   Transportation	                                                             107

                CHAPTER NINE—Procurement and Systems Acquisitio n
                   Responsibilities	                                                       	   10 9
                   Magnitude of systems acquisition	                                   	       10 9
                   Importance of science and technology 	                          	           10 9
                   Volume of Federal procurement 	                             	               10 9
                   Audit reports 	                                                 	           11 0
                   Major acquisitions	                                     	                   11 0
                   Science and technology	                             	                       11 6
                   General procurement . . :	                          	                       121
vi
                                                                                             CONTENT S
CHAPTER TEN—Federal Personnel and Compensation
                                                                                   Y.ge
   Responsibilities	                                                               126
   Size and cost of the Federal work force . . .                 .	                126
   Assistance to the Congress	                                                     126
   Audit reports	                                                                  126
   Compensation and retirement . . . .                      .	                     128
   Military recruiting 	                                                           130
   Training	                                                                       13 1
   Staffing of organizations	                                                      13 3
   Assignment and utilization	                                                     13 4
   Financial disclosure	                                                           135
   Social responsibility	                                                          13 6
   Military justice	                                                               137
   Other	                                                                          137
   Audits in process	                                                              138


CHAPTER ELEVEN—Human Resource s
   Responsibilities	                                                           .    140
   Audit reports	                                                              .    140
   Assistance to the Congress	                                                      140
   Department of Health, Education, and Welfare 	                             .     14 2
   Veterans Administration	                                                 . .     15 1
   Other Government health programs 	                                         .     153
   Department of Labor	                                                     . .     154
   Equal opportunity/nondiscrimination 	                                    . .     15 7
   Community Services Administration	                                       . .     15 7
   ACTION	                                                                  . .     la b
   National Science Foundation	                                             . .     15 9
   Consumer Product Safety Commission	                                      . .     15 9


CHAPTER TWELVE—Community and Economic Development
   Responsibilities	                                                        . .      16 1
   Audit reports	                                                            . .     16 1
   Assistance to the Congress	                                                       16 1
   GAO work on food	                                                        . .      16 2
   Government-wide and multiagency activities 	                       .     . .      165
   Government statistical programs 	                                  .     . .      163
   Department of Agriculture 	                                        .      . .     166
   Department of Commerce	                                            .      . .     169
   Department of Housing and Urban Development	                       .      . .     170
   Department of the Interior	                                        .      . .     172
   Department of Transportation	                                      .      . .     174
   Department of the Army Corps of Lngineers (civil functions)	       .      . .     176
   Environmental Protection Agency 	                                  .      . .      17 7
   Federal Communications Commission	                                 .      . .      17 9
   Small Business Administration	                                       .    . .      18 0
   National Railroad Passenger Corporation (AMTRAK)	                    .             181
                                                                                                         vi i
CONTENTS

           CHAPTER THIRTEEN—General Government Operations
                                                                                          Pege
              Responsibilities	                                                           18 2
              Audit reports	                                                              182
              Department of Justice	                                                      18 2
              Department of the Tieasury	                                                 188
              District of Columbia Government 	                                           19 2
              United States Postal Service	                                               193
              Intergovernmental relations	                                                19 4
              New York City	                                                              195
              Executive Office of the President 	                                         196
              Judicial branch	                                                            196
              Legislative branch	                                                         19 7


           CHAPTER FOURTEEN—international Operations

              Responsibilities	                                                           198
              Economic and financial assistance	                                          198
              International trade and finance	                                            203
              U .S . international security commitments abroad                            205
              Military assistance and support of other nations	                           207
              Conduct of foreign affairs	                                                 208
              Arms control and nuclear nonproliferation activities	                       209


           CHAPTER FIFTEEN--Claims Settlement and Adjudicatio n

              Responsibilities	                                                       	   21 1
              Payment claims	                                                 	           21 1
              Debt claims	                                                        	       21 1
              Special projects	                                           	               21 2
              Agency reviews and assistance	                          	                   214


           CHAPTER SIXTEEN—Field Operation s

              Responsibilities	                                                           21 6
              Audits of Federal corporations and other activities	                        21 6
              Audits of military pay and allowances	                                      220


           CHAPTER SEVENTEEN—Administratio n

              Management services	                                                        22 1
              Officelof Librarian	                                                        226
              Equal employment opportunity	                                               226
              Program Planning	                                                           227
              Policy	                                                                     22 7
              Internal Review	                                                            227
              Information Officer 	                                                       22 7
                                                                                 CONTENTS
                                 APPENDIXES
Appendix 1—Number of Aud'.t Reports Issued During the 15 Months Ended    P-e
   September 30, 1976	                                                   22 8
Appendix 2—Audit Reports Issued During the 15 Months Ended Septenr -
   her 30, 1976	                                                         22 9
Appendix 3—Legislation Enacted During the 15 \ionths Ended Septem -
   her 30,' 1976	                                                        31 4

Appendix 4—Summary of Assignments of Personnel to Congressional Com -
   mittees, July 1, 1975, to September 30, 1976	                          32 4
Appendix 5—Claims Statistics and Transportation Statistics	               32 7
Appendix 6—Financial Statements of the General Account;ng Office . . .    329
Appendix 7—Directory of GAO Regional Offices and Foreign Branches,
   December 1976	                                                         333




                                                                                            Ix
CONTENTS

                                Abbreviation s
            ADP          automatic data processing
            AEC         Atomic Energy Commission
            AID         Agency for International Developmen t
            AMTRAK      National Railroad Passenger Corporation
            AUTODIN     automatic digital network
            AUTOVON     automatic voice network
            CHAMPUS     Civilian Health and Medical Program of the Uniforme d
                           Service s
             COG        Council of Government s
             CONUS      continental United States
            DCA        Defense Communications Agency
            DEA         Drug Enforcement Administratio n
             DOD        Department of Defense
            EPA         Environmental Protection Agency
            ERDA        Energy Research and Development Administration
            FAA        Federal Aviation Administratio n
            FBI        Federal Bureau of Investigation
            FDA        Food and Drug Administratio n
            FEA        Federal Energy Administration
            FmHA       Farmers Home Administration
            GAO        General Accounting Office
            GPO        Government Printing Offic e
            GSA        General Services Administration
            HEW        Department of Health, Education, and Welfar e
            HUD        Department of Housing and Urban Developmen t
            ICC        Interstate Commerce Commission
            IRS        Internal Revenue Service
           JFMIP      Joint Financial 'Management Improvement Program
           LEAA       Law Enforcement Assistance Administratio n
           LMFBR      liquid metal fast breeder reactor
           NASA       National Aeronautics and Space Administratio n
           NATO       North Atlantic Treaty Organization
           VIE        National Ins~itute of Education
           NPS        National Park Service
           ONIB       Office of Management and Budge t
           OSHA       Occupational Safety and Health Administratio n
           SBA        Small Business Administratio n
           VA         Veterans Administratio n
           VISTA      Volunteers in Service to America
                                                                                                 UNITED                STATES    GENERAL ACCOUNTING OFFIC E




                                                                                                                           COMPTROLLER GENERA L
                                                                                                                                  OF TH E
                                                                                                                               UNITED STATE S
                                                                                                                              ELME.R 13. s,rAAT 8

                                                                                                                         DEPUTY COMPTROLLER GENERA L
                                                                                                                                   OF TH                                                                                     pG[ a
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'The E .ecutive Dlrectar, JFMIP report . tR a .reeNnp committee FR p—d el Rlllclel e .                                                      Doee:     Sealember 70, 1976
  of GAO, OMB, Tree>urr, and CSC. The D111-1 , FGMS le o .reerinp commlNee member
                                                           The most important audit and accounts legislatio n
                                                        enacted between 1789 and 1921 was the Docker y
                                                        Act of 1894, which completely reorganized Treasury' s
                                                        accounting and auditing methods . The several
                                                        kinds of comptrollers, which had mushroomed under
                                                        previous laws, were abolished, and centralized con-
                                                        trol was vested in the Comptroller of the Treasury .
                                                        Administrative duties were transferred to auditors
                                                        of the various departments .
                                                           The Budget and Accounting Act, 1921—a land -
                                                        mark in modernizing the Government's financial
                                                        management system—removed the audit and settle-
                                                        ment functions from the executive branch and placed
CHAPTER ON E                                            them in an independent General Accounting Office,
                                                        directly accountable to the Congress.
                                                           The basic intent in creating the General Accountin g
                                                        Office and the position of Comptroller General was
                                                        to strengthen congressional authority over and in-
                                                        volvement in fiscal matters, both by assuring inde-
HIGHLIGHTS OF ACTIVITIE S                               pendence in the performance of functions prexiously
                                                        vested in Treasury officials and by furthering the
200 Years of Accountabilit y                            Congress' ability to obtain candid information . Th e
                                                        legislative history of the 1921 Act consistently
  The year 1976 marked not only America's bicen-        stressed that the Comptroller General should exer-
tennial but also 200 years of the Government' s         cise objective and independent judgment, unfettere d
accountability to the people.                           by political influence from congressional as well a s
  After approving the Declaration of Independenc e      executive branch sources. This remains as important
on July 4, 1776, the Second Continental Congress         today as it was perceived to be in 1921, if not mor e
acted as a provisional government for prosecutin g      so. Historically, it has only been through scrupulous
the War for Independence . It had to carry out           adherence to this nonpartisan objectivity that the
finarcial operations, although it had no specifie d      Comptrollers General have been able to inspir e
financial powers until the Articles of Confederatio n    confidence in their actions and thereby serve th e
were adopted on November 15, 1777 .                      Congress effectively .
  A Committee of Accounts, composed of a membe r           Although GAO's responsibilities have been ex-
from each Colony, was established after the join t       panded and refined during the past 55 years, its majo r
Treasurers of the United Colonies had difficultie s      functions still are to :
settling accot its. These Committees examined the
                                                          —Assist the Congress in its legislative and oversigh t
Government's accounts until the Constitution wa s
                                                           activities .
adopted .
                                                          —Provide legal services .
  When the first Congress met in 1789 it was face d
                                                          —Audit and evaluate the programs, activities, an d
with the task of organizing the new government .
                                                           financial operations of Federal departments an d
One of its most perplexing problems was controllin g
                                                           agencies.
and accounting for public funds. An act signed by
                                                          —Help improve Federal agency financial manage-
President Washington established the Treasur y
                                                           ment systems.
Department, with a Secretary, a Comptroller, a n
                                                          —Settle claims and collect debts .
Auditor, a Treasurer, and a Register . The Audito r
and Comptroller were responsible for .he Govern-          This report summarizes the work of the Genera l
ment's accounting business ; accounts and claims        Accounting Office for the fiscal year ended June 30 ,
were presented to, and stated by, the Auditor and       1976, and for the 3-month transitional period t o
reviewed by the Comptroller, thus combining th e        September 30, 1976 . The transitional period allows
requirements of a double audit .                        for the change in the Federal Government' s fiscal
HIGHLIGHTS OF ACTIVITIES




Windy Mitchell erplains one of GA0's Bicentennial displays to Carmela Cimuio and Bud Gars, other mrmbers of GAO'r Graphic Semicer Staff.
Ms.Mitchell designed the display .

year to end on September 30, as provided in th e                      Members of Congress also received copies of man y
Congressional Budget and Impoundment Control                          reports addressed to Federal agency officials .
                                                                                                         Fiscal year     is -mont h
Act of 1974 .                                                                                               ended      y,enadeade d
                                                                                                                       Sept
                                                                                                        June 30 . 1915       . 30, 15.6
                                                                      Congressional reports :
                                                                          To the Congress .         --
Direct Assistance to the Congres s                                                                          199               30 1
                                                                          To congressional committees .     178               343
                                                                          To \fembets of Congress           255               29 5
   We make every effort to provide the informatio n                                                             632             939
on Federal programs and agency operations that w e                     Reports addressed to Federal
believe will be most useful to the Congress, its com-                    a_ency officials	                     411             44 1
mittees, and Members (consistent with our responsi-                           Total	                          1,043           1,380
bilities as an independent, nonpolitical agency) .
   Although they do not tell the full story of our                       Reports prepared in response to specific request s
activities, the reports we have completed indicat e                    are only one of our many services to the Congress.
the amount of assistance we have provided . As shown                   Other direct assistance includes :
below, we completed 1,380 reports on our audits an d                     • Testifying before congressional committees .
special studies during the 13-month period fro m                         Y Briefing committees, Members, mid staffs on
July 1, 1973, to September 30, 1976 . About 68 percen t                    Federal agency programs and activities .
were submitted directly to the Congress, its com-                        s Developing questions for use during hearings .
mittees, or Members. Interested committees and                           • Assigning staff members to work for committees .
                                                                                              HIGHLIGHTS OF ACTIVITIE S


  a Providing legal opinions and comments on pend-              Table 1 shows the number of reports to committee s
     ing legislation.                                        during the period ; some :were addressed to more tha n
  Our professional staff spent about a third of its          one committee. We also respond to requests o f
                                                             individual Members when feasible . The titles of all
time directly assi sting the Congress . This work did not
include the reports on Federal programs and activitie s      of our reports, including those to committees an d
that we did on our own initiative . Even though com-         \{embers, are shown in appendix 2 . Details on many
ntittees and Members of Congress extensively use th e        of these reports are provided in the following chapters.
information in these reports, we do not consider thi s                                   Table 1
                                                                                                                                              A'vmbn of
work direct assistance .                                     Senate Committees :                                                                    Tepons
                                                                 Aeronautical and Space Sciences . . .            	                                     3
                                                                 Aging	
Reports to Committees and Member s                                                                                                                      4
                                                                 Agriculture and Forestry	                	                                             6
                                                                 Appropriations	                                  	                                    40
  We received 764 requests for audits or specia l                Armed Services	                                          	                              9
studies during the 15-month period ended Septem-                 Banking, Housing, and Urban Affairs .            	                                     5
ber 30, 1976 . This was a considerable increase over             Budget	                                      	                                         3
the 469 requests received during the 12-month perio d            Commerce	                                	                                             6
                                                                 Finance	                                                 	                             3
ended June 30, 1975. Some of these requests can b e              Foreign Relations	                                       	                             2
answered with very little work, while others require a           Government Operations 	                              	                                26
great deal of effort. If our results are important fro m          Interior and Insular Affairs	                   	                                     6
a Government-wide standpoint, we try to arrange t o              Judiciary	                                   	                                         4
report to the Congress as a whole .                              Labor and P..blic %Veer e	                       	                                     9
                                                                  Nutrition and Human Needs	      __ .                            	                      t
  For example, early in 1976 several congressional                Operation of the Senate (Commission)            	                                      I
committees asked us to audit and evaluate the ban k               Post Office and Civil Service	                                  	                      3
supervision activities of the Federal Deposit Insurance           Public Works	                                               	                          4
Corporation, the Federal Reserve System, and th e                 Small Bus=iness 	                                                   	                  2
                                                                  Veterans' Affairs	                                                      	              5
Office of the Comptroller of the Currency . The com-
mittees requesting this work were the                              Total     .   .             .	                                                      142
  —House Committee on Banking, Currency an d
                                                             House Committees :
   Housing, including its Domestic Monetary Polic y             Aging	                                                                                   I
   Subcommittee, and its Financial Institutions,                Agriculture	                                                                             4
   Supervision, Regulation and Insurance Sub-                   Appropriations	                                                                         28
   committee ;                                    _              Armed Services	                                                                        16
                                                                 Banking, Currency, and Housing	                                                         3
  —Commerce, Consumer, and 'Monetary Affairs                     Budget	                                                                                 5
   Subcommittee, House Committee on Govern-                      District of Columbia	                                                                     1
   ment Operations ; and                                         Education and Labor	                                                                    I
                                                                 Government Operations	                                                                 28
  —Senate Committee on Banking, Housing, and                     House Administration	                                                                   2
   Urban Affairs .                                                House Beauty Shop	                                                                         2
   We organized a special GAO task force of account -             Information and Facilities (Commission)	                                    - .          3
                                                                  Interior and Insular Affairs	                                                            3
ants, attorneys, economists, and systems analysts t o
                                                                  International Relations 	                                                              19
carry out this comprehensive assignment . We do not              Interstate and Foreign Commerce	                                                        II
have audit authority at two of the agencies, and ou r            Judiciary	                                                                                 3
access to bank examination records at the Federa l               Merchant Marine and Fisheries 	                                                            3
Deposit Insurance Corporation has long been con-                 Post Office and Civil Service	                                                          13
                                                                 Public Works and Transportation	                                                           3
tested, so Nye made special arrangements with th e
                                                                 Rules	                                                                                      I
agencies for access to these records . Because of genera l       Science and Technology	                                                                  14
congressional interest in the agencies' powers, capa-            Small Business	                                                                            5
bility, and independence to properly supervise banks,             Ways and \leans	                                                                          3
we reported the results to the entire Congress early
                                                                    Total	                                                                              172
in 1977,
  14 IGHLICHTS OF ACTIVITIES

                          Table l—Continued                                   the past. In the 12-month period ended June 30, 1975 ,
                                                              Number of
                                                                              we testified 69 times, as compared to 139 appearance s
 Joint Committees :                                              repots
      Atomic Energy	                                                   5      before committees during the first 12 months of this
       Defense Production	                                             3      period. Such an increase is a gratifying tribute to ou r
       Economic	                                                      15      increasing capability to serve the Congress .
       Internal Revenue T—tion	                                        7
       Printing	                                                       2
                                                                              Staff Assignments to Committee s
          Total	                                                      32
                                                                                 On request, 55 staff members were assigned to th e
 Officers of the Congress	                                            11      staffs of 18 different committees or subcommittee s
                                                                              during the period . Further information, required b y
         Total Committees and Officer;	                             357
                                                                               the Legislative Reorganization Act of 1970, is show n
                                                                              in appendix 4 .
    In addition to congressional reports, we provided
 939 responses to Members on requests relating to
 claims by and against the U .S . Government. The                             Reports on Pending Legislatio n
 claims involved such subjects as Government con -
                                                                                 Our continuing review of governmental program s
 tracts, pay and allowances of employees, and trave l
                                                                              and activities, together with our expertise in law an d
 and transportation.
                                                                              the Federal legislative process, enable us to respon d
                                                                              to requests from congressional committees for im-
 Testifying at Hearing s                                                      partial, objective comments on proposed legislation .
                                                                             During the period, we provided 426 reports on pend-
  The Comptroller General and members of hi s
staff testified before congressional committees o n                          ing bills—161 to the Senate, 253 to the House, an d
172 occasions from July 1, 1975, through Septembe r                           12 to joint committees . Table 2 shows the number o f
30, 1976. This represents a very large increase over                         reports by committee .




GAO officials testify before the Subcommittee on Foreign Agricultural Policy, Senate Agriculture Committee, on the National Gain In portion System ,
February 20, 1976. (From Irft to right B. Douglas Hogmy Assistant Director, Al- Hirschhorn, Deputy Director, and Henry Erchuxgq Director,
Community and Economic D:relopmeut Division; Comptroller Central Elmer B . Staats; Richard 3 . Woods, Associate Director, CED; and Jens
Kelly, Chicago Regional Office .)
                                                                                          HIGHLIGHTS OF ACTIVITIE S
                             Table 2                           the Deputy_ Comptroller General, Robert F . Keller ,
 Senate Committees :                                           this office maintains continuous contact with con-
     App ropriat imts	                                     I
     Armed Services 	                                      I   gressional committees and \Members of Congress . Th e
     Banking, Housing S Urban Affairs   . .               7    Director of the office is Smith Blair, Jr .
     Budget	                                               I
     Commerce	                                           to
                                                               Monthly List of GAO Report s
     Finance	                                            4
     Government Operations 	                            61
     Judiciary	                                          1        Each month we send to the Congress, its com-
     Labor std Public Welfare	                          20     mittees, and all Members a list of GAO report s
     Post office and Civil Service	                     55     completed or released during the previous month.
       Total	                                          161
                                                               (Section 234 of the Legislative Reorganization Act o f
                                                               1970 requires these lists) . They are also published in
 House Committees :                                            the Congressional Record through arrangements made
     Appropriations	                                      1    with a congressional committee .
     District of Columbia 	                               I
     Government Operations	                            12 1
                                                                  The lists show the title, date, and number of each
     House Administration	                                I    report and identifies the Government agencies or
     International Relations	                             I    other organizations responsible for the activitie s
     Interstate and Foreign Commerce	                   13     reported on. Brief digests of reports to the Congress
    Judiciary 	                                         26
                                                               or committees are also included, as well as informatio n
    Merchant Marine and Fisheries	                      26
    Post Office ~ nd Civil Service	                     26
                                                               on legal decisions issued during the month.
    Public NVor r	                                       3
    Science and Technology .                            28     Recommendations for Legislation
     Small Business	                                     3
     Ways and Nfeans	                                    3        As required by the Budget and Accounting Act ,
       Total	                                         253
                                                               1921, Ave recommend legislation or suggest othe r
                                                               congressional action needed to correct problems o r
Joint Committee on Atomic Energy	                       12     improve Federal programs and activities . Recommen-
      Total	                                          42 6
                                                               dations that have not been acted on at the beginning
                                                               of each session of Congress are summarized in an
                                                               annual report to the Congress . Copies are sent to th e
Legal and Legislative Assistance                               cognizant committee Chairmen and ranking minorit y
   Committees and Members call on us continually               members to help them with their legislative and over-
for formal and informal legal opinions, advice, an d           sight responsibilities .
assistance ; views on contractual, fiscal and adminis-            A summary, of recommendations included in reports
trative provisions of law ; drafts of or revisions to          made during this 15-month period and open recom-
legislation ; and views on administrative regulations .        mendations from prior years is presented in chapter 2 .


Assistance on Financial an d                                   Duties Under the Congressiona l
Administrative Operations o f                                  Budget and Impoundment Control Act
the Congres s                                                     During the period Ave worked closely with variou s
    As in past years, Ave have a professional staff at the      House and Senate committees, Members, and the
 r,apitol to audit House and Senate financial operation s      Congressional Budget Office to help implement th e
and provide advisory services . (See p. 197 for furthe r       new congressional procedures for dealing with th e
information .)                                                 Federal budget . For example, Ave proposed draf t
                                                               legislative language requiring effective agency pro -
Liaison Activities                                             gram evaluations, helped the appropriation an d
                                                               authorizing committees improve the format and
  Our Office of Congressional Relations is the centra l        content of the budget-related information the) ,
coordination point for providing the Congress with             receive from agencies, and advised the Budge t
prompt, effective assistance . Under the superv ision of       Committees of our work in their areas of interest .
 HIGHLIGHTS OF ACTIVITIES

   Under the Impoundment Control Act of 1974 w e                  or propriety of proposed expenditures of Fed-
evaluated the legality and impact of 22 special mes-              eral funds .
sages (covering 117 deferrals and 50 rescissions) and          • The Office of' Management and Budget .
also identified 2 proposed deferrals and I rescissio n         • Contracting and procurement officers and bid-
that the President had not reported to the Congress.              ders, in connection with Government contracts .
   Also, the Comptroller General's first suit to compel        • Individuals and firms whose claims have been
the release of funds (under authority of the Impound-             disallowed by our Claims Division .
ment Control Act of 1974) was settled after th e               • GAO auditors in their audits of agency program s
Secretary of Housing and Urban Development an-                    and activities.
nounced reactivation of the subsidized housing pro -           The Comptroller General's legal decisions are
gram under section 235 of the National Housing Act .
                                                             binding upon the executive branch . Payments made
Approximately $264 .1 million of impounded annua l
                                                             contrary to them may be disallowed . Private firms
budget authority was released .
                                                             and individuals have further recourse to the courts i n
   To meet our responsibility for helping the Congres s
                                                             most instances.
obtain and use executive agency information, we pre -
pared the 1976 Congressional Sonreebook series, consisting     During the period our Office of the General Counsel
of three separate volumes, as follows :                      completed 6,927 separate legal matters . Further in-
                                                             formation on our legal work is described in chapter 4 .
   • Federal Information Soarces and Systems—describes
     approximately 1,000 Federal sources and infor-
     mation systems maintained by 63 executiv e
     agencies, which contain fiscal, budgetary, and          Auditin g
     program-related information (released in Sep-
     tember 1976) .                                            We audit the programs, activities, and financia l
  • Recurring Reports to [lie Congress--describes nearly     operations of Federal departments and agencies, an d
     800 reports required of 89 executive branc h            their contractors and grantees to :
     agencies by the Congress on a recurring basi s
                                                               • Evaluate the efficiency, economy, legality, an d
     (released in November 1976) .
                                                                  effectiveness with which they carry out thei r
  • Federal Program Evaluations—contains an inven-
     tory of approximately 1,700 evaluation report s              financial, management, and program responsi-
                                                                  bilities .
     produced by and for 18 selected Federal agencies ,
                                                               • Provide the Congress and agency officials with
     including GAO reports that relate to the pro-
     grams of those agencies (releas-d in January                 objective information, conclusions, and recom-
      1977) .                                                     mendations .

   The series represents GAO's first effort to carr y           These audits involve well over half of our pro-
out the requirements of the Congressional Budget Act         fessional staff' working in almost every Federal agency
of 1974 to "develop, establish, and maintain an up-          in the United States and in many foreign countries .
to-date inventory and directory of sources and infor-
mation systems containing fiscal, budgetary, an d            New Office in Panam a
program-related information. "
                                                                In July 1975 we established a Latin America Branc h
                                                             in Panama City, Panama. The branch is responsibl e
Legal Services and Decisions                                 for our work in Mexico, Central America, Sout h
                                                             America, the Nest Indies, and the Caribbean . Abou t
  Our legal work, covering the full range of th e            45 U.S . Embassies and consulates administer variou s
Government's activities, serves :                            programs in this large area . The branch' s central
  • Congressional committees and Members of                  location will enable us to be more knowledgeable o f
    Congress .                                               U .S . activities and programs and will make it possibl e
  • Heads of departments and agencies, as well as            to more promptly provide current information ,
    disbursing and certifying officers, on the legality      analyses, and recommendations to the Congress .
                                                                                                     HIGHLIGHTS OF ACTIVITIE S

'Volume of Audit Work                                                                         TABLE 4

    During the 15-month period Ave made 909 survey s                GAO ISSUE AREAS AND RESPONSIBLE LEAD DIVISION S
  and 1,716 reviews of government programs an d
  activities in the United States, 3 U .S . territorie s        Food
                                                                Dan c li ins avd Communlr       y
~.(Guany Johnston Island, and Trust Territory of the               De.elopme
                                                                Ev .boamevtvl Protection                    a niry avd Economic Developmen t
'Pacific Islands), and 67 other countries. Table 3              Land Use Plann: . .M Conhal             D i.t zivv
                                                                Transpanatian Syste. s avd Policies
 shows the broad functional categories of these audit           Water and Water Relate, P--
  assignments . The results of much of the audit work           C---d W.4- Potection
 done during the period will be included in reports t o         Adminizhation fNonDizvimivarion
                                                                      nd Equa l OaaortuZ Programs
 be completed during fiscal year 1977 .                                            y and Employment u .wn Resources Di.izivv
                                                                 Education, Training,
                                                                 Health
                                                                 Ivcame Securit
                            Table 3                              Aut<mafic Daro Processin g
                                           surveys   tteviees     Internal Auditing Systems
  Domestic programs :                                            A- noting act Financial Repar ing FiStudi-
                                                                                                          °          d General Mnvagement
                                                                                                                es Division
       Energy and materials .                53         84        Nanovvl Prodacr—u y
-      Community and economic devel -                            Facilities and Materia lMarwgement
         opulent	                           155       249        Implemeotatian of Mili tary         Lo gi — . —d Cammuvimtiay s
       FL-tman resources	                   151       270          Preparedness M                        Dr .ision
       General government 	                  80       187        Federal Records Man. nagement
                                                                 Inre.goverrmental Relations and
  General management :                                             Rc .eaue Shariv q
       Procurement and systems acquisi -                         L eEnfarceme r and Gtme                emral Go .ernmevr Di .. zio v
                                                                   Pr nu
         tion	                              120       288        Tao Admivish atio v
       Logistics and communications . .      92       260
                                                                 Fed—ll Pr  a                         P ar         m avd Syztemz
       Federal personnel and compen-                             Sci nc       nd Technology             ' Acquisirian Divisio n
         sation	                             97       136
                                                                 Tax Policy
       Financial and general manage -                            Program Evalaatiov Systems         J Pro ... . Analysi s Divisio n
         ment	                               86       115
                                                                  Feta r i P- --1 Monayemeat :JF deral Per d ays
  International programs	                    75       12 7            nd Compensation                    Compensation Divi io n
                                                                  Ivter ar ov I Eco         and       Inrcrvas~anal Dtviz~vv
       Total	                               909      1,716            Military Prog.a s
                                                                  Energ y
      Given the size of the Federal Government and th e           M°re-lz                              Ever9Y °vd Minerals Division
  scope of its operations, Ave must he selective in deter -
   mining which Federal programs and activities Ave wil l
   review. In deciding what audit work to do, Ave em-              Review of Regulatory Report s
  phasize Federal programs and agency operations i n                  Under the Federal Reports Act we are responsibl e
   which there are strong present or potential congres-           for reviewing the existing information-gatherin g
   sional interest and opportunities for improvement .            practices of 14 independent regulatory agencies and
   We are continuously in contact with congressiona l             approving their requests for additional information.
   committees to remain abreast of their interests and            The purpose is to (1) minimize the burden on th e
   activities and Avith Federal agencies in the day-toda y        persons and businesses—particularly small ones —
   conduct of their programs .                                    required to provide information, (2) eliminate dupli-
                                                                  cate collection efforts, and (3) make sure data tabu-
      Our Program Planning Committee, chaired by th e
                                                                  lations are of maximum usefulness . Our review an d
    Comptroller General, has identified and approved 2 9
                                                                  clearance functions apply to the following Federal
    major Federal programs or issue areas to receiv e             agencies :
   priority audit attention. Each of the identified issue
  -areas is assigned to one of our operating divisions .             Civil Aeronautics Board
                                                                     Commodity Futures Trading Commission
- .(See table 4 .) That division takes the lead in identi-
                                                                     Consumer Product Safety Commissio n
   fying specific matters to be examined, developin g                Equal Employment Opportunity Commissio n
    plans, and formulating approaches, whether or no t               Federal Communications Commission
   it has direct audit responsibility for all of the Federal         Federal Elections Commissio n
 'departments or agencies involved in the area .                     Federal Energy Administratio n
  HIGHLIGHTS OF ACTIVITIE S

    Federal Maritime Commissio n                                 Examples of other important legislation affectin g
    Federal Power Commissio n                                  our work follow .
    Federal Trade Commission                                     • The Ytterans' Administration Plgsician and Dentis t
    Interstate Commerce Commissio n                                 Comparability Act of 1975 required GAO to report
    National Labor Relations Boar d                                 to the Congress by August 31, 1976, on recruit-
    Nuclear Regulatory Commissio n                                  ment, retention, and pay of physicians an d
    Securities and Exchange Commissio n                             dentists employed by the Federal Govermment .
     During the 15-month period, we received 34 3                   A similar report on other health care personne l
  requests for reviews of proposed reporting or record -            is required by March 1, 1977 .
  keeping requirements, including several which wer e           • The _lational Productivity and Quality of 1176rking
  highly controversial . By September 30, 1976, 30 2                Life Ad of 1975 established a Center responsibl e
  requests had been approved, I disapproved, 2 with -               for formulating a national productivity polic y
  drawn by the agency, and 4 suspended ; 34 wer e                   and for reviewing and coordinating all Federa l
  pending. Also, separate reports on the information -              productivity activities. The act directs GA O
  gathering activities of three agencies had been issued ,          to report to the Congress on the actions of th e
  and reviews were in process at another six . (OSP-               Center and evaluate its effectiveness . It also
  76-19, May 7, 1976 ; OSP-76-10, May 11, 1976 ;                   directs us to recommend legislation which woul d
 and ACGiRR-76-2, Aug . 23, 1976. )                                improve the Center's efficiency and its imple-
    In Slay 1976, we sent a report to the Congres s                mentation of a national productivity policy.
 outlining the status of our [cork under the act an d              Public Law 94-119 (Oct . 21, 1975, 89 Stat . 1i08 )
 discussing the reasons for our limited success i n                added a section to the John F. Kennedy Cente r
 affecting the paperwork requirements placed on th e               Act which directs GAO to regularly review
 public by regulatory agencies . We recommende d                   and audit the C :enter'% accounts.
 that the Congress reassign GAO's responsibilities fo r         O 7 he Public {Yorks Bmplo)ment Act of 1976 au-
 the clearance function to an executive agency, pref-              thorizes a local public works capital developmen t
 erably the Office of Management and Budget .                      and investment program and establishes a n
 (OSP-76-14, May 28, 1976 . )                                     antirecessionary program . The act requires th e
                                                                   Comptroller General to investigate the impac t
 Impact of New Legislatio n                                       the emergency support grants have on the opera-
                                                                   tions of State and local governments and th e
      We trust constantly adjust our work programs o r
                                                                  economy. The results of our investigation an d
  increase our capabilities to accommodate responsi-
                                                                  any recommendations for improving the effec-
  bilities added by new legislative actions .
                                                                  tiveness of similar programs are to be reporte d
     The Energy Policy and Conservation Act of 197 5              to the Congress by July 1977 .
 gave GAO new audit authority which has greatly
                                                                 Legislation which expands existing Federal pro -
 increased our workload . Title V of the act requires
                                                              grams or creates new ones also automatically in-
 us to verify energy information submitted to th e
                                                              creases our workload . A few examples follow.
 Federal Government, when requested to do so by a
 congressional committee .                                      • The Consolidated Rail Corporation, established by
     In connection with this responsibility, the Comp-            the Regional Rail Reorganization Act of 1973 ,
 troller General, for the first time, has been authorize d        became operational in March 1976 . The large
 to (1) issue subpoenas, (2) require any person t o               Federal investment—over $4 billion—will re -
 reply to interrogatories, and (3) assess and collect             quire considerable audit work in connectio n
 civil penalites not to exceed $10,000 for each violation .       with the corporation's activities .
    Since the laty was enacted in December 1975, w e            O The\otional Health Planning and Resources Act of
 have received six requests from congressional com-               1974, enacted January 4, 1975, makes important
 mittees to examine energy company records . To hel p             changes to health policy, planning, and resource
 with the work required by this lase, we established a            programs and establishes new health systems
 suboffice, with 19 professional staff members, i n               agencies . Evaluating the effect of this legislation
 Houston, Texas, during the period . (See chapter 6               will he a major workload requirement in fiscal
for further information .)                                        year 1977 .
                                                                                                HIGHLIGHTS OF ACTIVITIE S

   • The Xew York City Seenonal Financing Act of 1975,      portation billings (required by the Transportatio n
     which became law December 9, 1975, authorize d         Act of 1940) to the General Ser v ices Administration .
     the Secretary of the Treasury to provide seasona l     The act, however, does not affect out authority to
     financing for the city of New York . After this        audit the policies, practices, and procedure s
     jaw was passed, the Senate Committee on
                                                            of executive agencies having transportatio n
     Banking, Housing, and Urban Affairs requested
                                                            responsibilities .
     us to audit New York City, its agencies, an d
     the Municipal Assistance Corporation.                     From July 1, 1975, to October 12, 1975, when th e
                                                            function was formally transferred, we audite d
   • The P'orngn Assistance Att of 1974 requires th e
     President to provide the Congress with a d(: -         $239,044,601 in transportation chargs_ A total o f
     tailed plan for reducing and eventually clirni-        17,23 :5 claim of overcharge. were stated agains t
     nating the \lilitary Assistance Program .              carriers for 52,06,414 and collectio.s born c_rra_rs
      Reductions were to be effective July I, 1976 .        amounted to '1,756 ; 959 . During t7_                 Ol
     Review of these matters will be included in our        claims by carriers against tie united             +. _. _
     fiscal tear 1977 audit work .                          settled for :572,21k .
   • 7Ge International Uetelopment and Fool AsuiNnr e
     Act rJ 1975 emphasizes the need for snore effectiv e
     agricultural development and food aid programs         Settlement of Claim s
     and stresses the use of private and voluntar y
     organizations in channeling development assis-            C j airm against t're I-r,,.•ea S la--_t          GAO    "I


     tance to foreign countries . This rringressiona l      for seultment include-- t i, ti,e~y .       reu -       _t, . .-,T-



     emphasis will be considered in our wor", plans .        be Y-tded by GAO and 1 2 ;	                    nr dou`:ru.
                                                            questions of law or fact . Ftorr, Jttl•: i_ .-       :c z n
Participation in Boards ,                                   September 30, 197F,, •e:e 1 . 1
Councils, and Commission s                                  lice L•nit d ..~ztts for
                                                                                             we 11,
  Federal statutes setting up special commission_ o r
                                                              • Das wvd cif 6h.6i cFf,•. c	                : :. _
councils may name the Comptroller General z_ a
                                                                 575 million .
member . Among those that he is serving on—and tee
                                                              • Prucssed 1 . ;63 -.: z1-". c.                           _
authorizing le g islation—are :
   • The Advisory Council for the Office of Tech-                 .            :e 52 .5 r:: ...r. _'— _ =-'	
      nology Assessment (Public Law 92-484, Dec . 13 .                .,_--r                                                      '
      1972, 86 Star . 80(j) .
   • The National Commission on Electronic fun d              Fcrts:er ..
     Transfers (Public Law 93-495 . Oct . 28 . 1974.        Divisicr. w; 1l ht fo~= ' -_ -=            -- - -
     88 Slat . 1508) .
   • The Commission on Federal Paperwork, (Publi c
     Law 93-556, Dec . 27, 1974, 88 Slat . 1790) .          Financial Management Improvement
   Since 1970, the Comptroller General has served a s
Chairman of the Cost Accounting Standards Board .
as required by Public Law 91-379, Ana . 15, 1970 . 84       o 1950 . we :              --
Star. 796 .                                                   •
                                                                                                           --
Audit of Transportation Payment s                                 GDone r s-e
                                                                  accoznrui g
  The General Accounting Office Act of 191- 4
transferred GAO's respomiblit for auditins* trans -               acco-u:raze        1-s :_=-   -- .
     HIGHLIGHTS OF ACTIVITIES

     Approval of Accounting System s                         Operating Expense s
    During the 15-month period ended September 30,
  1976, we approved accounting principles and stand-            The appropriation for operating our Office for th e
 ards for systems in 3 agencies, plus designs for 3 2         15-month period ended September 30, 1976, wa s
 systems in other agencies . By the end of the period,        $170.0 million . Total operating expenses for the perio d
 principles and standards for 333 of 338 systems sub-         were $169 .4million . About 82 percent was for salarie s
 ject to approval had been approved, and 177 of 33 8          and other personnel costs .
 designs had been approved . Further information on             Financial statements showing our assets and liabili •
 this work is described in chapter 5.                        ties, operating expenses, and other data are presented
                                                             in appendix 6 .
  Joint Financial Managemen t
  Improvement Progra m                                       Staffing
    The Comptroller General, the Secretary of th e
  Treasury, the Director of the Office of Managemen t          At September 30, 1976, we had 5,351 employees, a
  and Budget, and the Chairman of the Civil Servic e        decrease of 139 over June 30, 1975, largely as a resul t
  Commission provide the leadership for this coopera-       of the transfer of transportation rate audit functions .
 tive program for improving financial management            Of the current total, 4,142, or about 77 percent, wer e
 practices throughout the Federal Government Th e           members of our professional staff .
 program was authorized by the Budget and Account-             The table on page 221 summarizes the academic
 ing Procedures Act of 1950 . The program's operation s     and experience backgrounds of our staff. We are
 are repin ed in separate annual progress reports tha t     continuing to increase the mix of disciplines of ou r
 are published for the information of the Congress, al l    staff to enable us to better carry out our responsi-
 Federal agencies, and the public. (See ch. 5 for           bilities and assist the Congress.
 further information .)
                                                            Equal Opportunity

 Savings an d                                                  Our overall employment profile continues to im-
                                                            prove through the increased number of women an d
 Other Accomplishments                                      minority persons on our rolls . Since Septembe r
                                                             1973, women in professional positions increased from
   It is not possible to determine t, full effect o f       5.9 percent to 11 .8 percent . During the same period ,
 GAO's activities on Government operations, pro -           minority professional employees increased fro m
 grams, and activities . Where feasible, we do mak e        4.9 percent to 9 .2 percent . (See p . 226 for furthe r
estimates of the financial savings attributable to ou r     information) .
work . For the 15-month period ended September 30 ,
 1976, savings from actions directly attributable to ou r
work amounted to $532 million . In addition, actions        Proposed Legislation to
stemming from the efforts of GAO and of othe r              Revise and Restate Certai n
parties, such as the Congress and the Federal agencies ,
saved an estimated $1 .6 billion .                          GAO Functions and Dutie s
   One of our main objectives is to stimulate improve-
ments in Government operations ; many actions taken            On October 20, 1975, the House of Representative s
on our findings and recommendations cannot be               passed H.R. 8948 to amend the Accounting an d
adequately measured in dollar terms . In some ways,         Auditing Act of 1950. The bill provided for audit of
our work that leads to increased effectiveness in Gov-      the Internal Revenue Service by the Comptrolle r
ernment programs or activities is more importan t           General . It was designed to resolve longstanding
than actual financial savings .                             differences between GAO and IRS over our acces s
   Examples of savings and other accomplishment s           to records necessary to carry out our regular audi t
growing out of our work are presented in chapter 3 .        responsibilities .
10
                                                                                     HIGHLIGHTS OF ACTIVITIE S

    A similar bill was passed by the Senate on Octobe r       —Authorized the Comptroller General to issue
 1, 1976, but the House did not have time in the 94th           subpoenas for negotiated contract and sub -
session to agree to the Senate amendments . We                  contract records and records of other non -
expect this legislation will be reintroduced early i n          Federal persons or organizations ,
the 95th Congress .                                           —Authorized the Comptroller General to brin g
                                                                suit against Federal agencies to compel them t o
   Other legislation (S. 2268) directly affecting GAO' s
                                                                furnish requested records.
functions was introduced in the 94th Congress on
                                                              —Authorized and directed the Comptroller General
August 1, 1975. It would have :                                 to make profit studies of Government contractors .
    Enabled the Comptroller General to institut e             We believe this legislation would enable us to more
    civil actions in a Federal court in connectio n        effectively carry out our assigned responsibilities .
    with proposed obligations or expenditures o f          Therefore, we plan to request that it be reintroduced
    public funds determined by him to be illegal .         in the 95th Congress.




                                                                                                               11
                                                                  Legislative Recommendation s
                                                                  Acted on by the Congres s
                                                                  During the 15-Month Perio d
                                                                  Ended September 30, 1976

                                                                 Agriculture and Rural Developmen t
                                                                     Gnprorements in U.S. Grain Inspection System—We
                                                                  recommended that the Congress establish an essen .
                                                                  tially all-Federal grain inspection system, incorporat .
                                                                 ing sampling, grading, and weighing services whic h
                                                                    —would be phased in (1) starting at problem loca •
     CHAPTER TW O                                                       tions, (2) moving as soon as possible to por t
                                                                        elevators, and (3) after sufficient experience i s
                                                                        gained, extending to major inland terminals ,
                                                                    —would be operated on a reimbursable basis, an d
                                                                    —would restore faith in the system and attain it s
                                                                       intended objectives .
     LEGISLATIV E                                                   Public Law 94-582, enacted in October 1976, wa s
                                                                heavily influenced by our report and should accom-
     RECOMMENDATION S                                           plish the general intent of our recommendations.
                                                                (RED-76-71, Feb. 12, 1976. )

      The Budget and Accounting Act, 1921, requires
                                                                Commerce and Transportatio n
   GAO to make recommendations to the Congress
   "looking to greater economy and efficiency in public             Cost of Including Rehabilitation and Restoration of
   expenditures" and report such recommendations a t             Highurars in Federal-aid Highway Programs—On July 7 ,
   the beginning of each congressional session or i n            1975, the President proposed to redefine the ter m
  special reports at any time . When an audit shows              "construction" to include rehabilitation and restoration
  that corrective legislative action is required or desir-       of a highway . The change authorized Federal fund s
  able, the report includes a proposal for legislativ e          for resurfacing and for major repairs of deteriorate d
  consideration by the Congress or a recommendation              highways under the interstate highway constructio n
                                                                 program administered by the Department of Trans-
  to the affected agency to sponsor a legislative proposal .
                                                                portation's Federal Highway Administration . Th e
     We also report to the Congress early in each session ,     Department of Transportation did not have a n
  summarizing the status of all open GAO recommen-              estimate of the additional assistance that would b e
 dations for legislative action . This report is sent to the    needed, nor had it determined how the assistance
 chairmen and ranking minority members of the cog-              would be administered or how Federal funds woul d
 nizant committees to assist in their oversight respon-         be distributed . We suggested that the Congress require
 sibilities . (See "Summary of Open GAO Recom -                 the Secretary of Transportation to provide informatio n
 .nendations for Legislative Action," OCR-77-1002 ,            on the financial implications of the President' s
January 1977 .)                                                proposed change . In line with our suggestion, th e
                                                               Congress included a provision in the Federal-Aid
    This chapter summarizes the legislative recommen-
                                                               Highway Act of 1976, requiring the Secretary to
dations acted on by the Congress during the 15-month
                                                               study and report on resurfacing, restoring, an d
period ended September 30, 1976, and lists all ope n
                                                               rehabilitating the interstate system, including cos t
legislative recommendations, made during this perio d          estimates, recommended programs, and alternative
and in prior years, which we still recommend to th e           methods of distributing funds. (RED-76-19, Sept . 4,
attention of the Congress .                                    1975 .)
12
                                                                                 LEGISLATIVE RECOMMENDATION S

 Energy-Related Activitie s                                 and Production Act, Public Law 94–385, was enacted.
                                                            Among the energy conservation alternatives w e
    Congressional Authority to Reviaw Proposed Contract s   reported that were included in the act were (1) a
 Between the Energy Research and Development Administra-    grant program to assist lose-income persons t o
 tion and Private Uranium Enrichment Groups—O n             improve the energy efficiency of their homes throug h
 December 10, 1975, we testified before the joint           such actions as adding insulation and storm windows ,
 Committee on Atomic Energy regarding the propose d          (2) the establishment of mandatory energy conserva-
 Nuclear Fuel Assurance Act (H .R . 8401–S . 2035) . I n    tion standards for new buildings, including residences ,
 response to the joint Committee's question about           and (3) authorization of a demonstration program t o
 congressional authority to review proposed contract s      show financial incentives for conservation . (RED -
 between the Energy Research and Developmen t               75–377, June 20, 1975 .)
 Administration and private uranium enrichmen t
 groups, we suggested that any proposed agreements
 be referred to the joint Committee . The Committee         General Government
could then examine the proposal and report to the              Salary Adjustment for Top Federal Officials—\\'e re-
 Congress its views and recommendations and a
                                                            ported to the Congress on the need for a better syste m
proposed concurrent resolution, stating whethe r
                                                            for adjusting the salaries of top Federal officials .
 the Congress favors the agreement. This concep t
                                                            The 4-year process for assessing and adjusting salarie s
 was incorporated into the bill reported out by the
                                                            had failed to achieve its objective-, and salaries had
joint Committee on May 14, 1976 .
                                                            not been adjusted since March 1969. This situation
    Proposed Changes in the Basis for the Government' s     had created great inequities—five management level s
 Uranium Enrichment Services Charge—The Administrator       were drawing the same salary—and seriously im-
 of the Energy Research and Development Administra-         paired recruitment, retention, and incentives fo r
 tion proposed legislation which would enable him           advancement to senior positions throughout th e
 to charge a "fair value" price (a price above actua l      Federal service .
 costs) for the agency's uranium enrichment serv ices.         Our recommendations to reform the salary ad-
 The assumptions made in computing the projected            justment process for top officials were incorporate d
fair value price were judgmental, and it would b e          in Public Law 94-82, August 17, 1975, which pro-
 difficult, if not impossible, to determine whethe r        vides for adjusting the statutory pay ceiling at th e
 these were the most reasonable assumptions to use.         same annual percentage increase as that applied to
 We recommended that the joint Committee o n                the salaries of general schedule employees. (FPCD -
Atomic Energy consider revising the legislativ e            75–140, Feb . 25, 1975 . )
proposal, so that the joint Committee retains contro l
over establishing the Government's uranium en-                 Cost–af–living Adjustment Processes for Federal An-
richment charges, by requiring that any changes i n         nuities—The processes for adjusting Federal retirement
the basic approach used to arrive at the fair valu e        annuities to compensate for increases in the cost o f
charge and any additions to this charge necessary fo r      living actually caused the annuities to increase faste r
not discouraging development of private suppl y             than the cost of living or Federal white-collar em-
sources be included in the uranium enrichmen t              ployees' pay rates . This was caused by the extr a
criteria and submitted to the joint Committee fo r           1-percent increases which were granted to annuitant .
approval .                                                  by law, each time their annuities were adjusted fo r
                                                            increases in the cost of living. The Federal annuity
   In a closed markup session on the agency's fiscal        adjustment processes were more liberal than those o f
year 1977 authorization bill on April 6, 1976, th e
                                                            non-Federal pension systems . The law also permitted
joint Committee adopted our recommendation a s
title V to the bill . (RED–76–30, Sept. 22, 1976 .)         new retirees to benefit from increases in the cost o f
                                                            living which occurred long before they retired .
   National Standards Needed for Residential Energ y           We recommended that legislation be enacted re -
Conservation—We made a number of legislative                pealing the 1-percent add-on and otherwise making
recommendations aimed at promoting energy effi-             the annuity cost-of-living adjustment formula an d
ciency in both existing and newly constructed housing .     related provisions in major Federal retirement system s
   On August 14, 1976, the Energy Conservation              more equitable and more consistent with those o f

                                                                                                                 13
     LEGISLATIVE RECOMMENDATION S

  other Federal and private pension programs . Among           relief to beneficiaries only when the value of th e
  other changes, Public Law 94-HO, approved Octo-              estate property declines.
  ber 1, 1976, eliminated the extra I-percent annuity in -        Public Law 94-455, dated October 4, 1976, pro .
  creases and provided for semiannual adjustments              vided that the base value of property acquired fro m
  equal to the actual -percentage rise in the cost o f         or passing from a person dying after December 31 ,
 living . (FPCD-76-80, Julv 27, 1976 . )                       1976, is to be the same as the value immediatel y
                                                               before the death . (The law does permit increasin g
    Expenditure of Federal Funds for the Protection of
                                                               the property basis to its appreciated value as o f
 Presidents, Tice Presidents, Former Presidents, and Others—
                                                               December 31, 1976 .) This law solves the problem s
 As a result of our review of Federal expenditures fo r
                                                               our recommendation was intended to correct . (GGD-
 President \ixon s residences at Key Biscayne and
                                                               76-1, Oct . 20, 1975 .)
 San Clemente, we recommended that the Congres s
 enact legislation along the following lines :                     Taxable Estate Definition Changed To Include Amount
     —Appropriations for protection of private resi-            of Gift Taxes Paid on Gifts Made in Content lotion of
       dences should be made to the Secret Service ,            Death—If the Internal Revenue Service determines
       and no other funds should be available for tha t         that gifts were made in contemplation of death, thos e
       purpose.                                                 gifts are included in valuing a decedent's taxabl e
     —The accounting system of the Secret Servic e             estate. However, the amount of gift tax paid is no t
       should require that such expenditures be au-            included in the estate . Tnis, in many cases, results i n
      thorized by the Director or Deputy Director o f          less Federal tax being paid than would have been
      the Service .                                            paid had the gift not been made .
     —The Secret Service should make an annual publi c            WV recommended that the Joint Committee on
      report to the Congress, showing, in as much detai l      Internal Revenue Taxation initiate legislation whic h
      as security will allow, such expenditures .              would, for tax purposes, completely reverse trans.
     The report made by the Secret Service should b e          actions involving gifts made in contemplation of death .
      subject to audit by GAO, and GAO should b e                Public Law 94-455, dated October 4, 1976, pro-
      given complete access to all records, files, an d        vided that the gift tax on gifts made within 3 years o f
      documents supporting expenditures- made b y              the decendent 's death is to be included in the dece .
      the Service .                                            dent' s gross estate . (GGD-76-1, Oct . 20, 1975 .)

   In addition, we suggested that the Congress con-               Taxpayers Subjected to Jeopardy Assessments Given More
sider limiting the number of private residences a t            Prompt ,]udicial Revietu—Whenever the Internal Rev-
which permanent protective facilities w ill be pro-            enue Service determines that the collection of a ta x
vided for a President .                                        may be in jeopardy, it can immediately assess and
   Public Law 96-524, approved on October 17, 1976 ,           collect the tax—through seizure of property if neces-
generally adopted these recommendations, (GGD -                sary . Jeopardy assessments made for closed tax years
74-48,Dec. 18, 1973 .)                                         and covering taxes other than income, estate, gift, an d
                                                               certain excise taxes are made under authority of
    dlethod of Palnirg Estate Assets Changed—The
                                                               section 6862 of the Internal Revenue Code . We
 Internal Revenue Code (section 2032) permits a n
 executor, for tax purposes, to value an estate as of the      reported to -dte joint Committee on Internal Revenu e
                                                               Taxation that taxpayers so assessed were not afforde d
 date of death or as of 6 months thereafter. Use of the
                                                               prompt judicial review of the assessment and tha t
 latter date is called the alternate valuation method .
                                                               any property seized could be sold before judicia l
 When estate property increases in value after death ,
                                                               review took place .
 use of this method would reduce the taxable profi t
                                                                 Based on our recommendations to the joint Com-
realized by the beneficiary if the property is later sold .
                                                               mittee, Public Law 94-455, dated October 4, 1976 ,
 Loss of this income tax could be greater than the             provided for expeditious Tax Court review of th e
increase in estate tax realized .
                                                               appropriateness and the amount of all jeopardy assess -
   We recommended that the joint Committee on                  ments . It also restricted the sale of seized property
Internal Revenue Taxation initiate legislation amend-          until this review is complete . (GGD-76-14, July 16 ,
ing the Internal Revenue Code to provide estate tax            1976. )

14
                                                                                 LEGISLATIVE RECOMMENDATION S

    Withholding State Income Tax From Afilitar , Pay           set forth in the financial and compliance elemen t
Authorised—Thirty-five States and the District o f             of Standards for Audit of Governmental Or-
Columbia tax the pay of military personnel, bu t               ganizations, Programs, Activities, and Functions ,
until October 4, 1976, Federal law prohibited with -           published by the Comptroller General .
holding of the taxes . We recommended that the               —Restrictions on local governments' use of fund s
withholding privilege for State and District incom e          for certain purposes were eliminated .
taxes provided other Federal employees be extende d          —The nondiscrimination provisions were, broadened
to members of the armed services, in the best interest s      to prohibit discrimination on the basis of handi-
of the members and the taxing jurisdictions .                 capped status, age, and religion, and the pro-
- The Tax Reform Act of 1976 authorized with -                hibition was extended to cover all programs an d
holding agreements between the Secretary of th e              activities of a recipient government unless the
Treasury and taxing authorities to include member s           government can show, by clear and convincin g
of the armed services. Service personnel should fin d         evidence, that revenue sharing did not con-
it easier to meet their tax obligations, and the States       tribute to the program or activity in which the
and the District should increase tax revenues an d            discrimination is alleged to exist .
reduce the administrative costs of tax law enforce-          —Each recipient government must publish, an d
ment . (GGD–75-103, Nov . 19, 1975 .)                         hold hearings on, a summary of its propose d
                                                              budget and the relationship of revenue sharing
   Amendment to the Federal Magistrates Act of 1968—I n
                                                              funds to the items contained in the budget .
 1974 we recommended that the Federal 'Magistrates
                                                           (GGD-76-2, Sept. 9, 1975 ; .GGD–76–80, June 2,
Act of 1968 be amended to further define the authorit y
of magistrates as well as expand their trial jurisdic-     1976 ; GGD–76–90, July 30, 1976 . )
fiun to include most misdemeanors. (GGD-74–104,
Sept . 19, 1974 . )                                        Healt h
  On October 21, 1976, the President signed Public
                                                              Accessibility, of Public Buildings to the Phrsicall) ,
Law 94–577, which expanded the duties of U .S .
                                                           Handicapped—Enactment of the Architectural Barrier s
magistrates and further defined their authority .
                                                           Act in 1968 was a major step toward making publi c
The additional duties of the magistrates generally
                                                           buildings accessible to the physically handicapped .
relate to the hearing of [notions in both criminal an d
                                                           However, the act had not achieved all the desire d
civil cases, including preliminary procedural motions
                                                           effects, primarily because it left implementing actio n
and certain dispositive motions . In either case, the
                                                           to the discretion of the Government agencies named .
order or recommendation of the magistrate is subjec t
                                                              We recommended that the Congress amend th e
to final review by a district court judge .
                                                           act to (1) impose a clear statutory mandate on th e
                                                            named agencies to take all required actions to carr y
General Revenue Sharin g                                   out the intent of the law, (2) enlarge the coverag e
                                                           of the types of buildings and facilities subject to th e
   Improvements in Administration of Revenue Sharing
                                                           lava, (3) require agencies to insure compliance wit h
Program—Public Law 94188, approved October 13 ,
                                                           prescribed standards, and (4) remove the presen t
 1976, extended the Revenue Sharing Program through
                                                           exemption of the Postal Service from coverage unde r
fiscal year 1980 . The act made certain changes tha t
                                                           the law. Passage by the Congress of Public La w
we had recommended in testimony and reports t o
                                                            94–541, signed by the President on October 18 ,
the Congress :
                                                            1976, was completely responsive to our recommenda-
  —Each government that receives revenue sharin g          tions. (FPCD–75–166, July 15, 1975 . )
   totaling $25,000 or more is required to have a n
   independent audit of its financial s tatements, not        Public Hazards from Unsatisfactory Aiedical Diagnosti c
   less frequently than once every 3 years, conducte d     Products—Because the Food and Drug Administra-
   in accordance with generally accepted auditin g         tion's regulation of in vitro diagnostic products had
   standards that are defined in terms of standards        not been effective, unreliable in vitro diagnostic s

                                                                                                                  15
 LEGISLATIVE RECOMMENDATIONS

                                                            Act was amended by Public Laty 94-182, maintainin g
were being sole . in the United States and exporte d
                                                            the present system of coordinating benefits fo r
to foreign countries . In addition, not all biologica l
in vitro diagnostic products were regulated in th e         Federal employees program enrollees also covere d
same way, because legislation concerning their              by Medicare . This was one of our alternatives to th e
regulation was not clear .                                 joint proposal. (MWD-75-79, Aug . 4, 1975 .)
   In line with our recommendations, Public Law
94-295 was approved May 28, 1976, providing the            International Affairs and Financ e
Administration with the authority to (1) require
manufacturers of medical diagnostic products to b e           .\eed for Establishing Legislative Authority and a
registered, (2) require in vitro diagnostic produc t       Contingency Fund To Cope With Foreign Exchange Rat e
manufacturers to be inspected, (3) obtain access t o       Fluctuations—Radio Liberty and Radio Free Europe ,
manufacturers' relevant records needed to determin e       funded by U .S . Government grants from the Board o f
compliance with the Federal Food, Drug, an d               International Broadcasting, spend about 84 percen t
Cosmetic Act, (4) detain suspected violative products ,    of their funds overseas and have been experiencin g
and (5) prevent export of in vitro diagnostic product s    problems in maintaining an approved level of opera-
not meeting U.S . standards . (MWD-75-52, Apr. 30 ,        tions because of wide fluctuations in the foreig n
1975 .)                                                    currency exchange rates .
                                                              We suggested legislative language to authorize a
                                                           contingency fund, subject to approval by the Offic e
Income Securit y
                                                           of Management and Budget, which could be used t o
    Coordination Bet[veen .the Medicare and the Federal    provide a level of operations for the Radios consisten t
 Employees Health Benefits Progranv—Public Law 92-
                                                           with the appropriations passed by the Congress .
 603 was enacted on October 30, 1972 . Section 21 0        On July 12, 1976, the Board for Internationa l
 of that late required the Civil Service Commission t o
                                                           Broadcasting Act was amended by Public Law
 provide health insurance plans, under the Federa l
                                                           94-350 to incorporate our suggestion . However,
 employees health benefits program, which woul d
supplement medicare benefits . The intent was to           appropriations to implement the authorization hav e
 provide better coordination for benefits not paid i n     not been made to date . (B-173239, i\Iar. 2,_1976. )
full by medicare and reduce premiums of the Federa l
employees plan for individuals covered by both th e        National Defense
 Federal employees and medicare programs . Sectio n
 210 also provided that as of January 1, 1975, bot h          Elitnitmtion of the Incentive for Accumulating Military
parts A and B of the medicare program would not pay        Leave—Unlike officers, enlisted personnel could re -
 for any service also covered under the Federa l           deem unused leave for cash at the end of each enlist-
employees plan in which the beneficiary was enrolled .      ment ; this encouraged leave accumulation. As a
   On October 26, 1974, Public Law 93-480 wa s              result, the Government incurred large expenditure s
enacted and deferred the effective date of section 21 0    for unused leave and the enlisted members of th e
until January 1, 1976 . It also required the Civi l         military did not get the benefits of a vacation . We
Service Commission and the Department of Health ,           recommended legislation that would limit paymen t
Education, and Welfare to submit a progress repor t        for unused leave to 60 days during the ser v ice mem-
on the coordination of the two plans.                       ber's career. This would eliminate repetitive pay-
   In our August 4, 1975, report to the House Com-          ments, equalize treatment of officers and enliste d
mittee on Post Office and Civil Service, we suggeste d     personnel, and decrease the incentive to accumulat e
 the Committee analyze the two agencies' joint             leave for cash redemption . (FPCD-75-139, Mar . 20,
 proposal, as it did not fully meet legislative require-    1975 .)
ments and would provide preferential treatment t o            Our recommendation was incorporated in Defens e
 one group of Federal emplG .°es . We also provide d       Appropriation Acts of 1976 (Public Law 94-212 ,
the Committee with two r' ; -natives to the join t         Feb. 9, 1976) and 1977 (Public Law 94-361, July 14 ,
proposal . On December 31, P5, the Social Security         1976) .

16
                                                                                 LEGISLATIVE RECOMMENDATION S

 Natural Resources and Environmen t                            In March 1976 the Congress enacted the Fisher y
                                                             Conservation and Management Act of 1976, whic h
    jYeed To Improve Federal Coal Leasing Process—We         achieves the intent of our suggestion . (GGD-76-34,
 recommended that the Congress amend the Minera l            Feb . 18, 1976. )
 Leasing Act of 1920 to provide for (1) the award o f
 coal leases only on a competitive basis and (2) issu-
  ance of prospecting permits under which person s           Open Legislative Recommendations
 could explore for coal for commercial purposes bu t
 have no exclusive rights to leases.                          Made During the 15-Mont h
    On August 4, 1976, the Federal Coal Leasing              Period Ended September 30, 197 6
 Amendments Act of 1976 was passed . This Imv
 provides for the Secretary of the Interior to (1) offe r    Agriculture and Rural Development
 lands for coal leasing by competitive bidding and (2 )
 issue to any person an exploration license whic h              Section 901(6) of the Agricultural Act of 1970 ,
 confers no right to a lease . (RED-76-79, Apr. 1, 1976 .)   which requires that first priority be given by agencies
                                                             to locating new offices and other facilities in rura l
   Increased Emphasis .Needed on Reforestation and Timber-
                                                             areas, should be amended t o
Stand Improvement Backlog on .National Forest Land—The
growing demand for lumber and the increasing pres-             —have representatives of Federal departments an d
sure to use productive timberland for other, multiple -         agencies advise the Congress of their observa-
use purposes added to the need for the Forest Servic e          tions on site selection requirements, problems ,
to accelerate reforestation and timber-stand improve-           and needed improvements,
 ment work on the estimated 18-million acre backlog            —provide additional guidance on the matter of
 of national forest land needing such work . We pre-            site selection priorities ,
sented for consideration by the Congress severa l              —assign, or request the President to assign, on e
 alternatives for increasing funds to accelerate refore-        agency the overall leadership and coordination
 station and timber-stand improvement . One of thes e             responsibility for implementing section 901(b) ,
                                                                  and
 was to increase regular appropriations from genera l
                                                               --direct each agency to establish an affirmative
funds of the Treasury .
                                                                 action plan for implementing section 901(b) .
   In October 1974, the Forest Service advised th e          (CED-76-137, Sept. 7, 1976 .)
Congress of the additional amounts needed to liquidat e
its reforestation backlog over a 10-year period . For
fiscal year 1976, the Congress appropriated $62 . 7          Community Development and Housing
million for reforestation and timber-stand improve-              The Secretary of Housing and Urban Development
ment-$15 .2 million more than the amount re -                should require the Federal Insurance Administrator
quested in the President's budget . (RED-74-195 ,             to propose legislation amending the Flood Disaste r
Feb . 14, 1974. )                                             Protection Act of 1973 to prohibit federally regulated
                                                              financial institutions from purchasing mortgages in
  A`eed To Protect Our Fishery Resources—Many fish
                                                              the secondary market on properties in designate d
species important to the U.S . fishing industries wer e
                                                              flood hazard areas that are not protected by floo d
 being depleted through overfishing or expansion o f
 U .S . coastal areas.                                       insurance . (RED-76-23, Sept . 19, 1975 . )

   A State-Federal program was established in 197 1            Title I of the Housing and Community Develop-
 to coordinate management of domestic fisheries ,            ment Act of 1974 should be clarified as to the extent ,
 but progress has been slow . We suggested that th e         and under what circumstances, federally assisted ne w
 Congress consider enacting legislation which would          housing can be located in areas having high concen-
 give the Secretary of Commerce authority to impos e         tration of low-income persons, minority populations ,
 management measures in fisheries under domesti c            and publicly assisted housing and still comply wit h
jurisdiction in case such measures were not promptl y        the act's objective of promoting greater choices o f
 implemented by the States .                                 housing opportunities and avoiding undue concentra -

                                                                                                                  17
      LEGISLATIVE RECOMMENDATION S

     tions of assisted persons in areas containing a hig h          —Authorizing the Energy Research and Develop-
     proportion of low-income persons . (RED-76-106,                  ment Administration to construct the nest incre-
     June 23, 1976 . 1                                                ment of the uranium enrichment capacity usin g
                                                                     the proven enrichment process .
     Education, Manpower, and Social Service s                      —Establishing a Government corporation with self-
                                                                     financing authority to manage the Government 's
        To provide a long term solution to problems in               uranium enrichment facilities.
     recruiting and retaining Federal physicians and den-           —Developing legilation -411 provisions, similar t o
     tists, die Congress shoul d
                                                                     those in the Administration 's legislative proposal ,
        —direct the Director, Office of Manaizement an d             AWIU)Tiling it to enter into cooperative agree-
          Budget, to develop a uniform compensation pla n            ments with private enrichers using advance d
          for Federal physicians and dentists an d
                                                                    technologies.
        —require the Director to report, within I year o r       (RED-76-36, Oct . 31, 1975 . )
          earlier, on Office activities, together with recom-
         mendations, including proposed implementin g            Natural Gas Pipeline Regulatio n
         legislation and cost estimates .
                                                                    The Chairman, Federal Power Commission, shoul d
     (IIRD-76-162, Aug . 30, 1976, )
                                                                  report to the Congress on the results of its coordinate d
     The Sociaf Security Act of 1965 should be amended            effort with the Federal Energy Administration t o
  to provide for financing the henefician- rehabilitatio n        obtain the natural gas curtailment data needed t o
  program on the basis of an annual determination by              evaluate the effectiveness of its at_tailment policy . If
 the Board of Trustees, Federal Old-Age and Sur v ivor s          the desired results are not obtained or if the Com-
  Insurance and Disability Insurance Trust Funds, o f             mission funds the effort too impracticable, the Chair -
 detonstrated program success in providing saving s               man should seek legislative revisions to the Natura l
 to the trust funds through rehabilitating the maximu m           Gas Act to expand his authority to obtain informatio n
 number of beneficiaries into productive activity. This           on (1) natural gas sales by intrastate pipeline an d
 would eliminate the present fixed-percentage method             distributing companies and (2) the end use of the ga s
 of financing the program, which does not relate pro-            by consumers who purcli3se it front interstate and
 gram funding to its demonstrated success . (lI1tD-              intrastate pipeline and distributing companies . (RED -
 76-66, May 13, 1976 .)                                          76-18, Sept. 19, 1975 .)


 Energ y                                                         Environment and Natural Resource s

     The Congress should                                          The Federal Water Pollution Control Act shoul d
  —require the Energy Research and Developmen t                 be amended to provide that the Environmental
     Administration to report on its improvements i n           Protection Agency may grant Federal agencie s
     reporting data into its management informatio n            extensions to achieve water quality requirements
     system for nuclear materials and                           beyond July 1, 1977, where necessary . (LCD-76-312,
  —closely monitor the Energy Research and Devel-               June 18, 1976. )
     opment Administration's efforts in determinin g              The Mineral Leasing Act of 1920 should b e
     the amount and effect of foreign investments i n           amended to provide, for future coal leases, permits
     the domestic uranium industry .                            adjusting lease terms more frequently than after a
(E\Ill-76-1, July 2, 1976 . )                                   20-year primary- term. (RED-76-79, Apr . 1, 1976 .)
  The Joint Committee on Atomic Ener y shoul d                    The Federal Water Pollution Control Act should be
                                            g
review the status of each contract approved unde r              amended to give the Environmental Protection
the proposed Nuclear Fuel Assurance Act at its annua l          Agency the authority to
authorization hearings . (RED-76-111, Nlay 10, 1976- )
                                                                  —exempt from the permit program certai n
  The Joint Committee on Atomic Energy shoul d                     categories or classes of dischargers having a
consider :                                                         minimal adverse impact on water quality ,

18
                                                                               LEGISLATIVE RECOMMENDATION S

  —extend on a case-by-case basis the July 1, 1977 ,       public and private sectors . (FPCD–75-122, July 3 ,
   requirement that industrial dischargers achiev e        1975 . )
   permit effluent limitations where permit condi-
                                                             Tide 5, section 5941, of the U .S. Code should b e
   tions cannot be met by the deadline afte r
                                                           repealed because the cost-of-living allowance for
   challenges to permit conditions have been
                                                           Federal employees in Alaska, Hawaii, Guam, Puert o
   resolved, an d
                                                           Rico, and the Virgin Islands is no longer an appro-
  —grant extentions on a case-by-case basis t o            priate means of compensation . (FPCD–75–161 ,
    municipalities which cannot meet the July 1 ,          Feb . 12, 1976 .)
    1977, water quality requirements because o f
    insu0icient time or Federal funds .                      Proposed legislation streamlining Federal procure-
(RED-76-60, Feb . 9, 1976 .)                               ment laws shoul d
                                                             —repeal Public Law 92–582 or
  To provide for more competition in the award an d
renewal of concession contracts, the Congress shoul d        —amend Public Law 92–582 to require competitive
                                                               negotiations.
  —encourage Government construction of facilitie s
                                                           (LCD–75-313, July 21, 1976.)
   whenever possible, thereby lessening any potentia l
    problems from possessory interests and                   The Congress should consider amending the De-
  —amend the Concessioners Policy Act to eliminat e        fense Production Act and authorizing a single agenc y
    preferential renewal rights.                           to administer all priority programs t o
(RED-76-I, July 21, 1975 . )                                 —broaden application of the priority and alloca-
                                                              tion authority to include nondefense programs o f
General Government                                            vital national interest and
                                                             --prevent competition among the various priority
  Legislation should be enacted changing Federa l               programs.
white-collar pay systems to provide fo r                   (PSAD–76-14, Feb. 27, 1976. )
  —separate systems designed around more logica l             The House of Representatives should amend Hous e
   groupings of occupations,                               Resolution 42, which limits to 25 the number o f
  —pay rates based on the pay patterns of the labo r       members who may jointly sponsor a House bill, t o
   market in each area, an d                               allow the full membership of the House to jointl y
  --proper recognition of differences in individua l       sponsor House bills . (RED-76-104, \lay 12, 1976 . )
     employees' proficiency and performance .
                                                              The Congress should enact legislation to repeal al l
(FPCD–76–9, Oct. 30, 1975 . )
                                                           occupational taxes in sections 5081 through 5148 o f
   The law (30 U.S .C . 6) which prohibits employee s      the Internal Revenue Code on retail and wholesal e
of the Bureau of \tines from having certain privat e       dealers in distilled spirits, wines, and beer ; manu-
interests which may conflict or raise a reasonabl e        facturers of nonbeverage alcoholic products ; brewers ;
question of conflict with their public duties should b e   and manufacturers of stills and rectifiers . (GGD-75 -
amended to include the Administrator and employee s         111, Jan . 16, 1976 .)
of the \fining Enforcement and Safety Administra-
                                                              Section 8(e) of the joint Funding Simplificatio n
tion . (FPCD–75–167, Dec . 2, 1975 . )
                                                           Act of 1974 should be amended either to insure tha t
   Legislation should be enacted to establish objec-       non-Federal matching shares required for each in-
tives, standards, criteria, and processes for achieving    dividual program and appropriation %sill be provide d
total compensation comparability between Federa l          or to more specifically state that establishing a singl e
and private sector employees, including both pay an d      non-Federal matching share is authorized . (GGD–
benefits . (FPCD-75-62, July 1, 1975 .)                    75-90, Jan . 19, 1976. )

  Legislative provisions affecting the wage rate             The Federal Alcohol Administration Act should b e
determination process for Federal blue-collar em-          amended to clarify the authority of the Bureau o f
ployees should be amended to allow attainment o f          Alcohol, Tobacco, and Firearms to investigate possibl e
the legislative pay principle of comparabili'y between     consumer and unfait trade practice violations of th e

                                                                                                                 19
     LEGISLATIVE RECOMMENDATION S

     act before a permit hearing . (GGD-75-111, Jan . 16 ,       —prescribe information which must be included i n
     1976 .)                                                      a State's documentation to indicate that there i s
                                                                  an effective program to control utilization of lon g
    The acts allowing waiver of claims of the Unite d             term institutional services to inpatients, an d
 States, against an employee or former employee of a
 Federal agency or a member or former member of the              —provide for a less complex and less burdensom e
                                                                  procedure for calculating the reduction o f
 military, arising out of erroneous payments of pay o r
 allowances should be amended to permit the Comp-                 Federal funds when States do not make a
 troller General to set the monetary limitation o n               satisfactory- showing .
 cases that may be adjudicated at the agency level .           (MWD-76-89, Jan . 26, 1976.)
 (A-54197, Apr . 22, 1976 .)                                     The Congress shoul d
                                                                 —request HEW to prepare a study showing th e
 Healt h                                                           available options for regulating tobacco an d
                                                                   tobacco products and the impact each optio n
   The Congress should resolve the question of th e                would have on the rising U .S . lung cancer rat e
 applicability of the Federal Food, Drug, and Cosmeti c            and then
 Act to Federal agencies and departments, by clarify-            —consider giving HEW or some other appropriat e
 ing its intent regarding the regulation of federall y             a g ency the specific authority to regulate tobacco
 sponsored clinical investigations of new drugs .                  and tobacco products .
 (HRD-76-96, July 15, 1976 .)                                  (Ni D-76-59, June 16, 1976 .)
   The Social Security Act should be amended to                  The Congress should emphasize its oversigh t
    —require that all nursing facilities be fully protected   responsibility for those Federal agencies and program s
     with automatic sprinkler systems an d                    which would be affected by our recommendatio n
    —require the Department of Health, Education ,            that the Director of the National Cancer Institut e
     and Welfare (HEX') to establish rigid standards          establish a Federal policy on carcinogens . (1AWD-76-
     which must be met by nursing facilities requesting       59, June 16, 1976 .)
     a waiver from the recommended automatic                     Section 1816 of the Social Security Act should b e
     sprinkler system requirement.                            amended to authorize the Secretary of Health ,
 (\IWD-76-136, June 3, 1976. )                                Education, and Welfare to redesignate an inter-
     The Social Security Act should be amended to             mediary- when the small numbers of providers serve d
                                                              by the intermediary in an area impedes efficient
   —require the Secretary, HEIV, to enter into
    lease-purchase agreements with supplier and t o           administration . (MM-76-7, Sept. 30, 1975 . )
    encourage the use of lease-purchase agreements
    for durable medical equipment,                            Human Resources
   —repeal section 263(d)(5) of Public Law 92-603 ,
    which authorized the Railroad Retirement                    The Federal Hazardous Substances Act should be
    Board to contract with carriers to pay fo r               amended to
    medicare claims for its beneficiaries, an d                 —provide for adjudicating alleged violations pur-
   —require the Social Security Administration t o               suant to the Administrative Procedures Act ( 5
    have railroad beneficiaries' claims processed b y            U .S .C. 554—57) and
    the carriers handling all other medicare bene-              —authorize the Commission to assess for violations
    ficiary claims .                                             civil fines which are final unless appealed to th e
(\IWD-76-93, Feb. 11, 1976. )                                    U .S . Court of Appeals within a specified time
  The Social Security Act should be amended t o                  (5 U .S .C . 706) .
     —impose a specific time frame on the Secretary ,         (HRD-76-148, July 26, 1976 .)
      HEW, for insuring compliance with sectio n                The Occupational Safety and Health Act of 197 0
      1903(8), which pertains to long term inpatient          should be amended to (1) bring Federal agencie s
      care and the amount of Federal medical assistance       under the inspection authority of the Department o f
      paid to States for such care,                           Lairor, to supplement and strengthen Federal agencies '
20
                                                                                 LEGISLATIVE RECOMMENDATION S

inspections and (2) require that the results of Labor' s     —annually redefine the maximum maturity o f
inspections of Federal workplaces be reported to th e         sec .,-ities whose flotation is subject to the interes t
Congress . (HRD-76-144, Aug . 4, 1976. )                       limitation and/o r
                                                             —annually increase the dollar volume of long term
  The Occupational Safety and Health Act of 1970
                                                               securities which may be sold without regard t o
should be amended to require that :
                                                               the ceiling .
  —The grant arrangement for State inspection s            (OPA–76–26, Apr . 17, 1976 .)
   under an approved plan be used only if the
   State either has obtained Labor's approval of all
   iegal authorities, standards, and provisions o r        International Affair s
   agrees to use Labor 's established procedures ,           The Congress shoul d
   standards, and provisions until the State's ar e
                                                             —require that all North Atlantic Treaty Organiza-
   developed, adopted, and approved .
                                                               tion costs, regardless of appropriation, be iden-
  —A contract arrangement be used if a State want s
                                                               tified in annual security assistance progra m
   to make workplace inspections under the act but
                                                               presentations and
   is precluded, by limited legal authority or othe r
                                                             —provide a definition for those costs .
   problems, from operating satisfactorily under a
                                                           (ID–75-72, Aug. 25, 1975. )
   grant arrangement .
(HRD-76–161, Sept. 9, 1976. )                                The Congress should consider whethe r
                                                             —the provisions of the Jackson-Nunn Amend-
                                                               ment (to Public Law 93–155) have been satisfied
Income Securit y
                                                               by the Defense Department and
  The Congress could reduce conflicts between Stat e         —there is a need for more specific language in th e
health insurance requirements and contracts of Fed -           current law.
era! emplc,!ees health benefits carriers by clarifyin g    (ID–76–32, Apr. 28, 1976.)
whether State requirements should be permitted t o
alter terms of contracts negotiated pursuant to th e       Law Enforcement and Justic e
Federal Employees Health Bmefits Act . (NINVD–76-
                                                              The Congress should enact legislation to :
49, Oct. 17, 1975 .)
                                                              —Permit deportation of legal resident aliens wh o
 Title I\'–D of the Social Security Act should b e
                                                               have been convicted for smuggling offenses .
amended to
                                                              —Give the Immigration and Naturalization Serv-
  —avoid possible duplication of audits presentl y             ice discretionary authority to seize vehicles use d
     called for in the lacy and allow HENV flexibility         in smuggling aliens.
     in deciding what group(s) would carry out evalu-         —Prohibit the adjustment of nonimmigrants t o
     ations and audits,                                        legal resident status if grounds for such statu s
  —provide for a consistent rate to be used in com-            were acquired while nonimmigrants were in
     puting the incentive payment, so localities will          an illegal status.
     not concentrate collection efforts on new cases ,      (GGD–76–83, Aug . 30, 1976 .)
  —provide authority to one or more organization s
                                                              The Congress should require the Attorney Genera l
     to issue regulations concerning garnishments, an d
                                                            to identify the current cost of serving process so tha t
  --define the term "legal process. "
                                                            the Congress can revise the current fees to approxi-
(\INVD–76-63, Apr. 5, 1976 .)                               mate the cost of providing service . If fees are to b e
                                                            kept current, the Congress should eithe r
 Interest                                                     —requre  i that the Attorney General periodicall y
                                                                 analyze the cost of serving process and propose
  The Third Liberty Bond Act of April 4, 1918,                   fee adjustments or
should be amended to                                          —vest the Attorney General with authority t o
  —immediately repeal the 4)a-percent interest limi-              revise fees when necessary .
    tation or                                               (GGD–76-77, July 27, 1976 .)

                                                                                                                     21
  LEGISLATIVE RECOMMENDATION S

    The Congress should enact legislation concernin g        Agriculture and Forestry, ?fay 20, 1974 ; and letter
  domestic intelligence operations t o                       to Senator Dick Clark, July 30, 1974 .)
    —clarify the authority under which the Federal
      Bureau of Investigation would be able to initiat e     Commerce and Transportatio n
      and conduct such operations ,
    —limit the types of groups and individuals war -           The Congress should consider clarifying section 10 1
     ranting investigation and the extent of suc h           of the Postal Reorganization Act by authorizing th e
     investigations ,                                        Postal Service to close small offices if equivalen t
    —limit the extent to which the Attorney Genera l         alternate service is available . (GGD-75-87, June 4 ,
     may authorize the Bureau to take nonviolen t            1975. )
     emergency measures, and
    —require the Attorney General to periodicall y           Education, Manpower, and Social Service s
     advise and report to the Congress on severa l
     specified matters.                                        If the Congress decides that the American labo r
  (GGD-76-50, Feb . 24, 1976 .)                              market is being adversely affected and that adde d
                                                            protection front alien workers is needed, the Immigra-
    In light of the long term inactivity of the judicial
                                                            tion and Nationality Act should be amended to remove
 councils and the factors contributing to it, th e
                                                            the labor certification exemptions from certain cate-
 Congress should reexamine the role of the council s
 in carrying out their administrative and financia l        gories of aliens . (XI\CD-75-2, \lay 16, 1975 .)
 responsibilities over district courts . (GGD-76-67 ,
 \lay 10, 1976 . )                                          Energy-Related Activities :
   The cognizant legislative committees should discus s
                                                              The Energy Conservation and Production Ac t
 with the Law Enforcement Assistance Administration
                                                            should be amended to
 (LEAA) whether (1) the block grant concept is
 sulliciently flexible to enable LEAA and the State s         --establish a national program for energy conser-
 to adopt agreed-upon minimum standards to b e                  vation, including national goals and prioritie s
 applied nationwide when determining whether LEA A              and Federal agency goals,
 funds could be used for certain types of projects o r        —require that all existing homes financed directl y
 (2) additional, clarifying legislation is needed .             or indirectly through any federally insured agenc y
 (GGD-76—36, Apr . 5 . 1976 .)                                  meet minimum thermal standards ,
   The Immigration and Nationality Act should b e             —establish a cutoff date when appliances meetin g
amended to prevent newly arrived immigrant s                    minimum standards of operating cf&cieney would
from receiving welfare benefits. Legislation should             be required to be installed in new homes, an d
be enacted to prevent aliens in illegal status fro m          —ban the dse of ornamental gas lights and requir e
gaining grounds for permanent resident status.                  electric igniters, instead of pilot lights, on new
(GGD-75-107, Judy 15, 1975 .)                                   appliances .
                                                            (RED-75-377, June 20, 1975. )
Open Legislative Recommendation s
From Prior Years                                            General Governmen t

                                                               The Intergovernmental Personnel Act should b e
Agriculture and Rural Development                           amended to allow salary supplements for State an d
                                                            local government employees detailed to Federal posi-
   The Commodity Futures Trading Commission Ac t            tions where
should be amended to provide GAO access to records
of boards of trade, brokerage houses, exchanges, an d          —their Federal counterparts receive higher salarie s
other establishments subject to that act . (Letter date d        or
Feb. 13, 1972, to the Chairman, House Committee on             —the cost of living is higher.
Agriculture ; testimony before Senate Committee on          (FPCD-75-85, liar. 7, 1975 .)

22
                                                                                  LEGISLATIVE RECOMMENDATION S

    Title 5, section 3318, of the U .S . Code, allowing          responsible for furnishing all data required b y
 arbitrary listing of the top eligibles for a positio n          the Renegotiation Board and to have th e
 vacancy, should be amended to allow the Civil Service           contractors show reasonable cause why the y
 Commission to prescribe alternative selection proce-            did not furnish the data .
 dures. (FPCD-74-57, July 23, 1974 .)                        (B-163520, \fay-9, 1973 .)
   The Fair Labor Standards Act and title 5 of the             The Social Security Act, section 205(c), should b e
 U .S . Code should be amended to permit controlled          amended to prohibit a person from receiving credit s
 experimentation with flexible hours or compresse d          toward social security benefits if he has not paid the
 workweek schedules. (FPCD-75-92, Oct . 21, 1974 . )         required tax on self-employment income . (B-137762 ,
      Legislation should be enacted which woul d             Aug. 9, 1973 .)
   —establish an overall Federal employee retiremen t          The Intergovernmental Cooperation Act of 1968
     policy an d                                             should be amended to require that Federal agencie s
   —provide uniformity among the numerous Federa l           report to each State on all Federal financial assistance
     retirement systems as to methods of financing or        to the State and its political subdivisions . (GGD-75-
     benefits provided .                                     55, 14tar. 4, 1975. )
 (FPCD-74-93, July 30, 1574 .)
                                                               The Bankruptcy Act (11 U .S .C. 1) should be
   The Civil Service Act should be amended to elim-          amended to exclude, from discharge through bank-
inate the requirement that appointments to competi-          ruptcy, taxes assessed within 3 years before a bank-
tive civil service positions in the departmental servic e    ruptcy petition is filed . (B-137762, Aug. 9, 1973 .)
in Washington, D .C ., be apportioned on the basis of
population distribution. (FPCD-74-44, Nov . 30 ,               A late should be enacted to
1973 .)                                                        —transfer the Bureau of Custom' s statutory fees to
   Title 5, section 5334(6), of the U .S . Code should b e      the administrative jurisdiction of the Secretar y
amended to provide that an employee demote d                    of the Treasury ,
without loss of pay be entitled, upon repromotion o r           combine fees to eliminate certain administrativ e
restoration to his previously held grade, only to th e          work, and
rate of pay he would have received had he not bee n            —eliminate outdated user charges .
demoted . (FPCD-74--46, July 2, 1974. )                         We also recommended that the new law raise the
                                                             fees to a level that would recover all costs ; however,
   The Federal Deposit Insurance Act should b e
amended to grant GAO access to examination reports ,         a public law enacted on July 12, 1976—the Airport
                                                             and Airway Development Act Amendments of 1976—
files, and other records used by the Federal Deposit
Insurance Corporation . (FOD-76-13, July 21, 1976. )         prohibits administrative overhead costs for inspection s
                                                             at airports from being assessed against the parties in
     The Renegotiation Act of 1951 should be amende d        interest . (GGD-75-72, 'Mar. 10, 1975 .)
to
                                                               Chapter 24 of the Internal Revenue Code of 1954,
  —require the Renegotiation Board to obtain and             as amended, should be revised to include remunera-
    analyze profit and cost data on standard com-
                                                             tion received as agricultural wages in the Federa l
    mercial articles and services to determine whethe r
                                                             income tax withholding system . (GGD-75-53,
    excessive profits are efcaping renegotiation and
  —determine whether _he exemption for new ,                 Mar . 26, 1975 .)
    durable productive equipment is valid .                    A law should be enacted to provid e
(B-163520, \fay 1973 .)                                        —one premium pay plan to apply to the fou r
     The Renegotiation Act of 1951 should be amende d            inspecting agencies for services at U .S. ports of
to                                                               entry and
     —provide penalties for failure by contractor s            —a uniform policy on the charges to be made to the
      subject to renegotiation to file reports to th e           parties in interest, for inspections at U .S. ports
      Renegotiation Board as required by the act an d            of entry .
     —revise the penalty provision to hold contractors       (GGD-74-91, Feb . 14, 1975.)

                                                                                                                  23
 LEGISLATIVE RECOMMENDATION S

 Healt h                                                                                              a
                                                               —Require that hospitals disclose their greements
                                                                 with hospital-based specialists .
   The Department of Defense should study the
 appropriateness of the current minimum charge of           (\I\VD-75-73, Apr . 30, 1975. )
 $25 per hospital stay for dependents of active duty
 personnel under the civilian health and medica l           Income Security
 program of the uniformed services and, if warranted,
 propose to the Congress the legislative chmtge s             Language similar to that contained in sectio n
 needed to increase it_ (\IIVD-74-154, Apr . 10, 1974 .)    205(\) of the Social Security Act should be incor-
                                                            porated into the black lung law to permit the makin g
  The Fair Packaging and Labeling Act or th e
                                                            over of a deceased miner ' s check to his widow to
Federal Food, Drug, and Cosmetic Act should be              better insure that surviving widows have a continuou s
amended to :
                                                            source of income while their claims are being pro-
  —Require full disclosure of all ingredients on            cessed . (\I\VD-75-44, Dec . 31, 1974. )
     packaged food products.
  —Authorize the Food and Drug Administratio n                 We suggested that the Congress amend the Federa l
     to require food labels to specifically identif y       Employees' Compensation Act to
     spices, flavorings, and colorings .                       —strengthen or eliminate the reimbursemen t
  —Establish a uniform open-dating system for                   process for agencies receiving appropriated fund s
     perishable and semiperishable foods .                      and on whose behalf disability benefits were pai d
Legislation should also be enacted to establish a               from the Employee's Compensation Fund an d
unit pricing program, . including guidelines fo r              —apply the fair-share surcharge for administrativ e
designing and maintaining unit pricing information              costs to all participating Government agencies ,
and educating consumers about its use and benefits.             instrumentalities, and other organizations no t
(\AVD-75-19, Jan . 29, 1975 .)                                  wholly dependent on annual Federal appropria-
                                                                tions and not enumerated in the act.
   Legislation should be enacted to permit importin g
fresh, frozen, and processed shellfish from only thos e     (\IXVD-75-23, Mar . 13, 1975 . )
countries that harvest and process shellfish unde r
conditions at least equal to domestic standards .           Interes t
(B-164031(2), Mar. 29, 1973 . )
                                                             A law should be enacted to provide that :
   Legislation should be enacted to provide the Food
                                                             —The major trust funds not be invested in specifi c
and Drug Administration with the authority to
require firms to recall all violative products unde r          Government securities .
its responsibility, and the Congress should clarif y         —Interest be paid on the trust fund balances use d
whether diagnostic products of biological origi n              for nontrust purposes .
should be controlled under the Federal Food, Drug ,          —The rate assigned to each fund be the same an d
and Cosmetic Act or whether such products should               in line with the Treasury ' s cost of borrowing
he licensed in accordance with the Public Healt h             from the public .
Service Act. (NIXVD-75-52, Apr. 30, 1975. 1                (GGD-75-34, Jan . 10, 1975. )
   The Social Security Act should be amended to :
   —Eliminate the waiting period before Medicare           Law Enforcement and Justic e
     coverage resumes for kidney transplant patient s
     who reject their transplant after 12 months .           The Department of justice should consider pro-
  —Encourage greater use of home dialysis treatment.       posing to the Congress legislation authorizing ad-
(\AVD-75-53, June 24, 1975 .)                              ministrative adjustment of Marshal's fees or revisin g
     The Social Security Act should be amended to :        the fees prescribed by law. (GGD-70-69, Oct . 7 ,
                                                           1969 .)
     —Require hospitals that participate in Federa l
      health programs to publicly- disclose overlapping       Statutory authority (18 U .S .C . 4281 and 4284)
      financial interests of board members and key         for providing inmate release funds should be amende d
      empioyees.                                           to :

24
                                                                                 LEGISLATIVE RECOMMENDATIONS

   —Specifically authorize release gratuities to in-         —repeal the requirement that contracting officer s
     mates of community treatment centers .                    prepare determinations and findings for certain
   —Clearly authorize or prohibit loans to prisoners           procurements .
    in the work release program.                           (B-168450, Sept . 17, 1973 .)
 (GGD-75-3, Aug. 16, 1974. )                                 Federal policy for supporting contractors' inde-
  Tire Congress should consider passing legislatio n       pendent research and development should be clarifie d
to make it unlawful to hire illegal aliens . (GGD-         by congressional guidelines setting forth :
74-73, July 31, 1973. )                                       —The purposes for which the Government sup -
  The Congress should impose a mandatory waitin g              ports contractors' costs.
period for foreign students before allowing them t o          —The appropriate amount of this financial support.
acquire immigrant status, if grounds for such statu s         —The degree of control to be exercised by th e
were acquired while in an illegal status . (GGD-75-9,          Government over contractors' independent pro -
Feb . 4, 1975 . )                                              grams supported in some part by the Government.
                                                            (PSAD-75-82, June 5, 1975 . )
National Defens e
                                                           Natural Resources and Environmen t
  Section 206 of the Naval Reserve Act should b e
repealed, because the requirement that member s              The Mineral Leasing Act of 1920, with respec t
                                                           to oil and gas, should be amended to :
of the Fleet Reserve or Fleet Marine Corps Reserve
be physically examined at least once every 4 year s           1. Require that oil and gas leases on all Federal
serves no useful purpose. (FPCD-73-25, Mar. 19 ,                  lands be awarded competitively unless otherwis e
1973. )                                                          justified .
                                                             2. Increase the minimum acreage limitation appli-
  Legislation should be enacted to allow militar y                cable to the assignment of the leases .
enlisted personnel to reenlist for unspecified periods ,   (B-118678, Mar. 17, 1970. )
resulting in fewer personnel separating when thei r
                                                             The Mining Law of 1872 should be amended to :
enlistments expire because of the requirement fo r
specific periods of reenlistment service . (FPCD-75-67,       1. Establish an exploration permit system covering
July 5, 1974. )                                                   public lands and require individuals interested
                                                                  in prospecting for minerals to obtain a permit.
   Laws requiring 48 drill sessions and 2 weeks '            2. Establish a leasing system for extracting mineral s
active duty per year for military reservists should b e          from public lands.
amended to permit varying the training schedules             3. Require that, to preserve valid rights, (a) mining
of the Army and Air National Guards by categories ,               claims be recorded with the Department of th e
according to the required kinds and degrees o f                   Interior within a reasonable time after legisla-
training. (FPCD-75-134, June 26, 1975 .)                         tion is enacted and (b) evidence of a discover y
                                                                 of valuable minerals be furnished before claim s
  The Maritime Administration should be give n                   are recorded.
authority to approve, in appropriate circumstances ,         4. Authorize the Secretary of the Interior to gran t
  —subsidized construction ships in U .S. yards for              life tenancy permits to individuals now living o n
   foreign flag operation an d                                   invalid claims, if he determines that evictin g
  —subsidized L .S. flag operation of foreign-buil t             them from the lands would cause them undu e
                                                                 personal hardship.
   ships.
                                                           (RED-74-246, July 25, 1974 .)
(PSAD-74-44, Feb . 12, 1975. )
                                                              The National Commission on Water Quality issue d
 The Congress should enact legislation t o
                                                           its report on March 18, 1976. We recommended that
 —authorize agencies to solicit proposals from a           if as a result of the Commission's study the Congress
  competitive, rather than a maximum, numbe r              needs to reassess and review legislative goals, it shoul d
  of sources and                                           determine priorities and funding levels for Federa l

                                                                                                                 25
 LEGISLATIVE RECOMMENDATION S

 research programs to meet the revised goals . (RED -         —require the Secretary to (1) analyze the locatio n
 74-184, Jan . 16, 1974. )                                      and estimated cost of high-cost properties border -
                                                                ing authorized recreation areas for which addi-
    The Water Supply Act of 1958 and the Smal l                 tional funds are needed and (2) justify th e
 Reclamation Projects Act should be amended to pro -
                                                                desirability of a. quiring such properties .
 vide for interest rates which are more representative      (B-164844, Apr . 29, 1970.)
 of the Treasury's cost of borrowing money in financin g
 small reclamation loans and the construction of multi -       If the 160-acre limitation of Reclamation Law i s
 purpose water resources projects . (B-167712, Aug . 11 ,   still considered appropriate to encourage the estab-
 1972 .)                                                    lishment of family-size farms, the Congress shoul d
                                                            consider enacting legislation to prevent large land -
   In enacting legislation authorizing the establish-       owners and farm operators from benefiting by thei r
 ment of national recreation areas, the Congress shoul d    control of numerous 160-acre tracts . If the 162-acre
     —provide the Secretary of the Interior with guide -    limitation is no longer considered appropriate, th e
      lines for changing established boundaries whe n       Congress should consider establishing a new acreag e
      the acquisition of high cost properties on or nea r   limit for family farm eligible for subsidized Federa l
      the boundaries is involved and                        project water . (B-125045, Nov. 30, 1972 . )




26
                                                              services procured by Government agencies, and $7 .5
                                                              million involved debts which Government agencies
                                                              had been unsuccessful in collecting.
                                                                Following our recommendation, the Departmen t
                                                              of the Air Force is collecting about S13 .4 million in
                                                              additional revenues for airlift services furnished by
                                                              the Military Airlift Command during the 1973 Middle
                                                              East War. Other major sources of collections involved
                                                              recovery by the Department of Health, Education ,
                                                              and Welfare of erroneous payments resulting from a
                                                              defective computer program and refund of over-
                                                              charges to the Departments of the Army, Air Force,
                                                              and Navy for services involving sealift and other
CHAPTER THREE                                                 airlift programs.


                                                              Other Measurable
                                                              Financial Savings
FINANCIAL SAVINGS AN D                                           GAO work for the 15 months ended September 30 ,
OTHER BENEFITS                                                1976, resulted in "other measurable savings " liste d
                                                              below. Although some of these savings are due to
                                                              GAO efforts alone, others are the result of the com-
   The full effect of GAO's activities, in terms o f
                                                              bined efforts of GAO and other parties, such as th e
financial savings and improvements in the operation s
                                                              Congress and Federal agencies . The items consist
and effectiveness of Government programs an d
                                                              largely of realized or potential savings in Governmen t
activities, cannot be determined . For instance, th e
                                                              operations attributable to actions taken or planne d
actions taken on our recommendations, leading
                                                              on the basis of findings developed in GAO's examina-
perhaps to increased effectiveness in Governmen t
                                                              tions of department and agency operations . In mos t
programs, cannot be measured in financial savings .
                                                              instances, the potential benefits are based on estimates ,
   When we can estimate those savings and when ac-
                                                              and for some items, the actual amounts to be realize d
tions have been taken by the Congress or by an agenc y
                                                              depend on future actions or events .
we keep a record of them. Tables I and 2 summariz e
the collections and estimates of other measurabl e                   Attributable Directly to GAO Effort s
savings related to our work during the 15 month s
                                                                           All. . faktn or P(aaard         F(i~naMd !arin9a
ended September 30, 1976 .
                                                              Automatic Data Processing :
   Table I lists $532 million which is attributabl e
dfrecti~ to GAO's efforts .                                   Savings from elimination of unnecessary co -
                                                                puter printouts—Army (estimated annual
   Table 2 lists $1 .6 billion which is attributable to         savings)	                                         $11,000
the combined efforts of GAO and other parties, such
                                                              Benefits :
as the Congress and Federal agencies .
                                                              Savings resulted from GAO determination tha t
   This chapter also illustrates savings not fully or
                                                                overfunding existed in contractor's pension
readily measurable and other benefits resulting fro m           plan—Air Force (nonrecurring)	                     540,000
GAO activities.                                               The maximum per diem rate paid to nursin g
                                                                homes was reduced as a result of correction
                                                                of an error in then . nner in which the rate
Collections                                                     was calculated—Veterans Administratio n
                                                                (nonrecurring)	                                    235,000
                                                              Savings resulted front GAO determination tha t
   Collections attributable directly to our activitie s
                                                                past service costs for commercial subsidiaries
totaled S50 .4 million . Of this, S1 .8 million represented     were not reimbursable by the Government
recovery of overcharges for commercial transportation           Defense (estimated annual savings) . . . .          49,0010

                                                                                                                        27
      FINANCIAL SAVINGS AND OTHER BENEFITS

                                                                 Table 1

     FINANCIAL SAVINGS ATTRIBUTABLE TO THE WORK OF THE GENERAL ACCOUNTING OFFIC E
                    FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 197 6
                       Collections and Other Measurable Savings Attributable Directly to GAO Effort s
                                                              (000 omitted)

                                                                                                           Collections       Other measurable   Total
                                                                                                                                  ovtn p


                                    DEPARTMENT S
       Army	                                                                   	                                $8,425              $99,841      $108,26 6
       Navy	                                                               	                                     5,788               25,020        30,80 8
      Marine Corps	                                                            	                                    10                    50            60
      Air Force	                                                               	                                21,468               26,985        48,43 3
      Defetue	                                                                     	                                43              164,709       164, 752
      Health, Education, and Welfare 	                                 	                                         4,915              100,069       104,984
      Housing and Urban Development 	                                  	                                            11                   452           463
      Interior	                                                                            	                         –                   283           283
     .fustic- .      .                     . .   . -                                                                  -                   12            12
                   -   - -   - - ' - - -               - '	                                - -   - '   -
     State (including AID)	                                                                	                          —              23,077        23,077
     Treasury	                                                                         	                            476               4, 322        4,798
     General Services Administration	                                                      	                          –                   79            79
      4griculture	                                                                         	                          –                  443           443
     Transportation	                                                                       	                          –                  766           766
     Government-wide	                                                                      	                          –                  205           205

                                      AGENCIES

  Civil Service Commission	                                                                                                            950            950
 Defense Supply Agency 	                                                                                                               503            503
 District of Columbia Government	                                                                                                    3,000          3,000
 Environmental Protection Agency 	                                                                                                  16,207         16,20 7
 Federal Power Commission	                                                                                                              13              13
 Government Printing Office	
 Postal Service	                                                                                                                        196           19 6
 Veterans Administration	                                                                                                –             645            645
 Energy Research and Development Administration 	                                                                        –          13,800         13,800
 Board for International Broadcasting 	
 Export-Import Bank of U.S	                                                                                                            125              12 5
 Community Services Administration	                                                                                                     13                13

      Total for Departments and Agencies 	                                                                    41,136              481,763        522,90 1
Transportation Audit	                                                                                          1,757                    –          1,757
General Claims 1Vork	                                                                                          7,519                    –          7,51 9

          Total	                                                                                            S50,412             $481,765        S532, 177




28
                                                                     FINANCIAL SAVINGS AND OTHER BENEFIT S
                                                      Table 2


FINANCIAL SAVINGS ATTRIBUTABLE TO THE WORK OF THE GENERAL ACCOUNTING OFFICE
               FOR THE FIFTEEN MONTHS ENDED SEPTEMBER 30, 197 6

        Collections and Other Measurable Savings Attributable to the Combiner( Effort of GAO and Others

                                                   (000 omitted )


                                                                         Collections   Othermeaswable    Totel
                                                                                           saving,


                                  DEPARTMENTS
 Army	                                                       	              $32          $319,178        $319,210
 Nary	                                                       	                –           485,536         483,53 6
 11 larine Corps	                                            	                –             2, 131          2, 13 1
 Air Force	                                                  	              253           264,031         264,28 4
 Defense . .                      .	                                          -           187,353         187,35 3
 Health, Education, and Welfare	                             	                –            18,813          18,81 3
Housing and Urban Development 	                              	                –             1,716           1,71 6
Interior	                                                    	                _                  –               _
Justice	                                                     .                 –                 –               –
State (including AID)	                                       	                 –                 –               –
Treaat,y	                                                    	                 –                  –              –
General Services Administration 	                            	                 –            16, 800         16,800
Agriculture	                                                 	                 –           191, 900        191,900
Transportation 	                                             	                 –                 50             50
Government-wide	                                             	                 _                  –              _

                                       AGENCIES
Civil Service Commission	                                    	                 –                –                –
Defense Supply Agency	                                       	                 –           95,600           95,600
District of Columbia Government 	                            	                 –                –                –
Environmental Protection Agency 	                                	             –                –                –
Federal Power Coconssion                                                       –                –                –
Government Printing Office	                                      	             –              999              999
Postal Service	                                                  	             _                _                _
Veterans Administration	                                         	             –             4,468               4,468
Energy Research and Development Administration 	             	                 –                 –                   –
Board for International Broadcasting 	                       	                 –             6,000               6,000
Export-Impart Bank of U.S	                                   	                 –                 –                   –
Community Services Administration	                           	                 –                 –                   –

      Total for Departments and Agencies	                                   285         1,594,575        1,594,86 0
Transportation Audit
General Claims \York

      Total	                                                               $285        S1,594,575       $1,594,86 0




                                                                                                                   29
 FINANCIAL SAVINGS AND OTHER BENEFIT S

                 Astinn(akin er Planned                                                   _lefian taken or Plunnrd               F:+timoeed :agate+
                                                         F:innfedrartngr
 Communications :                                                           Energy Conservation :
 Savings from canceled operation and expansion                              Seven Navy installations haying additiona l
   of a radio broadcasting system—Deferie                                     charges for required reactive kilovolt ampere s
   (nonrecurring 545,9),000 : estimated annual                                (RKVA) are installing capacitors annong elerr
   savings S214,(M)	                                        47. 114, 000      [rival requirements and result in an estimate d
        omu ice iorsDefense is reducing 1,600                                 savings of $176,000 a - ar after the esdi n—c l
 The Department
                                                                              - esment of 5516.163 is -covered—Na y
                            center petition s and                                                                 __                      176, 000
     esmbl                                                                    (—hunted annual savings) - _
     established standard staffing criteria —Uefetss e
     (estimated annual savings) 	                           16 . OW . 000   Facilities Construction :
The Air Force consolidated its CONUS Aer.-                                  Construction of nitrogen rentorat facilities fo r
  nautical Stations and the Tactical Air Com-                                 four federally funded municipal waste treat -
  utand's High Frequency Command and                                          meat plants deferred—Environmental Pro       -
  Control Network (Coronet Claymore)—Air                                      tection agency (nonrecurring`	                         13, 500, 00 0
  Force (nonrecurring $396,000 : estimated
                                                                            cancellation of a planned 11 .000- foot long, 42-
  annual savings S672,000)	                                   1 .068.000      inch uccan outfall to discharge effluent fro m
Cancellation of a     Automated Multi-Media                                   the \acv's Fort Samehatneha sewage treat -
   Exchange (ANIME), planned for installation                                 rn nt plant into offshore waters—Navy (non -
  at the Presidio of San Francisco, California,                               rccurrine)	                                            11,600,000
  and establishment of DOD procedure for                                    Through better management the military serv -
  per odically reviewing communications re-                                    ices were able to house enlisted bachelors i n
  gnirenxents—Army (nonrecurring) . . . .                       =166.(100      Governnwtt quarter- andavoidpayingallow-
Reduction in umber of computer disk drives                                     ances to live in the civilian conunnnity--De -
  leased by the Defense Supply agency—                                        kme lcsdnsated annual savings) 	                         3,400,000
  Defense Supply agency (estimated annual                                   Avoidance of a military constntetion project
  savings)	                                                    498.000        Saves- (nonrecurring)	                                   1,600,000
Cancellation of proposed procurement and use                                Design and construction of it refusa incinerator
 of competitively awarded contract to replace                                 at the Lciterkennr Anny Depot, Chantbcrs -
 equiputent being leased o a sole source                                      burg . pemt svlvania, was deferred indefinite -
 basis—agriculture (estimated annual sav-                                     I—Aram- (noncerurriug) 	                                 1,434,00 0
 ings)	                                                         339.000     Plans to construct all unneeded cardiac catheter -
Reduction in teleconununication expenditures                                  ization labonttory at the Sepulveda, Cali -
  by establishing iaterex-hhnge channel tariff
                                                                              foruia, hospital were suspended—Veteran s
  rates—Defense (estimated annual saving)                         8,000       Administration (nonrecurring)	                             410,000
Contracting Policies and Procedures :                                       Federal construction grant for municipal wast e
Social Security- trust fund, a ailable to finance                             treatment facility v     reduced for ineligi-
   dte Beneficiary Rehabilimtion Program veer,                                ble appvnenance—Envirounnental Protectio n
                                                                              Agency (nonrecurring)  	                                     75,000
  reduced —Health, Education, and Welfare
  (estimated annual savings)	                               29,400 000      Through bettermanaget eat, the Navy-was able
Redaction in contract price resulting front de-                               to house enlisted bachelors in Governmen t
  teruination of defective subcontract cost or                                housing and avoid paying allowances to live
  pricing data—Air Force (nonrecurring) . .                    735, 000       in the civilian conununity—Navy (estimated
Savings resulted front reduction in contractors                               annual sayings)	                                             74,000
   tegotiated claim for certain support work—                               Cancellation ofproposed acquisition .fdassified -
  Navy (nonrecurring)	                                          47, WO        waste incinerator—Navy (nonrecurring)                        38,000
Reduction in contract price clue to detennina -                             Financial Management:
  tion of defective cost or pricing data—Navy
                                                                            Sayings resulted from the cancellation of an
  (nonrecurring)	                                                17,000
                                                                               improper charge by the Department of the
National Park Service increased rcntal charges
                                                                               Navy against special Department of Stat e
  to concessionaires for use, of certain Gayern-
                                                                              funds authorized to meet expenses incurre d
    nent-owned or leased properties and changed                                in the transportation, temporary care, and
 its policy fur computing future raus charged
                                                                               resettlement of Cambodian and Vietnames e
 b :tc,c1 on fair market yalur—Interior (nun-                                                                                          1, 150,000
                                                                               refugees State (nonrecurring)
 occurring . SI,000 ; estimated annual say ,~
 Sla,LO)'	                                                       16, 000    Interest Expense :
Rtyut,nts that had been mad. to conssuhan1, as                              Sayings in interest expense resulting from de -
  rates higher than established by ram policy                                 positing collections more promptly—Federal
  without prior approval were disallowed—                                     Power Conkiniscion       (estimated   annua l
  justice (nonrecurring)	                                        12,000       savings)	                                                    13,000


30
                                                                                        FINANCIAL SAVINGS AND OTHER BENEFIT S
                1111.11   f.krn nr pl. .nrd           14lim .lyd .. .Mg,                  :trti.n taken or planned             FalimaIn! —!.q,
Interest Income :                                                          Emergency Food and Medical Services Gran t
Savings resulting from depositing dollar repay-                             fiords from a project which did not meet pro -
    , cuts fiont Ions on a daily basis Agency for                           gram requirements were re-programmed
    International Development (esrmated annual                              Community Services Administration (non
   savings)	                                                    97,000      recurring)	                                                 13,000
Elimination of interest expense paid by the                                Logistics :
    Federal Government to three trust funds ad -
       nistercd by the Civil Serviec Conunissio —                          trimthication and us of a,,nnnidon co,              ,
   Civil Service Commission (educated annual                                  ponents on-hand forestalled procurement of
   savings)	                                                  950, 0O0        like components in fiscal years 1976-1977 .
                                                                              Also,, management practices in the Army wer e
                 of reimbursable interest costs for
   recovery from commercial power revenues—                                   we of ed—assuring better recognition an d
                                                                              use oC available components in future years
   Interior (nonrecurring)	                                   159,000           \tiny (nonrecurring)                               35, 000, 000
Savings in interest costs as a result of discon -
                                                                           During a review of contractor-operated depo t
   tinuing use of commercial bank accounts—                                   maintenance activities in Europe, GAO
   Export-Import Bank of U .S. (estimated
                                                                              determined that an additional maintenance
   annual sayings) .                                          125, 000
                                                                                        t' could be closed without impairing
Additional rei turnable interest costs for r°'                                d deep opot maintenance capability or efficiency -
   covery from commercial power revenues of the                               Army (nonrecurring)	                                 13. 100,000
   Southeastern Federal Power Program were
   identified when reviewing Corps of Engineers                            Consolidation of (1) procurement offices i n
                  information—Interior       (non-                           Japan, Korea, and Okin r, (2) quality- con-
  financial
  recurring)	                                                 108,000         trol organizations in Okinawa, (3) Autodi n
                                                                              terminals in Hawaii, and (4) aircraft mainte-
Loans, Contributions, and Grants :                                            trance activities at Yokota :fir Base, Japan
Savings resulting from Social Security :\drain-                               Defense (nonrecurring $96,000 ; estimated
   istratioti s me of accurate Veterans Achni-                                annual savings $1,63 1,000)	                          1 . 727, 000
   Ltration and Railroad Retirement Board                                  Work fore at the Army's Yokohama, Japa n
   benefit information to compute supplemental                                cargo part will be reduced in consonance
   security income benefits payments—Health,                                  with a decreased level of activity which ou r
   Education, and Welfare (estimated annual                                   report used as argument for consolidation .
   sayings)	                                             60, 000, 000         In addition, 50 pieces of materiel handlin g
The Ohio Department of Public Welfare took                                    equipment will be available for redstribu -
  action to provide for more timely termination                               Lion—Array (nonrecurring $250,000 ; esti-
  by the Stale of ineligible cases in the Aid to                              mated annual savings 51,400,000)	                     1,650,000
  Families with Dependent Children progra m
  by cuing computer terminals in county welfare                            Nonrecurring savings from canceled procure -
  o0ias—Health, Education, and Welfare                                        ment of spectrometers—Air Farce (nonrecur-
                                                                              ring)	                                                1 . 146, 000
  (estimated annual sayings)	                             2. 700, 000
1113\' disallowed a claim by the State of North                            The Long Beach Naval shipyard was holdin g
  C' nolma for Federal financial participation in                                 riA access to its requirement . As a —It
     Medicaid expenditures not eligible for Federal                         of our review, material valued at 5853,000 was
  cost sharing—Health, Education, and Welfare                                returned to Government supply agencies for
     act ecurring)	                                       2,134 .000         use by other Government o aanizations
Savings resulting from cancellation by HUD of                                Navy (nonrecurring)	                                     670 .000
  . section 236 homing project at Stanford                                 Consolidation of spectrometric oil analysis
   Universh —Housing and Urban Develop-                                      laboratories in the Department of Defense
    tent (estimated annual savings)	                          432,000        Defense (estimated annual savings) . . . .               300,000
A continuation grant awarded to the Penobscot                              Reduction in Ar vy s f —ad year 1977 budge t
  Bay Medical Center was reduced by the                                      because of t-,supportable projects, and h -
  amount of improper charges to a prior grant                                proved review techniques by the Anny t c
  made to the organization—Health, Educes                                    preclude inclusion of similar unsupportabl e
  tion, and Welfrre (nonrecurring)	                           218,000        projects in future budges—_Umy (nonre-
HEIV reduced a grant request to meet the                                     curring)                                                  291,000
  special education needs of migratory farm -
  workers because it recreational program for                              Consolidation of cartridge actuated devices
  ineligible children was c sapproved—Health,                                (CAD) management under a single s—ice
  Education, and Welfare (estimated annual                                   Navy (nonrecurring $120,000- estimated
  savings)	                                                   120,000        annual savings $120,000)	                                 240 .000

                                                                                                                                             31
 FINANCIAL SAVINGS AND OTHER BENEFIT S

                .-1Gionta&—pt .—d                       utimWrd eainsr                     -4dio, taus ru Canned           F1111.1d—iny t

 Logistics—Continued                                                       Military Training :
 Collection and savings resulted from the use of                           Sav ings resulting from dsestablihment efsemi m
   Military Sealift Command rather than con -                                ROTC. units not meeting prescribed ottice r
   tractor-prodded shipping—Defense isti-                                    production requirements—Air FoY an d
   mated annual savings) . . . . . . . . . .                   230, 000      Navy- lctimated annual v.-mge—va00,000
                                                                             and S I ,tl00 .0001                       -        li. X>u, 01111
A direct contract for engine overhaul services
   instead of a subcontract—Air Force iesti-                               Payments to Government Employee s
   mated annual savings)	                                      2220.000      and Other Individuals :
 Reduction of Navy's Rest Pacific training                                 Elimination of tu,np-smn tra" P"ment eac h
   flights—Navy (estimated annual saving) . .                 213.0(0        time an enlisted member of the Armed Force s
                                                                             reenli¢—Defense testim .1ted annual savings)          tk), O00, 000
Assets being held to fill requirements which n o
   longer existed were used and or made avail-                             Savings resulting from having the E :utAV,, t
   able to fill other requirements—Amp (non-                                 Center, Hawaii . modify its plat's in grantin g
   recurring)	              .        . . . . . .               1&1.0c10      "uplovces- longevity mereses — Starr a-sti-
                                                                             mated annual savings)	                                     A). tw
Consolidation of three separate Air Force log -
   tics staffs in Okinav a— .air Force iesdmated                           Unpaid in. rrntenrs of erroneous ncnlistntea r
   annual savings)	                                                                           canceled—.\rn tnonrentr -
                                                                             Lvau_.cs .ere canti
                                                               Ili. 000                                                                 2`1, 000
Cancellation of plans to contract out the main -
  tenance functions for all family housing at                              Conrrcnoa a overstated mNert c 7r .n-e balances,
  Dover Air Force Base and the adoption of a                                   == P°Fe wt° Force Bse . \orrh Can+ling— vir
                                                                               Fcrc	 u.           m                                     15.0 W
  more economical alternative whereby the ne w
  housing would be maintained by base per-                                 E :rcne.-us leave rm+rds +were mtrreted—Navy
  scam,,I air Force (nonrecurring) 	                           i26. 4ii1       . . ..re,urtine v               - -    - -               12.000
Savings resulted from a change in refuse collec-                           Reporting :
  lion services for family honing at Armc in-                              jay lugs r stdting from climinetiort of 29 smur-
  stailations—army "estimated annual savingsv                  Pi C: I,        t        s,       , _tanuon- rxcemiye branc h
Saving, in labor and material costs resultin g                                rep ors a+ theyCong— and the modificatio n
  from elimination of the requirement to affix                                 r 1! ocher reports—Goverurnent-wide (rsti -
  identification decal to packaged alcoholic                                   .: . .cd anmtal savings) .	                            205.00 0
  beverages sold in packaze stores—Marin e
  Corps (cimated annual savings)                                           Revenues :
                                                                                       to for e eov-am,&l nts
Reduced space requirement for Corps of Enzi-                               &~be= ed to recover                                e
                                                                                                          nitre t costs—air Fort
  veer_ records holding area—General Jen-ices                                     o=recurrinzl          -                - -   -   17.300, OW
  .- ldministration~etimatedannuaisavier_                       I1 ."
                                                                           D.C . City Council enacted Legi_Jation to ill -
Manpower Training :                          -                                 -reae refeMoron- fees for permits and
Savings attributable to conolidatio :, or nay is--                            lice:,-es—ffvtrict of Columbia Governnrea t
                                                                                esi-^.:atec annual savings) -            - - -      3.000, 00 0
  Lion training for the military- serv-ics—Do-
  fence (estimated annual savings	                            9J3. G;p      ar—.a'. Forces Recreation Center in West
Reduction of helicopter flight trair:iev ti-e for                             Ger=— inc :e~tsed the surcharge for foreig n
  an optional orientation prozram at the ]f37 _                               :r-l- guests to recover more of the actua l
  tan Academy—Army 'ten ;-sated an . 3< .                                     opera nt costs of the Center—Army (esti-
  savings)	                              - _ _                I20. Cfi~       mated a.-mual savings)                     . - . -        22,000
                                                                           Additional annual savings resulting front chang e
Manpower Utilization :                                                        in rei bur_.ement procedures by the U .S .
Savings resulting from replacing tcilirary rr_r-                              Tr—y for restricting dollar checks
  .—so—el with civilian in arpnon u-ico_s at
  Tr                                                                                 estimated annual savings) . . . .                  22,000
   the shlitary Acades:y—lr .: —id ated a, .
   nual savings)                                                           Supply Management :
                                                                           B y esrabinhinz a system for greater visibility
Savings in military pe—am,l co=st by ceetract-                                a .-,d utilization of shipboard supplies, th e
   ing out the food senice actinitees at the Na -.-a-                                    a, able m reduce procurement an d
  Academy—Navy'rstisaur'a:~;uai >vings                        fit. rLA              • M1 bud — by the amount of exces s
                                                                              ¢ apair
Reduction of —ftar : percnncl                                                 -applies which could be redistributed and
  senior ROTC unit after .",pion It u .: .. , a .                             —A e1s herc in the supply system—Nav y
  staffin g Guidelines—Na :z- 'eati :ratei an act .                             _-: . .ate nonrecurring savings for fiscal
  savings/	                                                   225 : r/ij      • ear- 197, and 19771 _	                              4,300,000

32
                                                                                     FINANCIAL SAVINGS AND OTHER BENEFIT S
               Action  faktnor plannrd             Fafimatedaarinda                     Action fakm or planned              Estimated eadnps
 DOD revised its packaging guideline to provide                         Amended billings to foreign customers for pay -
    for greater economies in packaging of                                 ment of transportation charges—Army
    material . The Army has been a leader in                              (nonrecurring)	                                        2,000,000
    specifying commercial packaging for items                           Accelerated deposit of checks received for pay -
    preaured, resulting in significant savings—                           [nett of materiel sold under the Foreign \lili-
    Defense (estimated annual savings) . . . .          3,978,000         tary Sales Act—Nay (estimated annual
     30 .dav depot safety level of direct support                         savings)	                                               1, 068, 000
    systan (DSS) stocks in Korea was eliminated                         The U.S . Army's cold stores warehouse i n
    .uul requisitions submitted to replenish the                          Kaiserslautern, Germany, had been incurring
    zdety level -- canceled—+.r ty ( n-                                   seavan delay costs estimated at $1 .3 million
    recurring)	                                         2, 725, 000       per year . DOD adopted most of our recom -
Througlt unproved supply management, the                                  mendations and the problem has been resolved
    N :wv was able to decrease the amount of                              at this time—Defense (estimated annual
     r rntories aboard s c of its arbnuarines                             savings)	                                               1,000,000
    and submarine tandems—Naves (estimated                              Amendment of sales agreement to include billing
   an oral —wings)                                      2,600.000         of xean transportation charges for services
Scientific equipment items held by EPA labora-                            provided by the United States—Army (non -
   torics identified :s cseess and made available                         recurring)	                                                820,000
   for use by other EPA laboratories—Environ-                           Billing of foreign military sales customer for lan d
   menrd Protection :\gency (nonrecurring) . .          1,762,000         transportation of materiel—Army (non-
Excess unreported reusable engine containers                              recurring)	                                                660,000
   were used to fill current requirements. The                          Correction of sales invoices to include prope r
   Tank Aunrrnotive Material Readiness Cum-                               ocean transportation charges and packing,
   n and vvm able to cancel part of a contract and                        crating and handling charges—Army (sti-
   ovoid the constructi on of wood crates to sup-                           mated annual savings)	                                   300,000
   port these requirements—Army (non-                                   Disclosure of the cost and magnitude of airlif t
   recurringl	                                             406,000        support provided by the Nay to members of
Excess items of ship repair and alteration ma-                            a private organization to enable them to at -
   teriel re turned to the supply system—Navy                             tend their 1974 annual reunion at Las Vegas ,
   (nonrecurring)	                                         268.000        Nevada, prompted the cancellation of similar
Scientific equipment items held by EPA labora-                            support for the 1975 convention—Navy (non -
        es declared excess and released to the                            recurring)	                                                191,000
   General Services Achninistration—Environ-                            Savings resulting from having Department o f
   mental Protection Agenev [nonrecurring) . .             247.000        Agriculture recompute ocean freight differ -
Unreported assets returned to the Army supply                             ential costs on wheat shipment to Egypt unde r
   system—Armv- (nonrecurring) 	                           178.000         P.L . 480—agriculture (nonrecurring) . . .                104,000
The San Antonio Air Logistics Center (ALC)                              Correction of sales invoice to include proper
   reduced a planned purchase of reusable plastic                         ocean transportation charges Army (non-
   containers—Air Force (nonrecurring) . . . .                            recurring)	                                                 100, 000
                                                           150,000
ENCess equipment and pickup trucks returned to
                                                                        Shipments of foreign liquor which were being
   the Arm, supply system or transferred to fill                          improperly paid for from appropriated funds
   esisting needs of other organizations—Army                              are now being charged to nonappropriated
   monrenrringl                                                           funds—Army (uncoated annual savings)                         94,000
                                               _           122.00 0
                                                                        Correction of erroneous depot search matrix
Issuance of nonstandard item as substitmes for                             codes which had resulted in unnecessary trans -
  standard items—General Services _ chninis-                               portation cons—:\rmy (estimated annual
   [ration -onrecurring) 	                                   68,000        savings)	                                                   92,000
Recovered nevv parking material and fiberboard                          Amended billing to foreign customer for pay -
  containers from the Defense Supply Agency                                ment of packing, transportation and port
   ,DSA : Defense Property Disposa l Facility
  Defene Supple Agent- inonrecurri ng) .                                   handling charge—army (nonrecurring)                         64, WO
                                                              5,000
                                                                        Amended billing to foreign customer for pay -
Transportation :                                                           enent of packing, transportation and port
Army canceled is plans to procure 588 general                              handling charges—Army (nonrecurring)                        61, (XX~
  purpose railway tank cars in fiscal year 1977,                        Savings resulted from routing all parcel air lif t
   1478, and 1979--Army Inonrecuraine)-                22, 300, (1110      mail through the Seattle Postal Concentratio n
Billing of ocean transportation charges for sere-                          Center rather than through both the Seattl e
  ices provided by United States—Army                                      and San Francisco Centers—Postal Servic e
   !nonrecurring+                         . . .         3,141,000          (estimated annual savings)	                                  31, fXXI
                                                                                                                                            33
     FINANCIAL SAVINGS AND OTHER BENEFIT S
                    Ar(ion into, ar ptannrd           Fa:imntrd raring,                  Anion b,:i, . 1 rinnnrd           Ewan-daori+9-
   Tr ansportation—Continued                                                 Veterans administration (estimated annua l
   Reinibursentent of appropriated funds for th e                            savings $568,000 ; nonrecurring savings
       shipment of foreign beer—Navy (nome -                                 $,900,000)	                                       4,468,000
         t rring)	                                              22.000    Reduction of computer processing time b y
   Procedures changed to prevent duplicate pay -                             utodernizing several applications systems
        ment of inland transportation charges for sea                        Government Printing Office (estimated
       containers in Europe—Nav) (estimated an -                             annual savings)	                                    800,273
       nual savings) . . .                  .	                 21,000
  Reimbursement of appropriated funrli for th e                           Reduction in staff requirements due to improve d
       shipment of foreign beer—air Force (non-                             job scheduling and more cilicient computer
       recurring)	                                                          usagr—Go—n.ent Printing Office (esti-
                                                               20.000       mated annual savings) . . .                          151,725
  Other Items :                                                           Computer-mutput-miaofilnt can improve the
  On GAO's recommendation, the State Dep-, -                                economy and efficiency of Government in -
       ment reached agreement with Iran on pay -                            formation systenss—Navy (nonrecurring)- .             63,000
       ment of military mission costs—State (esti-                        Elimination of unneeded com ponents of a rented
       mated annual savings)	                             2L 800, 000
  Savings resulted from better managuncnt o f                               computer system—Government Printin g
                                                                            Office (estimated aneual savings) . . . - -           47,000
      research equipment at Federal laboratories
      Energy Research and Development Adminis-                            Savings resulting front reentry of dropped
      tration (nonrecurring) 	                                              mortgage sues into FHA master compute        r
                                                          13, 800, 000
 Sayings resulted from cancellation of a flapped                            fife, and consequent billings of unpaid pre -
      procurement of Chaparral nvssilc system                               mimis—Housing and Urban Developmen t
      equipment—.-Arno- (nonrecurring)	                   11, 500, 000      (esumated annual savings)	                   -        16,0(X)
 Funds available for vocational rehabilitation                             Communications:
      services to be provided to supplemental secur-                       Cancellation of proposed procurement of a de -
      ity income recipients were reduced—Health ,                             partneno-wide computer ncuvork for tite De-
      Education, and Welfare (estimated annual                                paronent of Sgt icuitmre—Agriculture (non -
     savings)                                  . . .       5,437,00 0         recurring 5151,000,000; estimated annual
 Savings in staff-years by deferring collectio n                              savings $30,9(X),000) .              . . .   181, 900,000
     action on low dollar business tax delinquen -                        Ter oration of the development and inmplemen -
     cies—Treasury (estimated annual savings) .           4, 300. (X10        tation of the Air Force advanced Logistics
 Savings resulted from better management o f                                  System (AW—air Force (nonrecurrin g
     research equipment at Federal laboratories- -                            5109,600,000 ; estimated annual savings
     Navy and Transportation (nonrecurring) . .              903.000          58,100,007)	                                 117, 700, 000
 Elimination of costs incurred by the studen t                            Cancellation of HEW's proposed acquisition of
    store at the U,S. -XIilitary academy- becaus e
    of subsidized prices for ser•ir- erne ered to                             an IB\I 3701168 computer for its Data '%fan-
                                                                               oement Center—General Services Adminis-
    the Cade¢—Army (estimated annual savings)                750,000          tration (nonrecurrng)	                         3,800,000
The proposed move of four laboratories fro m
    W,ishington, D .C., and Beltsville, Maryland ,                        Contracting Policies and Practices :
    to Cincinnati. Ohio, was canceled—Euviron-                            Reduction of contract price resulting front de-
    mental Protection Agency (nonrecurring) . .              623.00 0        termination of defective cost or pricing data
Action taken by Postal Service to reduce the                                 Air Force (nonri e—mg)	                         2,387,000
   number of employees used to assist in custouss
   inspections—Postal Service festinated annual                           Energy Conservation :
   sayings) . .                                  . .         1657 000     Savings resulted front Government contractors '
Savings resulting from cancellation of a proposa l                           iutplementation of GAO-suggested energ y
   by HEW to award a contract for the evalua -                               conservation ,measures—Defense (estimate d
   tion of the health profession's shortage are a                            annual savings)	                                   138,000
   evaluation loam repayment program—Health ,
   Education, and Welfare f nonrecurring) . . .               40,000      Facilities Construction :
                                                                          Reduction in scope of a repair and alteration
         Attributable to Combined Effort s                                  project at the Central Heating Plant, Wash -
                                                                            ingron, D .C.--General Services Administra-
                  of GAO and Others                                          tion (nonrecurring)	                           13,000,000
Automatic Data Processing :                                               Reduction in funds requested by the Navy i n
Veterans Administration reassessed the need fo r                            fiscal year 1977 for construction projects t o
 4 regional computer centers for its propose d                              provide support facilities for Trident sub -
  target systemm and eliminated one center                                  marines—Navy (nonrecurring) 	                    3,100,000

34
                                                                                 FINANCIAL SAYINGS AND OTHER BENEFITS
             Anion takt— pta nnrd              Eetimatrd   earinge                 Art-tak —pta nnrd                 FC and d airing,

interest Income :                                                    Reduction in fiscal year 1976 training rates for
Savings resulted from improved cost-effective                          new pilots and navigators who were, no t
  procedures for disbursing Federal funds ad-                          needed because of pr jetted excesses of
     riswred by Farmers Home Administra-                               qualified personnel in those skills—Air Forc e
  tion—Agriculture (estimated annual savings) .    10, 000, 000        (nonrecurring)	                                   12, 990, OOO
Loans, Contributions, and Grants :                                   Manpower Utilization :
Savings resulting from reduction of monthly                          Savings resulting from improved overseas rota -
  fee paid to mortgagees for servicing section                         tion policies and practices for military per-
  235 mortgages—Hortsing and Urban Devet-                              sonnet—army and Air Force (estimate d
  opment (estimated annual savings) . . . .         1,700,000          annual savings—$7,200,000 and 523,700,
                                                                       000)	                                             30,900,000
A Federal Highway administration fundcd                              Savings in manpower costs resulting fro m
  highway was redesigned to be more in line
  with anticipated needs—Transportatio n                               changesrin travel regulations to require tha t
  (nonrecurring) 	                                         50,000       travel time authorizations be limited t o
                                                                       only the actual time required to complet e
Logistics :                                                            the travel based on the mode of transporta-
lZeduction in Defense Supply Agency's fiscal                            tion used—Army (51 1,700,000), Nar          y
  year 1977 clothing and textile war reserve                            (55,658,000), Air Force ($10,032,000), an d
  program appropriations request on the basis                           Marine Corp. ($2,131,000) (estimated annual
  that items requested may not be a valid                              savings)	                                          29, 521, 00 0
  requirement—Defense Supply Agency (non-                            Payments to Government Employees
  recuring)	                                       95, 600, 000        and Other Individuals :
Reductions made in DOD's 1977 appropriation                          Correction of computer program to prevent im-
  rcqucsts as a result of flying hour reduc-                           proper payments for unwed leave—air Forc e
  bons—Defense (estimated annual savings) . . 26, 800, 000             nonrecurring 56,9W,000 ; estimated annual
Reduction in Navy's fiscal year 1976 and 1977                          savings $3,300,000	                              10,200,000
  flying hour programs appropriation requests                        Savings resulting front revision of the join t
    n the basis that Navy programmed more                              Travel Regulations to preclude payment of a
   hours than required for force readho- re-                           temporary lodging allowance to members o f
  quirements—Navy (nonrecurring)	                   16, 715, 000       the military in excess of their daily expenses
                                                                       Defense (estimated annual savings) . . . .        8,576,000
GAO told the Senate Appropriations Corn-
   mince the Air Farce could not support needs                       Improved controls to prevent erroneous pay-
  for 1,727 personnel at military aerial porm                           vents of readjustment pay to—cotlicee
  9s a result the Committee delered funding                            Ai r Force (estimated annual savings) . . .         859,000
  for 1,700 positions and reduced the air Force                      Addition of new edit routines to the joint Uni -
   appropriation for fiscal year 1976 by 515,408,-                     form Nfilitary Pay System for use in collecting
   000—Air Force (estimated annual savings) . 15,408,000               rental charges—army (estimated annual
                                                                       savings)	                                              91,000
Savings resulted from replacing nonstandar d
   radio and tactical air navigation equipment                       Correction of student leave records at For t
   in F-15 aircraft with standard equipment—                           Benjamin Harrison, Indiana—\rmy (non-
   Air Force (nonrecurring $1,700,000 ; esti-                          recurring)	                                            85,000
   netted annual savings 5605,000)	                  2, 305, 000     Improvement in automated payroll system con -
 Reduction in appropriations for operating Navy                         trots to preclude duplicate and erroneous pay-
   tugboats by S1 .5 million and personnel re-                          menu ; air Force reserve pay and allowanc e
   duction savings of about $100,000 a year—                            system—Air Force (estimated annual savings)           50,00 0
   Navy (estimated annual savings) . . .             1, 600, WO       Procurement :
 Savings resulted from negotiating an increased                       Reduction in various procurement appropria -
   rental rate on land and buildings—Army                               tion accounts to be offset by application of
   (estimated annual savings)	                           32,000         free assets—Defense (nonrecurring) . . . . 126, 000, 000
                                                                      Reduction in the military services appropriatio n
Manpower Training :                                                     for the procurement of subsistence in kind
Recovcry of all costs of training foreign pilots                         Defense (nonrecurring)	                          7,139,000
  made possible by revision of regulations an d
 procedures for allocating training expenses                          Weapon Systems :
 not previously used in calculating program                           Savings resulted from termination of the Condo r
 rests—Air Force (estimated annual savings) .       68, 400, 000         missile program—Navy (nonrecurring) .          458, 400, 000
                                                                                                                                      35
     FINANCIAL SAVINGS AND OTHIR BENEFIT S

                 Anion ta,—ptanrrd                     E#ima!rd raring,      In an issue paper dated August 29, 1975, and in
  Weapon Systems—Continue
                       s                                                   previous discussions, we told the Senate and Hous e
  Sat irgs resulted from termination and deactiva .                        Committees on Appropriations, Subcommittees o n
     tion of the Safeguard sysmm—Arms (non -                               HUD-Independent Agencies, that the Departmen t
     recurring)	                                         2%- . 0W. 000
 Fiscal year 1976 funding for the \'chicle Rapi d                         had a policy of not reducing contract authority eve n
    Fire Weapon System teas reduced—Arnw                                  though program activities for which the contrac t
    (nonrecurring)	                                         6070 . 00 0   authority had been authorized had been completed .
 Savings resulted from consolidation an dr or im-                            At the request of the Committees, we estimated ,
    proved managen ert of test ranges and tes t                           using departmental budget data, that the Depart-
   facilities—Defense (nonrecurring $700,000 ;                            menrs fiscal year 1976 incremental contract authorit y
   estimated annual savings 518,000,000) .                 18,700,000
                                                                          request of S662 .3 million would have a total runou t
 Funds allocated to a longitudinal study of com -                         cost of about $17 billion in future years. The Depart-
   pensatory education were reduced by reduc -
   ing the scope of the study—Health, Education ,                         ment had provided the Committees with a total run -
   and Welfare (nonrecurring)	                             18 .400 .000   out cost estimate of $26 billion. To limit the De-
 Other Items :                                                            partment's future reuse of the contract authorit y
 Savings resulting from consolidating commo n                             granted in fiscal year 1976, the Congress used the
    activities to reduce administrative, technical ,                      GAO runout cost estimate of $17 billion to place a
    and suppot t services duplication—Board for                           ceiling on the total future expenditures on that au-
    International Broadcasting (estimated annua l                         thority. NVe understand that the Congress plans t o
      rungs)	                                              6.000.000      annually place runout cost limitations on the De-
 The Missouri Department of Social Senices re-                            partmenes contract authority authorizations to re -
   vised its cost accounting procedures to provid e
   for a more equitable allocation of costs be-                           strict total future program expenditures .
   tween activities subject to different rates of
   Federal reimbursement—Health, Education,
   and Wclfare (estimated annual savings) . . .              413 .000
                                                                          Actions to Improve the Marine Corp s
                                                                          Computerized Pay/Personnel Syste m

 Additional Financial Saving s                                                Following our audit of selected pay/personne l
 Not Fully or Readily Measurabl e                                          records at 18 reporting commands, we advised th e
                                                                           Commandant of the Marine Corps that about 3 0
                                                                           percent of the records sampled contained one or mor e
    Many important one-time or recurring financia l                        errors, most of which affected a member's pay. \Ve
savings result from joint efforts of GAO and the                           recommended that changes be made in the system s
 Congress, departments, or agencies . Actions are                          procedures for acknowledging input ; that administra-
taken to eliminate unnecessary expenditures or t o                         tive stalling requirements be reevaluated ; and tha t
correct deficiencies identified in GAO 's audit reports,                   unit commanders be required to formally respond t o
but the amount of savings directly attributable t o                        internal audit recommendations for improving con-
our work cannot be fully or readily measured . Som e                       trols and operating procedures in the computerized
illustrations follow.                                                      pay/personnel system .
                                                                              In June 1976, we were advised that the NMarin e
Cost Reduction in Future Outlays for Lowe r                                Corps was taking action to correct the problems note d
                                                                          in the review .
Income Housing Assistance Program s

  The U .S. Housing Act of 1937, as amended, au-                          Detecting and
thorized the Department of Housing and Urba n                             Reducing Incorrect Payment s
Development to administer a low-income housin g
program . The Congress has cumulatively authorize d                          On the basis of a random sample, we found tha t
the Department about $3 billion in contract au-                           about 8 percent of the monetary settlements bein g
thority for use in the program . Annually, the Congres s                  made as a result of actions taken by the Air Forc e
provides the Department appropriations to pay fund s                      Board for the Correction of Military Records were
up to the total cumulative contract authority .                           erroneous . The erroneous settlements, which resulte d
36
                                                                      FINANCIAL SAVINGS AND OTHER BENEFITS

in overpayments and underpayments, event undetected         made since January 1971 . In an October 1975 repor t
 because the Air Force had no procedures for adminL -       to the Congress (GGD-75-101), the estimated that
 trative review . Most of the errors were caused by         reserves available to pay landlords would be exhausted
clerical oversight .                                        in fiscal year 1976 and that net losses of about $1 7
    As a result of our review, the Air Force began a        million would be incurred by the end of the averag e
quality assurance program in July 1976, which in -          life of the outstanding policies issued through June 30 ,
eludes a supervisory review of selected cases. This         1974. We recommended that a property' s re-rent-
action should help detect and reduce the number of          ability be considered as a separate factor in evaluating
erroneous settlements made.                                 a lease guarantee application .
                                                               In March 1975, SBA revised its procedures to limi t
                                                            lease guarantees to the amount properties would brin g
Regulations Issued for Prohibitin g                         in ifrercnted after defaults occurred . In January 1976,
Undesirable Contract Types i n                              it furher limited lease guarantees to existing facilities
Procuring Professional Service s                            and required that all lease guarantees be issued b y
                                                            September 30, 1976 . No new guarantees are planned
   Since 1957 the Environmental Protection Agenc y          after that date.
and predecessor agencies have awarded Federal
grants totaling about $16 billion for constructin g
municipal waste treatment facilities . Municipalities       Legislation Enacted to Promot e
have generally contracted with consulting engineerin g      Energy Efficiency in Buildings
firms for designing waste treatment facilitic ., on th e
basis of a percentage-of-construction-cost of th e             On June 20, 1975, we reported to the Congres s
                                                            that over 40 million of the 70 million existing housin g
facilities. This is an undesirable fee arrangemen t
                                                            units in the United States needed thermal protectio n
because it does not give an engineering firm a n
                                                            improvements, such as ceiling insulation, caulking ,
incentive to keep costs as low as possible or to be cos t
conscious .                                                 weatherstripping, and the installation of storm door s
   We recommended in a report to the Congress               and storm windows . We reported also that, despit e
(RED-75-367, \lay 8, 1975) that the Agency require          our Nation 's energy deficiencies, constructing energy -
municipalities to use other contracting methods i n         efficient housing was still a low priority concern t o
                                                            nearly all participants involved in planning, designing ,
procuring professional services for designing wast e
treatment facilities .                                      financing, and constructing residential housing . En-
   On December 17, 1975, the Agency issued regula-          ergy savings of 30 percent and 60 percent for old an d
tions which prohibit using the percentage-of-con-            new buildings, respectively, were considered to b e
struction-cost method of contracting for architect-          conservative estimates .
engineer services .                                            On August 14, 1976, the Energy Conservation an d
                                                             Production Act (Public Law 94—385) was enacted .
                                                             Among the energy conservation alternatives suggested
Procedures Revised to Prevent Leas e                         in the report that wefe included in the act were (1) a
Guarantee Program from Sustaining Losse s                    grant program to help low-income persons improv e
                                                             the energy efficiency of their homes through such
  The Small Business Administration has authority
                                                             actions as adding insulation and storm windows, (2 )
to guarantee small business tenants' rent payments fo r
                                                             the establishment of mandatory energy conservatio n
commercial and industrial space which they woul d            standards for new buildings, including residences ,
otherwise be unable to obtain on reasonable terms .
                                                             and (3) authorization of a demonstration program t o
SBA interprets the law as requiring the program to b e
                                                             show financial incentives for conservation .
self-sustaining, which means that the fees for leas e
guarantees must cover default payments and admin-
mrative expenses.                                            Eliminating Costly National Park Servic e
  In January 1975, we told SBA the program was not           Procedures for Acquiring Private Land s
self-sustaining because re-rentability of properties ha d
not been considered when evaluating applications fo r          During fiscal year 1969, the National Park Servic e
lease guarantees. No new actuarial studies had been          (NPS) established the Opportunity Inholding Pro -
                                                                                                                    37
  FINANCIAL SF.VINGS AND OTHER BENEFITS


 gram—a land acquisition program to acquire private         gives Federal agencies better guidelines on how to
 lands (inholdings) located Avithin the boundaries          use each class of mail or special mail service and
 of older national packs as quickly as possible t o         on moving mail by the most economical means .
 preserve or convert these lands to their natura l          Such guidelines should provide a basis for agencie s
 settings .                                                 to reduce their postage costs and to use mailin g
    NPS established procedures whereby persons wh o
                                                            envelopes more economically.
 sell their - property to NPS may retain, for a fee, the
 residential "use and occupancy" of the property fo r
 a mutually agreed-upon period .                            Social Security Administration
   The "use and occupancy" provisions of NP S               Ruling Results in Reducing Socia l
served, in many- cases, as an incentive for propert y
                                                            Security Income Payments by One-Thir d
owners to develop vacant properties vrithin the parks .
Not only were the former owners permitted to use th e           During our review of the Civilian Health an d
property themselves, for what has been generall y
                                                             Medical Program of the Uniformed Service s
recognized as a minimal fee (I percent), but als o
                                                             (CHAMPUS), Ave noted that supplemental security
under existing NPS regulations the owners coul d
                                                             income payments were made to residential handica p
rent their property to others .
   Constructing new homes on vacant inholding s              facilities on behalf of handicapped individuals Avidt-
results in much higher acquisition costs to the Federa l    out considering CHANIPUS payments made on
Government once such properties are acquired .              behalf of these same individuals in determining in -
   On \fay la, 1975, we met Avith NPS officials,            come eligibility. Supplemental security income officials
who concurred with our views ; on May 21, 1975 ,            were unaware of the Special CHANIPUS program
NPS announced that the granting of "use an d                for the handicapped until Ave pointed it out, and i n
occupancy" privileges in park areas where a                 June 1975 they ruled that CHAMPUS payment s
statutory right does not exist will be confined to con-     can be included in income determination if mad e
struction started before July 1, 1973.
                                                            under the program for the handicapped . Nationa l
   NPS' decision to limit use and occupancy priv-           instructions were issued in August 1975 to effec t
ileges should help deter new construction, and shoul d
                                                            this change . They provided that supplemental securit y
result iu louver acquisition costs to the Federa l
                                                            income payments be reduced by one-third because o f
Government in acquiring private properties unde r
                                                            income received by individuals as a result of third -
the Opportunity Inholding Program, as well as i n
returning the area to its natural setting more quickly .    party payments .
                                                              Sayings resulting front reducing supplemental
                                                            security income benefits could be as much as $480,00 0
Guidelines for Improving Mailin g
                                                            recurring annually if all eligible handicappe d
Practices and Reducing Mailing Costs
                                                            CHANIPUS beneficiaries applied for supplementa l
  Before the Postal Reorganization Act, Federal             income benefits and did not have income or re-
agencies' postage payments to the Post Office Depart-       sources of their oven . However, since the number o f
ment were based on their own systems for estimatin g        such CHAMPUS beneficiaries is unknown, actua l
mail costs . Many agencies were underpaid because           sayings are not measurable .
their estimating systems were inaccurate .
   The Postal Reorganization Act established th e           Improved Regulations Governing GI Bil l
U .S . Postal Service with the intent that its operatin g
                                                            Benefits for Independent Study Program s
expenses he offset by its revenues . As a result, th e
Service has begun to determine its costs more ac-             During 1973 the Veterans Administration approve d
curately, and Federal agencies' postage costs hav e         an associate of technology degree program offere d
risen.                                                      by a State university through an arrangement with a
  As a result of our review, the General Services           proprietary company. The program required attend-
Administration issued Bulietin FPNRB-63 which               ing a class l day a month and completing independen t

38
                                                                    FINANCIAL SAVINGS AND OTHER BENEFIT S

study projects on topics relating to the course . Vet-       The Social Security Administration agreed with ou r
erans and other eligible persons enrolled in this         findings and is taking action to obtain accurat e
program were granted college credits and monthly          Veterans Administration and Railroad Retiremen t
VA educational assistance payments at full-time rates.    Board benefit information.
  fn July 1974, we provided the Senate and Hous e
Veterans' Affairs Committees information concernin g      Management Practices Over
ibis program, the basis on which it was approved, an d
                                                          Ammunition Procurement Improved
the problems which resulted front its operation .
   As a result of the information we provided, and a t       Ammunition component inventories on hand at the
the Committees' request, VA revised its regulation s      Army ammunition plants as of September 30, 1975 ,
in December 1974 so that veterans enrolled in th e        were worth about $550 million . GAO found that th e
program and similar independent study program s           Army lacked a sound management system for
were precluded fr om qualifying for full-time educa-      identifying, reporting, and managing inventories tha t
tional assistance rates.                                  had accumulated at contractor plants over the years .
   Although the dollar sayings resulting from VA' s       As a result, the Army was not in a position to conside r
revised regulations could not be readily measured ,       these assets as reductions against their total need s
we noted that, as of .November 1974, about a month        when preparing budgets, buying new components ,
before VA's change in regulations, about 13,00 0          and preparing production schedules .
veterans- were believed to be enrolled in the progra m       In our review of ammunition components, whic h
at full-time assistance rates, costing VA more tha n      we reported on in April 1976 (LCD-76331), w e
j3 .5 million monthly .                                   reviewed 68 components worth about $312 millio n
                                                          in the September 1975 inventory . We found tha t
Reduced Supplemental Security Income                      quantities of 47 components worth about $14 9
Program Administrative Costs an d                         million were beyond firm end-round productio n
Medical Assistance Payment s                               requirements . We analyzed the last procurement s
Under Medicaid                                            during calendar years 1974 and 1975 for 17 of the 6 8
                                                          components . In nine instances the quantities procure d
   The Social Security Administration has ha d            resulted in an unnecessary accumulation of com-
problems in making correct payments to supplementa l      ponents already in excess amounting to $3 .5 million .
security income program recipients since the progra m     Because production was so far advanced on thes e
began in January 1974 . One of the principal causes       items, it was uneconomical to stop production . W e
of these payment errors is that the agency does no t      pointed out that the Army faces the challenge o f
have accurate information on benefits paid to man y       insuring the bent possible use of these unneede d
program recipients by the Veterans Administratio n        components, and we recommended that it mount a
and the Railroad Retirement Board . Such informatio n     special effort to provide visibility over componen t
is used in determining eligibility and benefit paymen t   inventories to permit reduction of future ammunitio n
amounts .                                                 budget requests and identify alternative uses fo r
  We estimated that, if the Social Security Adminis-      excess components .
tration used accurate Veterans Administration and            Armament Command officials told us that they
Railroad Retirement Board benefit information ,           would make thorough reviews to insure that al l
35,600 ineligible recipients would be removed from        available ammunition components had been con-
the supplemental security income rolls, with a            sidered in fiscal years 1976 and 1977 budget sub -
reduction in administrative costs . Because supple -      missions and make appropriate reductions wher e
mental security income eligibility determinations ar e    necessary . As a result, ammunition budgets for fisca l
generally used to determine eligibility for \ledicaid ,   years 1976 and 1977 were reduced by $35,000,00 0
there would be an associated reduction in medica l        through the use of components that were identified
assistance costs .                                        and matched with production requirements. In

                                                                                                                39
     FINANCIAL SAVINGS AND OTHER BENEFITS

     addition, the Armament Command developed im-               computerized models, hots much to prepare, an d
     proved management practices which should hel p             when to prepare it.
     guard against unnecessary procurements in the future .       We recommended in our report to the Congres s
                                                                (B–115369) that standards be developed and the
                                                                work necessary for preparing good documentation
     Responsibility for Automati c
                                                                be done . On February 15, 1976, in answer to thi s
     Digital Network (AUTODIN )                                 recommendation, the National Bureau of Standards,
     Terminal Management Centralize d                           Department of Commerce, published "Federal Infor-
                                                                mation Processing Standards for Documenting Com-
      The limited effectiveness of DOD's consolidatio n         puter Programs and Automated Data Systems" (FIT S
    program and the unnecessary planning and develop-           PUB 38) .
    ment of centers in its automation program resulte d
   from the absence of a single entity (except for th e         Adoption of Standard Components
    Secretary of Defense) with the necessary authority an d
   resouces for complete management control of DOD' s               In December 1975 we questioned the Army's
   AUTODIX system . DOD was developing and install-              selection of the 105111 gun as the main weapon fo r
   ing expensive automated facilities in excess of it s          its new XJI–I tank in the face of recent test result s
   requirements, and consolidation of telecommunica-             showing a larger 120111111 gum to be superior . We also
                                                                 concluded that starting full-scale development of on e
   tions centers was not being achieved to the exten t
                                                                 XNI–I before testing the Leopard 2 AV (a tank
   possible . Each military department had designed and
                                                                developed in the Federal Republic of Germany)
  developed its own automated center—referred to a s
                                                                indicated the Army was not serious about the Leopar d
  a local digital message exchange (LDNIX) and wer e            as an alternative to the XdI–1, even if it proved a
  planning to install a total of 103 at a cost of over $100
                                                                cost-effective contender. It has been contemplate d
  million . Our review indicated that 11 of 15 planned          that developing these tanks might lead to the adoptio n
  installations selected for review were not required .         of a standardized North Atlantic Treaty Organiza-
  Our review also indicated that intraservice and inter -       tion tank.
  service consolidation of telecommunications centers              Defense officials said the Army had determined th e
  at 44 locations selected for review could result i n          I05t1un gun to be the only logical choice for th e
  annual sayings of over S2 .6 million . In line with          X\I–1 but that its turret would be designed to accep t
  recommendations in our July 1974 report, DCA wa s            the larger gun . Army officials suggested that Leopar d
  given the authority, responsibility, and resource s          components might be incorporated after the Xi\I–1
 necessary- for managing the total ACTODIN system ,            entered full-scale development .
 including terminals, thereby assuming the role o f               In July 1976 the Army announced a majorcr
 single manager over AUTODIX .                                  yersal in its position, stating that it would defe r
                                                                putting the XNI–1 into full-scale development ,
                                                               would not use the 105mut gun for the Xbf–1, an d
Guidelines Established for Documentin g
                                                               would ask the contractor to redesign the X\I–I t o
Computer Programs and System s
                                                               accept the 120mnt gun. At the same time, in th e
   In reviewing computer programs and mathematical             interest of standardization, the Department of De-
 models, we found that good documentation of com-              fense announced the signing of an agreement with th e
puter systems prevents waste and unnecessary cost s            Federal Republic of Germany whereby the X14– I
in man- ways—by making program modificatio n                   and Leopard 2 AV would use a common engine ,
feasible, by making redesign changes easier, and b y          transmission, track and fuel .
making computer programs and mathematical mode k                 In addition to economies in research and develop-
usable by others . Government-wide policy-, standards,        ment, production, and life-cycle costs, the adoption of
or guidelines were not available to help Federa l             standard components is expected to promote in -
managers decide what type of documentation t o                creased combat efficiency among the NATO allianc e
prepare for computer programs and, or mathematical            countries.
40
                                                                     FINANCIAL SAVINGS AND OTHER BENEFITS

 Delay of Full-Scale Productio n                          Improved Accounting Procedure s
 of PHALANX Weapon System                                 for Reimbursable Technica l
     In early 1975 the Davy expected a full-productio n   Assistance Project s
 decision for the PHALANX weapon system i n                   In our review of Civil Service Commission
 September 1976 . Accordingly, the Navy requeste d
                                                           revolving fund activities, we found that accountin g
 $312 million in development funds and $20 .3 millio n    reports for State and local technical assistanc e
 in production preparation funds for fiscal years 197 6    projects showed losses amounting to $273,000 fo r
 and 1977.                                                 fiscal years 1974 and 1975 . The costs of these project s
     fn a February 1975 study, we questioned th e          are intended to be fully recovered by the revolvin g
 realisut of the Navy's test program and the              fund . As a result of our report, the fund was re-
 PHALANX system's effectiveness . We also pointed          imbursed from other appropriations for costs whic h
 out that numerous technical problems had not bee n        had not been billed previously, and income wa s
resolved . We suggested that the Congress limit futur e    recorded in the fund which had not been properl y
funding of the program to research and developmen t        accrued by regional offices . Instructions on improving
efforts until it could be shown, with a reasonabl e       accounting and project costing procedures fo r
level of confidence, that the system was ready t o         reimbursable projects were furnished to Commissio n
enter production .                                        regional offices .
    In June 1975 the advised the Chairmen of the House
and Senate Armed Services and Appropriation s
Committees that the system's problems had not bee n       Top Management Emphasizes Positio n
resolved and repeated our position that the syste m       Classifications and Managemen t
should not be approved for production .
                                                              We reviewed the Civil Service Commission' s
   In a December 1975 study we pointed out that th e
Nacy had delayed a full-production decision until th e      administration of the Federal classification program ,
                                                           and selected agencies' administration of their
summer of 1977 . Subsequently the Congress delete d
                                                            position classification responsibilities . We found tha t
all procurement funds for this system and reduce d
research and development funding to $15 million .          weak controls and pressures exerted on job classifi-
                                                           cations had resulted in overgraded positions an d
                                                           increasing costs and had adversely affected employe e
Review of Technical Evaluations of                         morale and productivity . One conclusion in ou r
Contractors' Price Proposal s                               report to the Congress was that top Federal man-
    Department of Defense analysts were makin g            agement must make a commitment to improv e
incomplete or insufficient technical evaluations of       job classification . We recommended that the Presi-
                                                           dent of the United States issue a directive to th e
noncompetitive price proposals over $100,000 . In
the proposals we examined, about 40 percent of the        heads of all Federal agencies emphasizing th e
contractors' proposed direct costs had not been           importance of position management and the nee d
adequately reviewed . Also, many technical evaluation     to develop, at all management levels, an informe d
reports did not contain enough information to             interest in economically structuring work an d
support recommendations .                                 properly classifying positions . Such a memorandum
   We recommended that formal training of al l            was issued, and the Civil Service Commission wa s
personnel performing technical evaluations of con -       charged with evaluating agency classification per-
tractors' noncompetitive price proposals be in-           formance and bringing about corrective action.
tensified and that uniform performance and reportin g        During the review we audited several job classifi-
standards be developed for use by Defense activities
                                                          cations and determined that about 75 percent of th e
q taking technical evaluations .
                                                          positions were overgraded . As a result of our report ,
   Defense officials stated that our findings are being
                                                          the Commission and the agencies took correctiv e
referred to Defense components as matters to
                                                          actions to downgrade, redescribe, or abolish position s
emphasize in their continuing efforts to improve
management practices, and to the various trainin g        covered by our audit sample. Some employees wer e
activities for use in courses .                           reassigned ; a fete were promoted .

                                                                                                                  41
     FINANCIAL SAVINGS AND OTHER BENEFIT S

  Phaseout of U .S . Economi c                                  Reducing Requirements for U .S .
  Asslstance to Turke y                                         Military Personnel Proficient i n
                                                                The Thai Language Saves Languag e
      We reviewed the G .S. economic assistance t o
   Turkey and concluded that G .S. assistance played a          Training Costs
   major role in the dramatic overall progress of the               Our review of the stalling of positions for a militar y
   Turkish economy . Althou gh AID and the Stat e                assistance group in Thailand disclosed inadequate
   Department had discussed the possible phaseout o f            procedures for setting requirements for language-
   U .S . concession at aid to Turkey, neither had prepare d    designated positions . Proficiency of military personne l
   a phaseout schedule or strategy .                             in foreign languages is attained by training at th e
      We recommended (B-125085, Sept . 16, 1974) tha t           Defense Language Institute, Monterey, California .
   the State Department and AID develop an overal l                GAO suggested that each position should be covere d
  plan, with firm target dates, and integrated strategie s       by a written justification which would specify require d
  for reducing and phasing out U .S. economic assist-           skills . The military assistance group concurred wit h
  ance to Turkey .                                              our suggestion and neu- procedures were established .
     In line with our recommendation, economic assist-             The new procedures will result in fewer lauguage-
  ance to Turkey is phasing out . In recent years suc h         designated positions in the cu rrent and future struc-
  assistance averaged about S42 .5 million annually ;           ture of such groups . Due to the phaseout of the U.S .
  however, only four uncompleted economic assistanc e           military activities in Thailand, the changing staf f
 loans and one population planning grant are now                patterns prevent our comparing present requirement s
 active. These programs are scheduled to be full y              for language-designated positions wilh excess require-
 disbursed by December 1978 . During our review th e            ments found in our review . Therefore, it is not feasible
 AID Alksion staff was reduced from 41 to 3 as o f              to estimate dollar savings in training costs resultin g
 December 1975 . Only one liaison staff person was             from the corrective action implemented as a result of
 scheduled to remain in Turkey until later in 1976 .           our suggestion .


 Phaseout of East Asia Regiona l                               Development of Standards on Whether t o
 Economic Development Progra m                                 Recycle or Store Slightl y
                                                               Contaminated Solid Material s
     After reviewing the East Asia Regional Economi c
  Development Program, we concluded that multilatera l             On July 25, 1974, we advised the General ',tanage r
  institutions presented a viable alternative to support        of the Atomic Energy Commission (AEC), now the
  Asian regional development and that further suppor t          Energy Research and Development Administration
  for the program no longer constituted a prudent use of         (ERDA), that standards had not been developed fo r
  U .S. funds . AID had reassessed the program ; how-           disposing of slightly contaminated solid materials,
  ever, no phaseout schedule or strategy had been               such as copper and steel, which have been or will be
  developed by either AID or the Department of State .          taken from accelerators, reactors, and other nuclea r
    We recommended (ID-76-16, Oct . 28, 1975) tha t            facilities . Without standards agency officials could no t
  the State Department and AID develop and imple-              decide whether to recycle, store, or bury this material .
  ment an orderly plan to phase out the program. This              At one facility, we found that 600-800 tons of steel,
 recommendation was initially resisted by the Stat e            60-80 tons of copper, and I5-20 tons of stainless stee l
  Department and AID, but they later developed an d            had been stored for about 5 years in a fenced, un-
                                                               covered area . The salvage value of the copper at thi s
 implemented a phaseout of the program . The Septem-
                                                               facility was about $500,000 . This value is expected t o
 ber 1975 program staff of 16 was reduced to 4 as o f
                                                                increase in the future as more devices are dismantled .
 August 1976. AID indicated that, as requirements fo r
                                                                   AEC laboratory officials stated that the radio -
 administering the existing commitments decrease, th e         active levels in these metals are so low that a health
staff likewise will decrease . Responsibility for manag-       and safety problem did not exist .
ing residual activities under the program are bein g               Following our recommendations, the Director of
shared by the remaining program staff, other fiel d            ERDA's Division of Operational Safety stated, in a
 posts, and by AID in Washington, D .C.                        letter dated August 7, 1975, that the Division wa s

42
                                                                      FINANCIAL SAVINGS AND OTHER BENEFIT S

beginning a 2-year project to develop standards whic h      uraniun enrichment criteria and submitted to th e
would permit recycling and thus reduce or alleviat e        joint Committee for approval .
future storage of these materials.                             On April 6, 1976, the joint Committee adopted ou r
                                                            recommendation as title V to ERDA's liscal yea r
                                                             1977 authorization bill .
New Coal Sampling Procedure s
implemented at the Energy Researc h
and Development Administration' s                           More Equitable and Effective
                                                            Procurement of Mess
Y-12 Plan t
                                                            Attendant Services by the Navy
    At the request of the Joint Conunitice on Atomic
 Energy, vve reviewed coal s :mtpling procedures at the        For several years the Deparunent of the Navy
 Energy Research and Development Athninistra-               procured civilian mess attendant services by com-
                                                            petitive negotiation . Because of the complexity o f
 lion's Y-12 plant, Oak Ridge, Tennessee. We found
                                                            solicitations and the vagaries in interpretation betwee n
 the coal sampling procedures for tilt Y-12 plant had
                                                            Navy procuring activities, numerous protests wer e
 not been tested for statistical validity and were no t
                                                            received by GAO each year . In our decision entitled
 ex^'icit enough in guiding and instructing coal -
                                                            AIX, ilhlwpeomt Slercires, Inc., 53 Comp . Gen . 665)
 sampling personnel . We conciudetl that this led to
                                                            (1974), GAO suggested to the Navy that formal ad-
 personnel (1) not obtaining representative samples ,
 (2) not protecting coal samples front changes in           vertisement he considered for ail future procure-
                                                            ments of such services, particularly because both th e
composition, and (3) operating without it samplin g
                                                            Air Force and the Army used formal advertisemen t
 plan basal on statistical sampling standards .
                                                            for such services .
    In line with the recommendations in our Octo-              A series of informal meetings with Navy lega l
ber 211, 1975, report, ERDA said that the Y-1 2             representatives ensued, and the Navy informed
contractor has developed and implemented a coa l            GAO that all solicitations for such services afte r
sampling proeedute basal un American S"cicty fo r           Match 15, 1976, world he rormally advertiscd . ' 1' hc
Tsaing and Materials slanrlalds which should enable,        Navy also responded by declining to exercise an y
tits contractor to obtain it more representative sa"apl e   options on its 65 outstanding utcss attendant contracts .
of the coal received .                                        The result of this action has been a dramati c
                                                            reduction in the number of protests received in GAO,
Authorization Bill Revised to Require                       and informal advice received from both Navy
Review of Uranium Enrichment Service s                      officials and small business firms indicates that usin g
                                                            the formal advertisement method has proven quit e
Pricing Criteri a
                                                            satisfactory.
   At the request of the Joint Conunitice on Atomi c
Energy, we evaluated the Energy Research an d               Revising Military Procuremen t
Development Administration's proposal legislatio n          Regulation to Permit Acceptance of Lo w
a> change the basis of the Government's charge fo r
                                                            Bid Despite Technical Noncompliance
uranium enrichment services. We noted that ERDA' s
assumptions in computing it fair value charge (a            With Invitatio n
price above actual cost) were judgmental ; it woul d          The Armcd Services Procurement Rci elatio n
be difficult, if not impossible, to say that those wer e    (ASPR) previously granted the contracting cilice r
the most reasonable assumptions to be made .                discretion to waive bid bond deficiencies in certain
   We recommended to the joint Committee o n                types of cases. As a result of GAO's decision in
Atomic Energy that it retain control over establishin g     Conunernnl Sanitation .Srrrire, 55 Conip. Gen . 35 2
the Governutent's uranium enrichment charges b y            (1975), GAO recommended to the Defense De-
requiring that (1) any changes in the basic approac h       partment's ASPR Committee that the regulation be
"sell in arriving at the fair value charge and (2) any      amended to require waiver of bid bond deficiencie s
additions to this charge necessary to remain competi-       in cases where such waiver was discretionary with th e
tive with private supply sources be included in the         contracting officer .

                                                                                                                  43
      FINANCIAL SAVINGS AND OTHER BENEFIT S

         By letter dated March 19, 1976, the chairman o f        with persons or firms who had or were seekin g
      the ASPR committee advised GAO of a change in              business or financial relationships with COG . In
      the regulation to make the acceptance of a bid             addition, COG did not require that all purchas e
      mandatory where it is accompanied by a defective           orders be sequentially numbered and accounted for—
      bid bond but where the deficiency is within one of th e    whether issued, canceled, or mutilated . Also, man y
      stated exceptions. As a result, the Government wil l       departments authorized several personnel to approv e
      he assured of the advantages of acceptance of th e         purchase orders, increasing opportunities that in-
     lowest bid in all cases where bid bond deficiencies         appropriate or unneeded items may be purchased .
     are within one of the regulatory exceptions.                  In line with our recommendations, COG issued
                                                                 policy and procedure memoranda on standards o f
                                                                 conduct for employees and changes to COG ' s
     Added Controls to Recou p
                                                                 procurement policies .
     Unauthorized Readjustment Pa y

     Reserve officers who are involuntarily separated            Improved Cortrols Over th e
  following at least 5 years of continuous active dut y          Sale of Defective Automobile s
  may receive readjustment pay up to $15,000 . How-
  ever, they must repay an amount equal to 75 percen t             Our review of the effectiveness of automobile
 of the payment if they later become entitled to                 recall campaigns indicated that some dealers ma y
 retired pay on the basis of their total years of service .      have been selling vehicles from inventory withou t
 After we advised the Air Force of an apparent lack o f          correcting defects . Dealers attributed the absence o f
 control to assure repayment under these circumstances ,         repair records to misplaced files, repairs having bee n
 procedures were developed to accumulate a file o f              made without being reported, and oversight . As a
 readjustment pay data . The names of new retirees               result of our recommendations, the National Highwa y
 are matched . gainst this file to determine if an y             Traffic Safety Administration established a followu p
 recoupment o_' readjustment pay is required .                   procedure to help insure improved dealer compliance
                                                                 on vehicles in inventory .

 Other Benefit s                                                Dispersing Information About th e
                                                                Availability of Small Business
   Some actions taken in response to GAO's recom-               Administration Financial Assistance t o
 mendations result in benefits other than financia l
 savings . If the Congress enacts recommended legis-            Small Business Employer s
lation, or if new agency regulations or procedures ar e            The Occupational Safety and Health Act of 197 0
adopted, day-to-day operations at Federal, State ,                uthorizes the Secretary of Labor to establish manda-
and local levels may improve . Sometimes the actions             tory occupational safety and health standards an d
have a direct, favorable effect on the well-being o f           enforce them by inspecting work places and settin g
individual citizens .                                           penalities and correction deadlines for violations o f
                                                                the standards . The Congress authorized the Smal l
                                                                Business Administration (SBA) to make loans avail -
Guidelines for Employee Conduct an d
                                                                able to small businesses which were likely to suffe r
Improved Procurement Procedure s
                                                                major economic injury by complying with mandator y
   An employee of the Metropolitan Washingto n                  safety and health standards . Field offices of the Occu-
Council of Government (COG) placed a CO G                       pational Safety and Health Administration (OSHA)
purchase order for bedroom furniture for her ow n               were responsible for promoting this program . As o f
personal use . The purpose of the order was to take             June 30, 1975, however, SBA had made or guarantee d
advantage of a 49-percent discount available t o                only 145 OSHA loans totaling $30 .3 million.
COG under the terms of a Federal contract .                        The act provides that States operate their ow n
  COG's personnel manual did not clearly stat e                 occupational safety and health programs after OSH A
ethical standards employees should follow in dealing            approves their plans for developing and enforcin g

44
                                                                      FINANCIAL SAVINGS AND OTHER BENEFIT S

 standards . As of September 30, 1975, 22 States ,          Procedures Developed to Improve th e
 operating under OSHA-approved plans, were not              Completeness and Accuracy of Injury
 actively promoting the loan program and some smal l        and Employment Reports Submitted b y
 businesses, which had expressed a need for financia l
                                                            Operators of Metal and Nonmetal Mine s
 assistance to comply with the mandatory standards,
 were unaware of the assistance offered by the program .       The Mining Enforcement and Safety Administra-
    III an April 1976 report to the Assistant Secretary     tion requires all operators to report quarterl y em-
 for Occupational Safety and Health, Department of          ployment data and all occupational injuries an d
 Labor, we recommended that OSHA require all                illnesses, to help the Administration evaluate th e
states operating under OSHA-approved plans t o              progress made in reducing injuries and illnesses .
establish procedures requiring that small businesse s          On October 22, 1975, the told the Administratio n
be advised of the availability of financial assistanc e     that the injury reports submitted did not always
through SBA's loan program .                                accurately reflect the mines' injury and illness
   In July 1976, OSHA issued a program directiv e           experience and that, therefore, procedures to verif y
which instructed compliance officers of approve d           the accuracy and completeness of the operators '
State programs to inform small business employers ,         reports were needed . We suggested that the Ad-
during closing conferences, about SBA's loan progra m       ministration's inspectors, during their regular in-
and to record the notification in their case files . Th e   spections, review the mining operators' records and
                                                            reports to determine whether the operators under -
directive also required OSHA monitoring staffs to
                                                            stand the Administration's reporting requirement s
follow up on the implementation of the directive .
                                                            and to determine the accuracy and completeness o f
                                                            the operators' reports.
Property Management Regulations Amefided                       On November 12, 1975, the Administration in-
To Improve Equipment Managemen t                            stituted procedures in line with our suggestions .
                                                            These procedures should help insure that the Ad-
   The Environmental Protection Agency had no t             ministration's program initiatives and resource alloca-
complied with Federal Property Management Regu-             tions are based on more accurate and reliabl e
lations in managing scientific equipment . Agency           information and accordingly should help reduce th e
property records were not complete, and about $7. 2         number of accidents and injuries in metal and non -
million worth of scientific equipment was infrequentl y     metal mines .
or never used, while further unnecessary purchase s
were made.                                                  Improved Procedures for Developing and
  The Agency implemented our recommendations b y            Supporting Plans to Construct Federal Prison s
  —releasing over $2 million worth of scientifi c              In response to a Presidential directive, the Bureau
   equipment to other laboratories or to the Genera l
                                                            of Prisons developed a long-range plan in 1970 fo r
   Services Administration ,                                improving the Federal prison system. This plan
 —amending its Property Management Regulation s             called for 66 additional facilities at an estimated cos t
   to provide additional controls and strengthened          of $670 million ; as of June 30, 1975, it had bee n
   management practices in requiring and perform-           reduced to 34 facilities at an estimated cost of S46 0
   ing laboratory walk throughs ,                           million .
 —establishing scientific equipment pools ,                    As a result of recommendations made in our report
 —establishing procedures for screening purchas e           and discussions with Bureau officials during th e
   requisitions against idle, unneeded and/or exces s       review, the following actions were taken or will b e
   equipment before procuring new equipment ,               taken :
 —revising its personal property accounting syste m           —Implementing a system by which the Burea u
   to include equipment usage, an d                            will check with States, once every 6 months ,
 — purifying its property records to insure that they          to determine any available capacities .
   contain complete and uniform descriptive infor-            —Developing uniform custody classification defini-
   mation, including appropriate stock numbers .               tions .

                                                                                                                 45
     FINANCIAL SAVINGS AND OTHER BENEFIT S

      —Developing new capacity technology and defini-             parole of the N 'A benefits available to them, although
        tions and the determination of new capacitie s            the Veterans Education and Training Amendments o f
       for existing facilities . (Weaknesses in the Bureau' s     1970 requires such outreach efforts .
        method of determining capacities were als o                 In accordance with our recommendations, th e
       noted in a report by the Sumer and Investigatio n         Administrator of Veterans Affair,, implemented a
       Staff of the House Committee on Appropria-                program whereby (1) Veterans Services Officer s
       tions. )                                                  make semiannual visits to Federal and State prison s
      —Using life-cycle costing in future prison con-            to advise prison officials and inmates about available
       struction .                                               VA benefits, and (2) VA literature is distributed t o
 These new improved procedures should enable the                 imprisoned and paroled veterans to encourage the m
 Bureau to better determine the proper number an d               to use such benefits .
 types of new facilities needed .
                                                                 Improved Services to Florid a
  Ban on Color Additive Red No, 2                                Medicare Participant s

     The Food and Drug Administration permitted th e               The Medicare Part B carrier in Florida was no t
  use of Red No . 2 in food, drugs, and cosmetics fo r           processing beneficiaries' claims promptly . The delay s
  15 wears without determining its safety as renuircd            in payment were caused by management ' s lack of
  by the Federal Food, Drug, and Cosmetic Act .                  attention towards claims which could not be routinel y
    As a result of our recommendation, Red No. 2                 processed in a reasonable time .
 study data was evaluated, shorting that Red No . 2 ,              After our discussions with carrier officials, the
  when fed at high levels to test animals, caused a              carrier started (I) processing claims over 50 dais old
 statistically significant increase in a variety of malig-      on a priority basis and (2) processing other claim s
 nant tumors . On the basis of this information the             first-in, first-out. Additionally, the carrier revised it s
 Commissioner, FDA, banned the nse of Red No . 2 i n            computer screens to reduce the number of claim s
 food, drugs, and cosmetics on January- 19, 1976 .              delayed unnecessarily for verification of allowabl e
                                                                charges and duplicate payments .
 Time to Respond to                                                These changes, along with HEXTs contractin g
 Employee Complaints Reduce d                                   with a second carrier to process a portion of claims i n
                                                                Florida, resulted in speeding up payments . As of
    The Occupational Safety and Health Administra-              October 1975, the carrier had reduced the averag e
 tion implemented controls and procedures to insure             processing time for participant claims from 30 to 1 6
 that (I) worksites are promptly inspected when em-             days.
 ployees present complaints about alleged safety o r
health hazards and (2) complainants are quickl y
notified of OSHA's actions . OSHA's actions were i n            Plans Implemented to Reduce
response to issues raised by GAO in a paper prepared            Department of Labor's Complete d
for the Senate Labor and Public Welfare Committee,              Contract/Grant Closeout Inventor y
Subcommittee on Labor, Since OSHA issued it s
instructions, Atlanta, Chicago, and New York area                 Lt a report dated October 7, 1975, to the Assistan t
ollices reduced their response time average from 35 ,           Secretary for Administration and Management ,
                                                                Department of Labor, we reported that (1) about
101, and 12 days, respectively, to 3, 5, and 6 days ,
respectively, for the 6-month period ended April 1976 .         4,400 contracts and grants awarded by the Depart-
                                                                ment for manpower services and program evaluatio n
                                                                were awaiting closeout at June 30, 1975, representin g
Improved Outreach Efforts fo r
                                                                $4.2 billion in potential costs, and (2) regiona l
Veterans in Prison or on Parol e                                quarterly closeout activity reports were not bein g
   We reported that the Veterans Administratio n                prepared accurately . Until closeout action is taken ,
did not have a uniform system for their regiona l               the Government does not have complete assuranc e
offices to follow in informing veterans in prison or on         that funds have been fully accounted for .

46
                                                                        FINANCIAL SAVINGS AND OTHER BENEFITS

     In line with the recommendations in our report, th e     automated system, similar to that being used in th e
  17cpanynnent issued instructions on January 9, 1976 ,       Retirement and Survivors Insurance program, t o
  to its regions to (I ) reduce the inventory greatly and ,   handle the death termination and widow's benefi t
 if possible, entirely and prepa re an estimate of amici-     conversion process in the black lung benefits program .
 pa« •d progress by calendar quarter through Septem-          SSA implemented this system in November 1975 and ,
 ber 1976 and (2) reconcile inventory reports t o             as a result, has increased the number of claims con -
 individuals' records to determine the true, status o f       versions and reduced the processing time on conver-
 contracts/grants awaiting closeout, including th e           sions from 4 weeks to 1 week.
 numeer and dolla r amount, and establish a firm base
for measuring future progress.                                Improved Readiness of Army Units in Europ e

                                                                Tracked combat vehicles play a major role i n
Better Screening of Blood Donors for Hepatiti s
                                                              today's Army combat units . They provide mobility
  To avoid future blood donations by undesirabl e             and much of the firepower for these units .
donors, blood banks generally maintain a registry o f            During our review of their readiness, we visited ke y
blood donors that have caused, or could have caused ,         front-line combat units in Europe and found that
hepatitis in persons transfused with their blood. Ou r          —units did not have sullicient tank crews to full y
revio,v of post-transfusion hepatitis pointed out tha t          man all of their \160 tanks and \1551 Sheridan s
such a regis ry was maintained at the Massachusett s
                                                                 (armored reconnaissance vehicles) ,
General Hospital, but it was used to avoid callin g
undesirable donors in soliciting blood and not to scree n       —units had not coordinated unloading plans with
                                                                 other units using the same congested storage sit e
walk-in donors.
                                                                 because they did not know the units for whic h
  We discussed with hospital officials the problems
with their existing blood donor registry system an d             ammunition was stored,
rceouuucnded a meow hospital procedure .                        —units did not have all necessary ammunitio n
                                                                 supplies.
  On the basis of our recommendations, the dono r
registry was moved from the testing laboratory to th e        These and other related findings are discussed in ou r
collection center, where it is presently used to scree n      Judy 23, 1976, report to the Secretary of Defense en-
all prospective donors . Since implementation of this         titled "Readiness of First Line U .S . Combat Armored
procedure in March 1974, eight prospective donor s            Units in Europe" .
have been identified and rejected . If the blood of the          Crew shortages were brought to the attention of th e
eight donors had been accepted and transfused, i t            units as well as Headquarters, U .S . Army, Europe,
could have caused hepatitis in the recipients .               early in calendar year 1975. Although the Army had
                                                              planned to increase the manning in the units, little
Improved Processing of Widow's Claim s                        emphasis was placed on whether the unit con-
for Black Lung Benefit s                                      nianders had full crews for all their tracked vehicles .
                                                              Because of GAO 's emphasis in this area, the Army
  In a repor t to the Chairman, Special Studie s              took action to follow up out unit management t o
Subcommittee, House Committee on Governmen t                   insure that the full crews were available for all
Operations, we repor ted that the Social Securit y            tracked combat vehicles.
Administration's district offices were using surfac e            Ammunition problems related to coordination of
mail to notify SSA headquarters of a miner's death,           uploading with other users of the site as well as t o
instead of using a speedier teletype network operated         shortages of ammunition supplies were also correcte d
by Western Union . Following our recommendations,             by the units immediately.
SSA district offices began using that system in 1974 a s
an interim measure, and, as a result, the processin g
                                                               Improved Computer Us e
time of a widow's claim was reduced from 6 to 4 weeks .
  We further recommended that the Secretary of                   We suggested that Bonneville Power Administra-
Health, Education, and Welfare have SSA develop an            tion, Department of Interior, conduct a study t o

                                                                                                                    47
      FINANCIAL SAVINGS AND OTHER BENEFIT S

      determine whether the backlog of work order analysi s         Professional Wage Data Collectors t o
     could be reduced by greater use of the computer .              Collect Information on Non-Federa l
     Bonneville Potter is currently using the compute r
                                                                    Pay Rates for Determinin g
     and assigning unitized costs to larger units of property .
     In fiscal year 1975 the backlog of work orders, abou t         Federal Blue-Coilar Rate s
     $160 million, was reduced about S5 .7 million . Further            About 517,000 Federal blue-collar workers hav e
     reductions are expected in future periods .                      their pay rates determined by a utethod of thatchin g
                                                                     descriptions of Government jobs with private secto r
     Unclaimed Savings Bonds Returne d                              jobs in each of 135 wage areas and setting pay rate s
                                                                     for the Federal employees comparable to those o f
     to Veterans and Other Individual s
                                                                     local industry. A serious weakness in the data collec-
     GAO's followup on recommendations in a previou s                tion process was that the individuals matching jobs
   report showed that the Department of Treasury lt. s               and collecting the wage data generally slid not have
   continued its program to locate veterans and othe r              needed qualifications, experience, or training u t
  individuals who are the owners of C .S . savings                  effectively perform this difficult and highly judgmenta l
  bonds which have been held in safekeeping by Treas-               task . Data collectors were, being selected on an ad ho c
  ury and Federal Reserve banks for a long time . Ac -              basis from Federal employees in the local area, ofte n
  cording to Treasury officials, this continuing effort ha s       without regard to their occupation, which likely wa s
  resulted in the number of unclaimed bonds bein g                 unrelated to job analysis and classification or simila r
  reduced from over 850,000 to about 220,000 .                     skills needed tot this position. %Ve recommended that a
                                                                   permanent body of carefully selected and traine d
                                                                   full-time data collectors be established . The Depart-
  Improved Procedures for Employe e                                ment of Defense data collection agency subsequentl y
  Financial Disclosure Reporting System s                          took action in 112 of the 135 wage areas which w e
                                                                   consider generally responsive to our recommendation .
      During a review of service contracts, we found tha t
   employee financial disclosure reporting systems a t
   AC:TION and the -National Institute of Educatio n               Program for Discharge of Margina l
   (-NIE) should be improved . These systems implemen t            Performers Applied Consistently
  a Civil Service Commission regulation requirin g
                                                                   Among Military Service s
  employees responsible for making decisions or takin g
  actions on the Government's behalf that could hav e                 We reported that the Army, Navy, and Air Forc e
  an economic impact on the interests of any non-                   had introduced programs to simplify anti expedite th e
  Federal enterprise to file financial disclosure state-           discharge of enlisted personnel considered to b e
  ments to prevent possible conflict-of-interest situations .      marginal performers . However, since the program s
     We identified positions at these agencies, other tha n        had been developed independently, they were
  those identified by agency personnel, that appeare d             inconsistent and often inequitable as to the type o f
  to meet the established filing criteria of the Civi l            discharge, consent and appeal procedures, specificity
 Service Commission . At ACTION, we also found tha t               of criteria, and length of the evaluation period . I n
 followup efforts were not being taken when state-                addition, the Army limited its program to its Europea n
 ments were not returned promptly . At NIE, we als o              command, and the Marine Corps was using a quot a
 found that required supplementary statements wer e               system which delayed some separations under th e
not being requested from employees each June 30 ,                 established discharge procedure. Hence, a person
nor were they being requested from employees within               discharged under one program might have bee n
30 days after their occupancy of positions previousl y            retained by another.
identified as requiring statements .                                 We recommended that the Secretary of Defense
    Appropriate recommendations were reported t o                 establish a uniform, Defense-wide program to assur e
these agencies, which later concurred with our recom-             that consistent and equitable standards are applie d
mendations and commented that appropriate actio n                 by all the military services. Our recommendation was
either had been or would be taken.                                adopted and corrective actions taken .

48
                                                                            FINANCIAL SAVINGS AND OTIiER BENEFIT S

Divestiture of Conflicting Interest s                            internal ad,ninisoative nerds. It evolved front the
by U .S . Geological Survey Employee s                           practice of describing all individual's military service
                                                                 on his discharge cerlilical'.
     we reported that -19 cngdoyees and consultant s                The form can coolain drrogana,y iulin'ucuion .
 of tlu• U .S. Ucological Sm'vey o .aaed tinancial inter-        1•11erefore, the practice ol'rootinely providing it to al l
 ests which we believed either ciolatcd the Organi c             individuals rele ased ftrnu mililary xervice dots no t
 A,( of I1379, prohibiting ctophlyvvs frunu havin g              adequately s :di•gumd Nitric privacy . '1'hr uaaiorit)•
 fill: m-ml ilovi-esls in lands or mineral rralth of             of nililaly pers000rl do well aril ill,- DI) Forw 21 . 1
rrgiuns q ndrr su —s , or v'-' 1u4—lial conllicu of              [hey r 'rive do's nut aa--ty alfrr, darut i         ;viI ; ;-
 interest under D'I'mtit . . .or of ,the Interior regohlions .   life . For it w who do 'lot adapt well to . . .ilicoy life,
      l'he Uep :rouvut iovesligard the cases which we            however, [heir DI) Pura, 21-1 call celled this and c .ot
rnu nav :ucd in our report, and we were subsrqurnd) .            adversely allect them, I'mlivol:rly ill srckiug civilia n
adci>rd that :S7 of tit, .19 cloplovecs had diveste d            cutploylncol .
themselves of 72 limneial interests which potentiall y              The I epartaocm of DrIense agreed will, our reenm-
eonllicted lvillu their duties and 2 other employee .            uu•ndalwo to eliminate the rominc listrihutiou of d W
had terminated their etnploynlenl with the Survey .
                                                                 report and o)ake it availahlr only upon t%ritwo r r
                                                                 tpm'st of the individual concerned .
Army Improves Its Methods o f
Determining Skill Training Requirement s                         Improvements Being Made in the Lan d
    11ccause of shortcomings in its computer lit IvI and         Disposal of Radioactive Waste s
 tin• luclIt lology used to reeultcile the model wit h
                                                                     Lange voluu .es oI radioactive Wastcs, includiop• sow r
 tit,' manpuwcr progratn, till- Ato y ' s Nlililary I'vi-
                                                                  that me logg livid and highly losic, :ov disposed of a t
sonNINA Ccnlcr had not beta :till,- to accuratel y
pruivrl h'ail'ing rcgoircnu'nts fur the % ;oiousspecial-         ,is licrou•d couuurrrial hnri;l sites and Ircr principa l
tics ncrdetl in a ltuaderlt combat lucre- The Arun) •             P(.dernl Iacililics.
oll,-lt ruttonitled itself No rain cuhsted penonnrl i n              Smn(. o1 11       silts have hrru op -ord for occr :11 1
spccilic skills as much as 11 ltnotths bclinr Ihr rainin g       years, yet re fuuud thml III silt NO'.. Nil        rritrri a
,,as to begin . These conditions caused tit,- Alloy o ,           have never liven drecloI 1, (21 iti,polnun c;ol h
(rain people ill skills which were already nyrrslalled           scirnc(. ch :n'actrrislics :ti-r not well drImcd, mid O N
.)till for which, therefore, nn valid (raining rcytile-          canoe disposal silts me lulcasing tadiom livily to Ill,-
nn•mt existed . MorcnyCl' , rvco in d,osa• instancr s            clivironmvot.
where the Army had id,-dilied paining for whic h
                                                                      In a rrporl lu Ill- Congress, Wr o"Ol oorudr d
no valid requirement existed, it,, prorcdores existe d
                                                                  that Ihr Nuclear Regolalmy Cuunnissiun ,aid Ih r
In rcltcgoliale or terminate onlistnn•nl ruurarls -
                                                                  E.tiergy Research :old Developncol Aduaioisoaina
    In response to uor report, the Army has take n
                                                                 _jointl y
corrective actions in lilt( . trill our revoltNor] dations
                                                                       see that rougnnc~usivc statues        W ade a t
to improve its skill training rcgoircinents dcrintina -
                                                                       esisliug disposal sites to tvalumctheir
                                                                                                         ,a     aLilil y
Iiu is . We helieve tiles(- ingn'ovenu•ltts will loininliz e
                                                                       to rclain -dioaclive waslrs and
the future orcorrcnres of raiailtg in skills for whic h
                                                                      -ns(- the smdics' results to develop sill : selection
 no requirement cxisls .
                                                                        criteria, fun drtrrminiug Ow long-,rent suitabilit y
                                                                       of existing sites and for selecting future sites.
Action Taken to Safeguard Personal Privac y
                                                                     \Vc also made rccuumtcudations to improve th e
    We reported to it congressional roltuuillre on the            oua 11:1gelt u•nt ;111, 1 regul ;tioo of eon,uacrrial sites, an d
nerd for alttl oses of data recorded on DD Form 21 . 1 ,         to insole there will be adequate funding to rover th e
Report of Separation front Active Dirty, which still , -         long-tern, care requirements for the sites .
tit:u'izes an individual's military service . 'rbc Depart-           NRC and GRDA are taking steps to iogdcuo-nt no r
ment of Defcose developed the form to serve its                  recommendations -

                                                                                                                               49
 FINANCIAL SAVINGS AND OTHER BENEFIT S

 Expedited Health Surveys at A9 Sites o f                 Increased Public Participation i n
 Early Government Radiological Activitie s                Federal Highway and Airport Publi c
                                                          Works Project s
   The Energy Research and Development Admin-
istration is aware of 49 sites used previously by th e       In response to our recommendations, the Federa l
Government for various radiological operations .          Highway Administration and the Federal Aviation
Due to insufficient records, the only way to insur e      Administration issued instructions to promote stor e
 that there is no existing or potential radiatio n        direct citizen involvement in Governntrto-financed
hazard is to survey each site . In addition, ERDA doe s   highway and airport construction projects . These
not know the current use or ownership of some o f         agencies now require that environmental plannin g
the sites. Some sites have been identified, includin g    include public notification . Such as newspaper an-
land owned by an airport and land in a public park .      nouncements of proposed projects and public hearings ,
   We found that ERDA was having 1 contracto r            so that those likely to be affected by the projects ma y
perform the 49 surveys, but that it would be 198 0        learn of the potential benefits and present any objec-
before all surveys were completed .                       tions they may have .
   On the basis of our recommendation, ERDA i s
seeking funds to expedite this program anal hav e         Modification of Contracts to Includ e
all 49 surveys completed by fiscal year 1979 .
                                                          Examination of Records Claus e

Improvements in Personnel Managemen t                        In January 1975, the Air Force awarded tw o
                                                          contracts for developing the F–16 air combat fighter .
And Employee Moral e
                                                          Both contracts contained production options which ,
   The results of our study of personnel policies and     when exercised, will include important work to b e
 practices of Federal agencies in the Canal Zene A,-ere   done by foreign subcontractors . Both contracts state d
 reported to the Subcommittee on the Panama Canal ,       that the Examination of Records by rte Comptrolle r
 House Committee on Mcrchant Marine and Fisheries.        General clause did not apply to all work done out -
Hearings were held on June 16 and Jul- 22, 1975 .         side the United States . So waiver or concurrence wa s
Although our report contained no specific reconn-         obtained before waiving the clause, as is required b y
mendations or conclusions, observations and other         tine Armed Services Procurement Regulations and
information were presented on selected areas whic h       Title 10 U .S .C . As written, the contracts preclude d
indicated a need for some type of modification o r        out reviewing the performance of foreign subcon-
change . Using our study as an "action paper, "           tractors which would be producing components fo r
the Canal organization has made several proposals         U.S . aircraft.
and implemented policy changes . These include               In response to the Comptroller General's letter, th e
     —eliminating segregated housing communities i n      Deputy Secretary of Defense wrote us that appropriate
      the Zone by making future housing assignments       contractual modifications were being negotiated t o
      in all communities on the basis of eligibilit y     reinstate the Examination of Records clause in th e
      criteria rather than citizenship ,                  F–16 contracts . The clause was reinstated in bot h
     —phasing out the Latin American school syste m       contracts b% . supplemental agheement in Octobe r
      by consolidation frith the L .S. schools,           1979 .
     —greatly reducing the number of securit y
      positions,                                          Revitalized Effort to Provide Training t o
     —eliminating dual personnel registers ,
                                                          Procurement Personne l
     —recruiting more Panamanians ,
     —expanding training opportunities for Pana-            In 1970 we reviewed the Department of Defens e
      manian employees, an d                              career program for procurement personnel . We
      cicycloping an upward [nobility program.            concluded that many personnel were not completin g
  These actions could also diminish some of th e          mandatory training . Since 1970 the primary Defens e
friction present in United Statcs,Tanamania n             remedial action has been to increase centralized
relations .                                               management of procurement training.

50
                                                                        FINANCIAL SAVINGS AND OTHER BENEFIT S

  11,   a recent survey of the adequacy of procuremen t       whether interest should be charged on delinquen t
 training programs, we found that many employees i n          payments . After learning of our intention to audi t
 the Defense procurement workforce lacked the train-          its records, one lender who had not made payment s
 ing; to do their duties . We found that Defense (I) had      for 10 monde remitted over 51 .6 million to the
not given priority attention to the training of procure-      Department .
 ment personnel, (2) lacked a uniform program t o               The Department stated it is following up on delin-
accomplish the required training, and (3) devoted             quent payments, is taking step ., to improve the ac-
insufficient resources to provide the necessary- training .   curacy of its billings and accounting, and is explorin g
\\'e recommended to the Secretary of Defense that a           the feasibility of charging interest on delinquent pay-
plan be prepared which would (1) screen out personne l        ments .
for whom training could be waived, (2) establish
training priorities for those employees whose need s
are greatest, and (3) expand the use of other availabl e      Making Highways Safer
training modes .                                                 In a January 1976 report to the Subcommittee o n
    Defense officials concurred with our conclusions an d     Investigations and Review, House Committee o n
recommendations and stated they would now mount a             Public Works and Transportation, and to the Sub-
revitalized effort to provide training .                      committee on Transportation, Senate Committee o n
                                                              Public Works, we recommended that the Congres s
Increased Efforts to Collect Delinquen t                      adopt several provisions which had been included i n
                                                              either House or Senate passed highway safety legisla-
Mortgage Insurance Premium s
                                                              tion, We suggested that the Sta- , ~ flexibility un th e
   'fhe Department of Housing and Urban Develop-              choice of safety- projects for Feucral funding be in -
 ment insures lenders against losses on home mortgage s       creased to ltelp maximize -h _ safety- benefits, and indi -
 guaranteed under several Federal programs . The              cated that this could be done by consolidating existin g
 homeowners pay insurance premiums monthly to the             safety construction programs, or by increasing th e
 lenders. The lenders are required to remit the pre-          transferability of funds among the Carious progr .anis.
 miums when the Department bills them .                       We also identified weaknesses in the State : procedures
   We observed that the Department's billings wer e           for selecting safety improvement projects, and sug-
incomplete and inaccurate and that the Departmen t            gested that the Congress continue providing fund ., to
did not effectively follow up delinquent payments.            help States develop systematic project selectio n
The accounts showed that on February 1, 1976, abou t          procedures.
6,400 lenders were delinquent in paying about 285,000
                                                                In adopting the Highway Safety Act of 1976, th e
 mortgage insurance premiums totaling over $20
                                                              Congress provided lump-sum finding for two safet y
 million . About $9 million had been delinquent for 6
months or longer.                                             construction programs . The new act also increased
   We recommended that the Department improv e                the States' ability to transfer funtts among the re-
its system of accounting and billing for mortgage             maining safety programs . In addition, the Congres s
insurance premiums, take prompt and aggressive                authorized specific funtts to help States develo p
action to collect delinquent accounts, and consider           systematic procedures for selecting saft-ty prnjrcts .




                                                                                                                       51
                                                                                           Table 1
                                                              Procurement lair :
                                                                  Bid protests	                                               	        1, 78 5
                                                                  Other	                                                  	               683
                                                              Personnel lath:
                                                                  Cieilian	                                   	                        1,140
                                                                  Military	                                       	                       576
                                                              Transportation I w	                                 	                       55 3
                                                              General Government tatters 	                        	               -    1,5113
                                                              Special studies and anahsis	                            	                  60 7

                                                                     Total	                                   	                       6, 9.27


                                                                                          Table 2
                                                              Decisions rendered to :
     CHAPTER FOU R                                                Beads of dcparun,nte or agcreies                                      94 :1
                                                                  Certifying, disbursing, or contracting officers	                -     260
                                                                  Indi idual claimants	                                               2,864

                                                                                                                                      4 .067

                                                             GAO internal matters :
     LEGAL SERVICE S                                            Res errs of audit reports	                                              956
                                                                Mentorandut- to dieisionc and offices	                                1,352

                                                                                                                                      2,30 8
     Highlight s
                                                             Congressicnal requests :
                                                                 Opinions	                                                              51 3
     During the period of this report, the Office of the         Conuncnis on legislation	                                              426
   General Counsel, directed by Paul G. Dembling as
   General Counsel and Milton J . Secular as Deputy                                                                                     939
  General Counsel, provided legal services for the
                                                             Miscellaneous :
  Congress and GAO ; agency and department heads :               Cimular letters	                                                         36
  fiscal, disbursing, and certifying officers ; and indi-        Litigation reports (Attorney General or Court of
  vidual claimants .                                                Clain.)	                                                            600
     Our staff members assisted committees of th e               Comments on prceurement regulations 	                                   42
  Congress ; commented on proposed legislation ; and             Advice or opiniors to the Office of Managemen t
                                                                    and Budget 	                                                          32
 furnished format and informal legal advice to com-
  mittees, individual Members, and their staffs . We                                                                                    71 0
 prepared decisions affecting the rights and obligation s
 of agency- or department heads, disbursing or certify-            Total responses	                                                   8,02 4

 ing ollicers, and individuals . We also assumed primar y
 agency responsibility- for the impoundment wor k            as a result of the legal problems receiving promp t
 mandated by the Congressional Budget and Impound-           attention .
 ment Control Act of 1974 .
                                                               The arrival of our 140th lawyer in early Novembe r
   We disposed of 6,927 separate legal matters (se e        climaxed the staff expansion which began in fisca l
table I) . These produced the quantity and types o f         1973 . We, fortunately, have been able to attract
responses shown in table 2 .                                unusually well-qualified individuals who form an
  As will be shown later, our office is becomin g           overall staff well suited to accomplishing our mission .
increasingly involver' in GAO's ongoing work .                 We are investigating the use of computerized lega l
Our attorneys are participating more directly i n           research systems, such as FLITE, JURIS, an d
audits, rather than just reviewing report drafts . This     LEXIS . In the near future, Ave wi!I decide how to
intetaction between attorneys and auditors has              take advantage of available improvements in offic e
reduced the staff-hours GAO spends on its work,             machine, equipment, and facilities technology.

52
                                                                                                       LEGAL SERVICES



                                OFFICE OF THE GENERAL COUNSE L

                                                   GENERAL COUNSE L
                                                    P . G. DEMBLIN G                    SPECIAL ASSISTANT
       ASSISTANT TO TH E
                                                                                                TO
       GENERAL COUNSE L
                                                                                      THE GENERAL COUNSE L
       61 . F . FITZGERALD              DEPUTY GENERAL COUNSE L
                                                                                           J . A . C . STILLMA N
                                                     M . J . SOCOLAR




                                                                           LEGAL INFORMATION AN D
                                                                             REFERENCE SERVIC E
                                                                                  D. B . SMIT H
                                                                                    M . hl,CULLA
                                                                                    J . HATTE R
                                                                                    P . A . KUTYAN A




                              GENERAL                                                                   SPECIA L
                             GOVERNMEN T                                                                 STUDIE S
    PERSONNEL                 MATTERS               TRANSPORTAT H          PROCUREMENT                     AN D
       LAW                      LAW                      LA W                  LAW                      ANALYSI S

  F . H. BARCLAY        J. J. HIGGINS          I    F . H . UARCLA Y        I'. SHNITZER            R. R . PIE•RSON
    R . L . HIGGINS       R . H . LOWENSTEIN           L. M DICK              R. rl . STRONG           T. F . WILLIAMSO N
    E . J . MONSNIA                                                           S . EFROS


                                                                                                   SEPTEMBER 30, 197 6


   We are continuing; our summer legal intern pro-             tions of the Congressional Budget 011ice, the lega l
grain, established in 1973, which has helped reduc e           effect of spending ceilings and targets, and the scop e
the time and effort required to replace professional s         of the term "budget authority" for purposes o f
lost through attrition. This sear, about half Of Ou r          agency budget requests . We advised the. House. Ap-
new staff numbers will collie to us through this               propriations C'Onwrittee on the legality and propriet y
program .                                                      of actions which the Department of the Army pro -
                                                               posed to take to cure oterobligations of almost $20 0
                                                               million in fora' of its procurement accounts . W e
General Government Matters                                     issued opinions to several committees on the lega l
                                                               implications of the National Railroad Passenge r
                                                               Corporation ' s (ANITRAK's) acquisition of the north -
  During the period of this report, our attorney s             east corridor railroad properties and its ensuin g
responded to hundreds of questions--from the C'on-
                                                               dispute with the Department of Transpm Cation . NY C
       ageneies, GAO, and the public in,ol,in g
                                                                advised another committee on the propriety of
complex and controversial legal issues arising fro m            certain payments made to the States by the Depart-
the full range of governmental activities .
                                                                ment of Health, Education, and Welfare under th e
  The largest number of n_ues-tions came from con-
                                                                \Icdicarc and Medicaid programs.
gressional committees and Ntembers . Thus, at th e
request of a committee, we interpreted the provision s             Several responses concerned the availability of a
of the Congressional Budget and Impoundmen t                    Federal regulatory agency's appropriated funds to
Control Act of 1974 and defined the scope and func-             aid representatives of indigent consumers and other

                                                                                                                        53
     LEGAL SERVICES

       prospective intervenors in regulatory proceedings ,         changed the Federal fiscal year to end on Scptem-
       where such participation was necessary to resol ve          her 30 and, where appropriate, recommended legis-
       the matters before the agency . We also answered           lative changes to eliminate difficulties .  -
      questions from three committees about the inde-
      pendence, under the Federal Advisory Committe e
      Act, of advisory committees ris-a-ris their paren t         Procurement La w
      agencies .
         Par individual Members, we responded, for ex -             The Procurement Law division processed 2,46 8
      ample, on the legality of spending public funds to
                                                                  legal matters i nvolving the Governmen t' s acquisition ,
      rescue the American merchant ship, Afayguec, as
                                                                 lease, sale or disposition of its goods, set ices, equip-
      well as the Armed Force s ' use of such funds to evacu-
                                                                 ment, buildings, or other facilities . Of these matters,
      atc American citizens and foreign nationals fro m
                                                                 72 percent, or 1,785, were bid protest submissions, in
      Vietnam . The Megaguez decision was, for us, a land -
                                                                 which parties aggrieved by agency procuremen t
     mark case ; it was the first time we interpreted th e
                                                                 actions sought redress through our relatively speetl y
     War Powers Resolution and its impact on Presidentia l       and inexpensive procedures . The remaining 28
     potters . We explored possible legal loopholes i n
                                                                 percent, or 683 cases, involved other questions withi n
     current acreage limitations on mineral leases on lan d      the division's broad jurisdiction . (See table 3 . )
     which is in the public domain . We also wrote a deci-
                                                                      Because of our expertise in bid protests, the Federa l
     sion on a controversial requirement of the Environ-
                                                                  judiciary requests our services in court action s
     mental Protection Agency compelling the use of
     recyclable beverage containers .                              brought against contracting agencies by disappointe d
                                                                   bidders. In one such action, the U.S . District Court
        Our next largest number of inquiries carne fro m
    GAO divisions and offices . We helped the Genera l            for the District of Columbia asked its to consider i t
                                                                  dispute between a contractor and the Department of
    Government Division review the Postal Rate Com-
                                                                  the Navy. This case, which involved a cost-rciniburse-
    mission's rate-making process, resulting in recom-
                                                                  mertt contract for recruiting advertisement serv ices,
    nnendations to resolve rate-associated questions faste r
    and shorten administ rative proceedings . We helpe d          was novel in that it concernccl a prinnary dispute betwee n
    the F-Itunan Resources Division answer question s             the contractor and the Navy, as well as it dispute be-
   from it congressional subcommittee about HEW's                 tween the Navy's procuring office and higher agenc y
                                                                  levels . The -Nary had decided to awa id the contrac t
   administration of the Aid To Dependent Childre n
                                                                  to a firm which had received it lower technica l
   and Medicaid programs . We are assisting that divisio n
   and our International Division on it report, mandated         evaluation score than its competitor but which ha d
   by- statute, on the effectiveness of the Trade Act o f        submitted a lover bid . The procuring office favored
   1979 . We are aidin .q the Financial and General Nlan-        awarding the contract to the competitor, whos e
                                                                 evaluation score and price were higher. We uphel d
   agentent Studies Division in its review of Depart-
                                                                 the Navy's decision, finding that the competin g
   ment of Defense and other agency accounting prac-
                                                                 proposals were essentially equal . (B-184825, May 14 ,
   tices and in its revision of Budgetary Defindiota-
   the glossae- of standard terms and definitions use d          1975 . 1
  by all Federal agencies to supply accounting informa-             In another case, decided at the request of a U .S .
  tion to the Congress- We have also advised the Com-            District Court, we upheld an Army decision to use i t
  nuunity and Economic Division on problems arisin g            machine gun of foreign manufacture . Its decision t o
  from the use of irrigation water supplied by Interior' s      award a contract to the foreign manufacturer and not
  But call of Reclamation _                                     to a domestic concern violated neither the Buy Anted -
      Agencies asked our help on many complex issue s           call Act nor applicable procuretent regulations .
 involving the application of " continuing resolution "         (B-186276, Aug. 20, 1976. 1
 autltorit\ - in particular circumstances . Many of thes e        The basic procurement statutes specify using for-
 were resolved informally- and per}- quickly; to insur e        mal advertising procedures to obtain goods o r
 continuation of important programs that were jeop-             services, unless a particular exception justifies ne-
ardized by ambiguities in resolutions which applied t o         gotiation and formal advertising is not feasible o r
 them . Similarly, we issued a number of decision s             practicable . Therefore, we recommended that th e
interpreting tile " transition quarter' legislation which       General Services Administration not extend o r

54
                                                                                                                  LEGAL SERVICES

                                Table 3                                     renew its existing janitorial contracts, which ha d
               I1I1) PROTEST ACTIVITY                                       been awarded by negotiation, and that it study th e
                                                                            possible use of formal advertising for future janitorial
Ui,ptsifion of cs(rs b ;wdlcd :
     14utrsts sustaiuctl	                                            119    contracts. (B-184186, reb . 3, 1976.) Because of
     14ufcsu danicd	                                                889     widespread federal contr acting for janitorial services,
                                                                            this decision should have in impact throughout th e
       'Fund bid prnttsu elr~       .1	                             978
                                                                            Government.
     )%Quest tvitbdraArn brlim• dceision - _ . - - -                917        More and more frequently we handle the questio n
     N li .. .It :uuons dispusition	                                2115    of %vital security precautions are necded to safe -
     Protc.,b dismissed	                                              15    guard information in automatic data processin g
       'fund Jrridcd .. ithuvt )tent) dccisiun	                     W7      equipment . In a case involving the procureuu•nt o f
                                                                            data promising services by the federal Energ y
      'rend bid prod-st disposed of	                            1,711 5     Administration, Ave conclucit,d, after all independen t
                                                                            technical survey, that the successful bidder did no t
Uistrihwinn of Ill- su d—id(d furwAly :                        _-
     I)'-fense Supply Ag'."y	                              _         !)4    elect an informational security requirement .
     Doram,-At of thr .\it' Force	                                  12 2    (8-1711205, July 15, 1975 .) Events following th e
     Drparuucm of I[,, Al-up	                                       207     award of the contract proved its right .
     Ucp :u'ol-u of ill, MIA•y	                                     61 9       While Ave have traditionally maintained that th e
     Vann, Cures	                                                       t
                                                                            federal promurnlent system should permit maxi -
      'rural Dep :u'tnn-ut of Def—...	                               76     mum competition for Government contracts, we
                                                                            slid uphold a Navy decision to award it sole-source
    A4ency Inv Intrrnwiuual Devr•lopmtm	                               1
                                                                            contract for improving it nuclear submai inc sona r
    .\o lit"rt of due Capitol	                                          1
    0\ it Service Cutnuti .w.l	                                         I   system to the firm which had d—(—loped the origina l
    Connntn.ton oo (aril Righ	                                          I   system . The technical and delivery risks, couplet )
    1), parm—u of Agrivohll -	                                       33     with potentially higher costs, justilied the Navy 's
    Depat000w ul Cuuunerce	                                          26     decision . (11-18,1927, Apr. 23, 197 :1 .)
    Deparoucut of I Erahh, Education,and Wdf :ue .                   L'
                                                                               On the principle that all rompetions must kno w
    Doparuueut of I lunvug and Urban 1) .. . went	                      7
    M-parow-m n( the Imorior	                                        :1 0   about rhanges in the ground rules of a particular pro-
    n,pmooeo        4_iusfc,	                                           5   curement, Ave reroumuended that the Nationa l
   Dcpctnto,nt of Lahor                                                     Aeronautics and Space Administration terminate a
   Dvparot-o I[ State	                                                 7t   $2111i,I100,000 contract for purchasing liquid hydroge n
   Depamnrnt If Transport :ui(nI	                                    2 :1
   Dt partweut of the 'rrrsury	                                        it   for the space shuttle program . Sine- only the suc-
   District of Columbia Guru-r io-o 	                                20     cessful bidder had been told that its interest expense
   I'` M—l.mrnnd P-I-lw, l Ag,ocr	                                   I I
                                                                            would be reiuubursed in ;ill otherwise fixed-pric e
   E.—. A• Rese:trclt and Drvelopiue I , Athuntistra-
       oou	                                                            b    contract, Ave held that not all bidders had been
   Federal Communications Cuuunusion 	                                      given an equal opportunity to compete and tha t
   Federal Energy Adotinistr :tion	                                         negotiations should be reopened . (II- Ii14995, Feb. 26 ,
                                                                       I
   Go        ent Printing 011ie,	                                      7
   General !s rvices Athufoislr :uiwl	                              kil l    1975 . )
   Interstate Cutntnerce Cunu iLc ion	                                 1       On-bast- housing for military personnel is a n
   National Aeronautics and Spare Administration 	                   21     important factor in retaining these personnel and i s
   Mid-, Rcguladtry Counui .ion	                                      1
   S«-undies and E-li qgr C:wntois_,ion	                              I     a significant part of the Defense budget . Under th e
   sutall 11-ii— Adntinistratimt - -        .   . - - -	              14    principle that it is improper to award a negotiated
   Smithsonian h stitutiun	                                           1     procurement to a bidder whose offrr vaiies materiall- -
   'ILnnssec v:d1,y Aoltnrity	                             -          3
                                                                            front the specifications of the solicitation Acithou t
    United State. Court of Chins	                                       1
   United State.• hiforutation Agency . . .                             I   giving all bidders an opportunity= to compete on the
   \'etc-i is Adntinistratmit	                                       30     same terms, Ave held that the Navy had improperl y
      Total other than Department of Defense 	                      40 2    awarded a contract by not adhering to this principle .
     -rutaf protests rtrtnally devilled 	                           978     (B-182979, Sept. 12, 1975 .) This decision will affec t
                                                                            the Navy's turnkey housing program .

                                                                                                                                  55
     LEGAL SERVICE S

    By late, the District of Columbia is authorized to         agency may establish a nondiscretionary-, valid policy .
 satisfy its needs only by soliciting competitive bids o r     Under this principle, an agency may implement a n
  by interagency agreement . The District, however,            arbitrator's award which determines that the agenc y
  entered into a noncompetitive arrangement to provid e        violated the provision and, save for such violation, th e
  reproduction services with a firm which had received         employee would have received the benefits contem-
 a contract for the identical work with a governmenta l        plated by the agreement .
 entity . We found this arrangement to be invalid ,               Thus, the have held that, because the Interna l
 despite the fact that the terns of the arrangemen t           Revenue Service provided a time frame for career -
 were identical to those set out in the valid contrac t        ladder promotions, certain IRS employees wer e
 with the agency. (B-183706, B-184.115, Nov. 17 ,             entitled to retroactive promotions and back pay whe n
  1975 .1                                                      their promotions were not processed within the tim e
    More and mor e Federal grant funds have bee n             specified in the agreement . (55 Comp. Gen . 405
 made available in recent years to defray the cost o f         (1975) .) So, also, we upheld an arbitration award o f
 activities conducted at the State and local levels .         2 hours of overtime pay because the Federal Aviatio n
 A substantial part of this money fluids procuremen t         Administration had agreed to provide 2 hours o f
 contracts . To insure that these contracts are awarded       such work, but in fact had only provided the employee
 according to the law, appropriate regulations, an d          with 1 hour of overtime . (55 Comp. Gen . 405 (1975) . )
 the grant instruments themselves, on Sclucunber 12 ,         We agreed with an arbitrator 's award compelling
 1976, we advised all persons interested that we woul d       FAA to provide parking facilities for employees
consider complaints concerning such awards . In di e          because the agency had previously found that suc h
past vear, we have decided a number of such cases             accommodations were necessary for its operationa l
on their merits, some at the instance of Federal an d        efficiency . (B-180012 .02, June 25, 1976 .) When a n
State courts.                                                agency- changed its basic work week without consult-
   The C.S . budget for fiscal year 1966 allocated less       ing with the union, as provided in the agreement, we
than SIS billion for all governmental grants : however ,     held the award of overtime by the arbitrator imprope r
the funds dedicated to this purpose rose to more tha n       in the absence of it finding that, but fer the failur e
855 billion during the 15 months ended September 30 ,         to consult, the change in the basic work week woul d
1976 If this rend continues, we anticipate that ou r         not have occurred . (55 Comp. Gen . 629 (1976) . )
review of contracts under grants will become a sig-              While we have, in such situations, approved com-
nilicant part of our workload and will enable us t o         pensation for the employees affected by the agency's
accomplish tangible governmental economics .                 actions, we have not upheld awards of punitive dam -
                                                             ages to the union for the agency's violation ~ . the
                                                             agreement . (55 Conhp . Gen . 564 (1975) . )
 Personnel La w                                                  IRS detailed an employee to a temporary duty pos t
                                                             and required her to choose between a temporar y
                                                             promotion or per dieun during the detail . The em-
Civilian Personne l
                                                             ployee chose per diem. We held that the agency erre d
    Federal civilian employees entitlement to th e           in requiring the choice and that, since the employe e
 rights, benefits and perquisites of Federal chnploy-        would have been promoted temporarily but for thi s
 ment is governed by a complex variety of statutes and       improper action, she was entitled to a retroactiv e
 regulations . When an agency questions paying al l          promotion with back nay . (55 Comp . Gen . 836
 employees entitlement to compeasation, allowances ,         (1976) . )
 differentials, or other benefits, the agency may reques t      We have finished revising our civilian pay and leav e
 an ach-ance decision from the Comptroller General .         manuals which set out the laws and regulations o n
 Additionally, an employee who believes himsel f             personnel matters, as well as the GAO decision s
 entitled to a particular pay nicat may pursue his clai m
                                                             interpreting them. These manuals are used throughou t
 through the agency's request or file the claim wit h
                                                             the Government . Their printing and distribution i s
 GAO .
                                                             scheduled for early 1977, and revisions to simila r
   Our attorneys have responded to many questions
                                                             manuals covering travel and relocation expense s
inyoh-ing labor-nnanagentent relations in the Federa l
sector. In it collective bargaining agreement, in            will begin soon.

56
                                                                                                    LEGAL SERVICES

 Military Personne l                                           accurately established these points . (B-115800, B-
                                                               117604, Aug. 17, 1976 . )
    \Ientbers of the Armed Forces and commissione d
                                                                  Lt the other instance, we considered the appro-
 officers in the National Oceanographic and Atmos-
                                                               priateness of suspending reflection action in deb t
  pheric Administration and the Public Health Serv-
                                                               cases where the debtor has asked that his debt b e
 ice arc subject to various circumstances, before an d
                                                               waived under a statute authorizing this under certai n
 after retirement, which affect their pay and allow-
                                                               circumstances . Working with our Cla ;nts Division,
 ances . Differences in pay can result front length o f       we concluded that suspension would be proper when
 service and the types of duty involved, such as dut y
                                                               a reasonable possibility existed that the waive r
 in an area of critical skills, hazardous duty, and over -
                                                              would be granted ; when the Government's interes t
 seas duty. Individuals most be reimbursed for trave l        would be protected ; and when collecting the deb t
 costs while on temporary duty or for expenses inci-
                                                               would cause the debtor undue hardship . (B-185466 ,
 dent to changes in their duty stations. Retirement
                                                               Aug . 19, 1976 .) Taken together, our decisions shoul d
 pay is based on a number of factors, and individual s
                                                              save the Armed Forces significant time and money
 can choose reduced retirement pay to provide survivo r
                                                              in their collection efforts.
 protection.                                                      The Departments of Defense and Health, Educa-
   The laws, regulations, and instructions which gov-
                                                              tion, and Welfare administer millions of dollars in
 ern these benefits cannot specifically cover all even-
                                                              variable incentive pay and continuation pay fo r
 malitics ; our primary responsibility is to determin e
                                                              personnel who are in a critical shortage category.
 pay entitlement in questionable circumstances . Ou r
                                                              We advised our former Manpower and Welfare
 kno vledge in this field enables its to advise the Con-
                                                              Division (now the Human Resources Division) on lega l
 gress, governmental departments or agencies, an d
                                                              questions it encountered in reviewing the problem s
 other GAO divisions about this subject . Often we are
                                                              of recruiting and retaining physicians and dentist s
called upon to suggest legislative and regulator y            under these programs.
changes to effect a more efficient and equitabl e
                                                                  We received several inquiries concerning th e
systent of compensating these Federal employees .
                                                              applicability of the constitutional provision that n o
   Lt response to several congressional inquiries, w e
                                                              person holding any office of profit or trust under th e
reviewed and analyzed some potential conflict-of-             United States shall, without consent of the Congress ,
interest cases under the statutory provision whic h
                                                              accept any present, emolument, office or title of an y
requires a retired officer, under certain circum-
                                                              kind whatsoever from any king, prince or foreig n
stances, to forfeit his retirement pay if he does busines s
                                                              state We have long held that this provision require s
with the Government . The individuals in question
                                                              a former member of the uniformed services to forfeit
were employed by private concerns which sold to th e
                                                              his retirement pay if he accepts employment with a
Government . Additionally, we assisted our Procure-
                                                              foreign government without consent of the Congress .
ment and Systems Acquisition Division with a n                At the request of a congressional subcommittee, w e
ongoing review of Department of Defense procedures            coannented on a bill which, if enacted, would, tinde r
to jctect and prevent such conflict of interest . W e
                                                              certain circumstances, confer consent of the Congres s
expect our review• to lead to strengthened procedures .       so as to allow foreign employment without loss o f
   We received invaluable assistance front other GA O
                                                              retirement pay.
divisions in two cases involving the establishment o f            The Survivor Benefit Plan of 1972 provides annuitie s
criteria for collecting debts owed the Government b y         for dependents of retired members of the Arme d
Armed Forces unendters . In one case a ouninum r
                                                              Forces who are deceased . We have answered numer-
amount was set so the services would know whether t o
                                                              ous questions about the Plan, such as its applicabilit y
u y collecting from debtors no longer on active duty .
The Financial and General Management Studie s                 when a retiree waives retirement pay to receive a
Division, the Claims Division, and the Field Opera-           civil service annuity (B-185453, June 11, 1976) or
tions Division, by analyzing the cost data and cos t          Veterans Administration compensation (55 Comp .
accounting aspects of the issue, helped us conclud e          Gen . 684 (1976)) ; or problems involving the revoca-
that, while we agreed with the use of reasonabl e             tion or correction of annuity elections under th e
methods of establishing points of diminishing returns ,       Plan (55 Comp . Gen . 158 (1975)) ; or the applicatio n
we were not satisfied that the Arnted Forces methods          of cost-of-living increases to the amounts on whic h

                                                                                                                    57
     LEGAL SERVICE S

 annuities tinder the Plan are based (B-184874 .                    In another case Ave held that LASH (Lighter
 Sept. 9, 1976) .                                               Aboard Ship) services furnished cooperatively by
    In another decision, Ave held that the Secretaries of       domestic vessels and foreign-flag vessels to delive r
 the Armed Forces could issue regulations authorizing           Government cargoes to Chittagong, Bangladesh,
 civilian and military employees to travel at Govern-           violated the Cargo Preference Act of 1954, and that the
 nnent expense to receive non-Federal honor awards,             peculiar geographic limitations of the port, offered in
 but only if the awards arc reasonably related to their        justification of the combined service, could not b e
 duties. This authorization, however, did not extend            used to circumvent the act .
 to dependents accompanying the employees . (B-                     Answering a question about the propriety of payin g
 183110, July 29, 1976 .)                                      claims presented to the Military Scalift Command, Ave
                                                               held that the 3-year statute of limitations set forth i n
                                                                the Transportation Act of 1940 applies to the Com-
 Transportation Law                                            mand's shipping and container agreements because
                                                               a subsequent amendment expanded it to include al l
                                                               carriers and all contracts and agreements . (A-24222 ,
      While the General Accounting Office Act of 197 4
                                                              Jan . 21, 1976 .)
   transferred to GSA GAO's function of auditing and
                                                                   We held that all ocean carrier which had issued a
   adjusting payments to carriers and forwarders furnish-     joint tender with a motor or rail carrier, subject to a
   ing transportation to the Government . the act gav e
                                                               3-year statute of limitations, could not assert its
   the Comptroller General the right to review GSA 's
                                                               claim after the land carrier' s 3-year period expired .
  actions regarding this function . Additionally, GAO          (B-183940, Aug. 27, 1975 )
  continues to receive claims by carriers and forwarders           We upheld the Government interpretation of read-
  tot- loss of or damage to property ; it also oversees the
                                                              justing contracts for transpor ting fuel in pipelines in
  use of travel agencies in procuring official travel .
                                                               a case .-here the carrier's intent was plain on the face
  We also provide advice to enforce and implement
                                                               of its offer ; it received a fair return on its investment ;
  the provision of the Merchant Marine Act of 193 6
                                                               and, had the offer been ambiguous, it would have been
  which requires using American flag vessels for trave l       construed strongly against the carrier, which authored
  on official business and the similar provision in the
                                                               it . (B-183503, Sept . 2, 1976. )
 International Air Transportation Fair Competitive
  Practices get of 1974 which requires using America n
 flag air carriers, when available, for Government-
                                                              Special Studies and Analysis
 financed freight and passenger transportation .
     Perhaps the highlight of the year for its vcas the
 settlement by one of our attorneys of the so-called              The Special Studies and Analysis division serves
 Household Goods Cases . These involv ed 894 separat e         as the "inhouse " counsel for GAO 's offices and divi-
 lawsuits cowering 900,000 shipments of household              sions. Its contribution to GAO's audit and evaluatio n
 furniture, with carrier          claims    totaling over      work is demonstrated by an increasing number o f
  $100,000,000 . After innumerable conferences an d            matters of ever-grooving complexity referred to it .
 negotiations with attorneys for the carriers and Gov-            The division has helped draft legislative proposals ,
  ernment auditors and attorneys, and after extensive         one of which resulted in the United States Grai n
 investigation of the claims, our attorney negotiated          Inspection get of 1976 which established a new grai n
 a $16,500,000 settlement, far below the judgmen t             inspection system . It helped amend the Architectura l
 value assigned to the snits .                                Barriers Act and facilitated access by handicapped
     For the first Bute, Ave appeared before the Interstate   persons to Government buildings . It also participate d
 Conunerce Commission in its regulatory rule-makin g          in matters of policy which did not result in new legis-
proceedings . Relying largely- on our information, ICC        lation . For example, the GAO report on FBI domestic
issued a rule requiring motor carriers to justify an y        intelligence activities led to the Attorney General' s
published tariff exceptions or commodity rates pro-           curtailing such work substantially .
ducing charges in excess of the classification basis.            The Special Studies and Analysis division monitors
(B-183117, 1976 .)                                            executive branch compliance with the provisions of

58
                                                                                                      LEGAL SERVICE S

    the Congressional Budget and Impoundment Contro l          Legal Information an d
   Act of 1974 serving as the basis for the Comptroller        Reference Servic e
   General' s reports on executive branch rescissions an d
   de(crrals of budget authority. These reports cover al l
                                                                  The three sections of the Legal Information and
   actions proposed by the President and include detect-
                                                               Reference Service—Index-Digest, Index and Files,
   ing and repor ting those budget actions required to
                                                               and Legislative Digest—provide a complete support
   be, but not, disclosed to the Congress by the executiv e
                                                               service to help GAO attorneys and the stabs of othe r
   branch . The first lawsuit commenced by ttte Comp-
   n'oller General under the act was settled November 25 ,     offices and divisions carte out their daily work . We
                                                               issue numerous periodicals which keep GAO, othe r
   1975, when the Secretary of Housing and Urba n
   Development agreed to release impounded funds for           Government agencies and departments, interested
                                                              organizations, and the public informed of legislative
  the homeownership assistance program under sectio n
                                                              or legal developments which might affect then[ . We
  235 of the National Housing Act .
                                                               distribute advance copies of decisions and digests ,
      The division also gives legal advice within GAO o n
  the Privacy Act and the Freedom of Information Act .         prepare monthly pamphlets summarizing decisions i n
                                                              specific areas, publish an annual volume of decisions
  Although GAO is not subject to either of these acts ,
                                                              which illustrate novel or significant points of law or ar e
  GAO has regulations governing access to its records ,
                                                              otherwise interesting and applicable throughout th e
  nuclei- which legal questions arise, and much of the
                                                              Government, and serve as the GAO clearinghous e
  information GAO receives and uses in its work comes
                                                              for collecting and distributing legislative material s
 from agencies subject to bolt acts .
                                                              introduced in and being considered by the Congress.
      'fire division has developed three new serv ices fo r
                                                                 The decisions of the Procurement Law division ar e
 GAO's other offices and divisions : a regional office
 prograun, the OGC Maser, and inhouse tr aining               available on a regular basis for commercial publica-
                                                              tion . Additionally, we forward all our decisions
 proguuus. Under the regional office program, our
                                                              systematically- to the Air Force Accounting and Fi-
 attorneys periodically visit GAO regional offices to
                                                              nance Center in Denver, to be included in its com-
 provide direct legal advice on problems and to con-
                                                              puterized legal research system, Project FLITE
 sult with personnel on their work projects . The OGC
                                                              (Federal Legal Information Through Electronics) .
    fdriser is a publication circulated to all GA O               Tire Index-Digest section annotates and cross-
 prolcssiunals to provide information on legal matters        references all GAO decisions, maintains an elaborate
 useful in ongoing GAO audit work . Members of th e           card index systenn for locating then, provides persona l
division help prepare and teach courses for GAO's             and telephone research services on demand for th e
 professionals to help them with the legal implications       public, and upon request furnishes free copies o f
of their [cork .                                              decisions . During the. 15 months the section responde d
     Aitoncvs in due division helped to get audi t            to 5,318 individual research inquiries and sent ou t
agreennents with NATO countries in connection wit h           63,318 copies of our decisions .
 6ttrupean production of the F-16 fighter aircraft an d          The Index and Files section logs, indexes, cross-
the Roland missile Access to records agreement s              references and processes all incoming and outgoin g
were also negotiated with the Federal Reserve Board ,         letters and prepares daily reports on significan t
due Comptroller of the Currency, and the Federa l             matters for GAO's ollices and divisions . Durin g the
                                                              period of this report, the Index and Files employees
Deposit Insurance Corporation in connection with a
                                                              processed 72,738 pieces of incoming correspondence
congressional request to audit these agencies (see
                                                              and sent out 22,:195 decisions, reports and letters .
page 3) . Division attempts to get access to tine records
                                                                 Its the same period, the Legislative Digest sectio n
of contractors participating in the Department o f
                                                              opened 11,964 legislative history files on public an d
Housing and Urban. Development's experimenta l
                                                              private hills introduced in the first and second session s
housing allowance program stirred the social scienc e
                                                              of the 94th Congress and processed requests for reports
research community and resulted in a conference o f           on 426 bills from committees and \[embers of
social scientists, chaired by the Comptroller General .       Congress.




                                                                                                                     59
                                                                This Division is directed be Donald L . Scantichurv,
                                                               Director, and Harold L. Stugart, Deputy Director.


                                                               Approval of Agency
                                                               Accounting System s

                                                                 The Budget and Accounting Procedures Act of 195 0
                                                              requires the Comptrolle r Gene ral to approve ex-
                                                              ecutive agency accounting stems when he lintl s
                                                              them to be adequate and in conformity with th e
                                                              principles, standards, and related requirements pre -
 CHAPTER FIV E                                                scribed by him . The act also provides that GA O
                                                              cooperate with executive agencies in developing thei r
                                                              accounting systems. The approval process consists o f
                                                              first revietring and approving the principles and
                                                              standards under which the systeur is to operate an d
                                                              then evaluating and approving the detailed design o f
                                                              the system.
 FINANCIAL AND GENERAL                                          Accounting principles Will standards for 3 agencies
 MANAGEMENT STUDIE S                                          and designs for 32 systems evere appruvcd (luring the
                                                              la-month period ended September 30, 1976, a s
                                                              shown in table 1 .
 Responsibilitie s
                                                               Accounting Principles and Standard s
   The Financial and General Management Studie s
 Division                                                        Sinety--eight percent of the accounting systems no w
                                                              have approved principles and standards . Of the I I
      ---helps Gmerntncut agencies develop accounting
                                                              Federal departments, 10 have had principles and
         systems that meet the principles and standard s
                                                              standards approved for all their accounting systems .
         prescribed by the Comptroller General, wh o
                                                              The Department of Agriculture has had principles amt
         approves satisfactory systems ;
                                                              standards approved for all but 1 of its systems . (Sr i
      --revicys acne- accounting systems in operatio n
                                                              table 2 .) Only 4 other accounting systrnrs lar k
         and settles the accounts of accountable officers ,   approved principles and standards .
         except for military disbursing ollicers (whos e
         accounts are settled by GAO's Field Operation s
         Divi-,ionl ;                                         Accounting System Design s
     ---reviews automatic clata processing activities o r
         programs throu ,_hout the Government -                   Twenty-three of the additional approved accountin g
                                                               system designs were for the Department of Defens e
     ---provides expert technical and advisory services to     and nine were for civil departments and agencies . "Fhc
        otter GAO di .-isions and offices in automati c        percentage of system designs approved by the Comp -
        (lata processim_ systems analysis, actuaria l          troller General remained at 52 percent. This resulted
        science, and statistical science ;                     from an increase from 286 systems on June 30, 1975 ,
     - -promotes the improvement of auditing of Federal        to 338 systems on September 30, 1976, identified a s
        and ft-deralk assisted programs at all levels of       being subject to approval . (Svc tables 3 and 4. )
        ,mernment--Federal, State and local ;                    Most of the increases were in the accounting system s
     ---reviews the activities of the Securities and Ex-      of the military services, primarily the Department o f
        chan,c Couuuicsion : and                              the Navy. Further increases are expected in th e
     --participates in thc , loi,u Financial Managemen t      Department of Health, Education, and Welfare an d
        Improyeutent 1'10,ram .                               in the District of Columbia .
60
                                                                 FINANCIAL AND GENERAL MANAGEMENT STUDIES



                    FINANCIAL AND GENERAL MANAGEMEN T STUDIES DIVISIO N


                                                         DIRECTO R
           SPECIAL                                                                                  PLANNIN G
                                                 D • 1-• SCANTLfiIiuRI'
        ASSIGNMENTS                                                                                 ASSISTANT
             it
          N . . RAAUM                             DEPUTY DIRECTOR                                    N.N . MF:NTO
                                                    FI .L . SI'UGART '




I   FINANCIAL MANAGEMENT
         12 .11'. SIAI'ClY' R
                                 I                                                    I       AUTOMATIC DATA                I
                                                                                                PROCESSIN G
          J .J . DONLO N
                                                                                                  W.L. ANDERU1N
          J .r. o1.IV F: R




    ACCOUNTING SYSTEM S
       IN OPERATION
                                                                                      I       AUDIT STANDARDS
                                                                                                F .11. 1)A V 1':N {'ONl '
                                                                                                                            I
                                                                                                     I; .I. . N1 :AN
          n.('. KLNSK Y
                                                                                                      R .J . RVA N




    TECHNICAL ASSISTANC E
                                                                                          SECURITIES AND EXCHANG E
           GROU P
                                                                                                 COMMISSIO N
          J .I ., uoV O
          F" .11 . DANA
          F . nF. NTIL F
          K .n . JONES
                                                                                                      NF PTF:MIIF:N 30. 197(,


Reviewing Accountin g                                         Cost Recoveries o n
Systems in Operatio n                                         Foreign Military Sales
                                                                  In 1)     bee 1971, -- mld the Srrrr l:ny of
     HIV Budges and :\rrounligg I'rorcdmrs r\rl o f
                                                              I), .I r that Ili• Air Forcc did nut rfruv)•r m least
111311 rcgoires ( ; :\() n) review, Ironl till". I') Bolt•,
                                                              $5.7 million in )uses iurnrrrd in training finvig u
e..lrutivr agcury accounting systculs in operation .
                                                              students nudrr Ihr f--igu mililmy saps progr :u u
We ascertain whether accounting systems have her o
                                                              dnriug lisc:d year 1'975, primarily brc:ulse it used
ingllenu•uted and arc operalinq i q accordance wit h
"Lc principle . and st :md;trds aid designs approve d         nliliun rates .ahirh	      nom uusly )onlnncd i t
by the Cuugrirollrr (~enrra 1, and make rerunuucnda -         nbsulrtr .
tions in onr reports to (. Vert needed illyn) - .-ents.           Acting on unr te.. .mlru•ndations, the Air 14)rc c
    During lisral year 19721 and the 3-month lo-ansitio u      made changes t, their billing sysll-m to insure that
period, we prepared 3-I reports on accountin g                 rurreut tuition rates are used . We estimate that, as a
systems :md livancial ulanagcnt('nt activities . Semi          result or these changes, the Air Force will rolh•ct a n
tnTe snbu"irted to th. Congress, its rumluiltees, or           additional 517 .3 million fn- training provided durin g
 \rcnlbers, and 27 were sent to agenry olhcials .              fiscal year 1976. In addition, the Air Force is Iebillin g
 Some of these reports are sunuuarired below .                 foreign goyernnl .its to recover about S4 million i n

                                                                                                                            61
         FINANCIAL AND GENERAL MANAGEMENT STUDIE S
                                                             TABLE 1
                                                                                                        App—al date
                                                                                                   Principles
                                                                                                      and        S\stem
                                                Civil departments                                  standards     design s

         Dep :ufluent of health . hduc.omn .and 1\cltlu c
           National hi,111trte, of l le :ddl . Adwmi,Ilainc Accoumin_	                                           1,   11 7 6
         Dcpnrtulant of the huerial :                                                                                       -
                                                                                                                q "1 ? .
           11me :n, of Mille .. .	
           Miunle Lnt~n :rmam Ind ti:,tct \_ \dorm""' . ion	                                                6
         Dep :utnlent of Ju,ti :e :
                                                                                                                 1 2S; 7 6
           L :1\\ Fivoicemom As,Nancc :\ i llinnu .luon . Adminuuatice AcCOUntine	
         Departntent of State -
                                                                                                                ' 1.2X7 0
           A, ene\ Im Imenlaiona] De\clopnlent, Xnle-n1 Pa,-loll	
         Depaitntent of T,mil po,imion :
           Felicia]Raihoad Wimni,tlation                                                                         (' ;2 `17 6
            hansy,nt :nion S\,tanl, Centel	

                                                Independent agencies
                                                                                                                 9!_'7'70
        ('I%il Aeronautic, Bond . Ri\ioll	
                                                                                                                 :- 16'70
         Farm Credit Adnunislimion	
        Federal Fllel`!\ Adiiiiiii,tl .ltmn	                                                           ](
                                                                                                                 11   _X
                                                                                                                      1 7h
        \•eler .nl, Adlllllliillallon . \lollCleo I .o.ut ] 'M,LInI	

                                           Vilitar\ department s
 Deparouent of the :\n Fol re :
     Depannleut Stock Fund S\,tem	                                                                               1 -3 74 ,
                                                                                                                  I %21'71 ,
     General and S ,, Aem, Support Stock Fund . Di\i,ion Office	
                                                                                                                      V71 ,
     Fuels Stock Fund . [)I\ Won Of five	
                                                                                                                  1!_ ;7
                                                                                                                      ; 0
    ('lothine Stock Fund . Dni,ion Office	
    General and Sui 911 Support Stuck Fund . Corinudud Odic:	                                                          :17 b
	1                   "3
     Base Foci NlslenelS      .-amt 	                          ~_- - ----~	                 . ..                     ;7( ,
    Civil Ln_inear Co" -s' 111111	                                                                               3-1'71 ,
                                                                                                                           70
    (i\di:ul P :o roll	
    Mfln ll\ Aliclatt Stor .,_c and Dl,posiumi (enter (o,l Blllin. , S\ stem                                     "2?'7 0
      Airlift Services hnhn(rial Fund S_\,tem	                                                                   61] 7170
    Deparunenul hldu,tnal Fund S_\,tem 	                                                                         9 -' I 1 7 0
 Department „I the Arlll\ -
    Te,t and kAiation Ac U\nie	
 Depaltlaenl of the \ :I\ \
    lndusi ial Fund . Oidn :mce A\ thilie\	                                                                      tit 0'76
    General r\eommin_ at \Iur1110 Corp, Acti\itie, 	                                                             R! 1Ill76
                                                                                                                 011 U R,
    Joint Lnifonn Miliiar\ Pa\' S\,tenl	
              '                            In
    \a\ al Acadelll\ \hd,hlpinen a% S\,Kill	                                                                     Ulf, .-
                                                                                                                 9•_-1'7 6
                                                                                                                            6
    \ar:d [duration and l r :unin_ (ontlnand . Command I e,cl	
    \onmeeh :mired ( mninand Le\el S\ 'will	                                                                     1)21,76
    Fariliue, Lmsmeeim__ A\ ti\iues . ("r\ihan Pa\ roll	                                                             1'7 0
    General Accounim- Flect IAir). Field Le\cl	                                                                  9 '_1'70
    Geuctal A,counun_at \onnrccham/ed Re„puce \Lm c               jl mem S\dent Arli\ilie,	                      9"_-17 6
    hidtlstllal \ :1\;11 All Slatl„11, . (1\'111all P:I\ roll	                                                   9 28 76
 Off i,e of Secietai\ mid Defenw :\gencle, :
    Xauonal Sccunt\ :\_enc\ Central Seamr\ Servjae 	                                                             9 2447 0

       °Reappro\ :d

       62
                                                                FINANCIAL AND GENERAL h1ANAGEMENT STUDIE S
                                                                                         .11;1I   ;

             APPROVAL STATUS BY DEPARTMEN T                         ACCOUNTING SYSTEM DESIGN S
                   At September 30,1976                                SUBJECT TO APPROVAL




0 .11	                                                             I- .] MIAPPROVt P
                                                                          APPROVI1)



                                                               Mortgage Insurance Premium s

costs not prt•\io ish rhar~rtl hrcausc onldawd mi d                 I'hr Urp .trltuunl of Iluusiug :uul t'tkill ILtclop-
inrurrrrl mitiun r ;nrs t\cn• used . (FG\ISD 76 21 ,           nn•nt iu-~~ trs lcudcl . agail Ol IUUCY oll Ilumr lnort{~et ;rs
1A•r . I, I97?. 1                                              g u .0 autrrd nudrr a uwnbrr nt Frdrlal 111 uglants .
    lu ,iuh 1!)76 t.c inturnicd Ibr tirrn l :u~ ul Ih livs c   'I hr hone nttuots p .n insuran rr [,I, "num   ., uI . . . . u t
                           I lakru u l rrruunncudutiuu s        the Irndel" Ohp Irmil Ibc Inrminuu It, lltc Ilcp:nl-
th .n no ,trliuu had I
                                                                lilrnl t\hcu hillcd tit . thrtn . 'I hr Urp:utuuvl i s
ut .ulr h \ the 1)"I'aliutrnl•+ ioirrnal auditors tha t
                                                                sllpposrd to hill Ihv lendcrs ;uuurdh :uul Inllot. np b t
I I'- a stud\ hr -add lu inst .. .. that all hosts oI In -
                                                                s.c Ilim dw hills my P aid .
\idinl n•chuic l assistance : id mliniu ._ to thew-r d
                                                                    In \Ia\ 1976, — itdinv .(A the S"I IIlal) ul I loanin g
corr.., of Iran me idcnlilied q nd (2) rri ul I'll nrmro t
                                                                :md L rb;m D-ch,pmrnt than Illomaud . of mo't-
for snrh rusts hr uhlainrd .Fhr audilurs rstituated
                                                                gagrrs t\rrr drliutlucut iu p :t~-iug inwr :ttur prrutiuul s
that about ~18 utilliuu ill lisral scar 1971, rust ..            .unounting at nun-r Than `..211 milli . . . 'I he Drpnn-
truuld nut he rcco\crrd uuh•ss such arliou is take . .           mrnt, 11". 10-c' t.as deoird the usr of III,w liutds n ,
    \\c rcronuncndrd that the Department of D"Ieus r           mcri plog'ant nrrds .
ulakc thr .study and lake snrh ulhcr actions as ar c              \\'c n-couuncndcd that tic DupartUUrut iutpro\r it s
nerC35ary 10 loth' recover the costs I'm It•clmica l           sVStcm of acronuling mid billing , I", uumtga S c
a9Sistalicc and traieing ser\iccs Im"idcd it, Iran .           ilum'ancc prt•miums, I'lomptly culhrt d0intlucu t
WGAISU-Ili-ti-I, •huh- 13, 1971i .1                            accounts, and cumidt•r mhcthcr inwi—t should be

                                                                                                                            63
     FINANCIAL AND GENERAL MANAGEMENT STUDIES

                                                                                             Table 4

                                                                       STATUS OF :ACCOUNTING SYSTEMS

                                                                                                                                    D,ip.                           sabla't 6.
                                                                                                                                                                    sl9~n,ca1
                                                                                   Appror-    I       rappro"d         A14vord              t'tupnror-n1


     Civil deparunerin and .agelod-
           :Agriculture	                                                                      16                  1          it)                        7                  t    17
           Colnntcrce	                                                                         H                  -             7                       1                        it
           Health, Education, and Welfare	                                                    19                  -            .-                    11                        19
          I lousing and Urban Developilic-                    .    .                           I               -                I                       -                        1
          Interior	                                                                          19                -             12                       7                        19
         Justice	                                                                            13                -               H                      .,-,                     1 3
          Lahor	                                                                                              -               _                       -
         State	                                                                                7               -             4                        :t                      7
         Transportation	                                                                      H               -               7                       1                      It
         T--ry	                                                                              IH               -             IH                        -                   = Il l
         Esecutice Office of the President	                                                   4               -              4                         -                     .1
         Independent agencies	                                                               52               4             41                       15                        St i

           Total civil	                                                                  167                      5        119                     Sa —_—                  17 2

           Percent	                                                                          97               3            69                       11                    111 )


 Depanulcnt of Defense :
    -fir Force	                                                                              43               -            28
    .bale        . .              . . .                           . .                        29               -              -                     24                     12 9
    Navy (including the \larine Corps)                            . . .                      75               -            20                      -5 .1                   75
    Defense agencies 	                                                                       18               -             51                      13                     DI

          Total Defers=-e	                                                     _        165                   -            SH                    107         ----         Ili

          Percent	                                                                      100                   -            35                     la                      111)

 District of Columbia Government	                                                            I                -             -                         1                    1 1

          Toed all system-: .           .   - -   ,   , -   - -        ,   -            333                   1           177                    Inl                      33 H

          Percent	                                                                       98                                52=                      111      —_           hAl




     ~Snmhrr of±yflrms       n'ill      ndnc+lto-L<tclon plaue„l caev,lidations haw' I" n It ad r
                                     srA, nha= not I wo•„ i-la. I•d s, it v N i no-dtot .Ih .~FinancialAl,to- .000f lofnnnat iat :~'n ut, a n, tc aca .1          1 .",        'o
u tc le ing d .=fgn,.I c1hfd, "ill ioclud,~ ell of  If,, 11un-an of the Mon. Th, n- -1 . o L. 4~he,lul.-•1 (r r.mphto,a i u
       For tl:,. al., pats, th,s Fr ."        are no, prf 'll-A auto,ront —,s.
     ' Adoal uu:nh,r of a—untiog                   "of r,•t I ..t. rtuiord.



charged o ., delinquent payments . The Departmen t                                                 banks through the use of composite checks, whic h
told us it is following up on delinquent payments ,                                                saved the Government about $2.3 million . In our
taking steps to iniprore the accuracy of its billing s                                             review of the composite check program, we found tha t
and accounting, and exploring the feasibility o f                                                  additional savings were possible if more employee s
charging interest on delinquent payments . (FG\ISD-                                                participated in the program .
76-54, May 5, 1976 . )                                                                               agencies' efforts to promote employee participa-
                                                                                                   tion have varied considerably, with the Air Forc e

Composite Pay Check s                                                                              having 45-percent participation and saving abou t
                                                                                                   $1 .2 million of the $2 .3 million saved . Several othe r
 In 1974, about 19 percent of the Federal work farc e                                              agencies either had not implemented composit e
864,000 employees) had their pay sent directly t o                                                 check procedures or were using composite checks onl y

64
                                                                         FINANCIAL AND GENERAL MANAGEMENT STUDIE S




g„        q GAO der ,rs 7hr ,n ou„rng sr,rr,,, dni,,, d,,.u,„rnnu6,„ /~„ the U„h„nur :Irtiririn I luthini blind :eirh J~nrr f7„u ,,,,d Gnr y
         ulrrr .if the .\~„, C—pn~,lfr, .


u, a limited extent . If the Air Force's 45-percen t                  accounting system as bring used when in fact it tea s
partirip.uion rate were achieved ( ;overttntent-wide ,                not . Properly losses were not promptly reported an d
,in additional U million could be saved .                             investigated .
   In it November 1975 report to the heads of al l                        A, it result, large amounts of property were . not
Federal departments and major agenrics, we suggeste d                 under accounting control and wcte not shown i n
tliat more positive action promoting the use of com-                   financial reports ; equipment identical to idle equip-
posite checks hr taken and that the 1)cp :trtntent of                  ment already on hand was being poichased ; and the
Treasure assist agencies in promoting the program .                    reasons for property losses frequently could not b e
lF( ;MSD-76-11, Nov . IU, 1975 . )                                     determined .
                                                                          We recommended that the Administration main-
                                                                       tain accounting control over all property, promptl y
Property Accounting                                                    identify and investigate losses of properly, and main-
   lit jauuarr 1976, we reported to the Congress                        tain up-tu-date and accurate records showing whethe r
that major deficiencies existed in the Nationa l                        equipment is in use or is available for reuse in lici t
Aeronautics and Space Administration's propert y                        of new procurement .
accounting. At three space centers, equipment an d                         The Administration said it will emphasize th e
material \'allied at $I+t million had been oil hand fo r                importance of property mtanagenteni, to line man-
q s long as 10 years but still not recorded . Millions o f               agers, correct all known deficiencies, review property.
dollars worth of equipment was shown in the property                     management at each center every 2 years, and hav e

                                                                                                                                           65
     FINANCIAL AND GENERAL MANAGEMENT STUDIE S

     its internal auditors systematically follow up to se e    The establishment of an internal audit function wil l
     whether cor rective actions have been taken .             be studied further . (FG\ISD-76-34, Sept . 2, 1976 )
     (FG\ISD-75-27, Jan . 16, 1976 .)

                                                               Accounting for Obligation s
     Financial Controls Over Appropriation s
                                                                  Each year the Navy has systematically been
      The Chairman of the House Committee on Ap-                dcobligating, without proper justification, millions of
   propriations asked its to review in alleged violation        dollars in obligations recorded in its Military Personnel
  of the Anti-Deficiency Act (31 C .S.C . 665) by tin e         and Operation and Maintenance appropriation s
   G .S . Army Electronics Command . We reported tha t          successor accounts . Successor accounts are con-
  an Army audit showed that there was a deficiency o f          solidated accounts into which all prior-year obligated
  about S-10 million in the fiscal year 1972 "Other Pro-        but unpaid balances and accounts receivable ar e
  curement Appropriation." We also reported that (1 )           merged 2 years after the appropriation expires an d
  the precise reasons for the oyeroblieation may neve r         which arc available indefinitely to pay obligations
  be determined because ledgers ant journal voucher s           chargeable to any expired appropriation for the sam e
  had apparendv been lost [luring a reorganization an d         general purpose .
  none and (21 the Army may fund more overobliga-                 The Navy also wrote on' large amounts in account s
  tion, (FG\ISD-76-2 . Sept . ft, 1975 . )                      receivable which were recorded in these account s
     In October 1975, the Army notified the Chairma n          without determining whethet the amounts wer e
 that there had been a serious breakdown in control s          collectible Front June 30, 1973, to June 30, 1975,
 over procurement appropriations and that more                 such dcobligations and writcoffs amounted to $9 0
 overobligations may have occurred . In April 1976,            million . As a result, the Navy did not have adequat e
 the Army reported Ilia'. it had identified S205 millio n      accounting control over successor account obligations
 in overobligations in three procurement appropria-            and receivables.
 tions and was investigating nine other apparen t                 In July 1976 we [recommended to the Secretary o f
 violations of the law .
                                                               Defense that the Nayv (1) require an accounting fo r
    In accordance with a second request from th e             obligations and receivables in successor accounts ,
 Chairman, we reviewed the Arnty's procedures t o              121 reestablish in successor accounts those obligation s
 determine the atnounts and causes of the over-
                                                              and accounts receivable which were deobligated o r
 obligations and wliether accounting systems have
                                                              written off and against which futu re expenditures o r
 been improved to help prevent future violations .            collections were anticipated, and (3t have its account-
                                                              ing staff or internal auditors periodically review the
Accounting Operation s                                        validity of obligations and the balances of account s
                                                              receivable- The Department of Defense informed u s
    In response to a request 11'0111 the Counsel to the
                                                              that the Navy would implement our recomnienda-
 president . we reviewed the White Housc Office
                                                              tions . (FGNISD-76-45, July 2, 1976 . 1
 accounts for the period July I, 1969, to Au g ust 9 .
 1974 .
   We found it need ten improve accounting control s          Financial Managemen t
and procedures to help more that icceipt, and di, -           Information System s
bur'sentents arc properly handled and than effective
accounting control i, maintained over all funds ,                Federal agencies spend millions of dollars eac h
propel t , ~, and other asses .                               year to develop computer-based financial manage-
   We reronuncilded that an internal audit functio n          ment systems . Contracts with public accountin g
be establi-hed a, a means of assuring store effectiv e        and management consulting firms arc used extensivel y
control over the asset, of the l\ bite I-louse Office .       to pr %ide agencies with technical assistance . We
other agencies in the Gsrrutice 0111m of the Presi-           observed that nnany development projects wer e
dent, and the (Mire of the Vice President .                   unduh prolonged, costly, and frustrating, whil e
   The (sound told its that ronretke action woul d            other projects proceeded smoothly .
be taken and that the %\ hits I iousc t )flice is plannin g      In \ugust 1976 we published a booklet whic h
to improve its accounting~\,tcni and wtcrnal e onuols_        discusses managenreni s involvement in 68 key step s

66
                                                                           FINANCIAL AND GENERAL MANAGEMENT STUDIE S


in planning, contracting, designing, developing ,                     of data, and effective physical control over equip-
testing, implementing, and operating computer -                       ment, files, and negotiable instruments be maintained .
based management information systems . It will b e                    The Army said it has taken or plans to take actio n
useful to Federal, State, and local agencies an d                     on some of our recommendations and will includ e
contractors . ("Lessons Learned About Acquiring                       all of the recommended controls in the Army-wid e
Financial \Ianagenlent & Other Information Sys-                       standard civilian payroll system it is developing .
tems, " August 1976, by the Comptroller General of                    (FG\ISD-75-26, Oct . 9, 1975 .)
tltc United States . )                                                 Department of Commerce
                                                                         The Department of Commerce ' s automated payrol l
Automated Payroll System s                                             system services about 4,500 employees Avho iver e
                                                                       paid M million in calendar year 1974 .
  1Ve reported on reviews of three automate d
                                                                         XVe informed the Secretary of Commerce tha t
payroll systems .                                                      controls in and between the personnel office, th e
                                                                       payroll office, and the automatic data processin g
Department of the Army
                                                                       operations division needed improvement . %Vc made
   In fiscal year 1975, the automated payroll system o f               10 recommendations for improvements in control s
ll,e U .S. Army \Iilitary District of 1Vashingto n                     over employees, documents, equipment, and syste m
processed pay and allowances of about 5383 million                     development and operation . 'I'lic Departrment told
for 24,000 employers .                                                 us it had started some corrective actions . (FG\ISL)L -
   The system did not have certain internal controls                   76-3, -No, . 10, 1975.)
which are necessary to reduce the pos,ibility o f
unauthorized payments, fraud, and errors . 1%7e                        Department of Health, Education, and Welfar e
reported to the Congress that, because of thes e                          Since 1969 GAO, the Department of Health . Edu-
%—1knesses, the system could not be relied upon t o                    cation, and %Velfarc's Audit Agency, and a specia l
produce accurate payrolls and to protect the Gov-                      interagency payroll review panel have issued report s
ernment from improper payments .                                       on deficiencies in the Department's centralized payrol l
   We recommended that the duties of pay clerks an d                    system . As a part of our review, Ave have followed u p
other employees be separated, computer program s                        on the Department's actions to implement recom-
he modified to provide necessary checks and edits                       mendations included in these reports .




1'ax(J,~ln,n, Di:rrtnr ni the llparb—1 of 11nilth, F.~tamtimq 'd IIi!jan'r anbalrnl payroll opr.at-" . rrplintn apnati "', ~f   n-rtm~   to G:1 0
vo-ti v ;naurw, !r/t to fight, 31a . ..lim H . 0,d—rs ?,, rqh 11 . Pit,,, G-dd J . Bwh,, and .Marlin E
                                                                                                       . Calla.

                                                                                                                                              67
     FINANCIAL AND GENERAL MANAGEMENT STUDIE S

    In the first of a series of planned reports on our      • Did not receive credit from local tax authoritie s
  review, we pointed out to the Secretary of Health ,         for delinquent taxes paid to property buyer a t
  Education, and Welfate that (I) hundreds of wag e            the time of sale .
 and tax statements and pay records for 1974 wer e
                                                            We suggested several things the Department shoul d
 erroneous, (2) the Department had not recorde d
                                                          do to improve the property tax payment system ,
 canceled check adjustments on about 3,300 of th e
                                                          including using automatic data processing and
 estimated 3,800 erroneous 1974 pay records, and
 (3) the Department has not issued corrected wag e        establishing an accurate accounting of tax liabilities .
 and tax statements to an estimated 1,940 employees ,     The Department told the Subcommittee that it woul d
                                                          take corrective action in line with our suggestions .
 as required by Internal Revenue Service regulations .
                                                          This matter was the subject of a GAO report to th e
    We made several recommendations to the Secretar y
 of Health, Education, and Welfare which, if properl y    Congress . (FG\ISD-76-24, Nov . 26, 1975. )
 implemented, will correct the problems cited in th e
 report. (FG\ISD-768. Aug. 24, 1976. 1                    Automatic Data Processing

 Reviewing Approved System s                                The Federal Government has over 9,000 computer s
                                                         costing over $10 billion it year to operate . We stud y
    During the 15-month period, we reviewed eigh t
                                                         and report on policy matters that arise in managing
 systems that had been preciously approved by th e
                                                         and using these resources. Finding ways to improve
 Comptroller General to determine whether the y
                                                         Government operations is our principal objective .
 were being operated in compliance with their ap-
                                                         We zre continually strengthening GAO's capabilitie s
 proved designs . We found that significant change s
 requiring reapproval had been made or were bein g       in this highly technical area so we can better serv e
                                                         the Congress and provide technical assistance i n
 made in four systens . We iLo observed and repo -led
                                                         audits of Federal programs and operations.
 to agency heads improvements needed in property
                                                            Our automatic data processing staff makes suc h
 accounting, internal audits, and controls over pay-
                                                         studies, provides instructor and materials, and
 rolls, cash, accounts receivable, and advances t o
                                                         develops training in computer system auditing .
 employees and connector .


Testimony Before                                         Computers in Dange r
Congressional Committee                                      \Zany of tine Federal Government's 9,000 computers
                                                          are inadequately protected against sabotage, vandal -
   Oil September 25, 1975, the testified before the
                                                          ism, terrorism, or natural disasters . The causes are
 Subcommittee on Uanpower and Housing, House
                                                          poor security measures and poor recovery procedure s
Committee on Government Operations, on the Depart-
                                                         for continuity of operations at a number of Federa l
 ment of Housing and Urban Development's syste m
                                                          installations visited which make the installation s
of accounting fm property taxes on acquired single -
                                                         susceptible to catastrophic losses caused by bombing ,
family residential properties .
                                                          fires, floods, frauds, thefts, embezzlements, and
  We told the Subcommittee that the Department's
                                                         human error .
systenn lacked adequate controls to insure accurat e
                                                            In our report to the Congress, we recommende d
and prompt payment of axes, the tax records con-
                                                          that the 011ice of Management and Budget direc t
tained numerous errors and . as a result, the
Department :                                             that a management official at each Federal computer
                                                         installation be made responsible for physical securit y
  • faint taxes on properties it did not own -
  • Faiketl it) pay taxes it owed .                      of automatic data processing . We also recommende d
  • Made late tax pacnrents and thereby incurre d        that risk management techniques be used to compar e
     unnecess :uy penalty . and interest costs.          the cost of protection with the potential loss .
  • Made duplicate paynwu s on some properties.          (FG\ISD-76-40, May 10, 1976 .)

68
                                                                                    FINANCIAL AND GENERAL MANAGEMENT STUDIES




Pic. r of rrrardr rintm),d hp fir, . R- .1mcfion re ill he m;tly   and limr-romuming due to the Jack of rantingemy planning.
   Monnesy of Geeeral Service. :\ibniniseratioul



Computer-Related Crimes i n                                                      improvement Needed in Compute r
Federal Program s                                                                Systems Which Automaticall y
                                                                                 issue Funds or Decision s
   Computer systems have added a new dimension t o
potential crime . Although it is difficult to identify                              Computers in Federal departments and agencie s
specilic cringes as being computer related, we did                               annually issue unrevie\ved payments and perform
learn of 69 instances where improper use of computer s                           other actions involving billions of dollars in Govern-
resulted in losses of more than S2 million .                                     ment assets. These actions are sometimes wrong ; two
                                                                                 causes are software and data problems . In our repor t
   \lost of the cases examined did not involve sophisti-
                                                                                 to the Congress we suggested remedies to correct th e
cated attempts to use computer technology for
f euululcat purposes ; rather, they \ --re uncomplicated                         situation Government-wide . (FG\ISD-76-5, Apr . 23 ,
acts made easier because management controls ove r                                1976 . )
the systems in v olved were inadequate . In our report
 to the Congress, we recommended that the heads o f                              Trends, Benefits, and Problem s
Federal agencies emphasize management controls i n                               In Using Minicomputer s
their computer systems . (FG\ISD-76-27, Apr . 27 ,                                  \linicomputcrs, now used in Government primaril y
1976. 1                                                                          for scientific data processing and control of machinery ,

                                                                                                                                       69
     FINANCIAL AND GENERAL MANAGEMENT STUDIE S

   are expected to be used more and more for genera l           Audit Standards
  data processing to improve productivity. However ,
   there are problems in and limitations on using mini-           Our Audit Standards grou p
  computers, especially with software ; also, complicated
                                                                  —plans, coordinates, and ntonitms GAO's review s
  procurement regulations governing minicomputers
                                                                   of Federal agency- internal audit systems ;
  are causing excessive administrative costs and delays.
                                                                  —fosters audit cooperation and improved auditin g
  In our report to the Congress, Ave recommended tha t
                                                                   at the Federal, State, and local levels ;
  the General Services Administration simplify Federa l
                                                                  —provides support and ncistance to the nationa l
  procurement regulations . (FGNISD-75-53, Apr. 22 ,
                                                                   and regional intergoycrnnlental audit forums ;
  1976 .)
                                                                  —reviews financial reports of federally chartered
                                                                   organizations .
  Savings Available When Acquirin g
  Computers Under Grant Program s                              Reviews of Federal Agency
      Because of the large amount of Federal grant mone y      Internal Audit System s
   being spent for automatic data processing systems ,
                                                                 During 1976 Ave began reviewing the majo r
   there is it potential for either savings or waste—ofte n
                                                              Federal audit organizations to determine the :unoun t
  accounting to hundreds of thousands of dollars for an
                                                              of auditing being directed toward internal financia l
  individual grantee . It is important that Federa l
                                                              areas, such as controls over cash, properly, an d
  managers make sure that grantees follow business -
                                                              other assets for which Fecler :d agencies are responsible .
  like procedures in acquiring (by purchase, lease, o r
                                                              Our first review in this area, at the Department o f
  other methods) computers for grant programs .
                                                              Labor, showed that virtually no internal financia l
  Although instructions and procedures exist, these nee d
                                                              areas were being audited because the Departmen t
  In be extended to require consideration of all reason-
                                                              needed to perform "external" audits of its Compre-
 able alternatives . Also, agencies should make sure
                                                              hensive Sntployvtent and Training Act ]'")grant.
  that the instructions are followed .
                                                                 %%*c recommended that the Secretary of Labo r
     In our report to the Congress, Ave recommended
                                                              determine what action should be taken to provid e
 that Federal policies be strengthened to insure tha t
                                                              effective audit coverage of the Department 's internal
 grants, agencies follow business-like practices i n
                                                              financial operations . The Department agreed wit h
 acquiring computer system< . (FGAISD-75-34,
                                                              our recommendation and is working to acbir— a
 Julw 24, 1976 . )
                                                              balance betyeen internal and extcao :d audits .
                                                              (FGMSD-7o-67, June 25, 1976 . )
 Technical Assistance Services
                                                              Internal Audits of Accountin g
     *the Technical A istance group has a central             Reports and System s
 :malvtical capability to support audits, studies, and
 evaluations dour by GAO operating divisions an d                We asked the major executive agcncies about the
 offices . Personnel with specialized education and ex-       extent of their internal audit coverage of financia l
                                                              reports submitted to the Department of the Treasury ,
 pericncc provide expert technical advice and services
 in .nuouaatic dart processing, systems analysis, statis-     as well as the accounting systems that are the ba4i s
 tical Science. and actntl'ial science .                      for those reports . Our inquiry included 28 deparuneats
                                                              and agencies that account for about 90 percent of th e
     I lie group keeps abreast of new developments i n
                                                              Government's gross obligational authority .
each .uca of expertise it) maintain an internal capa-
bility to, applciny new methods and techniques t o               \\e reported to the heads of audit agencies tha t
ti :\t) at ignnients . During fiscal vear 1976 approxi-        the majority of the departments and agencies querie d
m .uch 1 .50 requests for i,sisiance were handled .           said they did not regularly perform audits in this area .
 lit nun} canes the work included developing impor-              We pointed out that these results . along with
tant portion ." of the reports issued by other GA( )           numerous prior reports on major -}-stern deficierrir:,
oper.uim, groups .                                            indicate a need for increased emphasis on internal

70
                                                                      FINANCIAL AND GENERAL MANAGEMENT STUDIES

audits of accounting systculs and reports to th e                  acceptance and implementation of the audit stand-
l y",•avury . (FG\ISU-Ili-43. June 411, 19711 . )                  ards, (3) encourage coordination of audits and stand-
                                                                   ardization of audit guidelines, and (4) promot e
                                                                   understanding and communication that will result ill
Fosterin g Audit Cooperatio n
                                                                   cooperative audit work and mutnal reliance o n
and Improvin g Auditin g                                           audits performed by others .
     Supplementing the Congtroller Gencl .d's Sfandnnls                 lit January 1976, representatives of all the fonuni s
f;.,    .hull! n/ 6',,rrnrnimbd Organi ;afinus, Plgt ;ranis ,      nut to discus matters of nnitual concern and interes t
               1•)111,11011, runtimes w lit- it uuyor function .   and to seek ways to resolve issues and problems . 'I'll c
•Three supplements published during liscal year 197 6              results were published in it joint conference repor t
illusllm' . how the standards should he applied .                  entitled "Initiatives for Improving Governncnta l
     ^Using Auditing m Ingcove Elliciency an d                     Audits.
 Hrononly " (Supplcna•nl Xo . 7) is a ease study describ-
ing hew broad-scupc audit techniques call be applie d              Federally Chartered Organizatio n
 1,I improve du• ctlirienc\- and rcninn ny of city govcro-
uuut activities . "f low :\editors Develop I r indings"              The accounts of private corporations establishe d
 (5upplrnient No . Ill shows how auditing t•an ron-                under Federal char lets must comply with the financia l
I l ibute to itninaviug ccouonly and elliciency . It also          reporting requirenu•nis of Public I,aw tilt :101 . 'I'licsc
shu\r-s hoe auditors nt.ly obtain sprcific criteria to             organizations, such as the United States OIyugti r
gallgc the cllirieney of existing practices . "Self-               Coumtitter alit([ the American Ilistmical Association ,
r\' .Ihl:niun Guide fur liu\eruni ital Audit Ihganiza-             roust be audited annually by public accountants an d
 lion:' (Supplenlenl No . 9) is .1 review guide for                the reports submitted to the Chairman, Hous e
gmvinnu•nl.d :mdi( oleanitations of evaluate how                   Connnittec on the Judiciary . Under an agn•emc•n t
\cell Ihrir orgallitations we following the :mdi t                 with the Chairman, (;AO reviews these audit repo-I s
st.uulaids .                                                       and comments ,it their compliance with the statute.
     To .lid and encourage 11,• cschang' . If audit infor-         I hoing the 15 ro nlhs coded September 30, 1976,
nt.ltion, we published a "I)ucctore of Federal Andi t              we reviewed 73 such reports .
t 1t,anu.niuns " and q ko a "I)hcctnry of Stale Audi l
l hganizations ." These directories provide inlorunalio n
on the location and site of do agencies . The Fedcra l              Securities and
director\ covers -1`.1 ontanitalions and the State
                                                                    Exchange Commission
dilcclol'\' contains infolln .nion toil 117 Statc-l—c l
agencies having audit rrsponsihilitics in the 50 States,
the I)istricl of Cululnhia, and -1 u—itoril                            ( )1,r division wits assigned responsibility for mtditin g
     \\'r issued an eynlsurc ([earl eluded "Audi t                 the activities of lb,- Securities and Exchange Com-
Guidelines I'll Audits of Financial l )Iterations o f              mission in February 1976. During 19711 we spent
Prdn .11lc A-iard hog-o. ... win a 1--n triad basis .               most of our time evaluating the Securities and Fx-
The purl so, of these guidelines is to standardize                 change Cunuuision s athuinisnation of the Publi c
prurcdures for linancial audits of State and lord                   Ctility Company Holding Act of 1935 . f)uring 197 7
records lit' fcderally assisted progruns . This guide               we will undertake alit overall planning survey of tile,
should sinlplif\ the auditing and thus enable it to be              Securities and lixchange Cowimnissiou's regulatory
dour uun'c ccononlical k                                            :will enforcement activities so we rail systematicall y
                                                                    develop our audit approarh . As ;in outgrowth of thi s
                                                                    survey effort, we expect to undertake detailed review s
Audit Forum s
                                                                    of SEC's programs, concentrating on such SEC : re,- .
   The I 1 inlergorerIlInertia audit forums continue t o            spousibilities as regulation of exchanges, brokers ,
be a valuable means for encouraging State, local and                dealers, investment companies, and investment coun-
Federal audit cooperation . With a total ttclubership               srlon. We also expect to look into SEC's larges t
of over 300 and it oil irials front all levels of govern nunt ,     program—promoting full and fair disclosure in
dose forums II) provide a means for exchanging                       financial and other statements on securities bein g
views and solving common problems, (2) promote the                  offered to investors .

                                                                                                                             71
 FINANCIAL AND GENERAL MANAGEMENT STUDIE S

 Joint Financial Managemen t                                 indexes have been developed ; all but 4 of the 2 5
                                                             functions had productivity increases during thi s
 Improvement Program
                                                             period .
                                                               The report gives special attention to r esults of a
    The Joint Financial Ntanagentent Improvemen t            series of demonstration projects on a concept called
 Program was authorized by the Budget and Ac-                total performance measurement . In this approach ,
 counting Procedures Act of 1950. It is a Government -       measures of productivity and e0ectiveness ate inte-
 wide cooperative program to improve and coordinat e         grated with information on employee attitudes an d
 financial management policies and practices through -       customer attitudes to provide a powerful diagnosti c
 out the Government so they will contribute sig-             tool to aid operational managers in identifying an d
 nificantly to the effective anti efficient planning an d    correcting problem areas .
 operation of governmental prcgrams .
    Leadership is provided by the four principals of         Cooperative Projects
 the program—the Comptroller General, the Secre-
tary of the Treasury, the Director of the Office o f            An interagency project team organized by , iP\111 '
Management and Budget, and the Chairman of th e              has helped the Farmers Home Administratio n
Civil Service Commission . The program is ad-                develop an improved financial management progra m
ministered by an Executive Director under the                which includes systems for loan disbursements, wor k
general guidance of a steering committee made up o f         measurement, and unified management information .
representatives from each of the central agencies .           Under the new loan disbursement system, loan fund s
Day-to-day conduct of the program is the responsi-           are drawn from the Treasury only as needed to kcc p
bility of full-time Executive Director Donald C . Bull .     pace with the work being financed . The Departmen t
   Some of the activities in which JFNIIP participate d      of Agriculture has reported that this system wil l
during the last year are discussed below . \lore de -        result in a one-time redaction in outlays of abou t
tailed information about the program's accompFsh-            $750 million and annual interest savings to borro we rs
ments may be found in separately published annua l           and the Government of about $-Ill million . The work
reports on the program .                                      measurement system provides tinely and accu rate
                                                             information on how much time county ollice cut-
                                                             ployees are spending at their various loanmaking an d
Produ-Aivity Measurement
                                                             supervisory responsibilities . This system is expecte d
    In July 1976, JFNIIP issued its third annua l            to increase productivity by making it possible fo r
 productivity report to the President and Congress .         field staff to devote more time to applicants and bor-
 Volume I of this report eivcs productivity measures         rowers while keeping up with a steadily growin g
for fiscal years 1967-1975, analyzes the causes o f          workload . A unified management information sys-
 productivity changes, and presents information on           tem incorpomlcs the loan disbursement and wor k
 the status of productivity programs . Volume 1 1            measurement systems . Improved elliciency and ef-
consists of case studies from various public and             fectiveness of service to borrowers is expected . It is
 private organizations which may provide useful              also possible that substantial sayings will come abou t
examples to others who are interested in improvin g          through increased productivity and reduced interes t
their productivity.                                          costs.
   The current productivity measurement syste m                 An interagency project team organized by JFNII P
 corers 1,926,000 staff-years in 279 organizationa l         has also been assisting the Bureau of Alcohol, To-
 elements of 51 Federal departments and agencies .           bacco and Firearms, Department of the Treasury, i n
 This represents 67 percent of the total Federal civilia n   developing a financial nranageutentplanning system
 Nm'k force. During fiscal year 1975 productivity of         to measure and improve the effectiveness of deliverin g
 the measured Federal work force increased 2 percent .       the Bureau's services . Specifications are being devel-
 Since the base year of fiscal year 1967, productivit y      oped for a comprehensive systent which will include a
has increased 10.7 percent—an average annual in -            labor distribution system, a payroll, personnel system ,
crease of 1 .3 percent. There are substantial variations     it criminal enforcement management information sys-
in the rates of change for individual organization s         tem, a simulation and modeling system, and a genera l
and for the 25 functional areas for which productivit-       accounting system . The work is being coordinate d

72
                                                              FINANCIAL AND GENERAL MANAGEMENT STUDIES

Leith plans for a nets Treasury personnel payrol l         Interagency Study Teams
information system which is modeled after it s)stc n
                                                              A booklet entitled "Operational Budgets—A Prac-
u>ed by the I)CIme-unent of the Interior .                 tical Approach" was published in November 1975 .
                                                           The booklet was based on the report of an interagency
conference s                                               study tem p which was appointed by jF311P to stud y
   In fall 1975, jf\I[P and the Association of Govern-     the Ilse of operating budgets for program management .
ment ArCOUntnrts sponsored a I-day seminar o n             The btwklet contains it number of *tideli— whic h
electronics fortis transfer . '['his scmioar provided      can be useful to many Federal agencies and othe r
information on current federal clforls in the elec -       Governmental organizations.
Irnric transfer area, plus a look ;t current technology,      The tcnrk of another jF\IIP interagency stud y
proposed new systems, and the impact on individual s       team was reported in it special jF\IIP publicatio n
and org;roizations. "Connnunications in linancia l         entitled "\loney \lanagentcnt Study.— This stud y
nta nagcnu•nt " eras the theme of the fifth Annua l        confirmed previous assumptions concerning the
Financial \laragentent Conference held in February         importance of cash management in the Federa l
                                                           Government and operating agenrit•s ' general lack o f
1976. In Septcmbcr 197G, jf\IIP joinctl u•itlt scccra l    attention to sprrilir plans and prot•etlun-.s for cas h
other arg ;ulizations in sponsoring ;ul Intcrgorern-       nrmagemenl . 'Ille study also demonstrawd that sub-
mrnl :d Financial \l ;ntagenu•nt Conference in St .        stantial financial savings ran be achieved by carefu l
Loris. This provided an opportunity for shout 17 5         atention it) cash nnrtaGentent . The booklet contains
tin:racial nt:utagers front Icticral, Suite, and loca l    Guidelines for agencies to Ilse ill developing thei r
4ocrrntnents in 25 states to exchange views on severa l    oven policies and procedures anti improving thei r
financial management issues of curr e nt concern .         cash management praclicrs.




                                                                                                                73
                                                              the Tennessee Valley Authority ; and the Energ y
                                                              Resources Council .
                                                               Major congressional legislation in the past few year s
                                                             requires GAO to evaluate and make recommendation s
                                                             regarding prograts carried out under the Federa l
                                                             Energy Administration Act of 1974 ; the Energy
                                                             Reorganization Act of 1974 ; and the Enemy Con-
                                                             servation and Production Act of 1976 .
                                                                In addition, under title V of the Energy Polic y
                                                             and Conservation Act of 1975, we have been give n
                                                             new responsibilities in the energy data area, in-
                                                             cluding the authority to independently verify energ y
                                                             data ; we may use this authority to inspect the books
     CHAPTER SI X                                            and records of private persons and companies unde r
                                                             certain conditions .
                                                               Mcme Canfield, Jr., is Director of the Division ,
                                                             and J. Dexter Peach is Deputy Director .


     ENERGY AND MATERIAL S                                   Energy
                                                                During the 15-month period ended September 30 ,
 Responsibilities                                            1976, GAO spent about 170 professional stair-years o n
                                                             energy-related assignments, 55 percent of which wer e
                                                             self-initiated and 45 percent requested by the Con-
      The Energy and Minerals Division                       gress . We completed 102 energy-related reports 7 3
      —audits and analyzes the energy and minerals -         to the Congress, Members of Congress, and com-
         related programs of all Federal departments an d    mittees (these reports include those energy-relate d
        agencies, including Federal contractors' energy      reports issued by other GAO divisions) and 29 t o
        pro,raus, and evaluates the interrelationship s      agency officials .
        among all Federal departments, a g encies, an d       We concentrated on (1) Federal efforts to conserv e
        programs as they in v olve energy and minerals      energy, (2) Federal collection and analysis of energy
        matters,                                            data, (3) the Federal role as a proprietor of energ y
     —evaluates Federal energy data collection an d         resources, (4) energy pricing, (5) energy researc h
        analysis activities,                                and development, and (6) international energ y
     — examines the hooks, records, papers, or othe r       problems .
        documents of any person or company who i s            Brief summaries of our major concerns follow .
        required to submit energy and financial infor-
        mation to the Federal Government or wh o
                                                            Nuclear Energy
        produces, processes, refines, transports or dis-
        tributes energy resources, an d                        The growing shortage of fossil fuels is spurrin g
     ---,iycs advice to other GAO divisions and office s    the search for alternative energy sources, includin g
       whenever energy minerals materials is a second-      increased use of nuclear potter.
       ary focus of their work .
                                                               We reported to the joint Committee on Atomic
   This division has overall audit and analvsis re-         Energy on the President's June 26, 1975, legislativ e
sponsibility for the Fedtral Energy Administration ;        proposal to allow the Energy Research and Develop-
the Energy Research and Developnictit Adminis-              ment Administration (ERDA) to help private firms
tration ; the -Nuclear Regulatory Commission ; the          build, own, and operate commercial uranium
Federal Power Commission ; the Department of the            enrichment facilities. (Enrichment is a process whic h
Lucrior (energy and minerals-related activities .) ;        transforms uranium into a usable nuclear fuel .)

74
                                                                                         ENERGY AND MATERIALS


                                  ENERGY AND MINERALS DIVISIO N

                                                  DIRECTO R
                                              M . CANFIELD, JR .

                                              DEPUTY DIRECTO R
                                                  J .D. PEACH




  MINERALS           TECHNICAL             ENERGY             ENERGY               ENERGY            MANAGEMEN T
                     ASSISTANCE           ANALYSIS             AUDIT             VERIFICATION            AH D
                                                                                    EXAMS             PLANNIN G

    J . FIADD       A. ANDERSEN           J . SPRAGUE        R . KELLEY          F .K . BOLAND       R . OELKERS




    MINERALS AND             ENERGY                 FEDERAL                 NUCLEAR                FEDERAL
     MATERIALS            RESEARCH AND               ENERGY               REGULATORY                POWE R
      (INTERIOR)          DEVELOPMENT            ADMINISTRATION            COMMISSION             COMMISSIO N
                         ADMINISTRATION

      D. CAHALEN            R . CARLONE              J . DUFFUS            J• HOWARD               G . ELSKEN




                                                                                                 SEPTEMBER 30, 1976




   In that report we commented on a private group' s        from the budget and also create the same type o f
proposal, submitted to ERDA, for assistance in              independent operation found in private plants .
building an enrichment plant using existing teclr-             Since we believe that plants using advance d
nolot•y. We stated that the requested assistance            technologies will need Government assurances simila r
was excessive for the project and concluded tha t            to those stated in the President's proposed legislation ,
the group's proposal was not acceptable ERDA is             we recommended that the joint Committee conside r
considering other proposed projects using advance d         developing appropriate legislation . (RED-76-36,
enrichment technologies ; we concluded that conditions       Oct . 31, 1975 . )
of these projects warrant Government assurance s                We reported to the Congress information on the
similar to those specified in the p resident' s proposed     economics and reliabilityof current-generatimr nuclea r
legislation .                                                powerplants.
   Because of the immediate need for additiona l                Generally, we learned :
enrichment capacity, we recommended that th e
joint Committee consider authorizing ERDA t o                     1. -Nuclear powerplants showed a general upward
make the nest increase in enrichment capacity b y                 performance trend during the first 7 years o f
adding to an existing Government plant.                           commercial operation .
   We also recommended that the joint Committe e                  2. The Nuclear Regulatory Commission is respon-
consider establishing a Government corporation                    sible for approving plans for shutting down nuclea r
with self-financing authority to manage the Gov-                  powerplants—a process called decommissioning .
ernutenPs titanium enrichment plants . This would                 The powerplant owner is responsible for decom-
 remove the high capital costs of enrichment plants               missioning and paying for it . The Commissio n

                                                                                                                      75
     ENERGY AND MATERIALS

    estimates that, depending on the alternativ e              —Any recommendations for legislation or othe r
    chosen by % the reactor owner, decommissionin g             plans to better enable NRG to get States to
    will cost $3 million to $60 million initially .             prepare adequate radiation emergency plans .
    3. There are no commercial spent-fuel reprocessin g       Both agencies agreed with our recommendation s
    plants operating in the United States today .            and agreed to implement them . (RED-76-73,
    Until questions about safeguarding plutoniu m            Mar. 18, 1976.)
    can be resolved, the Commission will not licens e
    commercial reprocessing plants. A Commissio n
                                                             Energy Conservatio n
    decision is not expected until 1978, indicating tha t
   a serious shor tage of spent-fuel storage capacit y         Conservation has one basic advantage which,
   could develop .                                          unfortunately, has not received much emphasis : i n
   4. Considerable Government assistance to nuclea r        many cases, once a conservation action is taken, the
   power enterprises exists in the form of indirect         savings become permanent or at least last many years .
   subsidies for atomic energy insurance and in-              The Federal Government has two roles in energy
   denmity, management of radioactive waste, an d           conservation actions : (1) creating an economic, social ,
   uranium enrichment .                                     political, and institutional atmosphere conducive t o
 (RED-76-7, Aug. 15, 1975 .)                                undertaking conser vation actions and (2) developing
                                                            new technologies to improve the energy use systems .
  The Nuclear Regulatory Commission is the lea d
Federal agency in helping States voluntarily develo p          1\'e visited 77 military and civil installations around
plans to cope with emergency radiation incidents at          the country to determine how effectively they were
nuclear facilities, particularly powerplants, and           implementing the Federal energy reduction program .
accidents involving transportation of radioactive           We reported to the Congress that installation s
materials .                                                 generally have tried to reduce energy consumption .
                                                            We pointed out, however, that much more can an d
    An interagency effort has resulted in publishe d
                                                            should be done to save energy through improved
 guidelines and free formal training courses for Stat e
                                                            program management, more internal reviews, bette r
 and local government officials responsible for radia-
                                                            energy-use information systems, stricter complianc e
 tion emergency planning. In addition, Federal
                                                            with Federal standards and regulations concernin g
 interagency field training cadres are available, at n o
                                                            both vehicle and building operations, modification s
 cost, to provide on-the-job assistance to the States i n
                                                             to existing facilities, and changes in mission and train-
 developing and testing their plans .
                                                            ing operations. We made a number of recommenda-
   As of December 1975, however, the Commissio n            tions in these areas to strengthen the Government' s
had concluded that no State plan was adequatel y
                                                            energy conservation program . (LCD-76-229, Aug. 19,
addressing the radiation emergency planning guide -
                                                             1976 . )
lines developed by the Commission and endorsed b y
                                                               We had previously reported (LCD-75-325,
de Federal Preparedness Agency . Our review o f
four States' plans generally supported the Com-             Sept . 17, 19741 that greater efforts were needed t o
                                                            conserve energy at Government installations. As a
missions conclusions .
                                                            result of a follow-on review, we recommended that th e
   In a report to the Congress, we recommended tha t
                                                            Department of Defense and the General Service s
the Chairman of the Commission and the Administra-
                                                            Administration further im :rove utility conserv ation
tor, ERDA, provide full-time field representatives
                                                            efforts by :
to serve with the interagency field training cadres . We
also recommended that the Chairman of the Com-                —Expanding reviews of utility rates and charge s
mission, in coordination with the Director, Federa l           through greater use of computer capabilities .
Preparedness Agency, periodically report to the               —Insuring that installation officials enforce pre -
Congress on the status of Federal efforts to assist th e       scribed Federal lighting and heating standards .
States setting out :                                          —Providing the training and personnel required t o
                                                               effectively manage utilities.
     —the States' actions to improve their plans.
     —The relationships and commitments of th e               In response, the agencies said that corrective action s
      various Federal agencies involved .                   were in process. (LCD-76-311, Dec . 31, 1975 . )

76
                                                                                         ENERGY AND MATERIALS

Energy Pricing and Regulatio n                              the higher deregulated prices, this advantage must
                                                            be weighed against higher prices to consumers .
   Prior to the Arab oil embargo in 1973, the Gov-               The report states that, in the final analysis, de -
ernment' s role in financing and regulating domesti c       regulation requires a political judgment based o n
energy resources consisted mostly of regulating natura l    careful weighing of the trade-offs involved . (OSP-76-
gas prices, pro viding incentives through such tax           11, Jan. 14, 1976.)
mechanisms as the depletion allowance and the write -            At the request of the Chairman, Senate Finance
oil of intangible drilling costs, manufacturing and         Committee, we analyzed the probable energy, eco-
selling enriched uranium (justified mainly on a             nomic, and budgetary impact of H .R . 6860 as passe d
national security basis), and in the yens immediatel y      by the House of Representatives . The bill would hav e
after \Forld War II, directly assisting the initia l         imposed quotas on imported petroleum products an d
development of the light water reactor industry .           decreased domestic energy consumption .
Since 1973, the Government's role has become more                Because of uncertainties regarding possible change s
pronounced and more visible, largely because of the          in the current oil price control system, we did no t
major price increases in oil, the fear of a major oi l       analyze the possible impact of decontrolling oil prices .
and natural gas gap near the end of this century, an d       However, both decontrol and foreign oil price in-
the recognized need to develop new energy sources .          creases would further add to the increased domesti c
   In a two-part report prepared at the request o f          oil price expected to result under H .R. 6860 pro -
Representative Jack Brooks, we reviewed the economi c        visions . (OSP/OPA-76-3, Sept . 2, 1975 .)
and env ironmental impact of curtailing natural gas              Despite a large supply of coal, the united States
usage, as estimated by the federal Power Commissio n         could be faced with a shortage of low volatile bitumi-
and the Federal Energy Administration, during th e           nous coal which is used to manufacture coke for th e
winter of 1975-76 .                                          steel industry . In a report to the Administrator,
   We reported that natural gas usage was expected t o       Federal Energy Administration, we recommende d
be curtailed much more in the 1975-76 winter than            that lie keep detailed information on transaction s
in the winter of 1974-75 . If the winter was norma l          involving coal exports. Because of the scarce domestic
and if alternative fuels- were available, however, wide-     supply of low volatile bituminous coal, we also reconi-
spread unemployment and extensive plant closure s             mended that the information at least show export s
were not expected .                                           by the three categories of volatility to deterutin e
   We found that, generally, alternative fuels, such a s      whether controls must be implemented . (OSP-76-17 ,
oil or propane, would be available but at three t o           Apr. 14, 1976 .)
four times the cost of natural gas . It appeared, there -         In contrast to it regulatory compliance work o n
fore, that, under normal weather conditions, the mos t         independent producers, the Federal Energy Adminis-
important economic impact of the gas curtailment s             tration had not completed enough work on crude oi l
would be in terns of higher industry-operating cost s          production activities of major oil companies to deter-
caused by the increased fuel costs . The industrie s           mine whether these companies had complied with th e
planned to pass on these increased costs to the con-           petroleum pricing regulations. In a report to the
sunier wherever possible (RED-76-39, Oct . 31 ,                Chairman of the Senate Committee on Governmen t
 1975 . )                                                      Operations, we recommended that the Fcdcra l
   Our second report discussed the supplies of natural         Energy Administration intensify its audit coverage o f
gas that could reasonably be expected through 198 5             the crude oil production Operations of major oi l
under either continued regulation or deregulation.             companies, and that it implement it more systemati c
We also analyzed the environmental, economic, an d              method for selecting independent pioducers for audi t
social e0icts of deregulation and concluded that i t            and a uniform policy for arriving at civil penalties
                                                                to assure equitable treatment of producers (OSP -
was unlikely that the Nation would ever again achieve
                                                                76-1, Oct . 2, 1975)
its current natural gas production levels . Even with
 continued regulation the price of natural gas will
                                                              Federal Ownership of Energy Resource s
 increase, but with deregulation the increase will be
 more rapid and possibly show t ;_ production decline.         The Federal Government's policies and program s
 Therefore, while additional suppiics are likely with        for developing the substantial energy-source fue l
                                                                                                                   77
     ENERGY AND MATERIALS

   reserves located on public lands can have an impac t        tinental Shelf operations prompted by recommenda-
   on energy supplies . These reserves arc essential to        tions made in two prior GAO reports .
   achieving greater energy sell-sufficiency .                    In June 1973 we reported that certain Oute r
     By late the Navy has had custody- of Federal land s       Continental Shelf operations having pollution po-
  containing huge reserv es of petroleum products .            tential were not adequately covered by regulations
  Traditionally these were held for national defense .         and instructions, and we recommended that th e
  After the 1973 Arab oil embargo, public attention rya s      Geological Survey issue appropriate instructions an d
  focused on producing these resetes for peacetime us e       regulations.
  and on the ost appropriate Federal agency t o                   A follotvup report dated February 24, 1974 ,
  manage them . We reviewed these issues in conjunctio n      pointed out that a Survey official had said regulation s
  with a congressional request to examine the Navy' s         would be issued by June 1974 . In our most recen t
  management of the reserve ; .                               followup effort addressed to the Chairman, Subcom-
     We reported that the Navy has plans to more full y       mittee on Conservation, Energy and Natural Re -
 develop reserve No . I in California and No . 3 i n         sources, House Committee on Government Opera-
 Wyoming, and to further explore reserve No . 4 in            tions, we reported that the regulations had not ye t
 Alaska . The report also discussed the status of th e       been finalized and would not be put into effect unti l
 reserves and the legislation, enacted in April 1976 1        1976 . (RED-76-48, Nov. 21, 1975. )
 which transferred management responsibility o f                 Our report on the trans-Alaska oil pipeline syste m
 reserve No. 4 in Alaska to the Department of the
                                                              (when it was about 40-percent complete) include d
 Interior on June 1, 1977 . That legislation als o           infor mation on construction scheduling, Federal an d
 authorized the Navy to increase production fro m            State monitoring efforts, and certain environmenta l
 reserve Nos . 1, 2, and 3 for a 6-year period .             matters. Much work has gone into protecting th e
    At reserve No . 3 the Navy had no formal procedure s     environment, but some environmental damage ha s
for systematically testing oil wells and solving prob-       resulted from construction . The most importan t
lems . The Navy said it had requested proposals for a        problems were the lack of erosion control, construction -
new operator contract and had started to develop a           related oil spills, and the failure to meet standard s
formal maintenance and testing program at tha t             for sewage treatment at the temporary constructio n
reserve .
                                                            camps. Many violations of the technical stipulation s
    In the past the Nat-v has taken the position that i t   were being corrected not through the quality contro l
is not required to follow the Armed Services Procure-       program but, instead, through efforts of the Federa i
ment Regulation for activities pct twining to petroleu m    and State monitors . Certain corrective measures
reserves . Consequently, Navy procurement for the
reserves has not corresponded to that generally use d
by defense agencies and does not inure that th e
Governmeni's best interests are being serxed .
  We recommended that the Secretary of the -\a\\ -
instinct the Director . Utlice of Naval Petroleum an d
Oil Shale Reserves, to :
        Establish contracting procedures which confor m
       to the aimed Services Procurement Regulation .
     --Review and modify, as necessary, the recentl y
       guarded conttac[s to operate petroleum reserve
       Nos . I and 4 to include the provisions of the
       procurement regulation .
       Comply tyi[h dn• newly established eonuractin g
       procedures for the new operator contract bein g
       planned for petroleum reserve No . 3. (LC1)-76 -
       313, May 14, !976 . 1
  As part of our followup procedures, we evaluated          GAO mtdifnn John O' .lf— and Ftmi .11rKinnq inrpntinq thr
the progress of regulation changes for Outer Con-           dh,l.- piprlinr.

78
                                                                                          ENERGY AND MATERIALS

were taken by the pipeline company to address thes e        efforts, and improve projections of electrical energ y
deficiencies . (RED-76-69, Feb . 17, 1976.)                 demand. (OSP-76-1, July 31, 1973 .)
   In 1971 the Department of the Interior stoppe d               A second report provided a framework and per-
 f<_suirig coal leases and prospecting permits becaus e     spective for considering (1) actions which coul d
 growing anhounts of coal resources were being place d      contribute to solving energy problems in the nest
 under lease at a time when production was falling off.      10 to 25 years and (2) the role of tine Federal Govern-
 Overall, production has bun poor . An issue which ha s     ment in encouraging such actions.
 ncyer been adequately addressed in the 55-yea r                 Our report focused on emerging energy supply an d
 history of the coal-leasing program is that of timely      conservation technologies which are technically
development . The case of obtaining leases and th e         feasible but which, for a variety of reasons, are not
low costs asociatcd with holding them have not               being actively commercialized by the private sector .
 increased production, contrary to the 'ment of th e         Fm each technology we attempted to define and assess
 law. In fact, these conditions, coupled with Interior' s    its potential role in filling energy needs by both 193 5
 failure to enforce production clauses in the leases,        and 2000 . We also focused on the major financial an d
 have provided a strong incentive for speculation .          pricing mechanisms which are available to th e
   Several changes are needed in the present an d            Government for stimulating activity with regard t o
 proposed coal-leasing regulations, especially thos e        emerging energy supply and conservation tech-
 concerning                                                  nologies.
                                                                 We recommended that the Congress continue t o
  —production standards for leases ,
                                                             place the highest priority on energy conservation
  —adjustment of lease terms,                                actions, including obtaining bettet cost/benefit dat a
  —assignment of leases, and                                 on the whole range of conservation opportunities ;
  —coal exploration .                                        continue to encourage the installation of units fo r
  Improvements are also needed in Interio r 's                solar hot water and space heating ; consider whether
preparation for and administration of coal-leasin g           it is advisable to enact legislation which would
                                                              authorize Federal loan guarantees to builders o f
programs . (RED-76-79, Apr . 1, 1976 .)
                                                              synthetic fuel plants or consider instead directin g
                                                              ERDA to continue research and development to
Research and Developmen t                                     improve the technology and, in addition, construc t
                                                               and operate smaller plants of a size sufficient to mee t
  In the first of two major repots dealing with energ y        its stated goal of obtaining socioeconomic, environ-
research and development, we identified and assessed          mental, and regulatory information in a timel y
the issues relevant to the Government's role in de-            fashion . (E\ID-76-10, Aug . 21, 1976. )
veloping the liquid metal fast breeder reactor
(L\IPAR) for use in electrical power generatin g
plants . Our study looked beyond the program s               Internationa l
managerial and technical aspects to its economic ,             The United States has a number of alternatives fo r
environmental, and social implications .                     coping with the growing natural gas shortage, bu t
  We concluded that the L\IFBR program should b e            each is limited . We reviewed the role of liquefie d
recognized as a research and development progran n           natural gas imports in alleviating the growing natu ra l
with uncertainties needing resolution before th e            gas shortage and the considerations involved i n
question of commercialization can be considered .            increased dependence on such imports .
Because of its great potential for the united State s          -Natural gas provides about 30 percent of the tota l
and the world, the L\IPAR program should h^                  U .S . energy requirements . We reported to the Con-
continued at its current research and developmen t           gress that importing liquefied natural gas to mee t
pace .                                                       part of the requirement could involve billions o f
   We recommended that the responsible Federa l              dollars for constructing specialized tankers and re-
agencies and the Congress obtain adequate infornna-          ceiving terminals . Large-scale liquefied gas import s
lion on domestic uranium resources, resolve environ-         will also present political, economic, and nationa l
mental and safety questions, improve U .S. under-            security problems similar to those created by large oi l
standing of and cooperation with foreign L\IFBR              imports . (ID-76-14, Oct . 17, 1975 .)

                                                                                                                     79
   IMAGE EVALUATIO N
   TEST TARGET (MT-3 )




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PHOTOGRAPHIC SCIENCES CORPORATIO N
         770 BASKET ROAD
            P.O. BOX 338
      WEBSTER, NEW YORK 1458 0
           171 '1 ^F 1"1n
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                     TA T
    0001"-



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                            0
                            '
 ENERGY AND MATERIAL S

 Energy Data Verificatio n                                    • In November 1975, Ave testified before the Sub -
                                                                 committee on Energy and Power, House Com-
    Title V of the Enet~_,N' Policy and Conservation Ac t
                                                                 mittee on Interstate and Foreign Commerce, o n
 has given us new responsibilities for energy data and           the economic and environmental impact o f
 inchtdes new and unique tools for our use Specifically ,
                                                                 curtailing natural gas usage during the winte r
 title V authorizes us to independently verify energ y           of 1975-76 . In December 1975, we testifie d
 data and states that ice may use our authority t o              before the joint Committee on Atomic Energy
 inspect the books and records of private persons an d           on ERDA's assistance to private uranium en-
 companies under the following conditions :
                                                                 richment groups .
    1 . If a contpmty is legally required to submit energ y
                                                              • In January 1976, we testified on the implications
          information to the Federal Energy Administra -         of deregulating the price of natural gas before
          ticn, the Federal Power Commission, or th e            the Subcommittee on Interstate and Foreign
          Department of the Interior.                            Commerce . Also, we testified before the Sub -
    2 . If a company is engaged in the energy business ,
                                                                 committee on Energy and Power, House Com-
         other than at the retail level, an d
                                                                 mittee on Interstate and Foreign Commerce, on
         a. furnishes energy information directly or in -
                                                                 reliable contract sales data needed for projectin g
             directly to any Federal agency, excluding th e
                                                                 amounts of natural gas that can be deregulated .
             Internal Revenue Serv ice, and
                                                              • In February 1976, we testified before the Sub -
          b. Ave determine that the Federal agency use s
                                                                 committee on Conservation, Energy, and Natura l
             this information in carrying out its officia l
                                                                 Resources, House Committee on Governmen t
             functions .
                                                                 Operations, on low-level radioactive waste storage
   3 . If the energy information is any financial infor-
                                                                 and disposal .
         mation pertaining to a vertically integrated
         petroleum company.                                   • In \larch 1976, Ave testified before the Senat e
   This new authority has generated many request s               Committee on Interior and Insular Affairs on
front congressional committees to examine energ y                S. 1864 (the Energy Information Act) and pro-
company records. Among dose are :                                vided general information on actions affectin g
   1. A rcyiety Gf the relationship between inter -              energy data collection and analyses . We als o
         national oil companies and oil producing an d           testified before the Subcommittee on \lines and
         exporting country governments, including a              Mining, House Committee of Interior and In-
         search of available literature, an examination of       sular Affairs, on issues related to the develop-
         company documents, and inquiries into th e              ment of Federal coal reserves and the abilitv o f
        degree to which, if any, preferred access t o            the Department of the Interior to effectively
         OPEC: crude assists in OPEC: price maintenanc e         administer a development program .
         mechanisms. We are also to consider v.I:a t
                                                              • In April 1976, we testified on (1) the financin g
        inhibiting effects, if an-, those relationship s
        might have on compam incentives to expan d               for commercialized demonstrations of energ y
        domestic energy production .                             technologies before the House Committee o n
  2. A review of the origins and effects of the cos t            Science and Technology, (2) developing an d
        increases occurring in the construction of the           commercializing energy technology before th e
        trans:Alaska pipeline . This work will include a n       Senate Committee on Banking, Housing, an d
       extensive literature search, an analysis of cost s        Urban Affairs, (3) S . 2872 (a bill to extend th e
       and a determination of the origins and reason s           Federal Energy Administration Act of 1974 )
       for the significant cost increases, and a " fina l        before the Senate Committee on Governmen t
       accomtting " of all project costs.                        Operations, and (4) ERDA's proposed syn-
                                                                 thetic fuels commercialization program befor e
Testimony at Hearing s                                           the House Committee on Science and Technology.
   We testified at 22 hearings on various energy issue s      • In May 1976, Ave testified on Federal financia l
before congressional committees and subcommittees .              assistance for developing and commercializin g
Summaries of the more significant testimonies follow .           energy technologies before the Subcommitte e

80
                                                                                      ENERGY AND MATERIALS

    on Economic Stabilization, House Committe e            —Review of the Nuclear Regulatory Commis-
    on Banking, Currency, and Housing, and the              sion's efforts to reduce the time required to ob-
    Subcommittee on Energy and Power, Hous e                tain a nuclear powerplant license.
     Committee on Interstate and Foreign Commerce .        —Review of the effectiveness of systems used t o
  s Itr July 1976, we testified on international co -       account for and protect special nuclear material .
    operation in energy research and developmen t          —Study of the Rocky Mountain resource develop-
    and on whether the U .S. breeder reactor de-            ment status, potential, and socioeconomic issues .
    velopment program coula be accelerated by
    using foreign technology before the Subcom-
    mittee on Domestic and International Scientifi c     Material s
    Planning and Analysis and the Subcommittee o n
    Energy Research, Development, and Demonstra-             \Ire are concentrating on Federal programs an d
    tion, House Committee on Science and Tech-           activities which deal with natural resources to be used
    nology . We also testified on shortcomings in the    for the production of goods, with the exclusion of foo d
    systems used to control and protect highl y          and energy-source materials, such as coal, oil, gas ,
    dangerous nuclear material before the Sub-           and uranium . Specifically, we are dealing with (1 )
    committee on Energy and Environment, House           Federal collection, analysis, and dissemination of raw
    Select Committee on Small Business .                 [materials data and forecasts of supply and demand ,
                                                          (2) the Federal role as a proprietor of racy materials
Work In Proces s                                         resources on public lands, (3) international policie s
                                                          and practices and their impact on the availability o f
  Work in process at the end of the la-month perio d     raw materials, (4) Federal research and developmen t
included :                                                efforts to conserve raw materials, and (5) Federa l
    Review of the promises and uncertainties sur-         policies to stimulate the private sector to increase th e
   rounding the drive to substantially increase coa l     production, recycling, and conservation of materials .
   production and use .                                      We completed 10 materials-related reports—9 t o
 —Review of the relationship between curren t             the Congress, Members of Congress, and committee s
   energy policy decisions and national energ y           (these reports include those materials-related reports
   goals.                                                 issued by otter GAO divisions) and l to an agenc y
 —Review of Government contractors' energ y               official .
   conservation programs .                                   Brief summaries of our materials-related wor k
 --Survey of he Federal resource and reserve dat a        follow .
   base for oil, i ~l shale, gas, coal, and uranium.
 —Evaluation of h, feral efforts to achieve energy       Federal Materials
   conservation .
                                                         Research and Developmen t
 —Revicw of the planning and construction o f
    transmission lines which interconnect .                The United States is by far the greatest user o f
 —Review of U .S. coal development: promises an d        non-energy minerals and other materials, and each
   uncertainties .                                       year it becomes more dependent upon imports . Be-
 —Review of ERDA's improved oil and gas te-              cause successful materials-oriented research and de-
   covery program .                                      velopment could increase the Nation's ability to deal
 —Evaluation of the status of the fast flux test faci-   with materials problems, the Senate members of th e
   lit)• construction and test planning efforts .        National Commission on Supplies and Shortages —
 —Review of conflicts among Federal, State ,             Senators John Tunney and William Brock—aske d
    and local governments and private interests con-     GAO to
   cerning the Outer Continental Shelf .                    —analyze Federal funding for materials researc h
 —Review of the transportation charges claimed b y           and development and
   petroleum companies importing foreign crud e              evaluate the effectiveness of Federal material s
   oil .                                                     research and development .

                                                                                                                 81
     ENERGY AND MATERIALS

     In our report to the Congress Ave stated that th e
  basic objectives of a national materials policy ar e
  not defined . Also, there is no system for assignin g
  priorities to national materials goals, nor any estab-
  lished institutional capability to assess alternatives .
  All that exists is an interagency committee lackin g
  the staff and authority to adjudicate differences
  between agencies and program options.
     We also found that Federal research and develop-
 ment efforts were highly fragmented ; data was
 incomplete and poorly gathered, Aeith virtually n o
                                                             E,-p— Rrmxh -dilor.r Ron AbAm -d Pnrd Carp.w ohrnring
 data collected on non-Federal activities ; and progra m     ~p—li-s al rhr CQIfILOC mm~garsar mire io cabm, .
 funding in constant dollars was actually decreasing.
    In view of these findings we made recommendation s       dependence on imports of five critical minerals . We
 aimed at modernizing the materials policy formulation       reported that, at the time of our review, foreig n
 process and the ntanagentent of Federal materials           suppliers of these minerals (1) were not politicall y
 research and development . We recommended that :            motivated to withhold supplies from the Unite d
     —The Congress consider establishing an institution      States and (2) were limited by economic forces as t o
       to analyze national materials issues and provid e     the antount they could increase prices . We recom-
      policy guidance on a continuing basis .                mended that the Departments of State, the Treasury,
      A comprehensive, unclassified information syste m      and the Interior and the Congress improve assurance s
      for materials research and development b e             of continued supply of these critical minerals, (ID -
      established, building upon existing informatio n       73-82, Jan . 29, 1976 .)
      in the Smithsonian Science Informatio n
      Exchangt
                                                             Federal Role as Proprietor of
     —The Science Information Exchange include in it s
      information system data pertaining to material s       Raw Materials Resource s
      research and development outside the Federa l             The mineral leasing acts and implementing Federal
      Government. (OSP-76-9, Dec . 2, 1975 .)                regulations place limitations on the number of acre s
                                                             of Federal land that a person, association, or corpo-
 Supply and Demand of Raw Material s                         ration may hold or control under a single Federa l
                                                             mineral lease and under all such leases. The primar y
     During the past 25 years, the fertilizer industry       purpose of acreage limitations is to prevent monopol y
  has gone through several cycles of bust and boons .        of any particular mineral found on Federal lands .
  In 1974 fertilizer supplies were again in short supply,       In a report to the Chairperson, Subcommittee o n
 and the United States did not hate enough nitroge n         Mines and Yining, House Committee on Interio r
  and phosphate fertilizer to meet domestic demand .         and Insular Affairs, Ave reported that little is know n
    Because of congressional concern over fertilize r        about the basis and appropriateness of the curren t
 shortages, we prepared a staff paper on the past ,
                                                             acreage limitations. M' oreover, the Bureau of Lan d
  present, and future fertilizer supply situation in the     Management has no system for insuring complianc e
  United States . The paper included information an d        with the on-shore oil and gas acreage limitation an d
  obser vations on the differences in Government and         is not effectively contmlling the phosphate, potash ,
  industry fertilizer forecasts, the factors in recent
                                                             and sodium acreage limitations.
 fertilizer shortages, the efforts of Government an d
                                                                We recommended that the Secretary of the Interio r
 industry to alleviate the shortages, and the outloo k
for future fertilizer supplies . (REI)--76-14, Sept . 5,     require the Director, Bureau of Land \Management ,
  197 . )                                                    to make a study to help determine whether there is a
    Responding to concern over future availability of        need for limitations on Federal mineral holdings base d
 material suppliers, Ave submitted a report to th e          on acreage or some other measure, such as estimate d
 Congress whi. h assessed the implications of U .S.          mineral reserves. If so, the Director should determin e

82
                                                                                      ENERGY AND MATERIALS

the appropriate type and size of the limitation fo r     Need for National Non-Fuel
each mineral that the Federal Government leases          Mineral Policy
and recommend to the Congress that the minera l
                                                           The Alining and Minerals Policy Act of 1970 wa s
leasing laws be amended accordingly . If limitations
                                                         passed because of the rising concern over tine trend
are needed, the Secretary should require the Bureau' s
                                                         of mineral imports and the Nation' s dependence o n
Director to develop and implement a system to con-
                                                         foreign sources for many materials . Since the passag e
trol the limitation for each mineral the Federal Gov-    of the act, the value of non-fuel mineral imports ha s
ernnient leases . (RED-76-117, June 24, 1976. )          increased . The Department of the Interior generall y
                                                         advocated a flexible policy under which the Unite d
Recyclin g                                               States could move from one supply mechanism to
                                                         another, such as substituting domestic resources fo r
  The Congress and the President are interested i n      imports . The Department's position on this matter wa s
expanding the Federal tole in recycling and procuring    not clear, however . Also, steps to be taken to ac-
and using products containing recycled materials .       complish a flexible supply policy on a lintel- basis ha d
In response, several initiatives have evolved to in -    not been spelled out .
crease the use of recycled materials in product s           In our report to the Congress, the recommended
purchased by Federal agencies . These include :          that the Secretary of the Interior
                                                           —identify and evaluate laws and agency program s
  —A General Services Administration program
                                                              that have an effect on maintaining and develop-
   whereby 86 specifications for paper-based prod-
   ucts were revised to require various percentage s          ing a sound and stable domestic mining an d
                                                              minerals industry ,
   ranging front 3 to 100 percent recycled fibers.
                                                              weigh tradeoffs between the purposes of suc h
  —Issuance by the Environmental Protection
                                                              laws and the Mining and minerals Poliey Act ,
   Agency in January 1976 of voluntary guideline s
                                                              and
   and procedures for Federal agencies to follo w
                                                              advise the National Commission on Supplies and
   in procuring products that contain recycle d
   materials.                                                 Shortages, the administration, and the Congres s
                                                              of changes in the regulations andor pertinen t
  —Enactment of the Energy Policy and Conser va-
                                                              legislation believed needed to strengthen develop-
   tion Act of 1975 which requires that Federa l
                                                              ment of a coherent national minerals policy .
   procurement policies be revised to encourag e
   procurement of recycled oil for both militar y          We also recommended that, until the Congress
   and nonmilitary use.                                  acts on expected recommendations of the Nationa l
                                                         Commission on Supplies and Shortages, the Secre-
  We concluded that there was a need for mor e
                                                         tary of the Interior exercise leadership in clarifyin g
nranagennent emphasis by the General Service s
                                                         national non-fuel mineral policy. This should entail
Administration and the Department of Defense t o
                                                           —continuing analysis of the advantages and dis-
further expand the procurement of ; ecycled products .
                                                             advantages of relying on imports for specifi c
   We recommended that the General Service s                 commodities an d
Administration establish a formal program for pro-         —formulating recommendations for specific action s
curing recycled products and insure that the effort s        andjor programs that may be needed to help
it has made in purchasing recycled paper-based prod-         reduce the Nation's reliance on imports wheneve r
ucts are extended to other commodity areas . We also         and wherever such reductions are possible an d
recommended that the Department of Defense de-               desirable . (RED-76-86, July 2, 1976 .)
velop a coordinated program to aggressively promot e
the procurement of products with recycled materia l      Testimony at Hearings
content .
                                                           AYe testified in December 197-5 on "Federa l
  The General Services Administration and th e           materials research and development : modernizin g
Department of Defense told us that they would tak e      institution management" before the Subcommittee
action to comply with these recommendations .            on Science, Technology and Commerce, Senat e
(PSAD-76-139, \lay 18, 1976 .)                           Committee on Commerce .

                                                                                                                83
     ENERGY AND MATERIALS

     Work in Proces s                                   —Data requirements, assumptions, and method-
                                                         ologies for formulating policies for futur e
       Work in process in materials includes :           timber supplies.
      --Impact of mine safety standards upon minera l   —Development of criteria for determining th e
         output and prices in the united States .        criticality of materials.




84
                                                             —Expanding our capacity to analyze and evaluat e
                                                              major program issues and exploring the implica-
                                                              tions of choices available to the Congress.
                                                             —Helping the Congress obtain and use fiscal ,
                                                              budgetary, and program-related data and im-
                                                              proving the quality, availability, and usefulnes s
                                                              of such information.

                                                            The Program Analysis Division is directed by
                                                           Harry S_ Havens, Director, and Dean K_ Crowther ,
                                                           Deputy Director .
                                                             Our major responsibilities are program and eco-
                                                           nomic analysis, program information, and progra m
 CHAPTER SEVE N
                                                           evaluation .



                                                           Program and Economic Analysi s

PROGRAM ANALYSI S                                          Capital Formatio n

                                                              Capital formation in the Canted States has recently
                                                           been it topic of considerable discussion . Assertions have
 Responsibilities
                                                           been made that the united Smtes is accumulatin g
                                                           capital at a rate which is historically low—low
   The Legislative Reorganization Act Gf 1970 and th e     relative to other developed cccnomics, too low t o
Congressional Budget and Impoundment Control Act           assure adequate economic growth for the future, an d
of 197-1 clarified and expanded GAO's responsibilities     too lore to absorb the growing labor force . Capital i s
to help the Congress analyze and evaluate Federa l         also said to be badly allocated among sectors of th e
programs and to improve the information the C:on-          economy . Thus, Ave have begun a project to identif y
gtess receives . The Program Analysis Division (origi-     the Governnent policies which influence capita l
nally the Office of Program Analysis) was establishe d     formation and to analyze the nature of their effects .
on September 5, 1974, to carry out these responsi-         The project consists of a series of studies on variou s
bilities.
                                                           aspects of capital formation . An initial study paper ,
  The division's duties include :                          "Capital Formation : An Overview,-' was completed
                                                           in \lay 1976 .
   —preparing broad analyses, particularly wher e
    economic factors are important and major pro-
    gran implications are involved ,                       Environmental Economic s
    providing leadership and assistance in focusin g          Lnvirmunental legislation has generated man y
    GAO's analytical resources to support congres-
                                                           regulations and requirements for the treatment o f
    sional decisions on major program issues ,
                                                           pollutants . These regulations, in turn, hays increased
  --improving the usefulness of Federal fiscal ,           the demand for capital . As part of the capital forma-
    budgetary, and program-related informatics and         tion project, Ave are studying the cost-benefit implica-
    helping the Congress obtain access to it, an d         tions of such legislation . Also, recent legislative
  —improving evaluative studies provided to th e           proposals on the mandated deposits for beer and soft
    Congress .                                             drink containers (bottles and cans) are bring studie d
  We have continued to focus on hro objectives in          to identify their costs and benefits for households ,
supporting the Congress, its committees, and its staff :   firms, and the env ironment.

                                                                                                                  85
     PROGRAM ANALYSIS



                                         PROGRAM ANALYSIS DIVISIO N



                                                                                         ADMINISTRATIVE /




                                 H
     MANAGEMENT COUNCIL                              DIRECTOR
                                                                                          MANAGEMEN T
                                                    H . S. HAVENS_
            D. J . DUGAN                                                                      P . A . SMIT H
                                                 DEPUTY DIRECTOR
           K . E . MARVI N
           K.W.   HUNTER
                                                   D . K. CROWTHE R




                                    (MISSION                    RESPONSIBILITIES )




                   EVAOLUATION       I                  GRAM
                                                   INFORMAT ON        1
                                                                              I
                                                                                    PROGRA
                                                                                         D MAN
                                                                                    ECONOMIC




                                                                                  SEPTEMBER 30, 197 6




 Tax Policy                                                 Ccnunerce Department's Bureau of Economic Anal-
                                                            ysis, and the Office of ? anigenient and Budget fo r
   A small tax policy group is reviewing several high       estimating revenue ; and the income reporting require -
 payoff projects. These include :                           meats of the law .

The Adequacy of the Revenue Data Bas e                      Timeliness of the Statistics of Income
and Estimating Procedure s
                                                               One implicaticn of the Congressional Budget an d
  Tax-related data and information must be availabl e       Impoundment Control Act of 1974 is the importanc e
for the Congress to estimate revenue . calculate it tax     of continually monitoring revenues to meet the act' s
expenditures budget, and make fiscal and budgetar y         requirements . Our report, ""timeliness of Statistics o f
decisions . At the present time, the data required b %      Income" (PAD-77-3, Oct. 22, 1976), covered the
                                                            promptness of an important data source, the Interna l
the Congressional Budget Act is unavailable in som e
                                                            Revenue Service's statistics of income series .
cases and hard to obtain in others .
   Therefore, we are reviewing the revenue-estimatin g      Criteria for Identifying Tax Expenditures
process of the Federal Government . Our study covet s         During the past year, we began work on a paper o n
the Internal Revenue Service' s processing cycles on        criteria for identifying tax expenditures . Future
which the statistical samples are based ; the production    reseaich will be on the efficacy of the investment ta x
of tax retur n statistics and their use by Treasu ry, the   credit for stabilization and growth, and an evaluatio n

86
                                                                                                              PROGRAM ANALYSI S




01-,tige n+rd admiral-1h,pmhle n bon., , dwiiirrd+cith thr Dirrrtor, Pragran A—Igir Dieing+. L Jt m right Hd ii Ste:earr, An- LittlrJohn;
Ifallau Cohn+: Haw) (la—, Dirrrmr ; Drm+ (."rosthrr, Depnp- Dirrctor; J o r r ph Co w l a; and Pn .Smith.

of direct versus indirect tax expenditures for meetin g                Economic Impact Analysi s
specific policy objertives. We will continue to study
                                                                      Assessment of Economic Studie s
the role of Federal tax policy and its impact n u
capital formation .                                                      The Congress is frequently presented with economi c
                                                                       studies, done by Government agencies or privat e
Special Studies                                                        concerns supporting or opposing va r ious legislative
                                                                       alternatives. The economic impact analysis staf       f
    (luring the year, the program and economic analysi s               assesses such studies when requested .
staff examined the financial tlifiitulties of New Yor k                   The Toxic Substances Control Act, for example ,
( :itr . 'Fwo resultant reports are in process : (1) a                 was designed to increase protection against potentiall y
discussion of the options open to -New York City, the                  dangerous chemicals by requiring certain testing an d
State, and the Federal Government to correct th e                      notification procedures by chemical manufacturers .
situation and (2) an evaluation of the city ' s methods                Several widely different estimates of the cost of thes e
for projecting revenues for budgetary purposes .                       requirements were preserved to the Congress . A
    The economic analysis staff participated in the GA O               staff study (OPA-76-6, Oct . 21, 1975) and tw o
study of " Implications of Deregulating the Price o f                  letter reports (OPA-76-12, Dec . 4, 1975, and PAD-
Natural Gas," which forecast the effect of highe r                      76-66, July 29, 1976) assessed these studies an d
prices on the supply of natural gas and concluded that ,                narrowed the range of likely costs .
while additional gas supplies would be a likely result ,                  Another report of this type, written in cooperatio n
this advantage must be weighed against the highe r                     with another GAO division, evaluated a study of the
prices paid by consumers . (OSP-76-I1, Jan . 14 ,                       economic impact of the National Forest Managemen t
 1976 .) See also page 77 .                                             Act of 197.6 (CED-76-123) . Assessments in progress

                                                                                                                                       87
   PRCGRAM ANALYSI S




  Tr,tirnonr bcf— 1h, S—a, B ..l       ll— .,,,I LW—Aff.— C—ittll - Aa, 1 -W. City .,d .th, -b-f a,,,id p-bl,,,,. on April 2, 1976
  Left 1. qht : L',],,,,d F. 11,ffi—, WA A w "", J. M- B. .4aaa, Can pl,.11,, G,,e,al, Albal Af- Nair, G—1 G--n
  Di	         d H.,n S . Jff,-n, Di,,I,,,,           D-vo, .




Psi, r_   h,dl- Di:	               AMN "V VMQ --k MW - m—W Q -Wd — ,M &                                    W     ",     M aaalt zirg
                        1.,!l                Leak D-ni,       B-1,
                                                                                             PROGRAM ANALYSI S

include studies of the economic effects of :pendin g       \lay 17, 1976) dealt with (1) Budget Circular A-107 ,
by the National Aeronautics and Space Administra-          which requires executive agencies to estimate th e
tion for research and development .                        inflation to he caused by major proposed legislation ,
                                                           rules, and regulations, and (2) the feasibility o f
Economics of National Defens e                             requiring agencies to systematically assess the effec t
   Par many years, the Defense budget has liven larg e     of proposed rules and legislation on competition.
enough to have influenced the U .S. economy. I n           The report concluded that the latter requiremen t
fact, some individual weapons systems are so es-            would assist congressional supervision of Federa l
pensive that Ihcir economic impacts must be con-            Government activities.
sidered by the Congress.                                      A study is underway to describe the pattern o f
   Onc example is the new F--I6 fighter, the analysis       Federal aid to State and local governments durin g
of which is further complicated because four Euro-          1969-75. The study- focuses on the major regiona l
pean allies are participating in the production . I n       shifts in per capita Federal aid to States and loca l
cooperation with the International Division, a staf f       governments and relates that change to severa l
.dudy was prepared on the multinational F-Ili agree-        socioeconomic indicators, such as unemployment, pe r
ment ([D-76-12, Sept . 2, 1975) . Another study i s         capita income, and population, and to major federall y
nndcreay to assess the economic impact of procure-          aided programs such as public assistance, revenu e
ment and standardization of a new main battle tank .        sharing, and the highway trust fund . The distributio n
   \lanpower costs now comprise more than half o f          of Federal aid in recent years will be better under -
the Defense budget . Our "Staff Paper on Defens e           stood in relation to formulas and other allocatio n
\lanpowcr Costs" (0I1_A-7(3-17, Dec . 18, 1975 )            criteria contained in Federal statutes .
discusses ways of controlling these costs and provides
information to help the Congress make difficul t           Government Regulation
choices in this area . We followed this up with ou r
report, "Alternatives in Controlling Department o f          Our studies of Government regulation have directl y
Defense \lanpower Costs. " (PAD-77-8, Nov. 12 ,            assisted the Congress and have been useful internal1 v
1976. 1                                                    as well, in expanding GAO evaluations of regulations .
                                                             Our staff paper, "An Economic Evaluation of th e
The Federal Government's Impact on                         O\IB Paper on `The Cost of Regulation and Re-
Financial Market s                                         strictive Practices' " (OR_A-76-1 I, Sept . 5, 19751 ,
   \Inch of our work has been devoted to analyzin g        was reprinted by the Subcommittee on Oversigh t
how the Federal Govermnent, through its regulation s       and Investigations, House Committee on Interstate
and financial activities, affects the economy throug h     and Foreign Commerce. That paper criticalh'
the financial markets . We reported that the Congres s     reviewed and evaluated an Office of \lanagcnucnt an d
should consider repealing the 31i percent interest         Budget assessment of the costs of regulation . The
rate limitation on long term public debt . (OPA-76-        weaknesses of the OMB paper and the problems in-
26. Apr . 16, 1976 .) A report to Representative Ichot d   herent in estimating the costs of regulation led to th e
(0I'A-66-18, Apr. 30, 19761 discussed wars for             conclusion that no final estimate is possible .
the Congress to increase its control over Federal loa n        "Government Regulation of Economic Activity- :
guarantee programs. We are continuing our analysi s         A Framework for Studying the Problem" (OPA-76-
of guaranteed loans .                                       2I, Mar . 23, 1976), was prepared for internal use .
                                                            It is the basis of PAD 'S development of methodolog y
                                                            for reviews of Government regulation .
General Governmen t
                                                               An overview of regulation is being prepared at th e
   Our general government staff identifies and analyze s    request of the Senate Government Operation s
issues in programs inyoly-ing intergovernmental re-          Committee . It is part of our contribution to th e
lations, revenue sharing and Federal aid to Stat e           Senate ' s review of regulatory reform . The paper wil l
and local governments .                                     discuss the economic, social, and political reasons fo r
   "Effects of Proposed Rides and Legislative Action s      regulation ; the costs and benefits of regulation ; and
 in Competition Can Be Analyzed " (OPA-75-6,                alternatives for regulatory- reform .

                                                                                                                  89
     PROGRAM ANALYSI S

     Transportation Analysis                                                     the usefulness of proposed Federal investments i n
                                                                                 transportation facilities .
      Our transportation analysis staff focuses on fiscal ,
   budgetary, and prograni-related information ; pro -
   grant evaluation ; and program analysis as they relate                        Program Information Responsibilitie s
   to transportation . This year saw background studie s
  of Federal highway programs, the financing o f
   ConRail, and programs affecting other modes o f                                 We carryout a number of the Comptroller General' s
  transportation, A staff paper was prepared for th e                           responsibilities for improving fiscal, budgetary, an d
  Subcommittee on Oversight and Investigation, Hous e                           program-related information for the Congress . This
  Committee on Interstate and Foreign Commerce, o n                             work is based on requirements set forth in the Legis-
  regulatory reform in the transportation industry .                            lative Reorganization Act of 1970 as amended b y
  (OPA-76-)3. Jan, 21, 1976.1 The paper compare d                               the Congressional Budget and Impoundment Contro l
  the views of individuals in different sectors of th e                         Act of 1974.
  transportation industry—kith each other, with th e                               Each year the Comptroller General is required t o
  historical reasons for regulation, and with the genera l                      report to the Congress on our progress in this work .
  arguments for deregulation . Specific projects under-                         His report discusses the Congress' informational needs ;
  way include studies of the interrelationship of Federa l                      their relationship to the reporting requirements ; th e
  highway, gnu gv, and economic policies : analysis of                          extent to which executive branch reporting presentl y
  capital problems in the airlines industry : and evalua-                       meets them ; changes needed in standard classifica-
  tion of cost-benefit or other techniques for determining                      tions to meet them ; the 011icCs activities, progress ,




Infmn+Wrier: Rryrra""'ls'half J the Rngrmn :L+ Wa Di; in meet :pith ,t1f arrmbrn if Ihr Sore lobar and Pablir W fja,e C—.iva to di,-
      the d,: ~Infvrn:r rf i,+ rnm,tien cur, nu to f1 .,t Crmm9trr iwrlcrlrn, h,i,latirr, Wrd n .rrsi~hl farrtw- Pirtarrd left to righl — : L11rr, R,,hr
1G.I0 r. ILihsd B—1,L ,GAO b~•nca 11 . 1hullm GAO t. U, . E-0                : 1" ' ,~nrT„ rrntr,. P'q'is-.1 sle, mnnbrr, S. nat. C"' n iur m+ Lahcr
~nu1 I^_d .Gr II'nJa"' Sean j';' , % 1r„L-,,,o,+a1 st Lif ai rlrr CnJan+v, 6- hnrdal-rrs rGAO), -d S,,—, 1)nnra .. p,nfrsiormd smff —h n
of''' G,,,n(trrr-

90
                                                                                                PROGRAM ANALYSI S


and results in helping the committees develop the m         cussions we published a staff study, "Proposed Budge t
and in monitoring, and recommending improvement s           Classifications, Functions, and Subfunctions ." (OPA-
in , congression al requirements for recurring reports ;    76-32, February 1976 .) We received comments from
and the executive branch's progress in fulfilling con-      congressional committees and other interested groups .
gressional information requirements . Our third annua l           Recently we have proposed changing the structur e
report to fulfill this requirement war entitled "Progre s   of budget functions and subfunctions toward a classi-
in Improving Fiscal, Budgetary, and Prograni-relate d       fication structure which will case congressional deci-
Information for the Congress ." (PAD-76-64, Aug . 30 ,      sions. Our report to the Congress, "Standard Budge t
1   61 )                                                     Classifications—Proposed Functions and Subfune-
                                                             tions" (PAD-76-49, August 19761, proposes an in-
                                                            crease in the number of functions and subfunctions t o
Standard Terminology, Definitions ,
                                                             permit greater flexibility in collecting data to mee t
classifications, and Code s                                  participants' needs under the new budget process .
   One of GAO's responsibilities under the Legislativ e      The report recommends that OMB supplement th e
 Reorganization Act of 1970, as amended, is to develop,      budget documents for fiscal year 1978 by includin g
establish, maintain, and publish standard termi-             a presentation of the budget using this structure .
 nology, definitions, classifications, and codes for Fed-         Underlying this overall classification suucutre, w e
 eral fiscal, budgetary, and program-related data an d       have developed individual program-oriented classi-
information .                                                fication structures for several subcommittees of th e
   We published a glossary of about 90 terms an d             House and Senate Committees on Appropriations .
definitions, entitled "Budgetary Definitions ." (OPA-        This work includes supplying info rmation abou t
 76-8, -November 1975 .) We have distributed ove r            appropriation and fund accounts or account groups .
6,0oo copies of the glossary, with circulation to al l        Information requirements documents, prepared fro m
 Federal agencies, congressional committees, Member s         our analysis of existing infor mation and discussions
 of Congress, and many other interested or ganizations        with appropriations conmitwe staf f members and
 and individuals. We are revising the glossary to in-         ag e ncy representatives, propose reporting format s
clude additional terms, primarily those related to th e       and cycles, information elements and their definitions ,
 budget execution process and economic terms com-             and classification structures . Our reconuncndations
 monly used to discuss the budget .                           for improvements to information provided by execu-
                                                               tive branch agencies are also included in thes e
  Underlying the definitions are concepts and prece-
                                                              documents .
dents in budgeting, authorizing, and appropriating .
Therefore, we are examining past and present fundin g              As an outgrowth of our work to assess informatio n
methods in relation to congressional control . This            requirements of appropriations subcommittees, w e
work is being closely coordinated with other legislative       have developed a unified, objective-oriented classi-
branch studies of control . We are studying revolving          fication structure for use in presenting Federa l
funds and Federal credit programs .                            research and development budgetary data . Thi s
                                                               structure will allow all Federal research and develop-
   We also address the usage of terms and fundin g
                                                               nhent funding to be presented in a manner which wil l
methods in commenting on bills and in response to
                                                               indicate the amount of Federal funds each agenc y
conunittcec requests .
                                                               commits to solving specific national problems and t o
   We have continued to develop standard classifica-
                                                               achieving specific objectives.
tions . A working group was formed in the summer o f
                                                                   The executive branch does not provide the Congres s
 1973 to seek a consensus within the legislative branc h
                                                               a picture of Federal research and development that i s
on changes required in the classification st ructure .
                                                               clear, comprehensive, and prompt enough to allo w
The working group, comprising staff members fro m
                                                                 .itaningful comparisons. Our proposed structure
the Senate and House Committees on the Budget an d
                                                                should help the Congress evaluate resource alloca-
on Appropriations, the Congressional Budget Office ,
                                                                tion in relation to priorities, oversee Federal researc h
and GAO, met periodically on this subject over a
                                                                and development activities, and compare thes e
6-uhonth period . Although a consensus was not reached
oil specific changes, these discussions helped us gai n         activities among various agencies . We are preparing a
 insight into an overall approach. Based on these dis-          report to the Congress on the unified classificatio n

                                                                                                                      91
     PROGRAM ANALYSI S

     structure and will continue to work toward its           Monitoring Recurring Reports
     implementation .                                         to the Congres s
                                                                 One of our responsibilities under the Legislativ e
     Federal Program Information                              Reorganization Act of 1970, as amended, is to monitor
                                                              the various recurring reporting requirements of th e
     We hate aided authorizing committees in specifyin g
                                                              Congress and a+tnntitees and recommend changin g
   and obtaining the information needed for thei r            or eliminating thent . To carry out this responsibility ,
   Match 15, 1976 . views and estimates reports . In file
                                                              we hays published a computer-based file (if thes e
   mete budget process, these reports nntst be suhnlitted
                                                              requirements as our of three periodic informatio n
   be each standing couuoitlee to its budget committer
                                                              directories. ((SPA--76-21, jute 1976 .)
  for use in preparing tale first concurrent resolution o n     Out- evaluation of recurring reports has led to
  the budget .
                                                              legislation eliminating or modifying requirements . I n
     The presentations developed for these committee s
                                                              the near future we plan to provide each congressiona l
  identified each Federal program and activity au-
                                                              Colli nn ice with x list of required reports which they
  thorized by legislation under the conun ;ttecs' juris-
                                                              receive. Each conunittee will be asked to evaluate th e
 diction . For each proerani we identified the budget
 function and subfunction : the names, titles, an d           usefulness of the reports received and recommen d
 sections of the authorizing public laws : the appropria-     improvements . These evaluations will be coordinated
 tion account number : the administerin g_ inwncv : til e     with the appropriate agency and the requirement wil l
 amounts authorized : the cipiration dates of th e            be improved or eliminated .
 legislation or program : and related budget authorit y
 and outlays for the past, rurrent, and budget vcar .         Information Directorie s
    Several conuuittecs asked to receive this informa-
tion each t-Car. In view of the continuing need for th e          An inventory of prograut-related information i s
information, we are automating the data base already          being publishedl periodically in a series of directories .
assembled .                                                   'I iiere are three inclexed directories and guides :

                                                                • " Federal Program Evaluation" describes pro -
Committee Oversight Information Need s                            gram evaluation repors produced by or for th e
                                                                  Government .
  We have received it number of requests fr- -:~ :
                                                                •"Pcdcral Information Sources and Systems "
authorizing Committees . for exaviple the Senate
                                                                  idcnti ics Pcdcral sutures and information sys-
Labor and public Welfare Committee. fc - assistance
                                                                  tems which contain budgetary, fiscal, and
in identifving overall information needs : this Senat e
Conunittre's needs are shared by most authorizin g                program-related data-
conuninces . ' File experience gained in answering it s           " Recut ring Reports to the Congress" lists execu-
request will help its advise and assist the Congress o n          tive branch reports required by the Congress on
oversight processes and information needs generally.              a recurring basis .
   We provided the Committee with an initial docu-
ment discussing its information needs (OPA-76-57 ,            Program Evaluation Responsibilitie s
Dec . 18, 1975), which identified critical point in th e
                                                                 1n response to the 1974 Budget Act, information
Budget process, the type of information needed by th e
                                                              was collected front 18 departments and agencies o n
Conunittec for the budget and legislative process, an d
the type of program execution information needed t o          such aspects of evaluation as legislative authority
assist [he oversight function . With the initial asses-       for evaluation ; staffing and funding ; the evaluatio n
ment of C:onintince needs as a basis, vve are workin g        process ; planned and ongoing studies and progra m
closely with Conmmittee staff to develop two informa-         evaluation reports issued in fiscal years 1973, 1974 ,
tion —t,ni models which could satisfy- some of th e           and 1975 . This survey Ne ill be conducted again durin g
Conmii[tcc*s more critical information Iequiretments ,        fiscal year 1977 . We also issued a report, "Long-
using data gathered from agencies and by the budg-            Range Analysis Activities in Several Federal Agencies . "
cuir, process.                                                (PAD-77-18, Dec . 3, 1976 .)

92
                                                                                                PROGRAM ANALYSI S

     'I•o meet our responsibilities under the Congres-       State and local systems to see hole their design affects
 sional Budget Act of 1974, we have provided evadua-         their cost .
  tico studies on programs and issues of concern an d
 have assisted committees in developing procedure s          Housin g
 fur I)vuVe integrating progrmu evaluation informa-
 tion into the oversight process .                             We arc evaluating the impact of carious factor s
                                                             (such its management, subsidy cost, and clefauhs)
     \\'c have also dune sort, work to improve an d          on the section 236 multifamily housing program .
 develop methods for program cvaloation tcith coo-
 phaSis oil ['valuating large-scale computer [models an d
 intpntcing training iu evaluadoo tt•chriqucs .'I'his ha s   Water and Soil Conservation Oversigh t
 resnited in :                                                 We are assisting the Senate Committee oil Agri -
   -An analysis of the Federal Energy Administra-            culture and Forestry in overseeing water and soi l
      tion's computer model portraying the U .S, energy      conservation programs. We are working on identify-
      system, "A Review of the 1971 Project Iridelwi d -     ing the influences of the many programs in this are a
                                                             and pointing out issues to be considered in oversigh t
      ,ure Evaluation SystR•m . ' (OPA-716 20, Apr. 21 ,
                                                             hearings.
      1976 .)
  --A current review of the transf er income model ,
                                                             Retirement Program s
      a large computer system widely used to portra y
     clllcts of carious income maintenance programs .           We are participating in a GAO task force reviewin g
  - -A study u ...Iv, ray to predict how and wl"l l           the possible consolidation of Federal retirement' funds .
     changes are likely to occur if a national health        Our efforts are aimed at analyzing the impact o f
      insurance hill is passed .                             integrating Social Security into the Federal retiremen t
   -Assistance ur the Civil Service Conuuicsion t o          system .
     improve its course on designing and executin g             We are also assessing the impact of early retirement
                                                             on tire retirement funds and on the retirees .
     program evaluation .

   For the past several yeas, congressional interest         Th? Implications for Rura l
in information on program results has increased sub-         Development of the President' s
stantially . We have developed a tool for providin g         1977 Budget Request
such information using existing research . By collect-
ing prggram results data and integrating it with th e           In February 1976, the Senate and House Agricul-
results of our own analysis, we are providing th e           ture Conunittecs jointly held oversight hearings on th e
                                                             harmers Home Administration (FuiHA), Departmen t
Congress with evaluative studies on a broad range o f
                                                             of Agriculture . During these hearings, Nleutbers of
topics .
                                                             Congress expressed concern about how the President' s
                                                             proposed budget for fiscal year 1977 would affect th e
School Lunch Progra m                                        goals and intent of the Rural Development Act o f
                                                              1972 . We were asked to analyze this issue .
   Aspccts of the national school lunch program,
                                                                In deciding which budget functions affect rural
raining front nutrition to commodity distribution ,
                                                             development, we focused on the funding authorize d
are being examined for their impact on program ef ec-
                                                             by the Rural Development Act and all funding fo r
ticcross .                                                   FrnHA. In addition we analyzed the funding fo r
                                                             agencies and programs which Agriculture official s
Gun Contro l                                                 at the hearings said contribute to the development o f
                                                             rural communities—such as the Department o f
  Our analysis includes the review of studies evaluat-       Housing and Urban Development's community
ing the effectiveness of various gun control measures .      development block grants, the Appalachian Regiona l
We have also analyzed handgun traffic and its im-            Commission's area development funds, the Environ-
pact on gun-related crime and surveyed selected              mental Protection Agency's water and sewer con -
                                                                                                                    93
     PROGRAM ANALYSI S

     struction grants, and the Economic Developmen t              developed under limited-dividend, private spon-
     Administration's funds for public works and business         sorship .
     development . (OPA-76=f2, Nlay 5, 1976 .)                    Rehabilitated housing generally has lower develop-
                                                               ment and direct subsidy costs than newly constructe d
     How Rural People Vie w                                    housing ; however, when private developers restore
     the Programs and Services                                 buildings under section 236 or section 8, the subsid y
                                                               will probably be greater than for new constructio n
     of Farmers Home Administratio n
                                                               because lucrative tax incentives for rehabilitatio n
     To support its oversight function, the Senate Com-        result in large tax expenditures which more than com -
  mittee on Agriculture and Forestry wanted informa-           pensate for direct subsidy savings. Rehabilitation ex-
  tion on how FniHA clients vivo- its programs an d           penses qualify for a 5-year rapid writeoff .
  services - %% rc developed a questionnaire asking fo r         Finally, we compared the total cost of leas-
  opinions, experiences, and perceptions on the follow-       ing existing housing under section 8 to the cost of con-
 ing six FmHA programs water, sewage, and soli d              structing conventional public housing. Where the
 waste ; rural housing ; essential community facilities ;     rents for ne%v and existing housing differed little, th e
 commercial, industrial, and job development ; site           long-term public-housing subsidy appeared to be les s
 preparation for business and industry : and farm             than that for leasing existing housingalthough in th e
 owning and operating.                                       short rum, leasing was less expensive . This anomal y
                                                             arises because public housing rents are fixed to th e
                                                             construction costs and operating expenses, while rent s
 Multifamily Housing Subsidy Cost s
                                                             under section 8 leasing will follow the general inflatio n
     The-costs of various housing subsidy programs have      in the economy . (PAD-76-14, July 28, 1976 .)
  been estimated and reestinuated for several rears . We
  prepared a report for the Senate Appropriations Com-
  mittee, "A Comparative Analysis of Housing Costs, "        Evaluation Planning Assistance
  to put in perspective much of the cost informatio n        to Committees
 available to the Congress on the major multifamily             A growing part of our work is devoted to innproving
 housing program: the low-rent public-housing pro -          the Congress' access to program evaluation infornna-
 gram, the section 236 rental assistance program, an d       tion . We are analyzing new approaches for integratin g
 the new section 8 leasing program . All three programs      evaluative information into the oversight process .
 help low-income households, and the section 8 an d
236 programs, which rely primarily of private financ-
 ing and development, also aid moderate-incom e              Evaluation Languag e
families . We developed a cost structure and estimatin g
                                                                We suggested legislative language providing fo r
methodology to compare the long-term costs of thes e
                                                             evaluations of programs to be authorized b y
programs. Most of this information was available
from our broad synthesis of housing program result s           —the Energy Conservation in Buildings Act of 1975 ,
data and evaluations . We considered both the direct           —the Public Land Policy and Management Act,
subsidies, such as annual payments to local housin g             an d
authorities or private developers, and indirect sub-           —the Toxic Substances Control Act.
sidies, such as tax benefits to developers and investor s    We assisted the staff of the Subcommittee on Inter -
or tax relief granted public housing projects by loca l      governmental Relations, Senate Committee on
governments.                                                 Government Operations, in developing evaluatio n
  Our comparisons had ntan% . results contrary to con-       provisions for the Government Economy and Spendin g
ventional vie,s :                                            Reform Act .
     —It is less expensive in the long run to provide low-
       mcnnne tenants with public housing than to sub-       Evaluability Assessmen t
      sidize private housing.
     —Nonprofit sponsorship of section 8 and sectio n         We conducted a review of the evaluability assess-
      236 housing is costlier to subsidize than units        ment process proposed by Senator Leahy in Senat e

94
                                                                                              PROGRAM ANALYSI S

Resolution 307 . This resolution would require GA O            The act emphasized the committees' need for revie w
to report on the evaluability of bills to be reporte d      and evaluation in support of their oversight function .
by authorizing committees .                                 It not only changed congressional organization an d
   %Ve tested the conceptual and technical feasibilit y     procedures for considering the Federal budget bu t
of appraising the potential evaluability of program s       also assigned the Comptroller General numerou s
proposed in legislation . Although Ave encountere d         additional responsibilities and revised others .
problems, Ave are examining alternate methods of               Titles VII, VIII, and S and the act's objective t o
providing evaluation planning assistance to com-            assure effective congressional control over the budg-
mittees considering legislation .                           etary process have increased our efforts to help the
                                                            Congress

Sunset and Zero-base Legislation                              —review and evaluate Government programs ,
                                                              —specify and fulfill its information needs, an d
  We reviewed legislative proposals which required th e       —control Presidential impoundments .
periodic reauthorization of legislation after review an d   (OPA-76-29, Apr. 21, 1976 . )
zero-base evaluation of pre rams . The concepts of
zero-base evaluation and zero-base budgeting hav e
been analyzed, and by working with committee staf       f   Evaluating Federal Program s
and giving testimony Ave have presented our views o n
the topic in general .
                                                               The 1974 act requires, among other things, tha t
                                                            "the Comptroller General shall develop and recom-
 The Congressional Budget an d                              mend to the Congress methods for review an d
Impoundment Control Act of 1974 :                           evaluation of government programs carried on unde r
 Its impact on th e                                         existing law. " "Evaluation and Analysis to Support
                                                            Decisionmaking" (PAD-76-9, Sept . 1, 1976) is a firs t
Authorizing Committees and GAO
                                                            step in collecting and disseminating general idea s
   The Congressional Budget and Impoundmen t                about these activities and relating them to othe r
Control Act of 1974 establishes a new congressional         decisionmaking activities .
budget process, a Committee on the Budget in each              To assist Congressmen and congressional staff in
House, and a Congressional Budget Office . The ac t         obtaining program evaluations, we issued " Evaluatin g
includes a procedure for congressional control ove r        Federal Programs, an Overview for the Congressiona l
the impoundment of funds by the executive branch,           User ." The uses of evaluation in congressional over -
provides the Congress with improved fiscal procedures,      sight and budgeting are outlined . Factors in decidin g
and focuses on a new congressional budget timetabl e        what to evaluate are offered . Some evaluative studies
                                                            requested by the Congress are cited .
planned around a fiscal year- starting on October 1 .
                                                              The pamphlet recommends that congressiona l
  Tile new budget timetable requires that th e
                                                            committees clearly specify the issues to be addresse d
committees submi t                                          and questions to be answered in evaluative studies .
 —A report to the budget committees by \larch 1 5           Committee agreements with evaluators on stud y
  of each year .                                            objectives, legislative program intent, study design ,
 —Authorizing legislation by \lay 15 of each year .         resources, timing, quality control, and reportin g
  This process should be facilitated in the futurr ,        requirements are also endorsed . Managerial and
  since the executive branch is required to reques t        methodological difficulties in carrying out evaluation s
  authorizing legislation a year in advance .               are outlined . (PAD-76-30, Sept . 1, 1976 .)




                                                                                                                 95
                                                                                       Table 1

                                                                                  pnrrrtrnmlr                    Uilliau
                                                             DOD weapons systems	                                  $12 5
                                                             DOD real property	                                       53
                                                             ADP equipment (a.ened Gove—n—t-.tide)	                    3
                                                             GSA stockpile	                                            7
                                                                                  E,padit
                                                             Mainte—ec of ,capon systutu	                             1 1
                                                             Purchase and distribution of supplies	                   10
                                                             Transportation of supplies	                               -t
                                                             Utilities and building maintenance (DOD, GSA)	            4

                                                              The Director of this Division is Fred J . Shafer, an d
                                                             Robert G . Roth\vell is the Deputy Director .

     CHAPTER EIGHT
                                                             Report s

                                                               Luring fiscal year 1976 and the transitional quarter ,
                                                            Ave submitted 130 reports - to the Congress. Of thi s
 LOGISTICS AN D                                             total, 97 were addressed to committees or %Members o f
                                                            Congress in response to specific requests . fn addition ,
 COMMUNICATIONS                                             144 congressional requests for information wer e
                                                            satisfied without written reports—by conversing o n
                                                            the telephone, by furnishing topics of documents an d
 Responsibilitie s                                          other information, and by briefing Members an d
                                                            their staffs. We also sent 95 reports to department an d
    The Logistics and Communications Division audit s       agency officials . Om' reports are listed in appendix 2 .
  logistics and communications activities in the De-           We made a number of important reviews an d
  partment of Defense and the General Services Ad -         studies in the energy area, and details of these appear i n
 ministration and related policies and practices            chapter 6—Energy and Materials .
  throughout the Federal Government . We are also
 responsible for auditing the Office of Telecommuni-
 cations Policy and all Government functions relate d       Manufacturing Technology
 to printing and publications, including those of the
 Government Printing Office.
                                                            Encouraging Industria l
    We have audit authority over (1) cataloging an d
                                                            Productivity Growth
 standardizing activities, (2) supple managemen t
 effectiveness, through reviews of the requirements for ,       The Federal Government spends billions of dollar s
 and the receipt, smraae, distribution, and disposal of,     each year for U.S : manufartured products . Inflation
 materials and equipment, (3) repair, maintenance ,          is constantly raising the unit costs of these products at a
 and overhaul of equipment and components, (4 )              time when pressures are mounting to limit Govern-
 acquisition and management of facilities, (5) readines s    ment spending. It therefore becomes increasingl y
of Activc and Reserve Forces, (6) management o f            important that manufacturers supplying the U .S .
Government industrial facilities, (7) acquisition an d      Government use the most efficient manufacturin g
operation of communications and automatic dat a             methods in producing products . Moreover, improved
processing (ADP) sysicmn , (8) transportation an d          productivity in both public and private sectors ha s
traffic management activities, and (9) supportin g          been generally recognized as one of the most effectiv e
activities, such as military food service, record s         means to stimulate economic growth .
management; and printing and publishing operations.             Consequently, Ave began comparing programs t o
   The range of our responsibilities, as shown by th e      the United States and other countries concerned wit h
most recent available data, is illustrated by table 1 .     advancing manufacturing technology—particularl y

96
                                                                                                             LOGISTICS AND COMMUNICATIONS



                                       LOGISTICS AND COMMUNICATIONS DIVISIO N

                                                                             DIRECTO R

                         C ONGRESSIDNAL AFFAIRS
                          AND SPECIAL PROJECTS
                                                                            F.J. SIIAFER                I   PROGRAM SUPPOR T
                                                                                                             AND EVALUATIO N

                               V .L . IIILL   ER         I              DEPUTY DIRECTOR                 I      ..   A

                                                                           R.G. ROTIIWELL




    COMMUNICATIONS AND DATA                        DISTRIBUTION MANAGEMENT            FACILITIES ACQUISITION AND           MATERIEL MANAGEMEN T
       MANAGEMENT GROUP                                     GROUP                        MANAGEMENT GROUP                          GROU P
           D .L. EIRICH                               H .W. CONNOR . JR.                    J.P. NORMa .E                      W . GR.SSHANS
                   LRY
                                                                                                                                     1AVRE5
                                                                                            J.G . ITCNELL                      J.M . NELLY
           C.a. SKICTH                                 A .w . suvn ER                        F.J- OBPRSON                      J .F. vORR I
                                                                                                                               R.I. TUCKER

    COMMUNICA TION SYSTEMS                         DISTRIBUTION SYSTEMS             BASE CLOSURES AND               MMUNIT10N MANAGEMEN T
    OPERATIONAL ADP SYSTEMS                        STOCK CONTROL                      REALIGNMENTS                 CATALOGING S STANDARDIZATION
    RECORDS MANAGEMENT                             5URP LUSDISPO5AL                 CONSTRUCTION FUNCTIONSMAINTENANC E
                                                   TRAFFIC MANAGEMENT               FACILITY ACQUISITION PROGRAM S MATERIEL MANAGEMENT SY5TEM 5
                                                   TRANSPORTATION READINESS         MAINTENANCE S REPAIR           READINES S
                                                   TRANSPORTATION SYSTEMS           POLLUTION CONTROL              REQUIREMENT S
                                                                                    PROPERTY USE S DISPOSAL        SUPPORT SERVICES


                                                                                                                                               ER 30.197 6

  for parts and components produced in medium an d                                   the continuation of the National Commission o n
  small lots—Tvitlt special attention to the potential for                           Productivity and in November 1975 its successor —
   ne%v applications of computers to designing an d                                  the National Center for Productivity and Quality of
  manufacturing.                                                                     Working Lifo.
     More advanced manufacturing technology is use d                                    In a report to the Congress, we recommended tha t
  in the United States than in other countries, but it i s                           the Center for Productivity and the Department o f
  not well diffused among small and medium-size d                                    Commerce lead the development of national polic y
  companies . Foreign competitors are capturing in -                                 and of an appropriate means for achieving balanced
  creasing shares of foreign markets and are increasingly                            productivity growth in industry. In so doing, they
  penetrating U .S. markets in competition with U.S .                                should strengthen their own efforts to support ,
 high-technology manufacturers. Unlike the Unite d                                   develop, and disseminate productivity-enhancin g
  States, its principal foreign competitors have tvcll-                              technology and to encourage others in both the public
 devcloped, government-directed programs and specia l                                and private sectors to actively support these objectives.
 institutional structures for overcoming barriers to                                    Our preliminary report was reviewed by a panel of
 diffusion of manufacturing technology and for advanc-                               manufacturing experts from Government, industry ,
 ing the state of the art through coordinated researc h                              labor, and academia . While many individual view-
 and development.                                                                    points were expressed, the panel supported the nee d
    The United States is the only major industr ial na-                             for national policy and action in this area.
tion without well-established formal or informal pro-                                   The Department of Commerce agreed that its
ductivity centers . Foreign productivity centers carry                               manufacturing technology efforts should be strength-
out a broad range of activities embracing science,                                   ened and said it will be guided by our recommenda-
engineering, and management . Moreover, their efforts                                tions. The Department will continue to cooperat e
clearly increase productivity. Consequently, whe n                                  with the Center and will help it establish workin g
the Congress held hearings on a productivity cente r                                 relationships with other Federal and private organi-
for the United States, we testified in support of both                               zations . (LCD-75-436, June 3, 1976 .)

                                                                                                                                                         97
     LOGISTICS AND COMMUNICATION S




 U a,kman pnpara a part which :,ill (a) be placed on materials handling line (tenter) and (b) be ma red to mriaus sorb renters to be machined .
 This n,tnr, r,odcml, ace pu a ra,wj f ports, and all its Aerations are under the control of a eo puter.
     (courtesy of togerroll-Raad Company )

 Materiel Management                                                      in efficiency and economy not readily measurabl e
                                                                          would also result from eliminating dual managemen t
                                                                          of supply items .
 National Supply System
                                                                             If potential savings are to be realized through a
  The concept of a national supply system has been                        national supply system, direction should be provide d
 underway in the Federal Government for more tha n                        by some authority not subject to the parochial in-
a decade. This system would employ one manager fo r                       terests of the agencies involved. The recently estab-
each supply item throughout the Government ,
                                                                          lished Office of Federal Procurement Policy would b e
thereby eliminating overlap and duplication i n
                                                                          appropriate .
supply functions.
                                                                             We therefore recommended that the Office o f
  Itn'entory could be reduced and about 520 .8
million could be saved if supply functions performe d                     Federal Procurement Policy confer with the House an d
by the Department of Defense and the General                              Senate Committees on Government Operations t o
Services Administration on dual-managed items were                       formally define the Congress ' concept of a nationa l
consolidated under a single manager . Oilier increases                   supply system . This definition should delineate ite m

98
                                                                                     LOGISTICS AND COMMUNICATION S

 management duties and establish short- and long-             Material Distribution System s
range objectives, as well as assign responsibility fo r
                                                                 Work in process as of September 30, 1976, include d
accomplishing them .
   The agencies involved generally agreed with ou r           a review of the Army's capability to support it s
                                                              European troops logistically in the event of an attac k
findings, but not with some of our recommendations .
                                                              on members of the North Atlantic Treaty Organiza-
 (LCD-76-232, Feb . 18, 1976 .)
                                                              tion . We are examining the Army's plans and prepara-
                                                              tions for resupplying combat units during the earl y
Consolidation of Support Function s                           stages of hostilities . One segment of the fieldwork
   The Department of Defense has established th e             involved observing the annual REFORGER exer-
Defense retail interservice support program to pro -          cise . REFORGER tests the ability to quickly move
mote effective use of interservice support, thus              U .S: based divisions into Europe in an emergency .
eliminating unnecessary duplication . Although we             The 1976 REFORGER tested, for the first time, the
reported in 1972 that improvements were needed ,              movement of combat equipment by ocean transport .
3 years later the program was still ineffective in the
Pacific .                                                     Ammunitio n
   Overseas coordinating groups responsible for pro -
posing worthwhile opportunities for consolidatio n              In April 1976 Ave pointed out to the Departmen t
were mostly ineffective ; local commands had pre -            that the Army could reduce its need for funds t o
vented consolidations with parochial objections ;             buy ammunition by improving its systems for man -
and the Secretary of Defense had not given the                aging ammunition component inventories .
Pacific Commander clear-cut authority to direc t                The Army had about $550 million worth of ammu-
consolidations of support functions over these narro w        nition components at plants on September 30, 1975 .
objections .                                                  However, because it had no reliable system fo r
   In the Pacific large savings and increased pro-            identifying, reporting, and managing these inven-
ductivity could be realized, without impairin g
                                                              tories, the Army could not consider them for fillin g
military missions, through consolidating suppor t
                                                              needs when it prepared budgets, bought new com-
activities at just a few locations .
                                                              ponents, and set up production schedules . In
   We did not attempt to put a total dollar figure
                                                              following our suggestion the Army thoroughly
on savings front these consolidations . However,
potential savings are estimated to be at least $9 . 1         reviewed ammunition component inventories o n
million annually, and equipment and vehicles valued
at $6.4 million would be made available fo r
redistribution .
   We recommended that these activities be con-
solidated and that the Secretary of Defense (1)
delegate clear-cut authority for the unified Pacifi c
Command +o direct interservice support consolidation s
and (2) sil;: . ,.ify procedures to transfer resources fo r
consolidations. Since the functions involved ar e
relatively standard throughout the military, we als o
recommended that DOD explore opportunities fo r
savings from similar consolidations in the continenta l
United States and in Europe .
  DOD said some of the consolidations Ave propose d
had been made and others were being studied . I t
disagreed that the Pacific Commander neede d
directive authority and said there were specifi c
                                                               :Issrciate Diarto, H. W. Connor end Assistant Director C . R .
procedures to resolve any disagreements on con-
                                                               Conf rt observe material morement phase of REFORGER 76 exercis e
solidations the Commander recommended . (LCD -                 at Oberdaduteuen, Germany- The dr eruy -WILVd \" container is being
75-217, Aug . 26, 1975.)                                       unloaded or German best nation personnel and equipment .

                                                                                                                              99
      LOGISTICS AND COMMUNICATIONS

    hand and reduced its fiscal year 1976 and 1977 pro -         elusion—that the Army may not be fully effective in
    grams for buying n .t•,c components by $35 million .        the missions assigned troops with pre-positione d
    (LCD-76-431, Apr, 16, 1976 .)                               equipment—has not changed because (1) equipment ,
       For the past 5 years, in response to requests fro m      repair parts, and certain types of ammunition men-
    the Chairman, House Committee on Appropriations ,           tial for combat are in short supply, and many wil l
    we have reviewed Army budget requests for long -            continue to be for several years, (2) some vehicles ha d
    range anuttunition-plant modernization and ex-              deteriorated, (3) there were not enough personnel to
    pansion projects that are estimated to cost $6 .5           maintain the equipment, and (4) shortages would re -
    billion (in 1975 dollars) during 1976-88 . For fisca l      quire U .S . units to bring equipment with them, thu s
   year 1977, the Army has done a good job in plannin g         increasing deployment time . Moreover, the equip-
   the production base for five new "improved conven-           ment in the hands of U .S . units was not as comba t
   tional munitions." However, the Army shoul d                ready as reported and thus would likely need main-
   emphasize phasing the projects for expanding th e           tenance before deploying .
   production base so that the projects for loading ,              NVe recommended to the Secretary of Defense an d
   assembling, and packing the ammunition end round s          the Secretary of the Army that the pre-positioned
   will be completed at the sane time as the projects          equipment program be reevaluated and variou s
  for the Cacilities to produce the shells, cargoes, an d      alternatives considered. We also made several recom-
  other components of the end rounds . Earlier produc-         mendations for actions to improve the program whil e
  tion capability for improved conventional munitions          these alternatives are being considered . The Arm y
  can he obtained by phasing future expansion projects         generally agreed with our recommendations and
 in this manner . (LCD-76-449, July 30, 1976 . )               said the critical problems of prc-positioning equip-
                                                               ment have been recognized and - are receiving to p
                                                               management attention . (LCD-76-441, July 12, 1976 . !
  Military Readines s
                                                               Readiness of Armored Units in Europ e
   During the past to months, we continued our em-
 phasis on reviews of the readiness of C .S . forces . Tw o      Our report to the Secretary of Defense concluded
 reports addressed subjects that affect the ability o f        that two key armored units were not as combat read %
 the United States to nicer its commitments in Europe—         as reported. Units reported as "substantially read y
 the readiness of (1) U-S . military equipment pre-            with minor deficiencies" lacked personnel to full y
 positioned in Europe for Army troops that woul d             staff all of their tracked vehicles and some personne l
deploy there in an entcrgenq and (2) C .S . armored           lacked skills necessary for combat . Units also ha d
units already stationed there . A third report addressed      problems with the readiness of their t r acked vehicles
Army contingency planning for the Pacific theater .           and the availability of their ammunition .
W c also reported on the seryiceyide need for effective-         In response to our recommendations, the Ar m
ly managing military flying by relating it to trainin g       has begun to correct many of the problems identifie d
and readiness needs . These reports are briefly sum-          and to improve its readiness reporting system .
marized below .                                               (LCD-76-412, June 30, 1976 . )


U .S Military Equipmen t                                      Army Contingency Plannin g
Pre positioned in Europ e                                     for the Pacific Theate r

   We initially reviewed this program in 1971-72 .               Reporting to the Congress, we concluded that th e
(B-146896, \far . 9, 1973 .) Our follo,,up review wa s        Army' s plan for supporting allies could be difficult
requested by the Chairman of the Joint Economi c              to implement because (1) only part of the wa r
COnitttince . In December 1975, the value of equip-           reserve materiel needed for those allies is stored i n
ment authorized for this program was X778 .4 million .        the area, (2) war reserves stored there for C .S . forces
  ,Since our 1973 report . the types and seriousness          would not be sufficient to alleviate an ally's shortage ,
of the programs problems changed- however, thei r             (3) transport problems would affect resupply, (4 )
overall effects are much the same . Our earlier con-          storing and maintaining resen-es would be diliicul L

100
                                                                                  LOGISTICS AND COMMUNICATION S


 and (5) the cur rent plan to provide logistic suppor t         We reported to the Congress that the Agency ha d
 to an ally needs revision.                                   not emphasized managing wartime needs for medica l
    \Vc recommended that the Congress and the execu -         supplies and equipment. A management plan ,
 tive branch reexamine and coordinate the nationa l           sufficient resources to solicit producers, and adequat e
 policy, announced by the President in July 1969, on          technical assistance had not been provided to carr y
 military support of G .S . allies (commonly referred         out the program, so :
 to as the Nixon doctrine), Army plans todefend Pacifi c        —Medical items readily available from commercia l
area allies, and the capability to implement thos e              sources had not been identified .
plans .                                                         —Planning agreements for most medical item s
   FYc also reconnntended that the Secretary o f                 classified as requiring emergency production b y
Defense, during this reexamination, evaluate th e                private firms had either not been implemented o r
usefulness of storing war reserves at Pacific locations          had provided insvricient quantities to meat
and reconsider his proposal to spend $89 million fo r            wartime needs.
additional Pacific ammunition storage facilities .              —Reserve stocks for medical items requirin g
   \Vc issued this report after waiting 6 month s                emergency production agreements were over -
without receiving formal Department of Defens e                  stated .
comments . (LCD-76-430, Oct . 6, 1976. )                         The method of determining needs made a n
                                                                 exaggerated allowance for possible problems wit h
 Managing Military Flying Program s                              the supply system .
                                                                In response to our recommendations, the Agenc y
    Military flying cost about $2.7 billion in fiscal yea r   assigned additional personnel, implemented a plan t o
  1975 . Most of this flying was for developing and           improve management, and began reviewing alternat e
 maintaining pilots' proficiency as an element o f            methods of determining wartime needs . In a
 military readiness . F ective management of such             special report on war reserve items to the Senate
 flying requires a system that can relate it to trainin g     Armed Services and Appropriations Committees, th e
 and readiness needs and results.                             Department of Defense said it did not contemplate
    We reported to the Congress that flying-hour              any further investment in medical war reserve stocks
 nianagentent varied among the military services . Th e       until the problems we reported arc solved to sonic
 Air Force system seems to be the most developed ; th e       extent. (LCD-76-405, \far. 5, 1976. )
Army' s, the least developed . -\[ally examples of
ineffective management were found .
    We made several recommendations to the Secretar y         Equipment for Army Mission s
of Defense for improving the management and con-                 The Army develops prototypes, or ideal models, o f
trol of military- flying. The Department of Defens e          combat units that prescribe the units' missions ,
generally agreed with the report data and ou r                organization, and personnel and equipment re-
conclusions, but gave no assurance that action woul d         quirements. From the prototypes, the Army establishe s
be taken . (L( :D-76-451, June 18, 1976. )                    actual combat units . \\'c reviewed the systems whic h
                                                              develop the prototypes, because they translate th e
                                                              Army's concepts and doctrine into planned an d
Requirement s                                                 actual combat units to carry out the Army' s
                                                              responsibility.
Medical Items for War Reserve Stocks                             Our report to the Congress pointed out that studie s
                                                              which precede the development of prototype units
  The Defense Supply Agency is responsible for                could be improved by more consideration of the type
inswing that medical supplies and equipment will be           of equipment needed for the units' missions, an d
available to the military services during tsar . This         how and by whom the equipment is to be used . Also ,
responsibility entails determining wartime needs and          equipment requirements for prototype units neede d
arranging to supply them by establishing reserve stock s      to be documented and regularly reviewed . Our
and making emergency production agreements with               findings were supported by two special Army studie s
private firms .                                               which found that, because of doctrinal weakness and

                                                                                                                   101
  LOGISTICS AND COMMUNICATION S

   lack of documentation and review of prototype units ,    equipment on hand could be used for planned futur e
   Army-wide requirements for wheeled vehicles an d         procurements or whether it should be scheduled fo r
  radios were overstated by about $727 million .            installation or applied to other programs .
      The Army also needed to (1) improve its effort s        We recommended that the Navy :
  to pattern actual combat units after newer, mor e           —Develop and submit backup data which woul d
  austere prototypes, and (2) tailor combat units '            relate annual procurement requests to planne d
  equipment requirements to their particular needs .           installation costs .
      In reviewing the tray the Army develops equipmen t      —Establish controls over the inventory on hand an d
  requirements for noncombat units, whose mission s            relate it to equipment to be installed, thereb y
  and workloads, rather than prototypes, govern thei r         forming a basis for balancing further installa-
  equipment requirements, we found that snore equip-           tions with additional procur ements .
  ment use standards were needed and existing stand-
                                                              The Navy concurred with our recommendation s
  ards needed to be realistic and enforced . Of th e
                                                            and stated that actions were being taken or planned .
  requirements for about $4.9 million of noncomba t
 units' equipment, the need for about $2 .1 million         (LCD-76-406, 'Mar . 15, 1976.)
 was questionable .
     In response to our recommendations to the Secre-       Navy Aircraft Overhaul Depots
 tary of Defense, the Army agreed to (l) change it s
                                                               The Department of the Navy operates six Naval
 procedures and otherwise improve the developmen t
                                                            Air Rework Facilities at an annual cost of $693
 process for prototype combat units, (2) assure tha t
                                                            million . We reported to the Congress that two wor k
 actual combat units conform to newer prototypes ,
                                                            shifts, 10 hour per day, 6 days per week, :would mak e
 and (3) establish and enforce use standards for
                                                            the mobilization potential of these six facilities mor e
 equipment in noncombat units . (LCD-75-442 ,
                                                            than double that required . \loreover, for peacetim e
 May 10, 1976. )
                                                            workloads, only about 68 percent of the availabl e
                                                            single-shift capacity was being used . The anhpl e
                                                            mobilization capacity and the low peacetime utiliza-
 Maintenance, Repair,
                                                            tion indicated opportunities for consolidating peace -
 and Overhaul                                               time workloads .
                                                               Decreases in production output and increases in
 Navy's Fleet Modernization Progra m                       unit costs at these facilities were due to weak wor k
                                                            measurement and management information systems .
   During fiscal years 1974–77 the Navy budgeted               The Navy intends to modernize the six Naval Air
about S2 .2 billion for improved equipment for it s        Rework Facilities to be self-sufficient, rather tha n
fleet . Two separate appropriations are used to fun d      execute an overall modernization plan to mee t
 these modernizations. Other-Procurement funds ar e        specific mobilization needs . We recommended tha t
used to buy the necessary equipment, and Operation s       the Secretary of Defense (1) consider operating thes e
and Maintenance funds are used to install it .             facilities more than one 40-hour shift a week, (2 )
   We reported to the Cong ess that the -Navy has n o      establish accurate mobilization needs, (3) consolidat e
configur ation manazement system to show complet e         excess capacity, and (4) concentrate on modernizin g
an. : incomplete modernization work for each ship .        only those facilities with long-term value .
Thus it cannot readily determine the amount o f               The Department of Defense generally agreed tha t
unfinished work, and equipment is frequently pur-          much money could be saved by improving the
chased without considering whether installatio n           management and operations of these facilities . Th e
funds are available . Consequently, when equipmen t        Department did not consider adding shifts appropriate
becomes available, it frequently is not installe d         at this time However, it concurred in our recom-
because operation and maintenance funds are in -           mendation to routinely examine projected depo t
sufficient .                                               maintenance workloads under mobilization condi-
   Also, the Navy could not determine from inventor y      tions, and the resulting facility requirements, an d
records on hand which items were purchased for             cited various actions underway or planned to ac-
fleet modernization . It also did not know whether         complish this . (LCD-751432, Dec . 23, 1975 . )

102
                                                                                LOGISTICS AND COMMUNICATIONS

 Weapon System Support                                      consumable items. DOD's stock fund customers ar e
                                                            mainly military units . GSA's stock fund customer s
                                                            are military mid civil agencies . Proceeds from sales
F-15 Aircraft
                                                            are used to purchase additional inventory.
    Large portions of major weapon system acquisitio n         During fiscal year 1976, both agencies asked th e
 costs are for support equipment, such as testers . We      Congress for -lditional stock fund capital to mak e
 reported to the Congress that, by better controllin g      up for inflation . n V c were asked by the Appropriation s
 factors affecting support equipment requirements ,         Committees to examine these requests.
  DOD could greatly reduce the investment in such               In addition, the House Committee on Armed
 equipment . More specifically, support equipment            Services asked us to review DOD ' s generation o f
 requirements for the F-15 were overstated because the      funds by selling equipment for which replacemen t
 :fir Force ' s new emergency deployment concept wa s        is not required . Receipts from these sales are termed
 not considered. The Air Force later reduced its             -free assets." DOD gives the Congress estimates o f
 requirement for avionics test equipment by abou t           these funds, which arc used in the budget process to
 $77 million .                                               partially fund defense progrants.
    Further savings of about $33 million are possible i f
 the Air Force uses avionics test equipment more fully ,    Department of Defense Stock Fund s
 rather than providing separate test shops at othe r
 locations scheduled to receive the r-15 . In determin-        In fiscal year 1974, the cash and working capita l
                                                            of DOD stock funds began to deteriorate. This
 ing support equipment requirements for the F-15, th e
                                                            deterioration was caused by rapidly rising costs ,
 Air Force is not fully considering equipment al ready
                                                            pricing policies, delays in updating published prices ,
 available .
                                                            and price freezes . Defense chose to resolve the cas h
    We aiso reported that the F-15 training aircraf t
                                                            shortage w4 li a 15-percent surcharge on sales .
 requirement can be reduced by 17 planes, valued a t
 about $170 million (not includ ;ng spare parts an d           In our report to the Senate Appropriations Com-
support equipment) . In determining the number o f          mittee, we reccannicnded that DOD resolve any
 training aircraft, the Air Force did not consider suc h    future major cash shortages by seeking direct appro-
factors as the number of pilots to be trained and th e      priations for the stock fund . We also recommende d
                                                             that the Secretary of Defense improve procedure s
 number of flying hours needed to train them . Instead,
                                                            for determining cash requirements and tailor cas h
it applied arbitrary percentages to the number o f
                                                             balances to the requirements of individual stock
 ntissicn aircraft planned .
                                                            funds . (LCD-761433, June 16, 1976 .)
  The Department of Defense generally concurred i n
our recommendations to reexamine support require-
ments for major weapon systems and stated a numbe r         General Services Administration I s
of actions that the Air Force would take to improv e        General Supply Fun d
weapon system support . It did not specifically com-
                                                               Although inflation reduced the purchasing powe r
ment on the 17 unnecessary aircraft . However, it
                                                            of the General Supply Fund, the fluid's capital was
agreed to ask the Air Force to reevaluate the numbe r
                                                            also reduced because it was used to buy vehicles fo r
of training aircraft required for F-15 training, using
                                                            GSA's motor pool and because excess supplies were
the F-15 training syllabus . (LCD-76-403, Jan . 22 ,        purchased .
1976 . )
                                                               The supply fund obtained some capital throug h
                                                            long-term loans from customers (a practice no t
                                                            intended by the Congress), and by unauthorize d
Stock Fund Managemen t                                      transfers from other GSA revolving funds .
                                                               In our report to the House and Senate Appropria-
  Both the Department of Defense and the Genera l           tions Committees, we recommended that the Ad-
Services Administr ation operate revolving _funds,          ministrator of GSA (1) repay supply fund borrowing ,
known as stock funds, to finance the purchase an d          (2) prevent future supply fund transfers, (3) improv e
storage of material for sale—generally low-value,           controls over advances, (4) require better cash fore -

                                                                                                                   103
      LOGISTICS AND COMMUNICATION S

   casting, and (5) explore alternatives to depot stockin g        Trident Submarine
   of items which could reduce the amount of additional
                                                                     At the request of the Chairman, House Committe e
  funding required .
                                                                   on Appropriations, we reviewed the Navy's economi c
      The Administrator of GSA agreed and said tha t
                                                                   analysis of ways to construct a drydock and it s
  GSA would take corrective action. (LCD-76-421 ,
                                                                   request for focal year 1977 funds for building facilitie s
  \far. 19, 1976. )
                                                                   to support the Trident submarine .
                                                                    The Navy had prepared an c=omic analysis to
  Free Asset Management
                                                                  evaluate the advantages of using phae•_d or unphase d
     Over $l billion in free assets were generated i n            construction for a drydock . This analysis showed tha t
   DOD's procurement accounts during fiscal year s                construction costs, unadjusted for inflatio t, would b e
   1972-75. During fiscal years 1974-75, DOD generate d           the same for both alternatives . But when inflation was
   an additional $66 million in research and develop-             considered, phased construction would cost about $1 0
   ment appropriations by including nonrecurring                  million less.
  research, development, test, and evaluation costs i n              The construction industry- recognizes some problem s
   the price of items sold .                                      with phased construction . Further, the Navy had
     Historically-, estimates of free assets for the Congres s    omitted, from its analysis of both alternatives, cost s
  have been low. If origin-1 estimates were closer t o            for contingencies and contract award and adminis-
  actual amounts, funds initially appropriated for                tration . These costs are generally higher under phase d
  Defense programs would be reduced Because th e                  construction, because construction is started befor e
  Department of Defense has not provided tkc militar y            design is completed, thereby increasing the risks o f
  services with a standard definition of free issets,             additional costs . We concluded that the Committe e
  they have developed their own definitions, which                should require the Navy to pruvide more realisti c
  tart among the military- departments and among th e             budget estimates . (LCD-76-341, July 14, 1976)
  Arntv' s Commodity Commands.                                      For fiscal year 1977, the Navy requested $12 9
    We reported to the House Committee on Arme d                  million for Trident-related construction projects. Th e
 Services that the Army has limited control over it s             Navy- also requested $11 million to help local govern-
 free-asset generations because of varicus problems i n           ments pay for increased municipal services an d
 managing its customer-order program in general .                 facilities resulting directly from construction an d
 These problems have impaired congressional over -                operation of the Trident support site.
sight of how free assets are applied .                              Amounts requested for several projects were over-
    Our reconmtendations to the Secretar of Defens e             stated by a total of $3 .1 million ; because of slippag e
were generally accepted and corrective actions wer e             in the schedule over $27 million requested for som e
begun . The House Committee on Appropriation s                   other projects could be deferred for a year withou t
reduced the Defense budget by 5200 million, based                hampering the program . (LCD-76-346, Sept. 20 ,
on its judgment of the underestimation of free assets .          1976 . )
(LCD-76-414, Mar . 3, 1976 . )

                                                                  Reserve Forces Facilities
Acquiring and Managing Facilities
                                                                     The Congress appropriated over $727 million i n
                                                                  fiscal years 1972 through 1976 as part of a 10-yea r
   Over the past several years, our work in this are a           program to reduce the Reserve Forces' backlog of
has been heavily influenced by requests from Member s            construction projects .
of Congress . For example, over the past 15 months ,                 We reported to the Congress unnecessary con-
Ave completed 28 assignments involving base closing s
                                                                 struction projects started, completed, or planned .
and,or the relocation of military activities . As of             Reserve Forces needs could be met faster and cheape r
September 30, 1976, we had I1 such assignments i n               by making greater use cf existing facilities and b y
process .                                                        constructing more joint-use facilities. The Defense
  Presented below are brief summaries of som e                   Department's process for reviewing and approvin g
other reviews .                                                  construction projects needed strengthening .

104
                                                                              LOGISTICS AND COMMUNICATION S

    The Department generally disagreed with our con-        Communication s
 clusions and recommendations . While acknowledgin g
 that certain weaknesses existed in its construction pro-   Military Telecommunications Center s
 ject review and approval process, the Departmen t
 stated that no unwarranted projects had been ap-              The Defense Department' s automatic digital net -
 proved m constructed . However, we identified 1 5          work is a computer-controlled communications sys-
 completed or ongoing construction projects for whic h      tem with about 900 telecommunications centers.
 cheaper alternatives were available. These project s       These centers process three basic types of messages—
 had an estimated construction cost of over $1 0            data card, magnetic tape, and narrative. \los t
 million. (LCD-75-309, June 11, 1976 .)                     messages are sent and received by data card or
                                                            magnetic tape without processing . However, narra-
                                                            tive messages require extensive manual processing ,
 Waste Water Treatment Plants                               such as (1) retyping the message, (2) proofreadin g
   We reported that, although the Congress ha d             the message, and (3) inserting the message into the
appropriated over $263 million to DOD for improving         terminal for transmission.
waste water treatment plants and connecting them t o           Some narrative messages could have been mailed
public sewage systems, many plants did not meet wate r      instead of electronically transmitted—for example ,
quality standards . In addition, the Department ha d        about 19 percent of the outgoing narrative message s
not taken measures to insure compliance with thes e         at some telecommunication centers . We estimate d
standards by July 1, 1977 .                                 that reductions ranging from 5 percent to 40 percen t
                                                            in the number of narrative messages electronically
  Because the DOD waste treatment program wa s
                                                            transmitted by 835 military telecommunicatio n
seriously impaired by problems of design, operation ,
                                                            centers could annually- save S1 .8 million to $15 .7
and maintenance of plants, we recommended tha t
                                                            million in personnel costs .
controls be established to insure that plants compl y
                                                               We recommended that DOD require (1) messag e
with effluent limitations and water quality standards .     releasers to become familiar with their responsi-
The military services should determine the improve-
                                                            bilities and (2) military departments to review regu-
ments needed to meet these requirements, implemen t
                                                            lations, directives, and policies to find unnecessar y
them, and monitor their progress . DOD generally-           requirements to electronically transmit messages .
aateed with our recommendations. (LCD-76-312 ,              The Secretary of Defense stated that military depart-
Jtme 18, 1976. )                                            ments were directed to implement our reconunenda-
                                                            tions. (LCI)-76-107, Dec . 4, 1975 .)
Architects and Engineers
                                                            National Warning System s
  To increase competition among architects an d
engineers for design contracts, we recommended tha t          Five general-purpose natural disaster and attac k
GSA and DOD revise certain practices and proce-             warning systems exist or are being planned ; however,
dures relating to public announcements and dis-             the Nation's needs could be met by improving and
cussions. These agencies should coordinate efforts t o      connecting two systems : DOD's National AVarning
refine life-cycle cost analyses and their application to    System and the National Oceanic and Atmospheri c
prcaward evaluations . We also recommended tha t            Administration's F1'eather Radio System (alread y
                                                            selected as the Federal home-warning system) . The
the Director, Otlice of %lanagement and Budget ,
                                                            three warning systems—a satellite warning system, a
require the Administrator, 011ice of Federal Pro-
                                                            high-speed radio warning system for nuclear attacks,
curement Policy, to revise procurement regulation s         and a teletype system are expected to cost 514 0
to require that agencies consider the bidder 's ability     million through fiscal year 1980 and do not appear t o
to estimate and analyze life-cycle costs .                  be operationally or economically justified .
  Legislation proposed by the Office of Federa l               We recommended that the President desig3ttate the
Procurement Policy embodied needed modification s           Office of Telecommunications Policy t o
in contracting for these services . (LCD-75-313,              —define and consolidate all Federal warnin g
July 21, 1976 .)                                               requirements,
                                                                                                              105
      LOGISTICS AND COMMUNICATION S

       —develop an integrated national program to mee t        Concerning Government automated informatio n
         these requirements in the most efficient manner ,     systems, we described in four reports (1) som e
        and                                                    planning and reviewing problems encountered durin g
       —prevent continued operation of unneeded warnin g       the development of certain systems and (2) estimate d
        systems .                                              savings from modifying or terminating a system .
     Several Federal agencies will be involved in carry-          The Air Force 's Advanced Logistics System was i n
   ing out these recommendations. Most have agreed on          development for 9 years at a cost of about $25 0
   the need for an integrated national program . (LCD -        million . The Air Force continued the program
   76-105, Apr. 9, 1976 .)                                     despite evidence that technical problems would pre-
                                                               clude its successful completion . Although the House
                                                               and Senate Committees on Appropriations terminate d
  Radio Spectrum Managemen t                                   this program, we issued the report to illustrate th e
  in the Federal Secto r                                       risks involved in pursuing large, highly technica l
                                                               automated data processing programs . (LCD-75-101 ,
      The radio frequency spectrum is a natural resourc e
                                                               June 17, 1976 . )
   that extends beyond national boundaries to accomnno-
                                                                  The Federal Aviation Administration, since 1965 ,
   date radio users throughout the world . It cannot b e
                                                               has spent $7.7 million developing and implementin g
  depleted through use, but it can be polluted or mis-
                                                              several management information systems . The Ad-
  used, thereby limiting or denying its use to othe r
                                                              ministration approved the development of these
  potential users . Demands for spectrum use ar e
                                                              systems without clearly defining objectives, adequatel y
  increasing more rapidly than technology- and manage-
                                                              estimating potential benefits, or determining cos t
  ment techniques can find ways to supply it, resulting
                                                              alternatives and equipment requirements. During the
  in congestion in sonic parts of the spectrum .
                                                              development of these systems, the agency prolonge d
     Government departments and agencies have ove r
                                                              development cycles, exceeded cost projections, and
  120,000 radio frequency assignments and hav e               prematurely acquired equipment . We recommended
 invested about S50 billion in radio equipment .              that the agency establish procedures and improv e
  However. the Federal sector lacks enough competent
                                                              techniques for approving and developing these type s
 personnel to manage and use these resources.
                                                              of systems . (LCD 74-118, Aug . 18, 1975 . )
     We recommended that the Office of -Managemen t
                                                                The Department of Defense is developing a n
 and Budget and the Office of Telecommunications              information system known as the World Wide
 Policy consult with agency officials to determine an d       Military Command and Control System, which is to
 support the level of personnel and funding necessary
                                                             inform Command Authorities so that prompt ,
 to improve the Government's management of th e
                                                             appropriate decisions can be made . Compute r
 radio spectrum . Federal departments and agencie s
                                                             security and internetting (high-speed data links )
 generally agreed with our findings and conclusions .        between computers in this system need improve-
As a result, OTP, in cooperation with the Civi l
                                                             ment . Since various alternatives are available fo r
Service Commission and the Office of Managemen t             improving computer systems, we suggested tha t
and Budget, established a Government spectrum -              management evaluate each and select those whic h
management career development program in 1976 .              would be the most economical and effective . (LCD -
(LCD-74-122 . Oct. 21 . 1975 .)                              75-116, July 21, 1975. )
                                                                The Defense Supply Agency designed and de-
                                                             veloped three automated logistical information sys-
Data Processin g                                             tems to support its supply management responsi-
                                                             bilities . We pointed out that sonic depot activitie s
Automated Information Systems                                could be accomplished more economically an d
                                                             effectively if these systems were impro ved . For
   Automated information systems (1) support man-            example, greater consolidation of parcel post ship-
ac~enhent in increasine the effectiveness and efficienc y    ments with freight shipments could save an estimate d
of operations and (2) provide timely informatio n            $1 million a year . We recommended that information
which permits nnana?ement to make prompt decisions .         systems be revised so the agency could (1) shi p

106
                                                                               LOGISTICS AND COMMUNICATION S

materiel more economically, (2) insure the accurate         related supplies increased from $38 million in 1964 t o
preparation, recording, and reporting of materiel           $139 million in 1974. Centralized management o f
shipments, and (3) improve control over the processin g     office copiers in multiagency buildings, large agenc y
of customer requisitions . (LCD-76-108, Feb . 211 ,         headquarters buildings, and large military building s
1976 .)                                                     could reduce costs by identifying copier needs for a n
                                                            entire building and meeting them efficiently .
Data Processing Equipment Utilization                          We recommended that GSA initiate a test progra m
                                                            for centralized management of copiers in one or more
   Tile U .S . Army Nateriel Development and Readi-         multiagency Federal buildings and include copiers in
ness Command and the Defense Supply Agency's                its program for providing common services in suc h
supply centers underutilized some ADP equipment .           buildings. GSA agreed with our recommendation s
The central processing unit of the Army's computer ,        and began studies in October 1976 to determine th e
costing $2 .6 trillion, was used less than 30 percent o f    most efficient method of meeting copying needs i n
its available hours . The three supply centers reviewe d     Federal buildings . (LCD-76-109, \far . 9, 1976 .)
had about 30-percent unused space on their dis k
drives (devices for storing information) . This unuse d
space was equal to 83 disk drives, which would repre -      Transportation
sent an investment of about $800,000 .
   We recommended that these organizations stud y           Military Airlift of Passenger s
ADP equipment utilization to identify the (1) share -
able capacity that should be offered to other user s            We reported on several aspects of the airlift servic e
and (2) excess equipment . Both organizations said          provided by the ; .lilitary Airlift Command . In one
studies had been started in this area. (LCI)-76-125,        report (LCD-75-231, Jan . 28, 1976), we cited the
June 30, 1976, and LCD-76-121, July 7, 1976. )              savings and benefits available from diverting passen-
                                                            gers from charter flights to regularly scheduled flights .
Other Data Processing Program s                             The charter passengers would occupy otherwis e
                                                            unused seats on scheduled flights and the charter
   Because of the continuing interest of committees and     would be canceled . This diversion of passengers
Members of Congress, we are continuing and expand-          would (1) save as much as 48 million gallons of je t
ing our reviews of automated information systems,           fuel annually, (2) reduce annual Defense costs by a s
including the World Wide Military Command an d              much as $3 .5 million, and (3) allow the financially
Control System, TRI-Service Medical Informatio n            ailing U .S . international carriers to reduce annual
Systems and logistical systems, and the Interna l           expenses by as much as $48 million .
Revenue Service's Tax Administration System . Addi-              In another report we evaluated—at the request o f
tionally, we are reviewing the management of com-            the Senate Appropriations Committee—an Air Forc e
puter operations and the Department of Agriculture' s       study dealing with the staffing of military airports .
plans to acquire data processing equipment . Reports         (LCI)-76-219, Feb . 2, 1976 .) The study was referred
on our findings, conclusions, and recommendation s           to in DOD' s response to an earlier GAO report whic h
in several of these areas will be issued to the Congres s    pointed out that airports were overstaffed . The stud y
during fiscal year 1977 .                                    called for 1,727 more positions than needed . On the
                                                             basis of our work, the Congress eliminated 1,70 0
                                                             positions, which reduced the Air Force budget b y
Records Managemen t                                           $15 .4 million .
                                                                 We are also reviewing the use of military airlift b y
Office Copiers                                                active or retired military members and their depend-
                                                             ents traveling worldwide for personal reasons . (LCD-
   Agencies in multiagency Federal buildings generall y
obtain office copiers independently of each other . As        76-230.) About 2 .8 million such passengers travele d
a result, copier costs are increased and copiers are no t     free in available space on DOD-controlled aircraf t
efficiently used . General Services =Administratio n          from fiscal year 1968 through the first quarter o f
figures show that costs for acquiring office copiers and      fiscal year 1976 . To process such passengers at militar y

                                                                                                                   107
      LOGISTICS AND COMMUNICATION S

  air terminals cost about S17 each, or about S7 .8 mil-      losing ships, cant.ot meet the demands of a nationa l
  lion in fiscal year 1975 . DOD should recover thi s         emergency e6eclively .
  processing cost front the traveler . We expect t o             Some of the problem areas identified were slo w
  repor t on this matter in fiscal year 1977 .                reactivation, unavailability of some basic spar• parts ,
                                                              an it. dequate onboard inven .ory system, and th e
  Transportation of Household Good s                          inability to accurately and quickly determine th e
                                                              condition and status of the fleet . After our fieldwork
     DOD spends about S200 million a year to move            had been completed, the Departments of Defens e
   household effects of military personnel between the       and Commerce jointly sponsored a program to up -
   United States and points overseas . Basically, there      grade 30 reserve fleet Victory ships so that reactiva-
  are A— mcdrods for making such moves—the direc t           tion could be reduced to 5-10 days . Itnniediate need s
  procurement method, under which the Governmen t            for emergency supplemental shipping will be satisfie d
  arranges frith individual firsts for all required serv-    by this program ; however, attention should also b e
  ices, and the "international-through-Governnuent-         directed to the remainder of the fleet . We recom-
  bill-of-lading" method, under which the Governmen t       mended that the Secretaries of Defense and C :om-
  pays a household goods f awarder (an agem wh o             meree continually review the entire reserve fleet t o
 performs shipping services) to :wake the arrangements .    insure that enough merchant ships can be activate d
 The House Committee on Appropriations asked u s            and deployed within the time required . We also mad e
 to sec if both systems were needed .                       several recommendations to the Secretary of Con n
    Administering two systems is uneconomical, bu t         coerce for Nlaritinte Administration programs t o
 eliminating one system is undesirable under presen t       improve the condition and status of the fleet .
 circumstances, The cost for the direct procuremen t            DOD co .curred in principle with our conclusions
 method was usually lower than for the other method .       and recommendations and considered the repor t
 However, for a number of reasons, this system coul d       valuable and constructive- The Department o f
 not be used exclusively .                                  Commerce agreed in general with the report's finding s
    Bill-of-lading rates are high in relation to ou r       and the intent of the recommendations. (LCD-76 -
 estimate of the reasonable cost of providing th e          226, Oct. 6, 1976 . )
 service . `%Vc recommended that DOD introduc e
 more competition into it rate-setting procedures .         Transportation of Foreig n
 The Department agreed and has taken action .
                                                            Military Sales Materie l
 It estimates that the change will save about S25
 million annually.                                             We reviewed transportation payments for ship-
    Our repor t was used by various committees i n          ments of foreign military sales materiel and foun d
considerin g_ the need for legislation to regulate the      that millions of dollars have not been recovered from
forwarder industry and to protect small business .          recipient countries for aecessorial services provide d
(LCD-75-225 . Nlay 6, 1976. )                               by the military and charged to the operating and
                                                            maintenance funds of the military services, becaus e
                                                            (1) DOD service components are not applyin g
National Defense Reserve Flee t
                                                            correct charges, (2) incorrect transportation tariffs
   The National Defense Reserve Fleet is the onl y          are being used, (3) percentage factors applied agains t
source of reserve dry-cargo shipping that the Unite d       the cost of goods for aecessorial services have not bee n
States can turn to for supplemental transportatio n         adjusted to meet increased transportation costs, an d
during a military or commercial shipping crisis .           (4) the number of transactions being processed fa r
Because of the declining number of break-bulk typ e         exceeds the system design—officials at the Arm y
ships—in contrast to newer, containerized-carg o            Nateriel Command stated that their foreign militar y
ships—and the decrease in the size of the Militar y         sales control system was designed for $600 millio n
Sealift Command's controlled fleet, the Departmen t         per year although the volume is more than S4 billion .
of Defense has recognized that the reserve fleet mos t        Our work thus far has resulted in collections of ove r
be relied on more to respond to future emergencies .        $16 million . We expect to report our findings to th e
However, the reserve fleet, which is aging and steadily     Congress in the next fiscal period .

108
                                                             Richard W . Gutmann is Director of the division,
                                                           and John F . Flynn, Morton A . Myers, and Jerome H.
                                                           Stolarow are Deputy Directors.


                                                           Magnitude of Systems Acquisitio n

                                                              The Department of Defense defines a majo r
                                                           acquisition as one with an estimated research, develop-
                                                           ment, test, and evaluation cost exceeding $50 millio n
                                                           or an estimated production cost exceeding $200
                                                           million . The estimated cost of 118 major system s
                                                           being acquired by Defense at the beginning of fisca l
 CHAPTER NIN E
                                                           year 1976 was more than 5220 billion .
                                                              Generally civil agencies have not established
                                                           criteria for defining major acquisitions ; however, we
                                                           have established a threshold of S25 million to defin e
                                                           major acquisitions of civil agencies. Identified by thi s
                                                           criterion, 467 major systems were being acquired by
 PROCUREMENT AN D                                          civil agencies at the beginning of fiscal year 1976 fo r
 SYSTEMS ACQUISITIO N                                      almost $185 billion .


 Responsibilities                                          Importance of
                                                           Science and Technology
   The Procurement and Systems Acquisition Divi-
sion's responsibilities include procurement and scienc e       Federal expenditures for research and developmen t
and technology programs and activities of th e              in fiscal year 1976 and the transitional quarte r
Department of Defense, the National Aeronautics an d       totaled almost ISM billion . Defense spent about half
Space Administration (NASA), the Energy Researc h           this amount ; the rest was for civilian and space
and Development Administration, the General Setv-          activities . \lost major Federal programs have an
ires Administration, and the Renegotiation Board .         important research and development componen t
                                                           upon which the programs' success depends .
These responsibilities encompass a majo r portion of
                                                              Science and technology greatly affect nationa l
the Federal Government's annual expenditure fo r           productivity and economy as well as the quality o f
those areas.                                               life. More and more, the Nation's foreign relation s
  This division is concerned with (1) establishin g        and its position in world affairs also depend upon the
needs and operational requirements, (2) identifyin g       strength and viability of science and technology an d
technology gaps, (3) supporting research an d              the management and use of these resources .
development, and (4) acquiring goads, seryiccs, and
facilities promptly and economically through th e
use of contracts, leases, and grants .                     Volume of Federal Procurement
  This division is the focal point for general under -
standing, coordination, assessment, guidance, and            Federal agencies awarded contracts and placed
                                                           orders with commercial firms for over $50 billio n
coumnunication on what has been done, ghat is bein g
done, and what should be done relative to th e
                                                           worth of supplies and materials, other services, and
                                                           capital equipment—excluding research and develop-
procurerrueut or goods and services and the Federa l
                                                           ment—during fiscal year 1975 . The major portion o f
Goverunrent' s science and technology policies an d        this amount was spent by the Department of Defens e
programs .                                                 and the military services .

                                                                                                                 109
   PROCUREMENT AND SYSTEMS ACQUISITIO N



                        PROCUREMENT AND SYSTEMS ACQUISITION DIVISIO N


      PLANNING AND ANALYSI S                            DIRECTO R                         SYSTEMS ANALYSIS STAF F

         C. W. MOORE, JR .                           R. W. GUTMAN N                              J . G. BARMBY




                                          PLANNING AND MANAGEMENT COUNCI L




      SCIENCE AND TECHNOLOG Y                    MAJOR ACQUISITION S                     GENERAL PROCUREMEN T

              M . A . MYERS                         J. H. STOLARO W                            J. F. FLYNN
  D .E. DAY             R .A. HAUTAL A       F .P . CHEMERY S.R . EIBET Z             A .H . TteCONNELL R .J. POSKAITI S
  C.S. DANIELS         J .S. HEINBAUG',      F.E . ASHY       L .J. LEPORATTI         R.B . HALL, JR .     J .A . RINKO
  O.T . FUNDINGSLAND R .G. MEISNE R          H.S . BARAS      S. PINES                J.R . HENDERSON S . WOLIN
             J .K. SPENCE R                  J.C . BOHAN      D .H . SCHWEB S                     C .F . BOGA R
            MISSION RELATED                           CIVIL PROGRAMS                     COMMERCIAL PROCUREMEN T
        SCIENCE AND TECHNOLOG Y                             COST                                PROCUREMENT –
         DOD/NASA/ERDA MILITAR Y                     DEFENSE PROGRAM S                         ACQUISITION PHAS E
                                                      MISSION STUDIE S               REQUIREMENTS & SPECIAL STUDIES
            NATIONAL ISSUES
                                                           TESTING                       PRICING & CONTRACT ADMIN .
       SCIENCE AND TECHNOLOG Y
                                                                                          PROCUREMENT COMMISSIO N
           SPECIAL PROJECTS
       SCIENCE AND TECHNOLOG Y
        SCIENCE ADVISORY STAFF




 Audit Report s                                                 the detailed status (cost, schedule, and performance )
                                                                and financial status of major civil and defense systems ,
                                                                (2) the effectiveness of various systems, (3) the missio n
   We provided the Congress and its committees with
                                                               capability and existence of technical problems with th e
 102 reports on science and technology programs, th e
                                                                F—15 aircraft, (4) overall airlift requirements, (5 )
acquisition of major systems, and Federal procuremen t
                                                               strategic nuclear policies and capabilities, (6) prob-
practices . In addition, we submitted 49 reports t o
                                                               lems in achieving major weapon system standardiza-
Members of Congress and 58 reports to departmen t
                                                               tion in the North Atlantic Treaty Organizatio n
or agency officials. We also responded orally to 5 7
                                                               (NATO), and (7) recent Defense acquisitions com-
congressional requests for information . Our major
                                                               pared with the acquisition framework recommende d
revietes arc summarized in this chapter .
                                                               by the Commission on Government Procurement .
                                                                  Some of the more notable reports on major acquisi-
                                                               tions are summarized in this section .
Major Acquisition s

   We submitted 63 reports to the Congress and con-            Information on the Requirement for
gressional committees, 17 to \lembers of Congress, an d        Strategic Airlift
5 to departmental officials during fiscal year 1976 an d          The Department of Defense has not provide d
the transitional quarter on various phases of majo r           enough data to enable the Congress to properly con-
civil and defense system acquisitions .                        sider the needs for new or alternate airlift programs.
   Examples of work in process include reviews of (1)          The Department's planned increases in airlift capa -

110
                                                                           PROCUREMENT AND SYSTEMS ACQUISITIO N

bility and its other proposed airlift programs will cos t         continued development might have to be based o n
about $13 billion.                                                incomplete information about (1) the relative effec-
  The airlift program may not be attainable because :              tiveness of various force mixes, (2) the most effective
                                                                   inain gun, and (3) the performance and cost of the
  —It is questionable whether the aircraft can operat e
    the number of hours per day projected .                        German tank, which was to be considered for possibl e
                                                                   U.S . Army use .
  —The estimate of available aircraft may be greatly
    overstated .                                                      The latter two issues are directly related to stand-
  —The availability of enough airfields to accom-                  ardizing —eapon systems in NATO. The Army
    modate a massive airlift during a war is open t o              apparently is not seriously considering adopting the
                                                                   German tank .
    question .
  —It is not certain that enough fuel would be avail -                We recommended that the Secretary of Defens e
                                                                   accelerate ongoing studies of the cost-effectiveness of
    able to rerun the aircraft to the United States .
                                                                   an armored force not wholly dependent on usin g
   The airlift programs have not been evaluated to fin d           costly heavy tanks and inform die Congress of th e
the most cost-effective combination of airlift force s             results of these comparisons and analyses.
to meet the requirement. The requirement, the limi-                   After the report was issued, the Department o f
tations on meeting the requirement, and all combina-               Defense announced that the selection of one of the
tions of existing, planned, or modified aircraft have               two U .S . prototypes was being delayed to study the
not been assessed in relation to other deploymen t                  possible incorporation of a common main gun, engin e
alternatives .                                                      transmission, drive train, and track into the tanks o f
   Reporting to the Congress, we recommended tha t
                                                                    both countries. (PSAD—76—113, June 24, 1976, an d
the Department comprehensively study the alterna-
                                                                    PSAD—76—113A, July 22, 1976 .)
tives of airlift, sealift, and pre-positioning of supplie s
and equipment . The Department should identif y
(1) the airlift requirement in specific terms, (2) the            Standard Avionics Equipmen t
costs, advantages, and disadvantages of alternative s             Will Be Installed in F-15 Aircraft
such as increased pre-positioning, and (3) the rapidit y
                                                                     The Air Force developed a standard air navigatio n
and availability of scalift . (PSAD—76-148, June S,
                                                                  instrument and a standard ultra high frequency radio .
1976. )
                                                                  This standard equipment became available i n
   The Senate and House Committees on Appropri-
                                                                  December 1975 and August 1975, respectively .
ations' Conference Committee, in its report on th e
Defense Department's 1977 appropriations, directed :                 In a report to the Secretary of Defense, we recom-
                                                                   mended that he direct the Air Force to begin installin g
  "that the Defense Department furnish GAO all basic in -          the new standard avionics equipment in F—1 5
 formation that GAO requires in order to complete examina-
  tion of the justification and requirements for the increase d    production aircraft as soon as possible If the Ai r
  airlift capacity being requested by the Defense Department ."    Force minimized the number of aircraft delivere d
                                                                   with the now-nonstandard, more expensive equipment ,
We are pursuing this matter with the Department .
                                                                   money would be saved b y
                                                                     —not buying this equipment,
New Main Battle Tank                                                 —not needing to remove this equipment to instal l
                                                                      standard equipment, and
   Improvements in antitank weapons have mad e
                                                                     —making operation and support more efficien t
 tanks more vulnerable than in the past . The numbers ,
                                                                      with the more reliable, standard equipment .
capabilities, and costs of tanks to be procured in the
future and their proper ntix with other weapons i n                   F—15 program officials maintained they had n o
 the combined arms team are unresolved questions .                 authority to make the recommended changes . How-
The Army is in the midst of its third attempt in a                 ever, they issued a revised cost estimate showin g
decade to develop a new stain battle tank, the XNI—1 ,             one-time savings of S1 .7 million and operation and
 and Nest Germany is also ready to produce a ne w                  support savings of $12.1 million during a 20-year lif e
 tank, the Leopard 2 Austere version .                             cycle.
   In a classified report to the Congress, we pointe d                Defense officials concurred with our recormuenda-
 out that the impending decision on tile XXI—l's                   tion to install standard radios and navigation equip -

                                                                                                                        111
   PROCUREMENT AND SYSTEMS ACQUISITIO N




 Hugh .Stmt, of the P,--,-1 mrd Su-- dg.—trmr D,, m- eiarnuur thr Gmraar r-1-d,, fo, X.17 O's non mom haul, tnnl.—th, lenp,nt
 7 At= at _1b,rdrra P--ia, Grom:d.


 ntent in the F—la aircraft . The Air Force, on Augus t          reallocations between projects, and further definitio n
30, 1976, issued a program management directive t o              of requirements . The reasons given for schedul e
install the standard avionics in F—15 productio n                delays were funding constraints, reconsideration of
aircraft as soon as possible and no later than the fisca l       project objectives, and laic subcontractor deliveries o f
year 1977 aircraft purchase . Aircraft delivered befor e         components to the prince contractor . These problem s
the production line changeover date are to be refitte d          have been encountered by other Government agencies .
with the standard avionics equipment . (PSAD—76—                    We found several opportunities for NASA to im-
159, July 20, 1976 )                                             prove its reporting of cost and schedule informatio n
                                                                 to the Congress and its cost estimating practices .
Need for Improved Reporting an d                                 We recommended that NASA (1) summarize an d
                                                                report to the Congress the cost of the project and al l
Cost Estimating on
                                                                additional costs directly identified with the project ,
Major Unmanned Satellite Project s
                                                                (2) maintain stable cost and schedule baselines fron t
    Previous reviews of National Aeronautics an d               which actual changes in project status could be
-Space Administration acquisitions sho—I drat cos t             determined, and (3) maintain adequate documenta-
and schedule estimates frequently have been optimis-            tion to support its cost estimates .
tic . In a report to the Congress we reviewed cos t                NASA did not concur with all of our recommenda-
growth and schedule delays, on the basis of NASA' s             tions for corrective action and stated that (1) develop-
status data on 25 major unmanned satellite projects .           ment estimates, instead of planning or other prelimi-
   NASA stated that cost grom-th , as due to revised            nary estimates, would be used as the baseline for
estimates, schedule delays, cont --t overruns, cost             measuring cost growth and actual performance, (2)

112
                                                                            PROCUREMENT AND SYSTEMS ACQUISITIO N

its identification of costs is hiked on its appropriatio n         completion data has been delayed . The Congress
structure and budget presentations to the Congress ,               has asked about cost and livancing, estintating pro -
and (3) hasclines should be changed, With prope r                  reduces, external reporting, effectiveness of the cost
approval, when programs are changed .                              control program, quality of the invesonent program ,
   Our rec .n .nendations are considered especiall y               equipment testing and performance, construction an d
impor tant at this time because of recent congressiona l           operational safety, and labor relations .
action to require it reporting system for NASA' s                     We reported to several subcou.nittres of the House
 ustjor projerls similar to the selected acquisitio n              Committee on the District of Coltunbia that cost
repm'ling system used by the Deparinu•a of Dcfimsc .               estimates Vero- generally unreliable because th e
                                                                   'Pra .sit Authority had not released the most reliabl e
1Ce staled that the Congress onp Irish to discuss frit h
 ]AS:', flu agency's plan tin- intph•ntenting, in th e              and -.,-rent data . We devised a formal for improved
reporting system developed, our recommendation s                   external financial reporting and aus sled clam, pr -
for iniprovein Is. (1'SAI)-75-90, July 25, 1975 . )                 yided in the Authority's first report based on thi s
                                                                    format .
                                                                      We also reported that improvements were neede d
Audits of the METRO Rapid Rail System                               in both construction and operational safety . Th e
                                                                    House Conunitur on the Disu-ict of Columbia wa s
  Congressional interest in the Washington Metro-
politan Area Transit Authority's "METRO" subway                    given information on the Authority' s invcsuncn t
                                                                    piogrmn, cost control program, and costs rehtrd t o
system has been very high . mi rRO cost estimates
                                                                    labor strikes and funding . WSAD-711 .38, Nov . 4,
have more than doubled since Febtaatry IJ69 an d
                                                                    1975 ; PSAD-7(i-1 .13, \lay 28, 1976 ; PSAI)-71)-147 ,
                                                                    June 25, 19761 ; and PSAD -76- 1115, Aug . 27, 1976 .)


                                                                   Impact of Shortages of
                                                                    Processed Materials on Programs o f
                                                                   Vital National Interes t
                                                                      Past shortages of proressctl materials, such as steel ,
                                                                   aluminum, castings, Gngings, and electronic com-
                                                                   ponents, increased costs and dvlavcd productio n
                                                                   schedules on some Federal programs_ Obtaining i t
                                                                   priority rating minimized die cili•.ct on defense pro-
                                                                   grams, but sonic civil prograuns could not obtain suc h
                                                                   a rating . [n it report to the Congress we reconunended
                                                                   that consideration be given to including nondefense
                                                                   programs of vital national interest under the lit ioriq•
                                                                   and allocation authority of the Dclensc Productio n
                                                                   Act, and that administration of the priority piogra is
                                                                   be Within it single agency .
                                                                      The agencies involved generally Were (onecrne d
                                                                   that adding nondefense programs would dilute th e
                                                                   purpose of the Defense Production Art, but agi ced that
                                                                   adntinistiation of such priorities should test in a
                                                                   single agency . WSAD-76-19, Feb . 27, 1970 . )


                                                                   Difficulties in Acquiring a
                                                                   Long-Range Radar System
                                                                      The Federal Aviation administration is buying 2 6
I'eggr Frmtd, a GAO naditw, d--tracing the potential havar d
adh- pacing benoren sub—) ors operated b) the IParMogtoa 1)etra-   nets long-range radar systems to help control ai r
poliran Area T aasit Authwi(p.                                     traffic en route . Our report to the Congress noted tha t

                                                                                                                         113
  PROCUREMENT AND SYSTEMS ACQUISITIO N

  the Administration did not follow recognized pro-            on the fiscal year 1977 Department of Defense Ap-
  curement practices in contracting for a prototype            propriations Bill, saving approximately $458 million .
  radar system. In particular, it entered into a cost-typ e       We had provided several committees with infor-
  contract for a prototype system on the basis of a pro-       mation pertinent to the decision to terminate th e
  posal that projected costs below the contractor's esti-      program . These included a staff study (PSAD—76-82 ,
  mate . Also, the agency did not prepare its own de -         Feb. 12, 1976), several letter reports, and testimon y
  tailed cost estimate and, after considering the contract ,   before the Defense Subcommittee of the Senate
 did not require the contractor to periodically estimat e      Committee on Appropriations otr June 24, 1976 .
  the cost to complete the prototype. Eight months afte r      Our testimony covered the test and evaluation of th e
 the contract award, the contractor projected a 100 -          Condor, its cost effectiveness, and our preliminary re -
 percent cost increase, and the Administration had t o         view of a contractor' s study of the system 's vulner-
 drastically curtail its prototype program .                   ability. The testing left in doubt the missile's ability
    We recommended that the Secretary of Transpor-             to function in battle. Furthermore, other system s
 tation require the Administration to (1) develop              existed that could perform the same function mor e
 detailed independent cost estimates for systems it plan s     effectively and at a lesser cost .
 to purchase and (2) completely review proposals to               The vulnerability study contained shortcomings
 see if contractors can produce at proposed prices . We        which raised questions as to its usefulness . For ex-
 also recommended that the Administration require              ample, several critical factors that should have bee n
 contractors to periodically estimate the cost of com-         taken into account were attrition rates, possibility o f
 pletion, especially when cost-reimbursable contract s         the system' s being jammed, and warhead lethality .
 are used . (PSAD—76—169, Aug. 25, 1976 .)                        We supplemented our testimony with a letter repor t
                                                               containing additional data on the testing of th e
                                                               Condor . (PSAD—76—163, July 19, 1976. )
 F—14A/Phoenix Weapon Syste m
                                                                  On September 3, 1976, the conference report o f
    The F—14A, Phoenix is an all-weather, carrier-base d       the House and Senate Committees on Appropria _
 weapon system, consisting of a fighter aircraft and an        tions (Rcpt. 94—1475) specified that the conferee s
 airborne missile, designed to engage a broad array o f        agreed to terminate the Condor missile program .
 enemy weapons, including (1) air-to-surface missile s            The estimated savings due to program cancellatio n
 launched from masses of enemy bombers and (2 )                were :
 enemy fighters in escort and force protection roles .                                                          ,17iffi

    We thoroughly reviewed this system, including it s         Acquisition cost for balance of program 	           $290
 effectiveness, its operational readiness, its technica l      Pod and aircraft modification costs	                  17 3

 problems, the question of whether a new engine shoul d                                                              463
be developed for the aircraft, cost and schedule matters ,     Less Navy's tennination costs	                          5
 and efficiency of production . Supply problems hav e
 limited the system's operations, and [he improvement s                                                             $458

offered by a new engine may not be needed .
    In a report to the Congress, we recommended tha t          Field Army Air Defense
the Secretary of Defense find the reasons for the suppl y
shortage and act in conjunction with the _Navy to                 Field Army air defense systems protect high-valu e
improve the situation . We also recommended that               targets and ground combat forces from enemy ai r
the Secretor}- thoroughly examine the plans for usin g         attacks . U .S. air defense capabilities seem inadequate
a new engine for the aircraft, in view of (1) the hig h        when compared to the threat posed by current an d
cost of developing, producing, and installing the en-          projected Warsaw Pact aircraft . Numerous Arm y
gine and (2) the benefits to be derived . (PSAD—76—149 ,       studies of its air defense assets and needs have no t
:lug. 3, 1976 .)                                               brought forth any decisive actions to improve th e
                                                               Army's air defense capability .
                                                                  We concluded in our report to the Congress tha t
Condor Missile Program
                                                               the Army should establish its needs for new air defens e
  Acquisition of the Condor, a Navy air-to-ground              systems on the basis of the total mission requirements ,
missile system, was halted by congressional actio n            considering the resources that could reasonably be

114
                                                                                     PROCUREMENT AND SYSTEMS ACQUISITIO N

 expected to be available for the mission . We recour-                     Evaluation of the Department of Defens e
 uu•nded that the Army, rather than justifying eac h                       Report on Guided Weapons Programs
,strut independently, prepare a mission-oriente d
 budget describing the we :gnon systems neared, an d                         The Senate Committee on Appropriations asked it s
inclicate the prio r ity for funding each requirement .                    to analyze the Department of Defense ' s report t o
 (11SAD-76-129, June 22, 1976 . )                                          the Committee on guided weapons programs . The
                                                                           request was prompted by dilliculties in understandin g
                                                                           the need for the numerous types of missiles develope d
Financial Status of Major Acquisition s                                    and procured by the military services for apparentl y
                                                                           similar mission requirements .
   In 1969 several rongresiional committees asked us
 to report periodically oil the status of various majo r                     The Defense report was, for lire most part, responsiv e
weapon system acquisitions . Recently, we also bega n                      to the Committee ' s request ; however, action wa s
 to report on the status of major civil acquisitions .                     necessary to reduce (1) deviations from lead/executiv e
                                                                           service designations and joint agreements, (2) th e
   In our first report to the Congress on the status o f
                                                                           overlap in service responsibilities, (3) tine pursuit o f
Innis nraior civil and defense acquisitions, sec inchuic d
                                                                           developments with performance limitations, and (4 )
financial data on 5R5 systems estimated to cost $404
                                                                           the use of different combat tactics against a commo n
billion on completion all increase of $1411 billio n
                                                                           threat to justify the need for different types of missiles .
over initial cost cstimatcs . Tile principal factor in cos t
                                                                              We suggested that the Committees require th e
growth was inflation, which accounted for -16 percen t
                                                                           Secretary of Defense to emphasize (1) mission are a
of the total . (PSAD-76 72, hell . 27, 197(1 . )
                                                                           requirements and selection of a single service fo r
                                                                           acquiring the capabilities needed and (2) compliance
                                                                           by the military services with management actions
                                                                           designed to minimize missile proliferation . If duplica-
                                                                           tive developments are warranted, they should b e
                                                                           pursued deliberately and formally . (I'SAD-76-57 ,
                                                                           Dec . 19, 1975 .)
                                                                              'Pile Department of Defense info rmed the Senat e
                                                                           Committee on Appropriations in January 1976 tha t
                                                                           the services were striving for common solutions fo r
                                                                           guided weapons to combat aerial threats to th e
                                                                           Army and Navy. The Department staled that effort s
                                                                           to reduce the proliferation of air-to-surface an d
                                                                           surface-to-air missiles would continue .


                                                                           Deficiencies in SH–3H Helicopte r
                                                                           Conversion Progra m

                                                                             In classified letter reports to the House and Senat e
                                                                           Committees on Armed Services and Appropriations ,
                                                                           we reported that the Navy's SH-31-1 conversio n
                                                                           program had several deficiencies . The major problems
                                                                           noted were :
                                                                              —The modification program was producing an
                                                                               overloaded helicopter with insufficient powe r
                                                                               and endurance .
G.10 staff numbers Cart Emus, Ralph D'Agartiao, Joe Frans, an d
                                                                              —The Navy planned to eliminate essentia l
-tlarvin Castedine observing the progress being made on eoartnretio n
 of the lead ship of the Navr'r FFG–7 Class of Guided dfirsile Frigate s       equipment, which would impair antisubmarine
 at Rath loan IVorhs, Bath, dfaine.                                            capability .

                                                                                                                                    115
  PROCUREMENT AND SYSTEMS ACQUISITIO N

      —The Navy's Operational Test and Evaluatio n              —conduct appropriate economic and environ-
        Force found the helicopter unsatisfactory .              mental analyses as an integral part of thi s
      —Users complained of low reliability and                   planning .
        availability.                                         The resulting plans are to be reviewed for thei r
      —The helicopter lacks an adequate system fo r           potential to increase testing capability and sav e
        communicating tactical information .                  mmrcy . (PSAD-76-75, Mar . 1, 1976 .)
      —The S—311's ability to fulfill its interim missio n
       requirements is questionable .
     On March 8, 1976, during the House Appropria-            Science and Technology
  tions Subcommittee hearings on the Department o f
  Defense fiscal year 1977 budget request, the Navy wa s          During the 15-month period, we prepared 2 1
 questioned on its actions to correct probtents men-          reports on science and technology . Several congres-
  tioned in our report . (PSA1)--75—101, July 1, 1975 .)      sional inquiries were resolved either through forma l
     The Navy reported that (1) it was budgeting $29 . 5      testimony or oral reports.
 million for the SH—3H conversion of 12 helicopter s              We testified four times at hearings of the Hous e
 for fiscal year 1977, (2) funds were being realined t o      Committee on Science and Technology . On \larch 1 8
 allow rapid development of improved avionics,                and July 1, 1976, we appeared before the Subcont-
 (31 weight had been reduced by removing some                 nrittee on Space Science and Applications to discus s
 avionics and heavy cargo decking, (4) enduranc e             the National Aeronautics and Space Administration' s
 had been improved by introducing a fuel cell, (5)            resource data base and program planning and contro l
 new tactical navigation equipment had been installed ,       system ; on \lay 5, 1976, our views on research an d
 and (6) onboard acoustic processing had bee n               development and the economy were presented to the
improved . (PSAD—75-98, -100, -101, and -102,                 Subcommittee on Domestic and International Scien-
July 1, 1975 . )                                              tific Planning and Analysis ; and on July 20, 1976, th e
                                                             appeared before this Subcommittee to discuss coordi-
Does the Department of Defense Hav e                         nation of government research and development. O n
                                                             September 17, 1975, we testified on contractors'
More Test Capacity Than It Needs ?
                                                             independent research and development at a combine d
   A report to the Senate Committee on Appropri-             meeting of the Subcommittee on Research an d
ations evaluated the extent of duplication among             Development, Senate Committee on Armed Services ,
Defense test ranges and test facilities in the areas o f     and the Subcommittee on Priorities and Economy i n
ordnance, propulsion, and underwater sound equip-            Government, Joint Economic Committee .
ment. The test capacih- was considerably greater tha n           At September 30, 1976, 47 audits involving both
the projected workload.                                      civil and defense activities were in process, includin g
   We recommended that the Secretary of Defens e             studies of:
 examine test facility workload and capacity to deter -        —Major space programs, such as the space trans-
 mine whether the workload should be consolidated a t             portation system, the space telescope, the lan d
                                                                  and sea satellites, the Mariner Jupiter/Satur n
fewer facilities.
                                                                  project, and the Pioneer Venus project .
   The July 22, 1976, Senate Committee on Appro-
                                                               —Other NASA activities, including its acquisition
priations report covering the fiscal year 1977 Defens e
                                                                  of space science data ; the planning and contro l
Appropriations Bill stated that Defense agreed wit h              system used to deploy its resources ; its project
our report and would                                              status reporting system ; and space shuttle
  —review workload and capacity data at the 1 1                   program facilities, operational costs, and use r
   designated facilities that support ordnance testin g           charge policy.
   and prepare consolidation plans if appropriate ,            —Research and development activities of th e
  —d-clop plans for possible consolidation of engin e             Department of Defense involving chemical ,
   propulsion testing currently done at the Naval Ai r           electronic, and undersea warfare programs .
   Propulsion Test Center and the Arnold Engi-                 _ Ocean-related science and technology activities ,
   neering Development Center, and                               including the status of deep ocean mining tech -

116
                                                                     PROCUREMENT AND SYSTEMS ACQUISITIO N

   nology and the use of underwater vehicles in               —Bringing technology to cities is a complex ,
   research and development .                                   long-term process because social, political, and
  —Transportation issues, such as lighter-than-ai r             economic factors often hamper technologica l
   technology and the Federal Aviation Administra-              solutions to public problems .
   tion's management of its research and develo p                Industry is reluctant to invest considerable
   nuns programs .                                               time and money in researching and solving cit y
  —Military weapons activities of the Energy                     problems when potential commercial markets
   Research and Development Administration, suc h                are unknown . Cities regard research as risky an d
   as its flight test program in conjunction with th e           are hesitant to incest their funds.
   Department of Defense and its nuclear warhea d             —Although transferring any technology from in-
   development program .                                         dustry to cities is difficult, this program indicate s
                                                                 that hardware or equipment is usually mor e
                                                                 difficult to transfer to cities than such softwar e
Science Advisory Staf f
                                                                 as a management improvement system.
   The Science Advisory Staff assists the Comptrolle r        --The Federal cosponsors did not always agree o n
General in carrying out his duties as a member of th e           how the program was to be managed, especiall y
'technology Assessment Advisory Council of the Offic e           regarding the extent to which results were to b e
of Technology Assessment and provides liaison be -               publicized for use by other cities .
between GAO and that Office . The staff carries out            We recommended that the Director of the -Nationa l
lead division responsibilities for science and technolog y   Science Foundation, in future programs to apply
assignments and is also a liaison with the scientific        science and technology to urban problems .
and engineering community .
                                                               —measure participants' attitudinal changes, such
   .Summaries of some of our more noteworthy reports
                                                                as increased receptivity to technology ,
follow .
                                                                require that, as much as possible, projects b e
                                                                selected whose costs and benefits can be meas-
Technology Transfer and Innovatio n                             ured ,
Can Help Cities Identify Problem s                              require that the planning phase of multiagenc y
and Solution s                                                  programs define, in the documents governin g
                                                                operation, the specific responsibilities of eac h
   The California four cities program—cosponsored by            participant.
the National Science Foundation and the Nationa l
                                                                The National Science Foundation agreed with ca r
Aeronautics and Space Administration—was a n
experiment in public sector technology innovatio n           recommendations . (PSAD-75-110, Aug . 6, 1975. )
and transfer in which four aerospace industry pro-
fessionals were placed in key advisory positions i n         Need to Complete Deep Ocea n
Anaheim, Fresno, Pasadena, and San Jose . Th e               Mining Environmental Stud y
 program's purpose was to ewaluale the potential fo r
 applying aerospace technology to urban problems .             Completion of the two-phase Deep Ocean Mining
   Following are some of the conclusions in ou r             Environmental Studv by the National Oceanic and
 report to the Congress.                                     Atmospheric Administration is needed to resolve
                                                             environmental impact questions which may aris e
  --Aerospace professionals working closely with cit y
                                                             when mining of manganese nodules starts on th e
     officials can help the cities identify problems an d
     develop technological solutions .                       deep seabed . Recovery of minerals contained in thes e
                                                             nodules—especially copper, nickel, cobalt, and man-
  —The cities benefited in many ways, but maini v
     through changes in management attitudes an d            ganese—could provide important resources for th e
                                                             United States .
     slides and by gaining problem-solving expertise.
     Benefits, however, were not always measurable .           Phase 1, begun in 1975, will describe preminin g
  --The participating industries gained insight int o        environmental conditions anu p—iict probable effects .
     municipal government operations but did not             Phase I1, intended to start in fiscal year 1977, wil l
     immediately expand their business.                      provide an opportunity to observe and measure actua l

                                                                                                                     117
  PROCUREMENT AND SYSTEMS ACQUISITIO N

   changes in the marine environment caused by minin g          NASA is eliminating facilities which are no longe r
   tests .                                                   needed because their capabilities are duplicated o r
      The Department of Commerce budget request fo r         obsolete . In addition, NASA is centralizing its aero-
  fiscal year 1977 does not include funds for phase II .     nautical research efforts, primarily at Langley an d
  The Chairman, Subcommittee on Minerals, Materials ,        Ames Research Centers . This effort to phase out
  and Puels, Senate Committee on Interior and In-            unneeded facilities and centralize operations shoul d
  sular ARaits, therefore asked us to evaluate the po-       further improve utilization of available facilities .
  tential effects of not funding phase If .                     At the Langley Research Center, NASA plans t o
     If this phase is not funded and does not begun in       construct, at a cost of $65 million, a wind tunnel
 fiscal year 1977 when U .S . firms begin prototyp e         capable of predicting full-scale aircraft performanc e
 mining, a unique opportunity to assess the environ-         and (low conditions at transonic speeds . The facility ,
 mental impact of deep ocean mining—before Cull -            which will to known as the National Transoni c
 scale mining begins in the ea r ly 1980s—trill be lost .    Facility, will be designed to achieve a capability abou t
 The Department agreed that phase 11 is necessary             10 times that of present transonic tunnels .
 but said the exact plan and funding requirements ar c          We did not determine the optimum capability for
 still being considered . (PSAD-76-135, Sept. 21, 1976 .)    the proposed National Transonic Facility . However ,
                                                             based on the preponderance of evidence, we concluded
                                                             that increased capability in this area would enhanc e
 Acquisition and Utilization of Win d
                                                             tine technology base and help develop more efficien t
 Tunnels by the National Aeronautic s
                                                             civil and military aircraft . (PSAD-76-133, June 23 ,
 and Space Administratio n                                   1976 .)
  The Chairman, House Committee on Science an d
Technology, asked us to assist the Subcommittee o n
                                                             More Improvement Needed i n
 Aviation and Transportation Research and Develop-           Equipment Management Practice s
 ment in a review of the Nation's civil aviation research
 and development programs and facilities.                    in Government Laboratorie s
    We examined NASA's 74 wind tunnels and relate d             Federal property management regulations issue d
 special-purpose test facilities, which cost about $30 9      by the General Services Administration (GSA)
 million. Average utilization of these facilities range d     require agencies to stake walk-throughs (periodi c
 from 59 percent for hypersonic wind tunnels to 7 6           inspection tours) at laboratories to identify idle an d
 percent lot subsonic wind tunnels . To operate the          unneeded research equipment and to establis h
 tunnels in fiscal year 1975 cost about $18 million—         equipment pools where appropriate . Visits to 1 0
 almost half going for personnel costs. Electric power       research laboratories of 4 Government agencie s
 and maintenance each cost over S4 million .                 showed that walk-throughs and equipment pools wer e
   Several conditions limit the use of certain win d         not used or were ineffectively used to improve equip-
 tunnels . These tunnels must be operated during " off-      ment utilization .
 peak" bolus, because rates are higher or adequate              GSA did not have any procedures for verifyin g
 potter is unavailable during regular working hours .        agencies' compliance with walk-through and equip-
 Also, equipment used to measure atlli process tes t         ment pool requirements prescribed in the regulations.
 data for some facilities is inadequate . The best instru-   Instead, it relied on the agencies to insure that it s
 mentation and data processing equipment currentl y          policy was effectively carried out .
 available could reduce the test time to as little as 2 5       In prior reports we cited elapsed-time meters as
 percent of the time now required .                          possible aids for determining whether research us e
   Our report to the Committee recommended that th e         warrants retention of equipment . The House Com-
leasibility and cost of upgrading present tunnel in-         mittee on Government Operations recommended i n
strumentation be explored in greater depth . NAS A           1967 that GSA require Government laboratories t o
stated it was planning to study ways to reduce tes t         test the meters on suitable types of equipment . Th e
time and energy use and would consider how to im-            Administration did not comply with the Committee' s
prove tunnel instrumentation and data acquisitio n           recommendation and has not issued guidance fo r
systems.                                                     using such meters in equipment management .

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                                                                      PROCUREMENT AND SYSTEMS ACQUISITIO N

  %ve recommended that the Administrator of Genera l        100 institutions in 1974 received only 66 percent o f
Services supply Guidance to agencies to insure bette r      $4 .5 billion. This funding shift is mainly attributable
equipmen t use . This guidance should require tha t         to the large increase in Federal funding of nonscience
each agency :                                               activities—$1 .8 billion in 1974 .
  —Establish teams of top managers and scientist s             Institutions in geographical regions receivin g
   to make laboratory walk-throughs and report              smaller shares of Federal science funds tend to receiv e
   their findings to the head of the agency.                larger shares of noascienee funds . Thus, total Federal
  —$stablish labo r atory equipment pools or give the       funds arc more evenly distributed than are Federa l
   heal of ilic agency written reasons why such pool s      science funds . However, the concentration of Federa l
   are not needed .                                         science funds at the colleges and universities has als o
  —Prepare an annual report for the agency head on          lessened . The top 20 institutions in 191x1 received 4 7
   the use and effectiveness of equipment pools .           percent of scientific research and development funds ,
  —Independently review walk-through practice s             whereas the top 20 in 1974 received 40 percent .
   and equipment pool operations from time to tim e            The National Science Foundation's science develop-
   to determine their effectiveness .                       ment program was initiated in 1965 to increase the
   The Administrator should also institute procedure s      number of excellent universities in science research
                                                            and education and to build up promising scienc e
 to insure that agencies are complying with the
Administration's guidance and that the desired              institutions in regions and States that have n o
results are achieved .                                      excellent universities . This program provided $22 7
   Finally, the Administrator should select a repee-        million to colleges and universities and ended i n
sentative number of laboratories in which to formall y       1972 . A National Board on Graduate Educatio n
test elapsed-time meters and obtain enough data t o         study concluded that the program was successful i n
guide Federal laborator ies on their use in equipmen t      geographically dispersing funds, resulting in a wider
I n ll agenicni .                                           distribution of science personnel and resources in th e
   The Administrator agreed to issue guidance re-            United States. The study also pointed out that th e
quiring agency- action on walk-throughs and equip-          goalsof dispersing funds geographically and developin g
ment pools . The Administrator agreed also to               promising institutions into outstanding ones arc no t
establish a project to determine the effectiveness of       exactly compatible Many of the institutions funde d
elapsed-tine ureters in identifying little-used equip-
                                                            under the science development program were i n
ment and to use the results as a basis for possibl e
                                                            geographical areas having universities already con-
Guidance to agencies. (PSAD-76-37, Dec . 3, 1975 .)
                                                            sidered outstanding in science .
                                                               Various factors aided four universities we visited
Geographical Distribution o f                               in obtaining Federal science funds : (1) recruitment of
Federal Science Funds t o                                   outstanding researchers able to attract funds, (2 )
Colleges and Universitie s                                  administrators' commitment to a strong researc h
    Senator Janes B . Pearson requested that we (1 )        program, (3) an academic environment that en-
analyze the geographical distribution patterns o f          couraged faculty research, (4) establishment o f
 Federal support for research and development a t           endowed chairs, (5) concentration on national priorit y
colleges and universities . (2) examine data and            research areas, (6) local community support, and (7 )
information on some of the Federal programs estab-          Federal science development programs . (PSAD-76-
 lished in the 1960s to strengthen academic science, an d   94, Apr . 16, 1976. )
 (3) identify the factors that bring some universitie s
success in competing for Federal research an d
development fiords.                                         Space Activities
  The geographical distribution of Federal funds t o          During the 15-month period we issued reports o n
colleges and universities has broadened in the las t        NASA's- Space Transportation System, land satellit e
decade The top 100 institutions in 1964 receive d           project, "SEASAT" project, and space telescop e
85 percent of total Federal funds, whereas the top          project.

                                                                                                                119
 PROCUREMENT AND SYSTEMS ACQUISITIO N

 Space Transportation Syste m                                and natural resources. The instruments aboard
                                                             LANDSAT acquire data for investigations in agri-
      The Space Transportation System is expected t o
  provide a new capability that will [educe the cost o f     culture, forestry, geology, land use, cartography ,
                                                             hydrology, ecology, and oceanography . The Depart-
  space operations and support a [ride range of scien-
  tific, defense, and commercial users . The system tril l   ments of Interior, Agriculture, Defense, State, an d
                                                             Commerce are involved to varying degrees in thi s
  include a space shuttle, a spacelab, a space tug, and
                                                             project, and international interest is high .
  ant interim upper stage . The space shuttle will consist
 of a manned reusable orbiter looking like a delta -             In a six iy requested by the Chairman of the Sub-
 winged airplane, an expendable propellant tank, an d        comimittee on HUD-Independent Agencies, Senat e
  two reusable rocket boosters .                             Committee on Appropriations, we reported that ther e
     NASA is to manage the program, integrate th e           is no long range plan for deciding whether LANDSA T
 space shuttle and space tug, and fund their develop-        should become an operational system. Consequently ,
 ment . The Air Force will assure that military interest s   it is not clear what must be achieved before such a
 are considered and will provide the Department o f          decision can be made . Related to the establishmen t
 Defense's portion of the system . Since Defense mission s   of a long-range plan is the question of the Federa l
 require an upper stage before -NASA's space tug wil l       Government's role in supporting satellite-based ,
 be available, that Department has agreed to develo p        remote-sensing technology .
 the interim upper stage bt . June 1980.                        We recommended that NASA lead the othe r
     The spacelab is being developed, in cooperatio n        participating agencies in developing a plan whic h
 with the European Space Agency, as a laboratory an d        includes requirements, milestones, and dates fo r
 observatory for space research in orbit .                   evaluating progress and the need for satellite moni-
    The system began development in 1971 . NASA              toring of the Earth's resources . NASA has taken the
 estimated in 1976 that total acquisition costs wil l        lead in an interagency exploration of the issues ht-
 exceed $12 billion, and that operating costs throug h       volved in establishing an operational system . (PSAD -
 1990 will exceed $18 billion.                               76-74, Jan . 30, 1976 .)
     Our report to the Congress noted that the develop-
 ment program will experience an estimated $1 billion        SEASAT Project
 cost growth (half of which is uncontrollable inflation)       "SEASAT-A" is an ocean dynamics monitoring
 and that NASA's revised development plan is intro-          satellite, scheduled for launch in 1978, that wil l
ducing risks that could further increase costs, set bac k
                                                             measure winds, waves, currents, sea temperatures,
schedules and lower performance. The developmen t
                                                             ice coverage, atmospheric water vapor, and th e
plan embodies such factors as reduced testing, com-
pressed schedules, and concurrent development and            shape of the Earth. Its objectives are
production .                                                   —demonstrating techniques for global monitorin g
    We recommended that the NASA Administrator                   of oceanographic phenomena and features,
more completer- and realistically estimate the cost o f        —providing oceanographic data for both practical
developing the sysenh, including those costs funde d             and scientific use, and
by -NASA budgets other than its research and devel-            demonstrating key features of an operationa l
opment appropriations . Also, NASA should presen t               ocean dynamics monitoring system .
estimates to the Congress in real-year dollars to allo w       Because NASA views the SEASAT project a s
a more meaningful analvsk of the prot_., rani s statu s      being dedicated to users of oceanographic data, it
and identify reasons for cost chanu— NASA, whil e
                                                             sought their early involvement to assure that the dat a
not disagreeing on the taro . did diflrr up ,pecific
                                                             and information to come from the satellite would b e
issues and interpretation; of (at- ~ P AD Iii 73 ,
Apr. 21, 1976. )                                             designed for them. NASA justified the project to the
                                                             Congress on the basis that user organizations woul d
Land Satellite (LANDSAT) Projec t                            provide the staff and money to make use of th e
  "LANDSAT" is :m experivtt'ut .d na                         satellite data .
                                                v, tfetrr-
mine hots data acquired bx                        liarh' s     After a preliminary economic assessment whic h
resources can be used in utaa .n_ine *. . .   %,uunment      did not consider costs, NASA also told tine Congress

120
                                                                  PROCUREMENT AND SYSTEMS ACQUISITIO N

that an operational SEASAT system could provid e         General Procurement
annual benefits amounting to $350 million .
  lit a study done for the Chairman of the Suh-             General procurement audits resulted in reports o n
committee on HUD–Independent Agencies, Senat e           (1) reduced procurement costs from extending the
Committee on Appropriations, we suggested tha t          Government's policy of self-insurance to certai n
the Congress require NASA t o                            inventories used by Government contractors, (2 )
  —provide specific information on how capabilitie s     causes of excessive profits on Government contracts ,
    envisioned in an operational SEASAT will brin g      (3) the status of Lockheed Aircraft Corporation' s
    potential annual benefits of $350 million ,          guaranteed loan under the Emergency Loan Guaran-
  —explore means to accelerate the obtaining of          tee Act, (4) major Navy and contractor inefficiencie s
    SEASAT–A participating agreements with firm          disclosed as the result of shipbuilders' claims for pric e
    commitments of resources from the -Nationa l         increases, (5) the need for the General Ser v ices
    Oceanic and Atmospheric Administration an d          Administration and the Department of Defense to
    the Department of Defense, an d                      further expand procurements of recycled products ,
  —take the lead in delineating agency responsi-          (6) the need for the Congress to consider revisin g
    bilities in possible future operational SEASAT –     laws on overtime work by Government contractors t o
    type systems.                                        allow mutually beneficial changes in employee work
(PSAD–76–76, Feb . 25, 1976. )                           schedules, (7) improvements needed in procurin g
                                                         beef for military personnel, (8) improvements neede d
Space Telescope Project                                   in the Defense Contrzct Audit Agency's operation s
  The space telescope is to be the largest, mos t         audits, (9) pricing procedures for procuring petroleu m
complex space observatory ever developed by NASA .        products in bulk, (10) the need to prevent unau-
NASA's main objective is to develop and operate a         thorized financing of contractors, and (11) ways to
high-resolution telescope system which will be usefu l    increase U .S . shipbuilding productivity .
to the international scientific community and greatl y       On \tay 13, 1976, we testified before the Sub -
extend malt's knowledge of the universe NASA' s           committee on Federal Spending Practices, Efficiency ,
planning estimate for the project shows a cost range      and Open Government of the Senate Committee o n
of $370 million to 5455 million . Postlaunch trackin g    Government Operations and discussed various prob-
and data acquisition and operation costs would            lems in Defense Department beef procurement, such
amount to about 5318 million throughout the expecte d     as complex specifications, inadequate inspections,
15-year life of the project .                              and questionable contracting practices .
  NASA's present plans are to establish a Spac e             We also testified on January 15, 1976, before th e
Telescope Science Institute, under a contract wit h        Subcommittee on Priorities and Economy in Gov-
an incorporated consortium of universities, to manag e     ernment, Joint Economic Committee, on our report ,
certain operational aspects of the space telescope .
                                                           " Subcontracting by Department of Defense Prime
  In a study conducted for the Chairman of th e            Contractors : Integrity, Pricing, and Surveillance ."
Subcommittee on HUD Independent Agencies ,
                                                           (PSAD–76-23, Nov . 19, 1975 .) Discussion involved
Senate Committee on Appropriations, we suggested
                                                           kickbacks on subcontracts, surveillance of contracto r
that the Congress, in evaluating NASA requests t o
                                                           purchasing systems, and the status of our reviews o f
fund the project, conside r
                                                           Lockheed's payments to foreign officials .
  —the possibility of NASA's losing the scientifi c
                                                              Our report recommended using a contract claus e
   community's support if the space telescope 's
                                                           to prohibit subcontractor-to-contractor gratuities .
   cost precludes a balanced astronomy program,
                                                          Following up on our suggestion, the Office of Federa l
  —the need for a firm life-cycle cost estimate which
   includes all development and operational cost s        Procurement Policy has proposed contract clause s
   associated with the project, an d                      setting standards of ethical conduct for contracto r
  —management and funding responsibilities for th e       and prohibiting them from soliciting or acceptin g
    proposed Space Telescope Science Institute.           gratuities from subcontractors . The proposed claus e
(PSAD–76-66, Jan . 1976 .)                                has been issued to interested parties for comment .

                                                                                                               121
   PROCUREMENT AND SYSTEMS ACQUISITIO N

     On August 24, 1976, the Deputy Comptrolle r               Corporation is the prime contractor for the body of th e
  General testified at overview hearings on the Offic e        plane and Pratt and Whitney Aircraft Division o f
  of Federal Procurement Policy held by the Subcom-            United Technologies is the prime contractor for the
  mittee on Federal Spending Practices, Efficiency, and        engine.
  Open Government, Senate Committee on Govern-                    We are working on pension costs at contractors '
  ment Operations. His testimony focused on                    installations as well as at Government-owned, con-
                                                              tractor-operated plants . Estimates of pension cost s
      —a new Procurement Office system for followin g
                                                              charged to Government contracts range from $90 0
       up on the recommendations of the Commissio n
                                                              million to $1 .2 billion annually. We will determine
       on Government Procurement,
                                                              whether Government controls and sut-veillance ove r
      —the current status of these recommendations an d        contractors' pension plan costs assured the reasonable -
       an overview of the Office's progress, an d              ness and allocability of such costs .
      —the more important procurement reform area s              We have begun a series of evaluations of State and
       receiving the Office's priority attention .            local governments' procurement activities . One such
    He also summarized the results of three GAO cas e        job was a cooperative effort with the State of Oregon ,
 studies of major system acquisitions by the Depart-          demonstrating the opportunities for savings when pro-
 ment of Defense—the Army's PERSHING II pro -                 curing goods and services.
 gram, the NAVSTAR Global Positioning System ,                   We recently began work on using procurement as a
 and the Navy's Shipboard Intermediate Range                 tray to accomplish socioeconomic goals . Governmen t
 Contact System . The Subcommittee wanted to find            and industry procurement specialists have complained
 out whether these Defense programs were followin g          that social and economic restrictions are foisted upo n
 the early steps of the acquisition process recommende d     the procurement process to pursue extraneous objec-
 by the Procurement Commission .                             tives, increasinn costs and administrative burdens .
    Two of the Commission's recommendations fo r             We intend to determine if these restrictions are reason -
  major systems acquisition (recommendations C– 2            able ways to accomplish the goals or whether bette r
  and C–5) are for legislation and addressed mainly to       alternatives exist . The Chairman of the joint Economic
  the Congress. These recommendations propose a              Committee is interested in one of these assignments —
 mission-oriented approach for presenting, reviewing ,       the implementation of the labor surplus policy i n
 and funding research and development budge t                Government contracts.
 requests. The proposals are intended to strengthen
                                                                 Several assignments are underway to test GSA' s
 congressional control over research and develop-            effectiveness in supplying goods and services to Federa l
 ment expenditures by relieving the Congress from
                                                             agencies. We will
 reviewing highly detailed and technical budge t
 presentations and by giving the Congress better in -          —evaluate GSA's self-service store program ,
 formation on the basic purposes of the propose d               determine if GSA's priority system for fillin g
 expenditures, including the key decisions that star t          customer orders from depots is working properly ,
 new programs . A report is to be issued to the Congres s       and
 describing and illustrating hoty the research an d            —determine if GSA is considering all relevan t
development budget requests would be presente d                 costs in deciding whether new items shoul d
and funded and suggesting ways for the Congress to              be centrally stocked or ordered commercially
further explore the proposed approach .                         by each agency-.
   Four European NATO countries are to produce
about 1,500 F–16 airplanes at a cost of several billio n
                                                             Extending the Government's Policy
dollars_ Considering the program ' s size, we plan t o
                                                             of Self-Insurance
devote much effort to appraising its efficiency an d
effectiveness . First we will evaluate the reasonablenes s     The Government could have saved $27 millio n
of prices negotiated for the two prime contracts an d        over the 5-year period ended June 30, 1973, by extend -
the coproduction and supply- subcontracts with th e          ing its policy of self-insurance to (1) contractor inven-
four participating countries. General Dynamics               tories under negotiated, fixed-price contracts an d

122
                                                                      PROCUREMENT AND SYSTEMS ACQUISITIO N

 related subcontracts, (2) Government-owned ship               —The collateral is adequatelysafeguarding the loan .
 repair property in the hands of conttuereial ship yards ,   (PSAD–76-63, Jan. 30, 1976. )
 and (3) Government facilities leased to contractors and
 users.
    In a report to the Congress, we recommended tha t        Shipbuilders' Claims for
 the Department of Defense, the National Aeronautics         Price Increases
 and Space Administration, and the Energy Researc h
                                                               Alleging that the Government caused them to do
 and Development Administration extend the self-
                                                             more or different work than was specified in con -
 insurance policy in selected areas . We also recom-
                                                             tracts, shipbuilders filed with the Navy 106 claims
 mended that Defense and the Energy Research and
                                                             totaling over $1 .6 billion between January 1, 1967 ,
 Development Administration jointly study extending
 self-insurance to special nuclear material held b y         and June 30, 1975 .
 contractors under fixed-price contracts .                     The Navy' s reviews of these claims have uncovered
                                                             major Navy and contractor inefficiencies . In ou r
    The Office of Management and Budget considers
our recommendations feasible if certain question s           report to the Congress, we made general recommenda-
 are resolved, but does not believe the savings woul d       tions to the Secretary of the Navy to improve th e
justify the costs involved . The Office also contend s       Navy's procedures for preventing such claims .
 that, in some cases, the current procurement regula-        (PSAD–76–24, Nov. 5, 1975 .)
 tions may already accomplish some of our recommen-
dations . (PSAD–75–105, Aug . 26, 1975.)                     Need to Expand Procurement s
                                                             of Recycled Product s
Causes of Excessive Profits o n
                                                                In response to the conservation opportunities of
Government Contract s
                                                             using recycled materials, the General Services Admin-
  In reviewing the renegotiation of excessive profit s       istration revised specifications for 86 paper-base d
by the Renegotiation Board from 1970 through 1973,           products, the Environmental Protection Agency issue d
we found that excessive profits were earned by smal l        voluntary guidelines and procedures in January 197 6
producers of items involving little technology wh o          for procuring products made with recyclables, an d
did most of their business with the Government and           the Congress enacted the Energy Policy and Conser-
had benefited from a seller' s market .                      vation Act of 1975 to encourage Federal procuremen t
  Our report to the Congress pointed out that, since         of recycled oil .
good procurement procedures will not necessaril y               In a report to the Congress, we found there was a
prevent excessive profits arising from a seller' s           need for more management emphasis by GSA an d
market, renegotiation is needed if the Congres s             the Department of Defense to procure more re-
intends to recover these profits . (PSAD–76-56 ,             cyclables . GSA should establish a formal program and
Dec . 31, 1975 .)                                            extend its efforts to other commodities . We als o
                                                             recommended that Defense aggressively promote
                                                             procurement of recyclables by developing a coordi-
Status of Lockheed's Guaranteed Loa n
                                                             nated program.
   Our fourth report to the Congress on the status o f          GSA stated it would develop policies, objectives ,
the Lockheed Aircraft Corporation's guaranteed loa n         and guidelines for a permanent program to procure
under the Emergency Loan Guarantee Act (1 5                  recycled materials . Also, GSA will continuously
U .S.C . 1841, Stipp . 1, 1971) concluded that :             review specifications to identify new areas wher e
  —Unresolved problems arising from Lockheed ' s             recycled materials can be required .
   payments to foreign offices, plus general economic           Defense stated it would review its policies for pre -
   conditions, may undermine fulfillment of its              paring procurement specifications to determine wha t
   L–1011 aircraft sales forecast.                           changes can be made to encourage other uses of
  —Lockheed does not anticipate cor,plete repay-             recycled materials. It intends to implement the En-
   nrent of its guaranteed loans within the extende d        vironmental Protection Agency 's guidelines whereve r
   period provided bylaw .                                   possible . (PSAD-76–139, May 18, 1976 .)
                                                                                                                 123
 PROCUREMENT AND SYSTEMS ACQUISITIO N

 Contractors' Use o f                                         recommendations and continue to support its effort t o
 Altered Work Schedules                                       stimulate more efficient contractor op .°rations .
                                                              (PSAD-76-35, Dec . 18, 1975 .)
     Altered weekly work schedules, such as flexible and
 4-day schedules, can reduce production costs in
 certain organizations and afford better ser vice, more       Pricing Procedures for Procuring
 efficient use of transportation and recreation facilities,   Bulk Petroleum Products
 and additional job opportunities.
                                                                 During the fuel shortage in 1973, the Defense Fue l
    Using altered work schedules is difficult for Govern -
                                                              Supply Center was forced to negotiate contracts with
 ment contractors, because the Contract Work Hou r            suppliers . These contracts formerly had been awarded
 and Safety Standards Act and the Walsh-Healy Ac t            by formal advertising. To evaluate the reasonableness
require overtime premium for more than an 8-home              of prices offered during 1973 and 1974, the Cente r
day . Also, all contractors must consider the Fair Labo r     used price data reported in trade publications ;
Standards Act requirement to par overtime premiums            however, this data was inadequate for evaluatio n
for wurking over 40 hours a week .                            purposes .
    We recommended that the Congress consider, as a              For early-1975 procurements, oil companies sub-
long-range objective, establishing more unifor m              mitted market data which showed that prices offere d
policies on overtime requirements . (PSAD-76-124 ,            the Government were based on substantial sales t o
Apr . 7, 1976. )                                              the general public; however, this data did no t
                                                              demonstrate that offered prices were based on quanti-
Improvements Needed i n                                       ties comparable to Defense buys .
                                                                 Separate reports were prepared for the Chairman ,
Operations Audit s
                                                              Subcommittee on Priorities and Economy in Govern-
   Operations audits by the Defense Contract Audi t           ment, Joint Economic Committee, and the Chairman
Agency, designed to evaluate the efficiency of con -          of the Permanent Subcommittee on Investigations ,
tractors ' operations, are one of the principal bases on      Senate Committee on Government Operations .
which the Department of Defense accepts claime d                 We recommended that, in granting exemptions to
contract costs for reimbursement under cost-typ e             the cost and pricing data requirements of Public Law
and flexibly priced contracts . We evaluated th e             82-653, the Secretary of Defense have oil companie s
Agency's effectiveness in these audits .                      show that prices offered are based on prices paid
   The Agency has made considerable progress i n              recently by commercial customers for comparabl e
planning apd making the audits ; however, in som e            quantities . Specifically, each supplier should b e
areas its concept of the operations audit could b e           required to provide price and quantity information fo r
improved . In a report to the Congress, we recom-             every bulk sale during the most recent 3-month period .
mended that dte Agency                                        If the data obtained is inadequate for judging th e
  —minimize delays and disruptions in performanc e            reasonableness of prices offered, the exemption woul d
    caused by demands of higher priority work ,               not apply and the required cost or pricing data woul d
                                                              have to be obtained and used .
  —improve planning in selecting areas for review,
  —increase the scope and depth of audits, and                   In addition, the Center did not ask the Defense
                                                              Contract Audit Agency to verify the market pric e
  —emphasize coordination with contract administra-
    tion offices on reviews of related functional areas .     data submitted by the oil companies . We believe suc h
                                                              audits should be performed, at least on a sample basis .
   Agency officials generally agreed with our evalua-
                                                                 The Assistant Secretary of Defense, Installation s
tion of operations audits and recommendations . Th e
                                                              and Logistics, stated that extensive efforts have bee n
Agency acted to improve performance before an d
                                                              made to obtain the most complete and meaningfu l
during our review . Some of the report recommenda-            data available . The Secretary said that during th e
tions have been partly carried out-, others are being         past three procurement cycles the quality and quan-
considered .                                                  tity of such data has progressively improved . He
 We also recommended that the Secretary of Defens e           acknowledged the need to assure the validity of sale s
monitor the Agency's progress in carrying out these           data submitted by contractors and stated that audit s

124
                                                                      PROCUREMENT AND SYSTEMS ACQUISITIO N

 will be requested, at least on a sampling basis .           ment on the advance payments to the contractor i f
 (PSAD–7Cr51 and–52, Dec . 29, 1975. )                       they had been made in accordance with Defens e
                                                             regulations and (2) determine what actions ar e
                                                             needed to prevent unauthorized financing of con -
 Need to Prevent Unauthorize d
                                                             tractors' performance under future contracts . Among
 Financing of Contractors                                    these may be a revision of Defense regulations t o
                                                             clearly define the term "partial payments" and t o
     While reviewing contract progress payments to the
  General Dynamics Corporation and Pratt and                 provide guidelines for both their use and the deter-
                                                             mination of their amount. (PSAD-76-152, June 25 ,
  11'hilney Aircraft Division of United Technologies fo r
                                                             1976 .)
  developing the Air Force's F–I6 fighter, we foun d
  that (1) General Dynamics received payments tha t
  did not exceed incurred costs but did exceed the 8 0       Ways To Increas e
  percent of incurred costs normally provided in fixed -     U .S. Shipbuilding Productivit y
  price contracts, and (2) Pratt and Whitney received
  payments exceeding incurred costs which were, i n              We reviewed the operations of four private U .S .
  effect, advance payments .                                  shipyards to identify opportunities for reducing cost s
     General Dynamics had received payments of up t o         and increasing efficiency and productivity . Our
 97 percent of periodically reported incurr ed costs . A s    interest in shipbuilding stems from the Government ' s
 of December 31, 1975, General Dynamics had bee n             financial involvement—the Navy' s direct procure-
 paid almost $48 million, or 90 percent of eligibl e          ment of ships and the \laritime Administration 's
 incurred costs . Had payment been restricted to 8 0          awarding of construction differential funds to build
 percent of these costs, General Dynamics would hav e         commercial ships.
 received over $5 million less .                                 We suggested that specific improvements in ship -
    Although Pratt and Whitney's eligible incurred            yard operations could be made in facilities acquisi-
 costs were only $1 .3 million as of December 31, 1975 ,      tion and management ; production planning and
 the Air Force had paid it over $2 .5 million ; under        control ; employee morale, absenteeism, turnover ,
 billing provisions similar to those contained in th e       efficiency, and productivity ; preventive maintenance ;
 General Dynamics contract .                                 quality assurance ; industrial engineering ; and pro-
    We believe the Air Force and the contractor s            curement of materials and supplies .
circumvented the established control procedures fo r             Followup reviews were made at each shipyard t o
contract payments.                                           see which suggestions had been adopted . Of our 7 0
    In our report to the Chairman of the Joint Com-          suggestions, shipyard managers had accepted 36 .
mittee on Defense Production, we recommended that            Some of our suggestions had not been implemente d
the Secretary of Defense direct the Secretary of the         because the funds to invest in capital equipment an d
:fir Force to (1) negotiate with General Dynamic s           facilities were lacking . Our report to the Congres s
and Pratt and Whimey to restructure the contrac t            identifies the 70 suggestions, along with the descrip-
payment provisions, (2) attempt to reach agreemen t          tion of the shipyards' implementing actions and thei r
with the contractors for the payment of only the usua l      comments on why our suggestions were not adopted .
80-percent progress payments, and (3) attempt t o                Our report also offers two ideas for making ship -
negotiate a refund of the payments already made              building operations more efficient : (1) Navy an d
above this 80 percent .                                      Maritime Administration audits of shipyard opera-
    We also recommended that the Secretary- (1) con-         tions and (2) interaction between designers an d
sider seeking recovery from Pratt and Whitney of th e        production engineers as the ship's design is evolving .
interest that would have been payable to the Govern -         (PSAD-76-168, Sept . 23, 1976.)




                                                                                                                 125
                                                              active duty military personnel . The Government pai d
                                                              over $74 billion in direct compensation and personne l
                                                              benefits for this work force during the fiscal year .
                                                              An additional $1 .6 billion was paid for the more than
                                                              900,000 members of the Reserve Forces and th e
                                                              National Guard .
                                                                Payments totaling about $15 billion were made to
                                                              Federal retirees and their survivors . Annuities of mor e
                                                              than $8 billion were paid from the Civil Service Retire -
                                                              ment Fund, and about $7 billion was paid from appro-
                                                              priated funds to retired military personnel and thei r
                                                              survivors.

 CHAPTER TEN
                                                              Assistance to the Congres s

                                                                 During fiscal year 1976, more than 40 percent of th e
                                                               audit work of this division was in response to con-
                                                              gressional requests . We received 127 requests durin g
 FEDERAL PERSONNE L                                            the 15 months ended September 30, 1976, and at tha t
 AND COMPENSATIO N                                            date, we had 43 requests on which ive were working .
                                                                 In addition to sending reports to committees and
                                                              Members of Congress in response to their requests, w e
 Responsibilitie s                                            informally provided information they requeste d
                                                              through-briefings, staff papers, and descriptive data .
                                                              We also commented on 40 legislative proposals.
  The Federal Personnel and Compensation Divisio n
                                                                 In several cases, the Congress used the informatio n
carries out GAO's audits of Government programs an d          to greatly reduce Federal expenditures . For example ,
activities for managing and compensating Federa l             in a report dealing with Federal annuity cost-of-
workers . These programs and activities include :
                                                              living adjustment processes, Ave recommended that
  —Manpower requirements and filling those re -
                                                              the Congress enact legislation making the adjustmen t
     quirements.
                                                             formula and related provisions in major Federal re-
  —Employee development through training, educa-
                                                             tirement systems more equitable and more consisten t
     tion, and career management programs .
  —Lase and retention of employees .                         with those of non-Federal and other Federal pensio n
  —Federal pay, fringe benefits, and retirement .            programs . The Congress enacted legislation changin g
  —Employee relations, including equal employmen t           the adjustment processes, and the Congressiona l
    opportunity programs ; labor-management rela-            Budget Office and the Office of Management an d
    tionships ; social responsibility programs ; and         Budget estimated that the changes would save $ 3
    morale, welfare, and recreation activities .             billion over the nest 5 years .
    Employee ethics and military'justice .
 H. L . Krieger is the Division Director and C . I .
Gould is the Deputy Director .                               Audit Report s

                                                                During the 15 months ended September 30, 1976 ,
Size and Cost of the                                         we prepared 90 reports on Federal personnel an d
Federal Work Forc e                                          compensation matters. Twenty-four were submitte d
                                                             to the Congress and 41 were submitted to specifi c
   In June 1976, the executive branch employed o ver         committees or Members of Congress on reviews mad e
2 .8 million civilian employees and more than 2 .1 million   at their request . Of the remaining reports, 24 were

126
                                                                  FEDERAL PERSONNEL AND COMPENSATIO N


                     FEDERAL PERSONNEL AND COMPENSATION DIVISIO N

                                                 DIRECTO R

                                                H .L . KRIEGER


                                             DEPUTY DIRECTO R
                                                 C .I . GOUL D




     MANAGEMEN T
    AND ANALYSIS
                                                                   CONGRESSIONAL
                                                                     ASSISTANCE
                                                                                      I   I
                                                                                          I
                                                                                                SYSTEMS
                                                                                               ANALYSI S

     J•J• KLINE                                                      C .A . SCHULER       I   J .K . HARPE R




                                           PLANNING COUNCI L




                                                                       I                                        I
                                   I
     MANAGEMENT POLICIES                      COMPENSATION                          SPECIAL PROGRAMS

I        Id . W . KANDLE                         J .S . EMERY              I        C .I . GOULD (ACTING)



     MANPOWER REQUIREMENT S            COMPENSATION AND RETIREMEN T            EQUAL EMPLOYMEN T
         D.G . BOEGEHOLD                       J .R . BIRKLAN D                   OPPORTUNITY
         V.A . DICARLO                          R .E . SHELTO N                   D .G . GOODYEA R
                                                                                   J .D. TRAHA N
     SELECTION/ACQUISITIO N            MORALE, RECREATION, AN D
         J .K . SEIDLINGE R              WELFAR E                              LABOR-MANAGEMENT RELATION S
                                                D .O. BENEDIC T                   J .L . BALLINGER
     UTILIZATIO N                               L.G . HOGLAN
          P.C . NEWEL L                                                        EMPLOYEE ETHICS AN D
          C .W . THOMPSO N                                                       MILITARY JUSTIC E
          P.R . DeBAIS E                                                          H .E. LEWI S
                                                                                  W .C . GRAHAM
     TRAINING/EDUCATIO N
          A.J . GABRIEL                                                        DEFENSE MANPOWE R
          K.H . BRAKE                                                             COMMISSIO N
          T .A . EICKMEYE R                                                        A .R . SHANEFELTER, JR .
                                                                                   B.C . VANNOY
     SPECIAL ASSIGNMENT S
          R,S . KLEEMAN
         W,H . M. .NEVIN




                                                                                              SEPTEMBER 30, 1976

sent to heads of departments and agencies and I          economy through improved personnel managemen t
was sent to a military field office .                    and controls . Agency officials were generally re -
  N106L of our reports contained recommendations         sponsive to our reports ; indicating agreement with
to promote greater effectiveness, efficiency, and        our findings and intention to take corrective action .

                                                                                                               127
   FEDERAL PERSONNEL AND COMPENSATIO N

   Compensation and Retiremen t                                                   ntaele available to the Presidrnl's lop-level reyica v
                                                                                  panel .
                                                                                    Also . we reconimeudcd to rho Congre'x, lus t
   Structure of Federa l
                                                                                  hearings he held to develop the k•gislative cbaur",
   White-collar Pay System s                                                      occessau)- to establish n .ore rational pay ,esters, .
     We reported u, the Congress that legislation wa s                            (FPCD-Ili 9, Oct . all, 19 ;5 . )
  needed to change Federal 6-Itite-collar pay systems .
  Existing %%Ilia•-collar pay schedules failed to recogniz e                      Total Compensation Comparability
  that (ltc labor market consists of distinctive majo r                           For Federal Civilian Employee s
  groupincs which have ditrcrrnt pay m-aunentx.
                                                                                      We reported to the Congress uu the nerd fill- IeGia .o
  Cowequently, die Government teas paying, in varyin g
                                                                                   lion requiring Ihal holh dw part and linwiiu o f
  degrees, more or less than labor market rates fo r
                                                                                   Pcdcral emplovecs be assessed :ual adjusted on the
  sonic employees .
                                                                                  basis of comparahility frith pay :nrd hrnclits rec fiycd
     Systems should he designed around more logica l                              by non-Fedcral coq foyers.
  groupings and the pay rates based on the gcogrrphic                                 Xo police esi,icd to guide the development of
  pay patterns of Ihr Libor market in tchich eac h                                both part' and henrlits in :r conrdinmcd and eonsisten t
  group competes . Also, dilh•rrncec in employee pro-                             nroycnx•nl lowards a common goal . Federal I wtn s
  hcicncy and pciforluancc should he properl r                                    %ycre established on a pirccnn-al basis by Loy, tyid r
  recognized in the method of prognCssint, through th e                           out policy objective, and principles to guide hvnrl u
  pa) rank of it ;lade .                                                          development and ingnoyrmrm- Ire eontr -.txt, earinu ,
                                                                                  late, established d,o principle that pay rates fo r
     We rerotntnendcd that the Chairman, tayi l
                                                                                  Federal omplorecs should be comparable Leith th e
  Jeri -ice ('ommi-ion. ill coordination frith th e
                                                                                  pa%- latex of their r000tc,pan, in the privnlr ,error .
  I)ircclor- 011icc of ALanaeemem and Budget, tak e
                                                                                  11'e", late, proscribe prove"", tin' :mnu :d revit .m l
  certain actions It, improve eonqu•ns ;ttion policies                            adiustmcnt by admini,t afire artion .
  and practices . Thee said the (1, it Service ( :ormnission                          We reconunended that the Chairm:nr, I :ivil tirrywe
  tray stud, the types of problems identiticd in ou r                             0,nonissmn, develop and propose Irgisl .rlion t o
  report . .utd . %%lien completed, the sntdics would be                          achieve total compensation comparability . for dcu -




S:. _-9 - . ..- -   .   . __                        Loren hit en     n ht. I,vda-+r.. Pa,, R. Lunn, Di ..w H. L. 6lirgrr, LW. S_ Dd—,, J-w, R.
& .-           Rr_-o L . L: : d:   Rcr e, : F Srr,'ron . td-
                                                          .-   C. S:ire-, nrd R,,bat D . OutrrGdd~r.

128
                                                                                   FEDERAL PERSONNEL AND COMPENSATIO N
 mininfl Pcdcrol employer : pa, and hcmrlils. -hl,,                    large nun)lcr, of nlililary nlrmbcrs iodirawd .li, -
 Conulussion g"le•ralIv agreed with nut- conrlusious and               sali,raclion will, milil ;ov colopcn,ation a, thr y
 rclonnnrndation, .                                                    Ilrrrcia-cd it .
    .-\Iso, rr I     IIIIllrrldcd I11 .11 the :lpproln im ,                  Tu1 :d eoolpcnsnlion (ba,e pay, Aloavnnccs, and
crrssional comnlitives hold hearing, rnlll—nlllg th e                  fringe bcaelils) wa, per .6—1 to l" Inwcr than on e
  .urs disrasscd, far the pmrposr of 'k—Ndopin{; Ih r                  ,-,final, of Iolal r . .. .I"o-lion b, l5 prrremt I t
Irai,l.11icr chance, 11          .'IN to Isla AA, a I livy o f         rnlm"I prrsonnrl :mold IiI Prr,r ..I of oll"", 1-,gola r
 IAI,II -011111cusalioll colliparahility for 1'rdcrd clu-               military cur 1pro .:rliao . Ihr n)ilit :ae r, l uiralrnl rd :,
ployres . (1'1'( :17 if, G', , jnk I . 1975 . 1                                        solar,, wa, undrrraimm"I be II) pclr'.nl I d
                                                                        rnGttrJ I" . rl olld 20	                       t It lhrrl, .
Classification of Federa l                                                    Lark of cisihility 4 rongmnsalioo and nufacorahlr
White-collar Jobs                                                       aNilnd"e low .ml pay wrrr bolh nrg.11kcl, ,Iaao,ctn l
                                                                        with racer,- mul I"Illi,olleul inlrnl . 'Fhm i,, s"rvi,r
      In I9i-1 Ow Goarrnnum paid $111 bilhoo in salarie s               n .rnll"I" with low mogoilinn :nrtl nnlacorablr
 pl 1 .3 oollion "olployrs holdior, posillon, aabir1 ,                  	             rntr: oI I nol"11 atioo wrl, loos, lilrly I o
 none nnd"r Ile- l7rnrr.d ticbrdolr. it, rhi"I c .lo-go a                 in liv :or ill" will Iravr do• ,I vier .
 I II ,ahilr-roll .o' workers . Federa l dcpa,nnrnl. .In.I                    ( ),, . v,pol'1 IrIi1I .IlllreI ,og,-twu, 1,r Ihr !,;'— L oy
 ag, . .nrioe hare Ih" loll drily In org :uliu• and cl ."'ily             of 17rfe•n,r for impro,iop Ihr ei,ihility of ron,pvom-
 {heir own U"n"ral Svledulr ptsilions, grad", I                           Iioo . (FI1( :I)-75 --1 '12, 1 h I . In, 1 1 1P )
 Ihroogh I5 .'I'llc Ciyil Sergio ( Iomulis,ion I, I-I Ilsi-
 hlo for rryiewing III,- vlassilivalum Imo- ir"s of th e               Cost-of-Living Adjustmen t
 drp.otlucnls :md ay,cncivs.                                           Processes For Federal Annuitie s
     :\ I, .[ I III Ih, Congw,s idcnlihrd weaknr"rs i n
 .hr rolnrols and presslor, on job Ilassi G, .. lion . ,III, It             \\'r rvI I,,! on to-,.Ire) ,-hang'.•: ill III, F" I " A
 rrsultrd ill o,c•rgrad illy, sums• of Ihr positions . \\ 'r           annuily —l—of—living adjnsl nl.•nl gnrn r .ar~ . - hhr ,r -
 6rlryr Ihis nol only in,rrsrJ rnsK bn1 also lowrrr d                   purl o' .I, sent to if,, Gunk rss ko I . Ioo,olrla oft, i n
rnq .loyre morale .Intl produ,lion .                                   '—do oirlg.; Prape eel I'.pid .Itioo br tun lily' Ilk, pr o
     Rcforc Ihr siloaliun ran irlgmoc, I ' ll Fcd, - I                      ' 1 'hr rust-ul-living :olio -' ol'ot p . ore•,:r•: e . . .r d
 Inall.n;e•owlil Illost loake a routooll foe'Ill to i . . .I .lnye '    annnili" to incrca„ L ._w) dram ill, ro:I of li,iog o r
 job classilicaion and In organize Ibr work of Fnlrra l                 Ilan Federal while-Inllar p .Iy rates . 1 ,16, war -11-d
deparina'nls and aucncir, "conumi, :dly.'hhis otinu k                   by Ilk, e•sU:, I-1u•nrnl inrrrasrs whirl wrlr gl :noe( l
must prrnu•atc all Coarrnnenl rrbolons .                                to 1111 . lila. .I,, by law, r:u'1, till),- Il"11 ;111 nniu- aver,
      16e• ( : onuni"aion :Ind Ill, 011irc of Nhnag'.nu. n t            adjnsl"el for in,rr ;o,-, in Ihr ro',I of hying . -I Ill—
and Iludgct generally agreed will unr r",oe.nnrnda-                     :moldy adi-t o-w pmresses weer Into, librral Ila o
 liunxlorsmrng;thenillgclasiliration prarlires. Ford"" ,                lilt       ul non-Prdrral proaion sY P-IIv :. 'I hr• law :dco
u 1 \lay 27, 19717, Ihr I'residrul iv,ued ., m<•n oraudnn .             prrm .imrd new• relin'ry to brnrlm from rn•d-o(-living;
asking he~nls of ay,cnrirs :uul drp:n-hnents Io rersaolin r             inrrras"s whirl, ore-oll"d I lore glary Irlrr'd .
their position w :woy,rnle•ul and d ;I,sili,aliou systrn)s.                  We rrrnuunrudrd Ibr Collgl(+ rn,rl Irgi+lajon
Thr Connuissinn, in conjunction will, III, near Fat-u n                 rllAing Ib" :unolily,osl-ol-liviou, ;o1pram,lo fonnnLr
E—loalion System, i, inlplru u•nting the• pl :.n to updat e             :col rrl " I' A provi,iooc in major Fvdcl .d Irlirrmrn t
"Iasiticatiun sland .wds. It also aglpra is Ile Counuis -               systems I mn• rrloilahlr and lour'. ron,)stem wil l
,ion is nun,- 1igorously audilmy, agency rlasslhralions.                 Ihosr Ill non-FI' "Iill and olhrr Ft.&Fal I'vo-ool, pro -
(I'P :1Y75--173, 1kc . -1, 1975 . )                                     gr:ulls . Snbs"gmcnlly, the Congas coacp'd Pnblif .
                                                                         Laav 9•I •WD,approved 0( lobe,- 1, 1970, -huh, ;	               kg
Military Members' Perceptions                                           othr, things, clio .inarrl Ibr rrra I-peer :,-ut to . .onl y
of Their Compensatio n                                                  inrrl•asrs and provided for v'.mi :mnwd arg jnstfn,WL%
                                                                        equal m, tit(- actual perrcutagc rise in the Lost of living .
  We informed file SmIclary of tk•fcnse that tl-rc                      The Congressional nodgcl 011uk: wol the r)ffvri o f
was a need to improve military nn-11111cls' perrcplioll s                NI aIlagrnu-ni and Iiodgrl rstiuroed that this chang,c
of flcir compensation . I .ack of visibility of colopen-                will save. ' :3 billion over flu: next 5 yrios . (l'P(A)- W ,
sation among military Illrinhrr, was widespread, and                    110, Poly 27, 1976.)
                                                                                                                                       129
  FEDERAL PERSONNEL AND COMPENSATIO N

  Unclaimed Civil Servic e                                     foreign areas . The allowance paid to 30,000 Federal
  Retirement Benefits                                          employees in Alaska, Hawaii, and U .S . territorie s
                                                               was no longer an appropriate means of compensatio n
    In a 1972 report to the Congress (B-130150 ,               since it conflicted with the Government's pay policies .
 Dec. 20, 1972), Ave recommended the Civil Servic e            Special pay rates should be used, instead of the al-
 Commission locate and pay former Federal employees
                                                               lowance, to overcome any recruitment or retentio n
 their unclaimed benefits in the Civil Service Retire-         problems caused by higher private sector pay levels .
 ment Fund . A followup review was made of the Com-
                                                                  We recotnntended that the Congress repeal th e
 ru ssion's actions on this recommendation and th e
                                                               authority for paying a cost-of-living allowance to
 results of the review were reported to the Conunis-           Federal employees in nonforeign areas, placing the m
 sion's Executive Director.
                                                               on the sane footing as similar employees in the con-
   The Commission identified about 101,000 forme r             tinental United States .
 Federal employees with unclaimed benefits, cor-
                                                                  As long as the allowance continues to be paid ,
 responded with nearly 46,000 of these people frit h
                                                               certain administrative changes are needed to bette r
 known addresses, and received about 11,000 replies .
                                                              achieve the intent of the legislation, compensatin g
 This resulted in 10,595 former employees or their
                                                              for interarea cost-of-living differences . The Chairman ,
 heirs being paid $13 .7 million in benefits from July 1 ,
                                                               Civil Service Commission, agreed to consider thes e
 1973, to December 31, 1975 . Commission actuarie s
                                                              changes . (FPCD-75-161, Feb . 12, 1976 .)
estimated that over the next decade these bene-
ficiaries could receive an additional $20 million .
The merit of this effort was reflected in so man y
                                                               Military Recruiting
people being located and paid earned benefits .
   Since only 10 percent of the eligibles had bee n
paid, additional publicity about this effort wa s             Advertising For Military Recruitin g
desirable, and Commission representatives indicate d
                                                                 Advertising expenditures for military recruitin g
that such action would be undertaken. (FPCD-76-41 ,
                                                              efforts for the all-volunteer force increased fro m
Jan. 21, 1976. )
                                                              $6.7 million in fiscal year 1970 to $96 .1 million in
                                                              focal year 1974 . The purposes of military advertising ,
 A Contributory Military
                                                              in addition to obtaining recruits, are to improve the
 Personnel Retirement Syste m
                                                              public 's attitudes toward the military and to improv e
    At the request of the Task Force on National De-          the images of the services .
 fense of the Senate Budget Committee, we reviewe d              Our report to the Congress showed that few recruit s
 the issue of a cont ributory military retirement system .    can be traced to advertising and attitudes towar d
    Military retired pay costs were increasing sharply .      the military have not changed greatly. The repor t
 In fiscal year 1965, 462,000 military retirees receive d     highlighted certain problems associated with th e
 $1 .4 billion. For fiscal year 1976, the military retire d   military services ' advertising recruiting efforts, an d
population had more than doubled to about 1 . 1               Ave made various recommendations for improvin g
million members receiving about $6 .9 billion . Pro -         them .
posed legislative reform of the military retirement              Among the problems reported was the lack o f
system did not include a contributory feature .               central direction and control over recruiting research .
    We reviewed and summarized the material avail -           Much research was duplicated, while needed researc h
able on the issue of a contributory military retiremen t      was not being done . Also, advertising costs relatin g
system . The report identified the advantages and             to the overall recruiting campaign were not full y
disadvantages, the cost implications, and the issue s         disclosed and reported by the services consistently .
to be resolved . (FPCD-76-43, Mar . 4, 1976 . )               The Department of Defense agreed with most of ou r
                                                              recommendations. (FPCD-76-168, Mar . 19, 1976 .)
Cost-of-Living Allowances to
Federal Employees in Nonforeign Area s                        Need to Improve Military Recruitin g
   A report to the Congress dealt with cost-of-living           Military recruiting costs increased from $430 millio n
allowances provided to Federal employees in non-              in the last year of the draft to over $508 millio n

130
                                                                                        FEDERAL PERSONNEL AND COMPENSATION

during the first year of the all-volunteer force . A                       incomplete procedural controls, noncompatible re-
report to the Congress discussed the lack of centra l                      cruiting boundaries, and service-administered menta l
control for monitoring quality, recruiter malpractice ,                    examinations. The Department of Defense has taken
 and fraudulent enlistment . As a result, unqualifie d                     and will continue to take action to correct thes e
 recruits were slipping drrough the enlistment process ,                   problems. (FPCD-75-169, Mar. 5, 1976 .)
failing during training, and receiving caily discharges ,
 unnecessarily increasing recruiting costs. In fisca l
year 1974, 41,000 such discharges—for conditions                            Trainin g
which were identifiable before enlistment—cost th e
 services about $70 million .                                               Student Attrition at th e
    The Armed Forces Examining and Entranc e
                                                                            Federal Service Academie s
 Stations are best suited to control the quality of mental
 and medical examinations, moral fitne ss, and en-                            The Federal service academies provide career offi-
 listment paperwork. They had been precluded fro m                          cers for the military and maritime services. In fiscal
 independently monitoring these functions because of                        year 1974, graduates of the three military academies
 subordination to recruiting services, fragmented and                       accounted for about 10 percent of the total starting-




Cadets at the U.S. Air Force Academy completing a GAO-administered questionnaire on tourer of riadeol attrition .
(Courtesy of U.S. At, Force)

                                                                                                                                131
  FEDERAL PERSONNEL AND COMPENSATIO N

   rank oficers acquired by the military services . In a          and they generally agreed with them . (FPCD-76-8 ,
   report to the Congress, we discussed the principa l            Oct . 31, 1975. )
  factors in student attrition at the lice service academics ,
  and identified alternatives for reducing the attrition .        Consolidating Military Chaplain School s
     Although some aurilion—i.r., students leaving
  before graduation—teas normal, attrition was high i n             Responding to a request from the Chairman, House
  recent years . At four of the lice academies, attritio n       Committee on Appropriations, we reviewed th e
  rates for graduating classes reached near-record levels .      feasibility of consolidating the military services '
  IIigh attr ition results in inefficient use of existin g       chaplain schools. A consolidated school shoul d
  facilities and increases the cost of educating a n             provide opportunities for cost savings or an educa-
  academy graduate . The cosy of training each studen t          tional environment leading to greater professiona l
  ranged from 1,37,000 at the \Icrchant \Marine Acad-            growth and development, if it is to be preferred ove r
  emy to $97,000 at the Air Force Academe . The                  separate schools . Selecting a specific site for con-
  portion of this cost attributable to the students wh o         solidation is a prerequisite to a cost analysis whic h
  dropped out ranged from 13 percent for the -Nava l             demonstrates whether savings could be realized .
 Academy to over 18 percent for the Coast Guar d                    We reported avidable alternatives which should be
 Academe .                                                       examined in the light of philosophical issues raise d
    Our report contained recommendations to th e                 by the services, a study done for the Interservice
 Departments of Commerce, Defense, and Trans-                    Training Review Board, the site to be selected, and a
 por tation, and to the services, for reducing studen t          cost analysis by the Department of Defense .
 attrition, and they were in basic agreement with thes e            The services had mined opinions about the desira-
 recommendations. (FPCD-76-12, \Iar. 5. 1976. )                  bility of consolidating the military chaplain schools .
                                                                 Although requested, the Department of Defense di d
                                                                 not comment on the report . I-Iowever, after receivin g
 Academic and Military Program s
                                                                 our report, the House Appropriations Committee
 of the Service Academie s                                       directed that the separate chaplain schools be con-
    We reviewed the academic and military programs               solidated . (FPCD-75-123, July 1, 1975 .)
 of the five ser vice academies . Our findings were re-
 ported to the Congress to enable it to assess how wel l         Better Evaluation Needed for
 the academics were conductin g these programs t o               Federal Civilian Employee Trainin g
 produce the types of graduates the services needed .
    All lice academies were generally producing quali-              Under the Government Employees Training Act ,
 fied officers, but several aspects of the academie s            the head of each Federal department and agency ha s
 programs could be improved . For instance, only th e            the responsibility for training its civilian employees .
 Naval and Merchant Marine Academies required a                  Each agency head is required to plan, program ,
 comprehensive examination to evaluate students '                budget, operate, and evaluate training programs . I n
 professional competence before graduation and com-              fiscal year 1973 about 960,000 U .S . civilian employees
 missioning . These examinations should not serve as             received about 45 million hours of training at th e
 rigid formats, but as guides to help other academic s
                                                                 cost of approximately $216 million . If estimate d
 develop systems to meet their specific needs and to             salaries were included, total training cost would b e
identify military training shortcomings .
                                                                 about $500 million .
   The Naval and Coast Guard Academies had re-
                                                                    WC reported to the Congress that the requirement s
 cently established formal programs to assess- individua l
                                                                 to evaluate training were not being met adequatel y
 and group performance after graduation ; the Air
 Force and 'Military Academics lacked such program s             and sufficient cos, data were not accumulated to
and relied principally on informal, fragmentar y                 maintain effective control over training costs .
feedback . A formal program gives the academics bette r            Our report contained recommendations to th e
information on the competence of their graduates .               Civil Service Commission for actions needed t o
   Our report included recommendations to th e                   provide training leadership and guidance and t o
Secretaries of Commerce, Defense, and Transp or tation,          promote successful evaluation methods . The Corn-

132
                                                                     FEDERAL PERSONNEL AND COMPENSATIO N

 mission agreed with our recommendations (CPCD -              Staffing and organization of these offices needed
 75-120, Aug . 12, 1975 .)                                 improvement . Although the static recently had bee n
                                                           reduced, they still consisted of 16,51H) civilian and
                                                           military personnel . Our report discussed (II farthe r
Planning and Controllin g
                                                           possibilities for consolidation and/or cutbacks, (2 )
Training of Federal Employee s                             problems in accounting for headquarters personnel ,
    We reported to Congresswoman Patricia Schroede r       (3) differences in management styles and organiza-
 on the implementation of employee t raining pro-          tional structures of the military departments, (4) role s
 vided nuclei- title 3, chapter 41, United States Cod e    of the service scrretaries, aad (5) impact of external
 (formerly the Government Employees Training Act) ,        demands anal changing workload .
 by the Department of Health, Education, an d                'I'lle report included lecotuuendations to th e
 \Yclfarc, region VIII, Denver, Colorado .                 Secretary of I)vfensc for iutproving the slail .ug o f
    Some required training plans were not prepared ,       these olllces, and although Defense agreed in genera l
 and those prepared did not follow Givil Servic e          with them, several matters remained unresolectl .
 Commission and departmental instructions . ' Fil e        The 011ire of the Secretary of Defense did nut agree
 regional training officer exercised some control over     with our rccounucndation for functional accounting ;
 training ; however, required review and evaluatio n       of headquarters personnel, believing that the curren t
 procedures were not always followed .                     organizational approach was adequate . (FI'CD 76 -
    Also, the criteria applied by the department in        35, Apr . 20, 1976. 1
author izing upward mohility and, to a limited extent ,
other training were of questionable usefulness i n         A Military Presence in a n
assuring that the training was beneficial to th e
Government . The criteria generally emphasized onl y       Industrial Environment
what training could not be approved or allowed wid e         The Department of Defense operate s about 90
discretion, so ollicials autho rized training on th e      commercial and industrial military support activities,
basis that it was not specifically prohibited rathe r      excluding shipyards . Although the work Im—s are
than on the basis that it would enable employees t o       predominantly civilian, over 10,0110 military personne l
better perform ollicial duties .                           are assigned . To dctcrminc the need for and rust o f
   We made recommendations to the Secretary o f            this military presence, we made a case study at th e
ffealth, Education, and Welfare directed toward            Naval Weapons Support Center, Crane, Indiana, an d
assuring that training meets agency needs an d             reported our findings to the. Congress .
employee objectives . The agency generally agreed wit h       At the cud of 1974, the center had a work force, o f
our recommendations and indicated that correctiv e
                                                           about 4,500 civilians and a military complement of 62 .
action would be taken . (FI'CD-76-31, \far. 4, 1976 .)     The cost of maintaining the military presence wa s
                                                           about $1 .2 million annually. Only 23 of the militar y
                                                           personnel were doing center-related work . The
Staffing of Organization s                                 remaininv 45, plus 10 civilians, were providin g
                                                           support services for the military complcuucnt, such a s
Staffing and Organizations of To p                         food and housekeeping, recreation, and healt h
Management Headquarters in Defens e                        care . We developed an alternate stalling pattern tha t
                                                           would have dropped Cis military positions, added 2 5
  At the request of the Chairman, Senate Committe e        civilian positions, and tcuuporar!y retained 3 militar y
on Appropriations, and the Chairman, Subcommitte e         positions—all of which would have resulted in annua l
on Investigations of the House Committee on Armed          savings of about S848,00 0
Services, we reciew•cd the staffing and organization o f
                                                              As a result of our study, the Departrucot of Defens e
Department of Defense top management head -
quarters . Their major interest was in the size and th e   agreed to review all commercial and industria l
                                                           activities to determine if military stalking can b e
decisionntaking processes of the Office=- of the Secre-
taries of Defense, Army, Navy,_ and Air Force ;            reduced or if the total cost of the military preseu .c e
Headquarters, U .S . Marine Corps ; and the Office of      can he minimized by reducing the support-of-military
the Chief of Naval Operations .                            overhead . (FPCD-76-7 . Apr . 12, 1976. 1

                                                                                                                 133
   FEDERAL PERSONNEL AND COMPENSATIO N

   Assignment and Utilizatio n                                     Nonproductive time of 15 minutes a . day equates
                                                                to 3 .1 percent of the statutorily required 40-hour
   Rotation Policies and Practice s                             Avcck. Straight application of the 3.1 percent to th e
                                                                total Federal civilian payroll would equal $1 . 2
     We reported to the Congress that the Department            billion in lost productive time a year . We acknowl-
  of Defense and the services could reduce the amount           edged that extended lunch periods were not practice d
  and cost of personnel movement overseas by better             by 100 percent of the workforce ; however, to th e
  managing policies and practices for rotating enliste d        extent it teas- practiced, considerable productive tim e
  personnel .                                                   was lost .
     A test we made showed that the prescribed lour s             We recommended that the Commission and th e
 of 24 percent of enlisted personnel returning fro m            Office of Management and Budget jointly conside r
 overseas had been shortened by an average of 7 . 7             the matters discussed in our repot to insure tha t
 months . For fiscal year 1974, Ave estimated that this        lunch period arrangements in Federal agencies compl y
 increased costs of permanent changes of station by            with statutory requirements for a 40-how- week . Th e
 S28 .9 million and increased travel time by abou t            Chairman, Civil Service Commission, stated that th e
 360 stall-tears at a cost of about $1 .9 million . Rota-      Commission planned to implement our recommen-
 tion costs could also be reduced by extending'over-           dation. (FPCD-75-147, Apr. 9, 1976 .)
 seas tours of first-terns enlisted personnel with 2 to 6
 ntondns service remaining, rather than returning
                                                               Job Opportunities for
 them to the continental United States at the en d
 of their prescribed tours.                                    Women in the Military
    The Department of Defense had recently approved               In a report to the Congress Ave stated that althoug h
  changes to policies and practices which had contri-          the services had essentially opened all noncomba t
  buted to personnel movements and costs . When ou r          jobs, Avonhcn were not being assigned to all of them ,
  report teas issued, it was too early to assess the ful l     primarily because (1) recruiters failed to tell wome n
 economic impact of these changes, but sonic cos t             about occupational options, (2) many Avoucn pre-
 reductions could be anticipated . Accordingly, Ave            ferred administrative or medical jobs, and (3) comba t
 recommended that the Congress require the Depart-             assignments Avere prohibited to women .
 ment to identify in future appropriation requests th e          Some women were assigned to jobs with require-
 extent of cost and movement reductions resultin g             ments that kept them front working effectively . N o
 from longer term implementation of the change d              standards had been established to measure women' s
 policies and practices . (FPCD-76-45, Apr. 22, 1976 . )      strength, stamina, and other abilities .
                                                                 The services had a unique opportunity to evaluat e
                                                              the extent to which women are interested in, and ca n
 Increased Productivity i n
                                                              parfornn, jobs traditionally restricted to men, and Av e
 the Federal Governmen t                                      made recommendations to the Secretary of Defens e
    In April 1976, Ave reported to the Director, Offic e      on how this might be done . The Department cf
 of Management and Budget, and the Chairman ,                 Defense agreed with our recommendations and indi-
  Civil Service Commission, the findings of our revie w       cated that opportunities for women in the militar y
 of management's treatment of working hours an d              would be reevaluated . (FPCD-76-26, \fay 11, 1976 .)
 lunch periods for Federal civilian employees .
    Although Civil Service Commission regulation s            Part-time Employmen t
 did not address the structure of the lunch period, the y     in Federal Agencies
 did allow agency heads to schedule breaks in th e
                                                                During fiscal year 1974, Federal executive agencie s
 workday of tip to 1 110111 . \lost of the 38 military an d
                                                              employed an average of 222,800 part-time employees
 civilian installations we contacted scheduled only a         a month, about 8 percent of total Federal civilia n
one-half-hour break for lunch . Most agency officials         employment. In a report to the Congress we discusse d
 aRrced that employees generally took 45 minutes t o          the ways part-time employees were used in Federa l
 I hour for lunch. Some officials attributed this t o         agencies, the advar .ages and disadvantages of usin g
inadequate dining facilities .                                them, and constraints on their increased use.
134
                                                                                 FEDERAL PERSONNEL AND COMPENSATIO N

   Legislation which would have provided increased                   Federal employees should not be in positions of actin g
opportunities for part-time employment was proposed                  for the Government when their private financia l
in the 94th Congress but was not enacted .                           interests are involved . To this end, Federal depart-
   We reported that in providing part-time employ-                   ments and agencies require employees to regularl y
ment, the GovernmcnL could use it great pool of
                                                                     submit financial disclosure statements listing thei r
t.dent which was not needed or available on a full -                 financial interests . These statements are to be re-
time basis . Agency officials cited instances in whic h
                                                                     viewed and analyzed by designated departmenta l
additional part-time employees could have bee n
                                                                     and agency officials to identify instances of actual o r
effectively used but were not hired, mainly because o f
funding limitations and personnel ceilings .                         potential conflict of interest.
   We recommended to the Director, 011ice of \lan-                      Because of widespread congressional concern in thi s
 lrement and Budget, that ceilings for part-tim e                    area, we reported to the Congress the results of re -
employees be eliminated or relaxed on a test basis .                 views of the financial disclosure systems of , ,x depart-
O\IB agreed on the desirability of part-tine cuiploy-                ments and agencies :
ment and the need to find appropriate ways to stake                     —The Civil Aeronautics Board (FPCD-76-6 ,
hiring easier, but it does not believe relaxing personne l                Sept . 16, 1975) .
ceilings is necessary . (FPCD-75-156, Jan . 2, 1976 . )                 —Thc Federal Maritime Commission (FPCD-76-
                                                                          16, Oct. 22, 1975) .
                                                                        —The Department of the Interim (FPCD-75-167 ,
Financial Disclosure                                                      Dec . 2, 1975) .
                                                                        —The Food and Drug Administration (FPCD-76 -
     Standards of ethical conduct for Governmen t                         21, Jan . 19, 1976) .
officials are prescribed by an Executive order of fil e                 —The Federal Aviation Administration (FPCD-76-
I l residrnt . A basic concept of the standards is that                   50, Aug. 3, 1976) .




 Gd0 friary tustifting an fio—id dado., bf,r thr Sub,--horn on Ad mitt .drr Ln,u and Gormn—W Rrlations, Hoorn Judm-y Com -
,nitrrr, Job, 29, 1976. L Jt to r,,,ht, dsrim,nr Cnpil-dlr, Ce—d Phdlip .S_ rhghe,, Cn npnoflr, Gr, :no! Fl— R. Swats, Frdr,nr Pmonnd od
 C,„pn .rnti o Dh id inn, Drpnrr 1)i,rrtn, Cr ,d L Gnurd, and Dep .l, cr„r,nr Cnnn,d        Sord
 (C'ounesr of Crenur, PIlnlog .pme Colnlllullimnollst

                                                                                                                                   135
  FEDERAL PERSONNEL AND COMPENSATION

     —The Department of Commerce (FPCD-76-55 ,                  insure that public buildings are made accessible to th e
        Aug. 10, 1976) .                                        physically handicapped . The legislation include d
     In all cases, we found and reported thittlie financia l    within the coverage of the act all Ccvernment-lease d
  disclosure systems needed improvement, principall y           buildings and facilities intended for public use or in
  in :                                                          which the physically handicapped might be employed ,
     —Procedures for collecting, processing, and con -          all privately owned building` leased to the Govern-
        trolling financial disclosure statements .              ment for public housing, and the Postal Service . I n
     —Criteria and systematic procedures for reviewin g         addition, agencies named in the act are required to
       statements .                                            establish a system of continuing surveys and investi-
     —Procedures for, and promptness of, followup o n          gations to insure compliance with prescribed stand-
       financial interests.                                    ards . Lastly, an annual report to the Congress i s
    —Enforcement and scope of criteria for identifyin g        required on the General Services Administration' s
       persons who should file financial disclosure            activities and those of other departments, agencies ,
       statements .                                            and instrumentalities of the Federal Government o n
                                                               standards issued, revised, awarded, or repealed unde r
  Agency- officials generally agreed with our findings and
                                                               this act and on all waivers granted.
  said appropriate remedial action had been initiated .
                                                                  Our report also contained recommendations to th e
     Also, at the request of Congressman John E . .11oss,
                                                               Architectural and Transportation Barriers Compli-
  we made a review to determine whether 49 employee s
                                                               ance Board ; the Secretaries of the Department o f
  and consultants of the Department of the Interior' s
                                                               Defense ; Health, Education, and Welfare ; and
  U.S . Geological Survey had di gested themsel ves o f
                                                               Housing and Urban Development, and the Adminis-
  financial interests that appeared to be or wer e
                                                               trator of the General Services Administration . Each
  potential conflicts of interest . (This matter was dis-
 cussed in our report FPCD-75-131, Mar. 3, 1975 . )            of them agreed with the recommendations and too k
                                                               positive action to improve the conditions described .
 As of November 5, 1975, 37 of the 49 employees and
                                                               (FPCD-75-166, July 15, 1975.)
 consultants had digested themselves of their conflictin g
 interests, I emplogee and 1 consultant had terminate d
 their employment, and 10 employees had been allowe d          Grievance Arbitration Awards
 by the Department to retain the interests that ha d
                                                                   In response to a request from the Chairman, Sub -
 been questioned . (FPCD-76-37, Feb. 2, 1976.)
                                                                committee on 'Manpower and Civil Service, Hous e
                                                                Committee on Post Office and Civil Service, w e
 Social Responsibilit y                                         reviewed arbitration awards made under the Federa l
                                                                Labor Relations Program, as embodied in Executiv e
                                                                Order 11491, as amended .
Accessibility of Public Building s
                                                                  Our analysis of 509 grievance arbitration case s
to the Physically Handicapped
                                                                confirmed that most grievances could be remedie d
   The Architectural Barriers Act of 1968 was enacte d          within existing law : 248 awards sustained the agency' s
 to insure that federally financed public buildings are         position, 216 sustained the union, and 45 benefite d
designed and constructed to be accessible to th e               both parties. Of the 261 awards benefiting the union ,
physically handicapped . Our report to the Congress             192 were monetary. -he remainder were not mone-
discussed the need for certain legislative and ad-              tary, such as removing a letter of reprimand from a
ministrative actions if the act's purpose was to b e            personnel file .
fulfilled . lVe recommended that the Congress amen d              1Ve did not feel any of the arbitrated award
existing legislation and suggested specific language fo r       deficiencies were serious enough to warrant legislative
clarifying the Federal laws.                                    action. However, we concluded the deficiencies
   Public Law 94-541, signed by the President o n              justified the existing procedures that allowed Federa l
October 18, 1976, was completely responsive to ou r            agencies and labor organizations to seek third-part y
recommendations for strengthening the Architectura l           review, such as by the Comptroller General, of th e
Barriers Act . The legislation required that Federa l          legality of particular awards . (FPCD-76-14, Oct . 17 ,
agencies named in the Architectural Barriers Act                1975 . )

136
                                                                       FEDERAL PERSONNEL AND COMPENSATIO N

 Military Justice                                            conditions . The services said they adopted th e
                                                             conditional ivaiver to save time and expense whe n
                                                             they felt the evidence would not support the judicia l
Pretrial Confinement of
                                                             proceeding required for an undesirable discharge .
Military Personnel
                                                                To assure that individuals discharged for unfimes s
   The Uniform Code of Military justice provides that        and misconduct receive consistent treatment fro m
 pretrial confinement be used "as circumstances may          the services, we recommended that the Secretary o f
 require ." The "Manual for Courts-D4artial" an d            Defense (1) issue clear policy guidance on whethe r
 Department of Defense and service regulations provid e      conditional waivers should be used and, under wha t
that confinement may be imposed, pending trial ,             circumstances, and (2) monitor implementation of the
when necessary to insure the presence of the accuse d        policy. (FPCD-76-46, Apr. 1, 1976 . )
at the trial or because of the seriousness of the allege d
offense .
   We informed the Secretary of Defense that mor e           Other
effective criteria and procedures were needed for
imposing pretrial confinement . The services did no t        Operating Military Resort s
adopt uniform guidelines and some servico activitie s
provided more stringent safeguards than other s                 Responding to a request from Senator William
against unnecessary pretrial confinement . Service           Proxmire, we reviewed the justification, financing,
representatives disagreed on how much discretio n            and operation of various military recreationa l
should be left to commanding officers .                      facilities . In April 1976, we reported to the Senato r
   We recommended that thte Secretary of Defens e            that certain changes were needed in operating thes e
(1) require that an independent, neutral party, wit h        resorts, mainly in the use of appropriated funds .
authority to release the confrnee, review each case o f         To boost troop morale, the military services operate
pretrial confinement and (2) issue definitive criteria       resort centers at various places around the world .
and procedures for pretrial confinement . (FPCD-76-          They are Financed by customers and by funds ap-
3, July 30, 1975 . )                                         propriated by the Congress. Our report covered resort s
                                                             costing $12 .6 million in appropriated funds yearly
                                                             in Germany, Hawaii, and the Philippines. Th e
Administrative Discharge s
                                                             largest resort is the Army's Armed Forces Recreatio n
of Military Personnel
                                                              Center in Garmisch, Germany, which . cost $1 9
   The practices followed by the military services i n        million to operate in fiscal year 1975 . Half tl.e cos t
permitting bargaining when people may be ad-                 came from appropriated funds and the other half
ministratively discharged for unfitness and misconduc t      was paid by the center 's users.
were the subject of a report to the Secretary of Defense .     Our report discussed the questionable use of ap-
Guidance from the Office of the Secretary of Defens e        propriated funds in operating some of these resorts .
was lacking, and there were differences among an d           We recommended to the Secretary of Defense certain
within the services in permitting individuals t o            changes which would affect the operation of thes e
 bargain for more favorable discharges . This resulted       resorts and the amount of appropriated funds the y
in individuals receiving different types of discharges       receive Tile Department of Defense and the Office o f
for comparable types of offenses .                           Management and Budget have undertaken a join t
   Department of Defense Directive 1332 .14 prescribe s      study to identify and evaluate appropriated fun d
the policies, standards, and procedures for separatin g      support of morale and recreation programs .
 personnel from the Armed Forces under the ad-                  We also suggested that the Congress conside r
ministrative discharge program . The bargainin g             imposing specific guidelines on using appropriate d
process involves the individual's agreement to waiv e        funds, in view of the Defense Department's delay i n
his right to a hearing by an administrative discharg e       updating its funding policy . (FPCD-76-20, Apr. 6 ,
board, in return for discharge under honorable                1976,)

                                                                                                                   137
  FEDERAL PERSONNEL AND COMPENSATION




 Ge—1 Von Staub— Hotel at the armed Foe— Rmeation Cenw, Ga—ach, Germany .
 (Coss   of tinned F.,ce> Rremation Cxnr- uvmiM .. Grn s)




 Personnel Management in th e                                   litigation, congressional hearings, and propose d
 Small Business Administratio n                                 legislation on the merit system, Ave did not consider i t
                                                                appropriate to make specific recommendations .
   Section 13 of Public Lau- 93-386, dated August 23 ,           (FPCD-76-10, Nov. 28, 1975. )
 1974, directed GAO to comprehensively audit the
Small Business Administr ation. In -Nmember 1975,
Ave issued a report to the Congress Avhich discusse d            Audits in Proces s
problems identified in the agency' s personnel manage-
ment practices . This report Avis one of a series pre-
                                                                  Eighty-eight audits were in process at September 30 ,
pared in response to the legislative Iltandatc .
                                                                1976. They involved a wide range of activities fo r
    Our examination showed that a majority of th e
                                                                managing and compensating the Federal work force.
agency's employees believed its personnel programs
                                                                For example :
and practices Acere "good" or "fair" but 37 percen t
believed that political influence had been used i n               —Performance evaluation—an assessment of de-
                                                                    partments' and agencies' systems for evaluating
filling certain jobs . Correspondence files disclosed
numerous political referrals. Management agreed to                  Federal employees' work performance .
                                                                  —Human resources research and development—a
review the problem areas discussed in the report an d
to take appropriate actions.                                        review, undertaken as a result of a congressiona l
                                                                   request, of the effectiveness of, and the level o f
   During its routine evaluations at the agency, the
                                                                   funding requested for, the Defense Department' s
Civil Service Commission also found Aveaknesses i n                human resources research and developmen t
personnel management . The agency had taken correc-
                                                                   program.
tive action on Commission recommendations .                       —Personnel requirements—a study to develop a
   Because of ongoing personnel management evalua-                 method for evaluating the systems and technique s
tion at the Small Business Administration, correctiv e             used by Federal agencies to determine their
action initiated or taken by the agency, cases under               personnel requirements .

138
                                                                                   FEDERAL PERSONNEL AND COMPENSATIO N




(":10 fdals —iring a magrvsianat request to rreirao Federal rrti-,ind systems . Left to right : Chainame .1&lrbr Pi,,, lloum :bmeI S'nriru
                                                                                                                                          t
 Cou+mitlee ; Cattilimller Grurrat Fhnrr B. Swa; Chairnma Rid—d C . While, .S'uhrmmaittrr on Reli.rn:oll and lrnplalrr Bnrrfu, llouu Pos
 pjlrr and Cird Snrirr C.nnwliltr,, C1ww, :nn firm S. R—, floors Co     aw on B-Aing, Guru,,, aad lfousirrg, and IL L . h}irga aril sapo-
  ,ore auditor 1 r,w R . L fvm al GAO's fide-1 Pnsonwl and Compemalion Division .
lt'ourlesr   of   Ilau_e \Ia)aritr Photo mpl—)


   —Administrative lase judges—a review of th e                             discrimination complaint systems for Federa l
    personnel management system for adminisu'a-                             employees .
    live law judges, their productivity, and relate d                      —Unionizing military personnel—a case study o f
     matters .                                                              the unionized armed forces of foreign countries ,
   —Retirement systems—an examination, under -                              addressing, among other things, the implication s
     taken at the request of three congressional con y                      unionization would have for U .S . Armed Forces ,
     mtittees, into the des irability of having consistenc y                particularly from the standpoint of militar y
     in benefits and funding of Federal retiremen t                         efficiency, discipline, and morale .
    systems .                                                              —\Military absences—a review to determine if th e
   —Military compensation—a review to determin e                            Department of Defense and the services ar e
     whether military personnel should be paid unde r                       appropriately dealing with the problem o f
     a salary system .                                                      military personnel who are absent without officia l
   —Executive pay—a study of the effect of Federa l
                                                                            leave or who have deserted .
     executive pay rates on employees and on agenc y
                                                                           —Defense Nfanpower Ctontunission reconnnenda-
     operations .
   —Equal Employment Opportunity—an exarrtina-                               tionsan examination of the progress achieve d
     tion of the effectiveness, costs, operations, an d                      or the disposition made of each of the Com-
     staffing of Equal Employment Opportunity                                mission's recommendations .




                                                                                                                                        139
                                                               and assignments of interest to the Congress, monitor s
                                                               and coordinates all related audit work, and serves a s
                                                               a focal point for contacts with outside organization s
                                                               and agencies .
                                                                Gregory J . Ahart is the Division Director an d
                                                               Morton E. Henig and James D . Martin are the
                                                               Deputy Directors.



                                                               Audit Report s

                                                                  During fiscal year 1976 and the transitional quarte r
                                                               ended September .'0, 1976, 39 reports in this area o f
 CHAPTER ELEVEN
                                                               responsibility we+c submitted to the Congress and 9 2
                                                              were submitted to specific committees or Members o f
                                                               Congress at their request . In addition, 54 reports wer e
                                                              sent to department or agency officials . Appendix 2
                                                              lists these completed reports ; table 1 shows th e
                                                              number and types of completed reports .
 HUMAN RESOURCES

                                                              Assistance to the Congres s
 Responsibilities

                                                                  About 392 .4 staff years (44 .9 percent) of the pro-
    The Human Resources Division (designated th e
                                                               fessional Washington and field staff resources spent o n
  Manpower and Welfare Division before \lay 1976),
                                                               division assignments were for directly assisting th e
  audits the Department of Health, Education, an d
                                                               Congress . This assistance included (1) investigation s
 Welfare ; the Department of Labor ; the Nationa l
                                                               and reviews directed by statute or undertaken at th e
 Science Foundation ; the Community- Services Ad -
                                                              request of congressional committees and Members ,
 ministration : the Consumer Product Safety- Commis-
                                                              (2) staff assistance to committees (see app . 4), (3)
 sion ; the Federal Trade Commission ; the Equal
                                                              comments on pending legislation (see ch_ 4), (4) testi-
 Employment Opportunity Commission ; the Lega l
                                                              mony at committee hearings, and (5) discussions o f
 Services Corporation ; ACTION ; the Corporation fo r
                                                             work plans and audit findings with the staffs o f
 Public Broadcasting ; health programs of the Depart-
                                                             congressional committees .
 ment of Defense and the Civil Service Commission ;
                                                                 The division received 328 congressional requests ,
 the Railroad Retirement Board ; the Veterans Admin-
                                                              125 of Avhich had not been fulfilled as of September 30,
istration ; and various other commissions and councils .
   In addition, the division is the lead division withi n     1976 .
GAO for all Federal programs on health, manpower ,               Many requests for assistance were satisfied in -
education, income security, consumer and worke r             formally by phone calls, meetings, or correspondence
protection, and nondiscrimination and equal oppor-           not classified as reports, or by furnishing copies of
tunicy. In fulfilling these responsibilities, it prepare s   reports . In addition, 30 statements were presented i n
Office-wide program plans, maintains a data base o f         testimony before congressional committees or sub -
audits, develops resource material to identify areas         committees .




140
                                                                                                                                                HUMAN RESOURCE S

                                             HUMAN RESOURCES DIVISION

                                                                  DIRECTOR
                                                                 G . J. ABAFT

                                                            DEPUTY DIRECTORS
                                                 ORGANIZATION STAFFING          OPERATION S
                                                    AN D
                                                      Y. E HexlcG               J.O.   WRTM



                     PIA                                                                          LELISLA RI W                                 ATYER l
                           C.sNCOLLI~TANT




HEALTH FIHA .NCING                     HEALTH RESEARCH                                 NP                    i1                            I                 ITY
 AND REGULATION                     RE SOURCES AxD SERVICES                                   PROGRAMS                                         NC PROGRAUS

EA.   DExsuaRE. JR .                        & J. VAROOLY                                    R F. LwvSE                                           F. w. CDRTlS




             DEPARTMENTAND
                        FHEAL
                           'EL              EDUCATION.                                        xD PE .YON .                          ♦cORPOH~~I o
                                                                                                                  F
                                                                                                           -I                      —LI P


                       EDUCATION DIVISIO N
                                                                                                    VETERA                  MINI    AiIDn
               OFFICE OF HUMAN DEVELOPMENT
                                                                                                                       e . PEC K
             P. , —                ] . E FELLV



                FOOD AND DRUG ADMIUSTRATION                                                         PENT x A i a        V            TIES
                        A . ]o]oISUN                                                                    P. c, wcrzLEV I




               NATIONAL INSTITUTES OF HEALTH
                                                                                                  NATION LSCIEXCE FOUNDATIO N




                 NATIONAL      N TE OF                                                          COMMUNITY SFR VICES ADMINISTRATIO N
             OCNPATIGWL SAFETY AND HEALTH                                                                     ACTIO N
                                                                                                  LEGAL SERVICES CORPORATIO N
                       ]. TDTCEN
                                                                                                          T. 1 . GAF




             HEALTH RESOURCES ADMINISTRATION                                                       RAILR           RETIREMENT BOAp D
              HEALTH SERVICES AOMIHISTNATIOH                                                                 R    zuOlFxMwn
             ALCOHOL, DRUG ABUSE, AND MENTAL
                   HEALTH ADMINISTRATION
                CENTER FOR DISEASE CONTROL
             C R F 'SIFRJARSR R O. FARAOA 1                                                    CONSUMER PI .UCT SAFETY COMMISSIO N
                                                                                                    OCCUPATIONAL SAFETY AND
                                                                                                 HEALTH ADMINISTRATION RABOR I

                SOCIAL SECURITY ADMINISTRATIO N
              R. E. UUGHEB         Y. — .-S,                                                               CORPORATION FO R
                                                                                                         PUBLIC BROADCASTING


                       OFFICE OF SECRETAR Y
             SOCIAL                      sFRVICE
                         RE. IFFERiTJR                                                                                       I DEFENS E
                                                                                                   AHp CII                vICE COMMISSIO N
                                                                                                                  I=    MCC.RSUCX

                                                                                                           IUH- RIGHTS AN D
                                                                                                  AN IDISCRIIHATION PROGRAMS _
                                                                                                        INCLUDING OFFICE OF
                                                                                                  FEDERAL CONTRACT COMPLIANC E
                                                                                                  (LABOR) AND EQUAL EMPLOYMEN T
                           FEDERAL TRADE                                                              OPPORTUNITY COMMISSION
                             COMMISSION                                                                         L SYSTIf
                             A ]OJORIAR

                                                                                                           ALTERNATIVE I .C
                                                                                                                         —
                                                                                                                         .
                                                                                                           DISTRIBUTION 11STE11
                                                                                                             ]. SbU1DALEAIS
  HUMAN RESOURCES

                                                       Table 1

                                                                                      nerxmsmbn,Wat to           ----
                                                           l'onFm-ce    'ouFmcdonal       \lumbers of  AFrneY     Totnl
                                                                           nnnlll,r•~      eo,Kma      o f 162
                                                                                                             a



 Denaruncnis :
       llmhh, Gduczlion, and N'elfar	                         24             21           27             31        1113
      Labor	                                                   .              1            to             5         21
      lWotsr (medical prugnuas)	                               3              5             1                        I 1
       Uultiag-cy	                                             1              -                             -          4
      others	                                                                              2                          2
 q tdcpcndent ag— s .
      civil S—wr Conmrissimt	                                  -              1             1               1        3
      Community Scr.-iccs Administration and ACTION	           I              I             1                1       •1
      Cmaunsr P—h- Safctr Commission	                          1              -                             -         1
      Equal Employment Oppoo it, Couunissioa	                                 1             1               -         2
      Natiomil wiener- roundmion	                               -             3             -                1        4
     \'deems Adntinistration	                                  •1             7            7              1 :1      31


       Toted                                                  49             40           a-             51 .1     1115




 Department of Health ,                                        $93 billion for school year 1975-76 . Total Federa l
                                                               outlays for cthu-ation-rt•lak'd programs were estimate d
 Education, and Welfare
                                                               at $11 .2 billion in fiscal year 19711 and at $1 .5 billio n
                                                               for the transitional quarter ended September 30, 19711 .
Overview of Programs Being Audite d                               IIE W's Education division—comprising the Ofic r
  In fiscal tear 1976 and the transitional quarte r            of Education, the National Institute of Fdocation ,
ended September 30, 1976, the Depa intent of Health ,          and the Office of (he Assistant Secretary for Educa-
Education, and Wcllaie (HEIV) had an authorized                tion—accounted for about $IIJ billion, or 32 percen t
budget of $159.8 billion and an estimated outlay o f           of the estimated Federal outlays far education fo r
$lil .4 billion for health, education, and incom e             the 15-month period .
security programs for the general population .                     The Lducation Division administers about 130
                                                               Federal programs to promote equal educationa l
Health Programs                                                opportunity for all children, encourage improvements
    Federal outlays for health were S53 billion, or            it, the education system, and support research an d
  about 11 .3 percent of the budget . These funds were         development in education .
 for (1) increasing health resources, such is research ,
 training and education, and health care facilities ,          Income Security Program s
 (2) providing health serv ice programs, such as Mcdi-           Total Federal spending for income security benefit s
 care and 'Medicaid . and (3) providing programs to           was estimated to exceed `5207 .2 billion . These benefits
 prevent and control health problems, such as con-            were (1) cash benefits, such as social security, veterans
sumer and occupational safety and disease control .
                                                               benefits, and public assistance, and (2) in-kind bene-
 Special piograns, such as drug abuse prevention ,
                                                              fits, such as food stamps, health care, and housing.
family planning, venereal disease control, and nursing
home improvement, were also provided .                           HENTs share of these -1—ditures was abou t
                                                              $131 .1 billion, or 63 .3 percent, for programs such a s
Education Programs                                            social security, supplemental security income, public
  Expenditures for public c d ucation from kinder-            assistance, special benefits for coal miners, and refuge e
garten through ?raduate school were estimated a t             assistance .

142
                                                                                                       HUMAN RESOURCE S

Health Resources, Services ,                                   whal r :utge of serv ices should lie provided or (2 )
and Mental Healt h                                             amending the mtlhorizing IcRislalion to require a
                                                               111iti n ,ill prrvenlivr• health program her all agc11rics'
Assistance to the Congres s                                    rmpluyees.
    :\s a prelude to fulfilling our responsibililics unde r       On Aogust 3, 1970, tee ieslilicd un this r,-I I t
wl-tion 131 .1 of the l IvAtlt Maintenance t hgaoiza-          brittle Ihr SubconuuiHCe ,n Retircownl and lint-
tioo Act of 1973, we provided iestimuuy, reports ,             ployre Iicurlils, li,use Cunnnitlre ,it Poll Ullirc an d
lowl", and stalf papers to House and Scoat . e0111 -           Civil ticreirc . (NI\\'U-711 62, •luxe 1•I, 11171 0
 nlittecS ('011sidering anlendnleuls h) the all . t )u r
                                                               Program .,   But Problems, In Dovolepinp Emergenc y
.ISSisullice rt'SRlicd in 111V drafling of additiona l
             no, li rr r,ogrrcvi,nal r. nsid"ati,,, :o ,d in   Medlcal Services Sy+lam s
.M—111
onl.olizatiunal and ad11titlistralive progr :un rhangr s            Urveloputrnl ill" sell-snslaining regional owdica l
by IIF'W .                                                     sysleuts depends on the williogorss of 1oc :d Ruvrr11 -
    \\ 'r also Icaliiicd . . .I other matters anal brivied      n"nis and providers, such as buspitals, to acr-lit 1111•
rungrrssiunal stilts ol, drag Irratntcnt and rahabilila-        legiomrl conrrpl . We reported to the 0,11111 1' .", tha t
o , ellotis of Ihy National Inslittuc Ili Iling Abuse .        regional N)'stelos No fur do nul have 11 11 101 tool mo ld
                                                               co,rdinatiutt liecess :oy to deliver rllrclivr e11u•rllror y
Effectiveness of Grant Programs Aimed                           111ydi'al scrvicrs clin wilily . Swett. delivery II;M I"co
at Developing Health Maintenance Organization s                improved by system devrluprncoly rurnur:q,rd and
and Community Health Network s                                  financed rider Ihr p.mrrpvnry I1lydiral Scrvicc s
    I'hc llr.ldt Mainivit au•c OrRauizalion Arl n l            Svslculs Act of 1975 .
 11175 authorized $325 nillim, fur local vc :as 197 .1 7 7          We lccoouncudrd Ihal III,- 0 mlItesv cxb•nd Ihr•
h . help de"A"J . hrallh maittrn'uree nrg."ivali,ns .           art ut (1) -'Jon v lurid ru„ . . it . . .rni III       . . . I' l l

'Ihesc organizations prucidr sp'cilic'cl'ires lu Ilmi r         syment develoP ..u•nl, (2) "•dote Ihr stop,• nl sort,•
.It thee ., either dirrcdv or tbr,ugh ,III       nn th e        ntnndalnry sq,lrm c,u q,nur•Io" (51 iminuvr IIF' W
basis ui prepaid talcs . 'If act pruvid' .s a liwmria l         pruttr:un admolislratiu.., :nrd (•11 improve run,.lioa -
in. cnticc for an organization t" crnpltasizv prevcion e        tion : . .nunµ Pr•drr :d pn g,mos related In	       r p'-o, Y
medicine, thus -during III .. ."'mall crust of brahl r          . .rcdical scrviccN . (IIRD 74 1511, lnly I'I, 1'174 . 1
rare .
                                                               Other Reports
   We rcp,rlcd lu rile Uungress ,ri h,ry cih•rlivel y
such organizations had spent krauts under hrdrr .1 1              l hhrr reports covered sm I t uo,Uer, ;m (I) I"Im o
programs br '       in 1971 and sul"gested ways t o            rrvirw by the Alcohol, Drug Ab11sr, and denia l
improve such activities . III : %V agreed with nor             Ilralth Adntinivllatioo, (21 gr:url and J i m al l
sgggrstions and entphasizrd that q tarry bard ahrad y          activities of the Naliowd Center for IIrahlt Setvirr s
been adopted . (\I\VU 75 98, Nnv . 21, 1975 . )                R'-watch, (5) obstacles 1, inq,h•nu•ntiuy, Ihr Ilralll ,
                                                               \Iainrru;ulrr Orwjoizalion All ul 1975, (41 wr•ak-
Inequalities In the Preventive Health                          nrsscs ill Ihr ad11tinislralion 'A Prrlrral asiisl :tnr r
Services Offered to Federal Employee s                         ploglauts, (5) the urban ran turbot progl ;on, :,n l
   Under Public Lao• 79-658, Frdvr l agencies olfe r           (b) [hr approval ,I n g ntl(;n( r inamauu fur Crd :u
pn•vcn live health scrvicrs to their employers . We            of Lrb :ulun IIuspital .
reported to the Congress that these scrvicrs ar c
                                                                Other Testimony
pntvirded uncqu :dly and that agcncywirde prcvc ..liv r
hrallh programs are inconsistent .                                 ()it November 3, 1975, we lemihrd Itelore the SnIL -
   \Vr rccontnu•ndrrl that it,,- if ManagcInvi a                convuiurc ,It I fr :dtb :rrrd Ib' h.n•nrunntcm, I lou v
and Budget and the Civil Scrvirc Commissio n                    Cmmorittcc on Interstate and Foreign Cuunnrtr' ,
eliminate inequalities within agencies . We also                011 our rrvirw of the urlmo rat 'ontrol pr,¢•r.     ., .
suggested that the Co..gr(ws consider either (1 )               (NIWD-75 90, Sept . 29, I!)7 :) . )
requiring a study of file costs and hroclils of pre-               Our wstuuony on the Kmcrv_cncy blcdiral Scrvi'!! s
ventive health services, to determine whether the y             Systems Act of 1973, below the Sutxouunrtte r ; o n
should he equally available to all employees and                Health, Senate Crnnu,ilux on Lal .ur awl I',blie

                                                                                                                               143
 HUMAN RESOIACES

 Welfare, in January 1976 provided the basis for man y       nitrofuran in animals utay also cause concur, FD A
 of the anendmcnt considered to revise and extend            had not obtained data on the extent of such netabo-
 the act .                                                   lile residues in fewll ,
    In Jane 1976. we testified before the Subcontnlitte c        We recununcnded that IMV plvnlplh' consider
 on Manpower and Housing, House Conuuittee o n               stlspcilding use of those nitrofurans for which the
 Covernmcnt Operations, on al'ollolis,ll treatment           absence of residues has not been ctndirlp-d, .1,Ill,
 programs for Government employees.                          Department said it plants to resoh'c the nitrofurm t
                                                             s:lfet' question .
 Audit Work In Process                                           Om \larch 15 . 1976, Ile testified hrfore the Stdt-
    Work in process at September 30, 1976 . included         eollolllttec ollour rcvic%v elf Ililnlfllralls ,
audits of the cifectivenes of (I l the community health      Feb. 25, 1976 . )
centers programs . (2) implementation of the sv .nc
influenza inununization program, (3) Public licalt h         Federal Control of New Drug
Serciee efforts to treat alcoholism and alcohol abuse .      Testing Is Not Adequately Protectin g
and (4i implementation of the prof'>sional standard s        Human Test Subjects and the Publi c
rcvieworganization progranl .\\'cvvere also reyicvyiu g         \\'c• reported to the Congrccs that FD:\ has tuom-
tl l Federal agencies' progres in developing etlplovcc       torcd mete drug tests and enfol-cnl ['slink rcquirc-
alcoholism n•caunent programs . (2) health regulatio n       mcnts inadc9mately . Cooscqucnik, FDA larks assur-
ptoxecing, (3? problems presented by specializatio n         ance that hmnlan suhicets of such tests are protecte d
and Ccographical distribution of pll-icians, (4 )            front unncecs ary hazards or that test data used i n
deinstitutionalization of the mcntally disabled, an d        deciding vvllether to appro\c mcw drugs for olarkelin g
k5l efforts to prevent Inertial re(ardation .                is reliable .
                                                                \CC q lade several recolollendaliows to t o
                                                             improve FDA's control over new drug testing . 11F.\ C
Food and Drug Administratio n                                generally agrecd that regulation of clinical invcstiga-
                                                             tions needed Strengthening.
Need to Establish the Safety                                    On •January 22, 1976, we tcslificd before the Still -
of Color Additive Red No . 2                                 committee Oil Health . Senate Commit" on Laho r
   \\e reported to Senator Gaylord Nelson that th e          and Public \\- elGmr, on our revicw . (1iRD 7696 ,
Foci{ and Dru Administration permitted the Ilse o f          July 15, 1976 .)
color additive Red No. 2 in food . elrtq,, . and cosmetics
for 1 years without finally determining its safety ,         Stronger Measures Needed to Insure Tha t
alltougit such determinations arc legally require d          Medical Diathermy Devices Are Safe and Effectiv e
and studies had raised questions about its safiiy .              At the request of the Chairman, Scnatc Comltuitc e
   \Tc reconuucnded that the additive's safety b e           Lill Governineilt Operations, we reported on FDA' s
promptly established or its use he prohibited, O n            program fur regulating medical devices which emi t
January 19, 1975• FDA banned Red No . 2 in food ,            heat for treating many hypes of nutscle and tendon
crud. and cosmetics, t\t\\'D-76--30 . Oct . 20 . 1973. )      pain .
                                                                 Although FDA is responsible for insuring that al l
Use of Cancer-causing Drugs in Food-producin g
                                                             such diatherinic deices marketed in interstate couo-
Animals May Pose Public Health Hazard :
                                                              nicrce are safe, effective, and properly labeled, it has
The Case of Nitrofurans
                                                             not established safety and performance standards or
  At the request of the Chairman . Subcolu niece Lil l       insured that these devices comply with Federa l
OvetsiOn and Imyesugation, House Connilittee oi l            requirements .
Interstate and Foreisrn Commerce, we reported o n                We made several reconutlerldations to FIEW t o
FDA ', re—lotion of nitrofurans . a class of drugs           strengthen FDA's program for regulating diathermi c
                       in labomlorv- ammllis -               devices . HE\G aid the Federal Food, Drug, an d
  The administration of nitrofurans to food-producin g        Cosmetic Act, as amended by the Medical Devic e
animals may threaten human health because of resi-           Amendments of 1976 (Public Law 99-294), provide d
dues it: fk . Althoueh sonic secondary- products of          FDA with the authority needed to assure that th e

144
                                                                                                        HUMAN RESOURCES
    public i s protected troll unsatr and incllcctiv, medica l      agencies, would establish a Federal policy on cancer =
    devices and Ihm, in inlplcnlenting the anlcadnlrnts ,           causinE chemicals . Allhuupll IIIAV agrccd that a
     tho Administration will provide appropriate Irgrol-            I'edecal policy is needed, it did out ere n nerd till a
     lions for diathellnic dcciccs . however, we bclicv e           (urinal cilort by the Cancer Insiilotc .
    flat the additional authority will nut coca curabl y               To pruvidc the drgrer ul nalcly ilopliol in til e
     improve rrgulation of such eicvi(-cs unless Fl )A dc -         Frcicral Fuud, Dion, and 0,sowlic All, MT Irr -
    ,clops an clYcctive I.CRulatory program. (IIRI) 71 1            cannnendrd that FDA have all proposed and I) ; -
     im, Svpt . 2, 19711 .)                                         viously approval thud additivrs 1-1c1I till 11,6 1
                                                                    "IIIrCI'-Caunilig Ilowullal .
    other Report s                                                      ( )n Sq,tcnlhrt' 20, 1976, we Irstihrd begin, Alic
       Chlwr reports covered such mntirrs as FDA' s                 'Suheonmlilter nn       1 hrrsiglll an .l luvrslir.alionn ,

    support fur rest :mr :m! s :milation, recalls of Lori            Ronne O)nitliillec Inn Intcrntate and foreign ( :oul-
    volonlcs of parcntcrals (liquid drugs ndnlinista'r d             nlrrre, no om repnrl nit I'Mcial cllortn it . Itruler l
•   intravenously or by other nun-oral means), nod rile              Ihr puhlir bunt rancor-rmtning chrmi,als. (t\I\V1 1
    nerd to resolve sal 0%, questions au sacclull in .               711-59, Jan, III, 19761
     Audit Work In Proces s                                         Other Report s
       Work ill process at Septembrr'10, 1970, includr d               Olhri repnrtn cnvrl,tl such mallets on the urrl
    :omits of I'l)A's rcgolation of (I) radiological uh•di-         Inc lichee ronhtrin Over Ihr hinntrliral I,F-11,1 1
    rinr, (21 rosutrlics, and (3) impulird products .               solgnh'icd by the Naliomil Inntitnirc of II—Iih an d
                                                                    vootpi -,ltr•Itsiv, t'atu ri r'rlrt,l-s.
    National Institutes of Healt h                                  Olhar Teetimon y
    Hopntills From Blood Transfuslon ; Evaluation o f                   Oo , (illy :11, 1975, w, trnllird Lenin, Ih r
    Methods to Reduce Tile Proble m                                 rnnoniure un Ilrallh . Srnalc Cnnnnilirr ern L:Ihr n
        Arrnr ling to ini         :Itinu derived ill Ihr ran-l y    ;nul I'nhlir \Vellmr, on om rrvirw tit the hrah b
    1970s, h,paiiiis (ruin blunt) I mslusiuns cost Ill,             prol-v,iun7, .^.uuh nu . . .wor lu       m . (\I\VI )
    :Nation se vial Illoulrcd million di11 :113 in I yrar, t h u    7 .1 1 ,14, t\l :uy 21I, 19TI 1 1
    report to the Cmtgrrss oxantim"I ways It, r,dor, it, ,          Audit Work In Process
    incidcorc of hrpalilis raised in this way, in,Iodin y
    ill•:\\' 's pl:uts In stop huspil ;dx Irvin po-hasing blond .     Work in you-ens as of S,plrnubrr '111, 1'171,, in, liche n
    4\ ,, identilicd a moolrr•r of Iillirnhi,a with rlinrimnin g    rcvirwn ill (I)     , ;. . .h-pntirrul ear, ,-.1, pail by
    llmchascd blood and madr- r,couunrndalmo, t o                   11,, N ;,lirnc,I Inailol- of Ilrahb al it ('hni, ;, I
    alleviate the problum .                                         Cr-nlrr in If-d" da, Md ., awl Ihr noph r--lr h
         HIM dill not agree with oar "'on n—dations t o             !pants and (2) llliW', ltiomog prngrrn In, loo -
    modify the national blond policy sn that blond r-nnI d          mrdiral ;md b,havi . ..A Irmo, I—,, -
    he bought limn b:mks wilil I ill, of supplyiug high -
    yuality blood . I-IBW Rcnvrdly agreed with our olh, r            Educational Opportunitie s
    rcrurtmu-udalions and reported that aclious it, 11win
    had hccn taken or pkouwd . (MIND-75-112, 1'eb . 13,              Follow Through : Lessons Learned From Its
     19711- )                                                        Evaluation, and Need to Improve Its Administratio n
                                                                        Follov: 'I hroopb ir: an —p,rio,rnr ;,I pvq,01 n
    Federal Efforts to Protect the Public From                       drsipnc(I to hurl more. rffrl tivr app",   ., F, , : I„ m :,, hin t
    Cancer-causing Chemicals Are Not Very Effective                  yumlg rhilrlrrn gruel lo .,-in,oni, farnilt >. ridh o
       Smiw scientists have. reported that q p to 90 perc,o t        m,iv,r,ir irri , ;,o d privet, ,rhrr ;,Iinn ;d —;o' o or •ani ,
    of human cancer is environmentally caused ;md con-               zations rlc•vcinpecl owlet aI,F .. h to Ir- irr.Ialh ,1
    trollable. We reported to tile. Cnngres that Federa l            in classrooms . II F, W ' ; t)ff :,,I of Four:rill rnr,trar rrd
    efforts to protect the public could he iruprov,d if it, (:       fur a national ,valuation tit th, ;Ipprr, :,,I;,., ,.H,• ,
    Director of the. National Cancer Institute, with th e               We rcportccl Io the 0 ""I", that, alt!;1,,_,, tr .oi ; a
    cooperation, advice, and support of other Federal                rtsolt froru Il i,: national                            ileac _,• .
                                                                                                                                   145
  HUMAN RESOURCES

 approaches achieved differences in outcome betwee n        Bilingual Education : An Unmet Nee d
 the children to whbm they were applied and others ,          We reported to the Congress that, because adequat e
 weaknesses in the experiment's design and implemen -      plans were not made to carry out, evaluate, an d
 tation will limit the Office of Education's ability t o   monitor the bilingual education program, HEW's
 conclude which approaches were successful . Improve -     Office of Education has progressed little toward (I )
 ments are also needed in program and projec t             identifying effective ways of providing instruction for
 administration .                                          bilingual education, (2) adequately training teacher s
   HEW agreed with our recommendations an d                of bilingual education, and (3) developing suitabl e
 described actions taken or planned to implemen t          teach ;ng materials . To help prevent the proble m
 them . (NIWD-75-34, Oct . 7, 1975 .)                      from recurring, we suggested that the Congres s
                                                           establish legislative controls over future educationa l
 Assessing the Federal Program for Strengthenin g          demonstration programs . The controls should requir e
 Developing Institutions of Higher Educatio n              Federal agencies to be accountable for establishing
   We reported to the Congress that the majo r             program objectives, as well as for assessing the
 Federal program to aid colleges and universities is       program and reporting periodically to the Congres s
aimed at developing institutions—those considere d         on its progress .
as having the desire and potential to contribute to          No comprehensive information is available on th e
 the Nation's higher education resources, but isolated     program' s effect on students ' academic progress, bu t
front the academic mainstream and struggling fo r          the Office of Education has contracted for a nation -
survival. However, in selecting institutions to partici-   wide evaluation of this . Local project evaluation re -
pate, the Office of Education had not consistentl y        ports have been of little use to local and Federal
applied the criteria it said it used to determine          decisionmakers .
eligibility. Further, many participating insrautions         HEW agreed with our recommendations to im-
had planned their projects and programs inadequately       prove program effectiveness and described actions
and without considering their plans for overall growth .   taken or planned to implement them . (biWD-76-25,
Also, Office of Education program monitoring effort s      May 19, 1976 .)
were limited and its evaluations of overall succes s
were largely subjective .                                  Training Educators for the Handicapped :
  HEW agreed oath our recommendations to correc t          A Need to Redirect Federal Programs
these shortcomings and described actions taken or             We reported to the Congress that, although mor e
planned to carry them out . (N11VD-76-I, Oct . 31 ,        and more handicapped students are now being inte-
1975 . )                                                   grated into regular classrooms and educators ar e
                                                           viewing special training of regular teachers as essen-
Experimental Schools Program : Opportunities               tial to effective education of the handicapped, HEW' s
To Improve the Management of an Educationa l               Office of Education has done little to encourage thi s
Research Progra m                                          special training. Office of Education programs for
   We reported to the Congress that the experimenta l      preparing teachers for handicapped students hav e
schools program cannot provide complete data o n           mainly involved (1) stimulating growth in colleges '
(1) the ability of school districts to plan and imple-     capacity to prepare specialists for educating th e
ment comprehensive educational changes and (2 )            handicapped and (2) financially supporting college
the impact of these changes on students, teachers ,        students entering the special education field .
administrators, and the community. In addition, the           Since Federal programs of this type began, co11_eges '
program did not insure that projects could provid e        abilities to prepare specialists in the education of th e
the type of cost data necessary to determine com-          handicapped have increased to the point that the
pliance with financial regulations.                        anticipated demand for these specialists will be met .
  We made several recommendations, aimed a t               Accordingly, the Office of Education should no w
improving the planning and execution of the program,       move to insure that regular teachers receive mor e
with which HEW generally agreed . (NINVD-76-54,            training in the special skills required for teaching th e
Apr. 27, 1976.)                                            handicapped .

146
                                                                                              HUMAN RESOURCES

   HEW generally agreed with our recommendations            Office of Human Developmen t
to improve its teacher-preparation programs in thos e
areas where the need is greatest and described actions      Improvements Needed in Rehabilitating Socia l
                                                            Security Disability Insurance Beneficiarie s
taken or planned to implement them . (HRD-76-77 ,
Sept. 28, 1976 .)                                              The Social Security Act authorizes the use of socia l
                                                            security trust funds to pay for vocational rehabilita-
Other Reports                                               tion services to disabled beneficiaries. The beneficiary
   We reported (1) to the Congress on reading activi-       rehabilitation program 's purpose is to return the
ties f mcled by Federal aid to educationally deprive d      maximum number of disabled beneficiaries to wor k
children and on the national assessment of educationa l     so as to save benefit payments and increase benefi-
progress, (2) to Congressman Albert H. Quie on th e         ciaries' earnings.
office of Education's migrant student record transfe r         As requested by the Chairman, House Committe e
system, (3) to Congressman Joel Pritchard on HEW' s         on Ways and Means, we testified before its Subcom-
disapproval of the Seattle school district's fiscal yea r   mittee on Social Security on February 3, 1976, an d
1975 applications for emergency school aid funds,           later reported to the Congress that such services di d
(4) to Congressman James A. Burke on the accurac y          not terminate benefits in most cases and that, there-
of the Boston public school system's student enroll-        fore, savings attributed to the program were muc h
ment and attendance figures, (5) to Congressma n            overstated.
Alan Steelman on certain problems of the Cosme-                HEW generally agreed with our recommendation s
tology Accrediting Commission, and (6) to th e              to improve program administration and had take n
Secretary, HEW, on mark-sense processing of basi c          or planned steps to implement them . We also rec-
educational opportunity grant applications and im-          ommended that the Con :=ress consider changin g
provements needed in the career education program .         the law in several respects, including (1) changin g
                                                            the fixed-percentage method of financing the progra m
Testimony                                                    to a method related to the program's success, (2)
                                                            reducing disability benefits of working beneficiarie s
  In November 1975 the testified before the Per-             according to their demonstrated earnings capacities ,
manent Subcommittee on Investigations, Senate Com -          rather than discontinuing all benefits when benefi-
mittee on Government Operations, concerning ou r            ciaries demonstrate the ability to earn money ,
previous reports on the Office of Education's guaran-        and (3) rescinding the 24-month wait for Medicare
teed student loan program. We provided the Sub -            eligibility for disabled beneficiaries whose benefit s
committee with background information on th e                have been terminated but later reinstated becaus e
program's purpose and operations and describe d              they could not continue working. Q\IWD-76-66 ,
major weaknesses .                                           May 13, 1976 .)

Audit Work in Process                                       Other Testimony

   At September 30, 1976, we were examining (1) th e           On December 3, 1975, we testified before th e
impact aid program, (2) the usefulness of Federal           House Select Committee on Aging on the difficult y
                                                            of identifying total Federal outlays that affect th e
education assessments, (3) the basic educational op-
                                                            elderly . We discussed several possible means o f
portunity grant program, (4) programs to meet th e
                                                            obtaining such information and some practical
special education needs of American Indian children ,
                                                            problems which the Committee could consider .
 (5) Federal educational assistance to institutionalized
neglected and delinquent children, (6) the Federal          Audit Work in Process
role in developing and promoting textbooks, othe r
                                                              At September 30, 1976, we were reviewing (1 )
curriculum materials, and behavioral modificatio n          the administration of the Children's Bureau, (2 )
techniques in local schools, (7) the financial viability    vocational rehabilitation training services, (3) th e
of private higher education, and (8) accreditation a s      impact of Federal programs on the elderly, and (4)
a requirement for colleges and universities to receiv e     the implementation of title III of the Older American s
Federal education assistance .                              Act.

                                                                                                                 147
      HUMAN RESOURCE S

      Medicaid Progra m                                          audit agreements in this area . (MWD-76-102 ,
                                                                 Mar. 18, 1976. )
      Recipients of Medicaid numbered an estimate d
   23 .2 million in 1976 and are expected to reach 23 . 6        Federal Fire Safety Requirements Do Not
   million in 1977 . HEW made medical assistance                 Insure Life Safety in Nursing-Home Fire s
   grants to States totaling $8 .2 billion in 1976 and ha s
   requested $9.3 billion for such grants in fiscal yea r          Two Chicago nursing-home fires kilted 31 peopl e
   1977 . The transitional quarter estimate for medica l        during early 1976, although our review, made at th e
   assistance grants is $2 .2 billion .                         request of the Chairman, Subcommittee on Healt h
                                                                and Long Term Care, House Select Committee o n
  History of the Rising Costs of the Medicare an d              Aging, disclosed that the buildings generally complie d
  Medicaid Programs and Attempts to Contro l                    with Federal fire safety requirements . Although loca l
  These Costs: 1966-7 5                                         firemen responded quickly to alarms, victims die d
                                                                from inhaling smoke and combustion products .
      Between 1966 and 1975, annual Federal and
                                                                According to fire safety experts, automatic sprinkler s
    State outlays for Medicaid and Medicare increase d
                                                                would have prevented these deaths.
   by over $20 billion. At the request of the Chairman ,
   Human Resources Task Force, House Committe e                   We recommended that the Congress require all
   on the Budget, Ave identified the source of these cos t     nursing facilities to be fully protected by automatic
   increases and described Federal efforts to contro l         sprinkler systems ; these requirements should b e
  these costs . The primary reasons for these cost in -        waived only when stringent standards, to be set by
  creases were (1) inflation, (2) increases in the numbe r     HEW, are met. In addition, the suggested that th e
  of people covered and in the use of services, an d           Department of Housing and Urban Developmen t
  (3) additional types of services . HEW had bee n             publicize its fire safety equipment loan insuranc e
  slow in issuing regulations to implement laws passe d        program and make the program more flexible .
  by the Congress and in responding to our recom-                On June 3, 1976, Ave testified before a joint sessio n
  mendations to control costs .                                of the Subcommittees on Health and Long Ter m
     We recommended that the Congress reduce cost s            Care, House Select Committee on Aging and Senat e
 by (1) requiring lease-purchase agreements fo r               Special Committee on Aging, on our review . (MWD- -
 wheelchairs and other durable medical equipment               76-136, June 3, 1976 . )
 and (2) eliminating the duplication of effort fro m
                                                               Other Reports
 having two different agencies pay Medicare claims .
 (MIVD-76-93, Feb . 11, 1976. )                                   We reported (1) to Congressman Edward I. Koch,
                                                               comparing the costs of home health care with those o f
 Improvements Needed in Managing and Monitorin g
                                                               institutionalization in nursing homes or hospitals, (2 )
 Patients' Funds Maintained by Skilled-nursing Facilitie s
                                                               to the Chairman, Senate Committee on Finance, o n
 and Intermediate-Care Facififie s
                                                               the use of prepaid health plans for inpatient service s
   Under Aledicaid, patients in skilled-nursing an d           in California and the costs of these services, (3) to th e
intermediate-care facilities are entitled to at least $2 5     Chairman, Subcommittee on Health, Senate Com-
a month for personal needs . On November 13, 1975 ,
                                                              mittee on Finance, on North Carolina's award of a
  Ave testified before the Subcommittee on Long Ter m         contract to underwrite and operate its Medicai d
  Care, Senate Special Committee on Aging, on con-            program, and (4) to the Chairman, Subcommittee o n
  trols over personal funds of Medicaid patients i n          Oversight and Investigations, House Committee o n
  nursing homes . Our reyiciv, made at the request o f
                                                              Interstate and Foreign Commerce, on HEW enforce-
 the Subcommittee's Chairman, uncovered severa l              ment of institutional utilization review requirements.
 problems with State and Federal controls over thes e         Reports were issued to the Secretary, HEW, on suc h
funds. We recommended that HEW (1) establis h                 matters as (1) the need for increased compliance with
 minimum standards that States must follow in estab-          nursing-home health and sanitary standards, (2) th e
lishing requirements for managing patients' funds ,           need to reduce administratively needy hospital day s
 (2) improve State monitoring of these funds by train-        and (3) the use of automated data systems for testin g
ing State inspectors, and (3) encourage common                Medicaid eligibility .
148
                                                                                              HUMAN RESOURCES

other Testimony                                            Medicare Program
   On July 17, 1975, we testified before the Subcom-          The Medicare program provides two basic form s
mittee on Oversight and Investigations, House Com-         of protection against the costs of health care fo r
mittee on Interstate and Foreign Commerce, o n             eligible persons aged 65 and over and certain others.
penalty provisions of the Social Security Amendment s      The hospital insurance program covers inpatien t
of 1972 pertaining to institutional utilization revie w    hospital services and posthospitalization care i n
                                                           vkilled-nursing facilities or the patient's home. The
under Medicaid .
                                                           supplementary medical insurance program covers
  We testified on July 27, 1976, before the Subcom-
                                                           physician services. For fiscal year 1976 and the
mittee on Health, Senate Committee on Finance, o n         transitional quarter, Medicare was allocated abou t
S. 3205, a bill to reform the administrative and reim-     $22.7 billion to cover about 24 million aged persons .
bursement procedures for Medicare, Medicaid, an d
other programs.                                            Tighter Controls Needed Over Payments fo r
                                                           Laboratory Services Under Medicare and Medicaid
other Assistance to the Congres s
                                                              We reported to the Congress that Medicare an d
  From October 1975 through May 1976, we assisted          Medicaid often pay substantially more for laborator y
the Subcommittee on Oversight and Investigations,          services than the prices charged by independen t
House Committee on Interstate and Foreign Com-             laboratories . Sometimes physicians obtain the service s
                                                           from laboratories and add large markups to thei r
merce, in a series of hearings on the Medicaid pro -
                                                           bills. The Social Security Administration pai d
gram . We updated information on the program for
                                                           independent laboratories without determining tha t
earl), and periodic screening, diagnosis, and treatmen t
                                                           they were certified to perform the services charged .
of children ; analyzed accreditation reports provided         We recommended that HEW (1) limit payments
by the joint Commission for the Accreditation o f          for laboratory services to the lowest levels at whic h
Hospitals ; and monitored HEW's enforcement o f            such services are available in a locality and (2) pay
utilization control provisions of the Social Securit y     only for the services of laboratories certified t o
Act .                                                      provide them .
                                                              HEW, in response to our recommendations ,
Audit Work in Proces s                                      described actions that were or would be taken .
                                                            (HRD—76—121, Aug . 4, 1976 .)
  At September 30, 1976, the were reviewing (1 )
collection of Medicaid payments from liable thir d          Delays in Processing Medicare Part e
parties, (2) identification of overstated nursing-home      Payments to Program Participants in Florid a
costs, (3) intermediate-care facilities, (4) controls          At the request of Senator Lawton Chiles an d
over the use of noninstitutional services, (5) Aedicai d    Congressman C . W. Bill Young, we reported o n
insurance agreements, (6) Illinois' Medicaid program        delays in Blue Shield of Florida's processing o f
and Federal efforts to direct control over fraud an d       payments under the supplementary medical insurance
abuse, (7) selected activities at a facility in Penn-       program. The delays were caused by a lack of
sylvania, (8) establishment of reimbursement rates for      managerial attention to resolving claims which coul d
                                                            not be routinely processed .
clinical labs and X-ray services, (9) the availability
                                                               We suggested to Blue Shield of Florida specific
 of medical services to Medicaid recipients, (10) pre -
                                                            procedures and controls for (1) identifying an d
 paid health plan corporate structures, (11) the prac-
                                                            processing claims which have been on hand fo r
tice of requiring nursing-home patients' relatives to
                                                            longer than a prescribed period and holding sectio n
 contribute to their care, (12) implementation of
                                                            managers accountable for their prompt processing ,
Medicaid utilization review requirements, (13) pro-         (2) identifying and reacting to backlogs daily, an d
 cedures for obtaining Medicaid materials and sup -          (3) improving the handling of documents .
 plies in the State of Washingtcn, and (14) HEW and            Blue Shield agreed to adopt some of our suggestion s
 State management of spend-down payments by                 and to study the feasibility of others . (MWD—76—7 0
                                                    '
 medically needy persons.                                   and MAVD—76—94, Mar. 19, 1976.)

                                                                                                                149
HUMAN RESOURCE S

Other Reports                                               provided to a Federal parent locator service and t o
   \\'e reported to (1) the Chairman, House Com-            the States for purposes of child support enforcement .
mittee on \\yaps and \leans, on the performance o f         (\t\VD-76-63, Apr . 5, 1976 . )
the Social Security Administration, compared wit h
                                                            More Can Be Learned and Don e
that of private contract intermediaries, in dealing wit h
                                                            About the Well-being of Childre n
institutions providing \ledicare senices and (2 )
Cougresswonari Elizabeth Holtzman oil the effec t             In a report to the Congress, we recommende d
of certain policies and procedures of Blue Cross an d       that HE\V (1) develop a system for evaluating th e
Blue Shield of Greater New York on reasonabl e              well-being of children and the impact of federall y
charge reductions under the supplementary medica l          supported programs, (2) direct research toward
insurance program .                                         problems identified by such evaluation, and (3 )
                                                            provide for greater dissemination of researc h
Audit Work in Process                                       knowledge.
  lVork in process at September 30 . 1976, included           \Ve developed and used a method for measurin g
reviews of (1) the \ledicare benefit structure and ho w     the progress of children accepted lilt protectiv e
selected national health insurance proposals \coul d        services be welfare agencies . This method focuses
affect \ledicare beneficiaries and (2) Social Securit y     on the well-being of children rather than on th e
Administration costs for processing and paying bill s       number and types of services provided or available .
of institutions providing \ledicare scr\-ices for 197 3     (\I\\'D-76-23, Apr. 9, 1976 .)
and 1975.
                                                            Other Reports
                                                               \Fe reported (1) to Congressman Gene Snyde r
Income Security Operation s
                                                            on possible welfare fraud in Kentucky, (2) to the
New Child Support Legislation                               Chairman, House. Committee oil Agriculture, on
Its Potential Impact and How to Improve It                  differences in aspects of the food stamp, aid to families
                                                            with dependent children, and supplemental incom e
   Over 7 million children who have a parent absen t
                                                            programs, (3) to the Chairman, Senate Budge t
from the home receive assistance under the aid t o
                                                            Committee, oil program integrity in selected Federa l
fatilies with dependent children program . \t c
                                                            income security programs, and (4) to the Chairman ,
reported to the Con gress that (1) many millions o f
                                                            Subcommittee on Social Security, House Commitw e
dollars spent to help these children could have bee n
                                                            on \\'ays and \(cans . on the need for store ntanage-
saved if child support payments had been obtained
                                                            ntcnt mid leadership in determining disability.
from absent parents. (2) several program improve-
                                                            Otter reports were issued on training programs fo r
ments were needed, and (3) some potential existe d
                                                            State and local public assistance employees and oi l
to establish or increase support payments . Major
                                                            problems in indirect cost reimbursement for a projec t
recisions approved in January 1975 to the child sup -
                                                            awarded to an HEW grantee .
port legislation could overcome program tveal :nesses,
but problems were occurring or anticipated whic h
                                                            Testimony
could limit improvements.
   HE\V agreed with our recommendations to includ e            On October 31, 1975, we testified before the Sub -
certain data in its annual report, to help the Congres s    committee on Oversight, House Committee on Way s
determine hots much the ne\v legislation has improve d      and \[cans, on the quality control program for ai d
                                                             to families with dependent children .
program operations . \%' e asked the Congress to con-
sider amending the legislation to (1) clarify evalua-          On February 3, 1976, we testified before the Sub -
                                                            committee on Social Security, House Committee o n
tion and audit requirements, (2) eliminate th e
                                                            Ways and \Leans, on our review of State operation s
financial incentive intended to encourage cooperatio n
                                                            for determining disability under Social Security pro -
in locating absent parents, (3) provide for consisten t
pacment to States and localities for collecting suppor t     grams . (HRD-76-105, Aug . 17, 1976 .)
payment-:, and (4) clarify the garnishment provision .          On September S, 1976, we testified before a join t
Also . we suggested that the Congress consider whethe r      session of the Subcommittee on Select Education ,
absent parents social security numbers should be             House Committee on Education and Labor, and th e

150
                                                                                                 HUMAN RESOURCES

Subcommittee Oi l Children and Youth, Senate Com-            press and assisting    congt'essional   committees     aul d
mince on Labor and public Welfare, on doe use of             subconunittecs.
foster care institutions under the aid to families will s
dependent cI ren program .
                                                             Veterans Administration Program for
Audit Work In PrOCOS S                                       Alcoholism Treatment : More Action Neede d
   At September 30, 1976, tee were rrviewing qualit y            We reported to the Congress that VA ' s trruntcn t
r.aarol and cligibilitc dctcrmiIl:Uions for aid h )          progrun has had littic impact un tilt estimated 3
f:,u,ilics with dependent children, foster care in child     million veterans who sulfur trout adcuholisn,--th ,
rare institutions, the Ill-"\V Audit Agency, the mau-        munher one hcalih problem in it,, VA hospital sys-
agcment and Ilse of social research and deeclopnlrn t        tem . VA had nun (1) established ovciall progrun
in selected Federal programs, LIliW's system fo r            goals, (2) provided retinal operational direction h, it s
reimbursing Stairs for tile . Federal silo a of publi c      71 alcoholism treatment units, or (3) committed itself
assistance costs, and the Induchiucse refugee re -           to developing a conipich,nsive progr .nn for veteran s
settlement program . Other revictrs in process con-          with alcohol problems. Sum, of the must populous
cernrd (I) cmergcncr assistance, (2) controls ove r          mcoupolium arras with VA hospitals hall no trral-
ihc. Ilse of consultants, (3) problems in holdin g           mcm units and no plans for any.
hearings for disability claimants more promptly. (4 )             VA was g,nrially receptive to our rccounocoda-
difficulties encountered by the Social security Ad -          tions to co'rcc'.t nn:sc and other prollifloS cited in ou r
ministration in obtaining pension data feud othe r           I'. ]) t and stated a naobcr of actions it had taltcu o r
Federal agencies to avoid s.. pplcunclual security in-       was plaunirg to take (NIWD-711-16, S,pt . 2, 1 1 175. )
r'otine overpayments, (5) the clfectivc—ss of the qualit y
assurance prokl:un for supplemental security ineomc ,
                                                             Potentially Dangerous Drugs Missing i n
and (6) opportunitirs to inlyu c information an d
referral services for the aged, blind, disabled, an d        VA Hospitals—Different Pharmacy
other persons.                                               System Neede d
                                                                We tcpurtcd to the Congress that Inrgc quail inns o f
                                                             drugs which trod to be abused could nut he m'ounicd
Veterans Administration                                      for at VA hospitals using du• convcntiunA pharmac y
                                                             system—the ward stock system . Despite VA endoisr-
   The current veteran population is about 29.11             ment of the unit dose system, which provides bctt' .r
million, and ;m additional 66 :1 million Innily mcm-         chug control, only 7 of 171 hospitals wcro using it .
bers of living veterans and survivors of deceased               Wr iccununcucicd that the Administrator establis h
veterans are potential recipients of veterans benclits .     a dciinitc timetable fur VA-wide ron,cision to ill( ,
During fiscal year 1976 and the t ransitional qua rtcr ,     unit [lose system . ArIeanwhilc, wr rccounnrodrd ,
                                                             drag controls at hospitals using thr Wart) stoc k
the Veterans Administration (VA) spent about $25 . 8
                                                             system should be shength,_ncd . VA ycncedly aktc.c.d
hillion on services to these veterans and dcpendc•nt s -
                                                              to our rcconnncuclaliots and plans to craven si x
about $20 billion for benefits such as education ,
                                                              qarc hospitals to the unit dt%r' systcn in fw al yea r
compensation, insurance, and pensions and abou t              1977 . 'Cit(! Administrator stated that dcveloptnen i
S5.8 billion for health care.                                of a VA-wide timetable will depend on ;n rvaluaiio n
   Our work at VA was directed at (1) assessing prob-        of these conversions, (M IND-7)-103, Sept . 30 ,
lems in recruiting and retaining physicians an d              1575. )
dentists, (2) evaluating VA' s efforts to provid e
prompt and accurate educational assistance pay-               Educational Assistance Overpayments ,
ments, (3) assessing the implementation of VA's com-
                                                              A Billion Dollar Problem—A Look at th e
puter-based compensation, pension, and educatio n
                                                              Causes, Solutions, and Collection Efforts
system (target system), (4) reviewing VA's health,
education, and income security func ,.' ;Its, and (5 )           We reported to the Congress that overpayments
 responding to requests from Mcml-: .f         of Con-        to veterans and their dependents under VA's educa -

                                                                                                                       151
  HUMAN RESOURCES

                                                                                 On April 8, 1976, we testified on the problem
                          ECCCATIONAL ASSISTANCE OVERPAYMENT S
 5 Millions                                                                   before the House Veterans' Affairs Subcommittee o n
 550
                                                                              Education and Training. On August 9 the Congres s
 500                                                                          enacted Public Law 94-378, which eliminated th e
                                                                              monthly prepayment of educational assistance bene-
 450                 Esi.ausxE o
                                                                              fits, effective June 1, 1977. (MWD-76-109, Mar . 19,
                     ~at ~rCri~
  w                                                                            1976 .)
              F- 1   o.              o	                            -

                     ux_a,cecreo                                   -
 350
                                                                              Recruiting and Retaining Federa l
                                                                              Physicians and Dentists : Problems ,
                lEftl0.a O.OVF414vu Exi ,Clinrr   i STI E
                                                                              Progress, and Actions Needed for the Futur e

                                                                                  We reported to the Congress that, despite numerou s
 100
                                                                               programs and practices to recruit and retain phy-
 1w                                                                            sicians, VA, the Department of Defense, and th e
                                                                               Public Health Service are having problems in thi s
 too                                                                           area. Except for an undocumented need for certai n
                                                                              specialties, we found no dentist recruitment or reten .
  m
                                                                               tion problems. To provide a long-term solution t o
  0    Fn-- FN, 1~                                                            such problems, we recommended that the Congres s
        19]0 19]1  1972                   1173    To.       1975       1916
                                                                              require the Director, Office of Management an d
                                                                              Budget, to submit within 1 year recommendation s
 The graph shows the dramatic growth in ors papneats during fisca l
pears 1970-76.                                                                for a uniform compensation plan for all Federa l
                                                                              physicians and dentists, including proposed imple-
tional assistance program have increased dramaticall y                         menting legislation and cost estimates . We also rec-
in recent years. As of December 31, 1975, overpay-                            onmmended that (1) t: secretaries of Defense an d
ments totaled almost $1 .4 billion, of which $446                             HEW identify and document critical specialties an d
million was overpaid in fiscal year 1975 and $41 2                             administer the continuation pay and variable incen-
million in the 6 months following . In fiscal yea r                           tive pay programs in accordance with the legislation ,
 1967, the overpayments represented 0 .7 percent of                            (2) the Secretaries of T>efense and HEW develo p
VA's total educational benefits paid, whereas, in th e                        long-range plans on he,. * Iysicians entering throug h
first 6 months of fiscal year 1976, overpayments                              the scholarship and UL' -sity programs are to b e
represented 15 .6 percent . Overpayments remainin g                           employed, and (3) the Administrator of Veteran s
uncollected had also increased dramatically, fro m                            Affairs and the Secretaries of Defense and HEW each
$8 .4 million at June 30, 1970, to $298 million a t                           develop programs to identify and fulfill their physician
December 31, 1975 .                                                           and dentist needs . (HRD-76-162, Aug . 30, 1976. )
   In Los Angeles we noted that the primar y
causes of overpayments were veteran and schoo l                               Other Reports
delays in reporting training changes, poor V A
                                                                                 We reported (1) to the Chairman, Senate Com-
processing practices and issuing of special payments ,
                                                                              mittee on Veterans' Affairs, on the veterans educa-
and prepayment and advance payment provisions o f
                                                                              tionaI assistance program for on-the-job training, on
the VA educational assistance law .
                                                                              the implementation of certain provisions of the Viet-
   Our report included numerous recommendations                               nam Era Veterans' Readjustment Assistance Act o f
to VA to eliminate the causes of overpayments an d                            1974 (Public Law 93-508), and on veterans' re-
improve collection. VA recognized the causes w e                              sponses to our questionnaires on educational assistanc e
reported and was taking actions to solve the problems .                       programs ; (2) to the Chairman, House Appropria-
We also asked the Congress to reconsider the merits                           tions Subcommittee on HUD - Independent Agen-
of prepaying veterans for training and return t o                             cies, on VA 's justification for establishing four regiona l
a postpayment system for educational benefits .                               computer centers for its proposed target system— a

252
                                                                                               HUMAN RESOURCES

 communications system which would modernize bene -          Other Governmen t
fit claims processing, (3) to Congressmen John E .           Health Programs
floss and Charles Rose on the "sole brand and model "
acquisition of a computer for a VA data processin g             We reviewed aspects of Department of Defens e
center, (4) to Senator Floyd K . Haskell on the ad -          health programs and the Federal employees healt h
ministration of the Denver VA Hospital, (5) t o              benefits program administered by the Civil Service
Congressman Bill Chappell, Jr ., on the comparison            Commission . From July 1, 1975 to September 30 ,
of VA pharmacy prescription costs, and (6) t o                1976, Defense spent about $4 .5 billion on direct an d
Congressman Les Aspin on disability retiremen t              indirect medical care for members and retirees o f
compensation for general flag-grade officers .                the military services and their dependents . The
   Reports were issued to the Administrator of Vet-          Federal employees health benefits program provide s
 erans Affairs on the need to revise the veterans assist-    health insurance for about 3 .1 million enrollees and
 ance program in the Philippines ; the possibility o f       about 6 .2 million dependents . Government employee s'
overpayments to certain community nursing homes ;            contributions to various insurance plans amounted
the effectiveness of internal controls in the computer -     to about $1 .1 billion, while the Government's share
based compensation and pension benefit system ; th e         was about $1 .7 billion .
proposed construction of a cardiac catheterizatio n
laboratory at the Sepulveda, California, VA Hospital ;       Proposed Coordination Between Medicare
VA's procurement and supply operations ; and re-
                                                             and the Federal Employees Health
gionalized hospital-laboratory services .
                                                             Benefits Program
Testimony                                                        At the request of the Chairman, House Committee
                                                             on Post Office and Civil Service, we reported that a
  On February 18, 1976, we testified before the              joint proposal by HEW and the Civil Service Com-
Senate Veterans ' Affairs Subcommittee on Healt h             mission to provide a less expensive option to enrollee s
and Hospitals on certain provisions of S, 2908, th e          in the Federal employees program who were also
proposed Veterans Omnibus Health Care Act o f                 covered by Medicare did not meet legislative require-
1976.                                                         ments and would provide preferential treatment to a
                                                              small group of Federal employees . The proposa l
Other Assistance to the Congress                              resulted from Public Law 92-603, section 210, whic h
                                                              prohibited payment by Medicare for any item o r
  At the request of the Senate Appropriation s                service. covered by a Federal employees plan in
Subcommittee on HUD-Independent Agencies, w e                 which the b_ -dicare beneficiary was enrolled.
provided information on certain areas of VA' s                   Public Law 94-182, approved December 31, 1975,
budget for the Subcommittee 's use during hearings            repealed section 210, as we suggested in one of the
on VA's fiscal year 1977 budget .                             alternatives we provided the Committee, thus main-
                                                              taining the previous relationship between Medicare
                                                              and the Federal employees health benefits program .
Audit Work in Process
                                                               (MWD-75-99, Aug . 4, 1975 .)
  At September 30, 1976, we were reviewing VA's
problems in recruiting and retaining medical person-         Policy Changes and More Realisti c
nel other than physicians and dentists ; its affiliatio n
                                                             Planning Can Reduce Size of Ne w
program for hospitals and medical schools ; its
surgery services ; its land transfers to medical schools ;   San Diego Naval Hospital
its domiciliary program ; its automated clinical report-       Responding to a request of the Chairman, Sub -
ing system ; the implementation of its computer-base d       committee on Military Construction, Senate Appro-
compensation, pension, and education system (targe t         priations Committee, we reported to the Congres s
system) ; its health manpower _assistance progra m           that the Department of Defense's criteria used i n
under Public Law 92—541 ; and its cardiac catheteri-         planning the number of acute care beds for the Sa n
zation laboratories .                                        Diego Naval Hospital did not reflect either actual o r

                                                                                                                  153
  HUMAN RESOURCES

 expected use and Defense had not fully explored th e           Other Reports
 possibility of using,nearby Federal or civilian facilities .      Other reports covered such matters as (1) militar y
   We developed a new model for determining acut e               pharmacy operations, (2) the military's drug and al-
 care bed requirements and recommended that De-                  cohol abuse treatment programs, (3) military medical
 fense implement a similar model and, before selecting          supply procurement practices, (4) the administratio n
 a site, await the Congress' decision on two policy             of psychiatric benefits tinder the civilian health an d
 matters the were suggesting. Defense agreed to us e            medical program of the Uniformed Services an d
 our model, but it expressed the view that using excess         program management, (5) total Government cost s
 acute care bed capacity at nearby Federal hospital s           involved in training physicians through the Arm y
 would impair its medical training program . The                Forces health professions scholarship program, (6 )
 Congress directed Defense to (1) use a model lik e             premium rate increases for the Federal employee s
 ours and (2) plan to fully utilize available beds i n          health benefits program, (7) methods of disseminatin g
 Federal and civilian hospitals when constructing o r           health plan information to Federal employees, an d
 moc--rnizing Defense health care facilities . (i\4WD-          (8) conflicts between State health insurance require-
 76-117, Apr . 7, 1976. )                                       ments and contracts of Federal employees healt h
                                                                benefit carriers .
 Cost-Effectiveness Analysis of Tw o
 Military Physician Procuremen t                                Testimony
 Programs : The Scholarship Program an d                          On December 11, 1975, we testified before th e
 the University Progra m                                        Subcommittee on Retirement and Employee Benefits ,
                                                                House Post Office and Civil Service Committee ,
    We reported to the Congress on our comparison o f
                                                                on our staff study on Federal health insuranc e
  the cost effectiveness of physician procurement by th e
                                                                premium rate increases . (MWD-76-76, Nov . 18 ,
  Uniformed Services University of the Health Science s
                                                                1975 . )
 with that of the Armed Forces health professions
 scholarship program . Our estimates, made at th e
joint request of Senators Wendell H. Ford and William           Audit Work in Proces s
 Proxmire, showed that in fiscal year 1984, the firs t
                                                                   Work in process at September 30, 1976, at th e
 full year of simultaneous operation of both programs ,
                                                                 Department of Defense included audits of the plan s
 (1) the educational cost will be $36,784 for eac h
                                                                for medical construction in fiscal year 1977 and of the
 scholarship program graduate and $189,980 for eac h            civilian health and medical program's specialized
 University graduate, (2) the educational costs pe r
                                                                 treatment facility administration, management, an d
staff-year of expected service will be $4,362 fo r
                                                                effectiveness.
scholarship graduates and $10,232 for Universit y
                                                                   Ongoing reviews of the Federal employees health
graduates, and (3) the total cost per staff-year of
                                                                benefits program included the actuarial process fo r
expected service (including anticipated pay and
                                                                premium rates, the different rates of two prepai d
retirement costs) will be $21,444 for scholarshi p
                                                                group health plans, and Blue Cross/Blue Shiel d
 graduates and $26,236 for University graduates .
                                                                and Aetna cost containment activities . In addition ,
   We provided the Congress with three alternative s            the are studying the cost of prescription drugs sold t o
 which, by eliminating the University, could produc e           the Federal Government .
 equivalent numbers of physician staff-years at les s
 expense than could both programs operatin g
 concurrently.                                                  Department of Labo r
   Defense disagreed with our use of a cost-effective-
ness analysis . It stated that a cost-benefit analysi s            The Department of Labor had art estimated outla y
would be more appropriate, as it would recognize the            of $32.1 billion for fiscal year 1976 and the transitional
intangible benefits from the University . This repor t          quarter . The Department administers and enforce s
served as the basis for discussion oa the floor of the          statutes to protect and improve the welfare of Ameri-
Senate . (MWD-76-122, May 5, 1976 .)                            can workers .

154
                                                                                            HUMAN RESOURCES

   Our audits were primarily of the Employment an d      Formulating Plans fo r
 Training Administration and the Employment Stand-       Comprehensive Employment Service s
 ards Administration .
                                                           At the request of three committees and man y
                                                         Members of Congress, we reviewed how program s
 Allocating Funds Under                                  were planned during the first 2 years of the Compre-
 Titles I and 11—Comprehensive                           hensive Employment and Training Act and how th e
 Employment and Training Act                             Department of Labor reviewed these plans .
                                                            Son :_- first-year problems appeared to have bee n
    We reported to the Congress that the Department      solved, but improvements were needed in (1) th e
of Labor' s methods for defining eligible areas and      work of planning councils, (2) the Department' s
allocating funds under the Comprehensive Employ-         reviewing process, (3) data used by State and loca l
ment and Training Act had caused inconsisten t           authorities in selecting groups most needing employ-
funding among areas of substantial unemploymen t         ment assistance and related services, (4) methods o f
and dilated the act's impact .                           choosing "delivery agents" to provide t raining an d
   Problems existed also in funding four title I con-    other services, and (5) identification of shortages o f
centrated-employment programs in rural areas . Th e      labor skills .
Department did not establish uniform criteria t o          The Department generally agreed with our find-
compute fiscal year 1975 funding levels . Two pro -      ings and said action was being taken or planned to
grams received funds not legally available to them.      implement our recommendations . (HRD-76-149 ,
                                                         July 23, 1976 . )
Also in violation of the statute, two States operate d
title I manpower programs as balance-of-State prim e
sponsors in areas also served by a concentrated          Other Reports
employment program.
                                                            We reported (1) to Congressman _James F . Hastings
  The Department generally agreed with our recom-         on the activities of Project Reach, Inc ., as an advocate
mendations on funding under title II but disagree d       and provider of services for migrant farm workers,
with our recommendations on funding the rural             (2) to Congressman Jamcs C . Cleveland on how th e
concentrated-employment programs . (IMWD-76-22 ,          Department of Labor certified foreign workers fo r
Jan . 2, 1976 .)                                          New Hampshire 's 1974 apple harvest, (31 to Senato r
                                                          Lowell P. Weicker, Jr., and Congressman William R .
                                                          Cotter and Robert N . Giaimo on how Federa l
Benefits Program for Injured Worker s
                                                          programs affect migrant and seasonal farmworkers i n
Under the Longshoremen's and Harbor                       the Connecticut River Valley, (4) to Congressma n
Workers' Compensation Ac t                                Pierre S . du Pont on public service employment i n
                                                         Delaware under title VI of the Comprehensive
  At the request of the Chairman, Senate Committe e       Employment and Training Act, (5) to Congress -
on Labor and Public Welfare, we reviewed the De-         woman Patricia Schroeder on how Federal agencies
partment of Labor's administration of the Federa l       use, administer, and enforce the Davis-Bacon Act an d
compensation program established under the Long-         Service Contract Act labor standards provisions i n
shoremen's and Harbor Workers' Compensation Act .        contracting for carpetlaying in Colorado, (6) t o
  The 1972 amendments to the act greatly increase d      Senator John G . Tower on the program to certif y
the Department's workload and backlog of claims .         the agreements that protect employees who ar e
                                                         affected by grants made under the Urban \las s
The Department had not provided sufficient resources
                                                         Transportation Act of 1964, (7) to Congressman
to meet the increased workload . Many administrative
                                                         Delbert L . Latta on the use of Comprehensiv e
problems could be alleviated by improved manage-
                                                         Employment and Training Act funds to rehir e
ment controls .
                                                         laid-off employees in Toledo, Ohio, and (8) to th e
  We made several recommendations on which the           Secretary of Labor on public service employment i n
Department said actions were being taken. (MAVD-         southwestern New York and on the Department' s
76—56, Jan, 12, 1976 .)                                  past and future role in offender rehabilitation .

                                                                                                              155
 HUMAN RESOURCES

Testimon y                                                 procedures be established for evaluating varianc e
                                                           requests .
  We testified before the Subcommittee on \4anpowe r          Although the Secretary of Labor stated that man y
and Housing, House Committee on Governmen t                of our recommendations had already been accom-
Operations, on \Say 24, 1976, on the operation of          plished and described plans to implement those re-
the Federal-State Employment Service System and ,          maining recommendations, we do not believe Labor' s
on June 15, on the administration of the Federa l          actions insure the best possible worker protection .
Employees' Compensation Act .                              (MlVD-76-19, Dec. 31, 1975 . )

                                                           Hazardous Working Condition s
Audit Work in Process
                                                           In Seven Federal Agencie s
  Work in process at September 30, 1976, include d            We reported to the Congress that seven Federa l
reviews of comprehensive manpower services, publi c        agencies which employ more than half of the Federa l
service employment, the summer youth program ,             workforce—the Defense Supply Agency ; the Depart-
and the job Corps, all under the Comprehensiv e            ments of Agriculture, Interior, the Army, the Navy,
Employment and Training Act ; veterans' employ-
                                                           and the Air Force ; and the Veterans Administra-
ment activities ; employment service activities ; th e
                                                           tion—do not have adequate procedures for identifyin g
unemployment insurance program ; trade adjustment
                                                           and correcting hazardous working conditions .
assistance activities ; the Employee Retirement Incom e
Security Act of 1974 ; the Federal Employees' Com-            We recommended that (1) the Secretary of Labo r
pensation Act ; the Davis-Bacon Act ; the Service          and the heads of other Federal agencies work togethe r
Contract Act ; and the Fair Labor Standards Act .          to make safety and health programs for Federal em-
                                                           ployees effective, as required by the Occupationa l
                                                           Safety and Health Act, and (2) the Congress amend
Occupational Safety an d
Health Programs for Employee s

  The Department of Labor' s Occupational Safet y
and Health Administration and HEM\ 's Nationa l
Institute for Occupational Safety and Health wer e
created to carry out the Occupational Safety an d
Health Act of 1970 . The purpose of the act is t o
insure a safe and healthful workplace for every em-
ployee in the Nation .
  Audit work was directed primarily toward deter -
mining whether the activities of the Administratio n
and the Institute were insuring worker protection .

Worker Protection Must Be Insure d
When Employers Request Permission To
Deviate From Safety and Health Standards

   Employers must comply with occupational safet y
and health standards set by the Department of Labor ,
or by States operating under plans approved b y
Labor, unless they can provide equal or better pro-
tection to workers by other means . We reported t o
the Congress on weaknesses in Labor and State pro .
                                                           At one Department of Agriculture facility, all emergency exits had
cedures for evaluating requests to vary from standards .   ban sealed and covered over with plywood to prevent the escape of
We made several recommendations to the Secretar y          srrew wa— flies . A fire ax had been provided at one of the exits fo r
of Labor to require that better Federal and State          employees to chop their way out if as emergency occurred .


156
                                                                                                HUMAN RESOURCES

the act to authorize the Department of Labor to              from legal action—even when financial institution s
supplement and strengthen agency safety inspections .        deliberately refused to comply with requirements .
  The agencies and the Department of Labor gen-                 Treasury said our report identified many deficiencie s
erally agreed with our recommendation and stated             it had previously noted and sought to correct bu t
that actions had been taken or were planned to im-           cited a number of mitigating factors which hampere d
prove their programs. (HRD-76-144, Aug. 4, 1976. )           its performance .
                                                                On August 2, 1976, we testified before the Senat e
other Reports                                                 Committee on Banking, Housing and Urban Affair s
   Other reports covered such matters as the Occupa-          an our review . ('NI4VD-76-95, June 24, 1976 .)
tional Safety and Health Administration 's approval o f
State plans, its need for better data on the severit y       The Equal Employment Opportunit y
and causes of worker injuries and illnesses, Federa l        Commission Has Made Limited Progres s
agencies' compliance with the Occupational Safet y
                                                             in Eliminating Employment Discriminatio n
and Health Act, and State safety and health enforce-
ment activities.                                               Although the Equal Employment Opportunit y
                                                             Commission has obtained relief for some victims o f
Audit Work in Proces s                                       discrimination, the employment status of minoritie s
   Work in process at September 30, 1976, include d          and women has not been substantially improved .
reviews of enforcement by the Occupational Safety            Responding to the request of the Chairman, Senate
and Health Administration and States of worker               Committee on Labor and Public Welfare, we reported
safety and health standards in the private sector,           to the Congress and recommended to the Com-
occupational health hazards in Federal workplaces ,          mission's Chairman needed improvements in manage -
and the effectiveness of the National Institute fo r         ment controls over program and administrative
Occupational Safety and Health in providing scien-           operations . To improve the Commission 's operations, it
tific criteria needed by the Secretary of Labor to se t      must also increase the stability of its top-level manage -
health standards .                                           ment positions . (HRD-76-147, Sept . 28, 1976 .)


                                                             Other Reports
Equal Opportunity/ Nondiscriminatio n
                                                               We reported to (1) Congressman Ronald V .
                                                             Dellums on HEW's administration of the Federa l
More Action Needed To Insure Tha t
                                                             contract compliance program for colleges and uni-
Financial Institutions Provide Equa l
                                                             versities and (2) Congressman James R . Jones on
Employment Opportunity
                                                             the Department of Labor's administration of the
    At the request of Senator William Proxmire, w e          contract compliance program for construction con -
reported on the Treasury Department 's administra-           tractors in northeast Oklahoma .
tion of the Federal contract compliance program at
financial institutions, including banks and savings an d
 loan associations . The program, authorized by Execu-        Community Service s
 tive Order 11246, requires Federal contractors t o
                                                             Administration
provide equal employment opportunity . Our repor t
discussed several management problems : compliance
 reviews are being performed at only a small percent -         The Community Services Administration, a n
 age of financial institutions, and these reviews are no t   independent agency, was established in Januar y
meeting prescribed standards . Treasury headquarter s         1975 by the Community Services Act to operat e
lacks sufficient management information and is not           community action and economic development pro -
enforcing the program according to Department o f            programs previously under the Office of Economic
Labor guidelines. The program's credibility has bee n        Opportunity . Agency funds for fiscal year 1976 an d
seriously impaired by Treasury's record of refraining        the transitional quarter were about $627 million .

                                                                                                                    157
   HUMAN RESOURCES

   Need to Improve Policies an d                                ACTION's Progress Toward
   Procedures for,Evaluating Communit y                         Meeting Its Goals
   Action Agencie s
                                                                  ACTION was expected to accomplish six goals fo r
      Because of a limited staff, the Administration ha s       strengthening and expanding Federal volunteer serv-
   had trouble monitoring and evaluating communit y            ices at home and abroad . We reported to the Congres s
   action grantees . As a partial solution, the agency ha d     that, despite some problems, ACTION was takin g
   required grantees to use a self-evaluation process,         steps to accomplish its objectives and had bee n
                                                               particularly successful in attracting older people fo r
   reducing the amount of direct Federal oversight
                                                               part-time volunteer service . We also reported tha t
   required . However, implementation of this process
                                                               the Congress, in its annual review of ACTIO\'s
   has lagged because of the agency's uncertain futur e        appropriation requests, should consider the agency' s
   and its delay in adopting a new organizationa l             progress in developing new programs —particularl y
   structure.                                                  those which would rise volunteers with professiona l
     We reported to the Director that (1) agency head -        and business experience to help solve communit y
  quarters needed to improve its monitoring and it s           problems .
  guidance to regional offices on implementing th e
  self-evaluation process, (2) regional and head -
  quarters offices had not established or appropriatel y
  staffed formal organizations to oversee evaluation ,
  (3) regional offices were not obtaining and usin g
  self-evaluation and planning reports, and (4) incon-
 sistent regional guidance contributed to disparity
 in the use and quality of the self-evaluation systems .
   To improve control over the programs throug h
 the present evaluation system, we made several rec-
 ommendations, on which the agency said actions ha d
 been taken or were in process . (HRD-76-151, July 20 ,
 1976. )


 Audit Work in Process

  Work in process at September 30, 1976, include d
reviews of the Community Services Administration's
economic development program, special emphasi s
poverty programs for the elderly, and the energ y
conservation program, as well as reviews of individua l
grantees requested by Xlembers : of Congress .



ACTIO N

   ACTION was established in July 1971 to consoli-
date all Federal volunteer programs previously scat-
tered throughout the Government .
  The agency's domestic programs received abou t              Foster Grandparent Program volunteer visits the bedside of one of th e
$125 million for fiscal year 1976 and the transitiona l       tans children she attends to daily . She works at the State Hospital
                                                              and Training School Winfield, Kamns .
quarter .                                                     (Courtesy of ACTION)

158
                                                                                            HUMAN RESOURCE S

  The agency concurred with our findings and de-          to develop a high school science curriculum project
scribed actions that were taken or planned . (4IWD–       "Individualized Science Instructional System ."
76-4, Mar . 15, 1976 .)
                                                          Assistance to the Congres s

National Science Foundatio n                                 At the request of the Subcommittee on Department
                                                          of Housing and Urban Development and Independen t
                                                          Agencies, Senate Committee on Appropriations ,
  The National Science Foundation, an independen t        the provided information on certain areas of th e
agency created under the National Science Founda-         National Science Foundation's budget for the Sub-
tion Act of 1950, attempts to advance scientifi c         committee's use during fiscal year 1977 appropriatio n
progress in the United States . Principal programs        hearings .
include funding basic and applied research projects,         In November 1975, the Foundation, in assessin g
supporting educational activities, exchanging informa -   its peer review system, sent opinion questionnaires t o
tion, and developing methods and technologies .           its researchers and peer reviewers . As of September 30 ,
Fiscal year 1976 funds, including the transitio n          1976, we were monitoring this opinion study—a t
quarter, totaled about $879 million .                     the request of the Chairman, Subcommittee o n
                                                          Science, Research, and Technology, House Com-
Opportunities for Improved Managemen t                     mittee on Science and Technology—to insure th e
of the Research Applied to Nationa l                       anonymity of the respondents and the accuracy o f
                                                           the results .
Needs Progra m
  At the request of the Chairman, Special Sub -           Audit Work in Process
committee on the National Science Foundation ,
Senate Committee on Labor and Public Welfare, w e            At the September 30, 1976, we were reviewing
evaluated the Foundation's management of th e              (1) the effectiveness of products used in scienc e
program of research applied to national needs .           education, (2) the accuracy and completeness of
We reported that the program's highly qualifie d           a Foundation study on its management of precolleg e
staff had tried to develop research responsive t o         science curriculum projects, and (3) procedure s
national needs, and had increased its emphasis o n        for awarding energy policy research grants .
useful research results .
  We recommended improvements in developin g
research programs, evaluating research proposals,          Consumer Product
and planning for use of research . We also recom-          Safety Commissio n
mended that, in hiring management officials, th e
Foundation consider professional personnel on Civil
Service Commission registers . The Foundation gen-            The Consumer Product Safety Commission wa s
erally agreed with our recommendations, except o n         created by the Consumer Product Safety Act to pro-
the hiring of personnel. (\•IN-\'D–75-84, Nov . 5 ,        tect consumers against unreasonable risks of injury ,
1975 .)                                                    assist them in evaluating the safety of products, de-
                                                           velop uniform product safety standards, and promot e
                                                           research and investigation into causes and preventio n
Other Reports                                              of product-related deaths, illnesses, and injuries .
  We reported to the Chairmen of (1) the Hous e
Committee on - Science and Technology, on th e             Better Enforcement of Safety
Foundation's administration of the science educatio n      Requirements Needed by the
curriculum project, "bfan : A Course of Study, "
and (2) that Committee's Subcommittee on Science ,         Consumer Product Safety Commissio n
Research, and Technology, on _ the treatment o f             We reported to the Congress that the Commission
peer reviewers' comments in a Foundation staf       f      (1) does not know whether safety requirements hav e
 memorandum recommending support for a proposal            been effectively implemented and (2) has not promptl y

                                                                                                                159
 HUMAN RESOURCES

 or successfully referred violators to the Department of   before the Senate Committee on Commerce . (HRD-
justice for prosecution .                                  76-148, July 26, 1976 . )
   We recommended that the Congress provide the
 Commission additional authority to fine violator s        Audit Work in Process
 and that the Commission insure that safety require-         Work in process at September 30, 1976, include d
 ments are followed and enforced . The Commission          reviews of the Commission' s development of standard s
 agreed with our recommendations .                         and its program to retail defective products and
  On September 9, 1976, we testified on our findings       notify the public .




160
                                                           protection ; food ; housing and community develop-
                                                           ment ; planning, management, and control of land use ;
                                                           transportation systems and policies ; and water-relate d
                                                           activities. We prepare program plans for the Office ,
                                                           maintain a data base of audits, develop resourc e
                                                           material to help identify areas and assignments o f
                                                           interest to the Congress, and monitor and coordinat e
                                                           all audit work related to our areas of responsibility .
                                                              Henry Eschwege is Director of this Division and
                                                           Baltas E. Birkle and Max Hirschhorn are Deput y
                                                           Directors .



CHAPTER TWELVE                                             Audit Reports

                                                             During the 15 months ended September 30, 1976 ,
                                                           Ave submitted 36 reports to the Congress and 86 re -
                                                           ports to committees or Members of Congress . We als o
                                                           submitted 35 reports to department or agency officials .
COMMUNITY AN D
                                                           These reports are listed in appendix 2 . Table I shows
ECONOMIC DEVELOPMEN T                                      the numbers and types of reports relating to eac h
                                                           department and agracy .

Responsibilitie s
                                                            Assistance to the Congres s
  The Community and Economic Development D'vi-
sion was formed in May 1976, principally to combin e            About 39 .1 percent of the professional resources Av e
the responsibility for auditing those community and         spent represented direct assistance to the Congress ,
economic development activities assigned to th e            including (1) making reviews or obtaining informa-
former Resources and Economic Development Divi-              tion specifically requested by congressional commit -
sion with similar responsibilities assigned to othe r        tees and Members, (2) furnishing staff assistance to
GAO divisions . All energy- and mineral-related audit        committees (see app . 4), (3) helping draft continents
responsibility was transferred to the newly forme d          on pending legislation (see ch. 1), (4) preparing fo r
Energy and Minerals Division .
                                                             and presenting testimony at committee hearings, an d
  We audit the Departments of Agriculture, Com-              (5) discussing work plans and audit findings wit h
merce, Housing and Urban Development, the Interio r
                                                            committee staff.
(except its energy- and mineral-related activities) ,
                                                              During the period, Ave completed work on 393 re -
and Transportation ; the Department of the Army ,
Corps of Engineers (Civil Functions) ; the Environ-         quests received from committees and Members o f
mental Protection Agency ; the Small Business Ad -          Congress ; at the end of the period Ave were still work-
ministration ; the Interstate Commerce, Federal Mari -      ing on 133 other requests . Many of the requests were
time, and Federal Communications Commissions ;              satisfied by oral reports or letters . In some cases ,
and various other agencies, boards, commissions, an d       when the requested work related to areas already bein g
councils. We also audit certain statistical program s       reviewed, the requests either were or will be satisfied
carried out by the Office of Management and Budge t         by furnishing copies of reports issued to the Congress
and the Departments of Labor, Justice, and Health ,         or to other congressional requesters . In 23 cases ,
Education, and Welfare .                                    requests were satisfied by preparing statements for o r
 In addition, this division is the lead division withi n    presenting testimony before congressional committee s
GAO for all Federal programs on environmental                or subcommittees .

                                                                                                                   161
  COMMUNITY AND ECONOMIC DEVELOPMEN T


                        COMMUNITY AND ECONOMIC DEVELOPMENT DIVISIO N

                                                                                        TECHNICAL STAFFS AN D
                                                    DIRECTOR                             SPECIAL ASSIGNMENT S
         FOOD COORDINATION                         H. ESCHWEGE                      T . D . REESE – PROGRAM AN D
           AND ANALYSIS
                                                                                                    REPORT REVIE W
               W. E . GAHR
                                               DEPUTY DIRECTOR                      R . JB. TICE
                                                                                            HU N –PLANNIN G
               D . Z . eoRC1ER                                                      W. B. HUNTER .LEGISLATIV E
                                                   B. E. BIRKLE                             AND SPECIAL PROJECT S




  AGRICULTURE, LAND,             HOUSING, COMMUNITY         ECONOMIC AND AREA                TRANSPORTATIO N
  tND WATER PROGRAMS             DEVELOPMENT,AND              DEVELOPMENT                     PROGRAMSAN D
                                   ENVIRONMENTAL                PROGRAMS                       REGULATOR Y
                                      PROGRAM S


      M . HIRSCHHORN               W. D. CAMPBELL                 J . LANDICHO                  H . J . WESSINGER
         B . P . CROR'LEY           S . CORREIRA                     R . E. ALLEN                   D . H. CLUF F
          L . L . GREGORY           O . W. K UEGER                    J . K. DONOHUE                H . MCLUR E
         D . D . HOGAN              R . S . PROCACCINI               T . C. GEARHART                C . E . ROHRER
          D . L . JONES             J . P. ROTHER                     S . L . KELET I
         W . St . MARTINO
         H . PICHNE Y
          F . K . RADE L
         S. S . SARGO L
          F . V . SUBAWSKY
         D . J . VANDE SAND
         R . J . WOODS

                                                                                               SEPTEMBER 30, 1976




 GAO Work on Foo d                                         Operation of the Emergency Food an d
                                                           Medical Services Progra m
   With increasing demands being placed on U .S .
food production, food and agriculture policies an d           At the request of the Chairman, Subcommittee o n
programs continue to be a national and internationa l      Labor and Health, Education, and Welfare, Senat e
concern . The objectives of our food system are to         Committee on Appropriations, we reviewed the op.
insure the American people safe, nutritious food at       eration of the emergency food and medical service s
reasonable prices ; insure the viability of the system    program, recently renamed the community food an d
itself ; and help meet the world' s food needs .          nutrition program .
                                                              In its reports on the fiscal year 1974 and 197 5
   As shown by table 2, our Office issued 55 report s
                                                           appropriations bills, the Senate Appropriations Com-
 dealing with food during the 15-month period . Many
                                                           mittee had directed the Community Services Admin-
 of these reports involved other issues, and some ar e
                                                           istration to devote at least 15 percent of the program's
 discussed in other sections of this publication . Fo r   funds to serving migrants, Indians, and seasonal farm -
 example, our assessment of the national grain inspec-     workers . In commenting on the supplemental appro-
 tion system is summarized in the section of this         priations bills for fiscal years 1973 and 1975, th e
chapter covering work done at the Department of            Committee also had instructed the agency to admin-
Agriculture. The following summaries of some of ou r      ister the program nationally .
food-related reports illustrate the scope of our wor k        Some of the projects funded in the three States w e
relating to food.                                         reviewed were of limited benefit in improving nutri -

162
                                                                                    COMMUNITY AND ECONOMIC DEVELOPMEN T
                                                                   Table 1

                                                                                            Reports submitted to
                                                                     Conbress     Congressional Members of         Agency    Total
                                                                                   committees     Congress         oRrlals

Departments :
    Government-wide and multiagency 	                                    I             1              I               -       3
    Govern ent statistical programs	                                    —              2             1                1       4
    Agriculture	                                                        3              7             5                6      21
    Army Corps of Engineers 	                                            1             -             5                -       6
    Commerce	                                                           2              3             4                3      12
    Housing and Urban Development 	                                     7              5            10                9      31
    Interior	                                                           4              7             5                1      17
    Transportation	                                                     8              7             3                6      24
Independent Agencies :
    American Revolution Bicentennial Administration            .        -              -             -                l        I
    Appalachian Regional Commission	                                    -              1             -                -        I
    Environmental Protection Agency 	                                   3              9             3                3       18
    Federal Communications Commission                                   I              2             -                -         3
    Interstate Commerce Commission                                      -              -             -                1         1
    Small Business Administration 	                                     5              1             2                4        12
    United States Raihvay Association                                   -               I            -                -        I
Organization outside the Federal Government :
    Nadonal Railroad Passenger Corporatio n                              1              1            -                -        2

       Total	                                                          36             47            39               35      157



                             Table 2                                          —monitor grantees on-site when the information
                                                                               system indicates a need ,
                                                Reports submitte d
                   Prepared by                   to the Congress.             —modify program funding criteria and practices t o
                                                  its eom aittees
                                                   or its Members              emphasize food services for the needy, an d
                                                                              —after the first year of operation, provide appro-
Community and Economic Development Division                 22                 priate congressional committees with an assess-
Logistics and Communications Division 	                      2
                                                                               ment of how well a nevv program operated b y
Procurement and Systems Acquisition Division	                2
International Division	                                     14                 local organizations has provided emergency
General Government Division	                                  2                food and medical services to migrants and sea-
Human Resources Division	                                     9                sonal farnnvorkers. (HRD-76-112, Sept. 1 ,
Federal Personnel and Compensation Division 	                  I
                                                                                1976 .)
Field Operations Division	                                     I
Program Analysis Division	                                    2
                                                                             Department of Defense Beef Procurement
      Total	                                                55

                                                                          We reported to the Chairman of the Subcom-
                                                                        mittee on Federal Spending Practices, Efficiency ,
tion and the availability of food among lower incom e                   and Open Government, Senate Committee on
people . In addition, preaward assessments had in-                      Government Operations, on meat procuremen t
correctly identified several grantees as serving mi-                    practices and procedures of the Department o f
grants, Indians, or seasonal farmw'orkers.                              Defense . Department specifications for beef wer e
   We recommended that the Director, Community                          costly, complex, and possibly more stringent tha n
Services Administration ,                                               required to meet the military ' s needs. As a conse-
  —develop an information system to provide mor e                       quence, only a few meat processors sold beef to th e
   accurate data on who is served by local project s                    Department. Also, since much of the beef accepte d
   and how,                                                             in 1975 did not meet these specifications, they did no t

                                                                                                                                     163
  COMMUNITY AND ECONOMIC DEVELOPMEN T

   achieve their purpose . Because Department inspector s   cessional sales program was helping the poor. (I•D-
   were insufficiently trained and inexperienced, thei r    76-53, Apr . 22, 1976 .)
   inspections of contractors' plants did not insure
   that the beef delivered met specifications . We recom-   Agricultural Production i n
  mended that the Secretary of Defense improve th e
                                                            Developing Countries
  practices and procedures for awarding and administer -
  ing beef contracts, in order to                              We reported to the Congress that Governmen t
    —obtain more effective competition ,                    policies and institutional factors had provided littl e
    —lower administrative costs by reducing procure-        incentive, or had acted as a disincentive, for develop-
      ment actions, and                                      ing countries to grow as much food as possible —
    —obtain meat of adequate quality at a reasonabl e       despite the urgent need for mote food and othe r
      cost .                                                countries' and institutions' efforts to help increas e
  (PSAD-76--142, May 25, 1976. )                            production. Also, food assistance from others had
                                                            permitted countries to postpone removing disincen-
                                                            tives . We recommended that the Federal agencie s
 Grain Reserve s
                                                            providing food and agricultural assistance conside r
    At the request of the Chairman, Senate Selec t          the adequacy of the recipient country's self-hel p
  Committee on Nutrition and Human Needs, we re -           measures and work for concerted action among al l
 viewed the U .S . policy on grain reserves and sum-        countries and institutions to induce them to substitut e
 marized factors to be considered in developing a           production incentives for disincentives . (ID-76-2 ,
 grain reserve program . The Nation can not be cer-         Nov. 26, 1975 .)
 tain that sudden shortages like those of 1972 and 197 4
 will not occur again . Such shocks would tax existin g
 food supplies and require crisis decisions on domesti c    Testimony at Hearing s
 price increases and allocations of food abroad, but a
                                                              On A-fay 13, 1976, we testified before the Sub -
 grain reserve, built during years of plenty and mad e
                                                            committee on Federal Spending Practices, Efficiency ,
 available during lean years, could act as a buffer
                                                            and Open Government of the Senate Committe e
 against unpredictable shortages . Because a reserv e
                                                            on Government Operations on the matters covered i n
 would be a physical source of food, it deserves seriou s   our report on Department of Defense beef procure-
 attention by the Congress as part of a package t o
                                                            ment. (PSAD-76-142, May 25, 1976. )
 meet U .S . food policy objectives. (OSP-76-16 ,
                                                              In June 1976, our testimony before the Sub -
 star . 26, 1976 .)
                                                            committee on Foreign Agriculture Policy, Senate
                                                            Committee on Agriculture and Forestry, pointed
 Food Aid
                                                            out fundamental problems in the Nation's foo d
   We reported to the Chairman of the Special Sub -         export policy machinery :
committee on Investigations, Senate Committee o n            —The agricultural reporting system fails to yiel d
International Relations, on the impact of Public La w          prompt, accurate projections of foreign demand —
480 food assistance and other development program s            necessary to help policymakers mitigate the
in the Philippines, India, Korea, and Chile .                  domestic supply decreases and price increases
   The Agency for International Development ha d               caused by large, letup-stun purchases .
refocused its development assistance programs to             —Current export policies—part of a broade r
reach poor people more directly than before, whe n             agricultural supply management system—ar c
                                                              incomplete, uncohesive, and insufficiently flexibl e
people were helped through " trickle down" aid . The
                                                              to meet both domestic and international objec-
title II, Public Law 480, food donation program wa s
                                                              tives and changes in food supply and demand .
reaching many poor people in the countries which             —Current policy implementation is fragmented ,
had ongoing programs .                                        often ill-timed, and generally lacking in ra-
   However, except for certain indirect aid, it was           tional decisionmaking based on a preselected
difficult to say that the title I, Public Law 480, con-       policy use formula.

164
                                                                      COMMUNITY AND ECONOMIC DEVELOPMEN T

 Work in Proces s                                            to date and (2) insure that adequate contro .s exist to
                                                             prevent unallowable transactions in the future.
  Reviews in process at September 30, 1976, relate d         (RED-76-50 R 52, Dec . 18, 1975 .)
to waste in the food system ; issues, options, and cost s
for revitalizing the U .S . commercial fishing industry ;
food prices—past and present ; Federal nutrition             Progress and Problems in Givin g
policy and programs ; food stamp program services            Rural Areas First Priority Whe n
and administration ; Department of Agriculture               Locating Federal Facilitie s
meat and poultry inspection ; congessional sales
                                                                Section 901(b) of the Agricultural Act of 1970, a s
programs under Public Law 480 ; and research pro-
grams for increasing food production in developin g          amended, requires all executive agencies to giv e
                                                             priority to rural areas when locating new offices an d
countries.
                                                             other facilities. This legislation has had little effect on.
                                                             Federal employment in rural areas. Only 3 of the 2 1
Government-Wide and                                          agencies Ave surveyed had fully complied with th e
                                                             requirement .
Multiagency Activitie s                                         Because agencies need congressional guidance t o
                                                             deal with the complexity of selecting sites, we recom-
  Many of our reports for the period involve d               mended that the Congress (1) have agency representa-
activities shared by several Federal agencies ; however,     tives and others report their site selection require-
most of them are classified according to the agencie s       ments, problems, and improvements and (2) provid e
principally responsible . Two of our reports on              additional guidance on priorities . We recommende d
Government-wide or multiagency activities are sum-           also that, if the Congress does not modify or repea l
ntarized below.                                              section 901(b) :
                                                               —Overall leadership and coordination responsi-
Information on the New Community o f                            bility be assigned to one agency .
Soul City, North Carolin a                                     —Each agency establish an affirmative action
                                                                plan to establish the policy and procedures re-
   At the request of Senator Jesse Helms and Congress -         quired by the section .
man L . H . Fountain Ave examined the financing an d           —The Administrator of General Services (1) in-
operations of the new community of Soul City, Nort h            corporate the requirement of section 901(b) i n
 Carolina. We obtained information on the project' s            Executive Order 11512, which governs the acqui-
history, physical development and cu rrent status ,             sition of Federal space and (2) revise the proce-
and the sources and amounts of Federal, State, and              dures for selecting public building sites so the y
local financial aid going directly to Soul City or to th e      do not favor urban areas.
surrounding municipalities for the city 's benefit . W e       —The Secretary of Agriculture delineate rural
also reported on various allegations made about th e            areas in accordance with the prescribed defini-
project.                                                        tion . (CED-76-137, Sept . 7, 1976. )
  The Department of Housing and Urban Develop-
ment and the Community Services Administratio n
had deviated from their established procedures i n           Government Statistical Program s
awarding or administering some grants, a loan, and a
loan guarantee given to Soul City organizations .
                                                               The Federal Government spends about $550 million
Also, a statistical sample of expenditures of the Sou l
                                                             annually for its principal statistical programs an d
City organizations showed that 25 percent did no t
                                                             employs about 8,600 people in its major statistica l
meet one or more of our tests for allowability .
                                                             agencies . The statistical programs relate to al l
   We recommended that the Secretaries of Housin g
and Urban Development ; Health, Education, and               activities, including agriculture, commerce, healt h
Welfare ; and Commerce and the Director of the               services, education, and labor . The statistics are
Community Services Administration (1) recover al l           used by both business and government to formulat e
unallowable grant and contract expenditures made             policy, allocate funds, make decisions, and plan eco -

                                                                                                                      165
 COMMUNITY AND ECONOMIC DEVELOPMENT

 nomic activity. We are addressing the availability,        estimating illegal aliens and include them in futur e
 accuracy, and burden to the public of these statistica l   estimates of the true population .
 programs because of the interest of the Congress, th e        We recommended further that the Bureau conside r
 business community, and the general public .               using a simplified population questionnaire an d
                                                            mail carriers for folio vup coverage, as possible way s
 Case Study of Department of Labor an d                     to improve coverage . This review was made at the
                                                            request of the Chairman, House Committee on Pos t
 Office of Management and Budget Activitie s
                                                            Office and Civil Service. (GGD-76-72, May 5, 1976 .)
 Under the Federal Reports Act

    The Federal Reports Act requires the Office of          Testimony at Hearings
 Management and Budget to approve certain execu-
 tive agency forms used to collect information from th e       We testified in October 1976 before the Sub -
                                                            committees on Oversight Procedures and on Reports ,
 public . ONIB is to insure that the information is
needed by the agency and does not duplicate othe r          Accounting, and Management, Senate Committe e
information being obtained by Federal agencies .            on Government Operations, on our report on activi-
    In a report to the Senate Committee on Govern-          ties under the Federal Reports Act. (GGD-75-85,
ment Operations, we made recommendations t o                July 24, 1975.) We testified in June 1976 before th e
                                                            Subcommittee on Census and Population, House
correc t
                                                            Committee on Post Office and Civil Service, on ou r
  —weaknesses and problems in OMB 's structure,
                                                            report on the decennial census undercount . (GGD-
   its procedures for approving forms, and it s             76-72, May 5, 1976 .)
   enforcement of the act,
  —problems in OMB's guidelines and require-
   ments prescribed for the agencies, and                   Audit Work in Process
  —certain weaknesses and problems in the Depart-              At September 30, 1976, we were fulfilling con-
   ment of Labor's clearance procedures and th e
                                                            gressional requests to review (I) the present status
   exchange of information.
                                                            of OMB's efforts to carry out its Federal Reports Ac t
   The Director of O\4B accepted some recommenda-           responsibilities, (2) public opinion surveys conducte d
tions ; stated that others were already a part of th e      or sponsored by certain Federal agencies, and (3) th e
Office's procedures, which he believed were adequate ;      adequacy of industrial capacity utilization statistic s
and rejected others .                                       prepared by three Federal and four private
   The Assistant Secretary of Labor for Administra-         organizations .        _
tion and Management generally agreed with ou r
recommendations for changes in the Department' s
forms clearance process . (GGD-75-85, July 24,              Department of Agriculture
 1975 .)

                                                               The Department of Agriculture, through about 2 0
Programs to Reduce th e                                     constituent agencies and more than 80,000 employees ,
Decennial Census Undercoun t                                administers various programs to (1) strengthen th e
                                                            agricultural economy through food and fiber produc-
   The Bureau of the Census estimated that the 1970         tion and marketing activities, (2) improve nutritio n
 census undercounted the population by 2 .5 percent ,       through family food assistance programs, child nutri-
or 5 .3 million people. This undercount rate varie d        tion programs, and nutrition research and education ,
throughout the country ; therefore, it could not b e        (3) protect the environment through land, water, an d
applied locally. We recommended that the Census             forest conservation activities, and (4) make rura l
Bureau assess and, if necessary, increase its efforts to    areas a better place to live and work through rura l
develop estimates of local undercounts.                     development and extension activities . The Depart-
   The Census Bureau did not include a factor for           ment's budget authority for carrying out these an d
illegal aliens in its "true" population estimate . We       other activities during the 15 months ended Sep-
recommended that the Bureau develop methods for             tember 30, 1976, was about $17 billion .

166
                                                                    COMMUNITY AND ECONOMIC DEVELOPMEN T

 Assessment of th e                                         tions it was taking or would take . In June 1976 th e
 National Grain Inspection Syste m                          Secretary established an export quality and weigh t
                                                            review group to improve handling of foreign inquirie s
    FVe reported to the Chairmen of the House Cora -        about quality or weight discrepancies . In Octobe r
 Iii :ec on Agriculture and of the Subcommittee o n         1976 the Congress enacted the U .S. Grain Standard s
 F, --ign Agricultural Policy, Senate Committee o n         Act of 1976, which Avis heavily influenced by ou r
 Agriculture and Forestry, that (1) the national grai n     report . (RED-76-71, Feb . 12, 1976. )
 inspection system had serious problems, (2) the
 Department of Agriculture, as overall supervisor, ha d
 been unable to insure the integrity of a system oper-      Federal Role in Alleviatin g
 ated by a widely dispersed group of over 100 Stat e        Agricultural Producers' Crop Losse s
 and private agencies and trade associations, and (3 )
                                                               Two Department of Agriculture programs—th e
 an essentially all-Federal inspection system %vas
                                                            Federal Crop Insurance Corp oration's crop insuranc e
 needed to (a) restore integrity and confidence in th e     program and the Commodity Credit Corporation' s
inspection system, (b) standardize inspection proce-
                                                            direct-payment program—protect agricultural pro-
dures and operations, (c) eliminate actual and poten-       ducers somewhat against loss of income when specified
tial otnflicts of interests by being independent from
                                                            crops are damaged by natu r al disasters or other
the private sector, and (d) increase foreign trade or a t
                                                            uncontrollable hazards .
least reduce chances of customers choosing to buy              In a report to the Congress, we (1) pointed ou t
from other sources .
                                                            some inconsistencies in the direct-payment program ,
   We recommended that the Congress establish a n           (2) described the current insurance program, and (3 )
essentially all-Federal grain inspection system, in-        provided information on the Ford administration' s
corporating sampling, grading, and weighing services ,      proposed legislation to expand the insurance progra m
which would start immediately at problem locations ;        and repeal the payment program . The Departmen t
move as soon as possible to port elevators ; and after      estimated that the proposed legislation would sav e
sufficient experience is gained, extend to major inlan d    the Government $259 million annually .
terminals . We recommended also that the system b e            The proposed legislation has considerable merit ,
financed through fees.                                      but various other options are available . We discussed
   We recommended that, in developing standard s            the main options and their advantages and disad-
and procedures for the system, the Congress conside r       vantages to producers and to the Government an d
several matters, including :                                the taxpayers, and Ave presented a number of matter s
  —Prohibiting conflicts of interest and imposin g          for the Congress to consider .
    appropriate penalties for violations .                     The Department agreed with our findings on the
  —Establishing adequate controls and procedure s           limitations of the direct-payment program and sai d
   for sampling and weighing grain .                        it strongly supported the proposed legislation . (RED-
  —Improving grain grading accuracy and uniform-            76-91, May §, 1976. )
   ity through continuing research and training.
  —Establishing (1) uniform standards for recruiting,
                                                            Program Needed To Overcome
   training, and supervising inspectors and (2) a
   rotation program and work production standard s          Problems Impeding Economic Improvement
   for inspectors.                                          of Small-Farm Operation s
   Agriculture officials emphasized the Ford admin-           We reported to the Congress that the Departmen t
istration's desire to continue the structure of the         of Agriculture and the land-grant colleges, whic h
national grain inspection system but agreed wit h           are responsible for agricultural research, needed t o
most other aspects of our recommendations .                 make a more concerted effort to solve problem s
   We also recommended that the Secretary of Agri -         impeding the economic improvement of small-far m
culture improve procedures for handling complaint s         operators. NVA: recommended that the Department :
from foreign buyers of U .S . grain and intensify re-         —Identify those small-farm operators who coul d
search and development on the official U .S . grai n           improve their operations by using availabl e
standards . Agriculture concurred and outlined ac -            technology and more efficient management .

                                                                                                               167
 COMMUNITY AND ECONOMIC DEVELOPMEN T

      —Provide the Congress with estimates of the costs            borrowers by (1) changing the method o f
       and benefits,of training and technicaliy assistin g         providing loan funds from a one-time deposi t
       such farmers.                                              in a non-interest-bearing, supervised bank ac -
      —Examine the potential for research to improv e             count to a multiple-advance system, (2) publi -
       the economic position of small-farm operators .            cizing opportunities to use more commercial
      —Consider the priority of such research in relation         lenders in joint financing and loan guarante e
        to other federally funded agricultural research .         programs, and (3) evaluating revised instruc -
      —Establish procedures for (1) evaluating the                tions to overcome loan packaging problems .
        economic and social impact of future researc h          We recommended that the agency (1) continue
        on existing farms and (2) determining the assist-    emphasizing the benefits of hiring employees wit h
        ance small-farm operators would need to pla n        diverse backgrounds, (2) develop minimum train-
       for and adjust to the resulting changes .             ing requirements and insure that they are met ,
   The Department disagreed with our recommenda-              (3) initiate a training and publicity program t o
tions . However, legislation in line with our recom-         inform employees and lenders of the benefits of join t
mendations was passed by the Senate (S . 2823)               and guaranteed financing, and (4) evaluate th e
to assist small farmers in upgrading their operations .      effectiveness of the revised loan packaging instruction s
The House did not act on this legislation in the 94t h       in reducing delinquency rates.
Congress, but the bills are expected to be reintro-            The Department said that Farmers Home had
duced in the next session . (RED-76-2, Aug. 15 ,             initiated or planned actions to accomplish the inten t
1975 . )                                                     of our recommendations . (RED-76-16, Sept . 10,
                                                             1975. )
Personnel Management Improvement s
Initiated or Needed To Help Farmers Hom e                    Testimony at Hearing s
Administration Meet Its Mission s
                                                               We testified on October 7, 1975, before the Sub -
  The Chairmen of the Subcommittees on Rural                 committee on Agricultural Research and General
Develr-)ment and on Agricultural Credit and Rural            Legislation, Senate Committee on Agriculture an d
Electrii:cation, Senate Committee on Agriculture             Forestry, on our observations on the food stamp pro-
and Forestry, asked us to determine if the Farmers           gram . (RED-75-342, Feb . 28, 1975 .)
Home Administration (1) had enough employee s                    On February 20, 1976, we testified before the
with diverse backgrounds and abilities to carr y              Subcommittees on Foreign Agricultural Policy an d
out the agency's greatly expanded missions and               on Agricultural Production, Marketing, and Stabili-
(2) was serving the public efficiently .                     zation of Prices, Senate Committee on Agricultur e
  AVe reported that :                                        and Forestry, on our evaluation of the national grai n
                                                             inspection system . We also briefed members of th e
  —The agency- had not recruited enough employee s
                                                             House Committee on Agriculture on our report an d
   with backgrounds other than in agricultur e
                                                             provided information to the Senate Committee o n
   to fully implement some of its newer nonfarm
   programs .                                                Agriculture and Forestry for use during its marku p
                                                             sessions and during the House and Senate conferenc e
 —The amount of training provided county office
   employees varied considerably from State to               on legislation to revise and improve the inspectio n
   State.                                                    system . (RED-76-71, Feb . 12, 1976 .)
 —The agency had enlisted the aid of the join t                 In June 1976 we testified before the Subcommitte e
  Financial \4anagement Improvement Progra m                 on Family Farms and Rural Development, House
  in developing a new system for determining staf f          Committee on Agriculture, on our report on obstacle s
  needs .                                                    to the economic improvement of small-farm opera-
 —The agency planned to improve service an d                 tions and what the Department of Agriculture could
  help reduce its cost to the agency and to rural            do to remove them. (RED-76-2, Aug . 15, 1975 .)

168
                                                                  COMMUNITY AND ECONOMIC DEVELOPMEN T


Other Assistance to the Congres s                        Department of Commerc e
  At the request of the Chairman, Joint Economi c
                                                           The Department of Commerce fosters, serves, an d
Committee, Ave provided information on
                                                         promotes the Nation 's economic development and
  —the laws which provide for Federal support o f        technological advancement br promoting progressiv e
    agricultural research ,                              business policies and growth ; assisting States, com-
  —the organizations involved in that research ,         munities, and individuals toward economic progress ;
  —the diversity of the research conducted,              strengthening the Nation 's international economic
  —the sources of funds for the research, an d           position ; improving man's comprehension and uses
  —the principal techniques that the Department of       of the environment ; assuring effective use and growt h
   Agriculture and State institutions use to manage      of the Nation's scientific and technical resources ;
    agricultural research.                               and promoting a sound American merchant marine .
(RED-76-92, Apr . 9, 1976 .)                               During the 15-month period ended September 30 ,
   Also, we provided the Chairman, Senate Com-           1976, the Department had about 35,700 employee s
mittee on Agriculture and Forestry, with a report on     and incurred obligations of about $2 .3 billion ,
our analysis of timber industry views on the economi c   including about 14,000 employees and about $65 0
effects that proposed forestry legislation would hav e   million in incurred obligations applicable to th e
on the industry and the general public . The Chair-      National Oceanic and Atmospheric Administration .
man requested the analysis for consideration durin g
Senate floor debate on S . 3091—a -bill entitle d
"National Forest Management Act of 1976 ." The           Action Is Needed Now To Protec t
industry' s contentions were generally unsupporte d      Our Fishery Resource s
and open to question—particularly with respect t o
                                                           Many species important to the fishing industry are
decreased timber supply, unmet housing goals ,
                                                         being depleted through overfishing and widening of
wasted old-growth timber, and higher housing costs .
                                                         United States coastal zones . The National Marine
(CED-76-123, June 15, 1976 .)
                                                         Fisheries Service was established in 1970 to protec t
   We also provided information and assistance t o       marine resources and promote fishing, but progres s
Members of Congress on such forestry matters a s         has been slow in achieving a coordinated manage-
land acquisitions, payments of forest receipts t o       ment approach to the problem .
States in lieu of taxes, maintenance of camps an d         We suggested that the Congress consider enactin g
trails, and ski area user fees .                         legislation to give the Secretary of Commerce au-
                                                         thority to impose management measures in fisheries
Audit Work in Process                                    under domestic jurisdiction if measures are not
                                                         promptly implemented by the States . Shortly after
  At September 30, 1976, Ave were reviewing foo d
                                                         our report was issued, the Congress enacted th e
price trends, the need for continuous inspection of      Fishery Conservation and Management Act of 1976 ,
neat and poultry processing plants, the effectivenes s   which gives the Secretary this authority .
of agricultural research management, the identifica-       We also suggested that the Congress conside r
tion and recovery of food stamp overissuances ,          amending the sh and Wildlife Act of 1956 t o
controls over food stamp vendors' receipts an d          establish priori- .es for using the fisheries loan fund ,
deposits, the effectiveness of the food stamp work       and encourage the transfer of vessels from fisherie s
registration requirement, the distribution of com-       which have more than needed to maintain their
modities for the school lunch program, efforts t o       harvest.
curb soil erosion on U .S. agricultural lands, issues       In addition, Ave made several recommendations t o
and problems in Forest Service timber managemen t        the Secretary of Commerce to strengthen the manage -
planning, rural economic and community develop-          ment of U .S . fisheries . The Secretary said our recom-
ment programs, the water supply and waste disposa l      mendations were appropriate until more basic man-
program, and the business and industrial loan pro -       agement problems were resolved . (GGD-76-34 ,
gram of the Farmers Horne Administratiun .                Feb . 18, 1976 .)

                                                                                                             169
 COMMUNITY AND ECONOMIC DEVELOPMEN T

 Need for a National                                        Meeting Application and Revie w
 Ocean Program and Pla n                                    Requirements for Block Grants Unde r
                                                            Title I of the Housing an d
     At the request of the Chairman of the Senate Com -     Community Development Act of 197 4
  mittee on Commerce, we reported on the administra-
  tion of marine science activities and oceanic affairs .      At the request of the Chairman, Subcommitte e
     Twenty-one organizations in six departments an d       on Housing and Urban Affairs, Senate Committe e
 five agencies were involved in marine science activi-      on Banking, Housing and Urban Affairs, we examine d
 ties and oceanic affairs . Independent experts, as          the problems which HUD and localities had in
 well as the various Government departments an d            meeting application and review requirements of th e
 agencies, disagree on whether this organizationa l          Housing and Community Development Act of 1974 .
framework is effective or should be changed .               One of the act's objectives is to give the poor greate r
   Because of the oceans' vital role in the Nation' s       choices of housing opportunities and avoid undue
                                                            concentrations of welfare recipients in areas wit h
welfare, economic self-sufficiency, and national se-
                                                            a high proportion of low-income persons . The ac t
curity, a national ocean program and plan is needed ,
                                                            requires each applicant for building subsidies t o
as is a determination of the organizational structur e
                                                            certify that its community development progra m
which would best accomplish it . The disagreemen t
                                                            gives the highest feasible priority to activities benefit-
among experts about the current structure 's effective-
ness emphasizes the need for such a plan.                   ing lots- or moderate-income families .
                                                               We reported that :
   Shortly before the Congress adjourned, S . 3889 wa s
introduced in the Senate to consolidate several of th e       —As of Nlay 7, 1976, HUD had issued no criteri a
agencies into a new department responsible for th e             or instructions for determining whether com-
Nation's common property resources . (GGD-75-97,                munity development programs met the require-
Oct . 10, 1975 .)                                               ments.
                                                              —Applications omitted information relating t o
                                                                the certifications, as well as to identificatio n
Audit Work in Process                                           of urgent-needs activities, and completion o f
                                                                housing assistance plan forms .
   Reviews in process as of September 30, 1976 ,
                                                              —The proposed housing programs of three appli-
concerned Federal programs to develop and main-
                                                                cants did not further the objective of avoidin g
tain a viable U .S. merchant fleet ; the effectiveness
                                                                concentrations of assisted persons in low-incom e
and management of the minority- business program ;
                                                                areas .
creation of jobs in economically lagging areas ;
                                                              —Information in 10 additional housing assistanc e
financial assistance to firms authorized by the Trad e
                                                                plans was inadequate for HUD to determin e
Act of 1974 ; the U .S. fishing industry ; and the
                                                                whether they were sufficiently d rected
                                                                                                  i       toward
metric system .
                                                                this objective.
                                                               We made several recommendations to the Secretar y
Department of Housing and                                   of HUD aimed at solving these problems. We also
                                                            recommended that the Subcommittee consider clarify-
Urban Developmen t                                          ing to what extent, and under what circumstances ,
                                                            federally assisted housing may be built in area s
   The Department if Housing and Urban Devel-               having high concentrations of low-income persons ,
opment (HUD) administers programs related t o               minority populations, and publicly assisted housing .
(1) housing production and mortgage credit, (2)              (RED-76-106, June 23, 1976.)
housing management, and (3) community plannin g
and development .
                                                            Ineffective Environmental Assessmen t
   During the 15-month period ended September 30,
1976, the Department had about 14,960 employee s            Efforts for Proposed Projects
and received appropriations totaling about $9.0              In the 5 years since passage of the National Environ-
billion.                                                    mental Policy Act, the Department of Housing an d

170
                                                                      COMMUNITY AND ECONOMIC DEVELOPMENT

 Urban Development had not developed an adequat e           about $209 million would be provided to local (rousin g
 program for assessing the environmental impacts o f        authorities for leasing units .
 projects proposed for its approval .                          We reported to the Congress that :
    Contrary to the Department's policies and pro-             1. Many leased units did not comply with loca l
 cedures, its offices had approved many projects with -           standards and building code requirements
 out preparing normal or special environmental clear-             and/or were in neighborhoods with high crim e
 ances to assess their environmental impacts or t o               rates, deteriorated housing, rat infestation, o r
 determine whether environmental impact statement s               other undesirable elements. Sonic local housin g
 should be prepared . When such clearances were                   authorities inadequately inspected or did not
 prepared, the project files often did not contain ade-           inspect leased housing before, and/or periodic-
quate information to (1) show which factors, such a s             ally after, leasing to insure that the units were
 air and water quality, had been considered and (2 )              decent, safe, and sanitary .
justify the type of clearance prepared . Several environ-      2. Improvements were needed to limit HUD' s
mental impact statements prepared for project pro-                annual contributions to the amounts require d
posals were of limited usefulness to the DepartmeriC s            for comparable, newly constructed, publicly
offices in planning and decisionniaking .                         owned housing projects .
   We recommended in a report to the Congress tha t            3. HUD needed to stake more effective use o f
the Departmen t                                                   authorizations to lease existing housing units.
  —elevate the environmental function to the highes t          We made a number of recommendations fo r
   practical organizational level ,                         improving (1) the regulations governing the housin g
  —emphasize to management the need to give                 units leased or to be leased under the original an d
   higher priority to complying with requirement s          revised programs and (2) HUD's management an d
   of the National Environmental Policy Act of 1969,        administration of these programs .
  —require clearance personnel to make more effec-             Although HUD agreed with our recommendation s
   tive use of the environmental expertise availabl e       relating to the new leasing program and adopte d
   in other Federal, State, or local agencies, an d          regulations to address these issues, it still needed to
  —set up a program to periodically instruct person-         take several actions to improve the original and
   nel in performing adequate clearances .                   revised programs. (RED-75-380, July 11, 1975 . )
The Department disagreed generally with our finding s
and proposals for corrective action .                       Using Independent Public Accountants to
   The Housing and Community Development Ac t               Audit Public Housing Agencies—
of 1974 established a block grant program to replac e       An Assessment
the categorical grant programs and required loca l
communities to assess the environmental impact o f            In 1972 and 1973 HUD began supplementing it s
their projects . Considering the Department's lack o f      own audit staff with independent public accountant s
emphasis on assessing environmental impacts when
approving projects, we suggested that the Congres s
consider how effectively localities are carrying out th e
environmental review responsibilities for propose d
projects . (RED-75-393, July 22, 1975 .)


 Leased-housing Programs Nee d
Improvements in Management
 and Operation s
  HUD and local housing authorities need to improv e
their operation, management, and administration o f
the leased-housing programs—original (section 23) ,
revised (section 23), and new (section 8) . HU D
estimated that fiscal year 1974 Federal assistance of       GAO auditor interviewing a leaied-louring tenant in Oakland, Calif.

                                                                                                                            171
      COMMUNITY AND ECONOMIC DEVELOPMENT

    in auditing recipients' records of Federal funds under     and Urban Affairs, Senate Committee on Banking ,
    five housing and ' community development programs .        Housing and Urban Affairs, and the Sub c ommittee
    The greatest use of these accountants has been i n         on Housing and Community Development, Hous e
    1 UD's low-rent housing program.                           Committee on Banking, Currency and Housing ,
       We reported to the Congress that, of 11 independen t    on the national flood insurance program . In Septem-
    accountants involved in 15 audits, none had ade-           ber 1976, we testified before the same Senate Com-
    quately reviewed all 17 compliance areas called for i n    mittee regarding our draft report on the secondar y
    their contracts. Some of the work done by tw o             mortgage market activities of the Governmen t
    accountants in forming opinions on financial state-        National Mortgage Association .
   ments may not have met standards of the America n
   Institute of Certified Public Accountants .
                                                               Audit Work in Process
      \Many of these deficiencies were overlooked b y
   HUD monitoring . Also, HUD had not periodicall y               Audit work in process at September 30, 1976 ,
   analyzed the accountants' reports to identify prob-         included reviews of HUD's experimental housin g
  lems common to housing agencies.                             allowance program, mortgage underwriting prac-
      We recommended that the Secretary of HUD :               tices, fair housing compliance and enforcement
                                                               efforts, need for more equitable real estate tax assess-
      —Revise the audit guide to explain more clearly t o
                                                               ments and formulas for allocating community devel-
         independent accountants what is expected i n
                                                               opment block grants, and the Feder?'- ?-rousing Ad -
         compliance reviews .
                                                               ministration's financial statement s
      —Assure that such accountants (1) know of HUD' s
        list of current handbooks governing housing
        agencies and (2) can confirm financial informa-
        tion applicable to their audits .                      Department of the Interior
      —Make training courses available to these ac-
        countants to familiarize them with HUD regula-           The Department of the Interior administer s
        tions for auditing housing agencies.                   over 500 million acres of Federal land and has trus t
      —Instruct HUD reviewer to improve the quality            responsibility for approximately 50 million acre s
       of their reviews and to reject audit reports no t       of land, mostly Indian reservations . In addition, the
       containing required supplemental financia l            Department's activities include conserving and devel-
       statements .                                           oping mineral and water resources ; promoting mine
      —Identify common housing agency problem s               safety and efficiency ; conserving, developing, an d
       warranting HUD's attention .                           utilizing fish and wildlife resources ; coordinatin g
                                                              Federal and State recreation programs ; and preserv-
    HUD agreed with most of our recommendation s
                                                              ing and administering the Nration's scenic, historic ,
 and began revising its audit guide and taking othe r
                                                              and recreational areas . The Department is also
 corrective actions. The Office of Management an d
                                                              responsible for the socioeconomic development o f
 Budget agreed to draw other Federal agencies' atten-
                                                              U.S . territories and the administration of programs
 tion to the findings disclosed in our report . (CED -
 76-133, Aug . 25, 1976 .)                                    serving American native peoples.
                                                                 For the 15-month period, the Department's 2 1
                                                              agencies had a work force of about 58,600 an d
Testimony at Hearings                                         a budget of about $3 .4 billion .
   We testified before the Subcommittee on Man -
power and Housing, House Committee on Govern-                 Improvements Still Needed i n
ment Operations, in July 1975 on the effectiveness            Coal Mine Dust-Sampling Program
of HUD ' s oversight of Federal subsidies paid unde r         and Penalty Assessments and Collections
the section 235 homeownership assistance progra m
and in September 1975 on HUD's managemen t                      The Department of the Interior reported that 9 4
and disposition of foreclosed multifamily properties .        percent of the active underground coal mine section s
  In 'November and December 1975, respectively,               were meeting the 2 .0-milligram standard established
we testified before the Subcommittee on Housing               by the Federal Coal Mine and Safety Act as th e

172
                                                                             COMMUNITY AND ECONOMIC DEVELOPMENT

 acceptable dust level . The Senate Committee o n                   Better Federal Coordinatio n
 Labor and Public Welfare asked us to review the                    Needed To Promote Mor e
 dust-sampling program to determine the validit y                   Efficient Farm Irrigation
 of its procedures and the accuracy of the Depart-
 ment's report .                                                      In some areas of the country, demand for water i s
    XVe reported to the Congress that the program ha d              approaching or exceeding supply . Agricultural irri-
 many weaknesses which precluded determining ho w                   gation is the largest use, accounting for about 8 3
 many mine sections were complying Leith the estab-                 percent of the water consumed in the United States.
 lished dust standards.                                                Of the 8.5 trillion gallon; of water delivered to
    In line with our recommendations, the Department                farms by the Bureau of Reclamation in 1973, less
 stated that :                                                      than half was productively used on crops . Over-
    —A study would he made to determine the accuracy                irrigation limits crop production by removing valu-
      and reliability of dust measurements .                         able nutrients from the soil ; increases farming costs
    —Dust-sampling equipment would be improved .                     by requiring more maintenance, pumping, and drain-
    —Better inspection procedures would be developed .               age ; and contributes to water pollution by washin g
    —Proper sampling procedures would be discusse d                 salts from the soil into streams and rivers and reducin g
      in more detail during training sessions for min e             streantflow and oxygen levels necessary for aquatic life .
      officials, and the Department would work wit h                   We reported to the Congress that Federal agencie s
      the United N4ine Workers of America and coa l                  did not have comprehensive data to measure damage
      mine officials to help miners better understan d              from overirrigation or the contributions to the prob-
      the dust-sampling program .                                    lem by various factors, such as low-cost water o r
    As Ave had found in the past, penalty assessments,               inaccurate estimates of when to irrigate and how
settlements, and collections continued to be late an d               much Avater to use .
inconsistent and the penalties collected were lowe r                   We recommended that Federal agencies coordinat e
than originally assessed and were a questionabl e                   to (1) develop more complete data on the problem s
deterrent to violations . Also, the Department coul d               of inefficient irrigation, (2) measure bow much spe-
not insure that all violations Avere assessed, settled ,            cific factors contribute to the protlem, and (3 )
and/or collected .                                                  identify the Government 's role in alleviating th e
    After our review, the Department again revise d                 problems and the agencies best structured to admin-
its penalty assessment, settlement, and collectio n                 ister the programs .
procedures and stated that the revisions should correct                 The main effort to encourage more efficient irriga-
most of the prohlenis Ave noted. (RED-76-56 ,                       tion on federal projects had been through the
Dec . 31, 1975. )                                                   Bureau of Reclamation ' s irrigation management pro-
                                                                    gram—a computerized scheduling service to hel p
                                                                    farmers determine Avhcn and ho%v much to irrigate
                                                                     their croplands. We recommended that, to accelerat e
                                                                    voluntary implementation of this program, the De-
                                                                    partments of Agriculture and the Interior jointl y
                                                                    develop objectives, policy recommendations, and ac-
                                                                     tion plans to educate and assist farmers who Avish t o
                                                                     improve their irrigation . We also recommended tha t
                                                                     the Bureau (1) review irrigation management service s
                                                                     to develop a more flexible, comprehensive program ,
                                                                     (2) direct greater attention to setting objectives and
                                                                     benchmarks and increase field visits in demonstra-
                                                                     tion projects, so the benefits can be clearly measure d
                                                                     and shown to farmers, and (3) require more carefull y
                                                                     tailored approaches to demonstrating the program ,
 GAO andifors taking dust measurements in a 20-inch ream 4 mile s    including identification of regional and nationa l
inside a coalmine.                                                   benefits . (RED-76-116, June 22, 1976.)

                                                                                                                          173
  COMMUNITY AND ECONOMIC DEVELOPMEN T

  Testimony at Hearing s                                      Management's procedures to review and revok e
                                                             obsolete public land withdrawals, (3) the opportunit y
      On July 25, 1975, in joint hearings of the Conserva-
                                                             purchase program of the National Park Service, (4 )
  tion, Energy and Natural Resources Subcommitte e           Bureau of Indian Affairs efforts to improve India n
  of the House Committee on Government Operation s
                                                             education, (5) Federal funding for the Navaj o
  and the Energy and Environment Subcommittee o f
                                                             Reservation, (6) problems at the Big Thicket Preserv e
  the House Committee on Small Business, we testifie d       in Texas, (7) the policies, procedures, and practices
  on our report, "Concession Operations in the Na-           used by Federal agencies to select dam sites, (8) th e
  tional Parks—Improvements Needed in Adminis-                1975 National Water Assessment, and (9) the effective-
  tration" (RED-76-1, July 21, 1975) and on the              ness of water resources planning under the Act o f
  administration of the National Park Service's contrac t
                                                              1965 .
  with Landmark Services, Inc., which provides a tou r
  bus service in Washington, D .C.
     In December 1975 we testified before the Subcom-         Department of Transportatio n
  mittee on Conservation, Energy and Natural Re -
 sources, House Committee on Government Opera-
                                                                For the 15 months ended September 30, 1976, th e
 tions, on our report that the Bureau of Reclamation
                                                             Department of Transportation had an estimate d
 could improve its procedures and practices for com-
                                                             budget outlay of $16 billion to provide fast, safe, an d
 puting cost ceilings and project estimates . (RED -
                                                             efficient air, highway, rail, and urban mass transi t
 76-49, Nov. 17, 1975. )
                                                             systems and to operate the U .S . Coast Guard . It had
    On March 30, 1976, at the request of the Senate
                                                             108,200 employees—72,500 civilians and 35,70 0
 Committee on Labor and Public Welfare, tee testifie d
                                                             members of the U.S . Coast Guard .
 on our reports entitled "Improvements Still \eede d
 in Coal Mine Dust-Sampling Program and Penalty
 Assessment and Collections" (RED-76-56, Dec . 31 ,          Unsafe Bridges on Federal-Ai d
 1975) and "Analysis of Closure Orders Issued Unde r         Highways Need More Attentio n
the Federal Metal and Nonmetallic Nline Safety Act
of 1966" (RED-76-64, Feb . 12, 1976) .                          We reported to the Congress that, at the rate th e
    On August 31, 1976, we testified before the Sub-          Federal Highway Administration's special bridg e
committee on Conservation, Energy and Natura l               replacement program was providing funds, replacin g
Resources, House Committee on Government Opera-               the estimated 7,000 structurally unsound bridges an d
tions, on our objectives and scope in reviewing th e         25,000 functionally obsolete bridges on federally
selection of sites for Federal dams.                         assisted highways would take about 80 years . Th e
                                                             Administration estimated that it would cost abou t
                                                             $10.4 billion to replace all 32,000 unsafe bridges o n
 Other Assistance to the Congres s                           the Federal-aid highways .
   On the basis of our November 1975 report an d                The fact that few States have included many bridg e
hearings held on that report in December 1975, th e          replacement projects in their Federal-aid highway s
House Committee on Government Operations sub-                programs indicates a need for Federal leadership in
mitted a report to the House of Representatives o n          planning and setting priorities for highway construc-
the Bureau of Reclamation' s indexing procedures for         tion projects .
computing authorized cost ceilings on water resource s          Also, bridge replacement data was not compile d
projects . We helped prepare the report that teas            centrally and related to the unsafe bridges, preventin g
adopted by the full Committee .                              comprehensive analysis, planning, and reporting b y
                                                             the agency .
                                                                We recommended that the Highway Administra-
Audit Work in Progress
                                                             tion (1) exercise more leadership to get States t o
  Audit work in progress at September 30, 1976 ,             consider replacing or improving unsafe bridges an d
included reviews of (1) the administration of the            (2) improve its bridge inventory data . The Depart-
Federal Metal and Nonmetallic Mine Health an d               ment of Transportation agreed that unsafe bridges
Safety Act, (2) the effectiveness of the Bureau of Land      needed more attention but said that additional actions

174
                                                                     COMMUNITY AND ECONOMIC DEVELOPMENT

were not needed by the Federal Highway Adminis-                We recommended that the Administration (1) re -
tration . It also said the Highway Administration had       evaluate the bases of its safety standards, (2) make
taken steps to imprr bridge inventory data .                standards more specific, (3) adopt a standard fo r
(RED-75–365, July _                                         measuring runway friction, (4) inspect airports o n
                                                            site before certifying them, (5) develop standards fo r
                                                            airports with limited certificates, and (6) include com-
improvements in the Safet y
                                                            muter air carriers in its certification program .
of Motor Vehicle s                                             The Administration concurred in part but said :
   We reported to the Chairman, Senate Committe e             • It needed more tests before adopting a standard
 on Commerce, that our studies of vehicle acciden t              for runway friction .
 data from North Carolina and New York showed tha t           • Overall standards were not needed for airport s
 national safety standards introduced through model              awarded limited certificates .
 year 1970 had reduced deaths and serious injuries i n        • It needed additional legislative authority t o
 accidents in those States. Little further improvemen t          include commuter airline airports in its certifica-
 resulted from the occupant protection standards                 tion program.
 introduced in the 1971–73 model cars, despite the          (RED–76–5, Aug. 8, 1975. )
 added cost of $850 million .
   To find out what implications these results migh t
                                                            Factors To Be Considered in Settin g
 hold for the Nation, we estimated the number of
occupant lives which might have been saved nation -         Future Policy for
 wide . We made certain assumptions, such as (1) th e       Use of Inland Waterway s
 data results from North Carolina were representativ e         Historically, the Federal Government has finance d
of the 'Nation and (2) all model years of cars were         virtually the entire cost of developing and maintain-
 exposed to accidents in proportion to the number o n       ing the -Nation's inland waterways but has alway s
 the road .                                                 permitted their free use for commerce and recreation .
   We concluded that the 1966–70 standards may hav e           We reported to the Congress that use of waterway s
saved about 28,230 lives between 1966 and 1974 . Th e       had expanded to the point where important lock s
value of these safety benefits, based on the dolla r        had become inadequate to handle all traffic and tha t
value of human life estimated by others, is greate r        further growth, augmented by Federal subsidies ,
 than the money spent on safety improvements fo r           would intensify congestion and increase the loss o f
 those years .
                                                            productive time . If the Federal Government charge d
   The Department of Transportation believed ou r           carriers, (1) waterways operation and maintenanc e
conclusion about recent model years needed to b e           costs would be recovered, (2) sonic traffic would b e
more fully supported . We consider our conclusions ,        shifted to other modes of transportation, relievin g
in light of the assumptions made, justified on the basi s   congestion at locks and lessening pollution, and (3 )
of the evidence developed in the two States . (CED -        energy would be saved . We urged that the Congres s
 76–121, July 7, 1976. )                                    consider these factors in deciding whether to continue
                                                            allowing free use of the inland waterways or adop t
Federal Aviation Administration' s                          the President's proposal for imposing user charges .
                                                            (RED-76–35, Nov . 20, 1975 .)
Airport Certification Program May Not Have
Resulted in Safe Airport s
                                                             Opportunities for Improving th e
  We reported to the Congress that the Federa l
                                                             Effectiveness of Rapid Transit Grant s
Aviation Administration's certification program ha d
upgraded airport safety but that its standards ha d            The Urban \lass Transportation Administratio n
been developed without detailed research and analysis        had provided grants to help purchase about 2,40 0
of their costs and their effect in improving safety .        rapid transit cars for U .S . cities, without knowing
This lack of objective basis for the standards pre -         the reliability of the equipment .
vented us from determining whether the safety leve l           In a report to the Congress, we recommended that ,
at airports was adequate .                                   before making such grants, the Administration requir e

                                                                                                                  175
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         s
  COMMUNITY AND ECONOMIC DEVELOPMENT

  grantees to shmv (1) that new equipment meets specifi c    people in rural areas . Ave were also looking int o
  reliability requirements and (2) that technology new       the Interstate Commerce Commission's - railroad
  to a transit system and not to be used in the immediat e   enforcement and compliance program, and action s
  future is needed . We also recommended that the            taken to alleviate the small shipments problem .
  Administr ation develop an information collectio n
 and dissemination system, so technological problems
 can be easily identified, classified, and met wit h          Department of the Arm y
 specific research and development .                          Corps of Engineers
    The Administration generally agreed with our
 recommendations and said that is had taken corrective        (Civil Functions)
 action in several areas. (RED-76-75, Mar. 10, 1976 .)
                                                                The civil works functions of the Corps of Engineer s
                                                              include interrelated programs of water developmen t
 Information Available o n
                                                              designed to improve national waterways and preserv e
 Estimated Costs To Rehabilitate th e
                                                             water and its ecosystems as natural resources . Efforts
 Nation's Railroad Tracks and Summar y                       are diversified among other water-related fields i n
 of Federal Assistance to the Industr y                      areas of navigation, flood damage prevention, hydro -
                                                             electric power production, water supply, shore pro-
    At the request of the Chairman and the rankin g
                                                             tection and preservation, estuaries, and recreationa l
  minority member, Subcommittee on Federal Spend-
                                                             projects . The Corps received a total of $2,266,400,000
  ing Practices, Efficient- and Open Government,
                                                             in congressional appropriations for the 15-mont h
  Senate Committee on Government Operations, th e
                                                             period and employed about 28,378 full-time and 4,09 6
  anahzed data on railroad track conditions and esti-
                                                             part-time people to carry out its civil functions .
  mated rehabilitation costs . We also summarized th e
  direct Federal assistance provided to the railroa d
 indus tr y from 1970 through June 30, 1975—about $ 4        Federal Efforts To Exten d
 billion—and research and development undertake n            Winter Navigation on the Great Lake s
 by the Federal Railroad Administration .                    and the St . Lawrence Seaway—
    Although there had been several studies on trac k
                                                             Status and Problems to be Resolve d
 conditions, none had been comprehensive enough t o
 be a valid measure of conditions across the country .          We reported to the Congress that, during the 4
 There was little assurance that future Federal fund s       years of the program to show the feasibility of extend-
 would be provided where needed, when needed, or in          ing the navigation season, winter traffic had bee n
 the amounts needed .
                                                             extended in some of the Great Lakes . Much of the
    For the past 5 teats about three-fourdis of th e
                                                             traffic, however, was not a direct result of the program .
 Federal funds for aiding railroads has represente d
emergency assistance to bankrupt carriers . Also ,              Major problems to be resolved before the prac-
research and development projects of the Federa l            ticability of a permanently extended navigatio n
Railroad Administration have increasingly addresse d         season on the Great Lakes and the St . Lawrence
current technological, economic, and management              Seaway could be judged conclusively were (1) th e
problems of the railroads . Since fiscal year 1970,          competing use of the waterways during the winte r
5209 million has been appropriated for the agency' s         season by power and navigation interests, (2) a lac k
research and development activities . (RED-76-44,            of a plan of action coordinated with Canada, and (3 )
Nov . 21, 1975 . )                                           potential environmental damage .
                                                                Also, the program's preliminary economic analysi s
Audit Work in Proces s                                       did not realistically portray the potential benefit s
                                                             and costs of a permanently extended navigatio n
  As of September 30, 1976, we were reviewin g
                                                             season .
Federal and State efforts to improve motor carrie r
safety, and Federal programs to meet the trans-                We recommended that the Secretary of the Arm y
portation needs of the elderly, the handicapped, and         require the Corps to

176
                                                                       COMMUNITY AND ECONOMIC DEVELOPMEN T

  —include in its funding requests and in reports t o         Federal, State, Local, and Public Role s
    the Congress information on all participatin g            In Constructing Waste-Wate r
    agencies' use of their regular appropriations fo r        Treatment Facilitie s
   the demonstration program ,
                                                                At the request of the Chairman and the rankin g
  —resolve problems between power and navigatio n             minority member of the Subcommittee on Conserva-
   interests,                                                 vation and Natural Resources, House Committee o n
  —work toward an agreement with Canada on join t             Government Operations, we reviewed selected aspects
   participation in extended-season operations ,              of the administration of EPA's grant program, which
  —finish assessing the expected environmenta l               pays 75 percent of the cost of constructing municipa l
   impact of extended-season navigation, an d                 waste treatment facilities .
  —resolve our questions on benefit and cost com-                We recommended a number of improvements,
   putations prepared for the program.                        including (1) reminding the regional offices awardin g
                                                              sewer system grants, which will increase the flow t o
  The Corps has prepared two reports on the program
                                                              treatment plants, to make sure the plants will not be
since the issuance of our report, both of which reflec t
                                                              overloaded, (2) instructing the regional offices to
modifications based on some of our recommendations .
                                                              monitor projects nearing completion, brie` grantees o n
(RED-76-76, Apr. 20, 1976. )                                  the data needed to close out those grant and begi n
                                                              collecting data for closing out grants when construc-
Audit Work in Process                                         tion is finished, rather than waiting for the grantee' s
                                                              request for final payment, and (3) requiring tha t
  At September 30, 1976, we were reviewing (1 )               defects noted during final inspections be corrected
the environmental effects of Corps dredging activities,       before final payment. EPA generally concurred wit h
(2) ways to obtain more efficient use of municipai and        our recommendations . (RED-76-45, Dec . 5, 1975 . )
industrial water supplies, (3) the latest benefit and cos t
data for the extended-navigation season on the Grea t         Federal Programs for Research o n
Lakes, (4) engineering proposals to rehabilitate Locks        the Effects of Air Pollutants
and Dam 26, (5) the issues associated with divertin g
Wellton-Mohawk Project Water, and (6) methods to                We reported to the Chairman, Subcommittee o n
                                                              the Environment, Senate Committee on Commerce ,
improve flood control operations.
                                                              that much more research was needed on the health
                                                              and ecological effects of air pollutants before nationa l
                                                              standards for air and ground vehicle emissions coul d
Environmental Protection Agenc y
                                                              be evaluated and standards set for other pollutants .
                                                                 We recommended that EPA (1) periodically esti •
   The overall mission o the Environmental Protec-            mate the resources needed for an adequate researc h
tion Agency (EPA) to protect and enhance th e                 program, (2) establish criteria or guidance for settin g
Nation's env ironment by conducting research, es-             research pfiorities, (3) develop an air pollution contro l
tablishing and enforcing environmental protectio n            strategy to facilitate better research planning, an d
standards, and providing funds for States and munici-         (4) better coordinate air pollution research done by
palities to construct sewage treatment plants . EPA           other Federal agencies .
also underwrites the administrative costs of loca l             In response, EPA stated that in fiscal year 1976 i t
pollution control agencies and helps finance th e             had begin to submit annually to the Congress a 5 -
cost of local planning for pollution abatement and            year plan which projects research program needs .
control .                                                     Included in that plan were guidance and criteria fo r
   During the 15-month period, the agency spen t              setting research priorities . EPA also said it was de-
$4.3 billion and employed a staff of about 9,550              veloping an air pollution control strategy and pro -
to administer programs related to water, air, soli d          grams for more effective interagency air researc h
waste, pesticides, noise and radiation .                      coordination. (RED-76-46, Dec. 11, 1975 .)

                                                                                                                    177
   COMMUNITY AND ECONOMIC DEVELOPMENT

  Federal Pesticide Registration Progra m                     and (2) coordinate with EPA on all future sampling s
  Did Not Adequately Protect Consumers                        of pesticide residues in food.
  From Pesticide Hazards                                         EPA generally agreed with our findings and said
                                                               that many of the problems would be corrected by it s
     We reported to the Congress that the America n           new registration regulations or by changes in existin g
   consumer has not been adequately protected from            programs. EPA said, however, that, because of limite d
   the potential hazards of pesticide use because of in -     staff and time, it would not require the full range o f
  adequate efforts to implement Federal laws . Authority      data to support reregistration under the 1972 amend-
  for regulating pesticides to insure that only effective     ments to the pesticide act . The Department of Health ,
  pesticides which will not harm man and the environ-         Education, and Welfare said it would coordinat e
  ment are used is contained in the Federal Insecticide ,     future pesticide monitoring activities with EPA bu t
  Fungicide, and Rodenticide Act, as amended, an d            did not agree with our recommendation to periodicall y
  the Federal Food, Drug, and Cosmetic Act, a s               test for all pesticide residues in food . (RED-76112 ,
  amended.                                                    Dec. 4, 1975 .)
     EPA (1) registers pesticides which meet its stand-
 ards for safety, efficacy, and labeling -and (2) set s
                                                              Progress and Problems in Implementin g
 tolerances for the amount of pesticides which ma y
 remain in food or feed . The Food and Drug Ad -              the National Water Pollutio n
 ministration of the Department of Healthy Education ,        Control Progra m
 and Welfare samples food and feed in interstate
                                                                 In a report to the Subcommittee on In v estigations
 commerce and may remove from commerce those                  and Review, House Committee on Public Work s
 which contain residues exceeding establishe d                and Transportation, we pointed out that EPA neede d
 tolerances.                                                  to take various actions before the national permi t
    We recommended that, during its reregistratio n           program created by the 1972 amendments to th e
 of all pesticides mandated by the 1972 amendments            Federal Water Pollution Control Act could becom e
 to the pesticide act, EPA identify pesticide registrant s    the key to cleaning up the Nation's waterways . Thes e
 whose safety, environmental impact, and efficac y            actions included (1) issuing thousands of additiona l
 studies are not available ; notify them ; and cancel th e    permits, (2) resolving lawsuits challenging a majorit y
  registration of those pesticides for which the studie s     of the industrial effluent limitation guidelines, (3 )
  are not submitted within a reasonable time . We             adjudicating appeals of permit conditions by man y
 further recommended that EPA (1) correct pesticid e          dischargers, (4) determining dischargers' adherence
 labeling deficiencies and establish procedures to in -       to permit conditions and taking enforcement action s
 sure that all pesticides are adequately labeled, (2 )        against noncompliers, and (5) reissuing expiring ,
 require periodic reviews of all pesticide tolerances an d    short-term municipal permits and modifying almos t
 insure that total human exposure to each pesticid e          all other municipal permits to reflect achievable o r
 residue in food does not exceed the acceptable daily         changing permit conditions . We also pointed out that ,
 intake, (3) cancel the registration of food-crop pesti-      through no fault of their own, many dischargers might
cides for which tolerances have not been approved ,           be unable to meet the July 1, 1977, water quality
 (4) reimplement the 5-year registration renewa l             requirements of the act .
program to insure that each pesticide is periodicall y          We recommended that EPA encourage and assis t
reviewed for compliance with laheling and dat a               the States in assuming the permit program . We
requirements, and (5) determine its needs for funds ,         recommended also that the Subcommittee propose
personnel, facilities, equipment, and tin,- to ad -          legislation going EPA the authority to (1) exemp t
minister the pesticide programs and bring thos e             dischargers which minimally impair water quality
needs to the attention of the Congress .                     from obtaining permits and (2) extend in necessar y
   We recommended that the Food and Drug Admin-              cases the July 1, 1977, deadline for meeting wate r
istration (1) expand its surv eillance program to tes t      quality requirements . The agency agreed with our
over a period of years all pesticides with tolerances        findings. (RED-76-60, Feb . 9, 1976 .)

178
                                                                        COMMUNITY AND ECONOMIC DEVELOPMEN T

Testimony at Hearing s                                         setting and monitoring, (12) automobile fuel economy
                                                               testing program, and (13) monitoring of exhaus t
  We testified in January 1976 before the Subcom-              emission controls of vehicles actually on the road . We
mittees on Oceanography and on Fisheries and                   were also investigating the effects of leaching from
Wildlife Conservation and the Environment, Hous e              land disposal sites .
 -ferchant Marine and Fisheries Committee, and i n
April 1976 before the Subcommittee on Oceans and
Atmosphere, Senate Committee on Commerce, on the               Federal Communications Commission
administration of the Marine Protection, Research ,
and Sanctuaries Act of 1972 (commonly referred to a s            The Federal Communications Commission wa s
the Ocean Dumping Act) . We stated that regulation             created by the Communications Act of 1934 to regulate
of the ocean dumping program had been ineffective .            interstate and foreign communications by radio ,
  We testified in February 1976 before the Subcom-             television, wire, cable, and satellite. The Com-
mittee on Investigations and Review, House Com-                mission's responsibilities during fiscal year 1976 and
mittee on Public Works and Transportation, on (1 )             the transition quarter were carried out by about 2,10 0
EPA' s progress and problems in implementing the               employees, and its appropriations totaled about $6 3
national water pollution control permit program ,              million.
pursuant to the Federal Water Ru"ution Control Ac t
Amendments of 1972, and (2) the results of our past
and current reviews of EPA's grant program fo r                Information Reported by Federa l
constructing municipal waste treatment facilities .            Organizations on the Purpose ,
  Nye also testified in April 1976 before the Subcom-          Duration, and Cost Associate d
mittee on Oversight and Investigations, House Com-             With Cable Televisio n
mittee on Interstate and Foreign Commerce, o n
                                                                 In connection with ongoing hearings, the Chairman ,
EPA's monitoring of the exhaust emission controls of
                                                               Subcommittee on Communications, House Com-
vehicles actually on the road . EPA had made onl y
                                                               mittee on Interstate and Foreign Commerce, aske d
limited progress in carrying out the provision of th e
                                                               us to obtain information on the purpose, duration ,
Clean Air Act relating to the control of emissions fro m
                                                               and cost of system planning, construction, operation ,
automobiles actually on the road.
                                                               experimentation, and research associated with cabl e
  In September 1976, before the Subcommittee o n
                                                               television .
Investigations and Review, House Committee o n
                                                                  We reported that information received from 1 8
Public Works and Transportation, we commented o n
                                                               Federal organizations showed that about $11 . 3
our review of the construction of a sewer system
                                                               million in contracts and grants had been spent fo r
project in Suffolk County, Long Island, New York .
                                                               cable television and that about $9 .7 million in
Neither EPA nor the State of New York had don e
                                                               guaranteed loans had been approved . In most cases,
much to inspect project construction .
                                                               the agencies had not issued specific guidelines for usin g
                                                               the funds, nor had they coordinated their activities
Audit Work in Proces s                                         with the other agencies. We observed that, if a n
                                                               Office of Telecommunications policy circular had bee n
   Work in process at September 30, 1976, included
                                                               implemented, information on the funding of cabl e
reviews of EPA's (1) waste treatment constructio n
                                                               television would have been more readily available.
grant program, (2) water pollution control planning ,
                                                                (CED-76-149, Sept. 15, 1976. )
(3) control of nonpoint sources of water pollution ,
(4) disinfection of municipal water supplies an d
wastewaters, (5) progress towards controlling an d              Audit Work in Proces s
eliminating the ocean dumping of municipal wastes ;
(6) implementation of the Noise Control Act of 1972 ,             At September 30, 1976, we were making severa l
(7) special pesticide registration activities, (8) progres s    surveys of programs and activities of the Federal
in meeting primary ambient air quality standards, (9)           Communications Commission ; however, none had
selvage sludge utilization and disposal, (10) personne l        progressed to the point of determining whether a de-
health monitoring programs, (11) radiation standards            tailed review and report were warranted .

                                                                                                                     179
      COMMUNITY AND ECONOMIC DEVELOPMEN T

      Small business Administratio n                              We recommended that the Administrato r
                                                                  —revise the rules and regulations on 'standards o f
                                                                     conduct by developing criteria to determin e
      The Small Business Administration provides fi-
                                                                     which employees have responsibilities whic h
    nancial, procurement, and management assistance to
                                                                     warrant the filing of financial disclosure state-
   small businesses, development companies, and smal l
                                                                     ments,
   business investment companies . It also provides fi-
                                                                  —issue specific guidelines clearly defining th e
   nancial assistance to victims of floods or otter catas-
                                                                     duties and responsibilities of the standards-of-
   trophies. The Administration had about 4,600 Cnn-
                                                                     conduct counselors and the ad lioc committee o n
   ployees and incurred obligations of about $1 .5 biaion
                                                                     standards of conduct, and
   during the 15-month period ending September 30 ,
                                                                  —improve the audit, examination, investigation ,
   1976 . At the end of the period, the Administratio n
                                                                    and review functions for SBA program activities ,
   had outstanding loans totaling $7 .6 billion.
                                                                     through organizational and procedural changes .
     Our audits at the Administration concerned severa l
                                                                  We also suggested that the Administr ator have th e
  major lnan and guarantee programs . Most of our
                                                               SBA aecring committee study the management re -
  'cork teas done in response to Public Law 93-386 ,
                                                               porting system and that the reports managemen t
  'which required a full-scale audit of the
                                                               division and the systems division expand tL-eir at -
  Administration .
                                                               tempts to include report users in decisionmakin g
                                                               which affects the reporting system, paying particula r
 Need To Improve th e                                          attention to the needs of regional and district o0icials ,
 7(a) Loan Progra m                                              SBA agreed with our recommendations concernin g
                                                               the need for more stringent roles and regulations on
   Under section 7(a) of the Small Business Act, SB A         standards of conduct and for an improved report s
 guarantees and makes direct loans to small businesses.       management information system . Actions have eithe r
 The 7(a) program is the agenc,;'s largest .                  been taken or are in process, SBA also agreed with ou r
   We reported to the Congress that SB A                      recommendations to improve the audit, investigation ,
        had approved loans for questionable purposes ,        and review functions . It recognized the need t o
        such as transferring risk front banks and othe r      obtain more staff for the internal and external audi t
        creditors to the agency itself ,                      divisions .
      —in certain cases, had not analyzed prospectiv e           This report was the eighth and last in our full-scal e
        borrowers' financial condition adequately o r         audit of the Small Business Administration . (GGD-
       verified the adequacy of collateral ,                  76-74, Aug. 23, 1976 .)
      —after loans were made, had not acted effectivel y
       t,' increase the chances of borrower success and       Testimony at Hearing s
       loa :. repayment .
                                                                On February 23, 1976, we testified before th e
  SBA generally agreed o-ith our recommendations
                                                              Senate Select Committee on Small Business on the
and either began or planned actions to correct the
                                                              results of our review of SBA's 7(a) loan program .
problems cited . (GGD-76-24, Feb. 23, 1976 . )
                                                                On \4arch 9, 1976, we testified before the Sub-
                                                              committee on Small Business, Senate Committee o n
Improvements Needed in Managemen t                           Banking, Housing and Urban Affairs, on our review s
Control Function s                                           of SBA's 8(1) procurement and lease guarante e
                                                             programs. Our testimony questioned the effectivenes s
    In a report to the Congress we pointed out that
                                                             of the 8(a) procurement program, and projecte d
(I)   tighter requirements would strengthen the dis-         substantial losses for the lease guarantee program -
 closure and review of employees' financial interests ,
                                                                We again testified on A•fay 6, 1976, before th e
 (2 organizational and procedural changes coul d
                                                             Senate Select Committee on Small Business on our
improve the audit and review functions, and (3) im-          review of SBA's 502 local development company
provements were needed in SBA ' s managemen t                program. We informed the Committee that, whil e
reports system .                                             the-program was making capital available to many

ISO
                                                                         COMMUNITY AND ECONOMIC DEVELOPMEN T

 small businesses, other objectives of the authorizin g         documentation, and the 5-pear plan should hav e
 legislation often had been subverted .                         shown a greater need for Federal assistance . We esti-
                                                                tnated that the required Federal funding from 197 6
                                                                 through 1980 would be at least $6 .2 billion, including
 Audit Work in Proces s
                                                                operating costs, capital investment, and right-of-wa y
  At September 30, 1976, we were reviewing (I) the              improvements . We recommended that, in the future ,
small business investment company program and (2 )               AA{TRAK avoid deficiencies in estimation and mak e
the effectiveness of Federal management services an d           in-depth studies of the actions necessary to estimat e
technical assistance movided to small businesses .              ridership . (RED-76-97, Apr. 21, 1976 .)


                                                                Quality of Rail Passenger Servic e
 National Railroad Passenge r
                                                                Still Hampered b y
 Corporation (AMTRAK )
                                                                Inadequate Maintenance of Equipmen t

   AAITRAK teas created by the Congress in 1970 as a               The AMTRAK Improvement Act of 1974 require s
for-profit corporation to- operate and revitalize the           us to report to the Congress annually on AMTRA K
Nation's intercity rail passenger service ANITRA K              activities . We selected maintenance activities for ou r
operates about 33- routes covering sonic 25,000 miles,          first review because, after 4j years, U .S. rail passen-
including 4 routes that service po _--s in Cr d,- and           gers still could not expect consistent service, o n
Mexico . As of 1975, A\IT°' .1i had -rued mi                    schedule, in clean and comfortable cars .
operational loss in every fiscal year since its first . 1972.      I- _ r the public to be provided with acceptabl e
The total Federal subsidy for that period amounted t o          service, AMTRAK must take more aggressive action
5634 .6 million .                                               to minimize its longstanding and well-publicized
                                                                problems . Many of dtese problems related to th e
                                                                repair and maintenance of passenger cars, locomotives,
How Much Federal Subsidy                                        and other equipment necessary to keep trains oper-
Will AMTRAK Need ?                                              ating . AAITRAK's program to improve maintenanc e
                                                                his been costly, ineffective, and slow .
  The Chairman, Subcommittee on Oversight an d                     The President of AMTRAK generally agreed wit h
Investigations, House Committee on Interstate an d              our recommendations to help correct the deficiencie s
F~rcign Commerce, at file request of the House Rules            and stated that actions w ere being taken to implement
Conunittee, asked us to assess the reasonableness o f           most of them. (RED-76-113, June 3, 1976 .)
A\ITRAK's projected operations and need for Fed-
cral funds for fiscal years 1976-80.
                                                                Audit Work in Process
  AMTRAK has needed and will continue to nee d
considerable Federal funding to survive . ANITRAK's               At September 30, 1976, we were reviewing ANl -
projected revenues were optimistic and its expense s            TRAK's management of its incentive contracts wit h
understated . Nlany items were not supported by                 the railroads .




                                                                                                                    281
                                                              Department of Justic e

                                                                 The chief functions of the Department of Justice are
                                                              to enforce the Federal laws ; represent the Govern-
                                                              ment in legal matters ; help State and local govern-
                                                              ments reduce crime ; confine, support, and rehabilitat e
                                                              Federal offenders ; administer the immigration an d
                                                              naturalization laws relating to the admission, ex-
                                                              clusion, deportation, and naturalization of aliens ;
                                                              and control narcotics and dangerous drug abuse . I t
                                                              conducts all suits in the Supreme Court in which th e
                                                              United States is concerned, supervises the Federa l
                                                              penal institutions, and investigates violations of Fed-
  CHAPTER THIRTEE N                                           eral law. The Attorney General directs the activitie s
                                                              of the U .S . attorneys and U.S . marshals at various
                                                             judicial districts. The Department has about 50,000
                                                             employees, and its projected expenditures were abou t
                                                              $2.1 billion during the 12-month period ended
                                                             June 30, 1976.
 GENERAL GOVERNMENT                                             Our audits at the Department of justice concerne d
 OPERATION S                                                 principally law enforcement assistance, rehabilitatio n
                                                             of Federal offenders, narcotics and dangerous drugs,
                                                             entry and deportation of aliens, and Federal la w
                                                             enforcement efforts . \Much of our work was done in
 Responsibilities                                            response to congressional requests .


    The General Government Division is responsible           Federal Bureau of Investigation
  for audit work at the Departments of Justice and th e
  Treasury, the District of Columbia government, th e            The Federal Bureau of Investigation (FBI) investi-
  United States Postal Service, the judicial and legis-       gates violations of Federal statutes, collects evidenc e
                                                              in cases in which the United States is or may be a n
 latve branches, and various other agencies an d
                                                              interested party, and performs other duties impose d
 commissions . It is also responsible for work concernin g
                                                              by law or Presidential directive.
 Federal, State . and Iccal intergovernmental relations .
                                                                 If a violation of Federal law allegedly has occurred ,
    The Director of the Division is Victor L . Lowe and       the FBI will investigate and present its findings t o
 the Deputy Director is William J. Anderson .                 the appropriate U .S . attorney or Department of
                                                             justice official, who will then determine whethe r
                                                              further action is warranted .
 Audit Reports                                                  In 1976 the FBI gave highest priority to white -
                                                              collar and organized crime . Its resources totaled
                                                              about $459 million and 20,000 employees.
   During the 15-month period ended September 30 ,
 1976, we submitted 85 reports to the Congress—21 t o        FBI Domestic Intelligence Operations
 the Congress, 33 to congressional committees, 19 t o
                                                                At the request of the Chairman of the Hous e
 Members of Congress, and 12, on activities of the
                                                             Judiciary Committee, we began reviewing FB I
legislative branch, to officers of the Congress . We sen t
                                                             operations . The Chairman specifically requested tha t
35 reports to department or agencv officials . A lis t       we first review the FBI's domestic intelligence opera-
of these reports is included in appendix 2 . Table I         tions .
shows the numbers and types of reports relating t o             We reported to the Congress that various change s
each agency .                                                arcneeded in these operations, which are too broa d

182
                                                                              GENERAL GOVERNMENT OPERATION S

                                GENERAL GOVERNMENT DIVISIO N

                                                    DIRECTO R
                                                    V .L .LOWE


                                            DEPUTY DIRECTO R
                                     I          W . ANDERSON




      LAW ENFORCEMENT AND JUSTIC E                                       INTERNAL REVENUE OPERATIONS            I
I                  D. STANTON                                      I                  R. FOGEL


    A.P . JONES                      J . OL S                          D. STATLE R


    DEPARTMENT OF JUSTIC E                                             INTERNAL REVENUE SERVIC E
    JUDICIAL BRANC H                                                   TAX ACTIVITIES OF THE BUREAU O F
    U .S. SECRET SERVIC E                                                 ALCOHOL, TOBACCO AND FIREARM S
    LAW ENFORCEMENT ACTIVITIES OF :                                    U .S . TAX COUR T
       U.S . CUSTOMS SERVIC E
       BUREAU OF ALCOHOL, TOBACCO
          AND FIREARMS
    GOVERNMENT-WIDE STUDIES




      INTERGOVERNMENTAL RELATIONS               I                          AGENCY-ORIENTED ACTIVITIE S
I                   A. HAIR

    A . GOLDBECK                B . THURMAN                            R. PETERSON               C . WAULEY
    F . MEDICO                                                         T . COLAN                 H . SANGE R


    INTERGOVERNMENTAL RELATIONS                                        U .S. POSTAL SERVICE        _
       (EXCEPT AUDIT STANDARDS )                                       DEPARTMENT OF THE TREASURY
    ADVISORY COMMISSION ON INTER -                                     LEGISLATIVE BRANC H
       GOVERNMENTAL RELATION S                                         EXECUTIVE OFFICE OF THE PRESIDEN T
    GENERAL REVENUE SHARIN G                                           SM I THSONIAN INSTITUTION
    D .C . GOVERNMEN T                                                 NATIONAL FOUNDATION ON THE ARTS
    NEW YORK CITY FINANCING                                               AND THE HUMANITIE S
    GOVERNMENT-WIDE STUDIES                                            VARIOUS COMMITTEES AND COMMISSIONS



                                   ADMINISTRATIVE : TECHNICAL STAF F

                                  W. RUSS                        O . D . McDOWELL


                                  PLANNING, JOB MONITORING, REPOR T
                                   REVIEW, SPECIAL STUDIES ,
                                    LEGISLATIVE
                                                                                        SEPTEMBER 30, 1976

                                                                                                               183
 GENERAL GOVERNMENT OPERATIONS
                                                         Table i

                     '                                                      Rrtwrts submined to
                                                             Congrecicna!     Members         offl..     agency
                                                 Cong".      —in—                1                       olltr(als   Total
                                                                              Cong—          Co ngress


 Departments :
    Justice	                                         9             3              4               -          7          23
                            tax and law en-
     Treasury—other than
        forcement	                                   -             3              2               -                      6
     Internal Revenue Service                        -             6              -               -          -           6
 Independent agencies :
     District of Columbia government . . . .         1             5              -               -         17          23
     National Foundation on the Arts and th e
       Humanities	                                   -              1             -               -          -           I
     United States Postal Service                    2             1             13               -          7          29
Other :
     In crgovernmental relations 	                   2              1             -               -          -           3
     Executive Office of the President	              -              I             -               -          -           I
     Revenue sharing	                                5             3              -               -          -           a
Judicial branch	                                     I             -              -                -         -           1
Legislative branch	                                  1             3              -               12         3          19

       Total	                                       21             33            19               12        35         120



 in scope and investigate too many people. Th e               Committee on the judiciary, on the preliminar y
 authority for these operations is also unclear .             results of our review- . In February- 1976 we testified
    lVe recommended that the Congress enact legisla-          before the same Subcommittee on our final result s
 tion which would (1) clarify the authority unde r            and on how the Department of justice 's guideline s
 which the FBI would be able to conduct such opera-           addressed major problems .
 tions, (2) limit the types of groups and individuals           In January 1976 we testified before the Senat e
warranting investigation and the extent of investiga-         Select Committee on Intelligence on the FBI's do-
 tions, (3) limit the extent to which the Attorney            mestic intelligence operations .
 General may authorize the FBI to take nonviolent
emergency measures to prevent the use of force o r            Audit Work in Process
violence in violation of Federal lai n. and (4) require          Audit work in process at September 30, 1976, in-
the Attorney General to periodicalh• advise an d              cluded reviews of the FBI's investigations and accom-
report to the Congress on several specified matters ,         plislunents, investigative indexes, and internal revie w
to assist it in exercising continuous oversight . We also     and inspection operations .
made several recommendations concerning thes e
areas to the Attorney General .                               Immigration and Naturalization Servic e
    The Department of justice agreed with and has
taken steps to implement some of our recommenda-                 The Immigration and Naturalization Service is
tions, parti_ularly through the 1976 Attorney Gen-            responsible for enforcing and administering Federa l
eral's guideline - ,r controllin g the FBI's domes[te         immigration and nationality laws . This responsibilit y
intelligence operations. We commented on thes e               includes inspecting aliens before admission to th e
cmidelines to the Chairman of the House Judiciar y            country ; adjudicating requests for benefits ; preventing
Subcommittee on Civil and Constitutional Right s              illegal entry ; investigating, apprehending, and re-
(GGD-76-50, Feb. 24, 1976 .)                                  moving illegal aliens ; and examining applicants for
                                                              citizenship .
Testimon y
                                                                 During the 12-month period ended June 30, 1976 ,
  In September 1975 we testified before the Sub-              the Service 's resources totaled about $209 million an d
committee on Civil and Constitutional Rights, House           8,355 employees . The Service has stated that illegal

184
                                                                                                 GENERAL GOVERNMENT OPERATION S

alien entries are growing faster than its manpowe r                         legislative and administrative recontnendations t o
resources and that, unless the economic incentive fo r                      strengthen the Immigration and Naturalization Serv-
aliens to conic here illegally is removed, the problem ,                    ice's capability . (GGD-76-133, Aug . 30, 1976 .)
lvhich is already far beyond Service capabilities, wil l
become totally insoluble .
                                                                            Drug Enforcement Administratio n
Public Expenditures for Newly Arrived Immigrant s
                                                                               Tile primary responsibility for Federal clung la w
    We reported to the Congress that the Department s
                                                                            enforcement lies with tile. Drug Enforcement Acbnin-
 of Justice and Stale, and the Congress, must act t o                       istration (DEA) of the Department of Justice . It is
 reduce the likelihood of newly arrived inunigrant s                        responsible for suppressing illicit trallic, mud regulatin g
receiving public assistance . Aliens were also acquiring
                                                                            legal trade, in narcotics and dangerous drugs . Th e
 grounds for permanent-resident status while in viola-                       Drug Enforcement Administration submitted a n
 tion of immigration Imv .
                                                                            appropriations request of $162 million for fiscal year
    We recommended that the Departments of Justic e                          1977 . Other Federal agencies involved in drug abus e
:u .d State improve tilt screening of immigrant visa                        control include the Department of State ; the U .S.
 applications. We also nccmnn[endcd that the Congres s
                                                                             Customs Service, Department of tile, Treasury and
 (1) amend the Immigration and Nationality Act t o
                                                                             the Immigration and Naturalization Service .
 prevent newly arrived immigrants from receivin g
welfare beeclits and (2) enact legislation to preven t                      Methadone Treatment: Abuse and Diversio n
aliens in illegal status from gaining grounds for brin g
                                                                               Methadone. an addictive synthetic drug with a
ncognizect as permanent residents . (GGll-75-107 ,
July 15, 1975 .)                                                            high potential for abuse—is used primarily in treatin g
                                                                            heroin addiction . At the end of 1974 about 115,00 0
Smuggling, Illicit Documents, and Scheme s                                  patients trere receiving methadone maintenance an d
Are Undermining U .S . Controls Over                                        detoxification treatment in 739 programs . Respotim-
Immigratio n                                                                bility for overseeing medical and treatment standard s
  We reported to the (longress that, by employin g                          in treatment programs rests with the Food and Dru g
professional smugglers or using illicit Documents,                          Administration, Department of Health, Edocation ,
numerous aliens are able to enter and remain in the                         and )Welfare ; DEA is responsible for preventing
United States illegally. Nlany illegal aliens are als o                     diversion.
engaging in schemes to obtain legal resident status .                         We reported to the Congress that the rood an d
Several problems restr ict U .S . controls . We made                        Drug Administration needed to take decisive cnforce-




Frank Pitts, Carl 7rister and Arnold Joao discuss lam enforcement along the U.S. border roith Customs Patrol Officers.

                                                                                                                                    185
  GENERAL GOVERNMENT OPERATION S

                                                               Audit Work in Proces s
  ment action against violative programs . The agency
 frequently delayed evaluating inspection reports o n             Work in process at September 30, 1976, include d
  treatment programs and notifying those programs              audits of (1) the effects of methadone diversion i n
  with violations that official remedial action wa s           New York City, (2) the Federal heroin suppressio n
 required . Enforcement action could be implemented            programs in Mexico, (3) Federal law enforcemen t
 more smoothly and quickly if conditional, instead of          programs along the Southwest U .S . border, (4) DEA' s
 final, operating approval was granted to new treat-           science and technology activities, and (5) the storag e
 ment programs until a comprehensive onsite inspec-            and disposition of property seized by selected Federal
 tion had been passed .                                        law enforcement agencies.
    AVe reported that improved coordination betwee n
 DEA and the Food and Drug Administration wa s
                                                               Law Enforcement Assistanc e
 needed in regulating methadone treatment programs.
    The Departments of justice and of Health, Educa-           Administration
 tion, and Welfare concurred with our .ecommenda-               The primary responsibility of the Law Enforcemen t
 tions, except for the use of conditional approvals .
                                                              Assistance Administration is to assist States and loca l
 (GGD-76-51, \far . 9, 1976. )                                governments to improve their criminpl justice systems
 Federal Drug Enforcement :                                   and reduce crime. Since 1969, the agency has awarde d
 Strong Guidance Needed                                       more than $4 billion for these purposes .
     Federal drug late enforcement efforts have for year s
                                                               Conditions in Local Jails Remain
  suffered from fragmented organization and resultin g
                                                               Inadequate Despite Federal Fundin g
  interagency conflicts. Efforts to resolve these problem s    for Improvements
  have failed.
     At the request of the Chairman, Senate Permanen t          Funds from the Administration' s block grant pro -
  Subcommittee on Investigations, Committee o n               gram have been used for constructing and renovatin g
  Government Operations, we reviewed selected area s          local jails. A review of 22 of these jails in 3 State s
  of drug late enforcement, in:.luding various agencies '     showed that using Federal funds had not adequatel y
  methods and results and the extent of interagency co -      improved overall jail conditions and that nationa l
  operation . Each enforcement agency has impressiv e         standards for the physical adequacy of local jail s
  statistics, but these are not necessarily accurate meas-
                                                               were needed .
  ures of enforcement effectiveness . Different enforce-
                                                                 Our report to the Congress recommended that th e
  ment methods have been used by the law enforcemen t
                                                              Administration and the States jointly develop stand-
  agencies, but it is difficult to determine whether on e
                                                              ards for jails and stated that the Administrator shoul d
  approach is superior to another . One of these methods ,
  buying evidence, is particularly controversial, an d        not permit block grant funds to be used for improvin g
 DEA needs to develop an overall policy covering it s         local jails if the applicant does not submit a pla n
 intent and expected success when using these funds ,         showing how the jail will be brought up to thes e
 so that indiscriminate buying is minimized .                  standards.
    To achieve a more cooperative environment amon g             The Department of justice said the block gran t
 the enforcement agencies, we recommended that th e            concept placed plimary responsibility on the States ,
 Attorney General (1) require the Director of the FB I         which would encourage them to formulate correction s
 and the Administrator of DEA to reach a formal under -        standards. Since such action would not improve the
 standing of the Bureau's role in assisting DEA an d          jail situation in those States not willing to change, w e
 to develop operational guidelines for cooperation a t         recommended that congressional committees discus s
the working level and (2) require DEA to emphasize             with the justice Department whether the bloc k
gathering and providing to the U .S . Customs Service          grant concept allows agreed-upon minimum standard s
information and intelligence to intercept illicit drug s       to be applied nationally for federally funded project s
at U .S . ports and borders. (GGD-76-32, Dec . 18 ,            or whether additional clarifying legislation is needed .
1975.)                                                        (GGD-76-36, Apr. 5, 1976 .)

186
                                                                                GENERAL GOVERNMENT OPERATION S

State and County Probation ;                                 prisoners in 56 Federal institutions and 5,000 prisoners
systems in Crisis                                            in contract facilities .

    Probation, placing criminal offenders in the com-        Prison Construction
 munity instead of in prison, is the most widely use d
 correctional activity . It is basically a State and local       We reported to the Congress that the Bureau of
 activity, but the Federal Government provides fund s        Prisons' long-range planning process for improvin g
 as part of the Law Enforcement Assistance Adminis-          the Federal penal system needed improvements t o
 tration program .                                           assure that the proper number and types of prison s
    We reported to the Congress that probation system s      will be built . Principal needs included a better de-
 were not protecting society and rehabilitating of-          veloped and documented long-range plan ; mor e
fenders very well. Information was inadequate fo r           accui5te information on the present and futur e
 sentencing, only about 23 percent of the probationer s      capacity of existing facilities ; more complete informa-
completed a treatment program, and probatio n                tion on present and future custody level requirements ;
officers had excessive caseloads . Although the Admin-       a range of estimates of expected population, with th e
 istration could help make improvements, the priorit y       construction program designed to satisfy the minimu m
given to probation in the criminal justice syste m           estimate ; and selection of penal facility designs afte r
 needed to be evaluated .                                    life-cycle costs are determined . We encouraged more
    The Department of justice generally agreed with          Bureau efforts to determine sizes of institutions and
 our findings and recommendations and noted a serie s        further exploration of the justice Departments state d
 of actions the Administration would take or wa s            need for a statistical information center to bette r
 taking to implement them . Generally, the States an d       project criminal justice system workloads .
 localities agreed with our conclusions and recom-               The Department said it agreed with a number o f
 mendations relating to the need to improve probatio n       our recommendations, and they either had been or
 systems . (GGD-76-87, \lay 27, 1976 .)                      would be incorporated in the Bureau ' s planning ac-
                                                              tivities . (GGD-76-10, Apr . 27, 1976. )
Testimony
                                                             Behavior Modification
  In February 1976, we testified before the Subcom-
mittee on Crime, House Committee on the judiciary,              We reported to Representative Ralph H . Metcalfe
on what we viewed as the progress and problems of th e       on the Bureau 's use of behavior modification pro-
Law Enforcement Assistance Administration pro -              grams—control and rehabilitative effort, special
gram . At the time of our testimony, the Subcommitte e       treatment and rehabilitative training—to get difficult-
was beginning to deliberate whether to extend tha t          to-manage and dangerous offenders out of'ong-ter m
program. We suggested revising the program t o               segregation. Under these programs, such inmate s
emphasize systematic research and evaluation of what         were isolated from other prisoners and treated wit h
works to fight crime .                                       behavior modification techniques and provided coun-
                                                             seling, work, education, recreation, and other activi-
Audit Work in Proces s                                       ties . We reported that the Bureau needed to determin e
   Reviews underway at September 30, 1976, at th e           how long-term segregation was being conducte d
 L-v Enforcement Assistance Administration include d         throughout the Federal prison system, assess th e
 assessments of the impact of learning problems o n          characteristics of the inmates involv ed, and use this
juvenile delinquency and the agency's progress i n           information to evaluate existing policy and oversigh t
 implementing recommendations of our previous                practices . The Department of justice generall y
 reports.                                                     agreed with our recommendations . (GGD-75-73 ,
                                                             Aug . 5, 1975 .)
Bureau of Prison s                                           Audit Work in Process
  As of June 30, 1976, the Bureau of Prisons had abou t         Work in process at September 30, 1976, included a n
8,000 employees and a $203 million annual budget t o         audit of programs for youthful offenders in Federa l
provide care, custody, and correction for about 25,000       prisons .

                                                                                                                   187
 GENERAL GOVERNMENT OPERATION S

  Department of the Treasur y                               periodic follmwup reviews of adherence to deposi t
                                                            requirements . (GGD-75-112, Aug . 1, 1975 .)
    The Treasury Department formulates, recommends,          Proposed Changes in Estate Taxation
  and administers financial, tax, and fiscal policies ;
 serves as financial agent for the U .S . Government ;          Gifts determined by IRS to have been made t o
 enforces tax, customs, and currency laws ; and manu-        avoid estate taxes upon death result, in some cases, i n
 factures coins and currency. The Department has            tax benefits unintended by the law and in others, i n
 about 112,000 employees, and its projected expendi-         tax burdens . We recommended that the Congres s
 tures for fiscal year 1976 were about $49 billion, o f     amend that part of the Internal Revenue Code dealin g
 which $37 .7 billion was for interest on the public debt   with gifts made by decedents and that, meanwhile ,
 and $6 .3 billion was for revenue sharing payments t o     the Commissioner of Internal Revenue emphasize to
 State and local governments .                              e-aminers of estate tax returns that present la w
                                                            requires gift tax returns for all gifts made in con-
                                                            templation of a person's death .
 Internal Revenue Servic e
                                                               We further reported to the joint Committee o n
    The Internal Revenue Service administers revenu e        Internal Revenue Taxation that the Internal Revenu e
 laws, except those relating to alcohol, tobacco, fire -     Code permits an executor to value an estate, for tax
        and explosives . During 1976, IRS spent abou t      purposes, either as of the date of death or as of 6
 $1 .7 billion to help taxpayers in meeting their filin g   months later . Use of the latter date is called the al-
 obligations, audit tax returns, collect taxes, and         ternate valuation method . When estate property
 make refunds to taxpayers, among other things . I t        increases in value after death, use of th ;s method ca n
 collected revenues of about $302 billion in fiscal year    produce tax benefits unintended by law . Therefore, w e
 1976 and made refunds of about $34 billion .
                                                            recommended that the Congress amend the Code to
   Our review efforts at IRS were limited because i t       provide estate tax relief to beneficiaries only when th e
refused to grant us independent access to records w e       value of estate property declines . Public Law 94-455 ,
needed to effectively review its operations and
                                                            dated October 4 1 1976, made legislative changes t o
activities. We made a number of reviews at the
                                                            correct the problems identified in our report. (GGD -
request of, and as agents of, the joint Committee o n
                                                            76-1, Oct. 20, 1975. )
Internal Revenue Taxation . The Tax Reform Ac t
of 1976, however, provides us independent access t o
                                                            No Apparent Need To Regulate Commercial
appropriate IRS records . Accordingly, as of January        Preparers of Income Tax Return s
1977, we will be able to expand our work .
                                                              Well-publicized IRS actions against commercial
Need To Revise Deposit System on Alcoho l                   preparers engaged in fraud and misconduct led man y
and Tobacco Excise Tax Returns                              people to presume that commercial preparers repre-
   We reported to the joint Committee on Internal           sented a special problem in the tax return prepare r
Revenue Taxation that IRS district offices were no t        industry . We reported to the joint Committee o n
depositing alcohol and tobacco excise tax remit-            Internal Revenue Taxation that commercial pre-
tances daily in banks . Because of this laxness, th e       parers, as a group, are not a special problem.
Federal Government was being deprived of the interes t        IRS needs the authority to deal individually wit h
which would have accrued if the funds had bee n
                                                             any preparers who engage in fraud or other mis-
deposited promptly. Accrued interest lost to th e
                                                            conduct . Legislative provisions considered by th e
Federal Government on remittances from just six
                                                            House Committee on Ways and Means would permi t
companies in the San Francisco district during th e
first 9 months of 1974 amounted to about $64,600 .           IRS to identify and penalize such preparers . These
   We brought the depositing delays to the attentio n       provisions would (1) require preparers to submi t
of IRS officials . As a result, IRS internal auditors       certain information returns to IRS, (2) establish civi l
reviewed the deposit practices at 14 other distric t        penalties for preparer misconduct, and (3) provide fo r
offices and found that 7 were deficient . Satisfactory      injunctions against preparers who engage in specifi c
corrective action was taken, and IRS has instituted         categories of misconduct . (GGD-76-8, Dec . 8, 1975 .)

188
                                                                              GENERAL GOVERNMENT OPERATION S
Occupational Taxes on the Alcoho l                              4Ve reported to the Joint Committee on Interna l
Industry Should Be Repealed
                                                             Revenue Taxation that many taxpayers have a
   We rep orted to the joint Committee on Internal           pressing need for complete return preparation—a
 Revenue Taxation that alcohol-related occupational          service the agency does not promote . However, a
 taxes arc an insignificant revenue source and in-           major venture by the agency into the complete retur n
 herently inefficient to collect because they (1) involve    preparation field seems unjustified, since a large ta x
 the direct collection of small amounts from a relativel y   industry provides this service. We made recommenda-
large number of taxpayers, (2) are overshadowed by           tions and proposals to the Commissioner of Interna l
Federal excise taxes on alcoholic beverages, whic h          Revenue, including a proposal to subsidize taxpayers '
produce much more revenue and are collected more             use of commercial and professional preparers by mean s
efficiently, and (3) are paralleled by State and local       of a tax credit as one method of alleviating the tax-
license fees.                                                payers' need for assistance . (GGD-76-49, Apr. 1 ,
  We recommended that the Congress repeal al l                1976. )
occupational taxes in sections 5081 through 5148 o f
                                                             Audit of Fiduciary Income Tax Return s
the Internal Revenue Code and amend the Federal
Alcohol Administration Act to clarify Bureau o f                We reported to the joint Committee on Interna l
Alcohol, Tobacco, and Firearms authority to investi-         Revenue Taxation that IRS increased its audi t
gate possible consumer and trade violations of the ac t      effort of fiduciary returns about 156 percent fro m
before a permit hearing . (GGD-75-111, Jan . 16,             1974 to 1975 . Problems noted were agents' lack o f
1976. )                                                      training and experience in dealing with fiduciary
                                                             returns, an ineffective system for selecting returns fo r
Assistance to Taxpayers in Filin g                           examination, and inadequate allocation of audi t
Federal Income Tax Return s                                  resources in the fiduciary tax enforcement area .
                                                                During the last half of fiscal year 1974, the Commis-
   IRS directly assisted taxpayers on about 41 million
occasions during fiscal year 1975 . This assistance—         sioner of Internal Revenue approved a plan to measur e
                                                             taxpayer compliance on fiduciary returns . This pro -
consisting mainly of handing out forms, answerin g
                                                             gram should alleviate the selection and allocatio n
questions, and helping to complete returns—was pro-          problems. A training course developed and initiated
vided over a toll-free telephone system ; at IRS offices ;   by IRS late in 1974 should provide a basis for mor e
and, during the filing period, at temporary offices ,        effective examination of fiduciary returns. (GGD-76-
shopping centers, and elsewhere . We interviewe d            33, Apr. 16, 1976. )
taxpayers visiting service locations in 1974 and foun d
that almost all were satisfied with the help received .      Use of Jeopardy and Termination Assessment s
   IRS also provides indirect assistance to taxpayer s          We reported to the joint Committee on Interna l
through its education and politic information pro-           Revenue Taxation that our review of a limited numbe r
grams. The agency overstates the impact of thes e            of jeopardy assessments made under section 686 2
programs on taxpayers .                                      of the Internal Revenue Code indicated that th e
                                                             assessments were justified. However, we are disturbe d
  By interviewing lower income taxpayers, the foun d
                                                             that, under section 6862 of the Internal Revenue Code ,
that ;
                                                             IRS may assess a tax and seize and sell a taxpayer's
  —Only- 4 percent sought Internal Revenue Servic e          property before the taxpayer can contest his liabilit y
   help during the 1974 filing period .
                                                             in court .
  —Eighty-six percent of the taxpayer helped by th e
                                                                We recommended that the Congress amend th e
   agency generally were satisfied with the hel p
   received .                                                Internal Revenue Code to give the taxpayer th e
  —About 58 percent of the taxpayers needed ful l            right to a judicial review and preclude IRS from
   tax return preparation . However, less than 3             selling seized property under section 6862 until suc h
   percent had returns prepared by the Interna l             a review is completed. The recommended change s
   Revenue Service, although 43 percent paid for             were made in Public Law 94-455, dated October 4 ,
   this service .                                            1976. (GGD-76-14, July 16, 1976 .)

                                                                                                                  189
GENERAL GOVERNMENT OPERATION S

Audit Work in Process                                        —change the procedure ao that each tribe or villag e
   As agents of th^ Joint Committee on Interna l              within a State is allocated a portion of revenu e
Revenue Taxation, on September 30, 1976, we wer e             sharing funds available for local government s
reviewing control over access to tax return informa-          that is based on the ratio of the tribe or villag e
tion, administration of taxes on self-employed in -           population to the State population.
come, extent of nonfiling of employment tax returns          The Bureau of Indian Affairs and the Office o f
by exempt organizations, Federal/State exchange o f        Revenue Sharing generally disagreed with our recom-
tax information, use of the Service ' s information        mendations, and these changes were not made i n
document matching program, 100-percent penalty             Public Law 9---188 . (GGD-76-64, \lay 27, 1976 .)
assessment, and the practice of paying for informatio n
from informers and others .                                Nondiscrimination Provision of th e
                                                           Revenue Sharing Ac t

                                                             The Revenue Sharing Act prohibits discrimina