Appendix to the Comptroller General's Annual Report, 1971

Published by the Government Accountability Office on 1971-01-01.

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

             APPENDIX T

                          O ~ NNU REPORT F H E



     k   n   ed       s ci t


    Kr Me hy the   1 Aw"mmon US . ( 0 0 m n w nt Printing Me ,
                    D .C .    Price ~2


               SECT!ON I .—Compilation of Findings and Recommendations fo r
                    Improving Government Operation s
                  Con tents                                                                         2
                  Coi i i p i I at i w i                                                            9
                  Index hy Govc1-11liwnt                                                          K)
                  Index lj~ fullf tiolial ( 1"issificattion   tit flit   Fe durbl i . . id-,ut   14 2

               SECTION IL—Wancial Savings Attributable to the Work of th o
                  General Accounting Office                                                      14 1

                  ( :011c( will, alit i othur mv :tsm ahle "tvlmes                               IA 4
                  I )ctaik of rnLcr M, a ' 1[1ahlc s~J"i ;lus                                    14 5
                  Additunw! hianchi v"Aw Pm hAv w noQ HmixuAlk .                                 H9
                  Savin ;zs and bell(:Ms to 'JOICI-6,	                                           15 7

               SECTION III .—Audit Reports Issued During the Year                                15 9

               SECTION IV .—Approvals of Agency Accounting Principles an d
                   Standards, and Systems Designs                                                189
    _                             _           ~;

                                               f   ~



j       -.. .~   ~ ._ ~	
                           ----       -   -
                                                                                                            SECTION           1


        'I'his section of the -Appendix contains a compila-        examinations of the manner in achich the ( ;o%ernmen t
     lion of General Accountin -Office findings and recom-         aoem ies are di char_+,ing their financial responsibilities .
    mendations for improving Government operations re-                The compilation summarlies the carrcctic=t actions           _
    lating for the most pen t to fiscal year 1971 .                taken by the agencies on the recommendations . Get -
        The compilation is organized >o that the `indings          taro of these actions iucolve ch:anses made in policies
     and recornmendatais arc identified with and grouped           and pr ceditrte _hrouth the issuance of revised (file( , -
     genet-ally on the basis of functional areas of the Gov-       tides and instructions . The effectiveness of these ac -
    ernments operations i>ga-ciless of the agencies in-            tions is dependent on the manner in which the di -
    volved . 1kcause findings developed in one agency fre-         rectiees and instructions are. implemented and cn th e
     quently have application is others, this arrange,nen t
                                                                   adequacy of the supervision and internal reviews o f
     facilitates consideration of all findin .gs in each rune-
                                                                   the operations . For this a ason, to the extent deeme d
     tional area in all agencies .
         Tate purpose of ti -compilation is to provide aeon-       appropriate. it is the police of the General Accountin g
     venient_ summary -showing, by functional areas, the           Office to review and evaluate the efrecti :eness of cor -
     opportunities for improved operations which have              receive actions taken b% the agencies .
     been identified) bt the General
                                Genera l Accounting Office in         The back of Section I, beginning on psige I .IQ, con
                out its audit responsi bilities, These responsi-   tains indexes of i I 1 agencies to which the findin,s
                                                                                                                       1 an d

     bilitics are -derived from the Budget and Accounting          reconunendations relate and ; 2? the applicable Fed -
     act, 1921, and other lags which require independent           etal budget functional classifications .

                            ONTENTSSS_CTION                                      4

                                                                                 C dIkIAN DOMESTIC PROGRAM S
                                                                                    Agricultural sominodity programs                                                               Pas
                                                                             -   -     Iced gain program payinen ;s not contributing to control of production                       - q
                                                                                       Rice export subsidy rates	
                                                                                    - -li hnat price-support loan rates      ..                     .. .                                  It

                                                                                    Air safety
            -                                                                          Surveillaner over production of critical part : for civil aircraft	                             10
                                                                                       Airport safe,, inspection                                    . . . .                            1 1
                                                                                    Atomic energ y
                                    _                                                  Price increase and change in criteria for uranitnn enrichment services .      -                 1 l
                                                                                       Managing high-levcl radioac?ive wastes
                                                                                    Goal mine health and safety
                                                                                       Implementation of the Federal Coal \Sine Health and Safety act of 1669                . . .     12
                                                                                    Economic development assistance
                                                                                       Basis for providing Federal assistance to econontiealh distressed areas       . . .              I :1
                                                                                    Economic opportunity program s
                                                                                       Progress being'tnade and difficulties being encountered by credit anions saving lost• -
    .                                                        -                            income - persons	                                                                             1 :3
                                                                                        ldmuii'tration of it neighborhood health ,ctvsccs pt tgratu tNcw Pori; City .f . . . .          14
                                                                                    Federal aid to educatio n
                                                                     -                 Policies and procedures for approving_ grants under th.• cinergcncv school assistanc e
                                                                                          program	                                                                                      15
                                                                                        -administration of Federal aid to educationally depri ved children	                             16
                                                                                       Assessment of the Te acher Corp, progtPinl in South Florida	                                     Ili
            -                                -                           -             Assessment of the Tea h,r Corps program on the Navajo and I lope Indian reservations _          t7        -
                                                                                        1s,essrreut of the Teacher Corp'_ program in XVstern North Carolina	                           17
                                                                                       Use of Teacher Ciorp uembers to supplant focal teacher ;	
                                                                                        administration of the leacher Corps progra m
                                                                                       Policies and procedure ; for administering study acid evacuation contracts . . .                 18
                                                                                       Student loan insurance fund 	                                                                   19
                                                                                    Grants to States for public assistanc e
                                                                                       Approval of and payuteut for trussing home care                                                 I,
                                                                                       Problems in providing nursing homc_ care         . .                                             I ,_ ;
                                -                        -                         - Payments for physician and .l'-t iv service- to nursing horn, patient ;            . . . ._       20
        -                                                                            - Problems in providing skilled nursing horn, cart	                                               20
                                                                                        Practices relating to r ur>ing honRt oper.uions                                                20
                    -                                                                  Administration of the Nfedicaid profit-ant by fiscal acen t
                                                                                        Inadcqua[c controls over Medicaid dray t;roi;r+m                                               22
                                                 -                                     Excessive ris e of physician services . . . .
                _                                                                      Eligibility under Medicaid	                                                                     23
                                                                                       Overpayments for ch ili care services	                                     _	                    23
                                                                                        ldntn;istration of certain projects for older Antcricars                .                      23
                                        -                        -                      Simplified method for determit ruff eligibility for public assistance 	                         23
                                                                                     Highway program s
                                                                                       Questionable basis for approving certain interstate kuxiIiary lour, segments                    211
                                                                                        %tanagement of the 1 ighwa - saf- v res area prod_ram .                                         2.1
                                        --                                             Federal participation or costs incurred by State ; fur highwav landscaping	                      26
                                                                                        Exceriutental-emergency communication sy,tenn 	                                                26
                            -                        -                           -      Limited progress of tile Appalachian highway program	                                           26 :
                                                                                     Information gathering and dissemination activitie s
                                                                                        Operation of the medical literature analv,is and retrieval slstvui 	                           27
                                                                                     Land management and natural resource s
                                                                                        Restrictions on the use of motorv :•d equipment in, v ilderne, ind simil a arras                27
                                                                                        Allocation of fluids for coustructiou of fo--e r roads and trails                  . . .       2$ -
                                                                                     Loan program s
                                                                                        Eligibilityof loan applicants	                                                                  28
                                                                                        Use of independent : u'iinys I clan-t	                                                          28
                                                                                        Advancing grant and loan funds	                                                                 29


                                                                                                     CONTENTS—SECTIO N

                                CIVILIAN DOMESTIC PROGRAMS--Continued
                    Loan programs—Continued                                                                                    p ag _
                         Determinii e ,warn,-al t asibi!itw of water and suer s . „ .-,                                           2”
                     -. :asstriesg -fFnu .eialtett-,bi!itvofloanstograrnigtssa~iations                 -                          Sif          -
                        -Rccords :to -t    nlai ;:taii :ed b, b .rrow,is	                                                         31 1
                         Interest credit to rural housing borio,wcrs 	
                         Instructions not adliered t o
                    Low-income housing programs
                         Occupancy of federally subsidized housigg
                         Yroblea;s in rehabilitating -housin, ~ to Provide h owes I 'll low-it c onw families
                         Accelerating, constmctinn and reducing costs of Io% -rent housirte         . . .                         31
                         EValueting economic feasibility of insuring toans at below- .nat44ct interest rat's                      ..?
                    Manpower training
                          .Administration of the : Job Upp r nnitie ss in the Busin -s Sector €JOItSj progra m
                          E'ff'ectiveness of the special i .npact program in f .os lttgele< in mccuun, the . goad of pro -
    .        --              vidingjobsfor the disadvantaged	                                                                     34
                          Lffcctiveriess of on-the .-job trait ing in --Appalachian f g o ss,,	                                   14
                  -    - Administration of training activities at a tnanpower t noin, :kills center . . . -                       35
                          Administration of on-the-job training contracts	                                                        It ,
                          Administration of nrtnpott-er training activities	                                                      ai
                         :Operation of the cooperative area manpower planning sssten-,                                            . . .,
                          Training under the GoN ernment . Employees 'training Act . . .                                           '.i 7
                     Mass transportatio n
                -         Determining the :ainount of grants	                                                                      al
                     Maternal and child health program s
                          Administration of certain research grant progran .s	                                                     38
                     Medicare program
            -Payments for services o f supervisonv and teachiol, physicians	                                     -                 :f t
                     - Delays in cost settlements for health services furnished under Medicate _ .                  _              N
                          Consolidation of claims processing activities	                                                            i9
                          17etenivnin . reasonablen ess of phr tcna-' charges     	                                               -1 0
                     Model cities progra m
                           Advances of funds 	                                                      -                             40.
                                  Open-space land prograin
                                      Leasing of land	                                                                             40
                                  Urban renewal program
                                     allocation of funds to meet national housing goals                                            Cpl

                                     _Administration of workable program requirements                                              }1
                                  Wage rate determination s
                                      Establishing winhoum wage rates under the Dane-Bacon Act for federally finance d
                                        housing projects	                                                                          12
                                  Water pollution contro l
                                      Operation and inaintenance of tuinit ipcd waste nratntent plants                             -1 2
                                      Controlling, industrial water pollution    _                                                  1'
                                  Water resources development progra m
                                  °- Evaluating the need for certain power tr-nsmi sion facilities 	                                14
                                   - .Guidance for relocating roads and bridges at water ncsources projects . .                    4-#
                                      U niecessary replacement of roads mid bridges at water tesomces proiects                     45              -
                                      Consideration -of-project benehG as well as costs in ro!erating toads and bridges at a
                                         water resources project	                                                                   15
                                      Comparability of design alternatives for Federal water resout s projects                     ;t i
                                      Contributions for non-Federal water resources proiects         -                 . . .       46      -

                                 INTERNATIONAL ACTIVITIE S

                                   Foreign assistance program s
                                     Administration of the military assistance training prograu ;                                  48
                                     U,S . relief assistance to Nigeria	                                                           50
                                     t' S, aid .. to the economic nnification of Central America 	                                 5o
                                     Developmental assistance programs in Latin :America                                           51
                                     Economic and military aid to Honduras 	                                                       51
                                     1 T .S . assistance in1,iberia	                                                               52


                                                                         INTERNATIONAL ACTIVITIES--Continue d

                                                                              Fore i gn assistance programs--Continued                                                                   E' ~,g e
                                                                                P-ugee relief . program in Lao >
                                                             -                  Civilian health and war casualty program in Laos                                 _                           54                   -
                                                                              International organizations and institution s
                     -                   -   -       -                           Purchase commitment made to an n ;tcrnationai organiz:nion prior to availability of
                                                         :                       - - funds	                                                                                    -             55
                                                                               ` Itidepe ;idcnt revie%v aiid evaluation of ir_•- . nrational Ore . taizations and ii .stimtion               n5
                                                                                 U .S . participation in the International Labor Organization 	                                              _i 6
                                                                                Management of ti .S. participation in international oigoniiations                                               7
                                                                              U .S . balance-of-payments positio n
                                                                                 Economic advantages of using American-made t rucks abroad                                                   57
                                                                                 Purchase of dairy and bakery piotiuc is for U .S . Fot'ces . .                       -                      it}
                 -                                                       - - Balance-of+payments benefits achieved through all ircrca~cd ac'mcultural barter pro -
                                                                           -         Grim . . . .                         . . .                   -	                                         :iii
                                                 -                           - Export expansion proposals                                                                                     54
                                                                                 Economic advantages of procuring U .S . peanuts in lien of toreien peatttns -                     - -        5' 1
                                                     -                           Potent r: say .ags in shipping costs to Turkey-	                                                            J4l
                                 -                                               Consolidation of laundry facilities abroad               -                             -                    60
                                                                                 Eeononiie adcauta g_es of usinc American ingredients to sa[ish• milk requircnsnts i n
                                                                                     Western Europe.                                                                             . . .       60
                                                                     -       International activitlL--s—genera l
                                                                                Nits .ing Government-o,vned materials in l'ientam	                  -                                           l
                                                                               :Control over local currency a :ade atailable to tic Republic of Vietnam,                                     ti t
                                                             -                  Overseas inilitary construction contracts 	                                                                   G2
                                     -           -                              Financial : administration of the consular services program               -                                   e,2
     -                                                                          Contact policies and procedures of the Agency for International Dcaclopmtent ,

                                                                                Opportunity to increase export sales of nonfat dry milk                                                         i
                                                                                Use or L' .S .-Owlied excess foreign currency in India                                       - - - -          (*l     -
                                                                                Potential displacement of U .S . a_.,t cul~urd exports                                                        W,
         -                                               -                    - Pliasedoa•n of U .S . military artivities in Vietnam 	                                                        no

                                                                           PROCUREMEN T
                                                                             Contract administratio n
                                                                               Contractors' claims based on Govtemnient-cursed deLiv,                                                          t kt

                             -                                               - Plant equipment acquired by eontractoes fin- the account of tit. 1. - vernureut                                 69
                                                                               Applieaciou . of "should cost" . concepts in r . -icw .a of contractors- -f a -iuo~s          - -               :i 9
                                                                               Processing of-engincerinq change proposal;                                                                      lit
                                                                               Contractors' acceptance of recommendations for                mp ,yin-e their p-momsu
                                                                                 systems	                                                                           -    -                     71 l           -
                                                                               Revision of certain paccitlQ spectiicatiolts                  -                                                 71
             -                                                                 Competition in procn'ement of commercial equipment -                      -                                     -1 1
                                                                               Evaluation of cost-plus-award-fee-tvpe contract perfot ta"ncr                                                    71
                                                                               Target costs under incentive contracts . . . .
                                                                             Contracting policies and practice s                                                                                _.
                                                                               Implementation of the Truth-in-Negotiations let . . . .                          -                                     -
                                                                               Waivers of preaward audits of contractors ' nonconipctitite prior propo"'l ;           . . .                      ._
                                                                               Defense indusiry profit shtdv                                                                                   73
                                                                               Awarding negotiated services contacts                                                                           7 l
                                                                               Improper_practices	                                                                                             74
                                                                     -         Coi ;traetingtot Metroliner and Turbo-Trtin projects                                                            7 t
                                                                               Contract award practic e s and administration            :                             . .. -                   'b
                                                                               Acquisition and utilization of-T-3C jet anct .,ti	                                 -   -                        75
                                                                              Facilities, construction, and leasing
                                     -                                            -Adnvnistrauun-of construction contract provisions 	                          -                               7;,
                                                                                  Department ef . Defense reporting to the Congress on nonadvert5ed militar y consu'uc -
                                                                 -                  lion contract aviards	                                                                                      76        i
                                                                                  Prob,erns in developing the Fast Flux Test Facility                               - .                         76
                                                                               ` .-Building tinder construction different than the one described to tile Congress .                             77            _

                                                                                                        CONTENTS--SECTION 1

                                  PROCUREFA ENT —Contin• io d

                                    Procurement procedures and practices                                                                                  Pa;; e
                                      Potential -savings by replscinK Gcvertrmcnc-a:uwd ;edanc each     rear .                -                              77
                                  - - Carcer progra€n for procurement personne ;                                                  -
                                      Emergency procurement . . . .                                       -                                                            -
                                      Small pu rchases iDepart ;cent of Deferst
                                      Smallputchascs Dr -rict of Columbia C _cernnien [
        -         -                   Lee of Governmen[ sources-of sup,,ly .                   -              -           -                                  [Su
                                      Lease versus Govcrnuter,t ownership of n aii-handltr v i ailr s

                                  RESEARCH AND DEVELOPMEN T

                                    Development of major weapon system s
                                      Selected a ajor weapon sys ;lull	                                  -     -     -                                       , i
                                      Production before completion of derelopnient and !esumg                      -                                          8 ..'.
                                      Krone antisubmarine helicopters .                                  --        -                                         83
                                      Deep sttbt tergence rescue vehicle	
                                      Antisubmarine warfare directional low-h quencs u h k and recording crstem                       .       .       .       }
                                      Surface ship sonar systeu :                    -                                                                       8i
                                      Tactical cchicles	                                                                                                     BJ
                                    Research and development-genera l
                                      Basic research programs	                                                                                               87
                              -       Tours of duty for managers of major res=:arch and dcvelopinem prcjerts -                                               87                                -
                                      Procurement of itrunitions under development 	                        -                                                88
                                      Incentive provision in subcontnrets for development of major weapon _nb estcir                  .               -      81    i

                                      Foreign affairs aspects of Federal research .                                                                          ;i 9
                                       dioutistration of contr acts and era*its for cancer research .              -                                         !) U
    -       - -           -           Construction and cony lion of oceanographic resc:neh %escls _                -                          -              9 l
                                      Coordination of Federal support of research vessel operation;                -
                                      Title to izsearcu %esscls	
                                      Visitors' Ilse of mesc op vs at ncc Nmioaal Radio .lstronuun- C~h=ct'ruorv .                                             i3
                                                                                                                       _-                 _
                                      Cost . sharing in fcda r Fly financ - t c_rmrch . . . .

                                      Funding research projects	                                            - - -        -                                   y5
                                      Distribution of indirect costs, 	                                                                                      !t 5


                                    Accounting and fiscal matters
                                      I inancing and --acco:iri ting l:olicies . .
                                      Activities at the Regional
                                                         -           Finance and Dais Processnt}! Center, Park, France -                          -          97
                                      Cost accounting for main tell a11c, operation	                                                                         97
                                      Status, progress and probicius in Federal r ncy accounting                                                             98
                                      Controlling and accounting for sight drafts                       -    :                                               98
            -         -               Derosit offunds in Federal Reserve banks                             -                                                 98
                                      Internal control procedures 	                   -                        -                                             t1 3
                                      Unauthorized retention of money accumulated for earned leaee of transferre d
                                         employees	                                                                                                           99
                                       ,ccou tings" .stern deficiencies Farmers Fionre Adntinistration7                                                       99
                                      Acc - _ .t-ag sysicm deficiencies Jimnigration and \aturalizat,on Service'                                  -           99                   -
                                      Accounting system deficiencies U .S . Coast Guard';             -        -                                            100
                                      Accounting system deficiencies (Urban Ma_,s Transportation Administration)                                  -         111 0
                                      Accounting sy'stcni deficiencies 'Atomic Energy Commission) 	                                                         100                _
                                      Budget and cost irnproveraents . .                                         .	                                         100                            -
                                    Management information system s
                                     Adequacy of data base, reports, and procedure=_                    --            -                                     i of                       -
                                    Management practices-genera l
                                     Increased screening of registrants with medical conditions at local draft boards             .       .       .         101            -
                                     Juror selection and utilization                                                                                        10 1
                                     Policy covering locations for holding court                                                                            10 2
                                     Policy for improving court administration 	                                                                            10 2
                                     Use . of . electronic traffic counters .    . . .             .	                                                       103
                                      Ilse of rnanpotser and inaenines at mechanized post offices	                                                          103

                         CONTENTS-SECTION i
                                                             INTERNAL MANAGEMENT PRACTICES AND RELATED CONTROLS—Continued
                                                               Management practices--general—Continued                                                     PuG,
                                                                 Use of value engineering studies in vessel construction 	                                  103
                                                                 Government. self-insurance, and performance and payment bonds	                             104
             -                                                   Administration of grants for construction of oceanographic shore facilities 	              10 4
                                                                 Improvements needed . in evaluating hospital construction and modernization desig n
                                             -       -             requirements	                                                                            10 5
                                 _                               Improvements needed in management control over the identification and reporting of                    -
                                                                   excess land	                                                                             106
                                                                 Preservice physical examinations of enlisted personnel	                                    106

                                                             PAY, ALLOWANCES, AND EMPLOYEE BENEFITS
                                                               Alcoholism program for Federal civilian employee s
         -           -                                   -       Establishment of program	                                                                  10 7
                                                               Federal employees' health insuranc e
                                                                 Administration of the Government-wide Service Benefit Plan	                                10 7
                 _                                             Government-furnished housin g
                                                                 Rental rates	                                                                              108
                                                               Pay, allowances, and benefits—genera l
                                                                 kfaintenance of attendance and leave records	                                              10 9
                                                                 Overtime claims	                                                                           109
                                                                 Nfaintenance of attendance and leave records 	                              -              10 4
                                                                 Allowances and differentials paid to civilian employees overseas 	                         10 9
                                                                 Employee entitlement to pay and leave 	                                                    11 0
                                                                 Accounting for military leave	                                                             11 0
                                                                 Full-time graduate education programs for military officers 	                              11 1
                                                                 Management at the U .S . Armed Forces Institute	                                           11 2
                                                                 Conversion of National Guard technician positions to Federal positions 	                   11 2

                                                             AUTOMATIC DATA PROCESSING SYSTEM S
                                     _                           -E v aluation of alternative means for acquiring automatic data processing equipment       11 4
                                                                  'Multiyear leasing and Government-wide purchasing of ADP equipment 	                      11 4
                                                                  Acquisition and use of software products for automatic data processing systems in th e
                                                                    Federal Government	                                                                     11 4
                                                                 Redistribution of the Government's ADP equipment 	                                         II a
                                                                 Improvement in management controls over the scientific use of computers                    11 6
                             -                                   Automated system for insurance programs 	                                                  11 6
                                                                 Case studies of auditing in a computer-based systems environment      -                    11 6

                                                             PROPERTY MANAGEMENT
                                                               Centre! over propert y
                                                                 Government-owned property used by a contractor 	                                           11 8
                                                                 Improved accounting control over equipment 	                                               11 8
                                                                 Accuracy of inventory records	                                                             11 4
                                         -                       Projections of future requirements for major items of military equipment	                  11 9
                                                 -               Low-cost, low-usage items in supply sysrctts 	                                             120
                                                                 Duplicate stocks	                                                                          120
                                                                 Laboratory equipment	                                                                      12 1
                                                               Construction, maintenance, repair, and overhau l
                                                                 Nfaintenance and repair of office machines	                                                12 1
                                                                 Nfaintenance of mail-handling equipment	                                                   12 2
                                                                 Renair/replacement policies for mail-handling equipment	                                   122
                                                                 Maintenance of helicopters	                                                                l22
     -                                                           Nfaintenance of conuneec_ial vehicles overseas	                                            123            -
                                                                 Rebuilding of tires	                                                                       123
                                                                 Spectrometric oil analysis in maintenance of engines	                                      124


                                                                                                                 CONTENTS—SECTION 1
                                        PROPERTY MANAGEMENT—Continue d
                                          Utilization and disposal of property                                                                 Pag e
                                             Avoiding accumulation of excess spare parts 	                                                      12 .1
                                             Use and redistribution of excess materiel in the Pacific area 	                                    12
                                             Use and redistribution of excess materiel in Europe	                                               1 25
        -                   -              - -Reclamation of usable parts from excess aircraft 	                                                12 6
                                             Excess inventor'^_s of industrial materials 	                                                      12 6

                                        OTHER GOVERNMENT ACTIVITIE S
                                          Transportatio n
                                             Centralized control of overseas air passenger transportation	                                     128
                                            :Reduced . paperwork in procuring bus transportation 	                                             12 8
            -                   -            Unused cargo space -on aircraft controlled by the militar, ,	                                     12 8
                                             Airlifting of military service newspapers	                                                        12 9
                                             Chartering practices of the :Military Sealift Command	                                            129
                                             Consolidation of household goods activities in Hai+'aii 	                                         129
                                         - - Air parcel post shipments of supplies	                    -                                       130
                    -                        Use of air : taxi service to transport mail 	                                                      13 0
                                          Government claim s
                                             Progress and problems in implementing the Federal Claims Collection Act of 1966                    13 1
                                             Improvements needed in guidelines and procedures 	                                                 13 1
                                             Collecting claims payable to the Government 	                                                      13 2
                                             Settling debt and payment claims . . .                . . . . .                                    13 2
                                           Manpower utilizatio n
                                               Ceilings on eniploynient of civilian personnel	                                                  13 3
                                               Use of enlisted personnel 	                                                                      13 3
                                               Readiness of Naval Air Reserve units	                                                            13 4
                                             :Employment of consultants and experts . . , .                                                     1; 4
    -                                       -. Transfer of regional activities to local post offices 	                                          13 5
                                           Use rcharges                                                                                          -
                                             Assessment and collection of postage for second-class mail 	                                        13 5
            _                                Unrecovered postage and handling costs for processing mail with insufficient postage          .     136
                                             Establishment of user charges for special services	                                                 136
                                             Fecs charged for special benefits 	                                                                 136
                                             Rental charges for occupying space in Government buildings 	                                        13 7
                                           Miscellaneou s
                -       -       -   -        Collection of supplemental duties on imported merchandise 	                                   .     13 7
                                             Federal assistance for presidential transitions 	                                             .     13 7
                                             Management and operation of communications systems 	                                          .     138

                                         INDEX BY GOVERNMENT AGENCY 	                                                                            14( )

                                         INDEX BY FUNCTIONAL CLASSIFICATION OF THE FEDERAL BUDGET . . _ . _ _                                    142

                                        - :PHOTOGRAPHY CREDITS             -

                                              Cleveland Local Educational Agency, p . 16 : Department ,,f Transp,,rtation, State of Florida ,
                                         1) . 25 ; U .S. Artily ; pp . 48, 85 : 86, and 121 : Agency for International. Development, pp . 53 and 54:
                                          U .S . \an }, p . 83 : and Woods Hole, p . 105 .

                                                                                                           SECTION      1

A   ricultur°al   Commodity Program s                          In response to GAO's rerormrc'nlations, ASCS off =i-
                                                             cials issued iv ula6ws to 'Wore clearly dAne fain i
   1 . Feed g ain Progrann Payments Not Contribut-           IIU'lOM for the diversion piorninins and to stren=gthe n
ing to Control of Production .--Mi 14 counties in six        adnrinistrativc controls at the State and nationa l
States, substantial pnownu had been made under th e          levels . These regulations should provide assurance tha t
feed grain program administered by the _ g6cuitum l          nonagricultural land is cxeiuclecl from the feed gai n
Stabilization and Conservation Serv ice _1SCS, De-           program and that count co'nnrittees are maintainin g
partment of _agriculture, for diverting from produc-         adequate surveillance of land to prmigjd • identif y
tion land being used for other than agricultura l            those track shifting fro'n ay6mhural to noiuWrind-
purposes= Most of the 14 counties Nvere undergoing tar -     twal uses . Report to the Cron,_ress . B-11482-1, jan . 12 .
banization, a change which could liken , result in pro -     197 1
gram enrollment of nonagricultural land .
   Questionable diversion payineuts totalina abou t              2 . Rice Export Subsidy Rates .---CMD propose d
$618,000 were made for the 1969 crop j-ear to 93 8           that the Secretary of As;ricuhuw take appropriate ac-
farmowners or operators in the 14 counties, Mo re -          tion to obtain, from Federal sources, information o n
s ieNved in detail payments of about $189,000 made to        domestic rite production . saley and hwi atones, along :
215 individuals or organizations born that ;roue . O f       kith more precise world market price data, for use i n
the 215 pa}-menu, 136 totaling about $116 .000 were          Mablislring weekly rice export subside rates . The De-
made for land used or designated for use for suc h           partment subsequent) adtiwd (30 that certain cor-
purposes as housing and commercial development ,             rective steps had been initiated and that a ne,v poli :- ti
sod nurseries . garbage dumps, and gravel pits .             and revised procedures had been adopted for estah-
   Since the use or intended use of the land ruled ou t      lishin the rates .
the growing of feed grain or was inconsistent wit h             The Department now considers several factors no t
crop production, the diversion payments did not con -        previously considered, including f I the availability ,
tribute to the control of production—the principal oh-       by t~pc~s, of don'es6c rice for export, i2 the Million -
jective of the diversion portion of the feed gain pro -      ship, by t 1 pes . Of export sales to export subside' iwcs ,
gram . Most of the payiuents were made to persons en -       for use in deter'nining whether domestic ri~c is geiier-
gaged principally in businesses or occupations othe r        ally competitive in " Md markets, and 3 ~ the degre e
than agriculture and thus were inconsistent with th e        to which do'nestic rice has becorne established i n
}n-ogram objective of maintaining farm income . Fur-         foreiqn markets . Time factors are co'nownt wid,.
ther, the making of chverhon payments for land bein g        the inforrn'ation Which C :AO proposed should be ob-
used or intended to b'~ used for nonagricultural pur-        tained and used in cstablishin L, , subside rates .
poses dill not aid in attaining_- the secondary progra m        Z he Departineia estimated that, under tile iie w
objective of conser v ing land for future, agricultura l     police and re p ised procedures, subsidies for i's_al teat .
or related uses .                                            1910 cwnnrercial rice exports would be about $10)
   ASCS icgulations governing the eligibility of lan d       million . This amomit "as $23 million less than the an-
for diversion payincrits were suh .jccted to V'artous in-    nual a : G'au of `?i35 .5 n&Hkn in eon mercial exim a
terpretations by county offices acrd cone nittees, bot h     ;ubsidl pay'nents made duri~ g the 1961-61 period fo '
of which have responAbilities for Val adnririistruio n       about the sainv chianti ies of rice . Deport to the Con -
of the program . Also, State and national oilices were       ,,ress, B 11-1824 . Jan . 1,5, 197 1
not providirle, tile, r-uidance to the county offices an d
cmnnhuees in ,ssar-s- to insures unifoini irntcrpieta-         `l . Wheat ea r ice-Support Loatf Rate-s .---The price-
tion of the rec il lat ions .                                ugTon rate for wheat -.it Gulf of Mexico ports wa s



       I   it riale t l t t I I t 1 1 , 1 )       -, 1,111 'I I ! .' t A t I-_ i if o pot 11 L '                                          ti,!-          ' l ihni–, d "j :, 1,              f VA !)! () -
     pi_is t I w 1 i A ! I c I I i i I - 1 i a I _-- , I r 1 i ! i 11 , i , :a ' I i , : ilt r :are, ,                                                    I nv1_ ' An i Taft ( !— ;~' , : !!at a -

       If I a i I I ( 'z . , 1> f'-' l t AT l 'i 1 1 11 t hk             i 1~ -a      I        ti1      1 he                                                 11 11, -_ and pel                     o.
     Avaik1hilin . ' if                                                                     1h ' ' -' ndf ,      A:   " , i o-. 1di ., - 11,   1'1ifAIIL              11 I ' ll !, 1 : A, I      . hit 1 7

     ( ' . 111bili ' d N ' jth                                                             1 . !, . 1, 1"" c I

     t it all the i i i t c r ~'_i t i a i ; Ian- . _,a4t' 1 I : (iu( I'i , Ali Ad -                             ,III! i 'l iki ' :1011t h"'i-                             it, ,
     Nanta!_- , ; 15 nI 3t ; - I lit- a MW A MA ph-& dw s                                                        idand to as pro's, tie                      cinwaii- hi,idi-ts ,
     Idiom urnivr p!n " ' Illy ' Al                             -111 lxo ! " [!wr tilal l                                         In on                               inkAl lo!h ' ' fin"! ; t
     iWand point .                                                                                                                                                knni ' iwd      ' upph ' -I '
           To dhamumn- ON direct iiii,, of                                       „-,u ii , t`1, ~,uh .
      t!ic Departint rit of AQ'1iC!l!',UFe 1 :1 IL11W p"W I                                                                                                              ' nhj!= ' [ " d t o
      t ., reduce the l'i 'lil late at the ,Illt :-' , onprilsint f(i l                                          ino(iintioll ' im oi!1 ' 111I          I AA or      U1' . p           lin n
      the cliflrrvn ”' it1 floight rat-, . Tll ' ~ 1)o-pa!thlwln I —                                             " !611~     j1'o ' l(l ' i !r ' i ' ll 1101 Inid"I jilf ;d(II-tkol -It! -
      ,cintled Oc piopoed , hmn, 2 dov afto alartmil Kn Q                                                        %-Mmc we- kwmn a- pilw"my par p b"aw-
         h(nNe%vi, (-,it the basis Of \(A-bal nif,owaiion ic-                                                    !wrh'! 1AA not tlic ' I'ttinkan . ik'ld( :~ na% c
     floin farm and trade              indi(atin'-, :i!At ill-, 7 ;i ' n, -                                      (ollt!'Il mel . Ocill, And nlsp, ., tion i 'ldni 'llik is re -
     man of about 2 or 3 unihm bAwk 4 wInt Wd A                                                                  U-10ci n ' !MkOiaiai             at
     read, heal ncitotiated .                                                                                    IA\       iji, in         il " d ; wvl ' ,m aw 01 11' u
         From September 3H, 1961 w, lkcmnher W MY                                                                    o : ms milan c ho KA not domninini the w,t:
     the quantit, of 1969 1 i,)p vhoat recorded he dw 1, ;111 , -                                                                (I ,-         ')~'lnc (ritual aircraf t
     UWARy CM&L Uorpoiat ; -)r. CCC is in -torn ,-                       it                                      paii,        iA— ;1k-(l A~ joiictai~ pall, had been place d
     milf locations in( ie,,Ned hv 12 Wk in hAwk huh -
            I, that, if dc Depaltnwnt had made a Amh re-
      'atin ,                                                                                                                                             In, i ' icnt that had hcv! i
     duction in dw loan rate, its was oriuirialk- , ont ' All-                                                                     thr ln ' thu- OI)n of OW palt .
     pawl MU could hm-e w6ded nwidrni a QrvaaM m                                                                    I mbi FAAs xiww                        1l-vain no ImAmomi ;in -
     vestment: in x,heat loo N ,                                                                                 \ciilan ' c . A lollobIT ''!               1 !1cald ' onfinnOl" nl~ ;w -
       GAO te, -CIS nmended in Mai( it 1I ,_ (l thit U .( -i,iji i
      it police to imnidc for the pmq q vinminadon V lin
                                                                                                                 M)l awil' .
      COIISISWIRIV,Ill j)li(c-llj)p0lt l('_U!ati(_)lN dial 3-111 1
                                                                                                                 ,n)d Znctj! qp la'                                ! i ;r 1AA po-~ia ;n i)!" -
      from diffiAenceI, in fiat_, ht iaws I other fat to!, . .,it h
     due condderudon tot innunilmnw alreadv mad, -
                                                                                                                 li .'- malolia, Al, , I'f i-ti, io'idn ' p ''ll , cl -
         In iesponse, (_VC stated W n had mQ"& a M "
                                                                                                                  Qw am 51,0" W Own , qill : i : . m qn An nnomi-
      I'M Illeth0d of alld 0Q)RAW prin"Hil" t
                                                                                                                 facvw~n of pnipmIn%                         ;W ;t (,M) "j"Wo                       Mt
     locational dill' crential, Aw V01 my "heat and v o
                                                                                                                 0MAHM, "ni .a_,' W&I 0 k lWalvin k hmn d .
     tain Other cotrunodnics . Under Ow new method . ima -
                                                                                                                 Awnwk h v, th- aWAsh" mk! Wolim 4 1 AA m -
      ,ional differentials -~enerall5 iaici't no incoo than rnin-
      inunn transportation costs to rN-QnNNI malins, W
                                                                                                                                                                                  li"In%eillan' c
      no nionew inducement is Plodded on "lld " M
                                                                                                                   (1w 4 the FA % w"oA 44" hW pnpwd tha t
      -oi-ati abnormal mo%crucri-ts If !r.on for pla, I , inal l
                                                                                                                 the lAodu'll'', 1! :t%1 ; :1AA ' r i1I dA V ' n1d (it lnnitOd c o
      under ( :( :(,: loan . Report to dx Uwwress . B Han ,
                                                                                                                 thlows')i                            I . ( .! J . .' HlAllLltA(_ -
     Jan . 15 . 197 1
                                                                                                                  mart- .
                                                                                                                 pmide t, . .  "Vanow jinowbo, MMKILunce CN'a -
      Or       SMety
                                                                                                                 ! , iln% nI , -1\I-i , rin— ; AnI En" t palls . uch as
           4 . Surveillance Over Production of Critical Pad s                                                    pi -qvictm) parts . that were not n4 cif inn arch c Homag e
      for CWH AMM . The WmAl Aviation --ldmini n                                                                  4 12 % or in the pnkhu inn cm ink am halen .
      tration 'FAA . Depattruent of 1 n spot ta t ion . i . re-                                                     Offi, ials " : n i ' . Depal t :!A')n of I lall,pol Latii'll \% a -c
      quired to prescribe inininnun standards, iu1c, . u ; d                                                      E_"M rall, A,~aw, ~ ,, tic, . pi,,IdcinsN, in, ii exitodand ad -
      rcgulatiolls to plon "ALe fli .--hi ' Afeu of "kit An-claft .                                              ~ ised GAO that, upon c,,inpiaimi of an overall rc\ ie\ \,

                                                                                                              SEMON 1
in J=uly -1971, corrective action would be taken to             Atomic Energy
strengthen the administration of the pro<_n'anr .
   GAO believed that store timely corrective measure s              f . Price Increase and Change in Criteria fo r
were needed to assure that critical proprietan , aircraft       Uranium Enrichment Services .--At the request of
parts were brought under production Surveillance an d           the joint Committee on Atomic Euere y, GAO re-
recommended that FAA take inunediate action t o                 yiewed certain factors relating to rite proposals mad e
bring such parts under production surveillance b y              by the Atomic Energy Conunission AEC, in Jun e
either FAA personnel or by production certificate hold-         111 ; 0 to amend its Uranium Enrichment Services Cri-
ers . (Report to the Congress, B–161197 1 Feb . 25 ,            teria and to increase its price for such services .
1971 1                                                             GAO reported in July- 1970 that the proposed chang< ,
                                                                in the existing enricJunent criteria, which would re-
     5 . Airport Safety Inspection,--The Federal Ayia-          (Imie that emichin, drat,, es be based on commercia l
tion -Administration (FAA ;, Deparunent of Trans-               criteria . raised the question of the need for and appli-
portation, has had tieneral awhority since 1958 t o             ca hihty of the new basis . The type of data which woul d
prescribe reasonable rules and regulations or minimui n         be generated under this commercial criteria coul d
safety standards regarding ( I ) air carrier airports tha t     be accumulated with equal facility tinder the exist-
stunt commercial passenger and cargo air carriers cer-          ing Criteria .
 tificated by the Civil Aeronautics Board and [ 2) gen-             Based on GAO's interpretation of the legislativ e
eral aviation airports which ordinarily ser ve onl y            history and statements from hearings on Uranium En-
 private and small commercial aircraft . GAO reported           iichntent Ser vices Criteria, it did not appear to b e
 that although conditions at airports may seriously in-         consistent with the, intent of Congress to conclude tha t
 fluence flight safety . FAA did not have a pro ran t           the term "reasonable compensation," as used in th e
specifically designee] to evaluate the safety of publi c        leI,Iislation, permitted including a profit over a perio d
 airports . It relied on airport inspections under othe r       of time . Since the commercial criteria which AEC pro -
 programs which do not have safety as a primary objet-          posed contemplated more than recovery of full costs ,
 tive. GAO concluded that these programs neithe r               GAO questioned the authorization of this revised cri-
singly nor collectiiei provided the data required fo r          teria and expressed the belief that the new criteri a
determining the safety of all airport .                         should not be adopted without frudter action by th e
    GAO also concluded that an airport safety inspec-           Congress.
 tion "program was needed so that FAA could bette r                 I :egarding . :E(1's proposal to increase the price fo r
 fulfill its responsibility of insuring the flight safety o f   such serv ices, GAO concluded that, as a result of cos t
 aircraft at both ;tit- carrier and genera) aviation air-       escalation and operating levels lower than anticipated ,
 ports - and suggested that such a program b e                   it did not appear that AEC's price of $26 a unit o f
 implemented .                                                  separative work was adequate to insure recovery o f
    Irv' Larch 1970, GAO furnished its findims to con-          appropriate Government costs, therefore, it appeare d
 gressional cornunittees considering a bill requirin g           that AEC's proposed price increase to $28 .70 a unit
 FAA=- to develop and enforce tuini,num mandator•               of separative work might be warranted .
safety standards for air carrier airports axl to certificate.       GAO suggested that the joint Committee might wis h
 airports i netting such standards. Ire May 1970 . th e          to consider tyhethei the proposed amendments to the
 Con gress passed the Airport and Airway Develop -              criteria were needed to accomplish the objectives of
 rent Act iyhich contains - those requirements .                obtaining commercial operating experience . -If in the
    The Department inforuuce GAO in June 1970 tha t              judgment of the joint Committee it was deemed ad-
 it intended to implement GAO's suggestions with re-            visable to adopt the proposed criteria .. GAO sug-
 spect to air vainer airports as part of its overall imple-     gested that the criteria should require a consistent an d
 nientation of the Airport and Airway Developmen t                uniform method of selecting variables and assump-
 Act . In addition . the Department said that it plans           tions to provide the degree of stability required fo r
 to - gun ep g_erteral vitiation airports and implemen t        future Ions-terns commitments . (Report to due chair-
 safety standards as needed . (Report to the Congress ,         man, joint Committee on Atomic Energ13–159687 ,
 B 161497(I'i, Jan. 15, 1971"                                   July 17, 1970 1

                       SECTION I

                             After i, uancc of t ;AO'Juk V410 report . tltr. C :on-      delay, in iurpl~ru :entin certain proarauts to provid e
                         gress enacted lc-£ishnion c laultirr its intent that ill(-      for lone_-terns t( 4 ,mte of rad ; oacti%e %~,I,tes and thef t
                         criteria for esta6lithint; iharees for uranium ta rich-         interior 'tor .c+,e in urxlerr*round tanks . As the .c tank ;
                         u ;ent services be Imsed on rocovet-, of Governmen t            increased in cse and .ere utilized Inure fief annse of till -
                         costs .                                                         accutnulatign of new wastes. there was an increase d
                             In December Ih Q . AF.C : proposed another recisio n        poesibilitc of tank leakages or failuivs o,, unino . Th e
                          to the Uranium Enrichment Services Criteria as a               :AEC: proposals for lon1 term stola<,e of wastes i n
                          result of this legidation . AEC : also proposed to incie , e   underground tanks required further evaluation befor e
                          the price for enrichment ar%ices from 528.70 to S3 2           long-term stoia e methods could he approved.
                          a unit of .rpaiative work . At the request of the Joint,           GAO proposed that AFKC de%clon and r_onsolidate
                         Committee on Atomic Enero-, % . GAO reviewed AEC's              its plans for resoling %%a,te ntanaLenurne problems
                          proposals.                                                     in,-) an overall coordinated plan which would provid e
                             GAO reported that tine provisions of the rev=ise d             I ) the current status of the %%ante management pro-
                          criteria hacin, an effect on pricing afforded an ade-          gra n, + 2 the pecili, action neces, ary to resolv e
                          quatc basis for iecom ring, o%er a reasonable pe,'~d o f       e-,fisting probtenis, 3 ; the time frames over %\,Inc h
                          time, appropriate Government costs of furnishing ec-            these actions could be carried out, and ;-1 the esti-
                          ricliment : er%ices,                                           nlated fiscal Nero' costs incolced . In addition GAO rec-
                             GAO reported also that AEC's estimated costs fo r           onnuended that AEC 's Division of Waste and Scra p
                          separati%°e work had increased substantialh since th e          tifanav_, ewcnt 6%e its immediate attention to the pla n
                          $26 price was established---a major part of which had           and that the 1 )%vision be liven certain specific iespon -
                          occurred since tile development of the 528 .70 price .         ,ihilities nece . an to pro%ide for its implementation .
                          Therefore . GAO helievvd that AEC`, propo,al to in -            AEC :agreed %\,nth th•e e proposals and ad v ised tha t
                          crease the price of a unit of sep .irative work--whic h         cari•,us bucl!et and ur vurtticual alternatives withi n
                          included a contingenc% factor--%%as consistent with             .AEC were alio being considered % . ith the objective o f
                          the pricing pioeisions of the r e %ise_ci criteria and til e    insuung that the approved overall waste inauagetrien t
                          pro%i,iom of the It islation .                                  plan %%ouid be eflecti%el% implemented .
                             AEC' agreed with GAO's t,%ester that financia l                  On June 2E4 1971 . AEC announced atu organiza-
                          statements, which AEC intended to pwpare, he pub-               tional chan ;;e %%hirh established a new Division of
                          h5hed zonnualk, anal that AEC perioclicallr pieparc in-         Wine \laniigeutent and Transportation and abolishe d
                          formation sho%.ing current projection, of cost, an d            the Dk i,ion of Waste anal Scrap Management. (,Re-
                       ' .revenues to provide AEC. and the joint Committee
                                                                                          port to the 1 ainoan- Joint Committee on Atomi c
                          with an indication of the extent to which tine estab-           FI nergp . B-1610,52 . Jan . 29, 191 1
                          lished price %vas meeting the objective of recoverin g
                          the Go%eriuient's costs over a reasonable period o f
                          tittle . (Report to the chairman, joint Committee o n          Coal (dine health and Safet y
                          Atornic Energy, B-159687, Feb. 9, 19-/1 '
                                                                                            8 . Implementation of the Federal Coal Min e
                    7 . Managing High-Level Radioactive Wastes . –                       Wealth and Safety Act of 1989 .The Bureau o f
                 At the request of the Joint Coni nittee on Atomi c                      \lines, Department of the Interior, has had signifi-
                 frier«p . GAO reviewed the policies and procedure s                     cant problems in carr%in l- out its responsibilities fo r
                 of the Atonsil- Encrf v Commission W"C) for the                         inspection of coal inines and enforcing' dic correctio n
                 management of radioactive wastes to determine wha t                     of unsafe and unhealthy conditions as required by the
                 actions had been taken oat matters discussed in a previ-                ict. GAO reported that progress in complying with
                 ous report issued by GAO on this same topic.                            the requirements of the act has not been in accord-
                    GAO repotted that AEC` had made pro g ress i n                       ance with the target date, set forth in the act, and i t
                  an ying out its piograms for the effective man tt~elnen t              did not appear that full compliance would be achieve d
JJ of i rdioactive waste material s : however, problems still                            in the beat futur e
                 remained to be resolved and delays were being experi-                      GAO's review at two districts disclosed that :
                 enced in implementing certain policies and practices .                       "I`he Bureau had inade only about 31 percent o f
                    Operational and technical difficulties had caused                       the required safety inspections and about 1 percent

                                                                                                          SECTION     I

  of the required health inspections from the effectiv e    Economic Development Assistanc e
  date of the act thiow-,h Decetnbcr 3t . 1970 .
                                                                9. Basis for Providing Federal Assistance t o
      Mine operators had not made carious require d
                                                            Economically Distressed Areas . Z he- Ecorlonlic De -
  ,amplines and insp tions, and some that :%ere mad e
                                                            %olopment :Administration F.D A r . Department O f
   \cei"e)lot adeluatt..' .
                                                            C :opuuc•rcc• . +a dewlll1 +t>n~_' elivil,ilitr for Federa l
      In many case:, mine operators had not submitte d
                                                            assistance in the long-rallic de%clopnu=nt of ccouor.li-
   required plans for roof safer% and thine ventilatio n
                                                            calh distressed areas front data that teas not curren t
  and for enivigency action in case of fail stoppag e       and ,as of yuestiom:blc acculac% . I - he questionable
   nor had the%- submitted listings of electrical equip-
                                                            relialiilit% of uncinployntcm data %%a, air' butable t o
   ment used in ninintr arei_s                              conceptual %%eakucs<e, in the methodoloe.%- for esti-
      Bureau inspectors sound nuu7erous safety viola-       wating unenlplo%rnent a, %vcll as to problems in de -
   tions, many of %chip h were the same typo that ha d      %c ' opult unenlpl•nnlent rates for small alcas. Al" ) ,
   been cited during previous inspections . This situ-      ,median f,uniiy inc,tnic data for States imd local anus- -
  ation %%as attribmable, at lease in pats, to the 1le-     another fattot 11scd in dctcnninillu eli . ibili ;%—arc
   parttnent's policies foc enforcing health and safet y    available nnh front the decennial population census .
  Standards, which at times had been extremely Ic-              l''D A" ability to properly identify areas eli gible for
   nicnt, Confusing, uncertain, and inequitable .           assistancc hin ,~e> nn the oundnes of unernploynx•n t
                                                            and inconlc data . and the dcsitnations of economi c
   Bureau representatives state! that shortages of quali-
                                                            disu'css mac inthx•n : e the distribution of moneys and
fied nlanpot%er and certain equipment and insuffi-
                                                            henctits from other Federal agencies . Because c tllrenl
cienttime were the principal reasons for noncompli-
                                                            family income data are not availahle . EIM is not abl e
ance with the requirements of the act . As to shortages     to snake the annual rc%icly of itrea eligibility based
of equipment, G_CO reported that the Bureau ! I)'           oft income that is required by the Public Works an d
had not made overall studies of the availability o f        Economic Deyelopmcnt Al t of 1965, as amended f-1 2
equipment and the normal time required to obtai n           V-S .C . 3121 i- or to ha,e it determinations of maxi-
equipment in short supply . `2? may have permitte d         nmun urant rate, on recent data .
unnecessarily prolon-'ed noncompliance with certai n            `I ' o improve the accuracy and comparability of in-
equipment requirenients when comparable substitute s        entploytnent data, the Department of Labor, 'whic h
were readily available, and 3'; had purchased 71101 0       is responsible for collecting such data, said that i t
dust-sampling equipment than it needed . thus contrib-      %could take steps to insure uniform application of it s
uting to the shortages of such equipment availabl e         prescribed cstilllatiol- techniques and that the itn-
to mine operators .                                         proyt•ments necessuy in the methodology % ;'ould he
   GAO recoEnized that the passage of the ac t greatl y     made by the end of fiscal %c•ar 191- 1 .
                                                                The Departnent of C :omntette agrecd, in principle ,
expanded the responsibilities of the Bureau but be-
                                                            that it %would be desirable to have more recent incom e
lieved that more could have been done to achiev e
                                                            information le ndarly- B,; using other data sources ,
greater compliance %%ith its requirements .
                                                            such as the OffieO Of Business h;cononlics ' data on pe r
   '['he Department stated that with one exceptio n
                                                            capita income, ,.DA hopes to develop waspnably ac -
actions responsive to GAO's proposals had been ini-         curate income statistics . The Department stated that
tiated or _plamled . The Department disa°reed with          a W01-1, s,roup Was stucil ing per capita income data—
GAO's proposal concerning the use of people les s            it recenth- developed data soutee su ggested by GA O
highly qualified than rentlar coal mine inspectors t o      as an alternative to median family income data —but
perform health inspections. GAO believes, however,           that much remained to he done before it could hi . used
that the Department should Ig iye further consideration      to lncasmc area economic distress . fReport to the
to the possibility of using such persons if the Depart-      Congress, B-1331£32, Afay 10 . 197 1
ment ekpetiences difficult%- in recruiting the required
number of regular coal mine inspectors . {Report to
the chairman, Subcommittee on Labor, Senate Coul-           Economic Opportunity Program s
nrittee on Libor and Public Welfare, B-1706£36,               10. Progress Being Made and Difficulties Being
\•Pas l3 1971 1,                                            Encountered by Credit Unions Serving Low-Incom e

   -   148-Reis   0--7 1__. .

    Persons : -In ,jauuary 1965, as Mart of du COnt-                  union`s pro,*rees toward rneetin ; that ~~oal %yould enabl e
    nlunit% Action I tovrau ; . the Office of Econotic Op-            (")HO and the credit union to determine %%hether th e
    portunity 'OEO be gan pro%id`un financial assistanc e             credit union's progtcss was adequate .
    to crudit unions sponsored b%- C :onnuunit r_ Action                 OEO and the National Credit Union Adnnnistra -
    Agenciesto sortie loin-income residents livint, in desin-         [ion of-11eed with CalO's conclusions and recuunnenda-
    nated ncizhhorhoods. At Decentbex 31- 1969, there                 tions. Iit response to these recotitiundations, 01C)
    were 106 federally Chartered, OEO-financed credi t                stated that it intended to obtain status report plats,
    unions having 65,900 members, $4 .2 million in uuv un-            and projections bearing on the roal of self-support o f
    hers' it `-posiu, and 18 .200 loans ontst :ndint-, totalin g      credit unions ; to r(,view the operations of the credi t
    8,1.2 million . Front inception . the credit unions ha d          unions and to provide necessary tnridance and assist-
    tilde loans totaling tiI 1 .2 million.                            ance, and to require them to concentrate their effort s
     `GAO reviewed eiizht of these credit unions . all O f            on cost reductions . ;Report to the Con g ress ,
    which had encountered amuuber of problems in thei r               B–16-1031 % -I ,June 1 1- . 197 1
    operations : These problems had resulted in relative h
    high operating deficits and in little success in attain-              Ii . Administration of a Neighborhood Healt h
                                                                      Services Program (Neer York City) .—GAO reporte d
    in_t-OEO's oal of becoming self-suppoith .
        'Fyn results of financial operations of the credi t           to tit(, Cron iess that innpro%ements were. needed in th e
    unions reeiet0ed showed that, froni the be,innint z, o f          operating,* efficient y and effectiveness of the Neighbor -
                                                                      hood IIealth Set%icrs Prorrram administered by St .
    OEO financing to December 196 1 1, they had incurre d
    expenses which exceeded operating revenues b y                    Luke's hospital Center . New York City . 'The progra m
                                                                      is financed 4%itll _rants front the Office of Economi c
    $500 .000 and that the deficits had been offset hs rant s
                                                                      Opportunit< <OFJ : . Because of a number of prob-
    from 'OEO atrnourrtili to 5565,000 . The credit union s
    would ha%c difficulties in achieving a break-even posi-           leins identified Belo%%' .. the project had not provide d
                                                                      a ;_~urfir3nth better health care delivery system than
    tion . 'yen with a Substantial increase in loans, unles s
                                                                       that %014'11 ptrs'iotuh existed .
    their ooeratiu'+, expenses %%ere reduced .
         The right credit unions slid not have sufficient share -               The amount of space available to the projec t
    holder deposits, the primary source of ftmcl . . for rnak-           limited du' ran_' 0f services v%'licit could be OITCle d
     in loans to generate interest income adequate to cove r              at the prriect site . A formal attreentent for use of              -
    Operating expense ;, Tlw insufficiency in shareholders '              the space had not been _sieved %kith the city .
    deposits was attrihutable,printarily to the Dery limite d                   The relatiye1V 10w a%erage cumber of patient s
      aeiujgs that lot,-income families ha%e available fo r              seen by proiect ph}'sicians and dentists indicated
     deposit in the credit- uninis. OEO provided _, rants to ,            that the project was not rnnaking nnaxintunn use o f
     credit unions which offset their operating deficits big              available professional staff tuenrbers . OEO guide -
     periods longer than the 1 or 2 years anticipated bti                 lines sue mst that uith adequate space a physicia n
     OEO _lillelilles .                                                   should treat 28 patients . and a dentist 14 patients ,
          Scven of the eight Credit unions experienced hiv$e r            per day : hu%cever, project physicians averaged onl y
     costs for splice occupied—rent, utilities, and tuainte-                      patients . and project dentists only 5 . 7 patients,
     name than other Federal credit unions of simila r                    I ,t .r da%, for the £i-month period encled February- 28 ,

     size, primarily because most of theln paid rent for spac e            1970 .
     whereasnany ether credit unions which here not OF. O                       :Although Ixuients weir generallytreated by th e
     financed were plo6ded w i th space free Of                 or           ague ptr%srarans when they visited die- project site
     aL relatively lot% rentals :                                         for mcdird sate- such continuity was often- los t
          GAO reported also that neither OEO not-                         %0hen patients were admitted to St . Luke's 1-Iospital                 -
                                                                          for nrpatien care because half the project'        s
     International . Inc . . an OEO contractor responsible
     forcer tun adn .nit+ . to ati%e functions of the credit unio n       curt did not have hospital ,irk ile~_, e. at St . Luke's.
     protirl t ., had requin~4 the OEO-financed credi t                         The project t-'erielaily provided individual-
     nuions to de}rk+p plans tnowitt, projections of then                 orienwd rather than faunily-oriented health care .
     Ltrur j ai of=er t ns t tar„et dates for achieving the.              OEO guidelines call jot` the projecis staff to at -
         ;,tl  ,r 1w, mrm ee.lf-.uhport try . The establishmen t           tempt to _ee the patient in his family setting whe n
                                                                          appropriate and lot all nienthers of the family to             1
       df su ; h ; tai'ci+ t dat, and its comparison with a reedi t
                                                                                                            SECTION      I

  he aeen by the same,ph}sician or u,un of pinsician s            curs faced in achicving, and maintaining. or - grr_• .
  to the extent feasible .                                         ated -.(11001 SN ~Jetns .
     The project had made some progress in imple -                  Grant talcs did not c6denc-e full con:pl ance b%
   -xmtFir« a pn tigram to provide cnmpre11(11 iv ' be :dth      the schoo l districts witil the regulations cdttcomin g
  care . including preventive care : limmur, additional          the formation of biracial and -Student cdi r~or-,
  efforts and spate i%ov ld be nece ary for the project          connnittees .
  to Pulp. implement such a piogtatn _                            GAO su 1-cstcd that 1111' Th-partment undertake a
     The project made free medical services available ,        strong nionitming progrann to help insure that gran t
  in some instance ;; to 1t ::-sons who did not meet 0P. O     funds ahratd ; rnadc available to school districts ar e
  eligibility criteria . The project needed to strengthe n     teed for the purposes intended . GAO sti,Rested als o
  its controls over eligibility determinations to insure       that . in the event additional funding is authorized .
  that OEO funds were used to provide care fo r                Deparunent procedures be strengthened by Al pro-
  those persons whooi the pretrram teas designed o -           viding sufficient time for program officials to inake, a
  help .                                                       thorough re6cw and evaluation of applications, f2 :
   In contment;nl ° ,n GAO's recommendations, th e             requiting that all information relied on in approvin g
l)eputc-Director of OZO acknowledged that improve -            an application be made a matter of recot-d, and l .i ~.
meats were needed in the project's administ ration             providing, for a nronitorinr„ system . i Report to th e
and informed GAO that progress had already bee n               chairman . Senate Seie, t Corurnittee on Equal Educa-
made in all areas cited The project informed OEO i n           tional Opportunity. B-161.`_1111 -, \Iar . 5, 197 1
January 1971, that all project physicians had clinica l
appointments and all pediatricians had attendin g                  13 . Administration of Federal Aid to Educa-
status at St . Lukc>' . Iii addition, a team approach in -     tionally Deprived Children : -Title I of file Elvinen-
tended to provide faurily-oriented rather than indk id-        tary and Secondary Education Act of 1965 authorizes
ual-oriented services was initiated on a test basis i n        fund, f~,l prt~,rants desit,'n1'd to meet the Special edu -
January . i Report to the C;on gress, B- 1 :30515, June 15 ,   cational needs of chilchen clrprived of normal educa-
 1971 ;,                                                       tional lieyclopment echo lice-in school attendance area s
                                                               {vas int,= high concentrations of children from low -
                                                               income families. t ;AO issued reports oft its reviews
Federal Aid to Educatio n                                      of the program in Ohio and in 'New jersei in which i t
                                                               identified anumber of areas of administration where
   12 . Policies and Procedures for Approvin g
                                                               opportunities for improvements existed .
Grants Under the Emergency School Assistanc e
                                                                  Among the areas identified in Ohio were :
{grogram .— In a report on the policies anci procedure s
of the Department of Health, Education,_ and Wei -                  Projedts ~-cre not con(1'tttrated on the education -
fare for approving, under the I met_gency School As-             ally deprived, but were opened to all intereste d
sistance Program . Federal grants to school districts t o        children .
defray the costs of niceting special problems arisin g              Facilities acquired could not be fully used fo r
 front school desegregation, GAO identified severa l             over a year hecau-e thr- local atency had not ar-
weaknesses and concluded that they a=ere clue mainl )            rauged to obtain sufficient operatin g funds .
 to the Departments policy of emphasizing the emer-                 Procedures for actluiring'and uslng Title I ednili-
ge`nch nahue of the proraiu and its desire for etipedi -          mert needed inrprovernent.
 tiotis funding, at the expense of a more thorough revie w          A local agc;ncv charged the program for unuse d
and evaluation of school' districts applications . Amon g        siek leave earned h} its employees althoirhit did
 the weaknesses were :                                           not charge its locally financed programs for suc h
                                                                 lea\ e .
       School districts did not submit with - their applica-
    tions, not did Lite Department obtain, sufficient in -       The in ow si=gnificant areas identified in New Jerse y
    formation to deterinine whether grants were mad e          were
    i n u r ordance with prograin regulations .                    Areas to participate in the program were no t
       Applications did not contain, as required by th e         selected and documented in accordance with pro -
    wL,ulatwns, comprehensive statements of the prob             gram criteria.


         SECTION i


                                                                                                                                                                                 >`    -


     -                           --         CMWnn   clltttg   hot lunclac   pia :   ?idt—d 1)), a f   -7 ?s1 :   r-. .   E   in    (       . .,,ttt,   d . oh :i ~ .       -

                 Projects were d(, si?ned aIld operated in a inallnei'                        l)oi t ,, t(>      till'        ~.       t               li - 11610,31 - 1       1)o-c . 28, 19 '70.
              which provided` t enp ral aid to the              vtcin                                  A l ai                tt
              rather than z;pc cal educational 1}iou aln'i hl! On -
              cationall ' (1cprit t d children .
                                                                                                  1? Assessment of the Teacher Corps Progra m
                 Stan, agnig~` -rniewcll 100jowt ajgd                atif lls   and            in South Florida . IM Kath w C" ,, migrant a t
              op ration ., ucle inadequate.                                                    dw t'nie i>iIN ! :i Mi ;lilli and pin tiicipatmw Sohc,rtls it',
                                                                                              Nouth l l o    ula >n i ;~tl ! l of 1 dut atic, ,al (q                               l i1 QV,
             ']'}e (~f3ice of 1 ~lnc adult . 1)t~hartlni~nt 4 MAN                                           tti       ,     h t A to hu f1 U y                                     Ivw v :
                                                                                               a , iiLt113!     poi pd, in                        4

           Education, € nd W ilarc, collcuri!'d ;v-1th                      l-c°                                                                              -
                                                                                                                                                                         C: :  X13 i` !~('ti~ 1I 1

         - oulll end "ltitl ;ls in_ dies. re ~~l,i is _ltlfl Greed to take et c-              j it(1 .1t1t'l l7 tjtr 1,hc' ?11?ii{'t'+i il', tc' .!('.Ilel l)t 1 ' 1}<llatli 112 19[£)°               _

           rec tive   Iction .
                                        -                                                      -IaiE ;- :V, :1 rt- :,ill1 .4 Itli t)1175 1 ,aIf1,, iN .: tt• : ,- c 112135} ISI€'t~1 -
              In - .t li, ttcr dated May t) 197L m1drowAd tci aH rhY                           !?Cl     :!c
                                                                                                          m4       il .ri i-(l~,lt'C.7 111 (lit' `.tIlt                                        t t
                                                                                                                                                     t )tFt'' . t'c ;1 llt'al . ."n-rf~ .1 . i _etl
           St(,w Rch(?QI o{ icei, 1, w 00U'e of EthwatiC)l] 4tlaanx                            n ctl mil o ac`t3 t hh                  ;=E' .tlt3tt ;t,N, aid w6v dwing-m
           11wl 91 .x' deficiencies in We pr(lt?r_llti Ytlt'IltltJ('(l b     GAO               " ,qv it1<ttic Al d                         1liA             l+ N nodal lilt l' llaoon IW -
           atul wliw"ed th-! .,fTict~2s to take stc1p s to det IIl-- ne                         ;ali : . Akt , : t :tl 1 11 .11' od 11w "I 333!! 3 „ who <ca411"I te d
           ivhrz„' air : W the dc1WVncWw WIN! in thch, Slates                                  thv 1, 1 ;,t;mmi n li . .,, :, d s wao vt- In nl d, t , r\ i n
           < rti w .uti P rumedial awni w1wiv nett darn W e-                                   P! 14, arum  .                                                                                             4

                                                                                                                            SECTION       t

        The Miami tiles=rain, had iliitt ll less inipact th .ii ; i t                                                                   t) -

     might have had because n .any 'leacher Corps ninn-                 grain to other t. ucathnal uast .tti im U1 milt state .
     vations ,Gf' .ie lint contiIlued after the Corps Illellib .u r         IheA 'Sistant`.t°(- ?t•t :llv .t,± flt11111(I_Oi' :    l(? (~
     fiuisiied theeil assiLnin fits . Specific procedures wer e         MWL F.ducaumL and Welfare., ,t                        uiied 4"dt h
     not developed to doter uine Nvhich innovations yvnul d             GAO' ,, rec_onyme ndationi that the Mu n T)t 101tr u t
     11-nefit regular cum mhuns at the participating school s           stay abn`, c1t dae in it v ,s- Of the unin,tAlYs st uh - O f
     and at the unR`erSCtti'_                                           the ideas . t' ypc a I:ts, and techniques u s ed ini tli c
        (UAO reconumndecl that local educational agencie s              tia%aio-I loll( pltrt ken aQ rim .raw— au, nililersit, ti t
     adopt specific procedures to hites_g ratc suc(-cssfu l             incorporate the ~l.:i`( (',~f ll Oncs ill its wgular a'aclic r
     Teacher Corps innovations into their Ietiillar .schoo l            preparatic>Il plOi x al?l .
      pn) ~rani, : that the nuniversity develop %, atis to dete2 -          Ife stat(d, Qwvvcr, that I HIV i1 .ehmed to delay
     niine' ilhAS ideas ewrinlents . and techiuilues shoul d            action 1111 G .M) , r CO111IM11dati011 that tilt' Office O f
     he included ill its regular teacher prelnuution pro-               l0luc athin ; cioperite % ;°ith the Arizona 1)epai tnicnt ci f
     pTam and that the Office rlf h;ducat% discus "A h                  f0du 'athin At its phu s iri dlsscminate Inforlmation o n
     the Florida Oepartment of Fducation tiler feasibilit y             tiilCZeSlttll lnnciVatiotU and teachitli–, nledinds to othe l
     of dissendnating information about successful Ccirp s              ('dui atio nal institutinns iii the State until the Depart -
      methods, The Assistant Sccretary, Comptroller, De-                Ineut could provide staff' and cxpertise to calm' Out it s
      partmeri of health, I?ducaticnn . and Welfare, con -              plan . =Report to the Cnu re~ss ; R—16 a (la l ' 1 = , ' fay 1 :3 .
      Curl`ad vcitli the recollullendations and describe d               101 1
     actions planned to put them into effect. "Report t o
      the Congi less, B-16 1031 ` I Apr1 F, 197 1                           16 . Assessment of the Teacher Corps Progra m
                                                                        in Western North Carolina . - he-pro ,g am increase d
        15. Assessment of the Teacher Corps Progra m                    educational opportunities available to pupik in grades
     an the  Navajo and Hopi Indian Reservations .--                    to which Qq :, nienbers ivcre assigned, hia the pro -
     lr ortherii Arizona-l-`niversity and particifladng school s        gram 's impact was not nearly as great as it cmdd ha v e
     on the 'Navajo and Iiolai Indian reservations increase d           been . l nst- of the activities started by Corps memher ~
     the educational Opportunities available to India n                 siv re not continued after tiles' left the schonk, and pro
     children through the operation of their Teacher Corgi s            ,Trani officials slid not evaluate Corps lucnihers' activi .
     pmghm. Corps members provided individualized in-                   tie, to identify those which were successful . C:onarnuni t
     struction and introduced several ne~v teaching method s            involvement v%-as made cliiiicult by western North Cara -
     which made the instruction more relevant to th e                    linds Iml imainous terrain and its scattered popilace .
     culture and background of the children . School official s          Of the 71 interns «ho completed the program, only P I
     stated that the ne v teaching methods had been success-             remained as teachers in the eNlo-county area served .
     hd and had been adopted by their regular teachin g                     Western Garolina Wil•ershy broadened its teache r
     staff;tAbout three-fourths of the 26 interns who had                Dreparation pivzram by niakir,g chat q" in its studen t
     completedthe program uvre hhvcl as teachers i n                     teaching practices . University oflicials did not empha-
     reservation schools :                                              size the inti°oduction of new courses for the Teache r
        Tile program iiai ionic degree of success in broad-              Corps because they helieyed Oat existing c nurses coAl-
     ening the     unive     sit ' teacher preparatiori program .
                             y s                                        be adapted to training teachers of dkaelyallt l<ed ehir-
     I-Iowever,    much     of the special curric tllurrl ofFwTd   to   drem 1,Iost intern, ; howevwe said that their cours e
     Tcadwr Cor1" interns was not coUcred to stucltents i n               cork ryas irrelevant and repetitious .
     the univ( , Isity 'v. regular teacher training program . Til e         GAO recorninended that innovations resulting flou t
     unive2s n , began a study to identify aspects of th e               the `I'eaicller Corps Imigrani be w lmuecl . that mays
     Tcac]Wl Corps Inot,: rain -thatshould he made availabl e            to achieve a higher ct gree of graduate iotention h e
     to either Students ,                                               explored, and that the types of C011inluni t v activities;
        1146 %vas .a need for the Office_ of Education to               reasonably attainable in rural areas be clarified . GACO
     may =abrom st of the uuive_esity s sa g e to cmaum th e            recommended also that rile (teed for d,e ininxi mi :adon
     universit", in incorporate successful _program feature s           of new e oil ms and approaches to Mucrition into th e
     intuit , aulai teacher prepara t-ion_ itro_Frani, and t o
               I                                                        'heather Corps and wgular curri,-c 1 finis at M%te m
     Cooper,)_,,, . with the Arizona Department of 1',chicatio n        Carolina University be evaluatc_l, The Assistant Sec-
     in in 1)l .mn to disseminate information On suet t sslul            retal yCoilIptroller, I opal trnent of Ile alti, Education ,


    and Welfare concurred „ith the reco;,nnendations                   >ideratiou 1,% 1ranteus of all ava11ahl, cost and othe r
    and described actions Planned to implement them .                  prrtanent infolination ;hull prvpar n , LudR_ets in sup -
     Kehort te, the Ctm ire . I ;- 16;t . ;1 ' 1 ?- . Ma% 20, 197 1    port of thrir requt " s f.0 f=ederal f nd .nti.
                                                                           Hie Couuuissiorter of i:ducatiou state=d that th e
         17. Use of -Teacher Corps Members To Sup -                     i~tar:her Corps had as .iUned a stall` nteniljt r to deyotc
    plant Local Teachers Bc._inni ig,, in 1969 iuembe i                it nrejor portinn of het tinge to the i -cost°r: of out -
    of tf r Teacher Corps t ~i ticipaunw, in the plcs_;rara i n        >tutrulint 1 u ;tcls and Chet the Corp, vroutd revise it s
    we=tern North Carolina were -iga ;ed to State or                   budge =_uidrlule-, so that nc•eotiation~ ,,ouid take int o
    Igcalle allotted teachilae pasiMlls . According to pro -           account a prnje t _ 1 IVIRills fiscal activity as „till a s
    _rain -officials, this practice resulted in supplanting            ,intent needs . Report to the 0munissioner, Office
    teachers who raoidd have othwrt ;ise bo.en hired by tl: e          of l"-duration . %Iat . 5 . I S71 i 1
    local educational h=enries . Since rction 517 of th e
    Hither Education Act of 1916 -1 state that no membe r                   19. Policies and Procedures for Administering
    of lue ' I eachet Corps .hall be 1'uru l=hed to acv loca l         Study and Evaluation Contracts .--"Through its in -
    educational -agency if that member is used to replac e             ~titute pro,cain, authorized under the- National De-
    ant teacher ,, .to is or Would odwi%%ise be cnfp i ,)yed by        fense. Education Act of 19513 . the Office of Education .
    such agency: GAO expressed the belie . that the -a-                Department of Health, Education, and Welfare, prc-
    r.ingement was not authorized _                                    vided financial support to uniyersitic and colleges to
        Although the practice was. not authnrizetl, the State          provide advanced study to persons concerned Irith th e
    and local ftuads which ,would have been c .pended fo r             teaching Of modern foreign languages, English . history .
    regular teacher salaries here used for G.:-ps members              and other subject_ . Afang of the universities which oper-
    salaries and related benefu, . As a - result . State and loca l    ated the institutes (Out at;["d for evaluations of thei r
    funding, of the Zit-still (-alohnt ,lrn~,rar?t increased           ptrticul a trro~!i ;tnts . ' fo coordinate the many evahta-
     fran: about 10 Percent to about 17 (1 percent, thus de -          tinns, the OIIitt- of Education contracted \,itli til e
      -rea .nu+ the amount of federal funds needed to oper-            Cow -time( of Plofesional Associations lot Studs= o f
    ate the~promatr._ Since this fnndmso, pim,dure is bein g           Special'1 - eacher Improvement Pro,_~rant, CO\ P .-ASS i
    used at other locations and mad Provide irn:al educa-              to undertake them v aluation ; .
     tional agencies with dle inapetui to continue sUCessfu l               In Apt it 19 7; 1 . ;A() reported that wider the con-
     fcatules Of _ t     1racher Corps prOgatil a f ter federa l       nac t tennis some :,f the= basic manageinetit function s
     funding cease,- GAO uggested that the Congres s                   of    the Ofiicr of 1 d ;c,ctiun that ue c, Intial to ar,
     rtifnht wish ; to _consider whether the enabfim,> 1c0sla-         , ( grout c a,lnnrai,trition of the contract \Yerc d,—legate
    tion should lie amended to authotic such mtaie ,c-                 d Office of \ I ' ll tatueuti•rt and Budget Gir -
    m ents . Deport
              '         to the Cocottes U-16i 31 - 1 . N       211 .     iikir No . A-%b . I, re,-ised . duects that executiv e
    1h 1?                                                              a,,cucies 17crform for then ,elv es those Imsic function s
                                                                       i,f mana ,-ernent ntec,sar, to retain esential contro l
         18.   Administration of the Teacher Corps Fro •               c,cr tht conduct of their 3imQtan : : These hasic func -
    gram .      Giantee, patticipatitn in eht . 'Coacher Corp s
                                                                        ,a,n. I nclude a,sienin of tauizational reslxntsibilities .
    Program held :about $428,000 of Federal funds I.or u p
                                                                        plannin : ,rocrulis . and e .aluating performance.
    to-`3 }ears hevond the contliletton of the petiod fo r
                                                                            I`he tt clec_,ation of authority to C :ONPASS for tnak-
    t hicn the` fund, %,cr_ intended to he used . A facto r
    Which contI ibu'te d to this accumulation of eXurss find s          u de*-tsions oat .,hat ,tidies would be undertaken o r
    was the Practice `of-furni ;;hing gn-antee with sp,cific             continued tray not, at least in one case . in the hest
    anintlnts- to t %c i n their hudaet =eque .ts for certai n           merest of the Office of Education, In this case . C O\ -
    esfiensi- items ivituou, instcuctin 'g grantees t , conside r       P.ySS continued in maluation of a Program at a n
    a: ailabie niformation which would have indicated tha t            additional t ost of `05 .000 even though the Office of
    lesser arnourts writhesuffic e                                      Education „as a aims further funding' of the evalua-
        GAO recommended tliat the Office (if Education ,                tion bc-Cause the program tea, hcitlg phased out .
    Depai tint nt of Health Education- and tVcifaic, pro -                  GAO recommended that. if the contract with CON -
    vide for III(- earl% identification of l_ratuees holdin g           PASS is continued, the Office of Education shoul d
    unused fund raga- action to locos°er such funds, an d               Im, Ale for retention of the hasic mana gement func-
     (, -, Ist 'heather Corps guidelines to provide for con .           tions it needs to etf ectii,el y direct and Control C:O\ .


                                                                                                                                  SECTION I

     PASS actnioes . Report to the Secretary. III : W .               lied" aid - it% ._tes tt, (it te.mim tilt, extent to whic h
     H 1640:,I(1, ._Apr . 22 . 1'171 1                                it., st-t id a bcin_ tmpi cnted and u, of e,_,'
                                                                      col trctiv- ac-nisi c, licrc~ nr ;ut(=rd .
        20. Student Loan Insurance Fund .--The Holm-                      711;10 runt ludi-c that the dc, .-,s .0 r rc,.atin- il l
     cial statements of thr Sludcnt Loart insurance Pon d             placement Intl rcteirtinn of AI ! .cacti , (ipient• te-
     for fiscal year 19611 did not Muscat faith- die financia l       suhrrd flour failtnr of cut,nr, ,                        all,] t t'rar -atne l
     position of the fund because not all unpaid pryn iurn s          to iAl fo.: I I LW ,'talc, and St	               tidelit!r ; . Both F IMV
     due from lenders ;rcre included in account, recd t)le ;          and the State c ntcurt~d                        ~utceitrtt ., shtn ;ltl b e
     not all piemitinns on loans made durinz t1w N, at acre           drtelopt-d to ;nc                            1>a lcn[s.
     considered in computin, the amounts shown for in-                    , his Slat, ; ,wd i ~uucti~n                   .:'Mich it Relic"(d.
     cetue front insurance prenriuur ; canned and deft-lied :           ,ould inn rrr,\'t        mtn,' 4 lu lu : , ;_•try death w dns -
     and the amount for unpaid default cl ln .iL . ;duct per.•        crttr ;!e 1 paI I Ill, and nIIiated ltctioc1 r ) elII11 1t,,
     Classified a, deferred cfa : e was ovcr,tawd .                      nIIicatr A[f I II ttntF \hdtc<ud pactnc111 l :c ,_rrfiu -
        To produce financial statements which Neill pry>en t                         utt r t,-ntrok . I II- W informed t ..AO dial- a s
     fairly the financial condition of the fund . t1w Offit t            tall tt t i . ;r>e I . -I ' ll ; t% ., _add b " riven to t ,rmlcro s
     of Education . Departrneut of Ifealth . L.ducatro l . and         ins. n ;           .telincs, of rpf,_- :`vain and ctmtnal=-and tha t
     "Veifare . needs to classify lenders default chino ,i t           u~~~nict ii : = of dw St, m 100flran,s       .       should br miry_
     p anel at %earend as loans receivable or sonic ~irnla r          ~f ;r, tic . Kcyrtrt to the Cos Tres:- li It1MI _1
      type of current asset rather than as dctero~d ch tl re> .        J u l , 21 . P!71 1
     establish an allm,ance fc,r losses oil ihe,e claims anti
     charge the aniilut)t to cxpensc in the ,ear in whic h                22 . Problems            in Providing Nursing Hom e
      the claims arc made t«xinst the fund . and IUCf,Jhc n           Care, G :IO reported to the C xnrre5s that actions
      accountint; procedures to insure that tine autount s            u-J_en h, the i)cparot ;Cnt of health - i;ducatton, an d
      shown oil the financial aatement, for W COUMS rc°ceiy-          \Celiare I IF W 1 and the State of California to cor-
      able and insurance premium income are derived fion t            rect prcdlenu p)cyiou~h (Ii,cI, sed fir ( ;AO „ere eu-
      reasonable and sound bases.                                     eralh inellrctiye .
        IILti't' took m' plaunrd to take appropriate action oil          problens n (fine 11urstnt> hrm ;e Care rOntirwed t o
     most of the matters discussed in GaO's report- Re -              g ist brcloi , o CaiifoTtia's Medicaid plan as approved
      port to the Conliess . 13- 16-1031 = l , Apr. 12, 1 9 7 1       by 111:A0 .. did not pim iac aeietlunte i-tudt lines, and the
                                                                      State did not hase adequate pt<,(eclures to hell) insur e
                                                                      compl i ance ,ritlt established Luid°lines - These prob -
      Grants to States for Public Assistanc e                         Ients relau d         1 ! inadequate control over drugs .
                                                                      !2 payments for patients in substandard nursing
         21, Approval of and Payment for Nursing Hom e                homy, . transfers Of parent, v,ithout just (ause,
      Care.--A review of the nursing home program tinde r             (-hs suppleniental pa}anents, prohibited under Me .lic-
      Medicaid in the State of California rcaealed "eak -             aid .tu nurin_ ironies- .-)1 inadequate safe_=uarcl°s-a-e r
      riessus ill tht State's adinission and bill"ut-_ procedures .   patients' personal fmak, tf6 )nisleadiuw adveituinl_` -
      Med i caid iecipie nts received nur~in_, home car(, wid; -      and - inadequate control., mvi- authorizations fo r
      nut adequate determinations that such cart , was ttat-          meditation and tivaunent, Fhe continuing tits sintl
      ianted- and studies by thrc p counties showed that a            hoinv prohIcros appeared to be atuib table . at least
    -high percentage of patients %ere not in need of th e             in pout . to tl inade_luar of adr7iuustratise reviews
      care provided . In additic.n, in some cases . care was          by 11FNC regional repi e,entatk es .
      approved and pa)nnents were made for periods afte r                GAO recoinurended that IIENV review State
      a patient's death or discharce, and nursing homes were          atencie implementation of IIEW regulation .. an d
      paid under hoth the Medicare and .Medicaid program s            impress upon State officials the need to clarify the
      for the same days of care .                                     ioles of State and county a _,,entcies involved ~_l th e
         GAO rev inierided that the Department of Health ,             Medicaid program .
      Education, and Welfare IILiti' 1 provide for , 11 de -             HEW inioinwd ( ;>>O that it Mould 1 - cusru,s wit h
      } eloping oi- evaluating the administrative and progra m        California officials the Federal regulations and thei r
      requirrnieiits used by the States in approving and pay-         application rtlatinv to the quality -of"nursir, ho, _ . e
      ing for nursing liome care and i 2 monitoring State              care ; and '2' assist the State in detertniiiiit he cor -


    rectiye actions with respect to GAO's findings . (Re-       aid program—and, in some cases, the Medicare pro -
    poi; to the Congress, B-164031 : 3) .. Aug . 26 . 197W      gram, As a result, the health and safety of patients ma y
                                                                have been jeopardized ,
       23. Payments for PhysiciaE and X-ray Services               GAO noted such problems as ( 1) patients not re-
    to Nursing Home Patients .—GAO's review of the              ceiving required attention; by physicians and nurse,, an d
    Medicare and Medicaid pro-gams in Californi a                 2 ) fire protection not being adequate . The deficiencies
    showed that the State had paid providers of medica l        resulted primarily from weaknesses in State procedure s
    services the single-patient visit fee rather than th e      for certifying clicibility of skilled nursing homes an d
    lower multiple-patient visit fee for visits made to more    from ineffective State and Department of Health, Edu-
    than one patient on the same clay in the same nursin g      cation, and Welfare (HEW, enforcement of Federal
    home . GAO estimated that such overpayments durin g         requirements, including those for State licensing .
    1969 totaled about $426,400 . of which the Federa l            In addition, patients had been placed in skilled nurs-
    share was about $343,00 . The overpayments occurre d        ing homes even though their needs were for less inten-
    because ( 1) physicians and providers of X-ray services     sive and less costly care which could have bee n
    did r.ot know the correct billing procedures for multi-     provided in other facilties : however, alternative f ;ici 'i-
    ple-patient visits, (2) the claims processing and pay-      ties in which less intensive levels of care could be pro-
    ment system used by the principal fiscal agent ( a          vided were limited . GAO believed that the primIr y
    private organization under contract with the State s        cause of this problem was that HEW had not develope d
    did not contain adequate controls to identify multiple -    criteria for measuring the need for skilled care under
    patient ,isits, and (3) physical payment profile,           the Medicaid program although the Social Securit y
    (histories of past billings used to determine the rea-      Administration had developed such criteria for skille d
    sonableness of physicians' charges) for multiple-patien t   care under the (Medicare program .
    visits had not been properly developed .                        In response to GAO's recommendations HEkV state d
       Regulations of the Department of Health . Educa-         that the Department's Social and Rehabilitation Serv-
    tion, and Welfare IIEW5 aid not provide guidelines          ice (SRS) had implemented a new monitoring an d
    to the paying agents concerning payment polices fo r        liaison program in each regional office that . woul d
    physician visits r. .ade on the same day to a number of     insure closer relationship with State agencies and re -
    patients in the same nursing home . HEW had made a          quire more frequent visits by regional officials and de -
    nationwide study on the diversity of payment policie s      tailed reviews of State Medicaid operations . HE W
    and the feasibility of prescribing= Uniform guidelines      also advised GAO that SRS planned to issue guideline s
    for use under the Medicare program, but it had no t         to assist the States in evaluating patients' needs fo r
    trade a similar study for the Medicaid program .            skilled nursing_ --are and services tinder the 'Medicai d
       In response to GAO's reconnnendadons for correc-         program and that, where applicable, the guideline s
    tive action . HE\1' stated that " I's uniform guideline s   would embrace areas of common interest, such as those
    would be issued to all Medicare carriers with respec t      outlined in criteria developed for the Medicare pro-
    to identifying multiple-patient visits and insttr 1 9       gram . + Report to the Congress, B-164031 I'3' . t1_av 28 .
    proper reimbursement, .'2' a study would be made o f         Id7,"
    the diversity of existing payment policies under Medic -
    aid preparatory to the issuance of guidelines, and !3 )        25. Practices Relating to Nursing Home Opera-
    HEW regional offices would he s-rriven the responsibil -    Lions .---At the request of the chairman, Subcomi-nit-
    ity for obtaininlv compliance mith policies under th e      tee on Long-Term Care ; Senate Special Committee o n
    Medicaid program . Report to the Congress .                 Aging, GAO obtained information about questions
    B-164031(3! . Feb. 1 19 ; 1                                 raised during the subcommittee's hearings on a sal-
                                                                iuonella outbreak in nursing homes in the Baltimore .
         24. Problems in Providing S piked Nursin g             Md ., area . GAO visited four nursing homes in 'Mary -
    Home Care .     GAO visited 90 skilled nursing home s       kind G%hich were participating in either the Medicai d
     i 30 each in the States of Michigan, New York, and         or Medicare pnmrams administered by the Depart -
    Oklahoma?_ having a total of 5,581 ?Medicaid patients :     anent of Health, Education, and Welfare (HEMP) .
    33 of these homes syere also serving Medicare patients .      GAO reported that :
    -Many of these nursing homes were not adhering t o               In Maryland, it was not an uncommon practice fo r
     Federal requirements for participation in the Medic -         physicians to sign death certificates without havin g
                                                                                       -                                        i
                                                                                                         SECTION i

  viewed the :--odies of patients who died in nursin g        activities were expected to increase in the future .
  homes ; the practice was not illegal in Maryland .           Report to the SubconnnitLet- on Long-Terns Care ,
  however, and it was not considered unethical by th e        Senate Spt°cial Committee on Aging, 11—161031X;
  State Medical Society.                                      Dec . 1, 1970 ,'•
     On three occasions physicians had been pai d
  under the Medicare and Medicaid programs fo r                  26 . Administration of the Medicaid Program by
  signing death certificates although the fee was no t        Fiscal Agents .—Most States contract with privat e
  reimbursable under either program .                         organizations--referred to as fiscal ageuts for-assist-
     The records of 322 Medicaid and Medicare                 ance in administerimt their Medicaid programs . In
  patients who died during fiscal year 1970 reveale d         GAO's review of the program in Kansas and Iowa .
  39 instances in which payments had been mad e               uyeakuesses iverr noted in fiscal agents' administratio n
  under the Medicaid program for nursing home care            of the. Medicaid program .
  for periods after the deaths of the patients . In 36 o f       .Neither Kansas nor lori.a had established control s
  the 39 instances, however, the overpayments ha d            adequate for insuring that payments were made onl y
  been detected by State employees and adjustment s           for medically necessary en ices, and neither Stat e
  had been made to correct the overpayments prio r            had provided adequate supervision or review of th e
  to GAO's bringing them to the attention of Stat e           administration of the programs by fiscal agents . A s
  officials .                                                 a result :
     In some cases payments had been made to nursin g              There %\ere indications of overuse of progra m
  homes for care on the same days under both th e               services, and both States experienced length% . de-
  :Medicaid and Medicare programs .                             lays in establishing procedures to control suc h
     Medicaid audits required by the State had not              overuse .
  been made at three of the four nursing homes visited .           \either State had ascertained the reasonablenes s
  GAO pointed out the need for the following actio n            of the amounts paid as customary charges for th e
                                                                services provided .
by HEW .
                                                                   Improvements Here needed in administrativ e
     HEXV's Social Security Administration and ,' or th e       practices relating to A l identification of claims fo r
   Social and Rehabilitation Service should assist pay-         services that night be covered by recipients ' privat e
   ing; agents under the Medicare and Medicaid pro-             health insurance policies, t2 prevention of dupli-
  gran-is in studying the feasibility of establishing ( I )     cate payments and payments for medical service s
  procedures to i<sure that paynnents are not made t o          provided after recipients' eligibility had terminated,
   physicians for signing death certificates, which is a n        z - filing of paid claims, and ;1) determination o f
  unallowable cost, and (2) controls to insure tha t            reimbursable costs to participating hospitals.
   duplicate payments for the same services are no t
   made under the programs .                                     GAO recommended that the :Secretary of Health ,
     The Social and Rehabilitation Service shoul d            Education, and Welfare (FIEW (1) provide th e
                                                              States with guidelines for reviewing and controllin g
   improve its monitoring of the State ' s administratio n
                                                              the use of Medicaid services, including the accumula-
   of the Medicaid program to insure that required
                                                              tion and use of data on charges made by individua l
   audits of nursing home costs are made .                    practitioners in determining the reasonableness of cus-
   HEW informed GAO that it planned to issue a lette r        tomaty charges, !2 ) require the States to provide th e
to State :Medicaid agencies pointing out that payment s       fiscal agents processing Medicaid claims with the iden-
to physicians for signing death certificates is an unal-      tification of recipients who have private health -insur
lowable cost under the program . Also, with respect to        ante coverage, and 3) define the State agencies '
duplicate payments under the Medicaid and Medi-               responsibilities relative to fiscal agents' activities .
care programs, HEW stated that the newly establishe d            I IEW informed GAO that utilization review guide-
management information system for improving th e              lines would be. issued but expressed the view that it s
administration- of the Medicaid program should help           existing regulations provided sufficient guidance t o
to insure that duplicate payments are not made. Wit h         State agencies with respect to l) the accumulatio n
respect to improved monitoring by SRS of State -Medic -       and use of historical charge data, including charges
aid programs; HEW advised GAO that monitoring                 to private insurance programs and (2'J the considers -



     tivi U+:lbe gimn to -private medical insurance coverage                                             1
                                                                                  future, and that the drug-eflcacy   stud ; was hi 1no -
     in ,_-cnr_Iputuig the ainiounts to he paid -hy - Medicaid .                  ress . IIEW also stated that it planned to institute a
     ltEW brlicvcd that the x%cakiesses noted in these                            closer monitoring and liaison program in c . ;-wh Ieoir,na l
     aie .rsMere causedby inadequate irraplenlentatioli b y                       office and to make more frequent yi>it ,~ aild detailed
     the Sta r   agencies of e .AIshii .̀ mpulations but state d                  reviews of State Medicaid operations . <Report to th e
     that it planned to nau .t,'urate a closer monitoring an d                    Congress, I3-164031 3 , Nov . 23, 1970) -
      iaison lnogram with the individual State agencies .
     IIEW inforined GAO that it would continue to evaiu -                               28 . Excessive Use of Physician Services-- - I'll( .
     ate its guidelines in light of information obtaine d                          Departnient of Health ; Education, and Welfare
     t1u outr}t its inonitoriiy of State proersuns . Report t o                     (HEW did not provide States with guidelines fo i
     the Congress, I3 16 . 1031 ~ 3      Oct . 20, 1970 ;                          evaluating the need, quality, or timeliness of medica l
                                                                                   se rvices under the Medicaid program . -In a review o f
       27 :- inadequate Controls Over Medicaid Dru g                               the program in Kent icky, GAO noted that HEM ha d
    Program, -During fiscal year 1969, about $307 inil-                            not adequately super v ised or nionitored the State' ,.,
    lion was rxpended for drugs under the Medicaid pro-                           eyaluatiort of inedical .services provided . GAO note d
    grain . about $14 millionof which was spent in Ohio .                         also that there was a creed for more effective action t o
     With regard to Ohio, GAO found tha t                                         curb inistises of physician services .
            4 substantial iltunber of welfare reel, ;, „t :: were                      GAO reviewed the cases of 100 Medicaid recipient s
         ineligible for Medicaid services, including drugs .                       who had received large quantities of drugs and iliter-
            Certaindrugs purchased under the State's Medic -                       viewed the attenciing physicians . Eighty-four of these
         aid progrrain «°ere not reasonably priced ,                               recipients had received an excessive ! nuber of pre-
            The Department of Health, Education, and Wel-                         scriptions a memd, and 62 of them brad averaged fir e
         fare i HEN 0 , in its studies of drug efficacy, neede d                  visits a month to dlflerent pl ;sStcLms, at an average
         to give prior, to lower cost frequently used drugs                       monthly cost of $33 .
         which liad been identified by the fII_.t1' Task Force                        GAO concluded that pan IIE,TV regulation--adopte d
         on Prewription Drugs as offering potential for con-                      by Kentucky --whMi allowed providers of services t o
         sidc°r0h , savings .                                                     si-Il init- .bills for paynient under Xteclicaid for period s
            Ohio ',, -controls over drugs ; finder its Medicai d                  up to 2 years after the services were provided-repre-
         prog ri mi_were inadequate for they State or HFNV t o                    sented an obstacle to etainining and evaluating th e
         determine whether i I) drugs obtained by nursin g                        nurnber and/or frequetley° of physician visits . It ap-
         ho Ines were administered to welfare piuients an d                       peared to CIAO also that Federal and State staffin g
         were effective in their treatment ; 2 drugs dis-                         limitations had cmaributed to tile probICHI4, and thil l
         peened and billed by phammo-ics were actually re-                        better monitoring of Kentucky's WOW by f1EVV ma-s-,
         ceived by welfare recipients, and 3 only neede d                         needed .
         drul'~s Ncere provided to ,tielfate iec•ipients .                            GAO recoininended that IIEVV provide the States
                                                                                  wall guidelines for efI'ectivel', reviewing the. vise o f
         GAO iectnilinended that dw Secretary of HEW :
                                                                                  physician ser ices, inctea .e its morrhodrig of the Staves '
                Provide assistance to Ohio and other States i n                  eyaluatiolis of physidan sonv0s, and redim! the .ova r
          ievisint ; their drug piiv.rleat polu°ies to cciti'orm t o              period dui ing which providers inay bill for services .
          HEIV po'icy .                                                               H N\' informed GAO that ( t guidelines would b e
                Give priority in the conduct of 1-1I,W1 s drtqv-                  issued for evaluating the irse of niedic al ser, i es, 2
          eflicmv ondies to those c rigs klen ified by the t IEW                  Medicaid prograrn staffs in Flenutch , had bee n
           1 a ,,k F(w ~ . a, having considerable potential fo r                 increased . V31 moliitoring of Stai-e evaluations ' of
         savin , And tuinish phpichms with ilifwilmlion o n                      jAiysician services would be increased a lid . a close r
         laic Ii g el N f)t by stud .es .                                        nlonitorint, and liaison plogranl )t'Ith each individua l
                Ku p ±'lll(ielin , for ut bath it nwie ;,s of drug ,             & ate gmcv Would be made, and (41 revised regula-
         i111)Illl )r 1111   _pll .• 11-station of -t,ll-ke guidelijws, an d     tions h . .d been inucd to reduce the 2-yvar tittle iii-n ta-
           , i\   A ,-i,A,i , t„ Oid
                            f          a~  and other State=s as needed .         tion for submi, ion of bills . FlE stated that, befor e
         IIF\\    iAii   f' th :,t mrzcl   hens Ave   .y   Awn” of reason -      react it g a lit hkn _v to dw tir!i Iinrit'ftion tit, t ht tild
    able                  tu! tre,4. rib,-' d drugs and for a r victw o f        he established, a silrttw w-:tile:' he made in all State_;
    tla : r '_iLilil :i'.       : -f' o xpt•k w d to he , ued in ihv I ra ., .   to ohtvlri Irif7irlietif7n as` ?c),a file length of 'lift- ntCvlrryC {

                                                                                                             SECTION I

to process claims for all medical care and services . ,' Re -   citizens in the coninxtnit}, ''- 2' the Department o f
port to the Congress, I3-161031(, 3 ;, Feb . 3, 197 1           Ihalth . Education, and Welfares AIEW re•nona l
                                                                office staff had not made regular visits to review an d
   29. Eligibility Under Medicaid .—Regulations of              evaluate Stain, open ;tion . and -3 the State a,4enc y
the Deparhnent of Health . Education, and Welfare               had not e t thli_Ited procedures for I- roject reports to
 `HEM' require that an individual's eli ,ibilitti
                                             l        fo r      he ;uhmittedoil a timely h sis.
Medicaid he reconsidered or redetermined at leas t                 In rc,ponse t, ( ;AO's rceommendaunns, I IEtC statcY i
once every 12 months .                                          that a plan had been established to evaluate local com-
   In Mas achusetts, the required redeterminations o f          niunity projects . a project had been completed t o
eligibility had not been made in about one-half of th e         identify and evaluate the criteria used by State agen-
 127 cases GAO reviewed . As a result . there was no            cies in funding local cotnnrunit% projects, and uid t
assurance that recipients continued to be eligible fo r         lines had hevn developed for cyahtating State agcnc t
Medicaid-- In addition, in detennining the financia l           planning activitie, . Report to the Administrator. So -
eligibility of employed Xledicaid applicants .. the Stat e      vial and Rehabilitation Set7ice . HEIt, Scpt. ?3 . 19,`0'=
had failed to make required adjustntents because of th e
excess incomes of some applicants .                                 32 . Simplified Method for Determining Eligi-
   HE11' informer{ GAO that corrective action vcoul d           bility for Public Assistance .--A simplified method to
be taken . (Report to the Regional Commissioner,                determine the chgibility of persons for adult publi c
Social and Rehabilitation Service,- f1MV, Ate.* . 17 ,          as .i,moce tva, used by the States on a trial basis .
 1970)                                                          Eli,_'ibility determinations Nyere to be based, to ilrc-
                                                                maximaut extent possible, on information furnished b y
   30. Overpayments for Child Care Services .— I n              the applicant tyithwit loutine intcrvietyin' of the ap-
a review of claims for Fedet.d sharing in du- adntinis-         plicant, and tcithout routine verification and invvstig a
trative costs of public assistance ptogratns in Californi a     lion by the c-wworkers .
and Pennsylvania, GAO noted that incorrect payment s               The Deparuueut of health . Ldw ation_. and Vlclfare
for child care services hall been made to some recipient s        IIEWinstituted a teat of the method to determin e
of public assistance.                                           tchcther the intended objectives .+ere being achieved .
   GAO reconunended that the Social and Rehabilita-             The test . which included validamig the correctness
tion Service (SRS ), Department of Health, Education ,          of eligibility decisions: trade hr the casetyorkcns, was
and - Welfare (HEIi'), look into the possibility that in -      cani ;d out by State and local welfare agencies an d
adequate procedures leading to incorrect pa~nwnt s              teas monitored by IIEIt . Laigely ()it the basis of results
might exist in outer States .                                   of the test . I IE'W directed the States to fu11v implemen t
   SRS agreed with GAO's recommendation : took ac-              t1w simplified method .
tions to determine whether States' procedures wer e                 (;A() reported to the Sc--natc Committee on Financ e
adequate to prevent overpayments ; and stated tha t             that it had nbservrd a number of problems in the iui-
corrective action, including adiustmetits of overpay-           plenrentation of the method by the States and in I IE\1" s
inents, would he taken where procedures were foun d               onduct of the test. ( ;AO bclicvetl that these pro b
to be inadequate . (Report to the Administrator, SRS ,          leer. Collectiyelr, were suflieient for questionin« cer-
111,1X' . Man 11 . 1971 t                                        tain of the data from which conclusions were drawn _
                                                                GAO expressed the opinion that the problems ob-
   31, Administration of Certain Projects for Olde r            served suggested a need for IIEINV to closely monito r
Americans—Title III of the Older Americans Act                   the natiomyide implementation of the simplified
of 1961 airthoriztal Federal funds for use by the States         method .
in community planning and coordination of pros*rams ,               GAO made several recommendations desimned t o
demonstration of programs or activities_ training o f            insure that States implement the simplified rrretho d
special personnel needed to carry out programs an d              effectively and work tow.1rd ftit ther simplification ant i
activities, and establishment of new programs or th e            urtproveuient . IIFINV subsequently provided guidance
expansion of existing Ones.                                      to the States for terifvilW inconsistent stateluents by
   In reviewing' six of N active -hide III projects i n          applicants and for developing and using _iniplihed ap-
Maryland, GAO fount{ that ( 1 ' half of them had no t            plication fortes. 1IEXV also developed a continuous
achieved their estimated potential in servirn' the senior        review system for monitoring and controlling the Attic -


                                                                                                                               t   ai
tinning of the method, and informed G,10 that i t                  stated, hM%ever, that no ricidly applied nunierical rat -
plann e d to reeralnatc the teleran, - 1,•yel tot ineli-, ibil-    ing ,t,,tetu caul adequately meastn°e the relative merit s
ity ; - t -;lrerience c, a, tin . d . Rennin to tie Senate.        of applications for interstate milt . l-te particularl y
Committee on l inancc, 1iAGKUI A3 Ain . 5 . 19710                  tylw”- in utgent n - ed aeis-s for adjnsunents of addi-
                                                                   sms to IM AN short route seprit'tits .
                                                                      CIAO agreed that a totalis inflcsible =ystc ;n st•onld
Highway Program s                                                  niu he fcassblc litre stated that the officials responsibl e
                                                                   fur uriva ing the intct-state pr ot;raut should have soni c
     33 . Questionable Basis for Approving Certai n                ine,in, of cloarh identifvutg tie various alternatives ,
Interstate Auxiliary Route Segments .- Mileage al -                act that, niter. dcahn v ith problems elf tile inagninid e
W-ations by the Feda l i Ii,I "a, Admitn,ti ation, De-             cnconntered in iolerscate trtileage allot-atiorts, the y
partntern of 1 iansponatioii, fur certain aaxiliarr ront e         ccill have it proper f r :unec%°orh for more informed t ian -
s cT rinenN 4die. fntcnt v Ilt,h" y Spent cyr•rc um d e            agentent net i,imm hpnrt to the Congress_ R-1637714 .
on a cm—by—ow basis "Wwnt the use of a sv>tem                      JAY `tl, 101i ,
in rank, States te, i nests for mileage in the order o f
their relative merit and il5rnficancv, Approyiu~ 'lies (                 34 . Management of the Highway Safety Res t
rt5 ars in this ba- ;, rya, ronn'ar~y to ill,- t•stabhshc d        Area Program .---Costs of colt-structmg highway safet y
practice of approyin_ additinin to tic Interstate Ilkh -           test am " are ,enemily Mod by the Stales and th e
 u'ay .Sy,tem onk attvr-s1,tem,t i( all y ratin to, ey aluattn „    Federal Ilighccay ldemnisnation ;FIlWA', Depart-
and couiparui= tilt_ rcl .tti :e ,nerd, and need : of .l i         nient of Transportation . In administering t iv rest are a
Wates.                                                             ptag,iamt FIIIVA had not regnir'ed the States to estab -
     Dive tti the -twnenG appro•.vd in this manner— a              lish and adhere m a quern A priorities to insure tha t
,S1 million p r t :runcai tic _tiepin . Iii (toes not              safety rest areas were onNirn( ted first at location s
ltteyide tie (neral h of is normally awxiawd uk h                  "hick truuld inert the motorists ' greatest needs . 1Uco ,
tic IM   .Mte System becaoae it primatih henchts ~r                Fl l~V' 1 IIA not provided and or required the -Stale s
private stem plain located near a small rural corn-                to adhere to definitive• guidelines relating to the sire- ,
rmtitiity - A rattu " system would have highiiehted til e           type qualnh anti cost of not auras a{ ceptable for ap-
fact that this eginent via, not in ~onsonanc,~ v,ith ti e           p!oval for Federal financial participation . As a re-
nati_cmcid-'(h racterofTVInw"tate110h wv Systern                   sult . the innonrit of land and the size . type, and cos t
and brat it Asmid not have guahhvd as an mithdri n                     1 IacANs varied wi&l for rest anus designed toserv e
 to die Interstat " . i .                                          siniilai yolnmes of t_rrflic . The cost and finality^ of
     GAO w"mmtended dint the practice of approivin g               t1ammit for dice not areas also v tied wiclo .
auxiliaiy irnertate mileage• on case-hy-case basis h e                   In response to GAO's reconrnrendat,ons, the Depart -
disrontinucil and that a innneiiral ratting, system h e            !vent stated that PIINVA tyonld contimte sit- eillane c
 tt sed to ran ;: requests on rite basis of pnorit n muc h         of the design of Amy rw area fa ,litit-s, includin g
reflect the current objective, of the Interstate high -             Wake midland icyu i s ition, to he certain that Federa l
Way Systonl-irl order to provide more „ssuraut-c 111~1 1            i .Inds are pioperIv and c,iseh spent and that un ievis-
       a_rxi'iar, interstate ,ndeagc is allo(ared on til e          utt, rintent gnicleirres, it v.otdd consider the advise-
basis rt ill( , most imptntant ttcMs of tic istow _2 1             hili" of sy%ik- _r uteiuteAmy die line wo"IrtmM         I
 lire mrittin State, are m[orded       i  equal opportunit y
                                                                    II I (;A0 . The i)epainiwnt ieiected the idea_ however.

 to cnn-h•ew for any additional inteistaic i nilca e whic h         that it erotrld be proper to establish het°ific tosi li m
. become available_ and }_; Ir,ponsible official s
Toil'                                                               ii,nion, for t-clnipment . GAO believes that, in the ab-
have a means for cot .yraring Ow relative merits of                se t-v of euidelint re aribW the uge and costo f
01 Maw' rire l ncats for amai anal mdcam                           etlnip bent acceptable fiat I"ederai financial -participa
     The I mprunemt a =reed that the Staho sMA I                    don . there \rill continue-to he a tact, of assurance that
have in et i nal opportunity- to rourpetc tor interstat e          needed facilities are being, provided at rc a~ouahl e
 mileage and that this n de : y should be allocated W               sits . : Report to the Congress. I l il t thi s ;; Anne 2 .
 sp ire_ the ritost important needs, The Oepartment                  19i7i

    35. Federai Participation in Costs Incurred by             cation s}si t , uts re) iewed I) GAO would be Yf•c) altiated ,
States for Highway Landscaping .-- The federa l                as suggested by t : :AO, under the retlri r -enIents include d
Highway - Administratiou (FH%VA , llepartment o f               in the nex% uidelioes . Report to the Adjuinistrator ,
Transportation . is responsible for approsing P- edera l        FH1VA, Jan . 28 . 197 1
aid to highway 1 tndscapin~~ projects initiated by th e
States for roadssde planting and related work cnutrib-            37. Limited Progress of the Appalachian High -
utitw to tie aesthetic and functional design of th e           way Program ."The Appalachian Regional Develop-
hlgliw ivs. Federal financial participation in landscap-       ment Act of 1965 )vas enacted to promote the economi c
 ng projects is allowed for the costs of planting wood y       development of the, Appalachian region on it coordi-
groundcover, shrubs, and trees, together with tu rfing.        nated and concerted re_ional basis . 'I he Appalachia n
mulching, and other wort: incidental to the coniple -          Regional Commission . created by the act, establishe d
6011 of it planting operation .                                a development highway system about 2,900 mules i n
    MVA's policy is to allow Federal participation ,           length to open up isolated areas of rite region and con-
once the planting and all other initial landscapin g con-      nect these areas v ith the Interstate Hil-liway System .
struction work on a project is completed, in all cost s        About 2 .530 miles of IngliNmy in this systein were con -
iilcm`red be a. landscaping contractor in caring for th e      sidered inadequate, requiring new construction or inl-
planting for peiiods up to 1 year to insure that suc h         provement, and were eligible for financing under th e
plantings become established .                                 act . The act authorized about $1,8 billion of Pedera l
    GAO's review showed that the majority of the wor k         funds for Appalachian development of which abou t
performed during the plant establishment periods was           `1 .08 billion was earmarked for the development high -
about the same as that %%]rich at any other time woul d        way program .
be classified as State maintenance . GAO therefore rec-            The Regional Commission did not establish con-
ourniended that FEI\1'A revise its policy to provid e           struction priorities directed toward achieving th e
 that the basis of Federal participation in landscapirw,        g reatest contr ibution tOtcard program goals at Iheearli-
 projects exclude the costs of maintenance-hype activi-         est practicable time, nor did it determine whethe r
 ties_ performed by landscaping contractors durin g             priorities established by the States were directed towar d
 plant establishment periods, other than those costs in-
                                                                that encl . Instead . the Regional Commission allocate d
curred for additional care required to insure the suc-
                                                                the Federal funds available on the basis of the estimate d
 cess of the protects . (Report to the Secretary of Trans-
                                                                cost of the highways authorized for each State . Th e
 portation, B-118653 . Sept . 16 . 1970 )
                                                                States, ill effect, were allowed to set their own priori -
    36. Experimental Emergency Communication                    ties, regardless of the extent to which tiler might fur-
Systems .—The federal 1-1igliwaV- Administratio n               Hier regional accessibility .
 i1~H«- A'. ; Departinent of Transportation, provided ,            The Re g ional Commission disagreed with GAO' s
as of August 19 1- 0, about $1 .1 bullion to certain State s    conclusion that priorities for hi .ghway construction
for the installation and evaluation of various types o f        should have been allocated to projects haying the
coil tnrimicatloll systems which allow stranded motor-          highest mlional prioinv. Tile 1tc iunal C :ouimissio n
ists - to communicate :a'need - for service.                    also stated that it believed GAO had somewhat over-
    FH%1 Y instructions in effect at the inception of th e      stated the problems of highway fragmentation that re-
hrogrsni requited that the States perform an evalua-            sulted . in its report to the chairman, Hous e
 tion study of the communication systems u-) determine          Committee oil Government Operations, the Regiona l
 !Iwir rAc,-tiveness- The instructions, however, did rio t      Commission restated its disagreenicut with GAO's con -
 contain specific guidelines for obtaining the informa-         clusions and said that it would continue to administe r
 tion needed to tuake such it determination, and GAO' s         the program in the same manner as it had in the past.
 review indicated that sufficient data were riot col-               Because the Congress was considcim , legislation to
 lected to adequately determine their effectiveness. Sub-       provide additional funds for the development liighiva }
 sequently, FRAVA recognized that additional data wer e         system, GAO 5mzgested that the Cone ess. 111i .glu, wish
  nrcdc"I mil issued additional guidelines to be followe d       to consider requiring the Regional Clt mmission, or tin)
  h) petiorining future research studies .                      future similar organization, to adopt it regional all-
    1 , 11 WA, in March` 1971 ; stated that the communi -        proach to the construction of the development high


                                                                                                                   SECTION     1

     ways .. (Report to the Congress. B–l64I9i `3 , Alay 12,        Lan[ Management an d
     1971 ;                                                         Natural Resource s
                                                                      33 . Restrictions on the Use of Motorized Equip-
     Information Gathering an d                                     ment in Wilderness and Similar Areas .- - .About 9
                                                                    million acres of Federal land ; under the adtaictistraticrn
     Dissemination Activitie s
                                                                    ;.t the Fc,rest Service . Jeparur 'nt of Aetit ilittoo . m w
       38 . Operation of the Medical Literature Analysi s           designated as %%ildernc-, area, b% the AVlldcrtus- Ac t
     and Retrieval System .—The Department of Health .              fit 11i64_ The act directed d e Scantvotes el

     Education, and Welfare ' s 'IIENY`t National Librar   y        c-ultuie and the Literi'n- to stud ; cvvial indhou acres
     of Medicine maintains a computerized medical litera-           (4 additional land, for possible futu . . cc Wllat:lti its
     ture analysis and retrieval systenl and administers vari-       wildernes areas.
     ous programs for collecting, publishing, disseminative ,            I he Wilderness Act protidv ; that nutnrizcct equip-
     and each in'ring medical health information .                   ment not be used in vcildet'lit— :ue,t< except as ne . 'es-
        A major use of ti :e library's computer has been t o         sar to meet minirnuni requoentc•nt, fern the adminis-
     prepare bibliographies of biomedical subjects requeste d        itittion of the areas 'tor the ptupost . c,f ill .act . Th e
     by medical schools, researchers, practitioners, publi c         Forest Ser'ice has determined that a >ienihcsn t
     health officials, at id other health professionals . Due t o    amount of trail construction . bridtm cmi,truc tion .
     the slowness inherent in the computer 's storage and re-        trash and litter cleanup, and other sort : is necessar;
     trieval system, limitations in the computer's vocabn-           to carr,' out its luspon ibilities for presering and prcr-
     larinconsistencies in indexing procedures . and error' s        tre-tintj the areas . but has restricted the a>,. of motor-
     by~the people who did the searching, the lihra!) , had          W'd equiprneut in c :u'ning out these activities. Ilaud-
     encountered problems in respondin, to requests . T o            tools -iuchxhm, sonic portable pm%cr tools, Bac k
     expand the system and correct the problems . the li-            animals . and backpackers arc generally used in_tvad .
     brary had awarded contracts for the development, de -               1'hc,e seven' limitations on using tuotorired eeluip-
     sign, and installation of an improved computer sx,stem          nient result in additional costs and create problems i n
     and for the training of employees in the systern's op-          prc,etviln; and prourtin, the atcas . For example, th e
     eration GAO concluded that, if properly installed an d          estimated $100 million cost of planned lonsttuction
     operated, the revised s\steinshould alleviate the prob-         and reconst ruction of 113 .000 miles of trails in wildcr-
     lems experienced in the past . .                                ncss and sunilat areas in three Forest Service regic,n s
         Also, the librai-v had not been able to satisfy all th e    Could he reduced, possible bt tine-half, if the use o f
     information needs of other HEW agencies having re-              a small trail machine especially designed for suc h
     sponsibilities for health programs . HIM agreed wit h           work were allowed . Also . the Forest Service restrict s
      GAO's recommendation that these needs be met i n               the use of i 1 t pmversaws for nnaintainint trails . 2
      revising the computer systerii and assigned iesponsi-          helicopter; for rentovin'_' accunmlated trash and `titter ,
                                                                     transporting equipment and material, for the con -
      bility to the :assistant Secretary for Health and Scien-
                                                                     struction of nail bridg,", and inspecting :urti repair-
      tific Affairs for coordinating technical and scientifi c
                                                                      ing reser voirs, and '3 compacting equipment fo r
      information within the Department .                             repairing reser\oirs.
         It was GAO's opinion that considerable saving s                 The National Park Service - NPS, Department o f
      could he te,dired if the library purchased its existing         the Interior, also could realize si gnificant savings b y
      eomputec equipment. However, after studying its fu-             usirie the small trail machine in areas it m .inage s
      ture equipment_ needs ; the library determined that ,           wider tine wilderness concept . N 'PS planned to con-
      becius" of changes in expected requirements, con-               sti uct about 2,000 "miles of trails in areas where the us e
      tinued leasing of equipment then in use would be mor e          of motorized equipment is limited .
      economical .                                                       GAO _recognizes that motorized equipment is no t
         On another point. GAO suggested that the Con-                compatible frith the ideal ~~°ildciirc-ss Concept but be-
      gless Inight Nvish to consider the library 's deterinina -      lieves that the constn,ction of trails; bridges, and othe r
      tion that all of its principal activities are public sera -     facilities and the presence of litter left in the areas by
      ices, toe which no fee; are charged . (Report to the            users also are basically inconsistent with the idea l
      C cmm,ic,s,, I- 16'Q41 c, ?', Nov . 30, 1970) .                 wilderness concept . Once decisions have been mad e


    u, ,-ristru, t- :,Uch 11, iluir> roil dkp(_ e- -of ;1(, 1111 kill ate d   "'a, proyidillnl vuarailteving part of ill,- financing
    htt +, ( ;Ate belie,,", than irrnloll)v and c'omtuiemx •                  oil 1nt.ine- !nails for amounts sreatci than necessar y

    shocdd h. t„ttsidercd . alotl~ mill other factou, ill lie -               l ocau .,e ],, ;ill speciidists '.Tire not ade(luatrty consider-
      ding «wn- to 11,1 111"tolited r•yuiprnl°nt .                            inf the pel onal msouurs or credit of tht (mikens .
       Irrtsmildl a, doo m 1 +t "ersice and NPS htliv\'-d                     partners - nmnagemcm . or principal stockfrolders o f
    that their lessilict ns „c-r t consistent kith the, inu•n t               dw apphrants ill their artahse, of loan applications.
    of the -Wildcrres, Act_ G_1C) Ter cutu ;cm cd v'tat th e                       GA0 ;( .(onunended that SBA establish,~rittria t o
    ( ln,l,•s . (u ;'id`•r ptorit in _ ltn tbel euidarr, e as t o             ,e,m,t loan spetialists in deciding t,hethta' an applica-
    th' i est. of .m h c•quiptiltnl . , Report to chi, Coneress .              tion 101- SBA asCi,tanCC ahould he disapproved or rnodi -
    B l2_7)0 .--i3_ 0m 2 9111 °(i ;                                            hed ,if ill, , ba.,is that the per,onal :c oitrces or credi t
                                                                              of the altpli( .trrts principals ,yerc substantial enoug h
      40 . Allocation of Funds for Construction of                            and that addiomi .tl fmimci,, issi,tancc could be ob-
    Forest Roads and Trails—At ,dune l ;1, 1969, th e                          tamed elsetder(• t\. ithout undue hard hip to th e
    I'orest S, vick.- 1 )cp o tioeilt of - Atriculture. ha d                   pi ill< ipals .
    i lannec for nc, role true titill it- ut, .,l,0111(tioll o f                     Flw :Administrator indicated that SBA's le ,al coun-
    roads and until, in oat-iinial forts mad Qrasslands a t                    e ' l had recieued etiain,, in>tnimon and coll'idele d
    fill estimated cost of $11 1 : =? billion . Although a portio n            dwell adequate and hall concluded that the proble m
    of such kwrk-is linarnced be credit, against tirnbe r                      arose becaust of lac!_ of compliance t,ith ill(' directiv e
    sates pi'i e, an(1 by contributions from coopcu atom .                    Tlio. :Administrator directed that action be taker : t o
    large poltion is financed by appropriated tends .                          1 1!110,• that if propt•r es°aluation t131 made of the prin-
        Forest sersice procedtues for all caun,g, funds ap-                    cipels' alsiltty to provide funds trout personitl resource s
    proptiated for roads and flails did not provide fo r                       and that files he adeeivateh dot unx•uted tyhell at deter -
    adequate coil]parisons of the need: of the v_u riou s                      11111WU m t,as made of undue hu(lship in tttilitin' per -
    national forests that tl`nu12 insure that lundinv ptIN -
                                                                               .onal resouu( : . "Report to the .Administrator . SBA,
    fires were ,,weir to the most needed projects . 1It e
                                                                                Pib . lb . 107 1
     Federal lid - 1i, iwav :Act of 1( 1 :13 pne, idc that suc h
    funds 'be allocated according_ to the relative nee& o f                       42 . Use of Independent Auditors' Reports .-- -
     the various national forest taking into consideratio n                    i'he harutcrs Honor Adtninistlatiou (RIGA . llepart-
       1 t exist t5g rowels and t rail '.2': value of timber or               ntent of .Agriculture, stake ; loans to rural public an d
    other resource, to be served, tai relative fire danger_.
                                                                              private nonprofit associations and onlanizatious to li-
    and ,-I comparadve difficulties of con_tructicin .
                                                                              uance s ariotts tuulert vkings, Stroh as the developmen t
         GAO's retitty of the funding (if project, in se e
                                                                              oI \ ,.-ater and sci%er fa iliti" . rcrreational facilities, and
     forests ill orke Forest Service legion s lov. .d that fun d
                                                                              rural housing prciects. FII .A rases reports of indt-,end-
     were l'ieinv used on projects that met limited need s
                                                                              int auditor, in adnlinisterin r these loans . The Rura l
     while liinjects of ,renter mieds- mere deferred .
         t he. Forest Service agreed in principle with GAO' ,;                F,lectrification Administ ation REAL . Department o f
     recommendation for establishing an effective s\~ste m                    :Agriculture, also uses reports of indel_,endent auditor -
     for tssi 5,-a,irig fundiint priorities on the basis of th e              in a(IrtrinisuVriug its to to pro{ rants . GAO conclude d
     relative -needs of all national forests and stated tha t                 that audit reports prepared by qualified independen t
     a study. with a 1 f7`? target date for completion an d                   auditotc could be useful to 1`1 IA it : supci~isin r its bor-
     implementation, c,,as being made . The Forest Servic e                   rcuut laart icultulti- from the sturdpoint of isolatin g
     stated also that interim reports on the stuck ontaine d   o.             .std an;dyziu,= problem areas and evaluating the fi-
     data which might aflect theallocation of-fiseal }'ea r                   > :anrial position and results of borlotyer,' operations .
     1972 fiords . iReport to the Congress . B 12 1053 ,                          AA-bile RB :y lead estahlisbeti if ,(null! 1,to,t :atu fo r
     Nm% 20 . 1970 ,                                                                    independent :orditol_,- . I I IA nettled to strengthet l
                                                                               its proceditiesand,prislikes because it had rivet `
                                                                                       Provided , fear guidelines :o its field staff for de -
     Loan Program s
                                                                                   terminin'r whether the auditors engaifed by its bor -
         ill . Eligibility of Loath Applicants.--GA0 c n-                              ,vers po essvd the independence and professional
     r1-ie i th,,t dw _,tall Business :Administration ~ SBA                        (h :ali it_ttions vs`(•ntial to the trriduct of audits and      ~i _
                                                                                                                               SECTION i
     preparation of required reports in aetordaltce klit h         had 1 1(t :anced dlc ± :I rtniovnit of 1, ;1 ;I, to a?socia-
      enera!!% accepted auditing; standards.                        tiorii t ; [• 1l thoudi subst :ential port .,n .- of sll h a :i . and s
       Propelly defined or uflret :vcic c mimtn i(awd it s         ` I " 'I ' * II`t ,.\pcnded h . till - .Iss,-1 i .ttti l l t, f0 . j I.-r' u p
     audititt" and wpoiun_t Wquireorettts to boricMul s             t,, 20 liaondl h of 101W't1 ., ;ld 2 IMI'li• MIC 01 Mor e
     and their iniielscndent auditors .                            advances of _, rant fund to a-oc ation, ..t tun es %dir ,
       Developed instntctiolls oil boar FI LL personne l            Cllr=~t> x: ;aliensIiad :;trbsantic["nioints„1ull :pen e,
     Wert' to rc~°icw and tie audit reports prepared b y            loan and or grant funcis on hard, fl : -11w ,,name_ .
     independent auditors .                                         the as-ociations did not u,e substantial 1 ,o lion, o f
       111A stated that its instruction< ;%etc hcu!lr revised       the ,rant fund . ad, a1LCd for perit)(IN tW tr 15 Innn111 c
t   rettci all' in line wll
                          i ; C :.A(Yrec-onrnu nd Ilion ; to :     ear Ion„(-r. Tuterest salim!, of about $200018 eo=tl d
                                                                   hale hceo reahZrd h ; dw Gt, .r ;nt•mnt if I IIrA ha d
         Define IhV Inininnint professional dualifications o f      advall"rd I I I,- funcis to till- tit association, only tt s
     i n_ depctulrrit auditor,.
                                                                    needed .
         Establish standards by t<hich borio%%ci:s inav selec t           HIA in .tructiians for ivaking ca>h achamr, to as-
     independent auditors accelrmble to FII_A .
                                                                   sociation-type borio%%et, obtainin w recreational loan> .
        Define standards tot making audit, and for prc-par-
                                                                    ,razing loans . and irrigation loans wt-rc stuiku to th e
     ing Ieports .
                                                                    ilistim tions lot' dw watt's and sett t`r ploLfla111 -
        Define tilerequired minimum scope of audit, in-
                                                                          :~.~ a result of (, ACYs rerc,lnnu•ndation~ . hI I - A ntyisrd
     cluding any procedtrms to be used in nulol in," report =       its instruction ; to rcyutrc tha n
     to inuet FHA's .speciiicneeds .
         Requiie that I'01 OWCI, and auditors be furnished                Gash achanc=s under all asst t=titan lout prn~~r<<11 u
     Fl IA requirements which till- auditors nutst meet i n           be made on the basis of the associations :olticipatt d
     performing audits and preparing reports .                        cast tcquirculents .
         Prov=ide F1iaper onnel asith guidance for the I                   Associations furnish periodic eNtimate, of pltojcc t
     vice• and use of the independent auditors reports .              expenditures and sat, It ectiniawe he reviewed an d
                                                                      analyzed by the 1 : 11A counts klpvrvisoas to deter-
   FHA stated also that . FFIA's professional staff a t
                                                                      in ; It(, the amount of rash to be ach anted .
the national hcadgitarteri and at certain field office s
tI•ouldbe `increased to insure that functions relatin g               Also . FFIA tated that advances tuxitd he monitored
to the use of independent auditors are performed b y               to insure that they arc made only when net(h .d . ;_Re• -
qualified individuals . In addition, F[ [A stated that ap-         port to tits Cougress . P,-,11`, 713 . July G . 19 -10 ;
propriate'action %%ould be taken tthere reviews o f
independent audit iepoits evidence noncomplianc e                     44 . Determining Financial Feasibility of Water
with requirements. , Report to the Cong_ress,d3 -1 10$71 .         and Sewer Systems—Contrary to its , instructions, th e
Jan . 22, 197 1                                                    Farmers I Ionic Administration t; HA1, Department o f
                                                                   Agriculture. had disbursed loan and grant funds t o
    43 . Advancing Grant and Loan Funds .—'rbe                     public and nonprofit associations to finance the mi-
FarmeirHomeAdministration r HI A IOrpartniento f                   provement and`or construction of water and sette r
Agriculture makes grant, and direct and insured loan s             systetns before adequately determining that the associa-
to public' and nonpublic associations to finance th e
                                                                   tions would have the minimum number of users t o
iutplovement aild'. or construction of ru ral water an d
                                                                   make their systems financially feasible . Failure to hav e
sewer facilities.
                                                                   the necessar v number of users when the systems go into
   'I'lae ( .overninet it's general policy is to limit advance s
                                                                   operation is significant because sufficient revenue; tnav
of loan and grant funds to recipients to amounts neede d
                                                                   not be generated to enable the associations to continu e
to lncrt their euf3 cent requirements to preclude un-
 ieves,lm borrotvin , by the U .S . -l'ieastiry and til e          operating and to meet repayments on their loans .
rclatrt[ iluc rest costs .                                            Also, FHA did not require associations to obtain fir m
   ( ;AO .nial /'-d thn monthly cash balances of 92 as -           commitments from potential users of proposed wate r
,m ttion, in nine States _which had been advance d                 and/or sewer systems including (1) cash contribution s
loan and !rant land- I shout fa-13 million from Ali -              covering the estimated cost of connecting service lilie s
;,u,i l J& 1 to Ch tuhi ~ P69 to finance cite improvemen t         from the users' property to the associations' water or
and : or construction of wate=r and sewer faci l ities. 111A       seater s y stems and `21 agreements requiting risers t o

         4       <- G[15 ( )-   ..   ld ----3                                                                                               29

    pay a minimum monthly rate regardless of whethe r                  cially feasible, since sales of grazing units are, the prin -
    they actually use the associations' facilities .                      ipal source of income to an association .
        I ha demand for t _ist tni in tinancin, sraunr, ha s                A subsequem review of 10 loans totalin g about .$8
    been -greater than the funds available during the pas t            million, nstde to :37 eta2imr association_ in font State s
    fey years . '] his fact makes it increasingly importan t           benyeen April 1968 and May I cs70, showed that. at the
    €fiat FIfA establish rt•as,nablc' user rcquiretncnt, and           Bunn_- the loans were closed . FHA's conditions relating
    procedures for enforcing, such requirements to insure              to the minimum number of members and initial caIIl l
    that loan and ;grant funds are pin ided to only thos e             contributions to be collected from members ccenerall y
    associations -havin g, financialk , fcastblc systoms_              %%erc suet but that 21 associations . which had roceiye d
       In . response to GAO's recommendations, PHA                     louts totaling `ti4 .2 million . had not sold the nunthel of
    agreed to provide finaneal asslStanCe to an associatio n           ( , r czing units determined necessary by FIIa financia l
    only after F11A county and State 'loan approvat official s         feasibility studies . further - FI IA ' s letters of conditions
    have verified and documented in the files that an asso-            for 15 of the 21 associations either had tequired the sal e
    ciation has obtained :                                             of fewer , razing units than indicated by its financia l
            The required number of users to make its propose d         feasibility studies or had failed to specify the numbe r
         system financially feasible .                                 of grazing units which should have been sold .
            A cash contribution. froth - each prospective use r              A re6e ;y of the current fn-ancial status of 16 associa-
         to cover the estimated cost of connecting a servic e           tions covered in GAO ' s earlier rov iew -showed that, a s
         line from the user's property to the association' s           of January 1970, seven were delinquent or. their loa n
         facilities,                                                    payments !)y about $265,000 .. and 12 sustained operat-
            An enforceable agreement from each prospectiv e             ing, losses in calendar sear 1969, pointing to possibl e
         user; , oninlitting the user 'o ; , ay at least minimu m      additional delinquencies .

         monthly rate to the association regardless of is Nethe r            GAO proposed that FHA establish a program fo r
         lie' uses the system :                                        monitoring, at the State and county offices, the closin g
                                                                       of tiirazin~, loans . GAO stated that I i the progra m

         Also, GAO was informed that FHA would establish
                                                                       should inclucle evaluations, made on a systematic basis .
    procedures to determine, on a systematic basis, iyhethe r           of the adequacy of the established loan-closing condi-
    associations are enforcing user agreements . (Report to             tions and whether these conditions had been met b y
    the. Congress . B-11 .1£373, Apr . 21 ; 197 1                      ,he associations and 2l the evaivations should .be mad e
                                                                        prior to the closing of loans so that Government fund s
      45,. Assuring Financial Feasibility of Loans to
                                                                        would not be disbursed until the pote ;ittal fiscal sound-
    Grazing Associations--The Farmers Home Admin-
                                                                        ness of grazing :associations had been determined . GA O
    istration (FHA1, Department of Agriculture, make s
                                                                        was informed that FHA had issued instructions in lin e
    loans to nonprofit associations of farmers and ranchers
                                                                       with GAO' . proposals . t Report to the Congress.
    to finance the acquisition and developmentof grazin g
                                                                       I3 i 1117 :? . ~~Iay ?7, 1911 ',
    land for their livestock ,
        In a 1968 report to the Congress, GAO had pointe d                46, Records To Be Maintained by Borrowers,--
    out the need for FIIA to establish certain minintun t              Instructions issued by file Farmers Monte Administra-
    loan-closing requirements to be met or exceeded b y                tion tF1IAt, Department of Agriculture, provide tha t
    grazing associations before loads were made in order t o           borrowers be required to maintain such accounts as ar e
    reduce the possibility of defaults and foreclosures oi l           zteeessaryto -sttecesfulh- continuetheiroperat-ions,trtce[ -
     loans. In March 1968, FHA issued revised instruction s            the requircmc-nts of State and local la gs and u,_,nla-
    which provi('ed that each association, before receivin g           tions . and meet the terms of their loan agreement s
     a grazing loan, t+ould have to meet requi rement s                with FITA and other creditors.
     wgarding the minimum number of members, the                          The instructions are not specific concerning the typ e
       umb      Ifgrazing units to be-sold i i .e ., rights to graze   of balance sheet and income accounts and other rec -
        speriiwd u_u_n;ber-of animals)-, and the initial cas h         Olds that should be maintained by cacll type of bor-
     cantihutu,ms to be eollef .ed from each member.                   rower and do not provide criteria or t,uidelines to be
         I hw ot the required number of grazing units is               used br FIIA field personnel in detenninhig whethe r
     the most significant factor in providing reasonabl e              borrowers' accounts and other records are adequate.
      s;nram (, that in association's operations will lie finan -         With such instructions . FHA field personnel tyould
    30                                                                                                                                   t
                                                                                                                 SECTION     I

be better able to coultsel attd supervise b ,rl-m er-, I ~ar -   are required to meet          .1ppr ,t al (widition, before
                                                                                          to .i .~

ticularly frost the standpoir=t of determining whethe r          G"VCrnment funds arc, cr isi)used : Mid otrls        fix=~h? e

the horrowers ' financial policies are bei < carried ou t
                                               s<                borrower . arc appm ,,ed for r,cieation loans .
in accordance - with -loan ~cquimments and tdwdie r                 'Fite Admiuistrator, F11 \, agreed «,itli GAO' s
their financial r;rrniTions Eire hein>! pit<en cd o ,rs t o      recotn!uco(l :itions and issued it huiletin to ill! State di -
quately protect the Government's interest .                      rectors and :listrict and counts supen°isors to pierc e
   FFIA agreed ttith GAO's recommendation that it s              treaterempha_sis or, their i cspor,siiniitics for ceinr that
instructions be retired . (Report to the Administrator ,           a<h pto,run imc lvinL, tuncfs far recreation pmpos c
h'HA, July 30, 1970 `                                            is administered in accordance with FIIA instructions .
                                                                 I Report to the .Achninisuaror. 111 :1, J1ar. 15 . 1()7 ]

    47. Interest Credit to mural Housing Borrow-
erS .—Ltnder : its irral housing loan profran ;, the
Farmers I-Ionae Adtuinistrat-ion {I : IIA', Departmen t          Low-Income Housing Program s
of Agriculture, is authorized to reduce to as iow a s
 I percent the interest rite charged to borrowers wh o              49. Occupancy of Federally Subsidized Fious-
                                                                 ing,—Procedures and practices of the Dcparunento f
have Toter or moderate incomes . FI IA accomplishes thi s
                                                                 Housing and Urban Development r IIi_- D'i and project
by computim, m annual interest creclit for eligible boi-
                                                                 owners were not adequate to insure that nluiiifanti h
 rowers and using this credit to reduce the norma l
                                                                 housing provided for low- and moderate-income, fami-
 interest rate .
                                                                 lies under the below-market interest rate mortgag e
    Under FI Ws instructions. a full-month's interes t
                                                                 insurance: program authorized bs section 221 d 3 o f
Credit isprovided to at borrower without regard to th e
                                                                 the ?National ITousin__1 :Act was heinsr o(c111)it'd by fami -
 day of the month in tchich the loan is closed . The De-
                                                                 lies intended to he served by the act . G .\O's tests
partrnent of Housing and Uiban Deveiopmcnt, whic h
 administers a similar ruo to as*t assistance prozrram, re-      shorted that housing units were being occupied b y
                                                                 families whose incomes may have exceeded the pre -
 quired that interest credits be con .puted from the dat e
                                                                 scribed limits for occupancy. Inconie information ma y
 mortgage proceeds are disbursed by the lenders .
                                                                 not have included all relevant data, n;ay not have been
    GAO estimated that, durinr, fiscal year 1971, F] I A
                                                                 current at the time of occupant y and was not verifie d
 would grant about $375 ;000 in interest credits to bor-
                                                                 to determine eligibil i ty for continued occupancy .
 rowers whose loans were closed on other than the firs t            GAO recommended that IIUD :
 day of the mouth . Similar unnecessary interest credit s
                                                                       Strengthen its procedures to promise accurate re -
 would also occur in subsequent ears .
                                                                    porting of income . ( ;AO suggested that each famil y
    F14A revised its instructions It, line with (AO• s
                                                                    adult be required to certify the accuracy of income
  recommendation that interest credits not be grante d
                                                                    information, Ako, families approved for membershi p
  for periods prior to loan closing . i:ehort to the Ad-
  ministrator, FI IA, Dec . 7, Ifi7 fl }                            in federally subsidized cooperative housing_ projects
                                                                    more than 60 ta gs before occupiutev should be re-
   48. Instructions Not Adhered To .--The Farmers                    quired to provide updated income information prior
Home Administration (FIWII, Department of Agri-                      to occupancy and, if their incomes hale increase d
culture, makes recre-ation loans to individuals midvi- it s          above the applicable income limits, they should pa y
farm-operating, faint-ownership . and farm-recreatio n               the prescribed "cut surcharge .
loan programs, in-reviewin g recreation loans tetali p g                Provide for roo m , effective surveillance by its fiel d
S7O1,(100 made to 16 individuals, GAO iound that FI I A              offices of adherence by federally subsidized housin g
county and distict supervisors, « ho are under the di-               projects to FIUD instnrctions for obtaining and veri-
rection of State offices, did not adequately follow FIJ A            fying family income information and for assignin g
instructions in approving loans totaling; about X375,00 0            families to appropriate-sized units .
made to nine of the 16 individuals .                                   1'sstablish an appropriate percentage-of-incom e
   CAn iet ontmetided that FHA require its State of-                 coitirihution as the mininiuna rent to be require d
fice oificitik to %cc that more realistic farm and home              for units in section 221 (1) G3= projects, the maxi-
plan,, hued u; (ictctmining t1w financial samtdriess o f             ntum rent being the equivalent market . or unsub-
recreation loans to incli% iduals, are prepared_ borrowers          sidized, rent for the housing .



           IN 1) qat"d diat ( ;Affzfilldilalal t—omnlenda-
      tv'ri, iould he ~-tudird i aldllll, I'l1 did not avlvv tha t
      o, olil- inflop~ah"!, s1~c)tlld k k • updal, d ini'a „, o( ( it-
      pallc% - . 1 thill mlwink ! , -lltai mr, < ~h,itlld kv -~lah -
        ~) I cd ;I I all ~i a 4 '1 ~1 i~l                  )',-I  elitaizt .        inc , one . a -
       cqui I ( ., 1 ill ;d, 1 1h, -                               or             in , !, l ill) I ,te r
        e ., , - I . it 1, in 1) , 1 ,al i kill(” . GAO ~u            ate( ;, t t wpli-q ., tha t
      tilt' ( ~f ol _l „, n!iul it i, i 11 ro ollniz . l %dirdicl Suc h
      olinnintilt 1 , nill call-, Aloolld Ill : —toldi'lled . "Repo t
           thc ( 1-n_! ,                I,- 11 1 ; ;60 . I a it . 20 1 ' i -, 1

         50 . Problems in Rehabilitating Housing To Pro -
      vide Homes for Low-income families . -Finalicia l
      aid 11 fIn 1,illlf d to 10t J1 hnlViilli_' atIdIM-1tie, t o
      antt l-,1-1a1ohtajc hin! ' niv Go ,        ot   . Ilt I o       3T

      foeili- . ( ;M)             0lu i ' pi         (it thi, poot i lai n
      i11 Philadulphia, P,_, h.- riol," ; n) " In      p-lvt . nl jf ill ,
      itlsua, hf , nixquit<r!              in 111,11 cn%, Althcond l
       _ tit C s 1-11hrd . ~onl, ii-al, of flit- Philadrlphi,-1 po-j -
      (-ct hil ' i not lw t . n ha, hie ,,ed a n ' ! !hv 1 )"j" olillwit l
      -4 Momw ald I rhin I InAln " m ; 1111) had n, q
                                                                                                           V"          W, wwa,m Q to PAN H"Wq Mwwora -
                      criiio-d                 inh the ;n1i " . 61 'e d
      r"pinammb Go Ow pnjwt .
         Wilwan p i al"W"ed !do> . ' onskaw ! n ” , ' d                                                    1 H 1 ) hMmild KM) dw . w a n .h M chmmArz-
      111 it "" llilod font-               of lialkitarl " i1% holl-il!t_                                  ime the oprloiolr: of I I t. 1), dw n , \, field nri_, irrli/alioll ;
      lathel than                     heats ing and limir, unit s                                          x,-ltd 1- ill ' i pf"iti ' m to in( !'ia,e ~llrvvillarlcv of I'), a l
      "-rP 1,qatcd in-a ' inl11l,t ! i :d and ' onall " I ' ial ' of -                                                       pnlr,,!itlll, . : Rf'polt to 1110 (~oltgrvsii ,
                        the 1 "             Quy
                                          Q AMAn-ol' - fanliho ' .                                                              ! 0 . 19 - 1
      and th!o! -                        liar t ._ der!         11 "l! " ,

      „,a, ~rl-_Ilfl,           Ako - dw          ii0h   I   !awls. til l                                    5L Accelerating Construction and Reducin g
      anplivin aml WW"Mm nay nwh n) a inalinv i                                                            Costs of Low-Rent Housing- The Dopartniont of
      that (lid ran iepan in tdia-%in ll ' nlw~ 11c                                                        Nou,iniand L' ;-ban                          HIA) review s
      dw p oymq, . Il l                                                                                    and                                        comshwpropose d
            ell;` Ike_ ii - the 1, (al holl-inu alitholie, tha t                                                     hoil ' ile- ploje' t, ,hi,h " 'INC as ,() :a linlita-
       it hit(! faili~d t(owpk ,idr dw app :o%eil ?"1 0                                                              MuM 1"l my whom" 1ALY . Mudgew d
      MUM       131311 . and wyed Ge at"hoid, u, relmd, the                                                con, 1"Mi h"pleoly W-d on linamdo"Aly W. cos t
      . ititatso n : 1_ h, iw %,a, no AdWaahm that thr awRlA w                                             (Milliate- .,-1 i,l, did 3w ; I cil, -, loal 1 ,1(\ ilrhllE con -
       Ed anwk am vM n t(} cornet tier :nail .-< hrWht t o                                                 qm(lloll - 11, q additional . .-t, due it, changes il l
      its attention .                                                                                       is    rah. ii~ . A, it 1-111t, rccll the li'v, bill for Coll -
           I he IMORM"i %”- bdimtkv Aim 1W, ame 4 NMM -                                                        twW,n ey, " Ied bwly,ml " ~n in ill-aw vme, ,
      wil; 60mirni , Wi mrauxi 9"41-awor, am! An n                                                             In wh nw~ INV unmalk pw&W an M A
      HLM mmiumna Mantinds of ANdlir, am! onwile-                                                          ii, ' c'." od th " -11 11 11a, 1 onk allot it -idlol I i riep -
      li .,: , and hecalli( th"le W . a m"I 0 ill WIT qw ?                                                 Cited PA"Yom in dw UK prim mhh the Owes (
      malions it, airne uizo o f the oi,ist appio i nia w                                                  hA&M AW AM W , 0 Ic , (. w 4 Ore rontra" wr,rk ,
      rnaw!ials .                                                                                            2 ici%oli,aM lod, on fln- ba,i, 14 ieviwd plan, an d
         Altholn:ih HL 7 1) look vow wom nwirmat, not-                                                     ,p<'ilitmAm and or Y obtairrml HUM apin:m-a l
      it'llictioll dcficie,lcie~, it (lid not ;1 ~,lvv ,6th (Au s                                          a an mm"w in the hidmod coawnc` al exists:
      perialn that ;t illovild as~itln linne illizpcctor= to instil .1                                      Hlv<~ , pli~codrlw, lluall\ dt'limid '-forml-tictioll b) al l
       hue' rl ;r jumnuri A val-Nd ma Or anonhav w0 h                                                      mmw& of idmmr 2 irmaM                       Awal admiri b
                    pklai . and proc ' -dille-Sulu eyu , ~tu to the                                        umv . No hwwmq "W " aid MW W dw wM b
         utt       j (0,04 M p. .rr however . III,- tiecretaer if                                          load of [I w L : .~ and I 11 : 1) .

                                                                                                                                                      SECTION I

         GAU eylizv—0 Ole hchw that r-Awa Mn, am !
     incivased vo=t' lould 1)1.~ riliniluized if ! HUD w -                                               o:
     N"M y cm p Kinw, ' ninlully 1whau "Tiovow ,                                 I             hm- ~—n ww"M ym ov w N~m vr p ~ a A
     hinitation, and iondionzinri di p 1110 to Kim Lik k                                                 nn~            aw"Lm h~a k a
       2 . We tee 4!www"s on Hinind m ano ditain                                                  AW nw'w~ 1, xi~ 1 Q h— na : n ' v— P"PA-ln~
      We full WwAt 4 omqviliku, "d 3 Kcal hwls w
     xudlol-itic '           n-fli,io-d To pTep.tl-e d"tail-I '-Sri-
     niates of :.ho co~a of Inqmwd champs a- a A"A O n                                           Vlvixq l t . : . . . . to mmv-                             5, nm y
     wqaimwll ,                                                                                                           pto ; 't'l~ l(I i n
         1-11-: 1) oa- !w -iln i ' ticahcoil Aw PWARY 4 my .-n-
     ilv~ lcalVtic , o ' t V~tiomtj, juc Ad wa AQHT ilml V v i
     authol'iriv, 'hotlid he                   to ll 'o nidVp ildent (() . [                                  w
     '-~tilllatill V-cotialill'u plVe, for I                            I It - 1 )                                                                                  J' i !
     dM*d not to di-ah -tit .a —uinj Kuh the Iwcili c                                                             in                                              -111 ; !
     Ammmaiv, ynnni= ik a"Aulk tontimi, unde r                                                                                                                      n-
     ill(' lit"-' Onation inVthod atial dw n-6 hAtion q Vii ?                                  1,1
     nwhocl . IRA) Awk h &~ M w hm-V thu niaui i                                                66 1
     of li e'--fiation I'll - ca'V-1,%-ca~v .-ollnion !ati!V1. that .
     Ili atiCill!)t IV i1SLlanFV iI i4VIII'lul 'rrlidehn'~ +ol thl •

     pwynn it r; I I I IA how that cm""Imums ,tidal :                                          Manpower Trainin g
     the val-iolls lelioll, and 'iLivs ;Ilf . tit, :"allablo mi d
     conduit is al t. ' Iliftilv' too ripidlc to ponnit thV &W ?                                  53 . Urnivittratiart of he Jab OpparhmitWs i n
     opinclit (II' SUCh                 clt thiS 11111" . 1 It - 1) (Ed a&W l                  the Business Sector 00BY 13mgmm AI~Nil s
     ~olllv !C\k"d pl-ocodul-es to help millinw -
     d0q4 and h"an a pHoL "It t ptint . n t                                                    j, hi, %1— h—wh, i . ii,                    wplo.,njf lit al plivat c
     ollm anivi&K ; Re poi-t to ill,- ( Op.,-,Vo,s .
     Aire . 4. 197 0

       52 . Evaluating Economic Feasibility of Insurin g
     Loans at BelawMarket Interest Rates .- -The De-
     paninvilt K Ilmoinz am! 0-Imn 10%QAwid ,                                                     Aker nninorw dw jwIsmv "M uwk Aw 01 -
       IUD (1('66111 ,1) insule a SLl Inihion !0una .                                          bmia                  l'-ji(Illit. Ow a((llHlU1Xi0n of
     loan for- purchase ~oid whabilitatioit of a ?8.>sni t                                     flat aoli plt '_IX :i           uld dw nixill ' ! in which
     .tpartwont piojoct %,,V, not mqymod hj an a4jn -                                          dw pimmin "m "Awd mId &Qn& :
     financial anlflt,k .
                                                                                                    Ki , pomn -~ k% IV                           ;in(! fill , -Nationa l
          HUI) ' ,                  for in,     ntS lU h IIMO~ a t                                \IlMhfl-      I)! 11tililill-iii"ll   I!! fill' total Ifflillb(T Of
     inatkct iiiivrcst iat,l; under c(iion 221 d                   of O w
                                                                                                                    !I% b o ' ult— t l " 111"— hnk-d- llaino's ter-
     Natv niai I Iouitle t, -t p"TY Qw We mmirlyinn m
                                                                                                                           I'll 111011L and it,( tlanlCC !VIC11 -
                        li'h' tojilli'-ve import tut <')' i ;"I ojc' 6-xc:
                                                                                                 zi0H Yj"t , on hawd ' uh~lalniall~ ,It data thitl_ fo r
                      HUD N%11-                 Thal Iciv --w ~oalf~-
                                                                        :o-,                     !111' In o " I pall, 11,1"! !wl iwcn ,irifict+ .;,d. ill some
     uonn, i-isks involvi , ti ; -i ii l- piwV, t- ihw i-,,-oid fit, ;
     nior cival-ly ' ho . that           illo     hail &U— .WA IV K H
                                                                                                 ' a"'~ . oiV% ha~cd )It inaktu1jie or llli'loaldill'-' data .
                                                                                                 A n-A-d awl hmmmed nunavannit infix i ;ation
     f-x 1 (2111 Of t l Iv e, ol if, I I I i( I
                                                                                                  "" t ' lll N% .V% put illtou-c in I vi,_llltl-v 1970 .
         Mso- the hag' !'I I I a llumbol (If dc' i3wn' 1mic b .,
                                                                                                       .\,              lin . .101"S i?ro ran provided for-
     I11 I) in ilpplotiw-' llioln~ain'111 .111, I , fol II I ,- }idio t
                                                                                                      lpillthe ,t ;,isi~ :tt taped to obtain Ilicallinuffill ern -
     a l 1 j ) ( .11Cd (ILIV~tiollAbIV : ' 1 7 111'1 .) . " tic ad E111,1 r tV l I () Ili( c
                        We itnumm" wis" "                                                         Illo\111unt CWd1LJh11. NI.Vii              I)MOd, (If hi'4 1 1
                        appiai,ol (If the jinqui" . 2 HUD did not .                              oI- !isiln-' cillployllient E'vels but not ducif             period s
     Ill k .\(Y, Opinion .                 nill)1% "'Inlilln . ille (o~l Of le -                    lo~ih ill-             ullemployllient -
                           the pl-opo ' l~ 7 i [!,, I - ('sinnale of annua l                           - 1- ho ]OBS Inovintni is not a job-creation pro"arn :
     qwminw VQMA, ~c Q HUP) At MAMM . d ic                                                       vidbly A does not Wminaw We nmhu of -exist -



       ing job openings . Therefore . during periods of de -        build manufacturing facilities and provide 3 .751 hard -
        ' lining or relatively stable labor demand, it appear s     core unemployed and. disadvantaged persons trainin g
       to simply shift the burden of uneurployment front            and jobs-were employing only 526 persons and the
       disadvanta ged persons to others .                           stipulated hiring periods had expired for eight of th e
            The people whom the JOBS program was de -               10 fontractors . Three contractors were involved i n
       signed to assist are too broad a segment of the popu-        bankruptcy proceedings and four had discontinued all
       lation and include many who have no clear an d               work under the contracts .
       legitimate need for assistance under this type of pro -           Spec ifically, GAO's revie%% snowed that + I j the pro -
       gram, Many persons enrolled under the existin g              gram was not tcell publicized and became known to th e
       elk0bility criteria appeared to require placement as-        contractors mainly through the efforts of the Los An-
       sistance only, not costly on-the-job training and th e       geles investment banking firm which had collected fee s
       support services that are also integral parts of thi s       of $242,100 front nine of the con tr actors for services in
       program .                                                    obtaining the contracts . 121 the basis for selecting
                                                                    contractors and establishing contract amounts was not
         GAO also reported a need for significant improve-
                                                                    adequately docuntcr,ted, and the doubtful financial
     ments in the administration and operation of the pro -
                                                                    position of some contractor, appearccl to limit the pro -
     grain . Contracting for on-the-job training on a fixed-
                                                                    granrs potential for success, ( 31 the terms of some of
     unit-price basis generally %vas not appropriate—many
     contracts prodded for excel—i _ payments to the con -           the contracts did not adequately protect the Covern-
                                                                    ment's interest because they provided for the paymen t
     tractors : tire number of job pledges by sonic prospectiv e
     employers were unrealistically high and not alway s             to four contractors of all the contract funds before an y
     consistent with their ability, or intention, to provid e       disadvantaged individuals had been hired, and fou r
                                                                    contractors could retain a sizeable portion of the con -
     john : a significant nuulber of the jobs provided b y
                                                                     tract funds even if then failed to hire any disadvan-
     contractors paid low wages and appeared to afford
                                                                     taged individuals, and (4` the Department ' s monitor-
     little or no opportunity for advancement : substantia l
                                                                     ing of the contractor; performance appeared to have
      improvements were needed in the procedure ; and prac-
                                                                     been inadequate clnring the critical early stages of th e
      tices for ascertaining and documenting the eligibility
                                                                     program .
      of persons for enrollment : and the Departmen t' s failure
      to scrutinize contractor performance perpetuated man y              GAO concluded that the program could have been
      of the problems identified .                                   effective with proper planning, careful selection of
         GAO's report contained a number of recommerida-             contractors, and adequate monitoring by th e
                                                                     Department .
      tions for improvement . The Department concurre d
                                                                          The Department stated that GAO ' s findings con -
      for the most part with the recommendations and cite d
                                                                     firmed those of an internal review made by the Depart-
      various corrective actions that had been taken or wer e
      being considered . In GAO's opinion, however, th e             ment in October 1969 . that the Department's 'Man -
      reasons cited by the Department for disagreeing wit h          power Administration concurred with GAO and ha d
                                                                     implemented to the fullest extent possible GAO' s
      the recommendation that contracting be on a cost-
                                                                    7ecomntenclations which were germane to the presen t
      reimbursenrerit basis rather than a fixed-unit-pric e
                                                                     status of the program, and that all possible actions
      basis' were not valid . (Report to the Congress, B-
                                                                     sere being taken to protect the interest of the
       163922 . Mai . 24. 197 1
                                                                     Government .
                                                                          GAO concluded also that the Office of Economi c
         54 . Effectiveness of the Special Impact Progra m
                                                                     Opportunity- which has assumed responsibility for th e
     in°I_os Angeles in Meeting the Goal of Providin g
                                                                     ti u :-ial Im p act pror*rmn should, in its administratio n
     Jobs for the Disadvantaged—GAO ' s te.iet: of th,
                                                                     c t titre t it je, ts, henefit from the problems experi-
     Department of Lnbot , .Spy ial Impact pro gram in Lo s
                                                                      -t   -d b the Department in its management of the
      1n«nlcs . Calif shoed tl)m tlpto_ra?n had fal l en
                                                                            . ass; in Los An r_eles . Report to the Congress,
     'al sp urt of a"romuli,l. :in               t    in
      the disac vallra,ed and h~rt : 1)— 11 t ;rh ar7mmi=ter=_d .
     Thor                                                             55 . 'Effectiveness of On-the-Job Training i n
      fact that at Jtnu i,             tic t~1 ' :u       tots- -   Appalachian Tennessee . - GAO reported a numbe r
      who %"( , w to tr ( ,I ,, ., t i . r                                           VIC ,r~ .t?.. a .tn :tiesof .thecotmnu -

                                                                                                           SECTION I

nity agencies and their subcontractors tivhich were con -     cases steps had already been taken to con ect the prob-
ducting an on-the-job training program in Appalachian         lems . G.%O concluded that recent rhan_es in the alan-
Tennessee under contracts with the Department o f             power Development and _Frainim. Act, providing fo r
Labor. Through June 30, 1969, the Department ha d             transfer of certain functions to the State• agencies, an d
spent about $2 .8 million in Appalachian Tennessee t o        the Department's proposed actions, if properly- imple-
train 8,700 workers under the on-the-job program s            urernurd, should serve to improve the effectiveness an d
which is authorized by the Manpower Developmen t              the administration of the prociam . 1 Report to the Con-
and Training Act of 1962 : GAO observed that :                ;Tess, B-11687 9 . A o% . 13, 19 _' W:
      Most of the employers visited by GAO were not
                                                                 56, Administration of Training Activities at a
   providing; any training, beyond that normally pro-
                                                              Manpower Training Skills Center,--The Depart-
  vided to new employees or generally were not hirin g
                                                              ments of Labor and Health, Education, and Welfare .
   p ersons with any le-.5 or different qualifications from
                                                              in cooperation with the Caiiforuia State security enr-
   those of nelsons tiler, had previously hired unde r
                                                              ployment and vocational educational agencies, admin-
   their nortna '.,bttsines practice . Under these circum-     ster under tire. Manpower Developntrnt and Trailin g
  stances . notlunz of si ,_, nificance was beinff_ ac-
                                                              Act of 1962, an institutional or classroom-type trainin g
  cotnpl : ~hed by the pro«rann that was not bein ,
                                                              program for unemployed or underemployed persons a t
  accontpii ;loci otherwise and Federal funds weie
                                                              the Last Bay Skills Center in Oakland, Calif. GA O
  heim, dissipated that could have been used for pro-
                                                              reported the follow i m-, weaknesses and problems in th e
  ductive on-tire-job training activities .
                                                              administration of thk progrann? :
      A naniher of persons reported by employers a s
   receivirc: training for entry-level jobs ahead\ pos-            Space acquired, renovated, and equipped was de -
   sessed extensive experience in the skill in which the y      signed to provide training to 1,500 individuals at on e
   were supposedly being trained .                              time . However, front April 1960- to December 1969 ,
      In some instances . employers were paid for a ful l       the center had in average monthly enrollment o f
                                                                only about 490 trainees. 'lie facilities %\ere not full y
   training period for enrollees who had not completed
                                                                used because . among other reasons, the center' s
   their training or were include(] unde . :-o trainin g
                                                                method of fundinm its trainim; courses on a project-
   subcontracts at the same time .
                                                                by-project basis was causing delays in initiating
      In many instances the community agencies en -
                                                                follow:-on n-ainin_a courses after prior courses had
   rolled persons for training who had not bee n
                                                                been completed, and the design of the training
   screened, tested, counseled, or certified by the Stat e
                                                                Courses did not readily permit new trainees to ente r
   Employluent Service .
                                                                into training positions made available through attri-
      In line with its national goal, the Department' s
                                                                tion as the courses were proceeding.
   contracts with the heo col1nnunit agencies provided
                                                                   1' rainees frequently (lid not meet the enrollmen t
   that at least 65 percent of the trainees be disad-
                                                                criterion that a person be in need of training to ob-
   vantaged . One of the community agencies did no t
                                                                tain employment . Some trainees were physically or
   meet this goal .
                                                                emotionally handicapped and sorne appeared t o
   GAO reported that neither the Department not- th e           have possessed, at the time they were referred fo r
cotnmunity agencies had made- in), meal effort to moni -        training, sufficient skills to obtain employment Neith -
tor employers' training activities, although the Depart -       out training.
merit is responsible for visiting the on-the-job trainin g
                                                                   Only limited counseling sen-ices were provided to
contractors to develop connptchensive program infor-
                                                                heip the trainees plan their vocational goals an d
ination . Increased monitoring nri lght have detected and
                                                                 assist therm with personal problems that would hin-
helped to correct the weaknesses noted by GAO . Fur-
                                                                der their progress in getting a job, and records fro-
ther, GAO reported that there was a need for close r
coordination between the Department, the State Em-              quently were not maintained on the counseling tha t
pioyment Service, and coniniumty agencies to enhance            had been provided .
tine overall =elfectivrness of the program. -                      Contrary to the Manpower Development an d
   7'he Department advised GAO that internal studies            Training Act and to Department of Labor directives ,
conducted -by -ithatl produced substantially the sam e          many trainees were paid training allowances for
conclusions as those reached by GAO and that in rinany          unexcused absences.


        SECTION I

                The local empioyntent security agency did not de-        Sc tatc   eniplo- nu-ut security agcnc i _ ,tier Cre Man -
              velop needed information on the smtus of trainees          power I)(-\ch,pnrent and '"raisin,!    ACT. =   MI)TA o f
              who left the center for employment and did not pro -       P162, in the Scue± of Oregon and Washinkurn . Fro m
              Fide these trainees with such followup services as         the inception of the MITI - A trainin : pro_rartts in Au-
              additional training and placement ser vices .                ust 196-- tltrotu{h June 30- 1970 . the I)eparnuen t
          'rhe Departments of Labor and Health . Education ,             e,tinratcs that about 1-1-,600 persons in Oregon an d
        and Welfare mere in ueneral agreement with GAO' s                ahout     2 _1JiUtipersou; in Washington here enrolled .
                                                                         About 57 .6 milli et teas spent in Oregon and S9 .9 mil -
        recommenclationsand outlined corrective actions to irn-
                                                                         lion in AAashin nm for MD'1 :A trainintt dt ring fisca l
        Proye the center's operations ;
                                                                          ,cars 1968 throutdh 1J70 .
           It was GAO's opinion that the problems noted could
        have been identified and corrected earlier throug h                 .1`hc Aif) I A rcquires that occupational training h e
        more appropriate and timely monitoring by the tw o               directed to those unemployed anrt nnderculployed per -
        Federal Departments and their State counterparts.                -sows who "1111201 n -asonably be expcct ' d to Secure ap-
        (Report to the Congress, B-146879, Feb . 10, 197 1               Im mate full-tune en :plottnent %%ithout traini n g. . GA O
                                                                          noted, hotyeyer. that indiyiduais who alreadu possessed
                                                                         bout niarketahle ,kills and recent y;ork experience ha d
             57. Administration of On-the-Job Training Con •
        tracts .-' I'ltc Department of Labor had 27 on-the-jo b          been referred to institutional nain;m ,~ or on-the-jo b
        trai rint contracts in the Milwaukee area (filling 196 8          trainin" Iry the State curploynunt security re. encies i n
        and 196"1 iulder the Manpower Development an d                   Oregon and \A'ashin ton . These persons would hav e
        Training Act of 1962 : These contracts authorized a              been better sol ved, in GAO's opinion, if the Stat e
         total o f 1,553 trainin« positions at a cost of abou t           1_ency had placed them dinc-c tly into available jobs .
        51 .259.000. GAO reviewed six contract ., which author-             ( ;AO also noted that the . Il, ,ctiycucss of MDT A
         ized 826 persons to be recruited for enrollment in train-        institutional traiuint-, projects in Orc,, on and Wasshin-
        ina at a cos of about $655 .1000 . Under the six contracts .      ton could be enhanced through in_roased emphasis b y
        19 peicent of the persons recruited ~,yere to be disad-           the State acid local employment securih- offices on job
        i antaeed, but only_ about 22 percent of the individual s        development for, and more timch placenitent of, per -
        enrolled in the pm~,ram were deli,,,natcd as disadvan-           sons corpleting trainin_ . A priurary goal of the occu-
         tae:ed .                                                         pational trainin c, pro6ded under the 1fDTA i s
            GAO also noted that of the 6051 persons enrolled              ~uccc-~lul employment . _A lat=e percentage of th e
         raider the c S contracts. 106 were either provided with          p o,,_, ratn 4radoates included in a ( :AO test were un-
         Trainingr in 'teutporary, part-tithe, or seasonal jobs, or       employed immediately after Completion of traiuino .
         were trained under- the contractor ' s rerular traininiz            The Department informed ( ;AO that it had take n
         piog rani that existed pion to its receiving the contract.       action in ccn:onanre %Kith ( ;AO's recommendation s
         Department regulations prohibit the rise of Federal              for iutproving the achninistiatiorn of the pro,ranr (Re -
         funds for trainin g person ,; for tctnji_oi<ai~- or seasonal     port to the Assistant Secretary for Administration, De-
         work unless= a combination of such employment pro-               partrnunt of Labor . Oct . 12, 19 ,: 0 1
         vides the trainee with .'ear-round ennploi ment . 'I'he y
                                                                              59. Operation of the Cooperative Area Man -
         a1sn prohibit use of Federal funds for trainin g
                                                                         power Planning System .---"I'he Cooperative Are a
         normally f_iven by ill(, contractor . hederail funds are to      Manpo%yer Plant ur• r System J-VOPS1; is designed t o
         be a-ed oolr for item\- of additional iraining efforts .        aehicve intera reney coordination in doe plannin g,~ an d
            T1 t Department cited certain corrective actions tha t       execution of all federally supported nnanpower train -
         ira? ' peen taken in rcyonse to GAO's rcconunenda-                l' and supportive manpowcr services programs .'I'he
        noun . Report to the Assistant Secretary for Adi ninis-          Depau tnrent of Laborinnyides leadership ill the opera-
          uatir,n . Department of Labor . Oct . 8 .197W                   tion of CAMPS .
                                                                             In surveyin ,' 0w npetauiom of CAMPS, (,AO note d
           58. Administration of Manpower Training Ac-                    ,flat it had vii(ountered problem ., in implenientin« F,x-
        tivlties .--i ;AO c sanJnccl into the trainee selection ,        ecuti~eOr°dcrAo, 11-1'32, dated :AuTurt 15, 1968, whic h
        "l, d,,               nt, and iob placement aspects o f          established the- Governnrcnt's policy of cooperativ e
        the on-tL~--h t ;,tinin ; -aid institutional trainin g_p>o-      'Planniu-, ;rncl execution  of  loanpo\yer training pto-
         n       rn ; :cli, t~ d 1 " ti . . Department of Labor: and -   gn n ;s . Soon of the main problems noted uyere :

    .   3fi
                                                                                                                SECTION I
     Co rfu inn anon- participatinc,, Federal and non -                In,guction= issue(; by dte Inilitan' services zinc] the
  Federal vuencies concernin,, the specific objective s            Dtfulse Stup!31\ A clW% for detenuinin c, training heed ,
  and fuuctians of CAMPS- pv'rtiuda11V the FOb' o f                and derclo t ? . ;« t t nil,_ plan, generalh appeared
  local and ;it ca orga!ii ation_ .                                adcquaty but had not been ell~ctivch° iu!p[cn+ented a t
     Limited commitin-Wnt to C:ANIPS by the par-                   most of the in~tailation; GAO visited . Training selec-
  ticipating Federal agencies and lin_tited colinnunica-           tion inmeduiv vrere eencralh lank applied but ther e
  tion front the headqua ter, offices of these a~encics            vyas it little illdiration of a systematic method of selec-
  to their local counterparts .                                    tion at Sonde of ill(` installauorls .
     Concern at the local levci that CAMPS plans ha d                 To co!rect dlese and other vveakncse, observed i n
  onlc it limited impact nptm the manpower butlgct-                ill, training program- ( ;AO recommended !hat th e
  itl, decisions of the Fede rill a,,cncies .                      Secretary of Defense :
  GAO was ach iced by the Department of Labor tha t                     Collmder idcntih im; training costs in the account -
this stfucture of CAMPS wiis beim     , revised . GA O               in sy,tcn! to make• these data available to manager s
believes that this revision rtrav help to correct thes e             at all levels.
problems . tKep,rt to the Assistant Secretary for Ad -                  Insure that DOD Instruction 7-130 .5 . prescribin g
ministration, Department of Tabor.' May 28, 19 -1 1                  policies and standards for conducting- training, is
                                                                     properh intplenrcnted .
       iio . Training Under the Government Employee s                   Insuic that adequate procedures and tnanatc-
 Training Act .—The Government Employees Train-                      ntent controls are established for recordist . com-
 ins., Act provides for Coacrmrre!ti-sponsored progrmn s             pleted tt tun, ill the petsouncl files .
 aisupplement and extend self-education, self-intpiove-                 Promote increased ctnllhasi ; e;n surveillance o f
 meni, and sett-gaining by employees . ]louse Repor t                uainim, activities by the use of management revicv r
 329, issued June 1 . 1967 . identified problems in etn-             grciups, including_ internal auditors.
 ployec .taiiring in the Government and recommende d
                                                                     GAO rccomnlended also that the Civil Servic e
 certain ill) procelnents :- ;(SAO reviewed the employe e          Cor!unission :
  training profrarns ill 1 installations of the Depart-
 ment of I)efense : I)OI) : to see what had been don e                  Provide leadtrhip in recon!mendim, or cstablish-
 in response it-) tile reconnin , ndation .s .                       ing a uniforiu costing, s%sstem for t raining items to
      'Fill- vrcaknesscs identified in 1967 icgarding train-         in=ure that costs in c rcomparable .
  ing, costs continued to exist within the Department o f               Providc snore f rcquent inspections of the training
  Defense during fiscal year 1970. The military depart-              activities at military departnlcnts and agencies of
 tnetits and agencies of -I)OD _did not have adequate                the Departnent of Defense .
 accounting systems for deterriiiningg and reporting ac -             DOD and the Civil Service Commission agreed, i n
 curate costs of +raining, and not all of the trainin g            general . with the findings and cited corrective action s
 costs were being identified in the cost accounting sys-           which appeared to be responsive to the condition s
 temm information reported to the Congress in th e                 cited in GAO's report_ Azeport to the Congress.
  annual training report, tended to give a distorted pic-          I3-70896 . \lay 25 . 197 1
  ture of the training programs that Nvere being operate d
 under -the act because the cost of internal training.
  which rtpresents snore than 75 percent of the tota l             Mass Transportatio n
  cosh . ,vas no'. reported : Also, trainee salaries were rio t
  repented as a _gaining` cost . GAO believes that thi s              61 . Determining the Amount of Grants .—Th e
i, dw n ost sign .;ficant ro't element in the Federal trai n       Urban ]lass Transportation Administration ,L \• I
  im, ptoeram-and should he t-ehorte.d . .                         Try ;! - Department of _'Transportation . administers a
       Thy : r c t sia^•, ;t in the umnial training reports were   cap!t .-rl grant- program to assist State and local publi c
 nm ohs-lined troll, the ;~, , ountinI' system but from var- =     bodies in financing the acquisition, construction, re -
  ioi!s ~,)m,e documents . In inost cases the source docu- _ -     construction ; and improvement of facilities an d
  mints -itlwr were n,t available for GAO's review or              equipment used for providing mass transportation
  could not he reconciled %pith the reports .                      service in urban areas.

       fhe lain requires that the amount of a grant b e            discussed, but also for the entire caant administratio n
  Ilrectlh re l ated to the net to eject r.osr. Iii addition i .   pro g ram . HEW ;reed if, ~ 1 !hake Strin gen t
rrgunvs UNFFA to estimate—on the hasis of engineer-                reviews of rexan~11 grant budret requests, 2 stud y
ili ,-, sttidte , studies of economic feasibility . and dat a      its entire adniiuistratiyt• plaeessin of I         with ; I
shoat=inLg the nantiv and extent of expected utilizatio n          viCN% to\[arils leyuiriug ptrnapter elpenditwz report-
of the facilities and equipment--chat portion of th e              inLr by grantees, and _3, give increased attention t o
cost of a proiect cannot he reasonably financed fro m              research utilization - t Rcport to the Secretat y, I
 revenues of the transit system .                                  B-161031 t 3- . j uk 31 . 1'190 t
      G,10's rcvic.c 0f selected grants s}roar ed that UNFI- 1
did not obtain and evaluate the availability of transi t
system ievviiues prior to the award of a $28 millio n              Medicare Progra m
 ,rant and the sub etjuent approval of a $•10 millio n
 print amendment . GAO believes that. if UNIT_1 ha d                   63 . Payments for Services of Supervisory an d
 obtained and evaluated data oil the availability o f              Teaching Physicians . -GAO's reviews of about $2 . 6
 tr ansit System revenues prior to the grant arard aril
                                                                   million of Medicare pa}rent for the service, of super-
                                                                   t ison- and teachin phc sicians at fine teaching hospital s
 approsed atiitnduient, it would p ace found that sys-
 teni revenues icere available which could have bee n              in four States indicated serious problems in paying fo r
 used to finance a part of the project's cost .                    the ph%sician- services on a reasonable charge 01- fee-
       GAO recommended that in -revietring application s           for-wrsice basis under the supplernentarc medical in-
 for Capital grants, - L' NITA establish policies, proce-          surance !part B= 1`0111011 of die Medicare program .
 tlures, and guidelinesto insure tharenginecrin shtdies ,          The Medicare prorana is athninistcled sic the Depart-
 studies of economic feasibility, and data shotcing th e            ment of health, Education, and Welfare ihEW" .
 nature and extent of expected utilization of the facifi-              The hospitals' medical records showed that the p h%`
 tics and equipment art, obtained and evaluated in de-             sieians ' services. paid by the Medicare program on a-
 termining the availability of s%stcnt revenues and ill             fee-for-service hasi under part 13, had been furnishe d
 calculating, the net project coat to be assisted wit h             in most cases onlN by residents and interna whos e
 Federal <I'rant Iunds. GAO recommended also tha t                  salarie, u-ere r6mbarsable to the hospitals under th e
 UNITA be required to adequately docunient its eval -               ho,pital insurance ;part A , portion of Medicare .
 uations and conclusions based on such studies . Re -                  It i, important that billings to Medicare for super-
                                                                    visory physicians services be supported by evidenc e
 port to the Secretaav of Transportation, 13--. 169191 .
                                                                    that they atere also involved in providing the sewices
 jime 30, 1971 '
                                                                    because it pa~naertt for the ;ellices provided only b y
                                                                    residents and interns was made tinder both harts :A
                                                                    and 13, Medicare wonld be payimr twice for the sam e
Maternal and Child Health Program s
                                                                    service .
  62 : Administration of Certain Research Gran t                       In addition m the problem of supporting the pro-
Programs . --An examination of the chilli welfare re-               pri--ty of the supervisory physicians' fees for the service s
search and demonstration urant prograut and th e                    provided hi residents and interns, there were also diffi-
maternal and child health and crippled children's re -              culties in achim isterin,, the dual Medicare reiniburse-
search pro,,t-ain showed that the Children's BUI-eat t              ntent system -,let- which the sere ices of the same
consistently awarded ~,rilats in excess of the amount s             supelsisory 1 11 -cian may be reimbursed antler bot h
of funds needed, had not taken -advantage of oppor-                 part A on t o     .axi s of costs and part B on the basi s
tunities to assure the maxinimn use of zrant fund ,                 of fee-Eot-sel~,ee . I`cr exaniple,for two of the hospitals ,
because of late expenditure - reportinJ bx- grantees . and          GAO reported that the costs claimed under part A
did not=knowzvhethet fiiidin sof research profects,cer e            and the 57 2 5 .000 al ready pail ; under part B for th e
being disseminated to interested uidividuak :uid or-                sere u s of salaried -supervisor 1 n sicitms exceeded th e
ganizations that might benefit from their use .                     hospitals' leimbutsable Medicare costs by abou t
   The Department of Health, Education; and Welfar e                - 13-1 .000.
  H1 .),V ? stated that GAO's report had generated self -              Other problems reported by ( ;AO included diffi-
 examination not only for the research grant prograttis             culties in :

                                                                                                                  SECTION      1

     EstaiSlishimg the `attcndiur' . 1 msieian-patient re-       p-tals, duou,l : the audit of cost re ports ba internaedi-
  lationship tit cessar7 to qua Iily for fe-fur-serf ice pav-    ancs . to the final settlement or agrr_•cntcn[ kith hospital s
  inert under I IEM regulations .                                coucerninr* theiracurai and reasonable \Iedi(arct. cost<_
     Cletrh establishing- that pat nts had mithorirc d           to be reimbured under the proemllll .
  \ledicaic pavmeuts to be ivade on their b_elialf.                  Some of the delays weiQ attrihuted in part to the us e
     Establizhinif the required "CUSton1,11- . . or '`prc-       of :t q IIr,\1-authori7td n irnb a enrent method whic h
  vailin " charge for physicians' ertices twheu majo r           resulted era Medicare payments that included private
  health insurers other than Medicare do not pay fo r            morn cost,, r, hich ~cero not covered under the Medi-
  ,iutilar services .                                            care progr t .rr, and deli .erx room costs, which sere no t
    At June 30, 1971 . the Coltress %mac.-, c,msiderin g         applicable to Medicare patient_; - In line i% ;th GAO' s
.-hantzes in the Mcdicart legislation which, under crr -          reconttneudation that discontinue or modify this
Min cir`tunstances; :could, provide for pa}in :,g for SU-        questionable r( . imburse~nunt method, IIF.NV took ac-
pervis .r y and teaching physician, service: era hospital s       tion cclaic11 it estimated would reduce Medicare cost s
on a tort baiis under part iA lather than under th e             bs- about $'loo million in fist a) year 111 72 . Ill,,W also
t raditional fee-for-service basis . -Aloe . 1IE\V was takim l   ;au_rc-ed to use outer aortal-tn line tcith GAO) recanr-
action, to cetermine the extent of and to recover th e            mend .etuon u, iatpro%" the ptoces of utakitrz settle-
questionable ore.,:c essive Medicare pavment, disclose d          nieutu . f Report to liv Conpres .l •–16-10 :31 ` t . june 23 .
                                                                  197 1
b. (, Affs reviews : Reports to the chairmen . Senat e
 Finance Committee and I Iouse Ways and .Beans Com-
naittee . B- 161031 1 .\it . 21, i910 : Sept . :10, 19770 :          65 . Consolidation of Claims Processing Activ-
Nov . 13 . 1970_ : Dec. =1, 1970 : and Dec . 22, 1970'.          ities,-- Under Medicare, payments for physicians '
                                                                 services, which rue a be based on reasonable charges .
    64 . Delays in Cost Settlements for Health Serv-             arc made by about 511 separate csuriet-, under contract s
ices Furnished Under Medicare .—Federal payments                 with the Social Sc( titk% Adnuuistraair,n :SSA, . I)e-
 to institutions, principally hospitals, for health service s    partment of Health, Education, and Welfare (II• ;Wj .
                                                                 l ach carrier patis 1)c11e6ts it designated geographica l
 provided to Medicare patients usually are trad e
 through fiscal intermediaries acting under- contract s          areas of the United States but does not pay Medicar e
 withthe, I)eparturent of Health, Education, and \\'el-          benefits for elieible railroad worker; and annuitants of
                                                                 the Rail road Retirement Board (RRM . 'i ' he Hoard,
 faw (hE\1') and administered by the Social Securit y
Administration (SSA), For fiscal years 1967 throug h             under a delceation of authority front SSA, had con-
 1969 such institutions were paid about $11 billion fo r         tracted with a separate carrier to make payments fo r
 thecosts of furnishing services to Medicare patients, o f       about 310,000 benciiciaeics--less than 5 percent o f
 which about $10 billion . was paid to hospitals . The pay-      the nearh 19 million persons eligible for physicians -
 ments were uaacie on an estimated basis, subject to ad-         services under Medicare.
 justments at the end of each institution' s Medicare                GAO reported that the arrangement of having a
 reporting period .                                              separate nationwide carrier pay Medicare claims o n
    GAO noted that, because of lengthy delays in making          behalf of workers and annuitants of the Railroad Re-
 sttttletitcitts, billions of Aiedicare dollarshad been paid     tirement Board was not the most ef3icient and effectiv e
 out on the basis of the. estimated cost of services lon g        arrangement for making such payments because :
 since incurred and which had not been afforded an                     The Board's carrier could not determine, in th e
 appropriate final accounting or timely review by the               manner prescribed by SSA . whether physicians'
 intermediaries and the Federal Government. At Sep-                 charges were reasonable .
 tember 130, 1970 over 3 years after the end of the-                   The determinations of reasonable charges by th e
 reportiul periods for the first ) ,ear under` Medicare—            Board's carrier and by the SSA carriers differed i n
 final setter ments for the cost of care provided had been          the same geographical areas . As a result, benefi t
 made wit t r only 68 percent of the. 2,245 hospitals i n           payments by the RRB carrier in fiscal year 1970 wer e
 eluded in GAO's review.                                            al aut $2,9 million higher than the payments that
     There were delays in every step of the settlemen t             would have been made by the SSA carriers for lik e
 process, from the preparation of cost _rzportsby-hos-              medical services.


     The use of a-sepat;atc carrier to pro(rsS railroad -          HF% ad%°ised GAO that on=ite teltresrnta t ; %es had
  related stairs resulted in increases] adnrnistratin-c         been plated t,ith all the urger Medicare carrier. t o
  costs of about $2 .8 million a year.                          stuck their claims ptocessiu° activities and that ne w
                                                                insn uctions had heen issued which requite each Car r ie r
   GAG recommended that HE,W arrant to have th e
                                                                to establish a quality coutroi ptoenun . the implemen-
railroad-rehired claims paid by the SSA carriers, HE W
stated that it was not prepared, without additional             tation of %chich should meet certain ntinintum stand-
                                                                atcl,_ ;Report to the Cow       —>s. B 161(131 i .l - Dec . '11 .
review . to accept GAO's recommendation that th e
                                                                 1970, and reports to the Commismoncr, SSA, Oct . 29 .
claims piocessin ', acttttties be conso!idated . and said
                                                                 1970 : Dec . 21 . 1`.(70 : and Dec . 3i, 197(1 }
that as an alternative, it olanned to have the RR B
carrier experiment in determining reasonable charge s
for pltvsicians' setcices . GAO su1_1eested that the Con -
c'ress might wish to consider the recommendation fo r           Model Cities Progra m
consolidation and review- the plans for the propose d
                                                                    67. Advances of Funds . -GAO noted that a Cit e
experiments .- (Report to the Gmn ivss, 6- 164031 (- 1
Jan . 21, 1971 )                                                Demonstr ation Agency _CDAj had advanced mode l
                                                                cities grant funds received from the Department o f
   66 . Determining Reasonableness of Physicians'               llousine and Urban Development HI'DY to opeiat-
Charges . -GAO's reviews showed a need for the So-              ulg agencies t, ithout fully miluatin ; their immediat e
cial Security Administration (SSA Department o f                cash needs and requirement ; . ( ;AO c,timated that i f
Health, Education : and Welfare (HEW) . to closel y             the CDA had ad%anced these funds more closely i n
monitor the procedures used by selected Medicare car-           line kith actual cash needs, the Federal Governmen t
riers to determine the reasonableness of physicians '           could hase sated about 526,000 in interest during
charges and to process and pay Medicare claims . In -            1970 .
stances were 'noted where benefit payment, had Vx -                In response to GAO's suggestions. HUD informe d
cceded the charges established as reasonable by the             (iAO of certain steps it had taken to minimize suc h
(arriers, where duplicate pa~aitents had been made .            premature advances . Report to the Assistant Sec-
and %\-here payments had been made without evidenc e            retary for Community Dmclopment . HUD, Apr. 8,
that the charges were reasonable . Also . errors were            1971 ,
noted in coding and recording customary charge dat a
whiclh contributed to improper payments, and instances
wcn c observed, where payments had been made fo r               Open-Space Land Progra m
noticovered services and where required safeguard s
against payments for unnecessary medical services ha d             68. Leasing of Land .--Under the open-spac e
not been implemented.                                           land progrun . administered b %. the Department o f
   Although the carriers and SSA had made improve-              Housing and Urban Development (IIUD`, Federa l
 inentsin the processing ofclaims and in the overal l           ,rants are provided to States and local public bodies
avhwnistration of the Medicare program . GAO be-                  grantees to acquire and or develop land to help
lieved that further improvements were needed . GA G             curb urban -sprawl, to assist in preventing the sprea d
therefore recommended that the Secretary of HEW                 of urban blight, to encourage- economic urban devel-
 provide for . ;                                                opment, to provide parks and recreational areas, and
                                                                to preserve conservation, scenic, and historic lan d
         g ore effective surveillance by SSA of carriers '
   claims ptu, eecing activities.                               areas .
       =fin e<aloation by SSA of the effectiveness o f
                                                                   i,AO anted dur6te .1 sur%e%• that certain grantee s
   the rorrectt%( nctiotis taken or planned to be take n        were .sirw land acquired under the program withou t
   in iwpi( .6n, (1 .6nic processing .                          obtaining HUD's approval . contrary to the require -
            . %ices' -md cvahtation of the regulations whic h   menu of the t~,rant contracts. GAO therefore under -
     llrnct cl rtrricrs to ;Hake assumptions concernin g        took a teciew of the program . GAO found- that HU D
   the nature ;md extent of services provided and t o           had not established procedures for _insuring- tha t
   d tcru,inw h,v% much latitude carriers should hav e          grantees were obtaining HUD's approval prior to leas-
   iii dl tciminiotg the wasonahleness of charges .             ing open-space land and had not developed require -

                                                                                                               SECTION      I

items or guidelines relative it, the use 0f revemte ;          allocated nn tu g- basis that GAO's analysis dealt onl y
leceived be ,tantecs from such leasing .                       with t,rc housur, aspect of the url,an miewal program .
   In iesp0sc to GAO ' s sue g estions . HUD state d           GAO rcannii .°s that the pu,~rani has coals other thai ,
that in,ouctions had }Teen issued to all regional ad-          housing nut belicyes that ae hieyenteiu of those goal ,
rnittisti-MOrs tcgtiiring that '.I ~ reviews and follos,u p    should n souOrt in a manner that does not resttit in a
reviews be made of leitain =rants awarded prior t o            siF!nitic:urt rcdu(;iriu in tic housing available to lot :--
january 1, 1970, on which delays in the acgukitio n            and moderatc-incomr (-tiro lies.
and,foi desclopment of the land were being experi-                 GAO believes that HUI) needs a resrnuce alltx:atio n
enced and that appropriate action he taken . 1:21 cout-        System that %could be applicable to each of it variou s
pliance site inspections be scheduled Nor certain proj-         pro rnrrs ten' asistiil ~ in attaining the national housin g
ects approved during l scat years 1962 throe<;h 196,2           goad and that it, (onsidrration of a system should 110 1
 urcl that apprapriate action be taken on any contrac t         be limited to the urban rerietyal pro *rant . GAO be-
violations disclosed, and "h :ill t,t .uuces entity t o         lieve, ,also that HUI) should consider reevaluating ur-
HUI) that the twits and conditions of their open -              ban mrnetral piojccts involving redeveloptnt'tt pri-
space land grant contra( is are being n;et .                    marily for nonitsidenti?! purposes that are in th e
   HUD also stated that information relative to it s            plannim” S .el c or : if in the execution sta g e, that hav e
approval of leases and the ust 1tl leasr° revenue, va[)nl d    sianily ant land areas still uncommitted far redo" . elop-
be. included in a consolidate(! pro .g rain guide heim .,       niert . Report to the Congress, I3-11815-1, Oct . 2 -
drafted . ;Report to the Com Tess . 8-168174, June lfi ,        1970 `
 19 ` 1
                                                                   70. Administration of Workable Program Re-
                                                               quirements .----l'o be eli ible for Federal financia l
Urban Renewal         Progra m                                 :rssiStance under the urban renewal program and cer-
                                                               tain other progruns-administered by flue Departmen t
      69 . Allocation of Funds To Meet National Hous-          of Housin,R and Urban Development fIIGll!, cities
ing Goals .—The Department of Housing and Urba n               are required by law to dcrclop NNorkable programs fo r
Development (HUD , needs all improved system t o               cotnmtuiily impromilvnt . 'I'hrse programs are designe d
better insure that the projects it helps support ar e          to encourage ( .ties to identify and attempt to alleviat e
responsive to tlic greatest needs of the cities in relatio n    their problems of blight and deterioration on it self -
to the national }ionsivio goal—the- realization of a de -      help and continuing basis .
cent bori'te and a suitable living environment for ever},          Although HUD's requirements for eyoikable pro -
American family as soon as feasible                            gratis are vXplicit. IIUI) accepted workable progra m
     'I'lie need for au improved systent was evidenced b y     submissions all(] issued certifications of eli!,ibility with -
the effect tine urban renewal program had on th e              out assuring that the requirements were being met . I n
supply of housing for loth- and moderate-income fam-           GAO ' s opinion, HUD's actions in thus certifying work -
ilies . GAO reported that ( I ) there was a significan t       able programs were contrary to the intent of the lcgis-
reduction in housing for low and ioderate-incom e               lation and tyorked to eliminate some of the incentive s
families in project areas natiomNide, (2) there was a           for cities to undertake effective self-help programs .
sionificarn reduction in the land area used and sched-             GAO stated that until Fit-) improved tile ( ILialit \
 tiled for use for residential purposes in project areas ,     of its reviews to assure that accurate and reliable info r
and (3 ;• in 321 cities, urban renewal had resulted i n         niation is reported and was willing to %%ithhold or a t
  he demolition of about 88,000 more dwelling unit s            least restrict certifications to assure that cities niee t
 than were constructed for low- and moderate-incom e            program requirements. HUD's administration of work -
families under all HUD prograrras'front 19-19 through          able programs would continue- to be somewhat les s
, curie 30, ,1968 .                                             than adequate .
      H LT D advised (>AO that it % vas engaged in devisin g      In response to GAO's recommendations for improve -
 ,i „ttwfactory et of objectives anti-criteria-and a satis-     merit, HtsD stated that, following delegation of au-
f ;:ctcIry rc sc;ilr 010(,16011 SVsteni , for the urban re-     thmity to appro}r workable programs to recentl y
 nc% , al pro«r;uu . HUD regarded as unjustified GAO' s         established area offices, the responsibilities sere being
evnu lusicnt That p' oL'i nu funds had not been effectivel y   discharged -more adequately and effectively . (Repor t

to th 4ssistant 5ec_retary for Meti'opolitaii Plannin g                                   construction wage iatc for most of the federally fi-
-MidDesclopuient HUH, Oct . 19 . 197 0                                                    nanco_d housin<, projects .
                                                                                              The Department agreed rrith GAO's m-omrnenda-
                                                                                          tions and stated that action tyas being taken to e l
Wage' Rate Determination s                                                                seek :wage deu•rminations which reflect accut .ateh- th e
                                                                                          prevailing t,ae rates for residential housin! construe -
     71 . Establishing Minimum Wage Rates Under                                            non, -2, conduct nua'e oil-site- surtets, contingent o n
the Davis-Bacon Act for Federally Financed Hous-                                             tvorable action on b,—I et w(lue,,ts for additional fiel d
ing Projects .—Linder the Davis-Bacon :pct, the De                                        staff, , 3 revise its procedures to clarifN distinctions
                                                            -OfLaborptesichmnswl%Napert   between dillerent ropes of construction and to facili-
to be paid to workers on-con%artiction of military hous -
                                                                                          tate more adequate collection of relevant data, an d
 ine, low-rent public housutg i and other federal)° fi-                                    :, P obtain from the Department of housin ;g an d
nanced housing projects. Such rates aril to be base d
                                                                                                an Dcvelopnicnt wage data on residentia l
on rues prevailing for cot responding classes of laborer s
                                                                                          const ruction .
and mechanics employed oil similar projects in the i :itv ,
                                                                                               Durin ,! appropriation hearings for fiscal war 19il .
 town, or , other civil subdivision where flit" work is t o
be perfotined :                                                                           the Department informed the llouse Subcommittee Oi l
    GAO's rep -iew of the rates determined by the De-                                      Appropriations of the corrective action being taken a s
 hartrientforseven federally fnanced housing projects                                     a result of GAO's recommendations and estimated tha t
in four areas in New Jersey, Oklahoma Pennsvivania .                                      sayings of $60 million annually could be realized b y
and Viminia showed- that the rates were hip*her tha n                                     the Federal Government be tent ; residential wag e
 the rates prevailing in these areas for smtilar privat e                                 rates instead of cnLillie rcial rat's its the rnininin m
residential housin g construction projects. The rates                                     rates for federally financed housin,, construction . This
prescribed by the Department for thew projects were                                       potential avin,s was based oil an estimate of $3 bil-
till' union-negotiated rates getierally tyiplicable to com-                               lion of federally financed public (lousing construction .
niercial building construi'rion : The -Department's files ,                               ;Report to the Con? Tess, B-1 .16812 - _Au!' . l2, 19 7/0 =
limNe er, (lid not contain adequate data to justify tha t
such negotiated rates were in fact pi e7/ ailing on residen -
fial -housing construction. GAO's _review shoi,ed also                                    Water     Pollution Contro l
that there were inconsistencies in the Depaitinent' s
deteintinations of prevailing to tie rates for fcderaill y                                      72 . Operation and Maintenance of Municipa l
financed public housing projects and for )rousing proj-                                   Waste Treatment Plants.---The Environmental Pro-
ects financed tinder federal)V- insured moitgaR .= loalts                                 tertiou A,,encv E.P \ } forineri the Federal Wate r
for the same area .                                                                       Quality Adininist :uion, Department of the Interior'.
    GAO estimated that the higher wage rates increase d                                   has awarded substantial aniounts of Federal funds t o
the $15 .6 iitillion contract costs of the seven project s                                State and local ,overnment and interstate commis-
by about $2 .4 million .                                                                  sions for the e onsuziction of %caste treatment facilities.
    Also . ,at-the time of GAO's reviet y four federal )                                  1_'.I'.1 estimated that local gorernnients were spendin g
hinaticed hoiising projects had been authorized fo r                                      between 5150 and $200 million a rear to operate an d
const r uction but had'not-been started in Oklahom a                                      maintain ;,aav treatment plants .
and New Jersey . GAU estimated that, , if the Depart-                                          Operation acid niaimeriance problems have beet ,
men f' c higher prescribed inininrnun tcat.,e rates for th e                              widespread for many years and leave resulted in ineffi-
Feder t e l : fin ;uiced housing projects -iyerc used . th e                                 ient plant eperanot~. A nidespread occurrence o f
ettt_t ( t)sttiiction ost, on these Lourplotined housin g                                 these problunis- u ',Is shown wn to exist during_, a nationwid e
projn i, —mid he a6ist t ~1 5 .nii ;lion of total estimate d                              study of 1 .500 taste treatment plants conducted by
    :=n uc ;iun c osta r f `; r̀S,9 million .                                             EPA in fiscal tears 196 ..)-67/ and More currently by
     \l . ;ioia,h tlic l)(~ rutment appeared tohave im-                                   GAO's ret-iew of 60 selected plants. EI' A's inspectio n
pIovod its :~tt- , cLrurnn~rttioti operations in the last                                 reports available for 5-1 of the 69 plants showed tha t
Jeer tens, ( ;-AUY rrtuav indi,ated that the Dcpart-                                      operation, mechanical, or ctrue-tural problems existe d
nicnt n -d not iik,n action to determine_ residentia l                                    at -to piattts .


                                                                                                                                   SECTION I

               Gr\O expressed the relief that operation and main-             trc   [,action,   lu clthc       stales- le", lan"ih c ],suit= Coul d
            tenance problemi have resulted front a lack of quali-             he                                  lri illy 4-o-l ; of t ll( ;Il_ and

            lied operating personnel, inadequate Icil'trol s                  . . :aura_ of II t . .-c ``,a r ,nl : ;u .ott 1o11 ttof a_e!wies af -
                                                                                           1 he ~I qw ai :d ad qu .0 k of the State plo-{_rams .
            industrial I%astes, and ml-idcquitte plant dcs : e-n of lac k
            of adequate equipment .                                                 1~:1 1 eetike ltn, :ill, hay? been hanaxtcd hr such
               EPA and the States have estabiishcd certain pift- -             l ;rui, ? ctni . as III, lac lc of daft t,n the topes and exten t
            dures for pr'eventine, detecting, and , ui l rclillc opert-       of 1 [ l hit:lllt, heinfl ditlnprd into the ;%,iterways b "
            tiouand maintenance problems . llos,u%mr, dir k- hak e             indo-tr, and the lack of kno : :kd«<• of the cflrct o f
            acknowled<,ed-a need to further tictelop auch pronr-                  rrtetin pollutults on the truer.
            dures and are con,ideiinq a mutnher of Inoposals ft n                     H We fiir St te ; mcludcd ill c,,AO > lex wN% ecncrll h
            improving plant operation and maintenance .                         required polluters ;n p oOde i comd ;;rc treatment o r
               G \O recommended that EP :A :                                    i=.s c<luiya11-In . The rrquirentrnt is due, at least in hart ,
                                                                                to cn .t ui cturuvtt frcun the 1`1161-otunental Protectio n
                   Establish in cooperation with the State, t c mprr-
                                                                                A2rnt% h .PA 'forinerlc the Fedetaal Water Qualm -
               hensive. guidelines for use by uxm ctpalitie States.
                                                                                .Ad m misu :uiotl, Deparmnt-in of the Iluerior` . How-
        -      and EPA in detr mining the p ovision neces :u-v
                                                                                eter . ;e,widim neatment nlac not itkays he neces-
               for insuring• proper and eflicicilt operation an d
                                                                                   ary to tchictc desired %c :ueru-cs .1 rcquirernent far
    -          Inair; ;eriance of municipal vcaste treatment plaints .
                                                                                s!r 1 tleatnentcal le_,u!tin additional capita l expendi-
                   Gather and disseminate infoin,ation to help th e
                                                                                tines and of elating* costs without increasing %cate r
               States` identify, develop, and implement more ef-
               fective procedures for the prevention, detection . an d           uses .
               correction - of plant operation and maintenanc e                       In addition, rnkmement action against polluter s
               problems .                                                       had been hindered by a lack of `-1 information oi l
                                                                                trends in %cater quality and progress being made t o
               G\O recommended also that, to avoid duplicatio n
                                                                                tue_ct State implementation schedules, ,2, author; t %
            of effort, El l A discontinue its plant operation an d
                                                                                 to enforce specific effluent restrictions, and 3 author -
            maintenance inspections except for the purpose of pe-
                                                                                 ilk    to enforce elates slat for implementing abatemen t
            riodically evaluating the -State procedures .
                                                                                tucastncs %yithout also havin, to shoo- a violation o f
                Ih July 191- 0, I'll"A amended its regulations t o
                                                                                 water quality standards or endangerment of hcalt h
            require as_suranccs from ( I . grant applicants that pos-
                                                                                 and welfare -a procedure %yhich could be costly an d
            sible harmful industrial wastes will receive pretreat -
                                                                                 title constunlllu .
            went ; prior to discharge into the municipal sewag e
                                                                                      EPA ' s actions . %chich ntct GAO's recommendations ,
            systern and t, 2) State water pollution control aRencic a
                                                                                 included I teyisiug its guidelines for the preparatio n
            that newly completed facilities %could be inspected a t
                                                                                 of Suite implementation plans to require submissio n
            least annually for the first 3 %cars and periodicall y
                                                                                 of the needed enforcement data and 2 • developin g
            thereafter . FTA also prepared guidelines dealing wit h
                                                                                 an industrial waste imentcny through the C=orps o f
            plant design and operation and maintenance, and es-
                                                                                  Enlg ineeis permit program and a voluntary question-
            tablished an operatio n_ and tnaintenaiue function i n
                                                                                  naire program . EPA ch-:agreed, ho%yever. wilh GAO ' s
            each region to assist the States in clevelopin ', thei r
                                                                                  position reearchng the secondary treatment iequirc-
             In,, . rants . t Report to the C nnores~, B--166506, Scpt. 1 ,
                                                                                  mellt .
                                                                                      C:AO recommended that the Congress consider th e
               73, Controlling Industrial Water Pollution . —                     matters disCIBA'd in the report during its deliberation s
            Si,ur , ,o" crnnu•nts have prillmly° responsibility for - colt-       on proposed water pollution control legislation . GAO
            uollin!, water pollution . ( ;AO's study of 14 waterway s              recommended also that the Congress consider whethe r
            in cite. States showed that some progress had bee n                   applicants for Federal grants should be required to
            made in al),ning industrial %,ater"pollution, but that                 provide secondary treatment eyed in those cases wher e
            slue! it oil needed to be bone . The approach, culpha-                 less than secondar% treatment would result in meeting
            sis, and a 1w ,vernents attained varied trots State t o                the water quality standards established by the State s
            State . In some States, prodding by the State govern-                  and approved by the Federal Government, (Report t o
            nu , nt u~ tiler with public pressure had spurred indus                the Con°ress, B-166506, Dec . 2 .19 -10",


    SECTION! !

    Water Resources Development Progra m                                  the ; vycmid slake- of the I»ojecr, cor,tinuent upon th e
                                                                         pi( , ;e( t heiiiv in service by a specific date . ( ;~\O il-u-
      74 . Evaluating the Deed for Certain Power                         thcr rNimunem4d that if cotluninuents could not b e
    Transmission Facilities .--The Department of th e                    obtained, the ( :orwress should be ;dosed of the t)"X
    Interior began xwwk in i965 On thc CcToAlead prof -                  letn so it could reconsider authorization of thepro -jeer .
    oft . which collsigs of , a dirl'i t-cullent t'let'.tri( tran y       Ile Department expreaed s,eneral disiv-, rceinerit "Al i
    mission line and associawd tt~rminals and a tel-nmirm- .             these n oin ncndations. GAO continues to beliv%w ,
    cturent transirt6siot; lines between certain points il l             homwcn that the recornmendatlons have i ierit sinc e
    Oregon and Arizona, as part of the Pacific ''eorthyv-egt -           their adoptinll ""ould show whether there will be a
    Mlh-}rest Intertie proigranl toconnect the electrica l               need for the project in the future and whether th e
    „ems of nine \Ve-,tern Sate,, Che Secretaty of th e                  project will be self-licluiclatint, . _Report to tlhe- Cron -
    Interior, int ad}isimc the Con '-'ress on the feasibility o f        ,ress, 13--1t ; 1061-Au ;, 5, 19 -1 0
    the project_ in Octt her 1961, stated that the delrlan d
    for electric power front CeJilo-Nkad would he suf-h-                    75. Guidance for Relocating Roads and Bridges
    cientty reeo}er An cog of the        Im,p      ct "Ahin 50 vcas .    at Water Resources Projects . --Roads and bridge .,;
        In late 11167 and earl} 1968 UM contacted poten-                 to he relocated as a miult of the construc%i of a
    tial users of tile' project and found that the anugxite d            water resources project nluat he constructed in accord-
    demand for 'pt,wer from the project was considerabl}-                amv }rith the Flood C' ntiai Act of MA as amende d
    Ks than KnTaated_by the IXrparnnxi" in a, feasilA M                  ;33 UM 7Mr- 1 c' if the cost of .eimstimi is t o
    repot~t . In add j tion. information was available to th e           he horse b .- the I'edvml ( ;mvrnnwnt . The ac=t direct s
    Delruunent :I, eail} as 1966 N,hKi indicated that W e                that a relocated road of hriduc Illu t he de,i ned o n
    dernlnd for power fault Ilk uinjeCt lul ht not nhate-                the basis of current trafTic and co mi neeed in accord-
     lialire tti ehe extent nece-,ary to inake the pt-ojec t             ance with applitalde State or county staiklarcls--if a
    self-litlliidntitli', v%-Allill the 50-rear p eriod .                facilit} is constructed to hioher suindards, the addi-
         In NLn, 1966 -GAO ruclilest”! the Qllarunent' ?                 tiona tort neat be paid 10 the o}r nor ,
     VIL'W', ()It the need tt, ..1MV11iil .ue the deShUl)ihtV o f             The :1°Mm olesthill Bridne hi Cafiforni i is -bein g
    C011ipletint- c on"truction of die , proje( `t . The I )epart -      cnnstruct.'d to in- , et projected t raffic needs. and th e
    Inent reportc't i ,n lalnlar~ i960 1 that a n_•}r stud} re-           Bureau of Rcclalllatk             Uepaltment of file Interior . -
                                                                                                         l ln

    afrined that the tint of the lzokwt % " m id be rt-1COV -            . : limulcin=y the entire c(»t, inwltdllm at &ast M nil-
    ered in 50 vat - In \ urdi 1 c )6`1 ,-GA0 examined th e              lion to ~ oastrttet the MY it, meet projected rathe r
         "- study . Let %\ Ali p<,t1-ut,al ire n of the ,"dut an d        th,wi current trdbu flee 1 Ile M ads ptakhrut "i s
     I)epartnlent ofliciak, alts; concluded that the iiari-              that the bricloc could In' refl>(- atcd and federally it-
     inenk praj Twd demand for Milt-Mead power }vTA N                    nnt'cd a al, r the ~neral Yisl,awn mirmh authnarl d
     yiLniificantly overstated, As a result of tire inKrinatK n           MKIrlynon of the Murn°I4)I,t)lll Smnh IAN, rathe r
     dt- .Tkgml in March PTY the Def-tartnient, in Ma v                   than tinder We Find Cloritiol V I of P 1 0 ) . itamended .
     1969 ;: postponed completion of the llrojet-t am! state d                ( ;A(_) advised the 1hparunNa that dieFlood Con -
     that it }\-rnlld leeval?litic' the need for We prc>{ect at a         Ind Act V I160, as amended . , ,,as the proper llc ikla-
     ftt uk datl'                                                         tloll for t lotatin~, Mlle- ht -ldt"r and that its provision's
          Ile l)cprlrtiner.t ' s action delavcei and possi171 }           lun g lie folzowal_a                      . Iz l> zi~lhcet} Clihm 1Va r'rime d
     axmided an oxi epd6we of $VT iuillioli . Thv pioJer t                spcclficall Guth nAng the Ihilt .yu7s chWen for tilt-
      :as estitnated to st :; ;III_) tllilholl to const!uut and tile'.     hrids<e .
     Deparnmrnt hyl t'ri mnuled $17 million . If the projec t                    lti .oM" ll tilt• t uestt r :tit-,alwlin< the authority o f
     is nc•,,er coinpluted . cons ructed iacilitia costillt $ 3            tilt• bllrean tt, Finr nee the claim, c cat of We b idqelra s
     nhillicin prc6abl ;• unald be used in the 1)eparul ;tmC s             resol ; cd. h} Ilk, mm It _ slation, ( ;A() believes tha t
     normal electric power operations . Some l lizr6on 4 th e             si uihr puble n nim he encmuiter"I in the funme a t
     other facilities cosnrw `,$10 inillicin may he of litt '             otllhr pt•o ;ewts and it~etil,ltilelldecl that the _huleatt es-
       alik- veil if the Ilt 1ect isro noleted .                           tablish i) olicwe ' inl pro( edures for relocating road s
         ( rec ollullelide d tllat . In e} luatiiig~ the rice d t o        and hrid-es ill accordance %Oth the Flood Control Ac t
     rc>rnph-te the prolcct . the lkparttrumt anurript to ob-             of I964 as a-mended, - report I n tilt , ( onlgieis ,
     i, in ii,~nl't)otential users couini ituel ;t_, for K use             1) 1? . i1-1`l, Ma \ . 10

                                                                                                                                                                                                                SECTION 1

             76. Unnecessary Replacement of Roads and                                                                                r€_r-{t    ., :tr to{' rC      , :Brit      nt : .it,{:n <arr<t t, : :It    it,   i_It> f ,, nv
            ddges at Mater Resources Projects=---The Buremi                                                                          As     mAilih         wpot~t and nithorizin               .e project, t h
          of Reciarn~afiorl . Departurent of fil e Inteli0i .- i, p lan-                                                                        r „+        luzod 01 , .€i.d for rte , acu      l u theta :

          nine; to eonstrii(r a nwdmo t wo-'hnqario mlwr lm €_6                                                                          \ ,tf, t , , . : v t a ,1 lht° ,l p-rt nor          c !€ :!;iia!i_ u iku -

          road, with two bridueo to replant certain 1l 4-tried                                                                       d” nn_ t h tl ;t{ :C_`t't, W', p er, cal :u?cs the replace -
          dirt roads and river -i ivasin,_i " tLI, will l>t inundates                                                                .r ;cnt -f all xrrt lw t11 ;1d tad fa, Lk't-. cs or _l estricts the

          as it result of the _ l-tiillrrDain and, - Re .st ' rt'oir irl Gah-                                                        Iitr?€ al,, t)t}! . ; :16,tltdollllliL , ('Xistiili, o ;ids :.ind hridg e
          fonka. The estimated cost of Ire rlew road and the nvo                                                                       . su, h a, ,+++ ._ ., uhin' .r! d a :, re:xrllt of Inore detaaet-1
          tJrt u k$212 011% . ~
               C                                                                                                                     ~kldt', o! illy uAll needs +tf Fit_ . .f ._ . r_r :~t) Continue s
               ( 7
               i)aSMI    the condhill n of the exivirip r{odh the c - ur-
                                   OD                                                                                                in    Ill'Itti     tka da   , - tairnwi ded
                                                                                                                                                                          : C`               hiri . should he

          not tmMc, the purposes servet .l, ai ! the availabrl7t'; of                                                                taken ( M ) iwK , r A" ?hat the , urvau silCii_,1d de -
          ci tther roads and hrldK to senT inxistrng tlaflrc, MY                                                                     tY'l ip , t t tt is ;or {it`tt'tlttt } ;If' v.- hen road'. (it- bridges
          rc-ported that replacement "us not iu ,;tified and recant-                                                                 Afected b% hur,~all p!o. 1cct's should he t,harldone d
          mended that the roads and bridges he abandoned, witii=                                                                     r d wi than i vpl .tc mL              INTort to the Gfil Y vm 11---

      -   out. repivltentent . Ile Burvau ASK that it did not                                                                         125015, AI t% '_ 1971

             --          :`t   711i      2 !~t !hp l til, tired At r o ad ; and Whig- -                               to he a F 7W ed t              a neta~ high- t 'i     i`ter i : C -~ iug       20 .2      nrit(r,=n .

                                   t4            .Y               7 (~           fi                                                                    t                    t            _


                   c   ,                                                                                                      Ad
                                                                          2                                                                                     i
                                                                                 t ~                                                                       t

                                                 ~                                                                                               i                                             fl
                                                                                                             1                            r F                                            S
                                                                              77. .~z



                                        i.                                                                                ,
                       fj!                                 1                                        y    _                     4.1

          z ' 7d_ .IrA         a         H : ;'                  aciettt)                     wshf d out r rowing   t j       the    l'< n Brow Way mashed o                        bridge actor           the .t idal lt I oak
                                             o        tl .i A'iu ?If 'an           Jlr{ :er .                                        rq the :'t t.?t " wan 1[t ;'€'7,                                                                  _

               71' Consideration of Project Benefits as Well                                                                         horn 1) in in ( .antttrnla r n tWl o rld son of 01 5
      , . as Costs in .-Relocating- Roads and Bridges it fa                                                                          AWL Mail u ;rill r( :2 .gh ;_'atnnaLt-, 1 S rmided 1W dl e
          Water- Resources Project .            1_ he Buir eau of Recla=                                                             Iz"M au, ( _ . it_) stated Flint , i . ;}-million o itlhl possibly b e
          Iil :dtion . I vp .;il'nn€ r of the lme&m . Pans to rchwatee                                                               saved 1+\ r€ iocatiie i the v .{l ..hwirstrearlt ,r€ar r tilt_' dani .
          a'1Wirrt-t            We                    ah ;rlww% 49 at'I'rrs .?lit' crt"t o                       the . u--           Mo n— import tnd" this alt€=I'n'itk'C .lov ition €bold pe -

                                . '; ', . ;                       4                                                                                                                                                             45

                   SECTION I
               alit annual octiefits--tile yaue of products or services          :old cn;senlination of t tsk'n intolinil0on and tech -
               resftlting fro : o the proicl t- of as mlif ,1 as $50 million     uirlucs betayeen tine uvo r ncies .
               to begin to be realized from the Auburn ptoiect 3 year,               .hhe I Brent . has m .tcle ti .rnifi<` .utt pnroic . ; iro the de -
          _ . .earlier.                                                          sign and const, twtior, of an i t +lams achich, under cer-
    - The Department iatcd that a inoic detailed cos t                            tain condition, have ;igndicart ad? alltaet- over othe r
               estimate for rc_iocatmg 1li ,giaatala 49 do,enstreanr from         t\°pes of dilm> "laile the Coll- h : : not 1_ept abreas t
               the dam would probably be considerably higher tha n                  f the advmwenicm, in arch d : nt de,ien if, tile -,iin e
               the S5 million rough estimate and that it appeare d               de<~rcc a, the liureatl . "hl .e Corps n :a ; hac< cl»htrucae d
               ltiglaly -doubtful ' that the Office of Manartcment an d          other top°s of clams at ittt ations a_-ilcvc• arch dam s
               Budget and the Con Liss r:ould be amenable to alt-                auight have been urore s lilitkle As Ml ex .1111ple, ( ; .\( )
               propriating fund ., sufficient for the relocation and th e         noted that the construction nl an mch darn at th e
               dam consu,uction to be undertaken at the same time .              Corps \eay Nfeionils ptoiect ;n C .11ilrrrnia %could hav e
               which would be licu"Sark if project benefit: were to be            resulted in saviltRs of about S9 :,rition oxvr the pro-
               realized sooner.                                                  posed rock-fill dam .
                  GAO recognized that the 55 million estimate for le-                 GAO al>o repnruid that grtiilance tails needed for
               locatin~ the bride dotynstrcant front the dam was not             evaluatiow desivii altcruat.yes . The iiuteau con traded
               it refined estimate but_ that the potential savin,_- acei e        an ftill eiuforced-concrete hning fl,r the San Luis Cana l
               significant enotign_ to justify having it more detailed            in California. A more carefully inepa r ed evaluation o f
               estimate prepared for use in determining the alternate             the design alternatives v ould have shown a cost ad-
               route more advantageous to the Goverrnnent . Also . a              vamtl,c_ et tii 2 utillinn in favor of an earth lining raQaer
               numbei of other alternative routes existed which ha d              titan file rotr-rete linill',' chosen by tile 11111-CaLl .
               the advantage of ; ertr.ittinig project benefits to b e                GAO concluded that the matters discussed in its
               realized sooner than the route selected by the Bureau .            report . both avith respect to the t l pc of chill for tilt•
                  The Departinent :s comment that the Co wress in , !             New Melones project and the tc, :a of lining for th e
               the Office of Mmiagenient and Budget would not ap -                Sao Lms Canal, indicated it need to clevelop guidelines
               I)MIn- iate,. sitntdtaneotrSIN', the funds needed for re -         setting forth factotS . includim,, those for making cos t
               location the road and constructin' the dam is some -               comparisons
                                                                                           . that are to be considered ut evahtatill g
               what speculative . C; AO stated th tt the Bureau shoul d           design alternatives.
               decide the inost_economical plan_ for relocating th e                  Ill response to ( ;AO recoinniendations, the Corp s
               highway and provide justification for that plat ; whe n            and the Bureau entered into it %%rittea aiTreell lent t o
               reduestiiw the tieccs .ar y appropriations .                       exchange useful information . _Mso, the Corp : as, reed t o
                  GAO recommended that the Bureau make a detaile d                consider use of certain lluienl practices that GAO ha d
               study of th stiniated cost of ilic downstream rout e               called to its attention . i Report to the Congress . B -
               and decernline which of the several alternatives is th e           125045, ;Apr. 6 . 197 1
               most economical when both costs and benefits are con-
               sidered .'GAO also recommended that the Bureau de-                    79, Contributions for Non-Federal Water Re -
               velop procedures for all Bureau watei, resources proj-            sources     Projects .—The procedures used by th e
                                                                                 Corps of hngi leers rCi6l Functions Department o f
               ects to provide r~r consideration -~` tiae effect that road
               and bridge relocations will have on the realization of            the Ainty, for computing the Federal contribution fo r
               project benefits . (Report to the. Congress. B-1 2 5015 .         flood control features on avater resources projects con-
               Mav 7, 1971 t                                                     str ucted I)v non-Federal agencies did not protect th e
                                                                                 Government from unbalancing of contract costs I)v til e
                      78 . Comparability of Design Alternatives for              contractor for the yariolr itemsoi tyork .
                   Federal Water Resources Projects:---Both the Corp s              L`ubalancin '-, of crnrtract costs occurs ashen a con-
                   of EnYineer ., t Giril lnnctiOns . Departn.ent of the         tt-ictor to obtain higher hro< . 0 ss pat scuts in th e
                   Anne, and the Bumatt of RYclalliation, IDepartment of         early stages of a contract assigns a higher cost tita n
                   the Interior . plan, const-uct, and ciperate similar grater   had been estimated to those items of work . such as ex-
                  -resources projects, but have diffetent design proce-          cavativu- that trill he cr,tnpleted first and a correspond-
                   dures ,and practices GAO reported that Nub,tantial            ingly lower cost to items that will be completed later .
                   savings could be achieved. by improved coordination           Therefore . although the total cost of a project may not


                                                                                                                           SECTION I

    iiicrea,e. . tuth-alam iii may i—uh ; ii the GoX(-!olovllt' -       he                  'c" , aced ahout Nl, - milliol i

    ,mitiibutin -,, mole ihan it Wad bwauw its umu k                    M 1M, state Mp", 0 CAM MO H Ole Yon, cm! -
    butiou is detcrmitied h} apoov a pmemmu to t Q                      uk,Am W 1a &"n"wd th"Mh uw zit It -
    cost otcei-taill leatilivs0t the project .
       GAO i-ccommeiided that thv Fedeial im-atillutiou b( -               - 1 - 11" Corp~                        pl"cedil!c' . i :! a,, -
    based on the ratio of projcx t cost cello ated to floo d            ,"rdawe xNitl) GMYS lc~m :allvlldatioll ' 1"I (!ctnl!li!l-
    control-to ate total paect am Mead 4 folle, iii g, th e             ilig tile Fedelid (olm-ibutioll at po'jc t t -
    Corps' procalule~ of applviTiL' a pelaziltage to the cost                                   (ost, all .            Repmt ti! the
    of certaill fualules of tile, project . ( ;,\(-) t-tililated that                  of tiv! Armn . 1i-16`t94 . julh


                                         INTERNATI01' 4AL ACTIVITIE S

     Foreign Assistance Program s                                                                  to equip-rent no ,, On hand . An ex -
                                                                             :1   , : ;pI, o!       1 ."
                                                                                                1'11S     mini= of Thai personnel a t
                                                                                                        i, 01c
            80 . Adminibtration of the Military Assistanc e                  a     m A SMUNO to opmw a n0he notnu NAk h
     Training Program—GAO, at the request of th e                            % .--ild nc.,, nQ intalled fcn some tear. .
     chairnian . Senate Connnittee on Fmvjn Relations .                          In allizion . GAO noted that the nufitarz advisers
     perforrued a detailpd review of Ow mMmy akmn, e
                                                                             _me inadequate conddan6mi to the rectint coun-
     naining, prograni in 110 recipient countries, In recen t
                                                                             t6c,' capabilities to pro%idu training froin their ow n
     year,, , according to GAO, the total funds provided fo r
                                                                             resource, and no effort was made b~ the advisers t o
     We training of Wreign ruMtvtry pwsonnel under thi s
                                                                             correlate the military assistance of ~eivice-funde d
     pmerarn have aVerat& alt)(ILIt y ;4 million a veer .
           In awning the training against the Wray m                         trainkm proamms "Ah aim U5 . Gmemuma train-
     ( j uitenrents and iesOUrces of recipient countries, GA O               ing prot,,raur, .
     found that some of the _training mus unnevesm, o r                          Finally . in thr election of ioreign students to b e
       %* ^ s not of high priority . Smne of the training p "                trained . the report noted that L .S . a5fers did not



          h-1, I-,                  wils 1rh t v        a ( -- , S   j—; 5    nuc : at 5-t Bel p "ir .           I",_   4? ;d,r   th e
     TWA" Namm .


                                                                                                                    SECTION I
    take the ac c~-a      :cp, u        that a <i :tfit ieni inon -       Selo . , lecNamin 'tu"l,
                                                                                              it Ilse —,el a!! 131(!ui-J111 . to !

    her " t qualilied af)(E-L-otc, %-,-V!v ulna, a - .t o—ned .              m~,-jiihtant h( ;na                  11hcap-
    and tested in One — teat tim %omid be maRable u )                 i myliaw 1wratm in it, iv s- than -,w4ac! ' " v adnan-

    attend schcdulf:d uitin i m "mw~ A, a reolk som e                 mrawn !it viers of the- GAO tc,ormixiaid tv;(,
     our.t had to he c,oaelvd of f!vfened, and, ru othe r
    cases~ inaivinalk 1ttalvhd and umpmMVd permnm i
    entered into thw u .tinin2 pto ,~rarn .                                           and upv!%kime the tllinin ,~ pvoienan t o



                                                        X _4                  Wx
                                                                              Al l -y


                            i—t—7i navigatm tecehitig training from a US . Air Fim, adviser in Korea ,

    achit~vr cflectivc nanagemerit or , 2! - reducing the size        are employed in the most effective manner to pursu e
    of dw tm0bg program so that it can be effectively                 abroad the security and political ohjectites of th e
    rnarraged ivitli presently authorized staff,,. .                  United States . In this regard . the Depaitment distrib .
       GAO stated in the report that the committees of dre            used the report m all mvrsnas posts haying supervism- y
    Congress might wkh to consider the dedryb1lim of                  responsibih, for such training programs . The Deyrt-
    enactin ,! 1eqislation requiiing the Semvmry of Des.              nient further stated that the trQAT program ha s
    to usiablish a measurement qsmn to must in deter-                 been a whaWe instrument in contributin g to th e
    o niii!l,_Le eflectiveriess of expenditures for the ioili-
                                                                      achievement of U .S . security and political objectives ,
    iare —islance
              ,        trainin g program .
                                                                         Although the Department of Defense disagreed vvit h
       'T'h,- 0epartment of State, in commenting on the
                                                                      some of (1 1,04 findings. A adviuml drat it had knmvl-
      p a1I .   iated that it contained a wealth of informa-
                                                                      edge of improvements needed in some of the areas
    twi, aatl data w : ieli will be extrerridy uwhd in the
    Department' s eff oi--s to improyc t l e effectiveness of         pWwd out in GAO`s report and that it was attemp t
    the tmKWg pograrn . The Department intends to use                 ing to solve these matters, i Repoi t to the Semite Coni-
    the iepott as it means of assuring Wat LES . resources            niiiace on Foreign Relations, B-163582, Feb . 16, 1971 ~


                SECTION t
                  81 . U .S . Relief Assistance to Nigeria .—In re-                           A nutritional survey conducted in the Biafrar t
              sponse, to it request from tie chainnan . Subcommittee                       endure in October 191697 showed that about one -
              oil Refugees in(! Escap . cs, :Senate Committee on th e                      third ' d the popuiatiml "assuffcrin ", fro;=, advance d
              Ju;ltciaty, GAO submitted reports in Augnst 1977 1                           pnnein depiivation CiAO . htwx%er, found no reli-
              ano in December I9*7 0, oil U .S . assktance furnished t o                   able data on tho, nuutbcr of civilian deaths whic h
    _ Nigel ia, The reports di closed that the U .S . Goy ern-                             had occurred in the endave during the :eat .
              ntent had provided Nigeria about `VIF n ;illior; i n                         GAO was unable to evaluate the effectiveness o f
              re lief assist ; nee, including Public Lam : 80 food con-                  dit- food planning and distribution for the postwa r
              modities cash donations, and relief and rehabilitatio n                    period because its staff menihers ;rere denied entry
              support . This assistance began in 1966 while the N'i -                    %alas by Nigeria. Reports to the chairman, Subeom-
              -erian civil war in progress and continued throueh-                        nritwe on Refugees and Escapees, Senate Committe e
               otit the war and through tie period following th e                        on the judicimy . 11-167677, Aug . 25, 1970, an d
              cessation of hosstilities in January 1970 _                                Dec . 17, 1970,
                  The United States, although recognizing the sov-
               creignty of the Federal - Military Government of IVi-                          82 . U .S . Aid to the Economic Unification of
               fferia . adopted a policy of political and military non -                 Central America .—From July 1961 through the be -
               involvement regarding the Nigerian civil war . Ilow-                         inning of 1970, the Agency for International Develop-
               ever, the United - States prodded relief assistanc e                      ment f- :AID= had budgeted about 5143 million and
               through L .S. voluntary relief agencie-, internationa l                   had paid out 567 million for aid designed to accelerat e
               relief organizations, and the Nigerian Red Cross .                        the economic unification of Central America . AID' s
                  Numerous char es occurred in the organization fo r                     Regional Office for Central America and Panam a
               relief in the Department of State and the Agency fo r                         hUCAPr, e tabii .hed in 1 1 ,62 to encou a e an d
               International Development These changes appar-                            support the Central American Corrrmon Market, wa s
               ently were ad hoc charwes in response to tl .e increase d                 responsible for the program . ROCAP aid was part o f
               demands of the Nigerian relief program . GAO be-                          a larger economic assistance program amounting, to
               lieved thatthis suggested a need to consider whethe r                     about 1 .3 bill ion (hi ring the 8-pear period to fiv e
               improved effectiveness could have resulted from as -                      countries of Central America . Such assistance wa s
               signing responsibility fo,r similar programs to a per-                    equal to about 31 percent of domestic revenues of th e
               manent. viable U .S . organization capable of planning ,                  five countries . or about 20 percent of the export earn-
               coordinating, acid -implementing major U .S . relief op-                  ings . The United States had provided about 78 percen t
               crations ' of the magnitude- and significance of th e                     of the total external assistance .
                Nigerian effort .                                                             Because of congressional interest in multicountr y
                   With tespect to relief food planning and distribu-                    economic development and the amounts of U .S . money s
                tion during the war . GAO observed tha t                                 invoked . CIAO revie ,.vvd MD's efforts to help accel-
                         A principal impediment to effective relief food                  erate economic unihcaticxr of Central America .
                      planning, had been the absence of reliable informa-                      GAO pointed out that although the Central Amer -
                      tion on the size and- condition of the population i n               ;call Conunon Market vas recognized by a number of
                      the %var-affected areas and on the availability o f                 authorities as the most successful attempt to (late at
                      local foods.                                                        economic unification anong developing countries ,
                         Although actual fooddistribution rates in th e                   achievement of a common market that is fully effectiv e
                      federall y controlled areas had been less than th e                 could be some tune away. With regard to AID ' s pro
                      planned, actual stockpiles of food apparently al -
                                                                                          g'ram management, GAO rnade tits following observa-
                      ways had been more, than sufficient to meet planned
                                                                                           tions :
                      distribution requirements .
                         Food distribution within the Biafran enclave ha d                       AID was unable to relate the. Common Market' s
                      beert limited to those food supplies which could b e                     actual accontplkliments and priorities to those :SI D
                      iluv-n into the area by night . Tile United State s                      had hoped for.
                         a tc r (forts to inci e lse the flotiv of food supplies int o           AID had not developed methods necessary t o
                        hr, but ,,as unsuccessful because of th e                             aneasure with reasonable a,-curacy the impact of AI D
                      irreconcilable positrons- of the combatants .                            programs on the Common Market movement or the


                                                                                                                     SECTION I
      impact of the unification movement on the region' s             program objectives and ,oak .,ere not stated 1tr ooi -c'_- -
      rate of ,;rowth and development .                                tircly measurable torn, and did not include• a tim e
          lII) loans for industrial projects requiring pre -           frame for acconrplkhn ;cru . Of a total of Borne 25 9
      dominantly rax,- material imports rather than local             developmental objectives and goals r v ;cv cci, abou t
      resouiresanay have contributed adversely to Centra l             13 percent ;xere stated in objectivt_I measurable term s
      Arnerica's balance of i m ments .                               and 16 percent had a specified time frame fo r
         AID needed to giveincreased attention to th e                 accomplishment .
      problem of slow use of available aid developmen t                   The report cited the cou"resssional intert'tt in tir e
      funds .                                                          problem of evaluating program perfortua nce vrhere
                                                                       foreign aid funds were involved and the fact that the.
      GAO recommended that the Achri nistrator of AI D
                                                                       Department of State and the Agen(y fw Internationa l
    should :
                                                                       Development' s guidance for the preparation of plan-
         Requite that long-term objectises and goals o f               ning documents had stated that objectives and final s
      U .S . support for the Conuuon Market he formulate d            should be measurable in terms of achievements de -
      in terms which permit measurement over time . to-                sired and have a time frame for coruplt :tinn of th e
      get-her with it statement of priorities and an explici t         planned achievement` . GAO concluded that specificit c
      plan and tune for achieving action .                             wits a prerequisite not only for effective adtninistra-
         Orde r, more comprehensive efforts to identify ke y           tion, but also for a responsible objective ass-sment o f
      problems requiring solution on it regional basis                 results . An improvement of this nat ure, (i .AO reported ,
      and require that AID ' s regional office for Centra l            would he of special long-range importance because o f
      America direct its future resources to only suc h                the need to show the Coui,,ress and the American pub-
      problems .                                                      lic, the dernonstrable and objectively measurable re-
         Accelerate efforts to develop methods necessar y             sults of U .S . developmental assistance programs .
      to measure with reasonable accuracy the impact o f                  GAO recommended that the 'wcwtary take th e
      AID programs on ill( , Conunon Market and the -                 ineasures necessary- to assure that in the pronrannoint*
      impact of the unification movement on the area' s               process objectives and finals .'both intermediate an d
      rate of economic growth and development .                        final ; were formulated and stated in terms objectivel y
         Give increased attention to wa y s of overcomin g             ureasur<able over time .
      the problem of slow use of AID loan funds in Cen-                   At June 30, 1 9 711 . Lite Department of State was stil l
      tral America ,                                                   reviewing GAO's recon:ruendatiou . -Report to th e
                                                                       Secretary- of State, 11--161932, June I 1 1971 i
      AII) agreed in principle with the recommendation s
    but also outlined some of the difficulties involved i n               84 . Economic and Military Aid to Honda ; .-- -
    their application . 'Report to the Congress, 11-16(93550 .
                                                                      The basic objective of U .S assistance to IIon _is is
    Aug . 13, 1970 ?
                                                                      to serve, within the Alliance for Prot ress, as a cata-
       83 . Developmental Assistance Programs i n                     lvst--causing or permittin g Honduras to mobilize it
    Latin America—During four reviews involving I .S .                much larger and snore intensified development effor t
    deVelopmental assistance programs in i_Aividual I :ati n          to achieve significant speedups in ec ononvic productiv -
    American countries or regions . GAO noted that cer-               itv and social and political progress . The end results
    tain U,S . program objectives, goals, and targets lacke d         are intended to be significantly ] .A t- incomes, mor e
    the specificity necessary to permit objective measure-            equal distribution of income, and higher standards o f
    ment and evaluation of program results over a perio d             living for Hondurans .
    of there. For this reason audit work was undertaken to               Prom 1961 to 1970, U .S . direct and indirect as-
    determine if the condition v .as common in L,S, as-               sistance toHonduras was about $149 million excludin g
    sistance prvgranuning in other Latin American                     it GAO estimated $15 million in commodity trade as-

    countries .                                                       sistance front U .S, preferential purchases of sugar an d
       GAO reported, in -it letter addressed to the Secretay          coffee . The U .S . contribution was about 73 percent o f
    of State, that in it review of selected fiscal year 197 2         the outside assistance to Honduras . Total assistanc e
                                    for developmental program s       was equivalent to about 37 percent of Honduran cen-
    f or i\ ! a .! An .i : . . . ; ountries, in a majority of cases   tral government revenue .


    SECTION        I

       GAO        fi~unii titai llondina ~                                        :V_ivll(c for llarinatl~,nal 1)r . .dopinClit
                                                                                                                     .              AID an d
                                                                                     l,r Fsp,)it-I ;ni-ii li~ank ,or—ribjwd in()iv than 8 7
            if!" \lkatife "ears had :1-il"I ' to-d ! , tit divo .
    no ri.aivni iki, , lv!anion of it, — rimi - i ' d m P10 A                      i mm " M it Wk ww"um A Ie nvvn aim Ti penain t
    d,v,~lopnwllt ~"hcll ' onipio,cl e,ilh ill,- IS+'di s . ( ;,\( )               ic,p, ti,,vk \11 )', i—i,tow c !ill - it, all ,oar, 1906 -6 9
    -tal,d that ll,diti,alli, "hilt . Ilondula, a, hic%wl lula -                   "as S2Q milliow an vvivi g , A mm 45A million a
    or malaw twig ill, , Alliam . it did n"i nlai;v                                tear . 1hi, e,a~ an a%vt,e~v of ahm!,           pc! capita a
    ,nnificant                      lovaid a ""VM" chnwmw .
    (oll5tinitiollal *okrinlnoni a hash US, cfc~lrc Th e                          ha%eleceived lvs,tlnoi-4l pvt (apita .
    florah"an fhnvnnnena~ monAm u, ml thim< a n                                      (011 "adv limited w6m, 4 A 11)- itriuved pwj -
    civil lib(irti", efficient a(hililli'tinion . and bioic p -                          "I ., .et,-IlJin hw,, l'—1 ;      ~hjc,'ev- had been at -
    f :nins ourim-, the Alliance %, :,-           nili"uttil io ; , tha n         to d I be ~( \ i, ." si! --! ' i nin! :if P311hirill uleas -
    expected .                                                                            t ~ [ Likellit - iai~ .n q i 'll   r . p—1 t, -., ation o (
         (;_A0 pointed (-,ill that baif                     in t ,                p!c, 'i, a~ !,-it naw" and illad -inall I f . .n t l!jCjjT lei
    ,- istan, r tratp ~y .,oidd be nquircd of "a amt Ad- -                                                                        to al lain punjec l
     ' ivv q k%ere to lloof ei tiNolvachic"c'! ill tit( , next . . . .rt e        -1~1v, it %
    and in the regard Illad, it) Ic ' ninniendatu'll, M--t o f                       (, :fit) 1c,, t 1!jjVnd'1i tha t
     these, -ii re olicerilrd \%it![ ded ;1 :                                             1 lit- I )nt, tn! 'q tilt, Po, ;             i" o , % aluati l th ,
     the planning and evaluation '4 the V:, enc-~ f" I                                             pn~ :!all' ' 111d     ifl, , - d!" , "n'idv! dic lcaoll -
     International De%clopment ' , AID pio,t inn . I n                               a~Lvpcii o .r            pIn 2, 0ot, Jlei lbe ~Ilatc6c q
     re-yondilitz on brilail of tilt , so ' _' m ;!                       th "          lwwd li          hiv ., , then ,
     Adininistiaim of All) aercd %,!ih loo,i ~! GA() ',                                   1 - he tic, t, tar, of I ),,Icn— ;no—,?de                3nilitaw,
     recommendations, ho%,ever . he remarked that the ir -                                                          equipjot ;J I q ll ,dn'! it i , , cl -lail l
     Imn Ad not appm to reHmt hdV the 1"gwu nuuk 0                                   think "I               avaiulk I" S— dw , 'pillinivilt adt-
     wivra pas in AID in lonoam pLuninu and malu p -                                 'phWA ,
     tion, and that inip ir civements in the                          of ill( ,          t -,ti jn" A "MA"w in ii"lulmt no, a"-"div e
     pmgmw have been and will canon u p to he .atle .                                 pAy"nK m lZwka imle nutin dil" all US .
         ( :A0 sjlnc' emed that C' on!"!O,s Ini'dit c, Ji r, ,                                t .tur :h~ti i an he ivl,ttud to the Educationa l
     c .sicivr :                                                                      and (i :it , aal I olindanoll be Inadv a !,art of th e
              H execuilke hmnch VnAn a-iwmr pmi ,                                     us~wittx,wm la—ard do prommy Tile Smu -
          illstifi(ations to ti l e Gqw!e•s 'hould be 1—11"I, t!ln d                  i,m nt                    honld                        c-iidiratiol !
         i o I dlmv tho rriathw hluty-l"tu p WcAnown o f                              an d
         the recipient country- c, onoinit . of iLd . and politi -                   t "' . letill ' i", ha%f , pronnde"ned                   broad, as,tim -
         ( , la1 (I'velopnienz acllic%& in Tv pm and lAamw d
          it the kulaw and 2 1 prowde a npqr w1didt KN t o                         Anved . v&I vivilv&n dw Abak"m K Or UN ,
          oil tit , , lilnc~pall oll"isiolled ", pla'Ac jklammut of                p"mmu    . RvportwilivUwKm -.. T IKI MTNoel 6 ,
                                                                                    `+ ` t
          us_aytaint~ we relative hnvk of i" h a_wnn, v
          (hi r ing th,, linle,pall : all(! ill(- natun. and lan- - 1-
          ec ,ijlolllic . ' ecial . and political devc1opnirn! ama k                   86 . Refugee Reliet Program in Laos :-- -GAC )
          ImIcid and to he suIgolved dm*g 0 4 umvio n                               VMW that ollh linlita'd data nn til t , c\ .dnation, of th e
              Whethe r cowoessional action lnit_h      ~ ', b ,,- de , iral &       10"T not pwnwu had been "ImAted to "7ah-
                                                     Apromhowdel ,                 in~ton . an,! the ALor 111(vination .d D"velop-
          and otlivi analytical tools to het ,-i nw,eup% trill.                     nwrlt ,< AI D
           treatern'njceutttt and ucuract .the 111 :1),r 1 (4 U S                  -,t- .all din-k tion, (i ~O al-(tt~acd That th e
           assistance proijayle, (lit a renpicink rate o f                         All) Nimmi, in kwo0d im la,v %,thm qwivnirw
           develOIN11CM .                                                           piocc0ilics and it, fun( lonal an't looion aati'lllcni .
                                                                                    jWtared , I%! W :o .M&W, L
     Mellon to the Chmpus. BA69521 . Dvc 1 1970 1
                                                                                       SAID offil ials ,uncd linit , onti n ._, it, c pl :n~- hilld 11 01
        84 U .S . AssiMame in Liberia .— Total U .S . as-                           liven for in"\c1livill tit ir ., Ov cleri t
     siMme to 11"a Or total tear,; 1MO49 arnounw d                                  of dw. mi,yns cat"A I" hawtv titilamy mliow'llvv y
     io S212 nriMon . an avem, of $21 Kilicirt a poi Th e                           ako mated that MW had h"n na"A" ui My exion-


                                                                                                                                                                                                                                          SECTION     1

                                                                                                                                                         1,       ~s

               YI     :                                                                                                                                  G
               MICA ,


                                                                                                                                                                                                               WEI               t         :

                                                                                                                                                                                                                             ",      ti

                         :~~ • n
                         7 ; Cdr
                                                                                                      .k .'p
                                                                                                                                    is .,`_                                       •,                                                                Cw.t
                                                                                          . .~ ` • .:? L                                                                                       t       P
                                                                                            ,r                                                                             r .,                                                                           1
                                                                                                                                                                                                                                                      . 1
                   j       '2!1                  P            Y{         Ltir(1   {kE'               ,Yffk 2 ,   ik            `~      G                      t    P :,
                                   66~                                                                                ,l

      1        r   vr~ ;~~ 1                 X           +•                  Mfr 1        ~z1 {         r        ''
                                                                                                                 i0o 1          k             .+.

                   U ' S. jxrign (wWaft", ~u +tlrs-11 : den: h!)git_tl fai!ho", to a 1€ :ufping rountr . Ia_'r/,r,e ~n .rn.r„en.! Hsa( :itc !
                   4abovel repin<-ed br modern AJD-%u:aueed John L K,nnady FI rpitai--Nation'! ILdu'i Cent,--f ~6eiott _ in Liif4~ria

                           Al      W                 1       .— d

                   ,43                                       .N .                         • t               !
                            i                                                                                                              ..                          ~                                             Pr ~e, wf                 !
                                                                         4                      1y                                                                                         S
          pp                             r
                                             ~                                                                             r
                                                         4    r:TSw7€                    ~'~'Sts.~~`r-aF3i~Lti'3~                                                                                                    .f .+ rr              !

          t~       4*4

                                                                                                                                           m            oo

<ics of the situation, lather than anticipatin :, future                pooriv clothed, nalel +upplies appeared ir,adecluate ,
 heeds and prepazim alternatixc• nxr ;cment plats .                     hotunt,, teas inadequate for the cro5rcicd conditions ,
    GAO also noted that the AID Mission in Laos di d                    farmland R°IS limited, and there %,ere lelativel' fear
 not have enottu'h stafl* to man Lv !)"ill the re-Cttgec pro -          medical dispensaries ,
 ,,rant and its other po wrraun, . Alwi repeated efforts .                 (iA0 suggested that the subcounnittec urine the re -
 howe\cr. -seem additional American positions for the                   port to the attention of AID for pos " i le use in itu-
 tetttnee ptoQrauz were authorized on June 26, 1071) .                  proltn, its !walla,"cntent of till- r to : 5run . Report t o
 Quite a Ions; tittle will have elapsed hctore these peo-               the chairman . Suhconunittec ,it Kcfutlees and Ps-
 ple could he physically in 1 .ao:, hccausc i t takes tittle            l-apec., Senate Canunittre on the ludi5 itn . B--133001 .
 to select, puxe's, train ;including 6 Monies of Lao
 lingua&e instruction= . and contple % .ith otheradtninis-
 native requhrments . 1n the tne.0 tmic, petNoune•f fron t                  87 . Civilian Healto and. War Casualty Progra m
 other - hro,nurlls were tenipoearil 'e,'itined to rein e ,             in Laos .---GAO reported that there was no civilian
                                                                        health and tsar casualty program as such in Laos . As-
     :AM officials stated that, bet cruse of th e - unst ibis an d
 diverse conditions it , Laos. standards had not hea t                  sistance rendered in thi, itrea by the Aeenc :v for Inter-
                                                                        national Development : All)_ ,as included as part o f
 csiablisthed as to the anu;unts and ty pes of assisautic -
 Instead . the needs of a particular group were- asesse d               the Public Health Development Proe:ratu of the AI D
 by Laotian Government and AID refugee otlicet:s o n                    \fission in Lao, #AID Laos il ;c taco ptimruv activ-
 tile 'Spot -                                                           ities Invoking ivilian h-•altlt and ca,n ru l e's ,ere th e
     During held N-isits to a limited number of rctut r e c             Upe,srtior, IitS r'tc,{wod Projrc_ .rnd tltel u .age I Ieaitl t
 tillages, it was observed that tite ref lt!ces nsuallt tccre            Project .


                                     Distribution of AID i .rdieid =tpplies a. Laotian refugee ..illage ,


                                                                                                                     SECUON I

       AID's as'i'tan" . to public livalth 6 . 1opment i n
    Inus had Imon canhyl on met a guru period dmin }               LOW      in Emap p
    "51 1001 Winn had been oldiuw,d- TI inilha i                       `]'ill, ClAilloitHICHL ',%a, horded in ,
    fol-Olit-lation I'loth011oodand S(41 luilhim fol Fill,_ [      ,istrnt %-.1th alAnIal a-isLarzkv                    !, ;o %vifl !
    I Ivalth . In addition . rite equivalent of 811 million i n    101 or no rdatkn to tho rmt, of 1, r, to                  nwnii, -
    local currvri(v ,-PnO -g al from t 5 . assistance had heat     ,tems and the funthw "a, Its, than 10 pujv re d
    furnished dKid"o tine It"n Im"arin over the nw ,                sits of the isterns .
    P&Q .                                                               Also . DOI) submitted all S11 . 14 laiihon 1 laml it, th e
       AID'S mana-"Oncill secillud le " i than adequate i n             \TO (onsortinin in )title 196'; f or d-now ;itati'lli .
    considmaticin of the lelmi%Ay high p4wity aninned i n           techrild and nwincely wink" "! d,peckmi ,
    these projects . The. Public Health DiNision gericial k         costs . In May 1970 t 59 .1 million ot ill(- cl,laj) \,a-, rell-
    manted to the exommes of the aitoatiorn and there sea,          tathTly MTjoed by the "Miso"hMi .
    little emphasis placed on dev,_lopnn-nt of long-rang e              The costs of die Gn syterns am wunnowd n n4a l
    plans related to civ=iliac war' casualties .                    in tilt, Inultinlillion-dollar amounts . Final 'o(S -in d
       At the time of GAO ' s visit in juIN 1970 . the Publi c      filial payniont, arc not (-Nlw(ted to he knc,•sn or mad e
    IfenIth Division (,f AID Ions had compiled snore dat a          YmH 572 or 1973 .

    on war casualties reared in the Village I lealth Projec t           GAO recommended that the w~lcla!N of Defense
    dispensaries . No Nou casualty infoitnation, however,              I make a report to the Picsideni and u) Cot =test o f
    mus compiled untH junv 1970 for the seem Operatim i             all pettiticn, fact ; roncernin_ thi, nadir and all y
    Brotheiliond Project hospital,, . Information on overall        action taken of to h" taken a, it-quiwd by Li%N and 2       f

    casualty figures was furnished by AID for earlier scars :       bring to the atteniion of DOI) olficiak the fact tha t
    ho-wever, these fi L' ures % ' Oe not xvl ~, accurate . Also    decisions on ill(. riaking of contractual obligatiotrs o f
    daimon civilian %orr casualties did not hicIrnk thos e          the Gmurnnien, should he consistent with the re-
    Nho were killed or thosv who were wounded htu di d               quirements of law and pertinent DOI) ducal rs .
     not seek inedical attention ,                                       DOD disaytreed with KAO acid cited tine \lutua l
        GAO suggested that the suhconumttee bring th e              QuAty .Act of 154 w% 11510 .0 its authority .
     report to Hic attention of AID for possihIc use in im-          Ac(ordin g, to DOI)_ the act alim%S ( ;oNellurwilt agen -
     proving its inanagentent of the pro,_, rani . :Report t o       cies to juake such agreements . reg ardless of fluid avail -
     the chairman, Subconuniace on RQMves .and E y                   ability or nwQA of aWmT congwalonal approml ,
     capces, Senate ConiurittiTon dwpakracy, BAMM L                  based upon we of the MAYM to ambbilfty of funds - '
     Nov . 21 19m )                                                  clause as contained in DOD 's commitment .
                                                                         It is still GAO's opinion that DOD's actions had th e
                                                                     effect of committing the Congress to appropriatin g
    Intematiotial Organizations and                                  WAWA funds after the fact nettwithstandhis th e
                                                                      proviso "subject to availability of fluids," and there
    institution s                                                     i\ as little practical control that Congress could exercise
       88. Purchase Commitment We to an inter -                      o%er the aniount of funds it would subsequently be
    national Organization Prior to Availability o f                  rwiLdwd to appropriate if the United States im to
    Funds-01m Anti-Ddhicilicy Act (31 U .S .C. 665 -1                ineet its contra(tual commitments under ill( , inter -
    requires that Goverianicnt agenvies - either have est o          national apwrnent . Finally, in acting. witho-it: expres s
                                                                     authoLhation and without saicierit Wds amillthle ,
    mated fluids available or hmv adv=ce congressiona l
    appiewl hefmr viramirltg"into
                              y     contractual obligations .         DOI) violated the act when the arrangement wa s
                                                                     signed in March 1960 . flSeport to the Congiess ,
       GAO found that no express authorization existed .
                                                                      B-t601,54 . Oct . 2 . 1970 )
    in Iaxv, allowing the. Department of Defense -.DOD`, i n
    March 1960, to enter into a commitment to purchas e                89 . Independent Review and Evaluation of In-
    four TIAWK missile Systems %A& having ortly a por-              ternational Organizations and Institutions .—GAO' s
    tion of the funds available . Tim pirrelaase was W e            mviews of U .S . financial lzrarticilmdon in inwirmthna l
    m a pax o1 C.S . limblImthn in a i0tten agreemen t              organizations have clearly shown the need for inde-
    with a consortium of five North Atlantic Treaty Or-             pendent reviews and evaluations of the organizations '
    vanization, (NATO) countries forined for the purpose            activities . 'Mme w6m g acid crahratioris provide .th e


                   SECTION I
     -        ot'e ;ul-2 :iucnts' t;oyeruStg hothes and, throa~h theta ,                     ( ;AO found that the U .S . Gcn.ernment's polic y
              member oAeutrnents %, : th adequ.tte information o n                       oblecti ;es for participation in the ILO were broadl y
              the to -_cr ;tt .tihite=h +_he at~anirttiotts :uc di-,thargiTi t,          defined and not vastly measured . Generally they were
              filch responsibi1ities in nte e 'tinlZ their respective ero a              to assist in the ecouornie and -social development of
              ,11d ol,ice tires .                                                        less de\eloped countries and to present the acv Rntatw %
                   It 11ras to this end that GAO t )inn ended that th e                  of the economic, social, and political systems of th e
              1),paillueut of State encourage tile estahlislillient (i f                 United States in contrast with other nondemocrati c
              .Ali ether y (. review and cyahtation function for Unite d                 s\stettts .
              'Nation, I .N ptoQl-aln= :end a( ttcitiv . .                                   Irtdit-iduals inter iewed and documents reviewed b y
                   In spl)nse to ;r ii-quest front tho chairman of th e                  GAO indicates] that their had been a lack of U .S .
              fly-u Foivi ru Aff,tit, (Aunntittce, GAO set forth . i n
                         c                                                               ittitiatiye 4t intplentent a 'tit tit pout y airned at attainiu g
              Dect"i ; i,cl 1970 . its %sews on the cw-ntial elements i t                m political objective, and that the I-nited States wa s
              considered ne e ss«n for achieyin'-, effective rode -                      not hat ir_ ant ureat success it) ae hiecim~ such ob-
    _ potillent re%iew 's and evaluations of tile ploer 'lln' s an d                      ct ttr_s . The result, according to these sources, ha d
              its tirttie, of all rho major inte r natiotlal of anizatior, >             hecn azt almost unimpeded expansion of Soviet-hlo c
              3trd institutions : it idnch the United States holds ment-                 ittiiuencc in the ILO .
              heisl io . "these elements rel :Ited to or ;auization . >talf-                 Related to the achie%entent of U' - S . obiectives is th e
               nR-lesie'+ t"n i delincs, and pulfottt_anre and reportirtn:               fact that the esecutiye branch ha, not heen sueeessfu l
        -     standards .                                                                in its efforts to increase suhgtmtiall\ the randier o f
                  GAO exprt            d , .- ,,illutLtncss ti; roopentte trill : th e
                                        s: e                                              Anwricani ctmploved hti the ILO -an obvious mean s
                          tet e reSOntati%- to the ornan ration„ bI prep-trine,          of ntakntw I= .S . influence felt ill the OrR:mizatloll -
              a statement of object, es . standardk and i~uidelnte s                         Responsib]e U .S edhci,tl die] not hate sufficient in -
             for the pinfes,ionalconduct of and report a on th e                         (ormation on nw-t of the Ot_aniiation's prot ,'ratn; an d
              reviett . and etahtatiors, for u .e by the eel rsentatiye s                acts\hies and the manner in which tile\ ,acre beine .
              in proposin ,_, and assisting, in the fornituation of th e                 curried out to he assured that U .S . contributions t o
              to rns - of reference for such reric,cs and vvalttation                    11,0 were heinez 11"'d in an effective and effi, lent man-
                  ' I ' ll(, Department of State has advised that . _it th e             ner and to at!( otnpli>h intended uhtecti\e5 .
             25th session of the Unites] Nation, Geneutl As,cmW\ .                           GAC) rerun . .ne„ded that the Departlnviit= of State ,
             the U .S . ieptesentatives sins-csted for consider:uio u                    Iahor, and C :annnrcc frame dcfini6w and measur-
             GAO' s proposal fo gy it mechanism which would mee t                        able U .S . objectives and develop and Implement a
             the need for effective independent evalua t ion of til e                    fiun polity and a :,oikahle plan for achie tit-, suc h
              activities of the entire L y. slStem, The IOeprutme m                      ohjectivcs, inc]udne ceps tr he taken t,- ins wase etn-
              further advised that . although the proposal reee ivc,-]                   p t ocnrcnt of : met i .au- by I LO -
              little support at the Genera] Assembly . the Depart-                           G\O recommended that the Department of State :
             ment will brim iCupagain in the future . GAO intenck                              Obtain more ccnnpletc and informative budge t
              to work with the State Department and other a lp - 1v ies                     and ptogrant proposals and require that thorou_ h
              in its continuing efforts to encourage the establishmen t                     anal\ses of these tlua bt: made .
             of effective e- iahtation ftinctions for the L .N . system                        Obtain adequate infornatinn on ILO's operation s
             as well as other major international orgato cations an d
                                                                                            and make (. freed    eeyahuitions of its projects an d
             institutions . ¢Report - -to the chairman, House Corn-
             mittee on Foreign :Affairs, I3-161-170, Dec . 4 . 191 0
                                                                                            The Departtttent of State expressed general a e?ree-
                     90. U .S . Participation in the International Labo r                ntent with GAO's reconiniendations that more com-
                  Organization .—GAO reported in December IWO that                       plete information be obtained from Ii .O and stated
                  although U .S : contributions to the Interitationai Labo r             that :It would pursue the information aspect not only i n
                  (Organi?aticn ,ILO', a specialized agency of th e                      its own contacts with ILO, but also by encouragin g
                  United Nations, held increased steadily . the Depart-                  other like-ruined governments to exec similar pressur e
                  ment of State ould not ere assurance they were bein g
                                    e                                                    on ILO for such information .
                  used effieientll- and effectively or that U S . interests                 The Department saw the need fo, better evaluatio n
                  were bein g served by the cvpenditure of the fonds . -                 of ILO activities and stated that it i,vould continue t o

                                                                                                             SECTION      I

press within the U .N . ,Nste n for establishment of evai-           Give the tnattcr of U .S . financial pare - ration i n
nation bodies .                                                   international oi_,anizatir_ms a hi-,her iniorty tha n
   GAO's report was subsequently tr :nsrnittcd be th e            it had in the past .
Department of State to all U .S . overseas p>sts havin t              Reali_o,n and strerngthen the Bureau -[ Interna-
labor offices and .vas used in connection tcith a Whit e          tional Organization :Aff it: so a to, e>tal ir' i denti-
House-directed study carried out by the Department s              fiable line, of respon, hilitt' and an al- ptcptiat e
of State, Commerce . and Labor relative to future U _S .          coordinatem_ mechanis m
participation in the I1 .0 . 1 Report to the Con g ress .             Establish a icnrkine, n of hanimt to irc :ud' neces-
73-163161, Dec . 22 . 1970 :                                      sary interdepartmental ach i,,- ,tc cone niacr, tcit h
                                                                  specific responsibilities and duties, each under- th e
    91, Management of U .S . Participation in Inter -             active leadership of it designated Department o f
national Organizations .—The President has charge d               State represcntativc as chairman .
the Secretary of State with the responsibility for di -            -I`he Department (if State advised ( ;AO that it ha d
resting and coordinating,' the activities of all U .S . de-     considered the otgam,ational and suiffnw, dittn~~e s
 partments and agencies invoked in the affair of th e           v(lien were needed and, to improve its operations . ha d
 United Nations . regional, and other international or-         initiated actions u "entialh in line tenth tilt tep, st° t
 ganizations and for appointing and instructing U S .           forth in the ( ;AO letter . The Depautnr..nt •spres ec i
 representatives to the ortianizatiens, Hm ever, during,        agreentent cc ith the object% es of tine G_%0 and pledged
 its reviews of U .S . participation in various interna-        every effort to brutg about needed nilproirmtent .
 tional organizations . GAO found that in most case s             Letter to the 13eputy Under tiecrctarc of State fo r
 there %%-as no effective tcorkin inechanistn for the De-       _Administration, 13—16[3767,-Au g . 6, 19 -1 0
 partmcnt of State to eflectivelY (air y out its assigne d
 respomihilities .
     C/\( found tcidespread feeling, both \\ ithin and out -    U .S . Balance-of-Payments Positio n
 .side the Department of State that the Departmen t
                                                                   92 . Economic Advantages of Using American -
   eneralh accorded a cer-v lots prioritc to the revieti r
                                                                Made Trucks Abroad . —Conrparative cast studies b%
 and evaluation of the pro p _,rants and accomp<uryint
                                                                GAO show that substantial savintt and balance-of-
 budgets of the international or!-=anizations_ There tras
                                                                payments advautat,,es can be realized at sonic merseas
 also it concern over dtc disparity which existed be-
                                                                locations by using more _American-inade. trucks i n
 tween file management lesel of the action officers il l
                                                                place of 1      i,,n vehicles being used by coinmcrcia l
 the Department's Burean Of International Organiza-
                                                                carriers nigher contact kith the military . Increase d
 tion Affairs and the near Cabinet level Officers the y
                                                                use of :American trucks could be achieved in it yariet h
 had to deal with in other departments and agencies .
                                                                of tats—iucrea :n~ the military's otvtt transportation
     1A ' ithitt the 13tircau Of International Org—anizatio n
                                                                capability, furnishin!, American trucks to contractors ,
  Affairs . GAO found areas of responsibility not clearl y
                                                                or requiring contractors to use :American trucks.
 defined as hemeen offices within the 13meau, as wel l
                                                                   A study of contract services costing $]u . millio n
  as with other departments and agencies : liorcover ,
                                                                ret Baled that expandin the military's capability- could
  there was no forinal vehicle for coordinated direction
                                                                .mniially- produce cost savings of $1 .$ million and re -
  within the Department .- -
                                                                duce dollar pad ments abroad by $6 .1 million .
     Although the Department of State has the primat e
                                                                   CIAO found that few comparative cost studies ha d
  responsibility relative to participation in the interna-
                                                                been made by the arrnnd serv ices and that the soun d
  tional organizations, it needs the assistance and advic e
                                                                operating and maintenance data needed were gener-
  in substantive areas found in other departments an d
                                                                all not available .
  agencies . This assistance was found to be uneven an d
                                                                   GAO recommended that the Secretary of Defens e
  at times nonexistent . In some cases, the initiative ha d
  been taken away front the Department of State so tha t         require :
  decisions . were :using made and acted on outside the              `I- he military services to develop better local oiler- _
  Department .                                                     ating and maintenance cost data to sere as a basis
     GAO recommended that the Department of State :                for evaluating con paratir-e costs . ,


    SECTION     I

        All-endmer_ts to Lhe pro(tiretnent IY'fr ldanonti re.-            Seek an equitahle rebate for taxes and duties levie d
      quirm; considerat :un of eco11011 ;ie adlzcnraLes %,-hir h        in the past .
      mt x4 ltt be realized tuoLleh the ,tie of -A nerican-lad e         Tire Uepattment of the Army state(] that it woul d
      volucles where the size of ti'i,- m-0 itv justifies loo-        examine into the econonn- of usim* U .S . i% heat, and, i f
      curelnent of such rehicdes_                                     it can be clearly demonstrated that there %could be an
        " Fhe service : to make cuuent            _Judie, it)(' t o   advamal-,e ill urine* U .S . wheat, the Thailand procure-
      periodical!% update the studies .                               ment office would be requested to make this a requit'e-
       GAO also .recotnrnc'nded steps deswmed to in -                 nlent in its contmcts .
    crease the ttsa pe of 1:t;erican tittcks abroad . The - e             ffte Dep_u'tntcnt of State in it, resporse stated that
    steps provide that :                                              GAO', xicus and recommendations had been referre d
                                                                      to a joint State- 'Defense committee on foreign tax re-
          BudL~ctary iequests be prepared for submissio n
                                                                       ic: and that the committee would give priority atten-
       to the Congress for American-made truck : to re-
       nlace the use of foreign truck, ;;here economic : ad -         tion to tax relief nrttulrs in V etnain ;uid Thailand .
       %antaes can be realized .                                        Repots to the C omress. B-171428 . Feb. 4, 1971 )
          The additional ti-ucks be distributed cost to loca-
                                                                            94 . Balance-of-Payments Benefits Achieve d
       tions where potential cost and balance-of-pa%trent s
                                                                      Through an Increased Agricultural Barter Pro-
       ad%antai;e, are Irtreatest.
                                                                      gram .--GAO reported in May 1968, that nearly 570 0
          Studies be made of the effectiveness of curren t
                                                                      million worth of Government expenditures abroa d
       operation and of t%'nes and sizes of American equip-           were qualifv-im-, for pavntent froth barter transaction s
       ment most needed abroad .
                                                                      annually compared with 5260 million worth actuall y
          Consideration be given to including- in contract s
                                                                      hartered - GAO h-lieved that a relaxation of - existin g
       a preference for American truck= anc! to antuactirr g
                                                                      hatter constraint, would increase American agricul-
       %%nth American fl1'Ins for trait porta_uxt Wl lit C~ a t
                                                                      t ual escorts and thereb% benefit till- U .S . balance-
       foreiii locations .
                                                                      of-1),mments position ,
       Department of Defense offici al, a (h ised that th e                 GAO reconnnended that the Department of Agri-
    ser%ievs concurred N, lth most of these findings and con -            ithme adopt a Folic y of letting market conditions de-
    clisions_and agreed to take steps along the lines pro -           termine the sine of ti .e barter pro,rzur rather than t o
    posed . ;Report ;n the Conttcss. 13-16380 . Feb . -1 .            htad the size below a theoretical or administrative
    197 1                                                             limit . 'The thrust of GAO', report was that the Depart -
                                                                      s g ent si x uld accept Ft higher percentage of bids eve n
       93 . Purchase of Dairy and Bakery Products fo r                if that meant some increase in the barter premiums
    U .S . Forces .-Art February 19,'1 GAO reported to th e           ; ;aid .
    Gon,ress on tire c;phorttnlities to economize on dair y                 In 1'ebruan 1971, GAO reported that the Depart -
    and bakery pu chases for U .S . forces in Southeast Asia .           . ,lit had to%en certain actions to increase agricultura l
    GAO !found that more . than half the wheat used fo r              export, through the barter pro'g rnnt . thereby benefit -
    bakery products liv U .S forces ill Thailand caste fro m            n_ the U .S_ balance-ot-pavmews position . These ac-
    Australia because the contracts for baker- product s              tions included increasim; the size of the barte r
    did not I°eq{tire the use of U,S . %%$ear . L I k resulted i n    pro ;ran by incrcasim the barter premium that th e
    lost sales of U,S, wheat Mid an um'I\orable effect oi l            Department was %%Hil' to pay . including additional
    the U .S . balance of payments _                                  free market stocks to the list of commodities eligibl e
       GAO recommended that the Department of Defens e                 for barter, and revising the destination list to whic h
    include a requirement :n its. contracts for bakery prod-          the commodities could be exhorted_ These actions re -
    ticts in 'Thailand that wheat from the United State s             milted in an increased barter program .
    be used .                                                               Barter contracts awarded under fundin g arraril e-
      CAO also recomt ;iended that the State Department _              ntent, durin•; ft,cai war 10 ;0 amounted to 542 9
          Direct its officials Lo consul with Rov°af Tha i             r ;tilliorr, compa red %rite 5181 million for fiscal yea r
       Gv%eminent otiicials regarding the possibility of ob-           1969. Total contract, signed dorma fiscal year 197 1
       tamir , relief froin taxes oil dairj and baker.- prod-          amounted to about S883 million . A comparison wit h
       ttcts p urchased for U .S. forces.                              the fiscal %-ear 1969 total o'i SISI Million shows art


                                                                                                                        SECTION I

    advantage to the U .S . balance-of-pai°menu of about            joirit h. cxplole .:=bail I _SDA the ]xtssil?ility of obtainin g
    5952 million durin« fiscal tears l9701 and 1971 . 'Re -         I ti peanuts provided under the CC(.,' export protttan i
    port to the dos _less_ B- 163530 . Feb_ 12 . 1971 '             to met future .,otlds,ide requirement . witch other-
                                                                    , .uc :-oul(i he purchased with dollar from forci[,( n
       95 . Export Expansion Proposals .--The Depart-               , olin es . L SI).A officials adv ised ( ;AO that tLev shoul d
    nient of -Agrricultute, Forei gn Agricultural Servic e          b pleased to discus : the po,sibility of makile-,Ameri-
      LSD \ FAS - has sponsored the sending of numer-               can peanuts available to AAFES at competitiv e
    ous foreign exccutise teams to the United States for             prices . Report to the Army and Ait Forcc Exchanvt•
    the purpose of providing technical assistance in th e           Service• . 13 1 11 l12 1 . Alav' 28. t( ; - 1
    management, processing, and uses of leticultural coin-
    inodities. These visiting teams consist of upper leve l              97 . Potential Savings in Shipping Costs to Tur-
    executives such as managing directors. technical serc-          key . -GAO found that 28 shipments- consisting o f
    ices officials, purchasing as,r-nts . and others in decision-   abort 11 .100 tons of n'li ultural conutrodities, unde r
    inakinR capacities . GAO's review of this program dis-            Citle. 11, p ublic Lair-1750, s,cre shipped to "Iu!-kish out -
    closed that the potential for exposing these officials          pc r is of Sautsun and l rabzon bcr uvicett 1)el err!bet 1966
    to theadvanta<,e of basins? -Ametiran equipment to iur-         ;cod \iav 1970- rrsultin in meta ni ahotit -5 1 )Lililti
    pros-c their Operations had not been full~ explored .           wore than the costs to deliver tiles_- c,arnii )di6cs t- ,
       Further review disclosed that "hile the I)epartmen t         dncct ports of call_ Mo:t of the lop ll"TO, c .r toadr-
    of Commerce- International Liaison "Trade Opportit-             from the (acat Lake, and till' ( ;Ulf C ;,ast . " 1 1 .prl1"I" t
    nities staff had Foieitm Business Visitors Service s            ch uee, tanetwd trout )F7 to,$ lH p<. i r ; dr .n t c; .,iVern
    Pro"yatn, the FAS sponsored teams had not been cov-             the ports of loadin g, toad di ' haft e and tr , -ll r odiI% .
    cred by this progran . GAO found general agreemen t                  Of the 37, >}rr nnerlt,, at Ira1t iii              a I art s
    anion. Agriculture and Commerce officials that ,                "t Ion-ism fl a'-, vcs;rls . i ` Irc,v 10 ,lupin • In, a :ountcc i
    withproper coordination . rAtncrican manufacturer s             to about ~'12Lt)01 of tl-r, G211 .{it10 in ,u ;tiat .
    and suppliers could prolitabl} cenduct prograrn setni-          clt o c-, ant . :;clrcrscly affc ; wd our \ tt on'~ t stir c . .
    nais and dentonsttations of their products in an at -           of-pay,nc•nt, i"mtion_ GAO al" . nowd that iou! id 0 1
    tempt to satisfy the visitors needs . i Report to th e          28 shipnrl-nt4        ,tc armor,, d be th,t 1)elrunl- ; nt , .1
    Deputy Assistant Secretary, Bureau of Domestic Coni -             A,ricuhure and s:r r ; . a r . . . _ht, !cd al kuol l ' lli . (IM )
    Merce, Department of. Commerce . Aoar . 23 . 1971 1             r nuid not :i>ccrt ;tin %1 11C tin r nr li t I t this 1 t t !21 n =.,
                                                                     reloaded aboard American or fore!en %--I, a t
        9fi . Economic Advantages of Procuring U .S .                I ;tankill .
    Peanuts in Lieu of Foreign Peanuts .--GAO foun d                     Officials of the .Aecnc, lot International Develop-
    that the EAtr!pcan LxchInge System ELS ; . a bra e               nient All) informed GAO that thev %611 artmpt t o
    L.S . nonappropriated fund activity tchich is a part o f         Obtain rvimburserncnt from CARE, forabout 51 ,21. 000
    the [Arm y and :Ait, Force Iachange Sers ice " :A :AFES .        representing tilt- additional chat ,ges incurred by for-
    hair-auan ed to bus-ahoiut `~92 .000 worth of peanut s          ttgn ila tr,sels bevorid Istanbul . It is ( ;AO's belie f
    from it German contractor . The• HLS decided to pur-             that csen if this aruount were reimbursed by CARE .
    chase drew heauuts ill Germany because the, thous,h t
                                                                     !his should not undo till- adserse cllectthe e pamient s
    that American peanuts would cot 2-1 ! s cents, a pound ..
                                                                     had on tine U .S, balance of payinerrts .
    plies freigh -ncl handling, conipated with a delivere d
                                                                         (=AO seas further advised that Turkis h ve .,,sols could
    cost of 23 rants a hound for the lorci_gil peanuts .
                                                                     transport these commodities from lstanbut tooutport s
       'Tile Department of Agriculture 1 USDA", operat-
    in, througli the Conunndity Credit Corporatio n                   for about SI per ton as compared to present costs to
      MC) . subsidizes tilt'- espcn't of peanut ; bs. scllin+,-       the. I'nited `hates rune*rot bctsrccn S17 and S30 per
    thenr to protcstio!s it prices s,hich make them avail -           ton_ In s~icr, of this reduced rate . All) personnel rec- -
    able conlpvtitiseis in for e ign markets . Ender this pro -      onamended exploration of obtaining Turkish currency _
    grain. unroastri peanuts in-tire Jrell s .•irich are till -       to finance transportation on Turkish coastal vessels.
    type 1urchased by thel I,St are gelling for about 1-1 ?l             While attempting to) reduce U .S- budgetarn1 costs i s
    conts a pixand, f .r> .b . orrain, processors' plants .           a step ii : the right direction, GAO believes that shi p
        In view Of the bglanc -of-paymsnts benefits tha t             nients of l'itle 1I commodities should be financed to
    Wright be waltzed . GAO suggested that the AAFES                  direct ports of call only .



        III view of tit(- _ill"lantial c, . t_ ; tit, l nits ~~t u            .M liit t 'l   -.jW1 i   ihst, :ILIced dial economic benefit s
     csiltm<_= flotti nnanUlt_,̀ shipments Lair 11 I,nll -                      potis.l, .r . b', fatriitics rather tha n
    moditics to outpnrts . !- ;AO n IMMIrn _d that ;All - )                 omr,.( un~2 sot Li Mid I sc vi, s and on July 21, 1971 ,
    Icqu'_Te thi : ( occrru.ly it I, I tai t. :'t to it "' l-v fo, an, 4    DC)D oiu- :ah ad%I-ed that the U .S . Armv : 11 iettialn
    finance the trall,pnrta6m of the e culntnodittts hc-                     ad initiated action :,it1h the .Air horre for laundt ;
    cond tint ct pmts',l calf ,                                            .ervices at Cam Ranh alas tiuouttii an approved Nfili-
        GAO belic,'es that this "oukl 1,e a "rst of i uikt•c' ,            tare Inters eparanen al l'urcha+c Request ;%Mich be -
    desire fur the collmlodities rind tsouic, give it addi-                 CaMo eilective July 1, VJ 1 . Report to the Secretail
    tional spun lbilit-, and expeliencc in haudlinc, ! ,r,i :-             of - Defense . 13- 165629, Star. 15 . 197 1
    tic ; ;~roblcni, so that :,hcn t1 t II,Ition from AI D
    pro franc- tai prn g rMms c<urpicurh operated b' th e                     99, Economic Advantages of Using America n
    Government of Tnrkec is nlact the pro ,_, rani „Qui d                  Ingredients To Satisfy Milk Requirements in West-
    tiunciion more efficiently and efiectivei .                            ern Europe .--1n June 1971 . GAO reported on the
        Its ;April 191- 1 . \H) t fi eed , itlh (iAO', w"'IIIutcn-         r ononlic advant .tel s of substituting filled milk front
    daticn all([ mkiod that step: ;%ere heing taken to re( -                the United States for whole milk purchased from Eu-
    tifythe situation . Report to the Adminutlator. _AID .                  ropean sources to slitisty the milk requireinent of mih-
    L- 1152 :)38 . Aug . , 21 . 19 710 :                                    t,m personnel and their dependents in %lestern Eu-
                                                                            rope . GAO found that the in- ., redients for lilied milk
          98 . Consolidation of Laundry Facilitie s                          vc,, ctable oil and nonfat th milk' were in surplus sup -
     Abroad .--GAO learned that, for certain locations ,                    ply in tare United States, were frequently acquired bv °
                                                                            the Department of .Agriculture to support domestic
     the Army obtained laundr'vry iccs by contractin g
                                                                            prix es, and tcere disposed of thr011-11 various cloniesti c
     t itll forei It Grnls . hcheicas the :AI Fn-,
                                                .c had its Ow n
                                                                           :uu1 fore i =n donanon plcigrams .
        n-1 ou e - facilities opct atlas at a fraction of thei r
                                                                               hiic Department of the Arni% evpte,sed concerti a t
       apant , al the -anie locales -                                       the possible effects that dlston*_inuan-e of fresh whol e
         Calculations made in conjunction frith _Arne an d                 nuik procurement might have on troop nicrale in Eu-
     Air Force sp ah,t irwvaled that mean t eful , t Ills                  rope. GAO -stated that the problem apparently woul d
    could liay v been _achieved throw ,\ the use of a mili-                tic minimize°d if the ruilitan vcould give adequate ad-
     tarn iuterscnttt a°recllhllt which would liaee enable d               vance notice: of its intention to sec-itch to filled milk an d
    1 lt—Arniy to aedttce its-volume of t outrat out, b, using,            to provide material dcsiRned to infonn military person -
    Air I= tiree late idri facilities at Cant Ranh 13av, Viei-             net and their families of the wholesouae characteristic s
    tlam . and L” 1 1 ahao, Thailand .                                     of filled milk, the general practice of providing filled
         L.titil the time of G A0's eximtination_ the twn sell -           milk at all other locations, and the overall balance-of-
     lies had riot t ooperateci to reduce espenc4tures by con-             uavntcnts adl aut-e, es resulting therefrom .
    srlidatin! their laundry service operations . After ( ;AO                 GAO i rcornmended that hr Department of Defense
    discussed the matter tiith .\ttnr and Air Porte laundr y                 DOD- establish close liaison yith the Department o f
    .peeialists, sups were raker, to cotimcivi an inteiservice             AUriculture ;Dill.A and with the Department of
    laundry support ar)arwernent for the Cram Ranh Ba y                    State in order to nuriiniize the potential economic o r
    area . ;                                                               politic .-- 1 repercussions to broader U .S . interests.
        GAO computation_ showed that annual savings o f                        fn line with GAO reconinlendations, the Depart-
    about 5227 .000 could be realized bt tie Gm erollien t                 ment of the Armv, on behalf of the Secretary o f
    if the Annv- would reduce its contract and obtain it s                 Defense agreed to conduct an objective consumer
    laundry services front the Air Force facilities at Gam                 acceptance test in Europe .
    Ranh Bay .                                                                USDA informed GAO that it was prepared to co -
         GAO proposed that the Department of Defens e                      operat=e with DOD in wli =tever decision DOD migh t
    ;DOD -undertake studies to determine tt hether sni-                    make in this -matter . The Department of State ad-
    dar-inter:erc'tee support a'.reeinents would be benefi-                vised UAO that it foresaw no political repercussion s
    eiai at other overseas locations in view of the potentia l             atI(, agreed \nth the decision made by ?lie Secretal-1-

    co ; acid-balance-of-pa,omenG benefits that ruiElht b e                of Defense . { Report to the- Congress, I3-1 725_39, June 3 ,
    realized . -                                                           1971 )                                                              i

                                                                                                                        SECTION I
    International Activities—Genera l                               sponsibility and to prvccss resultant claims against ven-
                                                                    dors . shippers, or other s -
         100 . Missing Government-Owned Materials i n                  'Itte Department of the Aa%v con id,red th-report .
    Vietnam .----I,, May 1967 . GAO reported that $12 0             on the y,hole . accurate and, in tier ct ;l, dw Dep,ut-
     million N,in th of U .S . Government-o:vned material and       ment of Defcnse ; DOD responded favorably t o
     supplies had not been accounted for by the principa l          GAO's recornnnenclatior,s. DOD stated that the nnag-
     construction contractor for the United States in Viet-         nitude of the unaccounted for materials ,%as tit( -
     train .-Subsequently, the co, :u-actoi reported that it ha d   stilt of the unprecedented conditions existent in Viet-
     accounted for all but 35 million %%oth of the . missin g       Liam . A ko . DOD has undertaken a full review of al l
     materials and supplies .                                       loss, shipping shortai-e . and danta,_e claims, and GA O
        At the request of the chairman, p ermanent Subcon-          believes this action >hould rest, ' in additional collec-
    niittee on finestigaitions, Senate Committee on Gov-            tion . ;Rt-port to the Congress . B-159151, May 28,
     ermnctit Operations, GAO performed a followup re -             19? ;
     view to determine the -methods used by the contracto r
     in arriving at the $d million figure and subnnitted n re -          101 . Control Over Local Currency Made Avail -
     port to the ( :ongiess in Max 1971 on the result, of tit, ,     able to the Republic of Vietnam .--G .10 reviewed
     followup review.                                                the effectiveness of corrective actions taken by the.
        GAO noted thar the conaactor's n .ethod of account-          Avency for International Development (AIDS an d
     ing-for the tnissin materials and supplies could not b e        the Depaitmmit of I)efcnsc `DOD to strengthen r_on-
     rewarded as valid . ()lie reason fo r the invalid e>timate s    trois Deer the bud~ret!ug- tefease, and u .c of local cur-
     concerned the. unreliable receiving repo is which were          rcncy ';piastersin Vietnam . '[ ' his review was col-
    prepared utility months after, the goods were supposed           luded at the request of the chairman, Foci en Opera -
     to have arri'.-ed in Vietnam- and which t,eie based en                 and (lovernnient Information Subconnnittee ,
     purchase of shipping 'documents rather than o evi-              ]'Ouse Counuittce on Government Operations . In
    dence of receipt . Also . the contractor made substantia l       !066, the subconnnitwe found that the AID missio n
    adjustments . generally not based on phvsicai counts, i n        in Vietnam had not cstablished adequa, c controls ove r
    inventors records and subsequenth reduced the unac-             nhe budgethi release, and use of L- .S . owned o r
    counted for balance GAO questioned the validity o f             u,ntiolled local currency made- a .ai :able for suppor t
    these adjustuents and the contactor canceled them .             of Vietnan(s chin budget .
        GAO also found that the contractor c_oliected on h              hron 1966 through 1968 the. AID mision in Viet -
    a relatively small value for loss and damage claim s             train trade a, ailable about 7I .'1 billion piasters 'equiva-
    front vendors, , iplpers . and others because of its fail-      lent to about 562o .7 million= to suppor t Vietnam s
    ure to follow up . to any substantial degree, of thes e          military and c : vit budgets- The -U .S . 3 r : t .'ary Assistance
    claims. Finally, front contract inception in 1962 t o           Gourmand in Vietnam was responsible for adininistra-
    September 1.9168, the contractor was relieved of ac-             tion of 50.9 billion piasters desi g nated for the military=
    countability for nratetials and equipment valued a t            budget . The AID miss-ion was responsible for adminis-
    over ;`H Brillion which had bec=ome lost, damaged, or           tration of 23 . i billion piasters assigned to the civi l
    otherwise uinseiviceable .                                      budget .
                                                                        Since 1966, the U .S . agencies have sit engthened thei r
        GAO noted great improvements in almost every
                                                                    administration and cont rol over the use of piasters, bu t
    aspect of the contractor's Material controls since GAO' s
                                                                    it was noted that further strengtheinin- was necessary .
    first report . The almost chaotic conditions existent in
                                                                    The controls and procedures established would gen-
    1966 at the three major_ supply depot operations for
                                                                    erally not detect or prevent improper payments b y
    themost -part have been corrected .                             Government of N'ietnarn personnel, such as payment s
       GAO recommended to the Secretary of Defense tha t            for unauthorized activities or for padded- payrolls .
    II) -further efforts to account for the contractor's un-        Large sums of piasters were released to the Govern-
    accounted for materials not be made, (2) the unac-              ment of Vietnam before needed, piasters were release d
    counted for materials be recognized for-rnally in th e          on the basis of unverified reports, and only a few pos t
    contract records . and (31 darnaoe reports prepared             audits were made .
    under- the contact he reviewed to determine whethe r               DOD and AID advised GAO that actions have bee n
    dye contactor has anade a reasonable effort to fix re-          taken to st rengthen controls over piasters for support

          148-665   0— .r   ,                                                                                                      61


    of Vietnam's military and civil budgets . Both agencies        same job), duplicate overhead and administrativ e
    believe that controls and rev icw practices in use plu s       costs, premium prices paid for construction equipment .
    actions to be taken, including procedural changes anc i        and disproportionate fee payment rates .
    staff increases needed to monitor the funds and pro-              (_=A0 proposed to the Secretary of Defense tha t
    grams, would provide adequate control The agencies             DOD 1 use a single construction agent in any on e
    have made some improvenicnts in the admuiistratio u            oyvrs .;Ls area, ; 2 ; insure pai'itr of coustruction con -
    and control over the militaly and civil budget suppor t        tractor fees and a3 provide timely procurement guid-
    programs, but the improvements cited swill not pros id e       ance to contractors under cost-reimbursable contracts .
    adequate control . Considerable improvements ar e                 GAO also recommended that in the future the Secre-
    needed, especially with regard to verification and othe r      tary of Dcfense .; i direct tnilitarl construction agent s
    measures to insure that Vietna m ' s reports of obli,,ations   to submit for DOD consideration the military justifica-
    and expenditures are reliable - Report to the Con«re .».       tion and a detailed estimate of the duplicate overhea d
    13-159451, ,Jul 2.1, 1970                                      and equipment costs expected if more than one cost -
                                                                   type --onstruction con tractor is considered, (2 ; conside r
        102 . Overseas Military Construction Con-                  strengthening administrative procedures on cost-reitn-
    tracts .--GAO examined the justification for the Ai r          bursable contracts, and t3' in cost-type constuctio n
    Force's engaging a separate contractor to build a sin gl e     contracts, require that military construction agents ob-
    airfield after the Department of Defense ;DOD i n              tain advance approval from the Office of the Secretar y
    early• 1966, had directed a U .S . Navy construction con -     of Defense for fee rates that are an exception to thos e
    tractor to complete the airfield as a part of a large an d     prevailing in that area.
    complex const ruction program to support the buildu p             DOD's response to the comments offered by GA O
    of ?' .S . military forces in the R-public of Vietnam .        was that improvements in the man agement of ariv
       Altliouvh=dye Air Force stated it had an urrent nee d       operation are always possible and that GAO's reco m -
    for the-airftcH an-1 justined the use of another con -         mendations are accepted in that spirit and swill be g ive n
    tractor in Victnatn on this basis, GAO's review dis-           full consideration in continued efforts to impsrove inan -
    closed that there were considerable differences of opin-       agement . 'Report to the Congress, B-159451, Oct . 28 ,
    ion within the various or g anizational components of          1970 `
    DOD as to the necessity for pursuing this course o f
    action, and that added costs ywere incurred by the US .           103 . Financial Administration of the Consula r
    Government. During performance of the contract, a              Services Program .---Aar integral part of the Depart-
    number of problems arose, many of which were relate d          nhent of State's responsibility over the conduct of for-
    to the lack of experience of the Air Force in adminis-         eign affairs is the providing of consular services to bot h
    tering major construction contracts oI this type and t o       U.S . and foreign nationals. 7 `hese services include pass -
    weaknesses in the major subcontractor's equipmen t             port and cit,zenship services and visa services for- aliens .
    procuretr.ent policies and practices .                            Legislation passed by the Congress on October 21 .
       Th e, Aav v proposed to DOD that the airfield be con-       1968 Public Law 90–6091 authorized the Secretary o f
    structed by its contractor as a part of its assigned re-       State to set immigrant visa and certain other consula r
    sponsibility . The Navy pointed out to DOD that an y           fees on a fair and equitable hasis commensurate wit h
    increasein construction capability should be achieve d         the services rendered and moviri in the direction o f
    by takirig advantage of existing logistics management.         fuller i      mentation of the use,-c ame principle .
    equipment, and material of its joint-venture construc-            GAO found, however, that the fees currently bein g
    tion contractor, Nevertheless . DOD authorized the Ai r        charged for processing and issuing immigrant visa s
    Force to use aaseparate Conti actor to build the airfield .    were established in 1952 and that the total cost to th e
       It was GAO's opinion that, had the Navy proposa l           Department for providing immigrant visas exceede d
    been followed, `several million dollars in added cost s        revenues by approximately $9 million in fiscal yea r
    would have been avoided. Those costs consisted of              1970 . In addition . GAO found that the Secretary of
    duplicate equipment purchases ;_for example, under th e        State had not promulgated definitive policy and cri-
    Air Force contract a subcontractor purchased heav y            teria for _he establishment of consular fees, nor did th e
    construction equipment for aboo± $9 .5 million whil e          Department's accounting system provide for the sys-
    similar equipment, valued at about $7 .4 million, ha d         tematic accumulation of cost and revenue data nec-
    already been bought by the Navy's contractor for th e          evary for the establishment of fees and for the


                                                                                                                          SECTION I
    efl'ecti , e financial tnaniwement of the tali m cote- ;3lia r      third-counnv nati ._el ;as I C V's r.l .0 Ir ~,r u_ra h di d
    activities . .               ..                                     nut spetiL salal% cars Ili, ! [ , C : -N " - I'll " ,, i rartor;
         \C(   rdinQd .- G_AO 11"01Hmended that the Secrc-              ha g ! to +-ompute•. till- rate ; one till .  r	 el ,uull-hne >
    tar% of State :                                                     inn ided in the ; otrtrart .
         Revise itnulio,r r;ult i ha and taller con,ular fees     nn       C :_AO Aso found that the ( ontractim-, oliichrs sere
      a basis that is respon>iye to Public Late 9Q-ti(1f) an d          not w%ic, .ine, the salaries, ;!ltd a, .1 r-nit . All)
      in corrt.,ttanc+• frith public policv that services pro-          lcinlbul:,im_ l~nntra( tnrs Inc ;daliel 1` vices, of tilt"
      ridcd to or for a lV per>on should he self-;u>taininst            limitation,- l u one r,nrtrart . th' . A l l ) audiu_t fonnd
      to Inv fullest extent possihl' ..                                 that a cant kiwi had paid _ tlalies of 5801. 000 inert .
         Protiiul«ate definitive polies and criteria for esmb-          than the rates a1L„red in tine coon act .
      lishiug con ul.ar fees .                                             GAO recommended that All) - V N r~ ~ lets dre 4 -
         Develop all ace'oucit n ,extent and related Ilro-              arie--s paid under cost-reintbul,,u,le conuste t lot 'fGV',
      eedures for periodically determinnl_ the cost of pro-             to detenoint , uhetltc"r elnp o,,( -c3' sahi i %,ere o-tab -
      vitt,tif (onslilal ser: ices.                                     Iished in accordance ,.,ith cu• lintilatious cont`rined i n
                                                                        their contract . Ci.AO Iurther n"conuncrlde•(I that th e
       Altholi gh ihel)epartnent of St uc. a_reecl to anahz e            Area Auditor General, in n:akini, final audits of com-
    the et,stitt- fee structure• tv deterroir "e file necessitc f,, ]   pleted cost-rein :bursenunt contracts place,p-rial em-
    :ntd vvte tt of it e hall<,e in the fees. it expres-ed the vic „    picla is on rlrtcrniinin« ailo,ca sir saLlric s
    that the costs associated with till investigations of ap-              The Director. -AIt) VX        . lvkised G-AO brat these
    plicants Miosc visas are not is ued should be excluded .            reconuncudations trek heiu_ inlplenu c nled .
    T11c1)eparinu•nt a~,t~ed to dcaelop definitive polic y                 In January 1970 . GAO found that 2-1 All) '\ X
    and criteria for the estahlisl;t_ut~nt of consular fee : .          contracts trere asaitin, close,ntt action . Sonte of these
    It pointed out, Ito%%cvvr . that the fee structure 11M A            had been complct ' d as e-trh a, ]()fit . In adc'mon _
    recognize the toreisn - polit y implications invoked .              GAO noted 139 contacts eN('tuted !) % -
       Regardict GAO's recommendation that an account-                         for vdliclt infortatioll cant cretin_ closeout .slims
    ing systeni be developed for s)-,tematically determinin g           ryas notavitilahle at .AID =V-N .
    the cost of pros idine' consular scr, ices, the Depar uncu t           GAO found that .AIll's internal auditols had con -
    of State indicated that it believed th ;o ~ndiu ,                   ducted final audit, ou orris s, ,,c, rotupleted e oitt acts -
    techniques were sufllcietit and that ~' .,- decelopnren< <, f       hecause tl)e Contra( I :Audit Brancli had _,,cncraitN no t
    an accounting system for till , I ,,,l pose eras urinecessarv .     liven notified ,+hen ccattracts sere con ;pleted .
       GAO firmly believes . limiever, that iiithout an ac-                The Chief of the Contract .Audit Branch Informed
    ceptable ,accountrii,=systertt-the Department of Stat e             G-AO that contiv tine officers had failed to not ; f ,r hi ;
    is not in a position to obtain reliable cost informatio n           office then con g a( t ; „ere coniplett•d . .AS it result ._ con -
    necessary ft r the effective financial manirgenient of th e         tract audits MAY, not initiated on it timely basis.
    consuls scir6ces program . Report to the Commis ,                      The Director, :AID V -N . adv ised that a, of June 12 ,
    I3 - I18G82 . Apr . 1-1 .197 1                                      1970, clo,cout pro edures had p een initiated on mos t
                                                                        of the expirecl (ont a - and that as current contact,*
      104 . Contract Policies and Procedures of th e
                                                                        reach the completil n _ 1 age, till_ closeout procu ur wil l
    Agency for International Development, Vietnam —
                                                                        be itill uediately inaur"urited . In connection with
    GAO's review disclosed that contract representative s
                                                                        GAO's other findin s . the A gency advised that car -
    frequently did not prepare required eviiluations of con-
                                                                        restive action either had Illicit taken or promised 6 .-
    tractor's performance . GAO reviewed ]0 contact file s
                                                                        the responsible officials . (Report to till , _Administrator .
    and found that the required evaluations were not i n
                                                                        AID . B--159151 . -\u;, . 27 . 197 0
    the files for about half ' of the contracts. As a result .
    contracting officers had not received the technical an d              105 . Opportunity To Increase Export Sales o f
    managerial advice needed to evaluate a contractor' s                Nonfat Dry Milk .--l- he Export marketing Service, il l
    pe,'f_orinance or his qualifications for further- Agenc y           cooperation with the :Agricultural Stahilization an d
    for International Development .AID) contracts.                      Couser%ation Service tASC :St, conducts I program
       Ili addition, GAO, found that till, Agency hx Inter-             under c,"hicll nonfat dry milk of the Commodity Credi t
    national Development- in -Vietnam I AID `A- \ 1 had                 Corporation is sold for dolk,rs to American plants
    cost-reirnbursement contracts for technical services of             overseas based on competitive bids or announced

    prices . The basic procedures for the pro gram are set                 106 . Use of U .S .-Owned Excess Foreign Currenc y
    forth in ASC-S Announcement MP–23 f hereafter re -                in India .--In 1971, GAO reported on possible uses o f
    (erred t~ asthe \1P 21 program? .                                 the large amounts of Indian currency trUpecs? Whic h
       The CIAO ireview shrmed that a significant increas e           tite United States had accumulated throngli the op-
    in sales of nonfat thy milk under the ,SI1 1–23 progra m          eration of its food and other assistance programs i n
    \would he possible if tit(- Department modified its pres-         India . In raid-1169 . the amount of Indian, rupee s
    ent restictice pi~ncedt res liehtly it) order to be abl e         available for U .S . expenditrnes cqualed 5078 millio n
    to ( t ; accept all reasonable bids and 1'2 ? reduce price s      and would have lasted about 19 }ears at current ex-
    asnecessiry to nest foreign competition .                         penditure rates . U .S . holdings Nyere expected to in -
       Under the restrictive bid procedure instituted i n             crease substantially in the future .
     aug ust 197.through
                  0            carp - April 1971, GAO found              GAO found that important econ+nnic, political, an d
    that bids for more than 4_5 million pounds of mil k               hvgal factors limited the amount of L'S .-mulled rupecs
    powder v ith a value approxim ttt r $550,000 were re-             that the United States meld spend in Lelia during;
    jected . The quantities covered by the rejected bids              an)- period . GAO believed. however . that many op-
    averaged only nine-tenths of I cent per pound belo w              portunities existed for increasing the use of rupecs i n
    tile award price .                                                support of U.S . progruns_
       Tnformation obtained from an o ; erscas daily com-                 GAO recommended that . I the Office of ,Man-
    panv which buys most of its milk from foreign supplier s          agement and Buch,, et insure that executive branch
     indicated that the Department of Al,,iiculture coul d             ruencies can seek approval for well-documented esccs s
    realire additional lecenuc of $2,3 million per year i f           currenc~ funcicd projects without r+ and to oyerat l
    the Department supplied milk to this company . Thi s              agency dollar ceiling., i2~ the Office of Managemen t
    compare- advised GAO - that it would be willimz t o               and Budget explore kith the appropriate committees
     purchase U .S . powdered milk if the price was com-              of the Como–ess the acceptability of direct apprnpria-
    parable to other foreign sources .                                tioru of forei+,n currency, and the Trcasury De-
        In view of the cost, the balaucc-nf-paynrcnts an d            parttt,ent establish more flexible procedures for vaht-
    other benefits possible in an increased . pro%ram .. GA O         tnf-, U .S--owned Indian rupees in dollars in maki m
     recommended that the DeparUucnt of Lgrictdtur e                  salve to U .S . agencies to encourage greater productiv e
    consider:                                                         use of the fund : for U .S . prog=rams it ; India tyithou t
                                                                      conrprontisinr con .. ssioral control over- the use. o f
              Givin ,' a higher relative priority to MP–23 sales
                                                                      the funds.
         in relation to Public Law 480, Title II, donations.
              Adoptim: a more tlesihle bid polies--so that greate r       ' I' ll(- agencies reneralk agreed ,%ith GAO s recon ;-
                                                                      tnendations . `('lie State Departrrrcnt noted tile llv<"ellc y
          quantities might be sold under the program .
                                                                      of the problems and stated that it had heguu a stud
              OfTering price -reductions to provide :America n
                                                                      to complement the GAO report . The Agency for Iii-
          plants overseas with U .S .-source milk powder on a
          basis ccxnpetitiNT M ith oflshere procurement .             ternatioval Development agreed ;rids the recommen-
                                                                      dations, but expressed teseri .ations about the economic
              Informing American firms which operate dair y
         plants abroad of the availability of American non-           and political impact of ereatcr local currency use in -
          f ;ri sire milk at competitive prices and encomag_ittg      India. The Office of Managernetrl tau; litid'-'et agreed
                                                                      with the intent of recortnrendation but had som e
          than tip use American milk .
                                                                      doubts about - rccnninlend ,tion 1 2 ! . The TreastnyDe-
        Officials of the Department generally agreed wit h            partitrent responded with classified rormnents .
               recommendations and, to the extent feasible .              GAO e Nptessed the belief that the Gnngre~s migh t
          c rnitnnie to give consideration to the proposals .         wish to favorably consider forei+?n currency denomi-
    F[+,~~+ sr r . the officials also stated that in addition t o     nated appropriatime, as all adyanta geous fundinti- form
      lovidinQ. donationsof nonfat drq milk to oversea s              and, with regardtotheezceS5iv 'C :urifill ulationofU .S .- _
    ~+~luntai} relief agencies to feed the needy . considera-         owned Ire ii-nu currencies in India, r Ziglit wish to con-
    tuna r, lawn E tv-n to certain -political and h mianitariat i     sider H `, whether a reduction in U .S .-m%ned ruiiee s
    intete-t- of the United States such as donations t o              should be tirade to preserve good relations with India .
     rod 1, . ople-displaced by earthquakes or other natUra l          f2'1 u•lietlrt ;i- exectitiye action in this regard rnects con-
    disaster -and to wat'refupies, t, Report to tiro Secretar y       gressional desires, (3 whether It-65lative action shoul d
    of         uiture, B–i 14824_ . Indv 16 .,197t :                  he taken concerning the U .S .-owned mpee balance in               t

                                                                                                                                                                                                        SECTION i
      -       I[' L10- of -3 .5 . 07LLA 4

                                PROJECTED ACCUMULATION OF U . S .-OWNED RUPEES                                                                               $3 .5 BILLION U .S . DOLLAR S
              3600              AVAILABLE FOR U . S . OBLIGATIONS IN INDIA TO                                                                                WORTH OF RUPEES I N
                                                                                                                                                             YEAR 2008
                                END OF YEAR 2008 (ACTUAL IS SHOWN FROM                                                                                                                                      ,
              3400              JUNE 30,             1951 THROUGH JUNE 30,                            1968)

              3200                                                                                                                                                                         /

                               AMOUNT IS SHOWN IN TERMS OF PUBLIC LAW 480
              3000             AND NON-PUBLIC LAW 480 ACCOUNTS                                                                                                                 !!

                               THIS CHART WAS PREPARED FROM DATA                                                                                                          !
              2800       r     COMPILED BY THE U . S . AID MISSION IN INDI A

                               FOR THE PURPOSES OF THIS CHART,                                                                                                   !
                               ONE U . S . DOLLAR IS EQUIVALENT                                                                                              !
                               TO 7 .6 INDIAN RUPEES                                                                                                     !
                                                                                                                                                     f                        51 .2 BILLION I N
              2400                                                                                                                              !f                            PL .180 ACCOUN T
                               AMOUNTS SHOWN HERE COULD EVENTUALLY BE                                                                       ~
                               LARGER . THE CHARTED ACCUMULATIONS ARE                                                                   !
                               BASED ON EXISTING AGREEMENTS . THE PROJECTION                                                        !                                                                            .•
                               IS UNDERSTATED TO THE EXTENT THAT NE W
                               PROGRAMS ARE FORMULATED OR NEW AGREEMENTS                                                      !
                               ARE MADE .                                                                                                                                                          ..

                                                                                                                      /                                                             Of
                                                                                                                      /!? . . . . .
                                                      ACTUA L
          -                    -_ .-®e PROJECTED                                                        l..
              1600                                                                                                        PL && O

                                                                                            /                               ~. .

                                                                                       /                         r                                                            $2 .3 BILLION I N

                                                                               /                                                                 : . : . . : . : ;ACCOUNT " . :• . . .
                                                                                                f                                                                                                                ..
              1000                                                         /
                             LOSS DUE TO                              /
                                                                                   f                                                                                           ';                       .. . .
               800 .         S242 MILLION                       f                               .v . . . : . ; . .•   €1011 . 61 L ~~ ~

               600                                   of[            f/ ,
                                                                                                                                                                                                    . . .
               400                                         !. `

                                                                                           PLANNED ANNUAL RATE OF EXPENDITURE 553 MILLIO N

                     57         61          65             69         73           77        81       85                     89                 93                   97             2001            2005
                                                                                        END OF FISCAL YEAR

     India, and -1 :hither authorit hould he oken to                        C< .1O recolOnie lId"1 that applications for imest-
    ,use nowPubli~e-Lo -lull extes cuimilcq in India fo r               tnent snrvr, :uid ~Ilalantry pto_narts inoolin« poten-
     -tint,, x:ithoa t -ahntolniatio u ,~_ to i~ tlt,°adv pollute d     tial loiei,n r:xporu of , ro l x in 1 - . s - surpiue should ti e
     for Puhiic ha+, 1810 UNITS, (_unrnrt . =RCJ)oll 11, til e          called to ill, attention of all excc-i tikc agouties con -
     /- -on<_ av f3-1 M t). )n t. T TV 1                                  erred . m that due_ rorsideratiott could be amen to th e
                                                                        likok e(lc,I of the proposed ime-tinent on the .-Amer-
          107 . Potential EMsplacernent of U .S . Ag1cul-               ican emnot it . mportq and balatire-of-l~acinent posi-
    tural Exports--The imestinent survey and _t=uatantee                tinn . GAO proposed that the cities of each iaeur "
    lerot;t,a u, were do i',.red to,deltlate tilt, iln :c of in-kat e   pa, ticipatin ill the deliher:uiois f .e ac corded ill detai l
    capital in less developed countries b} diaiin wit h                 and thhat the reasons for decisions rear-!led be expiciti c-
      Anwrican hew the cost of c mb i-tiria inrestmt•nt oi-             set forth .                                             -
    ponwite and by itawkig irnamn apguest remai n                            GAO Am ohseiN ed incest ;uu uciv . in policies enun -
     poli wl and business risks.                                        Awd in :AID hanclbaoks for im'estmeut swwv and
         The purpnse (if this rev ietc was to dete•rrnine N~ hethe r    auaiaiuee pio Tanis and in the All) manual ordol
     sufficient consideration W . Noy 6wu to ti,e p m . 4               dmhng .,nh ,leer pio,ranW . Atcotdinlzl, GAO
     all adverse effects of inxesttnent st w and ,ntarante e            further reronnuendcd that tilt, politic ; with respect to
     t to grm c on r_xprol marlin; for Atm ran 1nVuitura l              immutient ;urcep and oiarant -e l,ruffram, he reviewed
     connnodities : GAO wished to k .tow whether cowtter -              and reviwd to insure that tutu ao uniform and eou -
        >iling views of Gocernnient agencies hai in priorio,            Sistent in their interpretation and application .
     interest ; in dolnestic farm ,fit wrens and pmhlemti Mid                GAO further ref omn mrlAQ to the l3oard of Direc-
     in the US, halance-of-patntents. position mm-e 4 ire _              inrs of the Overseas Monte Inve ninent L:orporation- -
     vm0ft and wew hein_r ve>n Cue "ntsideration m d                     wilich asunted reVon>i'Gf for tlic ctaivation of pro-
     crhether-the kinds of economic analyses needed t o                  pos-tls aria ill r t,uipletion Of GAO's fiOldyvoik- -tha t
     tseio-it the effect of the inwstment programs on U .S .             till- Colporation 1 consult tcith the Deparunent o f
      t,=rir=ultural export markets ~~-ere ht mg trade .                  Aatiiahurr- and Odle! c'xecunve aLtc•nries to establis h
         Until January 19 . 1971 . hwestntent sun-ev acid ati n -        a moLiamn plot°mkw acceptable to all parties an d
     antec ptcimnis Sucre administered hc_ the gencc fo r                       include in its hohu dirt , .s We necemanl nums-
     International Development - .IID~ . Pursuant to the                 utc, for anal~rn, projects ~rhirlt tould adwisely at-
     Porci,gn As hmice Art of 1961, as amended in 1060 .                 k" Us ,t icuinual enorts .
     a new agencv, the Overseas Private Investment Gorpo-                    °Aithon$h file escrriCne at n, i's a_ 'd- in •gencial ,
                                                                         that Ilene "as a need •`or consideration and coordina-
     t .ttion ; was estabh fwd to cant out inendve pea=rate s
                                                                            on by all ai nries concrnu d . thc% cautioned abou t
      for private invcstment in less developed countries . The
                                                                         the pot,%teal for delat-; in approval of applications i f
      Adininistrttor of"AID-is to Chairman of the Board
                                                                         the application, t, r ~ubmitt -d to a forinal board
     o: the (Ruseas Private In roan eat Corpmatiott .                    •L t v      ;rated ,e" t n 11111-1 lice apl to ache,, GA O
         GAO found . that AID did not snake the kinds o f                r nn. ludid that .In ; one of Il,e Cv vI al tv-'5 cv tons fo-
     econoin c at),dyses ; nece ssary for ineaswina whMhe r              ht r -%al,niot> of tile , ;,pact of proposed illyestilteti .
     UT fotei;rn policy and economic dee•Cl"ment _+air ;                 wwo . nr h *uarsmtec pion" s ttould achOw tee .
      Awn- underl"itin, prom a m to hnost fort, ian produr -             oh,,rjces OttFitt . lbo,%mcr . tciiatevcr the nwa:n s
      An and expoyts of a« tic h . .ialcmufa !um Imuh c e d               adopted . ,he Depart wm of AWri Vww should b e
      inexcess quantity in the L Kited States oMa the dis-                Awn an c l , tiv lnicc in t r d , isionuaaking, I fwvn .
      adanoVs to the - dopll• V U .S . O nn erotiumt an d                   Report to the Cnt ,less, 11-166077 . Apr . 27, 1971 )
      balantc-of-pacntvnts -position . Also, ellorn: Of AI D
      ofli ials war ditrcted, pi immAy wwwd a6sting othe r                  108 . Phasedown of U .S . Military Activities i n
      nations to increase their agricultural produciit'it y             Vietnarn - -het±teen June 8 .. 19611, and April 15, 1970,
      through e<ononic developtne n and, by cluin g so, raise           the V .S . for -es it : A ietr3aitt were reduced from 738,00 0
      their st?nd .nds of living . 1117 officials therefore could       to 1-2-5 .300 troop, as a gait of ill(, phasedown of U.S .
      nardh-hase been expected to always be knowleck-,eabl e            uulitary at, ticitie ; in Vietnam . These reductions were
      Of and • :i%e i )% ( . I! idiin; consideration to factors which   nrid :- in th c e stepw---offer periods 4 3 to •I nsonths-fo r
      ,ceic ai oc i .k %,hh then pritnari'objectites.<                  each step--has mdeploying oulitarc units or placin g

                                                                                                                SECTION I
them in an inaetis c stint, in reassigning inc n ideal ,         Department of A~~iru ;t tu° for uranncm and
and by ctrtailing replacements sehedulcd to be sen t             pu,< e in!! c I 111MC110 1 "till= rehu-ned tI, thy• t - nitc (
to Vietnam. 'Fie military services met each of the               St,tt(, itnd a ,lvwrit,e of i acilitie, fur rlr :utitt_ .
directed troop -reduction cl edulesdespite the, ielatitrl r         Therc weir pmblvni., in iutmning An Force, ma-
short time provided . I'itc plena edown of tite large quan -     terie l• to the United States b cause of a lacli o f
tities of supplies and equipment was and continues t o           people qualified to pack and crate the materiel .
he it more formidable to k .                                     CIAO ohsertr ed aLo the followinn situations .,her e
   GAO reviewed the ) p olicies and procedures beir>           impro%enrent might be possible .
itpplied in the phasecimm to identify problems beiq;
                                                                    Because of ineffective screening, Arms icpail part s
eneotititeeed—particularly in the logistics area_-- :end                                                  . Vietuanie ;,,
                                                                 and components t,ew i<_sued to t1-
to bring the problems promptly to the attention of th e
                                                                 Amts althotts,h ncccicd bv U S . mihu-11 , scarves i n
responsible military commanders and the Secretary o f
                                                                 Vietnam, nr Shipped out of Victmun, althou ~ h
Defense while the phasedown ryas continuing . Th e
                                                                 deeded by the Vietnamese Army .
review was directed primarily to matters connecte d
                                                                    The lo,,, istical repo tum and accounting systcn t
with the third-step reduction of 50 .000 noops com-              did not provide accurate . complete, of timely data .
pleted April 1 5 , 1970 .                                           'I']te procedures for cancellation of requisitions fo r
   The circumstances made it difficult for or :ganiza-           supplies . not needed because of force reductions .
tions in Vietnam, subordinate to the command head -
                                                                 were not adequate.
quarters of the services; to prepare for efficient reduc-
                                                                     The Array had a si nif}cant backlog of onset yicc-
tions of military activities . They could not be provided
                                                                 able equipment in Vietnam hecause of limited main-
specific i nformation as to size and time of force reduc-
                                                                 tenance capabilities .
tions until announced by the Pre,ident . Further . they
were placed in the position of having to continue thei r         "there may al ,o be it need to strengthen contro l
 tssirmed missions until a fete clays prior to reassignmen t   over transfers to the Vietnamese of such facilities a s
of personnel and turn-in of equipment . In many case s         buildings . airfields, and ~.yater purification plants, t o
detailed procedures for s,ithdrat,al had to be impro-          insure that they are capable of t ring and maintainin g
vised even as the withdrawal was takin .,-,, place . Not-      them .
tvith .tanding these constraints. the Department o f             GAO su lugested that the Setrettuy of Defense :
Defense and the militar'v services were making a con-               Revictc existing plans of the military services fo r
certed effort to account for and control the arms ,              anticipated v. ithdrawals to imure that the plans pro -
equipment, and materiel which became excess as th e              vide for x%ithcinmals on a unit-by-umt basis .
phasedown proceeded .                                               Establish uniform procedures and criteria l ) fo r
    The constraint corm ib uted to it ti arietl r of prob-       the tran4er of excess materiel to the Viemamese
lerns requiring ;attention of military commands i n              Armed horces and ((2) to insure that all cxcess ma-
Vietnamand Washington, includinv the Office of th e              teriel in Vietnam is considered in fulfilling requir e
Secretary of Defense .                                           meats of the Vietnamese.
     There was a-need for ereater coordination amon g               Reduce the backlog of equipment awaiting prep-
  tire three military services in supplying the needs of         amtion for return to the United States .
  the Vietnamese _limed Forces . Lack of unifor m                 The Assistant Secretary of Defense Installation s
  procedutes resulted in some cases in equipmen t              and Logistics) stated that the militate department s
  needed by the ' ttein?aese : being shipped back t o          concurred generally with the conclusions and sugges-
  the United States .                                          tions and cited the recent actions to implement th e
     There wrie problems in returning Army equip-              suggestions. GAO believes that the actions, it con-
  nlent to the United States because- of the backlog of        sistently applied; will improyb the conditions which ea- -
  equipment t~ hich required cleaning (to meet stand-          isted in the early stages of the phasedown . (Report to
  ards of the U .S . Public Health Service mid the             the Congress, 11-17 15 -1 9, Mar . 15, 1971 '

sEc ,r[ON 1

                                                  iL RGCUREMEN T

Contract Administratio n                                          the increase it judged to be caused b, it (;,%n iner3i -
                                                                  CiertcICs, to Go%erIll] ent-caused Bela%
     109 . Contractors' Claims Based on Govern-                      Contractor B based its claims on jurlr. Trtent fac-
 ment-Caused Delays .—GAO had issued to the Con-                  tors . The contractor' s chief estimator stated tha t
  iress several,ieports in pint` %cars oar the 1a%-%',s pro-      disruption claims were based on highly intangihl c
cedures in rorniacung i%ith Iwi%aty industry for shi p            judgment factors and, in his opinion . ~xere impossi-
construction'_ A December 1958 report pointed ou t                ble to a, -tit atel% detail .
 that contractors had submitted i Iaitns for costs . sus-            Contractor C compared labor-hours cz -
 tained because of Go%ernrirent-caused deh\s, ,,hic h             Ilended in earlier const ruction c . ships of the sam e
 %, ere %aqut , and lacked adequate support, that ,valua-         class t%ith the labor-hours cspendi , o in the follo .~ -
 tions of the %faints by the Navy had been inconclusive .         on cortstntction and, after takin; into account th e
 and that the claims had been settled without sufficien t         physical diflerences in the ship,, attributed the in -
data to short the damage sustained by the c-ont r ac tots .       crease to Go%ernutcnt-caused delays .
Two other reports, in June and October 1964, pointe d
                                                                   GAO believes that umhout inlortnation linking th e
out that a_lack of eflecti%e price evaluation procedure s
                                                                additional costs to actions of the (iovernmeat, th e
had resulted -iu -the tie_,otiation of'unnecessaril% hig h
                                                                Goveminent had insufficient assu rance that the settle-
prices for work which had been added to the origina l
                                                                ments made ,,etc fait and re sonable . J hetefore GA O
contracts by change orders . GAO made a follo%ctg t             recomntencled that super%isots of shipbuilding requir e
review to determine %%hether improvements had bee n             contutetors to furnish evidence telatin l- the delay an d
made by the Navy .                                              disruptions to actions of the' ( ;ovenntnent and to pro -
    Claims submitted in the period :April 1965 throug h         ride specific data in support of additional cost s
January 19.69 by three contractors referred to as con-          claimed .
tractors A, 11, and C <- in the amounts of $114 .300 .000 ,        With respect to pticint, of cont ract chant_ es othe r
$486 .000 . and -$1,342M0 t%eie settled in the amounts          than those arising, front claims- ( :AO found that cer-
of $96,300,000, $351,000, and $760 .000, respectively -         tain contractors used historical data and standards i n
.Although the amounts of the claims were purported              preparing proposals for the pricing but the Navy gen-
to represent the additional costs incurred by the con -         erally did not obtain that data . It relied on the per-
tractors because of Go%elnment-caused interruption s            sonal udviuent of its ncgotiatots and auahsts. GAO
and delays, the contractors provided no tangible evi-           believes that the Nary t%oukd have been in a bette r
deuce-of the -additional costs incurred . In the absenc e       po ition to evaluate the pre>posak and %%ould have ha d
                                                                ,realer assurance as to the reasottablence s of the price s
of such evidence, the Nay%, in GAO's opinion, coul d
                                                                negotiated had it nbtained the data used br th e
not adequately ; evaluate the validity of the claims.
    The following are m rnptes of the rationale o n
                                                                   GAO recommended that the newly implemente d
which the con tractors ba~cd their determinations o f           "change order accounting° contract clause be clarifie d
additional costs attributable to Government-cause d             to clearly require contractor to segregate their direc t
interruptions and delays :                                      costs on constr uctive as well as formai!v writte n
        Contactor A compated the estimated labor-hour s         changes . To facilitate tha negotiation c' reasonable
     in its original price-proposal- %%ith the labor- ;tour s   prices for change orders, GAO recontmen:led also that :
     actually t-xpended and estimated to be expende d                Contractors lacking adequate systems for provid-
     to complotc the contract and attributed -titre increase      ing, a factual basis for proposed prit :es be encourage d
     o%ci the otiginr i estimate, after` an allowance for         to improve their systems .


                                                                                                                                  SECTION I
          Historical cot data and t iviards he obtauwd ,                                Requite -onuac6112 officers to rrvie.c proposal s
       whenever appropriate, for evaluation and audit .                            for pe( ial test eguilranent to m<uie that plant equip -
          The \avv urstur that trperc[sr,rs of ship! rr r ' .                      .!ir rt r. not included .
       obtain current evaluation< be the Defense C{ rtrac t                         I! . 1 ): ;gar t writ m, it!tod , :tth a,c findings cor d
       Audit Agencv of the estiin tins- Svstetns of ontrte-                     reco t :ndat i rns stud outlined the I , - ions taken or
       t ishcated in turir iespr tivr (, oulraphic act, ;trtc l                 propo ci! to b~• taken . 'report t ;, thv Congress . $ -
       that the evaluations include the h sris capon whic h                     i Iti- „St_ Apr . . 19 : 1
       proposed prices it(- de\eloped-.
          I - lie \ trt= "ww-raliv con uried , : th (- ~AO ; rer on. -             111 . Application of "Should Cost" Concept s
    nii_ndatioii, but pointed our, -hat oinu it tin cite d                      in Reviews of Contractors' Operations-At the re-
    problem a .eas art. usceptibl to ii-IM"%"urcnt .)!It no t                   qurst   Of 1177   )Dirt I ;r : tontir (=onut :itteI . through it s
    to total and precise sr,lution, It . ; as the \a\%' . ,t)inio n             Snhr      r r :uce on Fct tuun in ( .ot'(-mn)ent . GA O
    t_h,1 ,his t1,s parti< niaric true Of an, : _ttt'. i :,pt r r .t_l .ir% c   ntacl_ a stud, of the ica.,rbidtc of atp4tug '`should
    tot' .t!, explicit . and auditahle ju' lificatio;t of iii dcli ,            cost attalt>es ut its audits and ic%im ,- of Governmen t
    and (listuptioru Costs.             Repat to the                            pros tern,'nt I"h .• con)nittee dtfinr~d the "should cost"
                     . Apr . 26, 1971 :                        (B-17096         apptocich a, an attf-mpt to deternnine the amount tha t
                                                                                it t,r rpx,r s%st ~t :a or it product oua! t to cost t,iven at-
         110 . Plant Equipment Acquired by Contractors                          taioLrbl eflh! it icy and cononn o . operation ~In a re -
    for the Account of the Government .--Dcpauttnen t                           port to the Conlg ress on the stud% ( B-I598 q 6- May 20 ,
     of l iefrnse `_DOD regulation, I)FIA ide that . With $o g l e              1 1 ),•!t't GAO concluded that it is feasible . in auditing
     exceptions, contractor ; furnish all plant equipren t                      and revictiing conulucto. oerforntance, to utiliz e
     rmeded for contr act perforularice . Equipment so spe-                       eh i? cost'' ur th°scs .
    cialized tbatt its use is limited to testinz in th e                            Subseq .rentt% GAO wade a trial application of th e
     development or prodUcti011 of particular itcnis . or per-                  "should c"se - concepts at the plan of four contractors .
    forniance of particular services, is not considered plan t                  At each of the plants GAO found areas %vhere til e
     tgatpment. Such equipment--known as special tes t                          coat actors' operat i ons (ouid he inipm%ed and costs
     equipment is generally acquired by (ontrautrirs for th e                   could',re reduced through suet hilts as betterprodur-
    account of the _Government and owriccship is tetaine d                      tion plannin r and control- more competition in subcon-
     by the Government ( ;AO's prior % ork had indic ate %                      tnwtirrf~, and greater care to avoid -t- ir ;nin<, engineer s
     that some plant equipment had been inappropriately                         of h,~fher compeicnce than required b% the nature o f
     classified as special test equipment and acquired for th e                 the Nvoll, to I),. performed .
     account of the Government .                                                    ALtLoil, lt "should cost" revie. . techniques are in -
        GAO's review at plaints of five contractor shorte d                     tended to find out lint~- contractors operations can b e
     itIat . of the equipment acquired for- the account of                      hopro-'ed, tire% also lead to disclosure of areas wher e
     the Government at a- cost of S62 million, about $1 2                       Gorertunent muracting or administration practice s
     million worth should liar : been classified as plan t                      affect contract costs adversely . GAO noted areas wher e
     equipment and acquired for the account of th e                             the Government could improve its practices and reduc e
    i Ontra etol'S.                                                             costs through consolidation of procurements an d
        `£he problem of classification-steers front the Anne d                  through elimination of unnecessary requirements fo r
     Services Procurement Regulation which defines spe. -                       packaging and for testing.
    cial test equipment to including -"ail components o f                           GAO brought its findings and suggestions fo r
     am ?sscittblies Of such equipment ." This denrtition per -                 improvements to dre attention of officials of the con -
     nut, tile: at quisition of plant equipuent ;-s special tes t               tractors and the Department of Defense . The poten-
    equiputeiit when it is to be included in it group of tes t                  tial for total satings - u•frich could accrue from the
     equipment iterms- assembled for a specific- use : GAO                      finding, and suggestions was not readily measurable .
     recommended that the Secretary of Defense :                                In those instances where then were measurable, GA O
          Revi,e the d efinition of special test equipment i n                  estimated t!re potential saN ings to be almost S6 million
       the Aiwt, d `,( i ~ it, s Procurement Regulation an d                    anmtaliv. The Departinertt of Defense advised GA O
       other perriii~ nt I )( )I) i , :g tlatio is to exclude items             that the agencies concerned would look into the spe-
       that aIr rcal1ti !bunt equipment .                                       cific natters noted by GAO at the contractors' plants .


       Because "should cost" reviews require examination s                  Duplicate reviews .
    into n.any facets of contractors operations and man-                    Lengthy pros e sing= by groups not under the con -
    agement not cowered ill GAO's statutory authorit y                   trot of the group managin, the project.
    to examine contractors records, GAO suggested tha t                  GAO suggested that the Secretary of Defense des -
    the Congress ini,ht wish to consider expanding GAO's             4 mate a group to establish procedures for effectiv e
    statutory authority to enable it to stake effective              control of the piocessim, of en.,ineerinw change pro-
    "should cost" reviews on an independent basis . (Re -            posals and to nuniitor the implementation of - tie pro-
    port to the Congress, 11-159896, Feb . 26, 15171 `               cedures by till(, military serv ices . GAO suegested als o
                                                                     specific steps it believed would reduce processing time .
        112 . Processing of Engineering Change Pro-                  -I -he Department of Defense agreed with the sugges-
    posals—During the course of production of militar=y              tions . Report to the Cor _ ress, 11-152600, Jan . 20.
    aircraft, many eu6net ing changes are inade to mak e
                                                                      197i ,
    the aircraft safer . moic reliable. or easier to maintain .
    'fie need for such changes is usually brought to litrh t             113 . Contractors' Acceptance of Recommen-
    through test and operation of the units already pro-             dations for Improving Their Procurement Sys-
    duced . -Flip changes may originate with eitht-r th e            tems .- 'fbr _\title(! Services Procurement Regulatio n
    military service responsible for the aircraft or the con -       provides for ttie wvietc of contractor; procuremen t
    tractor, but plans for the changes . in the form o f             systcnis . ['It(, reviews ate p erformed primarily by th e
    engineering change proposals; must be approved by                Delen:,e Contract Adurinisuation Ser vices for th e
    the military service before- the contractor is authorize d       Depart nwnt of Defense Dt)DI and the Nationa l
     to make the changes . A delay in processing a chant v           Aeronautics and Space Admiunstration (N,-AS ~ . Stib-
    proposal can increase_ the number of aircraft delivere d         coutra tin, practic .rs are .ui important part of th e
    without the change . Once the aircraft are delivered -            procurement ,ystvwt --about S g t) bil l ;on r-i the 5-1 0
    tile change could be delayed for months or %vacs o r              hillion spent anmially under DOD prime contract s
    never inade at all. Furthermore it is genendly more                ors to subcontractors ---and improyentcut in the pr.ac-
    eypen>ive to niako. changes after production .                    uces could restdt in !ar,t' ;ayius to tile ( ;mclilluent .
        GAO examined 54 engineering change propocals-                    fn it report issued to the Congress in August 1970 ,
    implemented on 11 types of aircraft in the fiscsl dears               CG Stated that the 11-6e w pro .grani was sound incon-
     19+67 and 1968, to detennine whether extensive delay ,           ccpt but its impietnentatiort way not fulls- effective .
     had occurred in processing there .                               o"hot , as a need to ;note ate contra, tors whose pro-
        The average time foe• processing the 5-17 pro posal s         cutenient systems wore found to be unacceptable t o
     was 131 days as compared with time standard.<, estab-            make needed iniproyenn lit, . ( ;A') found instance s
     lished by the Department of Defense of 45 day, for               cyhery contractors hacl ref,rsed to take action on lveak-
     routine proposals, 15 days for ar gent proposals, an d           neves reported to theist, contendilw that their procure-
     24 hours for emergency proposals . GAO estimate d                ment ststenis welt ood vn ueh . Th_- nel!atiye attitud e
     that the additional costs caused by delays in proce sin -        of the contractor, did not appear to have diminishe d
     12 of the proposals could amount to as much as 53 . 7            their ability to obtain Goy_rrnment prinic contracts .
     million if all the planned changes were made .                      GAO also found a lived for :
        T1re following here Softie of the causes of th e                    Definitive standards for the approval or disap-
     delays .                                                             proval of contractors' procurement systems .
            Inelffective nioi itoring by project' offices of eyal-          Greater discretion in sclieduhn, detailed annua l
        nations by reviewing staffs .                                     reviews ofsv-stenis of contractors who,e systems ha d
            Insufficient direction for contractors from the .             been found to he satisfactory in the past .
        iitilitary serv ices as to the kind and extent of data         DOD and NASA agreed . in ,ieneral . with specific
        to be submitted -                                            proposals of ( ; :AO to improve the pro n-am for revie w
            Reliance on a single, overall time standard i n          of contractor procurement `ystenl, . Hot.—over, DOl)
        lieu of tinic standards for each individual organ i          did not he ieye that there %%as a roved to motivate con -
        zutioi_c o iceired in the evaluation .                       a.actorz to accept recommendations of the Governmen t
            Sc,picnual rather than concurrent              by the    because in actual practice most of the contractor ac-
        or_aniia c,n~ <<uu~ernect its an ca°afuation .               cepted theisi .

                                                                                                                SECTION I
   t ;_A( ) poulte(I scut 11iat it wTa incgtiitable Ior the     mews and '2 retinue that requests for the purchas r
rtotire ponsive contractor, to continue to receive th e         of equipu , w, c lea iw ataw whi-dwr 0tc specitcations
same consideration a4 that eivt•rt v out rat-tors %%l to ha d   arc brand name 1 .1 ,nual or haye been prepared o n
Iliad, efforts to dev-uc acceptable Invrureritent sv -          thy- basis o l ecluiprrettt dexription, in a supplier's rat-
 terrts from which the GA Crutnent and the crntu'arto r         al"u, and, if eo . that the request, give Rill writte n
 benefit : GAO recommended that the Secretary of Dc-             lu,tifaatton of the tent'{ for any restrictivr feattur s
fertse _onsider iny)osing- penahits, such as reduction s        'pecified .
 in allowable Inoins, or contractor, wwho e procurun;e-n t         NASA wras in avr nremrrtt \with the ohiectke of tit( .
 systeu s had been disapproved and %rho nratle no effor t       rec-otnuu•rrelations and !,tied that it intended to iin-
 to make the ch uti~e, necessary to inrprm he systetus .        plellient require nt,nu . t ntph t ir!it to oe,nuact n~- an d
  7Zepert 'o iht GOngrt_s, : I3-16 111, Attg- 111, 1970 ,       utauagentent oHic iai, the need to uuic -t .e cornietition .
                                                                  Report to the Cnt ettss . B-16-ltlt8 . 1 eh . 26 . V-1 711 ?
     114. Revision of Certain Packing Specifica-
tions .---7'h, General Sluices Achuinistration (G) A                116. Evaluation of Cost-Plus-Award-Fee-Type
 revised palckin ; specifications in Sclitenibcr 1966 fo r      Contract Performance .— um-plus-award-fee con -
 certau2 type; of cabinets . lockers_ and wardrobes . Th e      tracts arc used extenskck at National Aeronautics an d
 recisions resulted in additional cotttt"Wt-costs of $1 5       Spare .Adminisuation NASA= locatious . The (oil -
 million an increase of 12 percent during the firs t            11 acts l it ovide fo: parittent to the contractor of a vari-

 I 1 mnntlis th,' the ,pry tfitatirn> \%(-rein use . For su b   able fee determined subjectiveiv by Gov,rnnien t
'e(luent periods1hrou"lt jwtc 30, 19701 : ( ;A0 was un-         evaluators oil the basis of periodic e'wzuuatious of tilt '
  able to determine uhat_portion of the $H .l million i n       qualityof the conttaa for s pc rfenut~tnct against criteri a
 contract costs was attributable to the revise d                in the contract .
 Spec ifnc .ations .                                                At N AS :A's \tanned Spacecraft Center 'NISC) ,
    GAO concluded that the revised specifications pro-          award fees were paid to ill(- conttac'tor for aircraf t
 vided foi more elaborate packing than tier ssai\ an d           maintenance sere ices primarily on the basis of opinion s
 reconum ,ndcd that ( ;SA urvaluate tile, packing speci-        and judkntents of _NtSC evaluator, as to the contrac-
 fications GSA maintained that its actions were justi-           tor's performance. Objective nwasurentent standards
 fied and that a reevaluation(if the specifications wra s       had not been developed for evaluating performanc e
 unnecc sari' : (Report to the f on :less ; R- 16081 1 ,        even though tjlidan(r cn aircraft utaintenance opera-
 Feb . 19 , 1971 )                                               tions eras available from Air Force source, and fron t
                                                                 \ISC personnet vrho vverc su{ficirutlV involved in the
    115. Competition in Procurement of Commer-                   details of maintenance management .
cial Equipment -The National Aeronautics an d                       GAO reconintendeci that N :\S_\ examine into the.
Space Administration N-AS . V made a significan t                v,ork requirements of the contract and establish a per-
nunilier of egnipmc~nt pttrch-,ises vvith'ont effectiv e         forutance ovatuation plan vw Bich would place greater
corrtprtiticin- because, in nianv in~tances, restrictiv e        emphasis on objective perfortnance standards in term s
,pecihc atinns governed the ptocnt,rnent . Geueralh :            of output criteria and that \ :ASA snake use of avail -
specifications were prepared by ,gtiipnunt trsers ur till -     able performance indicators . NASA expressed a will-
der their direction an(! -included special features whic h       ingues to explore the possibilities of wrork order evalu-
file user, desired . Thise spvci .l features which some-         ations based on output measuicnu•nt standards NAS A
tinies wicrc- unncressat'v, tiSUAI were available onl y          noted, however, that such vvaluations represented i t
on a particular piece of eyuipnncut front a single sup-          significant change front the currrent maluaiion pla n
plier. If equipment users had not specified such fea-            and that staffing levels mil-ht not be adequate to im-
ture , specilication : could have been less restrlctive.         plement the change . Re}>m7 to the :Administrator ,
which probably would have resulted in increased cont-            NASA, 11--133391, :Apr . 1-1 . 1971 l
petition and in savings to the (_;ovvrninetu .
   GA,0 recommended that the Administrator of                       117. Target Costs Under Incentive Contracts.--
?NASA should i I ) require the use of specification s           GAO's review of target costs udder cost-plus-incentive-
that have acceptable i,tn,~es of dimensions perform             fee contracts negotiated by the National Aeronautics
ante, and other characloi ku, , of the tnininium equip-         and Space Administration ' s (NASA) Marshall Space
ment necec<ary to fulfill the Gov-errtnieliCs require -         );light Center, indicated large underruns related t o


       1_t Rd ellnes and 11 d,r first stied cf the Sanir n                       Whin in VP ;( ._ tltr- t,(' . a .,tl t                  illear .itlr,e owit -
    G launch Vehicle . U-nil"ri uns of t u'<,et co, -, . - t os t
    f-,tctasts included in coniract4 for control pr,tpoecs-- -                   al             a nlN-idrel t ` 21 wo
    iestrh . in In enti) e-ti pe t'cnttra ts- -n I ;u er fee Co n                      I' ; ; 18 urtu . :,ti, )a !lf,1 ' n S!', jnl :!ioll .
    contr mms .                                                                  Ini,t         ere- S1_ .`I 11+i11ioll 11 i' , hr1 than           I anu°d 1l ; 11 w
         The blight- Center had ne'-wAialed tat_) t to>tr .                      :Till t a il	           !1 ,1 .;,• In + ,           1,11, a, r tnor o to^*n -
    under rocket en±~ine -ontrac is that in, lulled n, .,tel u d                 ti .a!i                                                                  ?rtna th +
    ,ow and indirect costs which ),t,re w q dw nom o+, u -                       wn            . iiii . :+n(Y5 U t . .l li III- I I'llil , , Xr_ntt .1 1
    tote, complete . oa_turlY97L bile tar, t costs tc,_t ° w o f                                                      it w 111.
        ated by about $ .i nrillittn anal tilt , total lee, d i r                                                                ,ni!     n - .ale=' :i n .,- Little
    , oututrlor could rai ll under th,i (outr,~cl~ ., . re in -                   - .~ ., ., c,, ,. ;rt . .                         :n !hv oth, . 17 :, tntr t l .-
    , r+°led he ah"L$1_5 million . Tltt ta,irct ct,st m o                             cit d ,                 i ., li n ( ;AO 1             -ht w hi ;dn:;, o f
     liatert nndrr tilt• . c_ _Anti=ul for the tu,t stall " 1,f til e               n: :                n 10              cl . .      oI            , i .i„ak ;111(1
     launch t'f f i l,, included anu,uiiis in, inate p.11 ._+,i ill -             elan\ t,(?b. :,r, , . r io, L .,lt : I)th r
     direct I osts which w, re ovelst,,tc-d iN fl—ut 32 6
     := illion . .AS it res+ilt ; III,- total fro till- ctrwlal tor „,ui d                       lonild NO s " 11-1, plohl e'll,                                      13 %
     car n wits in( r lscd hr ithout $695,000 .                                   sli t t ;,c L,e+ ., c. „_ .' ;~ ii.~-_,,, i  f i,                  i-+ .• :,~ t :, ; : d
         ? ASA advisi'd GAO that in the cam , o A w ,1'kn
     t nginm it had Ircpcsted the 1 Aw, ( :nntr .r , W K                                                                                  ' till, + ' -
      Agency to conduct a postawald e ...ahlat-or                    .+ h . ur
                                                                             n                                                              ilinont,
     Rethet with other ttrerstateuaent, found in ( :_AO .                        (~,       t, 1 `--` _ f                        ill tf,-i! lol,irl- -
     :could he the hnsis fo l corroact adf~,rttn,•nt, N\ ,, \                        u ern_ .             \,,             ' 'I,        =+fitted ., m
     =0 thm a telet-ttre n,iew w,wid r-a' made of	                          ut           O . n 4w tai, .: r ;,1 an , oI ,w” . ++t to urni 1 ;
       osts fear the first tago of the VMS ;thine .” on i                        an dmi I .            1, w ,          "qh ., i,ou .h n uri c
      ))ottid inake other ,ost cxan -nation., to dow . ,1+_ th ,                      in            „lira+ . R .1„, „
     extent to which lesc costl, , .,h- he tppli"ahle .o tx er-
                          d                                                       1)r ' :' . !07i %;
       tated Material co ' t ' .
           _\',A also re ,.-ked its pio, u : . nli'nt l('2111 :16( 1 . %, n h        119 . Waivers of Preaviard )Audits of Contractors '
         prow        itnpl mmtedM ntld '}.?r':_) t t _ m" w r a nr _             Noncompetitive Price Proposals . - l0pnimcrlt of
      ante that coet,daw furnished !,)- cor.trak-tor r aw n                      1 )e rr w -1 H W +e_ ;,S 1            "a   Ae ulna_ incur te to -
      rate, cotuPlete: Ju ld curmm I_al ;(,tts W Ow CA M "                                      r      11 it .t inn       ac       t o-I 1 t Aig hwi
                                                                                                                        .; i li " hole l a nice %,il lli"Nez—f,nJ
      B fMMI Oct . 26 . 19 0 and - B 1 678112, Dec . 30.
      •97 0                                                                      , - h .1-d of cat 1_, t 'ill',xt,t ,uhtn :tt'-d ht' the
                                                                                 „ua I,:ic t:-, tl e rutura-ttnz,. uih-t , w(l,tect the I)eft'll,, ,
                                                                                 0,1 r :t(-t At_dit A,lent _, i ACA_A to audit the con-
                                                                                 u ~tt tw pr iu l,mpc I Ilk ru paidemt i irty Ill -
     Contracting          Pollees        and Pradke s
                                                                                  c :tic~,l In it r     ;ilia - t ,= ofli , r'dwile °el it is clea r
        118 . implementation of the Truth-in-Negotia-                            tail 61 - i- ,nit 111 alit' It !     . .t aisle' li ;Id (Iil :lte fol th e
     tions Act . L nder the Truth-in-Negotiations Act o f                        p!"p ed ln, n enaent .
     INN contractors am re"Kid tctstihnlit cast or peein g                           ( AC) e>:arriticd hl nitnenl, , petiti)e fiNrd-pri, e 111-0 -
     thm in support of their pine prgposals a& to ma t                              rr wnt w Unis mw a-u a wd ua $110 nAlion tha t
     the correctness of these dam Govt or p4hig dat a                             eew 'r .,a ;,lyd in 1% b ; is proeulrwM center: .
     see areccisrell- s~enetalh on negotiated Contracts no t                         C ontl,u,tir, fhc ry- L . :ad ,,,turd the preaward audit s
     based on adequate pr :,c competition, ).hen t ws e n                         for 130(If the action,,-anununm to ahout S,5L7 nail -
                                                                                 lull, O tilt, 1 it_) tc_ti:cis (If p .eau~,ard audit,. :
     +-eed 10ft' "r", ' rite 1• I . tct_etllei With the ri'inalaitain ,
     impleuientini ii, t> -- i,ioll~ t has been criticised hq in-                        Yl;irt,~-cute appeare d to 1 ,c jnstilied stn the hasi s
     d ),try gwke w-r w licing uteeluitrNv and wAtTl y                                of a)ai wl- inforitw on .
     burdensono (n? , nntractots . GA( ) re) ivwcd the reason-                           lmetc-nine did not appear to h,- it+stifiecl he -
     ahleness r,t ta+~t otiated under the act and th e                                 .-(, e i ! ac .lilahle information either was not fo r
     problems I- lwi ii oced Iw conuactor, and agent-) of -                           conaparahle .Itialititre,, ),as not turrc t +_,r had no t


                                                                                                                                      SECTION          I

        hum verilial (w ? , .W e conum          V& cWL ov      jul"n ;     Vu, ddm-                              iii Aided in GAO ' ~ sai(b _
        data wete %eiified bv price                      aid teciiinia l
                                        did not t race tile pecialtze d    of VC6 Vniudi 1 469 avc,tay"I 4, i perrent of ,ales o n
        audit Lmirving and wpodave torched hr the                           d1no "m k nd 95 pm na of -ales on corn,) t- tale
        DCA,Vt, auclitai ,; . Of Be 99 "mWav 31 were Ko k                    ,winwn Al "ork . "On bull wx wallmd as a
        fled, in pall, by conic who offill, on Be Nusi n                    p,testa w- of the tool aphM Awninurnu Imal ha-
        th ' a tillil '. was ill 'aflicient for all auldil . 1)(4,11" ,    hilow- .1nd                    !)Ili csclt _,=e of ( a,%erinni-Ill tapi -
        rci-, ulations (it, not jirc~\idv for %,aiver of iludit, oil        tai used ill                          th,        ill,- (hit, le ;lce llar -
        dis basis .                                                         I (med t(~ 11 .2 pt-rf eta fo ro d ' -fel i 'l. sa°e , and 1-1 .0 per-

        ( ;:\() lepalled to lilt! Defen ' r Contlai t ' V :dit Ae, It-     rem to! conimp nial wiles . lultlwl . vdit'll plo l it %' a '
     cy tile procurement odious in X%h i , 11 %~akera ref audits            ' on'id,red as a pencntaec of ewla% tapil ;1I inteil -
     did riot qy par to he Poled and this ,lie my urnki -                   ;nt-nt of ,to(kholdei, . there %%a ; !at!,- (lificien— be-
       -)k posta\%ard audits of tliv ;c                                     t%\c,n lilt- r:aesof lettlia .
     iVU0i!llot1nd('(1 that DOD :                                                 Hic 3'lajol' (olnpznahiLitz or tile zaic '
                                                                           A in um on—11ra, Wn',JAM invenavat bw delewe
            Plovide ulidall(c to colrtl-iile~ oflicel, lt 11 w             .iud coinrnx it ial woik vas die skrhSsuunial amount o f
        tylle at procureplent infollfi ..'Ition fOrlsidt-n-d ade-           " lpit :d plovidvd b"', the Go\cnillient S=t the forni o f
        (Illate to justify lad y I ' ofludil _                             `.lit-          pa,Inent ' . lost                            equipinclA 7
            Require cl-intractill'-, offi,ral, to illipim" the docu -
                                                                           and fa(ilific~, ['In, r,-Bi(ed the ornia(toitt' capital in -
        niuntation of %, Livers of midi : .                                                l('11 1 !lmd f0j_dVf0oS C
           Strengthen intel-11 .11 audit                    f the plo-          ( ; .\(),tls,, mvicwed 116negptiatcd defenw(ontrini s
        P&V                    of vaudit .                                  it) sve '.chcthvl it wa, pla, "ifal to dekulop alws liv -. 11 1
           Establish procedures fol n, polling %\Illk('Ts of III -         data on indi\ idual colai 'l, 11 and to see %, lieth2l , an y
        dit so that IX AA nmy convid" Insouard atAw o f                     "ON wnne in prohn existed . the mvipw A"mvd tha t
        the ' tt pI oc urvillet its .
                                                                           dara oft co o- profit- and iir\csn-d capital (ould be de-
            Pro\ idt, pg uidance as to \,hat aciion~ ~h,,t 1,1  1  he      zvloprd oil indi\idual tornra(ts and that there was i t
        uln "On Wery is insufFich-rit One to 1wimn a                        Wut rjol'-w of profit rate on defu1sc colittircts . 'Fit(,
        picaward audit .                                                   avem, rate, of retainfol individual contracts %,-er e
       The Deirannrum of 11055 agreed Mat uuiven o f                       Mkownialix llilrilf-r thall the a\vva~v annual profi t
     iuX sliould Ire better dmivawrted and Wat interna l                   niu, de%,loped floor the cicestiann tar . GAO uh-
     sul-willance of such mAkw-s should ne increased . A V - nt h          nowd to we 74 ham desme umara"arn I hiwevel .
     resi)(2CA to file the DoparWIVa l                                      the 146 canunct, rn Owed cannot he considered a% a
     stated in ohm that trshow histructol, provided th e                    !Ujjlcstr1rati\e sample .
     reLoniniended guiclance. GX0 1whimi ota Am th e                            Under c"nvin pnxvdur, Wr arpotiarion of profi t
     finding iirdirn,o ~! that Gem \vas a need for inqwox "                 for d9mm"ontntriv tittle cott_iclerauon is Own to th e
     nient iii ih~ c .v,tmr~- instnictkras and saymsted Am th e            amount of capital inve' trilent ir'luiled from the con-
     rccoiinnvntl,nion~ he reconsidc>rcd . Report it, th e                  tractor to Y jaral Art woth p rofit Adectives am do-
     coxtpw~ B Tom"Vit 1 lwo ~                                             x-clopod as a percentage of thr nnicipated costs . As
                                                                           .1 re~ul" ' inequities cdn and do, alke hemeell con -
         IN . Defense Mushy Wit Study—The
                                                                           tractors \vhell difforint! propo&oll ' of their capita l
     Arivied Forces appropriation authorization for fisca l
                                                                           arc r,qnired to perform the \cork . Further, by zelating,
     year 1970 directed GAO to study profiti earned on ne-
                                                                           prilin, to costs - contractors in ll0llC0lllj)PtitiV(' Siala-
     pAiated twitrackand                           entered- into by
     the Department of Dmvirse, the National aeronautic s                  tion, one not pro\ided %,ith positive incentives to mak t ,
     and Spa(v Adininistration,and tire Coast Girard . (,oil -             investrilenti in equipment that would increase eflici-
     (1,10, '( the V(qllic I"llelij,:y Cnlrjlllr~loll awarded t o          vir-y and result_ in reduced cost s , especially %Nlievc.
     InUL i(quijeiri,w , A dw DqmrIalcm of ikfave Nmre                     follow-on oritracts are involved . Under the curren t
     lil— illuhld' ~d                                                      sxstenl of ll('!Toti ;itil)g contract plices . such investment s
         P[,lil t!,I, I ~d, i, ;! ni,,iow 6xvs . nieasured as a            tend to im"m mile -r than roue tae, prat, in the lon g
                      ,I             ilificalltiv towel on defense         run . Other factors . however, such a ., vdiether the pro-
      —,I     11j,oi . ,i,       iNtm~iin,nial %\oik for 74                wrain will be continued- could be oi enhhng convidera-


    tions afl'ecti i_ contractors ' dee sion_ concernin g invest-    and no contractor serGices were to be obtained unti l
    inents in equipmerit .                                           final contract approval by the Procurement Office .
        (,AO believes that . in determining profit objectis es          GAO reviewed the contract files for 333 contract s
     for negotiated contracts'-where effective competitio n          awarded durinr_, fiscal Near 1969 and found that th e
    is Iackina, considerat i on should be given to capital re-       Procurement Orlice had heal partially effective i n
     quirements 1, yell is such factor, as risk complexity           curbing the practice of uerinitting a contractor to be -
     of the work. and otherauanagement and performanc e              -in work befo re the contract had been approved .
     factors . Where capital requirements of coutractor~ are            GAO reported the stnweN findings to the District i n
     insrenificant such as it, ritairy service-type contract, o r    order to br tag attention to the need for departnent an d
     contracts- for the operation of Government-orrncd               -uzency officials to adhere to procurement manual eel"u-
     plants, profit objcctiicc would contimic to oe d- ' el-         lations an(] improve practices for negotiatirR an d
     ored primarily through , consideration of the other fac-        award riii- negotiated ;;el, ices cant rct, . t Deport to th e
     tors . The system adopted Should be used, where                 Director, Department of (,eneial Se vices . District o f
     applicable, by all Government a_encies to simplify              C'oiurnl,rs Gocernn ;ent, Apr. 30, 197 1
     industry participation, '
        GAO did not consider that 1- -rislation ~.yas re<lnired           122 . Improper Practices . --in 0W prOCLIFerlIVI A
     to establish uniform irideline. . GAO recommended                of fond service, at the U .S . Merchant Marine Aead-
     that the Office of _Nl rnat,erient in(! Budget take th e         enlc, the Maritime Adminktra6orr, Department o f
     lead in the development e .` uniform, Government-wid e           C:onntlerce, hall not followed the policies and proce-
     guidelines for clete,miniggprofit objeeti%es in rr otia-         rhu-es prescribed by the Federal Procurement Regula-
     tion of Government contracts and that the =,uidcline s           tion-, regarding the type a contract used . selection o f
     emphasize consideration of the total amount of capita l          contractor, and contract renewal optic;ns .
     required bl a contractor Mien appropriate %\ her e                   Maritime negotiated the food service contract for
     effective price competition is lacking .                         the school Near ended June 30 . 1967, and . rather tha n
        ~Oil Julie 1_1, 1971, the Industry° Advisor% Counci l         obtainir=f~ malt r iNe ina,, ac, cpted prices for som e
     Sul-committee on Contract Financin g issued a report              iteul, in the cool acct ;% ithout ne fotiations, and did not
     recommending that the Department of Defense adop t               adequately reNiev: the cost da t a provided I;v ril e
     a--profit =policy which is in part based on contracto r          contractor.
    capital investment : Oil Juh 17, 19`l . ilrc- Deput y                 Tire contract for the ,chool years ended June 30 ,
    Serreta'rti of Defense       .ued          gmanduun       th e     1968 and 1961 1 . uhu'h mated to four categories o f
    _l sistant ~ectrfitries of Deic .,se ~~C'otriptroller an d           peals, t vas not at :arded to the lay: wsponsible bidder.
     Installations and loc,r tics' indicatinE his support o f          Instead- Maritime accepted the loan bid on the majo r
     the profit bled on capital investment concept and                cater=ore and then negotiated kith this bidder for price s
    requested the submission of a comprehensive profit pol -          ot: file other Batt ones . The ultimate contract price fo r
     icy proposal by December 1, 1971, ('Report to the C:on-          the four catr -_,or n ; v. a, 5 t 00i) hi_rher than the original
       ress, B-159896, Niar . I7, 197 1                               low bid, In GAOfs opinion . 'Mariti ne 's action leas no t
                                                                      in accord with re'uiation, and was not j,rstifieci by th e
         121 . Awarding . Negotiated Services              Con-       rea,ions --iNen . Also . avrarding the contract for a ?-near
    tracts .—GAO made a survoy of the District of Go-
                                                                      period was improper I lecanse of the statutory provision s
    himbia GOVelrltilCnt'S Prcacmement Office procedure s
                                                                      a_ainst rnultiplr-_ear contacts .
     and practices for awarding negotiated services con -
     tracts and noted instances of conthiuingnoricompii-                  GAO recnrnn-,cnded that actions be takcii to lire -
    ance with-procurement manual requirements _                       elude recurrencre of the cited situations_ Tt e Assistan t
        for nonpersonal service, cont r acts in excess o f            Secretary for Administration ad%ked CIAO in Augus t
     $2,500, departments or agencies were to provide a fill !         1970 that mernoranchuirs had been issued to p rocure-
    and detailed clescriprion of the services needed in a             ment Division personrel hr r„ul,t to their attention th e
    ineinatandum requesting the p rocurement Office to                matters dkeussed in ille GAO r`eprn t and reiteratin g
     s g rata for services' : the menloranduni was to include         the iriportance of 1ol l (rli t .r the prop r .ions of tht , Fed-
    writ roar and estimated total contract cost data and             eral Procurement httrtdauart~_ =Report if) fil e Assistan t
     c-1 r,~,pundence >.titf. the proposed contractor ; rceotia -     Secretary for Administration, Dep~artutient of Cor n
     tiou l~as io be completed by the Procurement Office :           rner'ceJune30, 19110 !


                                                                                                                                 SECTION I
           123. Contracting for ivtetroliner and Turbo -                     Pc-cause of the frequent requests for putcltasc, re-
        Train Projects=The Nfetroliner and Turbo-Trai n                 q - t r. .ten±~ on an tr_ rile i ; ;tcis . the ()trttatnn* office,.
        demonstration projects administered bu- the Federa l               . a, not pctvided t ,th Llfli( t -W leadtiral^ r(• <o .,y)iet e
         Railroad Administration, Department of 'Framporta-             I-r u'turntentt action .. t=,-fore the toot . bates ,
        tion . slid not accomplish their cbfeetives on a timel y          ft, result'd in tie 'ntlt ;rut use -1 {t•ttcr tomtr,u t
        basis and were not conducted a_ ori ginally planned .           a ul a               of tanpetiti,tr: Aix, . the conirtrtirtl-
        Technical problem ., encountered with the trains de -           ofli( er failed to definiti/e the ttet t e_tntt a, is lilt . n. m -
        lased the start of the p ?ject_s and prevented the Con -        6li ed contract, in a timt . 1% tj : .uincr lend "" t, mianil . t o
        tractor, from maintaining operational enough cars t o           n trOUate ,omt w (ontJ'a, t, -hail Atvi :u hstaotia l
        run the number of round trip= ne ce~sarc to full y              articur,u t,f Mrk had been ,)mpleled . Ora tteral oc-
        accomplish the projects' objectives .                           t - asvm, . FR \ pn;ic't oflu iak diwctt d contra" t.lts t o

             The Metroliners and Turbo-"Rains were an ad-               p_rform %mil: p,ior to obtiininu aun(trir,tion fro m
        vancenient of the ,late (if the art_ No similar equip-           U W rt,ntl', tfn_ (iS it ei . \'i( . 1 .1'rl'"       1[) \1 Stf l n Atl ~
         ment had ever been constructed or used in regular              (tri ;ttsu t cost control ntethocls .
         passer-,er - service ill the United States. An agreemen t            YR_l az .e"d kith ( ; AO's u•, ounucndattons foe              t_

        was entered into to lease -two -I'urho=Trains being de-          rerti~e action . Rep :	        to th,• -lctirtt r .ldulit --tr ;tinr .
         eeloped, and authorization was -ivetl to a railroa d             F R-                 7.
         company to contract forthe construction of jfl ietro-
         liners. witi :-mt knowledge as to whether the train s              125. Acquisition and Utilization of T-38 Jet
         would be able to operate to the degree anticipated fo r        Aircraft .- GAO's recietr of ill( . \ atioltal Aeronautics
         the demonstrations : Iii view of the si-nificant Govern-       and Space _Admini,timintt . A_ASA Manned Span -
        nieitc foods counuitted to the demonstrations . etc dtr-        craft C:entel's procurement (i ei= itt l '18 sntraft a t
         aelopment and testint, of prototypes should have bee n         a cost of about %.- million fill- use in the :t tronau t
         encouraged to proside -g rater assurance that late r           tt mtiu,,~ pml~ranr indicated that -out( . of til e eivh (
         demonstrations could be carried out as planned .               aircraft nni-ht not be needed to :sect astronaut an d
             Also, the- contracts with the rail road company an d       stain pilot `hill' rrytirements . "[he tstiutated futil e
         with the lessor ( 'if the Turbo-Trains (lid not provide for     land reclaireutents tue-d to determine the member o f
         a reduction in the aniouint of the contracts in the even t     ant 1,111 needed excetrdr-d the past living experience . I n
         the trains could not be used as planned . As it was no t       addit.on . NASA - , ar.nouucentent that the number of
         known whether the train-, would perform as antici-             astronauts ic_ excess by ,hour om-third also indicate d
         pated, a provision should have been inclucicd- ill th e        dent futtnt ilviu- requirements were likely to de creal ;e
         contracts to protect the investment of the Government .        ins tend of i r tease_ .
            'the Department of "Transportation tried wit h                  Recluse of the possibi]iit}' that the purchase of som e
        GAO's proposal that when the Department sponsor s               of the undelivered auctaft could he cancelled, GAO -
         futiu'e demonstration 1) rogcills imolvin1t near equip-        suggested that N- > \ reassess the fired for pt r chasing
         nient ; it should ~ 1 1 enc omua , v the use of a prototyp e    the eit.mit aircraft on lilt , basis of a consideration of it s
         to insure, to the extent prnsihle . that tine equipmen t       ps ;t Bing experience as al-, i ndication of future tirin g
         will perform as anticipated artd ;2! provide for con -         req ui reme n ts.
         tract price: adjustments if the equipment is not used              NASA dal not concur and stated that the procure-
         to the do-tee planned . -1lie Federal Railroad Adminis-        tnent- action had been resseswd and that the aircraft -
         tration issued n policy stuement providing for th e            \seg(.. needed to meet the requirements of the astro-
         adop tion of these proposals in sponsoring future dem-         naut trainut po',11 :11lt. . Report to selected committee s
         onstrations . tReport to the Congress . B-16 . 1. 197 l        of the Senate and the House_, B-172 1- 1 . -May 28 .
        .Tan . 2", 19 71 1                                               1971 ]

            124. Contract Award Practices and Administra-
        tion .—Tlhe contracting policies and procedures of th e          Facilities, Construction, and Leasin g
        Federal Railroad Administration t FRA Departmen t
        of Transportation, contained weaknesses of ec•titt- th e          126. Administration of Construction Contrac t
        tintelinr-~, 1cgality, and proper administration of             Provisions .--=Flee Army Corps of Engineers and th e
    -   COnt2~,t Is .                                                   naval Facilities Engineering Cotnrnand are agents fo r


          SECTION I
          tile Department of Defense -'DOD, ill the construe-                                C.;AO found that the reports to the Con gres did no t
          tion of military facilities . C :\O revictted their inspec-                    include most of thr nonachentised inilitai% . construc-
          tion procedures for inuring that consrtction is i n                            tion contract atcards for work overseas . GAO icicnti-
          accordance with c nttact specific:atious and found a                           lied 125 atcards of till, typ- : i00 . totalint, $184 mil -
          need for stone thening such procedures .                                       lion . in Southeast Asia : and 25, totaling 37 million . i n
                number of military facilities accepted by the Got, -                     the Republic of Gernnanv . Inclusion of thew• overseas
          ernment a, completed were not built in t'oinplianc e                           atcards in the nonadvcitised eontiactsreported to th e
          lvith ront tict specifications . As a result, the facilitie s                  C t hewn s .could iryc ,hotcn the proportion of adver-
          were not fully'4atisfactol-y for their imcnded use an d                        tised contract awounis in liscal veer I g68 to he 7 2
          or th>u Gor'ernin , in had to spend additional time an d                        percent rather thall 91 percent .
          effort having deficiencies corrected .                                             G :AO noted also that the Department of Defense
              GAO recoi»mended that the Set°r,taries of till -                              I)ODp %%as not required to report to the Congres s
           \rniv and the -Aat-i• hale the turn constructio n                              nanadatrtised construction conUact atcards finance d
          agencies :                                                                     tvth other than the militaiN construction appropria-
               Systelilatically monitor the cnfrn(vmtnt by fiel d                         tions . GAO identified nonadvertised military COIBMIe-
                                                                                          tion ,`ontract atcards of S"18 million in fiscal year 1968
            offices of the qualit.v control p oar ;anr> of contractors .
                                                                                         that had heen funded froth other appropriations
               Review the inspection repot tinge practices of fiel d
                                                                                          principally pio menww appropriations. In addition .
            offices . correct those not ill compliance %kith a- :eIIc v
                                                                                          GAO had Found in an earlier I,;%iev. that subcontract s
            regulations and implement a -systenl for Ilronih t
                                                                                          for construction, had been iv, umded by prime con-
            communication of inspection finding,, front the fiel d
                                                                                          tactors holding nr,rotiated detense contracts for re -
            ,)iTices to the construction nianaaemo-:nt levels.
                                                                                                       and devc1opmem and for production o f
      .        IIInprove tile -Anntrainni pi'of,, rani, fill- Irlspec-
                                                                                          Inl :crtel .
            tors and establish such prog,rains in the Nat't'.
                                                                                             ( ; .AO u,te.ted that DOI) require the military- cle-
               Perform morecompreiietlsive reviets of field of-
                                                                                          jlarnncnts to inrll ) their practices in repotting, t o
            flce implementation of agency procedures for in-
                                                                                          tie Com'4 1ess . fn response . DOD stated that ctlie r
            spection and supeivisiou of mtlitary construction .
                                                                                          means had been a,11'd to keel) tic Concaress inforTned
              GAOalso recounnended that the Sec etc° v of De-                             of the otcr :seas atcards discussed in GAO's report, 'Fil e
           fensc take action to inure that the tt .o constructio n                        Departnent, lim, over, concurred in a suggestion an d
          agencies exchar,l,,e inforniation and coordinate actisi-                        cited nett instructions that had been put into effec t
          ties hi areas of nit ual interest icgarding constaction                         to insure proper reporting in tae future .
          quanty assurance-                                                                  Since the regUir'cnnent to report nouadvcrtised uyil-
              D=OD arced - with these ieaiinmenlat .ons and i n                           itary cormiuction contr act awards does not extend t o
          ,Julie ta71 advised GAO of tine co rectne action s                              contracts financed fronn other than the u-aitary con-
           taken of planned by the, ttyo construction agencies .                          struction appropriations and in eiew of the substan-
            Report to the Congress, I?<--171 . 196, Apr . 16. 1971 i                      tial ani"tints imolyed . ( ; .A0 snq*gested that tile, Con-
                                                                                            ress might %cull to con tea t r requiring. D( 1) to
            127 . Department of Defense Reporting to the                                  h oadvil its reportn .t, to incwch tilcse contracts . Re-
          Congress on Nonadvertised Military Constructio n                                po—i L to the Con nc s. 1) 1 .i 51b_ Any, . I8 . 197 0
          Contract Awards--in Augu-t 1970 CAO issued a
            ep„rt tt, the Congress on asumey of certain aspects                                128 . Problems in Developing the Fast Flux Test
          of " t1w i%vard and administration of military construc-                       Facility . -Tile Fast Flux Test Facility (FFTF) -was
          tion rontract,                                                                 hein'* dcsitrned to proticie for radiation exposure o f
                 ut te rthe nhlitari construction authorization acts ,                   file! ., and matmah under conditions similar to thos e
          !i ;i     Tltal~•-deparall"Ilt, are required to report to tine                 expected to be encountered in liquid metal breede r
                         -,ill n unadvertised nr otiatedi inilitaiN. con -               real .:ors . . CI nlstructU :+u of the FVFF was estnilated b y
                  „          utt t=r .t ; . r ds . 1'Iic lI car wean 1 168 reft o        tl : , Atoinit f .u-rte. Commh~sion TALC : : to cost $102 .8 -
                                   tort.        contract awards, otalUwU
                        ti .ri        _lL-~ -n tl
                                               tt   .̀l i )tntt 01 ptiteatr of thy .        I a,= ,t, 1E t.nriUll tFn'd . .t 1 tIIllpletin, tilconcep-
                                                               ntl=tout        111 .1t   tua_ l l e-' ll  the }`I= IF . ow hr ;t step in the design                  -
                                                          tf             -I   . 2
                                                                                                                                                              f :_
                                                                                          t .t .              1U .i, al       Ytllrt . ~i st)hc dlii .s lot

                                                                                                                      SECTION I

    completing tire remaining phases of the work . 'lies ,                  Its :                          't-nirt   dte ayaiiabil -
    delays were caused by management problem- ; : spcci ;i-       it:

    cally, the laboratory responsible for the project had         lac    Ow,   :a      .it _ .      !r   t :

    not established an en=gineering-oriented organiratiion
    with sufficient management and technical capabilitie s            11) ti ;             c.0         is 7 .1t11 m icr NASA . bil l
    to develop a complex project such as FFFF, att(! . :AE_C:     ILR          ] t t`~ t N     out 1,,     cwullcttu, identified
    did not effectively b r ing about chances in ortnauiza-       tft ~ .purl[, =roier tl u, hr a _,t~,uu<*r d _]th appropri -
    tion and design approaches that had been identifie d          ated fund On Juno 20 . 1 - t -,h, st oat- passed tilt ,
    as being essential . Also, the technolol~ic'al base for de-   authottzatloll hill ,lit It mrutv_c UP' 141111111 aLIC-111 O f
    veloping the project was no , a, ad%anced as initial!} '      dw projee ts_ Report to tilt , Senate Co!!Jmiu e o n
    believed .                                                    _icr;nautital- and Sp1 - - Scut<~., i;-tb-t,18 . Mai . 29 ,
       _AEG agreed vyith GAO's sut~; son that _AEC : re -          19 ;1 `
    view the reactor awelopmenr and technology orga-
    nization and all levels of colt ractor an(! laborator y
     management invol ved with the project to streamlin e         Procurement Procedures and Practice s
     the organization, to strengthen review channels, an d
     to provide some. assurance - that there. \sill be ntasi-         130 . Potential Savings by Replacing Govern-
     moon contribution by staff and uanagement t o                ment-Owned Sedans Each Year .--The Federal civi l
     this high-priority project . !Report to the Congress .       ;w,enc ies had a domestic fleet of 3 7,0„00 sedans at the
     B-16I105, Sept . 23, 1970 )                                  end of fiscal ; ar I t i6 t i . Ili(- cost of operating then t
                                                                  rioting that yeCn' was S2 ; .f miiiit,u, of :~hich $1 7 .Ei
        129 . Duiiding Under Construction Differen t              lion v,-as related to the 2' ._5(11i sedans in the Genera l
    Than the One Described to the Congress .--At the              Setvires :Adminkti-xion`s , (,SA'. interagency motor
    National Aeronautics and Space Admi nistra'ion ' s            pools .
      NASA) Atanned Spacecraft Center, all engineerin g               GAO reported t}tatreplac ut G5 :As sedans each Bea r
    building under construction vyas substantially differen t     rather than eycn 5 wars too old save the Governmen t
    in function, program - application, and cost from th e        an estimated S5 .1 million atuurtlly because r 1 ; main-
    one NASA described and justified to the Congress .            tenance, repair, and tire casts are lov%est dur ing th e
       1'lie building authorized by the Congress was esti-        first %car of ownership and ,2 - the discount obtaine d
    mated to cost about $2.6 million and vyould have pro-         by the Government when it purchases sedans substan-
    vic',--d office space for 704 employees of the Manned          tially offsets the depreciation factor during the first yea r
    Space Flight Program- The building under construc-             of ox% net ship .
    tion was estimated to cost $2.4 million plus abou t               GAO recommended that the Adrnitustrator of Gen-
    $14.8 taillion- for laboratory equipment and woul d            eral Services, with the concu n nce and cooperation o f
    provide primarily laboratory space for employees o f           the Office of Management and Budget OMB) :
     the Earth Resources Survey Program .                                 Adopt a 1-year replacement standard for sedan s
       There was no indication that the Congress or it s                in the interagency motor pools .
    committees had been nwi jedof the change, hoxyever ,                  Revise the Federal Property Management Re-
    the engineering building was not identified as a spe-               ulations to require other Federal civil agencies t o
    cific item in the, NASA authorization act. The GA O                 adopt a 1-year replacement standard for sedans .
    has -long held that the breakdown into amounts o f                     Examine into the feasibility of aclopting a 1-year
    individual items in an agency' s budget estimates pre-              replacement standard for station wagons and ligh t
    sented to the Congress that are the basis oil whic h
                                                                        trucks in the civil fleet since tiler are purchase d
     lump sums are appropriated is not binding on the ad-               and operated under conditions similar to sedans .
    ministrative offices of the agency unless such break-
     downis carried into the. last . GAO sees no reason wh y         Department of Defense vehicles arc not subject t o
    such position shouldn't be equally applicable insofa r         GSA replacement standards and were excluded from
     as lump-sum _`authorizations are concerne3 .                  GAO's review . However, because the finding s migh t
        GAO stated that the committee might syish to con-          have application to these \ ehicles as well . GAO recom-
     sider idcntifvin-_ ; it NASA's authorization acts the spc-    mended that OMB examine into the feasibil i ty o f
     cifi, proji c to be constrel-wd : ;ith appropriated           adoptill-I a 1-veal replacement standard for Depart-


     rnent of Defcn            sedan.station                and light     be desirable to use CXperts froin DOD, other Govern -
     tt~tds.                                                              went agencies, industry, and educational institutions .
          GSA Diced t .-iih GAO', proposals . O\1B als o                  7 - he evaluation should be directed to :
     av_reed tha ce_ar ieplac(ritent cycle for GSA's                               Creating one organization to manage the progra m
       edai wag, optunai in the-lures curt brit planned t o                   on a full-time basis .
        -o*_mintle 'he f t l rew reply ~eznent c %r le for the presen t            Establishing prerequisite education requirement s
        me pi rr;ar ,t hccau=e of the impact of the addi -                    for use at the trainee level .
       .--ta i capital n -tsire=t : on tite over all Federal budge t               Stutd%igg the feasibility of a separate recruitin g
      _ :,d the eiaft         ptioli — of Other Federal project:, .           prollram for yotmtr trainees .
     GAO ceptt-sr<I tr e lar,r : -f that rite pat .ofr on the c_api -              Formulating a program to reduce the turnover o f
      ~al o a           rs             t r:d that the additiona l             %ountr people .
         tr`-at       9?t 1_,3t tat       tFtrd mtel t'it 'iMld b e                Performin g an in-depth analysis of the broadened
                  cF :ni     l UroU .tl          to ;,how 2 ,ear~ -            pmrurernent ?unction to determine the optinwm or -
        -Cz'     . t-- tl C ,t~rtc B-ISt- 1 2- Jett, c t ; _97 1              ,_, anization structure and staffmff requirements an d
                                                                               to la c_ out career patterns and training required t o
           141 . Career Program for Procurement Person-                        meet the staffing, requirements .
     nel :      )r rti eto of t ar t nsr 'D00 p i- urcin,ri t
                                                                                   ]r. tablishing realistic career appraisal and coun-
           -- t ,              pre , eq npi    and outer c*oods an d           selin_g program .
          Est r tioai= ten, of ti r lccns        ollar> annually an d               Considc .n stahliannrut r>f a DepartUnent o f
           t-plc s'utn3heds If thou= tads of orocznuanent- trans -             Defcrre prcrcurentcnt at aduu .- ft i dcyrlopi L,, mart-
       U_Uon Fite pc o uirement tiainsa rlons are subject t o
                                                                               menu-nt persornmet and a, a u•ntt-t for direction o f
       limit rc : 7,atritvs, p olicies . reg> -tt ir,ns, and directives        procurement training re>,fardless of where the train-
     .utd          i .? , l.rttn ernent personnel with a great dea l
                                                                               ing is Conducted .
     of     pe i1 vi edge, skill- and dedication . G_1O mad e
                                                                                   Estabn Itina a management information system t o
     a ~iury of the r fect ; %-c t-ss of the Department's p :o-                 provide information for staking (recisions in recruit-
     gian for r~ttuitiug, t autink ; and stinudatints peopl e                  int, . n Lining, and overall management of the career
     ni pursue careers in the procuremment field .
                                                                               pi ogram -
          The developritent of the current career program fo r                      Formulating a separate funding prop;ram or tak-
      pm-oeut'etnent ptisot;neT :aspronipted by the 5ecivtan.                  ing other steps to prevent disproportionate cuts in
     of Defense it-, 1965 Because of resistance from som e                      minim, funds dmin -, overall fund cutbacks .
     of the Services . ho ;-ever, the program -,vas not fuli v                     Appraising the effectiveness of the Central 1uto-
      implemented .                                                            inated Inventor' and Deferral System .
          GAO ' s study showed that, to revitalize the program .                    Deterrninimg the requirements to raise the status
      a major effort needed to be directed toward 1 ` up -                     and enhance the image of the procurement caree r
     dating, the program to nneet the needs of procuremen t                     field .
      as envisioned for the 1970's and beyond (2) recog-                            Establishing_ urufornm standards for selection o f
     n :zing the conflicting career Objectives of civilians and                 personnel for the procau-enlent function .
      of military officers in procurement . (3 : raising th e                       fn=tiring that the career program provides ful l
      status of tale procurement field, 4 1 attracting young,                   and satisfying career opportunities for personnel en-
      high , aliber people, (5', providing more data to assis t                  tering the procurement held.
      the _Defense Procurement C ;treer Management Board                            Workin g, with time Civil Service Cenunissior: on all
      in its de( i,ions, (6) mproying the selection of person-                   proposed corrective actions under its pur v iew .
      net for managerial -procurement positions, and 1 7 )
      °wing more intensive management attention to th e                        GAO  was   advised that the Department of Defens e
      program—the responsihrlit}_for tthicln is split betwee n             would undertake an intensive effort to improve it s
      two pa, t-time hoards .                                              procurement career development program for bot h
             ( :AO iecomnntnded that, to iincet future need s              inilitari and civilian personnel . 'Report to the Con-
      of pro(ureiiwm . the Secretary of Defense ini6ate ac-                c iess, li-l646A'1,Atru 131.1910 =
       iiivt tr. upd .u- .ht' rutrent career piourant and resolv e
      onset i-,    we   ;   u cd in GAO'- n >rt.'5, insure a com -            132 . Emergency Procurement .--During fisca l
          ett :anti ,rhir i,r          Ouaiwii  the- pr ram ; it trea t
                                                       c                   ,ear 1 1 t68 the I)vpartintent oLDcfcn e nevotiated about


                                                                                                                              SECTION I
     -~5 .-1 billion of erier_gencv piorurenncnt, about 72 per-                133. Small Purchases (Department of De-
     cent +.a> oec,etiated lcithout obtaining competition .              fense) .- -A small purchase is described in the :Arnted
     Isnar-tt-,etc+ moctoenientde, fined to about *2 .5 hillio n             u -ices h„to"llwnt Rr,_ulaticar as the pro( mernen t
     in final ,=mar 1"G0 . but the pmentase of noncompeti-                of suuplit,; and a - nper,onal _r llic,= thy- - gregw e
      ove proeurenlent r°etiiained at about the fiscal yctu               aunount of +,hit' is clot-, not c t- c c d S2.5t)o try fiscal yea r
      1 1-168 .lc c . GAO found that roan-: of the noncontpeti-            1969 smnfl pnmlar es in the I7epatolient of Defense
      ti+e 1 rocurcutenrs nii0ri have been made conipeti-                 ,DOD, aniouilwd to ,LIi billion for abour 6 .9 mil-
     ticcl :, at loi n r costs, and with acceptable time fo r             linn than m tons . Of rite 1 .6 billion, about x'926 util-
     clell%er+- .                                                        lion ;58 pcicent was awarded +,ithout competition .
           1 report issued to the C .Qn,~rcas in _'March l':a7 1               In all carlicr exau :ihiation GAO had found that buy-
      pointed out that G .1O'-, reiic%: of 54 nouconhpetiti+ e            ers had not hero a+rant th t c sort' of the itt'nrs the y
      ph'ocmentents ainountint, to w33 million showed that .              bought ++ere fisted in - suppliers` catalogs or federa l
      For 36 of then : amounting to 5:31 .5 million, there was            ,to, k catalog, at lower pi it e; . ( ; AO found also that i n
      information available at the time of the awards tha t              marry cases it),, buyers fat ked sufficient ioforrtation
      theft :+fart+othersupplicrs rho could ha+e delivcrcd a r            concernitt tilt' itCr is they +: ere hucint; to enable therm
      lo+eet pi ices and within the desired periods . ( ;AO                 c. adept ateiv t +al ; ;au rite rc-asonabl nr ;s of the prices
      estimated that. had competition been obtained . abou t              charged by the suppliers.
      53 .1 million could have been saved on 11 of the 3 6                    GAO examin.°d into the iutpletnentation of the cor-
      tirocurca rent, and all amount not readily determinable             recttce nettles utahli>hed by DOD and tit- militat e
      on the remainin,, 22 pros rn cnwnts .                                service ; after the hcarin4 s held in the fall of 196,` b e
           GAO recotuut .rded that decisions to nnocure non-              the Subrcnnntittee for Special In+c,t :,cation-, House
      coripetitively in enteigericiesbe based on :                        Conttnitwe on armed Ser+iccs .
                                                                              The <-xanunatic)n indicated that roost of the loca-
           .A determination that the selected supplier ca n               tions GAG +i,ited had etfectivtric implt•utented the cor-
        nial,r dt=livety7 a s}ieciGecl ntnthbcr Of days, weeks; o r       rective measure; . GAO's tests showed that generall y
        rutnthsearliet than other suppliers .                             small pturi t es c, .] c fairly priced . GAO believes. how-
           An estimate of the. additional unit cost to resui t            -t2'r, that DOD should cotttimu' to ntenitor this are a
        Iron, the piopcsed q oncompdutti ;r procurement .                    fowl becau,c of 0w kirroe nullifier of small pm( hale s
           A statement, Itofn the commander of the acti%it y              and the st tl pnificant ntunber of personnel +,ho are ett-
        needing the iteu : that the additional Lost is ju .stifieti       t!a'-'ed in raakin' small purchases .
        h1 the time saved .                                                   Among the inipro\cnitints noted ,here better traiii-
          I'he Deputy Assistant Secretar r of Defense t Installa-         it,2 of boners, impcovud procurement data, and mor e
     tions and Lo<(,tstics ; .-a l%ised that tine-ic was no treed t o     extensive internal Yes iews of small purchase a r -tivities .
     in}pleir ent-GAO's recouunendatiohs because plocure-                Also, the Deparinhcnt published it Small Purchas e
     nient official : were already giving great %eight to the             Manual . 'Report to the Congress, 13-162313, Jan . 29 ,
     urgency of need cited by the requesting activity an d                 19711
     were considering availability of other sources of supply;
                                                                              134. Small Purchases (District of Columbi a
     price factors. and other relevant matters in decision s
                                                                         Government) . ---GAO examined small open market
     to prccurc a ithout competition .                                   purchases made by the District of Columbia Govern-
          GAO pointed oar that the dcgtec of urgency fo r                ment. During fiscal year 1968 ; Disu'iet agencies proc-
     esrietc ency piocuteutents- ;ias generally indicated only           essed 38,6%5 purchase orders, totaling, about $1 6
     1w reference to a high pc ioritY number orr the procure-            million under authority delegated to them by the
     nient request \,ithout support as to urgency of rnis -              Bureau of -Procurement to ntal :e purchases directly
     si g n ; date material was requaied, or eiFect of delay .           front vendors for supplies and set7ices +vithin certai n
     Little attempt tuts made to'deterniine whcther th e                 limitations .
     earlier projected deli%°ety date i+as worth the additiona l             GAO's review of 000 purchase orders showed that ,
     rn~t GAO-st .ued -that its findin gs showed a need fo r             generally, information ice-orded bt the aft n°ies +va s
     tl ;l`           fill 'I Iflef1 n?provenients in awarding. enter-   not ullicient to full,, identily the items purchased ;
                                 ;,rot- Report to the C ngts_ s, B           utcies did not nail ihe ;n elves of Federal m Distric t
      . ~ I tfil . \ 1.n . i . 1931                                      st l ,pl+ s dill', .+ .,,t 16-rheas or atr .,le . tclns +sere
 SECTION     i

 a afltable .tI less co? t pun II      c°xme(I ect the olmr :        Ofl ial, nl 1 I L\\ and SSA agr=, c-d with GAO's sug-
 inarket limitation of `,'.500 in am° ene das front ;oIN on e    gestions, ind pnneclow, were drafted accordingly .
  .l~ndor and oil occasion purchases air i a sinet e tent'fo r
                                       f                          f :eporttot}i«Secretat~_I{EG\` . 13-1 64 03 1iJuly21 ,
 were split. apparently in order to stay under the appli -       1970
    able dollil, limitation ,
     flit) fouucl that of the `555,000 vat! tit of 'wall ope n          136 . Lease Versus Government Ownership o f
marLet purchases reviewed, iterns co-trnr5 ~ I-1 :3 .x101) o r    Mail-Handling Trailers .- -GAO's examination int o
 about 20 percent of the totstl dollar whey of pmx hawe           the cost of 1 s!sing versr ;s the cost of i_iovernnten t
 were procured from 18 t-cntdorn . The lane arnotutt              ov%n,°rship of ntaii-handling trailers in the New Yor k
 procured from only aft condors indicated a potentia l            C:it\ area horsed that t1w Post Once Department' s
 for consolidated pmc'inemc-nt-tend re t .ltant savings .         Lursiusr rate, hacl dcrhred ltcam w ; .`?j a day in 1966 t o
     The District established the Bureau of Procuremen t              1,41) a da% in fiscal sear i971 and that the avera g e
 f,-r the purpose of obtain i ng the maximum advantaues           dail} coat of Goscrn1lu°nt-ot%ned trailrrs in the %ea r
of centralized purchasin g . The procure tent offi ce r           ended Anvil', . PI-0,   w r - 5-1 .32 . GAU concluded that ,
 agreed with GAO that further itnprcweutent in tin s
                                                                  since the co,t of Go%ernnlent-ot%ncd wailers approxi-
 area was feasible . llie District plain to establish a n
                                                                  mated the co,t of leasim_, in fiscal %car 1971 - ther e
 oplintat-Di,triet-Nvide-inventory control system whic h
                                                                  would hale been littlr or no financial benefit, at tha t
 when properh implemented should g reatly reduce th e
                                                                  time . in accluiti <_ additional trailers in the :Vet% Yor k
 need for SmAl open market purchases. ,`Report to th e
 Commissioner . District of Columbia Governmert-                  City area on a Go vcrnntent-o%kwed basi . GAO sug -
.)an . 6. 1971 1                                                  "ested, hom,ver . that, because th^ leasing rates ap-
                                                                  peared to fiLre hurt(- shay ply from tine to time an d
    135. Use of Government Sources of Supply : —                  because Goverrunent costs also t,=-re subject to change ,
 1'1te costs of administering tile Medicare pro ,_zrat n          the Oepartment hould icsttuly these alternatives pe-
could be substantially reduced if the Social Securit y            riodicalh , to de t ermine the most economical metho d
Administration %SSAi, Department of llealth, Edu-                 of acrfuu ink urail-handlirr_4 trailers -
cation, anu \Velfare CI-tF• W' . were to authorize 3led-               The re,ult, of GAO's examination were discusse d
icire contractors to use Government sources of supply .           will! postal officials (Iuring, hearings held in Marc h
   GAO suggested that SSA authorize-cost-tope con-                I ,-)-! before the Subconunittee ore Trrasurs . Post Of-
tractors administering Nfedicare program functions t o
                                                                  lite .. and General Government, House Committee o n
 d ' actiture office furniture and equipment and ex -
                                                                 .Appropriations . During those hearings . the Assistan t
pendable supplies through General Services Admink-
                                                                  Postmaster C :eneral for Finance and Administration in-
tratioii s-uppir sources without requiring that title b e
vested in the Government and ,2'g, accluire printed              dicated that the Department had not planted to pur-
forms under Government Printing Office term-printin g            chase am trailers for the New York City area in fisca l
-ontracts when such items can be acquired at mor e               year t972 any : that future lease %etsus Government -
favorable -prices than obtainable ihrou ;_li commercia l         ownership decisions would give re(( anition to GAO 's
sources . GAO su( ested also that the fll_ 1W :audi t            examination results . ;Report to the chairman, Sub -
:\gene° take stepsF to insure that personal propert y            committee on Treasury, Post Office . and Executive
acquird from Governntcrit sources        supply are use d
                                           of                    ()Hice, House Conunittee on Appropriations, I3 -
for Medicare program purposes,                                    114874, Nov . 27, 1`170 1


                                                                                                                   SECTION I

                                       RESEARCH AND DEVELOPMEN T

    Development of Major Wear•on System s                                'ill,- (Mi" . of the Secret'llV of Defense and th e
                                                                      ulilllar" ;ery ices had paid cxuatsive attention to th e
        137 . Selected Major Weapon Systems .---Th e                  Imsku-w plOblems of deli tine peliorutance char-
    acqukitron of major weapons has required a lame                   actertltics of t;rtpcn . + ' terns and of Bete; tninin" th e
    investment tit recent Nears alTd has involved suh tan-            techrtral feasibility of achieving that l_,caorrnance .
    tial long -tctnl ennuniunVilt Of future expenditures .            There % .ere mane cucoumving signs that these prob -
    This has impacted Nervily Oil the resources available             Icros t .etc heinc! abated . hxtensire efforts were be-
    for other na t ional goals and priorities . liecause of dee p     im- applied —early in the t~eapon development proc-
    concern intile Con,ress and because of evidence o f               ess--to identilrine areas %6th hitch design risks an d
    >erious vNeaknesses in tit( , weapon systems acquisitrol i        to constructing said testing_ the~Itarckare itself t o
    pros t <s, GAO undertook to provide the Congress and              demonstrate the feasibility of high-risk component s
    the Department of Defense with a connuuin "r series o f           before proceeding x.ith further clerclopment .
    appraisals of those factors most closely related to effec-            In the preparation of and attention given to cost -
     ive- pei fornlan(c in procuring major weapons . In a             of fetti -eness detenninauors, there was a wide range
    report on the first 'such appraisal, issued to the Con -          of quality. Fins variation had lessened the value of
    -resit alt March 1971, GAO concluded that :                       these studies to the entire acquisition process .
            The Office of the Secretar y of Defense and the               One of the most important unresolved problem s
      nuhtarp services had heal engat ed in a substantia l            in the ntanaEement of major acquisitions was th e
      clfortto identifyand solve problems that had ad-                im)blent of oreanization . The essence of the problem
      versely affected the acquisition of major weapo n               appeared to be attempts to combine the specialized
                      terms -ofcompromised performance, dc-           roles of major weapon s},tents acquisition manage-
                  it'                                                 coeTrt into snore or less traditional military comman d
      layed availability, and increased costs . Generally,
                                                                      structures. Bef,' use of this, there usually Nvere a large
      the newer weapon procurements were followin g a
                                                                      number of organizations not directly involved whic h
      slower development pace ; and procurement prac-
                                                                      could only negatively influence the project . ' 1 here
      tices there more conservative than those of earlie r            should be a direct relationship between the missions
      periods . =Because many of the current program s                for which weapon systems requirements are deter -
      were in early stages of acquisition, evidence of th e           mined, e .g ., strategic deterrent, land warfare, ocean
      results of changed concerns was not yet availabl e              control, etc ., and the organizational structure
       to adequately assess them, but the outlook wa s                needed to acquire them . Such an arrangement woul d
      brighter .                                                      facilitate grouping related weapon systems in pack-
            The identification of need for a weapon syste m           ages of common mission and would permit putting
      and the relative -priority to be assigned to its devel-         together an acquisition organization of appropriat e
      opnrent,was a fundamental problem in acquisition                size and stature to handle these matters .
      of weapon systems . Initial decisions as to whic h               On 61 weapon systems where complete cost data,
      weapon systeni tictntld he developed and the priorit y        were available . estimates to develop and produce the m
       of its developmenttvere made by ally one of the mili-        had increased some $33 .=4 billion . About one-third o f
       tary services but the Department of Defense had no           this increase, or x+9 .5 billion, represented the differenc e
      organised method by which such 'proposals coul d              between the estimates prepared when the systems wer e
      1;" wea>ured against the Department ' s total needs .         first approved for development (the planning esti-
      Sit, h a rii~ thod v i s under; development . but it wa s     mates? and the updated estimates prepared when th e
       i .t     infarct,                                            systems were about to be placed under developmen t

    ,~t,ncts . The remrindei of the nwreasv . or, 2 .i .9 bil-          that it ,va, necc=,ary and hl.ei, to he successful, an d
lion . as dne to changes in e ulitities to he acqune d                  ,"hat duce sS v. as achieved .
_ind to n conibinatimi of such things his engineering                        Most of tht- Navy 's major weapon systems wer e
 ;, hanl""s . re aslon~ I "_' tlmat y, and lm'%isioi `- fo r             approved for lmcte scale production before completio n
increased co-t due to econonn( inflation .                               of developi,l-r anal testing . The „eaporns frequently
      GAO recommended that the Secretary of Defense :                   „ould 11w perform all the ,unctions intended, an d
                                                                         Sizeable amounts of time and money were spent to cor-
          Bake everk effort to develop and perfect a
                                                                         rect deficiencies . it appeared that deplo y ment of effec-
      Department-wide inch,-,chd- no :,. in its car p tai   .;
                                                                         tive , eapons Ina, not have heen accelerated b y
      of development—to be followed lbr all military >er, -
                                                                         concurr,ncy and, ;n f art . m av have been delayed .
      ices for deterrninill * two things A ` ,"lint :eapo n
                                                                             Since concinrerlcv can seriously affect cost and readi-
      systems a?e- needed in relation to the Department ' ,
                                                                         ness, it is ,vise to limit its use to those cases where th e
        ,isiom and -2= ;what the piouty of i ach ,n :ul d
                                                                         risk is n.ces ary mid there is a reasonabhv sood chanc e
      be in r=-lation to othc, systems and their missions .
                                                                         of success . File "I%y. pr('cednres for concurreney were
          Gstabli ;lt guidelines and standards for the hretia-
                                                                         not sulficienti, t `,i°chive Lhisiournakers were not pre-
      ration and utilization of cost-effectiveness studies .
                                                                         sented frith all the infoiination that should have bee n
       Idiese guidelines should require t hat sr.udies L ., up -
                                                                         avai Lable to them m co a . .iticr ri ,i, whether to procee d
      dated and revie%ved as part of the aecision pnxes s
                                                                         into production .
      when major chau .es in cost and 'or pert"+}rrt ;tni e
                                                                             The Blue Rih l wi Dere v Pane I ppc cord by th e
      require re,i~ecl schedules for funding cornuntnaents ,
                                                                          President mid III, . 5ectt ta!° of Defense n July 196 9
           Place m-cater dccisicnundkin~ authority for eac h
                                                                         to stud}- the tA,anizati'rL structure . atad operation o f
      major acquisition in a single oiQaniz,_tIon wit h in til e
                                                                         the Department of I)efctise---recowntended on Jul} . 1 ,
      sere ice concerned, with more direct control over th e
                                                                                   that :
      operations of- weapon systems pro_rrams and ~ ;tl l
      sufficient status to overcome organizational c-ori is t                A ne,c dereloarucnt pe l f - f;,r s+capon syit_ rs and othe r
                                                                         hard,„Ie -r_oi :!d -       ;nu _ter, and r lim :Agated hs latisc th e
      betveell „capon s,stcln n anal'ias and tar tradi-                  redaction of technical risks throvch denims= rated hardware
      tional functional or*.anization .                                  before hill-scale development, and to pride the needed
          Insure that each selected acquisition report I                 ftccio=.lity hi acct, .pion str ei ws .
      contain a suinniar, statement ic ',ardin', the overal l             'I'hc Panel stated further that th- nr_•, : policy shoul d
      acceptability o f the -weapon fnr Its mission .                     prciyid,' a general r tae against eoricurrent developmen t
      recognize the relationships of other weapon ,~tetti s               and production, ititlt the production decision deferre d
       complementary to the subject systenu, and ; 3 , re-                until successful demonsti°ation of duvelopmenta t
      flect-the currein status of pro=rain accomplislmient .             protot\'pes .
   The Pirector: Defense Research an(! P.ncinee il l                          GAO reconmiended thai the Navy revise its inst u -
 expressed general concurrence with these recomincnd :, -                 tion on concurrent development and production to pro -
 tuns . :`Report to the Conpgress . It 163058 . 1t rr, 18 .               vide for submission of the folio: ; -ndata to the Assist -
 19 1                                                                     ant Secretaries who snake concurret;cy decisions :
                                                                               i`i comparison of clesi r perfor finance requirement s
    138 . Production Before Completion of Develop -
                                                                            r: ith actual performance teased on testilig .
 ment and Testing : --Lame.-scale production of rnajo r                        An assessment of how essential an unproven com-
 Nceapon systems prior to icnipletion of development
                                                                            ponent is to the %%eapon s,=tern, and the feasibilit y
 and testing concitrtent development and production ,
                                                                            of either delayin g, production or using a substitut e
 or concurrence—is a primary cause of cost growth be -
 cause of -problems in attempting to produce itemsoil                       for the component .
 the basis of unproven designs GAO etaulined into fiv e                        Documented vier,- of Government activities and
  vstems of the N l , , . developed and produced c-oncur -                  contractors involved in the p oti.ct - as well as th e
 rentlr at a cc>t of about $2 billion, and reviewed a                       project auanager . as to the to a ihilitc of proceeding
 Navy study of 1 :1 %,eapons, nine of wink;h also were                      on a t:Oncte tout basis.
 prodiicsd rn it ~ :rrcutiv . The purpose of the work was                      An 1s ` t' $,IileIlt of tIle i - ,,IItlat'L )rs allillly to pro-
 to obtain r,rfc,nrl,l :i~ i . oft tilt, ,i,tent - ol concturency i n       duce the vca ca ; under rinser Iilc,ducthan
                               uariare d } ow die Nay' decided
                                                         s'                 «,adtcyn> .


                                                                                                                                                SECTION      1


                         d             t   +
                 (           Nl   ~        P                       't ♦ t i~                                  '            I     J      C                        ~
                                                                               ~   . ,


                                        v/ f       1       t~ t~t y A I1   1
           _         '       ~         t

                                                            AN ,

                                           011-50C Drone 110wc,pte r                                       '311--'30D   D ;ou,   II 'icuptr ,

               The Director of Defense Research and En,nteerinw,                         Navv muse is 11 tilt - t,on gelatin t- to concutr•nt de, -
           - and tite Aatt agreed in general tcitIi the recon U                          velopniz ,liit and prodtt t ion lit in"vidcd for the suL -
                   and outlined the action~ the Aavt- had taken o f                      mlZ-ion of nit anitt1ful "atd to h' . A-si,tZint ` , lrwtalies
             had planned to take . 'Report to the C:ot ress . B- -                       who -Make c on(m i-ere e( :„on, . GM) yet nn ntendc o
             1630.,A Nov . 19 . 1070 1                                                    o.,o that the Naval Audit ~ervicc t;n e consideratio n
                                                                                         to .Makin, rc - -_Hark cheduled audits of the practic e
                       139 . Drone Antisubmarine Helicopters .- -                        t,f c xIcttrrent develn ;nneut at ;d Drpthrr tie ; ; . The Aac ;
                 1'htnl>gl? ju* :e 30, 1960, tilt Nat`t= spent over a quai-              _r,rt-ed t in -' eraL Ite toor ; to tl,e Con ere. . H -1611PU 7
               tei of it billion doll, rs for the development and actlui-                IUec . 3 i . 19't '
               sition of the drone :ntisubinarine lielicoplet snot ,
               w,teni . This ystc.tn designed for rite deli~"eiv of tor-                       140 . Deep Submergence Rescue Vehicle . --Th e
                ltedoes by drone helicopieis, operates froth Surfac e                             subnte;,rt. e resttie_ t t• l iit k is :t -Hail sthmcr ibh
                  nips=for tile -purpose of atta kin!r ,]Id denoting en-                 ,T-11t de>IQ111Cd t aeScue prrsc~n -~~ f,ita a disabled sub -
               eniv stibmarines_ -['lie ,rsti , in provided the A-u, v t : it h           marine . Tht . deteloprnent test and ante for the res-
               it :apability it did not prtca usly hate ; hoc etui . th e                 cue t elticle fa ; esccedl t . -~t f final estiina~c . (W inad e
                s .steni suffered from it 16,01 rate of lots of the drone.                a w iecr to determine the cause= ; .
                1wheopteis— of the 750 purchased, 362 had been lo t                           The estimated cost for the I,, ,, tie vvmcL pro;ran t
                throut-h April 1969 .                                                     itrc eased by more than .1 .100 pt"rent between 196- 5
                      In ~a 1-cuort issued- to the Ce,n"ress in Decemhe r                 and 1969-- horn $36 .5 million for it 11-vehicle syi_et n
       -         19 7 0, GAO pointed out that the difficulties experi-                    and I tear of operation to e 16=1 trillion for a six -
                ettced with the sc,teni tcsuhed . in late pint, troll;                                      . Th et-ls%Mn c,ti'llited dec trlopnteut and intro -
                 proditcinW, the hehcoptct-.+_before dW%. aver- fully di-Vel -            duction period in retied front 1 to 10 teats_ hi addi-
                oped -and tested . Modifications of some of the ship s                    tiot , costs of support equipment increased because o f
                 frotircchich tile helicopter, sere to ol)erate were eont-                char yes made in the dvsi tt of the vehicle tchich iieces -
                 pletud while the helicopters ikew-- still under develop-                 sitated a redesic_,`u of support craft and some o f th e
                 uteni, This, to -_ they ccith tile' oipability that the                  supporting equipn.en t
                 itelico l itcr leer, Lspected to iircaide, created ,bone,                     In tr=pon_e to at earlier report to the Conine„
                 poi-         e on tho yavr and till' contractor ter ccpedit c              (li 16 :3<3, Fell. 20, 19 - u ill cd tih GA0 t)ointed ou t
                 del eloptnt n t artd d t livel v .                                        that the ilwicilsed efIecti via he obtained frot h
                       They, e=iticlo-milt devc1opmetit and production of                  prodt t in four inort telucic .. lit addition w the tw o
                  Maio]-         alma - t{nt, - 5 . t') Xa%v xt,-re d .,cusse-d i n        tilrcael) ra rdrt . r,0111k hC sill L ur HdAtl,!t to thei r
                   t ;t e,tri          'n   the t' t I'    ]j tb         -No%_19 -         ,list . .nr \-ett a h ised that it and a .ttt :ucd t cost-
                                    ___ . r         V   t       i S_dC~l drat dw           t`t [ t ~tt       itiei' its 1)e(.eIll tt t'7 t.-. 1 011MCin e_1 the .


     audy . die Nays reduced the proe,rarin to t«", rr,cu c                   program, die Depanntent of Uelernse- established ne w
     t  h ., l at an estimated eo    5109 - aril' ton .                       methods to improve the inana r etnent of major acqui-
        GAO be lieves that a substantial portion of di, cos t                 sition programs eehich %sill come( t the problems GA O
       ro\cth and prog,ann stretchout occurred because :                      reported .
                                                                                 1'he ne: ; medtods should help to insure more par-
          Fire original c~tiwates, irate by a Decl? Sub -
                                                                              ticipation by top man tgenwrit in tite acquisition proc-
       mergence Systems Rei ietc Gi lip established ht the
                                                                              ess, t. : :AO beliCVVS, however, tb .tt it is still necessary to
       Secretary of ill( , Nays - %vet• losr and v ere trad e
                                                                              reyi>e a%N re,ndations . , Report to the Congress, E -
       without stiflicient deign, preliniinary developnusnl ,
                                                                              167325, fuile3, 1171 ;
       and cestill"
         Ohannes x,-ere Inade in the vehicle desi,rn to in -                        141 . Antisubmarine Warfare Directional Low -
       ,~rease its eapahilities hevolid those statt•d in th e                 Frequency Analysis and Recording System .--Th e
       formal requireutent do :`untt•nt for the ye}ticle ,                    ctirectional lax-frequency analysis and recording sys-
       1 lie desi charges ill the vebicie included an Increas e               tent DIFAR i ., icardc•d as critical to the proper op-
     ill the opetating, depth to almost titre(- tithes the dept h             eriWon 4 the \ass', latest land- and carrier-base d
     ar to-hich tc-Ct COf sulinmruu persnrtnel i po~.ibic an d                nnvns o f der ,tin=;. e ! a :.,thmg, lo ' .,lizing, and attack-
     .ur increase in rescuo capacity from 1-1 to 2 l _n, i%ors .              u :, nlenrr submarines . It k intended as the principa l
           - 1-ho \avv inana="i•meut sVswill includes ma n gy non -           :u,Li,tub!aarine sensin~ mean : in the P-3C, the lates t
     tr ;ls . It does not . howeycr t :lire Formal t i tprova l               ~-crsicm of the land-based Y- `, patrol aircraft . Olde r
      :> . top-level loam enieirt (if r• .ujor ,h m -ws i n ,, a,in<<         cers,ons of the p -:i and other aircraft arc to be retro-
      the capabilities of a dei elojnn ntai'_ sesteni bevond thos e           iittcd ;cith 1)IFAR . 'I- lle e pceted costs of procurin g
      called for in the formal requirement (lo_'utnent . (;A( ?                p _,C _,lm raft . ethich [sill depend upon DIFAR for
      f,und no thorough and Drell-documented artahsis o f                      ,wi!ivicel .wnt of the ann,ubn, :rrine warfare role, will b e
         rn ideration eiveit in the de isior,makirt, pence" t o               about j2 .b pillion . A total of about 550 .2 million ha d
      the eiTe . t, tlii, -cl ange, would have on developin g li t            been e.Xpended . ., tit de-~-c1e,p .!ient, test, and evalua-
     cost .out tbnc- -which c,wi • ro,n idciable--nr to th e                   tion of DIFAR and it was %,dilated by the Navy tha t
        f    asuientent (if the be-netit, ulitainable from the in-             the total pn "'ram , c- ., .,onid he ill the hundreds o f
         reased capabilities iwainst the increased pre,gran l                  nnlhorts .
      costs .                                                                       In a report issued n, the (,oneness in jute 1971 ,
            To provide mot t , eTectis°e control over de%eloumen t             GAO stated that till- \n\v awarded , ontiacts in Apri l
       projects and oiet ,ienifiea utt ittare .iscs in developmen t             1968 for ill, production of DIFAR for deployment be -
      cost and time, GAO iecominerided to the Secretar y                       tor 1.16A litorr testing_ in deter mine its suitiabilits fo r
      e , the'Navv that lie require that :                                     ire ill an operational environment and despite avail -
                _Astillicient body of d ,ign- experimentaldmeiop-              able evidence % :Etch indicated :hat its performanc e
            melt tivork ;- and subsistenri i ting be donut befoi c              %,ould not a ,eptabh rireet requu'etltents .
            proniuh-,ation of an end-item sssteni tequireutun t                     A production conaract was awarded for a more com-
            doctime tit and trots establish it sound factual basi s             plcx -vstem i DIFAR 11 : vduch had not been success -
             for :nithotiiinc;, full-scale deyelopntfnt .                       fulls tested prior to atiard even drou,rh a less compie ~
                Analvse, be inade of the itupae (lit pio~,,rain cos t           s :stent iDIFAR 11 had failed testing . GAO believes
             and time schedules of proposed changes dv t«ned t o                than ,teitlicr system was reads for large-scale produc-
             Inc-ic•ase the -capabilities of equipment hevond th e              tion at the tittle the production contracts were awarded .
             required level .                                                       1-o pieclude die produ,tion of deyelopiienta l
               Vance approval of top-le%cl nianagenter.t b e
                                                                                eouiptnett which has not set demonst rated its abilit y
             obtained Inn ill chan g e, which are designed to lit -
                                                                                to meet prescribed objectives, GAO recommende d
             Clerise thv e ,nhibties of the Vqu t p ;neat beyond rc -
                                                                                 that :Navy instructions be revised to require that :
             oitireule nt, 'itd which         nifu antly ailed proLiain
             cost-and                                                               The approval for production, prior to completio n
             The _Nita . - t id«red the nsinagcmrnt objective s                   ofdevvlopnient_end testin g he,ontinsent . isamini-- _
        t ehlieit to t,,•         ~niizrn{t a ,~tt e n, genet ills sottu d        ruum, oil the equip d ent :atisfactoiiir passing a cunt-
          l~i di' not , -,             i =tions to be taken . - I°he Nav%         abk ._tcchnifal eva' ,chill it ' t by the responsible test-
                              ~.ro ,   i    i       of , .n' re%cue vehicle
                                           < < .c t-i
                                                                                   1~ - i4i'llfv-


                                                                                                                                             SECTION I
          'The equipment design tested he the ,an-- as tit ,                 143 . Tactical !Vehicles .--A'hi, Armv 'Tank-Auto-
        design to be produced .                                          ntotirr Collun tied is rt,. -ymhi   tt, the_ .-\t-mz Mat, ,-i~• l
        GAO recommended also to the Secretary of th e                    Command for the d~ ~rioprn+nt ant'=. prncun ruant o f
      Navy that :                           .                            tactical wheeled and tracked vehicles . During fisca l
                                                                         11-at t ci_t1 A total of mi ll ion woviamirwd
          DIFAR be thoroughly proven in the P -3C air -
                                                                         by the :Nunn 1 anI-_Autonttxi\t• Command for full -
        craft prior to installation in other aircraft ,
                                                                         tion, Telz .n=_r to research and development of vehicle .
           The Chief of Naval Operations hate adequat e
        information on „hick to base his decision for pro-               and the Command av aided Coutrtcts valued a t
        ducing an unproven item lot deployment rt rFquir-                55 . 15 .7 million for tam,.il vehicle production - GAO' ,
        ing that the request for authority to produce i t                pre% i wis :oldies and tudie, by the                    :\udi t
        include a comparison of the design performanc e                  A~rencr revealed mariaentent t,eakn~sses . Recntn-
        requirements with the -- performance actuall y                   mendations for imprcnenient had been made as a Iv-
        achieved as the result of testing.                               ,lilt of the studies .
         hhe Assistant Secretary of the Nav %                                GAO made a followup retieyy and found that prob -
      Management . stated that the \avv agreed with th e                  Icrm continued de,pitc otfantziu mid turd pnxcdma l
      intent of the ret'ommcndatiorrs . bitt did not state tha t         rlian~es.
                                                                              1 . improcr the anal snwm
      specific actions Nrbtild be taken Nt ith regard to the                                                  i f the tactic al,ahicle,

      tecoinmeudations . i l :eport to the• Con< Tess, 13--16 (1 877 ,   development pro«tans . C ; :AO retotnniended that th e
      June -4 . 197 1                                                     \rIm insult , that :
                                                                                Recluiri•ntcnt, docuutc ;us .IJet ifvitt in accorti-
          142 . Surface Ship Sonar Systern .--In It repor t
                                                                             amr with csistin, re,'ula!ions . the de,ircd charac-
      issued- to the Ctongress in March 1971 . GAO state d
                                                                             tet istics cif the tehirle to br• cie: eloped are prepared .
      that tb- .Navy began procurement ''- of the :A\-`SOS-2 6
                                                                             thotom-hlv analvzed, and approved at the Depart-
      surface ship sonar system before completion of initia l
                                                                             rnent level before any full-scale development efforts
      decelopmeht arid 'testing . Asa result ; the system under-
                                                                             are initiated .
      trent continued redesign and modification to correc t
                                                                                .-App,,,ved requirement ; documents clearly se t
      numerous equipment deficiencies and to incorporat e
                                                                             fen th talid and yeah tnallt at unable rcquirentents.
      features to improve perforimnic e, The cost to deMop                   based upon prior exploratot}' and expetitnevta l
      the wstent, which was estimated in Mat 1960 to b e                     \\orb, to IMIllit fUll sale df.~\eloitmrnt and prodw -
      about $1 .2 million, increased to an estimated $101 mil -              tiora tt ithin thy- de,itrnated time frame .
      lion by 1970 ; costs of production units increased : an d                 Coorclur"_tion and comtnl.ntcation betcycen th e
      deliverj- of production units was often later than orivi-              deseloping and usinr' n,encie, are improved to pre-
      wally scheduled . With the possible exception of the                   clude the need for s gnificant deviations from, o r
      most current- models of the system, performance bra s                  later waiver of relaxation of, clesi~m or performanc e
      below expectations .                                                   characteristics deemed essenti a l bt the user,
          In - cur earlier report to the Congress on the Navy' s
      large-scale production of major weapons before
       completion of development and testing f13-163058 ,
       Nov . 19, 19100 GAO had recommended that th e
      Maw revise its instructions relatin g to -concurrent de-                                                     r;t            sa l           `       I   f
      velopment and production to provide for the submis-
      sion of meaningful data to the Assistant Secretarie s              t   }~        •'~            ~ tl
      -who make concur enet decisions and . that the Nata l
       Audit Service give consideration to making regularl y                                                                                         r
       scheduled audits of the practice of concurrent develop -                    4                              tl'    1r   e                      ~
                                                                                                                         I               .
       Trent ;md production TIie Ai_v, in _cncral, -wmcd                                     ~~xFa `  ~t
                                                                                                rib `3rf      r          i n, .
       tea(, If,r :C I”, ontru idatlon- Report to tnc on rrC,?.
       13 ~u(!iii Alava J . I l ;= i                                                          ~;lf arltFl .   -toil, W cargo track                                -



                                                                                                                                                                                                                                                          M'E         w

                                             33 `~

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                                      ;11548           6-ion tract ed ca>~,, l crrw -

                                                                                       _                                                                   ,i',lf75'i ! ~          ; - tal     j   . !!      o,c oaAM caofu z                                   a,,ie ,

                                                                                                                                                       J(a _> prods rtlon of ct }l c ,cs k au llrni ed onl y
                                                                                                                                                   a to ' ,1?,_ ~ t :ic:lc have tir•tt            :r3t_d tltt' t a, tt tliiii' s
                                                                                                                                                   to i eel t c F SCI + 7 t f, : . ; r IlStll~ E,tlhlishcd i l d
                                                                                                                                                   1 .!C      the pro ,pe<tive Li,tl llaS plop uliced then ,
                                                                                                                                                    11itlbic dlercb~ ,n .tlinn"ili= co'th changes t uriti_ r
                                                                                                                                                   n od =till
                                      t                                                                                                 -T.            \I mm mm t places Peottef vni p mis nn di e
                    y                                                                                           k „ .                                     ; ; c -cu,inati a                „ .i .1etc and naient data
                                                                                                                                                                                                            of   c .                                                             -
               11                                                                                                                                   o 11i1 ' is onleil ill in'lieie' all( . to tilt, exturit pos -
                                                                                                                                                             inl 'L :1111 : 1 :t tltlliilV of pariitipan t s lioni one-
      .                                                                                                                            _,             t .( 11n_           [lie. ' V - lh!(U .JDt tlt the EtcA'e1opl11CT! t

                                                  -                                                           - -                                  i _ oje- t to protlime, xgblllt\' .
                                             11        0       ,.   t"~t                   ark•      n ;tec                                        [ iiu    y,_,        [    tia S~~t             i_,  % o th, :Amt,, Research and
                                                                                                                                              17            n, .                   _rc                 n     ; :e1a? , th these tecoill -
               -                                                                                                                              , . -. Ih . . -. ii           i[       . .:: i        llt' dt' -- . t[1lR L I I- wSv actin i s
                                                                                                                                                                                                                               : gyn

                                                                                                                                               ,.    c4 : . ;l               Mm& .
                                                                                                                                                       Amlx                      liatic      n;  require an in -
                                                                                                                                                                                                        „w                 1    a .
                                                                                                                                                                                                                                           . l
                                                                                                                                                            .-      .             „ ti          that ac p an! e d
                                                                                                                                                                                             tt mli h, .,                                  mto
                                                                                                                                                  d  - . ;n   t i :, _      n-  ,_ t   face rik . or drat th e
                                                                                                                                                            of l' ;,    ,u„11 and i aic_eptabl, to . th e
                                             :._                                                                                                  Ann ” iii            nl i- .       1 ,pet ( .1 C .
                                               ft                                                                                 1' i=1            Am” - nwilatwn,          c z n,_, d t lecntirc more,
                                                                                                                                                  d t 1uri t . tnnato obtain authorization toi ~
                                     Ckvr-            .~                           '+'                              '~'                  r        I t 1 ' ~ ihlct 6

          -                          ~h                                        ~ d'                                                                t                         t                          t              i                                 t Ct      1 t    tt L

                                                                                                                                                                                                    SECTION I
          (, , M-,         1 It - 11 r t r,   tit,Iz
                                                   f it " 1 : I C . ._• I I : , i 2 1 '- I : 1 t - ! ! t , 1 -i . t , !

     I h " ac I i 1 1 1 1 a II-, I I < I I I I i 1 l I i I I       mon, -- III, n t at                             'II .
      ,I l4, 1! 1 !i I , - t lit - .\ . ! I I ' ~ I 1 .,,tom_, . 11 4                                       Im 1" '
      "so, dtw?"W-lo intiLl, :11-                                                             0, Ow K "
                                                                                                                                                                                       ( 0 --e,o!w6 -'I all ;lljti

     Rewamh and Development—Genera l                                                                                           1

         141 Basic Research Programs . GAO (,oAl t                                                                              ( :A( l ' I!Iz ue'Twd ! ! I ' ll I!- Dt~parujlew of I)t fc! isc
                                                                                                                           1-0 ~U*w' immhu p v " n huld .i : to W " t -,
     I(, hi—it dic plat fi(- .= foll(mcd In Ox Ali Felt p
     ()Ificf- If s ' ientiIi " R ' .'ex, k OSI., IT, ~vlo till- ' jo " n -                                                 ..' h ', i, 11 i" ` ~ 1 1 -'! I i % , t ' ;1 ! I t 1 " . ._!coed 11 i i — 1 i ~ - t , 1, : 1 -
                an~! ut%in, Ou i " do of witomh piwww, A t                                                                 06i .oHm 0j " K 1 . Ohm 0 s l ut . most q, i now" w
                                                                                                                           ' wvni , t ' t ' iippra : lil , it ea!,h i! .                       fx! 0 ; ' ;
     ill(! lillo . of the Ic%ii-xv, ()Sl, %,a-, ,uppoltills_ ' 11--il l
     !2 111 1 proicits, oslno, &"a 35) nlilkm "w ,a o f                                                                    and                                                 I,t!l, .! oIL" kilvions- Inili -
     " Im )I had Sm l wyl, " i mid uvw brim, I m R " " A
                                                                                                                           'h ' ol :d be . i- kl -d I                     lj_-       ed foe       cat h  " ow! .I- I
                                                                                                                           to 111 km               qalihj      "!     K M hin° Uv I it                 " k abo : 1
         FiAmd oche v is Win We I&MOAMI scielp v l u " A w
      GM will pmok rapport kw unielvil l Iurp=sic tPonalt .
     (%pr Adem! apiwits Anuld qqqna bade                         atc h                                                     ,vdw— 'Fli, .-\it Fw(c took                                                  ic -
     ' nd ' in al 1, (lo-k re 'Llicil Lit then                                                                                     -to                                                       Repolz to di v
                                                                  pol -
      &I k N forth in an Exe"Kv mK as "AKK a b "                                                                           (Amww B 1 PINK Jar „-I VK 1
     pal uncut of Defeo d0woln GO&OW, Gw app ,wintv
                                                                                                                                  145 . Tows of Duty for Managers of Major Re -
     the, poli' . were not p(A-ided t hox-te% -,, I
                                                                                                                           search and Development Projects .- "f he Arinti
         (MR Ku"awd this 150, lmmdy %dwn selettiris
                                                                                                                           Nhw& q (Ammmml i, "I mmil Q Ow innumte d
      1110it-CILS III he flalld0d . A110, it !ill not prepare %Nintell                                                      N,—riot d,%                       and pl t ~t : llt zioll nixillifanen t
     plutilimtkin Aw6w the 7 : is Aw slyll"tinn ll w
                                                                                                                                  ti _Are 11% . *•           riv, il' - I h , , ist o!         at_acii -
             Although inan~• of the l injects app .ued 1 0
                                                                                                                            i :c i~ ocel '-,i ; N11i "ll awitiail'— Vtintl hal" -If thi s
     Mwh related w Ow AN Form muJol, wnw did w o
     Supportof rescinch ]lot clo4ek related to the ai r
                                                                                                                                  inanaL--d b" nalilar,                       (allvd p(jett 111,111 -
      Foi(e mission redticet, the effectivelle's of il~ basi l
                                                                                                                                        BC-CaLl”' It!                       :IltC,st in the t"' Inli c
     rescalch proglanisince fc ,,ver dollar, ail in ailable fo r
                                                                                                                           of Initnal -,                        offs, I ' d " I ; \0 I"\ ie% , ed thit.
     t losch related I Pscarch -
                                                                                                                              T,jvvE nminver ; imns or du m
         binnediatel)- after GAO ' s cvahiation the A-V 11m v                                                              I

                                                                   .                                                              1 lit- 'trim %'—I~ !lo= efh-i liolh ill 1p(euwltl no~ oxitai w-,
      rwkwd Al omwit projects in OSR as part of a                                                                          poh(l aill!                               pl " i' I                ~crve a
     Dgmw .kle am, hHowbig enactment of the 1970                                                                           tour it, dutv (if at lcils! 3 dw tino . ' (Ill~idvre d
                                                                                                                           em-wird for uch 03 A paimmv . NINY 14 We ptoj -
     it provision folbid(iing the we W 199 food for r w                                                                     ect vlmna,hi p had ser"A less Wim 2 yvam. NImt hal l
     se,ti-ch-- liiojv,-ts%%lrich IdwOmwadirect mdyTax .                                                                   been wwQm :d and some hats m6wd bNow coulptut -
       ill re-lationsliij) to I ~pccifi( niilitail, function w                                                              Q a T"w"wr of dul~ OwONVing amix of dmV-
     npumtkin . (It th p had, of its w4w We AN For m                                                                       w6ch PmAk coribmig of ww"Ap and expertis e
     dkpd&d U 1 OSI,                                  puNit of the a o                                                     and imhu dw need- for act a Ilroy" mmmyt, -
     five pIojv(tti'- hu' ' ! r' of ill"lifficient r(devalice .                                                            lt%ere jdIII0SL nont'XISIOnt .
         GAO found al— 0i :tt (AR w~ not o1whibig mull,                                                                            VldwMh Impi moulaan my & KA" mbmr ~
            , 1 " iii-fit I   , 1 - t i' I ON" i~, . l 111 11 :111 bu( ' 1115v                                             "ffi'"vv-;'w ciawns 4, w"wol, WWI thy, .Arose ha d
          I Iii Ito         1       1 4 ill         1 --nit 1% followed -                                                   m q 'Tivcll suffi i , ivill : lintideralion to the iu -sc of civilial l
                                                        11~               1 — alfll prot,4'ts sea s                        per '--cnne" it] fillilig, lio-sr j1,1=n Lei, . All prowc t
                                                                              p h w ! di'l
                                                                                      I not dc -                            lo!"l, had b, — n Indiix .,                      1-ho %—w 'ill ' ie ' t if ,
                       ,                                                                                                    l ., lm immiker Onmeh inambimin Ni o : inivnient .


          CONTENT S
      -         - -.                                                                               Pad=      -

                       SECTION I .—Compilation of Findings and Recommendations fo r
                           Improving Government Operation s
                          Con _eats                                                                   `J
                          Compilattor,                                                                 9
                          Iudct h Govcr ent < Uener                                                14 0
                          Index by Functional (lassiicaum-, of the heueral btuitiet -              14 2

                       SECTION II .--Financial Savings Attributable to the Work of th e
                           General Accounting Office    . .                                         14 . 1

                          Collections and other ineasurable savin gs .                              11 4
                          1)euiik of other nwasurabic savin-,s    _                                 t= 5
                          Additional financial s,%ings not Bilk or rr dik   1i ;c3ew'ab11' .   -     i4 9
                          Jaciny,s and benefits to others	                                           15 7

                       SECTION III .—Audit Reports issued During the Year .

                       SECTION IM—Approvals of Agency Accounting Principles and
                           Standards, and Systems Designs                                           'IS y

  The Army agreed generally with the GAO findings               tenure of these persons and (2) the findings and rec-
and proposals for extending the tenure of projec t              ommendations in GAO 's report. (Report to the Con-
managers . The Army :                                           gress, B–167412 ; Aug. 31, 1970 )
     Revised regulations to stabilize the tour of duty
                                                                    146 . Procurement of Munitions Under Devel-
  of project managers for an "indefinite" period .
                                                                opment.—GAO reviewed the procedures and prac-
     Revised criteria for selection of project managers ,
                                                                tices of the Arnry in authorizing production, purchase ,
  including exclusion of officers facing mandatory re-
                                                                and field use of developmental munitions . The review
  tirement within the expected tour of duty .
                                                                was limited to a specific round of howitzer anmmni-
     Arranged for estimating requirements for project
                                                                tion because GAO was informed that the procedure s
  managers 18 months in advance to provide for a n
                                                                followed were representative of the procedures i n
  adequate overlap of project managers on a continu-
                                                                managing other developmental munitions .
  ing program.
                                                                   Production and operational use of materiel prio r
   The Army believed it preferable to fill project man-         to completing development and testing is referred to a s
ager positions with military officers oil the basis tha t       concurrent development and production or concur-
they possess the breadth of experience in the militar y         rency . The concurrence of Army munitions is author-
art to give them an understanding of the problem s              ized by a "Limited Production" (LP) classification .
faced by the Army in the field . GAO pointed out that           Items so classified are to be used only for the urgen t
this expertise could be provided by military personne l         requirement they are intended to fulfill .
not necessarily assigned as project managers . Th e                The howitzer ammunition had been authorized a s
Army, in its revision of regulations to stabilize the tou r     LP for I year to fill an urgent requirement for close -
of duty for an "indefinite" period, did not clarify th e        range, direct-fire capability in Southeast Asia . The
term `indefinite " and, in its provision for an adequat e       item Nvas still in limited production 3%2 years later,
overlap of project managers on a continuing progra m            although authorization from higher echelons had not
did not establish a minimum period of overlap . There -         been obtained . The rate of use in Southeast Asia was
fore, GAO suggested that t' e Secretary of Defense :            far lower than had been anticipated but productio n
       Modify the criteria for selection of project man-        r; as continued and resulted in excess stock .
     agers to insure appropriate consideration of civilians .      GAO proposed that the Army improve its overal l
       Clarify the term "indefinite" in the stabilization       management of munitions development by :
  policy.                                                             Reviewing all LP munitions to deter line whethe r
       Establish   a   minimum period of overlap .                 similar problems warranting correction existed .
   GAO found on the basis of limited tests that con-                  Enforcing its regulation requiring that LP item s
ditions similar to those in the Army also existed in th e          be used only for the specific, urgent requiremen t
Navy and the Air Force and discussed them wit h                    for which purchases were approved .
officials of the Department of Defense (DOD), th e                    Complying with its requirements for periodic jus-
Wavy, and the Air Force . GAO suggested that the                   tification by the developing agency, and approva l
Secretary of Defense insure that appropriate actio n               by the Army General Staff, of the need to renew a n
is taken to correct similar deficiencies in the Navy an d          LP authorization .
the Air Force .                                                       Rlonitoring the use of developmental items pur-
   GAO suggested also that the Congress might wish tc              chased for the other services .
urge DOD to use civilians i n these positions to a                 The Assistant Secretary of Defense agreed with th e
greater extent to avoid the problems encountered i n            first three proposals and stated that action had bee n
the use of military personnel .                                 taken to (1) issue revised regulations strengthening
   On November 24, 1970, the Director of Defens e               and clarifying procedures for managing LP items an d
Research and Engineering, on behalf of the Secretary            (2) re>trict the amounts budgeted for procuremen t
of Defense, replied to GAO's report to the Congress.            of such items . Also, the Army reduced funding fo r
He stated that DOD agreed with (I) GAO's belief                 procurement of LP items from $220 million in fiscal
that program managers are extremely important i n               year 1969 to $10 - rnillion in fiscal year 197 1
the weapon system acquisition process and that em-                 The Assistant Secretary did not agree with GAO's
phasis must be placed onthe selection, continuity, and          proposal that the _s_emy° monitor the use of develop -


                                                                                                             SECTION' I
    mental items' purchased for the other services . H e        contract negotiations--contrary to the requirements o f
    stated that the Army had a monitoring responsibilit y       the Armed Services Procurement Regulation (ASPR :
    only when a safety risk was involved . The new Arm y        and the prime contract—did not set forth the details
    Regulation 71-6, dated January 1, 1970, however,            leading to the agreed incentive plan . In the absence
    does not mention this responsibility. Therefore, GA O       cf such documentation, GAO's evaluation could no t
    recommended that the Secretary of the Army revis e          be conclusive and was limited to specific aspects of the
    Army Regulation 71-6 to reflect the responsibility o f      incentive plan .
    the Army, ) maintain cognizance of the use of develop -        For example, U -       =s unable to determine whethe r
    mental items in instances involving potential safet y       there was a va :i i for paying added incentive fees
    risk . (Report to the Congress, B–169675, Dec . 7, 1970 )   for accomplishment of a single . specified flight tes t
                                                                performance objec'cive . The guidelines state tha t
       147 . Incentive Provisions in Subcontracts for           achievement of expected performance goals warrant s
    Development of Major Weapon Subsystems .—GA O               only target fees. GAO found, however, that the incen-
    had previously reported to the Congress on improve-         tive plan does not establish an "expected" or targe t
    inents needed in the management of tire NIKE–X              performance for which only target fees are allowe d
    antiballistic missile (AWM) development program             and, in fact, appears to allow incentive fees for " ex-
     (B-164250, Nov. 28, 1969) . That report covered im-        pected" performance .
    provements needed in the use and administration of             GAO suggested to tl-e Secretary that in the negotia-
    contract incentive provisions designed to reduce costs ,    tion of the follow-on to the present SPARTAN sub-
    meet schedules, and improve performances, and im-           contrac :—due to expire December 31, 1970—emphasis
    provements needed in the retention of records for re -      be given to insuring that ( I ) the incentive fee arrange-
    view by responsible Government officials concernin g        ments are in accord with the intent of the Departmen t
    multi-million-dollar negotiations between a weapon          of Defense guidelines and (2) documentation is pre -
    system' s prime contractor and its subcontractors . I n     pared and retained for use of reviewing authoritie s
    other reviews GAO had found indications that con -          of the details in support of the judgments used in nego -
    tract incentives were used inappropriately .                tiating the target fee and the value to the Governmen t
       As part of GAO's response to the request of th e         of incentive fees provided by the incentive plan .
    joint Committee on Atomic Energy for continuin g               In view of the absence of clear requirements in th e
    review of the SAFEGUARD ABM program, GA O                   ASPR, GAO further suggested action to (1) include ,
    examined into the cost-plus-incentive-fee subcontract       in cost-reimbursement prime contracts, clauses requir-
    for development of the SPARTAN—the SAFE-                    ing the preparation and retention of records of nego-
    GUARD ' s long-range missile subsystem . The subcon-        tiations for large dollar amount subcontracts and (2 )
    tract price at completion was estimated at $30 0            specifically provide that these records show the factor s
    million . A report was issued to the Secretary of De-       which were considered in negotiating the agreed upo n
    fense with air information copy to the committee, in        incentive fee plan.
    November 1970 .                                                The Deputy Assistant Secretary of the Army (Re -
       Current instructions in the Department of Defens e       search and Development) in commenting on GAO ' s
    and National Aeronautics and Space Administration           report in January 1971, stated that the incentive fe e
    Incentive Contracting Guide are that (1) the incen-         arrangements were in accord with Department o f
    tivepla . must identify the critical performance ele-       Defense guidance . He stated also that implementatio n
    ments and their alternative technical levels—th e           had been initiated on GAO 's suggestion that docu-
    minimum acceptable, the expected or target, and the         mentation be obtained covering the factors considere d
    maximum desirable—and (2) significant persona l             in negotiating the incentive plan for large dollar
    judgments used to quantify an incentive element             amount subcontracts. (Report to the Secretary o f
    should be carefully documented and the documenta-           Defense, B–16=1250, Nov. 23, 1970 )
    tion retained so that a basis exists for review and
    evaluation. The Guide states that expected perform-            148 . Foreign Affairs As pects of Federal Re-
    ance goals warrant target fees only, while added fee        search .—Research performed in foreign countries or
    incentives should motivate ; the contractor to achieve      otherwise bearing on foreign affairs is sponsored i n
    higher performance levels of value to the Government .      sonic degree by nearly every large agency of the Fed-
       GAO found that the available records of the sub -        eral Government . The full dimensions of such researc h


are obscure, but a level of spending of at least $7 0         Neves that this directive provides the framework fo r
million a year was identified by GAO .                        rnore effective coordination of research in foreig n
   The State Department has the responsibility to insur e     affairs .
that federally sponsored foreign research does not ad-           GAO also found that the State Department had a
versely affect U .S . relations with other counn ies . GAO    very small external research program and depende d
found, however, that the Department was neither re -          largely on other agencies to support research bearin g
viewing all proposals for foreign research nor furnish-       on foreign policy . GAO expressed the view that th e
ing agencies with guidelines for determining co Aition s      Department should establish a research progra_`er of a
under which proposed research might affect foreig n           scope commensurate with its responsibilities in foreig n
relations and should be submitted for review.                 affairs and recornmended that the Secretary of Stat e
   GAO concluded that the responsibility for the De-          develop a comprehensive statement of the Depart-
partmenes review function—presently divided betwee n          ment's external research policy . The Department
the diplomatic posts and two bureaus in Washington—           responded that it had increased external research fro m
should be assigned to the Washington bureaus . This           $72,000 obligated in fiscal year 1970 to $724,000 i n
would permit the reviews to be made under centra l            fiscal year 1971 and that it was hoping to furthe r
control on a consistent basis.                                increase its funding of external research . (Report to
   Accordingly, GAO recommended that the Secretar y           the Congress, B-171564, May 27, 1971 )
of State :
                                                                 149 . Administration of Contracts and Grants
     Issue guidelines to the domestic agencies statin g
                                                              for Cancer Research .—The National Cancer Insti-
  the factors to be considered in reviewing social and
                                                               tute (NC:I), Department of Health, Education, an d
  behavioral research' proposals .
                                                               Welfare (HEW), conducts cancer research at its ow n
     Issue guidelines to all agencies to help them idea-
                                                               laboratories and clinics and supports research through
  tify_ research in the phy-,icat and natural sciences
                                                               contracts and grants-in-aid . In reviewing the system
  which poses a potential risk to'.oreign relations .
                                                              of administering and funding die research, GAO ob-
     Require such research proposals to be submitte d
                                                              served that the system had resulted in delays in th e
  to the Department for review .
                                                               approvals and funding of contracts and grants which ,
     Require the agencies to furnish the Departmen t
                                                               according to NCI officials and others, had made th e
  summary information about their proposals fo r
                                                              start of some research projects uncertain and coul d
  foreign research in the physical and natural sciences .
                                                              cause p roblems for the research institutions in attract-
     Require agencies to submit their proposals fo r
                                                              inea and retaining qualified researchers .
  research by foreign performers directly to the De-
                                                                  The contracts awarded during 1970 required a n
  partment for review.
                                                               average of about 7 months for review and approval .
   The Department, in response to these recommenda-           About 1%2 months of this time resul .ed from reviews
tions stated that it was clarifying procedures for domes -    by the National Institutes of Heakh (NIH) whic h
tic agencies and Foreign Service posts to follow in           duplicated those made by NCI . "These duplicative re -
reviewing research projects, encouraging improve d            views had been made because the Secretary of HE W
analysis by the posts of'thr> imract and scope of Gov-        had delegated contract authority to NIH but not to
ernment-supported research abroad, and insuring bet -         NCI .
ter coordination between its own bureaus .                         , significant portion of the time taken in processin g
   In the area of coordination of foreign affairs researc h   research grants—an average of about 6 months —
among Federal agencies ; GAO found that recent pro-           occurred because the NIH study sections which revie w
posals for improving the coordination provided for th e       grant applications for scientific merit and the National
development of an overall Federal plan, but did rio t         Advisory Cancer Council which recommends approval
provide for machinery, to carry it out . In February          of grant applications, each meet only three times a
1971, however, the Under Secretaries Committe e               year. About 15 percent of the 1,182 grants awarded b y
within die National Security Council system was               NCI in fiscal year 1970 were for relatively smal l
directed to a~;ume responsibility= for insuring inter -       amounts---less than $30,000 each .
agency coonlinatron of foreignaffairs research and fo r          As recommended by GAO, the Secretary of HE W
for an anmal consolidated plan for such research t o          delegated authority to NCI to eater into research con -
lie submitted to the President for approval; GAO be -         tracts to avoid delays previously encountered when
                                                                                                         SSECTION 1

NIH reviewed NCI Proposals and negotiated the con -          bilities of grantee institutions during the anticipate d
tracts. Also, the Secretary stated that GAO ' s recom-       useful life of the vessels must be considered, and (5 )
mendation that NCI be authorized to award researc h          the research programs of other Federal agencies gen-
grants up 'o a specified dollar limit without revie w        erally depend on the use of research vessels acquire d
by NIH study sections would be considered .                  with NSF grant funds .
   Because of delays in approving HEW appropriatio n            In contrast to NSF, ONR maintained a 5-year plan
bills, GAO suggested that to facilitate more timel y         for research vessel construction which identified th e
financing of new programs and , projects the Congress        recipient institutions and showed whether the vessel s
might wish to consider enacting legislation authoriz-        were replacements or new additions, However, NS F
ing, in the case of NCI, the making of appropriation s       and ONR had no procedure for formal coordination o f
to be available for the next fiscal year following th e      plans for construction of new research vessels and re-
usual budgeC. year. (Report to the Senate Committee          placernent of existing research vessels .
on Labor and Public Welfare, B-164031(2), 'Mar . 5 ,            Regarding the matter of conversion versus construc-
 1971) '                                                     tion of vessels, studies conducted by the Interagenc y
                                                             Committee on Oceanography of the Federal Counci l
    150 . Construction and Conversion of Ocean-              for Science and Technology have shown that the con -
ographic Research .Vessels .-During fiscal years             version of old vessels to oceanographic research vessel s
1460 through 1969, the National Science Foundatio n          was, in the long run, both uneconomical and ineffi-
 (NSF) provided grant funds of over $16 million fo r         cient. One study by the Committee's Ships Panel con-
the design - and procurement of 28 oceanographic             cluded that, although certain immediate gains suc h
research vessels for use by educational and other non -      as lower initial costs and earlier availability might b e
profit institutions. GAO's review of this grant progra m     derived from the use of converted vessels, such use i n
showed that opportunities existed for more economica l       any long-range program was entirely unwarranted .
use of NSF grant funds for the design, construction ,        The Panel recommended that Federal support be re-
conversion, or modification of oceanographic researc h       stricted to financing the construction of new vessels.
vessels by (1) developing long-range plans in cooper-           NSF's grants to educational and other nonprofit
ation with the Office of Naval Research (ONR) whic h         institutions for the procurement of oceanographic re -
also finances the construction or conversion of researc h    search vessels, in the majority of cases, were for the
vessels for the same institutions; (2) requiring feas-       conversion or modification of military or other typ e
ibility studies as a basis for deciding whether to con-      ships into research vessels . NSF, however, had not
struct nest-; vessels or convert old ones, and (3) makin g   made or required the institutions to make feasibility
greater use of existing expert services of other Federa l    studies to determine whether converted vessels or new
agencies specializing in the design and procurement o f      vessels would best serve the interests of a particula r
research vessels .                                           oceanographic institution and would accomplish the
   NSF's annual budget submissions to the Congres s          objectives of the oceanographic program within avail -
requesting funds for the procurement of oceanographi c       able funds . Also, NSF had not made long-range plans
research vessels were not based upon a long-range pla n      for the orderly replacement of the converted vessels .
of action . Rather, NSF estimated the funds needed on           Also, GAO believed that in connection with financ-
the basis of proposals received and expected to b e          ing the construction or conversion of vessels for ocean o
received from grant applicants. The decisions as to          graphic research, it would be desirable for NSF t o
which institutions would be awarded grants for the
                                                             avail itself of existing Government expertise in ship -
procurement of research vessels were made on the basis
                                                             building, especially since NSF itself did not have th e
of those ;nstitutional proposals most worthy of support
after funds have been appropriated by the Congress .         in-house technical capability to advise and assis t
                                                             grantee institutions and to fully protect the interest o f
   GAO believed that the development of a long-range
plan for the procurement of research vessels was de-         the Government . The ;Maritime Administration, the
sirable because (1) - the success of a national oceano-      Naval Ship Systems Command, and the Coast Guard
graphic program requires the availability of a fleet of      had in-house capability for handling all aspects of
modeta research vessels, (2) significant amounts o f         ship-building including designing, soliciting bids fo r
fiiiid5 ale involved ; (3) a long leadtime is required t o   construction or conversion contracts, contracting, in-
construct or convert a vessel, (4) the needs and capa-       specting, and accepting delivery of a vessel .

   NSF and the Department of the Navy advised GAO              uncertainty as to the amount of research vessel sup -
that steps had been taken to coordinate long-rang e            port funds to be 'received and would enable the insti-
plans for financing vessel construction and conversion .       tutions to plan for more effective utilization of their
NSF further stated that it would conduct feasibilit y          vessels . GAO believed that any coordinated fundin g
studies to determine whether construction or conver-           arrangement between NSF and ONR should be ex -
sion of research_ vessels was best . Also, NSF bega n          tended to other Federal agencies which support th e
using the shipbuilding services of other Federal agen-         operation of research vessels at oceanographi c
cies. (Report to the Congress, B-169941, Sept . 23 ,           institutions .
1970 )                                                             NSF and the Department of the Navy pointed ou t
                                                               the basic reasons for using different methods of fund-
  151 . Coordination of Federal Support of Re -                ing the institutions vessel operating costs. Navy stated
search Vessel Operations .—In fiscal year 1969, th e           that these different approaches might present difficul-
National Science Foundation (NSF) provided throug h            ties in working out joint funding but did not preclud e
grants $8 .6 million for the support of 32 research vessel s   it . NSF believed the only alternative to the present sys-
and other assorted vessels operated or chartered by 1 8        tem of muitiagency support would be single agenc y
universities and other nonprofit research institutions .       funding with a transfer of funds from other agencies .
NSF' s' level of support in recent years was slightly i n          GAO believed that, although single agency funding
excess of 50 percent of the total cost of operating thes e     would alleviate some of the administrative problem s
vessels, the Office of Naval Research (ONR) pro-               inherent in the present system, it would not eliminate
vided about 40 percent, and the remaining support was          the need for Federal agencies to formally coordinat e
provided by other Federal agencies and State an d              their plans. Coordinated planning is needed to insur e
local sources .                                                that national goals in oceanographic research are ade-
   The Federal agencies providing funds to ocean -             quately considered and jointly pursued . (Report to the
graphic institutions in support of research vessel oper-       Congress, B-1699=11, Sept . 23, 1970 )
ations did not formally coordinate their financia l
support to meet the overall objectives of the national            152 . Title to Research Vessels .—The Nationa l
oceanographic program . These funds were provided b y          Science Foundation- (NSF) and the Office of Nava l
the various Federal agencies principally on the basi s         Research (ONR) provide research vessels to oceano-
of the needs presented by the individual institutions .        graphic institutions on differing bases . ONR, as a mat-
Although NSF took into account the anticipated fund-           ter of policy, retains title to the vessels, whereas NSF ,
ing by other Federal agencies, it had not jointly par-         in line with its general policy, conveys title to the ves-
ticipated with these agencies in planning for the mos t        sels to grantee institutions, subject to the Governmen t' s
desirable use of the available funds for the support o f       right to reclaim the vessels in case of national emer-
vessel operations and for the optimum use of the in-           gency or when the vessels are no long :r used by the
stitutions' research vessels .                                 institutions for oceanographic research . Beca , ise of
   The amount of funding provided by NSF to an                 NSF ' s policy of transferring title to the grantee insti-
institution generally was determined on the Basis of           tutions, the premiums for hull insurance on the vessel s
the difference between the institution 's total estimats~d     were borne by the Federal agencies financing the
costs of research vessel operations and that portion o f       operating costs of the vessels.
the costs that the institution expected to be financed            GAO estimated that, during calendar years 1963 -
by other Federal or private sources. The practice o f          67, hull insurance premiums totaled about $550,000 o n
ONR and other Federal , agencies had been to estimate          10 research vessels for which NSF had financed all o r
for each year the amount of vessel support funds to be         substantially all the construction or conversion costs ,
provided by -them individually to an institution with -        and that the costs of this insurance were home for th e
out regard to other sources of financing .                     most part by Federal agencies . If NSF retained title to
   NSF and ONR officials agreed that coordinate d              the vessels for which it had financed all or substanti-
support would-be feasible and desirable arid would re -        ally all the construction or conversion costs, the pur-
suit in better funding acid administrative practices be-       chase of hull insurance could be avoided under the
 tween- the two agencies. Coordinated funding, i n             Government's policy of self-insurance.
GAO's opinion, would also simplify administrativ e                Because this rnatter involved the oceanographic re -
proccdures p it the grantee institutions by avoiding th e      search activities financed by several Federal agencies;

                                                                                                          SECTIO N
GAO recommended_ that the Director, NSF, as a mem-           hours used by visitors steadily declined from 983 to
ber of the National Council on Marine Resources an d         122 hours in 1969 .
Engineering Development and the Federal Counci l                In GAO's opinion, the policies and practices fol-
for Science and Technology, present the question of          lowed in allocating telescope time may not be adequat e
ownership of research vessels to these coordinatin g         to insure that NRAO fully served its mission as a na-
bodies for consideration in establishing an appropriat e     tional center primarily for the benefit of visiting
Government policy regarding title to oceanographic re -      scientists .
        vessels purchased with Federal funds . The              NSF indicated that NRAO' s classification of its tem-
Director- concurred with the recommendation an d             porary staff as visitors was appropriate and did no t
stated_ that NSF was leaking steps necessary to imple-       consider that a study of visitor participation as sug-
inent it. (Report to the Congress, B-16999-1, Sept . 23 ,    gested or GAO was necessary . In support of this view ,
1970 )                                                       NSF explained that NRAO ' s permanent staff sup -
                                                             ported projects requiring long-term research whereas
    153 . Visitors' Use of Telescopes at the National        temporary staff generally supported projects requir -
Radio Astronomy Observatory .—The National Sci-              ing a more limited amount of time and that it was not
ence Foundation's (NSF) National Radio Astronom y            intended that visitors function as staff or even as a com -
Observatory (NRAO)—which is operated by Associ-              plement to the permanent staff .
ated Universities, Incorporated, tinder a cost-reimburs-        GAO noted that, although temporary staff migh t
able contract—was established as a national researc h        generally be concerned with projects requiring a mor e
center to be used primarily by visiting scientists . NRA O   limited amount of time, several 1-year appointment s
has its principal observing site at Green Bank, W . Va. ,    to temporary staff were extended to 2 years and tha t
and has additional facilities at Tucson, Ariz . NRAO ' s     temporary staff, in some cases, complemented the per-
policy provided that visitors he allocated 60 percent or     manent staff in its research efforts . Therefore, i n
more of the observing time on the telescope system s         GAO's view, it did not seem appropriate to classify al l
and that the remainder of time be for use by th e            salaried temporary staff as visitors for purposes o f
resident staff.                                               determining compliance with the 60 to 40 user policy .
   The manner in which NRAO 's policy had been car-             GAO recommended that NSF, in cooperation wit h
ried out raised certain questions regarding the allo-        the contractor, undertake a study of visitors ' use o f
cation of observing time between resident staff an d         NRAO's telescopes to determine what action, if any,
visitors because NRAO had classified its temporary em -      was needed to insure that NRAO fully served it s
ployees as visitors and on this basis considered tha t        mission . NSF, in a letter dated August 18, 1971, to the
visitors had used about 54 percent of observing tim e        chairman of the House Committee on Governmen t
during NRAO's 11 years of operations through fisca l          Operations, reaffirmed its position that a study of visi-
year 1969. However, if temporary employees had been           tors' use of the NRAO telescopes was not necessary a t
classified as staff, which GAO believed to be a mor e         this time. NSF agreed, however, that there was a n
appropriate classification, visitor's' use would have av-     apparent inconsistency concerning salaried appoint-
eraged only 34 percent of total- observing time durin g       ments and work assignments of some temporary staf       f
this period .                                                 employees which it planned to review and clarify . (Re-
   The temporary staff included research associates,          port to the Director, NSF, B–133338, June 15, 1971 )
scientists on leave from their home institutions, an d
students. Temporary staff employed by NRAO in Jun e             104 . Cost Sharing in Federally rinanced Re-
                                                             search .—Appropriation acts for fiscal year 1970 co v
 1969 were receiving salaries at annual rates ranging
                                                             e ying the major research agencies variously (1) mad e
from about $4,300 to $14,£00.
                                                             no provision for cost sharing, (2) required cost sharin g
   GAO ' s review ' showed' that the nrrmber of visitor s    on grants only, or (3) required cost sharing on bot h
using the NRAO telescope system had increased sub-           grants and contracts except for research specificall y
stantially over the years ; however, the amount o f          solicited by the Government .
observing time used by them hadnot increased pro-                A GAO report on the results of its case study of the
portionately . While the average number of telescop e        management of federally financed research by the Uni -
hours used by staff observers varied considerably durin g    versity of Michigan pointed out that the three differen t
 the 1959–69 period, since 1962 the average number of        statutory policies governing cost sharing in federally


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       Uur~~rnmcnt-r~~ ur'd 83-inch cycl000n located in the University of .lfichigan's Cyclotron Laboratory of the . North C;ampits .
       This equipment   xeighs about -325 tons and _cost about SI .9 'nill on :

      fin;.ulced research were in direct conflict with the coin-                               gan, ti,°hick conduct research under grants and coin-
      cq)t of it consistent policy of cost sharing which GAO                                   tracts for most, it not all, the majar=Federal research `
      bCi1CVCS     is both feasible and desirable for Federal                                  agencies. Iu addition, the implementation of three
      researcli ageiicicas and which was advocated in Senate                                   different policies and 'related 'agency regulations wil l
      Report 91-_i21 on the bill «Bich became Public haw                                       undoubtedly add to the admir_ =strative burden of the
      91--126, Public 1_, w 91–126, approved Noven-iber 26,_                                   educational institutions as well as other organization s
       1969, includes the appropriations for the National                                      similarly situated .
      Aeronautics and `pace Administration' and the Na-                                            GAO recommended= that the Congress conside r
      tiorial `science 1'oundmion,                                                             legislation to prescribe a consistent Government polic y
          Ako, the existence of different statutory standards                                  for cost sharing in federally financed research for al l
      for (ost diarlt ) ", 1<ly's the grolitld-v,Orl< for controversy                          federal a(rencies . The Bureau of the Bud,-et .not ;' the-
      witli agcncy regulations w1iich may go beyond these                                      Office of Management. and-Budget) specIfically ;en- -
      standards . The inip :ict of these difleiBrit standards will                             dorsed this recommendation none of the resew - h
      bc-. felt most k, those or+;anizatlon a vrll ch do research                              agencies covered in the stud ; (the Department o f
      far se.~clai ar,cncie>; hosc apprupriations are included                                 Defense ; the Department of IJe,ilth Education and
      in taxo or              of the related al)j)topriation-acts for                          Welfare : the Atomic Energy Commission ; the Natic,na l
      19 U. The      .,c~ of-,, mi ations include . particularly, edu-                          aeronautics and Space Administration ; and the ` ;t -
      Cd1Cit)nCfl Inshttlt .lolis 'deli ;ts the 1 nivertitty of ~Michi- -                      tit}nal -Science Foundation' opposed it . At the regnest -
                                                                                                           SECTION I

of lie Subcommittee on Intergovernmental Relations ,              Except for the Atomic Energy- Commission, whic h
`'senate Government Operations Committee, GAO sub -            did not express its views. all the agencies covered i n
mitted a draft of a bill to establish a consistent policy      the study concurred in the objective of this recent-
of sharing by recip ; ents in tile cost of research financed   mendation . The Bureau of tite Budget (now the Offic e
by the Federal Government . (Report to the Congress ,          of Management and Budget) advised GAO that it wa s
B-117219, Sept . 25, 1970 )                                    giving specific attention to policies and procedure s
                                                               for providing funds in a new circular, then in draf t
    155 . Funding Research Projects GAO's re-                  forte, on certain aspects of the administration of re-
port on the case study at the University of Michiga n          search projects . 'I'he Bureau of the Budget also note d
also noted that Federal agencies use two general meth-         that this matter would be considered in an interagenc y
ods to fund the university for costs incurred on re -          study of standardizing administrative requirements o f
search projects— advance payments and reimburse-               grant-in-aid pro grants under the. President's Federa l
ment of costs . Under the latter method, the universit y       Assistance Review program . ? Report to the Congress ,
uses its own funds pending reimbursement by the in-            B-117219, Sept. 25, 1970 1
dividual agencies . A test for a 6-month period showe d
that the university used about $3 .6 million of its ow n          156 . Distribution of Indirect Costs .—The report
funds monthly to cover costs ineured under federall y          on GAO's case study at the University of Michiga n
financed research projects .                                   further noted that the use of provisional rates, rathe r
   'Fhe method by which the university received pay-           than predetermined rates, for allocating indirect cost s
ment for research supported by Federal agencies ap-            to research projects was of concerti to university offi-
peared to be dependent primarily upon the type o f             cials. GAO believes that there is merit in a suggeste d
contractual' instrument used and the particular agenc y        method of using predetermined fixed rates, wither pro -
involved .                                                     vision for "rolling forward" to the next period the dif-
    University officials stated that, since the universit y    ference—plus or minus—between the estimated cost s
was alloyed neither a fee on contracts and grants no r         and actual costs . GAO recommended that the Director,
recovery of interest lost on university funds used to fi-      Office of Management and Budget, consider the roll -
nance Government cost-type contracts, the agencie s            forward concept and pursue this matter further wit h
should provide the university-with-sufficient advanc e         the various federal agencies and educationa l
payments to cover all costs of research projects . GAO         institutions .
concluded that, since the university didnot receive a             The Bureau of the Budget (no~N the Office of Nfan-
fee,- profit, or interest, the use of its own funds t o        agement and Budget) noted that it was considerin g
finance Federal research was it) effect additional cos t       the use of the roll-forward concept to permit the equi-
sharing .                                                      table application of predetermined indirect-cost rate s
   GAO recommended that the Director, Office of
                                                               in more cases and had drafted a revision of its Circula r
Management and Budget, in collaboration with othe r
                                                               No . A-21 to incor porate this and other matters . Excep t
concerned Federal agencies ; study the feasibility of
                                                               fo r the Atornic Energy Commission, which opposed the
z' ;)ting a uniform system of providing universities
with sufficient advance funds for programs financed b y         roll-forward technique, all the research agencie s
all agencies . Such a system should be designed with a n       covered in the study endorsed the recommendation di-
ainr toward reducing the administrative burdens of th e        rectly or by implication . i Report to the Congress,
universities and of the agencies in handling payments.         B-117219, Sept . 25, 1970)



Accounting and Fiscal Matter s                                  have considerable impact on the debt ceiling, the Fed-
                                                                eral budget, and the adequate funding of Eximbank ' s
    157 . Financing and Accounting Policies .—Dur-              operations . GAO, therefor , brought this matter t o
ing fiscal year 1970, as was the casein fiscal year 1969 ,      the attention of Congress in case it might wish to con-
the contingent liabilities reported by the Export-Impor t       sider requiring Eximbank to obtain its funds from the
Bank of the United States (Eximbank) as loan maturi-            least costly source .
ties sold subject to contingent repurchase commitment s             Also, arrangements in effect for some years permi t
included participations in specific loans in support o f        Eximbank to borrow substantial amounts from the
which Eximbank issued to the purchaser instrument s             Treasury at reduced rates . Had the Treasury charged
called "certificates of beneficial interest . " GAO believe s   Eximbank interest rates approximating the full cos t
these instruments should be considered as borrowing             of the funds, Eximbank' s interest and other financia l
or financing transactions rather than sales of asset s          expenses would have increased by about $16 .8 and $6 . 9
because :                                                       million in fiscal years 1970 and 1969, respectively.
    The buyer of a certificate does not actually take           Eximbank ' s justification for the reduced interest rate s
  possession of the loan instrument executed by the             is that they serve to compensate Eximbank for actions
  original borrower.                                            taken in furtherance of overall Government policy .
    The buyer is not free to dispose of the instrumen t         After this matter was brought to their attention, Exim-
  without restrictions.                                          bank and the Treasury entered into a new agreemen t
                                                                related to the reduced-rate borrowing . In GAO ' s
   Eximbank disagreed with GAO's views but is seek-
                                                                opinion the effect of this new agreement will partiall y
ing new methods of handling its certificates of bene-
                                                                eliminate Eximbank ' s low-cost borrowing from th e
ficial interest.                                                "'reasury . Further action is required to fulls , eliminat e
   GAO noted that Eximbank finances its operations ,
                                                                 the low-cost borrowing.
in part, ' by borrowing in the private market rathe r
                                                                    GAO also stated that Eximbank should documen t
than through the Treasury—apparently becaus e
                                                                 and describe in its annual reports to the Congress an y
Eximbank believes that this type of financing result s
                                                                 activities performed in the national interest that woul d
in benefits in computing the overall Federal budge t
                                                                 not be performed in the ordinary course of its business .
surplus (or deficit) and relieving pressures on th e
                                                                 Eximbank's annual financiai statements would be mor e
statutory debt limit . GAO believes that these benefits          informative if the financial results of such activitie s
are questionable and that Eximbank's private borrow-             were disclosed separately in the statements . Althoug h
ing results in substantially increased interest costs wh e p_
                                                                 Eximbank pointed out that it had informed Congress
compared to the costs of direct Treasury borrowing .             of national interest transactions in the past, Eximban k
During fiscal -years 1962 through 1970, private financ-
                                                                 agreed with GAO that such transactions and thei r
ing cost $43 .2 million more than borrowing through th e
                                                                 effects should be disclosed in Eximbank's annual repor t
Treasury would have cost, and additional costs of $29 .6
                                                                 to Congress .
million will be incurred over the remaining life o f
Eximbank's own securities .                                         GAO also noted that Eximbank's current procedure s
   Eximbank and the Department of the Treasury                   do not measure with certainty the potential long-term
agreed-Nvith the facts concerning the additional cost s          benefits derived from individual transactions unde r
the Ea iinbank- incurred by borrowing in the privat e            th export expansion facility which provides financia l
utarket .- The Treasury, did state, however, that th e          support for U .S . exports involving greater than norma l
policy changes implied in the recommendation to in -             risks . This program would be more effective if long-
crease Eximbank's borrowing from,the Treasury= might             term trade goals of the United States tiyere identifie d


                                                                                                             SECTION I
    on a geographical and/or industrial basis and if onl y      responsibilities to assure movement toward those objec -
    transactions which met these goals were approved .          tives . (Report to the Assistant Secretary of State, Bu-
    ; Report to the Congress, B-144823, June 21, 1971 )         reau of Administration, B-146703, Mar. 22 . 1971 )
      158 . Activities at the Regional Finance an d                359 . Cost Accounting for Maintenance Orcra-
    Data Processing Center, Paris, France .—A repor t           tiorrs .—The Department of Defense spends about $ 7
    was submitted to the Department of State on th e            billion a year for depot-level maintenance operations —
    results of GAO's survey of activities at the Regiona l      the major overhauling or rebuilding of military equip-
    Finance and Data Processing Center in Paris, France .       ment . GAO reviewed the cost accounting systems fo r
    GAO identified three possibilities for improving th e       depot-level maintenance of aircraft engines .
    activities at the Paris Center . These irnprovenrents          The cost accounting systems differed among th e
    consistt-d of (1, making a current appraisal of auto-       three services, and arnong installations within eac h
    matic data processing equipment requirements at th e        service, making impossible any meaningful compari-
    Center. so that excess equipment capacity could b e         sons bethmen facilities performing similar work . Fo r
    eliminated, (2) tightening controls over the issuance       example :
    of erroneous checks, and (3) modifying the Center 's             The Army and Nav% used job order systems bu t
    practices in the management of foreign currency ban k         in different ways : the Air Force used an entirel y
    accounts so that exchange Iosses could be reduced .           different system—one based on hours of tivork .
       The report also stated that the Department shoul d            All three services had a procedure for determin-
    give immediate consideration to the desirability o f          ing cost of "exchange materia ll' —a charge for rebuil t
    eventually controlling overseas financial transactions        parts taken from stock less an allowance for th e
    under a common data processing system for all th e            unserviceable parts returned to stock in exchange ;
    foreign affairs agencies, using the planned common            however, the Army used a substantially differen t
    system facility at Washington for any processing to be        formula from that of the Navy and Air Force fo r
    performed centrally under the system. One of the              determining the allowance for the unserviceabl e
    recognized opportunities for utilizing the facility as a      parts returned .
    part of a common system is in the centralized process-           Fuel, used in considerable quantities for testin g
    ing of payrolls—an activity now conducted on a re-            overhauled engines, was treated as a direct materia l
    gional basis by the Paris Center .                            cost by the Navy and an indirect cost by the Arm y
       (iAO made the following suggestions to the De-             and Air Force .
    partment of State :                _                             Fringe benefits, such as annual and sick leave
          A current appraisal should be made of the auto-         and Government contributions to life and healt h
       nratic data processing equipment requirements a t          insurance and to retirement, were treated as indirec t
       Paris .                                                    cost by the Air Force an a an integral part of labo r
          The Center should make a critical review of it s        cost by the Army and Navy.
       internal controls over the issuance of checks ,             GAO proposed that the Secretary of Defense issu e
       strengthen them wherever nec<.ssary, and establis h      instructions that would insure that the cost accountin g
       a program- for recording reviewing, and takin g          systems provide complete, comparable, and accurat e
       actions to prevent the recarrence of each continuin g    information on the operations and accomplishments
       discrepancy as it is identified .                        of depot-level maintenance . The Department of De-
          Consideration should be given to the develop-         fense agreed that there were inconsistencies in cos t
       ment of modified approaches to the management o f        reporting and that there were some areas requiring
       foreign currency batik accounts .                        more explicit instructions ; however, the Department
          The Department should proceed to formulate the        believed that a more strict compliance with existin g
       concepts that will best serve all tir° foreign affairs   directives and instructions would generally insure th e
       agencies under a common data processing system ,         desired uniformity in cost information .
       so that procedures within the Paris region can be          The GAO report also cited the need for an effor t
       revised on a basis consistent with those concepts .      within the Government to establish cost accounting
       The Department agreed with GAO ' s objectives, bu t      standards for Government activities comparable t o
    differed as to the means, timing, and assignment of         those to be developed by the congressionally establishe d



    Cost Accounting Standards Board for industry (Pub -           State and couiit)~ offices as payments to fanners an d
    lie Law 91-379, dated Aug . 15 . 1970) . (Report to th e      others under conservation . price support, and produc-
    Congress, B-459797, Feb. 2 . 1971 )                           tion adjustment programs . 1n one year ihe,c offices
                                                                  issued about 7 .4 million sight drafts totalin e, about $6 . 1
       160. Status, Progress, and Problems in Federa l            billion .
    Agency Accounting .--In December 1970 ; GAO is -                 The examination showed deficiencies in preparing
    sued its second annual report on the status of Federa l       and issuing drafts, in safeguarding drafts. and in ac -
    agency= accounting and the progress being made an d           counting for unissued and missing drafts . ,Mso, infor-
    problems encountered during calendar year 1969 b y            mation on issued drafts was not being furnished fo r
    Federal agencies in deveon ng irmprol—I accounting             timely recording in the accounts . CCC informed GAO
    systems for submission to and approval by the Comp -          of certain actions it had taken or proposed to take t o
    troller General ,                                             correct the deficiencies . ( Report to the Congress.
       The report, which was prepared in response to a             B-11-182-1, Jan . 15 . 1971 1
    recommendation of the House Committee on Govern-
    ment Operations, contained tine following observations :          162. 0e i,osit of Funds in Federal Deserv e
                                                                  Banks .--During fiscal year 1969, U .S . district court s
         Federal ag encies, with a few exceptions, continued
                                                                  maintained a Monthly average of about $35 millio n
      to maintain their increased interest and activity.
                                                                  of registry ac,ount funds on deposit in commercia l
         Bight systems designs and 21 statements of prin-
      ciples and standards were approved during t '.re            ban k,-of which about 15 percent were earning interest.
                                                                  If the funds had been on deposit in Federal Reserv c
      year for civil and international departments an d
                                                                  banks, die Government could have reduced its bor-
      agencies. At yearend 65 systems designs had bee n
                                                                  rowing requirements and interest costs. Lach distric t
      approved of a total of 144 subject to approval, a s
                                                                  court decides avhether the funds are to be deposited
      well as 95 statements of principles and standards ,
                                                                  in Federal Reserve banks or in commercial banks . O f
      and I of 42 segments of systerns subject to approval .
                                                                  the 93 district coutts ; 75 had de posits exehlSiveh• i n
      I-n the Department of Defense, three systems design s
      and eight statements of principles and standard s           conuncrcil banks or in both conuucrcial banks an d
      were approved during the year -                             Federal Reserve batiks . GAO estimated that the Fed-
                                                                  eral Government could have realized ,axings of abou t
          The concept of accrual accounting had been gen-
      erally agreed to throughout- tire executive branc h         $1 .8 million during fiscal year 1969 if all the distric t
                                                                  courts had deposited rc`istrN account funds exclu-
      of the Government . Current problems relate l rintar-
      ily"to application of the concept and maintenanc e          sively in Federal Reserve banks .
                                                                      GAO recommended that the Judicial Couferencc. o f
      of adequate systems.
                                                                  the United States, a policvmaking body for the judicia l
          Although many : agencies were making significan t
                                                                  branch, consider establishing, a policy requiring the
      efforts to improve . their financial mana~genent prac-
       tices in general and their accounting, systems in par-     courts to deposit registry account funds in Federal Re-
                                                                  serve banks c%cltuively anJ requiring the Administra-
       ticular, GAO was not satisfied with their overal l
      progress and felt that agencies efforts should b e           tive Office of the " ' .S- ('hurts to issue instructions to
       maintained and accelerated .                                the clerks of the court, to transfer registry accoun t
          Property accounting and cost accounting wefe tw o        funds on deposit in comu, ;urcial banks to Federal Re -
                                                                  serve banks . (Report to the Congress, B-133322 ,
       areas «here improvements Nvere needed in the ac -
                                                                   Oct, 8, 1970 }
       counting systems of the executive - agencies . Bot h
       propert . ac, oumting and cost accounting are integra l         163. Internal Control Procedures .—GAO's re -
       part, of m accrual accounting system ;                      view at three U .S . district courts, judicial branch ,
      Rcpwut to t1w Congress, B 115398, Dec . 31, 1970 1           slim,-ed that internal control procedures needed t o
                                                                   be strengthened to provide assurance that funds ant i
          161. Conn oiling   and    Accounting for       Sight     other items of value %sere properly accounted for, safe -
     Wafts . - ( ; AO etiamiued into the procedures followe d      guarded, and disposed of in a timely manner.
     6v dw Gm miodit ,% Credit Corporation (CCC)`fo r                 In all three districts seine personire~ received cash ,
       ntrolL :r+ and as nirfxir- for sight drafts issued in       recorded its receipt, and made bank deposits ; in two           ~-_
      1L~nculturnl St tbilir ;t'-ion aid Conservation S(n-vic e    districts cash dtat:ets were sometimes left open and

                                                                                                           SECTION !
unattended and control lists were not prepared fo r               165. Accounting Systetu Deficiencies (Farmers
cash received by mail : and in one district vault com-         Home Adhninistration) .--The financial statements o f
binations had not been changed in several years . Court        the Emergency Credit Revolving fund—a fund use d
exhibits of narcotics and rare coins valued at $750,000        by the Farmers Brine Administration (FHA), De-
and $200 .000, respectively, were not adequately safe -        partmert of Agriculture, to make emergency loans t o
guarded in one district because the vault's combina-           farmers and ranchers in natural disaster areas--did no t
tion lock was inoperative. In addition, certain fund s         present fairly the financial position of the fund a t
eligible' for transfer as miscellaneous receipts to th e       December 31 ; 1968, or the results of the fund's opera-
U .S Treasury after 5 ;ears had not been transferre d          tions. Specifically :
although more than 5 years, and in some instance s
                                                                    The net loss from operations and the accumul . d
nearly 9 years, had elapsed .
                                                                 net deficit were understated materially .
   Fundamental internal control procedures wer e
                                                                    FHA's estimates of future losses )n emergenc y
needed including ! 1) separating cash-handling an d
                                                                 loans and related receivables were not adequatel y
accounting responsibilities, (2) locking cash drawer s
                                                                 supported . FH .'s accounting system did riot pro -
when not attended, (3) changing vault combination s
                                                                 vide adequate information with which to evaluate
periodically, (4) preparing control lists for mail re-
                                                                 the collectibility of outstanding loans .
ceipts and making daily det-)sits, and (5) makin g
                                                                    Several account balances, including cash, wer e
timely required transfers to the U .S . Treasury .
                                                                 significantly misstated because transactions had no t
   GAO recommended that the judicial Conferenc e                 becrr recorded promptly or had not been classifie d
of the United States consider instructing the Director,          properly.
 Administrative Office of the U.S . Courts, to provid e
                                                                    FHA's basis for determining the administrative
the clerks of the courts with detailed internal contro l
                                                                 expenses chargeable to the fund was not sound an d
procedures for funds and other items of value and t o
                                                                 resulted in distortion of the reported costs o f
insure that the procedures were implemented . (Repor t
                                                                 operations .
to the Congress, B-133322, Oct . 8, 197u )
                                                                  FHA's accounting procedures and practices did not
   164, Unauthorized Retention of Money Accu-                  provide full and accurate disclosure of the financia l
mulated for Earned Leave of Transferred Em-                    results of the emergency loan program, adequate fi-
ployees .—GAO reported that the National Bureau                nancial information for management purposes, or re -
of Standards,, Department of Commerce, augmente d              liable accounting data for reports required by th e
its working capital fund without authority of law be -         Treasury Department. Because the procedures an d
cause it did not return to the Treasury, money ac -            practices applied also to FHA's other loan programs ,
cumulated for earned annual leave of transferred em-           the financial reports on those activities might hav e
ployees. The Bureau treated the reduction in th e              been similarly affected.
liability for accrued annual -leave of 757 transferred            FHA took steps to improve its financial manage-
employees as an increase in donated capital . Of the           ment sys_ern in line with GAO's recommendations .
reduction, $432, 589 represented accrued annual leav e         Also, the rlffir-- of the Inspector General (OIG) re-
expense which had been recovered by charges to cus-            vised its instructions in litre with GAO ' s recommenda-
tomers and retained in the fund . Inasmuch as th e             tion that OIG establish a program for testing the ac-
Bureau did not agree to pay the $432,589 into th e             curacy of FHA's financial reports and consult with
general fund of the `Treasury - as GAO had recom-              FHA to insure that FHA's system, as designed, wil l
mended, GAO reported the matter to the Congress Io r           comply with accepted accounting principles an d
its consideration :                                            standards and will contain adequate audit trails . (Re -
   GAO also recommended that the Department o f                port to the Congress, B-114873, Dec . 30, 1970 )
Commerce' s financial systems staff establish specifi c
guidelines to be followed xvl-_n accounting for assets            166. Accounting System Deficiencies (Immigra-
and liabilities i nvolved in significant transfers of func -   tion and Naturalization Service) .--A review of the
trens between agencies, as occurred in this case . Sub-        accounting system of the Immigration and Naturaliza-
sequently, the Department began to establish suc h             tion Service (INS) . Department of justice, revealed a
guidelines. (Report to the Congress, B-149858 ,                number of areas in need of improvement . GAO re-
!liar . 10, 1971)                                              ported that only limited use was made at the Wash-

ington level of cost reports providing cost informatio n      tion, covering the period July 1, 1968, through Decent-
by major organizational segments and by budget pro -          ber 31 , 1969, GAO observed that interagenc y
grams or activities because the reports did not mee t         agreements entered into between UMTA and othe r
the needs of management . No cost reports were de-            Government agencies were not accounted for properl y
veloped for use below the major organizational level ,        in U M'FA's books of account, and the accounts payabl e
even though operations within the functional or activ-        balance -shown on the June 30, 1969, financial state-
ity classifications were readily identifiable .               ments did not represent bona fide liabilities.
    GAO recommended that the Conunissioner, INS ,                GAO believed that UMTA needed to establish, i n
provide that adequate and timely cost reports be de-          manual form, appropriate procedural instructions fo r
veloped for each management level in Washingto n              the guidance of personnel responsible for accountin g
and in the field for, which cost targets have bee n           operations . U M'FA agreed and stated that appropriate
established so that INS management may have an ef-            corrective action had been initiated . (Report to th e
fective means of administering and controlling pro -          ,administrator, UMTA, Jan . 27, 1971 )
grams within cost targets or estimates .
    Also, there was a need to simplify fund controls b y         169. Accounting System Deficiencies (Atomic
 (l) reducing from 14 to five the number of INS allot-        Energy ComMiSsion) .--At the request of the join t
ments of funds and (2) placing the authority and re-          Committee on Atomic Energy, GAO reviewed selecte d
sponsibility for central office allotments at the highes t    aspects of the Atomic Energy Commission's (AEC )
practical level consistent wilt assignments of respon-        high energy physics program relating to high energ y
sibility . Contrary to requirements of the INS manual ,       accelerators.
annual and sick !eave accruals for INS central offic e           GAO noted that the laboratories had not reporte d
employees were not recorded each month . (Report to           accelerator operations and research subactivity cos t
 the Attorney General, B--157162, Aug . 5, 1970 )             data to AEC: on a uniform basis . This lack of uniform-
                                                              ity was caused, in part, by the different interpretations
   167. Accounting System Deficiencies (U .S .                placed on AEC's definitions of operations and research .
Coast Guard) .—A review of aspects of the centralize d         In addition, the accounts used by the laboratories for
automated reserve pay and retirement point accountin g        accumulating such data were not documented with de-
system of _ the U .S . Coast Guard, Department o f            tailed written account descriptions.
Transportation ; revealed a number of areas in nee d             AEC agreed to (1) redefine the operations subac-
of improvement . GAO reported that because the in -           tivity in a more precise manner so as to provide for
formation contained in the data base for the syste m          more uniform cost reporting by the accelerator labora-
was, in many instances, inaccurate and/or incomplete ,         tories, (2) require the laboratories to report separately
it was necessary for the Coast Guard to determin e            the costs of operating and maintaining facilities an d
retirement points manually before establishing retire-        major equipment relating to the performance of ex-
ment benefits, Also, a required monthly summary re -           periments at the laboratories which are not a part o f
port on reserve unit activities was prepared manually          the operations subactivity, and (3) require the labora-
at headquarters from data submitted by the districts           tories to develop written account descriptions. (Repor t
although the same information was also recorded o n            to the chairman, joint Committee on Atomic Energy,
the master tape containing the data base .                     8-159687, Feb . 8, 1971 )
   The Coast Guard agreed with GAO 's recommenda -
tions for corrective action and established a study group        170. Budget and Cost Improvements .At the
to recommend int -- ri ni :measures ,to relieve some of the   request of the joint Committee on Atomic Energy,
problems with the existing system and to design a new         GAO reviewed selected aspects of the Atomic Energy
system' (Report to the Commandant, U .S. Coas t               Commission's (AEC) high energy physics progra m
Guard, Nov . 30,1970 )                                        relating to high energy accelerators .
                                                                 In allocating high energy physics funds amc- gig pro-
    16 1 - AccotEnting System :Deficiencies (urba n           gram activities, decisions made by AEC regarding the
Miss   f C%:f! ;1BOY6 Lion Administration) .—In a revie w     specific amounts included in the various budget docu-
of selected financial transactions of the Urban Mas s         ments were reached by AEC officials on the basis of
1' ransportation Fund, _Urban =Mass Transportatio n           the input from the laboratories and their scientifi c
Administration (UN(TA), Department,of Transporta -            judgment, knowledge of program needs and priorities,

                                                                                                          SECTION      1

and personal experience . Alternatives considered i n        recotnmendatic .A . (Report to the Assistant Secretar y
arriving at specific allocations of funds generally N~er e   for Economic Development, Department of C:orn-
not documented . GAO believe(] that more informatio n        nrerce, Aug. 21, 1970 )
should be available as to the costs of operating th e
accelerators at various levels to enable AEC to mor e
fully evaluate the effects of alternative fundin g           Management Practices—Genera l
decisions .
   GAO studied the possibility that AEC: could develop ,        172. Increased Screening of Registrants wit h
through management cost analysis or other techniques .       Medical Conditions at Local Draft Boards .—GAO's
standards which might provide for a more efficien t          review at 30 selected local draft boards showed that 3 7
allocation of funds within the budgets provided by the .     percent of the registrants rejected because of medica l
Congress .                                                   conditions h ..d either ( I , submitted to their loca l
   In the study, GAO adjusted the cost data to achiev e      boards doctors' statements which indicated that the y
greater uniformity and developed information regar d         had the medical conditions for which they were late r
ing the cost of operating accelerators at various levels     disqualified or (1 2) been examined previously an d
of beam output. GAO stated that this informatio n            rejected for the same reason .
could be useful to AEC (1) in considering alternativ e          The report pointed out that these registrants (or
allocations of available funds, (2) in comparing ex-         their case ides , could have been sent to the loca l
pected operating costs and output with those actuall y       boards' medical advisors for screening and, if war-
achieved, and (3) in analyzing variances and takin g         ranted, rejected for military service without being sen t
corrective action, if needed.                                for preutduction examinations . In addition, the repor t
   AEG agreed that additional data concerning oper-          pointed out that there was a, need for a Selective Serv -
ations costs and beam output at various levels of            ice System (SSS procedure which would permit the
accelerator operation might be useful in program ad -        local boards to send registrant s- files to examining sta -
ministration and implemented procedures requirin g           tions to see if preinduction examinations were needed .
the laboratories to provide the appropriate data on a        GAO estimated that nationwide swings of $1 millio n
trial basis . (Report to the chairman, joint Committe e      in transportation and examination costs might hav e
on Atomic Energy, 13-19687, Feb . 8, 1971 )                  been realized by screening these registrants at the local
                                                             boards .
                                                                The SSS agreed to have local boards send cases t o
Management Information               Systems                 medical advisors (1) if the registrants were examined
                                                             previously at the examining stations and the station s
   171 . Adequacy of Data Base, Reports, and Pro-            requested them to return and (2) if the registrants ha d
cedures.—As the result of a review, GAO matte severa l       physical defects that the medical advisors could deter-
recommendations for improvement in the operatio n            mine without laboratory tests- and X-rays . The SS S
and administration of the computerized managemen t           did not sa)' if additional instructions would be issue d
information system- established by the Economic De-          to local boards and medical advisors or if it was willin g
velopment Administration (EDA), Department o f               to have local boards send registrants who had sub-
Commerce. Inasmuch as reports generated by the sys-          mitted doctors' statements as evidence of disqualifyin g
tem were, in some instances, inaccurate, untimely, and       medical conditions to medical advisors .
incorrectly- programmed, GAO recommended that                   The Department of the Army informed GAO tha t
EDA review the usefulness of the reports, revise re -        Armed Forces Examining and Entrance Stations wer e
porting requirements where necessary, and centralize         currently screening registrants' files when requeste d
responsibility for evaluating the reporting function .       to do so by local boards and were prepared to expan d
Other recommendations dealt with the-(1) accuracy ,          the serv ice in areas where local boards could not obtai n
reliabiiity, and completeness of the data base an d          a sufficient number of medical advisors . (Report to
 2) desirabilitf of having operating personnel prepare       the Congress, 13-162111, Nov . 9, 1970 )
the forms requiied to request information from th e
system, thus primitting trained system personnel t o            173. Juror Selection and Utilization .Although
devote full time to the systemri s operation and mainte-     the U .S . district courts, judicial branch, had been in -
natice . EllA ~rgreed to take' action on all of GAO's        formed of the benefits to be derived from the automa -

tion of juror selection procedures, the three districts      the courts ' responsibilities more efficiently an d
included in GAO's review had taken little, if any ,          economically _
action to implement such automation . In ttco districts         In the three districts reviewed . GAO found tha t
which used computers, annual savings were estimate d         two of the three were authorized to hold cour t at mor e
to be from $27,500 to $42 .000 . GAO believed that al l      than one location . One of these districts held cour t
districts meeting the criteria established by the Ad-        continuously at three locations, for 2-week period s
ministrative Office of the U .S. Courts, the adrninistra-    twce a year at each of two other locations, an al not
tive arm of the judicial branch, should automate th e        at all at three additional locations . GAO estimated
primarily manual procedures to bring about efficien-         that if the t%%o locations where court was held inter-
cies and economies_ . Two of the three districts include d   mittently were consolidated with the three location s
in GAO's review met the criteria in 1969 and th e            where court vcos -held continuously-, an estimated
other c strict was expected to meet it in 1971 .             $46,000 could be saved atmually through (1) makin g
   Also, GAO believed that the number of prospectiv e        the vacated Government-owned space available to Fed-
jurors summoned to appear at the district courts fo r        eral agencies who leased space at two locations an d
impanelment but not selected to serve on juries coul d        2? eliminating court travel costs.
be reduced . In one of the three districts, about 60 per -      GAO recommended that the judicial Conference
cent of the prospective jurors who appeared durin g          of the U nited States conside, ( I ) evaluating the nee d
1968 were not impaneled or challenged . GAO esti-            to hold court at locations «here the volume of case s
mated these uinutilized prospective jurors were pai d        requires that court be held infrequently and for onl y
about $75,000 ire fees and travel costs.                     short periods of time, (2) consolidating or otherwise
   GAOrecommended that the judicial Conferenc e              reducing the number of locations for holding court .
of the United States, a policyrnaking body for th e          and (3) sponsoring the necessary legislation, if legis-
Federal judicial system, consider requiring that :           lative action is required, to accomplish all or part o f
                                                             the objective . (Report to the Congress, R-133322 ,
    Target dates be established for completion o f
                                                             Oct . 6 . 1970 i
  automation by all districts that meet the criteria .
    The Administrative Office (I ) assist and encour-
                                                                175 . Policy for Improving Court Administra-
  age - the district courts that meet the criteria t o
                                                             tion,--GAO found in its review of administrative and
  achieve automation of juror selection procedures .
                                                             financial activities of U .S . district courts, judicia l
  (2) design records to be maintained be clerks o f
                                                             branch, that the Administrative Offrc~ of the U .S .
  courts which uuould provide' complete data on th e
                                                             Courts could provide additional assistance to the ju-
  prospective jurors from the time they were sum-
                                                             dicial Conference of the United States in improving th e
  moned until the jury impanelments were completed ,
                                                             operations of the courts by increased participation i n
  and (3) develop guidelines and instructions to pro -
                                                             determining, coordinating . and bringing about neede d
  vide the district courts Nvith a more realistic basi s
                                                             improvements in the courts' administrative and finan-
  for estimating the number of prospective juror s
                                                             cial activities . Although the Director, Administrativ e
  required to complete jury impanetments under var-
                                                             Office, is the administrative officer of the district courts ,
  ious circumstances.
                                                             neither he nor the Office has been delegated, by law
(Report to the Congress, I3-133322, Oct . 8, 1070 )          or the judicial Conference, the authority to requi r e the
                                                             Implementation of recommended police or procedure
    174 . Policy Covering Locations for Holdin g
                                                             changes .
Court . The U .S . district courts in some judicial dis-
                                                                GAO's review revealed a number of areas where i t
tricts hold court at some locations infrequently an d
                                                             believed opportunities existed for improved adminis-
for` short periods of time . This situation has resulte d
                                                             tration. The judicial Conference had also recognize d
in (1) lost time to the judges, due to the need for          the need for some of these improvements and its com-
travel and disruption to their schedules, (2) low usag e     mittees had proposed recommendations for improve-
of courtroom facilities which could be made availabl e       ments. In certain of these areas, limited progress ha d
to other Government agencies, and (3) increased cos t        been made toward bringing about the desired an d
of transporting i ourt ernpioNcesand records . The sub-      needed improvements .
 tantinl %okiw, of t, .rrk t%hich faces the courts ern-         GAO believed that strengthening the role of the
phas~zcs the need to oxplore means for carrying ou t         Director, Administrative Office, by providing him not

                                                                                                            SECTION I

only with the authority to recommend improvements i n           processed and in nearly three-fourths of the clerk s
the clerks' operations but also the means necessary t o         and mailhandlers working during evening premiu m
insure their consideration and implementation, where            pay hours. Such exlieclitious processing %%-as not nec -
applicable, could serve to diminish the necessity fo r          essary to meet mailers' needs .
the clerks to look to the district judges for direction on         Postal employees sorted substantial volumes of let -
administrative matters and thereby would allow th e             ter mail by hand while letter-sorting machines stoo d
judges to devote a greater portion of their time t o            idle . GAO estimated that more effective use of suc h
judicial matters .                                              machines could result in savings of about $487,000 a
  GAO recommended that the judicial Conferenc e                 year .
consider issuing , a policy statement setting forth th e           The Department could save about $500,000 a
specific duties and responsibilities of the Director, Ad -      year if mail being hand sorted at smaller post office s
nimistrative Office, and authorizing him to require th e        in the Detroit, Mich ., area were funneled into th e
clerks of the courts to implement his instructions an d         Detroit post office for machine processing .
recommendations concerning administrative and finan -              Canceling stamps and postmarking letters by han d
cial activities of the courts . (Report to the Congress ,       costs 1,360,000 a year in Detroit . A possibility fo r
11-133322, Oct. 8, 1970 )                                       reducing hand cancellation is the use of precancele d
                                                                stamps .
   176. Use of Electronic Traffic Counters.—Elec-                  Recruiting weaknesses, slow and burdensom e
tronic vehicle and pedestrian counting devices in-              hiring practices, outdated wage and advancemen t
stalled by the Immigration and Naturalization Servic e          policies, and uncertain work schedu .es for new em-
(INS), Department of justice, at ports of entry i n             ployees caused a serious labor turnover problem . I n
;Maine and Clermont were inaccurate and frequently               1969, employee turnover cost the Department abou t
inoperative . Inexpensive hand operated counters wer e          $17 million, primarily for recruiting and training .
used at other border-crossing stations, were more reli-            Substantial sums could be saved by consolidatin g
able than the electronic devices, and were preferred b y        or eliminating certain management reports .
INS personnel . In view of the maintenance and oper-
                                                                 GAO recommended that the Department ( I ) ex-
ating problems experienced with electronic counters ,
                                                              pedite its study of a priority classification of first-clas s
their significantly higher costs compared to other type s
                                                              mail and initiate appropriate changes to the existing
of traffic counters, and the INS Administrative Manua l
                                                              mail-processing system, (2) reassess the possibility of
provision allowing estimates of the count of borde r
                                                              using machines to sort letters now being hand sorted,
crossers admitted, GAO recommended that INS reeval-
                                                              (3) expand, where feasible and as rapidly as possible,
uate the use made of installed electronic counters an d
                                                              its program under which mail from smaller post office s
determine whether INS needs would be served by usin g
                                                              is consolidated at mechanized post offices for process-
less costly and more reliable types of traffic counters .
                                                              ing, (4) explore alternatives to existing procedures fo r
   On July 26, 1971, INS advised GAO that plans fo r
                                                              band-canceling and postmarking mail, and (5) ex-
new port of entry stations would. make provisions for
                                                              pedite its reviev,• of management reports, eliminate un-
more suitable and reliable courting devices—inductiv e
                                                              necessary ones, and simplify reporting requirements .
loop counters for vehicles and turnstile counters fo r
                                                                 The Postmaster General generally agreed wit h
pedestrians . (Report to the Commissioner, INS ,
 1pi . 30, 1971) -                                            GAO's findings and cited various actions being take n
                                                              to correct the matters discussed in the report . (Repor t
  177, Use of Manpomr and Machines at tech-                   to the Congress, 8-114874, May 27, 1971 )
anized-Post tlfiices.-GAO's review at selected large
mechanized post offices showed that the Post Offic e             178 . Use of Value Engineering Studies in Ves-
Department had not made the best use of its manpowe r         sel Construction .—In the construction and repair o f
and machinery in processing mail . GAO reported that :        its vessels, the U .S . Coast Guard, Department o f
                                                              Transportation, encourages private shipl uilders, by th e
     Because most !tailings occur at the end of eac h
                                                              terms of their contracts, to develop acceptable valu e
  business dap,` the Department ' s efforts to process
  first-class mail ~aitlrin 90 minutes of receipt by postal   engineering studies iyhich will promote cost savings t o
  faciliti(~s resulted in costly machines standing idl e      be shared by both parties. A large volume of value en-
  for long periods after the peak mail volume had been        gineering studies are developed each year in connec -


tion with the construction and repair of the Navy' s                The Department informed GAO that the Coas t
vessels . Navy regulations provide that copies of these          Guard would revise its policy of requiring private ship -
studies be forwarded to other interested Government              builders to hear the risk of loss or damage to Govtrn-
agencies, including the Coast Guard .                            ment-owned property in their possession by adopting a
    ('A0 reported that the Coast Guard had not estab-            policy of self-insurance in connection with contracts
lished written procedures for the review and evaluatio n         awarded for the acquisition of vessels over 100 feet i n
of the Navy studies in mane instances, officials respon-         length. Also, the Department agreed that savings wer e
sible for the Coast Guard' s vessel construction progra m        likely on ship construction contracts through judiciou s
had not reviewed Navy studies that had been received ;           waiver of the requirement for performance and pay-
and in those instances where the studies were reviewed ,         ment bonds and informed GAO that this require-
the Coast Guard's evaluation and disposition of th e             ment had been waived in its latest shipbuildin g
 studies were accornplished in an informal manner .              award . In its award of a $53 million contract i n
    As a test of the potential value of the use of Nav y         August 1971 for the construction of a new icebreaker,
studies in the Coast Guard, GAO selected . 55 of th e            the Coast Guard followed a self-insurance program .
 studies for review and discussion with Coast Guard of-           (Report to the Congress, B–114851, Aug . 12, 1970 )
 ficials. These officials agreed that 20 of the 55 studie s
 were suitable for use in Coast Guard vessel construc-              160. Administration of Grants for Constructio n
 tion and repair activities .                                    of Oceanographic Shore Facilities .—National Sci-
    GAO concluded that because the Coast Guard ha d              ence Foundation (NSF) grants for constructing shor e
 plans to construct several new vessels and had a sun-           facilities at oceanographic institutions were admin-
 stantial continuing vessel repair and alteration pro -          istered by three separate program offices in the Founda-
 gram; the adoption of a more effective procedure fo r           tion . Their policies and procedures varied . In GAO' s
 reviewing Navy value engineering studies was                    opinion, two of the offices did not have adequate for-
 warranted .                                                     malized procedures for the management of construc-
    In response to GAO ' s recommendation, the Coas t            tion projects by institutions receiving the grants . Th e
 Girard established a review procedure which, if prop-           two offices had determined requirements for the awar d
 erly carried out, should insure that such studies ar e          and administration of a grant on a case-by-case basis .
 properly evaluated and implemented, where appro-                The Foundation would have greater assurance tha t
 priate, oil a timely basis. (Report to the Commandant ,         grants were properly awarded and administered if th e
  U .S . Coast Guard, Dec . 8, 1970 )                            two offices would adopt formalized procedures like
  179 . Government Self-Insurance, and Perform-                   those of the third office . The adoption of uniform pro-
ance and Payment Bonds .—The Government gen-                      cedures would also eliminate the varied requirement s
 erally follows a policy of self-insurance . The U .S . Coas t    imposed upon grantees .
 Guard, Department of Transportation, has not fol-                    Also, NSF did not have criteria which clearl y
 lowed this'policyand has required that contracts fo r            distinguished between specialized research and gradu-
 the construction of vessels provide for insurance . As a         ate-level research facilities . As a result, similar oceano-
 result tite contract prices for vessel construction durin g      graphic. facilities had not been consistently classifie d
 fiscal fears 1964-66 were increased by about $918,000 .          and the extent of NSF' s participation in the construc-
 GAO estimated that if the Coast Guard continued t o              tion cost had varied significantly . Grants for construc-
 require such insurance; related premium costs of a s             tion of specialized facilities might be for their tota l
 much as $5 million could be incurred on planne d                 cost, while grants for construction of graduate-leve l
 construction .                                                   facilities were limited to an amount equal to that pro-
     Also, although the statutory requirement for per-            vided by the institution .
 formance and payment bonds may be waived on Coas t                  t'XSF pointed out basic differences between the pro -
 Guard contracts, no waivers had been made up to th e             grams administered by its three program offices but
  time of GAO' s review in April 1969 . GAO estimated             agreed that certain differences in procedures could b e
 that the Coast Guard could save as much as $900,000              eliminated and that adequate guidelines to grantee s
  b~ this acquirement for vessel constructio n                    were needed . NSF officials said they would seek uni-
  then in the planning stage .                                    formity of policies and procedures, including the pos-

                                                                                                                                                                             SECTION i
                                                                                                                                                                         }                              ,
                                                                                                                                                                    1'   .~       ~x   s.~ r   r
                                                                                                                                                                                               .. . .

       i                                                                                                                 i

               I                                                                                                                                          t   '               z

                                     10       ',        LI   1   1   L   L

                                .    ~4

                   ®                 vc~1,

                                `"                                                                                                     -

                                          1                  ~                           t+
                                ~                  ~•                    a       Y   j        -   +                                    ~                                                                    ~
           f           5                                                                              1~                     i t   s

                                                                                     Major facilities of the Wuorl .s Kole Oceanographic Institution .

           sibilit} of cenu-alizirnh administrative responsibility fo r                                                 inclusion of the four cost-reduction items . NO'e-re appr o -
           construction grants %"Ithin the hounclation, as recorn-                                                      priaa te, in nine contracts which _it subsequently awarde d

           u .endl,d . Sub .x(luently, in October 1970) NSF incorpo-                                                    for hospital construction .

           rated, aImong other things, oceanographic facilitie s                                                           Tn response to GAO`s recommendation -VA formal-
           support into a new function entitled the Nationa l                                                           izedprocedures for incorporating cast-reduction pro-
           Occ~ano~raphic Lahoratory Svstent with the objectiv e                                                        posals in its design criteria for prompt application, a s
           of maximizing; re~c <uch output frortr funds made avail -                                                    appropriate . to future ctsnstrtrexion projects .
           able for acadcmic oceanographic research . (Repor t                                                             (', :AO reported also) that VA had canceled fou r
           to till , Con(ress, H 160941, Sept . 23, t97-0 )                                                             modernization_ construction projects during develop-
                                                                                                                        ment or short]\ , after completion of the working draw -
                181 . Improvements Needed in Evaluating Hos -                                                           I11gs and specifications, which cost about $338,000 . `rile
           pital C.onstrustion and Modernization Design Re-                                                             project, were canceled because ill( , planned construc-
           quirements .- GA0 repoitcd that the Veterans Ad -                                                            tion \\-oil](] not have satisfied the needs of the hospitals ,
           ministration (V_ lmd not nnadc, adequate and timely               I                                          would have taken needco hospital beds out of service .
           invrsti-atious oT alrhiicct-rn jrterr ' cost-reductio n                                                      or would have cost more than VA had estimated an d
           propoals for the usc~ of less costly constru{ , tion,enate-                                                  such cost could not be justified . GAO expressed -'the.
           rids and nrcthod5 to dcterntinr tvhether their use' shcretl d                                                belief th ,t VA had enough information on these mat -
           liarcbeen uuule .r part of the VA design criteria ap-                                                        tors to have raised serious questions about the modern-
           plicablc to all hospital c'otcstruct.i(m .                                                                   vation projects before it authorized the workinl y
               (_ : Ys rrvicw of loo- architect-engineers` cost-
                                                                                                                        draw irrg-s and specifications.
           reihtction pr,~pos<d, r)hich VA had acceptcd in (, oil-                                                         VA n .forrned GAO that it had chanctqczl its pro -
           ncctic.~~tr ~~ith the con~arnellcut ccl_thrce Ix~spnt.rls .sh~ns-ed                                          cedli-res t-c? incorporate architect-engineer s' cost-ru(hic -
           th :o it tool. VA from 1 to 1 to incorporate tc w                                                            (loll proposals in its design criteria for ftttc ;rc
           iwins in its dc,,P,n criteria . ( ;A0 estimated that V A                                                     c(Instruction arid had ,treu-thened its rev ,•w practices
           111wht liavf , . ;avcd about l,1ti 3 O00 if it had required the                                              ]\afore award of architect-engineer contra\ fs Cor hos -

                                                                                                                                                                                               - 05

pital modernization projects . (Report to the Congress,     submitted by field stations for retaining land in excess
B-133044, Dec . 29, 1970 )                                  of VA landholding standarcis would be reviewed b y
                                                            central office officials and :;2) landholdings at field
   182 . Improvements Needed in Management                  stations would be reviewecl clnring visits of centra l
Control Over the Identification and Reporting of            office officials . In addition, VA instituted procedure s
Excess Land .—GAO reported that at eight of th e            which require that the annual survey reports sent to
14 Veterans Administration (V=A stations visited ,          the central office by the field stations be supplemented
about 832 acres of land, with an estimated value i n        with annotated land plot plans showing land use . (Re-
1969 of about $26 million, were identified as bring         port to the Congress, B-13304-1, Nov . 12, 1970 )
excess to current and established future needs of th e
respective stations based on VA's landholding stand-            183 . Preservice Physical Examinations of En -
ards and the wide dispersal of buildings .                  listed Personnel .--At the request of a member of the
   GAO stated that the retention of excess land wa s        Senate Committee on Armed Services . GAO made a
attributable to (1) station officials' reluctance to re -   review of the activities of the Armed Forces Examiu-
port unused land as excess, anticipation of future          ing and Entrance Stations and of the U,S . arm}' Re-
transfer of the land to outside VA, or fear of undesir-     cruiting Command to determine the experience of
able development on the land if it were declared            the inititarc departments in discharging enlisted per-
excess and (2) a lack of coordination among the V A         sonnel because of physical defects %%hich existed prio r
central office, the stations, and the General Service s     to entrance into military service . Because of prescrvice
Administration (GSA) . "The central office did no t         physical defects, about 20,000 enlisted personnel wer e
question annual real property reports when land bein g      discharged in fiscal year 1968, and about 19 .=100 i n
retained by field stations significantly exceeded VA' s     fiscal 1969 . GAO estimated that about $17 .9 millio n
landholding standards .                                     was expended in fiscal year 1969 for personnel dis-
   GAO stated that improved management control s
                                                            charged hccause of p reservice physical defects after
would result in more timely identification of land whic h
                                                            hating su veci for a year or less .
is excess to VA's needs so that it could be made avail -
able either for use by other Federal, State, or loca l         GAO noted that some improvements were being
                                                            implemented at the examining stations . These in -
entities or for safer by GSA .
   In response to GAO recommendations, VA state d           chided (l specializ .d training for military medica l
that guidelines would be developed for evaluatin- cur -     officers, i2) development of an automated meclica l
rent landholdings' and that specific consideratio n         examination system . and f 31 upgrading of the facilitie s
would be given to the land parcels identified in th e       at some of the examining tations . (Report to Senato r
GAO report. VA _stated also that (1) justifications         Schweikcr, B-146986, July 27, 1970 1

                                                                                                            SECTION 1

                        PAY, ALLOWANCES, AND EMPLOYEE BENEFI T

     Alcoholism Program for Federal Civilia n                    a whole would obtain from alcoholism programs i n
     Employees                                                   general . Such benefits would take the form of reduc-
                                                                 tions in, for example, traffic accidents, crime, and the
         184 . Establishment of Program .—As a result of         need for welfare and medical services attributable t o
     a study tirade at the request of the chairman, Specia l     the misuse of alcohol .
     Suhcomniittee on Alcoholism and Narcotics, Senat e             In conclusion, GAO expressed the view that a pro-
     Cornniittee on Labor and Public Welfare, GAO re-            gram aimed at salvaging the alcoholic Federal em-
     ported in September 1970 that substantial cost savings      ployee would attend to a part of one of the Ar ation' s
     could be realized by the Federal Government throug h        major health problems and, at the same time . woul d
     establishing it program for identifying . preventing, and   give a group of sick Federal employees a greater chanc e
     treating alcoholism annong its employees. Data were         to recover and live decent lives .
     not available on the number of federal civilian em-            GAO's report was used by thu subcommittee in its
     ployees sufferimr froni the tunes, or on the resultan t     deliberations or. proposed legislation which led to th e
     cost to the Federal Governmeut in terms of lowered          enactment of Public Law 91-616, approved Decem-
     worker efficiency and morale, absenteeism, bad deci-        ber 31, 1970, which provides that the Civil Servic e
     sions, early retirements, and related loss areas . There-   Commission, in cooperation with the Secretary of
     fore, in conducting its stud' , , GAO relied on informa-    health . Education, and Welfare and with other Federa l
     tion provided by individuals in federal agencies, Stat e    agencies and departments, shall he responsible for de-
     governments, and industry and by others who had             veloping and maintaining alcohol abuse and alcohol -
     studied the problem of alcoholism to arrive at esti-        ism prevention, treatment, and rehabilitation program s
     mates of the prevalence of alcoholism in the. Federa l      for Federal civilian employees . On July 7, 1971, th e
     Government, the employer costs incurred as a resul t        Commissioner issued gu~dclines for use by Federa l
     thereof, and the cost savings that might result from an     agencies in establishing' and maintaining alcoholis m
     effective Government-wide alcoholism prograrn .             programs. (Report to the chairman, Special Subcom-
        GAO estimated that tile prevalence of alcoholism         mittee on Alcoholism and Narcotics, Senate Commit -
     among the 2 .8 _million civilian employees in the Fed -     tee on Labor and Public Welfare, 13-164031(2) ,
- oral work force at June 30 ; 1970, ranged from 4 per-          Sept. 28, 1970 )
     cent (112,000 employees) to 8 percent (224,000 eni-
     plovees) and resulted in employer costs to the Federa l
     Government ranging from $275 million to $550 rnil-          Federal Employees' Health Insurance
     lion annually.
                                                                    185 . Administration of the Government-Wid e
        Since about 54 of every 100 alcoholic anployce s
                                                                 Service Benefit Flan .GAO examined into the Civi l
     would be likely to recover as a result of all alcoholism
                                                                 Service Commission ' s administration of the Govern-
     program, GAOestimated -a net cost savings to th e
                                                                 merit-wide service benefit plan operated by the, Blu e
     Government ranging from $135- million to $280 mil-
    lion a year after deduction of the estimated $1 5            Cross and Blue Shield organizations and noted th e
     million cost of the program .                               following area,, in need of improvement .
        GAO pointed out that all effective Government -              Instead of promptly investing all cash not neede d
     }vide ak r,holi,m profgfarn would not only bring abou t       for discharging the Plan's obligations, substantia l
     substantial einploven cost savings, but also, by helpin g     amounts of cash had been kept in non-interest-
     reduce the numher of alcoholics in the total popula -         hearing checking accounts . As a result, as much _
     ticm, would coutrilntte to the economic and socia l           as 9,400,000 of interest income had been los t
     bcuciits whick the Fcdcral Government andsociety as           annually .


     Several hundred thousand dollars of Plan fund s                   In October 1970 the Plan's Operations Cente r
  collected from local hospitals had been retained b y             adopted a revised pre„ edure for reimbursing loca l
  a local plan for long periods before being remitted t o          plans which resulted in freeing about $7 .5 million for
  the Plan's Operations Center with the result that th e           ?nvestme-nt . The Center's operating costs will be in -
  funds were not available for investment by th e                  creased by about $25,-.00 annually as a result of th e
  Plan .                                                           revised procedure . GAO estimates chat the investmen t
     The Operations Center had advanced funds t o                  of the additional funds should produce net interes t
  certain local plans, apparently in excess of th e                income of about $+07.000 a year for the Plan .
  amounts needed by these plans to meet curren t                      The Commission was generally receptive to GAO 's
  obligations, - thus reducing funds available for in -            other proposals and either took action or agreed to tak e
  ~estmerrt . This happened because a fomrula used fo r            action in line with such proposals . (Report to the Con -
  computing the needed amounts overstated the num-                 ,,ress, I3--164562 . Oct . 20, 1970 )
  her of days required by the local plans to obtain
  reimbursement .
     The laws of some -States require local plans t o              Govern rnerl g -Furnished Housin g
  maintain contingency reserves in addition to thei r
                                                                       186 . Rental Rates .—GAO ' s followup review con-
  other reserves, and the Commission's contract au-
                                                                   cerning rental rates charged occupants of Government -
  thorized annual allowances to local plans to satisfy
                                                                   owned quarters at certain Veterans _Administratio n
  these requirements . The equity of continuing to
                                                                   (VA) field stations disclosed that the VA was losin g
  snake- such allowances was questionable because the
  contingency reserves maintained by the Commissio n               $590,000 a year in rental income because rents charge d
                                                                   employees at 13 VA hospitals were too low . To th e
  and the carriers were adequate for protecting- th e
                                                                   extent that similar conditions existed at those hospital s
  interests of the Plan's enrollees:
                                                                   which were not visited by GAO, an even larger amoun t
     Investment income had been allocated among th e
                                                                   of income was being lost nationwide . This income coul d
  reserves of the high and low insurance options of
                                                                   reduce the amount of appropriated fluids needed t o
  the Plan and takers into consideration in establishing
                                                                   operate VA's medical care program.
  premium rates for the different options, The balance s
                                                                      The VA had deviated from Office of Managemen t
  of the special reserves for the high options wer e
  understated and the balances for tite low option s               and Budget criteria for establishing rental rates fo r
  were overstated ; because the method of allocati n               Govermnent-owned quarters . The criteria provided
                                                                   that basic rents should be based on prevailing rates fo r
  interest income among the reserves had ;rot resulted
                                                                   comparable private housing ; if no housing was avail -
  in distributing interest income in proportion to th e
                                                                   able for comparison, the rents were to be based on the
  sources of the funds invested to earn such income .
                                                                   income a property would produce ta!:ing into account
  GAO's proposals to tire Commission for improving                 its fair market value . The Federal Housing Adminis-
administration of the Plan related to :                            tration (FIIA) appraised the VA quarters included in
       Increasing the interest income earned by the Pla n          the GAO review and recommended the rental rates .
  by insuring that ( t ) all funds not immediatel y                Approval of the FHA-recommended rates was the re-
  needed to discharge Plan obligations are promptly                 sponsibility of VA field station directors .
  invested, (2) local plans promptly remit to the Op-                 GAO reconunctided that VA (1 t specify the data
  erations Center all Plan funds collected from hos-                field stations should obtain in support of FIIA ap-
  pitals, and (3) advances of funds to local plans d o              praisals of VA quarters and (2) direct field statio n
  not exceed the amounts needed by them to mee t                   officials to review and evaluate appraisal *arts an d
  current Plan obligations,                                        supporting data . In addition, to help insure that renta l
       Making a study to determine the reasonablenes s              rates are properly established, VA Central Office offi-
  of and the ne cessity for continuing to make allow-              cials should evaluate on a timely basis appraisal report s
  anres to local plans for the purpose of assisting the m          and supporting data and make selective evaluations o f
  in meeting State contingency reserve requirements .              activities relating to the approval of rents in the field .
       K, gcpdring that interest income be allocated to the           The VA agreed to ( I ) coordinate `vith PHA or other
  rc ..erves of lire (INI( , ient.opt i ons in proportion to the    appraisers to insure that VA obtained enough informa-
  un.rr (- of funds used in earning such income .                  tion to enable its personnel to make meaningful evatua-

108 -

                                                                                                                 SECTION I

    tions of rental appraisals, (2) revise its appraisal recor d    migration and Naturalization Service (INS), Depart-
    form to include the data necessary to make such evalu-          ment of justice, claimed as compensabic uncontrollabl e
    ations, and (3) more carefully review the appraisa l            overtime travel time to and from places where official
    record forms submitted to the VA Central Office an d            business was transacted outside the normal workda y
    obtain reappraisals where indicated . In May 1970 ,             and in excess of the basic 40-hour workweek . INS pol-
    FIIA issued revised instructions on PHA appraisals o f          icy provided certain conditions under which trave l
    Federal employee quartets .                                     time was considered as p outs of employment . Inas-
       In subsequent discussions, VA officials informed             much as INS officials have interpreted the instruc-
    GAO that the VA Central Office would review al l                tions car the matter in various ways . GAO recom-
    appraisals in detail for compliance with Office o f             mended that the instructions be clarified .
    Management an( ! Budget criteria. VA officials als o              On July 26, 1971, INS informed GAO that ther e
    agreed that reviews of rental rate activities would b e         was no variance in the application of instructions re-
    made by VA internal auditors and by other VA Centra l           garding the crediting of uncontrollable overtime an d
    Office representatives during their visits to field stations.   that under no circumstances was uncontrollable over-
    (Report to the Congress, B-133044, Sept . 21, 1970 )            time allowed for time in travel status awav from the
                                                                    official station or for time in transit between the las t
                                                                    investigative cor_`act of the day and the employee' s
    Pay, Allowances, and Benefits—Genera l                          residence .
                                                                      Based on its findings, GAO planned further discus-
        187. Maintenance of Attendance and Leave                    sions with INS to resolv e this matter . (Report to th e
    Records .—During fiscal year 1969, salaries of abou t           Commissioner, INS, Apr . 30 . 1971 )
    $53 million were paid to officers and employees, exclu -
    sive of judges ; of the courts of appeals and the district         109 . Maintenance of Attendance and Leave
    courts . During the 1968 leave year, a total of abou t          Records .—The Office of the Secretary, Departmen t
    $227,000 in lump-sum leave payments was made to 36 3            of Commerce, processes payroll and leave records fo r
    former court employees. Under the courts' payroll sys-          about 4,000 employees . Daring an audit, GAO foun d
    tem, the payrolls were not supported by time and at-            a high error rate—about 26 percent of the records sam-
    tendance records and the certifications of employees'           pled contained one or more errors . Clerical errors an d
    entitlements Nvere not Supported by proper evidence .           lack of knowledge of leave regulations and procedure s
       In its review at three district courts, GAO found in-        appeared to be the primary causes. In response to
    stances where (1) time and attendance records wer e             GAO's recommendations, agency officials agreed to
    not being maintained for members of the judges' staffs          ( l) establish a continuing series of classes for time -
    Oil the leave system and for some employees of th e             keepers with emphasis being placed on the need for
    clerks' staffs, (2) some members of the judges' staffs          accuracy and conformance with regulations, (2 )
    and some employees of the clerks' staffs were maintain-         schedule a series of unannounced audits of payroll an d
    ing their own leave records, (3) evidence was not avail -       leave records to insure control and review by payrol l
    able to support some lump-suui leave payments made              personnel, and (3) t rain a specialist to maintain th e
    to former members of the judges' staffs, (4) errors ha d        retirement records . (Report to the Director, Office o f
    been made in computing employees' leave, and (5 )               Financial il4anagement Serv ices, Office of the Secre-
    some employees had been advanced leave in excess of             tary, Department of Commerce, Sept . 23, 1970 )
    the amount that would have accrued to their credi t
    during the leave year.                                             190 . Allowances and Differentials Raid to Civil-
       GAO recommended that the judicial Conference o f             ian Employees Overseas .The Department of Stat e
    the United States consider requiring the Director, Ad-          establishes regulations for the payment of allowance s
    ministrative Office of the U .S. Courts, to provide for         and differentials to its own and other agencies' civilia n
    the maintenance of standard or uniform time and                 employees located at overseas posts . GAO reviewed th e
    attendance records and leave records for all cour t             establishment of the various allowances and had cer-
    employees, except judges. (Report to the Congress ,             tain observations on their payment and administration .
    p,–133322, Oct . 8, 1970 )                                        GAO found that savings could be achieved by giving
                                                                    greater consideration to the cost of Department o f
       188. Overtime Claims . —Investigators of the Im-             Defense-operated and American-sponsored overseas

          44"68 o----i t---a .      -                                                                                     109

    SECTiO N

    schools when establisfiin ,4 certain education allowanc e      International Development (AID) indicated that th e
    rates GAO also found a lack of uniformity in provid-           Agency's methods of determining employee entitle-
    ing transportation expenses for dependent childre n            ment to pay and leave needed to be improved in three
    going away to school and suggested that the State Dc-          major areas . GAO found that (1) unreconciled dif-
    partment clarify the regulations regarding reimburse-          ferences between employee rolls maintained for payrol l
    ment for these costs .                                         and personnel purposes prevented management fro m
       GAO noted certain conditions existing .which woul d         insuring that all patrolled persons were authorize d
    appear to be appropriate for consideration in establish-       employees of AID, (2) the established method o f
    ing the living quarters allowances and suggested tha t         controlling the time and attendance of transferre d
    they be examined in more detail : The conditions in-           employees while they were in an in-transit status ha d
    cluded ( I ) employees_ residing in high cost areas fo r       been ineffective, and (3) primary reliance on the work
    personal reasons rather than forofficial purposes, (2 )        of individual timekeepers for the computation of en,
    employee leasing quarters in excess of adequat e               ployce.. leave balances had resulted in two different set s
    needs, and (3) employees reporting estimated expense s         of leave balances for most of the employees, neither o f
    irl excess of actual costs .                                   which was a reliable record of employee entitlement
        It \%-as aho noted that the current standards an d         to leave .
    heights assigned tothe hardship . factors in establishin g        Based on the results of GAO's examination as a
    post diffeleiitial rates were, established in 195E and ,       whole, it vvas concluded that the design of the payrol l
    with very few changes, had retrained the saute . GAO           ,,\stmt was ineffective because it was based on a con-
    concluded that the weights tssiened to the differen t          cept which did not piovide for sufficient controls t o
    factors -needed to he reexamined and may require               insture that valid data had been taken into account i n
    settle changes as a result of changes in values and liviue:    d, wrnnining employee entitlement to pay and leave .
    conditions to be found at the various posts . Depart-          GAO believes that the system relied too heavily on th e
    tuent officials stated that a task force would be estab-       compilation of Unverified data generated by numer-
    lished to review the existing, criteria and update th e        ous individuals throughout AID and on centrall y
    standards and weights, as appropriate.                         directed efforts to monitor the work of those individ-
       GAO found that the leased houisinv program a t              uals on an after-the-fact basis .
    several posts had resulted in substantial casts in exces s        GAO recommended that ( I i the system be rede-
    of the authorized living quarters allowance whic h             signed to place primary reliance on controls exercise d
    would have been provided ill lieu of leasing quartets.         by organizational units within AID and on automati c
    In some instances, the leased quarters appeared to b e         controls applicable to the data compiled by the orga-
    in excessof normal needs . EAccordingIv,GAO suggested          nizational units and (2) immediate action be initiate d
    the adoption of uniform housing standards, the estab-          to establish the organizational unit controls and th e
    lishment of housing boards at posts, and the improve-          reporting requ'rements needed for the planted rede-
    ment of. coordination oil housing matters anion ',             signed system.
    Government agencies to help hold down t1w escalatin g             Asa result of GAO's recommendations AID initiated
    rental costs resulting front the competition betwee n          corrective action needed for the planned redesigned
    agencies' employees for adequate residential livin g           system . ([report to the Controller, AID, July 13, 1970 )
        On jufy 29;1971, the Department of State advise d             192 . Accounting for (Military Leave.--Inaccurate
    that it agreed with fife proposals_ stated in the repor t      accounting for military leave in the Army has been
    and has_ taken and will continue- to take -corrective          a continuing problem and has been the subject of a
    actions for nirpioving nranagenent'procedures . It also        number of GAO's earlier reports . The weaknesses in
    ;fated that steps arc° being taken to clarify tine regula-     accounting for leave have persisted despite the adop-
    twnm to prmidt• additional guidelines- to mpiemen t            tion of additional procedures and controls by the Army .
    d w ptoccdu res. ( Re, p r t to the Deputy Linder Secretar y   Military personnel are paid for the unused leave at the
    of Suttcfor :Admiunttarion, .Apr.2 , 1971 )                    time they are separ—ed front military service . Inacc u
                                                                   rate balances of unused leave have been amajor factor
       191 . Employee Entitlement to Pay and Leave :_ -            contributing to improper payments by the A my to it s
    t   TO (,> urination ntto selected payroll records o f         milit-ary personnel. In April1971 GAO issued a report
    c cm) alk paid Arm t tear employees of the Agency for.         to the Congress on its current review of the problem .        '

                                                                                                           SECTION 1
   Based oil the incidence of the errors GAO found               193 . Pull-rime Graduate Education Program s
in the WHO%yup review, estimated annual overpayment s        for Military Officers .--A memorandum issued by th e
of about $23 million and underpayments of abou t             _Joint Chiefs of Staff in 1961 established criteria for
$3 million could result. 'This was a conservative esti-      dcteruiinin~ graduate echtcation requircnx-n LS fo r
mate . The ultimate improper payments could be a t           tary officer positions . )UIio+= fiscal scar 1969, ove r
considerably higher rates of pay because of subsequent       4 .200 olficets were enrol ;.d in full-time graduat e
longeyitvand statutory pay increases and promotions .        education programs at an csti :nated cost of at least
GAO estimated that, should the military personne l           $70 million .
choose to use their erroneous leave balances rathe r            In a report issued to the Cortgress in August 1470 .
than receive payment at the time of separation, a net        GAO pointed out that the criteria for identifying mili-
loss of about • 1;600 inan-years of manpower availability    tary officer positions requiring graduate education . an d
could result .                                               the ways in which the criteria were applied, were . s o
   The following conditions contributed to the hig h         broad and perntisske that almost any officer position s
incidence of errors :                                        could be certifies[ as requiring such education . Posi-
                                                             tions were certified as requiring graduate education
     Prescribed records were not used to establish date s
                                                             although the need for such education had not bee n
  servicemen arrived at installations and leave take n
                                                             established . Certifications were requested and ap-
  while in travel status was not charged .
                                                             proved without adequate consideration of :
     Leave taken in connection with intrapost trans-
  fers t leave taken between completion of trainin g              Work experience or sbort training courses a s
  and reassignment to another unit at the same in-             alternatives to full-time graduate education.
  stallation) vas incorrectly= treated as routine dela y          Inconsistencies between the official joh descrip-
  ell route .                                                  tions, which did not require graduate education, an d
     Attendance records were not used as the sourc e           the job descriptions submitted for certification of
  for recording leave .                                        graduate education requirements .
     The work of pay clerks was inadequatel y                     Use of civilians in the positions where possible .
  supervised.                                                     Inconsistencies among the services concernin g
     Little or no internal audit of leavehad been per-         need for graduate education in similar or identica l
  formed by either local internal review staffs or th e        positions .
  Army Audit Agency.                                              liesentiality of graduate education for performin g;
                                                               duties of the position .
  GAO recommended that the Secretary of the Army :
                                                             Furthermore, many officers with graduate educatio n
     Direct that local internal review staffs be increased
                                                             were not assigned to positions requiring their special-
  and that they and the Army Audit Agency regularly
                                                             ized education .
  conduct reviews of pay and allowances wv i_th eui-
                                                               GAO suggested that the Secretary of Defense :
  phasis_on military leave.
     Order a study of the Army'- leave practices to               Issue a policy statement expressing more clearly
  insure that the leave data input to the military pa y        the objectives of the graduate education program .
  system will be more accurate .                                  Order revision of the existing criteria to limit the
     Direct that travel orders be endorsed by appro-           broad, permissive interpretations .
  priate officials to show dates of arrival and departure         Obtain the advice of the Civil Service Commis-
  at all > military locations to which' the individual s       sion or another qualified body in developing the
  traveled ;' including intermediate points, and tha t         new criteria .
  these endorsements be used with the travel vouche r             Require uniform application of the new criteri a
  to compute the chargeable leave .                            by the military services .
  'Plte Army concurred, in general, with the findings             Consider using civilians in uositions requiring
and conclusions and accepted the first two recommen-           graduate degrees .
dations With respect to tlic third reconnnendation ,              Review the assignment policies and practices of
the Army expressed doubt that endorsement of travel            the military services for insu ring maximum use of
orcici~ would reduce the error rate significantly. (Re-        personnel havin ', specia l i zed_ graduate education fo r
port to the Gongress, 13 125037, Alin 2, 1971)                 tile jobs having Such education as a_preregttisite .
  The Department of Defense' noted that GAO ha d            materials . This condition contributed to the Institute' s
failed to take into account the intangible accepted         denving enrollment to servicemen in courses when th e
values and benefits of graduate education . GA O            Madison inventory had stock shortages . Institute offi-
pointedout that the criteria of the joint Chiefs of Staff   cials informed GAO that, when Madison had stock
did not justify the program on these generalized bases      shortages, in all probability stock was available at fiel d
but on the requirements of specific positions.              installations and could have been provided to at least
   The Department of Defense posit i on indicated littl e   a portion of the applicants . In Judy 1969 the Institut e
early corrective action in response to GAO's findings       introduced procedures intended to improve its contro l
and suggestions . GAO suggested that, in view of the        of inv entories at field installations.
Department's position and the announced plans of th e          GAO recommended that the Secretary of Defens e
military serv ices to expand the graduate education pro -   take action to insure that (1) the study to provide a n
gram ; the Congress might wish to consider limiting th e    information base on student dropouts and nonstarts
fill-time, fully funded graduate level education p~n-       is completed in a timely manner and that the correctiv e
gram to (1) those positions for which such education i s    action suggested by the study is taken and (2) the in-
essential for the satisfactory performance of duty an d     ventory control procedures initiated during GAO' s
 (2) only those officers who can be used primarily i n      review are properly employed and that attention i s
those positions. (Report to the Congress, B-165558 ,        also given to other areas that appear to warrant man-
Aug . 28, 1970 )                                            agement attention . GAO rec :amended also that pro-
                                                            cedures be established to provide the Institute wit h
    194 . Management at the U .S . Armed Force s            information, for management purposes, on futur e
Institute .—The mission of the U .S . Armed Forces In-      trends in course enrollments and completion rates . Th e
stitute is to provide educational services and material s   Deputy Assistant Secretary of Defense (Manpower and
to members of the Armed Forces on subjects normall y        Reserve Affairs) stated that the Department of De-
taught in civilian- academic institutions. The annua l      fense was taking corrective actions. These action s
budget of the Institute is about $6 million . To deter-     appear to be responsive to the GAO recommendations .
mine the effectiveness of the Institute's educatio n         (Report to the Congress, B-169062, Oct . 8, 1970 )
programs and its management of field inventories ,
GAO reviewed the completion rates experienced in th e           198 . Conversion of National Guard Technicia n
correspondence and group-study programs and th e            Positions to Federal Positions .—The National
control over educational materials issued to field          Guard Technicians Act of 1968 converted Armv an d
installations.                                              Air National Guard technicians from State to Federa l
    The Institute had experienced loin course-comple-       employee status, effective January 1, 1969 . One of the
 tion rates in recent years—about 10 percent in th e        principal purposes of the legislation was to provide a n
 correspondence program and about 31 percent to 3 9         adequate and uniform retirement and fringe benefi t
percent in the group-study program . Internal auditors      program .
of the Department of Defense reviewed the program s            National Girard technicians are civilian employees
in 1965 and, in a report on the review, expressed           whose employment generally requires them to be mem-
 concern _with respect to the low completion rates an d     bers of the Guard also . Prior to the conversion the y
 made recommendation for improvement . When GAO             Nvere considered employees of the States although thei r
 began its review in 1969, GAO found no evidence tha t      salaries were paid out of Federal funds ,
 the Institute had taken action on the recommenda-             As stated in its report issued to the Congress in
 tions . However, during the course of the review th e      April 1971, GAO's review of the records of over 1 .000
 Institute took action to deal with the low completion -    technicians selected at random in 12 States showe d
 rate problem, including a study to provide an informa-     that, in general, the conversion had been carried out
 tion base on dropouts and student nonstarts (student s     in accordance with the act and implementing regula-
 who, after enrolling,- do not submit lessons )             tions and instructions . With few exceptions, the grades,
    Also, prior to July 1969, the Institute was issuing      rates of compensation, leave balances, and annual leav e
 from its Madison, Wis ., inventory more than a millio n    accrual categories recorded at the time of conversio n
 dollars' worth of educational materials annually t o       were proper. `1Thel•e were many discrepancies, however ,
 field installations, but was not keeping records of the    in data pertaining to service prior to conversion, at-
 location, quantities on hand, or disposition of the        tributable primarily to clerical errors, omission of data ,

                                                                                                         SECTION I

and misinterpretation of instructions . The erroneous         the advantages of centralized authority, uniformity o f
 data had no significant effect on the status of the tech-    operations, and possible savings in personnel costs .
 nicians at the time of conversion and generally will no t    CIAO was subsequently informed by the Departmen t
have any significant effect as long as they are employe d     of Defense that the personnel offices in all the States
by the Federal Government . But the errors could hav e        had been consolidated by the end of calendar yea r
 an effect on the technicians' retirement rights an d         1970 .
 benefits and the related cost to the Government .               Under the act of 1968, many of the technician s
    GAO recommended that the Secretary of Defens e            elected to be covered by the Federal civil service re-
 require the National Guard Bureau to review, in co -         tirement system; There is a question as to the statu s
-operation with the States, the personnel records of al l
                                                              of those Federal contributions remaining in the Stat e
 technicians converted to Federal employee status to
                                                              systems which are not committed to pay retiremen t
 insure the accuracy of the data recorded . The Assistant
                                                              benefits to such technicians . The Senate Committee o n
  Secretary of Defense, agreed in general .
     Three of the 12 States had separate personnel office s   Armed Services requested the Department of Defens e
  for the Army National Guard and the Air National            to resolve this matter with the States . The Departmen t
  Guard . (The other nine had, or were planning to have ,      assigned this responsibility to the National Guard Bu-
  consolidated personnel offices .) Consolidation offers       reau. (Report to the Congress, B-20748, Apr . 29, 1971)



Acquisition                                                into the leases as is now required by lai n , the fund
                                                           will have to he substantially increased.
  196.     Evaluation of Alternative Beans for Ac-             In addition the Government was not making maxi -
quiring   Automatic Data Processing Equipment . —          mum use of its ADP equipment purchase funds be -
Tile Government Printing Office (GPO) rents auto-          cause purchases were made by agencies on the basi s
maite data processing (ADP) equipment directl y            of their individual funding capabilities rather tha n
from the manufacturer. GAO reported that commer-           from a Government-wide viewpoint.
cial ' leasing firms cffered rental arrangements tha t         GAO suggested that the Congress might wish t o
provided opportunity for saving about $1 .2 million in     consider legislation authorizing GSA to contract on a
rentals, over a 5-year period, on an ADP system in-        multiyear basis through the ADP fund without th e
stalled at GPO in 1969 . GAO also reported that sav-        necessity of obligating the total anticipated payments .
ings were possible by purchasing two leased ADP sys-       GAO recommended also that Federal department s
tems- installed in earlier years, if GPO foresaw long-      and agencies make sure that maximum practicable
term usage of these systems .                               use is made of multiyear leases and that competitio n
   GPO subsequently informed GAO that the planned           is obtained .
retention periods for the existing ADP systems rule d          GAO recommended .hat GSA take a more activ e
out conversions from lease to direct purchase but that      role in contracting for ADP equipment to make sure
it planned to relinquish certain ADP peripheral equip-      that multiyear leases are used and that GSA and th e
ment and satisfy these needs under short-term leases       Office of Management and Budget (OMB) reques t
with -commercial leasing firms . (Report to the Con-        additional capital for the ADP fund and use a Gov-
gress, B-114&29, Nov . 24, 1970 )                          ernment-wide, best-buy approach on purchases .
                                                               GSA and OMB agreed with the findings and recom-
   197. Multiyear Leasing and Government-Wid e             mendations and took action to implement them. (Re -
Purchasing of ADP Equipment .—Multiyear leasin g            port to the Congress, B-115369, Apr . 30, 1971 )
is a , rnoi c economical alternative than short-ter m
rentals when automatic data processing (ADP) equip-            198. Acquisition and Use of Software Product s
ment cannot be purchased . An analysis indicated tha t     for Automatic Data Processing Systems in th e
Government rental costs for ADP equipment might b e        Federal Government .—Software is a term that has
reduced during the lease periods by as i-such as $7 0      come into use with automatic data processing (ADP )
million under 3-year leases and-by as much as $15 5        systems to identify computer programs, procedures ,
million under 5-year leases . In many cases, however ,     and related documentation and to distinguish such
agencies arc hatred by 'law from entering into multi -     features from the hardware components of the systems .
year leases becau s e equipment . acquisitions must b e    It is estimated that Federal agencies are spending be-
financed from 1-yearfunds .                                tween $2 billion and $3 billion a year for acquisitio n
   the Ceneral 4er%, ices Administration (GSA) has a n     and in-house development of software .
ADP fund (icvolviug) to assist in carrying out its re-        Many broad management problems were found dur-
sponsibilities for the efficient and economical acquisi-   ing the GAO study. One important problem that was
tion of the Government ' s ADP equipment . The fun d       not receiving adequate management attention involve d
can be used when agencies are barred from enterin g        the change which was taking place with regard to th e
into multiyear leases but unless GSA is given author-      way computer services were being marketed to th e
ity to contract on a multiyear basis without obligatin g   Federal Government by the computer vendors. The
the total anticipated payments at the time of entering     acquisition of software from computer manufacturers
                                                                                                        SECTION I
has usually been an unidentifiable part of the total          vide coordinated management and central polic y
price of a computer system .                                  direction to users for determining the most econom-
   During the past fete years, many changes in mar-           ical and efficient means for obtaining compute r
keting practices by computer manufacturers have               software .
occurred . These included the separate pricing (unbun-           Administrator of General Services employ th e
dling) of software products; the introduction of divers e     single-purchaser concept, use formally advertise d
contractual arrangements for acqui ring software, th e        procurement contracts, strive to obtain nonrestrictiv e
advent of general-purpose proprietary software pack -         or license-free contractual arrangements for softwar e
ages, and the licensing of the use of software product s      with rentals based on use, consider buying outrigh t
with overly restrictive provisions . The Federal Gov-         software products that would be widely use d
ernment has had . no centrally: guided or unified ap-         throughout the Government, and maintain an in-
preach for dealing ; with these changes .                     ventory of computer software.
   GAO found that Federal users, for the most part ,             Director of the National Bureau of Standard s
 acquired their needed computer software without cen-         establish and maintain a reference index of compute r
 tralized direction or guidance . As a result, they :         programs, make detailed technical evaluations o f
    Procured computer programs unnecessarily since            computer programs for use by all Federal ADP in-
  they were already available at other data processin g       stallations, and promulgate Federal standards fo r
                                                              computer languages and program documentation .
  locations within the Government .
    Procured software products with overly restrictiv e        In addition, GAO recommended that, pending th e
  use provisions and thereby required additional soft-      issuance of more specific policy guidance, the opera-
  ware procurements in multiuse instances .                 tional and cost factors described in its report be use d
    Acquired similar computer programs at varying           by Federal agencies in reaching decisions on softwar e
  prices within a relatively short period of time .         needs . (Report to the Congress, 11-115369, June 30 ,
    Deprived the Government of an opportunity to            1971 )
  benefit from quantity procurements.
    Used various criteria and techniques for selection
  and evaluation of computer software which resulted        Utilizatio n
  in the acquisition of many variations (some bein g
                                                               199 . Redistribution of the Government's AD P
  better than others) of the same product .
                                                            Equipment .—The General Services Administration
    Duplicated unnecessarily technical evaluations o f
                                                            (GSA) is responsible for providing an efficient an d
  computer programs.
                                                            economical system for the utilization and disposal o f
   GAO believes that, to better manage the vast re -        Government property . Regulations issued by GSA re -
sources invested in data processing facilities, the Fed-    quire agencies to report Government-owned and Gov-
eral Government needs a master plan . Such a pla n          ernment-rented excess automatic data processin g
would include agreed upon goals or objectives against        (ADP) equipment . An ADP management infonua-
which quality and progress could be measured . I t          tion system was established to assist GSA in the re -
would provide resource planning, implementatiompro-         distribution of excess ADP equipment .
cedures, and appraisal and feedback procedures .               GAO reviewed the redistribution of excess AD P
   GAO recommended that the Director, Office o f            equipment and observed instances where excess Gov-
Management and Budget, arrange for the formulatio n         ernment-owned equipment was not being used, al -
of amaster plan for the acquisition and use of software     though, between August 1967 and June 1970, simila r
and the structure needed to implement the plan . GA O       equipment was rented from suppliers at a cost of
recommended also that OMB Circular A-54 be                  $920,000 . The equipment was idle because (1) agen-
amended to include specific policy guidance to use r        cies had not given GSA sufficient notice as to whe n
agencies for the acquisition, management, and use of        the equipment would be released, (2) agencies had not
software throughout the Federal Governnment .               released the equipment to GSA for redistribution, an d
   Relative to the guidance and leadership necessar y        (3) GSA had relied oil excess equipment bulletin s
for the procurement of software, GAO recommended            rather than the ADP management information syste m
further that the :                                           to identify opportunities to redistribute exces s
     Director, Office of Management and Budget, pro -       equipment .



       GAO recommended that the Administrator of Gen-              number of studies to explore the impact of computer s
    eral Services improve the ADP management informa-              on auditing activities in the Federal Government.
    tion system- reports and that he emphasize the use of          These studies dealt primarily with batch-processing-
    the system to identify opportunities to redistribute ex-       type computer operations or those systems that requir e
    cess ADP equipment. The Administrator agreed an d              input data to be coded and collected into groups o r
    advised GAO of the steps GSA was taking to imple-              batches for processing . Particular attention was de -
    ment GAO's recommendations . (Report to the Con-               voted to :
    gress, B-115369, Jun° 15, 1971 )                                    Internal auditing of computer-based systems—t o
                                                                     determine whether effective independent review s
       200. Improvement in Management Control s                      and appraisals %% ere being made .
    Over the Scientific Use of Computers .-Following a                  System documentation—to determine whethe r
    survey of the National Aeronautics and Space chninis-            curreut and complete documentation was main-
    tratiom's (NASA) Ames Research Center, GA O                       tained .
    pointed out a need for the Center to revise its proce-
                                                                        Use of computer techniques to audit computer -
    dures to encourage efficient use of automatic data proc-
                                                                     based systems—to assist other Government auditin g
    essing facilities and to insure that they were used onl y
                                                                     organizations in auditing computer-based systems .
    for properly approved purposes .
       The NASA Center Director agreed with GAO's                     In individual Federal agencies, internal audit cov-
    findings and took responsive corrective action . (Repor t      erage of agency computer operations varies from cotn-
    to the Director, Ames Research Center, Oct . 27, 1970 1        prehensive system testing to practically no work at all .
                                                                   Although some internal audit groups have recentl y
       201. Automated System for Insurance Pro-                    shown i , icreased interest, auditors in the past have
    grams.—The Federal Crop Insurance Corporation ' s              tended to shy away from comprehensive reviews o f
    automated system for insurance programs was well de -          computer-based systems . Even though computer sys-
    signed and provided generally accurate information t o         tems are increasingly becoming an integral part of
    management. However, GAO pointed out improve-                  agency management and control, independent review s
    ments that could be made to increase its efficiency and        and appraisals are generally not made to assist man-
    effectiveness :                                                agers in establishing effective controls over comple x
          Costs could be reduced by identifying, throug h          ccmputcr systems .
       analyses, those field offices and conditions responsibl e      GAO believes it is important for an independen t
       for erroneous input data and by taking appropriat e         group to review and e\aluate agency computer oper-
       corrective action.                                          ations, especially those systems which affect agenc y
          Considerable savings could be achieved by chang-         management and control operations as well as Clos e
       ing from a thatching control based on surnames an d         involving the disbursement of billions of dollars ever y
       first initials to a control using a more positive' basis,   year. In the absence of independent evaluations o f
       such as social security numbers, to protect against th e    computer-based systems, the computer operation i s
       issuance of multiple insurance contracts to the sam e       vulnerable to undetected error, misuse, and possibl y
       producer or the issuance of insurance contracts t o         fraud . GAO believes that Federal agency manager s
       ineligible producers .                                      should require internal auditors or a similar group t o
          Procedures needed to be strengthened to provid e         devote more attention to computer systems than i s
       assurance that programs and changes in program s            currently being done.
       were full)- documented .                                       A related problem centers on the fact that mos t
                                                                   Federal agencies have not developed or implemente d
      The, Department of Agriculture subsequently in -
                                                                   agencywide documentation standards for computer -
    formed GAO of corrective actions taken or to be taken .
                                                                   based systems. Generally, documentation being pro-
    (Report to the Secretary of Agriculture, B-114834,             duced is incomplete and inadequate . Documentatio n
    Aug . 28, 1970 )
                                                                   may be t .. .ed by management not only to monitor an d
       202.   Case Studies of Auditing in a Computer-              control the computer facility resources of an organiza-
    Pasud,      t•^ttt :~ Envinn"m•cnt .— In` response to the       tion, but also as a check on perfoninance and com-
    erowing of-ed fun ell:,-cd%-t antd efficient means fo r         pliance with established goals and standards for suc h
    audit-9 rc,rnputer 1%t , cd     t ins, GAO conducted a         resources. Consequently, GAO believes that Govern-
                                                                                                       SECTION I

meet-wide documentation standards should be devel-              Search files and select data for examination .
oped and promulgated by the executive branch t o                Make special analyses or summarization of data.
guide all Federal agencies in maintaining an adequat e          Perform computations.
level of system documentation . GAO also believes tha t         Wentifr unusual transactions .
the heads of Federal agencies, as an interim measur e           "Pest check processing accuracy .
pending adoption of Federal standards by the execu-
tive branch, should take necessary action to assure tha t      Several techniques used successful k. by GAO include
their computer systems documentation meets the stand-       generalized computer audit programs, custom designe d
ards listed in this report .                                computer audit programs, test decks, and detailed
   New computer auditing techniques have been de-           nevi^m s of selected computer programs . GAO's repor t
veloped to assist the auditor- in reviewing computer        contains a discussion of each technique and a reference
systems and computer-generated records . These tech-        to case studies for the reader interested in furthe r
niques hermit the auditor to use the computer's spee d      study . ]_Report to the heads of Federal department s
and accuracy to :                                           and agencies, 11-1115369, June 1971)

                                      PROPERTY MANAGEMEN T

Control Over Property                                            In some cases receiving reports needed to establis h
                                                              accounting control were not furnished to the account-
   203. Government-Owned Property Used by a                   ing department . In other cases transfer document s
Contractor .—GAO's re, , ie%v of the control and utili-       were not furnished to Kennedy by the ;Manned Space-
zation of plant equipment and facilities owned by th e        craft Center or Marshall Space Flight Center whe n
National Aeronautics and Space Administratio n                equipment was shipped to Kennedy . This was becaus e
(NASA) and used by a NASA contractor, revealed a              these centers, like Kennedy, had not complied wit h
need for (1) revisions in computing rent for use o f          NASA requirements for establishing control over prop-
the facilities in commercial work, (2) adjustments i n        erty . GAO's review showed also that physical inven-
arriving at value bases for rentals, and (3) improve-         tories were not being taken as frequently as require d
ments in accounting for and in the use of Government-         by NASA instructions .
owned- plant equipment .                                         GAO suggested that :
   Use of an incorrect method in computing rent fo r               All receipts and transfers of equipment be han-
use of Government-owned facilities for commercia l              dled through a central receiving and shippin g
work resulted in an understatement of rentai payment s          department .
of about $54,000 over a 4%2-year period . In addition ,
                                                                   Documents acknowledging receipt of equipmen t
 the base upon which the rental was determined wa s             contain all the information necessary for identifica-
understated by an undeterminable amount because n o             tion and valuation purposes .
 consideration- Nvas given to transportation, installa-
                                                                   All documentation on equipment transactions b e
tion, rehabilitation, improvement costs for equipment ,         processed through the accounting and propert y
and the cost of land used by the contractor .                   management offices .
   In accounting for Government-owned plant equip-
                                                                   Physical inventories be taken or supervised b y
ment, the contractor was not maintaining the appro-             someone other than the custodian of the equipmen t
 priate records to either record and/or identify th e           being counted .
 location of equipment amounting to about $478,000 .               Physical inventories be taken by counting al l
 Further, GAO's review showed that apparent unneeded            equipment in a given area rather than by usin g
 equipment was not -br=ing identified to determin e
                                                                listings of equipment .
 whether it should be retained or disposed of .
                                                                   Complete physical inventories of all equipmen t
   NASA took steps to strengthen contractor contro l            in the custociv of NASA be taken at least once ever y
 over Government-owned plant equipment but more                 3 years.
  cork was needed with respect to other matters reveale d          Survey reports for missing or damaged equipmen t
 in the GAO review . (Report to the Administrator ,
                                                                be promptly prepared and processed .
 NASA, B 158390, July 31, 1970 )                                    A task force be established to review equipmen t
    204 Improved Recounting Control Over Equip-                 accountability at the Marshall Space Flight Cente r
rnetit .--The Kennedy Space Center of the Nationa l             and the Manned Spacecraft Center and to repor t
Aetonautics and Space Administration (NASA) di d                 the extent of the deficiencies, their basic causes, an d
not establish accountability for equipment costing ove r         the corrective action needed .
$320 million until as long as 4_years after it was re -             The NASA-wide requirements for taking physica l
                                                                 inventories be revised to include specific guideline s
r ei%cel . This delay in recording equipment in its finan -
                                                                 on the means, methods, and personnel to be used .
cial and detailed property records was generally du e
to the ab,cii(c of unit cost data needed to record th e        NASA took corrective action in response to all o f
items when the% were received by Kennedy .                    GAO's suggestions except for two pertaining to phys-

                                                                                                         SECTION I

ical inventories . GAO believed that further action wa s   needs for aircraft. combat vehicles, tactical and sup -
necessary to improve physical inventory procedures .       port vehicles, communications and electronic equip-
(Report to the Congress, B–16965£1, Aug . 11, 1970 )       ment, missiles, and weapons and Q, equipment o f
                                                           these types already on hand . GAO tested the accurac y
    203 . Accuracy of Inventory Records .—Followin g       of these thvo systems since infonuation derived fron t
a GAO report oil inventory controls in the Depart-         them must be dependable for the Anny to make accu-
ment of Defense issued to the Congress in 1967, th e       rate and timely decisions for budget preparation an d
Department prescribed new procedures to improve th e       procurement requests .
accuracy of recorded inventories . GAO reviewed th e          GAO found significant weaknesses in both informa-
Army inventory procedures in the continental Unite d       tion systems . As a result of inadequate data. the validity
States and in Europe to determine the effectivenes s       of fiscal year 1970 budget and procurement action s
of the new procedures .                                    was highly questionable . Unless there is significant im -
   Although the Army was attempting to schedule an d       provement, equipment imbalances may affect seriousl y
take physical inventories on a regular basis and it s      the Army's ability to perform its mission effectively .
depots appeared to be doing a good job, significan t          Inaccuracy in data on equipment needs resulte d
improvement in the accuracy of inventory records ha d      from lack of adequate controls to insure that all per-
not been achieved . The Army's inv entories of abou t      tinent data were considered . For example :
$3 billion in the continental United States require d          Some valid equipment requirements for entir e
adjustments amounting to $830 million in 1969 t o            Army units were excluded from tile SN'steril ' s
reflect quantities based on physical comets—downward         computations .
adjustments of $439 million for inventory that di d            Requirements were included for units that did no t
not exist and upward adjustments of $391 millio n            need the equipment .
for inventory the Army did not know it had . Th e              Requirements were included for units schedule d
$830 million represented an adjustment ratio of 27 . 7       for deactivation .
percent as compared with the ratio of 23 .5 percen t           Some requirements were considered more tha n
GAO had found in 1966 . The Army's inventories o f           once .
 about $1 .1 billion in Europe required even greater ad-        Some activities were not revising their equipmen t
justments in 1969 : downward adjustments of $64 8            requirements to reflect current needs .
million and upward adjustments of $768 million fo r            Changes to requirements took an inordinate lengt h
 a total of x$1 .4 billion . These adjustments exceede d     of time to process for approval through the variou s
 the average inventory value by about $300 million .         Army commands .
    Accuracy of records was not improved because th e        Inaccuracy in data on equipment oil hand resulted
 Army had underestimated the magnitude of the task .       from weaknesses in reporting . For example :
 The manpower and automatic data processing equip-
                                                                 Army units did not report accurately the equip-
 ment provided for the task were inadequate and no t
                                                              nnent in their possession .
 effectively applied .
    GAO made a series of recommendations designe d               Quantities of equipment were "lost" in the Army
 to strengthen procedures and improve accuracy of th e        system and not reported at all .
                                                                 Acceptable substitute equipment was not reporte d
 Army's inventory records . The Army generally agree d
 with GAO's findings and conclusions and initiate d           as available assets .
 action on each of the recommendations, The Army' s           At one depot GAO found that 100 cargo trucks ,
 actions, if effectively implemented and pursued on a      valued at $1 .5 million, had been in storage for almos t
 continuing basis, should bring about substantial im-      a year but had not been included in the Army's com-
 provement in accuracy of the inventory records . (Re -    putations of available equipment . Because of question -
 port to the Congress,-ii–146828, Feb . 26, 1971 )         able validity of the data, some inventory manager s
                                                           refused to use the data on equipment o hand a s
    206 . Projections of Future Requirements fo r          derived from the information system . Instead, the in-
 Major Itetrts of Military EquipMent . —The Army re-       ventory managers used data, also of questionable valid-
 lics oil ty,o comp ulcii?,ed management informatio n      ity, that they developed through estimates or persona l
 systems for information at< to ( 1) its major equipment   knowledge.

  GAO recommended that the Airily :                                 All inventory management organizations give th e
     Establish it procedure to insure that all appro-             program a high priority.
  priate data are considered in determining equipmen t            The Acting Assistant Secretary of Defense (Instal-
  needs .                                                      lations and Logistics) agreed, in general, with the find -
     See that processing of changes to equipment au-           ings and proposals. He reported a number of correc-
  thorizations is accelerated .                                tive actions, taken or planned, which GAO believe s
     Require internal auditors to validate equipmen t          will eliminate unneeded stocks in the supply system i f
   requirements periodically and to review the ac -            carried out effectively . (Report to the Congress, II-
  curacy of units'' reports of equipment on hand .             133118, Mar . 31, 1971 )
     Continue with the plan to revise the asset infor-
  oation systeni through the reporting of major item s             208 . Duplicate Stocks .—The Marine Corps man -
  of equipment by serial numbers .                             aged and stored large numbers of items that either had
     Direct that procedures be revised so that all majo r      been designated for management under a single man-
  equipment on hand will be included in asset reports .        ager within the Department of Defense or were man -
                                                               aged and stored for all Government users by the Gen-
  The Army concurred in the recommendations an d
                                                               eral Services Administration, In a report issued to th e
stated that it had taken, and would continue to take ,         Congress in November 1970, GAO pointed out tha t
corrective action against the problems cited in GAO' s         this resulted in a sizeable duplicate investment in in-
report . GAO believes that the Army's actions--coni-           ventories and in substantial additional costs in suppl} '
pleted, begun, or planned-should bring improve-                management . As of June 30, 1969, the Marine Corp s
ments. (Report to the Congress, B–163074 ; June 8,
                                                               Supply Activity had 265,000 items valued at $280 . 5
1971 )                                                         million on hand and on order . About 185,000 item s
   207 . Lots-Cost, Low-Usage Items in Supply Sys-             (70 percent), valued at $141 million were also man -
temS.---In a report issued to the Congress in Octobe r         aged by the Defense Supply Agency, the Army Tank -
1967, GAO pointed out that substantial savings coul d          Al toil otive Command, or the General Service s
be achieved by eliminating some 1 .2 million 10w-cost,         Administration .
low-usage items from the Department of Defens e                   Although the Marine Corps and the Department of
(DOD) supply system . The Department agreed an d               Defense had been aware of this duplication for severa l
cited a program undertaken for that purpose .                  years, the Marine Corps had resisted efforts to requir e
                                                               it to relinquish its management and stockage of th e
   GAO ' s followup to evaluate the effectiveness of th e
                                                               duplicated items .
program showed that there were still as many as
                                                                  GAO proposed that the Secretary of Defense either :
900,000 loco-cost items in the supply system- that wer e
seldom, if ever, needed . It has been estimated that th e           Require the Marine Corps to reduce existing du-
annual carrying cost ; of inventories is from 20 to 25           plicated stocks and to direct using activities to
                                                                 requisition directly from the designated managers o r
percent of the value of the inventories .
                                                                    Direct tire Defense Supply Agency and the Marin e
   GAO proposed that DOD improve its program for
                                                                 Corps to develop a plan which could retain the do-
elimination of items from the supply system by insuring
                                                                 plicated stocks at Marine Corps depots but under th e
that:                                                            management of the Defense Supply Agency .
     Stock retention policies of inventory managemen t            The Assistant, Secretary of Defense_ (Installations
  organizations' do riot restrict the systematic identi-       and Logistics),althougli agreeing with the intent o f
  fication and :Cliuiination of loci--cost inactive_ items .   the first alternative, said that neither of the proposal s
     lncrctivc :teens are `promptly eliminated unles s         would be immediately implemented . He did not com-
  there me valid future needs that cannot be me t              ment on the second alternative but stated that a ma-
  readily- and economically by purchase or fabrication         teriel management system would be developed fo r
  of stocks ns needed .                                        the Marine Corps to support deployable forces effec-
     Provision is made for periodic idtntification an d        tively and economically . GAO believes that the pro -
  elimination of lo%, -cost, slow-inoving `items that ca n     posed action is not responsive to the problem and tha t
  be Obt11TIe11 readily 'and economically by purchase          prompt and aggressive action is necessary . (Report to
  or fabrication as needed .                                   the Congress, B-146828, Nov . 10, 1970)

                                                                                                       SECTION I
    209 . Laboratory Equipment,—As a result of             for identifying little-used equipment—were not bcic g
GAO's earlier findings and subsequent hearings befor e     used in four of the six laboratories .
the House Committee on Government Operations, th e           GAO rcconunended that DOD :
committee made certain recommendations in Octo-                 Require laboratory management to conduct sys-
ber 1967 to the Department of Defense and the Gen-           tematic, documented walk-throughs to identify un-
cral Services Administration designed to improve tnan-       needed and little-used cquipment and make i t
agement of laboratory equipment. GAO made a review           available for redistribution or declaration as excess .
in the Department of Defense (DOD) to determin e                Require the use of equipment pools.
floweffectively the committee's recommendations ha d            Provide guidance on the use of elapsed-tim e
been carried out,                                            meters for equipment management purposes .
   Although DOD had taken certain actions on th e
                                                           GAO recommended also that the ulilitary audit agen-
recommendations, some of the weaknesses in manage-
                                                           cies include verification of these procedures in thei r
ment continued to prevail . At the six laboratorie s
                                                           scheduled reviews.
included in GAO ' s review, there h•as no formal, sys-
                                                             DOD Nvas in general agreement with the recom-
ten t atic procedure requiring top management to wal k
                                                           mendations and outlined the actions being taken to
through the laboratory and identify unneeded o r
                                                           implement them . (, Report to the Congress. B-1601-10 ,
little-used equipment . (GAO's partial walk-through s
                                                           Nov. 24, 1970 )
with, agency representatives turned up excess equip-
ment with an acquisition cost of about $1 .7 million . )
Four of the six laboratories had equipment pools bu t      Construction, Maintenance, Repair ,
they were not operated efficiently ; one had no equip-
                                                           and Overhau l
ment pool_; and one had all inventory listing of equip-
ntent which it contended-and GAO disagreed—                   210 . Maintenance and Repair of Office Ma-
served the same purpose as an equipment pool . ( A         chines .—GAO's teview of 13 Veterans Administra-
                                                           tion (VA) stations showed that, where office machine s
major benefit of cquipment pools is the elimination o f
                                                           were serviced under annual maintenance contracts ,
duplicate purchases .) Elapsed-time meters—useful in
                                                           station officials had not studied cost and use factors to
obtaining usage data for calibration scheduling and        determine alternative service methods which could
                                                           have been used . GAO estimated that savings o f
                                                           about $38,000 could have been realized if machine s
                                                           at these stations had been serviced on a per-cal l
                                                           basis . GAO also estimated that, if the same con-
                                                           ditions existed at VA's other field stations, savin" s
                                                           of as much as $400,000 annually could he realized
                                                           through greater use of the per-call service method.
                                                              GAO recommended that the Administrator of Vet-
                                                           erans Affairs ( 1 ) establish procedures requiring field
                                                           stations to determine theanost economical maintenanc e
                                                           and repair service method for office machines, (2 )
                                                           require that field stations document reasons for using
                                                           more costly maintenance and repair service, and (3 )
                                                           establish appropriate followup procedures to insur e
                                                           that field stations comply with requirements .
                                                              VA agreed with GAO's recommendations and too k
                                                           steps to implement them .
                                                              Because of potential Government-wide significance ,
                                                           GAO suggested that the General Services Adminis-
                                                           tration (GSA) reemphasize to federal agencies th e
                                                           importance of reviewing their methods for obtainin g
                                                           maintenance and repair services to ascertain whethe r
                                                           the most economical method was being used .
     GAO also recommended that GSA closely monito r              where the cumulative repair costs, within a 1-yea r
 Federal agencirs' compliance with the pertinent GS A            period, had exceeded both the original acquisition
 p o licies . GAO sugested that GSA consider requirin g          cost and the latest replacement cost for the conveyors .
 the agencies -to report periodically the -number of offic e     The Department's repair replacement policies did no t
 machines and the percenta g e serviced under annual             require consideration of cumulative repair costs i n
 +naintcnrnaca contracts and per-call arangernents .             making repair/replacement decisions and the mainte-
     GSA brought this matter to the attention of all Fed-        nance management reporting system did not provid e
 eral agencies and established procedures to notify in-          for reporting such costs to postal management .
 dividn rl agvncies inhere additional economics ui servi c-         GAO recommended that the Department (1) pro -
 in l- office machines could be -realized . (Report to the       vide post offices with more specific ; repair; replacemen t
 Conlress,11-16041), Oct . :` , 1970 )                           guidelines, inc_. dint; the requirement that the cumula -
                                                                 tive, as well as the one-time, repair and maintenance
      211. Maintenance of Mail-Handling Equ -tp-                 cost be considered in making repair/replacement de-
  ment -_Tlic Post Office Department could reduce it s           cisions and (2 • establish procedures that specify whe n
   inamterance costs on its bolt: belt and tray transport         repair costs should be reported to appropriate official s
  systems, without adversely affecting the operation o f          so that they can take action to replace equipment be -
   the equipment, by reducing the frequency of certai n          fore excessive repair costs are incurred .
  routine preventive maintenance and by reducing th e               The Postmaster General advised GAO that the De-
   time prescribed by the Department for performin g              partment concurred with GAO 's first recommendatio n
   such maintenance.                                              and wild modify its instructions to post offices ac-
     GAO's review showed that, generally, there was n o           cordingly . He stated, however, that the Departmen t
   more repair and breakdownof the systems at post of -           already had specific procedures for reporting excessive
   fices that did little or no routine preventive mainte-         repair costs but that the need for closely adhering to
   nance than at post offices that performed such main-           these procedures would be reemphasized . (Report to
   tenance in complying,=- with established requirements .        the Postmaster General, 11-114874, Dec . 3, 1970 )
   GAO estiniated that, if the maintenance were per-
   fornie d - at reduced levels, the annual cost of preventive      213. Maintenance of Helicopters.—Because of
   maintenance at the five post offices included in GAO ' s      large quantities of helicopters, engines, and compo-
   review would be about $318,000 less .                         nents awaiting repair at the .luny .-aeronautical Depo t
      GAO recommended that the Department (1 )                   Maintenance Center, and the unusual military need
   evaluate its routine preventive maintenance require-          for the equipment, GAO reviewed the Army ' s heli-
   ments for the bulk belt and tray transport systems an d       copter maintenance program .
   other mechanized nrail-liandling equipment to elimi-             The backlog of equipment awaiting repair had in -
   nate .unnecessary maintenance routines and reduce tim e       creased substantially during the 18-month perio d
   allowances for perfonriing maintenance work and (2 )          preceding January 31, 1970, because of increased mill -
   establish procedures requiring periodic evaluations o f       tart' operations and insufficient use of maintenanc e
   maintenance routines .                                        capabilities . At that date 200 helicopters valued a t
      Tl Pm . :ita + m 0,ei .0 :,d concurred with GAO's rec -    about $63 million and large quantities of engines an d
- o+oiim w :id ailon, +mi :n, d that a comprehensive revie w     components with an original cost of about $88 million
   of the Department's maintenance management syste m            were awaiting repair and overhaul . At the same time ,
    would be made, (Report to the Congress, B-11487=1 .          the Army had on order or was planning to buy abou t
    Dec . 31, 1970 )                                             1,700 helicopters and large quantities of engines an d
                                                                 components .
    212. Repair/ Poplacement Policies for Mail -                    In a report issued to the Congress in December 1970 ,
  Handling Equiphieni .--Excessive repair costs may              GAO concluded that the Army could attain the sam e
  have hcen incuncd on certain portableconveyors be-             or increased availability of helicopters at less cost b y
  causc the Pori. Office I lepartnient did not have specifi c    expanding its maintenance program and reducing or
  guidelirncs {or use in determining when equipmen t             stretching out its procurement program . The Army
  should he wp!acccl instead of repaired . The lack of           had sufficient physical plant and equipment availabl e
  such r uideliues re~ultcd in the convc}ors being re            to expand its maintenance program . Additional fund-
  paiced rather than replaced . GAO cited instances              ing was needed, however. for personnel costs involve d

   1f :

                                                                                                                                                      SECTION I

     III    esmbli hinr1 A Y'Cond work shift- and, if necessary,    tion of administrative costs and in larger discounts for
           third hilt,                                              quantity purchases .
            GA0 proposed tllnt the Army :                -             GAO suggested- that :
            Rc , appral!c its r.iaintenance progralnto take full          'm= ile Secretary of Defense reemphasize" to the

         adva11ta ,11 , e of hotl2 in-house and contractor mainte-     army and the Air Force the need to use and enforc e
         nauce capabilities. to reduce the backlogs of aircraft,       labor standards to measure and improve efficiency
         engines and co,iiponcnts awaiting overhaul . -                andproductivity of the, maintenance operations .
            Review the supply statu-, of aircrsaft engines, and           The Army in Europe report to Higher headquar -
         1major cmiiponeuts to reevaluate boththe needfor              ters the uneconomical effect of the lack of ne w
         those on order and their delivery schedules .                 replacement vehicles and the repair- of old vehicle s
                                                                       beyond economical repair, and that the reports b e
         The Army agreed w0.          h these recommendations and
                                                                       used by the Secretary of Defense as the basis fo r
     stated that overhaul plogranls had been or Nvould-kie
                                                                        requests for additional funds for replacement .
     increased, and that procurement requirements for sonic
                                                                           The Army - consider eliminating the Frankfur t
     of the nc~, iteu~s had been reduced . Subsequentlythe
                                                                        automotive parts center and having the six equip-
     Army reduced its plauiucd proclmreinentof helicopter
                                                                        ment support centers order directly from the manu -
     cnf ;ines and components by about $113 million. (he-
                                                                        factu2ers' distributors.
        ort to the (_:on g ross li 146888, Dec. 7 1970'
                                                                           The Army and the Air Force consider establishin g
          214 . Maintenance of - Commercial Vehicles                    a single   purchasilig office for autamotivc 'parts t o
     Overseas .—In August 1970 GAO_ issued a report to'-                serve both services .` -
     the Congress on a review of the Department of Defense _            The Department of Defense cited the actions take n
     management of commercial vehicle maintenance in                 or planned with respect to these suggestions . One of th e
      Flurope .                                                      actions taken—elimination of the inve .ntorv-tit Frank -
         The costs to the Army and           the Air Force of main-  furs--resulted in annual savings of about $175,000 . -
      raining their commerci ;,1 vehicles in Europe during the       (Repart to the Congress.. K-133244, Au lg; 11, 1970 )
      liscal yern , 1069 were about $7 million, or $2,8 million
      higher than plamwd . Factors contributing to higher                215 . Rebuilding of Tires .—In a-report issued to
      costs included frequent and large volumes -of repetitive       the  Congress in January 1971, GAO estimated tha t
      repairs, e .rcessivc preventive maintenance and inspec-        about $1 million could have been saved ill Europe
      tiorts, and cxccssivc time spent on repairs and inspec-        during fiscal year 1969 if the motor vehicle tire-rebuild -
      tions . Ncither the Arum, nor the `Air Force was using - - in ,, programs of the Army and Air Force , had bee n
      established standards for direct and indirect labor to - more effective . ' Significant (JUantitie _Of used t1res tha t
      measure efficiency and productivity of the maintenance                                                                             ,
      operattoils .                                                                                                                          _
          Ati of j amrlrN' 1, 196 1 ), about 23 percent of the t o121 -
      lllt'rt'L11 vl.11lCler of the Aiim gnallhcd for replacement,                  F       -                          ~! r
      1Z<_piaccumcnts w( , iv not <tv ailable, however, and the-'_
      Army       approved about $D1,000 for expenditure on;                         t
        t pails to vehicles %N hick v+cme considered` to be uneco-
      aloiuir :d too rep" ,
           T1 le ru1y st<x marl a l,u; e inventory of vehicle repair                  ,
      parts Ott lrankfurt, ( ;erinam, in addition to =stockiw,                      K ti                                                                           i
      sImilar pal is to vs :naint i--Hance centers anal at 18 motor                                                                                               n
      prols in (_;em)rmy . Tlic Frankfurt inventory -was -uu-                                                                                                       ~
      n~'CC ;SSCtI'y atld 0S t'1111IhiMI01t WOUld Savc about $475,- -
      0(l0 alutmdly pl inwiprdly in Salaru', .
           A si n "       pni :z hasiwr c)1lit c for roxuinercial ehicic+
      1)a  1 -  st tIvi11+~,  1)Uth t I i u A t' RIy' lard the Air Force, wou]d _       j;Xat. .ite-s of or,-i .,cl-tri :icd -rarn drsj,r, .,I             w, "o ,
      li ttve 1)r , n tc;-iiblc and (ould ha-, e resulted in reduc-                     ?ebuilding .
                                                                                                                                                               ,, .

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         I`                                            . y \\~\?2\\\~\,2

                                                                                                                        SECTION I

    the 23 months following fecal Year 1967 for significan t        and could not be delivered ,+h . n rt-disu-ibution tea s
    qur,utities of spare parts' identical to those which had         roquested .
    been declared excess durin ,April . May . and _June 196 7          GAO trade a numiier of sus esti<ms to tile Svc letart
    when parts which most about $3 .8 million were de -             of Uefeux to intproae the cllectiv-nehs of the Pacific
    Glared excess_ It was e timated that the newly acgtwe d         t_:ommand I tilzation and R-IiNnibution Ageuc% an d
    parts would cost about -W3,900 .                                to clatlfy and improve criteria for identifvtng excess
       GAO recommended that FAA assemble and owa-                    materiel . ' Hw llepartuuent of 1Je4cllm stetted that till ,
    nize into appropriate -form information pettaininz t o           Aran had t_;een diri•rtl-d to imployl. the t°11,ectiyeness
    (i t the types and numbers ofdacilities in me, t2': th e        ,if the o1wiation- . Eteport to tile ( :ont,, irss,
    particular Spin-(, parts needed to maintain each typ e              ll    '.' . 1'1-0 ,
    of facility, and (3? the expected useful life of th e
    facilities.                                                         219 . Use and Redistribution of Excess Materie l
       GAO also recommended that FAA i i i establish                in EUrope . - To obtain ma+inmm use of the materie l
    p?'r.'edures dtsitned to insure that SUCK infolul,mt. n         itt the 1 t i , ait       dw :kIel, tttr IJepa rtmetIt of I refen>e
    is appropriately used in inventor utanasrenunt deci-                abli,l w d _t spy_, w! prcrzi ;tnt, c nndncted he the A[ate -
    sions and %2' in the intemu, declare spare part, ext_c,, ,      tu               1. di,tr.hutiut ; Gcru r . La lop" . to promot e
    only aft it has been determined that they are ola-                  lisua a lots of exec-mss nl`,tvr ei amomf the militar y
    solete or unfit for use or than continued retentio n                          .n I:ur ; . t :AU traiectecl tilt- pi-Y'lane to
    would become economicrily impracticable .                       t - ritLlf t; ldr'iu l(t aief dire ttl'elwe s .
       The I9epartment acknowledged that FAA ' s inven-                   tc,t . in, ( pivtr t thy= In rat rely to jufy 1967 thmut-
                                                                         1.                                                         01

    torymana!~entent Irrocedyres could be improved_ 1 Re-                          P lti" . about 41 c r}1 still-ul %rori of exces s
    port to the Congress, I3-161#97!I!, ,fill%- 22, 1970 1          t talc-lid :,a- te . .ntrd to the tenter and about $20
                                                                    iodhon %,orth %,,e, redi tributedl - llo(cevrt_ not all o f
         218 . Use and Redistribution of Fxcess Materie l           the Nav< rt! .muation- t ill,! none of the _Air Forc e
    in the Pacific Area .—To obtain maximum use of the              rntlnit lot . ill l"im pe had reported their excuses to
    materiel in the p acific area the Department of Defens e        .hlr , :rr t t t r haef used the• C :entet .c a possible source
    established a special inogrtun, conducted by the Pacifi c       of 'upph fill their ryuin<mcnts . (: .AO estimated tha t
    Command Utilization- and Redistribution Agency .                full pamcipauom by \ay% ott ;anizations and Air Force
    Okinawa_, to promote iedistribution of excess materie l         contra tol- in l utope could hate nesutled in additiona l
    within and, among the military services it-, the Pacifi c       redistribution of $6&L000 worth of excess materiel i n
    area . GAO reviewed the program to evaluate its adc-            the 12-month period ended December 1, 1969, an d
    quacy and effectiveness .                                        rnmarablt- amounts in snbsegUeTlt years .
        During fiscal year -1969, excess materiel costin!, $603         G .-AO found alNo that :
    million was reported and about $23 million wort h                       Excesses were rel•ased h}- the Center for disposa l
    of these excesses was redistributed . GAO found tha t                after the period of screening against requirements- -
     more excess materiel could have been redistribute d                 genetaliy 90 clays from the time the excesses %,ere
    had there been greater participation in the program .                first repor tcd--eren though some of the items ha d
     Air Force contractors and some military activities ha d             a potential for redistribution and %yere in fact neede d
     not reported their excesses to the Agency nor had the y             shortly after they sere released for disposal .
     used the Agency as a-possible aource of supply for thei r              Substitute and interchangeable excesses were no t
     requirements. Since the Government received onl y                   considered for redistribution eren though compute r
    about $0 .075 on each $1 worth of materiel sold a s                  equipment capacity had been provided to includ e
    surplu greater effort should have been made to us e                  information oil such items and an audit in 196 8
    exec« heirs rather than to sell them- as surplus .                   by the Office of the Secretary of Defense indicate d
        'Fire Agency served merely as an information center .            that use of substitute and interchangeable excesse s
      file management tc>ponsibilit} was fragmentedan d                  would have increased redistribution by about $1 . 5
     nn one or!.*anization had an overview of . the entire               million in the 15-inonth period covered in the audit .
     prgci tun._ Also, 'thc military services did not have clea r           Excesses redistributed to .Army requisitioners to
    criteria for definin"~ cxccs materiel, and some of the               meet permissive overstockage may have deprive d
     materiel wpoited as excess %vas not actually excess                 organizations with amore urgent need and resulted ,

           I   I5   f ;Q?   0                                                                                                      125
  in sotue instances, in the subsequent reporting o f             other than the ones being scrapped, (2 ) slow-roving ,
  the same stocks as excess .                                     low-demand consumable items, ( 3 ; consumable item s
  GAO recommended that the Secretary of Defense :                 with a unit price under $10, and i-1) consumabl e
                                                                  items designated as leasing a shelf life .
     Require full participation in this program by th e              GAO's review of another aircraft disposal progra m
  militan services and contractor.                                of the Navy shotyed that the aircraft had been scrappe d
     Reevaluate thescreening cycle to present pre-                without a reclamation project having been establishe d
  mature disposal of needed items .                               for the disposal . These aircraft contained items cost-
    ]require the resolicitation of organizations . whose          ing about $507,000 which the Navy needed . Ha d
  excesses were recently released and are subsequentl y           the Navv reclaimed the items, it would have avoide d
  needed, to determine whether the excesses are stil l            purchasing }120,800 v%orth of new items .
  available for redistribution .                                     The reclamation criteria and procedu res of the Air
     Insure that the program for considering substi-              Force and the Armv were generally effective in iden-
  tote and interchangeable items is c-u•ried out a s              tifying needed items to be reclaimed . Minor areas in
  previously recominended by the Department of De-                idtich improvements could be made were brought t o
  fense audit .                                                   the attention of local officials.
     Establish procedures to hold requisitions for per-              GAO found also that thecontro l ,., of the three service s
  missive_ oyerstockage in abeyance so that if requisi-           did not insure that items to be obtained from reclama-
  tions for current operating stockage are receive d              tion werc considered in making decisions to procure
  during the screening period, they can be filled first.          needed stock . As a result, new items- were procured
  The Department of Defense concurred in genera l                 unnecessarily .
with GAO's conclusions and recommendations . (Re -                   GAO proposed that the Secretary of Defense requir e
port to the Congress, B-140389, Feb. 3, 1971 )                    the Navy to consider the following criteria for reclama-
                                                                  tion of parts from excess aircraft :
   220 . Reclamation of Usable Parts From Exces s
                                                                           Needed items, regardless of whether there is a
Aircraft, — Excess aircraft not needed by the military                   maintenance demand recorded for the particula r
services are mothballed - at the Military Aircraft Stor-
                                                                         model of aircraft being disposed of.
age and Disposition Center in Arizona . When there i s
                                                                           Needed slots-moving, loco-demand items .
no longer any foreseeable need for them, they are
                                                                           Needed low-unit-price items where (1) tota l
scrapped . Since many of the components and part s                       quantities available or needed are great enough t o
of these aircraft can be used in repairing operationa l
                                                                         warrant the effort of reclamation or (2) unit price s
aircraft, they are. reclaimed before the aircraft are
                                                                         have changed considerably .
scrapped . During fiscal year 1969 the Center re -                         Needled, although unserviceable, shelf-life item s
claimed, from aircraft which were to be scrapped ,                       that can be economically restored to serviceabl e
items which had originally -cost about $83 .5 million .                  condition .
GAO made a review of the reclamation program t o
test the effectiveness with which the military service s          GAO also proposed that the Secretary of Defense re -
were recoFering needed components and parts - and                 quire that (II all excess aircraft being disposed of b e
were reducing their purchases accordingly.                        screened for total reclamation requirements and (2 )
   GAO's review of two reclamation projects of the                the military services establish appropriate procedure s
:lac=y, inwhich items .•osdng $3 .1 million were to be            to insure consideration of the items to be obtaine d
reclaimed from 141 aircraft scheduled to be scrapped ,            from reclamation before purchases are made ,
showed that additional items, costing $410,000, were                 The Department agreed with these proposals an d
w cdt d and should have been included] in the reclaina -          cited the actions taken to implement them . (Report
uun project,. The Navy purchased $252,100 wort h                  to the Congress, B-157373, Aug . 6, 1970 )
of nr„ part,, to cover its need for the harts that shoul d
ha,t, been included in the reclamation projects .'rhe                221 . Excess Inventories of Industrial Mate-
Navy rite ~i ;r cxrlml d the following categories o f
                                                                  rials .--GAO's review at four of the 10 naval ship-
items from cnr.~irler:}tton for reclamction even thoug h          yards showed that about 30 percent of the inventorie s
rcquircm .~nt :, for th : . nt> Illav have existed : (1) thos e   cl .industrial materials at the four yards were excess _
L~r nnaititruatur demands rcJated_to models of aircraf t          to their needs . The excess material—valued at over $17

                                                                                                          SECTit3N 1
million-had riot been i-epoi•ted to the naval supply          tified similar conditions but the recommended corrcc-
system for, redistribution or for disposal, and the yard s    tive measures had not been fully implemented .
did not have an adequate program for identifying ex-             In response to GAO's su g gestions for improvement ,
cess material . GAO estimated that, disposal of the ex-       the Navy stated that inventories at the 10 naval ship -
cesses at the four, yards would eliminate holding costs       yards had been reduced by about S28 million in th e
of about $3 .4 million annually.                              period January through_ September 1970—and th e
   Much ofthe accumulation of the excess materia l            trend was continuing--and cited a number of related
resulted from the orde6ti g, of mate*-ial far, in advance     actions taken or planned to :
of actual need and from the establishment of stoc k                Improve requisitioning of material .
levels on the basis of inaccurate demand and use data .            Develop revised stocking criteria .
   GAO noted also that the yards were not snaking                  Establish _guidelines for placing material in inyen-
maximum use of Navy procedures to reduce the cos t              torv .
of requisitioning high-rise, low-value items . These pro-         Dispose of excess material and set up annual in-
cedures provide for requisitioning' of such items i n           ventoty and reporting requirements .
bulk, and placing them in bins in the work areas ,                 Increase to $10 the unit value of material which
rather than it uisitioning there in small quantities            may be bulk issued .
as needed . Elimination of unnecessary requisitioning a t     Thee Navy stated also that the Inspector General %%ould
the four yards could reduce : costs by about $1 .3 millio n   provide surveillance of the implementation of audi t
annually.                                                     report recommendations . (Report to the GonQress,
   Internal audits and studies at shipyards had iden -        B-125057, May 28, 1971)


                                  OTHER GOVERNMENT ACTIVITIE S

    Transpoytation                                               various installations and military departments . flow-
                                                                 ever, the joint Agency Transportation Study Grou p
        222. Centralized Control of Overseas Air Pas-            in a recently released report conservatively estimate d
    senger Transportation .-In a report to the Congress ,        that it cost about $2 to issue and process a TR . The
    GAO cited the need for centralized control over pro-         group qualified its estimate by saying that a number o f
    curement of overseas air passenger transportation t o        agencies believe the cost should be at least $5 . On the
    eliminate unnecessary purchase by the Departmen t            basis of these figures, annual savings between $300,00 0
    of Defense (DOD) of seats on commercial flights .            and $800,000 will result from GAO's effort . (Repor t
    GAO had proposed in three previous reports to th e           to the Congress, B-125283, July 27, 1970 )
    Congress that the Secretary of Defense designate a
    single authority to exercise such contro l                       224. Unused Cargo Space on Aircraft Con-
       GAO found, however, that effective centralized con-       trolled by the Military .—On several previous occa-
    trol had not yet been established and that corm: er• via l   sions. GAO had reported to the Congress that th e
     transportation had been used by DOD personne~ th e          cargo capacity of aircraft controlled by the Military
    same time that space was available on aircra' i otr-         Airlift Command (MAC) had not been fully use d
    trolled by the Military Airlift Command (A4Ac : .            and GAO had made several recommendations designed
    GAO estimated that savings of $4 million in DOD' s           to improve aircraft utilization .
                                                                    In Augu=t 1970, GAO again reported to the Con-
    cost of commercial air transportation could have bee n
     realized during fiscal yen- 1968 if the passenger capa-     gress and stated that although use of the airlift capa-
    bility of MAC had been used more effectively .               bility had improved significantly since its earlie r
       DOD agreed that centralized control of oversea s          reviews, optimum use of cargo and passenger flight s
    air passenger transportation had not been establishe d       still had not been achieved, and available cargo capac-
    at the time of GAO's review._ but reported that a join t     ity in the belly compartments of aircraft had been lef t
     res,tdation had been issued establishing such contro l      lamely unused. GAO estimated that the unused spac e
     for air travel after January 1, 1970 . The amount of        in the belly compartments of aircraft controlled b y
     savings that will be realized in future years could no t    MAC would have accommodated an additional 20
                                                                 million pounds of cargo annually The cost of procur-
     be determined by GAO from available data . (Report
     to the Congress, B-133371, July 21, 1970 )                  ing an equivalent amount of cargo airlift would hav e
                                                                  been about $11 million .
       223. Reduced Paperwork in Procuring Bu s                     The Department of Defense (DOD, agreed wit h
    Transportation .-In July 1970, GAO reported to th e          GAO's findings and stated that newly established ter-
    Congress that the number of Government transporta-            initial liandling procedures had already increased the
    tion requests (TR's) issued by the Department of De-          average belly compartment load . It also indicated tha t
    fense (DOD) to procure bus transportation and th e            previous restrictions on the use of unaccompanied
    related paperwork could be reduced significantl y             baggage as filler cargo had been removed . DOD offi-
    through greater use of the bulk purchase program .            cials said they will continue to review the program t o
    L'ndei this program, DOD is authorized to use a singl e       further improve the effectiveness of DOD's airlif t
    TR to procure quantities of bus tickets .                    system .                                                    t
       DODhas agreed ; with GAO s findings and is taking             Because of the sharp reduction in cargo shipments
                                                                 to Southeast Asia and the related decrease in the num
    cori cctive action .
       GAO dial not attempt to '-measure the savings i n          ber of cargo flights, GAO was not able to estimate th e
    pLipei work in terms of dollars because the cost of is-       savings that will result . (Report to the Congres s
    suing and piocessin ,g TR's differed significantly at         B-133025, Aug . 19, 1970)                                      I`
                                                                                                           SECTION I

    225 . Airlifting of Military Service News-               request concerning the comparative economies of usin g
papers .—About 15 tons of Pacific Stars and Stripe s         berth service (regular commercial service) and char-
and other service newspapers are airlifted daily fro m       tered vessels for the ocean movement of military cargo .
a Government-owned printing plant in Japan t o               The study was directed primarily to determining
Southeast Asia by a commercial jet aircraft chartere d       whether the Military Sealift Command was complyin g
especially for that purpose . The cost of chartering th e    with the provisions of the Wilson-Weeks Agreement i n
aircraft is about $5 million annually .                      its decisions to charter ships . The Wilson-Weeks Agree -
   In March 1971, GAO reported to the Congress tha t         ment is an agreement between the Department o f
the Department of Defense (DOD) could save about             Commerce and the Department of Defense (DOD )
$3.8 million annually by contracting with a commer-          which, among other things, provides priorities for th e
cial firm to print the newspapers in Bangkok, Thailand .     use of commercial and Government-owned shippin g
Instead of airlifting about 15 tons of newspapers daily ,    capabilities in the transportation of military cargo .
only the printing negatives (about 25 pounds) woul d            GAO informed the chairman that on the basis of it s
be shipped by air . Less costly surface transportation       analysis of the cargo carried on a limited number o f
would be used to move the common newsprint to th e           charter voyages, berth service would have been les s
printing facility which was nearer to the ultimat e          costly . But, GAO made it clear that its estimate of th e
readers. DOD- agreed that the commercial printin g           cost of berth service was based on the lowest berth rates
concept was feasible and stated that negotiations were       on file and that there was no guarantee that servic e
planned to try the concept for the relatively few copie s    could be obtained for such rates. In fact, GAO foun d
distributed in Thailand. DOD added that the print-           that there was generally insufficient berth sen-ice avail -
ing of the Thailand copies would be a valuable tria l        able to meet the needs of the Military Sealift Command .
run and, if successful, could be extended to other areas        With respect to the Wilson-Weeks .Agreement, GAO
in Southeast Asia.                                           found that the Military Sealift Command ' s procedures
    GAO believed that more immediate action wa s             for procuring ocean transportation provided reasonabl e
needed' and recommended that DOD begin negoti-               assurance that the terms of the agreement were com-
ating withqualified firms in Sou th east Asia for th e       plied with . In essence, use of Government-owned ship -
required printing service . GAO recommended als o            ping capability had been limited to the extent possibl e
that the printing be shifted as expeditiously as possible    and the remainder of DOD's shipping needs had bee n
where costs are favorable .                                  satisfied through the use of the U .S . Merchant Marine .
    A task force established by DOD to study GAO' s              In addition to the report furnished the chairman ,
 recommendations reported that the commerical print-         GAO prepared a statement on this same topic which
 ing firm GAO had identified as having the capability t o     was delivered by the Assistant Comptroller General o n
 print the Stars and Stripes had subsequently merge d        March 9, 1971, before the House Committee o n
 with another firm and no longer had the facilities t o       Merchant Marine and Fisheries . ( Report to the
 uo me required printing. Officials of the new organiza-      House Committee onMerchant Marine and Fisheries ,
 tion indicated that in view of the continuing reduction      B-145455, ,Jan . 22, 1971 )
of U .S . forces in Southeast Asia they would now re -
quire a 4-year contract before making any initial finan-        227 . Consolidation of Household Goods Activi-
 cial outlay for new equipment .                             ties in Hawaii .--In December 1957, GAO had rec-
    Primarily because of the 4-year requirement, the task    ommended that the Commander in Chief, Pacific ,
 force recommended that the printing of the Stars an d       consider consolidating five separate military househol d
Stripes not be shifted . But, it recognized the necessity    goods shipping offices on Okinawa into a single office ,
 of reducing expenses being incurred to airlift the news -   and that he reevaluate an earlier study concernin g
 papers and it is currently studying less expensive means    similar consolidations in Hawaii . GAO believed the
 of delivery. (Report to the Congress, B-165683 ,            consolidation would result in more economical use o f
 Mar, 10, 1971 )                                             administrative personnel and in improved carrie r
                                                             operations .
    22,G. Chartering Practices of the Military Sea -            The plan for Hawaii was approved by the Depart-
lift Con►mand, In January 1971, GAO reported t o              ment of Defense (DOD) in May 1970 and the join t
the chairman of the House Committee on Merchant              Office was activated on February 1, 1971 . GAO's sub -
Marine <,nd Fisheries on the study it bad matte at his       sequent review showed that the consolidation was inn -

complete and the joint Office was merely superimpose d          similar information on supply parcels so as to facili-
on existing service offices . Rather than reducing costs ,      tate the screening process at the postal gateways .
the consolidation resulted in significantly higher cost s       The Department of Defense agreed with the firs t
to accomplish the sane functions .                            two recommendations and stated that the third recom-
   In April 1971, GAO reported to the Secretary o f           mendation—the requirement that delivery dates be in-
Defense and recommended that he reexamine the task s          dicated on supply parcels---would be considered i n
now being performed by the separate shipping offices in       connection with its special review of the military mail
Ilawaii to determine if they could be performed mor e         concepts, operations, and procedures . (Report to th e
economically and with greater efficiency by the join t        Congress, B-157476, May 6, 1971 )
Office. GAO also recommended that the Secretary re-
examine the household goods activities on Okinawa t o            229 . Use of Air Taxi Service To Transport
determine if a joint office there would benefit the           Pail .---GAO's review of the Post Office Department' s
Government .                                                  mail transportation policies and practices for convert-
   In response, DOD stated that the GAO review ha d           ing surface transportation modes to air transportation
been premature and that some of the problem areas ha d        modes, with emphasis on air taxi mail serv ice, showe d
been corrected subsequent to the issuance of the GA O         that :
report . DOD indicated that the GAO report will assist
                                                                   The Department exceeded its legal authority i n
in the overall management of the personal propert y
                                                                its use of "emergency" contracts for air taxi servic e
movement program . (Report to the Secretary of De-
                                                                for transport of mail .
fense, B-172376, Apr. 26, 1971 )
                                                                   During the early months of the air taxi mail servic e
   228. Air Parcel Post Shipments of Supplies . —               program, which started in 1967, the Departmen t
In a report issued to the Congress in Xfay 1971, GA O           awarded a number of air taxi mail set-vice contract s
stated that supply depots of the military services wer e        without obtaining formal competitive bids and with -
using air parcel post to a greater extent than necessar y       out adequate assurance that bidders were qualified .
because local controls had not been established, in al l           Questionable contract rate increases were grante d
cases, to insure selection of the most economical, ye t         because the Department did not have adequate pro -
timely, methods of shipment . Use of alternative meth-          reduces for evaluating and processing air taxi oper-
                                                                ators' requests for rate increases until almost 2%2
ods could save about $520,000 annually at three of th e
                                                                years after the program started.
seven installations included in GAO's review. Abou t
$450;000 is being saved annually at two other installa-            Transporting first-class moil by air taxis was mor e
tions as a result of adoption of controls GAO recom-            costly than by scheduled commercial airlines o r
niended .                                                       available surface transportation . Also, discontinu-
   Alternatives to air parcel post include . Navy and Air       ance of unneeded Sunday night air taxi mail serv ice
                                                                would save at least $569 .000 annually .
Force contractor-operated, doniestic cargo airlift srs-
tems ; special types of lower-cost airlift postal service s      In response to GAO's recommendations, the Depart-
to overseas areas ; and surface transportation .              ment took action to reduce the number of emergency
   GAO recommended that :                                     contracts and agreed to furnish the Civil Aeronautic s
    The Secretary of Defense see that procedures a t          Board (CAB) with copies of all future emergency con -
                                                              tracts, in recognition of CAB's responsibility for regu-
  military "supply- installations are revised to insure
                                                              latin air transportation, and to state explicitly in each
  consideration of all acceptable means of deliver y
                                                              such contract the details of the emergency which gav e
  and selection of the least costly means that will per-
                                                              rise to the contract . The Department also initiated ac-
  mit delivery in the required time.
                                                              tion to (1 ) eliminate unneeded Sunday night air tax i
    The Navy adopt a mail-monitoring program at               mail service, (2) discontinue nonessential airtaxi mai l
  the Navy fleet post offices to Sciect the least costl y     routes, and (3) restructure and consolidate other ai r
  means of sendin, official mail overseas .                   taxi mutes . The Postmaster General reported that, as of
      Che -Department of Defense issue policy guidance ,      tune 30, 1970, these actions had reduced the annua l
  similar to that of the Army, requiring all militar y        expenditure rate for the air taxi mail service program
  sc tvrces and other Government activities using th e        by about $1,158,500 or 13 percent, (Report to Senato r
  nulrtary postal system to indicate delivery dates or        Gordon Allott, B-166772, Oct . 22, 1970 )
                                                                                                                           :, t
                                                                                                                                    SECTION 1

Government Claim s                                                                  terminated during the first 12 or 18 months after th e
                                                                                    legislation became effective .
    23€3 . Progress and Problems in Implementin g                                      Despite the problems which arose in issuing regula-
the Federal Claims Collection Act of 1966 .Th e                                     tions and in carrying out the requirements of th e
Federal Claims Collection Act of 1966 became effectiv e                             Federal Claims Collection Act, departments and agen-
on January 15, 1967 . This was the first general statu-                             cies did make substantial progress in compromisin g
tory authority to give Federal agencies broad adminis-                              claims and in terminating collection action at the ad-
trative power to compromise and terminate collectio n                               ministrative level. Undoubtedly the necessity for pri-
action on claims . To implement the act the Comptroller                             vate relief acts by the Congress was sub tantially
General and the Attorney General of the United State s                              reduced and the Department of justice noted a sig-
issued joint standards for the guidance of all Govern-                              nificant elimination of unnecessary litigation since th e
ment agencies and, under these standards, agencie s                                 act became effective .
were required to ( 1) issue internal regulations, (2 )                                 GAO helped the departments and agencies by ( I )
collect, compromise, or terminate collection action o n                             suggesting ways to improve collection operations, (2 )
claims, and (3) report those claims which could not b e                             assisting in the establishment of a checklist of proce-
settled by the agency to the GAO for further collectio n                            dures to be used in the debt collection process, (3 )
action .                                                                            providing sample letters that had been used effectivel y
    The act was designed to reduce the collection work -                            by GAO in making collections, and (41 recommend-
 load of the Department of Justice and to ease th e                                 ing procedures to be foliowed so that prescribe d
 burden of the courts . Placing the responsibility of rou-                          demand actions could be taken promptly .
 tine collection work at the administrative level was t o                              The departments and agencies reacted favorably t o
enable the U .S . attorneys to devote more time to litigate                         GAO's suggestions. For example, the Army Financ e
 those claims for which the prospects of collection wer e                           Center at Indianapolis, Ind ., and GAO have been co-
 such as to justify the incr eased costs and efforts o f                            operating closely in an effort to reduce a large backlo g
 court action.                                                                      of claims . Several meetings have been held and GAO
    Prior to enactment of the act, most agencies had n o                            personnel have been assigned temporarily to the Cente r
 authority to compromise or terminate collection actio n                            in a fu rther effort to provide assistance. Substantial
 on claims but were required to refer all administra-                               reductions have been made in the backlog .
 tively uncollectible claims to GAO for further action .                               GAO reported that its reviews demonstrate that
 Similarly, GAO had no compromise authority an d                                    there are many revisions still necessary in the admin-
 settlements could not be negotiated until the claim s                              istrative regulations of the various agencies to mak e
 were finally sent to the Department of Justice.                                    them conform with the act and the joint standards an d
    In its report to the Congress, GAO pointed out tha t                             that therefore GAO will continue to make reviews t o
 many agencies did not issue internal regulation s                                  determine agency compliance and will render suc h
 promptly . Several agencies had not issued their regula                            assistance as needed .
                                                          e-tionsmreha}ftcivedaoh      GAO informed Congress that it could not state ho w
 act . even though they were allowed a period of 6                                  many claims are presently outstanding in the Govern-
 months after its passage to do so.                                                  ment, or how much money is involved, but statistic s
    Agency regulations which were issued often did no t                              furnished by only a few agencies indicate that hun-
 provide for the collection procedures required by th e                              dreds of millions of dollars are invol v ed . In spite of th e
 act and the standards. They did not prescribe the inter-                            amount of money due the Government, the impressio n
 vals between demands, conditions tinder which an d                                 which. GAO gathered during its reviews was tha t
 the times: at which a compromise should be solicited,                               agencies have a tendency to curtail debt work when-
 and conditions under which collection action shoul d                                ever there is a budget cut, since there is little likelihood '
 be suspended or terminated .                                                        of protests being made over delays in collection . It is
    Due to =a Iacl< of implementing agency instruction s                             GAO's opinion that all agencies should allot reason-
 or regulations and uncertainty regarding the prope r                                able shares of their resources to their debt work . (Re-
 procedures to be followed, GAO found that backlogs                                  port to the Congress, B-117604(3), July 23, 1970 )
 of, la ims developed: in many departments and agencies .
 In attempting to di,pose of these backlogs, collection                                 231 . Improvements Needed in Guidelines an d
 action on a large rnuntber of claims= was iniln operly                             Procedures .—GAO reviewed that portion of the De -

partment of State's Foreign Affairs Manual which              the Denver and Newark Regional Offices on claim s
established general criteria for implementation of th e       payable to the Government : (1) collection action no t
Federal Claims Collection Act and the joint stand-            being promptly initiated or pursued in an aggressive
ards promulagted thereunder. GAO also reviewed th e           and timely manner, (2) suspension and termination
guidelines which the Department of State issued f or          of collection action without p' sitive evidence to sup -
use in conjunction xvith the manual . The guidelines          port the detennination, (3) failure to refer claims to
provided that (1) if a review indicated there was no          the GAO when administrative suspension or termina-
 possibility that the debtor could pay now or in th e         tion action would not be proper under the Federal
future, the debt could be terminated and (2) in suc h         Claims Collection Standards, and (4) failure to solici t
category, it would be desirable to have financial in -        compromises, when such action would be appropriate .
formation regarding the financial status and physical         GAO noted, however, that the major portion of th e
condition of the debtor, but if such information wa s         omissions and noncompliances occurred prior to th e
 not available through inability to locate it, and eve n      date on which the Veterans Administration (VA) too k
though the "statute of limitation" does not run affains t     action to correct similar deficiencies disclosed in a
a Federal claim, the law would permit terminatio n            previous GAO review at the Philadelphia Center .
of the debt.                                                     The Veterans Administration issued a revision o f
    GAO pointed out in its report that there is a statut e    agency collection policies and procedures which re-
 of Iimitations applicable to certain claims of the Gov-      flects the intent of the Federal Claims Collection Ac t
 ermnent . This statute provides, in part, that except as     of 1966 and the implementing joint standards . Em-
 otherwise provided by Congress, every ac t i on for mone y   phasis was placed on procedural matters designed t o
 damages brought by the United States or an officer o r       correct deficiencies found by GAO and internal re-
 agency thereof which is founded upon any contrac t           views . (Report to the Administrator of Veterans Af-
 express or implied in law or fact, shall be barred unless    fairs, VA, B–t 1-1859, Dec . 18, 1970 )
 the complaint is filed within 6 years after the right of
 action accrues or within 1 year after final decision s          233 . Settling Debt and Payment Maims .—Th e
 have been rendered in applicable administrative pro-         review by GAO of the Defense Supply Agency' s
 ceedings required by contract or by law, whicheve r          (DS.A) Manual containing instructions for settlin g
 is later . GAO further pointed out that inability to         claims against the Government (payment claims) dis-
 locate a debtor is not sufficient reason to terminate col-   closed that it was generally adequate and in conform-
 lection action under the joint standards issued to im-       ity with the GAO Policy and Procedures Manual for
 plenient the Federal Claims Collection Act .                 Guidance of Federal Agencies . Four recommendations
    GAO also reviewed the Department's procedures fo r        for clarification were made. One of these stressed the
 settling debts, and in its report recommended that (1 )      importance of protecting the interest of persons un-
 adequate controls be established to insure timely proc-      familiar with the provisions of the 10-year barring ac t
 essing of demand letters, (2) the final demand lette r       (31 U.S .C . 7la) . This is clone by refers ing immediatel y
 include a statement that in the absence of paymen t          to GAO 's Claims Division all claims received fo r
 or satisfactory arrangements for payment, the deb t          which the right of payment accrued 8 years or mor e
 would be referred to GAO for further collection action ,     prior to the elate of receipt and which cannot promptl y
 (3) compromises be solicited, when appropriate, an d             approved and paid by the agency in the full amoun t
 (4) in deceased cases, development action be under-            ;aimed .
 taken to ascertain whether the decedent left an estate .        GAO reviewed actual operations at four activitie s
    The Department of State agreed to make the nec-           of the Defense Supply Agency which are all locate d
 essary changes in its guidelines but noted that the          in Philadelphia . At one of these activities, GAO note d
 Department does- not have adequate manpower t o              that appeals for reconsideration or adjustment of a
 process letters on the basis set out in the joint stand-     claim were not always forwarded to GAO after a n
 ards. -(Report to the Secretary of State ; B–117604(8) ,     administrative denial . The GAO Manual provides tha t
 Oct . 29, 1970 )                                             reclaims of items previously denied by the adrrtinis-
                                                              trative agency must be forwarded to the Claims Divi-
  232. Collecting Claims Payable to the Govern-               sion, GAO, unless it is determined administrativel y
ment .—In its report to the Administrator of Veteran s         that the action taken in denying the claim was clearl y
Affairs, GAO listed the following deficiencies noted in       in error and properly can be corrected by the agency .

                                                                                                         SECTION I
DSA officials took prompt action to insure the correc t      trolled through budget and program plannin g
processing of payment claims administratively denied .       procedures .
   Recommendations were also made to improve, i n               GAO proposed that the Director of the Office o f
the field offices, procedures for collecting debts payable   Management and Budget permit departments and
to the Government ( debt claims) .                           agencies to accomplish their programs without re-
   DSA bars taken action to make revisions in its manua l    strictions on numbers of personnel—being limited onl y
and to improve its processing of both debt and pay-          by the availability of funds . In December 1970 th e
ment claims. It has also established new controls and        Director agreed to eliminate employment ceilings i n
initiated an internal reporting system that will insur e     the Department of Defense for a 1-year trial period .
prompt management reaction to in-house claims prob-          GAO recommended that the Secretary of Defens e
lems . (Report to the Director, DSA, B-117604(10) ,          establish a centralized group of officials to assess th e
May 28, 1971 )                                               effectiveness of fiscal and program constraints on em-
                                                             ployment levels during the test period .
                                                                GAO suggested also to the Secretary of Defense tha t
Manpower (utilization                                        substantial improvements in the management of tota l
                                                             personnel resources could be achieved through con-
   234 . Ceilings on Employment of Civilian Per-             tinuous evaluation by officials independent of th e
sonnel . —Before fiscal year 1969, civilian personne l       component organizations of the Department of De-
ceilings for the executive departments and agencies          fense . GAO proposed that he establish a group o f
generally were established on the basis of annual budg-      high-level officials, responsible to him, for continuin g
ets and were administered by the Bureau of the Budge t       objective evaluation of missions, programs, and activi-
(now the Office of Management and Budget) . O n              ties of the component organizations within the De-
June 28, 1968, the Congress enacted the Revenu e             partment . The Department of Defense did not agre e
and Expenditure Control Act of 1968 which imposed            that establishment of such a group would significantl y
restrictions on the hiring of civilian employees. These      improve its existing review process and pointed ou t
restrictions superseded the ceiling 'system previously       that virtually every level of management was making
imposed by the Bureau of the Budget . On July 22 ,           maximum effort to achieve the savings necessary to
1969, the restrictions on hiring imposed in the ac t         meet budget reductions . (Report to the Congress,
were repealed and the earlier ceiling system impose d        B-165959, Apr . 30, 1971 )
by the Bureau of the Budget was reinstated . GAO re -
viewed the effect of the personnel ceilings and hirin g         235 . Use of Enlisted Personnel .—At the time of
restrictions on the management of civilian personnel .       GAO's review of the use of Army enlisted personnel ,
                                                             there were about 1 million trained enlisted personne l
   In GAO' s opinion, personnel ceilings or hirin g
                                                             assigned to Army units—divided about equally betwee n
restrictions, whether imposed by statute or by the Office
                                                             continental United States installations and oversea s
of XTanagement and Budget, do not provide the mos t          installations. GAO found that about 10 percent of th e
effective management control over civilian personnel .
                                                             personnel at the four continental United States instal-
They tend to be :                                            lations included in the review were assigned to dutie s
    Arbitrarily applied because of the difficulty of         for which they had not been trained . Informatio n
  making them fit program requirements .                     obtained in other reviews at overseas installations
     Inflexible because they do not alloy for changes        showed that the rate overseas was even higher.
  in skills as needed in changed programs.                      GAO recognized that personnel turbulence—th e
     Uneconomical when they permit accomplishmen t           number of men entering and leaving the Army an d
  of'progranis through use of overtime labor at pre •        the number being assigned and reassigned—has in -
  mium pay.                                                  creased sienificantly in recent years and has added to
                                                             the problems of personnel management . The Army
    Ineffective in controlling expenditures since, a s
                                                             needs a personnel management system capable of cop-
  an alternative, programs may ba accomplishe d
                                                             ing with the varying degrees of turbulence . The exist-
  through contracting ; Nvith firms or institutions for
                                                             ing system, with some revisions and adequate enforce-
  personal services .
                                                             ment, may afford the Army the potential for effectiv e
GAO believes that personnel levels can be better con -       personnel management . But the adequacy of the sys -


    tem could not be evaluated because the Army failed           being given to furnishing the Active Navy with equip-
    to strengthen and enforce it and continued to circum-        ment resources was a contributing factor to the low -
    vent it .                                                    readiness status of the Naval Air Reserve units ;
       Some of the problems in personnel managemen t             however, the substantial costs incurred to maintai n
    stemmed from inaccuracies in the data accumulate d           Reserve units suggested a need to determine whether
    under the Army's personnel statistical and accountin g       alternative courses of action are advisable .
    systc,n. Others resulted from practices which circum-            In April 1969 the Navy= approved the development of
    vented the normal operation of the personnel manage -        a 5-year plan to improve the readiness of the Naval Ai r
    went systen, . These practices included "bulk filling" o f   Reserve . As of June 30, 1970, however, the plan had
    requisitions fer personnel (assignment of personnel i n      not been fully developed . The development and imple-
    groups rather than on the basis of the requisitione d        n entation of the plan would provide a sound basi s
    skills and skill levels of the individuals) and manda-        for the corrective actions needed .
    tory levies (a practice, . utside the normal requisition-        Assuming that the present Naval Air Reserve forc e
    ing procedures, which directs installations to transfe r      level is to be maintained, GAO suggested two alterna-
    personnel to fill v=acancies at other installations) .        tives to the Secretary of Defense : (1) allocation o f
       GAO recommended that the Army :                            additional resources to upgrade the readiness statu s
                                                                  of the Reserves or (2) maintenance of the status qu o
         Enforce existing personnel management policies
                                                                  and assumption of the risk of reduced operational ca-
      and procedures at all levels of corunand and refrai n
                                                                  pacity in the event that mobilization of the Reserve s
      from initiating at headquarters level such actions a s
                                                                  is required . The Navy generally concurred with th e
      " bulk filling" and mandatory levies.
                                                                  first alternative .
         Strengthen existing personnel management
                                                                     On other matters noted in the review, GAO recom-
      policies and procedures rather than introduce ne w
                                                                  mended that the Naval Air Reserve inspectors give in -
      programs or changes which add to reporting require-
                                                                  creased emphasis to the reporting of material readines s
      ments and complicate the operation of the system .
                                                                  and that the Secretary of Defense give attention to th e
         Give priority attention to the manpower require-
                                                                  completion and implementation of the 5-year plan to
      ments for the personnel management career fiel d
                                                                  improve the readiness of the Naval Reserve .
      and stabilize the tours of such personnel as soon as
                                                                      The Navy generally concurred with GAO's finding s
                                                                  and evaluation of readiness and in its suggestions an d
       The Department. of the Army agreed with the gen-            recommendations for improvement . (Report to the
    eral- thrust of GAO's report and stated that increase d        Congress, B-146964, Nov . 30, 1970 )
    attention to the personnel management area had bee n
    programmed by the Army Audit Agency . (Report to                237 . Employment of Consultants and Ex-
    the Congress, B-146890, May 6, 1971 )                         perts .—In a report issued to the Department o f
                                                                  Health, Education, and Welfare (HEW) and the
        236 . Readiness of Naval Air Reserve Units .—             Civil Service Commission relating to the use of con-
    Naval Air Reserve units at the four naval air station s       sultants and experts, GAO stated that neither HEW' s
    GAO visited were not achieving their primary pur-
                                                                  procedures for controlling their hiring and use nor th e
    pose of having trained units and suitable equipment
                                                                  Commission ' s procedures for monitoring other agen-
    available for active dirty in the Armed Forces in tim e
                                                                  cies' procedures were effective enough to insure com-
    of war or national emergency . These units bad aircraft
    which lacked certain equipment needed to perform as-          pliance with laws and instructions governing thei r
    signed primary missions; there were various types of          employment .
    supply and maintenance problems ; and there were                 HEW indicated that GAO' s recommendations fo r
    shortages of aircraft and maintenance support equip-          corrective action would receive consideration i n
    ment which 'impaired training.                                planned changes in its procedures . Also, the Commis-
       In two recent readiness/administrative inspection re -     sion agreed with GAO's recommendations and advised
    ports GAO examinee), little emphasis was placed on th e       that appropriate changes would be made in its instruc-
    material readiness of the units, and no mention wa s          tions and operating practices . (Report to the Secretary ,
    made of necd~d improvement in the management o f              HE y1, and the Chairman, CSC, B-164031(1), Apr . 1 ,
    a4crirft maintcua'nce support: equipment. The priority         1971)


                                                                                                              SECTIO N

    236 . `transfer of Regional Activities to Loca l            leges, (2) the Department had not establishe d
Post Offices . The Congress, concerned about th e               adequate specific criteria to guide publishers and em-
amount of expenditures and the size of the staffs o f           ployees in classify=ing certain free copies of publication s
the Post Office Department's regional offices, ha d             for postal-rate purposes, and (3) examinations o f
placed ceilings on the staffing of such offices . Sub-          publishers' records were neither timely nor effec t ive--
sequently, in November 1967, the Department trans-              consequently, certain copies of sonic publications whic h
ferred 15 activities and related positions from its re-         had been improperly- classified by publishers were no t
gional offices to local post offices although the activitie s   &--tected and a second-class postal rate, lower tha n
were essentially regional ones and the post office em-          that required by postal regulations, was charged .
ployees engaged in them were under the technica l                  GAO recommended that the Department (1 i re-
supervision of the regional offices .                           voke or suspend second-class mailing permits for ineli-
   GAO reported that the transfers did not appea r              gible publications and establish a policy of chargin g
to be consistent with congressional intent regardin g           postage at the appropriate rate on all copies of publi-
ceilings on regional staffing and costs, and that ther e        cations mailed after the date that such publication s
was a loss of efficiency in the regional offices .              Irst faii to meet second-class mail eligibility require-
   GAO recommended that the Department discon-                  ments, (2) revise its regulations to clearly define sam-
tinue its practices of having local post office empfoyec s       ple (free) copies and establish time limits during whic h
perform regional activities and of charging t'.ie cos t         samples may be mailed to the same person at second -
of the salaries and fringe benefits of such employee s          class rates, and (3) strengthen its internal manage-
 to the appropriation for operating post offices.                ment review to insure- effective and timely examinatio n
   The Postmaster General said that the tra' .isfers were       of publishers' records for publications mailed a t
 part of a move toward a decentralization of operating           second-clay s postal rates.
 functions and were not designed to avoid the congres-              In response to GAO' s report, the Postmaster Gen-
 sional ceilings on staffing and expenditures for regiona l      eral ordered, on a high priority basis, a complet e
 offices . He stated also that the Department had con-           examination of all pertinent regulations, including th e
 cluded that certain of the transferred ~work could b e          administration thereof, and the specific provisions o f
 performed more efficiently in the regional offices . The        the second-class mail privileges discussed in GAO' s
 Department arranged for the return to the regiona l             report . The Department study was completed in Janu-
 offices of 1=13 positions nationwide, which were relate d       ary 1971 and the resulting report contained man y
 to four of the 15 activities previously transferred to          recommendations for improving the administratio n
 local post offices, but it stated that regional office per-     of second-class mail .
 sonriel ceilings_ prevented returning more positions .             Pending completion of its study, the Departmen t
 ( Rcport to the Congress, B-15976$, Nov . 13, 1970 )            issued instructions in October 1970 to all postmaster s
                                                                 to make a thorough review of procedures for comput-
                                                                 ing postage on second-class mailings and to make re -
!User Charge s                                                   computations and appropriate adjustments if postag e
                                                                 had been incorrectly changed . The Department also
    239 . Assessment and Collection of Postage fo r              took various positive actions to strengthen control s
Second-Class Mail .—GAO noted that the Post Offic e              over second-class mail revenue, including improve d
Department appeared to place almost complete reli-               procedures and increased frequency in examinin g
ance on information provided by publishers in deter-
                                                                 publishers' records .
mining the amount of postage due for second-clas s
                                                                    The Postmaster General stated that the only viabl e
math Li examinin g ' into , the matter further, GA O
                                                                  long-term solution to sonic problems relating to second -
 found that the Department had undercharged postag e
                                                                 class mail was a drastic redesign and simplification o f
of at least $700,000 a mually on 176 of the 33 .1 pub-
lications examinee) by (SAO, which were retailed a t              the existing rate classification structure and that pro-
 secoud-c lass rates.                                             posals to accomplish this would be . presented to th e
    These undert Barges rrccu Wed because (1)publisher s          Postal Rate Commission created under the Postal Re -
 were char,gvd the lm%ci second-class postal rate s               organization Act, Public Law 91-375, approved Au -
 althnueh the publications tailed to meet the legal or            Mist 12, 1970 (84 Stat ; 719) . (Report to the Congress ,
 regulaton, mquir,nwws for second-class mail privi -              8=161568, Sept; 18, 1970)

   240. Unrecoverod Postage and Handling Cost s              'Hie Bureau subsequently determined that, under the
for Processing Tail With Insufficient Postage -               four new agreements signed in fiscal year 1971, it woul d
The Postmaster Ceneral was required by law to collec t       receive substantial benefits from the wort: of the re -
postage due for mail without sufficient prepaid postag e     search associates.
and to recover the cost of handling such mail fro m             G1O recommended also that, if overhead costs rise
the addressee . lie could, however, waive the handling       substantially as a result of future increases in the rmm-
charge when lie deemed it to be in the interest of th e      ber of research associates, further consideration be give n
Government .                                                 to establishing accounting procedures to avoid charg-
   The Post Office Department had waived the col-            ing overhead costs to users who will not benefit fro m
lection of the handling charge since August t958— a          the program . For fiscal year 1971, however, the Bu-
condition which GAO believed was not intended by th e        reau stated that the number of research associate s
Congress. Also, GAO found that some mail with insuf-         declined rather than increased . (Report to the Assist -
ficient postage was not being detected by the Depart-        ant Secretary for Science and 'Technology, Depart-
ment . If the conditions noted in 13 postal facilitie s      ment of Commerce, July 30, 1970 )
covered by GAO's review were typical, the Depart-
ment: was incurring significant losses nationwiue . Th e        242. Eees Charged for Special Benefits .—I n
Department did not have an effective policy to pre -         view of tile concern expressed by the Senate an d
scribe the methods and responsibility for detectin g         House Appropriations Committees that the Govern-
mail with insufficient postage .                             ment was not receiving sufficient return for all th e
   GAO shade several recommendations designed t o            set-vices rendered to special beneficiaries by certain
help solve this problem, including a recommendatio n         regulatory agencies, GAO undertook to determine how
that the Department return mail with insufficient post-      effectively the agencies were implementing the law i n
age'to -sendeis " rather than forward such snail to the      that regard .
addressees:                                                     Title V of the Independent Offices Appropriatio n
   -Phe Postmaster General stated that, to better ap-        Act, 1952, provides that Government activities result-
praise the problem and the solutions available, a cost -     ing in special benefits or privileges for indi6duals o r
benefit analysis would be made and that this analysi s       organizations be financially self-sustaining to the fulles t
would generally recognize GAO's recommendations .            extent possible, that regulations prescribing fees be a s
 (Report to the Congress. B-16156$, \far. 31, 1971 )         nearly uniform as practicable, and that fees be fair an d
                                                             equitable, taking into consideration direct and indirec t
    241. Establishment of User Charges for Specia l          costs to the Government, value to the recipient, publi c
Services .After reviewing the research associat e            policy or interest served, and other pertinent facts.
progranrconducted by the National Bureau of Stand-              The Bureau of the Budget (now the Office o f
ards, GAO questioned whether the Bureau had fol-              Management and Budget) issued policyguidanee (Cir-
lowed its established policy of consistently chargin g       cular No. A—25) to agencies for implementing those
research associate `sponsors for overhead costs of the       requirements . The circular broadly defines services
program and whether certain sponsors receive d               that provide special benefits and establishes guideline s
preferential treatment by not following the policy .         oft the types of costs to be considered in setting fee s
Based on comments made by the Department of                  and charges .
Commerce, GAO concluded that there was sufficien t              GAO found that the fee policies of seven regulator y
justification for not charging sponsors for overhead         agencies—the Civil Aeronautics Board (CAB), th e
cost, when appreciable benefits can be expected t o          Federal Conununications Commission (FCC), th e
accnle to the Bureau from the research .                     Federal Maritime Commission (FDIC), the Federa l
   (TACT recommended, however, that the Bureau de-           Power Commission (FPC), the Federal Trade Com-
termin g on a case-hc-case basis thether the work of         mission (FTC), the Interstate Commerce Commissio n
resew, It associates k likely to provide a benefit to th e   (ICC), and the Securities and Exchange Commissio n
Pmc.w which k at least commensurate with the cost s          (SEC)-were not as uniform as practicable, did no t
incurred . fn these instances -where the Bureau doe s        take all costs to the Government into consideratio n
not ivc(icr suhu unt~al bt~nefits, GAO believes that the     in determining the amounts of assessments, and did no t
Bun m should a st tbltsh an appropriate user charge t o      provide for fees to be charged in all appropriat e
asses, the sponsm, fox services provided by the Bureau .     instances .

                                                                                                         SECTION 1
   Subsequent to GAO's review-, five agencies--FCC .        or- with the other agencies—the p ost Office Depart-
ICC, CAB, FPC, and SEC:—took steps to change                ment and the General Sen ices Administration . (Re-
their- fee schedules . However, because actions take n      port to the Cornress, 11-168904, Aug . 24, 1970 1
by the agencies individually niay not result in the uni-
formity intended by the law, GAO recommended tha t
the Office of Management and Budget reexamine ( 1 ;i        Miscellaneou s
the policies and practices of the regulatory agencie s
in esLablishing their fees and (2) the language of Cir-        244. Collection of Supplemental Duties on
cular No . A-25 to determine_ whether it provided ade-      Imported Merchandise .—As part of its function o f
quate guidance to the agencies_ in implementing titl e      assessing and collecting duties on merchandise im-
V of the Independent Offices Appropriation Act, 1952 .      pc .ted into the United States, the Bureau of Customs.
   The Office of .l•lanagement and Budget ag ree d          Department of the Treasury, permits importers to pa y
g enerally with GAO's conclusions and recorrunenda-         an estimated amount of duty on incoming merchandis e
tions and said that it would conduct a broad revie w        pending final determination of the amount of duty to
of user-charge policies. (Report to the Congress, B-        be assessed . When the determination is made, overpaN
 1-15252, Oct . 23, 1970 )                                  ments are refunded and importers are billed for tin e
                                                            amount of underpayments (supplemental duties) . A
    243 . Rental Charges for Occupying Space in             surety bond is previously filed by the importer to insure
Government Buildings :As required by law, funds             payment for the supplemental duties . Under the term s
for financing the Operations of the Office of the Comp-     of the bond the_ surety and the importers are jointly
troller of the Currency are obtained by assessment s        liable without regard to time limits . Under the Burea u' s
against the national banks which it regulates and super-    billing procedures supplemental duties not, paid withi n
r•ises. However, refit-free space is being provided i n     30 days are considered delinquent and if not pai d
Government-owned buildings . At June 30, 1969, the          within 75 days a demand for payment notice is sent t o
Office occupied 151,917 square feet of space 72,91 1        the responsible surety . Departnent of the Treasury
square feet of refit-free space in Government-owned         regulations provide for revocation of the bonding au-
buildings and 79,006 square feet of space in privatel y     thority of sureties for inexcusable, prolonged, or re-
owned buildings at au annual rental of abou t               peated failure to honor demands for payment .
$390,000:                                                      GAO noted that the Bureau was not taking aggres-
    GAO believed that it was inconsistent for the Offic e   sive collection action against delinquent sureties, cer-
of the Comptroller to bear the cost of leased spac e        tain collection practices could be improved, and a mor e
in privately owned buildings and not bear the cos t         effective monitoring program for evaluating field offic e
of space occupied in Government-owned buildings . A s       collection procedures was needed . Out of about $6 .7
a result of GAO's suggestion that the Office of th e        million of supplemental duties outstanding at April 30 ,
Comptroller be required to pay for the fair renta l          1970, about $4 .9 million, or 73 percent, was delin-
value of space oc :fupicd in Government-owned build-        quent, including about $3 .8 million which was more
ings, the Department of-the-Treasury advised th e            than 60 clays old .
Comptroller that effective July 1, 1970, the Depart-           GAO suggested that more effort by the Bureau ' s
nientplanned to charge the Office of the Comptrolle r        national office officials would be an effective way o f
rent for space it oc cupied in the Treasury Building and    improving collections from the sureties . Such actio n
the-Treasury Annex in Washington, D .C .                    was undertaken against one surety company—th e
    Officials in the Office of the Comptroller advised       largest writer of Customs ' bonds—with a demand fo r
GAO in :flay 1970'thatthey agreed with the principl e       payment of about $1 .=1 million . Shortly thereafte r
of paying fair rental for space occupied in Govern-          most of this amount was paid by the importers or th e
merit-owned buildings and that some minor detail s          surety company . Also, the Bureau stated that it had
in the DepartmentOf the Treasury's computation of            issued revised instructions for collecting delinquen t
rent were being further negotiated . They stated also        duties . (lteport to the Secretary of the Treasury, B -
that thry would negotiate' rental fees when contacted        114898, Jan . 27, 1971 )
b~, other -agencies furnishing space . GAO was advise d
th .0 ns of Junr 90, 1971, final agreement had not             245. Federal Assistance for presidential Tran-
1w,, ii reached with the I)cpartnrent-of the Treasury       sitions.—GAO reported that the amounts and/or


period of availability of funds authorized by the Presi-           The need to amend the h'ormer Presidents Act t o
dential Transition Act of 1963 and the Former Presi-            provide for adjustment of the overall limit on com-
dents Act of 1958 do not appear to be adequate t o              pensation of the former President's staff, in line wit h
carry out the objectives of the laws . The Office of.           pay raises in general . Or, perhaps, in view of the un-
Rlanagenient and Budget supported GAO' s                        certain purpose for the limitation on total salarie s
=-.onclusions .                                                 within the total appropriations available, the limi-
    The Congress appropriated $900,000 for the Gen-             tation could be safely eliminated .
eral Services Administration to finance the 1968-6 9          (Report to the Congress, B-149372 and B-158195 ,
 transition between the incoming and the outgoin g            Nov . 16, 1970 )
 administrations. Although the transition act is silent
 oil the matter of the division of the funds betwee n             246 . Management and Operation of Communi-
 the administrations, the legislative history reflects a n    cations Systems . In 1960 the Department of De-
expectation that they be divided equally . This was do n      fense (DOD) established the Defense Communication s
 in the case of the 1968-69 transition .                      System and the Defense Conmrunications Agency t o
    GAO was informed by President-elect Nixon ' s repre-      supervise the System . Although some progres, had bee n
 sentative on transition matters that "approximatel y         made toward the integrated communications syste m
 $1 .5 million was required to defray the expenses of th e    er =ioned at that time, much remained to be done .
 incoming administration for such items as the renta l        GAO found significant problems in organization an d
 of temporary office space, telephone and other com-          management which appeared to hamper accomplish-
 munications, travel, expenses of task forces, disburse-      ment of the objective.
 ments in connection with interviewing applicants, an d           Other than the Secretary of Defense there was n o
 a myriad of other expenses necessarily incurred during       one person or office serving as a focal point with au-
 the interregnum It is apparent that the $450,000 i n         thority and responsibility to coordinate all aspects o f
 Federal transition funds made available to the incom-        communications . There was a lack of coordinatio n
 ittg Nixon administration was clearly inadequate t o         among the organizations involved in communications,
 cover all of President-elect Nixon's transition expenses .   it; hiding the staff in the Office of the Secretary o f
    Transition funds are made available to the outgoin g      Defense, the Joint Chiefs of Staff, the Defense Com-
 President and Vice President for a period of 6 month s       munications agency, and the military departments .
 after they leave office for use i n winding up the affairs   GAO found many examples of the costly effects at-
 of their offices . GAO found that former Presiden t          tributable, at least in part, to fragmented and unco-
 Johnson still had a heavy workload 18 months after li e       ordinated management . Some of the examples follow .
 left office .                                                    An uncoordinated program, begun in 1965, to pro -
    While the Former Presidents Act sets an overal l          cure data subscriber terminal equipment (equipmen t
 limitation on salaries that can be paid to a former Pres-     at the end of transmission circuits used to send or re-
 ident's office staff, the maximum salary that can be          ceive data) required more than 1,000 changes in speci-
 paid to any member of his staff is tied in with th e          fications at a cost of $29 million . These changes delayed
 executive schedule pay rates . The overall limitation         delivery, and additional millions of dollars were spen t
 has not been amended as frequently as pay rates have          to lease equipment .
 been raised in recent years . it is thus apparent tha t          The uncoordinated development of Project Advent ,
 the unbalanced movement of pay rates and overal l             under the satellite communications program, resulted
 limitations can cause problems in paying the salarie s        in duplications, inefficiencies, and delays . About $17 0
 of the former President's staff .                             million had been spent on this project when it wa s
     GAO suggested that the Congress might wish to            canceled . Despite that experience, current satellite proj -
 consider :                                                    ects were being developed with an organization simila r
     The desirability of increasing the amount of fund s       to that of Project Advent .
   authniizcd under the Presidential Transition Act fo r          Lack of coordination, between the Defense Com-
   the incoming President and Vice President. -                munications Agency which manages the main trun k
      I'hc need for an extension of the time durin g           lines of the Automatic Voice Network (DOD's mai n
   which Presidential Transition Act funds are avail-          voice system) and the users who control the access line s
   able to the former- President and Vice President            to the Automatic Voice Network, was the chief reason

                                                                                                      SECTIO N

for an inadequacy of access lines and a loxv rate of       Defense Communications Agency a civilian post . Thi s
completed calls—45 to 53 percent in a sample 6-mont h      would remove any question of the Director's partialit y
period .                                                   toward his own military department.
   In early November 1969, a reorganization plan pre -        On May 21, 1970, DOD established a new positio n
pared by the Deputy Secretary of Defense - proposed        of Assistant to the Secretary of Defense (Telecom-
establishment of the position of Assistant to the Secre-   munications) and a.phointed a civilian to 611 the posi-
tary of Defense (Communications) . GAO recom-              tion . DOD stated that the new Assistant would conside r
mended that, in the " proposed reorganization ,            the first recommendation . With respect to the secon d
consideration be given to removing the Defense Com-        recommendation, DOD did not agree that the director-
munications Agency from the chain of command unde r        ship of the Defense Communications Agency should
the joint Chiefs of Staff and making the Director of       be a civilian post. DOD felt that, since the Agency is a
the Defense Communications :Agency responsible di-         military organization, the Director should have military
rectly to the new Assistant . This would permit greate r   experience . GAO believes that the Agency and it s
autonomy in the functions of the Defense Communica-        directorship should be free from influence by the join t
tions System. GAO recommended' also that considera -       Chiefs or a particular military service . (Report to the
tion'be given to making the position of Director of the    Congress, B-169857, Oct . 19, 1970)


                                                            INDEX BY GOVERNMENT AGENCY

                                                        -   Agency                                                               Ila n

            AGRICULTURE, DEPARTMENT OF 	                                                      .   .       2, 94, 99
               Agricultural Stabilization and Conservation Service 	                          .   .       1,105
               Commodity Credit Corporation	                                          -       .   .       3, 96, 105, 16 1
               Export N9arketing Service	                                                     .   .       105
               Farmers Hrnne Administration-	                                                 .   .       42, 43, 44, 45, 46, 47, 48, 16 ..5
              -Federal (`top Insurance Corporation 	                                          .   .       201                                                           -
               Foreign Agricultural Service_	                                                 .   .       95                                                    -
               Forest Service 	                                                               .           39,40
               Rural Electrification Administration 	                                         .           42
            APPALACHIAN REGIONAL COMMISSION 	                                                 . .         37
            ATOMIC ENERGY COMMISSION	                                                         . .         6, 7, 120, 128, 169, 17 0
            CIVIL SERVICE COMMISSION	                                                             .       60,185,23 7
            ( ~)\T\iFR( T ., P.F.P .\RT\,E\T OF	                                                          90, 95, 189
                 Fvonow : o Do-,C            cent \( :i onwrimc p	                            . .         9, 17 1
                 \I,uit : w• t d i :Jiti .u	                                                              122
                 National Bureau of Standards	                                                . .         164,24 1
            DEFENSE, DEPARTMENT                  OF _	                                        . . .       60, 80, 85, 88, 92, 93, 100, 101, 102, 108 ,
                                                                                                              110, 111, 112, 113, 118, 120, 127, 130,
                                                                                                              131, 132, 133 ; 137 ; 145, 147, 183, 193 ,
                                                                                                              194, 195, 207, 208; 209, 214, 215, 216 ,
                                                                                                              218, 219, 220, 222, 223, 224, 225, 226 ,
                                                                                                              227, ' 28, 234, 24 6
                  Air Force, Department ofthe 	                                               . .         96, 98 ; 102, 144, 145, 159; 214, 21 5
                  Ar,ny, Departmentof the	                                                    . .         96, 98, 99, 126, 143, 145, 196, 159, 183, 192 ,
                                                                                                              205, 206, 213, 214, 215, 218, 235
                    Corps of Engineers (Civil Functions)	                                       .         78,7 9
                  Defense ContracrAudit Agency	                                               .            11 9
    _             D6-,- SnpplyAgeney	                                                         . .         233                                     -
        -         Navy, I)cpartmeutof the        . ..                      .	                 . .         102, 109, 126, 138, 139, 140, 141, 142, 145,
                                                                                                                                      ; 2
                                                                                                               150, 151, 152, 159, 178 2. 1, 236
                  L` .S . AIminc C-rps,	                                                                  208
            DISI MCl' 01' COLUIMBIA GOVERNMENT 	                                              . .         121,12 4
            L1VVIJMNNIENTIL PROTECTION AGENCY	                                                        .   72,7 3
            F.XliCL'"1'I~'B ()I i FICE OF THE PRESIDENT
                 Ft onomic Opporhmity, Office of	                                             . .         10, 11 ; 5 4
                 Manage-cut and Budget, Office of	                                              .         106, 130, 197, 23 4
            EXPORT-IMI'OR'1' 13ANK OF THE UNITED STATES	                                      . .         15 7
            GENERAL         SF   RVICES AD11IN1:STKATION -:	                                  . .         114,130 ; 197, 199,210                            _
            GOVERNMENT PRINTING OFFI(li•:                            . .        . .                   .   196
            I1EA1.:111, EDUCATION, AND WELFARE' , DEPARTMENT OF                               . .         21, 22, 23, 26, 27, 28, 32, 38,_56,62, 63,237
                Dillcation, OL19cr, of . . . .               . .                            . . .         12. 13 ; 14 , 15, 16, 17 ; 18, 19, 2 0
                National Institutes of l Iealth            . .                                            149                      -                                -
                Social and 12elulbilitation Service	                                          . .         24; 25 ; 29, 30,3 1
                Social Security Administration .                                          . . . .         25, 63, 65, 66, 13 5
            DOUSING AND URBAN 1)EXELOPMENT ; DEPARTMENT OF                                            .   49, 50, 51, 52, 67, 68 1 69, 7 0


                                                                                                             SECTION I
                           -    -            agency                                              Rem

        INTERIOR, DEPARTMENT OF THE 	                    . . .               74
           Mines, Bureau of	                             .                   8
           National. Park Service 	                      .                   39
           Reclamation, Bureau of	                                           7, 76, 77, 7 8
        JUDICIAL BRANCH ,	                               . . .                162, 163, 173, 174, 175, 18 7
        JUSTICE, DEPARTMENT OF	                          . . .                166,176,18 8
        LABOR, DEPARTMMENT OF	                                               9, 53, 54, 55, 56, 57, 58, 59, 71, 9 0
        NATIONAL AERONAUTICS AND SPACE ADMINISTRATION                         113, 115 1 ' 16, 117, 120, 125, 129, 200, 203'
        NATIONAL CREDIT UNION ADMINISTRATION	             . .        .        10
        NATIONAL SCIENCE FOUNDATION 	                    . .         .        150, 151, 152, 153, 180
        OVERSEAS PRIVATE INVESTMENT CORPORATION 	          . .           .     107
        POST OFFICE DEPARTMENT	                           . .        .        136, 177, 211, 212, 229, 238, 239, 24 0
        RAILROAD RETIREMENT BOARD 	                      . .                 65
        SELECTIVE SERVICE SYSTEM	                         . .        .        17 2
        SMALL BUSINESS ADMINISTRATION	                       .   .           41
        STATE, DEPARTMENT . OF	                           . .        .       80,81,83,84,8 -),89,90,91,93,99,103,106 ,
                                                                                 148, 158, 140, 23 1
            Agency for International Development 	       . . .               81, 82, 133, 84,85, 86, 87, 97, 101, 104, 106,
                                                                                  107,19 1
           Federal Aviation Administration	              .   .       .
                                                                4, 5, 21 7
           Federal Highway Administration	               .   .       .
                                                                33, 34, 35, 36
    -      Federal Railroad. Administration	             .   .       .
                                                                123, 12 4
           U .S . Coast Guard . .                 .	     .   .       .
                                                                120, 167, 178, 17 9
           Urban Nla,s Transportation Administration 	    . . . 61, 168
        TREASURY, D1LP1,RTMENT OF THE	                   . . . 106, 157, 243, 24 4
        VETERANS ADINITNISTRATION	                       . . . 181, 182, 186, 210, 23 2
        MULTIAGENCY FUNCTIONS 	                                 120, 154, 155, 156, 160, 184, 198, 202, 230,
                                                                   24'2, 245

                                                                                                                       14 1

          SECTION 1


          Cadc             -           -              Function                                                                   Item

          050 NATIONAL DEFENSE :
              051 Department of Defense-IX ilitary	                                                    60, 88, 92, 93, 96, 98, 99, 100, 101, 102, 109 ,
                                                                                                          110, 111, 112, 113, 118, 119, 120, 126 ,
                                                                                                          127, 131, 132, 133 ; 137, 138, 139, 140,
                                                                                                          141, 142, 143, 144, 145, 146, 147, 159,
                                                                                                          172, 183 ; 192, 193, 194, 195, 205, 206 ,
                                                                                                          207, 208, 209, 213, 214, 215, 216, 218 ,
                                                                                                          219, 220, 221, 222, 223, 224, 225, 226 ,
                                                                                                          227, 228, 233, 234, 235, 236, 246
                 057 TMilitary assistance	                                                 . . . .     80,8 4
                 058 Atomic energy . .                           .	                        . . . .     6, 7, 128, 169, 170
               151 Conduct of foreign affairs	                                             . . . .     89, 90, 91, 101, 103, 104, 148, 158, 190, 191 ,
                                                                                                         23 1
                 152 Economic and financial assistance 	                                   . . . .     80, 81, 82, 83, 84, 85, 86, 87, 88, 94, 97 ,
                                                                                                          105, 107, 108, 15 7
                 154 Food for Peace	                                                       . . . .     106
               251 Manned space flight	                                                    . . . .     115, 116, 117, 125, 129, 203
             -- 259 Supporting space activities .. .	                                                  200 .                                                  }
              351 Fr.t i t ou •'Libiliidtien	                                                . . .     1, 2, 3, 42, 45, 161, 165, 20 1
               VP2 ltur,u housii :! ; rntl Imbhc i icilitieM1	                             . . . .     43, 44, 46, 47, 48                                     -
          400 NATURAL RESOURCES :
              401 Water resources and power	                                                       .   72, 73, 74, 75, 76, 77, 78, 7 9
              402 Land management . .                      .	                              . .   .     39,40
              405 Recreational resources 	                                                   . . .     39,40
          -   501 Air transportation	                     .                                . . . .     4, 5, 21 7
              502 Watcr transportation                                                                 122, 167, 178, 17 9
              303 Ground uausportation	                                                    . . . .     33, 34, 35, 61, 123, 124, 168
              505 Postal servicc 	                                                         . . . .     136, 177, 211, 212, 229, 238, 239, 24 0
              •0%t '1il        ncr.t of b .<irc .•          .	                             . .         41, 95, 164, 189, 24 1
               F07 Aica and jig;,:odl dc .e!u1 :•r .r .a	                                              9, 36, 37, 17 1
      -       :'od Rrnola ; ; on of in ;~iner . . .          .	                            . . . .     242
              551 Concentrated community dceelopmcnt . . . .                             . . . . .     10, 11, 6 7
              552 Community enviroinnent : . .                                 . . .         . . .     68, 69, 70
              5 :i5 Low and moderate income housine aids . .                       . .             .   50, 51                                                     -
              556 Maintenance of the housing mortgage gtarket	                             . . . .     49,52
          6(10 EDUCATION AND -MANPOWER :                              -                                       -                                           -   -
               601 Elementary and Secondary education 	                                    . . . . 12, 1 3
               602 Iligher education .'                         . .       .	                . . . . 14, 15, 16, 17, 18, 19, 20
               604 Manpower training and etnploytnentservices	                                     . 53, 54, 55, 56, 57, 58, 59, 23 7
                  (,t .ii,H nt r e I :c8 r  and basic research	                               . . . 150, 151, 152, 153, 180
               I 'W ' Otl t t . . . ntpu a oid	                                             . .      8,7 1



                                                                                                                                 SECTIM4 I
     Coda - .       -   -    -                  Function'                                                                 14.

     650 HEALTH :
         -651 Development of health resources . . -         .	        	                         38, 149
          652 Providing or financing medical services	                    	                     21, 22, 23, 24, 25, 26, 27, 28, 29, 62, 63, 64 ,
                                                                                                  65, 66, 135, 185
         702 Public assistance	                                           	                     32
         703 Social and individual services 	                                     . . . . . .   30, 3 1
         804 Hospital and medical care for veterans 	                             .             181, 182, 186, 21 0
         809 Other veterans benefits and services	                                . . .         23 2
         901 Legislative functions	                                                       	     19 6
         902 Judicial functions %	                                                    	         162, 163, 173, 174, 175, 18 7
         903 Executive direction and management 	                             	                 24 5
         905 General property and records management 	                            	             114, 130, 197, 199, 204
         908 Law enforcement and justice	                                         	             166, 176, 18 8
         909 National capital region              . . .          .	               	             121, 134

                1~~•-C.i;S   O--71-11                                                                                                        133   -

      SECTION                     1 1


                                                        Collections and Gther Measurable Saving s
       -                      -                   - -                                     (000 omitted )

           -                              -                                                                                 Other                    -
                                                                                                           Collections    in quablc    Tota l

     Army          .                          -   .      - -	                                                $1,394 $143, 395         S144,789
     Navy	                                                                                                      555    1,766              2,32 1
     Air Force . .            .	                                                                                 146   4,055              4 1 20 1
     Defense                           . . .                                         .	                           72   3, 114           1 3, 186
     Agriculture	                                                                                            . . . .  23,559            23 .55 9
     Commerce	                                                                                                     1       78                  79
     Health, Education, and Welfare 	                                                                         2,596       987             3 .53 3
     Housing and Urban Development 	                                                                         . . . .      333                 333
     Interior	                                                                                                     4   1,366              1,370
     Labor	                                                                                                        3  60,000            60,003
     Post Office	                                                                                             2,200       262             2,462
     State(including AID, Peace Corps, and USIA)	                                                                147      653                 800
     Transportation	                                                                                         . . . .      393                 393

      Civil Service Commission .        . .           .	                                                     . .    . .   851               85 1
      National Aeronautics and Space Administration 	                                                         .         1,248             1,248
      Office of Economic Opportunity . .                 .	                                                       17 . . . . .                17
      Sclective Scrviec System	                                                                              . . . .      110               11 0
      . eterans Administration	                                                                               . . . .     857               85 7

           J oiz i for cleparLments and agencies	                                                             7, 135       243,027     250, 162
     Transportation audit	                                                                                   14,848       . . . . .     14,848
     General claims work . . .                                              .	                                2,900       . . . . .      2,90 0

                  Total	                                                                                     24,883        243,027     267,910

               I ucl udes $1,099,6011 resulting-from   reviews of Defci se international activitie s

                                                                                                                                           SECTION I f

                                                           Details of Other Measurable Savings

                          Details of other measurable financial savings including additional revenues attributable to the work of the
                     General Accounting Office during the fiscal year 1971 totaling $245,027,000 are listed below . Approximatel y
                     $64 million of the savings or additional revenues are recurring in nature and will continue in future years . The
                     items listed consist largely of realized or potential savings in Government operations attributable to action take n
                     or planned on findings developed in GAO's examination of agency and contractor operations . In most instances,
                     the potential benefits are based on estimates and for some items the actual amounts to be realized are contingen t
                     upon future actions or events.

            -   -,               Action takes or planned          Estimated sayings                  Action takut nr plonned               Estimated sac ing ;

    _                Supply Management:                                               Savings resulting front award of firm fixed-
                     Reduction in procurement of helicopter en-                         price-type contract rather than a time-and-
                       gines and components made possible by                            materials-type for certain repair and over-
                       more expeditious repair of items already in                      haul services—Air Force (estimated annual                                    -
                       the supply system—Army (nonrecurring) . $113,000,000             savings)	                                                 $208,000
                     Cancellation of requisitions for unneeded sup-                   Redistribution and sale of excess aircraft spar e
                       plies which otherwise would have been                            parts to the U .S . Air Force, Navy, a NAS A
                       shipped to Vietnam from the United                               center, and others —National Aeronautics
                       States—Army !nonrecurring)	                    7,300,000         and Space Administration (nonrecurring) .                  208,000
                     Reduction in procurement of transceivers as                      Cancellation of requisitions for supplies in ex -
                       backup in helicopters based on studies that                      cess of needs—Army (nonrecurring) . . .                     140,000
                       showed such use was not cost effective—                        Savings resulting from elimination of dupli-
                       Army (nonrecurring),	                          7,031,000         Gated data bank services— Navy (estimated
                     Revision of mileage criteria permitted transfer                    annual savings, $100,000 ; nonrecurring,                                 -
                       of more used vehicles to the Vietnamese                          $20,000)	                                                  120, 00 0
                       Armed 'Forces and avoidance of procure-                        Savings resulting from consolidation of pro -
                       ment of new vehicles-Army (nonrecurring ;                        curement activities and p '    graphic labora -
                       additional savings will continue during the                      tories in Germany—P.             $32,000 ; Air
                       U .S . troop withdrawal)	                      6,100,000         Force $74,000 (estimated . ..nual savings) .                106,000
                     Transfer of ammunition in excess position in                     Savings resulting from adoption of procedures                       -
                       the Marine Corps to satisfy a requirement                        to reduce the reject rate . in reworking cony                 -   -
                       in the Army (nonrecurring)	                    4, 122, 000       ponents for rocket launchers—Army (non-
                     Identification and transfer of unneeded lab-                       recurring)                                                   96,000
                       oratory equipment to other users—Defense                       Storage charges to the Government were re -
                       (nonrecurring and indeterminable future                          duced because the Commodity Credit Cor -
        -              savings) -	                                     1,100,000         poration agreed to pay storage, at its more
                     Contract price reductions resulting from                           favorable terms, on dairy products trans-
                       reviews of prices negotiated for supplies--                      ferred to other agencies rather than require
                       Army . $606,000 ; Air Force $452,000 (non-                        the agencies to assume such .charges
                       recurring)	                                  -  1,058,000         Agriculture (estimated annual savings). . : .               45,00 0
                     Increased redistribution of excess materiel                      Cancellation of plans to repair unneeded
                       resulting from greater participation in the                       equipment—Army (nonrecurring) . . . .                       41,000
                       program of the Materiel Asset Redistribu-
                                                                                      Unrecorded supplies of the Armed Forces
                       tion Center, Europe, by the Rota Nava l
                       Station—Navy (estimated annual savings) .         323,000         Institute identified at field installations
                                                                                         Defense (nonrecurring)	                                     40, 000
                     Cancellation of procurement resulting from
                       disclosure of errors in computation of re-                     Savings realized from repair and reuse rattler
                       qurements for aircraft engine spare parts—                        than disposal of aircraft propellers —Army
                       Air Fore (nonrecurring)	                          267,000         (nonrecurring) .                            . .             27,000


                   AM- W.— or   Plan nod                  Estinezkd   —inga                  Anion   taken or pivincrl               r"th-led .nciw .s

    Supply Management—Continue d                                               Transportation :
    Savings resulting from a contract provision                                Savings resulting front adoption by the Mili-
      requiring manufacture of suspension lugs i n                               tary Sealift Command of a self-insuranc e
      larger production lots—Air Force (non -                                    policy of war risk coverage for time-charter
      recurring)	                                                $11,000         ships--Navy (nonrecurring and indeter-
                                                                                 minable future savings)	
    Construction, Repair, and Improvemen t                                     Savings by reducing the paperwork involved
    Casts :                                                                      in the procurement of bus transportatio n
    Construction costs for federally finance d                                   for DOD personnel--Defense (estimate d
                                                                                 annual savings)	
       residential projects will be reduced throug h
                                                                               Savings resulting from reduced sheathing of
       action by the Department of Labor unde r
                                                                                 ammunition vessels—Defense (estimate d
       the Davis-Bacon Act to establish minimum
                                                                                 annual savings)	
       wage rates for residential projects on the basis
                                                                               Savings resulting from elimination of environ-
       of prevailing wages for similar privately
                                                                                 mental and morale flights from Clark Ai l
       financed projects . Rates previously used wer e                           Base, Philippines, toBangkok, Thailand, an d
       the higher ones for commercial and in-                                    Taipei, Taiwan, which did not meet criteri a
       dustrial-type construction—Labor (esti-                                   for such flights—Air Force (estimate d
       mated annual savings)	                                60, 000, ()1 0      annual savings, $156,000 ; nonrecurring ,
    Reduction in price under the defective pricing                               $34,000)	                                                   190,000
       clause of a construction contract—Arm y                                 Savings resulting from use of surface rathe r
      . (nonrecurring)	                                           120,000         than air transportation for shipments o f
    Savings resulting from enforcement of warrant y                              unaccompanied baggage of military per-
                                                                                 sonnel—Defense (estimated annual sav-
       provisions of contracts for painting o f
                                                                                 ings)	                                                       130,000
       facilities where specifications had not bee n
                                                                               Savings resulting from reclassifying parcel s
        met—Army (nonrecurring)	                                      59,000
                                                                                  mailed by Pacific Stars and Stripes as surface
    Payments to Government Employees and                                          mail rather than military ordinary mai l
    Other Individuals :                                                          which resulted in the parcels being cony
                                                                                  urercially airmailed—Defense (estimate d
    Savings resulting from amendment of join t                                    annual savings)	                                             76,000
      Travel Regulations to reduce per client rate s                           Cancellation of requisitions for househol d
      for military personnel on temporary dut y                                   goods containers by the U .S . Naval Suppl y
      assignments of 60 days or more—Arm y                                        Center, Pearl Harbor, Hawaii—Nav y
      $4,131,000 ; Air Force $2,822,000 (nonre-                                   (nonrecurring)	                                              73,000
      curring and indeterminable future savings )              6,953,00 0      Savings resulting from shipping unaccom-
                                                                                  panied baggage of Army personnel from Get-
    Contracting Policies and Practices :                                          many to the United States by commerical ai r
    Savings resulting from use of surplus U .S .                                  freight rather than military ordinary mail —
                                                                                  Army (estimated annual savings) .              .
      butter rather than purchasing European
      butter—Defense (nonrecurring) 	                             800,000       Household goods containers located and re -
                                                                                  used rather than procuring new ones---
    Cancellation of a proposed contract arttend-
                                                                                  Defense fnonrecurring)	
      ntent that would have granted an excessiv e
     allowance to the insurer for administrativ e                               Interest Costs :
     expenses under the Government-wide In-
                                                                                Placing cash resources of the Veterans Cantee n
      demnity Benefit Plan of the Federal Em-                                     Service field offices in Treasury facilitie s
      ployees Health Benefits Progran.—Civi l                                     rather than in commercial depositories pro-
      Service Commission (nonrecurring) . . . .                   444,00 0        vided funds to the Government which coul d
    Savings resulting _fiom . use of American-mad e                               be productively used in reducing public born
      buses rather than foreign-made buses a t                                    rowing—Veterans Administration (estimated .
      overseas' locations-Defense (estimate d                                     annual savings) ,                      . . .
      aurival savings)                . . . .                     218,000       Funds advanced before they were needed fo r
    Saving.: resulting from use of more economical                                upgrading utilities were recovered, thu s
      p<rsoiial service contracts for overseas per-                               preventing unnecessary . interest--expense-
      sut,nel—Agency for International Develop -                                   Housing and Urban Development (nom
      lie "'It (nonrecurring)	                                        27,000      recurring) . .


                                                                                                                                 SECTION 1 1
                  acti- Mkga er planned                  F..rtirn W m min                 adios taken or pinnned                 k:•nrnn[ed mine

    Interest Income :                                                       Recovery of unused grant funds and the'dis -
    Recognitian of the interest factor on those funds                         allowance of expenditures which were no t
                                                                              authorized by Teacher Corps guidelines
      used for construci ;on of the Yellowtail Unit ,
                                                                              Hcahh, Education, and Welfare (nonre-
     Missouri River Basin Project, which wer e
                                                                              curring)	                                                 $67,000
      allocated to the municipal and industrial
     water supply, will result in better return of                          Reduction in Medicare funds paid for drug an d
      interest to the Government for the cost of                              medical supply costs at two hospitals, becaus e
      financing the project—Interior (nonre-                                  of changes made to comply with the Socia l
      curring)	                                                 $918,000     Security :Administration's prescribed method
                                                                              for computing such costs-Health, Edu-
    Additional interest income to be earned b y
                                                                             cation, and Welfare (nonrecurring) .           .            26,00 0
      the Federal Employees Health Benefits pro -
      grant as a result of investing funds mad e                            Decrease in grant which had been approved i n
      available under revised procedures for re-                              an excessive amount because of the Eco -
      imbursing local Blue Cross-Blue Shield                                  nomic Development Administration's ac -
      plans— Civil Service Commission (estimated                              ceptanec of overvalued assets as a portion of
      annual savings)	                                           407,000      project costs—Commerce (nonrecurring) ,                     18, 000
    Change in the interest rate criteria will resul t                       Utilization of U .S :Owned Foreig n
      in the recognition of niore realistic interes t                       Currencies:
     costs applicable to the power facility invest-
      mentr of the Government and thereby pro -                             Savings resulting from the restoration of India n
      vide a basis for the ultimate recovery from                             rupees error°ously charged to the touris t
      the users of power facilities of a proper inter-                        conversion account and made available for
      est amount as well as the Federal i nvestmen t                          purchase by U.S. civilian and military per-
      in such facilities—Interior (Ist year estimat e                         sonnel and their dependents—State De-
      and indeterminable future savings)        .                200,000      partment(nonrecurring) . .                                378,000
                                                                            Savings resulting from the sale of excess U .S . -
    Automatic Data Processing Systems :
                                                                              owned local currency to a U .S . financed
    Reduction in magnetic tape cost at Goddar d                               contractor in India—Agency for Interna-
     Space Flight Center through greater use o f                              tional Development (nonrecurring) . . . .                 200,000
      rehabilitated tape--National Aeronautics                              Savings resulting from payment of international
      and Space Administration (nonrecurring) .                  543,000      postal debt with U .S.-owned excess foreign
    Savings resulting front combining business an d                           currency—Post Office Department (non -
                                                                              recurring)	                                                 48, 000
      scientific data processing operations—
      National :Aeronautics and Space Adnunis-                              Manpower Utilization :
      tration (estimated annual savings, $325,000 ;
      nonrecurring; $65,000)	                                    390,000    Conversion of 75 Coast Guard military billet s
                                                                              not requiring military skills or military
    Savings by having ADP system maintenanc e                                 duties to civilian positions—Transportation
      done by organizations specializing in suc h                             (estimated annual savings) : .          . .
      maintenance—Veterans Administration (non -
      recurring) . . .              .	                             97,000   Revenues :
                                                                            Increase in interest revenues resulting from
    Loans, Contributions, and Grants :
                                                                              change made by the Commodity Credi t
    Avoidance of excessive claims for Federal reim -                          Corporation in its basis for computing in-
      bursenient for costs in administering publi c                           terest on agricultural price-support loans —
      assistance programs in - Pennsylvania—                                  Agriculture (nonrecurring ; and indeter-
      Health, Education, and Welfare (nonre-                                  minable future savings)	                                  570,000
      curring)	                                                  894,000    Additional revenue front revised rates fo r
    Cancellation of proposed procurements of buse s                          transmitting non-Federal -power over the
      and related equipment and services under a n                           Federal power transmission syste m
      urban` mass transportation demonstratio n                              Interior (estimated annual savings)                         167,000
      grant, because the time remaining in th e                             Implementation of increased billing rates to
      testing period was not sufficient under th e                            recover full cost of services rendered udde r
      guidelines to develop patronage for experi-                             open-heart surgery sharing agreements wit h
      mental - routes—Transportation -(nom-ecur -                             medical schools and hospitals—Veterans
      ring)                          .                           270,000      Administration (estimated annual savings) .                 02,00 0

                                                                                                                                             147 '

            SECTION 1 1
                            ,; ittion Nk", or   planned        V± twtai,d-millp                  Altion W.-t or planned                  Etffimri'ed mdup a

            Revenues—Continued                                                    Disposal of the . case files of registrants aged 3 5
            Additional revenues deriver: from revised                               years or over who are, no longer liable for
              policies and procedures fo : appraising and                           service in the Armed Forces, resulting i n
             selling marginal timber us!d for low-grade                             savings in personnel costs, warehouse space ,
              plywoxl or pulpwood—Interior (estimated                               and equipment—Selective Service System
              annual savings)	                                        $70, 000      (estimated annual savings)                                  $110,0()0
                                                                                  Reduction in operating costs and investment in
            Increase in fees charged nongovernnient cus-
                                                                                    equipment by consolidating calibration an d
              to n by the National Bureau of Standards
                                                                                    I -pair activities at the Madrid, Spain, track -
              for electronic calibration services—Cote-
                                                                                    ing facility—National Aeronautics and Space
              mergp (nonrecurring and indeterminable                                     -                                                 -                      -
                                                                                    Administration (estimated annual savings,
              future savings}                                          60, 000
                                                                                    525,000 ; nonrecurring, .$50,000)	                             75,00 0
            Other Items :                                                         Savings in electric power costs in Germany b y
            Adoption of a different policy and revision of                          installation of devices to reduce reactiv e
              procedures for establishing rice export sub-                          current—Defense (estimated annual sav -
    .        sidy rates—Agriculture (nonrecurring and                               ings)	                                                        50,00 0
              indeterminable future savings)	                    22, 900, 000     Discontinuance of practice of purchasing tid e
                                                                                    evidence on home properties managed an d
            Cancellation of four new open-heart surgery
                                                                                    sold for the Department of Defense
             centers because of insufficient caseloads to
                                                                                    Housing and Urban Development (csti-
             provide heart surgery teams with the work
                                                                                    mated annual savings)                                         46,00 0
              to develop and maintain their skills at the
             highest level—Veterans Administration (es-                           Savings by discontinuing leases on little -
              timated annual savings, $32£1,000 ; nonre-                            used telecommunication terminals—Army
             curring, $260,000)                                       588, (Y00     $11,000 ; .fir Force $24,000 (estimated                                           -
                                                                                    annual savings)	                                              35,000
            Recognition by the Corps of Engineers of reim-
                                                                                  Recovery of a contractor 's unearned target fee ,
              bursable power costs, which had not been                              art- elimination        its unearned incentiv e
              included in the Government's power invest-
                                                                                    fee—National Aeronautics arid Space A- -
        -     m ent, to be repaid to the Government—                                ministration (nonrecurring)                                   32,000              -       -
              Army (nonrecurring)                                     344, 000
                                                                                  Reduction of subsidy payments render the suga r
            Revisions of operating procedures and con-                              program, through establishment of reliabl e
             struction specifications resulted in increased                         procedures for determining what constitute s
              effectiveness of property rehabilitation pro-                         a farming operation and through improved
             grams in Pennsylvania—Housing and Urban                                monitoring of farm constitutions (a farming
             Development (nonrecurring and indeter-                                 operation would be subsidized at a greate r
              minable future savings)	                                280,000       rate if the operation were constituted as
                                                                                    separate farms rather than as a single one)
            Discontinuance of surety bond premium costs
                                                                                    Agriculture (estimated annual _savings) . .                    2£1, 000
              and a corresponding reduction in adminis -
                                                                                  Incre .rse in revenues from the sale of cotton as a
              trative expense resulting from the Post Office                        result of basing the minimum acceptabl e
              Department becoming a self-insurer for                                sales price for extra-long staple cotton on th e
              mail -losses by its customers—Post Office                             loan rate in effect for the State in which th e
              Department (estimated annual savings) . .               262,000       cotton is stored—Agriculture (estimate d
            Declaration of a tender and various items of                            annual savings) . . .                                          16 .000
               floating plants by the Corps of Engineers as                       Cost of refurbishing the Office of the Secretary `
               excess, thus saving - maintenance and re-                           of the Interior was limited to the nraxinm m
               placement costs—Army (nonrecurring)                    170, 000      amounts allowable under the Federal
                               -                 -                                  Procurement Regulations arid- the Federal
            Savings resulting from elimination of muteces-                         Property Management Regulations—Inte-
             - sary-forwarding to Denver, Colo ., for audit       _                rior (nonrecurring.) • . .      -.                              I1, 000    -
               of medical service claims paid by contractors                      Savings resulting from more effective utili -
            - _ er the Office of Civilian Health and Medical                       nation of leased family housing —Air Force .
               Program— Defense (estimated annual sav-                              (nonrecurring)                                                7,000
               ings) . . .                    .	                      150,000            Total other measurable savings .                  243, 027, 000


             kt? ;3
                                                                                                             SECTION i t

                  Additional Financial Savings Not Fully or Readily Measurabl e

     Many significant financial benefits to the Government, either one-time savings or recurring savings, tha t
are attributable to the work of the General Accounting Office are not fully or readily measurable in financia l
terms . These benefits result from actions that are taken or that are to be taken by the Congress or the department s
and agencies to eliminate unnecessary expenditures or to otherwise correct deficiencies brought to light in GAO ' s
audit reports. Some examples of these actions identified during the fiscal year 1971 are described below .

Reduction in Costs of the Medicare Program Du e              agree with the recommendation because of the hnpre-
to a Change in the Method of Apportioning Hospita l          ciseness of any apportionment method .
Cost s                                                          At their request, GAO furnished congressional com-
    In a review of the Medicare program, CIAO note d         mittee staffs with its analysis of the difference in costs
that some fiscal intermediaries had delay=ed making fina l   resulting from use of the two reimbursement formula .,,
settlements with hospitals for reimbursement cost s          and on February 19, 1970, in public hearings befor e
 under Medicare . Fiscal intermediaries serve under con-     the House Subcommittee on Intergovernmental Rela-
                                                             tions, HENN witnesses were questioned about the GA O
 tract with the Social Security Administration (SSA) ,
 Department of Health, Education, and Welfare                findings . Also, on February 26, 1970, in public hearing s
 (HEW), to make Federal payments to institutions for         before the Senate Finance Committee dealing wit h
health services provided to Medicare patients .              serious cost overruns under the Medicare program ,
    Delays in making final settlements with hospital s       HEW officials were further questioned about thei r
were clue in part to questions raised concerning the us e    justification for the continued use of the combinatio n
                                                             method in view of GAO's findings .
by hospitals of the combination method—one of two
                                                                The method continued to be authorized, however,
methods for apportioning Medicare costs . Use of th e
                                                             and in June 1970 GAO informally proposed that the
combination method resulted in the inclusion of privat e
                                                             Secretary of HEW discontinue or modify its use . HE W
 room costs, not covered under the program, and certai n
                                                             responded in a letter dated September 28, 1970, tha t
 delivery room costs, not applicable to Medicare pa-
                                                             SSA had been intensely studying the combinatio n
 tients. In response to questions raised by the inter-
 mediaries, the HEW Assistant General Counsel fo r           method as part of its complete reexamination of
                                                             Medicare cost reimbursements .
Health Insurance in November 1967 pointed out t o
SSA that the inclusion of private and delivery roo m            GAO ' s finding were also made available to th e
costs in the reimbursement formula was inconsisten t         Senate Finance Committee which was then considerin g
                                                             Medicare reimbursement matters in connection with
with the law .
                                                             its deliberation on proposed Social Security ati-end-
    GAO's analysis of a sample of cost reports for hos-
                                                             ments. In its December 11, 1970, report the Senat e
 pitals in 32 States and Puerto Rico showed that use o f
                                                             Finance Committee stated that :
 the combination method resulted in reimbursement s
amounting to about 4 percent higher than reimburse-             Both the Comptroller General of the United States and
ments under the other method . GAO estimated that            the HENV Audit Agency have recommended that the use o f
                                                             the combination method should be eliminated because certai n
elimination of the use of this method wOUld reduce           pediatric and obstetrical costs are included in the total ancil-
INSedicare payments to hospitals by between $100 mil -       lary service costs against which the - Medicare portion - o f
lion and $200 million annually .                             charges are applied' to arrive at program' reimbursemen t
    In a February 1970 report to SSA, the HEW Audi t         * * * There are no rational grounds for preserving th e
Agency recommended that the combination method h e           unintended reimbursement of such costs where it is feasibl e
                                                             to avoid 'such payments . Furthermore, the statute require s
eliminated or modified, but in April 1970 SSA replie d       that Medicare pay only for the actual costs associated wit h
that although it would study the matter, it did not          the elderly :


    SECTION 1 1

       In January 1971, HEW advised GAO that, in ac-             by a "limited production" (LP) classifeation . Items
    cordance with an agreement with the Senate Financ e          still under development are so classified when ther e
    Co;n ;nntee, a decision had been made discontinue            is an urgent operational requirement for the ite m
    the use of the combination method for larger institu-        which cannot be ntet by an existing item . The L P
    tions . In testimony before a subcommittee of the Hous e     classification and subsequent renewals authorize pro-
    Committee on Appropriations . HEW estimated that             curement only in the quantities and for the purpose s
    the change would sacs $100 million in Nledicare cost s       approved by the responsible element of the Arm y
    for fiscal year 1972.                                        General Staff .
       GAO's review of formulas for reimbursing institu-            GAO found that howitzer ammunition underdevel-
    tions under the Medicare program and its assistanc e         opment, which had been ', iyen an LP classification fo r
    to the Congress in the matter contributed s :±bstantiall y    1 year, was still being procured 3V2 years later withou t
    to the estimated annual sayings of $100 million i n          the required authorization to continue procurement
    Medicare costs . However, the exact amount attribut-         uncles the LP classification . GAO noted also that the
    able to GAO's efforts is not readily measu rable .
                                                                 LP classification was not limited to items for whic h
                                                                 there were urgent operational requirements . In Jun e
    Cancellation of Plans To Procure Four Deep Sub-
                                                                  1969 GAO suggested that the Army review all "L P
    mergence Rescue Vehicles
                                                                 items controlled by the Army Munitions Command,
       In 1964 the Chief of Naval Operations authorized          enforce its regulation requiring that LP items be pro -
    the development of the deep submergence rescue vehi-         cured and used only for the specific urgent require-
    cle (DSRV), and established a requirement for si x           ments for •xhich procurement had been approved, an d
    vehicles . At the time of GAO's review, the Navy had         enforce its requirement for justification of need to
    purchased two vehicles and was planning to reques t
                                                                 renew LP authorizations .
    funds to purchase four more . GAO questioned whethe r
                                                                    In response to the suggestions, the Army informed
    the cost of the four additional vehicles was warrante d
                                                                 GAO that it was conducting a spec?l review of L P
    by the marginal increase in effectiveness of rescue
    operations the vehicles would provide and, in Nla y          procurements . Subsequently the Army informed GA O
     1969 ; proposed that the Secretary of Defense e% ,aluate    that the funding- for LP procurements had droppe d
    the estimated cost of tite four -vehicles in relation to     front $990 .3 million in fiscal year 1969 to $ 7/2 .1 million
    their estimated usefulness . GAO's findings were con-        in fiscal year 1971--a reduction of $918 .2 million . AI-
    sidered in congressional hearings on the militar y           though the phasedown of acti\-ities in Vietnam reduce d
    budget, and the issue of need for the additional vehi-       the sense of urgency and was a contributing factor i n
    cles was also raised by tile. Subcommittee on Economy        the reduction of LP procurements, the Army state d
    in Government of the Joint Economic Committee .              that GAO's suggestions were a major factor in the
       Subsequently the Navy informed CAO that it wa s           reductions .
    conducting a study of the matter . In its report of
    December 3, 1970, the study group concluded tha t            Reduction in Procurement of the Shillelagh Missil e
    only the two vehicles already purchased were neede d           The annual report of tile Comptroller General fo r
    and the Navy cancelled its plans to purchase the fou r       the fiscal year 1970- pointed out that congressiona l
    additional t°e p ic les. The Navy estimated that the         consideration of GAO 's findings in a review of th e
    four vehicles would have cost nearly $:300 million to        development and production of the Sheridan weapo n
    purchase and about $17 million annually to operate .         system (a tank-like, armored, reconnaissance airborne
                                                                 assault vehicle) was an important contributing facto r
    Significant Reduction in Production of Materie l             in the reduction of $57 .6 million in the fiscal year 197 0
    Prior to Completion of Development and Testin g              appropriation of funds for continuing production of
      The production and operational use of new materie l        the Sheridan weapon system .                   :
    by the military departments prior to completion o f             The Sheridan was designed to fire several types o f
    de%clopment and testing is commoniv refer r ed to a s         152nnn ammunition, including the Shillelagh missile .
    concurrent deg -elopment and production, or simpl y          The Army =advised GAO that because of the cutbac k
    concurrency. In the Arnav, concurrency is authorized         in production of the Sheridan, the fiscal year 1971

    150 ,
                                                                                                       SECTION 1 1
procurement of the Shillelagh missile had been re-          increased Effectiveness of the Central File of Activ e
duced by '37 .9 million .                                   Research and Technological Work Maintained by
                                                            the Defense Documentation Cente r
Savings in Transportation Costs by Avoiding Un-
                                                               The Department of Defense (DOD), through it s
necessary Shipments of Supplies to Vietna m
                                                            Defense Documentation Center, maintains a centra l
   GAO's continuing review of the phasedown of U .S .       file of active research and technological work . Th e
military activities in Vietnam showed many oppor-           central file was established to provide project man-
tunities for savings in transportation costs by avoidin g   agers, scientists, and engineers in DOD with curren t
annecessary shipments of supplies to Vietnam from           information on the work in process in DOD and the
the continental United States or from intermediate          National Aeronautics and Space Administration i n
supply points . In response to GAO's recommendations ,      order to avoid costly duplication of unnecessary re-
new procedures were established or existing procedure s     search efforts and to speed the development and i m
were strengthened for (1) canceling requisitions issued     provement of defense material and equipment. Mos t
by units being inactivated or redeployed, (2) inter-        of the data are first processed into machine-readabl e
cepting requisitions issued by units scheduled to b e       form at data banks of the Army, Navy, and Air Forc e
inactivated or redeployed (by senior officers with ad-      and then forwarded to the central file .
vance information on planned schedules), and (3 )              GAO noted that the file did not have informatio n
insuring maximum consideration by the Military As-          on all research and technological work being actively
sistance Command in Vietnam of the excess supplie s         performed by DOD and that much of the data in th e
and equipment already on hand in Vietnam and avail -        file was out of date because changes in the status o f
able for transfer to meet the requirements of the Viet-     the work had not been reported on a current basis.
namese Armed Forces .                                       GAO recommended that the Secretary of Defens e
                                                            require the issuance of guidelines which would hel p
Production of the Army's Tactical Fire Directin n           the organizations reporting to the Defense Documen-
(TACFIRE) System Deferred Pending Completion                tation Center to establish a method of monitoring th e
of Test and Evaluatio n                                     data reported to insure that such data are curren t
                                                            and complete. The Office of the Director, Defens e
   At the request of the chairman of the House Com-
                                                            Research and Engineering, advised GAO that DO D
mittee on Appropriations, GAO made a review of th e
                                                            concurred in the recommendation and outlined th e
Army's acquisition of its Tactical Fire Direction (TAC-
                                                            implementing steps taken or planned . The Navy's im-
FIRE) system . Under the terms of the total package
                                                            plementation of local procedures reduced its percent -
procurement contract for the TACFIRE, the Arm y
                                                            age of work that had not been updated from 66 percen t
was committed to snake a decision, at a point in tim e
                                                            in October 1969 to 6.5 percent in July 1970 .
which would not have permitted completion of tes t
and evaluation, as to whether to proceed with produc-
                                                            Savings `through the Use of Government Moto r
tion . (A "total package procurement" is the acquisi-
                                                            Pools in Lieu of Rented Car s
tion of equipment order a single contract whic h
contains price, performance, and schedule commit-              GAO's review of about 3,200 travel vouchers fo r
ments for the development, production, and spare -          commercial car rentals in the Navy showed that, in 7 7
parts support of the equipment .) In its report to the      percent of the cases, it would have been more eco-
                                                            nomical to have used cars from the motor pools of th e
chairman of the House Committee on Appropriations.
                                                            General Services Administration (GSA) . One of th e
GAO suggested the possibility of modifying the con -
                                                            deterrents to such use was the Civil Service Connnis-
tract to defer the production decision until after com-
                                                            sion requirement that the Government traveler hav e
pletion of test and evaluation .                            a drivers identification card to obtain a car from a
   The Army included $17 .5 million for the productio n     GSA motor pool . GAO recommended that the Secre-
of the TACFIRE in its budget request for fiscal yea r       tary of Defense request the Civil Service Commissio n
1971 . These funds cyere appropriated . However, the        to waive the requirement . The Civil Service Commis-
:-louse Committee on Appropriations directed th e           sion complied and in January 1971 amended the Fed-
Army to defer its decision on production of the TAC-        eral Personnel Manual to ' permit a Governmen t
FIRE until fiscal year 1972 .                               traveler to operate n GSA car without a driver's identi -


fication card provided he has a valid State driver' s          Southeast Asia, GAO could not determine the saying s
license.                                                       that will result .

Cancellation of a Program To Train Senior Militar y            Savings Through Centralized Control Over Pro-
Officers To Fly Rotary Wing Aircraft                           curement of Overseas Air Passenger Transportatio n

   GAO questioned the need of a program, institute d              GAO reported to the Congress in July 1970 tha t
by the Army, to train selected senior officers (generals ,     there was a need for the Department of Defens e
colonels, and lieutenant colonels) for rotary wingfligh t      (DOD) to establish centralized control over the pro-
training at the same time that the Army was reducin g          curement of overseas air passenger transportation t o
its program for training of regular helicopter pilots .        eliminate the -unnecessary purchase of seats on com-
This matter was brought to the attention of the House          mercial flights . GAO estimated that savings of $4 mil -
Committee on Appropriations . The committee deleted            lion could have been realized during fiscal year 196 8
all funds for this purpose ($1 million) from the 197 1         if DOD travelers had used the unused passenge r
appropriation bill and directed the Array to ceas e            capability of the Nfilitary Airlift Command instead o f
 training senior officers to fly rotary wing aircraft .        commercial air transportation.
                                                                  DOD agreed with GAO's finding and stated tha t
Discontinuance of Improper Transportation Pay-                 corrective measures had been taken . The amount of
ments to Navy Personnel                                        future savings that will result from such correctiv e
                                                               measures could not be determined from available data .
   Navy personnel assigned to a ship being overhaule d
at a place other than the home port, and whose de-             Development of Official Data on Rice Exports fo r
pendents reside at the home port, are entitled t o             Use in the Administration of the Rice Expor t
periodic round-trip travel to the home port (37 U .S .C .      Progra m
406b), GAO rioted that 1108 Wren assigned to the U .S .S.
                                                                  The Commodity Credit Corporation (CCC) . in ad-
YORKTOWN were paid $6,200 for round-trip trave l
                                                               ministering the Rice Export Program, needed to ob-
from Boston, ASass ., where the ship was being inacti-
                                                               tain from Federal sources information on domestic ric e
vated, to Norfolk,-Va ., the ship's home port . The Con-
                                                               production, sales, and inventories, by major types o f
gress did not intend that this benefit be extended t o
                                                               rice—long-grain, mediuni-grain, short-,rain, an d
personnel assigned to ships being inactivated,
                                                               mixed rice. In the absence of Federal information o f
   The Comptroller General advised the Secretary o f
                                                               this type, CCC relied primarily on unofficial estimate s
Defense that there was no legal basis for such payment s
                                                                and inadequate information for decisions as to th e
and that no further payments should be made . I n
                                                               types of rice to be included in the Public aw 480 ex-
February 1971 the Secretary of the Navy instructe d
                                                               port prcgram . GAO found that increased expor t
Navy commands that personnel are not entitled t o
                                                                program costs resulted from the lack of neede d
trr.iisportation to their home ports %%,hen their ships ar e
                                                                information .
being inactivated .
                                                                   GAO estimated, that, in crop years 1965 and 1966 ,
 Utilization of Cargo Space on Aircraft Controlle d             about 6 .4 million cwt . (hundredweight) and about 2 . 3
 by the Military Airlift Command                                million cwt ., respectively, of the more costly long-grai n
                                                                rice was shipped to foreign countries under the Pub-
    In Augus t- 1970, GAO reported to the Congress tha t
                                                                lic Law 480 export program, although according t o
 optimum utilization of cargo and passenger flights con -
                                                                information obtained by GAO, most Public Law 48 0
 trolled by the Military Airlift Command had not bee n          foreign recipients preferred niedium-grain rice. Th e
 achieved and available cargo capacity in the belly com -       average cost for loner grain rice under Public Law 48 0
 partments of aircraft had been left largely unused .           was about $1 per cwt. higher than inedium-grain ric e
 GAO estimated that there had been sufficient unuse d           for the same years . Also, the export subsidy rates for
 space in the belly compartments of aircraft to acconi-         long-grain rice were about twice as high as those for
 modate an additional 20 million pounds of cargo an-            the medium-grain type . GAO believed that the avail -
 nually . The cost of procuring an equivalent amount o f        ability of official data on rice exhorts by types could
 cargo airlift would have been about $11 million .              have been of assistance in reducing the amounts of th e
    The Department of Defense agreed with GAO' s                more costly long-grain rice which were actually ex -
 findings . But, because of reduced cargo nioveiiients t o       ported to tine Public Law 480 foreign recipients .

                                                                                                     SECTION 1 1

   Following GAO's inquiry, the Administrator, For-        from the local operating agency level pertinent infor-
eign Agricultural Service, recommended to the Direc-       ntation on model neighborhood related projects.
tor, Bureau of the Census, Department of Commerce ,           GAO believed that data on model neighborhood
that the monthly report of domestic exports of ric e       related projects—regardless of funding source—wer e
from the United States be revised and that subclassifi-    essential to the local decisionmaking process and woul d
cations be established and reported monthly for long -     be of assistance to CDAs in the formulation and imple-
grain, medimn-grain, short-grain, and mixed rice . I n     mentation of a truly comprehensive demonstration-
GAO's opinion, improved administrative decision -          type program, as was contemplated under the basi c
making and substantial savings would be realize d          model cities legislation .
through availability of the requested official rice ex -      HUD stated that it would take several actions rela-
port statistics . The amount of such savings, however ,    tive to the GAO recommendations . These actions in-
is not readily determinable .                              cluded the (1) implementation of a large-scale man-
   GAO was informed that the Bureau of the Censu s         agement assistance program to provide sustained onsit e
began to report rice exports as requested and, in ad-      help to model cities, (2) issuance of a memorandum t o
dition, export sales reports from CCG's Kansas Cit y       model cities reemphasizing the importance of main-
office became available on a timely basis .                taining information on all projects—regardless of fund -
                                                           ing source, and (3) exploration of the feasibility of
Potential Economies Through Use of Governmen t             establishing a more effective interagency workin g
Supply Sources by FLEW Grantee Institution s               group .
   Grantees of the Department of Health, Education ,
and Welfare (HEW"' had not been authorized to us e         Strengthened Procedures Concerning Economic
General Services Administration ' s (GSA) supply           Feasibility Determinations of Rental Housin g
sources in the procurement of equipment and supplie s      Projects Approved for Mortgage Loan Insurance
needed for the activities financed under the grant . In       In a survey of the mortgage insurance program for
several instances GAO's reviews of various grant pre -     rehabilitation of housing projects at the Departmen t
grants administered by the National Institutes of          of Mousing and Urban Development (HUD) Are a
Health indicated that savings could have been realize d    Office, Boston, Mass ., GAO noted that (1) projects
if the grantees had used the GSA supply sources fo r       did not include a sufficient number of contiguous row -
supplying and equipping the grant project .                house properties (the cost of rehabilitating scattered
   Because of the potential economies, GAO brought         structures has been estimated to cost from $2 to $3
the matter to the attention of HENN' . In October 1970,    per square foot more than projects containing a num-
IIEW authorized grantees to make use of GSA source s       her of contiguous structures), (2) requests for con-
of supply or services when it was in the best interes t    struction changes had been submitted for approva l
of the Government and the grantee .                        after work was completed, (3) homemaker-trainin g
                                                           programs were not developed for residents of rehabili-
Improved Local Capacity To Plan, Develop, an d             tated projects, (4) required annual physical inspection s
Manage the Model Cities Program                            of completed rehabilitation projects generally were no t
                                                           accomplished, (5) documents did not contain a nota-
  GAO noted, as a result of its review of Federa l
                                                           tion that the "as is" value of acquired property did no t
agency coordination and participation in the Mode l
                                                           exceed the fair market value as determined by com-
Cities program, that certain city demonstration agen-
                                                           parable studies, and (6) the files for sonic complete d
cies (CDAs) were reporting project data (work prog-
                                                           rehabilitation projects did not contain the annual state-
ress and accrued costs) to the Department of Housin g      ments of profit and loss as well as income and operat-
and Urban Development (HUD) only on project s              ing expense analysis documents.
funded totally, or in part, with HUD supplementa l            The HUD Regional Administrator advised that th e
funds and were not collecting data and reporting o n       Area Office will direct its efforts toward the develop-
projects which were funded from other Federal, State,      meat and insurance of projects with contiguous build-
and/or local sources. GAO noted also that there ha d       ings when required, and accepted the other GAO
not been established at the Federal headquarters leve l    recommendations . Savings resulting from the changes
an interagency group to assist CDAs in obtaining           in policies and practices cannot be readily determined ,


Conversion of Military Billets to Civilian Position s           and disposal of equipment considered excess to con-
                                                                tractors' needs. This identification of excess equipmen t
   GAO proposed that the Coast Guard implement a
program that would convert military billets, essen-             can preclude the purchase of similar equipment b y
                                                                other contractors .
tially civilian in character, to positions that could be
filled by civilian personnel . GAO estimated that there         Adjustment of Reserves for Federal Employees
were 361 positions that could be filled by civilian per-         Health Insurance
sonnel in accordance with Coast Guard's criteria . Con -
                                                                    Pursuant to the Civil Service Commissions contract ,
version of these military billets to civilian position s
                                                                the carriers of the Service Benefit Plan--Blue Cross
could eventually result in considerable savings an d
                                                                and Blue Shield for Federal Employees--maintain a
would make military personnel available to fill mili-
                                                                special reserve to provide for possible future operatin g
tary billets .
                                                                losses . Because changes in preiniuwn rates are based ,
   As a result of GAO ' s review, the Coast Guard con-
                                                                in part, on the balances in the special re .nrve, the
verted 75 of the 361 military billets to civilian positions .
                                                                carriers maintain separate special reserve accounts fo r
(See p . 1 ,17 .'• Additional conversions were planned fo r
                                                                 the high and low insurance captions .
fiscal year 1972 .
                                                                    GAO's review of the special reserwes indicated tha t
Instructions Issued To Evaluate Agency Need fo r                 the balances for tile high options were understated an d
Landholding s                                                    that the balances for the low options were overstate d
                                                                because the carriers' method of allocating investmen t
   GAO noted that the Coast Guard had been retain-              income among these reserves had not resulted in dis-
ing a considerable amount of land which appeared t o             tributing investment income in proportion to th e
be excess to its needs and that a program for system-           sources of funds invested to earn such income . GA O
atically reviewing its landholdings had not been devel-         proposed that the Commission initiate action towar d
oiled . It was proposed that each Coast Guard distric t         the adoption of an allocation method that would re -
office set up a review program to evaluate the con-             sult in reasonable and equitable distributions of in-
tinuing need for landholdings and that Coast Guar d             vesmrent income between the high- and low-optio n
Headquarters furnish the necessary guidelines for im-           reserves and suggested that this revised method tak e
plernegting such a program, GAO proposed also tha t              into consideration the estimated amounts required fo r
the Commandant dispose of land cited in the repor t             payment of future benefit claims and the estimate d
which, upon review, proved to be excess to Coas t                amounts of premium income earned but not receive d
Guard needs .                                                    from the Commission .
   As a result of GAO's review, the Coast Guard issue d             `I'lte Chairman of the Commission stated that GAO' s
guidelines for implementing a program for system-               suggested allocation method had been discussed kit h
atically and continuously reviewing its landholding s            the carriers who had agreed to use it contmencin,~ wit h
and began to dispose of the property .                           calendar year 1969 . GAO later suggested to a respon-
                                                                 sible official of the Commission that the revised alloca-
Improved Management of Equipmen t
                                                                 tion method should be applied retroactively, for eac h
   In a review of the management of equipment b y                year since inception of the plan, because premium rate s
Atomic Energy Commission (AEC), GAO noted tha t                  would otherwise continue to be based, in part, on th e
the Commission's onsite reviews at some field loca-              prior inequitable allocations of investment income . Th e
tions were too - limited in nunaber and,/or scope t o            official agreed to discuss the matter further with the
permit an adequate evaluation of equipment man-                  carriers and, in a letter to GAO dated June 29, 1971 ,
agement activities of AEC field offices and contractors .        he stated that the carriers had retroactively adjuste d
    In response to GAO's recommendation . AEC re -               the reserves for all prior years by-transferrin ..- a total
quested its field office managers to place more emphasi s        of $,5 .928,670 from the low-option reser ves to tile, high-
on onsite reviews . Consequently, AEC: operations offic e        option reserves.
managers have been personally conducting frequen t                  A precise determination cannot be made of the ulti-
. alk-through_ inspections .
,                                                                mate effects of the transfers between the low-optio n
    According to AEC these inspections along with in -           and high-option reserves, because many-factors in ad-
creased overall emphasis on equipment managemen t                dition to reserves are taken into consideration in estab-
activities have had _a significant -impact on identification     lishing premium rates. GAO rioted that the transfers

                                                                                                                  SECTION I I

         were made prior to the end of calendar year 1970 ;             water uses, to provide an overview of the total _wate r
         but after prerniunr rates had been established for 1971 .      and related land resotu; es of the basin, and to insur e
         GAO noted also that at Dec.cmber 31, 1970, the low-            that the investment will be supplemented by action s
         option reserves had a balance of $75 .4 million an d           to abate other sources of pollution .
         that the high-option reserves had a deficit of $8 4
         million . Ccnnscque nth•, the transfers from the low -         Improved Operation and Maintenance of Municipa l
         option reserve should have the effect of either reduc -        Waste Treatment Plant s
         ing- or curtailing increases in the 1972 high-optio n             During fiscal years 1957 through 1971, the Environ-
         premium rates, about 40 percent of which are payabl e          mental Protection Agency (EPA) (formerly tha Fe d
         be the Federal Government.                                     oral Water Quality Administration) awarded grants t o
                                                                        States, mumci? .-.titics, and intergovernmental agencie s
         f,>fiore Effective Use of Grant Funds for Constructin g        of about $2 .2 billion for the construction of abou t
         Municipal Sewage Treatment Plants                              11,000 waste treatment projects having a total esti-
            GAO's examination into the effectiveness of the             mated cost of about $10 billion . In addition, it i s
        Environmental Protection A'ency's (EPA) (formerl y              estimated that over $200 million is expended annuafl y
        the Federal Water Quality Administration) construe -            by local governments to operate and maintain waste
- tion grant program for abating, controlling, and pre -                treatment plants .
        venting syater pollution showed that the program ha d              In September 1970, GAO reported that operatio n
        been administered for the most part on a first-come-            and maintenance problems for municipal waste treat-
         first-served or readiness-to-proceed basis . Little con-       ment plants had been widespread for many years an d
         sideration had been given to the immediate benefits            had resulted in inefficient plant operations. "Thes e
        to he attained by the construction of individual treat-         problems resulted from a lack of qualified operatin g
         ment plants. As a result, the benefits were not as grea t      personnel, inadequate controls over industrial wastes ,
         as they could have been because waste treatment facil-         and inadequate design or lack of adequate equipment .
        iies had been constructed on waterways into whic h                 T-he Agency amended its regulations to require as-
         nearby major polluters continued to discharge un-              surances from t 1 . gra_ t applicants that possible harnr-
         treated or inadequately treated wastes.                        ful industrial wastes receive pretreatment prior t o
            During fiscal years 1957 through 1971, EPA awarde d         dischargc into municipal sewage- sNIstems and ( 2
        more than 11,000 grants totaling $2 .2 billion for the          State water pollution control agencies that newly com-
         construction of waste treatment facilities estimated to        pleted facilities would be inspected at least annuall y_ _
         cost $10 billion. At June 30, 1971, the Congress was           for the first 3 years and periodically thereafter . 7'h e
         considering proposed legislation that would authoriz e         A genc}' also prepared guidelines dealing sjith plan t
         Federal -ants totaling $6 billion over the nest 3              design and operation and maintenance, and establishe d
         )-eats for the constructic— of facilities estimated t o        an operation and maintenance function in each region
         cost $12 billion .                                             to assist the States in developing their own programs.
            In a repor t to the Congress, issued in November               GAO believes that the improved operation and
          1969, GAO recommended that the Sta gs, in estab-              maintenance of existin g_ municipal wastc treatment
        lishing, prior ities for the construction of waste treat-       facilities may, in some cases, improve performanc e
         ment facilities, and EPA, in approving grants for suc h        enough so as to eliminate the necessity of additiona l
         construction, give consideration to (1) the benefits to        capital expenditures to obtain higher pollutant remova l
         be derived from the construction of the facilities an d        rates. In addition, the requirement that -industry pre.-
          (2) -the v actions to be taken, or planned to be taken ,       treat its wastes which could be harmful to municipal
         by other polluters on the waterways .                          treaunent plants should preclude the need for Federal .
            The Agency agreed with GAO's recommendation s               grant funds to provide the pretreattrtent at the munic- .
         and revised its regulation-, in July 1970 to require           ipal plants .
          that no Federal grant be made for a municipal wast e
         treatment -project unless that Project is included in          Utilization of the ADP Management Informatio n
         all effective basin-wide plan for pollution abatemen t         System To Identify Opportunities To Redistribute
         consistent with water quality standards. The basic             Excess `ADP Equipmen t
         objectives of this revision are to provide a cost effectiv e      Public Law 89-306, approved October 30, 1965,
         abatement - plan for protecting existing and projected         established a Government-wide program for the effi -

cient and economical .Ise of automated data process-         August 1967 and June 1970, ADP equipment wa s
ing (ADP) equipment under the General Service s              rented at a cost of $920,000 while similar excess Gov-
Administration (GSA) subject to fiscal and policy            ernment-owned ADP equipment was not being used .
control of the Office of Management and Budget . I n         GAO suggested that GSA emphasize the use of th e
April 1967 a Government-wide ADP management in-              ADP management information system to identify op-
formation system was established to provide informa-         portunities to redistribute excess ADP equipmen t
tion needed in meeting the requirements of Publi c           rather than rely on agencies' requests for equipmen t
Laub 89-306 .                                                advertised in the excess equipment bulletins .
   In a review of GSA's activities in the redistributio n       GAO was informed in January 1971 that an AD P
of the Government's excess ADP equipment, GA O               management information system report had been pre -
noted that GSA was relying on the use of excess equip -      pared shoving the ADP equipment rented from one
nient bulletins to identify opportunities to redistribut e   major supplier . In May 1971, GAO was informe d
equipment rather than the ADP management infor-               that the initial report had been found to be quite help-
dnation system .                                              ful for redistributing excess ADP equipment and that
   Using data in the ADP management information              other reports showing equipment rented from seve n
system, -GAO pointed out instances where between              additional suppliers had been prepared .
                                                                                                        SECTION 1 1

                                     Savings and Benefits to fathers

    Savings and benefits to others consist of realized or potential benefits other than those directly to the Govern-
nient, which are attributable to action taken or planned on findings developed in GAO's examination of agenc y
and contractor operations . The more significant savings or benefits to others identified during the fiscal year are
described below .

Balance-of-Payments [benefits Achieved Through               was required to pay handling charges ranging from
an Increased Agricultural Barter Progra m                    17 cents to 30 cents a hundredweight to transfer th e
                                                             butter to Government freezer space . The handlin g
   Economic betterments are benefits to the U .S .
                                                             charges could have been avoided if vendors had
economy . An example of this type of benefit is describe d
                                                             directed the butter to Government freezer space before
ina report to the Congress in May 1968 . GAO reconn-
                                                             offering it for sale to CCC .
mended to the Department of Agriculture that existin g
administrative constraints on barter transactions b e           In response to GAO recommendations, CCC revise d
relaxed in order to permit an increase in agricultura l      its price-support regulations, effective April 1, 1970 ,
exports which would benefit the U .S . balance-of-           to provide for reimbursing vendors who had place d
payments position .                                          butter directly in Government freezer space, in a n
   In a followup report to the Congress in Februar y         amount not to exceed the in-and-cut handling cos t
1971, GAO stated that the Department of Agriculture          that CCC would otherwise be required to pay . Thi s
had taken ce . tain actions to increase agricultural ex-     change enabled the vendor, by placing butter directl y
ports through the barter program . These actions in-         in Government freezer space, to avoid the in-charg e
eluded (I) increasing the barter program by increasing       which he would have incurred by placing butter i n
the barter premium that the Department was willing t o       cooler or freezer space before offering it to CCC fo r
pay,- (2) including additional free market stocks t o        purchase.
the list of commodities eligible for barter, and (3 )           CCC purchases of butter at warehouse location s
                                                             during the 8anonth period subsequent to the change
revising the destination list to which these commoditie s
could be . exported . As a result of relaxing the barte r    totaled about 102 mi'! -i on pounds. Most of the butte r
constraints by the Department, barter contracts for th e     was located in Government freezer space at the time
first half of fiscal year 1971 had reached the highest       offered for sale and did not require subsequent han-
                                                             dling . The elimination of the subsequent handling con-
dollar amounts in the history of the program .
                                                             sequently reduced the cost to the dairy industry at no . ,
   For fiscal year 1970 there were $129 million wort h
                                                             increase in cost to CCC . GAO estimated that annual
of barter: contracts awarded, and for the greater part o f
                                                             savings to the dairy industry would total about $152, -
fiscal year 1971 the amount was $885 million . A com -       000, which represented the approximate cost of extr a
parison with the fiscal year 1969 total of $181 millio n     handling that was eliminated . In addition, the revisio n
shows an advantage to the U .S . balance-of-payments          resulted in several improvennents that directly benefite d
position of about .$952 million during the fiscal year s     CCC operations ; however ; the related dollar saving s
 1970 and 1971 . ,                                           of these benefits were not readily determinable .
Elimination of Unnecessary Handling of Butter                Reducing the Cost of Insurance to           Serviceme n
  GAO noted that large quantities of butter offere d         Under the Servicemen's Government Life Insurance
for sale to the Commodity Credit Corporation (CCC )          Progra m
under the price-support program were located in ware-          The law authorizing the servicemen's group life in-
house cooler or freezer space . After- purchase, CCC         surance program (38 U.S .C . 701) -prov ides that nieni-

bets covered by the program bear the cost of nornia       traceable to the Vietnam conflict . The legislative his-
mortality claims and that the Government bear tfi e       tory of the authorizing legislation showed that the Con -
cost of mortalities traceable to the extra hazards o f    gress intended that the Government bear all mortality
war.                                                      costs traceable to the extra hazards of war. Therefore,
  GAO's review of the Government's extra hazar c          GAO recommended that, in order to ` implement th e
costs under the program showed that although th e         intent of the legislation, the_Congress should conside r
Veterans Administration computed the Government' :        amendatory legislation changing the formula con-
extra hazard costs in accordance with the formula pre -   tained in the law .
scribed by law, the application of the formula re-           Public Law 91-291, approved June 25, 1970, con-
sulted in servicemen contributing about $15 millio r      tained a provision to assure that the Government bear
dur ing fiscal year 1968 for the costs of death claim     all mortality costs traceable to the extra hazards of war .


                                                                                                                           SECTION                 II I

        AUDIT REPORTS ISSUED DARING THE FISCAL YEAR                                                         1971
                                                                                                                  Addre see and date Issued
               -                                                                                Reference    Congress Committees Age¢cy
                                                                                                                        or members o[fìclal s
                                                                                                                         of Congress

                               CIVIL DEPARTMENTS AND AGENCIE S

        Department of Agriculture .
         Agricultural Research Service :
           Settlement of accounts of accountable officers :
              Eastern Administrative Division	                                                                                                 10-15-70
              Finance Office, Minneapolis, Minn 	                                                                                               1-25-71
              Finance Division, New Orleans, La	                                                                                                3-15-7 1
              Selected activities of the Plant Protection Division 	                                                   	                        5-18-7 1
          Agricultural Stabilization and Conservation Service and Cormnodi .y Credit Cor -
              poration :
            Objectives of the feed grain program not attained because of inclusion o f
              nonagricultural land	                                                               114824      1-12-71	
    =       Audit of Commodity Credit Corporation for fiscal year 1970	                           114824      1-15-71	
            Need for stronger control over sight drafts prepared by State and county offices	                                                   7-16-70
            Guides needed for audit of administrative operations in State and count y
              offices	                                                                                                                          '3- I-70
          Farmers Home Administration :
            Savings available to the Government by timing advances of loan and gran t
              funds with actual cash requirements	                                                 114873     7- 6-70	
            Improvements needed in financial statements of the Emergency Credit Revolv -
              ing Fund	                                                                           114873     12-30-70	                             :. .. .
            Procedures and policies on the use of independent auditors should be strength-
               ened	                                                                               170874     1-22-71	
            Financial feasibility of rural water and sewer systems should be checked more
               thoroughly	                                                                         114873     4-21-71	
            Nonenforcement of requirements designed to insure the financial soundness
              of loans to grazing associations	                                                    114873     5-27-71	
           Information regarding the FHA recreation loan program (request of Congress -
              men William Clay, Robert N . C . Nix, Charles C . Diggs, Jr., Augustus F.
              Hawkins, John Conyers, Jr ., Adam C . Powell, and Congresswoman Shirley                                           -
              Chisholm)	                                                                           114873	                          8- 5-70	
            Need for more specific requirements regarding the types of accounts and record s
               which organization-borrowers should maintain	                                                                                    7-30-7 0
            Loan and - grant funds provided under the water and sewer program to an
               ineligible borrower	                                                                                                    	        8- 7-7 0
            Need to revise procedures for appraising nonfarm land for rural housing loans 	                    ... .       .	                   8-28-70
            Need to revise instructions to prevent unnecessary interest credits to borrowers
               receiving rural housing loans	                                                                                                  12- 7-70
             Loan management practices and management information system to b e
                improved . i	                                                                                                                    2- 9-7 1
             Practices follo}ved in establishing and accounting for allowances for losses o n
                uncoilectibleloans	                                                                                                             2-25-7 1
             Need for closer adherence to existing instructions by county and district super-
                visorsin making recreational loans to individuals	                                                                              3-15-7 1
                   448–66F   0--7 1---1 2                                                                                                           3

                        SECTION 111

                                                                                                                                                                  Addressee and date Issue d
                                                                                                                     Retemace                                  Congress Conn ntres       Agenc y
                                                                                                                                                                        or Members . otllelals
                                                                                                                                                                        of Congress          -

                                   CIVIL DEPARTMENTS AND AGENCIES—Continued

                        Department of Agriculture—Continued
                          Federal Crop Insurance Corporation :
    _                       Audit for fiscal year 1970	                                                                114834                                  4-13-71	
                            Opportunities for improving automated system for insurance programs 	                      114834	                                                             :.       8-28-7 0
                          Forest Service :
                            Problems related to restricting the use of motorized equipment in wildernes s
                               and similar areas (relates also to National Park Service, Department of th e
                               Interior) . . .     .	                                                                  125053                                 10-29-70	
                            Funds appropriated for roads and trails could be used more ^ffectively 	                   125053                                 11-20-7 0
                            Increase in annual fees for sununer-houie-site permits in San Bernardin o
                               National Forest (request of Congressman Richard T . Hanna)	                             152490	                                                      7- 9-70	
                            Alleged nonpayment of wages to employees for contract work performe d
                               (request of Congressman Wayne N._ lspinall)	                                            171001	                                                     12-31-70	
                            Settlement of accounts of accountable officers :
                               Forest Products Laboratory, Madison, Wis 	                                                                                                                           6-28-7 1
                               Region 1, Missoula, 'ATont	                                                                           	                                                              3- .8-7 1
                               Region 4, Ogden, Utah	                                                                            	                                                                  2-23-7 1
                               Regional Office, Milwaukee, Wis	                                                          	                                                                          7-10-7 0
                          Soil Conservation Service :
                            Settlement of accounts of accountable officers :
                               State offices :
                                  California	                                                                                                                                                                                -
                                  Colorado . . . . :	                                                                                                                     	                          2-11-7 1
                                  Georgia . :	                                                                                                                            _	                        10- 9-.7 0
                                  Kentucky	                                                                                                                                                          9-21-7 0
                                  Mississippi . . . .                         .	                                      .. ..                                     .	                                   4--12-7 1
                                  South Carolina	                                                                                                                                                   10-21-7 0
                                  Wiscoinsin	                                                                                                                                             ..        10- 7-70
                               Headquarters, Washington, D .C	                                                                           	                                                           B-13-70
                               South Regional Technical Service Center, Fort Worth, Tex 	                                                                                                            7-29-70
                               Cartographic Division, Hyattsville, Nfd	                                                                      	                                                       6-10-7 1
                -        -Distribution of -Hatch and Smith-Lever Act funds to land-grant institutions                                                -                                                -
                            (request of Congress%vonian Shirley Chisholm) 	                                            170667	                                                     11-10-70	
                        Department of the Army, Corps of Engineers (civil functions) :
                             Opportunities for improvement in the development and evaluation of desig n
                             '. . alternatives for Federal water resources projects, including projects of the
                -           - - Bureatt of Reclamation, Department of the Interior	                                    12 :1045                                4- 6-71	                                          -       -
                             Adherence to the Small Business Administration's set-aside provisions in awardin g
                                  dredging contracts (request of Congressman Wendell Wyatt) 	                          169513	                                                      9-21-70	
                            Need to compute interest expense on net additions to the Federal investment i n
                                  water resourcesprojects	                 :	                                                                            	                                           7- 6 —70-
        _                    Need to revise procedure for determining the Federal contribution for partnership                                                                                                       -
                                 -Water resources projects	                                                            167941 -                                 - .. .         _                     7-30-7 0
                        - . -Settlemegtof accounts of accountable officers 	                                                                                       .                                10-14-7 6
                                                                                                                                                             : . . . :	
                             Need to improve accounting for financial activities of the Missouri River Basi n
                                  integrated projects	                                                          :	                                                                             :.    2-25-7 1
                             IniprovenurAs to be made in accounts and accounting procedures for Corps of
                                  Engineers multipurpose projects in Federal Columbia River Power System 	                                       	                                                   3- 1-71
                    -   Department of Commerce :
                         Office of the Secretary :                     -                        -
            _              Nced for strengthening administrative procedures' and controls over mainte -
                              nance of leave and retirement records 	                                                 . . . . . . .`	                                                                9-23-7 0


                                                                                                                                             SECTION Ii i

    -                                                                                                                    Addressee and date Issne d
                               -                                                                        Reference    Congress Committees Agenc y
            -                                                                                                                  or Members Officials -
                                                                                                                               of Congres s

                           CIVIL DEPARTMENTS AND AGENCIES—Continue d

                Department of Commerce—Continued
                  Economic Development Administration :
                   More reliable data needed as a basis for providing Federal assistance to eco -
                      nomically distressed areas (relates also to Manpower Administration, Depart -
                      merit of Labor)	                                                                     133182    5-10-71	
                    Need for improvement in the management information system 	                                          	                              8-21-70         -           -
                    Improvement needed in the management of construction activities 	                                                                  10-14-7 0
                  Environmental Science Services Administration :
                    Sale of personal property under exchange-sale authority (request of chairman ,
                      Special'Studies Subcommittee, House Committee on Government Opera -
                      tions)•	                                                                             169903	                      7-27-70	
                  National Bureau of Standards :
                    Unauthorized retention in working capital fund of money accumulated fo r
                      earned leave of transferred employees	                                               149858     3-10-71	
                    User charges should be established for benefactors of the research associat e
                      program	                                                                                                           	              7-30-70
        _         National Oceanic and Atmospheric Administration :                                                                                                         -   -
                    Administration of payroll, leave, and related functions 	                                                                          12- 8-70
                Department of Health, Education, and Welfare :
                 Office of the Secretary :
                    Action taken to collect certain salary overpayments (request of Senator Charle s
                      E . Goodell)	                                                                          164031	                10-27-70	                  :, . .
                    Status of construction of new Howard University teaching hospital (request o f
                      Congressman Garner E. Shriver)	                                                    164031(1)	                     3- 8-71	                :..
                    Procedures and practices for employment of consultants and experts need ini -
                      provement (relates also to procedures of Civil Service Commission) 	                164031(1)	                                    4- 1-7 1
                  Food and Drug Administration :
                    Settlement of accounts of accountable officers, Dallas District Office 	                                                            6-14-7 1
                  Health Services and Mental Health Administration :
                    Government funds used to develop a computer system for hospitals (request of
                       Congressman Robert McClory) 	                                                         170688 . :	                 I- 8-71	          c
                    Opportunities for savings in cost of medical and surgical care for Indian patient s
                       by use of Federal hospitals	                                                                                                     7- 9-70
                    Portland Area Office actions for increased use of Federal hospitals for care o f
                       Indian patients 	                                                                                      :	                        8- 1-70
                    Opportunities for reducing indirect costs under medical research grants	                                                           10-30-70
                    Questionable disclosure of information developed through use of Federal gran t
                       funds                                                                                                                             1-12-7 1
                    Settlement of accounts of accountable officers :
                       Aberdeen Area Office, Indian Health Service	                                                                                _     3-29-7 1
                       Public Health Service Hospital, New Orleans, La	                                                                                 10-21-70
                  National Institutes of Health :
                    Information gathering and dissemination activities of the National Library o f
                       Medicine	                                                                           164031(2) 11-30-70      :	
                    Training grant awarded to the University of California_ at Los Angeles (reques t
                       of Congressman Charles M . Teague)	                                                164031(2)	                     9-18-70	
                    Cost incurred in connecdon with a rock concert sponsored by the Vietna m
                       Moratorium Committee (request of Congressman William J . Scherle)	                     168527	                   10-14-70	              :....
                    Funds withheld from fiscal year 1970 appropriations for extramural program s
                       (request of chairman, Senate Committee on Public Works)	                         	 164031(2)	                    10-21-70	
                    Administration ofcontracts and grants for cancer research (request of chairman ,
                       Senate Committee on Labor and Public Welfare) . : :	                                164031(2) :,	                 3- 5-71 ,	

                                                                                                                                                      Addressee and date issue d
                                                                                                                     Reference      ^ Congress                  Conir uttecs             lceney
                                                                        -          -                   -                                                        or Mennbers              official s
                                                                                                                                                                of   Congres s

                CIVIL DEI'MRT MEATS AN!) AGENCIES —Continue d

    Department of Health, Education, and Welfare—Continued :
     National Institutes of health—Continued -
         Use of Federal grant funds at a university (request of Senator Robert C . Byrd) . 164031(2)	                                                            6- 8-71	
         Training grant awarded to the University of California at Los Angeles . . . : . . . : .. .	   : .	                                                                               9--22-7 0
         Settlement of accounts of accountable officers, Headquarters, Bethesda, itid	               	                                                                                    5-18-7 1
         Refund due on research grant awarded to a un :versity	                                      --- .'	                                                                         -    6-21-7 1
     Office of Education :
       Improvement needed in administration of the Federal program of aid to edu -
          cationally deprived children in Ohio	                   _`	                                   :. .. .      164031(1) 12-28-70 - . .`	
       In proved ;idminisu:rtion needed in New Jerseyfor th° Federal program of aid
          to educationally deprived children             . .	            : . : . . . : :	                   .. .     164031(-1)       4- 7-71	                                                    : . . ."
       Examination of financial statements of   . . . the ` Student Loan Insurance Fund for
          fiscal year 1969	                             is	           :	                                             164031(1)        4 12-71	                                                   : ...:
       Assessmcm of the impact of the Teacher Corps program at the University of
          Miawui and p .uticipatin; achoo!s in south Florida	                                                  :.    164031(1)        4-16-71	
      Asscsstucin of the Teacher Corps program at Northern Arizona University an d
          participating schools oil the Navajo and Hopi Indian Reservations	                                         164031(l)        5-13-71	
       Assessment of the Teacher Corps program at Western Carolina University an d
          participating schools in North Carolina	                                        : : : . : . . : . :	      -164031(1)        5-20-71 . . . .`,	                             ; :, . :	
       Review of certain activities of the Florida School Desegregation Consultin g
          Center (request of Congressman William C . Cramer)	                                                        164031(1)	                                  8-18-70	
       Expenditures of Federal funds granted to -a university under the community                                                                                                                              -
          service and continuing education programs (request of Senator Norris Cotton) .                             164031(1) <	                               12- 7-70	                             :, .
       Need to improve policies and pt ca•cdures for approving grants under the emer -
          gency school assistance pro ;—rant (eeque t of chairman, Senate Select Com -
          mittee on L•'qual Educational Opportunity)	                                                                164031(1)	                          :. .        3- 5-71	
       Basis used for classifying contracts as competitive or noncompetitive (reques t
          of chairman, Special Subcommittee on Education, House Committee o n
           Education and Labor)	                                                                                     164031(1) .`	                                   3-30-71 . . .    ,::
       Settlement of accounts of accountable officers, Washington,' D,C	                                                                         :	                   '	           7-14,-70 `
       Debt collection activities tinder the Guaranteed Student Loan Program . . . : . . .                                 117604`	                   : :	                         1- 5-7 1
       Need for improvements in the administration of the Teacher Corps program . .                                 .. 	                :	                                                 3- 5-7 1
        Policies and procedures c .f the Office of Education in awarding a contract to th e
           Consortium of p rofessional Associations ; for Study of Special Teacher lm- `
           provement programs 	                                               :	                                     164031(1) : :	                      ;	               ;	              4-22-7 1

     Social and Rehabilitation Service :
       Problems in approving -arid paying for nursing horne care under the Medicai d
          program in Cilifornia 	                   : :	                         :	      :. ..                      164031(3)         7-23-70	                           : :.
       Continuing problems in pro% iding ueusing home care and prescribed drugs unde r
          the Medicaid program in Clalifornia . . .`	                    : ,	            :. ..                      164031(3)         8-26-70	
       lmprovement needed in the ai hninistration of the Iowa and Kansas Medicaid
          programs by the fiscal agents . . . .                                                                     164031(3) 10-20--70	                                                              :. . '
       Cont .ok over M(dicaid drug pro t, nnu in Ohio need iniprov p ment	                                          164831( .'1) - 1 1 -23-70 .
       41`ays to rahicc• payments for physicians and X-ray-services to nursing hom e
          patients under ;Medicare and Mcdic tid	                                                                    164031(3)        2- 2-71 , . . . .
       Control ue•etled o'.,•r excessive use of pir:sician services pi'micicd under th e
          Medicaid pro,,tani in Kentucky . . .                                           .. . .                      164031(3)        ?- a-71 . . .
       p roblems in providing proper care to Aledic .tid .md Medic,irc patients in skilled
          nursing homes	                                                                                             16403- 1(3)       -'?H-7 1
       Obwrva tion, of test of simplified Incfkud for dct"r111i ;1inf' elij'lhlity of persons                                                -
          for adult public assistance progr w "i (rvgl w t of chairtn m ' ;,-hate Committe e
          on Finance)•                                                                                               164031(3) :                                     8          I0


                                                                                                                           SECTION Il l

                                                                                                             Addrasscc and data Issue d
                                                                                             Reference   Congress Committees AgencyJ.
                                                                                                                   or bfennbus officials -
                                                                                                                   of Congress

               CIVIL DEPARTMENTS AND AGENCIES-Continue d

    Department of Health, Education, and Welfare- Continue d
     Social and Rehabilitation Service—Continued
       Examination into certain practices relating to nursing home operations in th e
         Baltimore, Did ., area (request of chairman, Subcommittee on Long-Ter m
         Care, Senate Special Committee on Aging)	                                        164031(3)	                12- 4-70	
       Certain aspects of research grant programs administered by the Children' s
         Bureau	                                                                          164031(3)	                                7-31-70
       Need for better accountability of Federal funds for child care costs of Wor k
          Incentive program	                                                               	         .. . ... .. .. .. .. .. ..     8- 4-70
       Problems relating to overdue redetermination of eligibility and computation s
         of cost sharing for medically needy persons under the Medicaid program i n
         Massachusetts	                                                                                          	                  8-17-70
       Need for improved administration and control of activities under title III of th e
          Older Americans Act	                                                                 	                                    9-23-70
       Opportunities for improving administrative controls over payments for medica l
          services to indigent persons under the Medicaid program in Illinois 	                                                     10- 9-70
       Incorrect payment of child care allowances noted in California and Pennsyl -
          vania	                                                                                                                    3-11-7 1
      Social Security Administration :
        Improvements. needed in processing Medicare claims for physicians' services i n
            Texas	                                                                      _ 164031(4) 12-31-70	
        Opportunity to reduce Medicare costs by consolidating claims processing activi -
            ties, Department of Health, Education, and Welfare and Railroad Retirement
            Board	                                                                         164031(4)     1-21-71	
        Lengthy delays in settling the costs of health services furnished under Medicar e	 164031(4) 6-23-71	
        Medicare payments for services of supervisory and teaching physicians at Her -
            man Kiefer Hospital ; Detroit, Mich . (request of chairmen, Senate Committe e
            on Finance and House Committee on Ways and Mean) 	                             164031(4)	                 8-21-70	
         Payments to hospitals and extended-care facilities for depreciation expense un -
            der the Medicare program (request of chairman, Senate Committee o n
            Finance)	                                                                         142983	                  8-21-70	
         D4edieare payments for services of supervisory and teaching physicians a t
             Massachusetts General Hospital ; Boston, Mass . (request of chairmen, Senat e
             Committee on Finance and House Committee on Ways and Means) 	                 164031(4)	                  9-30-70	
        Medicare payments for services of supervisory and teaching physicians a t
            Jackson Memorial Hospital, Miami, Fla, (request of chairmen, Senate Co mt
             mittee on Finance and House Committee on Ways arid Means) 	                   164031(4)	                 11-13-70	
         Medicare payments for services of supervisory and teaching physicians at Wayn e
             County General Hospital, Eloise, Mich . (request of chairmen, Senate Com-
             ntittee oil Finance and House Corinuittee on Ways and Means) 	                164031(4) 	                12- 4-70 ,	            :.
         Medicare payments for services of supervisory and teaching physicians at the
        - . .Dallas-County' Hospital District, Dallas, Tex . (request of chairmen, Senate                  -                                          -
             Committee on Finance and House Committee on Ways and Means) 	                 164031(4)	                 12-22-70	                   :
         Information concerning Medicare payments for care provided in hospitals an d
             in cxtehded-care facilities (request of Congressman James A . Burke)	          164031(4) _	               3-24-71	
         Information pertaining to changes in ownership of certain hospitals in California
             from proprietary to nonprofit institutions (request of chairman, House Com -
             mitteeon Ways and Means)	                                                      164031(4)	                 5-27-71	
          Overreimbursctnenr to hospitals for costs tinder the Health Insurance for th e
             Aged program	                                      : : . . :	                     :	          	                         7- 6-70
          Administrative costs of the Medicare program can be reduced by authorizing
              contractors to use Government sources of supply	                              164031(4)	                               7-21-7 0


                    SEBTION ill

                                         --_—               _`                                                                                    Addresseermddateissued -
                                                                                                                     Refereuce                Congress Commlttees Ageney
                                                                                                                                                        or Jternbers  ofâclals
                                                                                                                                                      - of Congress                                      -

                                   CIVIL DEPARTMENTS AND AGENCIES—Continue d

                        Department of Health, Education, and Welfare—Continue d
                         Social Security Administration—Continue d
                          - Procedures of certain commercial carriers for determining the reasonablenes s
                              of physieiane charges under the Medicare program 	                                                                                        10-29-70
                            Procedures used byBlue Shield of Florida, Inc ., for determining thereason -
                              ableness of physicians' charges under the Medicare program	                        	                                                      12-21-70
        -                   Review of traffic management systera	                                                          	                                            12-29-70
                           P ; ocedures used by California Physicians' Service for processing and payin g
                              claims for physicians' services under the 'Medicare program	                                                                              12-31-70
                            Cost of hospital services provided to \Medicare patients by the Massachusetts
                              General Hospital	                                                                                                                         2- 1-7 1
                            Medicare cost reimbursements to hospitals by the Georgia Hospital Servic e
                              Association, lna	                                                                                                   	                     3-18-7 1                 ,
                            Medicare payments to certain hospital-based physicians in Illinois 	                                          	                             6-28-7 1
                           Travel and overtime practices of hearing examiners 	                                                       	                                 6-28-7 1
                            Payments made by'Iedicare carriers for drugs and biologicals furnished t o
                              Medicare beneficiaries 	                                                                                                                  6-30-7 1
                        Department of Housing and Urban Development :
    -                     Department-wide :
                    -       Coordination between agencies in administering federally assisted programs i n
                              the metropolitan area of Los Angeles, Calif 	                                            	                                                8-11-70              -
    -                       Need to improvemanagement and utilization of foods collected through th e
                              assessment of fees	                                                                                                                       3-24-7 1
                            Settlement of accounts of accountable t - -crs'.
                              Atlanta, Ga	                                                                                                                              4- 5-7 1
                              Region H1, Philadelphia, Pa	                                                                                                              1-18-7 1
                              San Francisco, Calif	                                                                                                                     3-3C-7 1
                          Housing Assistance Activities :
                            Opportunity for accelerating construction and reducing cost of low-ren t
                              housing	                                                                                 114863                 8- 4-70	
                            Problems in the program for rehabilitating housing to provide homes for low -
                              income families in Philadelphia	                                                         118718                 3-19-71	
                            Information regarding the rent supplement program insurance funds and
            -                 federally assisted housing programs (request of cha:roan, Subcommittee on                                                                                -
                              Housing and Urban Affairs, Senate Conuttiucc on Banking and Currency) . , . .            114860	                               8- 7-70	
                            Design specifications for teindows in low-rent housing projects in Atlanta, Ga .
                              (request of Congressman Fletcher Thompson)	                                              1187111	                             12- 8-70	
                            Acquisition of Crestview Apartments by the Cleveland :Metropolitan Housin g
                              authority (request of Senator William B . Saxbe)	                                        118718	                              12-14-70	         :	       , .
                                     aspects of public housing projects in Nebraska (request of Congressma n
                              Dave Martin)	                                                                            170836	                              12-31-70	
                            Selected aspects of the operation of the St . Louis Housing Authority (request of
                              C:ongrminanWilliain Clay)	                                                              118718	                                9-21-7 1
                -           Review of certain aspects of College Housing Project C7 -I-Ore-85(D) in Port-                                                                 -        -
                              land, Oreg-.-(request of Congresswoman Edith Green), 	                                   173037	                               6-25-71	
                            Urban research and technology activities	                                                             	                                     7-30-7 0
                          Metropolitan Development Activities;
                            Controls needed over the leasing of land acquired under the open-space lan d
                              program 	                                                                                168174                 6-16-71 ,	
                            Sale of park land acquired with financial assistance under the open-space lan d
                              program (request of Congressman Edward J . Derwinsxt) .                       ..         168174 .                       . .    8- 4-70      . .. .
                        -   Information on Jonathan and Cedar-Riverside community projects in Minne -
                              sota (request of Congressman 11 . R . Gross)	                                            170971	                              11-30-70	


                                                                                                                                                                                 SECTION II I

                                                                    —~                                                             _--~_                  Adda-cc and rlalc i,sucd                 --^

                             - -                                                                                   Rnfer,, w,=                     Congress           C ri inutt-,    Agenc y
                                                                                                                              -                      -                or \1~mtmrs     anicial s
                                                                                                                                                                      u[ r'ougn•s S

                                     CIVIL DEPARTMENTS AND AGENCIES—Continued

                          Department of Housing and Urban Development—Continue d
                          Model Cities Activities :
                            Propriety of expenditures and benefits derived front planning the Model Citie s
                               program in Cleveland, Ohio (request of Congressman Charles A . V anik) . . . .          171500	                                          i--IfS-71	
                            Procedures followed by the Seattle City Demonstration Agency in disbursin g
                                Model Cities grant funds	                                                              	                                                                  4-- 8-7 1
                            Collecting . and reporting data on Model Neighborhood projects	                        	                                             :	                       4-16-7 1
                          Mortgage Financing Activities :
            -                Lxamination of financial statements of the Government National Mortgag e
                                Association for fiscal year 1969 and of the Federal ,National Aortgage Asso -
                               ciation for 2-maonth period ended Aug . 31, 1963	                                       114823                      10-15-70	
                    _       'righter control needed on occupancy of federally subsidized housing	                      114860                       1-20-71	                                                           -
        -               -   Examination of financial statements pertaining to insurance operations of th e
                                Federal Housing Administration, fiscal year 1970	                                      114860                       5- 7-71	                                                       -
                             Examination of financial statements of the Government National Mortgage
                                Association for fiscal year 1970	                                                                  114828           6-14-7 1
                             Rehabilitation of Clifton Terrace Apartments in Washington, D .C . !request o f
                                Congressman Joel T. Broyhill)	                                                                     168191                 . ..          9-23-70 - -	
                             Review of Frontier Heights housing project, Smohomaish County, Wash . (reques t
                                of Congressman Lloyd Meeds) . .                                                                    i71630	                              4- 2- 7 1	
                             Propriety of rental increases authorized at two projects in New Jersey (request                             -                                                                     -
                                of Congressman Dominick V . Daniels)	                                                              1713013                              4-16-71 . . . .
                             Improvements needed in administering the rehabilitation of housing projects ,
                                Boston, ,lfa55	                                                           :	                                                                              2-12-7 1
                           Urban Renewal Activities :
                             Opportunity to improve allocation of program funds to better meet the nationa l
                                housing goal 	                                                                                     118754          10- 2-70	
                             Examination into the Ferry Oaks Concentrated Code Enfo rcement project i n
                                Salem, Oreg . (request of Senators Mark O. Hatfield and Robert W . Pack-
                                wood)	                                                                                             169208                               2-26-71 -	
                             Review . of activities of a plumber in Bayonne, N .J . (request of chiinuan, Gov-
            -         -          ernnient Activities Subconucittee, House Committee op. Government Opera-
                                tions)	                                                                                            170980	                              4-V -71	
                             Weaknesses in planning and niauagieg a housing code enforcement project in                                                                                    -
                                 St . Louis (request of Congressman William Clay) 	                                                167655	                              ti- :3-71	
                             Need to strengthen administration of die workable program for communit y
                                improvement	                                                                                   	                                                          10-14-7 0
                -         - Need to strengthen administration of the Neighborhood Facilities Grant pro -
                                grani	         :	                                                                                       . . . :	            :	              :	            2-12-7 1
                        - Department of the Interior:                                                                               -                                                          -         - -
                          -` Office of the Secretary :
                              Refurbishing ofoffices (request of Senators Quentin N . Burdick, Henry M,
                    -            Jackson, Lee Metcalf, and George Murphy, and . Congressmen H . R . Gross                                                                     -
                                  and john j . McFall)—	                                                       -                   169502	                              8-12-70	
                             Bonneville Power Administration (including constr uction and operating activities                          -           - -                               -
                                  of Army Corps of) ngineers and Bureau cf Rechu nation) :
                               Examination of financial statements of Federal Columbia River Power Syste m
                                  for fiscal year 1970	                                                                            114858          12-21-70	
    _                          Examination of accounting records and practices for fiscal year 1970 	                      	                                                              3- 4-7 1
                             Bureau of Mines :
                               Problems in implementation of the Federal Coal Mine Health and Safety ac t
                               - of 1969 (request of chairman, Subcommittee on Labor, Senate Committee o n
                                  Labor and Public Welfare.)	                                                                      170686	                  _           5-13-71 . .-- : . : . . .


                SECTION: 1I1

                                                                                                                              Addressee and date issue d
                                                                                                            Reference     Congress Comtnfttees       Agency
                                                                                                                                    to Membus        officials                                -
                                                                                                                                    of Cw'gr'ss

                           CIVIL DEPARTMENTS AND AGENCIES—Continue d

                Department of the Interior—Continue d
                  Bureau of Reclamation :
                    Assurances needed that cost of the Celilo-Mead tratistnission lire proiect will b e
                       recovered	                                                                            164064       8- 5-70	                                        -
    -               Savings available under the program for relocating roads and bridges at th e
                       Auburn Dani and Reservoir in Calitornia	                                              125045       5- 7-71             -	
                    Capitalization of interest during construction of power facilities	                :.    170816	                                             10--23--7 0
                    Review of accounts and accounting procedures for multipurpose projects	                                                 . ... ..              3- 4-71             -
                    Recommended action to improve accounting for operation of Missouri diver                                                                                      -
        -              Basin integrated projects	                                    :	                     ... .. .. .. .. .. ... . ... .. .. .. ..              3- 8-7 1
                    Accounting matters relating to reimbursable cost of power for Missouri Rive r
                       Basin project	                                                                                                           . ..             4-12-7 1
                    Settlement of accounts of accountable officers 	                                                             . .. ... .. .. ...              4-21-7 1
                  Federal Water Quality Administration :
                    Need for improved operation and maintenance of municipal waste treatmen t
                       plants	                                                                               166506       9- 1-7 0
                    Controlling industrial water pollution—progress and problems . . : . .                   166506      12- 2-70	                           .    .. .. .. .
                    Decision to retroactively increase the amount of certain Federal grants awarded
                       for the construction of municipal waste treatment facilities . . . .                  166506	                                             8- 7-7 0
                 - Settlement of accounts of accountable officers 	                                                            .. .. .. .. .. ... ..             9-14-7 0
                  National Park Service :
                    Granting of access rights to the George Washington Memorial Parkway i n
                      exchange for certain privately owned property (request of Senator Willia m
                       B. Spong, Jr .)	                                                                      1,59104 . . . .               11-20-70 . . . . . . . . . .
            -       Settlement of accounts of accountable officers, Western Service Center, Sa n
                       Francisco, Calif	                                                                                                    .. .. .               1- 5-71                 -
                  Office of Territories :
                    Financial management of Virgin Islands Government needs substantial ini-
                       prove(nents	                                                                          11 ,1808     3-- 2-71	
                    Need for departmental surveillance and on-site reviews of the accounts of th e
                       Trust Territory of the Pacific Islands 	                                                                                       . ..       12-I5-7 0
                Department of Justice:
        -        Office of Attorney General :                                                                                                                                             -
                   Improvements needed in collection practices of U .S . Attorncy's office, Portland ,
                     Oreg	                                                                                                      . .. .. ... . .. ..               1- 6-7 1
                 -Bureau of Prisons :                                                                                                                              -
                   Federal Prison Industries, Inc . :
                     Examination of financial statements (1970) 	                                            114826       1-19-71	                                            .
                     Review of certain financial nanagement activities :
                        Correctional Institution, Danbury, Conn	                                                                       	            -            12-I8-7 0
                        Correctional Institution, Tallahassee, Fla	                                                                         .. .. ..              1-20-7 1
                        Penitentiary; McNeil Island, Wash	                                                   : .. ... .. .. .. .. .. .. .. ... .. ..             12-28-7 0
                        Penitentiary, Seagoville, Tex . . .	                    .                                                       .. ... .. .               1-12-7 1
                        Penitentiary, Terminal Island, Calif 	                                                     -	                                            12-16-7 0
                     Settlement of accounts of accountable officers, Penitentiary, Atlanta, Ga	                -	                                   :             1- 4-7 1
                     Need to revise certain accounting, procurement, and other practices	                    114826	                              :.              4-14-7 1
                 ftmnigration and Naturalization Service :
                   Review of accounting systern	                                : . . . . :	      :. .       157162	              :	                              8- :i-7 0
                   Accelerated inspection system at Seattle-Tacoma International ;Airport	                    . :	                                                9-21-7 0 -
                   Settlement of accounts of accountable officers, Northeast Regional OBce ,
                      Brrlington Vt	                                                                                              ..                             2-24-7 1
                   yen Ltcd administrative operations of the Northeast Regional Ofticc	                                           .. ... .. .. .. ..             4-30-71

                                                                                                                                                                 SECTION 11 1

                      -                                                                                                                      4d 1 cssae and date issned
                                                                                                                       Reference        Congress Conuuittees         Agenr r
                                      -                                                                                                             trt 'ekm6ers     oirlcial s
                                                                                                                                                    a( Cungnlss

                                     CIVIL DEPARTMENTS AND AGENCIES—Continue d

                          Department of Labor :
                            Practices of Regional Administrative Office, San Francisco, Calif 	                                           	                                 4-12-7 1
     -                      Manpower Administration :
                              The Special Impact program in Los Angeles is not meeting goal of providin g
                                  jobs for the disadvantaged	                                                           168560          10- 7-70	                                    -
                           - Need to enhance the effectiveness of on-die-job training in Appalachia n
                                  Temwssee	                                                                             146879          11--13-70	
             -                Opportunities for improving training results and efficiency at the East Bay                                                                                 -
                                  Skills Center, Oakland, Calif ., under the Manpower Development an d
                                  Training Act, Departments of Labor and Health, Education and Welfare . _ .            146879          2--10-71	
                              Evaluation of results and administration of the Job Opportunities in the Busines s
                                  Sector program in Eve cities 	                                                        163922           3-24-71 _	
                              Certain information concerning activities of Youth Pride Economic Enterprises ,
                                  Inc . (request of chairman, House Committee on the District of Cohnnbia, an d
                                  Congressman Joel T . Broyhill)	                                                       164537	                           10-28-70	
                              Operation of a Neighborhood Youth Corps project sponsored by the Cadd o
                                  Electric Cooperative of Binger, Okla . (request of Senator Henry L . Belhnon) . .     130515	                           11- 6-70	
                               Federal funds expended for operation of the Federal/State employment service
                                  and the Interstate Conference of Employment Security Agencies (request o f
                                  chairman, Subcommittee on Employment, Manpower, and Poverty, Senat e
                                  Committee on Labor and Public Welfare)	                                                133182	                          11-13-70	
                               Contingent fees paid by contractors for contracts awarded under Federal man -
                                  power programs (request of Congressman William A . Steiger)	                           168560	                           3-26-7 1
                               Need to strengthen administration of on-the-job •raining program in Milwaukee ,
                                  Wis	                                                                                                                                      10- 8-7 0
                               Opportunities to enhance effectiveness and strengthen management of th e
                                  Manpower Development and Training Act programs in Oregon and Wash -
                                  ington	                                                                                          _	                                       10-12-7 0
                            U .S . Training and Employment Service :
                               Information regarding the Cooperative Area Manpower Planning System .                                                  	                 _    5-28-7 1
                            Wage and Labor Standards Administration :
                               Construction costs for certain federally financed housing projects increased due
                                  to inappropriate mhritnum wage rate determinations 	                                   146842          8-12-70             . . . :	          -- : . .
                            Settlement of a .counts of accountable officers, Regional Administrative Office ,
                               Chicago, III	                                                                                                                                 6-10-7 1
                          Post Office Department :
                           Better controls needed over assessment and collection of postage for second-clas s
                              mail, a money loser	                                                                       161568          9-18-70	
                           Transfer of regional activities to local post offices inconsistent with congressiona l
                              intent	                                                                                    159768 11-13-70	
                           Economies available by reducing preventive maintenance requirements for certai n
                              mechanized mail-handling equipment	                                                        114874 12-31-70	                                           _ _
         _                 Postage due and handling costs for processing mail with insufficient postage are -
     -                        not being recovered	                                                                       161568          3-31-7 1
                           More effective us^-of manpower and machines recommended in mechanized pos t
                              offices . . :	            :	                                                               114874          5-27-71	
                           Procedures followed by the Postal Inspection Service in charging postal employee s
                              with mail losses (request of chairman, Senate Committee on Post Office an d
                              Civil Service) . . . . :	             : . . :	                                       -     168446	               :	 - . 8- 6-70	
                 --        Use of air taxi service for . transportation of mail (request of Senator Gordon Allott) .     166772	                      10-22-70	
                           Certain nratters concerning the discontinuance of the Evansville-St . Louis high-                                       -
                              way post office (request of Senator Gordon Allott) 	                                       166772 :	                    It- 5-70	

                                                                                                                                                                                 16 7

                        SECTION III

                                                                                                                                                   Address,, and date Issued
                                                                                                                                 Reference     Congress Commute'-' Agenc y
                                                                                                                                                         or 9iem1srs      oirMills           -
                                                                                                                                                         ef Congress

                                     CIVIL DEPARTMENTS AND AGENCIES—Continue d

                        Post Office Department—Continue d
                          Leasing_ of mail-handling trailers in the New York City area (request of chairman ,
                            Subcommittee on Treasury, Post Office, and Executive Office, House Com -
                            mittee on :appropriations)	                                                                            114874 _	                    11-27-70	
        -                 Savings expected from centralization of the procurement and storage of vehicl e
                            repair parts (request of chairman, Subcommittee on Government Procurenient ,
        -                   House Select Co rnnittee on Small Business) 	                                                          114874	                       2-17-7 1
                          Leasing versus buying small and medium size post office buildings (request o f
                            chairman, Subcommittee on Treasury, Post Office, and Executive Office, Senate
                    -       Committeeoil Appropriations)	                                                     -                    145650                        3-12-71	
                          Need for improvement in determining dvage rates for tuck drivers on star routes 	       	                                                                 10-13-7 0
                          Fourth-class retail operations at the Chicago Post Office	                                                 	                                              10-21-7 0
                          Administration of Postal Service Management Institute 	                                                                                                   11-18-70
                          Potential interest savings by depositing postal funds directly in Federal Reserve
                            banks	                                                                                                 114874	                                          11-18-7 0
                          Policies for repairing or replacing materials-handling equipment 	                                       114874	                                          12- 3-7 0
                          Need to improve administration of travel activities in the Bureau of Research an d
                            Engineering	                :	                                                                                                                 . .. .   12- 4-7 0
                -         Payment of Sunday premium pay