oversight

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)

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                         F
the
comptroller general
of the
united states




ANNUAL
REPORT
1971
I




    For sale by t h e Superintendent of Documents, U.S. Government Printing Office
                    Washington, D.C. 20402 - Price $1.75 (paper cover)
                               Stock Number 2000-0097
                                                                                  CONTENTS

                                       EXHIBITS
                                                                                            Page
Exhibit 1-Brief Chronology of Evolution and History of the U.S. General
    Accounting Office, 1789-1971 . . . . . . . . . . . . . . . . . .                         153
Exhibit 2-Legislation  Enacted During Fiscal Year 1971 Relating to the
    Work of the General Accounting Office . . . . . . . . . . . . . .                        156
Exhibit %Number         of Audit Reports Issued During Fiscal Year 1971           . . .      163
Exhibit &Transportation          Audit and Collections During Fiscal Years
     1962-71.     . . . . . . . . . . . . . . . . . . . . . . . . . . .                      164
Exhibit 5-Transportation        Claims Settled During Fiscal Years 1962-71 .            .    164
Exhibit 6-Claims Division Settlements and Collections During Fiscal Years
     1962-71.     . . . . . . . . . . . . . . . . . . . . . . . . . . .                      165
Exhibit 7 C t a t e m e n t of Assets, Liabilities, and Investment, June 30, 1971       .    166
Exhibit 8-Summary    of Changes in Investment of U S . Government, Fiscal
     Year Ended June 30, 1971 . . . . . . . . . . . . . . . . . . . .                        167
Exhibit 9-Summary          of Operating Expenses, Fiscal Year Ended June 30,
     1971   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        168
Exhibit lO-Summary of Sources and Application of Funds, Fiscal Year
                       . . . . . . . . . . . . . . . . . . . . . .
     Ended June 30, 1971                                                                     169
Exhibit 11-Map of the U.S. General Accounting Office Regions . . . .                         170
Exhibit 12-Directory       of the Field Operations Division . . . . . . . . .                171



INDEX    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         173


PHOTOGRAPHY    CREDITS
     The GAO Watchdog, pp. x, 10, 138, 143, 144,and 148; Federal Railroad Administration,
p. 6; Health, Education, and Welfare, Department of, p. 6 ; Interior, Department of the, p. 6 ;
Housing and Urban Development, Department of, p. 6 ; National Institutes of Health, pp. 6 and
59; Institute of Marine Science, p. 76; University of Michigan, p. 80; U.S. Air Force, pp. 82
and 92; US.Navy, p. 87; U.S. Army, p. 94; Agency for International Development, pp. 102
and 107 State, Department of, p. 103;and the Rohr Corporation, p. 112.




NOTE:
     A separate Appendix to the Comptroller General’s Annual Report contains more detailed
information concerning the work of the General Accounting Office. Included are (1) a compilation
of findings and recommendations for improving Government operations, (2) financial savings
attributable to the work of GAO, (3) a list of audit reports issued, and (4)a list of approvals of
agency accounting principles and systems designs.




                                                                                               ix
                                                                          Comptroller General Staats
                                                                            opens the morning session
                                                                            of GAO’s 50th anniversary
                                                                            ceremonies on June 11 at
                                                                            the West Auditorium, New
                                                                           State Department Build-
                                                                            ing, by greeting GAO
                                                                            oficials, employees, and
                                                                            guests.




    Leadoff speaker on June 11 was George P. Shultz, Director, Ofice of
    Management and Budget.




I




!
                                                                                HIGHLIGHTS OF ACTIVITIES

                                                         perintending the recovery of debts due the United
                                                         States, countersigning warrants, and preserving rec-
                                                         ords relating to the Government’s financial transac-
                                                         tions. New and expanded audit and investigative au-
                                                         thority was provided by authorizing and directing the
                                                         Comptroller General to investigate, at the seat of Gov-
                                                         ernment and elsewhere, all matters relating to the
                                                         receipt, disbursement, and application of public
                                                         funds.
                                                            In partial recognition of the importance of the
                                                         Budget and Accounting Act, 1921, and to show the
                                                         link with the past, this report includes as Exhibit 1
                                                         a brief chronology of the evolution and history of the
CHAPTER ONE                                              General Accounting Office, 1789-1971.
                                                            To commemorate our 50th anniversary, a number
                                                         of events took place:
                                                               The House of Representatives approved the fol-
                                                            lowing resolution :
                                                              Resolved by the House of Representatives (the Senate
HIGHLIGHTS OF ACTIVITIES                                   concurring), That the Congress of the United States ex-
                                                           tends its congratulations to the former and present officers
FOR THE YEAR                                               and employees of the General Accounting Office on the
                                                           occasion of the fiftieth anniversary of that Office; and be
                                                           it further
                                                              Resolved, That as it is fitting and proper to commemo-
Fiftieth Anniversary of the                                rate the fifty-year history of the General Accounting Office,
General Accounting Office                                  the month of June 1971 is designated for ceremonies ap-
                                                           propriate to such commemoration.
   The year 1971 marks the 50th anniversary of the             Many Members of Congress placed congratula-
enactment of the Budget and Accounting Act, 1921,           tory statements about the General Accounting Office
which established the General .4ccounting Office,           and its operations in the Congressional Record dur-
headed by the Comptroller General of the United             ing the month of June.
States and the Assistant Comptroller General                   A series of 16 lectures by prominent leaders in
 (changed to Deputy Comptroller General in 1971).           many fields was arranged for the benefit of GAO
   The same act created the Bureau of the Budget (now       staff members to be presented throughout the year
the Office of Management and Budget) to assist the           1971. These lectures, all related to the theme of
President in hi5 budgetary and management respon-           improving management for more effective govern-
sibilities with respect to the executive branch of the      ment, are to be printed in book form during 1972.
Federal Government.                                            Publication in several professional journals of ar-
   This legislation, which was signed into law on           ticles about the General Accounting Office and its
June 10, 1921, was a landmark in modernizing the            operations.
financial management system of the Federal Govern-
                                                               Publication of a special anniversary issue of The
ment. I t removed the audit and settlement functions
                                                            GAO Review, our quarterly professional staff maga-
relating to the receipt and expenditure of the Govern-
ment’s funds, which had been lodged in the Treasury         zine, devoted entirely to GAO’s history and evolution.
Department since 1789, from the executive branch and           On June 11, 1971, special ceremonies marking
placed them in an independent General Accounting             the signing of the Budget and Accounting Act, 1921,
Office which, under the Comptroller General, is ac-         were held in the New State Department building
countable directly to the Congress for the proper dis-      and in the GAO building. These ceremonies included
charge of these important functions. Other functions         presentation of three of the anniversary lectures,
vested in the new office included responsibilities for       bestowing of the annual honor awards on GAO staff
 rending binding legal decisions, settling claims, su-       members with Representative Chet Holifield of
HIGHLIGHTS           OF A C T I V I T I E S


                                              GAO 50TH ANNIVERSARY LECTURE SERIES

              Date                                 Speakers                                      Subject
    March 22               John W. Kendrick                                  The Conetruction and Use of Productivity
                             Professor of Economics                            Measures for Federal Government Agencies
                             The George Washington University
    May 21                 Hugh Sidey                                        Improving Public Understanding of Public
                            Chief                                              Affairs
                            Time-Life News Bureau-Washington
    June 11                George P. Schultz                                 Views on Improving Management for More
                            Director                                           Effective Government
                            Office of Management and Budget
                           Russell E. Train                                  Improving the Management of Environ-
                             Chairman                                          mental Programs
                             Council on Environmental Quality
                           Robert C. Weaver                                  Management of Urban Programs
                            Professor of Economics
                            City University of New York
                           Chet Holifield                                    The General Accounting Office and the
                            Chairman                                          Congress
                            House Committee on Government Operations
    July 15                Leonard P. Spacek                                 Utilizing What Is New in Accounting
                             Senior Partner
                             Arthur Andersen & Co.
    August 16             William Gorham                                     Ignorance in Government Is Not Bliss
                           President
                           The Urban Institute
    September 17          James E. Webb                                      Leadership Evaluation in Large Scale Efforts
                            Former Administrator
                            National Aeronautics and Space Administration
    September 24          Alexander B. Trowbridge                            Three Paths in Search of the National Interest
                            President
                            The Conference Board
    October 7             H. M. Boettinger                                   What Is New in Management Sciences
                           Director of Management Science
                           American Telephone & Telegraph Co.
    October 15            Judge Harold Leventhal                             The Lawyer in Government
                            District of Columbia Circuit Court
                            U.S. Court of Appeals
    November 16           Dr. Harlan Cleveland                               The Growing of Public Executives
                           President
                           University of Hawaii
    December 6            John J. Corson                                     Uses and Limitations of Experts
                            Chairman of the Board
                            Fry Consultants, Inc.
                          Alan L. Dean                                       Uses and Limitations of Experts
                            Deputy Assistant Director for Organization and
                              Management Systems
                            Office of Management and Budget
    December 13           David E. Bell                                      Assessment of Efforts To Assist Under-
                            Executive Vice President                           developed Areas
                           The Ford Foundation



2
                                                                                          HIGHLIGHTS       OF A C T I V I T I E S
  California, chairman, House Committee on Govern-                 found in how this staff performs in our governmental
  ment Operations, as guest speaker, and an evening                system that shows many signs of continuing to increase
  reception sponsored by the GAO Employees                         in size and complexity.
  Association.                                                        The General Accounting Office has moved far in its
  In his address at the GAO honor awards ceremonies                first 50 years, particularly in the years since World War
on June 11, Representative Holifield remarked as fol-              11. It has adapted itself to the needs and challenges of
lows on the leadership and the staff of GAO over the               our changing times. Even more important, it is con-
years :                                                            tinuing to adapt and mold its methods and products
   considering that Mr. Staats served so many years in the
                                                                   to the needs of the Congress which it was established
executive branch and the presidential orbit, I find it inter-      to serve.
esting that he has committed himself so firmly to shaping the         Objective information about our national programs
GAO as a service agency to the Congress. And, more than             and their effects is almost the lifeblood of our national
his predecessors, he has refashioned the GAO as an institution     legislature if it is to remain an effective force in our
to keep it abreast of the times, to expand its horizons, to
diversify its skills.
                                                                   national government and responsive to the needs of the
    In paying this tribute to Comptroller General Staats, I do     people. The General Accounting Office, as an agent of
not want to detract from the important work of his predeces-        the Congress and accountable only to it, is one of these
sors. Earlier Comptrollers General, including J. R. McCarl         sources of information.
and Lindsay C. Warren, were congressionally oriented. Pre-            The General Accounting Office has demonstrated
ceding his appointment, McCarl was a private secretary to
Senator George Norris of Nebraska, and Lindsay Warren was
                                                                    that it can be an increasingly effective force in assisting
a Member of Congress from North Carolina for many years.            the Congress to carry out its legislative and surveillance
    When I came to the Congress in 1943, Warren was in his          responsibilities. It is becoming increasingly effective in
third year as ,Comptroller General. He guided the GAO               promoting financial management improvement in the
 through the critical period of World War 11, helped to estab-      Federal agencies. It has led the way in expanding the
lish the joint accounting improvement program, developed
the concept of the comprehensive audit, extended the practice
                                                                    scope of auditing to embrace evaluations of govern-
of auditing at the site of operations, and did much to make         mental management performance, including efficiency
 the GAO an increasingly effective force to serve the Congress.     and economy in the use of public funds and other re-
    In 1954, Joseph Campbell succeeded Mr. Warren as Comp-         sources, compliance with the i n t e n t of laws enactcd by
 troller General and served for ten years. During his tenure       the Congress, and results achieved through govern-
the GAO became increasingly involved in defense contract
 audits and played an important role in the enactment of such
                                                                   mental programs and operations.
 landmark legislation as the Truth in Negotiations Act.              AS its capacity to provide such evaluations improves
    Each Comptroller General has an Assistant Comptroller          with experience, the General Accounting Office should
 General who is his good right arm. Frank H. Weitzel served        assume a role of increasing importante as an independ-
 in that position, culminating a long and distinguished career     ent source of information on the accountability of
 with the GAO over a period of 45 years, almost for the length
 of its existence. Robert F. Keller, the present Assistant Comp-
                                                                   public administrators for their operations. In our demo-
 troller General, also has served with distinction in the GAO      cratic society, the public, whose good is expected to be
 for many years. Both Weitzel and Keller have made outstand-       served by such operations, must have the means to hold
 ing contributions to the evolutionary development of the          public officials accountable for their performance. The
 office.                                                           General Accounting Office through its operations pro-
    There are many other career men and women in the
 GAO-I       cannot begin to name them all-who deserve our
                                                                   vides one important way to accomplish this objective.
 thanks and appreciation for selfless and dedicated work in the
 public interest. They have helped to build the GAO as an
 institution. They have built their careers around this institu-   Activities for the Year-In            Brief
 tion. The GAO is as good as its people, and judging by the
 reputation it has, I would say that the people are very good.       During fiscal 1971, the General Accounting Office
   As the General Accounting Office completes its first            continued a high level of activity in carrying out its
50 years of operation, it is timely for those of us now a          several interrelated functions of:
part of it to reflect on what the future holds.                         Assisting the Congress in its legislative and over-
   Today, we have a dedicated staff of approximately                 sight activities.
4,800 employees of which nearly 3,000 are profes-                       Auditing the affairs of Federal departments and
sionals. In large part, what the next 50 years hold for              agencies.
the General Accounting Office and its functions will be                 Providing legal services.

                                                                                                                                3
HIGHLIGHTS OF ACTIVITIES

      Assisting in the improvement of Federal agency            with ‘the passage of the Legislative Reorganization
   financial management systems.                                Act of 1970 which was signed into law on October 11,
      Settling claims and collecting debts.                     1970. The provisions of this law as they relate to GAO’s
   Accounting for GAO activities statistically does not         capacity to serve the Congress are discussed in Chapter
convey, in a readily comprehensible way, a meaningful           Two.
view of the capabilities of the Office to assist the Con-          In immediate response to one section of the act the
gress in its legislative and oversight activities.              Comptroller General, in February 1971,began sending
   Another way of viewing these services can be illus-          to the Congress, its committees, and Members, on a
trated by four possible answers to the question: What           regular monthly schedule, a list of all GAO reports
was the most valuable product or service provided by            released during the previous month. The list is or-
the Comptroller General and the General Accounting              ganized by activity classifications used in the Federal
Office during fiscal year 1971?                                 budget and includes a brief summary of each report
      Some would say it was GAO’s special study of              as well as its title, date of issue, and file number, and
   defense industry profits which the Comptroller Gen-          the identity of the agencies whose programs or opera-
   eral sent to the Congress in March. He described the         tions are reported on.
   report which is discussed in Chapter Five in these              GAO’s efforts to serve the needs of the Congress
   words :                                                      continued to increase during the year, as evidenced
       We believe this to be the most detailed and comprehen-   in part by the fact that 460 audit reports were sent to
    sive effort made to date comparing profits on defense and   the Congress, its committees, and Members. Also of
    nondefense work of private industry. We have made every     importance were various other services provided such
    effort to be as impartial and objective as possible.
                                                                as drafting legislation, making special studies, supply-
       Some would say it was the measurable financial           ing information, and assigning staff members to work
    savings-totaling nearly $268 million-attributable           with the committees. These services are discussed in
    to the work of the General Accounting Office during         Chapter Two.
    the year, details of which will be found in Section            During fiscal year 1971:
    I1 of the Appendix.
       Some would say that the most valuable service                 GAO representatives testified on 30 occasions be-
    was that pravided by the approximately 20 percent             fore congressionalcommittees.
    of GAOs professional staff who provided direct                   GAO staff memfberswere assigned to the staffs of
    assistance to the Congress as discussed in Chapter            21 committees or subcommittees. This represents ap-
    Two.                                                          proximately 10,971 man-days of GAO staff time.
     Or, some would refer to the work done by the                    Six hundred and thirty-two reports were fur-
  General Counsel’s Office in preparing any one of                nished to committee chairmen on pending bills-
  the 715 decisions issued during the year on bid pro-            412 to the Senate and 220 to the House.
  tests. In these types of cases, a party, believing he
  has been wrongfully denied a Government contract,
  may appeal to the Comptroller General for a review
                                                                Auditing
  of an agency contract decision. (See Chapter Nine.)              The work for which the General Accounting Office
  In this chapter, some highlights of our operations for        is perhaps most widely known is auditing the affairs
the year are noted. Succeeding chapters present in              of Federal departments and agencies, including con-
considerable detail more complete information on these          tractors with negotiated contracts and grantees of Fed-
diverse and wide-ranging operations.                            eral funds. This work embraces:
                                                                     Financial auditing, which is concerned primarily
Assistance to the Congress                                        with financial transactions, accounts, and financial
  For several years, GAO has been increasingly con-               repofts and with compliance with applicable laws
cerned with the broad questian of its role in assisting           and regulations.
the Congress in its review of legislative proposals and              Management auditing, which involves examining
in providing the Congress with assessments of the                 into efficiency and economy in the use of resources.
results of current or ongoing programs. Recognition                  Program auditing, whiich is concerned mainly
by the Congress of GAO’s role in these matters came               wifi inquiring into &e results or benefits from the

4
                                                                                                           HIGHLIGHTS OF ACTIVITIES

       conduct of a program and evaluating whether pro-                                Health and Safety
       grams are meeting the objectives set by the legisla-                                Problems in Providing Proper Care to Medicaid
       tive or other authorizing bodies.                                                 and Medicare Patients in Skilled Nursing Homes.
      During the year GAO conducted 1,844 audits in                                        Ways To Reduce Payments for Physician and
    the United States and in 51 other countries, about                                   X-ray Services to Nursing Home Patients Under
    the same level of activity as in other years.                                        Medicare and Medicaid.
    Civil agency programs. . . . . . . . . . . . . . . . . . . . . . . . . .    932
    Defense programs______________________________                              685
                                                                                           Substantial Cost Savings From Establishment of
    International programs_________________________                             203      Alcoholism Program for Federal Civilian Em-
    Government-wide and multiagency studies----------                            24      ployees.

              Total__________________________________                          1,844
                                                                                          Problems in Implementation of the Federal Coal
                                                                                         Mine Health and Safety Act of 1969.
       The results of many of these audits will be presented
.   in reports to be published during the next fiscal year.                            Procurement
       The nature of GAO’s audit operations are described                                  Multiyear Leasing and Government-Wide Pur-
    at length in Chapters Four, Five, Six and Seven.                                     chasing of Automatic Data Processing Equipment
       A total of 975 formal audit reports, relating to                                  Should Result in Significant Savings.
    almost every aspect of Federal Government operations,
                                                                                           Application of “Should Cost” Concepts in Re-
    were issued, as follows:
                                                                                         views of Defense Contractors’ Operations.
           173 reports were sent to the Congress, all of
                                                                                            Opportunities for Savings by Increasing Competi-
             which are also available to the public except
                                                                                         tion in Procurement of Commercial Equipment.
             those classified for national security reasons.
             Reports on audit findings, conclusions, and                                   Price Increase and Change in Criteria for
             recommendations are submitted by the Comp-                                  Uranium Enrichment Services.
             troller General to the Congress when required                                 Evaluation of Information From Contractors in
             specifically by law and when they are judged                                Support of Claims and Other Pricing Changes on
             to be of such significance as to warrant the                                Ship Construction Contracts.
             attention of the Congress.
                                                                                          Acquisition and Use of Software Products for
           287 reports were sent to congressional committees,                            Automatic Data Processing Systems in the Federal
             officers of the Congress, or individual Members
                                                                                         Government.
             in response to requests for special audits or in-
             vestigations, inquiries, or other types of informa-                           More Competition in Emergency Defense Pro-
             tion.                                                                       curements Found Possible.
           515 reports were sent to Federal department and                                  Fair Prices Paid for Small Purchases by the De-
              agency officials. These reports contain audit                               partment of Defense.
             findings, conclusions, and recommendations
                                                                                       Manpower Training
             calling for agency attention and action but not
              deemed to be of sufficient significance to address                            Opportunities for Improving Training Results
             to the Congress. However, copies of many of                                  and Efficiency at the East Bay Skills Center, Oak-
              these reports are also sent to congressional com-                           land, Calif., under the Manpower Development
             mittees interested or concerned with the sub-                                and Training Act.
              ject matter.                                                                  Evaluation of Results and Administration of the
       Almost all GAO reports present information, and                                    Job Opportunities in the Business Sector (JOBS)
     recommendations where appropriate, relating to the                                   Program in Five Cities.
     manner in which Federal agencies manage, administer,                              National Defense
     and report on their programs and operations.
       The following listing of selected reports issued to                                  Acquisition of Major Weapon Systems.
     the Congress during fiscal year 1971 provides a quick                                  Potential for Improvement in Department of
     grasp of the variety, range, and ,depth of GAO’s audit                               Defense Maintenance Activities Through Better
     work.                                                                                Cost Accounting Systems.

                                                                                                                                          5
HIGHLIGHTS OF ACTIVITIES

International Activities                                    GAO’s legal services cover a wide range of subject
                                                         matter and activity. Legal assistance is furnished in the
       Opportunities for Better Use of U.S.-Owned Ex-
                                                         form of formal decisions, comments on proposed legis-
    cess Foreign Currency in India.
                                                         lation, and internal advice on GAO audit findings. To
       Improved Financial Administration and Revision    appreciate the range of GAO’s legal activities, it is
    of Fees Needed-Consular Services Program.            necessary to reflect upon the growing complexity of the
      Long Missing Government-Owned Materials in         legislative approaches being taken to deal with our
    Vietnam Still Unaccounted For.                       social, political, economic, and military needs and to
                                                         recognize that GAO is responsible for determining the
Other                                                    legality of a major portion of all Government
      Administration of Metroliner and Turbo-Train       expenditures.
    Projects.                                               Within the broad areas of civilian personnel, mili-
      Audit of Federal Deposit Insurance Corporation     tary personnel, contracts, transportation, and general
    for the Year Ended June 30, 1970, Limited by         Government matters, over 400 legal decisions a month
    Agency Restriction on Access to Bank Examination     are prepared by our Office of the General Counsel.
    Records.                                             This work involves all fields of law and requires ex-
                                                         pertise in statutory construction procedure, evidence,
      Postage Due and Handling Costs for Processing      and contract interpretation.
    Mail With Insufficient Postage Are Not Being
                                                             During fiscal year 1971, decisions issued by the
    Recovered.
                                                         Comptroller General and other legal matters handied
      Management of Federally Financed Research by       by the legal staff totaled 5,612. Included iri this output
    the University of Michigan-A Case Study.             were 643 reports on proposed legislation and 427 ad-
                                                         visory legal opinions to congressional committees or
Access to Agency Records                                 Members of Congress. Also included were 77 reports
                                                         for the Office of Management and Budget.
   During the year, GAO experienced increased diffi-         More complete information on GAO’s legal services
culties in obtaining access to agency information and    is included in Chapter Nine.
documents needed to carry out its responsibilities.
These difficulties occurred principally in relation to
international matters. The Departments of Defense        Financial Management Improvement
and State have applied procedural restrictions in the
foreign affairs area on an increasing scale. These re-      Under the Budget and Accounting Procedures Act
trictions have had the effect of seriously hampering     of 1950, GAO assists agencies in the improvement of
the efficient and effective conduct of GAO audit work    their accounting systems and approves these systems
in a field in which there is increasing congressional    when they are deemed adequate and in conformity
interest.                                                with principles and standards prescribed by the Comp-
   Absolute denial of access to documents is rare but    troller General.
the restrictions imposed on obtaining access to them        In fiscal year 1971, GAO approved the designs of
results in obstruction and delay and impairs our capa-   nine complete accounting systems, six parts or s g -
bility to serve the Congress as intended. Complete in-   ments of systems, and 12 statements of accounting
formation on our access-to-records problems has been     principles and standards submitted by civil and inter-
presented to three Senate committees. (See Chapter       national departments and agencies.
Two.)                                                       Of 148 civil and international department and
                                                         agency accounting systems subject to approval, the
Legal Services                                           complete accounting systems designs of 80 organiza-
                                                         tional entities had been approved as of June 30.
   The Comptroller General of the United States is          No accounting systems were approved for the De-
responsible on behalf of the Congress for determining,   partment of ‘Defenseduring the year.
with certain exceptions, the legal propriety of execu-      Details of GAO’s work in this area will be found
tive branch expenditures.                                in Chapter Three.

6
                                                                                  HIGHLIGHTS OF ACTIVITIES

Transportation                                               receivable of about $5.4 million. GAO reported 2,084
                                                             claims to the Department of Justice for collection by
   I n meeting its responsibility for determining the cor-   suit. (For details see Chapter Eight.)
rectness of charges claimed for freight and passenger
transportation services furnished the United States,
GAO audited $2 billion in transportation charges this        Operating Expenses
year. This amount consisted of $1.2 billion paid for
                                                                Operating expenses for fiscal year 1971 amounted to
5.3 million freight shipments and $800 mi!lion for 2.9
                                                             $79.8 million. Approximately 83 percent of this
million passenger movements.
                                                             amount-$66 million-was for salaries and other per-
   A total of 102,326 claims of overcharges by the
                                                             sonnel costs.
United States against carriers were settled for $16 mil-
                                                                Financial statements showing our financial position,
lion, while 15,957 claims against the United States
                                                             summary of operating expenses, and sources and ap-
by carriers were settled for $18.87 million.
                                                             plication of funds are included in this report as Ex-
   Assistance was furnished to the Department of Jus-
                                                             hibits 7,8,9, and 10.
tice in some 22 legal actions involving claims against
the United States for approximately $353,646 cover-
ing 1,254 shipments. Twenty-seven suits, the subject         Staffing and Training
of reports in this or prior years, were settled for about
$185,000, or about $322,000 less than claimed.                 At June 30, we had 4,75 1 employees, an increase of
   Carriers filed 401 suits covering 230,100 shipments.      119 over the number at the end of the previous year.
Three hundred and seventy-five of these suits and            Of the total, 2,989 were members of the professional
about 228,333 of the shipments covered overseas move-        staff representing nearly a dozen different disciplines.
ments of household goods by the Department of De-               Over 3,100 members of our staff were provided with
fense. The amount sued for is not stated in the peti-        special training during the year through our own train-
tions. However, court decisions have been rendered           ing facilities. About 1,400 staff members participated
in connection with certain issues common to the 795          in training or career development programs conducted
household goods suits filed to date. Using these deci-       in other agency or non-Government facilities. (See
sions and other issues raised in the case, GAO esti-         Chapter Ten.)
mates potential liabilities to the Government of nearly
$10 million if the final rulings of the Court are adverse    Organization
to the Government. (For details see Chapter Seven.)
                                                                An organization chart for the General Accounting
                                                             Office at June 30, 1971, appears on page 8. Such
Claims Settlement and                                        charts for the principal divisions and offices of GAO
Debt Collection                                              appear in the chapters of this report in which their
                                                             activities are discussed.
   General claims against the United States in fiscal
                                                                As of July 1, 1971, several changes in our organiza-
year 1971 involved Government contracts, compensa-           tional structure became effective. These are impor-
tion due civilian employees (including overtime and
                                                             tant enough to highlight here since they were made
premium pay), quarters and cost-of-living allowances,
                                                             for the purpose of strengthening our operating and
travel, transportation of household effects, per diem,
                                                             planning capabilities.
allowances on changes of official station, pay and al-
lowances due military personnel, retired pay, compen-           The Office of Policy and Program Planning was
sation due deceased civilian officers 'and employees,        formed to :
pay due deceased members of the Armed Forces and                   Advise and assist the Comptroller General and
National Guard, and miscellaneous claims by Govern-             the Deputy Comptroller General in ( 1 ) policy for-
ment personnel and pubmlic creditors.                           mulation, guidance, and review with respect to all
   GAO settled 8,686 claims against the United States           GAO functions, ( 2 ) establishing long-range objec-
for $117.8 million and collected 20,394 claims by the           tives and direction-of-effort planning, and (3) for-
United States totaling $2.9 million. At the end of the          mulating the annual budget.
year 7,853 claims under collection represented accounts            Conduct internal reviews of all GAO operations.

                                                                                                                   7
    449-406 0   - 72 - 2
                                                                                                                                                                  I
                                                                     COMPTROLLER GENERAL                                                                          1
                                                                            OF THE                                                                                D
                                                                         UNITED STATES                                                                            I
                                                                                                                                                                  -I
                                                                        ELMER B. STAATS                                                                           v)


              I
              I                       I
                                             I                  ASS1STANT COMPTROLLER GENERAL
                                                                              O F THE
                                                                                                                       I                            I             0
                                                                                                                                                                  n

   ASSISTANT TO THE                                                      UNITED STATES                      ASSISTANT TO T H E
                                         PROGRAM
COMPTROLLER GENERAL
O F THE UNITED STATES
                                      PLANNING STAFF      I               R. F. 1 L L E R              I   COMP TROLL E R GEN ERAL          I N FORMATION

                                                                                                           MANAGEMENT SE RVlCES
                                       H. C. KENSKY                                                                                         R. J. SAWYER          m
                                                                                                                                                                  v)
                                                                                                                  T. D. MORRIS


                                                                                  OFFICES




                                                                                                                                 r-
                                                                                              I
       OFFICE O F                      OFFICE O F                DATA                               OFFICE O F                     OFFICE O F
     ADMINISTRATIVE                    PERSONNEL              P ROC ESSIN G                        THE GENERAL                     POLICY AND
        SE RVI CE S                   MANAGEMENT                CENTER                               COUNSEL                     SPECIAL STUDIES
         DI RECTOR                      DI RECTOR          DIRECT0 R                          GENERAL COUNSEL                       DIRECTOR
        H. J. SIMMONS                 LEO HERBERT
                                                      .   R W. BENTON                          P. G. DEMBLING                    E. H. MORSE, JR.

                                                                                  DIVISIONS



      INTERNATIONAL                        CIVIL                 DEFENSE                                   TRANSPORTATION
                                                                                                                                         OPERATIONS
          DIVISION                       DIVISION                DlVl SION             DlVl SION               DIVISION                    DIVISION
          DI RECTOR                      DIRECTOR                DIRECTOR             DIRECTOR                   DIRECTOR                 DIRECTOR
       0. V. STOVALL                  A. T. SAMUELSON         C. M. B A I L E Y    J. M. CAMPBELL           T. E. SULLIVAN              J. E. THORNTON
                                                                                                                                    ~




                                                                                                                                              I
                                  I
                                                                                                                             FIELD OFFICES
 OVERSEAS OFFICES                                                                                                ATLANTA, GA.       LOS ANGELES, CALIF.
                                                                                                                 BOSTON, MASS.      NEW YORK, N.Y.
FRANKFURT. GERMANY
  NEW DELHI, INDIA

HONOLULU, HAWAII
                                  I                                                                              CHICAGO, ILL.
                                                                                                                 CINCINNATI, OHIO
                                                                                                                 DALLAS, TEX.
                                                                                                                 DENVER, COLO.
                                                                                                                                    NORFOLK, VA.
                                                                                                                                    PHILADELPHIA, PA.
                                                                                                                                    SAN FRANCISCO, CALIF.
                                                                                                                                    SEATTLE, WASH.
  SAIGON, VIETNAM
                                                                                                                 DETROIT, MICH.     WASHINGTON, D. C.
  MAN I L A, PH I L I P P IN ES
                                                                                                                 KANSAS CITY, MO.

                                                                                                                                                  JUNE 30, 1971
                                                                            ASSISTANCE TO T H E CONGRESS

        Assistance on House and Senate financial and              The Department of Housing and Urban DeveIop-
          administrative operations                           ment’s program to provide rehabilitated housing for
        Recommendations for legislation                       low-income families in Philadelphia resulted in
                                                              some benefits, but some important goals of the pro-
    The information in the succeeding sections is fur-
    nished both in accordance with past practice and pur-     gram have not been fully achieved and compliance
                                                              with prescribed construction requirements has not
    suant to the direction of section 205(b) of the Legis-
                                                              been effectively enforced. (See Appendix, Section I,
    lative Reorganization Act.
                                                               Item 50.)
                                                                  The Labor Department’s JOBS (Job Opportuni-
                                                              ties in the Business Sector) program has been effec-
    Reports to the Congress                                   tive in focusing the attention of businessmen on the
t

       The responsibility of the General Accounting Office    employment problems of disadvantaged persons and
    for reporting to the Congress information obtained as     in eliciting ‘broad commitments by many private
    the result of its reviews is clearly indicated in the     employers to hire, train, and retain the disadvan-
    Budget and Accounting Act, 1921, and is emphasized        taged ; however, because of problems in the design
    in the related legislative history. For this reason, a    and administration of the program, including an
    major thrust of the Office is to meet this fundamental     insufficiency of accurate and meaningful data on
    obligation by furnishing to the Congress reports on        program operations, reported accomplishments have
    GAO findings, conclusions, and recommendations cov-        been generally overstated. (See Appendix, Section I,
    ering a wide variety of Government defense and civil       Item 53.)
    activities in Washington, the field, and overseas. Spe-       I n areas of increasing urbanization the congres-
    cial emphasis is placed on reporting the results of as-    sionally established objectives of the Department of
    sessments of programs in which there has been a           Agriculture’sfeed grain program, namely, controlling
    strong congressional interest in determining whether       feed grain production, conserving land for future
    they have achieved the purposes intended by the Con-       agricultural or related uses, and maintaining farm
    gress. Examples of such finding in reports issued to       income, were not being substantially achieved, due
                                                               to payments made to recipients engaged in businesses
    the Congress during the year are :
                                                               or occupations other than agriculture and because
         An analysis of the Teacher Corps program at           payments were made for diversion of land being used
      selected universities and participating schools          or intended for use for nonagricultural purposes.
      showed that significant educational advances were         (See Appendix, Section I, I tem 1.)
      achieved in elementary schools having concentra-             The Army’s administration of its depot-level main-
      tions of low-income families, that innovative teach-     tenance program for helicopters resulted in a sub-
      ing methods were developed and applied with              stantial backlog of helicopters, engines, and
      success, and that there had been some limited impact      components awaiting repair a t a time when the
      on the teacher preparation curricula of the univer-      Army was processing purchases of large quantities of
      sities; however, suggestions were made for further        new helicopters and engines. (See Appendix, Section
      extending and giving permanence to the benefits al-       I, Item 213.)
      ready realized from the program. (See Appendix,              A study of 14 waterways in five States showed
      Section I, Items 14, 15, and 16.)                         that generally some progress had been made in abat-
         The Neighborhood Health Services Program, as           ing industrial water pollution, but the emphasis and
      administered by St. Luke’s Hospital Center in New         achievements have varied from State to State and,
      York City under grant-in-aid funding from the             in some States, tangible results have been minimal.
      Office of Economic Opportunity, had not yet pro-          (See Appendix, Section I, Item 73.)
      vided a significantly better health care delivery            Action was needed to improve the Department of
      system for the 20,000 poor intended to be served;        Defense program for the development and reten-
      several factors were identified which had inhibited       tion of career procurement personnel in view of
      the program from alleviating the cycle of mutual          evidence that the program had accomplished much
      perpetuation which exists between poverty and             less than was anticipated at its inception in 1965.
      sickness. (See Appendix, Section I, Item 11.)             (See Appendix, Section I, Item 131.)

                                                                                                                  15
 ASSISTANCE TO THE CONGRESS

   In addition to reporting to the Congress on the results      should lead an interagency effort to develop uniform
of Government programs, GAO considers the efficiency            Government-wide guiddines for negotiating profit
and economy of Government operations to ascertain               objectives which will give due emphasis to the total
whether appropriated funds are being spent prudently            amount of contractor capital to be devoted to the
and for the intended purposes. Reports are frequently           performance of the contract; the guidelines would
issued to the Congress on GAO findings of areas where           be applicable where effective price competition was
management can be improved and savings achieved,                lacking. (Seep. 89 for details.)
particularly in respect to the operations of the Depart-
ment of Defense. Illustrations of such findings follow.
         Management deficiencies in the Army’s tactical         Reports to Committees
     vehicle development program have continued despite             The Budget and Accounting Act, 1921, requires          ‘
      organizational and procedural changes. (See Ap-
                                                                 the Comptroller General to make such reviews as are
      pendix, Section I, Item 143.)
                                                                 ordered by dther House of Congress or by committees
         Significant savings and substantial balance-of-
                                                                 having jurisdiction over revenues, appropriations, or
      payments advantages could be realized at some over-
                                                                 expenditures. Requests by all committees for special
      seas locations if the armed services would make
                                                                 audits and surveys are, as a matter of policy, accepted
     arrangements which would increase the use of Amer-
                                                                 and given priority attention.
      i c a trucks and trailers in place of foreign vehicles
                                                                    I n the past year GAO issued 133 special reports
      being used by commercial carriers under contract
                                                                 on audits and reviews pursuant to requests of commit-
     with the military. (See Appendix, Section I, Item
                                                                tee and subcommittee chairmen. These reports in-
     92. )
                                                                 volved varied subjects in the areas of complex defense
         An examination of the progress and problems in
                                                                 procurements and activities, sensitive international
     implementing the Federal Claims Collection Act of
                                                                 Government operaijons, and a multitude of program
     1966 highlighted the following matters: ( I ) the
                                                                 activities in the civil departments and agencies.
     significant backlog of claims involving hundreds of
                                                                    A close working relationship was maintained with
     millions of dollars, ( 2) the administrative deficien-
                                                                 the committees and their staffs through briefing ses-
     cies in implementing the act, ( 3 ) the assistance
                                                                 sions on GAO reviews and by exchanging information
     rendered by GAO to improve agency debt collec-
                                                                 on matters of mutual interest. GAO frequently ad-
     tion operations, and (4)the effectiveness of the act
                                                                 justed work schedules to expedite completion of re-
     in reducing the debt collection litigation burden of
                                                                 ports for use of the committee upon learning that the
     the Department of Justice and the courts. (See
                                                                 subject matter of audits and reviews which it had
     Appendix, Section I, Item 230.)
                                                                initiated was also on a committee’s current oversight
   From time to time the Congress directs the Comp-             or legislative agenda.
troller General to make special studies on matters                 Briefing sessions with the staff of the House Ap-
of particular current interest and concern. The results        propriations Committee were, again this year, a most
of one such study, required by, section 408 of the              effective method of providing the results of GAO
Armed Forces appropriation authorization for fiscal            work for use by the committee in its important budget
year 1970 (Public Law 91-121), were reported to the            review responsibilities. The House Appropriations
Congress as the “Defense Industry Profit Study” on             Committee also received GAO’s 17th annual report
March 17, 1971. The law prescribed that GAO make               on significant audit findings resulting from the Office’s
a “study and review on a selective representative basis        audits and other examinations in the defense and
of the profits made by contractors and subcontractors          civilian agencies of the Government. The report con-
on contracts on which there was no formal competitive          sists of a comprehensive summary of information
bidding.”                                                      which the committee may find useful in connection
   I n a statement by the Comptroller General concern-         with budget hearings, when officials of the respective
ing the report, the study was described as “the most           departments and agencies are present to respond to
detailed and comprehensive effort made to date com-            questions concerning the management of programs
paring profits on defense and non-defense work of              within their areas of responsibility. As in the past, the
private industry.” The GAO recommended as a result             Appropriations Committee hearings this year reflected
of the study that the Office of Management and Budget          the extensive reliance by committee members on this
16
                                                                                 ASSISTANCE T O T H E CONGRESS

    report as an instrument in aid of the discharge of their     formation to permit a proper determination that the
    legislative duties.                                          grants were made in accordance with program regula-
       Illustrations of special reports made at the request      tions or that the grants were in line with the purpose
    of committee and subcommittee chairmen include a             of the program.
’   report to the Special Subcommittee on Alcoholism and            GAO continued to enjoy a close working relation-
    Narcotics, Senate Committee on Labor and Public              ship with the Joint Committee on Atomic Energy.
    Welfare, on the substantial cost savings available from      In particular, GAO issued, pursuant to committee re-
    the establishment of an alcoholism prevention and            quests, seven reports on the activities of the Atomic
    treatment program for Federal civilian employees.            Energy Commission (AEC) covering, for example :
    GAO estimated that net annual cost savings to the                 Proposed revisions to the criteria for uranium en-
    Government would range from $135 million to $280
                                                                   richment services and to the related price of such
    million annually, while at the same time contributing
                                                                   services.
    to the reduction of a major national health problem.
                                                                      Progress and problems in programs for manag-
    In announcing the issuance of the GAO report, the
                                                                   ing high-level radioactive wastes.
    chairman described it as a “breakthrough revelation
                                                                      Use and operating costs of the AEC’s high energy
    of the tremendous savings in human and economic
                                                                   accelerators.
    resources that can be achieved” by the institution of an
    appropriate alcoholism program. I n December 1970,             The Joint Committee utilized GAO reports in its
    legislation was enacted providing for the establishment      consideration of actions proposed by AEC to revise
    of a Government-wide alcoholism program for Federal          operating policies and practices and in the commit-
    civilian employees. At the end of the year a similar         tee’s oversight review of AEC programs.
    report was being prepared for the committee concern-
    ing alcoholism among employees in the military
    services.                                                    Reports to Individual Members
       The chairman of the Subcommittee on Labor,                of Congress
    Senate Committee on Labor and Public Welfare, re-
    quested GAO to examine the implementation of the                GAO believes that if an individual Member of Con-
    provisions of the Federal Coal Mine Health and Safety        gress ,isconcerned about a Government activity or pro-
    Act of 1969 which require the Department of the In-          gram, the Officeshould try to provide assistance. GAO
    terior to inspect coal mines for identification and cor-     encourages Members to first obtain the desired infor-
    rection of unsafe and unhealthy conditions. On the           mation or action directly from the agency, but if this
    basis of its findings, GAO concluded in its report to        approach does not obtain satisfactory results, GAO will
    the chairman that the Department’s policies for en-          proceed to review the matter and furnish the Member
    forcing health and safety standards have been, at times,     a report. Frequently consultation with the Member
    extremely lenient, confusing, uncertain, and inequi-         concerning the nature of his interest helps to bring the
    table. GAO made a number of suggestions for improve-         issue into sharp focus, thereby conserving staff
    ment, and the Department reported that actions               resources while still satisfying the Member’s needs.
    responsive to GAO’s proposals had been initiated or             During the year the Office furnished 143 audit re-
    were planned.                                                ports to individual Members covering the activities of
       GAO was requested by the chairman, Senate Select          nearly all of the departments and agencies. The follow-
     Committee on Equal Educational Opportunity, to re-          ing selected examples provide an indication of the
    view the policies and procedures of the Department of        range of subjects examined by GAO as a result of spe-
     Health, Education, end Welfare (HEW) for approv-            cial requests by Members.
     ing grants of Federal funds to school districts to defray       At the request of Senators Joseph M. Montoya
     the costs of meeting special problems arising from            and William Pyoxmire, GAO investigated the han-
     schobl desegregation. The report to the committee de-         dling and control of petroleum products in Southeast
    scribed the conditions noted by GAO and contained              Asia. GAO concluded that while some improve-
     GAO’s conclusion that in many cases school districts          ments in fuel transportation and distribution meth-
     did not submit with their applications, nor did HEW           ods had been made, a number of significant weak-
     regional officials obtain by other means, sufficient in-      nesses still existed with the result that the products

                                                                                                                      17
A S S I S T A N C E TO T H E CONGRESS

  were not managed in the most effective and eco-             However, in view of the recently enacted provisions
  nomical manner. In the words of the report, issued          in section 203 of Public Law 91-441, which imposed
  on July 28, 1970, “major problems have been ex-             certain restrictions on IR&D payments, GAO rec-
 perienced in managing the fuel function and sub-             ommended that sufficient time be allowed for an
  stantial losses of product have occurred.’’                 assessment of the impact of such limitatiions before
     Senator Gordon Allott asked the GAO to review            consideration should be given to any further legis-
  the use by the Post Office Department of air taxis          lative controls.
 to transport mail, with particular attention to the             Congressman Henry Reuss asked the General
  growth of air taxi service during the tenure of a           Accounting Office to examine certain aspects of
  former Assistant Postmaster General. On Octo-               selected Department of Defense public affairs pro-
  ber 22, 1970, GAO reported to Senator Allott on             grams. On June 29, 1971, GAO reported to Con-
 the relationship of the former Assistant Postmaster          gressman Reuss on the Joint Civilian Orientation
 General to a particular air taxi contractor; on the          Conference. The report described such matters as
 rapid increase in air taxi service, especially that pro-     the selection of participants and their itinerary and
 vided by certain contractors; on the weak adminis-           activities during the conference. GAO computed the
 trative practices attending air t w i service; and on        costs of the conference and determined that $80,000
 the questionable statutory basis for the expansion of        in costs were borne by the Government, while $22,-
 such service.                                                000 in costs werc recovered in fees charged to the
     G k O reported to Senator Mmargaret Ch,ase Smith         participants.
 on November 6, 1970, concerning the operation and            Assistance to individual Members also includes the
  administration of the executive lunchroom at the          reports GAO furnishes upon request concerning claims
 headquarters of tlie National Aeronautics and Space        by and against the United States such as those involv-
 Administration. GAO found that the cost of operat-         ing Government contracts, compensation of civilian
 ing the lunchroom considerably exceeded the reve-          personnel, and pay ar,d allowances of military person-
 nue produced by the fee charged to users, that a           nel. During the year 606 written reports of this type
 number of food purchases had been made from the            were made.
 Army commissary at Fort McNair in violation of
 military regulations, that food purchase receipts had
 been altered to remove indications that purchases          Reports on Pending Legislation
 were made at Fort McNair, and that improper food
 purchases were continuing even after instructions             The GAO professional staff is well acquainted with
 had been issued to halt this practice.                     the programs and ,activities of most Government agen-
    Congressman H. R. Gross asked GAO to investi-           cies through on-site review and observation of ‘agency
 gate contract actions relating to a purchase by the        operations. Consequently, the Office can provide the
 Department of the Army of certain radio sets from          committee with independent advice and information
 Bristol Electronics, Inc. GAO’s February €2, 1971,         on proposed legislation; often there may be no other
 report discussed several questions, including the is-      available source for such well-informed comment. Dur-
 suance by the Small Business Administration of a           ing the past year GAO responded to 632 committee
 certificate of competency to Bristol after the Army        requests for comments on bills. The significant increase
 had rejected Bristol as incapable of performing the        from 438 such reports in fiscal year 1970 i,s a measure
 contract, the performance record of the contractor         of the increasing congressional reliance on GAD’Sleg-
 under the contract, the settlement of the contractor’s
                                                            islative analysis expertise. It may be expected that the
 claim for extra compensation, and the basis for a
                                                            provisions of the Legislative Reorganization Act may
 subsequent Army contract award to Bristol.
    At the request of Senator William Proxmire,             reinforce this trend.
 GAO considered whether it would be feasible to                GAO also furnished 77 reports to the Office of Man-
 convert contractors’ independent research and de-          agement and Budget at its request on numerous pro-
 velopment (IR&D) as a budget line item. I n the            posed bills and enrolled enactments: The clear ad-
 report to Senator Proxmire on March 8, 1971, GAO           vantage of furnishing views on bills to the committees
 concluded that line-item control of IR&D pay-              and OMB is that many problems relating to fiscal
 ments to major defense contractors could be effected.      and administrative provisions in proposed legislation

18
                                                                                ASSISTANCE T O T H E CONGRESS

   An illustration of staff assistance provided by the          tractual, fiscal, and administrative aspects ,of laws and
General Accounting Office to the congressional com-             legislative proposals ; and commenting on related
mittees concerns the bankruptcy of the Penn-Central             agency regulations. Frequently, the legal questions
Railroad. In connection with the committee investi-             upon which the Comptroller General was asked to
gation of this subject, GAO provided staff assistance to        rule were closely related to fundamental issues involv-
the Senate Commerce Committee and the House Com-                ing the proper roles of the legislative and executive
mittee on Banking and Currency. The personnel from              branches.
GAO assisted the regular committee staffs on various               A legal opinion of the Comptroller General was
aspects of the complex financial questions resulting            issued on February 23, 1971, at the request of the
from the Penn-Central difficulties.                             chairman of the House Merchant Marine and Fish-
   I n another case, GAO furnished staff assistance to          eries Committee, concerning the authority of the De-
the Senate Judiciary Committee, Subcommittee on                 partment of Health, Education, and Welfare to close
Antitrust and Monopoly Legislation, for the purpose of          Public Health Service (PHS) hospitals and clinics
aiding the subcommittee’s inquiry into the relation-            throughout the country. After a thorough review of
ship between the structure of Blue Cross Associations           legislation dating back to 1789, the Comptroller Gen-
and the high cost of health care. The subcommittee’s            eral, affirming an earlier GAO opinion, ruled in sub-
examination into the subject included several days af           stance that HEW was without statutory authority to
hearings.                                                       effect the closing of all PHS hospital facilities either
   A third illustration of staff assistance to cofigressional   outright or by means of the transfer of these institu-
committees involved GAO personnel assisting the                 tions to non-Federal ownership.
House Committee on Post Office and Civil Service ;n                In one of two opinions issued at the request of a
connection with various manpower studies undertaken             Member of Congress, GAO determined that the presi-
by that committee. Furthermore, as in past years, GAO           dential decision to terminate construction of the cross-
provided the Joint Atomic Energy Committee with                 Florida barge canal did not involve the validity of an
professional staff assistance in connection with its an-        obligation or expenditure, or the proper accounting
nual authorization legislation for the Atomic Energy            for receipts, but did involve the legal authority of the
Commission.                                                     President to impound funds appropriated by the Con-
   Information on assignments of GAO staff to com-              gress. It was therefore held that GAOs jurisdiction did
mittees of the Congress during fiscal year 1971 is pre-         not extend to making an authoritative determination
sented on page 22. This table has been prepared in              on the question of whether the President is legally re-
accordance with the requirements of section 235 (b)             quired to obligate and spend funds appropriated for
of the Legislative Reorganization Act of 1970. This             the construction of the barge canal. In the second opin-
section of the law requires including in this report            ion, the Comptroller General’s earlier opinion concern-
names of employees assigned or detailed to congres-             ing the proposed closing of Public Health Service hos-
sional cominittees, period of such assignments, and             pitals was shown to be clearly and precisely different
related cost data.                                              from the canal situation.
                                                                   On December 29, 1970, the Comptroller General
                                                                rendered an advisory legal opinion on a complex
Assistance in Legal and                                         appropriations question involving the trust fund estab-
Legislative Matters                                             lished by Public Law 91-258, the Airport and Air-
                                                                way Development Act of 1970. Advice had been
   Numerous requests were received from committee               requested by a number of Members of Congress. Sev-
chairmen and individual Members for advice and as-              eral bills, including H.R. 7072 and S. 1437, were sub-
sistance on legal and legislative matters. Legal opin-          sequently introduced for the purpose of making the
ions were rendered to chairmen and Members on sig-              intent of the Congress clear and precise concerning
nificant issues, while GAO attorneys on several hun-            utilization of the trust fund.
dred occasions responded informally to questions                   Another congressional inquiry resulted in an opin-
raised by staffs of committees and Members. Some of             ion by the Comptroller General that the waiver au-
the forms of assistance rendered in this area were:             thority of the Secretary of Health, Education, and
drafting of legislation; providing advice on the con-           Welfare under section 1115 of the Social Security Act
                                                                                                                      21
 A S S I S T A N C E TO T H E C O N G R E S S

             SUMMARY OF ASSIGNMENTS OF PERSONNEL TO CONGRESSIONAL COMMITTEES-FISCAL                                                              YEAR 197 1

                                                                                            Length of assignment
                                     Committee                                          .              _____       Salary          Travel           Other     Total cost
                                                                                            From          To                      expenses       expenses 1
                                                                                                                                                 . .



                                      Senate

Committee on Armed Services:
   Subcommittee on Preparedness Investigation:
       Foster. George H., Jr . . . . . . . . . . . . . . . . . . . . . . . . . .         3-17-69      11-28-70      $9. 824     .........            $835     $10. 659
       Littleton. David A . . . . . . . . . . . . . . . . . . . . . . . . . . . .        3-19-69      12-31-70      10. 307     .........             876      11. 183
Committee on Commerce:
       Schremp. Robert A . . . . . . . . . . . . . . . . . . . . . . . . . . .           7- 7-70      12-30-70     311. 548     .........             982       12. 530
Committee on Government Operations:
   Permanent Subcommittee on Investigations:
       Allen. Robert E.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . .        12-14-70        6-30-7 1    6. 276      .........              533       6. 809
       Balaban. Jack2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       12-16-59        6-30-7 1   20. 828         $2. 245          1. 770      24. 843
       Balach. William J.2 . . . .                  ....              ....               1-25-71        6-30-7 1    4. 601             122             391       5. 114
       Barbieri. Robert A. . . . . . . . . . . . . . . . . . . . . . . . . . . .         7-15-70        6- 4 7 1   15. 188              10          1. 291      16. 489
       Bridges. Larry J . . . .                                                                         6-30-7 1        692            385              59        1. 136
       Brooks. Willaim D . .                                                                           4-23-7 1      2. 792     .........              237       3. 029
       Catalano. Joseph S . . . . . . . .                                     .....      7-28-70      12-31-70      4. 031      .........              343       4. 374
       Dorpfeld. David C . . . . . . . .                                                               3-19-71       1. 832     .........              156        1. 988
       Dumont. Charles R . . . . . . .                                                                 6-30-7 1     9. 650          1. 764             820      12. 234
       Dutton. Darryl W . . . . . . . . . . . . . . . . . . . . . . . . . . . .          6-26-70      12-26-70      3. 771              79             321       4. 171
       Farinella. Joseph . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       8-17-70       6- 4-71      9. 068              90             771       9. 929
       Frame. Maurice2 . . . . . . . . . . . . . . . . . . . . . . . . . . . .          12-10-62       6-30-7 1    18. 062              18          1. 535      19. 615
       Freesland. J . William. Jr . . . . . . . . . . . . . . . . . . . . .              4-21-69       7-31-70      1. 630      .........              139       1. 769
       Gieck. William L . . . . . . . . . . . . .                                                      4-23-71      3. 147      .........              267       3. 414
       Gordon. Joseph Y . . . . . . . . . . . .                                                        9-1 9-70         475    .........                40           515
       Harris. Daniel C . . . . .                 ..                                                   7-17-70          504    .........                43           547
       Kennedy. Edward D . . . . . . . . . . . . . . . . . . . . . . . . . .             8- 5-70      10-26-70      2. 427     .........               206       2. 633
       Kiessling. Linda . . . . . . . . . . . . . . . . . . . . . . . . . . .           10-29-69       6-30-71      9. 777    ..........               83 1     10. 608
                                                                                                       7-1 7-70         410   ..........                35           445
                                                                                                       7-23-70          961   ..........                82        1. 043
                                                                                                       1-15-71      3. 004                2            255       3. 261
                                                                                                       6-30-71     16. 309    ..........            1. 386      17. 695
                                                                                                       6-30-7 1    25. 796          3. 398          2. 193      31. 387
                                                                                                      10- 2-70      2. 438              15             207       2. 660
                                                                                                       7-17-70         566             136              48           750
                                                                                                       6-18-71      5. 812    ..........               494       6. 306
                                                                                                       6-30-71     18. 552    ..........            1. 577      20. 129
                                                                                                       4-23-71      2. 288    ..........               194       2. 482
             Unger. Joseph2 . . .
         Vigen. Gregory L . . . . . . . . . . . . . . . . . . . . . . .
                                                                                        i3-19-69
                                                                                         4- 8-71
                                                                                         6-26-70
                                                                                                       7-24-70
                                                                                                       6-30-71
                                                                                                      11-20-70
                                                                                                                       962
                                                                                                                    4. 792
                                                                                                                    3. 215
                                                                                                                              ..........
                                                                                                                              ..........
                                                                                                                                        57
                                                                                                                                                        a2
                                                                                                                                                       407
                                                                                                                                                       273
                                                                                                                                                                 1. 044
                                                                                                                                                                 5. 199
                                                                                                                                                                 3. 545
         W e b , Lewis L . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     4-19-71       6-30-7 1     4. 346    .........                369       4. 715
         Yeager, James R . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       1-18-7’1      3-19-71      1. 255    ..........               107       1. 362
Committee on the Judiciary:
    Subcommittee on Antitrust and Monopoly Legislation:
         Chervenak. Richard E . . . . . . . . . . . . . . . . . . . . . . . . .          8- 4-70       1-29-71      7. 931              48            674        8. 653
    Subcommittee on Internal Security:
         Castonquay, Alson A . . . . . . . . . . . . . . . . . . . . . . . . . .         1- 6-70      10- 9-70      3. 790 . . . . . . . . . .        322        4. 112
         Derkits, Robert F . . . . . . . . . . . . . . . . . . . . . . . . . . . .      11- 3-69      10- 9-70      4. 865 . . . . . . . . .          414        5. 279
Committee on Labor and Public Welfare:
    Subcommittee on Labor:
         Anderson, Homer W . . . . . . . . . . . . . . . . . . . . . . . . .             4-22-70      6-30-71      25. 595    ..........           2. 176      27. 771
         Bailor. Bernard S . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    11- 9-70      1- 8-71       2. 538    ..........              216       2. 754
         Elliott, Allen R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5-11-71      6-30-7 1      1. 921    ..........              163       2. 084
  See footnotes at end of table .



22
                                                                                                                    ASSISTANCE T O T H E CONGRESS

       SUMMARY OF ASSIGNMENTS OF PERSONNEL TO CONGRESSIONAL COMMITTEES-FISCAL                                                            YEAR 197 l-Continued

                                                                           Length of assignment
                                        Committee                      ....                                         Salary         Travel            Other        Total cost
                                                                            From          To                                       expenses        expenses   1




                                 Senate-Continued

     Committee on Labor and Public Welfare-Continued
        Subcommittee on Labor-Continued
                                              .
            Hatchell. Otis D., Jr .........................                                  5-11-71     6-30-71     1. 596 . . . . . . . . . .         136           1. 732
            Hooper. AlanM ..............................                                     4-22-70     10- 2-70   34. 678 . . . . . . . . . .         398           5. 076
           Kulanko. Andrew F ...........................                                     3- 9-71     6-30-71     5, 058 . . . . . . . . . .         430           5. 488

                            House of Representatives

    Committee on Appropriations:
       Surveys and Investigations Staff:
            Bedell. Warren F.2. . . . . . . . . .                                              1-29-70   6-30-71    21. 335 3 $2. 717                 1. 814         25. 866
            Burgess. Edna R.2. . . . .                                                       10- 3-66    6-30-71     9. 745 . . . . . . . . . .          828         10. 573
            Carrigan. Francis P . . .                                                         3-30-70    5- 7-71    14. 364        2. 225             1. 221         17. 810
            Davis. Robert A.2. . . . .                                                        7-1 8-66   6-30-7 1   24. 326          3 781            2. 068         27. 175
            Doyal. Francis M . . . . .                                                  ..    8- 6-70    2-26-71     9. 933         1. 478               844         12. 255
            Gabriel. Anthony J.2. . . . . . . . . . . . . . . . . . . . . . . . .            11- 2-70    6-30-71    13. 626        1. 323             1. 158         16. 107
            Hallberg. Eric L . . . . . . . . . . . . . . . . .              ........          3-2470     3-19-71    12. 724        6. 908             1. 082         20. 714
           Luty. Edward F . . . . . . . . . . . . . .                       ........          2-16-70    5-20-71    13. 044        8. 584             1. 109         22. 737
           May. Frances . . . . . . . .                                                       6- 6-65    7-31-70        883 . . . . . . . . . .           75             958
           Zeunges. Theodore F . . . . . . . . . . . . . . . . . . . . . . . . . .            7- 7-69    3- 1-71     9. 875        1. 510                839         12. 224
    Committee on Armed Services:
       Special Subcommittee for Special Investigations:
           Lewis. Ernest E., Jr.2 ..........................                                  8- 6-70     6-30-71    15. 586    ..........            1. 325         16. 911
           McArter. Robert J . . . . . . . . . . . . . . . . . . . . . . . . . . . .          7-28-69     9- 4-70     3. 625    ..........               308          3. 933
           Thorns. Edward R . . . . . . . . . .                  ......                       9- 2-69     8- 7-70     1. 985    ..........               169          2. 154
           Underwood. Warren C.2.. . . .                         .............                9- 4-70     6-30-71     9. 853    ..........               837         10. 690
    Committee on Banking and Currency:
           Campbell. Wayne .....                                                              4-12-71     5- 7-71       760     ..........                65             825
           Cohen. Raymond . . . .                                                             7- 8-70     6-30-71   16. 979              172          1. 443         18. 594
           Fisher. David . . . . . . . .                                                 .   12-23-70     3-26-71    2. 769     ..........               235          3. 004
           Godwin. Wayne . . . . . .                                                         11-13-70    12-21-70    1. 021     ..........                87          1. 108
           Kunzler. John A.2. . . .                                                          11- 9-70     6-30-71    6. 639     .........                564          7. 203
           Morgan. Ronald G . , . . . . . . . . . .                                           6-29-70     7-31-70    1. 419     ..........               121          1. 540
    Committee on Government Operations:
           Bittman. Thomas C.2. ........................                                     2-16-71     6-30-71      4. 149 . . . . . . . . .           353           4. 502
           Stats. Charles H ...............................                                  1- 4-71     1-18-71         393 . . . . . . . . .            33              426
I      Subcommittee on Foreign Operations and Government
i
         Information :
           Moser. Dale E . . . . . . . . . . . .                                         .   6- 8-70     6-30-71     18. 459 . . . . . . . . .        1. 569         20. 028
       Subcommittee on Intergoverment
           Gibson. MaryJo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       7- 7-69     1-30-71    10. 533 . . . . . . . . . .         895         11. 428
           tlamal. Charles E.2                                                   ......       7- 7-69     6-30-71    17. 127 . . . . . . . . . .      1. 456         18. 583

                 Lynch. William C.2.                                                          6- 7-71     6-30-71     1. 305 . . . . . .                 111           1. 416

                 Benchoff. Harry E., Jr                                                    5-1 1-70       7-10-70        516    ..........                44              560
                 Cordyack. John E . . . .                                                  8-31-70       10-30-70     1. 811    .........                154           1. 965
                                                                                           6- 2-71        6-30-71     1. 578    .........                134           1. 712
                                                                                           8-10-70       10-30-70     3. 494          1. 439             297           5. 230
                 Marten. Charles B., Jr           ....                                     5-11-70        7- 9-70        320    ........                  27              347
                                                                                           8-31-70       10-30-70     1. 825    ..........               155           1. 980
                 Walter. George L .                                                  . . . 7- 7-70        3-25-71    13. 554             871          1. 152          15. 577
        See footnotes at end of table .

1             449406 0-721-3                                                                                                                                              23
  A S S I S T A N C E TO T H E C O N G R E S S

     SUMMARY OF ASSIGNMENTS OF PERSONNEL TO CONGRESSIONAL COMMITTEES-FISCAL                                                                                   YEAR 197 l-Continued

                                                                                                        Length of assignment
                                        Committee                                                                           __--        Salaw           Travel          Other      Total cost
                                                                                                         From                  To                       expenses      expenses 1


              House of Representatives-Continued

Committee on Interstate and Foreign Commerce:
        Balakos, John N.2.....................                                                                            6-30-71        $4,591 . . . . . . . . . .       $390        $4,981
        Gadsby, J. William2... . . . . . . . . . . . . . . . .                                                            6-30-71         5,045 . . . . . . . . . .        429         5,474
   Special Subcommittee on Investigations:
        Anklewich, Thomas B. ........................                                                   7-20-70           8- 6-70           133                $4           11           148
       Frei, Harold J.. ..............................                                                  3-23-70           3- 5-71        14,994     ..........           1,274        16,268
       Maranto, Joseph A.. .....                                                                        3-28-70           3- 5-71        11,631     ..........             989        12,620
       Williams, Dean C.. ...........................                                                   7-20-70           8- 6-70           581                 3           49           633
   Subcommittee on Commerce and Finance:
       Canter, Robert J.2. ...........................                                                  9-22-69           6-30-7 1       15,134 . . . . . .              1,286        16,420
Committee on Merchant Marine and Fisheries:
   Subcommittee on Fisheries and Wildlife Con-
     servation:
       Geist, Harvey.. ..............................                                                   5- 1-70           1-20-71        14,390     ........             1,223        15,613
Committee on Post Office and Civil Service:
   Subcommittee on Manpower and Civil Service:
       Hugler, Edward T.2.. . . . . . . . . . . . . . . . . . . . . . . . . .                           2-19-68          6-30-71         24,326              16          2,068       26,410
                                                                                                                         6-30-7 1           583 . . . . . . . . . .         50          633
                                                                                                                         6-30-7 1        22,971 . . . . . . . . . .      1,953       24,924
Select Committee on Crime:
         Hooper, Alan M.                                                                                                 2-26-7 1         7,917 . . . . . . . . . .        673         8,590
House Office Building Commission :
         Medoff,Mamie . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       10-20-69             6-30-7 1        10.308 . . . . . . . . . .        876       11,184

                                         Joint

Committee on Atomic Energy:
                             ........................
            Sperry, Roger L.*.                                                                      {
                                                                                                  1-12-70
                                                                                          . . . . 1-18-71                7-31-70
                                                                                                                         6-30-71
                                                                                                                                          1,533 . . . . . . . . . .
                                                                                                                                          9,850 . . . . . . . . . .
                                                                                                                                                                           130
                                                                                                                                                                           837
                                                                                                                                                                                      1,663
                                                                                                                                                                                     10,687

               Total.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $704,650 $36,400               $59,894      $800,944

  1 Theseamounts, wwchare8.6percentof thesalarycosts,includetheQov-                                          (3) Health Benefits Program.
ernment's estimated share for personnel beneflts payable to the Civil Service                                  2 This individual's assignment continued after June 30,1971.
Commission for the (1) Life Insurance Fund, (2) Retirement Fund, and                                           8 This cost was reimbursed by thecommitteeorsubcommitteeconcerned.


                                                                                                                                                                                                a
is not utilized illegally when exercised on a State-wide                                                     legal obligation to reimburse airline companies for
basis in connection wi,th demonstration, pilot, and ex-                                                      money advanced by them in connection with the de-
perimental projects in the welfare sarea. However,                                                           velopment of the SST.
other legal questions were reserved for future consid-
eration upon the receipt of information from HEW.
   Other legal opinions issued to Members of Congress                                                       Testimony at Hearings
at their request involved topics such as the authority
of the General Services Administration to acquire the                                                          One of the most positive and direct methods avail-
Willard Hotel in Washington, D.C., in a trade for a                                                         able to GAO for effectively assisting the Congress in
portion of Miller Airfield on Staten Island, N.Y., and                                                      its oversight and legislative responsibilities consists of
a series of questions growing out of the debate over                                                        appearances before congressionalcommittees to presmt
the termination of the wpersonic transport program,                                                         views on legislative proposals and to furnish informa-
including whether or not the Government had any                                                             tion concerning the results of GAO's reviews. This year
                                                                                                                                                                                                ?.
24
                                                                                   ASSISTANCE TO THE CONGRESS

      the Comptroller General, the Deputy Comptroller               GAO testified on other matters of special importance
      General, and other representatives of the Office testi-     to the Congress and its committees, including impound-
      fied before committees on 30 occasions. The wide va-        ment of appropriated funds by the executive branch,
      riety of subjects covered during the course of the year     before the Subcommittee on Separation of Powers,
      is indicated by the list of appearances included below.     Senate Judiciary Committee ; Federal Government
         Special note should be taken concerning several of       water pollution control activities, before the House
      the subjects discussed during congressiqnal testimony.      Public Works Committee ; military procurement mat-
      For example, three of the appearances dealt with pm-       ters including defense contractor profits, the status of
     posals to amend the Export-Import Bank Act: the             major weapons acquisitions, and the making of “should
      Senate Committee on Banking and Currency held the          cost” reviews, before the Subcommittee on Priorities
     first hearing on September 17, 1970; the second hear-       and Economy in Government, Joint Economic Com-
’
     ing took place on March 9, 1971, before the Senate          mittee; and the administration’s bill to estkblish a
     Committee on Banking, Housing, and Urban Affairs;           system of general revenue sharing, before the House
     and the final hearing was held on May 20, 1971, by          Ways and Means Committee.
     the Subcommittee on International Trade of the House           Representatives of GAO also presented statements
     Committee on Banking and Currency.                          on two matters relating to legislative branch operations.
         There were two hearings at which GAO representa-        In testimony before the ‘HouseCommittee on Standards
     tives testified concerning the legal authority of the       of Offcia1 Conduct, GAol gave its views on the pro-
     Department of Health, Education, and Welfare                posed Legislative Activities Disclosure Act, which
     (HEW} to cease its operation of the Public Health           would vest in the Comptroller General the responsi-
     Service hospital system. The first appearance was be-       bility for administering rules and regulations regarding
     fore the Health Subcommittee of the Senate Labor and        the disclosure and reporting of lobbying activities.
     Public Welfare Committee on March 8, 1971. Two              GAO also testified before the newly established Joint
     days later, GAO officials discussed the same subject        Committee on Congressional Operations on the pro-
     before the House Interstate and Foreign Commerce            posal to conform the Government’s fiscal year to the
     Committee’s Subcommittee on Public Health and               calendar year.
     Welfare.                                                       The complete list of appearances follows.


         APPEARANCES BY GENERAL ACCOUNTING OFFICE REPRESENTATIVES AT CONGRESSIONAL HEARINGS DURING
                                             FISCAL YEAR 197 1

                         Committee                        Date                               Subject


                          Senate

    Finance.                                         Aug. 18, 1970 H. R. 16311, the Family Assistance Act of 1970.
    Banking and Currency:
        Subcommittee on International Finance.      Sept. 17, 1970 S. 4268, to amend the Export-Import Bank Act to facilitate
                                                                      greater expansion of U.S. export trade.
    Appropriations :
        Subcommittee on Legislative.                Nov. 24, 1970 Budget estimates for fiscal year 1971 for the Cost Account-
                                                                    ing Standards Board.
    Small Business :
        Subcommittee on Monopoly.                   Jan. 19, 1971 Drug procurement systems of Federal agencies.
    Labor and Public Welfare:
        Subcommittee on Health.                     Mar. 8, 1971 S . Con. Res.6, the proposed closing of Public Health Serv-
                                                                     ice hospitals by HEW.
    Banking, Housing, and Urban AtFairs.            Mar. 9, 1971 S. 19 and S . 581, to amend the Export-Import Act of 1945,
                                                                    as amended, to allow for greater expansion of U.S. ex-
                                                                    port trade and to exclude Export-Import Bank receipts
                                                                     and disbursements from the budget.
    Judiciary :
         Subcommittee on Separation of Powers.      Mar. 25, 1971 Impoundment of funds by the executive branch.


                                                                                                                         25
ASSISTANCE T O T H E CONGRESS

     APPEARANCES BY GENERAL ACCOUNTING OFFICE REPRESENTATIVES AT CONGRESSIONAL HEARINGS bURING
                                     FISCAL YEAR 197 l-Contirrued
                     ~.
                      Committee                         Date                                Subject


                   Senate-Continued

Appropriations:
   Subcommittee on District of Columbia.          Apr. 19, 1971 Proposed legislation concerning the financing of capital
                                                                  improvement program in the District of Columbia.
Appropriations :
    Subcommittee on District of Columbia.         Apr. 19, 1971 District of Columbia accounting systems.
Appropriations:
    Subcommittee on Legislative.                  June 7, 1971 GAO budget justifications for fiscal year 1972.
AppropPiations :
    Subcommittee on Foreign Operations.           June 24, 1971 Military assistance access to records problems.

           House of Representatives

Banking and Currency.                             July 1,   1970 H.R. 18236, to amend the Inter-American Development
                                                                   Bank Act to authorize U.S. participation in increases in
                                                                   the authorized capital stock and resources of the Fund
                                                                   for Special Operations of the Inter-American Develop-
                                                                   ment Bank.
House Administration:
   Subcommittee on Library and Memorials.         July 23, 1970 GAO’s audit work at the Smithsonian Institution.
Government Operations:
   Subqommittee on Special Studies.               Aug. 6, 1970 H.R. 13769, to include the District of Columbia in the
                                                                 provisions of the act of June 29, 1966, relating to ac-
                                                                 counting adjustment or reimbursement between appro-
                                                                 priations available to departments, bureaus, etc.
Apprapriations:
   Subcommittee on Legislative.                   Sept. 24, 1970 Budget estimatesfor fiscal year 1971 for the Cost Accounting
                                                                   Standards Board.
Merchant Marine and Fisheries.                    Mar. 9, 1971 Military procurement 6f all surface transportation.
Interstate and Foreign Commerce:
     Subcommittee on Public Health and Welfare.   Mar. 10, 1971 H. Con. Res. 98, the proposed closing of Public Health
                                                                  Service hospitals by HEW.
Standprds of Official Conduct                     Mar. 16, 1971 H.R. 5259, the proposed Legislative Activities Disclosure
                                                                  Act.
Post Office and Civil Service.                    Mar. 18, 1971 Briefing on functions and activities of the GAO.
Government Operations:
     Subcommittee on Legislation and Military h4ar. 26, 1971 Defense Industry Profit Study.
       Oppations.
Appropriations:
     Subcommittee on Legislative.             Mar. 30, 1971 GAO budget justification for fiscal year 1972.
Education and Labor:
     Special Subcommittee on Labor.            Apr. 2, 1971 Wage rates determined by the Department of Labor on
                                                               mail hauling services under the Service Contract Act of
                                                               1965.
Banking and Currency:
     Subcommittee on International Trade.     May 20,1971 H.R. 5846, to amend the Export-Import Bank Act of 1945,
                                                               as amended, to allow for greater expansion of U.S. ex-
                                                               port trade and to exclude Export-Import Bank receipts
                                                               and disbursementsfrom the U.S. budget.
Public Works.                                 May 25, 1971 GAO reviews of the Federal water pollution control pro-
                                                               gram.
Government Operations:
     Subcommittee on Special Studies.         June 8, 1971 H.R. 3644, accounting procedures for the District of Colum-
                                                               bia.
Ways and Means.                               June 24,1971 H.R. 4187, the General Revenue Sharing Act of 1971.

26
                                                                                   A S S I S T A N C E TO T H E C O N G R E S S

   APPEARANCES BY GENERAL ACCOUNTING OFFlCe REPRESENTATIVES AT CONGRESSIONAL HEARINGS DURING
                                   FISCAL YEAR 19714ontinued

                    Committee                            Date                                 Subject


                    Joint

Economic :
    Subcommittee on Economy in Government.        July     1, 1970 Inventory practices relating to Government-owned ADP
                                                                     equipment and the need for procurement specifications
                                                                     which will afford free and full competition to all qualified
                                                                     potential bidders.
Economic:
    Subcommittee on Economy in Government.        Jan.    4, 1971 Assistance which contributes to       the military capability of
                                                                      foreign countries.
Economic :
    Subcommittee on Priorities and Economy in Apr. 29, 1971 Acquisition of weapon systems.
      Government.
Congressional Operations.                     June 21, 1971 Proposal to estabiish the calendar year as the fiscal year for
                                                              the U.S. Government.


Assistance on House                                             implementing improvements in the operation of the
and Senate Financial and                                        House restaurant. Cost studies were made in the Senate
                                                                restaurant pursuant to the request of the Subcommittee
Administrative Operations                                       on Restaurants, Committee on Rules and Administra-
   GAO has a small professional audit and accounting            tion, US.Senate.
staff at the Capitol for the purpose of performing
audits, examinations, and reviews of various activities
                                                                 Recommendations for Legislation
of the House and Senate. This staff also furnishes
assistance requested by officers of the Congress on                 The Comptroller General is required by the Budget
management, financial, and administrative problems.              and Accounting Act, 1921, to make recommendations
These requests are received practically daily and re-            to the Congress “lookibg to greater economy and effi-
quire GAO to work very closely with those officials on           ciency in public expenditures.” In the course of each
immediate problems as well as on long-range plans for            audit or examination, GAO carefully considers the
improving Capitol operations, including the use of               need for corrective legislative action. When‘ever it
computers and microfilming.                                      appears that legislation is required or desirable, recom-
   At the request of the officers of the Senate and of           mendations to the Congress are included in GAO’S
the House of Representatives and the executive officer           reports. In some cases, however, GAO may suggest that
of a committee GAO audited and reported on the                   the agency concerned initiate legislative action. Addi-
following activities :                                           tionally, as part of its legislative program GAO brings
      Joint Committee on Atomic Energy                           proposals to the attention of the committee having
         (expenditures)                                          jurisdiction over the sdbject in order to obtain legisla-
      Senate Office Beauty Shop                                  tive action either in the form recommended by GAO
      Senate Employees Barber Shop                               or as modified ‘bythe committee upon further study.
      Senate Recording Studio Revolving Fund                        A discussion of these legislative recommendations
      House Recording Studio Revolving Fund                      follows.
      House Stationery Revolving Fund
      House Office Equipment Service
                                                                 Recommendations to the Congress
      House Finance Office
                                                                 During Fiscal Year 1971
   I n the last quarter of fiscal year 1971, the GAO staff
at the Capitol was expanded considerably to comply                 1. Reports to the Congress on nonadvertised military
with the request of the chairman, Committee on House             construction contract awards.-Under      the military
Administration, to conduct cost studies and assist in            construction authorization acts, the military depart-
                                                                                                                               27
ASSISTANCE TO T H E C O N G R E S S

 ments are required to report to the Congress all non-       cation of such analyses was feasible. The committee
 advertised (negotiated) military construction contract      defined the “should cost” approach as an attempt to
 awards. The fiscal year 1968 reports listed 110 non-        determine the amount that a weapon system or a prod-
 advertised contract awards, totaling $91 million, and       uct ought to cost given attainable efficiency and
 indicated that about 91 percent of the amount of mili-       economy of operation.
 tary construction contracted for in that year had been         Subsequently GAO made a trial application of the
 advertised. GAO found that the reports did not include      “should cost” concepts at plants of four contractors.
most of the nonadvertised military construction c m -        At each of the plants GAO found areas where the
 tract awards for work overseas and identified 125           contractors’ operations could ‘be improved and cost
 awards of this type: 100, totaling $184 million, in         could be reduced through such things as better produc-
 Southeast Asia; and 25, totaling $7 million, in the         tion planning and control, more competition in sub-
Republic of Germany. Inclusion of these overseas             contracting, and greater care to avoid assigning engi-
awards would have shown the proportion of advertised         neers of higher competence than required by the nature
contract amounts in fiscal year 1968 to be 72 percent        of the work to be performed. GAO noted also areas
rather than 91 percent.                                      where the Government could improve its practices
    In response to GAOs findings, the Department of          and reduce costs through consolidation of procure-
Defense stated that other means had been used to             ments and through elimination of unnecessary require-
keep the Congress informed of the overseas awards.           ments for packaging and for testing,
The Department, however, concurred in the sugges-               The findings and suggestions for improvements were
tion that such awards be included in the reports and         brought to the attention of officials of the Contractors
cited new instructions that had been put into effect to      and the Department of Defense. The potential for total
insure proper reporting in the future.                       savings which could accrue from the findings and
    GAO noted also that DOD was not required to re-          suggestions was not readily measurable. In those in-
port to the Congress nonadvertised construction con-         stances where savings were measurable, GAO esti-
tract awards financed with other than the military           mated the potential savings to be almost $6 million
construction appropriations. GAO identified nonad-           annually.
vertised military construction contract awards of $98           Because “should cost” reviews require examinations
million in fiscal year 1968 that had been funded from        into many facets of contractors’ operations and man-
other appro,priations-principally procurement appro-         agement not covered in GAOs statutory authority
priations. GAO had found also, in an eariier review,         to examine contractors’ records, GAO suggested that
that subcontracts for construction had been awarded          the Congress might wish to consider expanding GAO’s
by prime contractors holding negotiated defense con-         statutory authority to enable it to make effective
tracts for research and development and for production       (‘should cost” reviews on an independent basis. (Ap-
of materiel. Since the requirement to report nonadver-       plication of “Should Cost” Concepts in Reviews of
tised military construction contract awards does not         Contractors’ Operations, E!-159896,    Feb. 26, 1971.)
extend to contracts financed from other than the mili-          3. Tours of duty for managers of major research
tary cmstruction appropriations and in view of the           and development projects.-The Army was not effec-
substantial amounts involved, GAO suggested that             tively implementing existing policy and regulations
the Congress might wish to consider requiring the            that project managers of major research and develop-
Department of Defense to broaden its reporting to            ment projects serve a tour of duty of at least 3 years
include these contracts. (Survey of the Use of Adver-        (the time considered essential for such critical posi-
tised Contracting iq Military Construction, B-133316,        tions). Most of the project managers had served less
Aug. 18, 1970.)                                              than 2 years. Most had been reassigned, and some had
   2. AppZication of “should cost” concepts in reviews       retired, before completing a 3-year tour of duty. Over-
of contractors’ operations.-At the request of the Joint      lapping tours of duty-which provide continuity of
Economic Committee, through its Subcommittee on              leadership and expertise and reduce the need for act-
Priorities and Economy in Government, GAO made               ing project managers-were almost nonexistent.
a study in the preceding year of the feasibility of apply-      Although project managers may be either military
ing “should cost” analyses in its audits and reviews of      officers of civilians of comparable grade, the Army’had
Government procurement and concluded that appli-             not given sufficient con-hideration to the use of civilian

28
                                                                               ASSISTANCE T O THE CONGRESS

personnel in filling these positions. All project man-        satisfactory performance of duty and to those officers
agers have been military officers who are subject to          who can be used primarily in the positions. (Improve-
high turnover through reassignment or retirement.             ments Needed in Determining Graduate Education
The Army believed it preferable to fill project manager       Requirements for Military Officer Positions, B-165558,
positions with military officers on the basis that they       Aug. 28, 1970.)
possess the breadth of experience in the military art            5. Need for guidance on the use of motorized equip-
to give them an understanding of the problems faced           ment in wilderness and similar areas.-The Forest
by the Army in the field. GAO pointed out that this           Service, Department of Agriculture, has imposed
expertise could be provided by military personnel not         severe limitations on the use of motorized equipment
necessarily assigned as project managers and suggested        by its employees in managing about 14 million acres
that the Congress might wish to urge the Department           of wilderness and similar areas,, These restrictions have
of Defense to use civilians in these positions to a greater   resulted in additional costs and have created problems
extent to avoid the problems encountered in the use           in protecting and preserving the areas. ‘The $100 mil-
of military personnel. (High Turnover of Managers             lion estimated cost of planned construction and recon-
Directing Major Research and Development Projects,            struction of 18,000 miles of trails in three Forest Service
B-167412, Aug. 31,1970.)                                      regions could be reduced, possibly by one-half, by using
  4. Full-time graduate education programs for mili-          a small trail machine especially designed for such work.
tary 0fiiCers.-A memorandum issued by the Joint               The Forest Service, however, restricts the use of such
Chiefs of Staff in 1964 established criteria for deter-       machines. The National Park Service, Department of
mining graduate education requirements for military           the Interior, also could realize significant savings by
officer positions. During fiscal year 1969, over 4,200        using the trail machines in areas it manages under the
officers were enrolled in full-time graduate education        wilderness concept.
programs at an estiniated cost of at least $70 million.          The Forest Service has also placed restrictions on
   GAO noted that the criteria for identifying military       using power saws for maintaining trails; helicopters for
officer positions requiring graduate education, and the       removing accumulated trash and litter, transporting
ways in which the criteria were applied, were so broad        equipment and materials for constructing trail bridges,
arld permissive that almost any officer position could        and inspecting and repairing reservoirs ; and compact-
be certified as requiring such education. Positions were      ing equipment for repairing reservoirs.
certified as requiring graduate education although the           GAO recognizes that the use of motorized equipment
need for such education had not been established;             is not compatible with an ideal wilderness concept but
there were inconsistencies between the official job de-       believes that the construction of trails, bridges, and
scriptions and the job descriptions submitted for cer-        other facilities and the presence of litter left in the areas
tification of graduate education requirements ; and           by users are also not compatible. GAO believes that,
certifications were requested and approved without            once decisions have been made to construct such facili-
adequate consideration of available alternatives to           ties and dispose of accumulated litter, economy and
meet requirements of the positions. Furthermore, many         convenience should be considered, along with other
officers with graduate education were not assigned to         factors, in deciding when to use motorized equipment.
positions requiring their specialized education.               Because the Forest Service and the Mational Park
   In response to GAO’s findings and its suggestions          Service believed that their restrictions were consistent
that the objectives of the graduate education program         with the intent of the Wilderness Act of 1964, GAO
 be clarified and that the existing criteria be revised       recommended that the Congress give consideration to
to limit the broad, permissive interpretations, the De-        providing further guidance on the use of motorized
partment of Defense contended that GAO had failed             equipment in these areas. (Problems Related to Re-
to take into account the intangible accepted d u e s hlld     stricting the Use of Motorized Equipment in Wilderness
benefits of graduate education. In view of this position,      and Similar Areas, B-125053, Oct. 29, 1970.)
 and the announced plans of the military services to ex-        6. Financing the Teacher Corps program.-Begin-
 pand the program, GAO suggested that the Congress            ning in 1969, members of the Teacher Corps participat-
might wish to consider limiting the fuli-time, ‘fully         ing in the program in western North Carolina were
 funded, graduate-level education program to those            assigned to State or locally allotted teaching positions.
 positions for which such education is essential for the      According to program officials, these corps members

                                                                                                                       29
 ASSISTANCE TO THE CONGRESS

 supplanted teachers who would have otherwise been            rate program in 1961, Congress had chosen not to
 hired by the local educational agencies. This practice       amend the legislation to include such a requirement.
 is not authorized by the enabling legislation which          I n view of the large percentage of families that were
states, in part, that no meniber of the Teacher Corps         contributing less than 25 percent of their income for
shall be used to replace any teacher who is or would          section 22 1 housing, GAO suggested that the Congress
otherwise be employed by a local educational agency.          might wish to consider whether HUD should establish
    Although the practice was not authorized, the State       an appropriate percentage-of-income contribution as
and local funds that would have been expended for             the minimum rent to be required. (Tighter Control
regular teacher salaries were used for corps members’         Needed on Occupancy of Federally Subsidized Hous-
salaries and related benefits. As a result, State and local   ing, B-114860, Jan. 20, 1971.)
funding of the Western Carolina program increased                8. Limited progress in highway program to increase
from about 10 percent to about 70 percent, thus de-           the nccPssibility to and through Appalachia.-In a re-
creasing the amount of Federal funds needed to operate        view made to determine whether the highway system
the program. Since this funding procedure is being            being constructed to promote the economic develop-
used at other locations and may provide local educa-          ment of the Appalachian region was achieving its ob-
tional agencies with the impetus to continue successful       jective, GAO found that the Appalachian Regional
features of a Teacher Corps program after Federal             Commission, created by the Appalachian Regional De-
funding ceases, GAO suggested that the Congress might         velopment Act of 1965, had not established construc-
wish to consider whether the legislation should be            tion priorities directed toward achieving the greatest
amended to authorize such arrangements. (Assessment           contribution at the earliest time nor had it deter-
of the Teacher Corps Program at Western Carolina              mined whether priorities established by the States were
University and Participating Schools in North Caro-           directed toward that end.
lina, B-164031 ( 1 ) , May 20,1971.)                             GAO believed that an opportunity still existed for
     7. Establishment of an appropriate minimum rental        the Commissioner to give priority to projects that
 rate for occupancy of federally subsidized housing.-         would contribute most toward improving accessibility
 The Department of Housing and Urban Development              to and through the region. Inasmuch as the Commis-
  ( H U D ) had not established a minimum rental rate for     sion disagreed with GAOs conclusions, GAO sug-
 occupancy of the federally subsidized housing project        gested that the Congress might wish to consider re-
 provided under section 221 of the National Housing           quiring the Commission to allocate remaining funds
 Act, aIthough other housing programs more recently           toward that end. (Highway Program Shows Limited
 enacted by the Congress require a minimum contribu-          Progress Toward Increasing Accessibility to and
 tion. Under section 221, HUD finances multifamily            Through tlppalachia, B-164497(3), May 12, 1971.)
 housing for low- and moderate-income families at low            9. Problems in controlling industrial water pollu-
 interest rates. The minimum contribution required            tion.--Because of ( 1) the increasing public concern
under the rental housing assistance program (author-          and congressional interest in the problem of water pol-
ized by section 236 of the National Housing Act, as           lution and (2) the significance of industry’s contribu-
amended) and under the rent supplement program                tion to the problem, GAO examined into the progress
 (authorized by the Housing and Urban Development             made and the problems encountered in reducing pollu-
Act of 19651, both of which are generally directed to-        tion caused by industrial waste discharges.
ward families of lower income than those of the section          Wide variances were found in the levels of financ-
221 program, is 25 percent of family income.                  ing and staffing of State water pollution control agen-
    CAO stated that it believed that it is inequitable for    cies. Where State agencies lacked sufficient staff, per-
HUD to provide section 221 housing assistance without         sonnel spent much time reviewing and approving plans
requiring a minimum percentage-of-income contribu-            for the construction of waste treatment plants but did
tion when the Congress has deemed a minimum con-              not perform other important activities, such as plant
tribution appropriate for assistance under programs for       visits and water quality monitoring.
generally lower income families.                                 Enforcement action by the Environmental Protec-
    The Secretary of HUD expressed the view that al-          tion Agency (EPA) (formerly the Federal Water
though there had been ample opportunities since the           Quality Administration) had been hindered by a lack
enactment of the section 221 below-market-interest-           of authority ( 1 ) to enforce specific effluent restric-
30
                                                                                 ASSISTANCE TO T H E CONGRESS

    tions, ( 2 ) to enforce dates set for implementing abate-       Multiyear leasing is a more economical alternative
    ment measures without also having to show a viola-           than short-term renting when funds to purchase ADP
    tion of water quality standards or danger to health          equipment are not available. In many cases, however,
    and welfare-a procedure which could be costly and            agencies are precluded by law from entering into multi-
    time consuming, and (3) to move against all polluters        year leases because their funds are available for ob-
    on a waterway. EPA could move only when pollutants           ligation for 1 year only. The Government’s revolving
    crossed a State boundary, when the Governor con-             funds, such as the ADP fund, can generally be used
    sented in cases of intra-State pollution, or when sub-       for multiyear leases, but the law requires that obliga-
    stantial economic injury resulted from the inability to      tions be established to cover anticipated payments for
    market shellfish.                                            the entire period of the leases.
       The five States included in GAO’s review generally           Because of the substantial savings that can be
    required polluters to provide secondary treatment or its     achieved through multiyear leasing rather than short-
    equivalent. The requirement was due, at least in part,       term renting, GAO recommended that the Congress
    to encouragement from EPA. Secondary treatment               consider legislation authorizing GSA to contract
    may not always be necessary, however, to achieve de-         through the ADP fund on a multiyear basis without
.   sired water uses. A requirement for such treatment can       the necessity of obligating the total anticipated pay-
    result in additional capital expenditures and operating      ments at the time of entering into leases. (Multiyear
    cwsts without increasing water uses.                         Leasing and Government-wide Purchasing of Auto-
       GAO recommended that the Secretary of the In-             matic Data Processing Equipment Should’ Result in
    terior encourage the States to strengthen their staffs;      Significant Savings, B-115369, Apr. 30, 1971.)
    develop, in cooperation with the States, an inventory            11. Changes to engineering building after authoriza-
    of industrial sources of pollution; obtain data on trends    tion by the Congress.-In a report to the chairman,
    in water quality and on progress being made by indus-        Senate Committee on Aeronautical and Space Sciences,
    try in meeting target dates for the construction of          GAO noted that a building under construction at the
    abatement facilities ; and provide additional guidance       National Aeronautics and Space Administration’s
    to EPA regional personnel on enforcement procedures.          (NASA) Manned Spacecraft Center was substantially
    GAO recommended also that the Congress consider              different in function, program application, and cost
    these matters during its deliberations on proposed           from the one NASA described and- justified to the
    water pollution control legislation.                         Congress.
       In addition, GAO recommended that the Congress                The building authorized by the Congress was tca be
    consider whether applicants €or Federal grants should         an office building for employees of the Manned Space
    be required to provide secondary treatment even in           Flight Program and was estimated to cost about $2.6
    those cases where less than secondary treatment would        million not including equipment. The building under
    result in meeting water quality standards established        construction will cost $2.4 million plus about $14.8
    by the States and approved by the Federal Govern-            million for laboratory equipment and will provide pri-
                                                                 marily laboratory space for employees of the Earth
    ment. The EPA had proposed to amend the Federal
                                                                 Resources Survey Program.
    regulations to require all applicants for Federal assist-
                                                                    Neither the Congress nor its committees had been
    ance in the cost of constructing waste treatment facili-
                                                                 notified of the change; however, since the engineering
    ties to provide secondary treatment. (Controlling In-        building was not identified as a specific item in the
    dustrial Water Pollution-Progress and Problems, B-           NASA authorization act, there is no legal basis to ques-
    166506, Dec. 2,1970.)                                        tion NASA’s redesigning the building to provide labora-
       10. M u l t i y a r leasing of the Government’s auto-     tory space instead of office space.
    matic data processing ( A D P ) equipment through the           GAO stated that the committee might wish to con-
    ADP fund.-The             General Services Administration     sider identifying in NASA’s authorization acts, the
    (GSA) has an ADP fund to assist in carrying out its          specific projects to be constructed with appropriated
    responsibilities for the efficient and economical acquisi-   funds. This identification would restrict the availa-
    tien of general-purpose ADP equipment. The Govern-           bility of funds appropriaited ufider the construction of
    ment obtains most of its equipment throhgh Frchases          facilities apptopriations to the projects and amounts
    or short-term rentals.                                       identified in the authorization acts.

                                                                                                                     31
ASSISTANCE T O T H E CONGRESS

   In the 1972 fiscal year authorization for NASA, bill        GAO believes also that, on the basis of experience
H.R. 7109 reported out by the committee identified          gained from the last transition, an extension of the
the specificprojects to be constructed with appropriated    period of availability of transition funds to the former
funds. On June 29, 1971, the Senate passed the au-          President and the former Vice President beyond the
thorization bill which also included the identification     6 months set by the Presidential Transition Act is
of the projects. (Building Authorized To Provide Office     desirzble.
Space at Manned Spacecraft Center Redesigned T o               Also, it seems reasonable to GAO ( 1) that an in-
Provide Laboratory Space, B-165 118, Mar. 29, 1971.)        crease in salary for persons on the Executive Schedule
   12. Need for consistent Government policy for cost       would warrant, at the same time, a corresponding in-
                                                            crease in the overall limitation in the Former Presidents
sharing by institutions in federally financed research.-
Appropriation acts for fiscal year 1970 covering the        Act on the compensation of persons employed by a
major research agencies variously (1) make no pro-          former President under the act, or (2) that the limita-
vision for cost sharing, ( 2 ) require cost sharing on      tion could be safely eliminated.
grants only, or ( 3 ) require cost sharing on both grants      In reporting to the Congress on its review, GAO
and contracts except for research specifically solicited    suggested that the Congress might wish to consider (1)
by the Government.                                          the desirability of increasing the amount of funds au-
   The three different statutory policies governing cost    thorized under the Presidential Transition Act for the
sharing in federally financed research are in direct        incoming President and Vice President, (2) the need
conflict with the concept of a consistent policy of cost    for an extension of the time during which Presidential
sharing which GAO believes is both feasible and de-         Transition Act funds are available to the former Presi-
sirable f o r Federal research agencies and which was       dent and Vice President, and ( 3 ) the need to amend
advocated in Senate Report 91-521.                          the Former Presidents Act to provide for adjustment or
   GAO recommended that the Congress consider leg-          elimination of the overall limitation on the compensa-
islation to prescribe a consistent Government policy        tion of the former President’s staff, in line with pay
for cost sharing in federally financed research for all     raises in general. (Federal Assistance for Presidential
Federal agencies. At the request of the Subcommittee        Transitions, B-149372 and B-158195, Nov. 16, 1970.)
on Intergovernmental Relations, Senate Government              14. Need to provide more complete information o n
Operations Committee, GAO submitted a draft bill            the overall impact of and prospects for foreign as-
to establish such a policy. (Management of Federally        sistance to individual countries.-GAO reviewed and
Financed Research by the University of Michigan-A           reported to the Congress its findings and conclusions
Case Study, B-117219, Sept. 25,1970.)                       regarding the results of 10 years of US. assistance to
   13. Federal assistance for presidential transitions.-    Honduras. Comparisons were drawn between progress
After researching the historical background and re-         achieved and program objectives. As a result of expe-
viewing the current application of the Presidential         rience with this review, GAO suggested that Congress
Transition Act of 1963 and the Former Presidents Act        might wish to consider:
of 1958, GAO concluded that the amounts and/or                     If executive branch foreign assistance program
period of availdbility of appropriations authorized by        justifications to the Congress should be restructured
these two laws did not appear to be adequate to carry          ( 1 ) to show the relative long-range acceleration of
out the objectives of the laws.                               the recipient country’s economic, social, and politi-
   The Congress appropriated $900,000 to finance the          cal development achieved in the past and planned
1968-69 transition between the incoming and outgoing          in the future and (2) to provide a more explicit
administrations. Although the transition act is silent on     focus on the timespan envisioned to precede phase-
the matter of the division of the funds between the           out of U.S. assistance; the relative levels of such as-
administrations, the legislative history reflects an ex-      sistance during this timespan; and the nature and
pectation that they be divided equally. This was done         rate of economic, social, and political development
in the case of the 1968-69 transition. GAO believes that      anticipated and to be supported during this time-
the $450,000 in Federal funds made available to the           span ; and
incoming administration was clearly inadequate in light           Whether congressional action might be desirable
of the $1.5 million estimated to have been spent to           for facilitating the development of improved models
defray its expenses.                                          and other analytical tools to better measure, with

32
                                                                           ASSISTANCE T O T H E CONGRESS

  greater objectivity and accuracy, the impact of          (2) whether executive action in this regard meets
  U S . assistance programs on a recipient’s rate of       congressional desires, ( 3 ) whether legislative action
  development.                                             should be taken concerning the U.S.-owned rupee
(Administration and Effectiveness of U.S. Economic         balance in India, and (4) whether authority should
and Military Aid to Honduras [Secret], B-169521 ,          be given to use non-Public Law 480 excess currency
Dec. 3, 1970.)                                             in India for grants without appropriations, as is already
                                                           permitted for Public Law 480 excess currency. (Op-
   15. Need for improved evaluation of the results of      portunities for Better Use of U.S.-Owned Excess For-
the military assistance training program.-At the re-       eign Currency in India, B-146749, Jan. 29, 1971.)
quest of the chairman, Senate Committee on Foreign
Relations, GAO performed a detailed study of the
military assistance training program. Several potential    Actions Taken by Congress on
areas of improvement in administration of the pro-         Recommendations Made in Prior Years
gram were identified, GAO also found that it was dif-
ficult to assess the degree to which U.S. military as-        1. Contractors’ independent research and develop-
sistance training had increased the effectiveness of       ment costs borne b y the Government.-Independent
forces in the recipient countries. The reason for such     research and development (IR&D) is that part of a
difficulty was the lack of established measurement         contractor’s total research and development program
criteria and of a system for periodically evaluating the   which is initiated at the discretion of the contractor
program.                                                   without relation to any particular grant or contract. In
   In addition to describing recommended action to be      some cases, however, the Government negotiates a
taken by the Secretaries of Defense and State, GAO         general agreement with a contractor to establish a
stated in the report that the committees of the Con-       dollar ceiling on the cost of IR&D which the Govern-
grCss might wish to consider the desirability of enact-    ment will bear. T,he policies of the Department of
ing legislation requiring the Secretary of Defense to      Defense (DOD) and the National Aeronautics and
establish a measurement system to assist in determin-      Space Administration (NASA) prescribed that IR&D
ing the effectiveness of expenditures for military         costs would be subject to reimbursement even if not
assistance training programs. (Problems in Administra-     related to current or prospective Government work. By
tion of the Military Assistance Training Program,          contrast, the Atomic Energy Commission (AEC)
B-163582, Feb. 16, 1971.)                                  would allow IR&D expenses only if contract work was
                                                           benefited. During 1968, the Government reimbursed
   16. Means tq reduce U S . holdings of excess Indian     major contractors about $700 million in IR&D ex-
rupees.-GAO reported to the Congress that as of            penses, nearly all the reimbursement being made under
June 30, 1969, the United States had available for ex-     DOD and NASA contracts.
penditure in India about $678 million in Indian rupees        GAO reviewed and reported to the Congress con-
and that American holdings of rupees are expected to       cerning several issues arising from the Government’s
increase substantially throughout the next 40 years.       sharing of IR&D costs. In its report, GAOl set out
In summary, GAO found that important political,            several suggestions for legislative consideration :
economic, and legal factors limit the amount of U.S.-
owned rupees that the United States can spend in                Because no clear distinction can be made between
India during any period. Even so, considerably greater       IR&D, bid and proposal, and other independent
amounts than are now being spent could be beneficially       technical effort, any agreed ceilings on IR&D can be
used within the limitations. Administrative difficulties     avoided through description of an IR&D project
within the U S . Government have also acted to restrain      under a different terminology. Therefore, all inde-
the level of excess currency spending.                       pendent technical efforts of contractors should be
   GAO recommended that the Congress might wish              considered as a single entity.
to favorably consider foreign-currency denominated              Unlike the AEC and NASA, DOD has separate
appropriations as an advantageous funding form and,          appropriations for procurement and for research and
with regard to the excessive accumulation of U.S.-           development activities and DOD’s share of contrac-
owned foreign currencies in India, might wish to con-        tors’ IR&D costs generally is absorbed by the pro-
sider (1) whether a reduction in US.-owned rupees            curement appropriation without identification as
should be made to preserve good relations with India,        IR&D. If the Ccjngress Authorizes continuation of

                                                                                                                33
 ASSISTANCE TO T H E CONGRESS

     the present practice of allowing the inclusion of        issues discussed by GAO. On October 7, 1970, the
     IR&D as an acceptable cost element in negotiated         Armed Forces appropriation authorization for 1971
     contracts, DOD should be directed to break out and       was approved as Public Law 91-441. Section 203 of
     identify separately in its appropriation requests the    that act imposed certain limitations on the payment
     m o u n t estimated as required for this purpose.        by the Government to contractors for IR&D and bid
        The policies followed by DOD and NASA on              and propostil costs. (Allowances for Independent Re-
     acceptability of IR&D costs differ from those of AEC     search and Development Costs in Negotiated Con-
     which allow such costs as an element of overhead         tracts-Issues and Alternatives, B-164912, Fe'b. 16,
     onIy to the extent that they provide a direct or in-     1970.)
     direct benefit to the contract work. A policy should        2. Allocation of unfilled domestic sugar marketing
     be established by the Congress stating the extent to      quotas to other domestic areas.-Statistics published
     which, and under what circumstances, Government           by the Department of Agriculture showed that, during
     agencies should participate in the contractors' in-      the 6-year period from 1963 through 1968, annual
     dependent technical efforts.                             marketings of sugar by domestic producers ranged from
   I n conjunction with setting a Government-wide             225,000 tons to 913,000 tons-about 4 to 13 percent-
policy regarding IR&D, GAO brought out several                below the quotas authorized by the Sugar Act of 1948,
additional issues for consideration by the Congress:          as amended. The domestic marketings below authorized
      Whether or not the present practice of allowing         quotas occurred because of continuing, long-term
   IR&D as an acceptable overhead cost in negotiated          deficits in the sugar production of Puerto Ricol and the
   contracts should 'be replaced by a system of:              Virgin Islands. The act required that unfilled domestic
          (1) Extending the use of direct research and        quotas be allocated to foreign countries. GAO was in-
       developfient contracts to include those IR&D           formed, however, that other domestic areas could pro-
      prbjects which the agency wishes to support fully       vide the unfilled quotas. Substantial benefits, including
      on a cost-sharing basis and thereby providing           increased income for domestic sugar producers and
      greater assurance that the desired work will be         reduced dollar outflow for sugar imports, could be
      performed and that the Government will be en-           achieved by allocating the unfilled quotas to other
      titled to information and royalty-free rights to any    domestic sugar-producing areas rather than to f o r e i b
      inventions arising therefrom, and                       countries.
          (2) Authorizing an allowance for a stipulated          GAO recommended that the Congress in its exten-
      percentage of the remainder of the contractor's         sion of legislation-which expired on December 31,
      total IR&D effort, irrespective of the source of the    197l-consider modifying the deficit allocation pro-
      funding, either as a prdfit factor or through ac-       visions of the act to enable the Secretary of Agriculture
      ceptance as a recognized overhead cost, as an          to allocate continuing, long-term deficits of a domestic
      incentive to contractors to continue technical         area to other domestic areas rather than to foreign
      efforts beyond those directly contracted with the      countries. Public Law 92-138, approved October 14,
      Government.                                             1971, did not modify the deficit allocation provisions of
      Whether or not allowances to contractors for           the act specifically as recommended in the report, but
  IR&D should be limited to projects that have a             it eliminated the 15,000-ton quota for the Virgin
  direct and apparent relationship to a specific func-       Islands, reduced the quota for Puerto Rico by 285,000
  tion of an agency.                                         tons, and reallocated these reductions to the mainland
     Whether or not, if IR&D allowances by DOD               cane sugar area. (Administration of Sugar Market-
  and NASA are continued on the present basis and            ing Quotas Established by the Sugar Act of 1948, as
  are not related directly to current or prospective         amended, B-118622, Sept. 23,1969.)
  Government procurement, financial support should
 be provided to companies with similar capabilities,         Restatement of Prior Year
 which do not hold Government contracts, as a means          Recornmendations
 of supporting and strengthening industrial
 technology.                                                   1. Production of weapons systems despite known
 During hearings in March 1970, the Senate and               deficiencies in essential components.-The Army pur-
House Committees on Armed Services explored the              chased quantities of the §heridan-a tanklike weapon
34
                                                                             ASSISTANCE TO T H E CONGRESS

 system-MGOAlEl tank turrets, and M60AlE2 tanks             cent Farmers Home Administration (FHA) operating
 which will require substantial modification before they    loan funds were available. Section 321 (a) of the Con-
 will be fully suitable for operational use. Appreciable    solidated Farmers Home Administration Act of 1961
quantities were authorized for production despite           requires that, prior to designating a county for emer-
known development deficiencies in essential com-            gency loan assistance, a determination be made that a
 ponents. As a result, many of these weapons were put       general need exists for agricultural credit which cannot
into storage instead of being added to th: combat           be met from other sources, including FHA programs.
effectiveness of the Army as planned.                       No documentation was available to show that this
   GAO proposed a series of actions for application         determination had been made prior to designation
to current and future development programs to in-           of the 14 counties
crease management effectiveness and to deploy accept-          The FHA contends that emergency area designa-
able weapon systems sooner. The Army concurred in           tions may be made before other available funds are
most of the proposals and stated that major actions or      exhausted and that the Congress never contemplated
improvements had been initiated which should reduce         that a disaster designation should be withheld as long
deficiencies in future program management.                  as such funds are available.
   Several committees and many Members of the Con-             GAO found no specific criteria in the enabling leg-
gress had expressed a strong interest in major weapon       islation or pertinent legislative history indicating the
systems and how their development and procurement           intent of the Congress in this matter and suggested,
could be improved. To enable the Congress to exercise       therefore, that the Congress might wish to clarify the
appropriate legislative controls over the funding of        law regarding the use of funds in other loan programs
major defense systems, GAO suggested that the Con-          before the use of emergency loans is approved.
gress might wish to require that (1) a determination           The Department of Agriculture advised the chair-
be made by the Secretary of Defense, prior to authoriz-     man of the House Committee on Government Opera-
ing production of a new system or major modifica-           tions in May 1969 that (1) GAO’s report correctly
tion of an existing system, that all of its sigrlificapt    showed the Department’s position on designating emer-
components have satisfactorily met all prescribed de-       gency areas and making 3-percent emergency loans
velopmental tesks and ( 2 ) in any case where the Sec-      when other program funds arc available and ( 2 ) be-
retary of Defense considers that authorization of pro-      cause this has been a longstanding practice without
duction is essential, even though not all developmental     congressional objection, the Department did not see a
tests have been satisfactorily completed, a certification   need for legislation on this matter.
to that effect be furnished by the Secretary of Defense        GAO continues to believe that, since the law or
to the appropriate congressional committees-such            pertinent legislative history is not sufficiently clear
certification to include the reasons for authorizing con-   on this matter, clarification of existing legislation is
current development and production and the status           needed. (Policies and Procedures for Recommending
of development of each significant component.               Emergency Area Designations, B-114873, Mar. 24,
   GAO findings in subsequent reviews of the develop-       1969.)
ment of major weapons, as presented in reports sub-            3. Review of policies and prnctices for acquiring
mitted to the Congress in fiscal year 1971 and discussed    land for reservoir projects.-The     Corps of Engineers
in Chapter Five (under the caption Research and De-         was acquiring fee title to thousands of acres of reser-
velopment, Major Weapons), tend to add weight to            voir project land when less costly flowage easements
this suggestion. (Need for Management Improvement           would have sufficed or when no interest was required
in Expediting Development of Major Weapon Systems           for water control purposes. GAO estimated that the
Satisfactory for Combat Use, B-163058, Nov. 17,             additional cost of acquiring fee title to 388 selected
1969.)                                                      tracts at seven reservoir projects amounted to about
    2. Clarification of law regarding use of available      $2.7 million.
f u n d s under other loan Programs before use of emer-        I t was recognized that fee acquisition might have
gency loans is approved.-A GAO review in 14 coun-           been desirable to satisfy purposes other than water
ties designated as emergency areas by the Secretary of      control; however, GAO found that the Corps had not
Agriculture showed that 3-percent emergency loans           identified the additional cost incurred for other project
had been made when substanka1 amounts of 5g-per-            purposes, mainly recreation and fish and wildlife. The

                                                                                                                 35
ASSISTANCE TO THE CONGRESS

 Fish and Wildlife Coordination Act indicates that the      that, based on its estimates of in-house cost, 11 of the
 Congress desires cost information on land acquired for     contracts were awarded at prices that were about $2.1
 fish and wildlife purposes. GAO found also that the        million in excess of the statutory limitation and about
 total cost of the land acquired for recreation purposes    $4.4 million in excess of the costs that would have
 was paid for by the Federal Government even though         been incurred if the work had been done by the Corps
 some of these costs may have been properly financed        itself.
 by non-Federal interests under the cost-sharing provi-        The Department of the Army disagreed with these
 sions of the Federal Water Project Recreation Act.         finding and stated that the policies and practices of
    In response to GAO proposals, the Department of         the Corps were in accordance with the policies and in-
 the Army stated that information on acreages and ap-       tentions of both the Congress and the administration.
 proximate costs to be incurred for such purposes as           In GAO’s opinion, there was a deviation from the
 recreation and fish and wildlife could be furnished to     provisions of 33 U.S.C. 624. Therefore, GAO sug-
the Congress, if it was desired. With respect to the        gested that if the Congress should determine that the
additional financing which may have been available          Corps’ policies and procedures applicable to its dredg-
from non-Federal sources, the Department stated that        ing operations are to be continued, consideration be
this would tend to decrease recreational development        given to revising or repealing 33 U.S.C. 624. (Need
by local interests and, at some future date, would          for Improving Policies and Procedures for Estimating
cause substantial administrative problems.                  Costs, Evaluating Bids, and Awarding Contracts for
    GAO suggested that the Congress, in prescribing the     Dredging, B-161330, Aug. 7,1967.)
nature and extent of reservoir project purposes, might          5. Need for change in interest rate criteria for de-
wish to require that the Corps identify, for conges-         termining financing costs of Federal power program.-
sional consideration, the costs incurred in acquiring        The criteria used in determining the cost of financing
greater interests in land than are needed for water con-     the Federal power systems of the Department of the
trol purposes, the purposes for which such interests are     Interior and the Corps of Engineers-costs that are
acquired, the related acreages, and the benefits to be       repayable from revenues obtained from the sale of
derived from such interests. I t was also suggested that     power-result in the use of interest rates that are not
the Congress might wish to express its intent as to          representative of the cost of funds borrowed by the
whether the additional COSTS incurred for recreation         Treasury during the construction of the various power
and fish and wildlife purposes should be treated as          systems. Consequently, the Government’s cost of fi-
separable costs and be subject to cost sharing under         nancing these systems has been significantly under-
the Federal Water Project Recreation Act. (Review           stated.
of Policies and Practices for Acquiring Land for Res-          As an example of the understatement of financing
ervoir Projects, B-118634, Feb. 3, 1969.)                    costs, the interest rates used in the Federal Columbia
   4. Policies and procedures used in estimating costs,     River Power System, although established in accord-
evaluating bids, and awarding contracts for dredg-          ance with long-accepted criteria, have resulted in un-
ing.-The law under which the Corps of Engineers             derstating by a b u t $22 million the capitalized interest
awads contracts for dredging (33 U.S.C. 624) stipu-          costs during construction for those major projects still
lates that appropriated funds shall not be used to pay       under construction in fiscal year 1968 and in under-
for any work done by contract if the contract price is      stating by about $2 million the interest expense for fiscal
mpre than 25 percent in excess of the estimated cost of     year 1968 on the unrepaid Federal investment related
the Government dping the work with its own equip-           to the transmission facilities of the Bonneville Power
ment and crews.                                             Administration.
   The Corps has taken the position that it is not re-         Although recent changes by the Department and
quired to prepare in-house estimates unless a Govern-       the Corps will result in significant improvements, GAO
ment plant is or will be available to do the dredging.      believes that neither will result in a realistic measure
Instead, the Corps awards contracts for dredging to         of the cost to the Treasury of borrowing money during
the contractor whose bid price is low and is not more       the period of construction of power projects.
than 25 percent in excess of the Corps’ estimate of fair       Accordingly, it was suggested that the Congress
and reasonable cost to a contractor, exclusive of profit.   might wish to consider changing the interest rate cri-
GAO’s examination of 32 dredging contracts showed           teria to provide that:
36
                                                                               ASSISTANCE T O T H E C O N G R E S S

     The interest costs to be capitalized ,as part of the     the Bureau as to which purpose is of primary im-
  Government’s investment in power projects be based          portance-replenishing      and stabilizing the ground
  on an interest rate prescribed by the Secretary of the      water supply or preventing ineligible landowners from
  Treasury taking into consideration the average mar-         receiving benefits from p‘roj ect water.
  ket yield, during the year in which the investment             GAO suggested also that, if it is determined that
  is made, on the outstanding marketable obligations          replenishing and stabilizing the ground water supply
  Which he considers to be most representative of the         should be given primary consideration, the Congress
  cost to the Treasury of borrowing money to construct        might wish to consider the applicability to the San
  the power projects.                                         Luis service area of the provisions of several bills intro-
     The interest to be paid to the Treasury annually         duced in the 91st Congress which would have had
  on the Government’s unrepaid investment in power            the effect of lessening the need to pump ground water.
  projects be based on a composite of the average              (Questionable Aspects Concerning Information Pre-
  market yieIds used in computing the capitalized             sented to the Congress on Construction and Operation
  interest costs.                                             of the San Luis Unit, Central Valley Project, B-125045,
(Change Proposed in Interest Rate Criteria for Deter-         Feb. 12, 1970.)
m&ng Financing Costs of Federal Power Program,                   7. Leasing of Federal lands for development of oil
B-167712, Jan. 13,1970.)                                      and gas resources.-Most of the leases awarded by the
    6. Need for guidance to establish purpose to be ful-      Bureau of Land Management, Department of the In-
filled by a water resources project.-The Department           terior, for the development of oil and gas resources
of the Interior’s feasibility report for the San Luis Unit,   on Federal lands have been granted on a noncompetid
Central Valley Project, submitted to the Congress in          tive basis and, in many cases, at prices less than their
1956, stated that an important purpose of the Unit was        indicated fair market value. The lands are leased
to replenish the ground water. In 1965 the Bureau of          noncompetitively because of a statutory requirement
Reclamation amended its contract with the Westlands           that lands not located within the boundaries of a known
Water District, the largest user of water provided by         geologic structure of a producing oil or gas field must
the Unit, to include provisions which, if fully imple-        be leased noncompetitively. Generally, the geologic
mented, could prevent accomplishment of this purpose.         data needed to determine whether lands offered for
    The contract was amended to prevent ineligible            leasing are within such a structure are not available
landowners (owners of more than 160 acres of irrigable        to the Department before leasing and drilling.
land) from indirectly benefiting from the water pro-             GAO believes that the Government should and could
vided by the Unit. T o irrigate lands in excess of 160        use competitive bidding to a greater extent to obtain
acres, an ineligible owner would have to pump (use)           prices that more nearly approximate the lands’ fair
ground water. Ineligible landowners could ‘benefit from       market value.
a rise in the water table resulting from non-use of              Also, indications were found that the statutory right
ground water by eligible landowners and from percola-         of lessees to assign to other persons leases in units as
tion into the ground water of irrigation water applied        small as 40 acres impedes rather than induces the de-
to the lands of eligible landowners, thus resulting in a      velopment of oil and gas resources.
reduction of ineligible landowners’ cost of pumping              The Department of the Interior stated that of three
ground water.                                                 alternatives it had considered for extending competi-
    T o prevent these benefits, the contract was amended      tive bidding, it preferred the partially competitive sys-
to provide that Westlands, when directed by the Bu-           tems. However, GAO believes that disposal of oil and
reau, pump ground water rather than purchase water.           gas rights on Federal lands should be based on the
This could result in the Bureau’s paying Westlands            principle of a fair market return to the Government
 about $2 million and in the Unit’s losing revenues of        and that this objective can best be achieved under
about $4 milfion.                                             a competitive bidding system.
    The Department stated that it di,d not share GAOs            Accordingly, GAO suggested to the Congress that
concern over the financial impact of the amendment,           the Mineral Leasing Act be amended ta (1) require
since it believed that Westlands would not be required        that oil and gas leases on all Federal lands be awarded
to pump ground water. GAO suggested, nevertheless,            competitively unless otherwise justified and ( 2 ) increase
 that the Congress might wish to provide guidance to          the minimum acreage limitation applicable to the as-

                                                                                                                      37
 ASSISTANCE TO THE CONGRES§

 signment of the leases. (Opportunity for Benefits                For refunds claimed on initial returns, interest is not
 Through Increased Use of Competitive Bidding To               allowed if the refunds are paid within 45 days follow-
 Award Oil and Gas Leases on Federal Lands,                    ing the due date for filing the return or the date the
 B-118678, Mar. 17,1970.)                                     return is actually filed, whichever is later. For those
     8. Acquisition of land for national recreation areas     refunds claimed by correction of or amendment to
  containing improved properties.-The National Park           returns, interest usually accrues for the period from the
  Service (NPS), Department of the Interior, had ac-          prescribed due date for filing the return until the
  quired or planned to acquire high-cost improved prop-       refund is certified for payment. Returns may be cor-
  erties located on or near the baundaries of authorized      rected or amended up to 3 years after they are required
  national recreation areas although, in GAO’s opinion,       to be filed.
  these properties could have been excluded or could              GAO suggested a change in the Internal Revenue
  be excluded from the areas without interfering with         Code to provide that interest on refunds resulting from
 the areas’ development. Changes in boundaries to ex-         taxpayers’ furnishing additional information to correct
  clude such properties nat yet acquired would result in      or amend their initial income tax returns accrue from
 significant *benefitsto NPS, especially in those areas      the dates the claims for such refunds are filed and that
 where authorized funds have fallen far short of the          the Internal Revenue Service (IRS) be authorized to
 amount required to complete the land acquisition and         establish a reasonable period after such claims are filed
 where considerable amounts of unimproved land with          within which interest-free refunds may be made. The
 16wer estimated costs an acre remain to be acquired.        Department of the Treasury disagreed primarily on
    The Department of the Interim rejected the sugges-       the basis that the Congress has recognized that interest
 tion that consideration be given to adjusting boundaries    should be paid because the Government has had use of
 of certain recreation areas to exclude high-cost im-        the ,taxpayers’ money. Also, the Department belmieved
 proved properties and stated that some acquisitions of      that, if this proposal were adopted, similar legislation
 expensive properties are necessary to protect scenic,       might be required which would make it unnecessary
 historical, and cultural values.                            for taxpayers to pay interest on tax deficiencies until
    In enacting legislation authorizing the establishment    the expiration of a reasonable period after being noti-
 of national recreation areas, the Congress frequently       fied of the deficiency. GAO did not agree with the
h a to define boundaries before important facts, such        Department because the Congress ,had previously made
 as the cost of various tracts of land, are known. GAO       various changes in the Code to provide that interest not
 therefore recammended that the Congress, in enacting        be allowed on certain refunds when justified by exist-
 such legislation, provide the Secretary of the Interior     ing circumstances even though the Government had
 with guidelines for making changes in estzblished           use of the taxpayers’ money during the retention
boundaries when the acquisition of high-cost properties      period.
located on dr near the boundaries is involved.                   GAO suggested that the Congress might wish to
    It w a s also recommended that the Congress require      consider amending the Code to provide that interest on
the Secretary to prepare an analysis of the location and     refunds resulting from taxpayers’ furnishing additional
estimated cost of high-cost properties on the perimeter     information to correct or amend their initial income tax
of thoie authorized recreatibn areas for which addi-        returns accrue from the dates ,the claims are filed,
tional funds are needed and to justify t a the Congress     except that IRS be authorized to establish a reasonable
the desirability of acquiring such properties. (Problems    period after such claims are filed within which interest-
in Land Acquisitions f o r National Recreation Areas,       free refunds may be made. It was suggested that, if the
B-164844,Apr. 29,1970.)                                     Code were changed in this regard, the Congress might
                                                            also wish to consider making the change applicable to
   9. Opportunities f o r reducing interest costs to the
                                                            excise, employment, and estate tax refunds. (Proposed
Government on certain types of Federal income tax
                                                            Revision to the Internal Revenue Code Governing
refunds.-Under the Internal Revenue Code of 1954,
taxpayers who claim refund,sby correction of or amend-      Interest Payments on Certain Types of Federal Income
ment to their income tax returns receive a considera-       Tax Refunds, B-137762, Sept. 19,1968.)
tion, in the form of interest at the rate of 6 percent,       10. Opportunities for reducing i~terestcosts on re-
not accorded to taxpayers who claim Pefunds &t the          funds uttributable to net operating lbss deductions.-
time they file their returns.                               The Ihternal Revenue Code of 1954 permits taxpayers
38
                                                                             ASSISTANCE TO THE CONGRESS

 to offset net operating business losses of il current tax      Amending the civil service retirement law as pro-
 year against a prior year’s taxable income and thereby      posed would result in the full salary costs of reem-
 receive a tax refund. Interest on these refunds is paid     ployed annuitants being financed by the employing
by the Government at the rate of 6 percent, commenc-         agencies rather than a portion of such costs being
 ing on the first day following the close of the year in     financed by the retirement fund. (Proposed Revision
 which the business loss occurred. Also, there is no         of Law Governing Financing Salary Costs of Retired
 interest-free period allowed the Government within          Civil Service Annuitants Reemployed by Federal Agen-
which to process refunds attributable to net operating       cies, B-130150, May 28, 1968.)
loss deductions. Therefore, taxpayers who delay filing           12. Need to improve effectiveness of construction
 claims for refunds for periods up to 3 years receive        grant program for abating, controlling, and prevent-
interest for the entire period. Interest paid on all re-      ing water pollution.-The construction grant program
 funds attributable to net operating loss deductions          for abating, controlling, and preventing water pollu-
 during fiscal year 1964 was estimated to total about $28     tion has been administered by the Environmental Pro-
 million.                                                     tection Agency (EPA) (formerly the Federal Water
    GAO suggested that the Congress might wish to             Quality Administration) for rhe most part on a first-
 consider amending the Code to provide that interest on       come-first-serve,d or readiness-to-proceed basis with
 refunds resulting from net operating loss carryback         little consideration given to the benefits to be attained
deductions begin from the date that applications or          by the construction of individual treatment plants.
 claims for such refunds are filed instead of from the           Since the Federal Water Pollution Control Act ~ F O -
date following the clqe of the twable year in which the      vides that priority for construction grants be given on
net operating loss occurred, except that the Internal        the basis of financial as well as water pollution control
Revenue Service be authorized to establish a reasonable      needs-which could result in the award of grants for
period after applications or claims are filed within         the construction of waste treatment plants that pro-
which. interest-free refunds may be made. This change        vide little benefit in terms of appreciably improving
would he consistent with current provisions which al-        water quality or uses-GAO suggested that the Con-
low the Government an ipterest-free period within            gress might wish to consider amending existing legis-
which to process ordinary refund payments. The As-           lation to provide that priorities be established on the
sistant Secretary of the TreGury for Tax Policy stated       basis of benefits to be realized.
that the Treasury is prepared to support legislation to          In addition, EPA has followed a policy of generally
carry out this proposal.                                     requiring secondary treatment facilities for inland wa-
   GAO suggested that the Congress might also wish           ters. GAO recognized that the requirement of second-
to consider similarly amending statutory provisions          ary treatment may be desirable as the ultimate objec-
concerning interest payments on refunds attributable         tive; but, in view of the magnitude of the problem and
to investment credit carrybacks, foreign credit carry-       the limited Federal funds available, GAO expressed
backs, and unused deductions of life insurance com-          the belief that, as an interim measure, consideration
panies. (Opportunities for Reducing Interest Costs on        should be given to less than secondary treatment when
Refunds Attributable to Net Operating Loss Deduc-            such treatment would result in enhancing water qual-
tions, B-137762, May 26,1967.)                               ity or in attaining the States’ water quality standards.
   11. Proposed revision of law governing financing of           Since EPA disagreed with this position, GAO recom-
salary costs of retired civil service annuitants reem-       mended that the Congress consider requiring EPA to
plbyed by Federal agencies.-GAO recommended that             provide for interim goals and to allow communities to
the Congress consider amending the provision of the          construct less than secondary treatment facilities when
civil service. retirement law rehting to the payment         it can be demonstrated that a lesser degree of treatment
of annuities and salaries to reemployed retired em-          will result in water quality enhancement commen-
ployees (5 U.S.C. 83114.) to provide that amounts            surate with proposed present and future water uses.
equivalent to the annuities allocable to the period of        (Examination into the Effectiveness of the Construc-
actual employment, which are deducted from reem-             tion Grant Program for Abating, Controlling, and Pre-
ployed retired employees’ salaries, be transferred by        venting Water Pollution, B-166506, Nov. 3, 1969.)
the employing Federal agencies to the Civil Service            13. Clarification of statutory provisions regarding
Retirement and Disability Fund,                              Federal grants awarded for constructing municipal
     4 4 9 4 0 6 0--F2---2                                                                                        39
ASSISTANCE TO THE CONGRESS

rclaste treatment facilities which benefit in dustrial              14. Cost of providing retirement, disability, and
users.-The Federal Water Pollution Control Act of             compen ration benefits for Federal Deposit hsurance
 1956 authorizes the Environmental Protection Agency          Corporation employees.-The Federal Deposit Insur-
 (EPA) (formerly the Federal Water Quality Adminis-           ance Corporation (FDIC) is required to contribute to
tration) to award grants to State, interstate, municipal,     the Civil Service Retirement and Disability Fund on
and intermunicipal agencies for the construction of           salaries paid to its employees after June 30, 1957. How-
necessary waste treatment facilities to prevent the dis-      ever, the law does not require FDIC to pay into the
charge of untreated or inadequately treated sewage            fund the Government’s share of the cost of providing
or other waste into any waters. EPA does not differen-        the retirement and disability benefits for FDIC em-
tiate between municipal and industrial wastes and con-        ployees from the creation of the Corporation through
siders the term “other waste” as including industrial         June 30, 1957. Neither does the law require the Cor-
wastes.                                                       poration to make any payments into the Employees’
   EP.4 has awarded grants to municipalities for the          Compensation Fund nor to bear any portion of the
construction of facilities to treat ( 1 ) domestic wastes     cost of administering the civil service retirement system
only, ( 2 ) industrial wastes only, and ( 3 ) domestic and    or the Employees’ Compensation Fund.
industrial wastes. .4 large amount of Federal grant              GAO has recommended in several annual audit re-
funds has been awarded for the construction of facili-        ports that the Federal Deposit Insurance Act be
ties to treat significant quantities of industrial wastes.    amended to require FDIC to pay its share of the above
   Although the Congress is aware of EPA’s policy of          costs. GAO believes that the adoption of the recom-
awarding granb to municipalities for the treatment of         mendation would result in a more equitable allocation
both domestic and industrial wastes, it is questionable       of the cost of retirement, disability, and compensatiori
whether the Congress intended that grants be awarded          benefits between the Federal Government and FDIC.
for the construction of facilities for the ,treatment of      (Audit of the Federal Deposit Insurance Corporation
industrial wastes only. GAO therefore suggested that          for the Year Ended June 30, 1970, B-114831, Feb. 18,
                                                              1971.)
the Congress might wish to (1) clarify its intent as to
whether Federal grants are to be awarded to munici-             15. Audits of the Federal Deposit 1:nsurance Cor-
palities for the construction of facilities to treat indus-   poration on a calendar year bask-GAO has recom-
trial wastes only and ( 2 ) consider other alternatives to    mended in several annual reports on its audits of the
present practices for financing the construction of fa-       Federal Deposit Insurance Corporation (FDIC) that
cilities for the treatment of both domestic and indus-        section 17(c) of the Federal Deposit Insurance Act
                                                              be amended to require that GAO audits of FDIC be
trial wastes.
                                                              made on a calendar year basis rather than on a fiscal
   I t was suggested that the Congress might wish to
                                                              year ‘basisas provided in the act. adoption of this rec-
consider the information in GAOs report in view of            ommendation would eliminate the inconsistency be-
proposed water pollution legislation regarding the fi-        tween the periods covered by GAO’s audit reports and
nancing of municipal waste treatment facilities and the       by FDIC’s annual reports. ( , h d i t of Federal Deposit
problem of financing industrial pollution control,            Insurance Corporation for the Year Ended June 30,
   On July 2, 1970, the Code of Federal Re\gulations          1970, B-114831, Feb. 18,1971.)
was amended to provide that no Federal grant may be
                                                                 16. Proposed repeal of requirenient that the Comp-
made for any waste treatment system designed to treat         troller General make an annual audit of the General
industrial wastes only, and that, if industrial wastes are    Supply Fund.-GAO submitted for the consideration
to be treated in a joint municipal-industrial system, in-     of the Congress a legislative proposal recommending
dustry would have to pretreat those wastes which              that section 109(e) of the Federal Property and Ad-
could be harmful to the’system.                               ministrative Services Act of 1949 be amended to dis-
   While the full import of the regulations is not clear,     continue the specific statutory requirement that the
they do not fully cover the matters GAO suggested             Comptroller General make an annual audit of the
for consideration by the Congress. (Federal Grants            General Supply Fund.
.4warded for Constructing Waste Treatment Facilities             It is believed that the Accounting and Auditing Act
Which Benefit Industrial Users, B-166506, May 8,              of 1950 and the Budget and Accounting Act, 1921,
1970.)                                                        provide ample authority for the General Accounting
40
                                                                             ASSISTANCE TO THE CONGRESS

Office to review the General SuppIy Fund when detef-         (Need to Revise Fees for Services Provided by the Im-
mined necessary or when requested to do so by the            migration and Naturalization Service and US.Mar-
Congress. I n the absence of the specific audit require-     shals, B-125051, Oct. 7, 1969.)
ments of the 1949 act, GAO would have the same                  2. Proposed change in financing Bureau of the Mint
freedom of choice under the broad general audit au-          operations.-GAO rccommended in a 1959 report on
thority given to it under the 1950 and 1921 acts in se-      its audit of Bureau of the Mint operations that the
lecting the period and scope of financial reviews that it    Congress consider making a change in the method of
has in other areas in the General Services Administra-       financing the Bureau’s operations. Although a bill
tion and in other agencies in general.                       which would have changed the method of financing
   Bills to implement the recommendation were intro-         was introduced in 1967, it was not enacted into law.
duced in the 90th and 91st Congresses but were not
                                                                bAO later suggested that the Secretary of :he
enacted. A similar bill, S. 1022, 92d Congress, was          Treasury propose to the Congress that a change be
introduced in March 1971, but had not been reported
                                                             made in the method of financing the operations of the
out of committee as of June 30,1971.
                                                             Bureau of the Mint which would permit greater flexi-
                                                             bility in planning coin manufacturing operations and
Restatement of Legislative Proposals to                      simplify financing procedures. It was suggested also
Heads of Departments or Agencies                             that the proposal provide for affirmative congressional
                                                             action normally associated with the appropriation
   1. h’eed t o revise fees for seruices prouided by U S .   process.
marshals.-GAO estimated that the fees charged by
                                                                The Department recognized the need for improved
U.S. rr,arshals during fiscal year 1968 for serving proc-
                                                             financing of the Bureau’s operations, but believed that
esses fGr private litigants were insufficient by about
                                                             it should defer submitting any legislative proposal on
$470,000 to recover costs. A recommendation was
made that the Department of Justice consider propos-         the matter until the then new Director of the Mint
ing to the Congress legislation authorizing adminis-         had had an opportunity to review the entire Bureau
trative adjustment of marshals’ fees or revising the         operations and until several proposed changes in the
fees, which are presently prescribed by law. Although        coinage laws and other acts affecting the Bureau’s
the Department informed GAO in April 1969 that it            operations had been enacted. (Financial Management
was considering proposing such legislation, it had not       of Bureau of the Mint Operations Needs Improve-
proposed such legislation through June 30, 1971.             ment, B-144877, Jan. 16,1970.)




                                                                                                                41
Larry A . Jobe, Assistant Secretary of Commerce for Administration, accepts congratulations for
    his leadership role in improving and obtaining G A O approval of the designs of the Depart-
    ment of Commerce accounting systems. A n informal celebration of this accomplishment
    was held at the Department o f Commerce on J u n e 18, 1971. From the left: Comptroller
     General Elmer B. Staats; Secretary o f Commerce Maurice H . Stans; M r . Jobe; and E. H .
    Morse, Jr., Director, O f i c e o f Policy and Special Studies.




Department of Commerce Financial Systems Staff with top departmental oficials and the Comp-
    troller General at informal celebration on June 18. From the left: Elmer B. Staats, Comp-
    troller General; Maurice H . Stans, Secretary o f Commerce; Eleanor Clark; Meir S. Gabbay,
    Chief, Financial Systems Staff; C . L. Harvill; Ben L . Brown; John J . Zych; Harry Kirst;
    W . R. Kuttner; June Williams; Joyce Cicala; and Larry A . Jobe, Assistant Secretary for
    Administration.
                                                                            ASSISTANCE T O T H E AGENCIES

                                                           Congressional Study of
                                                           Accrual Accounting
                                                              The staff of the House Appropriations Committee
                                                           completed, in fiscal year 1971, its study into whether
                                                           Government-wide application of accrual accounting
                                                           was worthwhile and the cost of changing expenditure
                                                           recording and reporting systems to the accrual basis.
                                                           The study was an outgrowth of GAO fiscal year 1970
                                                           appropriations hearings. The report of the study dis-
                                                           closed serious problems associated with the develop-
CHAPTER THREE                                              ment of accrual accounting as a tool of management,
                                                           a measure of budget results, and an economic indicator.
                                                              The report strongly indicated that conversion of the
                                                           Government’s accounting systems to the accrual basis
                                                           and maintenance on that basis would be costly in rela-
                                                           tion to the benefits. I t suggested that formal accrual
ASSISTANCE IN IMPROVING                                    accounting be developed only fo,r Government agency
                                                           management needs, and that economic indicator needs
AGENCY MANAGEMENT                                          be provided by statistical or other techniques external
                                                           to the agencies’ formal accounting system. The report
PRACTICES                                                  also concluded that rather than require approval of
                                                           accounting systems, the law should provide for ap-
                                                           proval of entire financial management systems.
Summary of Assistance Provided                                The report focuses on many of the p~oblemsand
                                                           sets forth some of the crucial issues facing those con-
   An important part of the work of the General Ac-
                                                           cerned with the luture direction of improvements in
counting Office is providing assistance to the agencies
                                                           financial management. As indicated below in the dis-
of the Government in bringing about greater effective-     cussion of the accrual accounting recommendations of
ness, efficiency, and economy in the conduct of their      the President’s Commission on Budget Concepts, this
programs and activities. This chapter describes GAO’s      report, together with information developed in GAO’s
work ( 1 ) in assisting agencies in establishing and       comprehensive studies of accrual accounting, will be
maintaining their financial management information         useful in chartinq the future course of accrual
systems and improving their related management             accounting in the Government.
practices and ( 2 ) in certain other management areas.
The work was performed by or in coordination with
GAO’s Office of Policy and Special Studies under the       Assistance in Improving
direction of Ellsworth H. Morse, Jr., Director, and        Financial Management
Frederic H. Smith, Deputy Director. An organiza-
tional chart of this ofice is presented on the following      GAO assists in the improvement of financial man-
                                                           agement of agencies by providing guidance in the form
page.
                                                           of accounting principles and standards, including re-
   Further assistance to agency management is dis-
                                                           quirements for the design of accounting systems, and
cussed in Chapters Four through Six with regard to
                                                           by assisting agency staffs in the development of ac-
findings and recommendations €or corrective or im-
                                                           counting systems. Further assistance is provided by par-
provement action resulting from audit work and in          ticipating in the leadership of the Joint Financial
Chapters Seven through Nine with regard to assist-         Management Improvement Program (JFMIP) ,assist-
ance in the areas of transportation, claims, and legal     ing in Civil Service Commission and agency training
services. Assistance to the Congress on its internal ac-   programs, and working on special projects.
counting and financial management is discussed in             Good budgeting and accounting provide more dis-
Chapter Two.                                               ciplined planning and control over the management

                                                                                                                43
ASSISTANCE T O T H E AGENCIES

                        OFFICE OF POLICY AND SPECIAL STUDIES



                                                DIRECTOR
                                            E. H. MORSE, JR.


                                            DEPUTY DIRECTOR
                                               F. H. SMITH
                                                           I

                                                                       PROCESSING POLICY
                  ASSOCIATE DIRECTOR
                       A. R. VOSS                                        DEPUTY DIRECTOR
                  ASS1STAN T DI RECTORS                                   E. J. MAHONEY
                       D. J. HORAN                                     ASSISTANT DIRECTORS
                     FRANK G E N T I L E                                    J. L. BOYD
                      R G. MEISNER
                        E. L. P A H L                                       H. J. MASON
                                                                           K. W. H U N T E R



                FIN ANCl AL MANAGEMENT
                                                                        SYSTEMS ANALYSIS
                   D E P U T Y DIRECTOR
                       D. BORTH
                  ASSOCIATE DIRECTOR             I                     ASSOCIATE DIRECTOR
                     E. T. JOHNSON
                 ASSISTANT DIRECTORS
                      H. R DAVIA
                    G. K. D e R Y D E R
                                                 t-
                                                 I
                                                                          K. E. MARMN
                                                                       ASSISTANT D I R E C T 0 RS
                                                                           H. B. GALVIN
                                                                           J. D. COMTOIS
                       F. VIs LYLE                                          T. M. RABUN
                    R W. MAYCOCK
                    R. J. RYAN, SR
                    I. ZUCKERMAN




           I     ACTUARIAL SCIENCE                                          RELATIONS




            ,
                  ASSISTANT DIRECTOR
                       H. L. FEAY
                                                tI
                                                           I
                                                                       ASSISTANT DIRECTOR
                                                                        M. A. DITTENHOFER




                                   I
                                   I
                                           SPECIAL PROJECTS                 I
                                           ASSOCIATE DIRECTOR
                                             W. L. C A M P F I E L D
                                   I


                                                                                         JUNE 30, 1971

44
                                                                              ASSISTANCE TO THE AGENCIES

of resources and better information for managers on          of the President’s Commission on Budget Concepts.
results attained in relation to those planned. While it is   One study was of the significance of variations between
not possible to directly measure dollar savings attribut-    accrued expenditures and Federal disbursements on 50
able to good accounting systems, such systems can            grants-in-aid to State and local governments and uni-
make a significant contribution to the effective use of      versities and the other of accounting for and report-
resources by either making it possible to reduce actual      ing on accrued revenues and expenditures in the De-
expenditures or attaining greater accomplishments            partment of Defense and six of the larger Federal civil
with available resources.                                    agencies.
                                                                The grant study indicated that:
Prescribing Accounting Principles                                Use of Federal disbursement data to represent
and Standards                                                  Federal accrued expenditures for grant programs
                                                               would not significantly distort either the Treasury
   An important accounting responsibility assigned to          Department’s annual reports of total Government
the Comptroller General by law is the prescribing of           expenditures (outlays) on the accrual basis or the
accounting principles and standards to be followed             yearly budget surplus or deficit when computed on
by the executive agencies in establishing and main-            the accrual basis.
taining their accounting systems. The first comprehen-           The use of Federal disbursement data for that
sive statement of these principles and standards, issued       purpose would, however, somewhat distort the
in accordance with this requirement, was released in           Treasury Department’s monthly accrual-based com-
1952.                                                          parative statement of budget revenues and outlays
   The establishment of accounting principles and              and budget surplus and deficit.
standards is not a one-time action, however, and revi-           Accrued expenditures for some departments and
sions and additions must be made from time to time             some grant programs would be significantly dis-
to give effect to lessons learned from experience, evo-        torted in both the annual and monthly reports.
lution in financial management concepts, and the                The study of accounting for and reporting on ac-
requirements of newly enacted legislation. A complete        crued expenditures and revenues confirmed the con-
restatement of the accounting principles and stand-          tinuation of the major problems in accounting on the
ards prescribed by the Comptroller General was issued        accrual basis for certain tax revenues and constructive
on June 30, 1965, as Title 2 of the General Accounting       delivery on procurements to the Government’s special
Office Policy and Procedures Manual for Guidance of          order, and concluded that, while there had been
Federal Agencies, and this restatement has been              marked improvements in the recording and reporting
amended from time to time.                                   of accrued expenditures and revenues, there still re-
                                                             mained many diverse problems bearing upon the relia-
Accounting Recommendations of the                            bility of some portions of the data.
President’s Commission on Budget Concepts                       The data developed in these two studies, together
                                                             with that in the report of the staff of the House Appro-
   T,he President’s Commission on Budget Concepts            priations Committee on its study of the usefulness of
recommended in 1967 that budget expenditures and             accrual accounting, will contribute materially to deci-
receipts be reported on an accrual basis instead of the      sions by the Comptroller General, the Director, Office
cash basis. Specific instructions to the executive agen-     of Management and Budget, and the Secretary of the
cies for implementing the Commission’s recommenda-           Treasury-the Government’s three principal financial
tions were issued by the Bureau of the Budget (now           officials-of the extent to which accrual accounting
the Office of Management and Budget) and the De-             will be employed in Government accounting systems
partment of the Treasury. Necessary refinements were         in the future.
also made in the principles sand standards of account-
ing for Federal agencies prescribed by the General
                                                             Cooperative Work in the Development
Accounting Office.
                                                             of Accounting Systems
   During the year the GAO completed two compre-
hensive studies for the Central Agency Steering Com-           To provide further assistance to the departments and
mittee on Implementation of the Recommendations              agencies in developing and submitting acceptable

                                                                                                                  45
A S S I S T A N C E TO THE AGENCIES

statements of accounting principles ,and standards and          Assisted the Air Force in making control improve-
systems designs, the Comptroller General provided             ments in its Air Reserve Pay and Allowance System
them with detailed guidelines whiclh were issued in           and furnished guidelines for submitting the system
November 1970.                                                design for approval.
   Under the arrangements made in fiscal year 1970              Reviewed a study report of an Ad Hoc Committee
to restrict GAO approval of agency accounting sys-            on Family Housing Cost Accounting to suggest im-
tems to ( 1 ) principles and standards and ( 2 ) general      provements in the system to be su’bmitted to GAO
systems designs, GAO devoted substantially more man-          for approval.
power to assisting agencies in the development of im-
proved accounting systems and related aspects of finan-
cial management. In many cases the cooperative work        Review and Approval of Accounting
consisted of active GAO participation with agency staff    Principles and Standards and
in systems development work. In others, advice and         Proposed Systems Designs
assistance were furnished on a consulting basis as
                                                              GAO’s review and approval activities for the civil
needed.
                                                           and international departments and agencies during
   In the civil and international departments and agen-
cies, in addition to the formal review and approval        fiscal year 1971are summarized :
actions related in the following section, GAO staff was                                                              Systems desions
                                                                                                         Principles
actively engaged at yearend with agencies in develop-                                                       and     Cmnplete Segments
                                                                                                         standards syatems of sustems
ing 23 systems designs which are expected to be sub-
                                                           Under review, July 1, 1970.. . . . .               13       18          9
mitted for formal approval in the near future.             Submitted for review. . . . . . . . . . . .         7       10          1
   In the Department of Defense, GAO :                     Approved .....................                     12        9          6
                                                           Returned or withdrawn. . . . . . . . .              I        5          3
     Continued to actively assist the Office of the Sec-
                                                           Under review, June 30, 1971. . . . .                7       14          1
  retary of Defense and the military services in the
  development of the system design for the Joint Uni-                        (See Appendix, Section IV)
  form Military Pay System, preparatory to submis-
                                                              At June 30, 1971, 80 complete accounting systems
  sion of the system far approval. Assistance included
  participation in the development of automated audit      designs had been approved out of a total of 148 such
  programs, and in the design, testing, and evaluation     systems in the civil and international departments and
  of system components.                                    agencies. Progress in approving accounting systems
     Provided cooperative assistance in developing the     over the past 5 years and the current status of effort
  design of the Department-wide accounting system          are depicted in the chart on the following page.
  for operations, including monitoring the efforts of         During fiscal year 1971, the Department of Defense
  the Air Force which made a test of the system.           submitted for approval the system designs for two in-
     Worked with the Navy Department accounting            dustrial fund accounting systems, which, when added
  improvement team on an active, day-to-day basis to       to the three systems under consideration at the be-
  implement the Department’s extensive accounting          ginning of the year brought the total under considera-
  improvement program which is being carried out           tion during the year to five systems.
  with the assistance of a national public accounting         Two submissions were returned during this period,
  firm.
                                                           one because of proposed changes which would ma-
     Began to work cooperatively with officials of the     terially affect the design and the other for further
  Office of the Assistant Secretary of Defense (Comp-      development. At the close of the year, GAO had three
  troller) in a project to develop a handbook of ac-       submissions under consideration including the design
  counting principles and standards to be applicable       of an industrial fund accounting system, an accounting
  throughout the Department of Defense.                    system segment design, and one statement of principles
     Assisted the Defense Supply Agency in determin-       and standards.
  ing the sufficiency af system design documentation          The Department does nat know the number of com-
  to be provided for GAO review and formal approval        plete accounting systems and segments of systems in
  of the Agency’s Standard Automated Materiel Man-         use in its aktivities which require approval of the Comp-
  agement System.                                          troller General. However, it has indicated that appro&
46
                                                                                                    ASSISTANCE TO THE AGENCIES

      NUMBER OF ACCOUNTING SYSTEMS SUBJECT i o APPROVAL,                            Joint Financial Management
      APPROVED, SUBMITTED FOR APPROVAL AND UNDER ACTIVE                             Improvement Program
        DEVELOPMENT AT END OF FISCAL YEARS 1966 TO 1971
    N U M B E R OF SYSTEMS
    160
                                                                                       The Joint Financial Management Improvement
                               154
                                                                                    Program (JFMIP) is the principal Government-wide
    150                                                              148
                                                              146                   means for coordinating agencies' financial manage-
    140              5YSTEMS DESIGNS SUBJECT
                          TO APPROVAL
                                                        143                         ment improvement activities. Leadership of the pro-
    130
                                                                                    gram is provided jointly by the Comptroller General
                                                                                    of the United States, the Secretary of the Treasury,
    120
                             DESIGNS IN ACTIVE DEVELOPMENT
                                                                                    the Director of the Office of Management and Budget,
    110
                             DESIGNS SUBMITTED UNDER REVIEW   e'
                                                                                    and the Chairman of the Civil Service Commission.
    100
                             DESIGNS APPROVED                                          A Steering Committee comprised of a representa-
                             SYSTEMS IN OPERATION APPROVED                          tive of each of the central agencies coordinates the
     90
                                                                                    Joint Program. The Committee meets regularly to con-
     ao                                                                             sider problem areas, arrange for and supervise work
     70
                                                                                    projects, and evaluate financial management progress
                                                                                    throughout the Government. The principals of the
     60
                                                                                    program meet from time to time to review overall
     50                                                                             reports of agency progress and to provide broad pro-
     40                                                                     NDEE
                                                                            CTlVI   gram guidance to the Steering Committee.
                                                                            EDEV
                                                                            PMEN       The principal JFMIP events and activities during
     3D
                                                                                    the year are described below.
     20
                                                                                       The Steering Committee met with the top financial
     10                                                                             management personnel of each of the agencies listed
      0                                                                             below to review their progress in developing financial
                                                              1970   1971
                                                YEARS                               management systems. During these meetings emphasis
    mately 40 different types of industrial fund accounting                         was given to the need for managing programs in terms
    systems will be submitted, as well as other systems                             of performance and costs and for designing accounting
    applicable to such areas as procurement, research and                           systems to meet management needs.
    development, operations, and stock funds.                                            Peace Corps (now part of ACTION, a new
       After approval of a systems design, GAO has a con-                                  agency)
    tinuing responsibility to follow up on the timely im-                                Federal Bureau of Investigation
    plementation of the approved design and to provide                                   Department of Agriculture
    consulting assistance on system refinements. If GAO                                  Agency for International Development
    finds that the system is notibeing promptly implemented                              Civil Service Commission
'   as planned or has been adversely modified, then                                      National Aeronautics and Space Administration
    cooperative action is taken with the agency to make                                  National Science Foundation
    the needed corrections. If those corrections are not                                 Office of Economic Opportunity
    made, GAO will withdraw approval of the design.                                      Department of the Treasury
                                                                                         United States Information Agency
    Special Report on Accounting Systems
                                                                                       During the year, the Steering Committee began pub-
    Development Problems and Progress
                                                                                    lishing a periodic JFMIP News Bulletin as a means of
      In December 1970 the GAO issued its second annual                             keeping Federal agencies currently informed about fi-
    report to the Congress summarizing its findings on                              nancial management improvement activities in the
    problems and progress relating to improvements of                               Government.
    Federal agency accounting systems during calendar                                  I n addition, the JFMIP and several organizations
    year 1969. (See Appendix, Section I, Item 160.) The                             representing State and local governmental interests
    House Government Operations Committee, in its re-                               sponsored the first State-Federal Financial Manage-
    port dated March 5,1968 (H. Rept. 1159,gOth Cong.,                              ment Conference in October 1970. This conference
    2d sess.) , recommended that such a report be made.                             was attended by over 200 representatives of various

                                                                                                                                       47
A S S I S T A N C E T O THE A G E N C I E S

 levek Df Government including: (1) State treasurers,          recommended procedure would simplify agency appro-
 budget officers, comptrollers, auditors, legislative fiscal   priation accounting.
 review personnel, and governors’ financial assistants           More detailed information about accomplishments
 and ( 2 ) Federal agency officials. The purposes of the       and activities under the JFMIP will be found in the
 conference were to improve intergovernmental rela-            separately published annual progress reports on the
 tionships in the financial management areas and to            program.
 reduce the misunderstandings resulting from the in-
 volvement of a number of Federal agencies having
 different objectives in various State and local govern-       Intergovernmental Programs
 ment programs. Presentations were made by top Fed-
                                                               and Operations
 eral Government and State officials. Follow-on work-
 shops permitted Federal and State officials to disc&
                                                                  GAO continued to provide technical guidance and
mutual problems in detail and plan methods for stream-
                                                               assistance to State and local audit staffs and to develop     ,
lining the grant-in-aid process. A report of the pro-
                                                               a body of audit standards to govern the audit of govern-
ceedings was distributed to all conference attendees.
                                                               mental programs, particularly those conducted by
     Another conference is planned for February 1972.
                                                               State and local governments with Federal financial            :
 I t is hoped that this second meeting will further develop
                                                               assistance.
the relationships and improve the communications be-
                                                                  In providing assistance to State and local organiza-
 tween the financial officials of Federal, State, and local
                                                               tions GAO staff members have :
governments.
     A task force chaired by a representative of GAO was            Presented technical papers for State and local
organized to study the feasilbi3lity of developing a single      auditors at meetings of the :
Government-wide computerized payroll system appli-                  National Legislative Conference
cable to processing all civilian employee payrolls. The             National Association of State Auditors, Comp-
study group met with 14 agencies to gather informa-                    trollers and Treasurers
tion on existing systems. At yearend the group was                  Municipal Finance Officers Association
preparing its report. Preliminary findings indicate th,at           Institute of Internal Auditors
complete centralization, although technically feasible,             Arranged for a series of workshops for State audi-
probably would not be practical because payroll data             tors, dealing primarily with performance auditing.
in many cases is used for cost accounting and other                 Assisted in the developmental effort of audit staffs
accounting purposes that could not be adequately                 in certain States.
served by a single Federal payroll system.                          Conducted or arranged for the presentation of
     A bill, based on JFMIP draft legislation, was intro-        three courses for State auditors through the auspices
duced in the Congress in May 1971 to provide for self-           of the Interagency Audit Training Center, adminis-
insurance ‘by the Federal Government of military and             tered by the Department of Commerce.                        ,
civilian personnel who are charged with accountability            In addition, substantial progress was made during
for public funds or p ~ b l i cproperty. The proposed          the year in developing a set of auditing standards for
legislation, still under congressional consideration at        governmental programs. This work was done under
yearend, would repeal Public Law 84-323 which re-              GAO leadership and largely by an interagency work
quires pertinent agency heads to purchase fidelity bonds       group organized in February 1970, composed of mem-
forthe affected accountable employees. It is estimated         bers of the Federal departments and agencies with
the proposed legislation would result in net annual            large grant programs and part-time consultants from
savings to the Federal Government of as much as                States, local governments, and universities. It is
$190,000.                                                      planned to complete and publish these standards during
    The Steering Committee is also dra,fting a legisla-        the next fiscal year. T,hereafter a substantial effort will
tive proposal to provide for merging agencies’ prior           be needed to generate acceptance, arrange for training,
year appropriation accounts with the current year ap-          and carry out other activities to upgrade the quality of
propriation accounts for each appropriation title. This        auditing of governmental programs.
48
                                                                                     ASSISTANCE TO THE AGENCIES

    Automatic Data Processing                                        System documentation-to      determine whether
                                                                   current and complete documentation was
       The use of data processing services by the Federal          maintained.
    Government has increased very rapidly. At June 30,               Use of computer techniques to audit computer-
    1961, there were 730 general-purpose computers in use          based systems-to assist other Government auditing
’
    in the Government. By June 30, 1971, this nurriber had         organizations in auditing computer-based systems.
    increased to about 5,500 computers.                           (See Appendix, Section I, Item 202.)
       The Federal Government now spends over $2 billion            GAO continued to work with the Civil Service Com-
    annually for the purchase, lease, and operation of aut-      mission and the internal audit staffs of the Government
    matic data processing equipment. The use of this equip-
                                                                 to provide a training program for auditing in an auto-
    ment to carry out Federal Government functions has           matic data processing environment. This course is now
    had a significant impact on the operations of almost
                                                                 being offered by the Civil Service Commission to audi-
    every major agency of the Government.                        tors of all Federal agencies.
       I n the Department of Defense, the principal applica-
                                                                    As a result of its continuing studies in this field, GAO
    tions are in command and control, supply and logistics       made recommendations for improvements in the man-
    programs, and financial management operations. In
                                                                 agement and administration of ADP facilities on a
    these activities computer systems are processing millions    Government-wide basis. Studies are now being made
    of transactions monthly. Numerous small-scale com-
                                                                 as a followup to earlier studies which were the subject
    puters are being used throughout the Department fop
                                                                 of comprehensive reports to the Congress in June 1958,
    base-level operations and extensive communication
                                                                 December 1960, March 1963, April 1964, August 1965,
    facilities are being used to transmit data between using
                                                                 April 1968, and June 1969. Copies of these reports were
    organizations and computer centers.
       I n the civil agencies, many large-scale paperwork        widely distributed to Government agencies to assist in
    operations have been converted to automatic data             the development of ADP programs throughout the
    processing systems. Important examples are found in          Government.
    the Treasury Department, the Social Security Admin-             The latest report in this series, entitled “Acquisi-
    istration, the Veterans Administration, the Department       tion and Use of Software Products for Automatic Data
    of Agriculture, the Postal Service, and the Census           Processing Systems in the Federal Government,’’ was
    Bureau.                                                      issued on June 30, 1971. This report pointed out that
       GAC) continued to provide advice and assistance to        many changes in marketing practices by computer
    Federal agencies on questions involving the acquisition      manufacturers have occurred during the past few
    and use of automatic data processing systems. GAO            years. These included the separate pricing (unbund-
    reviewed with agency officials deficiencies related to       ling) of software products, the introduction of diverse
    the planning for and use of such systems disclosed           contractual arrangements for acquiring software, the
    during its audits. Currently, GAO is conducting a
                                                                 advent of general-purpose proprietary software pack-
    general survey of ADP activities in civil departments
                                                                 ages, and the licensing of the use of software products
    and agencies throughout the Federal Government to
    examine the overall management and control of ADP            with overly restrictive provisions. The Federal Govern-
    activities, m d the participation of internal audit groups   ment has had no centrally guided or unified approach
    in ADP matters.                                              for dealing with these changes. (See Appendix, Section
       I n response to the growing need for effective and        I, Item 198.)
    efficient means for auditing computer-based systems,            Many broad management problems were found dur-
    GAO conducted a number of special studies to explore         ing the GAO study. For the most part, Federal users
    the impact of computers on auditing activities in the        acquired their needed computer software without cen-
    Federal Government. These studies dealt primarily            tralized direction or guidance. As a result, they:
    with computer operations that require input data to be            Procured computer programs unnecessarily since
    coded and collected into groups or batches for proc-           they were already available at other data processing
    essing. Particular attention was devoted to :                  locations within the Government.
        Internal auditing of computer-based systems-to
      determine whether effective independent reviews and          1 Software is a term that has come into use to idenkify computer
                                                                 programs, procedures, and related documentation and to distin-
      appraisals were being made.                                guish such features from the hardware components of the system.

                                                                                                                               49
A S S I S T A N C E TO T H E AGENCIES

        Procured software products with overly restric-         In addition, GAO recommended that, pending the
     tive use provisions and thereby required additional     issuance of more specific policy guidance, the opera-
     software procurements in multiuse instances.            tional and cost factors described in this report be used
        Acquired similar computer programs at varying        by Federal agencies in reaching decisions on software
     prices within a relatively short period of time.        needs.
        Deprived the Government of an opportunity to            GAO reviewed the Government-wide program for
     benefit from quantity procurement.                      acquiring ADP equipment envisioned by Public Law
        Used various criteria and techniques for selection   89-306. Under this law, the General Services Admin-
     and evaluation of computer software which resulted      istration (GSA) is responsible for carrying out a co-
     in the acquisition of many variations (some being       ordinated Government-wide program for the efficient
     better than others) of the same product.                and economical acquisition of general purpose ADP
        Duplicated unnecessarily technical evaluations of    equipment. GAO’s review of progress under the pro-
     computer programs.                                      gram showed, however, that the Government was not
   GAO believes that, to better manage the vast re-          making maximum use of funds available for acquisi-
sources invested in data processing facilities, the Fed-     tion of ADP equipment, primarily because (1) multi-
eral Government needs a master plan. Such a plan             year equipment leases were inhibited by appropriation
would include agreed upon goals or objectives against        limitations and (2) agencies continued to make pur-
which quality and progress could be measured. I t            chase decisions on the basis of their individual funding
would provide resource planning, implementation              capabilities and needs.
procedures, and appraisal and feedback procedures.              Also, most of the Government’s equipment was being
  GAO recommended that the Director, Office of               obtained from system manufacturers under negotiated
Management and Budget, arrange for the formulation           contracts through purchases or short-term rentals. GAO
of this master plan and for the structure needed to          estimated that agencies having short-term leases could
implement it. GAO recornmended also that OMB                 have saved up to $155 million over a 5-year period if
Circular A-54 be amended to include specific policy          they had taken advantage of contracts that were, in
guidance to user agencies for the acquisition, manage-       effect, 1-year contracts with options to renew, or if
ment, and use of software throughout the Federal             they had had authority to enter into multiyear leases.
Government .                                                    GAO recornmended that GSA assure that the
   Relative tu the guidance and leadership necessary         agencies obtain ail possible benefits under their con-
for the procurement of software, GAO recommended             tracts, that the advantages of increasingly available
further that the:                                            competition be obtained both in purchasing and in
                                                             leasing, that additional capital for purchasing equip-
        Director, Office of Management and Budget,
                                                             ment for other agencies’ use be requested for GSA‘s
     provide coordinated management and central policy
                                                             ADP fund, and that GSA and the Office of Manage-
     direction to users for determining the most economi-
     cal and efficient means for obtaining computer          ment and Budget Bssure that purchases are made on
     software.                                               the basis of the best buy for the Government as a
        Administrator of General Services employ the         whole rather than for the individual agencies. GAO
     single-purchaser concept, use formally advertised       sugyested also that the Congress might wish to consider
     procarement contracts, strive to obtain nonrestric-     granting authority to GSA that would enable those
     tive or license-free contractual arrangements for       agencim not otherwise able to do so to achieve the
     software with rentals based on use, consider buying     savings available from multiyear leasing instead of
     outright software products that would be widely         short-term leasing.
     used throughout the Government, and maintain an            GAO also reviewed the manner and extent to which
     inventory of computer software.                         Government-owned ADP equipment which was excess
        Director of the National Bureau of Standards         to agencies’ needs was being redistributed for use by
     establish and maintain a reference index of computer    other agencies in lieu of their purchasing or leasing
     programs, make detailed technical evaluations of        other ADP equipment. G.40 found instances where
     computer programs for use by all Federal ADP in-        excess Government-owned equipment was not being
     stallations, and promulgate Federal standards for       used although, at the same time, similar equipment
     computer languages and program documentation.           was being rented. Savings of $920,000 could have been
50
                                                                             ASSISTANCE TO T H E AGENCIES

realized if excess equipment had been used in place         that many revisions of administrative regulations and
of the rented equipment. Also, potential purchase           instructions were necessary.
credits of $760,000 that could have been retained were         Another aim of GAO was to assist agencies in im-
lost in other transactions. GAO recommended that            proving their collection procedures and debt opera-
GSA improve its ADP management information sys-             tions. This included assistance in setting up actual
tem reports, emphasize use of the system to identify        steps to follow in the collection process in connection
opportunities to redistribute excess equipment, and dis-    with locator actions, demand letters, financial informa-
seminate information on available purchase credits.         tion, etc. GAO also furnished guidelines in soliciting
GSA advised of steps it had taken or would take to          and determining acceptability of offers in compromise.
implement GAO’s recommendations. (See Appendix,                I n March 1971, the chairman of the Legal and
Section I, Item 199.)                                       Monetary Affairs Subcommittee of the House Commit-
                                                            tee on Government Operations was informed, in re-
                                                            sponse to his request, that GAO was continuing its
Review$ of Financial                                        review in additional agencies and that:
Management Systems                                               A followup examination of the debt collection
                                                              activities at the Army Finance Center, Indianapoiis,
   The GAO, in discharging its statutory audit respon-        Ind., showed a substantial improvement in its debt
sibilities and as a matter of generally accepted auditing     collection.
practice, reviews and evaluates the effectiveness of de-         The agencies w!iose activities had been reviewed
partmental and agency systems of internal control,            appeared now to have a much keener awareness
including internal audit.                                     of their responsibilities under the Federal Claims
   GAO reports on these reviews contain many recom-           Collection Act.
mendations for improvement in the work of the in-                Agencies generally had been receptive to GAO’s
ternal audit staffs, for increased coverage of program        recommendations to improve their regulations and
operations, or for internal audit of activities not pre-      collection operations.
viously covered in the agencies’ internal audit                  One of the biggest problems remaining was to
programs.                                                     insure that each of the agencies allocated a reason-
                                                              able portion of its resources to carry out its respon-
                                                              sibilities under the act and the joint standards.
Claims Collection
   I n July 1970 GAO issued its first report to the Con-
                                                            Transportation Management
gress summarizing its findings on the progress and
problems in implementing the Federal Claims Collec-            GAO authorized agency heads to (1) use imprest
tion Act of 1966. (See Appendix, Section I, Item 230.)      funds for the payment of transportation charges not
This act, which became effective on January 15, 1967,
                                                            exceeding $25 on domestic freight shipments moved
was the first general statutory authority giving Federal
                                                            on commercial bills of lading and ( 2 ) redelegate their
agencies broad administrative power to compro’mise
and terminate collection action on claims.                  discretionary authority to approve the use of commer-
   At the time of its report GAO had made reviews           cial forms and procedures for such shipments. These
in seven agencies. GAO’s purpose was to help agencies       authorizations were consonant with recommendations
conform their internal regulations to the act and to        of the Joint Agency Transportation Study group which
the implementing standards promulgated jointly by           completed a comprehensive study of agency transpor-
the Comptroller General and the Attorney General            tation practices in September 1970. (See Chapter
of the United States pursuant to the act. GAO found         Seven, p. 118.)




                                                                                                                 51
                                                                                               C I V I L OPERATIONS

                                                              agencies in the executive branch, its findings, and
                                                              agency comments and action taken on its suggestions
                                                              and recommendations for improvement in their opera-
                                                              tions. Detailed descriptions of findings and recom-
                                                              mendations in all the civil departments and agencies
                                                              in the executive branch are contained in Section I of
                                                              the Appendix.
                                                                 Comments on GAO’s work in the civil departments
                                                              and agencies in cooperating in the improvement of their
                                                              accounting systems and in reviewing those systems
                                                              and approving them when deemed to be adequate and
                                                              in conformity with the principles and standards for
CHAPTER FOUR
                                                              accounting prescribed by the Comptroller General are
                                                              included in the preceding chapter.


                                                              Department of Agriculture
AUDIT OF CIVIL OPERATIONS                                        Fourteen reports were submitted to the Congress
AND PROGRAMS                                                  on reviews of Department of Agriculture operations
                                                              other than international operations which are discussed
                                                              elsewhere in this report. Ten of these reports were
General                                                       submitted to the Congress as a whole and four were
                                                              submitted to Memibers of Congress. In addition, 28
   The audit work described in this chapter was per-          reports were issued to Department or agency officials.
formed by or under the direction of GAOs Civil                Selected activities of the major constituent agencies of
Division which has overall responsibility for carrying        the Department were reviewed by GAO with effort
out all audit work in the civil departments and agen-         divided among rural development activities, forestry
cies of the Federal Government; the Corps of En-              and conservation activities, marketing and consumer
gineers (Civil Functions), Department of the Army;            services activities, farm program a’nd commodity ac-
and the District of Columbia Government, other than           tivities, agricultural research and education activities,
that relating to international activities and charges for     and departmental administrative and financial man-
transportation, which are the responsibility of other         agement activities.
divisions. The Civil Division is under the supervision           Summaries of the principal matters discussed in the
of A. T. Samuelson, Director, and Gregory J. Ahart,           reports submitted to the Congress follow.
Deputy Director. An organization chart of the Civil              GAO made a selected review of payments made for
Division appears on the following page.                       diverting land from the growing of feed grains to an
   During fiscal year 1971 the General Accounting             approved conservation use under the feed grain pro-
Office submitted 216 reparts to the Congress on reviews       gram administered by the Agricultural Stabilization
of activities of the civil departments and agencies of        and Conservation Service (ASCS) , The review, made
                                                              to ascertain whether the diversions were aiding in the
the executive branch and of the legislative and judicial
                                                              accomplishment of program objectives, was confined to
branches. Of these reports, 97 were submitted to the
                                                              areas undergoing urbanization.
Congress as a whole and 119 were submitted to corn-
                                                                 A sizable portion of the payments tested was for
mittees, officers, or Members on reviews made in re-
                                                              land used, or designated for use, for such nonagri-
sponse to their specific requests. In addition, 209 reports   cultural purposes as housing, commercial development,
were submitted to department or agency officials. A           and recreation. Since such use ruled out the growing
list of these reports is included in Section I11 of the       of feed grain or was inconsistent with crop production,
Appendix.                                                     the payments did not contribute to the control of pro-
   The following sections of this chapter describe briefly    duction-the principal objective of the diversion pay-
GAO’s audit work in the major civil departments and           ments. Also, the payments did not aid in conserving
                                                                                                                    53
C IVI L 0 PE RAT ION S

                                                                       CIVIL DIVISION

                                                                               DIRECTOR
                                                                          A.   T. SAMUELSON

                                                                          DEPUTY DIRECTOR
                                                                               G.   I. AHART


                                                                                                   P. CHARAM                  J . D. H E L L E R          I.    D. MARTIN
                              TECHNICAL STAFFS AND
                               SPECIAL ASSIGNMENTS                                                 0. K. C R O W H E R        W. B. HUNTER                F. M. MIKUS
                                                                                                   W. L. ELMORE               F. D. L A Y T O N           M. A. MYERS
           L. K. GERHARDT                               0. D. McEOWELL                             DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE,
                                                                                                      EXCEPT OFFICE O F EOUCATION
           L. A. NELSON                                 H. PICHNEY
                                                                                                   AMERICAN B A T T L E MONUMENTS COMMISSION
           G. H. STAPLES                                J. A. VlGNALl                              RAILROAD RETIREMENT BOARD
           J. C FENTON                                  R 1 . WOODS                                SELECTIVE SERVICE SYSTEM
                                                                                                   U. S. C I V I L SERVICE COMMISSION
           R S LINDGREN
                                                                                                   VETERANS ADMINISTRATION
                                                                                                   GORGAS MEMORIAL INSTITUTE OF TROPICAL
                                                                                                     AND PREVENTIVE MEDICINE, INC.




           I. M. CRAWFORD          E.      MESSINGER       W. L. RUSS                              H. ESCHWEGE           A. L. PATTERSON, JR.             F. K. RABEL
           C. P. McAULEY                                   D. F. STANTON                           M. E. HENIG           G. D. P E C K                    H. L. STUGART

           DEPARTMENT OF JUSTICE                                                                   DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE-
           D E P A R T M E N T O F THETREASURY                                                       OFFICE OF T H E SECRETARY-HEAD START PROGRAM
                                                                                                     OFFICE OF EDUCATION
           F E D E R A L DEPOSIT INSURANCE CORPORATION
                                                                                                   OEPARTMENTOFLABOR
           FEDERALHOME L O A N B A N K BOAROAND
               CORPORATIONS SUPERVISED                                                             FEDERAL MEDIATION AND CONCILIATION SERVICE
           REGULATORY AGENCIES                                                                     NATIONAL LABOR RELATIONS BOARD
           T A X COURT O F THE UNITED STATES                                                       NATIONAL MEDIATION BOARO
           UNITED STATES T A R I F F COMMISSION                                                    EXECUTIVE OFFICE OF T H E PRESIOENT-
                                                                                                     OFFICE OF ECONOMIC OPPORTUNITY
           EXECUTIVE OFFICE OF THE PRESIDENT
             (EXCEPT O F F I C E OF ECONOMIC OPPORTUNITY)
           DISTRICT OF COLUMBIA GOVERNMENT
           LEGISLATIVE BRANCH
           JUDICIAL BRANCH
           SUBVERSIVE ACTIVITIES CONTROL BOARD




           M. HIRSCHHORN          W. D. CAMPBELL       J . P. ROTHER, J R.                         V. L. LOWE                                                  R. W. K E L L E Y
                                                                                                                              J. W. KEGEL
           A. N. BERRY            J. D. P E A C H                                                  8. E. B I R K L E                                       S S. SARGOL

           D E P A R T M E N T O F AGRICULTURE                                                     D E P A R T M E N T O F HOUSING A N D U R B A N DEVELOPMENT
           CORPS OF ENGINEERS ( C I V I L FUNCTIONS)                                               DEPARTMENT OF TRANSPORTATION
           DEPARTMENT OF T H E INTERIOR                                                            WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY
           FARM CREDIT ADMINISTRATION                                                              PANAMACANALCOMPANY A N D C A N A L Z O N E
           FEDERAL C O A L MINE BOARO OF REVIEW
           INDIAN CLAIMS COMMISSION
           INTERNATIONAL BOUNDARY AND WATER COMMISSION
             (US. SECTION1
           NATIONAL C A P I T A L PLANNING COMMISSION
           NATIONAL FOUNDATION ON T H E ARTS
              AND T H E HUMANITIES
           TENNESSEE V A L L E Y AUTHORITY



           M. A. NEUWIRTH               D. p. LEARY         F. MEDICO                              L. G. SMITH                                            J . K. SPENCER
           V. L. H I L L                                    D. C P U L L E N                       P. A. BERNSTEIN        E' A.                    lR   11. J . WESSINGER




                                                                               t
       1 DEPARTMENT OF COMMERCE                                                                1   ATOMIC ENERGY COMMISSION
           POST OFFICE DEPARTMENT                                                                  ENVl RONMENTAL PROTECTION AGENCY
           GENERAL SERVICES ADMINISTRATION                                                         NATIONAL AERONAUTICS A N 0 SPACE ADMINISTRATION
       1   RENEGOTIATION BOARD                                                                     NATIONALGALLERYOFART
           SMALL BUSINESS ADMINISTRATION                                                           NATIONAL SCIENCE FOUNDATION
           GOVERNMENT SERVICES, INC.                                                               SMITHSONIAN INSTITUTION (APPROPRIATED FUNDS)
       ~   APPALACHIAN REGIONAL COMMISSION




                                                                                                                                                                    JUNE 30, 1971



54
                                                                                                C I V I L OPERATIONS

land for future agricultural or related uses. In response     vanced the full amount of the loans although substan-
to GAOs recommendations, ASCS stated that action              tial portions were not spent by the associations for pe-
would be taken to insure that payments are not made           riods up to 20 months or longer. Also, FHA advanced
for the diversion of ineligible land and to recover any       grant funds to associations at times when the associa-
overpayments or unearned payments, where appro-               tions had substantial funds on hand.
priate. (See Appendix, Section I, Item 1.)                        Substantial savings in interest could be realized by
    GAO expressed its opinions on the financial state-        the Government if FHA advanced funds only as
ments of the Commodity Credit Corporation (CCC)               needed. GAO recommended that FHA follow this
for fiscal year 1970 in its report to the Congress on         principle under all of its loan programs involving bor-
its annual financial audit of the corporation. GAO            rowers’ associations and that it establish a system of
also reported on the manner in which CCC was carry-           monitoring to assure that advances are made in accord
ing out selected programs and activities. Two of the          with the borrowers’ actual needs. FHA drafted proce-
matters on which GAO commented are discussed                  dural revisions which it believed would meet the ob-
bebw .                                                        jectives of GAO’s recommendations. (See Appendix,
    CCC needed better information on rice production,         Section I, Item 43.)
sales, inventories, exports, and world market prices for          Loans and grants for the construction and/or im-
establishing weekly export subsidy rates. Following           provement of water and sewer systems were being
GAO’s proposals CCC began using additional infor-             made without adequately determining whether the
matian consistent with that which GAO proposed be             systems would have enough users to produce sufficient
obtained and changed its method of computing rice             revenues to pay off the loans. In February 1970, 123
export subsidies. I t was estimated that these changes        borrowers were delinquent $2 million on outstanding
would reduce such subsidies by $23 million in fiscal           loans of $42 million because they did not have a sufi-
year 1970.                                                     cient number of users to financially support the opera-
    Also, CCC needed to eliminate inconsistencies in           tions of their systems.
price-support regulations which gave producers an                  GAO believes that, in addition to verifying that
advantage of 15 to 20 cents a bushel if they placed            prospective borrowers have obtained a sufficient
 their wheat under price support at Gulf of Mexico             number of users, FHA should require the bor-
 ports rather than at inland points. CCC subsequently          rowers to obtain from the prospective users cash con-
adopted a different method of establishing price-sup-          tributions to cover the estimated cost of connecting
 port locational differentials for 1970 crops. (See Ap-        service lines to the borrowers’ facilities and enforceable
 pendix, Section I, Items 2 and 3.)                           agreements committing the users to pay minimum
     Loans made by the Farmers Home Administration             monthly rates to the borrowers whether they do or do
 (FHA) to rural organizations for financing the de-            not use the facilities. In response to GAO’s recom-
 velopment of water and sewer facilities, recreational         mendations, FHA stated that it expected to take ac-
 facilities, rural housing, and other projects have ex-        tions that would overcome the problems pointed up
 panded rapidly, totaling almost $1 billion at January 1,      in G.40’~report. (See Appendix, Section I, Item 44.)
 1970. Although FHA instructions require borrowers                 GAO had recommended after an earlier review of
 under certain circumstances to submit annual audit            FHA’s grazing loan program that FHA establish cer-
 reports prepared by qualified independent auditors for        tain minimum requirements to be met or exceeded by
 use by FHA in administering the loans, GAO found              borrowers before making loans to associations of farm-
 that the instructions were neither adequate nor prop-
                                                               ers and ranchers to acquire and develop grazing land.
 erly enforced.
                                                               I n a followup review, GAO found that, contrary to
     FHA stated that its instructions were being revised
                                                                revised instructions issued to its loan officials by FHA,
 generally in line with GL40s recommendations and
  that appropriate action would be taken where reviews         loans were still being made without requiring com-
  of independent auditors’ reports evidenced noncom-           pliance with the most significant factor in providing
 pliance with FHA requirements. (See Appendix, Sec-            reasonable assurance that the loans would be repaid.
  tion I, Item 42.)                                             That factor was the requirement for the sale of a mini-
     I n testing the timing of the disbursement of loan and     mum number of grazing units (rights to graze a spec-
 grant funds to borrowers’ associations to finance water        ified number of animals)-the         principal source of
 and sewer systems, GAO found that FHA generally ad-           income to an association.

                                                                                                                    55
      C I V I L OPERATIONS

         In reviewing the current financial status of 16 of the          Severe limitations placed on the use of motorized
       associations covered in its earlier review, GAO found          equipment in wilderness and similar areas by the
      that, as of January 1970, seven were delinquent in their        Forest Service, Department of Agriculture, and the
      loan payments and 12 suffered losses in 1969, point-            National Park Service (NPS) , Department of the In-
      ing to possible additional delinquencies.                       terior, result in additional costs and create other prob-
         In response to GAO's further recommendations,                lems in protecting and preserving the areas. The $100
      FHA changed its regulations to provide, among other             million estimated cost of planned construction and re-
      things, that no loan be closed until a district super-          construction of 18,000 miles of trails in three Forest
      visor had verified that all loan-closing conditions had         Service regions, for example, could be reduced, possi-
      been met. (See Appendix, Section I, Item 45.)                   bly by one-half, by using a small trail machine espe-
         GAO reported also that the financial statements of           cially designed for such work. NPS, too, could realize
      the Emergency Credit Revolving Fund-a fund used                 significant savings by using the trail machine. The
      by FHA to make emergency loans to farmers and                   Forest Service had also placed restrictions on using
      ranchers in natural disaster areas-did not present              motorized equipment for such activities as trail main-
      fairly the financial position of the fund at December 31,       tenance, bridge construction, and litter cleanup.
       1968, or the results of the fund's operations. FHA's ac-          GAO recognized that the use of motorized equip-
      counting procedures and practices did not provide for           ment is not compatible with an ideal wilderness concept
      full and accurate disclosure of the financial results,          and did not disagree with the Forest Service's concept
      adequate financial information for management pur-              of minimizing the use of such equipment. GAO be-
      poses, or reliable accounting data for reports required         lieves, however, that once decisions have been made to
      by the Treasury Department. These procedures and                construct trails, bridges, and other facilities and to
      practices applied also to FHA's other loan programs,            remove accumulated litter, that economy, convenience,
      and the financial reports on these activities may have          and other factors should be considered in deciding
      been similarly affected. FHA took steps to improve its          when to use such equipment. Inasmuch as the agencies
      system, and the Office of the Inspector General agreed          believed that their restrictions were consistent with the
      to review the action taken. (See Appendix, Section I,           intent of the Wilderness Act of 1964, GAO recom-
      Item 165.)                                                      mended that the Congress consider providing further




 I
.,I
 !
"I
'"I

                                  Machine-constructed trails in a Forest Service nonwilderness area.



      56
                                                                                                  CIVIL OPERATIONS

guidance as to the use of such equipment. (See Appen-            Department of the Army
dix, Section I, Item 39.)                                        Corps of Engineers
    At June 30, 1969, the Forest Service had planned             (Civil Functions)
for new construction or reconstruction of roads and
trails in national forests and grasslands at an estimated            During fiscal year 1971, GAO submitted one report
cost of $10.4 billion. Although a portion of such work           to the Congress, one report to a Member of Congress,
is financed by credits against timber sales prices and by        and five reports to Department or agency officials on
contributions from cooperators, a large portion is fi-           reviews of activities of the Corps of Engineers.
nanced by appropriated funds. GAO reviewed the                       GAO concluded in its report to the Congress that
                                                                 substantial savings could be achieved by improved co-
Forest Service’s procedures for allocating funds appro-
                                                                 ordination and dissemination of information between
priated for this work because of indications that priority
                                                                 the Corps and the Bureau of Reclamation, Department
was not being given to those projects offering the
                                                                 of the Interior, ‘both of which design and construct
greatest benefits or fulfilling the greatest needs. Its          water resources projects. GAO gave several examples
review confirmed these indications.                              where exchange of information might be helpful, in-
    It is GAOs belief that an effective system for com-          cluding one case where the construction of an arch
 paring the needs of all forests and for assigning priori-       dam rather than a rock-fill dam by the Corps would
 ties on the basis of their relative needs is essential to the   have saved about $9 million.
effective use of available funds. The Forest Service                 GAO also pointed out a need for evaluating design
agreed that a better system of programming funds was              alternatives, citing one case where an analysis would
needed and stated that a study, with a 1975 target date           have shown a cost advantage of about $12 million in
for completion and implementation, was being made.                favor of the use of an earth lining for a canal rather
The Forest Service stated also that interim reports on            than the concrete lining chosen by the Bureau of
 the study contained data which might affect the allo-            Reclamation,
 cation of fiscal year 1972 funds. (See Appendix, Section             I n response to GAO recommendations, the Corps
 I, Item 40.)                                                     and the Bureau entered into a written agreement to
                                                                  exchange useful information. Also, the Corps agreed to
     I n another report to the Congress, GAO expressed
                                                                  consider use of certain Bureau practices that GAO
 its opinion on the financial statements of the Federal
                                                                  had called to its attention. (See Appendix, Section I,
 Crop Insurance Corporation for fiscal year 1970.                 Item 78.)
     I n two reports to agency officials, GAO commented               In a report to the Secretary of the Army, GAO sug-
 on the need for stronger controls at the national, State,        gested a method whereby the Corps could improve its
 and county levels over sight drafts prepared by Agricul-         procedure for computing the Federal contribution to
  tural Stabilization and Conservation Service offices and        non-Federal water resources projects, thereby preclud-
  on opportunities for improving the Federal Crop Insur-          ing additional costs to the Government. (See Appendix,
  ance Corporation’s automated system for insurance               Section I, Item 79.)
  programs. In both instances, agency officials generally             Audit work in process included reviews of such ac-
  agreed with GAO’s findings and recommendations.                  tivities as the revolving fund, dredging, the increasing
   (See Appendix, Section I, Items 161 and 201.)                  cost of constructing multiple-purpose projects, and the
     Audit work in process included reviews of such ac-           effects of water resources projects on the environment.
  tivities as the foreign meat inspection program, the
 rural environmental assistance program, the commodity
  distribution program, and the flood prevention and
                                                                  Department of Commerce
  watershed protection programs. Work in process also              During the year GAO submitted three reports to
  included reviews of the forestry research program, the         the Congress on reviews of Department of Commerce
  recreation loan program, and the financial activities of       operations: two to the Congress as a whole and one to
  the agricultural credit and rural housing insurance            a committee of the Congress. I n addition, five reports
  funds.                                                         were issued to Department or agency officials.



                                                                                                                        57
C I V I L OPE RAT I ON S

   Selected activities of seven major constituent agen-   research associates in those instances where the Bureau
cies and offices of the Department were reviewed, with    does not receive a benefit commensurate with the
primary emphasis being given to economic develop-         costs incurred. (See Appendix, Section I, Item 241.)
ment, scientific and technological, and maritime             Audit work in process included a review of the use
activities.                                               of EDA’s program resources in awarding grants and
   One report to the Congress concerned the ques-         loans for public works and development facilities, a
tionable accuracy and currentness of the median family    study of the effectiveness of total Federal assistance
income data collected once every 10 years and the         provided to a designated redevelopment area, an
unemployment data used by the Economic Develop-           evaluation of the cost of a mid-decade census and the
ment Administration (EDA) in identifying eco-             alternatives, a review of the Maritime Administration’s
nomically distressed areas which may then be desig-       operating-differential subsidy program, and a review
nated eligible for special Federal assistance. The De-    of Federal earthquake research activities.
partment of Labor, which is responsible for collecting
the unemployment data, agreed to take steps to im-
prove its methodology for estimating unemployment
                                                          Department of Health, Education,
and to insure uniform application of techniques to
improve accuracy and comparability of data. The           and Welfare
Department of Commerce agreed that it would be
                                                            Thirty-nine reports were submitted to the Congress
desirable to have more current income information on
                                                          on reviews of Department of Health, Education, and
a regular basis. It stated that EDA hoped to develop
reasonably accurate income estimates by using per         Welfare (HEW) operations. Of these reports, 17 were
capita income data rather than median family in-          submitted to the Congress as a whole and 22 were
came data, although much work remained to be done         submitted to committees or Members of the Congress.
before per capita income data could be considered         In addition, 32 reports were issued to Department or
an acceptable substitute. (See Appendix, Section I,       agency officials.
Item 9.)
   In another report to the Congress, GAO expressed       National Institutes of Health Activities
its belief that the National Bureau of Standards had         In one of the reports to the Congress GAO com-
augmented its working capital fund without authority      mented on the gathering and disseminating of medical
of law by retaining in the fund about $432,000 that       information by the National Library of Medicine, an
had been accumulated to pay the accrued annual leave      organizational unit of the National Institutes of Health
of employees who were later transferred to another         (NIH) . The library makes substantial use of its com-
agency within the Department. Inasmuch as the Bu-
                                                          puter to prepare bibliographies of biomedical subjects
reau did not agree with GAOs recommendation that
                                                          requested by health and research institutions and pro-
the amount be paid into the general fund of the
                                                          fessionals. Since the library had encountered prob-
Treasury, GAO reported the matter to the Congress
for its consideration. (See Appendix, Section I, Item     lems in responding to such requests, it was designing
164.)                                                     an improved computer system and was training em-
   One report to the Department suggested ways to         ployees to overcome the problems. GAO concluded
reduce errors and strengthen procedures and controls      that the revised system, if properly installed and op-
                                                          erated, should alleviate the problems.
for the maintenance and verification of the 4,000
                                                             Also, the library was unable to satisfy all the health
payroll and leave records processed by the Office of
                                                          information needs of other agencies within HEW.
the Secretary, and another commented on problems en-
                                                          HEW agreed with GAO’s recommendations that these
countered in the operation of the Economic Develop-       needs be met by revising the computer system and
ment Administration’s (EDA) quick query computer-         that computer equipment, which for the initial phase
ized management information retrieval system. ( See       of the system was being leased rather than purchased,
Appendix, Section I, Items 189 and 171.)                  be obtained at the lowest possible cost.
   Another report to the Department concerned the            I n addition, GAO suggested that the Congress might
need for the National Bureau of Standards to estab-       wish to consider the Iibrary’s determination that all
lish appropriate user charges for services provided by    of its principal activities are public services, for which

58
                                                                                                       CIVIL OPERATIONS
    no fees are charged. (See Appendix, Section I, Item             be available for the next fiscal year following the
    38.)                                                            usual budget year. (See Appendix, Section I, Item
       I n reviewing the system of administering and fund-          149.)
    ing National Cancer Institute (NCI) research, GAO
    observed that the system had resulted in delays in the          Ofice of Education Programs
    approvals and funding of contracts and grants which,               At the request of the chairman, Senate Select Com-
    according to NCI officials and others, had made the             mittee on Equal Educational Opportunity, GAO re-
    start of some research projects uncertain and could
                                                                    viewed the policies and procedures for approving
    cause problems for the research institutions in attract-
                                                                    grants under the Emergency School Assistance Pro-
    ing and retaining qualified researchers.
                                                                    gram administered by HEW’S Office of Education.
)      .4s recommended by GAO, the Secretary of HEW
    delegated authority to NCI to enter into research con-          This program provides Federal grants to school dis-
    tracts to avoid delays previously encountered when              tricts to defray the cost of meeting special problems
    N I H reviewed NCI proposals and negotiated the con-            arising from school desegregation. GAO identified sev-
    tracts. Also, the Secretary stated that GAOs recom-             eral weaknesses in the procedures which GAO con-
    mendation that NCI be authorized to award research              cluded were due mainly to the Department’s policy
    grants up to a specified dollar limit without review by         of emphasizing the emergency nature of the program
    N I H study sections would be considered.                       and its desire for expeditious funding, at the expense
       Because of delays in approving HEW appropria-                of a more thorough review and evaluation of school
    tion #bills,GAO suggested that, to facilitate more timely       districts’ applications.
    financing of new programs and projects, the Congress               GAO made suggestions to help insure that grant
    might wish to consider enacting legislation authorizing,        funds already made available to the school districts
    in the case of NCI, the making of appropriations to             are used for the purposes intended and to strengthen




    Injecting a mouse with a chemical as part of an experiment in cancer research at the National Cancer Institute, Department   of
                                                 Health, Education, and Welfare.

                                                                                                                             59
C I V I L OPERATIONS

procedures in the event additional funding is author-        their assignments and if the participating universities
ized. (See <Ippendix, Section I, Item 12.)                   had established formal procedures for evaluating and
   Title I of the Elementary and Secondary Educa-             incorporating useful ideas, experiments, and techniques
tion Act of 1965, administered by the Office of Educa-       into their teacher preparation programs. Also, %ate
tion, provides financial assistance to local educational      departments of education needed to take a more active
agencies to meet the special educational needs of            role in disseminating information about successful
educationally deprived children residing in areas hav-       features of the Teacher Corps program.
ing high concentrations of children from low-income             HEW concurred in GAO’s recommendations and
families. GAO issued reports to the Congress on its          described actions planned to put them into effect.
reviews of this program in Ohio and New Jersey. The             GAO also suggested that the Congress might wish
follolving areas of administration that could be             to consider amending existing legislation to authorize        1



strengthened were identified in these two reports.           the assignment of corps members to State or locally
      Project locations were not selected in accordance      allotted teaching positions in place of regular teachers
   with Office of Education criteria.                        if the funds that would have been spent for regular
      Projects were designed on the basis of the needs       teachers’ salaries are used to pay corps members’
   of the school system in general rather than on the        salaries and related benefits. This procedure, while not
   educational needs of the children.                        authorized, was being used by certain agencies in North
      Services, materials, and equipment were made           Carolina. IPts use decreased the amount of Federal
   available to all children rather than being concen-       funds required and could provide local agencies with
   trated on the educationally deprived.                     the impetus to continue successful features of a Teacher
      Facilities acquired could not be fully used for over   Corps program after Federal funding ceases. (See Ap-
   a year because the local agency had not obtained          pendix, Section I, Items 14, 15, 16, and 17.)
   sufficient operating funds.                                  The Office of Education contracted with the Con-
      State audits lvere not of sufficient scope to comply   sortium of Professional Associations for Study of Spe-
   with Office of Education requirements, but the State      cial Teacher Improvement Programs (CONPASS)
   educational agency had taken action to improve            to coordinate the many evaluations of programs carried
   audit coverage.                                           out by colleges and universities under the Office of
                                                             Education’s institute program, authorized by the Na-
   The Office of Education agreed to promptly im-
                                                             tional Defense Education Act of 1958.
plement G , 4 0 s recommendations. (See Appendix,
                                                                GAO reported to the Secretary of HEW that under
Section I, Item 13.)
                                                             the terms of the contract some of the basic manage-
   In three reviews made to assess the effectiveness of
                                                             ment functions of the Office of Education that are
the Office of Education’s Teacher Corps program in
                                                             essential to an effective administration of the contract
attaining its 1egisIative objectives, GAO noted that
                                                             were delegated to CONPASS. I n one case, a subcon-
programs in south Florida, western North Carolina,
                                                             tract for evaluation of a program was continued against
and the Navajo and Hopi Indian reservations in Ari-
                                                             the wishes of the Office of Education because, under
zona and New Mexico had strengthened educational
                                                             the contract terms, CONPASS had the authority to
opportunities for children of low-income families.
                                                             make the decision.
Corps members assigned to these programs provided
                                                                GAO recommended that, if the contract with CON-
individualized instruction, introduced new teaching
                                                             PASS is continued, the Office of Education should
methods, and participated in education-related com-
                                                             provide for retention of the basic management func-
munity activities. About one-half of the interns who
                                                             tions it needs to direct and control CONPASS activi-
completed these programs became teachers in schools          ties. (See Appendix, Section I, Item 19.)
serving poor areas. Also, some degree of success was            For various reasons disclosed in its report on its
achieved in accomplishing the Teacher Corps’ second          examination of the financial statements of the Student
legislative objective-to encourage colleges and uni-         Loan Insurance Fund for fiscal year 1969, GAO was
versities to broaden their teacher preparation               of the opinion that the statements did not present fairly
programs.                                                    the fund’s financial position and the results of its opera-
   The programs could have been more effective if            tions. HEW took or planned appropriate action on
local educational agencies had continued successful          most of the matters discussed in GAO’s report. (See
innovative methods after corps members completed             Appendix, Section I, Item 20.)

60
                                                                                                 C I V I L OPERATIONS

    Medicaid                                                     ministered to welfare patients and were effective in
                                                                 their treatment, drugs dispensed and billed by
       Seven reports to the Congress concerned the admin-
                                                                 pharmacies were actually received by welfare recipi-
    istration in selected States of the Medicaid program-
                                                                 ents, and drugs provided to patients were needed.
    a grant-in-aid program under which the Federal Gov-
’   ernment participates in the costs incurred by the States      Also, GAO found that there was a need for HEW,
    in providing medical care to individuals who are un-       in its studies of drug efficacies, to give priority to cer-
    able to pay for such care. About $4.7 bill’ion was ex-     tain lower cost, frequently used drugs offering potential
    pended under the program during fiscal year 1970;          for considerable savings.
    the Federal share was about $2.4 billion. GAO’s in-           GAO believes that the weaknesses in administration
    quiries into the administratidn of the program were        were principally the result of inadequate guidelines,
.   made because of substantial increases in program ex-       supervision, and surveillance by HEW and, in turn, by
    penditures and the concern of the Congress over the        the State agencies and their fiscal agents. HEW made
    rising costs of medical care.                              a number of improvements in line with GAO’s recom-
       Inquiries were made into such matters as payments       mendations. (See Appendix, Section I, Items 21, 22,
    for physicians’ services, nursing home care, and drugs;    23,24,26,27, and 28.)
    the eligibility of recipients for services provided; and
    the need for the services and drugs provided. GAO          Medicare
    found a wide variety of weaknesses in the administra-         Five reports to the Senate and House legislative
    tion of the program by HEW’S Social and Rehabilita-        committees dealt with Medicare payments for the
    tion Service, the State agencies, State-appointed fiscal   services of supervisory and teaching physicians in vari-
    agents, and providers of services. Among these             ous hospitals. The Medicare program is administered
    deficiencies were:                                         by the Social Security Administration, HEW. GAO
         Paying for medical ,services without determining      described the serious problems that had been en-
      whether the physicians’ charges were reasonable          countered in administering the program as the result
      and customary.                                           of payments being made to the physicians or to the
         Paying fur overuse of program services; e.g., ex-     hospitals on a fee-for-service basis for physicians’ serv-
      cessive hospital claims, excessive number of medical     ices that, according to the hospitals’ records, had been
      prescriptions, and excessive visits by physicians.       provided by residents and interns. Inasmuch as the costs
         Paying physicians and providers of X-ray services     of the residents’ and interns’ services were also reim-
      single-patient fees instead of the lower multiple-       bursable to the hospitals under the Medicare program,
      patient fees when visits were made on the same day       the program could have been paying twice for the
      to a number of patients in the same nursing home.        same services.
         Furnishing skilled nursing home care to a high           At June 30, 1971, the Congress was considering
      percentage of patients whose need was for less in-       changes in Medicare and Medicaid legislation which,
      tensive and less costly care.                            under certain conditions, would provide for paying for
         Paying benefits to a substantial number of recipi-    supervisory and teaching physicians’ services in hos-
      ents whose continued eligibility had not been deter-     pitals on a cost basis rather than on the traditional
      mined on a timely or accurate basis.                     fee-for-service basis. Also, HEW was taking action to
         Continuing payments to nursing homes where            determine the extent of and to recover the questionable
      significant substandard conditions persisted.            or excessive Medicare payments disclosed by GAO’s
         Paying for the same days of nursing home care          reviews. (See Appendix, Section I, Item 63.)
      under both the Medicare and Medicaid programs.              Appropriate final accountings or timely reviews had
         Paying claims for care of former nursing home          not been made of billions of dollars of Medicare funds
      patients after their death or discharge.                 paid aut on the basis of the estimated cost of services
         Paying for drugs on a cost-plus-a-percentage-of-       long since provided by hospitals and other institutions
      cost basis, which is contrary to Federal policy and       because of lengthy delays in making settlements. Some
      tends to increase costs.                                  of the delays were attributed in part to the use of an
         Using procedures in one State that were inade-        HEW-authorized reimbursement method which re-
      quate for either the State or HEW to determine            sulted in Medicare payments that included private
      whether drugs obtained by nursing homes were ad-          room costs, which were not covered under the Medi-

                                                                                                                       61
C I V I L OPERATIONS

care program, and delivery raom costs, which were not      actions be taken. HEW subsequently advised GAO that
applicable to Medicare patients.                           it had taken the recommended actions. (See Appendix,
   In line with G A O s recommendation that HEW            Section I, Item 66.)
discontinue or modify this questionable reimbursement
method, HEW took action which it estimated would           General                                                     1


reduce Medicare costs by about $100 million in fiscal         Other reviews made at the request of congressional
year 1972. HEW also agreed to take other actions in        committees and Members of the Congress related to
line with GAO recommendations to improve the proc-         such matters as the progress made by the Department
ess of making settlements. (See Appendix, Section I,       in improving its automated payroll procedures, the
Item 64.)                                                  development of plans for desegregating student bodies
   Medicare payments on behalf of eligible railroad        of certain public schools in Florida, practices of cer-     .
workers and annuitants of the Railroad Retirement          tain nursing homes in the Baltimore, Md., area, prob-
Board (RRB) are made by a single carrier under con-        lems in implementing the simplified method for deter-
tract with the RRB. In exploring ways by which Medi-       mining eligibility of persons for adult public assistance
care could be administered more effectively and            programs, and payments to hwpitals and extended-
economically, GAO inquired into the costs incurred by      care facilities for depreciation expenses under the Medi-
the RRB carrier compared to the costs of making such       care program.
payments through the 50 carriers under contract with          Among the reports to Department officials was a
the Social Security Administration (SSA) . GAO esti-       report on opportunities for savings by authorizing
mated that benefit payments by the RRB carrier were        Medicare contractors to use Government sources of
about $2.9 million higher than the payments that           supply and a report on the need for improvement in
would have been made by the SSA carriers for like          the fiscal management of research and demonstration
medical services in fiscal year 1970 and that adminis-     grant programs of the Children’s Bureau. (See Ap-
trative costs of as much as $2.8 million could be saved    pendix, Section I, Items 62 and 135.)
by paying the claims through the SSA carriers.                Another report, issued to HEW and the Civil Serv-
   HEW stated that it was not prepared, without addi-      ice Commission, related ta the use of consultants and
tional review, to accept GAO’s recommendation that         experts. G . 1 0 ’ ~review showed that neither HEW’S
the claims-processing activities be consolidated, and      procedures for controlling their hiring and use nor
said that, as an alternative, it planned to have the RRB   the Commission’s procedures for monitoring other
carrier experiment in determining reasonable charges       agencies’ procedures were effective enough to insure
for physicians’ services. GAO suggested that the Con-      compliance with laws and instructions governing their
gress might wish to consider the recommendation for        employment. (See Appendix, Section I, Item 237.)
consolidation and review the plans for the proposed           Audit work in process included reviews of the De-
experiments. (See Appendix, Section I, Item 65.)           partment’s programs related to comprehensive health
   In a series of reports-one to the Congress and three    planning, communicable diseases, rehabilitating nar-
to the Commissioner of Sacial Security-GAO com-
                                                           cotic addicts, biomedical research, health professions
mented on the varying procedures used by selected
                                                           education, monitoring of drug preparation, regulation
Medicare carriers to determine the reasonableness of
                                                           of food processing establishments, teacher training, in-
physicians’ charges and to process and pay Medicare
                                                           come maintenance and social service aspects of wel-
claims. GAO pointed out, among other things, that
payments were made in excess of the established rea-       fare, Medicare, Medicaid, and the administration of
sonable charges for the services performed, duplicate      black-lung benefits.
payments were made, and payments were made without
obtaining adequate evidence that the charges were
reasonable or that the services were covered by            Department of Housing and
Medicare.                                                  Urban Development
   HEW advised GAO that the carriers and SSA had
taken action to improve the processing of Medicare            As a result of reviews of activities of the Department
claims and the overall administration of the Medicare      of Housing and Urban Development ( H U D ) , GAO
program. GAO believed that further improvements            submitted 23 reports to the Congress: eight reports to
were needed and recommended that certain specific          the Congress as a whole and 15 to its committees or

62
                                                                                              CIVIL OPERATIONS

Members, I n addition 11 reports were issued to HUD             Financial aid is furnished to local housing authorities
officials. The reports dealt principally with urban         to acquire and rehabilitate housing for sale or rental to
renewal, mortgage financing, housing assistance, and        low-income families. Because, contrary to approved
metropolitan development.                                   plans, considerably more of the acquired units consisted
   One report to the Congress showed that despite the       of multifamily housing rather than single-family hous-
fact that the legislative history of the urban renewal      ing and many units were located near industrial and
program indicated congressional intent that urban re-       conlmercial sites, the possibility of low-income families,
newal contribute to the improvement of urban housing,       and their incentive for, purchasing their own homes
the program has resulted in a significant reduction in      was greatly reduced. Also, the selection of houses for
housing, particularly for low- and moderate-income          acquisition and rehabilitation was made in a manner
families. I n 324 cities, 88,000 more dwelling units were   that did not encourage repair of adjacent houses by
demolished under that program than were built for           their owners. The program was ineffective also because
low- and moderate-income families under all of HUD’s        of important deviations from contract specifications and
housing programs. The program concentrated pri-             from HUD’s minimum standards of livability and con-
marily on commercial, institutional, and industrial de-     struction and because there was a need to improve
velopment, rather than on housing, particularly from        specifications to assure use of the most appropriate
 1959 to 1968.                                              materials.
    GAO reported that HUD’s method of allocating                 Although HUD took some action concerning con-
funds took insufficient account of the national housing     struction deficiencies, it did not a p e e with GAO’s
goal and recommended an improved system to insure           position that it should assign more inspectors to insure
that all HUD projects-not just urban renewal-are             that the proyam is carried out in accordance with
responsive to housing needs. HUD stated that it was         approved plans and procedures. Subsequent to the is-
devising new criteria and a revised allocation system        suance of GAO’s report, hoxvever, the Secretary of
for the urban renewal program but regarded as un-            HUD informed GA40that, as a result of decentralizing
justified GAO’s conclusion that program funds had not        the operations of HUD, the new field organizations
been effectively allocated. (See Appendix, Section I,       would be in a position to increase surveillance of local
 Item 69.)                                                   rehabilitation programs. (See Appendix, Section I,
    Another report stated that procedures and practices      Item 50.)
of HUD and project owners were not adequate to in-               GAO reported that where the low bid for construc-
 sure that multifamily housing provided for low- and         tion of low-rent public housing exceeded the cost
moderate-income families under the mortgage insur-           limitation approved by HUD, which it frequently did,
ance program authorized by section 221 of the National       HUD generally permitted contract award only after
Housing Act was being occupied by families intended          the local housing authority ( 1) negotiated a reduction
 to be served by the act. GAO’s tests showed that hous-      with the lowest bidder for work of reduced scope, (2)
ing units were being occupied by families whose in-          resolicited bids on the basis of revised plans, and/or
 comes may have exceeded the prescribed limits for            ( 3 ) obtained HUD’s approval of an increased cost
 occupancy. Income information may not have included         limitation. GAO expressed the belief that resultant
 all relevant data, may not have been current a t the        delays and increased costs could be minimized if (1)
 time of occupancy, and was not verified to determine        HUD reviewed cost estimates carefully before approv-
 eligibility for continued occupancy.                        ing cost limitations, ( 2 ) the use of negotiations was
    HUD stated that GAO’s findings and recommenda-           limited so as to obtain the full benefit of competition,
 tions would be studied carefully but did not agree that     and ( 3 ) local housing authorities were required to
 income information should be updated prior to occu-         prepare detailed estimates of the cost of proposed
 pancy or that minimum rental rates should be estab-         changes as a basis for negotiation.
 lished at an appropriate percentage of income, as               HUD was pessimistic about the possibility of pre-
 required under the new section 236 program for lower        paring realistic cost estimates and did not agree that
 income families. GAO suggested, therefore, that the         local authorities should be required to use independent
 Congress might wish to consider whether such mini-          cost estimates in negotiating prices for changes. H U D
 mum rental rates should be established. (See Appendix,      did adopt some revised procedures to help minimize
 Section I, Item 49.)                                        processing delays. (See Appendix, Section I, Item 51.)

                                                                                                                    63
CIVIL OPERATIONS

   GAO reported also that certain grantees were leas-        a whole and three were submitted to committees or
 ing land acquired under the open-space land program         Members. Also, eight reports were issued to Depart-
without HUD’s knowledge or approval--contrary to             ment or agency officials. Excluded from these numbers
the requirements of the grant contracts-and that the         are two reports to the Congress and two reports to
lease revenues were being deposited into the grantees’       agency officials on operations of the Federal Wacer
general operating funds and were not being set aside         Quality Administration which are commented on in
 for open-space land project activities. HUD had not         the section of this report applicable to its successor
established procedures for insuring that grantees ob-        agency, the Environmental Protection Agency.
tain approval prior to leasing and had not developed            One of GADS reports to the Congress related to the
guidelines relating to the use of revenues received          Department’s Celilo-Mead project, a part of the Pa-
from such leasing. HUD took action to require (1) re-        cific Northwest-Southwest Intertie program to con-
views and followup reviews of certain grants, (2) coin-      nect the electrical systems of nine western States. GAO
pliance site inspections of projects, and ( 3 ) certifica-   had concluded that the demands for power from the
tions from all grantees that the terms and conditions        project were less than anticipated by the Department
of their grant contracts were being met. HUD advised         in its 1964 feasibility report on the project and, as a
GAO that instructions regarding the use of lease reve-       result, the project might not be self-liquidating within
nues would be issued. (See Appendix, Section I, Item         the planned 50-year period. A Department study made
68.)                                                         in 1969 reaffirmed that the project would be self-
   In other reports to the Congress, GAO expressed its       liquidating, but GAO found that the Department’s
opinions on the financial statements of (1) the Gov-         projected demands for project power were significantly
ernment National Mortgage Association for fiscal year        overstated.
 1969 and the Federal National Mortgage Association             Although the Department postponed completion of
for the 2-month period ended Angust 31, 1968, ( 2 )          the $185 million project, it disagreed with GAO rec-
the insurance Operations of the Federal Housing Ad-          ommendations to (1) obtain commitments from pro-
 ministration for Sscal year 1970, and ( 3 ) the Govern-
ment National Mortgage Association for fiscal year
1970.                                                             PACIFIC NORTHWEST -
   In response to an inquiry from a Member of Con-                SOUTHWEST INTERTIE
gress, GAO reported that HUD’s decision to insure
a $4.4 million mortgage loan for purchase and reha-
bilitation of an apartment complex had not been sup-
ported by an adequate financial analysis. GAO rec-
ommended that the Secretary of HUD require, as a
matter of policy, that fair market value appraisals
be made and used in determining the amounts to be
included in insured mortgage loans for the purchase
of property to be rehabilitated. HUD advised GAO
that the recommendation would be adopted. (See Ap-
pendis, Section I, Item 52.)
   Audit work in process included reviews of HTJD
activities involving urban renewal, model cities, metro-
politan development, housing assistance, mortgage fi-
nancing, special insurance operations, and Depart-
ment-wide financial administration and management.


Department of the Interior
  GAO submitted seven reports to the Congress on
reviews of Department of the Interior operations. Of
                                                                    Mop  01 contained ~n Deportmenr of the Intenor’s October   1964 Report on
these reports, four were submitted to the Congress as               the Feornb,ilty 01 the Ceiilo.Meod Prolect.




64
                                                                                               ClVl L OPE RAT IONS

spective power users before undertaking additional con-      tions. In many cases, mine operators had not submitted
struction on the project and ( 2 ) advise the Congress       required plans to the Bureau of Mines for approval on
of any problem in obtaining such commitments SO it           such matters as roof safety and mine ventilation, and
could reconsider authorization of the project. GAO           the Bureau had not approved many of the plans that
continues to believe, however, that its recommenda-          had been submitted.
tions should be adopted if the Department decides that          Many repeated violations of safety standards were
there is a need to complete the project. (See Appendix,      found by Bureau inspectors which GAO believed were
Section I, Item 74.)                                         attributable, at least in part, to the fact that the De-
    Roads and bridges to be flooded as a result of water     partment’s policies for enforcing the health and safety
resources projects of the Bureau of Reclamation may          standards have at times been extremely lenient, con-
be relocated at Government expense. GAO reported             fusing, uncertain, and inequitable. GAO cited many
that the Bureau, in financing the entire cost of con-        other weaknesses in the Bureau’s implementation of
structing a bridge at the Auburn Dam and Reservoir           the health and safety program and made various pm-
in California to accommodate projected rather than           pcrsals to the Secretary of the Interior to achieve im-
current traffic, was incurring an additional cost of about   provements.
 $1.5 million which was not eligible for Federal financ-         The Department of the Interior stated that, with one
ing under the law. Legislation was subsequently cn-          exception, actions had been initiated or planned to
 acted, however, which authorized the Bureau to fi-           respond to all of GAO’s suggestions. GAO believes the
 nance the entire cost of the bridge. GAO recommended        Department should give further consideration to the
 that the Bureau establish policies and procedures in         possibility of using less highly qualified persons to make
 accordance with the basic legislation-the Flood Con-         health inspections if the Department experiences diffi-
 trol Act of 1960, as amended-for use in future reloca-       culty in recruiting the required number of regular coal
 tions of roads and bridges.                                  mine inspectors. (See Appendix, Section I, Item 8.)
    GAO also recommended that little-used dirt roads             Audit work in process included reviews of such ac-
 and bridges which were going to be replaced by a new         tivities as power rate and repayment studies, the finan-
 highway system costing $26.2 million be abandoned            cial operations of the Southwestern Federal Power
 rather than replaced and that the Bureau reconsider          System, and the interest rate criteria used in detennin-
 several alternatives to the site chosen for a planned        ing the financial cost allocated to municipal and indus-
 bridge location to determine which is the most eco-          trial water supply projects. Other reviews were being
  nomical when both costs and benefits, rather than costs     made of the education and employment assistance pro-
  alone, are considered.                                      grams of the Bureau of Indian Affairs and the results
                                                              achieved in awarding Federal grants for outdoor
     The Department disagreed with each of GAO’s
                                                              recreation.
  recommendations. (See Appendix, Section I, I t e m
  75,76, and 77.)
     In other reports to the Congress, GAO expressed
                                                              Department of Justice
 its opinion on the finanical statemenb prepared by
  the Bonneville Power Administration for the Federal           During fiscal year 1971, G L 4 0submitted a report to
  Columbia River Power System and the need for sub-          the Congress in which it expressed its opinion on the
  stantial improvements in the financial management          financial statements of the Federal Prison Industries,
  of the Virgin Islands Government.                          Inc., for fiscal year 1970. A report to the Commissioner
     In a report to the Subcommittee on Labor, Senate        of Industries commented on the need for the Federal
  Committee on Labor and Public Welfare, GAO re-             Prison Industries, Inc., to revise certain accounting,
  ported that, while some progress had been made in          procurement, and administrative practices.
  implementation of the Federal Coal Mine Health and            .4report to the Attorney General commented on im-
  Safety Act of 1969 during the first year following         provements needed in the Immigration and Naturali-
  enactment, much remained to be done to achieve full        zation Service’s accounting system, and a report to the
  compliance. The Bureau of Mines had not made the           Commissioner, Immigration and Naturalization Serv-
  required number of inspections. Neither had the mine       ice, commented on questionable uncontrollable over-
  operators made various required samplings and inspec-      time claims and the need to reevaluate the use made

                                                                                                                     65
C I V I L OPERATIONS

of electronic vehicle and pedestrian counting devices at    wage determination activities under the Service Con-
border-crossing stations between the United States and      tract Act of 1965; a legal decision rendered by the
Canada. (See Appendix, Section I, Items 166, 176,           Comptroller General on September 19, 1969, which
and 188.)                                                   held against the use of wage escalation provisions in
   Nine other reports were issued to Department or          wage determinations; and certain legislative proposals
agency officials during the year.                           of the 92d Congress, 1st session, to amend the Service
   Audit work in process included reviews of such ac-       Contract Act.
tivities as collection practices, accelerated inspection       GAO’s report to the Congress on the Job Oppor-
of persons entering the United States, grants and con-      tunities in the Business Sector program included an
tracts for law enforcement and education purposes,          analysis of data on the results of program operations.
and efforts to control the abuse of dangerous drugs.        In response to GAO’s recommendations to ( 1) im-
                                                            prove the management information system, (2) modify
                                                            the design of the program, and (3) adopt new pro-
Department of Labor                                         cedures and practices to improve the administration
                                                            of the program, the Department said that it concurred
   GAO’s principal audit emphasis at the Department         for the most part and cited various corrective actions
of Labor was directed to reviewing the major Federal        that either had been taken or were being considered.
manpower training programs and activities of the Man-       However, the Department said that it did not concur
power Administration. Other reviews included the            with GAO’s recommendation that, where cost experi-
Neighborhood Youth Corps, Concentrated Employ-              ence is lacking, contracting for training and related
ment, and related programs authorized by the Eco-           services be on a cost-reimbursement basis rather than
nomic Opportunity ‘4ct of 1964, as ,amended, and ad-        on a fixed-unit-price basis. (See Appendix, Section I,
ministered under authority delegated by the Office of       Item 53.)
Ec.onomic Opportunity. Reviews were also made of de-           In its report on the Special Impact program in Los
partmental determinations of prevailing wage rates          Angeles, GAO commented that the program had
under the Davis-Bacon Act and other acts.                   fallen far short of accomplishing its goal of providing
   G.40 submitted four reports to the Congress on re-       jobs for the disadvantaged and had been poorly ad-
views of Federal manpower training programs. These          ministered by the Department. The program’s short-
reports discussed the (1) evaluation of the results and     comings were exemplified by the fact that at June 1,
administration of the Job Opportunities in the Busi-         1970, the 10 private contractors in the program-who
ness Sector program in five cities, ( 2 ) Special Impact    were to receive about $8.9 million to build or lease
program in Los &4ngelesnot meeting its goal of provid-      manufacturing facilities and to provide 3,751 hard-
ing jobs for the disadvantaged, ( 3 ) need to enhance       core unemployed and disadvantaged persons training
the effectiveness of on-the-job training in .4ppalachian    and jobs-were employing only 526 persons and the
Tennessee, and (4) opportunities for improving train-       hiring periods had expired for eight of the 10
ing results and efficiency at the East Bay Skills Center,   contractors.
Oakland, Calif. A fifth report to the Congress dis-            GAO concluded that the program could have been
cussed the increase in construction costs for certain       effective with proper planning, careful selection of
federally financed housing projects resulting from in-      contractors, and adequate monitoring by the Depart-
appropriate minimum wage determinations by the              ment. The Department agreed with GAO’s findings
Department.                                                 and stated that the GAO recommendations which were
   Four reports were submitted to congressional com-        germane to the current status of the program had been
mittees or Members of the Congress pursuant to their        implemented to the fullest extent possible. (See Ap-
requests for information on certain Department of           pendix, Section I, Item 54.)
Labor operations and activities. In addition, five re-         The report covering the on-the-job training pro-
ports were issued to Department officials.                  gram in Appalachian Tennessee concluded that the
   In April 1971, GAO representatives testified in          Department, the State Employment Service, and the
hearings before the Special Subcommittee on Labor,          two community agencies involved needed to sub-
House Committee on Education and Labor, on mat-             stantially improve certain program operations. Most
ters relating to GAO’s review of the Department’s           employers visited were not providing any training be-

66
                                                                                              C I V I L OPERATIONS

yond that normally provided to new employees or               Post Office Department
generally were not hiring persons with different quali-
fications from those normally hired. Some persons                GAOs review of Post Office Department operations
whom the employers reported as receiving entry-level          during fiscal year 1971 cavered such activities as the
skill training already possessed extensive experience in      utilization of manpower and machinery to process mail,
that skill. Also, closer coordination was needed between      the assessment and collection of postage and related
the Department, the Employment Service, and the               fees, and the transportation of mail. As a result of its
community agencies designated to carry out the                audit work, GAO submitted 11 reports to the Con-
program.                                                      gress: five to the Congress as a whole and six to com-
   The Department told GAO that internal studies              mittees or Members. Twelve reports were issued to
had produced substantially the same conclusions as            Department officials.
those reached by GAO, and that in many cases the                 After a review to ascertain whether the Post Office
Department had taken steps to correct the problems.           Department was making the most effective use of man-
(See Appendix, Section I, Item 55.)                           power and machines in processing mail, GAO con-
   I n a report to the Congress on the operations of a        cluded that the Department was not. Because most
manpower training skills center in Oakland, Calif.,           mailings occur at the end of each business day, the
GAO stated that the center’s facilities were substan-         Department’s efforts to process first-class mail within
tially under-used because of delays between the com-          90 minutes of receipt resulted in costly machines stand-
pletion of one training course and the start of a             ing idle for long periods after the peak mail volume had
follow-on course and because the use of an inflexible         been processed and in many clerks and mailhandlers
curriculum did not: readily permit new trainees to            working during evening premium pay hours. Such
enter courses except at certain prescribed times. Also,       expeditious processing was not necessary to meet
GAO commented on the changes in the procedures for            mailers’ needs. Also, mail was being hand sorted at
funding the center. Other problems concerned the              small post &ices although better utilization of re-
selection of individuals for training, and counseling and     sources could have been obtained if the mail had been
followup services provided to trainees. The Depart-           funneled into large, mechanized post offices for ma-
                                                              chine processing. GAOs recommendations for im-
ments of Labor and Health, Education, and Welfare
                                                              provement and the Department’s response were
stated their general agreement with GAO’s recom-
                                                              contained in GAO’s report to the Congress. (See Ap-
mendations and outlined corrective actions to improve         pendix, Section I, Item 177.)
the center’s operations. (See Appendix, Section I,               In another review, GAO noted that the Department
Item 56.)                                                     appeared to place almost complete reliance on infor-
   GAO also reported that construction costs on 11            mation provided by publishers in determining the
federally financed housing projects in New Jersey,            amount of postage due for second-class mail. A fur-
Oklahoma, Pennsylvania, and Virginia could be in-             ther examination showed that publishers were charged
creased by about $3.9 million because the minimum             the lower second-class pasta1 rates although the pub-
wage rates which the Department established under             lications did not meet the requirements for the lower
the Davis-Bacon Act were higher than the rates pre-           rates. The Department had not established adequate
vailing in these areas €or similar private residential        specific criteria and its examinations of publishers’
housing construction prajects. In response to GAO             records were neither timely nor effective. GAO re-
recommendations, the Department stated that action            ported that the Department’s revenues could be in-
was being taken to ( 1) seek wage determinations which        creased significantly if administrative improvements
reflect accurately the prevailing wage rates for resi-        were made. (See Appendix, Section I, Item 239.)
dential housing construction, ( 2 ) conduct more on-             In another report to the Cangress, GAO pointed
site surveys, (3) revise its procedures to clarify distinc-   out that the Department had not been recovering all
tions between different types of construction and to          postage due on mail with insufficient postage and had
facilitate more adequate collection of relevant data,         not been recovering any of the costs of detecting and
and (4) obtain from the Department of Housing and             collecting postage due. GAO’s report contained several
Urban Development wage data on residential con-               recommendations designed to help solve this costly
struction. (See Appendix, Section I, Item 71.)                problem. (See Appendix, Section I, Item 240.)

                                                                                                                   67
 C I V I L OPERATIONS

    The Congress, concerned about the amount of ex-              (FAA), the Federal Highway Administration
 penditures and the size of the staffs of the Department’s       (FHWA) , the Federal Railroad Administration
 regional offices, had placed ceilings on the staffing           (FRA) , the U.S. Coast Guard, and the Urban Mass
 at such offices. Subsequently, the Department trans-           Transportation Administration (UMTA) .
 ferred 15 activities and related positions from its re-           Twelve reports were submitted to the Congress on
 gional offices to local post offices although the              reviews of Department operations: eight of these were
 activities were essentially regional ones. GAO reported        submitted to the Congress as a whole and four were
 that the transfers did not appear to be consistent with        submitted to its committees or Members. In addition,
 congressional intent regarding ceilings on regional             14 reports were issued to Department or agency
 staffing and costs, and that there was a loss of efficiency    officials.
in the regional offices. The Department agreed that                As part of its requirement to promote flight safety
certain of the transferred work could be performed              of civil aircraft, FAA provides limited surveillance over
 more efficiently in the regional offices and stated that       the production operations of certain aircraft parts
 these activities were being returned to the regions as         manufacturers and their suppliers, but certain parts
 quickly as they could be absorbed within personnel             critical to flight safety that are furnished by suppliers
 ceilings. (See Appendix, Section I, Item 238.)                 to aircraft manufacturers or owners generally were
    In another report to the Congress, GAO stated that          not subjected to production surveillance by FAA or by
the Department could reduce its maintenance costs on            the manufacturers.
certain mail-handling equipment, without adversely                 Officials of the Department were generally aware
affecting the operation of the equipment, by reducing           of the problems noted by GAO in its report to the
the frequency of certain routine preventive mainte-             Congress on this subject and stated that, upon com-
 nance and by reducing the time prescribed for per-             pletion in July 1971 of a review then in process, correc-
forming such maintenance. The Department con-                   tive action would be taken to strengthen the admin-
curred with GAO’s recommendations and stated that               istration of the program. GAO suggested, however,
it would review its maintenance management system.              that since certain parts had contributed to accidents
 (See Appendix, Section I, Item 21 1.)                          and incidents, prompter action was needed. The De-
   In a report to a Member of Congress on a review              partment then instituted immediate requirements to
made at his request, GAO stated that the Department            bring the designated critical parts under production
had exceeded its legal authority in its use of emergency        surveillance. (See Appendix, Section I, Item 4.)
contracts for air taxi service to transport mail; that             Also, GAO reported that although it is FAA’s re-
a number of contracts were awarded without obtaining           sponsibility to promote flight safety of civil aircraft,
formal competitive bids, which may have increased               FAA did not have a program specifically designed to
costs; and that questionable contract rate increases           evaluate the safety of public airports, which include
were granted because the Department did not have               air carrier and general aviation airports. Subsequently,
                                                               the Department indicated that it intended to imple-
adequate procedures for evaluating rate increases re-
                                                               ment GAO’s suggestion for a safety inspection program
quested by the contractors. (See Appendix, Section I,
                                                               with respect to air carrier airports as a part of its
Item 229.)
                                                               overall implementation of the Airport and Airway
   Audit work in process included reviews of the eligi-
                                                               Development Act of 1970, and that it planned to sur-
bility of certain organizations to mail matter at reduced
                                                               vey general aviation airports and implement safety
rates, the adequacy of fees charged for certain services
                                                               standards as needed. (See Appendix, Section I,
rendered, and the system used to ascertain the revenues
                                                                Item 5.)
derived from and the cost of handling the several
                                                                   FAA needed to strengthen its practices for procuring
classes of mail and performing certain services.
                                                               and managing inventories of spare parts for use in
                                                               maintaining its network of air traffic control and air
                                                               navigational aid facilities. GAO recommended that,
Department of Transportation
                                                               instead of determining needs solely on the basis of
  A significant portion of GAO’s audit effort in the           usage over a prior period, FAA should develop in-
Department of Transportation was devoted to review-            formation on the types and numbers of facilities in use,
ing activities of the Federal Aviation Administration          the particular needs of each type of facility, and their

68
                                                                                              C I V I L OPERATIONS

expected useful lives. FAA should also insure that such      Since these trains were an advancement of the state
information is appropriately used. The recommended           of the art, it was not known if they would operate
procedures would obviate the need for large-scale            as anticipated. Contracts totaling over $19 million were
disposals such as occurred previously when FAA               let, however, for the lease of two Tufbo-Trains and
declared as excess spare parts costing about $9 million.     the construction of 50 Metroliners without benefit of
The Department acknowledged that FAA’s procedures            prototypes. Also, the contracts contained no provision
could be improved. (See Appendix, Section I, Item            for adjustment of the amount of funds to be contributed
217.)                                                        by the Government if the trains could not be used as
   I n a report relating to the Interstate Highway Sys-      planned.
tem, GAO pointed out that FHWA’s policy of approv-               The Department agreed with GAO’s recommenda-
ing short segments of interstate highway on a case-by-       tions to encourage the future use of prototypes on
case basis resulted in the approval of one $47 million       demonstration programs involving new equipment and
route which does not provide the general benefits            to provide in future contracts for price adjustments if
normally associated with interstate highways. Previ-         the equipment is not used to the degree planned. (See
ously, requests for authority to construct other routes      Appendix, Section I, Item 123.)
were not approved although they appeared to be more              In another report GAO stated that an opportunity
justified in terms of traffic and national significance.     existed for the Coast Guard to reduce the cost of
GAO suggested a method for ranking requests for              vessel construction by not requiring shipbuilders to
additional mileage that would afford all States an equal     buy insurance and performance and payment bonds.
opportunity to compete for additional mileage, would         GAO estimated that insurance premiums and bond
serve as a means of clearly identifying various alterna-     costs would amount to as much as $6 niilli,on on
tives, and would provide more assurance that mileage         planned construction. The Department advised GAO
is allocated on the basis of the most important needs.       that the Coast Guard would adopt the general Govern-
 (See Appendix, Section I, Item 33.)                         ment-wide policy of self-insurance and that it had
    I n another report, GAO pointed out the need for         waived the requirement for performance and payment
FHWA to (1) require the States to establish and ad-          bonds in its latest shipbuilding award. (See Appendix,
here to a system of priorities to insure that highway        Section I, Item 179.)
safety rest areas are constructed first where most               I n another report to the Congress, GAO expressed
needed, (2) provide and require the States to adhere         its opinion on the financial statements of the Saint
to definitive guidelines which would limit the amount        Lawrence Seaway Development Corporation for the
of land and the size, type, quality, and cost of rest area   calendar year 1969.
facilities and equipment acceptable for Federal fi-              In reports to Department or agency officials, GAO
nancial participation, and ( 3 ) establish review proce-     commented on the need for ( 1 ) improvement in
dures at the national level to insure that such priorities   FRA’s contracting practices and procedures, (2)
and guidelines are being followed.                            UMTA to improve its procedures for determining
    The Department advised that, in revising its exist-      the amount of financial assistance to be granted to
ing guidelines, FHWA would consider the advisability          State and local agencies for providing mass-transporta-
of specific guidelines along the line suggested by GAO,      tion service in urban areas, and ( 3 ) UMTA to im-
but that it believed the establishment of specific cost      prove its accounting and financial reporting system.
 limitations for equipment would not be proper. GAO           (See Appendix, Section I, Items 124, 61, and 168.)
                                                                 Audit work in process included reviews of programs
believes that without cost limitations there will con-
                                                              related to FAA’s efforts to automate and improve
tinue to be a lack of assurance that equipment, gen-
                                                              the air traffic control system, selected aircraft pro-
erally paid for in full by the Federal Government, will
                                                              grams, FAA’s programming and planning of air
be provided at reasonable cost. (See .4ppendix, Sec-
                                                              navigational aid and traffic control projects, construc-
tion I, Item 34.)                                             tion of complex urban highways, problems associated
    Metroliner and Turbo-Train services between vari-        with ur’ban transportation planning, highway safety
 ous east coast cities introduced as demonstration proj-     programs, FHWA’s review and approval process for
 ects sponsored and funded by FRA, were started sev-          highway construction projects, and the administration
 eral years behind schedule and did not become fully          of grants awarded to improve rail rapid transit
 operational due to technical problems with the trains.       systems.

                                                                                                                   69
C I V I L OPERATIONS

Department of the Treasury                                 missioner of Customs demanded payment of about
                                                           $1.4 million from the largest surety which had failed
   During the fiscal year, GAO submitted tkvo reports      to honor demands from Customs regional offices.
 to the Congress as a ivhole and one to a congressional    Shortly thereafter: all unprotested receivables were
 committee. Also, 19 reports were issued to Department     paid by the importers or the surety company. T h e Bu-
or agcncy officials.                                       reau also issued revised instructions designed to im-
   As required by law, funds for financing the Office      prove its collection procedures. (See Appendix, Section
of the Comptroller of the Currency are obtained by         I, Item 244.)
assessments against the national banks which it r e p -       Audit work in process included reviews of the man-
lates and supervises. GAO believed that it was incon-      agement of trust funds, financial statements of the
sistent for the Office of the Comptroller to bear the      Bureau of Engraving and Printing, and controls over
cost of leased space in privately owned buildings and      the collection of delinquent taxes.
not the cost of space occupied in Government-owned
buildings. The Office occupied almost as much space
in Govcrnmrnt-oivned buildings as it did in privately      Appalachian Regional Commission
 owned buildings for \vhich it paid an annual rental of
$390,000.                                                      In a review made to determine whether the highway
   Officials in the Office of the Comptroller stated       system being constructed to promote the economic de-
 that they agreed with the principle of paying for         velopment of the Appalachian region was achieving
 space occupied in Government-owned buildings and           its objcctive, GAO found that the Appalachian Re-
would negotiate rental rates when requested by the         gional Commission, created by the Appalachian Re-
Federal agencies that furnished the space. However,        gional Developmmt Act of 1965, had not established
no final agreements had heen reached as of June 30,        construction priorities directed toward achieving the
1971. (See Appendix, Section I, Item 243.)                 greatest contribulion at the earliest time nor had it
   In the other report to the Congress, GAO expressed      determined wrhether priorities established by the States
its opinion on the financial statements of the account-    were directed toward that end.
ability of the Treasurer of the United States for fiscal       CAO believed that an opportunity still existed for
years 1968 and 1969.                                       the Commission to give priority to projects that would
   The report to the congressional committee involved      contribute most toward improving accessibility to,
an evaluation of costs cited by the Treasury Depart-       through, and within the region. Inasmuch as the Com-
ment as onr of its justifications for raising the mini-    mission disagreed with GAO's conclusions, GAO sug-
mum denomination of Treasury bills. Reports to asency      gested that the Congress might wish to consider re-
officials related to such matters as accounting for        quiring the Cornmission to allocate remaining funds
import duties by the Bureau of Customs automated           toward that end. (See Appendix, Section I, Item 37.)
revenue accountinq system, certain tax return process-
ing techniques at Internal Revenue Service service
centers. procedures and controls over merchandise en-      Atomic Energy Commission
tered in a foreign trade zone and bonded warehouses,
separate mailing to the same recipients of both proof         C.40 submitted scven reports to the Joint Commit-
and uncirculated coin sets, cancellation and destruc-      tee on Atomic Energy, one report to the Congress as
tion of unfit currency at various Federal Reserve banks    a ivhole, and eight reports to officials of the Atomic
and branches, and settlement of accounts of account-       Energy Commission ( AEC ) on various activities of
able officers.                                             AEC.
   A report to the Secretary of the Treasury commented       The report to the Congress commented on the
on the need to improve procedures for the collection       causes for the delay in the design of the Fast Flux Test
of supplemental duties on imported merchandise. Sup-       Facility ( F F T F ), the highest priority project in the
plemental duties are payable by sureties if the import-    AEC Liquid Metal Fast Breeder Reactor program.
ers do not pay them within 75 days. Certain sureties       The ccinceptual design of the FFTF, the first step in
ivere not promptly honoriny demands for payment of         the design cycle, \vas delayed and thereby caused com-
delinquent accounts. At G . 4 0 ' ~suggestion, the Com-    pressed schedules on the remaining phases of the work.

70
                                                                                                     C I V I L OPERATIONS




         D E F E R R E D SECTIONS OF DEVELOPMENT   CONSTRUCTION ASSISTED OR TO BE ASSISTED




 nmmmn   ADEQUATE SECTIONS OF DEVELOPMENT
         HIGHWAY SYSTEM


These delays were caused by management problems:                   proposals and reported that AEC’s proposed revised
specifically, the failure to establish an engineering-             criteria were identical to the original criteria, except
oriented organization with sufficient capabilities to              for certain language modifications made to conform to
develop such a complex project. AEC agreed to review               the wording of the amendment. G.40 expressed the
the reactor development and technology organization                belief that ( 1 ) the provisions of the criteria having a n
and a11 levels involvtd with the project to streamline             effect on pricing provided an adequate basis for re-
the organization, to strengthen review channels, and               covering, over a reasonable period of time, appropri-
 to provide assurance that management and staff would              ate Government costs of furnishing enrichment serv-
make maximum contributions to this high-priority                   ices and ( 2 ) the proposed price was consistent with
project. (See :lppeiidix, Section I, Item 128.)                    the pricing provisions of the revised criteria.
   At the request of the Joint Committee, GAO re-                     .4EC agreed to accept G.40’~suggestions that finan-
viewed and issued a report on proposals made by AEC                cial statements showing the results of the enrichment
in June 1970 to amend its Uranium Enrichment Sew-                  activity, which AEC intended to prepare, be published
ices Criteria and to increase its price for such services.         annually and that .4EC periodically prepare current
 G.40 stated that, on the basis of its interpretation of           projections of costs and revenues. G.40 stated that such
applicable legislative history, -4EC’s proposed change             information \vould provide AEC and the Joint Com-
to a commercial criteria should not be adopted with-               mittee with an indication of the extent to which the
 out further action by the Congress. With respect to the           established price is meeting the objective of recovering
proposed price increase, GAO concluded that, because               the Government’s cost over a reasonable period of time.
of cost escalation and operating levels lower than an-              (See Appendix, Section I, Item 6.)
ticipated, a price increase might be \varranted. (See                 In a report to the Joint Committee on iZEC’s poli-
Appendix, Section I, Item 6.)                                      cies and procedures for management of high-level ra-
   After issuance of the above report, the Congress                dioactive wastes, G.40 pointed out that, although
enacted legislation amending the Atomic Energy Act                 progress had been made by .4EC, some problems re-
of 1954 and clarifying its intent that the criteria for            mained to be resolved. Delays were being experienced
establishing charges for uranium enrichment services be            in implementing certain policies and practices because
based on recovery of Government costs.                             of a need for more definitive technology on such mat-
    In December 1970, AEC proposed another revision                ters as the relative merits of alternative practices and
 to the Uranium Enrichment Services Criteria as a re-              proposals for interim and long-term storage. Also, .4EC
 sult of this legislation. .4EC also proposed to increase          had not developed an overall coordinated plan for
 the price for enrichment services. In response to a re-           resolving its 11-aste management problems and for
quest of the Joint Committee, GAO reviewed these                   achieving its objectives.

         44940’60 - 7 2 4                                                                                                  71
CIVIL OPERATIONS

   I n response to GAOs suggestions, AEC agreed to          Shield organizations are promptly remitted to the
place responsibility for development of such a plan         plan’s operations center, and advances of funds from
in the Division of Waste and Scrap Management and           the operations center to local organizations do not ex-
to give that division other responsibilities necessary to   ceed the amounts needed to meet current obligations.
provide for effective implementation of the plan. O n          G.40 also recommended that the Commisision study
June 29, 1971, AEC announced an organizational              the necessity for continuing to make allowances to local
change which established a new Division of Waste            organizations to assist in meeting State contingency
Management and Transportation and abolished the             reserve requirements and require a change in the
Division of Waste and Scrap Management. (See                method of allocating interest income between the re-
Appendix, Section I, Item 7.)                               serves for high- and low-option insurance.
   In a report to the Joint Committee on the use and           A subsequent change made in the procedures for
operating costs of .4EC’s high energy accelerators,         reimbursing local organizations will result in increas-
GAO pointed out that there was a need for greater           ing interest income by about $400,000 a year. Also, the
uniformity in the cost data being reported to AEC by        Commission took action or agreed to take action in line
contractor-operated accelerator laboratories and that       with GAO’s other recommendations. (See Appendix,
more information should be available to .4EC as to the      Section I, Item 185.)
costs of operating the accelerators at various levels to       At June 30, 1971, reviews were in process on the
enable AEC to more fully evaluate the effects of al-        Commission’s administration of the Government-wide
ternative funding decisions. .4EC agreed to implement       indemnity benefit plan of the Federal employees health
procedures to achieve greater uniformity in the cost        benefits program, certain activities financed out of the
data reported by the accelerator laboratories and has       Commission’s revolving fund, and the Civil Service
agreed to require the laboratories to submit additional     retirement and disability program.
data on accelerator costs and output at various levels
of accelerator operations for use, on a trial basis, in
budgeting and program administration. (See .4ppen-          District of Columbia Government
dix, Section I, Items 169 and 170.)
   A4uditwork in process included reviews of (1) the            During fiscal year 197 1, GAO submitted two reports
cost, schedule, and design aspects of selected large con-   to the Congress on reviews of District Government op-
struction projects and ( 2 ) scientific and technical in-   erations. One was submitted to a committee and the
formation dissemination activities.                         other was submitted to a Member of Congress. Three
                                                             reports were issued to District Government officials.
                                                               The reports submitted to the Congress involved the
Civil Service Commission                                    level of Federal assistance to the District and financial
                                                            and property administration of Federal City College.
   G , 4 0 s major audit effort in the Civil Service Com-       Pursuant to requests from the chairman, House
mission was devoted to reviewing the Federal em-            Committee on the District of Columbia, and the chair-
ployees health benefits program. During the year, a         man, Subcommittee on the District of Columbia, Sen-
report was submitted to the Congress on a review of         ate Committee on Appropriations, GAO made an
the Government-wide service benefit plan for Federal        analysis and evaluation of proposed legislation which
employees, operated by Blue Cross and Blue Shield or-       provided for changing the method of financing the
ganizations. In addition, two reports were submitted        capital improvement program of the District of Co-
to Members of thc Congress and one report was sub-          lumbia. GAO officials testified on this analysis and
                                                            evaluation during hearings held by the subcommittee
mitted to the Commission on other Commission ac-
                                                            on the District’s fiscal year 1972 budget. GAO also
tivities.
                                                            provided the staff director of the subcommittee with
   I n the report on the service benefit plan, GAO
                                                            three papers covering reviews of various District ac-
pointed out a n opportunity for the Commission to in-       tivities to assist the subcommittee in reviewing the Dis-
crease the interest inrome earned by the plan by insur-     trict’s fiscal year 1972 appropriation request.
ing that all funds not immediately needed by the plan’s        In reports to District officials, GAO commented on
operations center are promptly invested, refunds col-       the need for department and agency officials to adhere
lected from hospitals by local Blue Cross and Blue          to procurement manual instructions in negotiating

72
                                                                                                C I V I L OPERATIONS

and awarding contracts for services and in making                 I n another report, GAO stated that, although some
small open market purchases. (See Appendix, Section            progress had been made in abating industrial water
I, Items 121 and 134.)                                         pollution, much more needed to be done. Some States
   Audit work in process included reviews of selected          had spurred industry to action, while in other States
activities within the public safety, human resources,          few tangible results could be seen. Wide variances
housing, and urban environment protection programs,            existed in the levels of financing and staffing of the
as well as general reviews related to grants-in-aid and        State water pollution control agencies. Activities such
nontax revenue collections.                                    as planning and enforcement had been hampered by a
                                                               lack of needed data. Enforcement was also limited by
                                                               the absence of certain legislative authority.
Environmental Protection Agency                                   The Department of the Interior indicated that a
                                                               proposed amendment to the Federal law and certain
   The Environmental Protection Agency (EPA) was               actions taken or planned by EPA were in accord with
established pursuant to Reorganization Plan No. 3 on           three of GAO’s recommendations for improvement.
December 2, 1970. EPA comprises the former ac-                 The Department disagreed with GAO’s recommenda-
tivities of (1) the Federal Water Quality Administra-          tion for providing additional guidance to regional per-
tion, Department of the Interior, ( 2 ) the National Air       sonnel on enforcement procedures and with GAO’s
Pollution Control Administration, Department of                position that less than secondary treatment of wastes
Health, Education, and Welfare ( H E W ) , ( 3 ) the           may suffice under certain circumstances. GAO recom-
Bureaus of Solid Waste Management, Water Hygiene,              mended that the Congress consider these matters in its
and Radiological Health, Environmental Control Ad-             deliberations on proposed legislation. (See Appendix,
ministration, HEW, ( 4 ) the Division of Radiation             Section I, Item 73.)
Protection Standards, atomic Energy Commission, and               GAO representatives appeared before the House
 (5) the Departments of .Agriculture, Interior, and            Committee on Public Works, in May 1971, to discuss
HEW activities related to pesticides.                          GAO’s issued reports and ongoing work related to
   GAO submitted four reports to the Congress on ac-           EPA’s water pollution control program.
tivities of EPA or its predecessor agencies; two reports          Audit work in process included reviews of the water
to the Congress as a whole and two reports to Mem-             pollution research and development program, the air
bers. Also, two reports were issued to agency officials.       and water pollution enforcement program, the solid
Most of the reports dealt with water pollution control         waste demonstration grant program, the solid waste
activities.                                                    management practices at Federal installations, and the
   I n one report to the Congress, GAO stated that op-         program to control automobile exhaust emissions.
eration and maintenance problems at municipal waste
treatment plants had been widespread for many years
and had resulted in inefficient plant operation. These
                                                               General Services Administration
problems resulted from a lack of qualified operating
personnel, inadequate controls over industrial wastes,            A significant portion of GAOs audit effort in the
and inadequate plant design or lack of adequate                General Services Administration (GSA) was devoted
equipment.                                                     to reviewing the acquisition and management of the
   EPA amended its regulations to require assurances           Government’s automatic data processing equipment,
from grant applicants that possibly harmful industrial         the management of the communications system in civil
wastes will receive pretreatment prior to discharge into
                                                               agencies, the stockpiling of strategic and critical mate-
the municipal sewage system and assurances from State
                                                               rials, the management of the excess and surplus per-
water pollution control agencies that newly completed
facilities will be inspected at least annually for the first   sonal property programs, the acquisition of proposed
 3 years and periodically thereafter. EPA also prepared        construction sites, the leasing of office buildings, and
 guidelines dealing with plant design and operation and        the management of space in Government-occupied
maintenance, and established an operation and main-            buildings. Four reports were submitted to the Congress
tenance function in each region to assist the States in        as a whole and six were submitted to committees or
 developing their programs. (See Appendix, Section I,          Members. Also, five reports \\.ere issued to the Admin-
 Item 72.)                                                     istrator of General Services or other agency officials.

                                                                                                                    73
C I V I L OPERATIONS

   GSA is responsible under Public Law 89-306 for          least $1.5 million. GAO concluded that the revised
carrying out a coordinated Government-wide program         specifications, for which a cost-benefit analysis had not
for the efficient and economical acquisition of general-   been made, provided for more elaborate packing than
purpose ADP equipment. GAO’s review of progress            necessary. Although GSA maintained that avoidance of
under the program showed that the Government was           potential damage and loss in subsequent procurements
not making maximum use of its ADP equipment pur-           outweighed any advantages that would have resulted
chase funds, primarily because agencies continued to       from a cost-benefit study, GAO believes that the re-
make purchase decisions on the basis of their individual   vised specifications should be reevaluated. (See Ap-
funding capabilities and needs.                            pendix, Section I, Item 114.)
   Also, most of the Government’s equipment was being         GAO also reported that replacing GSA’s sedans each
obtained from system manufacturers under negotiated        year would save the Government an estimated $5.1
contracts through purchases or short-term rentals.         million annually because ( 1) maintenance, repair, and
GAO estimated that agencies having short-term leases       tire costs are lowest during the first year of ownership
could have saved up to $155 million over a 5-year          and ( 2 ) the discount obtained by the Government
period if they had taken advantage of contracts that       when it purchases sedans substantially offsets the de-
were, in effect, 1-year contracts with options to renew,   preciation factor during the first year of ownership.
or if they had had authority to enter into multiyear       Further, GAO reported that additional savings could
leases.                                                    result from extending the 1-year replacement standard
   GAO recommended that GSA assure that the agen-          to sedans of other Federal agencies and to station
cies obtain all possible benefits under their contracts,   wagons and light trucks.
that the advantages of increasingly available competi-        GSA agreed with GAOs findings. The Office of
tion be obtained both in purchasing and in leasing, that   Management and Budget also agreed that a 1-year
additional capital for purchasing equipment for other      replacement standard was optimal but recommended
agencies’ use be requested for GSA’s ADP fund, and         that GSA continue the current 6-year replacement
that GSA and the Office of Management and Budget           standard for the present, primarily because of the
assure that purchases are made on the basis of the best    impact of the additional one-time capital investment
buy for the Government as a whole rather than for the      on the Federal budget. GAO believes that the addi-
individual agencies.                                       tional investment with imputed interest would be re-
   GAO suggested also that the Congress might wish to      covered through annual savings in about 2 years. (See
consider granting authority to GSA that would enable       Appendix, Section I, Item 130.)
those agencies not otherwise able to do so to achieve         Audit work in process included additional reviews
the savings available from multiyear leasing instead of    of GSA’s activities under its Government-wide respon-
short-term leasing. (See Appendix, Section I, Item         sibilities for the management of ADP equipment, and
 197.)                                                     the continuance of reviews of the stockpiling of strategic
   Another GAO report showed that if excess                and critical materials, the disposal of excess and sur-
Government-owned ADP equipment had been used to            plus personal property, the construction and manage-
replace similar rented equipment, savings of $920,000      ment of public buildings, and the management of
could have been realized. Also, potential purchase         communications and supply systems.
credits of $760,000 that could have been retained were
lost in other transactions. GAO recommended that
GSA improve its ADP management information sys-            National Aeronautics and
tem reports, emphasize use of the system to identify       Space Ad minist ration
opportunities to redistribute excess equipment, and
disseminate information on available purchase credits.        During fiscal year 1971, G A O s work at the National
GSA advised of steps it had taken or would take to         Aeronautics and Space Administration (NASA) was
implement GAO’s recommendations. (See Appendix,            performed at NASA headquarters and at various NASA
Section I, Item 199.)                                      field installations. Eleven reports were submitted to
   Another report concerned revised packing specifica-     the Congress-four to the Congress as a whole and
tions for certain types of cabinets, lockers, and xvard-   seven to committees or Members. Four reports were
robes which resulted in additional contract costs of at    issued to agency officials. The reviews were concerned

74
                                                                                              C I V I L OPE RAT I ON S

principally with contracting, procurement, and various       tive, which probably would have resulted in increased
administrative activities.                                   competition and in savings to the Government.
   A GAO review of two cost-plus-incentive-fee con-             NASA agreed with GAO’s recommendations and
tracts for F-1 rocket engines for the Saturn V launch        stated that it intended to implement requirements em-
vehicle indicated large underruns of the target costs,       phasizing to contracting and management officials the
which could result in larger fees for the contractor.        need to increase competition. (See Appendix, Section
An underrun could be due to an initial overestimate of       I, Item 115.)
cost rather than to contractor efficiency.                       G.40 also reported that NASA’s Kennedy Space
    Further review showed that the target costs included     Center had not established accountability for equip-
amounts for certain materials and indirect costs which       ment costing over $320 million until as long as 4 years
were overstated by about $5 million because they were        after it had been received. The major reason for the
not based on the most accurate, complete, and current        delays in establishing accountability was the absence
cost data available to the contractor when it submitted      of iinit cnst data t h a t should have heen provided upon
its pricing certificates. As a result, the total fees the    delivery. Also, physical inventories were not being taken
contractor could earn under the contracts were in-           as frequently as required by NASA instructions and im-
creased by about $1.5 million.                               provements were needed with respect to the methods
    NASA advised GAO that it had requested the De-           and personnel used in taking physical inventories.
fense Contract Audit Agency (DCAA) to conduct a                  Accurate and timely information on property is
postaward evaluation and that contract adjustments           essential for management to maintain efficient and
would be sought on the basis of DCAA findings and the        economical operations, to prepare financial reports to
overstatements GAO noted. (See Appendix, Section I,          the Congress, and to establish responsibility for custody
Item 117.)                                                   of the property. NASA took corrective action on all of
    A GAO review of a cost-plus-incentive-fee contract       GAO’s suggestions, except for two pertaining to the
for the first stage of the Saturn V launch vehicle also      taking of physical inventories. G.40 believes that fur-
 indicated a large underrun of the target cost. Further      ther action is necessary to improve physical inventory
review showed that the target cost included amounts          procedures. (See Appendix, Section I, Item 204.)
for certain materials and indirect costs which were              In a review made at the request of the chairman,
overstated by about $2.6 million on the basis of cost        Senate Committee on Aeronautical and Space Sciences,
and pricing data available to the contractor before he       GAO noted that a building under construction at
 submitted the pricing certificate. As a result, the total   NASA’s Manned Spacecraft Center was substantially
 fee the contractor could earn under this contract was       different in function, program application, and cost
 increased by about $695,000. NASA advised GAO that           from the one N.ZSA described and justified to the Con-
 it planned to obtain an appropriate fee adjustment          gress. Neither the Congress nor its committees had
 from the contractor.                                        been notified of the change in NASA’s plans.
    A revision made in its procurement regulation, if            G.40 stated that the committee might wish to con-
 properly implemented, should provide NASA with               sider identifying in N.4SA’s authorization acts, the
 greater assurance that cost data furnished by contrac-       specific projects to be constructed with appropriated
 tors is accurate, complete, and current. (See Appendix,     funds. This identification would restrict the availability
 Section I, Item 117.)                                       of funds appropriated under the construction of facili-
    GAO noted that NASA had made a significant                ties appropriations to the projects and amounts identi-
 number of equipment purchases without effective com-         fied in the authorization acts. NASA’s 1972 fiscal year
 petition because, in many instances, restrictive specifi-    authorization bill, as passed by the Senate, provided
 cations governed the procurement. Generally, specifica-      for such identification. (See Appendix, Section I, Item
 tions were prepared by equipment users or under their        129.)
 direction and included special features which the users         In a report to selected committees of the Congress,
 desired. These special features usually were available       GAO stated that NASA’s Manned Spacecraft Center
 only on a particular piece of equipment from a single        might have purchased more aircraft than needed to
  supplier. In some cases, the special features were          meet astronaut and staff pilot flying requirements. The
 unnecessary. If equipment users had not specified such       flying requirements used to determine the number of
 features, specifications could have been less restric-       aircraft needed exceeded the past utilization rates. I n

                                                                                                                    75
C I V I L OPERATIONS

addition, indications were that the number of astro-            project, cost growth in the Viking and other major
nauts was likely to decrease, thereby causing a cor-            NASA projects, and the management of the earth
responding decrease in NASA’s flying requirements.              resources survey program.
   Because of the possibility that the purchase of some
of the undelivered aircraft could be canceled, GAO
suggested that NASA reassess the reasonableness of
the procurement action. NASA believed, however, that            National Science Foundation
procurement of the aircraft was justified. (See Ap-
pendix, Section I, Item 125.)                                      During fiscal year 1971, four reports were issued on
   In reports to the Administrator, NASA, GAO com-              the results of GAO audit work at the National Science
mented on the payment of award fees to the contractor           Foundation (NSF)-one each to the Congress and a
for aircraft maintenance support services at NASA’s             Member of Congress, and two to the Director of the
Manned Spacecraft Center without using the objective            National Science Foundation.
measurement standards in NASA’s cost-plus-award-                   I n the report to the Congress, GAO stated that a
fee contracting guide established for use in evaluating         number of improvements were needed in the adminis-
contractors’ performance and on the need for revisions          tration of Federal support of shore facilities and vessels
in computing the rent for use of Government-owned               for oceanographic research activities at educational
facilities for commercial work and for improvements             and other nonprofit institutions. These included the
in the accounting for and use of Government-owned               need for uniform policies and procedures concerning
plant equipment by a NASA contractor. (See Appen-               construction of shore facilities, development of Iong-
dix, Section I, Items 116 and 203.)                             range plans for acquisition of research vessels, formal
   In a report to the Director of NASA’s Ames Research          coordination of plans for vessel acquisition between
Center, GAO pointed out the need for the Center to              NSF and the Office of Naval Research, and coordina-
revise its procedures to encourage efficient use of its         tion of Federal support of research vessel operations.
automated data processing facilities and to insure that         NSF stated it had implemented some of GAO’s sug-
the facilities are used only for properly approved pur-         gestions and that others would be adopted. (See
poses. (See Appendix, Section I, Item 200.)                     Appendix, Section I, Items 150, 151, 152, and 180.)
   Audit work in process included reviews of such                  In a report to the Director, NSF, GAO pointed out
activities as the cost effectiveness of the space shuttle       opportunities to improve administration of the National




                                                                                     t




                        Research Vessel Pillsbury, Institute of Marine Science, University   of   Miami.

76
                                                                                               C I V I L OPERATIONS

Radio Astronomy Observatory (NRAO) , a contractor-           available from other sources. However, the credit
operated nationa1 research center established for use        unions encountered a number of problems which re-
primarily by visiting scientists. GAO suggested im-          sulted in relatively high operating deficits and in little
provements in NRAO's procedures for allocating tele-         success in attaining the goal of becoming self-support-
scope observing time, for evaluating the levels of           ing. Also, the credit unions had not established target
research efforts and the quality of research programs        dates for achieving that goal. OEO informed GAO of
carried out at NRAO, and for implementing NRAO's             actions it planned to take in line with GAO's recom-
policy regarding usage of the telescope systems by           mendations. (See Appendix, Section I, Item 10.)
visitors and staff to insure that NRAO serves its mission       Audit work in process included reviews of activities
as a national research center primarily for visiting         of specific community action agencies made pursuant
scientists. NSF agreed in general with GAO's recom-          to requests of committees or Members of Congress, the
mendations. (See Appendix, Section I, Item 153.)             adequacy of audit reports prepared by independent
   Audit work in process included reviews of the ocean       accountants, manpower programs carried out by the
sediment coring program and of programs for support-         Opportunities Industrialization Centers, contracts for
ing the development and improvement of information           support services and evaluations, the impact of the
systems in the various scientific disciplines and research   total Federal effort in improving the living conditions
in the atmospheric sciences.                                 of migrant and seasonal farmworkers in selected geo-
                                                             graphical areas, and OEO's efforts in innovative ap-
                                                             proaches to economic development in urban and rural
Office of Economic Opportunity                               areas.

  GAO submitted 10 reports to the Congress on reviews
of Office of Economic Opportunity (OEO) operations.          Selective Service System
Two of these reports were submitted to the Congress
as a whole and eight were submitted to committees or           During fiscal year 1971, GAO submitted one report
Members. Two reports were issued to agency officials.        to the Congress and issued nine reports to agency offi-
   In one report to the Congress, GAO stated that            cials on Selective Service System activities.
improvements were needed in the operating efficiency            In the report to the Congress, GAO stated that
and effectiveness of the Neighborhood Health Services        an estimated savings of $1 million in transportation
program administered by St. Luke's Hospital Center,          and examination costs might have been realized nation-
New York City, in that ( 1) the space available to the       wide if local draft board medical advisors had been
project limited the range of services which could be         used to a greater extent to screen registrants with prior
offered, ( 2 ) the relatively low number of patients seen    histories of medical problems. The Selective Service
by project personnel indicated that maximum use was          agreed to have local boards make greater use of medical
not made of the professional staff, ( 3 ) continuity of      advisors for this purpose. (See Appendix, Section I,
care was lost' when patients were admitted to hospitals      Item 172.)
because project physicians did not have hospital privi-         The nine reports to agency officials concerned per-
leges, (4) care was individual-oriented rather than          sonnel management policies and procedures and the
family-oriented, and (5) free care was provided to           settlement of accounts of accountable officers.
persons who were not eligible. OEO agreed with GAO's
recommendations and described actions that had been
or would be taken to effect needed improvements. (See        Small Business Administration
Appendix, Section I, Item 11.)
   In another report to the Congress, GAO reported on          GAO submitted one report to a committee of the
the progress being made by OEO-financed credit               Congress and one report to a Member of the Congress
unions in becoming self-supporting, the benefits they        on Small Business Administration (SBA) activities. In
provided, and the results of their financial operations.     addition, one report was issued to the Administrator
   The principal benefits were the availability to low-      of SBA. The report to the Administrator dealt with
income persons of (1) depositories for their savings         the need for SBA to improve documentation and
and (2) loans that they otherwise might not have             evaluation of borrowers' eligibility for business loans.
obtained or loans at lower interest rates than those         (See Appendix, Section I, Item 41, )

                                                                                                                    77
C I V I L OPERAT IONS

  Audit work in process at June 30, 1971, included            of the VA design criteria applicable to all hospital
a review of the effectiveness of the minority enterprise      construction.
program, including section 8 ( a ) contracting activities,       GAO’s review of four architect-engineers’ cost re-
and a survey of the effectiveness of Federal disaster         duction proposals, which VA had accepted in connec-
assistance programs related to housing construction and      tion with the construction of three hospitals, showed
business redevelopment.                                      that it took VA from 1 to 4 years to incorporate the
                                                             items in its design criteria. GAO estimated that VA
                                                             might have saved about $486,000 if VA had required
Veterans Administration                                      the inclusion of the four cost reduction items, where
                                                              appropriate, in nine contracts which it subsequently
    At the Veterans Administration ( V A ) , GAO re-          awarded for hospital construction.
viewed selected phases of the medical, compensation              GAO also pointed out that VA canceled four mod-
 and pension, loan guaranty, insurance, facilities con-       ernization construction projects during development
 struction, education, and supply management pro-             or shortly after completion of the working drawings
grams and submitted 10 reports to the Congress, in-           and specifications, which cost about $338,000, even
 cluding five reports to the Congress as a whole and five     though VA had enough information to raise serious
to committees or Members. Also, 12 reports were issued        questions about those projects prior to authorizing
to agency officials.                                          the working drawings and specifications.
    As the result of a review of VA landholdings and             VA informed GAO that it had changed its proce-
land requirements at 14 VA stations, GAO stated that          dures to incorporate architect-engineers’ cost reduc-
management controls over the identification and re-           tion proposals in its design criteria for future
porting of excess landholdings needed to be improved.         construction and had strengthened its review prac-
GAO identified 839 acrcs of land at eight stations           tices before award of architect-engineer contracts for
with an estimated value of about $26 million which           hospital modernization projects. (See Appendix, Sec-
were excess to current and established future VA needs       tion I, Item 181.)
based on V:Ys landholding standards. VA4stated that              In another report, GAO stated that although VA
guidelines would be developed to evaluate current            regulations provide that a comparison of cost and
landholdin ys and that specific consideration would be       related factors be made before determining whether
given to the parcels identified in the GAO report.           to use individual service calls or annual maintenance
Also, VA cited specific actions that would be taken          contracts for servicing office machines, VA was not
to improve controls. (See Appendix, Section I, Item          making such comparisons. O n the basis of practices
182.)                                                        found at 13 stations, GAO estimated that, if the same
   Following up on an earlier review, GAO reported           conditions existed at VA’s other field stations, sav-
that VA was losing $590,000 a year in rental income          ings of a much as $400,000 annually could be realized
because rents charged employees at 13 VA hospitals           through greater use of the per-call service method.
\rere too low. GAO stated that VA. in setting the                VA subsequently amended its regulations to require
rental rates, had deviated from Office of Management         field stations to determine the most economical method
and Budget criteria which require Government rents           of servicing office machines and to fully document,
to be based on rents of comparable private housing.          where applicable, the reasons for use of a more costly
VA stated that it would review all appraisals in detail      method. Also, the General Services Administration
for compliance with Office of Management and Budget
                                                             brought this matter to the attention of all Federal
criteria and that reviews of rental rate activities would
                                                             agencies and established procedures to notify indi-
be made by internal auditors and other central office
                                                             vidual agencies where additional economies in serv-
representatives. The agency also informed GAO of
other actions it would take to insure compliance with        icing office machines could be realized. (See Appendix,
the criteria. (See Appendix, Section I, Item 186.)           Section I, Item 210.)
   I n another report, GAO stated that V-4 had not               In another report to the Congress, GAO expressed
made adequate and timely investigations of architect-        its opinion on the financial statements of the Vet-
engineers’ cost rcduction proposals for the use of less      erans Canteen Service for fiscal year 1970.
costly construction materials and methods, to deter-            Audit work in process included reviews of the ad-
mine whether their use should have been made a part          ministration of VA’s educational assistance program,

78
                                                                                              C I V I L OPE RAT ION S

hospital planning and construction, automatic data                Examination of the financial statements of the
processing, and VA’s hospital outpatient program.               Federal Home Loan Bank Board for the year
                                                                ended December 31, 1969, B-114827, September 2,
                                                                1970.
Regulatory Agencies                                               Audit of the Federal Savings and Loan Insurance
                                                                Corporation supervised by the Federal Home Loan
   GAO reported on the policies and practices of the            Bank Board, for the year ended December 31, 1969,
Civil Aeronautics Board, the Federal Communications             B-114893, November 12, 1970.
Commission, the Federal Maritime Commission, the                  Examination of the financial statements of the
Federal Power Commission, the Interstate Commerce               Tennessee Valley Authority for the fiscal year 1970,
Commission, the Federal Trade Commission, and the               B-114850, March 31,1971.
Securities and Exchange Commission in respect to                 GAO was unable to fully discharge its responsibili-
their assessment of fees for services which convey spe-       ties for auditing the Federal Deposit Insurance Cor-
cial benefits or privileges to identifiable recipients.       poration because the Corporation would not permit
Title V of the Independent Offices Appropriation Act,         unrestricted access to examination reports, files, and
1952, the basic authority for the assessment of such          other records relative to the banks it insures. Without
fees, provides that these services shall be self-sustaining   such access! GAO was unable to express an overall
to the fullest extent possible and shall be as uniform         opinion on the Corporation’s financial statements.
as practicable taking into consideration all relevant
                                                              The importance of resolving the access-to-records
and pertinent facts. The Bureau of the Budget (now            question is indicated by the Corporation’s estimate that
the Office of Management and Budget) issued policy            there xvere insured deposits of $3,346 million in 244
guidance (Circular No. A-25) to agencies for im-              problem banks at June 30, 1970.
plementing these requirements.
   The report points out that the fee policies of the
seven regulatory agencies were not nearly as uniform
as practicable nor, in establishing the fees and charges,     Multiagency Reviews
were all costs to the Government taken into consid-
                                                                 A number of GAO’s reports are classified as reports
eration.
                                                              on multiagency reviews involving two or more depart-
   Five of the regulatory agencies took action to change
                                                              ments or agencies and relating to defense or inter-
 their policies and the Office of Management and
                                                              national operations as well as civil operations. Three
Budget agreed to reexamine the language of Circular
                                                              of these reports are discussed below.
A-25 to ascertain whether it furnishes adequate guid-
                                                                 Because of the magnitude of Government-funded
 ance for fixing fees and charges as required by the act.
                                                              research by educational institutions-about $1.7 bil-
 (See Appendix, Section I, Item 242.)
                                                              lion in fiscal year 1969-GAO made a study of how
                                                              one of the large institutions-the University of Mich-
                                                              igan-manages research supported by the Government
Other Civil Departments
                                                              and how it views some of the issues that have evolved
and Agencies                                                  from the great increase in that research.
  GAO’s audit work in certain civil agencies of the              As a result of its study, GAO recommended that the
Federal Government consisted primarily of the exami-          Director, Office of Management and Budget, in collab-
nation of their financial statements. Reports on these        oration with other concerned Federal agencies, study
examinations are identified below.                            the feasibility of adopting a uniform system of provid-
      Audit of the Federal Deposit Insurance Corpora-         ing universities with sufficient advance funds for
   tion for the year ended June 30, 1970, B-114831,           performing research for the Federal Government SO
   February 18, 1971.                                         that the universities are not required to use their own
      Audit of the financial statements of the Federal        funds. The Bureau of the Budget (now the Office of
   home loan banks supervised by the Federal Home             Management and Budget) concurred in the objectives
   Loan Bank Board, for the year ended December 31,           of this recommendation and advised that it would be
    1969, B-114827, August 10, 1970.                          considered.

                                                                                                                   79
CIVIL O P E R A T I O N S




University-owned Space Research Laboratory on the North Campus of the University of Michigan. Entire construction funds
                             provided by the National Aeronautics and Space Administration.

   Because provisions in appropriation acts relating to      cember 31, 1970, which provided for the establishment
cost sharing are not uniform, the extent of cost shar-       of a Government-wide alcoholism program. (See Ap-
ing in federally financed research may vary according        pendix, Section I, Item 184.)
to which Federal agency is financing the research.               Another report concerned GAO's research of the
GAO therefore recommended that the Congress con-             historical background of the Presidential Transition Act
sider legislation to prescribe a consistant Government       of 1963 and the Former Presidents Act of 1958. The
policy for cost sharing. The Bureau of the Budget            basic purpose of the report was to provide information
specifically endorsed this recommendation. (See Ap-          on the transitional process that might be of interest to
pendix, Section I, Items 154, 155, and 156.)                 the Congress and the executive branch. GAO con-
   A GAO study, made at the request of the chairman,         cluded that the amounts and/or period of availability
Special Subcommittee on Alcoholism and Narcotics,            of appropriations authorized by these two laws did not
Senate Committee on Labor and Public Welfare, to             appear to be adequate to carry out the objectives of
determine the savings that might be realized from a          the laws and suggested that the Congress might wish
program aimed at identification, prevention, and treat-      to consider amending them. (See Appendix, Section I,
ment of alcoholism among Federal civilian employees          I tem 245. )
showed that on the basis of authoritative opinions of
knowledgeable individuals, Federal employees suffer-
ing from alcoholism numbered between 112,000 and             Legislative and Judicial
224,000 and that the resulting employer costs were           Branches
between $275 million and $550 million a year. GAO
estimated that an alcoholism program would achieve           Legislative Branch
net cost savings to the Government ranging from $135
million to $280 million a year. GAO reported also that         Audit work in the legislative branch included
other benefits would accrue to the Federal Govern-           examinations at the site of operations of the following
ment and to society as a whole.                              activities:
   Subsequent to the issuance of GAO's report, the              The Senate :
Congress enacted Public Law 91-616, approved De-                  Senate recording studio

80
                                                                                              C I V I L OPERATIONS

     Senate employees barber shop                             branch employees was issued to the Director, Adminis-
     Senate office beauty shop                                trative Office of the U S . Courts.
  The House of Representatives :                                 The report to the Congress contained GAO recom-
                                                              mendations for consideration by the Judicial Con-
   The Sergeant at Arms
                                                              ference of the United States, a policymaking body for
   House finance office
   House recording studio                                     the Federal judicial system, on the following matters :
   House office supply service                                     Opportunities to reduce jury costs and incon-
   House office equipment service                               venience to prospective jurors by reducing the num-
   House beauty shop                                            ber summoned.
   House printing clerks                                           Need to accelerate automation of juror selection
                                                                procedures.
  Architect of the Capitol :
                                                                   Savings available from deposit of registry account
    U.S. Senate restaurants                                     funds in Federal Resene banks.
    House of Representatives restaurant
                                                                   Savings available through consolidating court
  Capitol Guide Force                                           locations.
  Joint Committee on Atomic Energy                                 Opportunities to improve procedures for safe-
                                                                guarding funds and property and for maintenance
  Library of Congress
                                                                of time, attendance, and leave records.
  Government Printing Office                                       Need to strengthen role of the Administrative Of-
   The salaries, mileage, and expense allowances of             fice to accelerate improvements in administrative
Senators, salaries of officers and employees of the             and financial activities of district courts.
Senate, clerk hire of Senators, and other expenses of            Detailed comments on the foregoing matters are con-
the Senate are examined on the basis of documents             tained in the Appendix, Section I, Items 162, 163,
submitted to GAO.                                              173,174,175, and 187.
   Fifteen reports on audits of activities in the legis-         Other work in the judicial branch consisted of an
lative branch were issued during the year. Three of           audit of the payroll and leave records and a review for
these reports related to activities of the Senate, six to     the purpose of settling the accounts of accountable
activities of the House, two to activities of the Architect   officers of the U.S. Tax Court.
of the Capitol, two to activities of the Government
Printing Office, and one each to the activities of the
Joint Committee on Atomic Energy and the Library
                                                              Organizations Outside the
of Congress.                                                  Federal Government
   I n reports to the Congress GAO expressed its opinion         In reports addressed to the Board of Trustees, Gov-
on the financial statements of the Government Print-          ernment Services, Inc., G.20 expressed its opinion on
ing Office (GPO) for fiscal year 1970 and expressed           the financial statements of Government Services, Inc.,
its belief that savings could be realized by GPO by           and of its Employee Retirement and Benefit Trust
buying automatic data processing equipment or by              Fund and Supplemental Pension Plan for the year
leasing it from commercial leasing firms rather than          ended December 31, 1970. The examinations were
from the manufacturer. (See Appendix, Section I,              made at the request of the Board of Trustees.
Item 196.)                                                      GAO also examined the financial statements of the
                                                              Disabled American Veterans National Headquarters
                                                              for the year ended December 31, 1969, the Life Mem-
Judicial Branch                                               bership Fund for the year ended June 30, 1970, and
                                                              the Service Foundation for the 6 months ended De-
  During fiscal year 1971, a report on opportunities          ccmbcr 31, 1969, pursuant to the requirements of
for improvement in the administrative and financial           Public LaLv 90-208, approved December 18, 1967 (36
operations of the U S . district courts was submitted to      U.S.C. 90i(b) 1. A report expressing GAOs opinion
the Congress and a report on a review of payrolls and         on these financial statements was submitted to the
lump-sum leave payments made to former judicial               Congress during the fiscal year.

                                                                                                                  81
4




    . *
    .x
                                                                                        DEFENSE OPE RAT 10N S

                                                           civilian pay and allowances and education and train-
                                                           ing programs), (9) communications, and ( 10) ac-
                                                           counting systems and accounting operations.
                                                              I n addition to these reviews, GAO made a number
                                                           of special audits and surveys at the request of various
                                                           committees and individual Members of the Congress.
                                                           O n this special work, 127 reports were issued to the
                                                           committees and Members of the Congress. These re-
                                                           ports related principally to ( 1) administration and cur-
                                                           rent status of weapon system acquisition programs such
                                                           as the C-5A, S-3A, F-14, and F-15 aircraft, the
CHAPTER FIVE                                               Maverick, Condor, Tow, and Shillelagh missiles, and
                                                           tactical data systems designed for command and con-
                                                           trol functions and for intelligence gathering and pro-
                                                           cessing, ( 2 ) administration and current status of other
                                                           programs such as the Civilian Health and Medical
                                                           Program of the Uniformed Services and the acquisi-
AUDIT OF DEFENSE                                           tion of computers for various automatic data process-
                                                           ing systems, ( 3 ) operations of nonappropriated fund
OPERATIONS AND PROGRAMS                                    activities in the United States and overseas, (4) airlift/
                                                           sealift requirements of the iiiilitary services, (5) ques-
                                                           tions concerning the existence of waste, extravagance,
Nature of Audit Work Performed                             or other improper practices by the military depart-
                                                           ments, (6) procurement practices in acquiring specific
    The audit work described in this chapter was per-
                                                           goods or services and administration of specific con-
formed by or under the direction of GAO’s Defense
                                                           tracts, and (7) inquiries concerning proposed transfer,
Division xvhich has overall responsibility for carrying
                                                           consolidation, or phaseout of functions performed at
out all audit work in the Department of Defense and
                                                           various military installations.
the military departments other than that relating to the
Corps of Engineers (Civil Functions), Department of
the Army; international activities; and charges for
transportation, which are the responsibility of other
                                                           Approach to Audit
divisions. The Defense Division is under the supervision
of Charles M. Bailey, Director, and Richard W. Gut-        General
mann, Deputy Director. An organization chart of the
Defense Division appears on the folloiving page.              Because GAO’s manpower resources are limited in
    GAO’s audit efforts in the Department of Defense       relation to the magnitude and complexity of the oper-
 (DOD) continued to be directed toivard aiding in the      ations of the Department of Defense, it is essential that
improvement of management and operating controls           audit effort be directed to selected areas where findings
and financial administration of the complex operations     and recommendations can be of most assistance in
of the Department. Regular audits and reviews com-         bringing about needed improvements in management
pleted during the year or in progress at the close of      and control and be most responsive to congressional
the year related to programs and operations in such        interest in the operations. In keeping with this concept
functional areas as ( 1 ) acquisition of major weapon      GAO has redirected its audit efforts in the areas of
systems, ( 2 ) research and development, (3) procure-      acquisition of major weapon systems and procurement.
ment (including negotiation of contract prices and
administration of contract terms and conditions),          Acquisition of Major Weapon Systems
 (4) supply management, (5) phasedown of military
activities in Vietnam, (6) facilities and construction,      The complexity of modern weapon systems has
 ( 7 ) maintenance, repair, and overhaul, (8) manpower     brought about a significant increase in their costs and
utilization (including administration of military and      in the potential risks that the systems as produced may

                                                                                                                  &3
DEFENSE O P E R A T I O N S

                                                DEFENSE DIVISION

                                       I                                                 1
                                                        DIRECTOR
                                                C H A R L E S M. B A I L E Y                      I   PROGRAM DIRECTION
                                                                                                       AND EVALUATION                 I
                                                                                                       ASSISTANT DIRECTOR
                                                 DEPUTY DIRECTOR                                         JOHN R. RITCHIE
                                               RICHARD W. GUTMANN




     c
     I
     I
                   SUPPLY MANAGEMENT

                    ASSOCIATE DIRECTOR
                     J. KENNETH FASICK
               DEPUTY ASSOCIATE DIRECTOR
                     MARVIN COLBS

                    ASSISTANT DIRECTORS
         F E L I X E. ASBY
         MATHEWGRADET                  JOHN LANDICHO
                                                        I
                                                        I
                                                        I
                                                               -
                                                                    II
                                                                                        PROCUREMENT

                                                                                     ASSOCIATE DIRECTOR
                                                                                      JAMES H. HAMMOND
                                                                               DEPUTY ASSOCIATE DIRECTOR


                                                                    I HYMAN S. BARAS
                                                                                      JOHN F. FLYNN

                                                                                     ASSISTANT DIRECTORS

                                                                         FRANK P, CHEMERY
                                                                                                 CHARLES WEINFELD
                                                                                                 SAM P I N E S
                                                                                    STANLEY R. E I B E T Z

                                                                                             ~
                                                                                                                                 I
                                                                                                                                 II
              RESEARCH AND DEVELOPMENT                              I                    MANPOWER                                I
                    ASSOCIATE DIRECTOR                                               ASSOCIATE DIRECTOR


                    ASSISTANT DIRECTORS                                              ASSISTANT DIRECTORS
         HOWARD L. DEHNBOSTEL       So SEYMOUR PODNOS                  DONALD G. BOEGEHOLD                 MAX S T E T T N E R
         WILLIAM D. LINCICOME       DAVID So GLICKMAN                  JOSEPH J. KLINE                     PAUL C. NEWELL




                                                        c
            FACILITIES AND SUPPORT SERVICES

                   ASSOCIATE DIRECTOR                                                ASSOCIATE DIRECTOR
                   R O B E R T G. ROTHWELL                                             HASSELL B. B E L L

                    ASSISTANT DIRECTORS                                              ASSISTANT DIRECTORS
     WILLIAM A. CALAFIURA         JOHAN DE LEEIJW                      EDWN C. EADS                   ANDREW B. McCONNELL
     DONALD L. EIRICH             CHARLES So COLLINS                   WILLIAM F. COOGAN              GUY BEST

                                                                                ~~           ~~             ____~       ~




              ACCOUNTING SYSTEMS REVIEW
                                                                   1                  SPECIAL PROJECTS


                    ASSISTANT DIRECTOR
                    C H E S T E R S. DANIELS
                                                               i   I
                                                                                     ASSOCIATE DIRECTOR
                                                                                       J. H. STOLAROW

                                                                                      ASSISTANT DIRECTOR
                                                                                                                                 I

                                                                                      BERNARD W. SEWELL


                                                                                                                JUNE 30. 1971


84
                                                                                        DEFENSE OPE RAT IONS

fail to meet the performance objectives for which they     As the DCAA has increased its effectiveness, GAO’s
were designed. The Congress has expressed increasing       emphasis on audit of individual contracts has been
concern that, for many of the new weapon systems,          shifted to evaluations of the audits performed by the
actual costs are exceeding by significant amounts the      DCAA and to broader areas of procurement and con-
initial estimates of costs to develop and produce them;    tract administration. GAO is now giving greater atten-
time schedules for development and production are          tion to such other important aspects of procurement as
continually extended ; deliveries are delayed and de-       ( 1) price escalation provisions included in negotiated
ployment of the systems is deferred for many months        contracts, ( 2 ) furnishing of materials to contractors
even after repeated extensions of time schedules; and      and controls over such materials, and (3) contract
the actual performance characteristics of the systems      terminations.
frequently fall substantially short of those expected
from the original design.
   I n recognition of this congressional concern, the      Audit Reports Issued
General Accounting Office has established a staff
within its Defense Division, the Major Acquisitions            GAO submitted 176 congressional reports on its
Group, to make continuing reviews on a current basis       audits and reviews: 49 to the Congress and 127 to
of major weapon systems which are in various stages of     committees or Members of the Congress on special
the acquisition cycle-from the formulation of the con-     investigations made at their request. In addition, 272
cept of the system, through the phases of contract defi-   reports were submitted to officials of the Department
nition, development, and production, to its operational    of Defense. Of these, 37 were directed to the secretarial
deployment. For this purpose, weapon systems are con-      level and dealt principally with contract administra-
sidered “major” if costs are expected to reach $25 mil-    tion, pay and allowances, and support service matters
lion for research, development, test, and evaluation, or   which were not deemed to be of sufficient significance
$100 million for production. The Major Acquisitions        to report to the Congress; 235 were directed to lower
Group has as its primary objective the determination of    level officials and dealt principally with matters relating
the basic causes of cost growth, schedule slippage, and    to settlement of disbursing officers’ accounts and mat-
deterioration of the originally expected perform-          ters relating to local policies, procedures, and practices
ance characteristics in order to make recommendations      disclosed in site examinations of civilian payrolls and
for improving the weapon acquisition process.               related records.
   GAO believes that its reports to the Congress on            The discussion of GAO’s general work in the De-
these continuing reviews will provide the means of         partment of Defense on matters relating to transporta-
keeping the Congress and appropriate congressional          tion is included in Chapter Seven, Transportation,
committees currently informed on the progress and          beginning on page 113. The reports issued on such work
status of the major programs in the weapon acquisition     are not included in the number of reports issued as
process and assist them in formulating decisions affect-   cited above. A list of the reports issued, including those
ing authorization and appropriation of funds for the        dealing with transportation matters, is presented in the
programs.                                                  Appendix, Section 111, of this report.

Procurement
                                                           Significant Findings and
  For many years the major part of GAO’s audit effort       Recommendations
in the area of procurement has been applied to the
pricing of negotiated contracts. Interest in this area        GAO’s reviews of the management of the operations
continues. However, with the increased responsibility      of the Department of Defense and the military depart-
and effectiveness of the Defense Contract Audit Agency     ments frequently result in findings which indicate a
 (DCAA) in the postaward reviews of contract prices,       need for improvement in management controls. Re-
GAO is able to give greater attention to other important   ports on such findings incIude recommendations for
aspects of procurement.                                    improvement.
   GAO’s work in rhe audit of contracts and the work of       The replies of DOD officials to reports in which ad-
the DCAA are complementary rather than duplicative.        ministrative actions on the part of Defense offi-

                                                                                                                   88
DEFEN SE OPERATIONS

cials are recommended have been generally responsive,      control and with sufficient status to overcome orga-
indicating, in most of the cases, agreement with the       nizational conflict between weapon system managers
findings and an intention to institute corrective meas-    and the traditional organizations.
ures. Numerous replies advise that new directives and         The report included certain recommendations to
instructions have either been issued or are intended to    the Secretary of Defense. The Director of Defense
be issued. To insure that the revised directives and       Research and Engineering, in commenting on the
newly announced policies are being carried out, GAO        report, expressed general agreement with the recom-
emphasizes the need for independent reviews at higher      mendations. (See Appendix, Section I, Item 137.)
echelons within the Department and by internal audit          Reviews of four management areas critical to effec-
organizations.                                             tive acquisition of major weapon systems were in
   The principal areas where GAO findings indicated        process as of June 30, 1971. These reviews were di-
a need for improvement in management controls are          rected at ( 1) the adequacy of cost effectiveness studies
discussed in the following sections of this chapter.       made in the concept formulation phase of selected
                                                           weapon systems and the requirements and procedures
Acquisition of Major Weapon Systems                        for updating such studies, (2) the validity and credita-
                                                           bility of the cost estimating process, ( 3 ) the effective-
   GAO is engaged in a continuing review of the            ness of management of technical changes to weapon
weapon system acquisition process to provide the Con-      systems, and (4) an examination of the theory and
gress and the Department of Defense with a series of       practice in testing and the utilization of test results to    I


appraisals of those factors most closely related to        reduce uncertainties in decisionmaking.
effective performance in procuring major weapons. I n
a report on the first such appraisal, issued to the Con-
gress in March 1971, GAO concluded that:                   Research and Development

    A substantial effort was being made to identify and    Major Weapons
  solve problems that in the past had adversely affected
                                                               GAO issued seven reports to the Congress on reviews
  the acquisition of major weapon systems in terms of
                                                            of research and development of major weapons. One
  compromised performance, delayed availability, and
                                                           of the reports, dealing with tactical reconnaissance
  increased costs.
                                                           development programs in the Department of Defense,
    The development pace was slower and the pro-
                                                           is classified “Secret.” Six other reports covered find-
  curement practices were more conservative than
                                                           ings in reviews of the Navy’s practice of approving
  those of earlier periods.
                                                           large-scale production of major weapon systems be-
     Procedures were being devised to improve the
                                                           fore completion of development and testing (one
  means by which needs for proposed weapons and
                                                           report), Navy’s development of specific weapon sys-
  the priority to be assigned to their development could
                                                           tems (four reports) and Army’s development of tacti-
                                                                                )

  be measured against the total needs of DOID.
                                                           cal vehicles (one report).
    An intensive effort was being made to improve
                                                              In one of these reports, GAO stated that most of
  the processes of defining performance characteristics
                                                           the Navy’s major weapon systems were approved for
  of proposed weapons, determining feasibility of
                                                           large-scale production before completion of develop-
  achieving those characteristics, identifying high-risk
                                                           ment and testing. The weapons produced frequently
  areas in the design, and demonstratinx successful
                                                           would not perform all the functions intended, and
  performance of high-risk components.
                                                           sizeable amounts of time and money were spent to
   GAO found one of the major unresolved problems          correct deficiencies. It appeared that deployment of
to be that of organization. The problem appeared to        effective weapons may not have been accelerated by
stem from attempts to combine the specialized roles of     this practice and, in fact, may have been delayed. Al-
major weapon system acquisition management into            though the Navy had procedures for an orderly pro-
more or less traditional military command structures.      gression from development into production, they were
This made it difficult to obtain decisions. There was a    not sufficiently effective. Decisionmakers were not
need to place greater decisionmaking authority for         presented with all the information that should have
each major weapon acquisition in a single organiza-        been available to them in considering whether to pro-
tion, within the service concerned, with more direct       ceed into production. The Navy was in general agree-

86
                                D E F E N S E 0 PERAT IONS




T h e AN/SQS-26 sonar system is a hull-mounted, surface
   ship sonur system designed t o detect, classify, localize, and
   track submerged submarines at long range from antisub-
   marine warfare shifls. The picture on the left shows a sonar
   dome mounted on a skip's hull. T h e one above is of display
   consoles of the sonar system.

ment with GAO's recommendations for improving its
procedures and for providing essential information to
the decisionmakers. (See Appendix, Section I, Item
138.)
  Digests of five other reports are presented in the
Appendix, Section I, and are further identified in the
following summaries.
     The Navy experienced problems with four weapon
  systems. The difficulties with three of the systems-
  the drone antisubmarine helicopter, the antisubma-
  rine warfare directional low-frequency analysis and
  recording system, and the surface ship sonar sys-
  tem-resulted, in large part, from production before
  completion of development and testing. The difficul-
  ties with the fourth system-the deep submergence
  rescue vehicle-resulted from inadequate prelimi-
  nary planning and subsequent design changes made
  without formal approval by top-level management.
  This increased the estimated cost from $36.5 million
  for a 12-vehicle system to $463 million for a six-
  vehicle system, and increased the estimated period
  for development and introduction from 4 to 10
  years. The Navy subsequently reduced the program
  to two vehicles at an estimated cost of $199.4 million.
   (See Items 139, 140, 141, and 142.)
     Despite organizational and procedural changes
  by the Army in its management of the tactical ve-
  hicles development program, many of the manage-
  ment weaknesses observed in earlier reviews by GAO

                                                              a7
DEFENSE OPERATIONS

     and by the Army Audit Agency were found to be            overlapping tours of duty, which provide continu-
     continuing. The Army cited additional corrective         ity of leadership and expertise, were almost nonex-
     measures it had since taken which were responsive        istent. Limited tests showed similar conditions in
     to GAO’s recommendations. (See Item 143.)                the Navy and the Air Force. DOD agreed with
                                                            . GAOs position on the importance of project man- ‘
General                                                       agers in the weapon acquisition process and with
   Four reports were issued on the general aspects of         GAOs recommendations. (See Item 145.)
research and development. Three reports, issued to               A cost-plus-incentive-fee subcontract of about ’
the Congress, dealt with basic research programs in           $300 million for development of the SPARTAN-
the Air Force, procurement of munitions under devel-          the SAFEGUARD’S long range missile subsystem-
opment by the Army, and tours of duty for managers            included provision for incentive fees to motivate the
of major research and development projects in the             subcontractor to achieve higher performance levels.
Army. The fourth report, issued to the Secretary of           Records of the subcontract negotiations, contrary to
Defense, dealt with incentive provisions in contracts         the requirements of the Armed Services Procurement
for development of major weapon subsystems. Di-               Regulation and the prime contract, did not set forth
gests of these reports are presented in the Appendix,         the details leading to the agreed incentive plan. I n
Section I, as further identified in the following             the absence of such documentation, it was not deter-
summaries.                                                    minable what “expected” or target performance,              ~




      The Office of Scientific Research of the Air Force      which warrants only target fees, was contemplated
   was supporting about 1,200 projects, costing about         in the incentive plan. In fact, the incentive plan ap-
   $285 million. Some of the projects appeared to in-         peared to allow incentive fees for expected per-
   volve basic research which was not closely related         formance. The Army agreed with GAO’s suggestion
   to the Air Force mission. Federal policy is that the       that documentation be obtained covering the factors
   National Science Foundation will provide support           considered in negotiating the incentive plan for large
   for general purpose research and that other Fed-           dollar amount subcontracts. (See Item 147.)
   eral agencies should support basic research only in
   areas closely related to their missions. The Air Force   Management of Procurement Programs
   reviewed these projects and disqualified 115 of them
   because of insufficient relevance. In addition, the      Special Studies
   Air Force adopted several GAO suggestions for im-           I n fiscal year 1970 a report was issued to the Congress
   proving management of the basic research programs.        on a study, requested by the Subcommittee on Econ-
   (See Item 144.)                                          omy in Government, Joint Economic Committee, of the
      Because of an urgent requirement in the Army,         feasibility of applying “should cost” analyses in GAO
  howitzer ammunition in the process of development         audits and reviews of Government procurement. I n
  was authorized to be produced under a “Limited            requesting ,the study, the subcommittee defined the
  Production” classification for 1 year. The item was       “should cost” approach as an attempt to determine the
  still in limited production 3J/2 years later without      amount that a weapon system or product ought to cost
  authorization from higher echelons or renewal of          given attainable efficiency and economy of operation.
  the “Limited Production” authorization. The Army
                                                            The study revealed that it is feasible for GAO, in audit-
  adopted several GAO recommendations for man-              ing and reviewing contractor performance, to utilize
  agement improvement and reduced procurement of            ‘‘should cost” analyses. The greatest opportunity for
  “Limited Production” items from $220 million to           the Government to benefit from the application of
  $10 million. (See Item 146.)                              “should cost” appeared to be through its use, on a selec-
     The Army was not effectively implementing ex-          tive basis, in preaward evaluations of contractors’ price
  isting policy and regulations that project managers       proposals.
  of major research and development projects serve             Subsequently GAO made a trial application of the
  a tour of duty of at least 3 years. All project man-      concepts at the plants of four contractors. A report on
  agers have been military officers who are subject to      the trial application, issued to the Congress in Febru-
  high turnover through reassignment or retirement.         ary 1971, confirmed both the feasibility and value of
  Most had served less than 2 years. Furthermore,           the application of “should cost” concepts. Because such

88
                                                                                          DEFENSE OPERATIONS

reviews require examinations into many facets of con-        ing. In July 1971 the Deputy Secretary of Defense is-
tractors’ operations and management not covered in           sued a memorandum to the Assistant Secretaries of
GAO’s statutory authority to examine contractors’ rec-       Defense indicating his support of the concept of profit
ords, GAO suggested that the Congress might wish to          based on capital investment and requested that a com-
consider expanding GAO’s statutory authority to en-          prehensive profit policy proposal be submitted by De-
able it to make effective “should cost” reviews on an        cember l, 1971. (See Appendix, Section I, Item 120.)
independent basis. (See Appendix, Section I, Item               A 1968 amendment to the Defense Production Act
111.)                                                        of 1950 directed GAO to study the feasibility of ap-
   A provision of the Armed Forces appropriation au-         plying uniform cost accounting standards to negotiated
thorization, 1970-Publi,c Law 91-121-directed       GAO      defense contracts of $100,000 or more. A report on the
to study and review on a selective, representative basis,    study, issued to the Congress in fiscal year 1970, pre-
the profits made by contractors and subcontractors on        sented GAO’s conclusion that it is feasible to estab-
contracts on which there is no formally advertised com-      lish and apply such standards to provide a greater
petitive bidding entered into by the military depart-        degree of uniformity and consistency in cost accounting
ments and certain other Government agencies. The             as a basis for negotiating and administering procure-
study covered the profits of 74 large defense contractors    ment contracts. The Congress acted affirmatively on
for the 4-year period of 1966 through 1969. GAO              the report. A 1970 amendment to the Defense Produc-
computed the average rates of profit before Federal          tlon Act of 1950-Publi,c Law 91-379, approved Au-
income taxes for both defense work and comparable            gust 15, 1970-established a Cost Accounting Stand-
commercial work. The following results were presented        ards Board, as an agent of the Congress, ,to develop
in a report issued to the Congress in March 1971.            cost accounting standards. The Board consists of the
    Based on sales, the rate was significantly lower on      Comptroller General as chairman and four members
  defense work: 4.3 percent on defense work, 9.9 per-        appointed by him. The Board began to operate in
  cent on commercial w r k .                                 January 1971 and separate reports on its activities will
    Based on the contractors’ total capital investment       be made to the Congress.
  used in generating the sales (that is, total liabilities
                                                             Negotiation of Contract Prices
  and equity but exclusive of Government capital) ,
  the difference in the rates narrowed: 11.2 percent            Three reports were issued to the Congress on reviews
  on defense work, 14.0 percent on commercial work.          of negotiation of contract prices, The reports dealt
    Based on capital investment of stockholders, the         with implementation of the Truth-in-Negotiations Act,
  difference in the rates was negligible.                    waivers of preaward audits of contractors’ noncompeti-
   The major factor causing comparability of the rates       tive price proposals, and contractors’ claims based on
of return on contractors’ capital investment for defense     Government-caused delays.
and commercial work was the substantial amount of               Under the Truth-in-Negotiations Act, contractors
capital provided by the Government in the form of            are required to submit cost or pricing data in support
progress payments, cost reimbursements, equipment,           of their pri,ce proposals and to certify that the dilta are
and facilities. This reduced the contractors’ capital in-    accurate, complete, and current. This requirement
vestment requirements for defense work. Under cur-           applies generally to noncompetitive contracts or con-
rent procedures for negotiation of defense contracts,        tract amendments expected to exceed $100,000. GAO
little consideration is given to the amount of capital       reviewed the reasonableness of prices negotiated under
investment required from the contractor to perform the       the act for 35 contracts valued at $135 million. For 18
work. Profit objectives are developed as a percentage of     contracts, valued at $47 million, negotiated prices were
the anticipated costs.                                       $1.5 million higher than warranted by the cost data
    GAO recommended that the Office of Management            available to contractors at the time of negotiation. The
and Budget take the lead in the development of uni-          overpricing stemmed basically from the same circum-
form Government-wide guidelines for determining              stances which the Truth-in-Negotiations Act was
profit objectives in negotiation of Government contracts     designed to remedy : contractors’ submission of incom-
and that the guidelines emphasize consideration of           plete, inaccurate, and noncurrent data. Little or no
the total amount of contractor capital required, when        overpricing was found in the other 17 contracts valued
appropriate, where effective price competition is lack-       at $88 million. GAO brought the findings of overpriC-

                                                                                                                     89
DEFENSE OPERATIONS

 ing to the attention of agency officials and they took       for the account of the Government at a cost of $62
 action to obtain price adjustments where appropriate.        million, about $12 million worth should have been
  (See Appendix, Section I, Item 118.)                        classified as plant equipment and acquired for the
    Preaward audits of contractors’ noncompetitive price      accounts of the contractors. DOD concurred in
 proposals may be waived by the contracting officer           GAO’s recommendations for distinguishing between
whenever it is clear that information already available       plant equipment and special test equipment. (See
is adequate for the proposed procurement. GAO’s               Item 110.)
 review of 344 noncompetitive, fixed-price procurement           Many engineering changes are made to aircraft
actions amounting to $500 million showed that pre-            in production to make them safer, more reliable, or
award audits had been waived for 130 of the actions           easier to maintain. Engineering change proposals
amounting to $51.7 million. Of the 130 waivers, 31            must be approved by the military service involved
appeared to be justified; 99 did not appear to be justi-      before the contractor is authorized to make the
fied on the basis of available information. The Depart-       changes. A review of the processing time for 547
ment of Defense agreed that waivers of audit should           engineering change proposals implemented on 11
be better documented and that internal surveillance           types of aircraft showed extensive delays. The aver-
of such waivers should be increased. (See Appendix,           age processing time for the 547 proposals was 131
Section I, Item 119.)                                         days as compared with time standards established
    Claims submitted by ship construction contractors         by the Department of Defense of 45 days for routine
for costs sustained because of Government-caused in-          proposals, 15 days for urgent proposals, and 24 hours
terruptions and delays were vague and lacked adequate         for emergency proposals. DOD agreed with GAO’s
support. The claims submitted by three contractors in        suggestions for reducing the processing time. (See
the amounts of $1 14,300,000, $486,000, and $1,342,000        Item 112.)
were settled in the amounts of $96,500,000, $354,000,            DOD’s program for review of contractors’ pro-
and $760,000, respectively. The contractors provided         curement systems was sound in concept but its
no tangible evidence of the additional costs incurred.       implementation was not fully effective. Some of the
In the absence of such evidence, the Navy, in GAO’s          problem areas involved a need for ( 1) motivation
opinion, could not adequately evaluate the validity of       of contractors whose procurement systems were
the claims. The rationale on which the contractors           found to be unacceptable to make needed improve-
based their determinations of additional costs attribut-     ments, (2) definitive standards for approval or dis-
able to Government-caused interruptions and delays           approval of contractors’ procurement systems, and
included such broad factors as increases in c,osts over       (3) greater discretion in scheduling detailed annual
original estimates of costs, increases in costs over costs   reviews of contractors whose systems had been found
incurred in construction of the same class of ships under    to be satisfactory in the past. (See Item 113.)
earlier contracts, and general judgment factors.                The Department of Defense negotiated about $2.5
    The Navy generally concurred in GAO’s recommen-          billion of emergency procurement in fiscal year 1970.
dations for improving documentation of claims. (See          Nearly three-quarters of the procurement was nego-
Appendix, Section I, Item 109.)                              tiated without competition. Many of the noncom-
                                                             petitive procurements might have been made com-
Other Aspects                                                petitively, at lower costs, and with acceptable time
                                                             for delivery. (See Item 132.)
   Six reports to the Congress covered other aspects
                                                                A ~OIIOWUP review of small purchases (purchases
of procurement. Digests of these reports are presented
                                                             ivhich do not exceed $2,500) showed that the cor-
in the Appendix, Section I, as further identified in the
                                                             rective measures established by DOD and the mili-
following summaries.
                                                             tary services after an earlier review had been effec-
     Department of Defense regulations provide that,         tively implemented at most of the locations visited by
  with some exceptions, contractors furnish all plant        GAO. Among the improvements noted were better
  equipment needed for contract performance. Special         training of buyers, improved procurement data, and
  test equipment is not considered plant equipment           more extensive internal reviews of small purchase
  and is generally acquired by contractors for the ac-       activities. (See Item 133.)
  count of the Government. A review at plants of five           Department of Defense procurement of weapons,
  contractors showed that, of the equipment acquired         support equipment, and other goods and services

90
                                                                                       DE FE N SE 0 PE R A T IONS
 totals tens of billions of dollars annually; involves     meet the needs. Both systems had weaknesses and the
 hundreds of thousands of procurement transactions;        information provided by them was not adequate for
 is subject to numerous statutes, policies, regulations,   the intended purpose. GAO questioned the validity of
 and directives ; and requires procurement personnel       the fiscal year 1970 budget and procurement actions
 with a great deal of special knowledge, skill, and        which relied on such information. The Army took
 dedication. Although a career program for procure-        corrective action in response to G A O s findings and
 ment personnel was promoted by the Secretary of           recommendations. (See Appendix, Section I, Item
 Defense in 1965, the program was not fully imple-         206.)
 mented because of resistance from some of t h e serv-         Digests of eight other reports arc prescntcd in the
 ices. A major effort was needed to revitalize the         Appendix, Section I. These reports are further identi-
 program by updating it to meet the procurement             fied in the following summaries.
 needs for the 1970’s and beyond; recognizing the
                                                                In a report issued to the Congress in 1967 GAO
 conflicting career objectives of civilians and military
                                                             pointed out that substantial savings could be
 officers in procurement; raising the status of the
                                                             achieved by eliminating some 1.2 million low-cost,
  procurement field ; attracting young, high-caliber
                                                             low-usage items from the DOD supply system, and
  people ; and making other management improve-              the Department cited a program undertaken for that
 ments. DOD advised GAO that it would undertake              purpose. A followup review showed that there were
  an intensive effort to improve its procurement career      still about 900,000 such items in the supply system.
  development program. (See Item 131.)                        (See Item 207.)
                                                                The Marine Corps supply system included many
Supply Management                                            items which duplicated the inventories in other sup-
                                                             ply systems. This increased the investment in inven-
   Ten reports were issued to the Congress on reviews        tories and the costs of supply management. At
of various aspects of supply management.                     June 30, 1969, there were about 185,000 items valued
    I n one report GAO pointed out that, following           at $148 million in the supply system of the Marine
its earlier report on inventory controls in the Depart-      Corps which were also managed by the Defense
ment of Defense, the Department prescribed new pro-          Supply Agency, the Army Tank-Automotive Com-
cedures to improve the accuracy of recorded inven-           mand, or the General Services Administration. (See
tories. Although the A m y \vas attempting to                 Item 208.)
implement the new procedures, accuracy of its                   Although the Department of Defense had taken
records was not improved because the Army                    certain actions on earlier recommendations to im-
had underestimated the magnitude of the task and             prove management of laboratory equipment, some
had not provided adequate manpoiver and automatic            of the Iveaknesses in management continued. There
data processing equipment. In 1969 the Army’s inven-         were weaknesses in identifying excess or little-used
tories of about $3 billion in the continental United         equipment, in the use of equipment pools to avoid
 States required downward adjustments of $439 million         unnecessary duplication of equipment, and in the use
and upward adjustments of $391 million to reflect             of elapsed-time meters to provide equipment usage
quantities based on physical counts. Its inventories of      data. (See Item 209.)
 about $1.1 billion in Europe required even greater              To promote redistribution of excess materiel
 adjustments in 1969: downward adjustments of $648            within and among the military services in the Pacific
 million and upn*ard adjustments of $768 million. The         area and in Europe, DOD established two agencies :
Army generally agreed with these findings and took            the Pacific Command Utilization and Redistribution
 action on GAO’s recommendations. (See Appendix,             .4gency, Okinawa, and the Materiel Asset Redistri-
 Section I, Item 205.)                                       bution Center, Europe. Although these agencies were
    Another report pointed out the unreliability of the       instrumental in redistributing much excess materiel,
 Army’s projections of future requirements for major          their operations would have been more effective had
 items of military equipment. The Army relied on two          there been greater participation in the program.
 computerized management information systems for the          Some activities were not reporting their excesses to
 projection. One provided information on needs; the           the agencies or using the agencies as a possible source
 other provided information on equipment available to         of supply. (See Items 218 and 219.)

                                                                                                                  91
DEFENSE OPERATIONS




             A portion of the storage and reclamation areas at the Military Airlift Storage and DispoSition Center.

        Aircraft for which there is no foreseeable need are       Phasedown of U.S. Military
     scrapped. Since many of the components and parts             Activities in Vietnam
     in such aircraft can be used in repairing operational
     aircraft, they are reclaimed before the aircraft are            With the Department of Defense now being engaged
     scrapped. The criteria and procedures of the Army            in reducing its combat operations and related military
     and the Air Force were generally effective in identi-        activities in Vietnam, GAO has undertaken a series of
     fying and reclaiming needed components and parts.            reviews of the policies and procedures being applied in
     Those of the Navy were not. (See Item 220.)                  the phasedown. The first report on the phasedown,
        A review a t four of the 10 naval shipyards showed        issued to the Congress in March 1971, covered the third
     that about 30 percent of the inventories of industrial       reduction in troop strength (50,000 troops) which was
     materials at the four yards was excess to needs. The         completed April 15, 1970, and reduced the strength to
     excess material-valued a t over $1 7 million-had             425,500 troops.
     not been reported to thc naval supply system for re-            Despite the relatively short time provided, the mili-
     distribution or other disposal. (See Item 221.)              tary services met each of the directed troop withdrawal
        Supply depots of the military services were using         schedules. The phasedown of the large quantities of
     air parcel post without adequate consideration of            supplies and equipment was and continues to be a
     alternative methods of shipment which were more              formidable task. The organizations in Vietnam, sub-
     economical and would have permitted delivery in              ordinate to the command headquarters of the services,
                                                                  could not be provided specific information as to size
     the required time. (See Item 228.)
                                                                  and time of force reductions until announced by the
  The Department of Defense and the military depart-              President. Therefore they could not make advance
ments concurred generally in the findings in these re-            plans for control and efficient disposition of the supplies
ports and took artion to implement GAO’s suggestions              and equipment which became excess, and plans had to
and recommendations for improvement.                              be improvised even as withdrawals were taking place.

92
                                                                                          D E F E N S E OPERATIONS

Further, they were placed in the position of having to       least 125 such awards in fiscal year 1968: 100, totaling
continue their assigned missions until a few days prior      $184 million, in Southeast Asia; and 25, totaling $7
to the reassignment of personnel and turn-in of equip-       million, in the Republic of Germany. In response to
ment. Notwithstanding these constraints, a concerted         G:2Os suggestions for improving the reporting to the
effort was being made to account for and control the         Congress, the DOD cited new instructions that had
supplies and equipment which became excess as the            been put into effect to insure proper reporting in the
phasedown proceeded.                                         future. (See Appendix, Section I, Item 127.)
   Some of the continuing problems in disposing of ex-
cess supplies and equipment stemmed from a lack of           Maintenance, Repair, and Overhaul
procedures for determining which excesses were to be
turned over to the Vietnamese Armed Forces and                 Five reports were issued to the Congress on this
which were to be shipped back to the United States, a        topic. Digests of the reports are presented in the Appen-
shortage of facilities for cleaning the excesses to be       dix, Section I, and are further identified in the fol-
shipped back (to meet the standards of the U.S. Public       lowing summaries.
Health Service and the Department of Agriculture),
and a lack of qualified people to pack and crate the              The Army’s backlog of helicopters awaiting re-
 excesses to be shipped back.                                  pair and overhaul had increased substantially in
   The military departments concurred generally with           the months preceding January 31, 1970. At that date
GAO’s conclusions and suggestions and cited recent             there were 200 helicopters and large quantities of
 actions to implement the suggestions. (See Appendix,          engines and components in the backlog. At the same
 Section I, Item 108.)                                         time the Army had on order or was planning to
                                                               buy about 1,700 helicopters and large quantities of
                                                               engines and components. GAO concluded that the
Facilities and Construction                                    Army could attain the same or increased availability
                                                               at less cost by expanding its maintenance program
   GAO issued two reports on this subject to the Con-          and reducing or stretching out its procurement pro-
gress: one dealt with the administration of construction       gram. The Army agreed and later informed GAO
contract provisions, and the other with reports to the         that overhaul programs had been or would be in-
Congress by the military departments on nonadvertised           creased, and that procurement requirements for
military construction contract awards.                         some of the new items had been reduced. (See Item
   The inspection procedures and practices of the A m y         213.)
Corps of Engineers and of the Naval Facilities En-                 The costs to the Army and the Air Force of main-
gineering Command-the agents for the Department                 taining their commercial vehicles in Europe were
of Defense in construction of military facilities-were          higher than planned because of repetitive repairs,
not sufficiently effective to insure that construction was      excessive preventive maintenance and inspections,
in accordance with contract specifications. A number            and excessive time spent on repairs and inspections.
of facilities accepted by the Government as completed
                                                                Neither of the services was using established labor
did not meet contract specifications. As a result, the
                                                                standards to measure efficiency of the operations.
facilities were not fully satisfactory for their intended
use and/or the Government had to spend additional               GAOs suggestions for improving efficiency of the
time and effort to correct deficiencies. DOD agreed
                                          ~
                                                                operations were concurred in by DOD. (See Item
with G.40’~recommendations for strengthening the                214.)
 two construction agencies’ procedures and practices               About $1 million could have been saved in Europe
relative to the inspection of military construction. (See       in fiscal year 1969 if the motor vehicle tire-rebuilding
Appendix, Section I, Item 126.)                                 programs of the Army and the Air Force had been
    Under the military construction authorization acts,         more effective. Neither of the services had surveil-
the military departments are required to report to the          lance systems to monitor the programs, and signif-
Congress all nonadvertised (negotiated) military con-           icant quantities of tires that could have been rebuilt
 struction contract awards. GAO noted that most of the          were sold at nominal prices as scrap. DOD con-
 nonadvertised awards for work overseas were not in-            curred in GAO’s suggestions for strengthening the
 cluded in the reports to the Congress. There were at           programs. (See Item 215.)
                                                                                                                    93
       DEFENSE OPERATIONS
                          Helicopters awaiting repair at the Army Aeronautical Depot Maintenance Center.




                                                                         - ,
1./1                                                                         ,
                                                                            i
                    P.                                                      5
           The cost accounting systems of depot-level main-            were some areas requiring more explicit instructions.
         tenance operations-the major overhauling or re-               (See Item 159.)
         building of military equipment-differed among the                There was no coordination among the three s e n -
         three services and among installations within each            ices in their operation of spectrometric oil analysis
         service. This made it impossible to compare results           laboratories. (The analysis is a technique for meas-
         of operations of installations performing similar             uring worn metal parts in oil, taken from engine-
         work. The Department of Defense agreed that there             lubricating systems, to determine the extent of wear
         were inconsistencies in cost reporting and that there         and the need for repair or replacement of engine

       94
                                                                                             DEFENSE OPERATIONS

      parts.) The services operated their laboratories in-          GAOs review of civilian pay and allowances in-
      dependently of each other, differed in their criteria      cluded an evaluation of the effectiveness of the internal
      for frequency of analysis, and were separately plan-       controls and internal audit work, a statistical sampling
      ning to acquire 357 additional laboratories at a cost      of the propriety of salary rates, a review of the pro-
      of $7.1 million. At GAO’s suggestion DOD studied           cedures for determination of entitlements to severance
      the operations and established a new program under         pay and computation of the amounts payable, and an
      the direction of the Navy. (See Item 216.)                 evaluation of the effectiveness of the conversion of
                                                                 National Guard technicians to Federal employee status
                                                                 as provided by the National Guard Technicians Act
    Administration of Military and                               of 1968.
    Civilian bay and Allowances                                     The 1968 act converted Army and Air National
                                                                 Guard technicians from State to Federal employee
       The number, variety, and complexity of entitlements       status, effective January 1, 1969. One of the principal
    provided by legislation covering military pay and al-        purposes of the act was to provide an adequate and
,   lowances create difficult administrative problems. Al-
                                                                 uniform retirement and fringe benefit program. In a
    though the military departments have taken prompt            report issued to the Congress, based on a review of the
    action with respect to erroneous or illegal payments         rerords of over 1,000 technicians selected at random in
    identified by GAO and have accepted suggestions for           12 States, GAO noted that the conversion, generally,
    corrective measures to preclude recurrence, erroneous        had been carried out in accordance with the act and
    payments in significant amounts continue to be made.         implementing regulations and instructions. There were
        I t is the opinion of the General Accounting Office      many discrepancies, however, in data pertaining to
    that the administration of military pay and allowances       prior service. The erroneous data had no significant
    will not be improved significantly until the present         effect on the status of the technicians at the time of
    complex laws are simplified. The Department of De-           conversion and generally will have no significant effect
    fense has made a number of studies in recent years           so long as they are employed by the Federal Govern-
    with the view of simplifying the pay and allowance           ment. But the errors could have an effect on the tech-
    structure and has considered preparing legislative pro-       nicians’ retirement rights and benefits and on the
    posals for submission to the Congress. However, no            related cost to the Government. DOD agreed with
    legislative proposals for simplifying the military pay        GAO’s recommendation that the National Guard Bu-
    and allowance structure have been submitted by the            reau, in cooperation with the States, review and correct
    Department.                                                  the data pertaining to prior service of the technicians.
        GAO issued one report to the Congress on military         (See Appendix, Section I, Item 195.)
    pay and allowances. The report dealt with the account-
    ing for military leave in the Army and pointed out
                                                                 Manpower Utilization
     that inaccuracy in the accounting, which had been the
     subject of a number of GAO’s earlier reports, was a
                                                                   GAO issued three reports to the Congress on this
     continuing problem despite the Army’s adoption of           subject. Digests of the reports are presented in the
     additional procedures and controls. Inaccurate bal-         Appendix, Section I, and are further identified in the
     ances of unused leave have been a major factor con-         following summaries.
     tributing to improper payments by the Army t o its
                                                                       GAO concluded that civilian personnel ceilings or
     military personnel. Based on the incidence of the errors,
                                                                    hiring restrictions, whether imposed by statute or by
     GAO estimated that overpayments of about $23 mil-
                                                                    the Office of Management and Budget, do not pro-
     lion and underpayments of about $3 million could               vide the most effective management control. They
     result annually. Should the military personnel choose          tend to be arbitrarily applied, inflexible, and un-
     to use their erroneous leave balances, rather than re-         economical. GAO proposed that the Director of the
     ceive payment at time of separation, a net loss of             Office of Management and Budget permit depart-
     about 4,600 man-years of manpower availability could           ments and agencies to accomplish their programs
     result. The Army concurred, in general, with GAO’s             without restrictions on numbers of personnel-being
     findings and recommendations for corrective meas-              limited only by the availability of funds. In Decem-
     ures. (See Appendix, Section I, Item 192.)                     ber 1970 the Director agreed to eliminate employ-

                                                                                                                       95
DEFENSE OPERATIONS

  ment ceilings in the Department of Defense for a              I n response to GAO's findings and its suggestions
  1-year trial period. (See Item 234.)                       that the objectives of the graduate education program
     About 10 percent of the enlisted personnel at the       be clarified and that the existing criteria be revised to
  four Army installations in the continental United          limit the broad, permissive interpretations, the Depart-
  States where GAO made its review were assigned             ment of Defense contended that GAO had failed to
  to duties for which they had not been trained. Tn-         take into account the intangible accepted values and
  formation obtained in other reviews showed that the        benefits of graduate education. I n view of this position,
  rate at overseas installations was even higher. GAO        and the announced plans of the military services to ex-
  recognized that the number of men entering and             pand the program, GAO suggested that the Congress
  leaving the Army and the number being assigned             might wish to consider limiting the full-time, fully
  and reassigned had increased in recent years and had        funded graduate level education program to those posi-
  added to the problem of personnel management. The          tions for which such education was essential for the
  Army agreed with the general thrust of GAO's find-         satisfactory performance of duty and to those officers
  ings and recommendations for corrective measures           who could be used primarily in the positions. (See
  and stated that increased attention to the personnel       Appendix, Section I, Item 193.)
  management area had been programmed by the                    Another report noted that the U S . Armed Forces
  Army Audit Agency. (See Item 235.)                         Institute, which provides educational services to mem-
     The Naval Air Reserve units at the four nava! air       bers of the Armed Forces on subjects normally taught
  stations visited by GAO were not achieving their           in civilian academic institutions, had experienced low
  primary purpose of having trained units and suitable       course-completion rates in recent years. The rates were
  equipment available for active duty in time of war or      about 10 percent in the correspondence program and
  national emergency. Priority given to the Active           about 31 to 39 percent in the group-study program.
  Navy was a contributing factor to the low-readiness        Although DOD internal auditors had observed this
                                                             situation in a 1965 review and had made recommenda-
  status of the units. The development of a 5-year plan
                                                             tions for improvement, no action had been taken by the
  to improve the readiness of the Naval Air Reserve
                                                             Institute. However, during the course of GAO's review
  had been approved by the Navy in April 1969 but, as
                                                             the Institute took action to deal with the low
  of June 30, 1970, had not been fully developed.            completion-rate problem. The action included a study
  Development and implementation of the plan would           to provide an information base on dropouts and student
  provide a sound basis for the needed corrective ac-        nonstarts (students who, alter enrolling, do not submit
  tion. (See Item 236.)                                      lessons). (See Appendix, Section I, Item 194.)
                                                                Another report presented findings of weaknesses in
Administration of Education and                              accounting and reporting of costs incurred under the
Training Programs                                            Government Employees Training Act. The act provides
                                                             for Government-sponsored programs to supplement
   Three reports were issued to the Congress on this         and extend self-education, self-improvement, and self-
subject.                                                     training of employees. A 1967 House Report on the
   One report pointed out that over 4,200 military           operations of such programs had identified accounting
officers were enrolled in full-time graduate education       for training costs as one of the problem areas and
programs in fiscal year 1969 at an estimated cost of at      had recommended certain improvements. The weak-
least $70 million. These officers were selected for the      nesses identified in 1967 regarding training costs con-
graduate education on the basis of certifications that       tinued to exist within the Department of Defense. The
the positions they were to occupy required such educa-       cost accounting and reporting systems were inadequate
tion. The criteria for determining the graduate educa-       and did not include all training costs. Internal training
tion requirements for the positions and the ways in          costs, which represent more than 75 percent of the
which the criteria were applied were so broad and            total costs, and trainee salaries were not included. DOD
permissive that almost any officer position could be         and the Civil Service Commission agreed, in general,
certified as requiring such education. Furthermore,          with these findings and cited corrective actions which
many officers with graduate education were not as-           appeared to be responsive to the conditions cited in
signed to positions requiring their specialized education.   GAO's report. (See Appendix, Section I, Item 60.)

96
                                                                                   DEFENSE OPERATIONS

Administration of Communications                        among the organizations involved in communications
                                                        and, other than the Secretary of Defense, there was
  I n a report issued to the Congress> GAo pointed      no one person or office seming as a focal point with
out that, although Some Progress had been made to-      authority and responsibility to coordinate all aspects
ward the integrated communications System Contern-      of communications. DOD accepted Some of GAO’s
plated in 1960 when the Department of                   recommendations and established a new position of
established the Defense Communications System, much     Assistant to the Secretary of Defense (Telecommunica-
remained to be done. There was a lack of coordination   tions). (See Appendix, Section I, Item 246.)




                                                                                                           97
\
    WASHINGTON, D.C.
                                                                               INTERNATIONAL OPERATIONS

                                                              In addition to the foreign assistance programs, other
                                                           major elements subject to review in 1971 included
                                                           foreign trade programs; U.S. participation in interna-
                                                           tional organizations and institutions ; management and
                                                           utilization of US.-owned foreign currencies; activities
                                                           affecting the U S . balance-of-payments position ; and
                                                           management and operations of US. embassies, con-
                                                           sulates, and other installations in foreign countries.
                                                              Defense international activities are discussed in this
                                                           chapter. Other audit work performed overseas pertain-
                                                           ing to the Department of Defense and the three mili-
                                                           tary departments is incorporated in Chapter Five.
                                                              During the year, GAO conducted audits in countries
CHAPTER SIX                                                outside the United States as summarized below, includ-
                                                           ing those performed a t U.S. military installations
                                                           abroad.
                                                                                     Areas                   Countries
                                                           European Branch Area (Europe, Africa, Near East, and
                                                             South Asia)    ..         . .                    .    26
                                                           Far East Branch Area (Southeast Asia and Pacific)       15
AUDIT OF INTERNATIONAL                                     Latin America and other foreign areas                   10
QPEWATIQNS AND PROGRAMS                                          Total                                             51

                                                              To a limited extent GAO provides advisory assist-
   GAO’s audit efforts relating to international opera-    ance in improving financial management to Govern-
tions and programs during fiscal year 1971 have been       ment officials, heads of foreign audit institutions,
devoted primarily to the U.S. activities in Southeast      officials of international organizations, and students of
Asia and foreign assistance programs throughout the        foreign countries, many of whom are sponsored under
world. I n these reviews GAO has emphasized the need       U.S. foreign assistance programs. This year GAO pro-
for improved management and operating controls, and        vided briefings to and engaged in discussions with
financial administration.                                  individuals and groups from 21 countries, the Orga-
   The International Division is responsible for carry-    nization for Economic Cooperation and Development,
ing out the audit work of the General Accounting Of-       and the World Health Organization. GAO efforts in
fice relating to all U.S. Government programs and          this area are limited to a few hours of orientation and
activities conducted in foreign countries and Hawaii.      briefing and do not involve long-term training.
The division’is under the supervision of Oye V. Stovall,      The visiting foreign nationals included ambassadors ;
Director, and Charles D. Hylander, Deputy Director.        embassy officials ; heads of audit organizations and
An organizational chart is shown on page 100.              their staff members; finance, budget, and treasury
   During fiscal year 1971 the following reports on        officials ; members of parliaments; national bank
international matters were issued :                        officials ; staff members of international organizations,
To the Congress as a whole ,                       17
                                                           and others holding senior financial management posi-
To committees or Members                           30      tions in government. They were interested in the func-
To department and agency officials                 -
                                                   28      tions and operations of the General Accounting Office
                                                           and its role in relation to activities of the executive and
       Total                                         75
                                                           legislative branches. Specific interests varied through
   About one-fourth of the total GAO effort applied to     such subjects as audits independent from the executive
international programs during the year was in response     branch; relationships with and reporting to the Con-
to congressional requests.                                 grcss; accounting systems reviews and approvals ; staff
   The principal international programs, areas, and        development; auditing by automatic data processing
agencies to which GAO applied its audit resources are      equipment; and GAO’s work in the field of program-
discussed in the following sections of this chapter.       ming, planning, and budgeting systems.

                                                                                                                   99
INTERN AT ION A L OPE RAT IONS

                                            INTERNAT ION AL   DI VI YON


                                                                                            ASSISTANT     FOR
      SPECIAL PROJECTS                          OYE V. STOVALL

                                               D E P U T Y DIRECTOR                         JAMES S. KLAPP
      CHARLES E. HUGHES
                                              CHARLES D. HYLANDER



                 I                                                                                  I

  I    MANAGEMENT AND           I                                                    I       PROGRAMS AND            I
       INSPECTION S T A F F                                                                EVALUATION STAFF

      CHARLES E. WILLIAMS                                                                LAWRENCE J. SABATINO



                          r                                                                  1
  DEFENSE, STATE AND R E L A T E D AGENCIES                           AID, TRADE, AND INTER-AGENCY
                     AND                                                           AND
            L A T I N AMERICA 1                                   EUROPE, AFRICA, NEAR EAST, SOUTH ASIA 1

                JAMES A. DUFF                                                 GILBERT F. STROMVALL
                                                                                   DOMINICK A. BINETTI
                JOHN E. MILGATE
                                                                                       FRED DZIADEK
              ROBERSON E. SULLINS
              EUGENE C. WOHLHORN                                                   JAMES Y. KURIHARA
                                                                                     J O H N D . REDELL




           F I N A N C I A L MANAGEMENT                               I N T E R N A T I O N A L ORGANIZATIONS


            FRANK M. ZAPPACOSTA                                                    FRANK C. CONAHAN

]Responsible for country and regional
 program reviews in the respective
 geographic areas.

                                        I    OVERSEAS BRANCHES            I
                          EUROPEAN BRANCH                            FAR EAST BRANCH
                             FRANKFURT                                  HONOLULU

                          JOSEPH P. NORMILE
                           WILLIAM L. MARTIN0
                                                              I     CHARLES H. ROMAN
                                                                     CLIFFORD I. GOULD




                      1                        I I                            II                           I
                                    I                                          I
                                    I                                          I



                          NEW DELHI OFFICE                SAlGON OFFICE                  MANILA OFFICE

                          LOUIS W. HUNTER               THOMAS R. BROGAN                 FRED E. LYONS



                                                                                                          JUNE 30, 1971

100
                                                                                INTERNAT ION A L OPE RAT IONS

Reviews of U.S. Activities Relating to                         Five reports on countrywide and regional reviews
                                                            were issued. Three of these were submitted to the
Vietnam and Southeast Asia                                  Congress and related to country reviews of Liberia and
  GAO issued 44 reports relating to programs and            Honduras, and a regional review of U.S. aid to the
activities being conducted in Vietnam and Southeast         economic unification of Central America.
Asia. Twenty-six of these reports were made in response        Two other reports were submitted to agency officials
to requests from congressional committees or individ-       and related to (1) a country review of Nicaragua and
ual Members of the Congress. The reports included           ( 2 ) a regional review which identified several improve-
such matters as:                                            ments needed in the planning and programming of
                                                            developmental assistance programs in Latin America
     Need for increased control over local currency         to meet U S . objectives and goals.
  made available to the Republic of Vietnam for sup-           At the close of the fiscal year reports were in process
  port of its military and civil budgets.                   on country reviews of Afghanistan, Ecuador, Indo-
     Opportunities to economize on purchases of dairy       nesia, Morocco, and the Philippines.
  and bakery products for U.S. forces in Southeast              In the report to the Congress on assistance to Liberia
  Asia.                                                     GAO noted that U.S. assistance to that country totaled
     A case history showing need for improvements in        $212 million between fiscal years 1960 and 1969. GAO
  the management of overseas military construction          found that a number of problem areas existed, includ-
  contracts.                                                ing ( 1 ) lack of Liberia’s financial support, (2) poor
     Economic advantages of using American-made             location of physical facilities, and ( 3 ) inadequate
  trucks abroad to transport military cargo.                commitment by Liberia to institute changes necessary
     Problems in the administration of the military         to attain project objectives. Action taken by agencies
  assistance training program.                              on these matters, if followed, should improve the
     A followup review showed long missing Govern-          effectiveness of the US.program. (See Appendix, Sec-
  ment-owned materials in Vietnam still unaccounted         tion I, Item 85.)
  for.                                                          In the report on Honduras, GAO pointed out that
     Review of U S . purchases of local currencies in       while economic growth during the .4lliance for Prog-
  countries which are recipients of military aid.           ress years had accelerated, there was no evident
   Some of these reports are discussed elsewhere in this     acceleration of its overall social or political develop-
chapter. At June 30, 1971, reports were in process           ment when compared with the 1950’s. GAO concluded
relating to reviews of (1) U S . assistance and support      that among other things improvement was needed in
to the Philippines and ( 2 ) U.S. participation in the       the planning and evaluation of Agency for Interna-
foreign assistance programs for Indonesia.                   tional Development (AID) programs in Honduras. I n
                                                             response to GAO’s recommendations the Department
                                                             of State and AID mentioned that they were consider-
Broader Based Reviews of                                     ing ways to improve their present methods in this
Program Results                                              regard. They also stated that the GAO report did not
                                                             appear to reflect fully the progress made in recent years
                                                             by AID in the planning and evaluation of individual
Countrywide and Regional Reviews
of U.S. Foreign Assistance                                   projects and activities. (See Appendix, Section I, Item
                                                             84.)
  GAO continued to place emphasis on countrywide                 In August 1970, GAO submitted a report to the
and regional reviews of the various U S . foreign assist-    Congress on the administration by the Agency for
ance programs and activities being performed by the          International Development of US. assistance chan-
several U.S. Government agencies within selected re-         neled through the AID Regional Office for Central
cipient countries. This approach provides a broader          America and Panama (ROCAP) . ROCAP was cre-
perspective as a means for reporting on the effective-       ated primarily for the purpose of developing and ad-
ness with which the total multiagency activities, within     ministering programs of a regional nature to bolster
a given country or region, were programmed, man:             and expedite the regional economic integration move-
aged, and meeting U.S. objectives.                           ment in Central America. GAO observed that the

                                                                                                                  101
INTERNATIONAL OPERATIONS




Honduran and AID personnel observing demonstration of portable saw mill furnished by A I D t o help expand forest product
                                               output in Honduras.

achievement of a Central American Common Market                recommendation. (See Appendix, Section I, Item 83.)
that was fully effective was some time away. In addi-             Another report to the Secretary of State on a review
tion, GAO stated that a majority of the assistance was         of developmental assistance programs in Nicaragua            ,
allocated by AID for matters and activities similar to         remains classified and accordingly is not summarized
those undertaken by individual country AID missions            here. I t related to improvements needed in the admin-
without distinguishing the relative merits of financing        istration and planning of the programs to meet U.S.
such matters on a regional basis. The Administrator,           objectives.
AID, agreed in principle with the four recommenda-
tions included in the report. (See Appendix, Section I,        Interagency and Trade Programs
Item 82.)
   In a report to the Secretary of State in June 1971             The need for enlarging the foreign commerce of
concerning developmental assistance programs in Latin          the United States has long been recognized, particu-
America, GAO stated that despite a number of improve-          larly in relation to the Nation’s favorable balance of
ments in the project formulation process, a significant        trade. In the past, U.S. trade surplus has helped the
opportunity existed for improving the planning and             country to finance its international programs. Since
programming of developmental assistance programs in            1964, however, this trade surplus has declined pro-
Latin .\merica to meet U.S. objectives and goals. GAO          gressively and has been a major reason for the con-
found, in a review of selected fiscal year 1972 pro-           tinued U.S. balance-of-payments deficits. Responsibili-
gramming documents for developmental programs for              ties for trade development are divided among several
six Latin American countries, that in a majority of            U.S. departments and agencies. I n an effort to assist
cases program objectives and goals were not stated in          the export expansion programs of the Government,
objectively measurable terms and did not include a             GAO is continuing a substantial effort in this area.
time frame for accomplishment. At June 30, 1971,                  Fourteen reports on GAO’s reviews of trade pro-
the Department of State was still reviewing GAO’s              grams and other interagency activities were issued dur-

102




                            I
                                                                                      INTERN AT I O N AL OPE RAT I O N S

PotentjaE use of excess rupees to modernize the U S . Consulate   for well-documented, excess-currency-funded projects
                 building in Calcutta, India.                     without regard to overall agency dollar ceilings, ( 2 )
                                                                  the Office of Management and Budget explore with
                                                                  the appropriate committees of the Congress the ac-
                                                                  ceptability of direct appropriations of foreign cur-
                                                                  rency, and ( 3 ) the Treasury Department establish
                                                                  more flexible procedures for valuing U.S.-owned In-
                                                                  dian rupees in dollars in making sales to U.S. agencies
                                                                  to encourage greater productive use of the funds for
                                                                  U S . programs in India without compromising congres-
                                                                  sional control over use of the funds. The agencies gen-
                                                                  erally agreed with GAO’s recommendations, but inso-
                                                                  far as GAO is aware no plan of action has been agreed
                                                                  upon in the executive branch. (See Appendix, Section
                                                                  I, Item 106.)
                                                                      I n July 1970, GAO issued a report to the Congress
            Front view of the Consulate building.                 concerning the need for strengthening controls over
                                                                  the budgeting, release, and use of U.S. owned or con-
                                                                  trolled local currency made available for support of
                                                                  Vietnam’s military and civil budgets. The report
                                                                  pointed out that large sums Lvere released for civil
                                                                  budget activities before the cash was needed and
                                                                   that local currency was released for both military and
                                                                   civil budgets on the basis of unreliable and unverified
                                                                   reports furnished by the Government of Vietnam. T h e
                                                                   Department of Defense and the Agency for Interna-
                                                                   tional Development advised that actions had been
                                                                   taken and would continue to be taken to strengthen
                                                                   controls over local currency for support of Vietnam’s
                                                                   military and civil budgets. (See Appendix, Section I,
                                                                   Item 101.)
  Rear view of and entrance t o the Consulate building.               GAO recommended in a report to the Congress in
                                                                   May 1968 that the Department of Agriculture relax
ing the year. Four were submitted to the Congress: two             its existing barter constraints in order to increase agri-
concerning utilization of U.S.-owned foreign cur-                  cultural exports and thereby benefit the US. balance-
rencies, one on the agricultural barter program, and
                                                                   of-payments position. Based on a followup review,
one relating to the displacement of U S . agricultural
                                                                   GAO reported to the Congress in February 1971 that
exports. Three reports were submitted to congressional
                                                                   the Department had taken steps to increase such ex-
committees and one to an individual Member of Con-
                                                                   ports through its barter program. Barter contracts
gress on reviews made a t their requeut. Six were sub-
                                                                   awarded increased from $181 million in fiscal year 1969
mitted to agency officials relating to U.S. trade pro-
                                                                   to about $885 million in 1971. (See Appendix, Section
grams, Food for Peace, utilization of U.S.-owned for-
eign currencies, and balance-of-payments benefits.                 I, Item 94.)
   I n a report submitted to the Congress in January                   In another report GAO suggested to the Depart-
 1971 suggesting possible uses of the excessive amounts            ment of Agriculture that it give priority to a special
 of Indian currency which the United States has                    export sales program before committing stocks of non-
 amassed, GAO noted that the amount of Indian rupees               fat dry milk powder to foreign donation programs
 available for U.S. expenditure in mid-1969 totaled                under Title I1 of Public Law 480. The potential for
 $678 million which would last about 19 years a t cur-             more than $3 million of additional export sales per
 rent expenditure levels. GAO recommended that ( l )               year was identified in this report. Officials of the De-
 executive branch agencies be allowed to seek approval              partment generally agreed with GAO’s recommenda-
        449-406 0-72-S                                                                                                   103
INTERNATIONAL OPERATIONS

tions and, to the extent feasible, will continue to give    ness of expenditures for the military assistance train-
consideration to the proposals. However, the officials      ing programs. (See Appendix, Section I, Item 80.)
further stated that in addition to providing donations         I n another review, GAO stated that comparative
of nonfat dry milk to overseas voluntary relief agencies    cost studies showed that substantial savings and bal-
to feed the needy, consideration is also given to cer-      ance-of-payments advantages could have been realized
tain political and humanitarian interests of the United     at several overseas locations by using more American-
States, such as donations to feed people displaced by       made trucks in place of foreign vehicles being used by
earthquakes or other natural disasters and to war ref-      commercial carriers under contract with the military.
ugees. (See Appendix, Section I, Item 105.)                 A study of contract services costing $10.7 million re-
   Work in procesr at June 30, 1971, relating to trade      vealed that expanding the military’s capability could
programs included reviews of the (1) effectiveness of       annually produce cost savings of $1.8 million and re-
overseas trade exhibitions, ( 2 ) utilization of foreign    duce dollar payments abroad by $6.4 million. Depart-
trade zones, ( 3 ) evaluation of the impact of foreign      ment of Defense officials stated that the services
assistance programs on agricultural exports to the          concurred with most of GAO’s findings and recommen-
European Economic Community, and (4) effective-             dations and agreed to take steps along the lines pro-
ness of market promotion activities. Interagency re-        posed. (See Appendix, Section I, Item 92.)
views in process included the implementation of a              A report was submitted to the Congress concerning
required transition to dollar sales of commodities, and     the economic advantages of using American ingredients
the management and accounting for convertible local         to satisfy milk requirements of military personnel and
currencies acquired by sales of commodities.                their dependents in Western Europe, rather than pur-
                                                            chasing whole milk from European sources. The De-
                                                            partment of the Army expressed concern a t the possible
Other Reviews
                                                            effects that discontinuance of fresh whole milk pro-
   Other reviews consisted of functional-type audits        curements might have on troop morale in Europe, but
relating to the administration of selected U S . Govern-    agreed to conduct an objective consumer acceptance
ment programs being performed within several foreign        test in Europe. (See Appendix, Section I, Item 99.)
countries or in countries throughout the world. The
following reports are illustrative.
   At the request of the chairman of the Senate Com-        U.S. Participation in International
mittee on Foreign Relations, GAO reviewed and re-           Organizations and lnstitutions
ported on activities under the military assistance
training programs in IO forei‘gn countries. The report         Over the past decade, the US. Government has
showed that some of the training was unnecessary or         increasingly relied on international organizations and
was not of a high priority and other training was un-       institutions as a means for channeling resources to
related to the equipment on hand. It also showed that       assist in the economic development of other countries.
sufficient consideration was not always given by mili-      During this period, annual US. contributions to these
tary advisors to the recipient countries’ capabilities to   organizations and institutions have increased by sev-
provide training from their own resources, and there        era1 hundred percent. In contrast, funds made avail-
was no attempt made to correlate military assistance        able in the annual foreign assistance appropriations
training programs with other U.S. Government train-         acts for U.S. bilateral economic assistance have de-
ing programs. In the selection of foreign students to be    creased. Administration proposals for fiscal year 1972,
trained, GAO found that the U S . advisors had not          if approved, would result in US. contributions to the
taken the necessary steps to insure that a sufficient       international organizations and institutions being
number of qualified candidates were available. As           slightly higher than U.S. bilateral economic assistance.
a result, many unqualified personnel entered some           (Only a small percentage of funds contributed to the
courses and other courses were canceled or deferred.        international bodies is used for other than develop-
In the report, GAO suggested that the Congress might        mental assistance activities.)
wish to consider the desirability of enacting legislation      The United States participates in two categories of
requiring the Secretary of Defense to establish a meas-     international organizations. One category includes the
urement system to assist in determining the effective-      United Nations system of organizations and regional

104
                                                                               I NT E R NAT ION A L OPE RAT IONS

                                       COMPARISON OF FUNDS APPROPRIATED
                                      FOR U.S. BILATERAL ECONOMIC ASSISTANCE
                                            WITH U.S. CONTRIBUTIONS TO
                                  INTERNATIONAL ORGANIZATIONS AND INSTITUTIONS
                                               FISCAL YEARS 1963-1972                                      BILLIONS
  BILLIONS
 OF DOLLARS                                                                                              OF DOLLARS
   3 .O                                                                                                          3 .O




   2.5                                                                                                           2.5




   2   .o                                                                                                        2.0




   1 .5                                                                                                          1 .5




   1   .o                                                                                                        1    .o




   0 .5                                                                                                          0.5




   0                                                                                                              0
        1963   1964        1965       1566        1967       1968       1969         1970        1971         1972
                                                   FISCAL YEARS                                    (ESTIMATED)


organizations such as the Organization of American        forth its views on the essential elements it considered
States. The Secretary of State has primary responsi-      necessary for achieving effective independent reviews
bility for managing U.S. interests in these organiza-     and evaluations of international organizations and
tions. The other category consists of the international   institutions. I n response to GAO’s suggestions, the
financial institutions such as the World Bank and         Department of State informally proposed, at the
the regional development banks. Responsibility for                       - the l.?nited Nations General Assembly,
                                                          3qtlq F P Q ~ of
managing U.S. interests in these institutions rests       that a United Nations-wide review and evaluation
with the Treasury Department and the National Ad-         body be established for the purpose of improving the
visory Council on International Monetary and Finan-       illiwiLai CmLIoi    Iiieciianisms or‘ that organization. AI-
cial Policies under the chairmanship of the Secretary     though the Department found little support for the
of the Treasury.                                          proposal, it has advised that it will introduce the pro-
   GAO’s reviews of the first category of organiza-       posal again in the future. GAO intends to work with
tions pointed to the need for the Department of State     the Department and other agencies in its continuing
to obtain sufficient information from international or-   efforts to encourage the establishment of effective eval-
ganizations to adequately assess the programs and         uation functions for other major international organi-
projects proposed to be implemented as well as the        zations and institutions in which the United States
need for establishing better monitoring and evaluation    holds membership.
procedures as a means for assuring that U.S. contribu-       As GAO’s review progressed, it became evident that
tions to the organizations were being efficiently and     there was no effective working mechanism within the
effectively utilized.                                     Department of State for the Department to discharge
   In December 1970, at the request of the chairman       its responsibility for directing and coordinating the
of the House Foreign Affairs Committee, GAO set           activities of all U S . departments and agencies involved

                                                                                                                     105
INTERNATIONAL OPERATIONS

in international organization affairs. Accordingly,         The independent audit body was established in 1968
GAO prepared an outline suggesting a more effective         as an outgrowth of a 1967 amendment to the Inter-
organization for the management of U S . participa-         American Development Bank Act which directed the
tion in the developmental assistance activities of inter-   Secretary of the Treasury, as the U.S. representative
national organizations. The Department of State sub-        to the Bank’s governing body, to work toward the
sequently advised GAO that it had considered the or-        establishment of an independent external audit func-
ganizational and staffing changes which were needed         tion for that Bank. The legislation provides that the
and, to improve its operations, had initiated actions       Comptroller General shall review periodically the
essmtially in line with the suggestions set forth by        audit reports issued by the iindependent audit group
GAO. (See Appendix, Section I, Item 89.)                    and shall report his findings to the Treasury and to the
   Another report dealt with a purchase commitment          Congress. A report to the Congress on this review was
made to an international organization prior to the          issued in July 1971.
availability of funds. GAO found that, in March 1960,
the Department of Defense (DOD) entered into a
written agreement with a consortium of five NATO            Agency for
countries, formed for the purpose of producing HAWK         International Development
surface-to-air guided-missile systems in Europe. It was
GAO’s opinion that DOD lacked authorization to                 The Agency for International Development admin-
enter into a purchase commitment without sufficient         isters US. economic assistance programs under the
funds being available, and D O D acted in a manner          provisions of the Foreign Assistance Act of 1961, as
which did not comply with the intent of the Anti-           amended, and other related legislation.
Deficiency Act. DOD advised GAO that it did not                During fiscal year 1971, GAO conducted audits
agree with the reported findings and recommenda-            and special reviews pertaining to various economic
tions. After considering DOD’s comments, GAO re-            assistance programs and related activities primarily
mains of the view that DOD viojated the Anti-               administered by the Agency. Some of GAO’s reports
Deficiency Act. (See Appendix, Section I, Item 88.)         relating to the Agency’s programs are discussed more
   GAO’s review of U S . participation in the second        fully in this chapter under the caption “Broader Based
category of international organizations-the interna-        Reviews of Program Results.” Sixteen reports were
tional financial institutions-was    discussed early in     issued in response to requests from congressional com-
the fiscal year in testimony by GAO representatives         mittees on various matters of their respective interests.
before the House Banking and Currency Committee.            Nine reports were issued to agency officials, relating
The GAO representatives set forth G A O s objectives        generally to improvements needed in the administra-
in reviewing the management of U.S. interests in the        tion and management of economic and other foreign
international lending programs of these institutions.       assistance programs and to internal operating
The representatives expressed the belief that there was     procedures.
a pressing need for better information in both the             A report to a congressional committee covered the
planning and the measurement of the results of the          results of a limited review of the refugee relief pro-
programs. GAO believes that major improvements in           gram in Laos. GAO found that US. officials had been
the financial processes and stewardship reporting of the    reacting to the exigencies of the refugee situation in
international organizations and institutions should be      Laos but plans had not been developed for the move-
sought through the U.S. representatives and without         ment of refugees in the event of certain contingencies.
interference in the internal operations of the interna-     GAO noted that the AID Mission in Laos did not have
tional organizations. A t the close of the fiscal year,     enough staff to manage the refugee programs along
GAO was reviewing, in this context, U S . participa-        with its other ongoing activities, that the refugee relief
tion in the World Bank/International Development            program was not adequately evaluated, and that no
Association, the Inter-American Development Bank,           written operating procedures or clearly defined stand-
and the Asian Development Bank.                             ards had been developed by the mission to care for the
   During the year, a review was completed of the           refugees. During field visits to a number of refugee
progress made toward independent and comprehen-             villages, it was observed that the refugees were poorly
sive audits of the Inter-American Development Bank.         clothed, water supplies appeared inadequate, housing

106
:g co'nditions in   Loatian refugee camps.




                                             107
I N T E R N AT I O N A L OPE RAT I O N S

was inadequate for the crowded conditions, and farm-          redesigned system. (See Appendix, Section I, Item
land was limited. GAO suggested that the commit-              191.)
tee might wish to bring this report to the attention            In connection with GAO’s examination of AID
of AID for possible use in improving its management           vouchers and related documents, GAO suggested that
of the program. (See Appendix, Section I, Item 86.)           AID should improve existiqg procedures to insure that
    Other reports to congressional committees included        overseas transactions are adequately documented. At
 ( 1 ) an examination into AID’S audit of invoices in         year end, AID had not advised GAO of any planned
connection with a contract for rehabilitation of ex-          procedural changes to improve the documentation of
cess property and ( 2 ) a review of the status of pre-        overseas financial transactions.
viously made recommendations for the civilian med-
ical program in Vietnam.
    In a report to the Administrator of AID, GAO stated       Defense International Activities
that it had reviewed 40 contract files and found that
contract representatives had failed to prepare required          Defense international activities include the military
evaluations of contractor’s performance. As a result,         assistance program, Defense participation in interna-
contracting officers had not received the technical and       tional organizations, and other international activities
managerial advice needed to evaluate a contractor’s           of the Department of Defense and the military
performance or his qualifications for future AID con-         departments.
tracts. In addition, GAO found that AID’S cost-                  During the year, GAO submitted five reports to
reimbursement contracts in Vietnam for technical serv-        the Congress on reviews of these activities. In addition,
ices of third-country nationals frequently did not            five reports were issued in response to requests from
specify salary rates, and that AID was reimbursing            chairmen of congressional committees and individual
contractors for salaries in excess of the limitations. GAO    Members and six were issued to agency officials.
recommended that AID review the salaries paid under              Three of these reports, relating to ( 1 ) problems in
cost-reimbursable contracts for third-country na-             the administration of the military assistance training
tionals, to determine whether employees’ salaries were        programs, ( 2 ) economic advantages of using American
established in accordance with the limitations con-           ingredients to satisfy milk requirements in Western
tained in their contracts. GAOl further recommended           Europe, and ( 3 ) economic advantages of using
that the .4rea Auditor General, in making final audits        American-made trucks abroad to transport military
of completed cost-reimbursement contracts, place spe-         cargo, are discussed under the subcaption “Other
cial emphasis on determining allowable salaries. (See         Reviews” in this chapter beginning on page 104.
Appendix, Section I, Item 104.)                                  In October 1970, GAO issued a report to the Con-
    The General Accounting Office, in discharging its         gress concerning the justification of the Air Force in
statutory audit responsibilities and as a matter of gen-      engaging a separate contractor to build a single airfield
erally accepted auditing practice, reviews and evaluates      after DOD, in early 1966, had directed a U.S. Navy
the effectiveness of departmental and agency systems          construction program to support the buildup of U.S.
of internal control. During fiscal year 1971, GAO re-         military forces in the Republic of Vietnam. DOD later
ports to local officials included the following suggestions   authorized the Air Force to use a separate contractor
for improving internal controls over financial trans-         to build the airfield.
actions.                                                         I t was GAO’s opinion that, had the Navy proposal
    GAO examined into selected payroll records appli-         been followed, several million dollars in added costs
cable to centrally paid American employees of the             would have been avoided. These costs consisted of
Agency for International Development. Based on the            duplicate equipment purchases (for example, under
results of the work, GAO recommended that the design          the Air Force contract a subcontractor purchased heavy
of the payroll system be changed because it was based         construction equipment for about $9.5 million while
on a concept which did not provide for sufficient con-        similar equipment, valued at about $7.4 million, had
trols to insure that valid data had been taken into           already been bought by the Navy’s contractor for the
account in determining employee entitlement to pay            same job), duplicative overhead and administrative
and leave. As a result of the GAO recommendation,             costs, premium prices paid for construction equipment,
AID initiated corrective action needed for the planned        and disproportionate fee payment rates.

108
                                                                                INTERNATIONAL OPERATIONS

   In response to GAO’s comments DOD stated that               In a report to the Secretary of Defense, it was
improvements in the management oi any ope1,ation            pointed out that savings and balance-of-payments ben-
are always possible and GAO’s recommendations are           efits estimated at about $227,000 annually could be
accepted in that spirit and will be given full considem-    realized by the Government if the Army would reduce
tion in continued efforts to improve management. (See       its contracts for laundry services in Vietnam and ob-
Appendix, Section I, Item 102.)                             tain such services from the Air Force’s laundry facilities
   Another report described the method used by the          operating at a fraction of their capacity in the same
principal construction contractor for the United States     locales. Until the time of GAO’s examination, the two
in Vietnam to account for all but $5 million of $120        services had not cooperated to reduce expenditures by
million worth of the missing materials and supplies pre-    consolidating their laundry service operations. After
viously reported as unaccounted for by GAO, and the         GAO discussed the matter with Army and Air Force
reasons the method cannot be regarded as valid. These       laundry specialists, steps were taken to consider an in-
reasons include the fact that numerous receiving re-        terservice laundry support arrangement for the Cam
ports used to account for the arrival of the majority of    Ranh Bay area. GAO proposed that the Department of
the shipments in Vietnam were prepared by the con-          Defense undertake studies to determine whether
tractor many months after the goods were supposed           similar interservice support agreements would be bene-
to have arrived, and that questionable adjustments          ficial at other overseas locations in view of the poten-
were made affecting the reliability of the contractor’s     tial cost and balance-of-payments benefits that might
inventory records. When informed of the questionable        be realized. On July 21, 1971, DOD officials advised
validity of the adjustments, the contractor canceled        that the U.S. Army in Vietnam had initiated action
them. In commenting on the report, the Department           with the Air Force for laundry services at Cam Ranh
of Defense agreed that no further efforts should be         Bay through an approved Military Interdepartmental
made to account for the $120 million worth of mate-          Purrhase Request. which became effective July 1,1971.
rials. DOD also commented that the magnitude of the          (See Appendix, Section I, Item 98.)
 unaccounted for materials was the result of the unprec-        In addition to reports to the Congress and the reports
edented conditions in Vietnam. The GAO considered            to the committees or individual Members of Congress,
the DOD responses to be favorable and noted great            a considerable number of informal congressional in-
improvements in almost every aspect of the contractor’s      quiries were received and responded to. These con-
material controls since GAO’s first report. (See Appen-      cerned all types of military assistance to recipient
 dix, Section I, Item 100.)                                  countries including economic supporting assistance and
    In February 1971 GAO reported to the Congress            military service-funded appropriations assistance.
 on the opportunities to economize on dairy and bakery          At the close of the year, a report on U S . assistance
 purchases for U.S. Forces in Southeast Asia. GAO            to the Government of Thailand in consideration of the
 found that more than half of the wheat used for bakery      deployment of Thai forces to Vietnam was being pre-
 products by U S . Forces in Thailand came from Aus-         pared. This proposed report, requested by the chair-
 tralia because the contracts for bakery products did        man of the Subcommittee on U.S. Security Agreements
 not require the use of U.S. wheat. This resulted in lost    and Commitments Abroad, Senate Committee on
 sales of U.S. wheat and an unfavorable effect on the        Foreign Relations, will provide information on pay-
 U S . balance of payments. GAO recommended that the         ments, direct and indirect, to the Thailand Govern-
 Department of Defense include a requirement in its          ment and its officials for their forces sent to Vietnam
 contracts for bakery products in Thailand that wheat        and the factors relevant to such payments.
 from the United States be used.                                Other reports in process relating to defense inter-
    In response to GAOs recommendations the Depart-          national activities included reviews of:
 ment of the Army stated that it would examine into               Military operations and commitments in the
 the economy of using U.S. wheat, and, if it can be            Philippines.
 clearly demonstrated that there would be an advantage            Military assistance program and related activities
 in using U.S. wheat, the Thailand procurement office          in the Republic of China.
 would be requested to make this a requirement in its             Assistance related to Free World Forces in
 contracts. (See Appendix, Section I, Item 93.)                Vietnam.

                                                                                                                  109
INTERNATIONAL OPERATIONS

Department of State and                                                                lMMlGRANT VISAS ISSUED
                                                                                            FY 1965 - 1970

Related Activities
                                                                1
   During the year, two reports were submitted to the
Congress on improvements needed in the administra-
                                                                                                    -7 349    .:

tion of departmental responsibilities. Four reports were
submitted to agency officials and generally related to                       -
programming and internal management procedures.                               a9
I n addition, two reports were issued on Peace Corps
activities in response to requests from individual Mem-
bers of the Congress.
                                                                               :
   GAO reported to the Congress on the need for im-
                                                                             i

                                                                             A
proved review and coordination of the foreign affairs                        .. .
                                                                             ?$:.
                                                                             . .....
                                                                             a
aspects of Federal research. The Department of State                         1966          1967        1968        1969   1970

has the responsibility to insure that federally sponsored
research does not adversely affect US. relations with                                   FEES COLLECTED FOR
                                                                                       IMIGRANT VISAS ISSUED
other countries. However, the Department does not                                           FY 1965. 1970

review all proposals for foreign research. GAO made
suggestions for departmental issuance of review guide-
lines to other agencies and for improvement of the
Department’s review procedures. The Department of
State generally agreed and stated that it was taking
certain actions, including clarifying procedures to
other agencies and the Foreign Service posts, to im-
                                                                                           ..       . ..
prove its review function. I n February 1971, the Under
Secretaries Committee within the National Security
Council system was directed to assume responsibility
for insuring interagency coordination of foreign affairs                                               . ..
research and for an annual plan for such resrarch to be                                    1967        1968        1969   1970

submitted to the President for approval. (See Appen-
dix, Section I, Item 148.)                                  services and that the systematic accumulation of such
   The Department of State provides consular services       information through an accounting system was un-
to both U S . and foreign nationals. GAO reported to        necessary. GAO firmly believes that without an ac-
the Congress that although established Government           ceptable accounting system the Department of State is
policy provides that services provided by any Federal       not in a position to obtain reliable cost information
agency to the public should be self-sustaining to the       necessary for the effective management of the consu-
fullest extent possible, the costs to the Department for    lar services program. (See Appendix, Section I, h e m
providing immigrant visas exceeded revenues by an            103.)
estimated $9 million in fiscal year 1970. I n addition,        Another report was issued to the Department of
the report stated that definitive policy and criteria       State suggesting improvements in the establishment
                                                            and administration of allowances and differentials
had not been promulgated for the establishment of
                                                            paid to U S . civilian employees stationed overseas.
consular fees nor was there an accounting system ade-
                                                             (See Appendix, Section I, Item 190.)
quate for providing data necessary for the effective
                                                               As a result of a GAO survey of the activities of the
financial management of the various consular activities.
                                                            Department of State’s Regional Finance and Data
   I n response to GAO’s proposals the Department           Processing Center in Paris, France, a report was issued
agreed to study the need for a change in the fees and       to the Department which made several suggestions for
to develop definitive policy and criteria for the estab-    improving its practices in the processing of payrolls, the
lishment of consular fees. However, the Department          utilization of disbursing officers, and the accounting
felt that cost-finding techniques were sufficient to        for overseas allotments. The report also included
periodically determine the costs of providing consular      suggestions for improving internal activities of the Paris
110
                                                                                 INTERNATIONAL OPERATIONS

Center, The Department agreed with the GAO objec-            the year then ended. The certificates of beneficial
tives mentioned in the letter, but differed as to the        interest sold subject to contingent repurchase should,
means, timing, and assignment of responsibilities to         in GAOs opinion, be considered as borrowing or
assure moving toward those objectives. (See Appendix,        financing transactions rather than sales of assets. Exim-
Section I, Item 158.)                                        bank disagreed with GACYs views but i s seeking new
   During the year GAO continued its review of               methods of handling its certificates of beneficial
vouchers and supporting documentation for the settle-        interest.
ment of accounts of accountable officers of the De-              In its report to Congress GAO recommended that
partment of State, as well as following through on           Eximbank should (1) increase borrowing from the
formal and informal exceptions taken in prior years          Treasury so that the substantially increased costs of
in connection with reviews of fiscal transactions at the     borrowing in the private market can be avoided and
Department of State, USIA, and the Peace Corps.               ( 2 ) document and describe in its annual reports to the
                                                             Congress any activities performed in the national in-
                                                             terest that would not be performed in the ordinary
Treasury Department                                          course of its business. GAO also recommended that
                                                             the Secretary of the Treasury and the President of
   Chapter 4 of Public Law 91-599, approved on De-           Eximbank should renegotiate the agreement concern-
cember 30, 1970, provides that the General Account-          ing reduced interest rates charged on certain Treasury
ing Office shall audit the administrative expenses of        borrowing. Only portions of these recommendations
the Exchange Smtabilization Fund administered by the         have been accepted by Eximbank. (See Appendix,
Secretary of the Treasury and previously excluded            Section I, Item 157.)
from GAO audit authority. The Treasury previously
had considered its international affairs costs also to be
a part of the Exchange Stabilization Fund. I n fiscal        Problems in Obtaining Access to
year 1971 GAO began a survey of the organization             Information and Documents
and management of the international affairs functions
of the Treasury Department. The current GAO sur-                GAO has experienced increasing difficulties during
vey of all Treasury international functions will provide     the year in obtaining access to information and docu-
a foundation and the necessary background informa-           ments needed to adequately perform its reviews of in-
tion for the audits required under Public Law 91-599,        ternational programs and activities.
beginning with fiscal year 1972.                                The Departments of Defense and State have in-
                                                             creasingly employed delaying tactics in preventing the
                                                             necessary access to records which would enable GAO
Export-Import Bank                                           to perform its reviews of their programs. The Depart-
                                                             ment of State has continued to refuse GAO access to
   Pursuant to the provisions of the Government Cor-         any records of US. occupational costs in Berlin. In
poration Control Act, an audit of the Export-Import          April 1971, GAO notified the chairmen of the con-
Bank of the United States for fiscal year 1970 was made      gressional committees primarily concerned of the con-
and a report furnished to the Congress. A short-form         tinuing refusal. GAO representatives testified before the
report was also issued to Eximbank on GAO's exami-           Subcommittee on Foreign Operations, Senate Appro-
nation of its financial statements for inclusion in the       priations Committee, in June 1971, on the general
Bank's annual report.                                        problems of obstruction and delays. In July 1971, GAO
   T,he financial statements, except for Eximbank's          also appeared before the Subcommittee on Separation
treatment of sales of certificates of beneficial interest,   of Powers, Senate Committee on the Judiciary. The
presented fairly the financial position of Eximbank          access to records problem is further discussed in Chap-
at June 30, 1970, and the results of its operations for      ter Two on page 13.




                                                                                                                  111
                                                                                               TRANSPORTATION

                                                             is for services procured on standard forms and is au-
                                                             dited centrally by GAO on the basis of paid bills sub-
                                                             mitted by Government agencies. Other expenditures
                                                             for direct procurement of commercial transportation
                                                             consist primarily of contract services, including the
                                                             transportation of mail; payments by the Military Sea
                                                             Transportation Service for commercial ocean services ;
                                                             and payments by Government corporations that are
                                                             audited on site.
                                                                 The Government also spends several billion dollars
                                                             annually for operation of military transportation fleets,
                                                             for movement of civilian employees’ household goods
                                                             on a commuted basis, for reimbursement of transporta-
CHAPTER SEVEN                                                 tion charges incurred by cost-type contractors, and for
                                                             other indirect transportation services. These expendi-
                                                              tures are covered in GAO reviews of selected activities
                                                              and programs of the various agencies.


                                                             Audit of Transportation Payments
TRANSPORTATION
                                                             and Settlement of Claims

   The General Accounting Office is responsible for          Transportation Payments
determining the correctness of charges paid for freight
and passenger services furnished for the account of             The Transportation Act of 1940 requires the ad-
the United States, for the recovery of overcharges, and      ministrative agencies to pay the bills of carriers subject
for the settlement of transportation claims both by and      to the Interstate Commerce Act and the Federal Avia-
against the Government.                                      tion Act upon presentation prior to audit by the Gen-
   As a further part of its basic audit responsibility,      eral Accounting Office. Although payments to carriers
GAO reviews, evaluates, and reports on the transporta-       not subject to these acts may be audited prior to pay-
tion and traffic management activities of Government         ment, for administrative efficiency all transportation
agencies and assists the agencies in their traffic manage-   bills for services procured on standard Government
ment and transportation activities.                          forms are normally paid before audit.
   T h e Transportation Division of the General AC-              Because certifying and disbursing officers are ex-
counting Office is responsible for carrying out these        empted by law from liability for any overcharges by
functions. Its staff of over 700 professional, technical,    carriers arising from the application of improper rates
and clerical personnel is headed by Thomas E. Sulli-         or charges on senices procured by standard Govern-
van, Director, and Fred J. Shafer, Deputy Director.          ment transportation forms, paid transportation bills are
An organizational chart of the Transportation Division       submitted to G,40 for central postaudit, &termination
follows on page 114.                                          of overcharges, and recovery of overcharges directly
    I n settling transportation claims, GAO furnishes        from the carriers. The principal transportation pay-
technical support and other assistance to the Uepart-        ments that are not sent to GAO for postaudit are those
ment of Justice in the prosecution or defense of trans-      made by Government corporations and those procured
 portation suits to which the United Sta.tes is a party.     under contract, such as U.S. Postal Service mail con-
    The scope of GAO’s responsibilities for auditing and      tracts and Military Sealift Command shipping con-
 reviewing transportation in the Federal Government is        tracts. GAO audit of transportation charges is normally
 indicated by the magnitude of the Government expend-         completed in 6 to 7 months after payment.
itures for transportation services. Direct procurement           GAO audited 5.3 million bills of lading for freight
 of commercial transportation amounts to about $4 bil-        shipments, for which the Government had paid about
 lion annually. Approximately $2 billion of this amount       $1.2 billion, and 2.9 million transportation requests for

                                                                                                                  113
TRANSPORTATION

                                       TRANSPORTATION DIVISION




         E. C. RISMILLER                                                       D. LODWICK




                                   TRANSPORTATION           AUTOMATED
                                                                                 STAFF AND
             AUDITS                  AND TRAFFIC          TRANSPORTATION
                                     MANAGEMENT                               SUPPORT SERVICES
                                                           AUDIT SYSTEMS
      ASSISTANT DIRECTOR               REV1EWS
                                                                              ASSISTANT DIRECTOR
                                                         ASSISTANT DIRECTOR
           R. E. WEST                                                              P. T. SMITH
                                  ASSOCIATE DI RECTOR       J. M. LOXTON
                                   H. W. CONNOR, I R .

         4SSISTANT DIRECTORS
         I  C. R. COMFORT




        i
               RAIL AUDIT                                                             PROCE DU RES,
                BRANCH                1. GOLDMAN

               S. EHRLICH
                                                                                        IN TE RNAL
                                                                                      REVIEW STAFF


              MOTOR AUDIT
                BRANCH                                                                  SPECIAL
                                                                                        REPORTS
              C. C. LOOMIS                                                              BRANCH
                                                                                      J. L. CALLAN
                                                                                  I                   I




        i
              RAIL REVIEW
                BRANCH                                                                   FISCAL
                                                                                      MANAGEMENT
               0. L. TATE
                                                                                        BRANCH
         I                    I
                                                                                       A. T. BOUR

             MOTOR REVIEW
                BRANCH
              F. S. FISHMAN




             TARIFF SECTION
              G. L. PARKS




                 VOUCHER
                  SECTION
              H. M. MORGAN

                                                                                        JUNE 30, 1971


114
                                                                                                                                       TRANSPORTATION

passenger travel, for which the Government had paid                                  million, which were credited to basic appropriations of
about $.8 billion. From the audit of transportation                                  the procuring agencies or, where this was not possible,
payments, GAO issued 102,326 overcharge notices to                                   deposited in the Treasury as miscellaneous receipts. A
commercial carriers requesting refunds totaling $16                                  summary of this activity for fiscal year 1971 is shown
million. Collections from carriers amounted to $14.8                                 below.


                      BILLS OF LADING AND TRANSPORTATION REQUESTS EXAMINED DURING FISCAL YEAR 1971
                                                                                                                                 Notices oJ overcharge issued
Audit:                                                                               Number                Amount paid            Number                        Amount
   Bills of Lading.. ...................................                       5,272,008           $1, 174, 527,007              84, 192             $14,432,626
   Transportation Requests. ..........................                         2,922,200               776,753,577               18, 134               1,578,547

           Total..    .......................................                  8,194,208                 1,951,280,584           102,326                16,011, 173



   The amount of payments audited was about 18                                        settled and adjusted in the General Accounting Office.
percent less than the prior year, and the amount of                                   Pursuant to this law transportation claims against the
overcharges detected and reported to carriers was about                               United States, with certain minor exceptions, are sub-
10 percent less. This activity was accomplished with                                  mitted to GAO for adjudication. The exceptions relate
8 percent less audit hours than were utilized on the                                  to claims for loss and damage, accessorial or supple-
transportation audit in fiscal year 1970. A schedule                                  mentary transportation services, and amounts due be-
showing transportation audits and collections for fiscal                              cause of errors in extension or footing on prior bills.
years 1962-71 is included as Exhibit 4 on page 164.                                   These latter claims after payment are subject to review
   As part of the review of transportation payments,                                  in GAO's audit of paid vouchers.
GAO also identified hundreds of shipments where the                                       GAO received about 19,000 claims and settled or
transportation services were procured at the legal rates                              otherwise disposed of 15,957 claims for approximately
but resulted in excess costs to the Government which                                  $20.7 million. The greatest amount claimed was on
were not recoverable from the carriers. These traffic                                  assigned bills of certain Military Airlift Command con-
management errors resulted from the selection of un-                                   tractors, which are audited before payment to protect
 economical routes, modes of carriage, or types of serv-                               fully the Government's interest. On these assigned bills
ice and were brought to the attention of responsible                                   and other original unpaid bills for $17 million, about
transportation officials of the agencies involved for nec-                             $265,000 was disallowed as being in excess of the proper
essary corrective action.                                                              contract and/or tariff rates. The balance of the claims
                                                                                       were supplemental bills of carriers for changes in their
Claims                                                                                 original charges or demand for repayment of over-
                                                                                       charges collected by GAO. In disposing of these claims,
   Sectioc305 of the Budget and Accounting Act, 1921,                                  amounting to about $3.7 million, $2.1 million was cer-
 provides that all claims and demands whatever by the                                  tified for payment and $1.6 million was disallowed or
 Government of the United States or against it shall be                                terminated. A summary of this activity is shown below.


                          TRANSPORTATION CLAIMS RECEIVED AND SETTLED DURING FISCAL YEAR 1971
                                                                                                                Settled
                                                          On hand                              h'ulJlbCr           Amount               Amount               0 n hand
                Class of Claiins                      July 1 , l g ? O   Receic ed            oJclarn~s             Cla I JJWd           allowcd         June SO. 1971
Freight. .....................                              8,635        17,455               14,617          $6,051,515          $4,268, 139                   11,473
Passenger. . . . . . . . . . . . . . . . . . . .              410         1,418                1,340          14,672,352          14,597, 701                      488
                                                                                                    ~~




           Total. . . . . . . . . . . . . . . . . .          9,045       18,873               15,957          20,723,867          '18,865,840                    11,961
     1   Includes allowance of $14,070,463for Military Airlift Command movements audited before payment.

                                                                                                                                                                  115
TRANSPORTATION

  A schedule showing transportation claims settled           papers in Bangkok, Thailand. Instead of airlifting
during fiscal years 1962-71 is included as Exhibit 5         about 15 tons of newspapers daily from Japan, only the
on page 164.                                                 printing negatives (about 25 pounds) would be shipped
                                                             by air. Less costly surface transportation would be used
                                                             to move the common newsprint to the printing facility
Transportation Management Reviews                            which was nearer to the ultimate readers. DOD agreed
                                                             that the commercial printing concept was feasible and
    The General Accounting Office continued to in-           stated that negotiations were planned to try the con-
 crease its emphasis on coverage of civil agency             cept for the copies distributed in Thailand. DOD
 transportation activities. For example, of 17 working       added that the printing of the Thailand copies would
 transportation assignments at yearend, six were con-        be a valuable trial run and, if successful, could be
 cerned solely with civil agency matters. The majority       extended to other areas in Southeast Asia. However,
 of GAOs efforts in the transportation field, however,       subsequent to the issuance of this GAO report, the
 were directed to Defense Department activities and          commercial printing firm in Bangkok was merged with
 were concerned with the way the Federal transporta-         another firm and could no longer print the newspapers
 tion dollar is being spent.                                 required for delivey in Southeast Asia. DOD has indi-
    During fiscal year 1971, GAO issued four reports         cated that it is currently studying less expensive means
 to the Congress on transportation and traffic manage-       of delivering the Stars and Stripes. (See Appendix, Sec-
 ment problems. One report cited the need for central-       tion I, Item 225.)
 ized control over procurement of overseas air passenger        GAO also reported to the Congress that the number
 transportation to eliminate DOD’s unnecessary pur-         of Government transportation requests (TRs) issued
chase of seats on commercial flights. GAO estimated         by DOD to procure bus transportation and the related
 that savings of $4 million in DOD’s cost of commercial     paperwork could be reduced significantly through
 air transportation could have been realized during fis-    greater use of the bulk purchase program. Under this
 cal year 1968 if the passenger capability of DOD had       program, DOD is authorized to use a single TR to pro-
been used more effectively. DOD agreed that central-
                                                            cure quantities of bus tickets. DOD has agreed with
ized control of overseas air passenger transportation
                                                            GAO’s findings and is taking corrective action. GAO
had not been established at the time of G A O s review
                                                            did not attempt to measure the savings in paperwork
but reported that a joint regulation had been issued
establishing such control for air travel after January 1,   in terms of dollars, but, based on cost of issuing and
 1970. (See Appendix, Section I, Item 222.)                 processing a T R as estimated by an independent study
    In another report, GAO stated that the use of cargo     group, the savings should be between $300,000 and
space on military controlled aircraft had improved sig-     $800,000 annually. (See Appendix, Section I, Item
nificantly since its earlier reviews, but that optimum      223.)
use of cargo and passenger flights still had not been           Other reports which were substantially completed
achieved. Available cargo capacity in the belly com-        at the end of the year concerned ( 1 the transportation
partments of aircraft had been left largely unused.         of ammunition worldwide, ( 2 ) contracts for container-
GAO estimated that the unused space in the belly com-       ship service, and (3) the need to improve utilization of
partments of aircraft controlled by the military would      cargo space on ammunition ships.
have accommodated an additional 20 million pounds               GAO answered specific requests from individual
of cargo annually. The cost of procuring an equivalent      Members of the Congress concerning various trans-
amount of cargo airlift would have been about $11           portation and traffic management activities. For in-
million. D O D agreed with GAO’s findings and cited         stance, at the request of the chairman of the House
corrective actions taken or planned. Because of the         Committee on Merchant Marine and Fisheries, GAO
significant reduction in cargo shipments to Southeast       made a study of the comparative economies of using
Asia, GAO was not able to estimate the savings that         regular commercial service and chartered vessels for
will result. (See Appendix, Section I, Item 224.)           the ocean movement of military cargo. At the request
   Another report showed that D O D could save about        of another Member of the Congress, GAO studied the
$3.8 million annually by contracting with a commer-         feasibility of using a deactivated airbase as a trans-
cial firm to print the Pacific Stars and Stripes news-      portation facility.

116
                                                                                              TRANSPORTATION

  Other matters of congressional interest reported on       total amount of $107,058 were settled by the collection
were:                                                       of $45,165 through judgments, compromises, or
    Charges incurred by DOD for detaining rail cars.        otherwise.
    Selection of air carriers by DOD.                           GAO received from the Department of Justice no-
    Proposed rate increase of the Alaska Railroad.          tice of the filing of 401 suits by carriers covering 230,-
    Closing of the St. Louis Field Office, Eastern Area,    100 shipments. Three hundrcd and seventy-five of the
  Military Traffic Management and Terminal Service.
                                                            suits filed and about 228,333 of the shipments were on
    Evaluation of a DOD test involving use of Great
                                                            overseas movements of household goods by the Depart-
  Lakes ports for moving military cargo to Europe.
                                                            ment of Defense. The amount sued for is not stated in
   GAO also issued reports concerning transportation        thc pctitions filed in those suits but GAO estimates the
matters to heads of departments and agencies. One of        liability of the United States on the 795 suits filed in
the more significant reports involved the consolidation
                                                            this and prior years to be about $10 million if the final
of household goods shipping activities in Hawaii. In
                                                            rulings of the Court are adverse to the Government. I n
response to an earlier GAO report, DOD established
a joint household goods office in Hawaii, but, instead
                                                            the same period GAO furnished technical advice and
of abolishing various local offices, it superimposed the    other assistance to the Department of Justice in 22
joint office on the existing offices. GAO reported to the   suits for $353,646 involving 1,254 shipments. Twenty-
Secretary of Defense that the consolidation had re-         seven suits, the subject of reports in this or prior
sulted in significantly higher costs to accomplish the      years, involving 2,404 shipments and $507,208, were
same functions. (See Appendix, Section I, Item 227.)        settled by payment of judgments for $185,154 and by
   Other reports issued to heads of departments and          dismissal or withdrawal of the balance.
agencies involved :                                             Following the refusal in October 1970 by the De-
    The legality of certain negotiated air rates.           partment of Justice to follow the GAO recommenda-
    A survey of the transportation activities of the         tion that a petition for a writ of certiorari be filed
  Social Security Administration.                           in Trans Ocean V a n Service v. United States (Ct. C1.
   Significant transportation matters now being studied      No. 137-66, decided May 15, 1970), GAO prepared
include (1) traffic management in the U.S. Postal            a report of amounts due the parties according to its
Service, (2) controls over the procurement and use of        understanding of the decision of the court. Due to the
household goods containers, (3) transportation of pe-        difference between the GAO interpretations and those
troleum fuels via pipelines, and (4) effectiveness of        of the plaintiff in this representative case, a subse-
Government programs to strengthen the American               quent hearing before the Court of Claims will be held
Merchant Marine.                                             before a settlement can be reached.
                                                                In another of the five representative cases selected
                                                             for trial of the issues in the 795 household goods suits,
Assistance in the Legal Field                                Global V a n Lines, Inc. v. United States (Ct. C1. Nos.
                                                             259-65 and 355-65), a report of the Commissioner
   The General Accounting Office continued to pro-           to the Court of Claims was filed February 1, 1971.
vide technical assistance to the Department of Justice       GAO took exceptions to the Commissioner’s report
in the prosecution and defense of transportation suits       and, at the request of the Department of Justice,
by or against the United States and in proceedings           prepared an evaluation of the potential financial im-
before the Interstate Commerce Commission. As part           pact to the Government.
of this assistance, transportation specialists partici-         Another activity of continuing importance in GAOs
pated in three pretrial conferences in the Court of
                                                             audit and legal assistance work relates to the collection
Claims and one trial before a Commissioner of the
Court of Claims.                                             of motor carrier overpayments. Overpayments arise
   GAO reported debts against carriers involving 771         as a result of the application by carriers of unjust and
items in the total amount of $218,498 to the Depart-         unreasonable rates as defined by the Interstate Com-
ment of Justice for collection. During the fiscal year       merce Act. Reparations for such overpayments to mo-
similarly reported debts covering 232 items in the           tor carriers may be recovered only through suits filed in
                                                                                                                 117
T R A N S PORTAT ION

the US. District Courts. During the year GAO iden-                Considering and acting upon various requests
tified and prepared reports on motor overpayments              from the administrative agencies for permission to
involving 610 shipments and claimed reparations of             deviate from established procedures to provide more
$244,400. Eight of these cases were referred to the De-        economical and efficient traffic management.
partment of Justice and GAO understands that as of             GAO continued its practice of meeting with rep-
June 30, 1971, the Department had filed suits on most       resentatives of individual carriers or members of their
of them. In addition, when advised of unjust and un-        trade associations to discuss and resolve mutual prob-
reasonable rate situations, certain motor carriers vol-     lems relating to the audit of carriers’ bills. During the
untarily refunded overpayments on 31 6 shipments            year, GAO participated in six meetings with various
amounting to $160,900.                                      domestic and international carrier associations and
                                                            had numerous discussions in Washington with carrier
                                                            and carrier association representatives.

Assistance in the Traffic and
                                                            Joint Agency Transportation Study
Transportation Field
                                                                Under the Joint Financial Management Improve-
   GAO assisted various Government agencies in their         ment Program, GAO continued to participate in a joint
traffic management and transportation activities. This       agency study of freight and passenger transportation
assistance included :                                        in the civil agencies. The study was under the chair-
     Furnishing recommendations about billing pro-           manship of an official of the General Services Ad-
                                                            ministration with full-time staff members assigned
  cedures to the Military Traffic Management and
                                                            from the General Accounting Office, the Genera1 Serv-
  Terminal Service ( M T M T S ) for incorporation in
                                                             ices Administration, the Office of Management and
  their Revised Tender of Service as an appendix to
                                                             Budget, the Treasury Department, and the Depart-
  their Personal Property Management Regulation
                                                            ments of Commerce, Agriculture, and Health, Educa-
  covering the transportation of employees’ move-            tion, and Welfare. The report outlining the conclu-
  ments of household goods on Government bill of             sions and recommendations of the study group was
  lading service.                                           released to the public in September 1970.
    Furnishing recommendations to MTMTS re-                     The study resulted in 58 recommendations which
 garding a proposed tender to cover freight forwarder       offer the means not only to simplify and expedite pay-
 movements of freight-all-kinds shipments.                  ment of the 9 million yearly transportation transactions
    Working with the Post Office Department on an           but also, in many instances, to integrate the audit of
 arrangement to audit the transportation accounts           payments as a natural outgrowth of the payment proc-
 for the U S . Postal Service, effective July 1, 1971, on   ess and to produce savings.
 a reimbursable basis.                                          Of the 58 recommendations, 30 will require imple-
    Furnishing data to the Department of Justice in         menting action by GAO as part of its responsibility to
 connection with its investigation of billing irregu-       promulgate accounting principles, standards, and ma-
 larities of van carriers transporting shipments of         terial for the guidance of Federal agencies in develop-
 electronic equipment and office furniture.                 ing accounting systems and internal auditing programs ;
    Furnishing information to MTMTS regarding the           uniform procedures for use of Federal agencies; and
 application of Ex Parte 256 increases incorporated         regulations governing the relationship between GAO
 in rail line-haul rates in certain class tariffs and the   and other Federal agencies and between CAO and in-
 effect on rate quotations on file.                         dividuals and private concerns doing business with the
    Furnishing passenger fares and other transporta-        Government. Of the 28 remaining recommendations,
 tion data to the Department of Labor for prepara-          four will be implemented by GAO in concert with
 tion of the monthly consumer price index.                  carriers and various other agencies, 16 will be individ-
    Providing guest lecturers at the U.S. Army Trans-       ually or collectively acted upon by various other
 portation School, Fort Eustis, Va.                         agencies, one will be handled under the Joint Financial

118
                                                                                            TRANSPORTATION

Management Improvement Program, and seven re-              charges on small domestic freight shipments and re-
quire no further action.                                   delegation of authority to approve the use of commer-
   GAO is proceeding to implement those recommen-          cial forms and procedures in documenting transporta-
dations for which it has responsibility. In this connec-
                                                           tion shipments. Other recommendations in the study
tion, the Comptroller General in a letter to the Heads
of Departments, Independent Establishments, and            report are being similarly considered and will be imple-
Others Concerned, B-163758, dated May 6, 1971, pro-        mented by letter and in the GAO Policy and Procedures
vided for the use of imprest funds to pay transportation   Manual for Guidance of Federal Agencies.




                                                                                                               119
. _




i



i     ir
      D
I
i




"'I
                                                                                                             CLAIMS

                                                               In addition, the division has responsibility for super-
                                                            intending the collection of debts. This responsibility
                                                            stems from ( I ) section 304 (31 U.S.C. 93) of the
                                                            Budget and Accounting Act, 1921, which incorporated
                                                            by reference the authority formerly contained in section
                                                            4 of the act of July 31, 1894, to superintend the re-
                                                            covery of debts due the United States, and ( 2 ) the
                                                            Federal Claims Collection Act of 1966 (31 U.S.C.
                                                            951-953). Under the latter act, the General Account-
                                                            ing Office is required to collect, compromise, or termi-
                                                            nate collection action as appropriate, on all claims of
                                                            the United States arising out of its activities or referred
                                                            to it by another agency as being administratively
CHAPTER EIGHT                                               uncollectible.


                                                            Claims Against the United States
                                                            (Payment Claims)
                                                               Generally, all Government agencies have the pri-
                                                            mary responsibility for paying the obligations incurred
                                                            in connection with their operations. There are, how-
General                                                     ever, two classes of claims which must be adjudicated
                                                            by GAO before payment is made or denied. The first
   Section 305 of the Budget and Accounting Act, 1921,      includes those in which there exists such reasonable
provides that all claims and demands whatever by the        doubt as to preclude action by the administrative
Government of the United States or against it shall be      agency in the absence of specific statutory authority,
settled and adjusted in the General Accounting Office.      and second, those which the administrative agencies
The Claims Division, under the direction of James M.        are specifically prohibited by law from paying prior
Campbell, Director, and John P. Gibbons, Deputy             to settlement by the General Accounting Office. In
Director, has been assigned the responsibility for the      addition, the Claims Division considers all reclaims
adjudication and settlement of all claims by and against    of items previously denied by administrative agencies,
the United States that are cognizable by the General        unless it is determined by the agency involved that
Accounting Office with the exception of claims by and       the administrative disallowance was clearly in error and
against common carriers for transportation items. An        can properly be corrected at the agency level.
organization chart of the Claims Division as of the close      On July 1, 1970, the Claims Division had on hand
of the fiscal year is presented on page 122.                 1,400 claims against the United States and received
   The authority and responsibility vested in the Claims    9,681 during the fiscal year 1971. During the same
Division to adjudicate claims is not all-inclusive. Con-    period, 8,686 claims were certified for payment,
gress has enacted various laws authorizing designated       amounting to $1 17,782,204. As of June 30, 1971, there
Government agencies to settle specific classes of claims    was on hand a closing balance of 2,395 claims. In
arising under programs administered exclusively by
                                                            addition, since September 1970, final action was taken
such agencies. Other laws have been enacted, however,
                                                            on 5,234 claims which were barred because of the 10-
which provide that payment of designated classes of
                                                            year statute of limitations on the filing of claims in
obligations may be made only upon settlement by the
General Accounting Office. These latter classes of obli-    the General Accounting Office (31 U.S.C. 71a).
gations include claims for underpayment of wages               Claims against the United States arise from every
under the Davis-Bacon Act (40 U.S.C. 276a-2) and            kind of Government transaction, and the claimants
the Contract Work Hours and Safety Standards Act            include private citizens ; Government personnel, both
 (40 U.S.C. 330(a) ), as well as judgments against the      civilian and military; business entities ; and State and
United States.                                              foreign governments. The categories of claims include

                                                                                                                  121
CLAIMS

                                CLAIMS DIVISION



                                     DIRECTOR
                                 J. M. CAMPBELL              CLAIMS SERVICE
         ADMINISTRATIVE
            OFFICER
         MRS. M.V. BUTLER       DEPUTY DIRECTOR               MRS. J.F. MARTIN
                                    J. P. GIBBONS




                                          I



                                  AGENCY REVIEW
                                       AND                   D E B T BRANCH
                                ASSISTANCE B R A N C H        R. H. CLARK
                                 MRS. E.S. MAYFIELD
                                                         L


          -   PAYMENT CLAIMS
              REVIEW SECTION
                                                                 DEBT REVIEW
                                                                   SECTION
              A. W. LILLISTON                                     L. WEINER



              PAYMENT CLAIMS                                     DEBT CLAIMS
          -    ADJU Dl CATION                                   ADJUDICATION
                                                                   SECTION
                                                                J. A. BAMBRICK




                                                               DEMAND SECTION
                                                                H. A. WEIGLER




                                                                 COLL ECTl ON

                                                               MRS. E.J. PICKETT




                                                                    J U N E 30, 1971

122
                                                                                                                                                                                                    CLAIMS

Government contracts ; compensation due civilian em-                                   of the President and the monthly portion of his ex-
ployees, including overtime and premium pay; quarters                                  pense allowance. After the certificate is reviewed, it
and cost-of-living allowances; travel; transportation of                               is forwarded to the Bureau of Accounts of the Treasury
household effects; per diem; allowances on change of                                   Department for recording in the administrative ac-
official station; pay and allowances due military per-                                 counts. In compliance with the provisions of 31 U.S.C.
sonnel; retired pay; compensation due deceased                                         82b, a bonded certifying officer of the Bureau of Ac-
civilian officers and employees; pay due deceased mem-                                 counts certifies payment to the Washington Regional
bers of the Armed Forces and the National Guard; as                                    Disbursing Office of the Division of Disbursement. The
well as miscellaneous claims by Government personnel                                    Washington Regional Disbursing Office then draws
and public creditors.                                                                  checks on the Treasurer of the United States in the
   Perhaps one of the least known functions of the                                     name of the Chief Disbursing Officer, and the checks
Claims Division is the processing of the necessary cer-                                 are delivered to the White House.
tifications for payment of the salary and expense allow-                                   The function performed by the Claims Division in
ance of the President of the United States. Section 102                                 settling claims against the United States clearly is one
of title 3, United States Code, provides that the Presi-                               that is not only beneficial to the individual claimants
dent shall receive compensation in the aggregate                                        involved, but also is in the best interest of the United
amount of $200,000 a year, to be paid monthly, and                                      States. It is beneficial to individual claimants in that
in addition an expense allowance of $50,000 to assist                                   it affords them the opportunity to receive a full, fair,
in defraying expenses relating to or resulting from the                                 and impartial review of administrative action in dis-
discharge of his official duties.                                                       allowing their claims at lrttle or no expense to them.
    Near the end of each month, a certificate of settle-                                It is in the interest of the Government in that it reduces
ment, payable to the President, is processed in the Pay-                                significantly the number of claims that otherwise would
ment Claims Section, Claims Division, General                                           be the subject of formal legal proceedings instituted by
Accounting Office, setting forth the monthly salary                                     claimants with the attendant expense, delays, and over-


                           SETTLEMENT CERTIFICATE
                                                                                        U.D.0S011"   ,.
                                                                                                      ,I_   * za.,I),
                                           UNITED STATES
                                         ACCOUNTING OWICE
                                                                                                CERTIFICATE O F SETTLEMENT
                                                                                                      UNITED *TAT=*          GENERAL ACCOUNTING OFFlCE
 In wre.rmdenQa
  PI
   .
   -     nf..(0;                   WASHINGTON. D.C. 20348                                                                 C U l M S DIVISION
                                                                                                                       WASHINGTON D 5 L09dB
 Mvisiox       Claims
 ClohNo.:       Z 245801
                                                                       _______
                                                                          mw
                                                                                        ChlmNo       2-2453305                                                    ,971


                                                                                                                                                                                        I                                I

               Miss sane smith
               3720 R Street, N. W.
               Washingtan, D. C.    2oow
           L                                             A                                                                               (See   directions below)

               Madam?
                                                                                               I C B B W Y thur   13   due rmm the Uoltld Stater lo the above-named clllmantls). ~ w n b l ofrom (ha ~ D P r o ~ d d l o n < L
                     Your claim f o r adhtional compensatmn for services alleged
               t o have been rendered dwing the eeriod A w t 12 ( a t noon)             hdhld, tho mm of     $4,959,350.00                                                                                   on .eeoont 01
               through September 1, 1969, is m &ployee Of the office of Economic        f i n a l award of the Indun Claims Commission dated December 2, 1970, in the                                 CBSB   of The
               Oppmtlmity, IS disallowed f o r the mesons stated below.                 Washoe Wibs Y. The United States Of America, Docket Nc. 288.

                    The record shows that on April 8, 1969 you were given B              20x1746
               temporary appointment, not ta exceed Avgust 7, 1969, 88 B Program
               Assistant, GS-7, $6981 per m u m . The appointment apeoified that
               the total employment m u s t not sxceed 700 burs. You were given                      (House Document No. 92-103, 92nd Congress 1st Session, page 10,
               an extension of your temporary appointment not to exceed A w t 12,                         Second   Supplemental Appropriations Act,'1971, approved M8y 25, 1971)
               1969, since you worked only 680 hours under the f i r s t temporary
               appointment. The file further shows you submitted your resignation        For credit to: U7372
               effective A u g u s t 12, 1969.

                    The report of the Office of Economic Opportunity indicate8
               that you were not reemployed by that agency u n t i l Jan- 7, 1970
               when you were given a new temporary appointment 88 a Rogram
               dmistant, GS-7, in VISTA.

                    Aooorrlingly, there exists no legal basis upon which y a w claim
               msy be allowed.

                                               very t r u l y yours,

                                               For the Director, Claims Division



                                               Adjudicator-Authorizer
               00:   Office of Economic Opportunitg
                     l2M1 Nlnetsenth Street, N. W.
                     Wasfigtan, D. C.    20506




                                                                                                                                                                                                                  123
CLAIMS

crowding of court dockets. Similarly, CAO’s claims          the amount due, the legal liability of the parties, or
settlement action is beneficial to the United States in     the action to be taken. Similarly, the Claims Division
that it reduces significantly the number of requests        independently adjudicates claims submitted by debtors
that otherwise would be made upon the Congress or           requesting review of disputed claims asserted against
individual Members thereof for the enactment of             them by Government agencies.
private legislation.                                           O n July 1, 1970, GAO had on hand 27,919 claims
                                                            by the United States and received 25,768 claims during
                                                            fiscal year 1971. GAO collection proceedings yielded
Claims by the United States                                 approximately $2.9 million on the 20,394 claims which
(Debt Claims)                                               were settled. Claims referred to GAO for collection
                                                            are written off by the administrative agencies prior
   Regulations promulgated jointly by the Attorney          to referral to GAO. Claims currently on hand, totaling
General and the Comptroller General ( 4 CFR 101-
                                                            33,293, have a face value of approximately $50 million.
105) pursuant to the Federal Claims Collection Act
                                                            With the exception of 7,853 claims which are under
of 1966 (31 U.S.C. 952) require that debts due the
                                                            collection, representing accounts receivable of about
United States on which administrative agencies have
taken appropriate collection action, but which cannot       $5.4 million, the claims have been assigned to claims
be compromised or on which collection action cannot         examiners and adjudicators for further processing.
be suspended or terminated in accordance with such             GAO processing procedures include attempts by
joint regulations, be reported to the Claims Division for   various methods to locate debtors whose whereabouts
further collection action. In addition. numerous claims     are unknown, issuance of demands for payment, and
of the United States are referred to the Claims Divi-       development of information on the financial status of
sion for adjudication Lvhen they involve doubt as to        debtors. GAO also instructs Government agencies to




                                                                                                          ~            ~




              OLDBALANCE        DATE         SCHEDULE       AMOUNT             RECEIPTS                       BALANCE
                PICK UP                         NO.          DEBT                                               DUE

         DEC 2 7 19?0                                                                                         $850.34
              850.34
              6 00.3 4
                                    OX22 tQ
                                   JAN   \s n
                                                        I
                                                        I
                                                                       II           50.008                        800.3 4 S
              76O.O 0                                                               40.34%                        760.0 0 8
                                                                                    30.9 0 €                      730.9 o a
             73Q.Q0                                                                 30.0 0 8                     70O.OOS
             700.0 0                                                                56.0 0 8                     650.00s
             650.9 0               MAY                                              25.0 0 S                     625eOOS
             625.0 0                c”
             600.0 0                                                                25.9 0 s                     6 00.0 0 S
                                                                                    20.75 8                      579.25s




                                                                                                                                          I




                                                        I


            GENERAL ACCOUNTING O F F I C E
                     FORM 4022                                        16-71529-1   U S. G O V E R N M E N T P R I N T I N G O F F I C E




124
                                                                                                            CLAIMS

withhold, if otherwise proper, amounts due debtors           States. However, any case in which the propriety of
for application to their debts.                              granting waiver is doubtful, regardless of the amount
   If a debtor is financially unable to remit the full       involved, is for consideration by the Claims Division,
amount of his debt in one payment, he is permitted           and only the GAO may waive overpayments of pay
to make installment payments commensurate with the           to an individual aggregating more than $500 or those
amount of the debt and his ability to pay. A compro-         which are the subject of an exception made by the
mise settlement is encouraged when it becomes clear          GAO in the account of any accountable official. Waiver
that a debtor is unable to pay the full amount of his        may not be granted in any case after the expiration of
debt within a reasonable time, the cost of collection        3 years following discovery of the overpayment.
does not justify the enforced collection of the full             In every case before a request for waiver is granted,
amount, there is a real doubt concerning the Govern-         it must be established by the application of recognized
ment’s ability to prove its case in court for the full       legal principles that there is no indication of fraud,
amount claimed, or for a combination of reasons.             misrepresentation, fault, or lack of good faith on
   During fiscal year 1971, GAO solicited 16,129 com-        the part of the employee involved or other person hav-
promises from debtors. There were 299 compromise             ing an interest in obtaining a waiver of the Govern-
settlements actually effected during the year, in the        ment’s claim.
aggregate amount of $156,662 in liquidation of debts            A person who has been granted a waiver of a claim
totaling $369,858. I n many cases in which compro-           may be refunded any amounts which he has repaid
mises are accepted, collection action against other liable    to the United States for such claim, provided that he
parties continues. Compromise settlements accepted by        applies in writing to the employing agency within 2
GAO are final and conclusive on the debtors and on           years following the date of the waiver. Payment of the
all officials of Government agencies and courts of the       refund is made by the employing agency, not by the
United States. The vast majority of compromise set-          GAO.
tlements are predicated upon the financial hardship of          During fiscal year 1971, GAO considered 714 re-
the debtors.                                                  quests for waiver of erroneous payments of pay totaling
   If collection action by the Claims Division is un-        $562,379. Of these, 453 in the amount of $387,459
successful due to the debtor’s refusal to answer corre-      were waived in full; 2 2 3 requests for waiver, amount-
spondence or his willful refusal to arrange for settle-      ing to $137,797, were denied; and the remaining 38
ment of his indebtedness with GAO, the Government’s          were waived in part-$24,708 being waived and $12,-
claim is referred to the Department of Justice for suit      415 being denied.
to enforce collection, provided that the debtor’s finan-         O n March 22, 1971, the GAO, in a letter to the
cial circumstances warrant this action. In such case, a      Heads of Departments, Independent Establishments,
certification by G.40 of the parties liable and the          and Others Concerned, directed attention to Public
amount due the United States is transmitted to the           Law 89-505, approved July 18,1966 (28 U.S.C. 2415),
Department of Justice, together with all of the infor-       which imposed limitations on the time within which the
mation and documents necessary to support court pro-         Government must institute suit for recovery on vari-
ceedings, including where appropriate proofs of claim        ous categories of claims of the United States. Each
against the estates of decedents and bankrupts, an-          agency was admonished to review its debt claim files
swers to interrogatories, motions for summary judg-          and to take timely action to refer cases to GAO and/
ments, and other documents used by district attorneys.       or the Department of Justice, in order to prevent the
A total of 2,084 such cases were referred to the Depart-     Government from losing its right to sue through
ment of Justice during the past year.                        default.
   Public Law 90-616, approved October 21, 1968 ( 5
U.S.C. 5584), provides that the Comptroller General
or the head of each executive agency may waive a             Agency Review
claim of the United States arising out of an erroneous       and Assistance Branch
payment of pay occurring on or after July 1, 1960,
made to an employee of such executive agency, when              I n an effort to improve agency effectiveness in
collection would be against equity and good con-             claims settlement and debt collection operations, on
science and not in the best interest of the United           August 8, 1970, the Comptroller General established,

                                                                                                                  125
CLAIMS

 within the Claims Division, a new branch known as           regulations and that some of the regulations issued did
 the Agency Review and Assistance Branch.                    not provide for the collection procedures required by
    One of the primary functions of the Branch is to         the act and the standards. Collection actions taken
 review agency regulations, procedures, and actual           by administrative agencies frequently were not
 operations relating to the adjudication of payment and      documented.
debt claims and to the collection of debts due the              GAO also found that backlogs developed because
 United States. Also, in accordance with 4 CFR 92.7,         of the lack of implementing agency instructions or
the Branch reviews the record of agency actions and          regulations and uncertainty regarding the proper pro-
operations under 5 U.S.C. 5584, relating to waivers of       cedures to be followed. In attempting to dispose of
claims of the United States arising out of erroneous         these backlogs, collection action, on a large number
payments of pay made to civilian employees. After
                                                             of claims, was improperly terminated during the first
reviews are completed, reports concerning GAO find-
                                                             12 or 18 months after the legislation became effective.
ings and recommendations are submitted to the heads
                                                                GAO cannot state precisely how many claims are
of agencies or, in appropriate cases, to the Congress.
   Each agency has primary responsibility for the pay-       presently outstanding in the Government or how much
ment of obligations incurred during the course of its        money is involved. Statistics furnished by only a few
operations. This authority, however, is limited by ap-       agencies, however, indicate that hundreds of millions
plicable statutes, statutory regulations, and availability   of dollars are involved.
of appropriations. Also, under the Federal Claims Col-          GAO will continue to make periodic reviews in the
lection Act of 1966, the head of an agency has primary       various departments and agencies to determine agency
responsibility for the collection of debts due the United    compliance with the GAO Manual and the Federal
States arising during the course of operations of his        Claims Collection Act. GAO will provide assistance
agency. The new Branch is making every effort to ren-        and guidance to insure greater uniformity and effi-
der assistance to the executive branch of the Govern-        ciency in administrative claims collection ,operations.
ment by helping to establish or improve agency               (See Appendix, Section I, Item 230.)
procedures and operations, especially in connection
with their operations under the General Accounting
Office Policy and Procedures Manual for Guidance of          Review of Payment and Debt Claims
Federal Agencies, the provisions of the Federal Claims       Operations and Regulations
Collection Act of 1966, and the regulations which were
issued jointly by the Comptroller General and the            Department of State
Attorney General of the United States to implement
the act.                                                        During fiscal year 1971, GAO reviewed the regula-
   During fiscal year 1971, GAO reported to the Con-         tions of the Department of State as well as its actual
gress on the progress and problems in implementing           operations in connection with both payment and debt
the Federal Claims Collection Act of 1966. The report        claims. In a report to the Secretary of State, GAO
was based on a review of the claims collection activities    noted that with minor exceptions payment claims were
of seven agencies and on data obtained from question-        being handled in conformity with the GAO Manual.
naires executed by 15 agencies. This act was the first       GAO did find several areas in the Department’s debt
general statutory authority to give Federal agencies         collection procedures and practices which it felt should
broad administrative power to compromise and ter-            be changed, including guidelines issued to implement
minate collection action on claims. The Joint Stand-         the Federal Claims Collection Act. GAO also found
ards of the Comptroller General and the Attorney             that collection action was not taken in a timely manner
General require agencies to ( 1 ) issue internal regula-     against debtors, or in the case of deceased debtors,
tions or instructions for claim collection, ( 2 ) collect,   against their estates. At the time GAO issued its report
compromise, or terminate collection action on claims,        to the Secretary, the Department had already adopted
and ( 3 ) report those claims which cannot be settled        many of the changes in its operating procedures which
by the agency to the GAO for further collection action.      were suggested at the time of the review. (See Appen-
   GAO found that some agencies did not issue internal       dix, Section I, Item 231.)

126
                                                                                                           CLAIMS

Veterans Administration                                    adequate resources be allotted to establish and main-
                                                           tain an effective collection operation within the Office
   GAO previously reviewed regulations and claims          of Education. At the end of fiscal year 1971, GAO
operations at the Veterans Administration (VA) Cen-        was preparing a report to the Congress on all significant
tral Office, Washington, D.C., and at the Veterans         matters disclosed by its review of the loan program.
Administration Center in Philadelphia. At the time of
its report to the Administrator, GAO recommended
changes in the regulations insofar as they were in con-    Defense Supply Agency
flict with the GAO Manual and the Joint Standards.
   VA did revise its regulations and called attention in      Following reviews of regulations and claims op-
its all-station publications to the areas which GAO had    erations at the Defense Supply Agency (DSA)
brought to its attention.                                  Headquarters and at four of its field activities in Phila-
   Reviews made during fiscal year 1971 in the Re-         delphia, GAO reported to the Director of that agency
gional Offices in Denver, Colo., and Newark, N.J.,         that instructions contained in the DSA Accounting and
revealed collection deficiencies similar to those found    Finance Manual were generally adequate and in con-
in the Philadelphia Center. Most of them occurred,         formity with the GAO Manual and the Federal Claims
however, before the regulations were revised. (See         Collection Act. GAO noted, however, several instances
Appendix, Section I, Item 232.)                            in which the instructions needed to be corrected or
                                                           clarified.
                                                              GAO noted at one of the field activities that appeals
Office of Education                                        for reconsideration or adjustment of a claim were not
                                                           always forwarded to GAO after an administrative
   GAO has undertaken a review of the indebtedness
to the Government arising incident to the Federal loan     denial. The GAO Manual provides that reclaims of
insurance portion of the Guaranteed Student Loan           items previously denied by the administrative agency
Program which is administered by the Office of Edu-        must be forwarded to the Claims Division, GAO,
cation, Department of Health, Education, and Wel-          unless it is determined administratively that the action
fare. On January 5, 1971, GAO informed the Secre-          taken in denying the claim was clearly in error and
tary of the Department that, in view of the magnitude      properly can be corrected by the agency. DSA officials
of the Federal Loan Insurance Program and the sig-         took prompt action to insure the correct processing of
nificant indebtedness to the Government resulting from     payment claims administratively denied. (See Appen-
the operations of such program, it was incumbent that      dix, Section I, Item 233.)




                                                                                                                127
                                                                                                    LEGAL SERVICES

                                                               to and on behalf of the Comptroller General concern-
                                                               ing any public expenditure upon which he may be
                                                               called to rule.
                                                                  I n addition to matters covering the legality of Gov-
                                                               ernment payments, the Office of the General Counsel
                                                               prepares reports to the Congress on proposed legisla-
                                                               tion, often working in close collaboration with commit-
                                                               tee staff members, and reviews all GAO audit reports
                                                               to assure that legal implications have been appropri-
                                                               ately considered.
                                                                  It is difficult, in a brief report, to convey adequately
                                                               the broad extent to which legal assistance is furnished
    CHAPTER NINE                                               in the form of formal decisions, comments on proposed
                                                               legislation, office opinions to operating divisions, audit
                                                               report reviews, and informal advice furnished daily by
                                                               the staff. To appreciate fully the range of the legal
                                                               activities of the Office, it is necessary to reflect upon
                                                               the growing complexity of the legislative approaches
    LEGAL SERVICES                                             being taken to deal with the social, political, economic,
                                                               and military needs faced as a nation and to recognize
                                                               that the General Accounting Office is responsible for
                                                               determining the legality of a major portion of all Gov-
       The Office of the General Counsel is headed by          ernment expenditures.
    Paul G. Dembling, General Counsel. Assisting Mr.              The legal work is handled under the following sub-
    Dembling in directing the work of this office are the      ject categories:
    Deputy General Counsel, Milton J. Socolar, and As-              Civilian Personnel
    sociate General Counsels F. Henry Barclay, Jr., John T.         Contracts
    Burns, and Stephen P. Haycock. The entire staff com-            General Government Matters
    prises some 208 attorneys and support service person-           Military Personnel
    nel. An organization chart of the office is presented on
                                                                    Transportation
    page 130.
       The legal work of the General Accounting Office            Within these broad areas, the work includes over
    stems from article 1, section 9, clause 7, of the Con-     400 decisions a month involving all fields of law and
    stitution of the United States which provides that:        requires expertise in statutory construction procedure,
                                                               evidence, and contract interpretation. While it is not
       “No Money shall be drawn from the Treasury, but
                                                               possible to review all of the major legal efforts of each
,   in Consequence of Appropriations made by Law;
    ***     9)
                                                               category, the followiw descriptions provide an insight
                                                               into the nature and extent of the assistance rendered.
       The design of this provision, as explained by Alex-
    ander Hamilton, was “to secure these important ends-
    that the purpose, the limit, and the fund of every ex-
    penditure should be ascertained by a previous law.”        Civilian Personnel
    Thus, under the Constitution, control over the public
    purse was placed in the hands of the Congress.                The civilian personnel structure of the Federal Gov-
       The Comptroller General of the United States is         ernment is founded upon a complex array of statutes,
    responsible on behalf of the Congress for determining,     regulations, and instructions designed to assure equi-
    with certain exceptions, the legal propriety of execu-     table treatment for all employees. Rights and authori-
    tive branch expenditures. A major function of the          ties are spelled out to cover such matters as entitlements
    Office of the General Counsel is to provide legal advice   to pay, including severance, overtime, holiday, Sunday,

                                                                                                                     129
t;
0




         ASSOCIATE                     ASSOCIATE
      GENERAL COUNSEL              GENERAL COUNSEL                                   GENERAL COUNSEL
        s P.HAYCOCK                F. H. BARCLAY, JR                                      J. T. WJRNS


                                                                                                                                  L E G A L REFERENCE
                                                                                                                                      SERVl CES



       CONTRACTS-1
                            GOVERNMENT
                                                       CIVIL IAN
                                                                      I      MILITARY
                                                                            PERSONNEL           II      T RAN SPO RTATION
                                                                                                                              I
                       t
        ASSISTANT
     GENERAL COUNSEL       GENERAL COUNSEL     GENERAL COUNSEL
                                                                                                        E. W. CIMOKOWSKI
       R. H. RUMIZEN         J. W. MOORE           C. P. FRIEND           0. E. CARPENTER
                                                                                                            -- "T.- NEVINS
                                                                                                           M.         - - -
                                                                                                I   I                         1



       CON TRACTS-2

        ASSISTANT
     GENERAL COUNSEL
       P. SHNITZER     t                           I N DE X-DI GEST
                                                                      r


                                                                          INDEX AND F I L E S             LEGISLATIVE                  LIBRARY
                                                       SECTION                SECTION                    DIGEST SECTION
       CONTRACTS-3
                                                    S.   J. DAVIS          M. J . REYNOLDS               R. B. HARRILL                N. E. CROWN
        ASSISTANT
     GENERAL COUNSEL
       M. E. MILLER                                                                                                                      JUNE 30, 1971
                                                                                               LEGAL SERVICES

and night differential compensation ; reimbursement of     against any member of the Commission holding any
travel, transportation, and relocation expenses; vaca-     other position as an officer or employee of the United
tion and sick leave; removals from the service; and        States. (50 Comp. Gen. 736)
other subjects concerned with personnel management.
   The General Accounting Office affords officials of
the Government an avenue of assurance that person-
nel payments authorized by them are in accord with         Contracts
existing requirements. The Office also provides for each
employee of the Government an inexpensive forum for           The award of public contracts is governed by various
deciding his entitlement to claimed additional pay or      statutes as implemented by detailed regulations gen-
allowances.                                                erally designed to assure that the Government will
   A decision covering a broad range of employees in-      obtain required goods and services under procedures
volved a request from the Civil Service Commission as      which are fair and equitable to those in the private
to whether retroactive increases in compensation were      sector desirous of meeting the Government’s needs.
authorized for wage board employees whose pay had             While GAO deals with myriad problems in the con-
been determined without proper recognition of certain      tract area, the bulk of the decisions it is called upon to
pertinent wage data under the so-called “Monroney          render involves so-called “bid protests.” A statistical
Amendment.” It was held that the statutory basis for       summary of bid protest decisions rendered during the
the requirements at issue served to take the question of   fiscal year follows on page 132.
retroactive pay adjustment outside of the general rule        The General Accounting Office provides an estab-
against such adjustments, and the Commission was           lished forum to which a party who believes he has been
permitted to grant retroactive increases to the wage       wrongfully denied a Government contract may appeal.
board employees involved. (50 Comp. Gen. 266) Since        The legal work of the Office in the “contracts” area is
there are some 520,000 wage board employees in the         largely devoted in such appeal cases to determining
Federal Government, the significance of this decision is   whether statutes and regulations were properly adhered
readily apparent.                                          to and the party to whom a Government contract prop-
   In a case involving a single employee, the Office       erly should be awarded.
considered the pay implications related to a finding          This forum, independent of the administrative agen-
that a female employee had been assigned work at a         cies responsible for initial determinations giving rise to
level higher than that for which she was paid and had      “protests,” serves to protect the integrity of the Govern-
been improperly denied appointment to the higher           ment’s procurement processes and offers bidders+spe-
level position by reason of discrimination based upon      cially important to small bidders-an inexpensive and
sex. It was concluded that the circumstances, as a mat-    quick avenue of relief when compared to other types of
ter of law, required payment of retroactive compensa-      judicial proceedings.
tion. (50 Comp. Gen. 581)                                     The Congress and agencies throughout the Federal
   In a case involving duties performed by customs in-     Government as well as private legal practitioners and
spectors to prevent air piracy it was ruled that the       business firms rely heavily upon GAO in this area to
inspectors were not to be regarded as performing cus-      assure that the Government’s contracting policies are
toms functions so as to come under 1911 act for pur-       sound and that such policies are properly reflected in
poses of paying premium compensation for overtime,         the contracting procedures followed.
Sunday or holidays services. Rather, payment for such         Many of the contrart decisions rendered during a
services was held to come under the Federal Employees      fiscal year establish guidelines for the administrative
Pay Act of 1945. (50 Comp. Gen. 703)                       agencies and for persons and firms desiring to do
   In a dual employment situation we held that a           business with the Government. In addition, the Office
member of the Advisory Council on Urban Trans-             works with the Armed Services Procurement Regula-
portation which meets intermittently may not also          tion Committee and the General Services Administra-
serve on a different day as a member of the National       tion Federal Procurement Regulations Directorate to
Water Commission which also meets intermittently in        implement through regulations the decisions of the
view of prohibition in the Water Commission Act            General Accounting Office. It also expresses its views

                                                                                                                131
  LEGAL S E R V I C E S

  NUMBER OF DECISIONS RENDERED DURING FISCAL                                                                 evaluation process. None of the competitively situated
          YEAR 1971 ON BID PROTESTS                                                                         offerors was advised or given an opportunity to submit
                                       Department                                                 Total     price revisions after discussions taking the factor into
                                                                                                     2       account. The failure to apprise offerors of a significant
 Agriculture. . . . . . . . . . . . . . . . . . . . . . . . . . . .                                13       cost evaluation factor for the purposes of discussion
                                                        ...................                       114       and the unequal application of the cost factor were
                                                                      ............                  3
 Army . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                             168
                                                                                                            held to have constituted serious and substantial devia-
 Atomic Energy Commission                                        ................                   6       tions from the regulatory requirements regarding the
 Civil Service Commission. . . . . . . . . .                           ..........                   1       competitive negotiation of contracts. After receipt of
 Commerce. . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                  3       the decision, the Post Office Department canceled the
 Defense. . . . . . . . . . . . .                                ................                   3
                                                                                                            contract. (50 Comp. Gen. 637)
                                                                                                   68
District of Columbia Government. . . . . . . . . . . . . . . . .                                   11          The negotiated procurement of supplies and serv-
Federal Communications Commission. . . .                                                            2       ices on a sole-source basis has been a fertile field of pro-
Federal Housing Administration. . . . . . . . . . . . . . . . . . . .                               1       tests over the years. I n view of the statutory finality ac-
General Services Administration. ....                                      ...........             57       corded findings in support of a contracting agency’s
Government Printing Office. . . . . . . . . . . . . . . . . . . . . . . .                           4
                                                                                                            determination to negotiate on such a basis, effective
Health, Education, and Welfare. ....................                                               13
Housing and Urban Development. . . . . . . . . .                                             ..     8       corrective action is usually not possible. However, in
Interior . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       20       an instance involving the procurement of portable
Internal Revenue Service (Treasury) . . . . . . . . . . . . . . . .                                 3       sterilizers, the Office recommended that the Defense
Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            ..     2       Supply Agency eliminate a sole-source restriction. In-
                                                                                                    5
 Marine Corps.            ...                                                                        1
                                                                                                           vestigation had established that there was nothing par-
                                                                                                     1     ticularly unique about the design or manufacture of
National Aeronautics and Space Administration, . . . . . .                                         18       the desired item and that several firms, other than the
National Institutes of Health.. . . . . . . . . . . . . . . . . . . . .                             1       designated sole source, possessed the capability to
                                       ............................                               142      produce the desired item. Thereafter, the restricted
                                                                                                    3
Panama Canal Company, . . . . . . . . . . . . . . . . . . . . . . . .                               1      procurement was canceled and resolicited on an un-
Post Office Department. . . . . . . . . . . . . . . . . . . . . . . . . . . .                      10      restricted basis with results which demonstrated the
Department of State.. . . . . . . . . . . . .                                            ...        2      effectiveness of the competitive system. (50 Comp.
Tennessee Valley Authority. . . . . . . .                                                ...         1     Gen. 209)
Department of Transportation. . . . . .                                                  ...       19
                                                                                                              A recurring question presented in bid protest cases
Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            1
Veterans Administration                           .....................                             8      is whether a prospective contractor is sufficiently re-
                                                                                                           sponsible. Determination of a bidder’s responsibility is
                                                                                                  715      generally conclusively determined by the administra-
                                                                                                           tive agency. I n one case a contracting officer’s deter-
Protests denied.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               641
                                                                                                           mination of nonresponsibility was reversed because he
Protests sustained. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                74
                                                                                                           failed to afford the protesting firm a reasonable oppor-
           Total ......................................                                           715     tunity to furnish financial information, which if ab-
                                                                                                           tained would have reasonably established its financial
                                                                                                          ability to perform the contract. While it was not pos-
on all proposed regulations of these two groups whose
                                                                                                           sible to terminate the contract awarded to another firm,
regulations cover most Government procurement. The
                                                                                                          the contracting agency was directed to expunge the
following examples illustrate the kinds of issues con-
                                                                                                          nonresponsibility determination from its records so that
sidered and resolved.
   Increasing attention has been devoted to the review                                                    future eligibility for Government contracts would not
of all aspects of the conduct of negotiated procure-                                                      be adversely affected by the erroneous determination.
ments. The introduction and unequal application by                                                         (50 Comp. Gen. 281)
the Post Office Department of a transition cost factor                                                        The armed services procurement act was amended
in the evaluation process resulted in a decision strongly                                                 in 1962 to require that, in the case of any negotiated
recommending that a contract be terminated without                                                        contract in excess of $2,500, written or oral discussions
delay. Subsequent to the close of negotiations, the                                                       shall be conducted wtih all responsible offerors whose
agency introduced an imprecise cost factor into the                                                       proposals are within a competitive range, price and

132
                                                                                                     LEGAL SERVICES

    other factors considered. There are certain exceptions,       sidered by NASA and the contract was finally awarded
    the chief of which is that no discussions need be held        to the Fairchild-Hiller Company. (50 Comp. Gen. 1)
    if award is made on the most favorable initial proposal          While it has been the policy of the Office where
    as submitted, provided that fair and reasonable prices        differences of technical opinion arise between protest-
    would result and the offerors were notified of the pos-       ing bidders and agencies, to accept the position of the
    sibility that this procedure would be used. The net           agency, there were several noteworthy departures in
    effect of the general provision is to require negotia-        the past year. Thus, in a protest by Link Division,
*
    tions with any responsible offeror whose proposal may         Singer-General Precision, Inc., a question was raised
    reasonably be improved to the point where it becomes          as to whether Honeywell, under its proposal to supply
    the most acceptable. While the statute applies only           a sophisticated computerized aircraft navigator train-
    to contracts negotiated under the authority of the            ing system, was meeting certain material requirements
    armed services procurement act by the defense agen-           of the specifications. To resolve this question, the Na-
    cies, the National Aeronautics and Space Administra-          tional Bureau of Standards was requested to evaluate
    tion, and the Coast Guard, an equivalent provision has        Honeywell’s proposal against the specifications and to
    been made applicable by regulation to agencies which          render an advisory opinion on exactly what the speci-
    operate under the authority of the Federal Property and       fications required and what Honeywell’s proposal of-
    Administrative Services Act. In order to establish which      fered. (B-171609, May 12, 1971)
    initial proposal is most favorable for possible immedi-          In another case an engineering question arose in a
     ate award, or which proposals are within a competitive       protest concerning the type of sail rotor blade proposed
    range so as to qualify for written or oral discussions,       in connection with a “High Altitude Platform Study.”
    it is customary for solicitations to list the factors to be   An analysis of the offer submitted by the protesting
    considered in the evaluation of proposals and the max-        bidder was made by a member of the Office staff who is
     imum point score allocable to each factor. In one            an engineer as well as a licensed helicopter pilot. Based
    instance a number of factors were included under a            upon this analysis, an independent determination of
    single heading with the provision that if all factors         the merits of the protest was made. (B-17 1305, June 8,
    were met, the proposal would receive 100 points for            1971)
    that grouping, otherwise the proposal would receive a            The Office was required to consider and apply prin-
    zero score for the grouping. GAO held that the assign-        ciples of labor law in a bid protest filed by Trans World
    ment of scores on such an “all or none” basis was             Airlines (TWA) in connection with a contract for
     improper and partial scores should have been assigned        support services at Kennedy Space Center. As the in-
    for meeting some but less than all of the factors in          cumbent contractor, TWA had entered into wage rate
     thegrouping. (B-171113, Mar. 3, 1971)                         agreements with its union employees and contended
        In negotiated contracts, unlike formally advertised        that any new contractor who proposed to hire a sub-
     procurements, factors other than price may be involved.      stantial number of TWA’s employees would be bound
     This past year a case was considered in which a lower        by the “successor employer” doctrine to pay the same
     priced proposal was technically acceptable but a higher      wages. Since TWA was required to compute its bid
     priced proposal was found to be technically superior.         price for the new contract at such wage rates, it urged
     Where the technical superiority was determined to             that all other bidders should be required to bid on
     justify the additional cost, it was concluded that there      the basis of paying the same wage rates. TWA’s protest
     was a proper exercise of administrative discretion by         was denied on the ground that there was no valid basis
     the contracting officer to award the contract on the          for concluding that the ‘hccessor employer” doctrine
     basis of the higher priced technically superior proposal.     was applicable to Government service contracts; and
      (B-170633, May 3, 1971)
                                                                  it was held that Boeing’s low bid, computed on the
        Negotiation procedures should be conducted in such
                                                                   basis of the lower wage rates in its agreement with the
     manner as to give all offerors equal opportunity to
                                                                   same union, could be accepted. The soundness of this
     compete. Thus, it was held improper for the National
     Aeronautics and Space Administration (NASA) to                decision appears to be upheld by subsequent National
     have set deadlines for the submission of revised              Labor Relations Board and court decisions. (Emerald
     proposals which were 1 week later for the General             Maintenance, Inc., 188 NLRB No. 139, Mar. 5, 1971;
     Electric Company than for the Fairchild-Hiller Com-           and William J . Burns Inbernational Detective Agency,
     pany. As a result of this decision the matter was recon-      Inc. v. NLRB, 411 F. 2d 911) (50 Comp. Gen. 592)
                                                                                                                       133
 LEGAL SERVICES

 General Government Matters                                   Military Personnel

     The scope and complexity of Government programs             Like the civilian personnel structure of the Govern-
  are ever expanding. The Federal Government is mov-          ment, the pay and allowances of military members of
  ing into changing relationships with State and local        the Armed Forces of the United States are adminis-
  governments and with the private sector in connection       tered under an extraordinarily detailed composite of
  with new approaches for meeting our social needs.           statutes, regulations, and instructions. General Ac-
  As annual budgets increase, attention is being directed     counting Office decisions in the military personnel
                                                              area are relied upon by the Department of Defense
  toward restructuring the administrative framework in
                                                              and the military services in formulating the regulatory
 which the Government will function to enable success-
                                                              materials designed to implement the basic intent of
 ful accomplishment of the tasks which must be under-
                                                              statutory entitlements and authorities enacted by the
 taken. The changes taking place are founded upon             Congress.
 policies established through legislative enactments             Decisions are requested on matters involving pay and
 which require continual interpretation to assure that       allowances for active and inactive duty personnel, re-
 the executive authorities exercised are consistent with      tirement pay, and travel and transportation allowances
 the congressional intent underlying them.                    for military members and their dependents.
    The range of cases decided by the General Account-           In the active duty pay and allowance area, con-
 ing Office on general Government matters is virtually        sideration has been given to such questions as entitle-
 as broad and varied as the full scope of Government         ment to two kinds of hazardous duty pay at the same
 activity.                                                   time (50 Comp. Gen. 425), the necessity for submis-
    For example, GAO held in response to a request for       sion of monthly flight certificates to support payment of
 a ruling that the Postal Reorganization Act establishing    flight pay (B-125037, May 24, 1971), and computa-
 the Postal Service did not require or permit the transfer   tion of reenlistment bonus (B-172695, June 14,1971).
 of some $300 million to fund accrued annual leave of            I n the retirement and retired pay area decisions were
                                                             rendered on questions relating to the concurrent pay-
 personnel transferred from the Post Office Department
                                                             ment of retired pay and disability compensation under
 to the newly established Postal Service. (R-164786,
                                                             the Federal Employees’ Compensation Act (50 Comp.
 June 28,1971 )
                                                             Gen. 491), the proper application of the retired pay
    A number of decisions concerned the use of Federal
                                                             reduction formula in cases involving dual compensa-
 funds for costs associated with impecunious parties in      tion (50 Comp. Gen. 604), the correct retirement
cases heard by the Federal courts. These decisions in-       grade of an officer promoted following reappointment
volved such matters as determining the appropriations        from the temporary disability retired list (50 Comp.
chargeable with the expense of court-appointed coun-         Gen. 677), and the entitlement of aliens to retired pay
sel and expert witnesses under the Criminal Justice Act      after 20 years’ active enlisted service (50 Comp. Gen.
of 1964 (50 Comp. Gen. 128,589)’ and the availability        269).
of appropriated funds to pay for transcripts on behalf
of indigent litigants appealing in forma pauperis to the
District of Columbia Court of Appeals (50 Comp. Gen.
                                                             Transportation
205).
    The Secretary of Health, Education, and Welfare             Payment of Government transportation bills is gen-
announced that he intended to close down all Puhlir          erally made upon presentation by the carriers to the
Health Service hospitals and clinics throughout the          executive agencies subject to postaudit and adjustment
country. I n a highly publicized advisory opinion to a       in the General Accounting Office. Virtually all of the
congressional committee and in testimony before the          Government’s transportation liabilities are determined
committee, it was held that the Secretary did not have       in the Office.
the requisite authority to accomplish his intended pur-         Decisions and litigation reports prepared by attor-
pose. (B-156510, Feb. 23, 1971)                              neys assigned to transportation cases involve highly



134
                                                                                                   LEGAL SERVICES

 technical concepts relating to the interpretation and        Legal Reference Services
application of voluminous tariffs and rate tenders as
well as to numerous statutes, decisions, opinions, and
                                                                 Legal Reference Services, through its Law Library
 regulations pertaining to transportation matters ; com-
                                                              and its Index-Digest, Index and Files, and Legislative
putation of charges for air, motor, rail, and ocean
                                                              Digest Sections, provides the support requisite to carry-
carrier services ; and proceedings before regulatory
                                                              ing out legal and other activities of the General Ac-
agencies and the courts.
                                                              counting Office.
    During the year attorneys of the transportation staff
                                                                 T o inform departments and agencies promptly of
participated in some 15 cases filed in US. District
                                                              significant decisions, general distribution of advance
Courts and referred by those courts to the Interstate
                                                              decision copies and digests is made. Wider notice of
 Commerce Commission ( ICC) for determination. The
                                                              significant decisions is obtained through the publication
suits resulted from refusal by motor carriers to refund
                                                              of monthly pamphlets and an annual volume of those
overpayments arising from the application of rates
                                                              decisions which are considered to be of widespread
considered unjust and unreasonable under precedent
                                                              interest to members of the public as well as to Govern-
rulings of the ICC.
                                                              ment personnel. Information as to those decisions
    GAO transportation attorneys write trial briefs for
                                                              which arc not published is made available to Govern-
 use by the Department of Justice in court cases involv-
                                                              ment agencies and libraries by the distribution of
ing transportation matters. In Clnitcd States v. Curry
                                                              quarterly digest pamphlets covering each of the general
Motor Freiglzt Lines, Inc. (USDC, Nor. Dist. of Tex.,
                                                              subject areas discussed above.
Civil Action No. 2-872, decided May 14, 1971), the
                                                                 Copies of decisions are available from G A O s Public
court relied on the GAO brief to grant the United
                                                              Information Desk located in Room 75 10. And all (pub-
 States judgment for the amount sought.
                                                              lished and unpublished) decisions are furnished to
    GAO attorneys participated in the case of United
                                                              LITE (Legal Information Through Electronics)
States v. Southern Pacific Co. (337 I.C.C. 504),
                                                              operated by the Staff Judge .ldvocate at the Air Force
 wherein ICC sustained the view that port service
                                                              Accounting and Finance Center, Denver, Colo.
charges were inapplicable to shipments consigned to
                                                                 A cumulative citation and card index is maintained
 Pacific coast military installations for export. This rul-
                                                              on all decisions, and research services are furnished
 ing reasonably can be expected to result in savings to
                                                              upon request. During fiscal year 1971, the Index-Digest
 the United States in excess of a million dollars.
                                                              staff serviced 3,746 research inquiries.
    Many suits have been instituted in the U.S. Court of
                                                                 The Index and Files Section recorded and analyzed
Claims by so-called exempt freight forwarders of house-
                                                              14,908 pieces of incoming correspondence and dis-
hold goods. GAO maintains close cooperation with the
Department of Justice in defending these suits. Some          patched 2 1,375 decisions, reports, and letters. This
of the decisions in the leading cases have been objec-        section prepares a daily report summarizing the content
tionable and further proceedings have been recom-             of incoming and outgoing correspondence to keep
mended as being in the best interests of the United           offices and divisions within GAO advised.
States, since the potential monetary liability of the            The Law Library, which serves all offices, divisions,
Government is substantial. (B-157382, B-157840,               and branches of the General Accounting Office, as well
Mar. 24,197 1 )                                               as the legal reference needs of the other agencies lo-
    Following issuance of the Joint Agency Transporta-        cated in the GAO building, handled 5,396 requests for
tion Study Group report in early 1970 (see p. 118), the       reference services. Its annual inventory showed a total
 transportation staff, which participated with the Study      of 58,989 bound volumes, looseleaf publications, and
 Group, assisted in preparing proposed legislation to es-     pamphlets and magazines.
tablish an exemption from the general prohibition                The Legislative Digest Section prepared 17,045 legis-
against advance payments to carriers performing trans-        lative history files on all public and private bills intro-
portation services for the Government. Contact with           duced in the Second Session of the 91st Congress and
the Study Group continues as action is being taken to         the First Session of the 92d Congress during fiscal year
implement its recommendations for improvement of              1971 and processed requests for reports on 751 bills
Government transportation procurement, payment,               from congressional committees, Members of Congress,
and audit procedures. (-4-24222, July 27, 1971)               and from the Office of Management and Budget.

       449406 0-72-10                                                                                               135
                                             DEC1SIONS DISTRIBUTED BY ASSIGNMENT AREAS
        NUME
         l80C                                                                       1769


            t60C                                                                                                         01970
                                                                                                                                  7971
            14oc



            120c



            1ooa



            600


            600


        .   400


            200



                                                                             . . . . . . . .~..
                                                                                             -.
                                                                                             . ._.
                                                                                                 .
                       GENERAi                   C1 W L i AN
                     GOVERNMENT                 PERSONNEL                 CONTRACTS
                      MATTERS




Decisions and Other Legal Matters
Handled During Fiscal Year 1971

Assignment areas :
      Civilian Personnel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         861
      Contracts.                                                                                                                                        . . . . . . . . . 1,769
      General Government Matters. .                                                                                                                     ..          . . . 1, 156
      Military Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           524
      Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,101
      Private Inquiries.                                                                                           .....             . . . . . . . . . . . . . . . . . . 201


         Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   5,612


Legislative and legal reports furnished to committees and Members of Congress and the Office of Management
  and Budget (included in the above statistics on decisions and other legal matters) :
136
                                                                                                               ADM IN ISTR AT I ON

era1 and the operating directors highlight the course.                        d. Basic Supervision. This 10-day course is an in-
T o illustrate how the various ofices and divisions                       troduction to basic concepts of effective supervision.
of GAO work together, a model for management                              Its objectives are to augment the participant's knowl-
auditing is used which outlines the major functions                       edge of supervisory theory and practice and to motivate
and responsibilities of management and relates audit-                     him to develop and use a constructive supervisory
ing to these functions. The importance of continued                       style. The session summarizes traditional and con-
professional and personal growth is emphasized                            temporary theories of organizational and human be-
throughout the course.                                                    havior and strategies for dealing with day-to-day-prob-
   c. Intermediate Training. This 10-day course is                        lems of supervision in GAO. Case studies based on
given to staff members with from 1f/2 to 3 years' experi-                 GAO situations are used to illustrate how theory re-
ence in the Office. The objectives are to ( 1) introduce                  lates to practices of supervision and management and
techniques and practices that improve job perform-                        how the individual can improve his supervisory style.
ance, ( 2 ) describe how staff and line organizations can                 Subjects presented include communication, motiva-
work together, and ( 3 ) familiarize staff members from                   tion theory, responsibilities for personnel administra-
the various divisions and regional offices with each                      tion, job planning, problem solving and decisionmak-
other's work and responsibilities. The following topics                   ing techniques, delegation and group interaction, fac-
are covered during the program: improving writing                         tors influencing the formulation of new policies, and
style, identification and analysis of evidence, statistical               managing organizational change.
sampling techniques, and evaluation of various audit                          e. Executive Forum. This 5-day program is given to
approaches. Case studies and simulated audit situa-                       upper level managers to help them (1) understand
tions are used to demonstrate approaches and tech-                        the factors causing changes in organizational priorities,
niques of planning audit assignments, carrying out                         ( 2 ) recognize operating requirements as priorities
audits and reviews, and preparing and processing audit                    change, and ( 3 ) update their knowledge on techniques
reports.                                                                  of motivation and personal development. Discussions
-_     . ..-..
     i_"-._      ..I . -   -.   .   . ..   .




                                    GAO professional staff taking part in the Intermediate Training Program.

                                                                                                                               143
           ADMINISTRATION

    .../    are problem oriented and proposed solutions are                   the Report Development Workshop and is designed to
    ^I     analyzed, evaluated, and eventually forwarded to top               improve report- and letter-writing skills. The phi-
            management for its consideration.                                losophy of communication, organization of sentences
               f. Systems Analysis. This 10-day course is available          and paragraphs, editing, and the effective use of the
           to senior staff members to introduce them to analytic             logic, syntax, and grammar of the English language
           techniques which can be used in audits. The course                are the topics covered.
           shows participants how the analyst approaches a prob-                j . Federal Action and the People of Our Cities.The
           lem and helps auditors recognize where analytic tech-             National Institute of Public Affairs has cooperated in
           niques can be applied.                                            sponsoring this 1-week seminar. It stresses the need
              g. Overview of Systems Analysis. The objective of              for the coordination of Federal programs in the Na-
           this 6-day course is to familiarize the top managers of           tion’s cities. Subjects discussed by a panel of experts
           GAO with the philosophy and fundamental concepts                  include the urban condition; government in a metro-
           of systems analysis.                                              polis; model cities; purposes and problems in com-
              h. Report Development. The objective of this 5-day             munity action, manpower programs, public education,
           workshop is to help GAO’s staff to develop better                 transportation, health prqrams, public assistance, and
           reports more quickly. The workshop is designed to ( 1)            law enforcement; life in the inner city; and a survey
           improve coordination and communication between re-                of how city dwellers view the Government. Participants
           port planners, writers, and reviewers and those who               are senior staff members of GAO and representatives
           read GAO reports and ( 2 ) increase each staff mem-               of Federal, State, and local governments.
           ber’s interest in writing clear, logical, and accurate               k. Intergovernmental Relations. The General Ac-
           reports. The workshop is based on the philosophy that             counting Office, the Brookings Institution, and the US.
           planning both the audit and the report is critical to             Civil Service Commission sponsor this 3-month pro-
           a lucid and timely report, and that writing is a craft            gram for Federal officials who are or will be administer-
           that can be developed through clear understanding of              ing or auditing grant-in-aid programs. Its purpose is
           the English language and extensive practice.                      to help officials understand their roles and the impact
              i. Writing Skills. This 3-day workshop supplements             of grants-in-aid at the State and local levels. Partici-




I

!

                              Technical and support personnel in a problem-solving session for first-line supervisors.

           144
                                                                                                                                                                 ADM INISTRAT I O N

pants include Federal officials from GAO and the ex-                                                          Programs for Professional Staff-Continued
ecutive agencies who are assigned to work at the State                                           Basic supervision. . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  240
and local level. I n addition to the actual work ex-                                             Executive Forum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            139
                                                                                                 Systems analysis (survey). . . . . . . . . . . . . . . . . . . . . . . . . .                 79
perience, the participants meet periodically to share                                            Systems analysis (overview). .......................                                         69
and discuss common experiences.                                                                  Report development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               330
                                                                                                 Writing skills.. ...................................                                        180
2. Other Programs                                                                                Federal Action and the People of Our Cities.. . . . . . . . .                                52
  a. Reading Skills. This workshop, which meets for                                              Intergovernmental relations. . . . . . . . . . . . . . . . . . . . . . . .                    4
ten 2Y2-hour sessions is aimed at helping GAO staff
                                                                                                                                Other Programs
members acquire the skills needed to quickly assimilate,
                                                                                                 Reading skills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        61
organize, and communicate the substance of written                                               GAO orientation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             673
material. The program is designed to increase reading                                            Better office skills and services (BOSS). . . . . . . . . . . . . . .                        83
speed and comprehension and to develop techniques                                                Communications skills. . . . . . . . . . . . . . . . . . . . . . . . . . .                   20
for better listening and concentration.                                                          First-line supervision. .............................                                        30

   b. GAO Orientation. Through this 3-hour program,                                                        Total.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3, 156
all new employees are made aware of the functions,
policies, and procedures of GAO involving personnel
                                                                                                 T R A I N I N G GIVEN T H R O U G H
matters. Employee rights, benefits, and responsibilities
                                                                                                 O T H E R G O V E R N M E N T AGENCIES
are also reviewed during this session.
   c. Better Ofice Skills and Services ( B O S S ) . This                                        O R NON-GOVERNMENT FACILITIES
course is designed for support services personnel in                                                The evolutionary character of GAO's work, and
grades GS-2 through GS-4 and consists of eight 3-hour                                            with it the burden to produce exacting work products
sessions. The materials reviewed are typical of those                                            in a short time, demands that GAO foster programs
encountered during an 8-'hour working day. The course                                            that will broaden the interdisciplinary skills and the
was designed originally by the Civil Service Commis-                                             managerial capabilities of senior staff members. T o
sion and has been adapted for use in GAO.                                                        meet the challenges at hand, GAO staff members are
   d. Communications Skills. This workshop, which                                                assigned to formal training programs conducted by
                                                                                                 colleges, universities, professional organizations, and
consists of fourteen 2S-hour sessions, is designed to
                                                                                                 other Government agencies including the Civil Service
increase reading speed and comprehension, improve
                                                                                                 Commission.
written and oral communication, and increase the
                                                                                                    GAO managers take part in executive development
listening ability of employees. I t is aimed at support
                                                                                                 programs conducted at the Graduate Schools of Busi-
services personnel in grades GS-2 through G S 4 .                                                ness Administration of Harvard University, Columbia
   e. First-Line Supervision. This 5-day course is of-                                           University, the University of Michigan, and the Massa-
fered to first-line supervisors, principally technical and                                       chusetts Institute of Technology. A number of staff
clerical employees, in the divisions which support the                                           members attend the Federal Executive Institute at
professional staffs. Current concepts and techniques of                                          Charlottesville, Va. ; the Industrial College of the
supervision, the importance of effective delegation,                                             Armed Forces; the Executive Seminar Centers at Kings
personnel management responsibilities, and the im-                                               Point, N.Y., and Berkeley, Calif. ; the Brookings Insti-
portance of attitudes, assumptions, and values held by                                           tution Conference for Federal Executives; and the
supervisors are emphasized.                                                                      Intergovernmental Affairs Fellowship Program spon-
                                                                                                 sored by the Civil Service Commission in cooperation
                                                                                                 with the Brookings Institution.
          SUMMARY OF TRAINING GIVEN THROUGH                                                         T o provide for specific operational needs, a total of
          GENERAL ACCOUNTING OFFICE FACILITIES
                                                                                                 263 employees attended various programs offered by
                                                                                      Number
                           Name of training program                                  attending   the Civil Service Commission. Courses in the following
                 Programs for Professional Staff                                                 areas were the most utilized: management and super-
                                                                                                 vision, systems analysis, automatic data processing, ac-
General orientation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           581
Central orientation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       363     counting and auditing, personnel operations, and
Intermediate training . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          252     various secretarial courses. Eighty-six staff members

                                                                                                                                                                                            145
  ADMINISTRATION

 attended courses available at other Federal agencies,                                          Service and Professional Organization-Continued
 and private industrial concerns were a source of train-
                                                                                        CPA review.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          125
 ing for 119 employees. Various other professional and                                  Bar review.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                3
 service organizations and institutions held seminars or                                Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            24
 conferences or conducted training attended by 303 staff
 members.                                                                                                        Colleges and Universities
    In addition, a total of 608 staff members attended                                  Management development . . . . . . . . . . . . . . . . . . . . . . . .                          285
 college and imiversity courses on their own time in                                    Accounting and auditing                                                                         105
 order to keep abreast of various topics including man-                                                                                                                                  42
 agement sciences, quantitative approaches used in busi-                                                                                                                                 40
 ness, economics, law, and automatic data processing.
                                                                                           ing) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      32
                                                                                                                                                                                         30
 SUMMARY OF TRAINING GIVEN THROUGH OTHER GOV-                                                                                                                                            28
 ERNMENT AGENCIES OR NON-GOVERNMENT FACILITIES                                          Statistics.     .......................................                                          18
                                                                                                                                                                                          6
                                                                             Number                                                                                                      22
                    Name or t y p e oftraining program                      attrnding

                    Civil Service Commission                                                      Total..        ...................................                                  1,375

Federal Executive Institute. . . . . . . . . . . . . .                           12
Accounting and auditing. . . . . . . . . . . . . . . . . . . . .                 40     Professional Recognition
Management and supervision. . . . . . . . . . . . .                              73
Automatic data processing and computers. . . . . . . . . . .                     25        During the past year, 35 staff members passed the
Communications (writing, speaking, and listening)                                30     CPA examination and received their certificates im-
Secretarial skills.      .......................                                 27     mediately. Durin,g the same period 14 employees re-
Personnel management. .                 ................                         33
                                        statistics, procure-
                                                                                        ceived CPA certificates after fulfilling their experience
  ment, economics, and PPBS). . . . . . . . . . . .                               19    requirements and three employees with CPA certifi-
                                                                                        cates joined GAO’s staff. Five hundred and nine staff
           Other Federal Government Agencies                                            members are now certified public accountants, and
Management and supervision. . . . . . . . . . . . . . . .                        22     96 others have passed the examination and will re-
Accounting and auditing. . . . . . . . . . . . . . . . . . .                     13     ceive certificates when they complete their experience
                                    ..........................                   10     requirements.
Law and contracts. . . . . .                                                      9
                                                                                          Most States now recognize the professional nature of
                                                                                   7
Procurement. . . . . . . . . . .                                                   6    GAO’s work as meeting their eligibility requirements
                                                                                        for the CPA certificate. The Office is constantly work-
   communications, statistical sampling, ADP, traffic                                   ing with State boards of accountancy and committees
   management, economics, and personnel functions). .                            19
                                                                                        of professional organizations to keep them informed
           Private Industries and Organizations                                         on the professional quality of GAO’s work.
Automatic data processing.           ......................                      75
                                                 ................                15     Educator-Consultants
Secretarial skills. . . . . . . . . . . . . . . . . . . . . . . . . . . . .      11
Accounting and auditing.. . .                                                     5
                                                                                           Leading educators from colleges and universities
Traffic management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
                                                                                  4     continued to assist GAO in formulating its programs to
hliscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . .            5     obtain, develop, and retain an outstanding professional
                                                                                        staff. For their advice and counsel during the year,
         Service and Professional Organizations
                                                                                        GAO is indebted to the following educator-consultants :
20th Annual Symposium-FGAA . . . . . . .                                         28
International Conference-NAA      .................                               5          Floyd A. Bond, Dean, Graduate School of Busi-
Annual hlanagement Symposium-FGAA . . . . . . . .                                12        ness Administration, University of Michigan.
Operational Auditing in Industry and Government                                              Don L. Bowen, Professor of Public Administration,
  Annual Symposium. . . . . . . . . . . . . . . . .                               9
                                                                                           College of Business and Public Administration, Uni-
American Power Conference Annual Meeting                                          6
Various other seminars and conferences. . . . . . . . . . . . . .                91        versity of Arizona.

146
                                                                                               ADMINISTRATION

    John W. Buckley, Chairman, Accounting-Infor-           required, and at the same time requires only a mini-
 mation Systems, Graduate School of Business               mum expenditure in supervisory time and in records
 Administration, University of California, Los             processing costs. Under the new system, performance
 Angeles.                                                  ratings of “Satisfactory” may be communicated orally
    John E. Champion, Professor of Accounting,             or by means of a standard form. Performance ratings
 School of Business, The Florida State University.         of “Outstanding” and “Unsatisfactory” must still be
    William W. Cooper, Dean, School of Urban and           documented by a detailed justification. Also, the re-
 Public Affairs, Carnegie-Mellon University.               quirement for written performance standards has been
    Robert W. French, Assistant to the President, Of-      eliminated in favor of a policy of increased emphasis
 fice of Institutional Planning and Programs, Uni-
                                                           on the responsibilities of supervisors and managers to
 versity of Alabama.
                                                           orally communicate job and skills requirements to
    Paul V. Grambsch, Professor of Management,
                                                           those under their direction.
 University of Minnesota.
                                                               In addition to the new performance evaluation sys-
    C. Jackson Grayson, Dean, School of Business
                                                           tem, a revised, uniform, agencywide system has been
 Administration, Southern Methodist University.
                                                           implemented to provide for the appraisal of employee
    Kermit 0. Hanson, Dean, School and Graduate
                                                           effectiveness to assist supervisors in conducting job
 School of Business Administration, University of
                                                           counseling and in connection with the merit promotion
 Washington.
                                                           program. One very important feature under the new
    Frank S. Kaulback, Jr., Dean, McIntire School of
                                                           system is that upon receiving counseling, the employee
 Commerce, University of Virginia.
                                                           is given a copy of his effectiveness appraisal. While not
    Harry M. Kelly, Associate Dem, School of Com-
                                                           mandatory under current Civil Service Commission
 merce, New York University.
                                                           regulations, this particular provision is regarded as
    Ossian MacKenzie, Dean, College of Business .4d-
                                                           essential to improved employee-management relations.
 ministration, The Pennsylvania State University.
                                                            In conjunction with the counseling for improved ef-
    James R. McCoy, Dean, College of Administra-
                                                           fectiveness, professional employees and their super-
 tive Science, Ohio State University.
                                                           visors jointly execute a Career Development Status
    Alfred M. Pelham, President, Wayne County
                                                            Report. This report is an improved version of the pro-
 Community College, Detroit.
                                                           fessional and career development planning form which
    Frank P. Sherwood, Director, Federal Executive
                                                            it replaces. The revised form provides a comprehen-
  Institute, U.S. Civil Service Commission.
                                                            sive record of supervisory-employee counseling and is
                                                            an added help to the individual in personally assessing
Personnel Operations                                        his strengths and weaknesses.

   The review and evaluation of basic regulatory func-     Grievance and Appeal Procedures
tions, employee benefit and service programs, appeals
procedures, and related administrative functions and           Changes in the regulations of the Civil Service Com-
services have been carried out on an as-needed basis       mission necessitated the revision of GAO procedures
and as required by the directives of the Civil Service     for the disposition of grievances and appeals from
Commission.                                                adverse actions. The major points affected were (1)
                                                           the definition of specific time frames for the processing
Performance Evaluation                                     of both grievances (90 days) and appeals from adverse
                                                           actions (60 days), ( 2 ) the granting of discretionary
   During the past year, a streamlined performance         authority to an examiner to grant or deny a hearing
evaluation program was developed and implemented           to an employee in the resolution of a grievance, and
with the approval of the Civil Service Commission.          ( 3 ) the definition of specific procedures to be followed
The new system meets the basic requirement that em-        in hearing an issue of discrimination when it is intro-
ployees be appraised of their current performance          duced into the appeal proceedings on an adverse
status on an annual basis, or for such lesser periods as   action.

                                                                                                                  147
ADMINISTRATION

Equal Employment Opportunity and                               create positions having the broader responsibilities
Upward Mobility                                                required to support job reclassifications to higher
                                                               grades.
   During the past year GAO carefully reexamined its              A job rotation training program was developed to
Equal Employment Opportunity Program to identify               give employees the opportunity to gain the experi-
improvements to make it as effective as possible. This         ence necessary to qualify for higher grade positions.
program was completely revised as recently as July 1,            A broader schedule of job-related training was
 1969. Since then the number of equal employment               instituted to increase knowledge and skills, looking
opportunity officers and counselors and related train-         to more effective upward mobility for the
ing advisors has been increased substantially to pro-          participants.
vide more far-reaching effectiveness. In addition, in
                                                               Major emphasis in the new upward mobility pro-
May 197 1, the Director, Office of Personnel Manage-
                                                            gram was initially given in the Transportation Divi-
ment, designated an employee of the Office as the
                                                            sion, the Claims Division, and the Office of :idminis-
Equal Employment Opportunity Coordinator, a full-
                                                            trative Services where the largest concentrations of
time position responsible to the Director.
                                                            support staff are employed. Beginning in the spring
   Recruitment efforts, particularly among minority
                                                            of 1971, nearly 100 employees took part in training
groups, have been accelerated during recent years and,
                                                            designed to advance their job-related skills and subse-
as a result, appointments to the professional staff have
                                                            quently earned promotions under the program. Other
increased substantially.
                                                            employees are currently taking such training. Career
   Upward mobility has been the object of considerable
                                                            development programs are underway in every division
emphasis recently. The G.lO has been concerned for
                                                            or office where employees can be benefited, and em-
a number of years with the lack of opportunity for
                                                            ployees are being given the opportunity to elect
employees to advance upward, once they have reached
                                                            whether they wish to participate.
certain plateaus. This situation occurs because certain
areas in this Office are technical, clerical, or adminis-
trative in nature, rather than professional. :is a conse-
quence of this concern, several programs were launched      Administrative Services
during the past year to improve advancement
                                                                The Office of Administrative Services is organized
opportunities :
                                                            with the following major components: the Budget and
    Substantial bvork was done to redesign clerical         Finance Branch, the Records Management and Serv-
  and support positions throughout the Office to            ices Branch, and the Publications Branch. (See the
                                                            organization chart on the following page.) T h e office
                                                            is under the supervision of Herschel J. Simmons,
                                                            Director.
                                                               In the General Accounting Office the budget ad-
                                                            ministration and financial management functions have
                                                            an important role owing to G A O s responsibility for
                                                            promoting sound financial management practices.
                                                            GAO’s administrative operations are often utilized as
                                                            the testing ground for proposed innovations and modi-
                                                            fications in accounting systems as they are to he imple-
                                                            mented throughout the Government. For example,
                                                            GAO was among the first agencies to implement a
                                                            “cost-based’’ budget concept. Also, the budget and
                                                            financial management operations are frequently called
                                                            upon to act as a sounding board for new budgetary
                                                            policies promulgated by the Office of Management and
                                                            Budget (OMB) .
GAO’s EEO Coordinator meets with an employee repre-            In addition to preparing and executing GAO’s
                    sentative.                              budget, the Budget and Finance Branch:

148
                                                                               ADMINISTRATION

                           OFFICE OF ADMiNISTRATlVE SERVICES



                                          DIRECTOR
                                      HERSCHEL J. SIMMONS

                              I




BUDGET AND FINANCE
     BRANCH
SANFORD H. C O R N E T T
                                         AND SERVICES
                                           BRANCH
                                      LARRY A. HERRMANN
                                                              II
                                  L                                L




                                              SUPPLY
      ADMlN ISTRATIVE                                                           EDITING
                                           AND SERVICES
      FINANCE SECTION                                                           SECTION
                                             SECTION
    GERTRUDE E. GRESHAM                                                      JESSIE M. SCHMID
                                        FREDDIE R. CAMPBELL




I                                          ILLUSTRATING                    COPY PREPARATION



1
      PAYROLL SECTION                        SERVICES                          SECTION
     MARGARET   Z. ESTES                    DANIEL COX                     THEODORA L. BRANDY
I




                                                                       i
                                                                                PRINTING
                                            INFORMATION
                                                                                SECTION
                                              SECT I ON
                                                                           CECELIA M. TAYLOR
                                          VIRGINIA E. GATES




                                           DIRECTIVES AND
                                                                              DISTRIBUTION
                                          SPECIAL REPORTS
                                                                                SECTION
                                              SECTION
                                                                             SIVIA K. KUMPU
                                           JANE k BENOIT




                                                                                     JUNE 30, 1971



                                                                                                149
ADM IN ISTRAT ION

     Maintains liaison with the Office of Management              Furnishing information from records material to
  and Budget and prepares such reports as may be               other agencies, the courts, and the public. During
  required by OMB, the Treasury, and others on                 fiscal year 1971, 953 requests were received and
  budget, payroll, and related financial matters.              serviced. That total includes requests ( 1) from Gov-
     Maintains the administrative accounting and               ernment agencies, ( 2 ) from attorneys and subcon-
  financial reporting systems, including the summary           tractors for certified copies of contracts and payment
  accounting control and deposit of all GAO collec-            bonds under the Miller Act, ( 3 ) for copies of docu-
  tions involving all Government agencies.                     ments from Revolutionary and Civil War records,
     Examines and certifies all administrative vouchers        (4) for transcripts of pay of military and National
  and invoices covering operating expenses.                    Guard personnel, and (5) for contracts and vouchers
     Prepares, examines, and certifies GAO payrolls            to be used by GAO’s Claims Division in its claims
  including the maintenance and audit of individual        ’   settlement work.
  leave and retirement records.                               The Records Management and Services Branch
   Since virtually all financial and supporting admin-     also :
istrative records of the Federal Government are under             Procures, controls, and distributes all supplies,
the jurisdiction of the General Accounting Office, rec-        material, furniture, and equipment for GAO and
ords management is an important responsibility. Some           arranges for and provides utility, transportation,
of the functions of the Records Management and Serv-           and mail and messenger services.
ices Branch include :                                             Furnishes illustrating and graphic art services
     Advising the Administrator of General Services            within GAO and, upon request, to congressional
  in the development, maintenance, and review of the           committees.
  general records schedules for the control of the vari-          Edits and prepares for printing certain GAO
  ous categories of Federal administrative support rec-        publications.
  ords needed for the audit of Government accounts.           The Publications Branch edits, types, proofreads,
     Reviewing for approval overall fiscal records pro-    reproduces, and distributes audit reports of the Comp-
  grams and requests for approval to dispose of fiscal     troller General and reproduces and distributes other
  and accounting documents submitted to GAO by the         material originating in GAO, including manuals, deci-
  departments and agencies of the Government. In           sions, digests, memorandums, regulations, and other
  fiscal year 1971, 54 schedules covering the disposi-     documents.
  tion ,of agency fiscal records were approved.               As discussed in earlier chapters of this report, GAO’s
     Controlling agencies’ records holdings ,transferred   audit reports are a major product of the Office. During
  to Federal records depositories and granting final       fiscal year 1971, nearly 1,000 reports containing GAO’s
  approval for the disposal of these records. I n fiscal   findings and recommendations on a wide variety of
  year 1971, the Branch approved the disposition of        Government activities were issued. The importance of
  129,053 cubic feet ‘of fiscal records that were stored   these reports to the Congress, its committees, and
  by Federal Records Centers. At June 30, 1971,            Members, the departments and agencies, and other
  891,202 cubic feet of records under GAOs control         recipients necessitates timely and accurate preparation.
  were on hand in Federal Records Centers.                    The Office of Administrative Services is also respon-
     Maintaining a continuing records management           sible from time t.0 time for furnishing management
  program for GAO, including storage, disposal, and        services to independent commissions and boards which
  transfer of records generated at G A O s headquarters    are attached to GAO for support and for serving as an
  or field offices. During fiscal year 1971, GAO de-       advisor to officials of ,these independent bodies on man-
  stroyed 6,707 cubic feet and transferred 15,355 cubic    agement services problems. Currently, such services
  feet of its records to Federal Records Centers o r the   are being provided to the Cost Accounting Standards
  National Archives, leaving on hand a balance of          Board which began operations during fiscal year 1971
  75,275 cubic feet.                                       pursuant to Public Law 91-379.




150
                          EXHW I T S




449-406   0 - 72   - 11
                                                                                                   EXHIBIT 1




               BRIEF CHRONOLOGY OF EVOLUTION AND HISTORY OF THE
                    US. GENERAL ACCOUNTING OFFICE, 1789-1971

September 2,1789. President Washington signed a bill       omy and efficiency in public expenditures, ( 3 ) mak-
  that established the Treasury Department and pm-         ing investigations and reports ordered by designated
  vided for a Secretary, a Comptroller, an Auditor, a      congressional committees, (4) rendering advance
  Treasurer, and other lesser officers. The duties of      decisions on legality of proposed expenditures, (5)
  the Comptroller were to superintend the adjustment       settlement and adjustment of all claims and demands
  and preservation of public accounts. All public ac-      by or against the Government, and ( 6 ) prescribing
  counts were to be verified and transmitted to the        accounting forms, systems, and procedures.
  Comptroller for his decision.                          July 1, 1921. J. Raymond McCarl of Nebraska, be-
March 3, 1817. President Madison signed an act to          came the first Comptroller General of the United
 provide for the prompt settlement of public ac-           States. Lurtin R. Ginn of Indiana was appointed
 counts. This act contained the language that is still     Assistant Comptroller General.
 in effect under section 305 of the Budget and           March 9, 1931. Following the retirement of Lurtin R.
 Accounting Act, 1921.                                    Ginn, Richard N. Elliott, a former Member of
July 31, 1894. President Cleveland approved an ap-        Congress, became Assistant Comptroller General.
  propriation act which included the Dockery Act,         Upon the retirement of Mr. McCarl on June 30,
  named after Representative .4lexander M. Dockery        1936, at the end of his 15 year term and again after
  of Missouri. Under this act, a single Comptroller of    illness necessitated the retirement of the next Comp-
  the Treasury replaced the several kinds of comptrol-    troller General, Fred H. Brown, Mr. Elliott served
  lers which had mushroomed under previous laws           as Acting Comptroller General. He retired on April
  and which were abolished. Centralized control was       30, 1943, when he reached the mandatory retire-
  vested in the Comptroller of the Treasury. The audi-    ment age.
  tors were designated for the audit of particular       April 11, 1939. Fred H. Brown was appointed as
  departmental accounts.                                   Comptroller General. After 14 months in office, he
June 10, 1921. The signing by President Harding of         had a stroke which necessitated his retirement.
  the Budget and Accounting Act, 1921, marked the        August I , 1940. President Roosevelt nominated and
  culmination of efforts of more than a decade to          the Senate confirmed the same day the nomination
  modernize the financial management system of the         of Lindsay C. Warren of North Carolina to be
  Federal Government. This act created the Bureau of       Comptroller General. Mr. Warren resigned from the
  the Budget and established the General Accounting        House of Representatives on October 31, 1940, and
  Office under the control and direction of the Comp-      assumed his duties as Comptroller General on
  troller General of the United States. The GAO was        November 1,1940.
  designated as an establishment independent of the
  executive branch reporting to the Congress. The        May I , 1943. Frank L. Yates, a career GAO employee,
  statutory duties formerly vested in the Comptroller     became Assistant Comptroller General. He served
  of the Treasury and the six auditors were trans-        until his death on June 29, 1953.
  ferred to the Comptroller General.                     December 6, 1945. .4 significant development in the
     The principal functions vested in the GAO in-         Federal Government’s financial system was marked
  cluded (1) investigation of all matters relating to      dhen the Government Corporation Control Act was
  the receipt, disbursement, and application of public     signed by President Truman. This act provided that
  funds, (2) making recommendations for legislation        the financial transactions of all Government corpora-
  deemed necessary and those looking to greater econ-      tions should be audited by the General Accounting

                                                                                                            153
EXHIBIT 1

  Office in accordance with principles and proce-           cooperative program led to many advances in the
  dures applicable to commercial corporate transac-         Government’s financial practices through legislation
  tions. The need for annual scrutiny and control by        as well as through modernization of agency
  the Congress of the financial transactions and opera-     procedures.
  tions of Government corporations was first outlined     June 30, 1949. The Federal Property and Adminis-
  in the Comptroller General’s annual report for the        trative Services Act of 1949 was signed into law.
  fiscal year 1928. Pursuant to this statutory mandate      Included in its provisions was authority for the
  the Corporation .4udits Division was established in       Comptroller General to prescribe accounting prin-
  GAO.                                                      ciples and standards for Government property, ap-
December 20, 1945. The Reorganization Act of 1945           prove property accounting systems, and examine and
  made it clear that the General .4ccounting Office         report on such systems in operation.
  was a part of the legislative branch of the             October 19,1949. The comprehensive audit program
  Government.                                              was instituted by the Comptroller General. This pro-
March 8, 1946. The Anti-Kickback Act was passed.           gram was defined as including the audit of receipts,
 GAO was granted power to inspect plants and audit         expenditures, and application of public funds; the
 books and records of contractors engaged in per-          verification of assets, liabilities, proprietary accounts,
 forming cost-plus-fixed-fee or cost-reimbursable          and operating results of Federal agencies; and de-
 contracts for the purpose of ascertaining whether         termination of compliance with all laws, regulations,
 fees, kick-backs, gifts or gratuities are paid by sub-    and decisions applicable to financial transactions.
 contractors to secure the award of subcontracts or       August 17,1950. The Post Office Department Finan-
 orders.                                                    cial Control Act of 1950 became law. This law trans-
August 2, 1946. The Legislative Reorganization Act          ferred to the Post Office Department the accounting
  of 1946 authorized the Comptroller General to make        for postal operations previously performed by GAO.
  expendhure analyses of each agency of the Govern-         It directed the Department to develop an up-to-date
  ment to enable Gongress to determine whether pub-         system of accounting under principles and standards
  lic funds have been economically and efficiently          prescribed by the Comptroller General and with his
  administered.                                             cooperation and subject to his approval. Provision
January 6,1949. Secretary of the Treasury, John W.          was also made for GAO audit at the agency site in
  Snyder; Director of the Bureau of the Budget,             accordance with generally accepted principles of
  James E. Webb; and the Comptroller General                auditing.
  Lindsay C. Warren signed the document which             September 12, 1950. President Truman signed into
  established officially the cooperative effort then        law the Budget and Accounting Procedures Act of
  designated as the Joint Program for Improving             1950. He described it as “providing a firm founda-
  Accounting in the Federal Government. Since 1959          tion for modernizing the Government’s accounting
  the program has been referred to as the Joint Finan-      along efficient lines to serve management purposes,
  cial Management Improvement Program.                      safeguard the public funds and inform the Congress
     This program grew out of discussions late in 1947      and the taxpayers clearly of what happens to the
  between representatives of the General Accounting         funds provided for Government activities.”
  Office, the Treasury Department, the Bureau of the           The act directed the Comptroller General to pre-
  Budget, and the Senate Government Operations              scribe accounting principles and standards for Fed-
  Committee. It was agreed that improving account-          eral agencies, cooperate in the development of their
  ing and reporting in the Federal Government would         accounting systems, and approve them when deemed
  be undertaken as a joint venture by the three central     adequate. Provision was made for more comprehen-
  agencies. T o provide GAO leadership in this pro-         sive and selective auditing of agency operations, at
  gram, the Accounting Systems Division was formed          sites of those operations, and in line with improved
  in January 1948, headed by Walter F. Frese.               agency accounting systems, internal controls, and
     On October 20, 1948, the Comptroller General           related administrative practices.
  addressed a letter to the heads of all Federal agen-    January 12, 1951. The first general statutory clause
  cies enlisting their cooperation in the program. This     on GAO access to contractor records came into being

154
                                                                                                     EXHIBIT 1

  with the enactment of P u b k Law 921 of the 81st          more meaningful negotiations with better cost data
  Congress, an amendment and extension of the First          so that the Government is able to obtain more ad-
  War Powers Act of 1941. Permanent access-to-               vantageous contract prices. In large part, this law
  records legislation was enacted in Public Law              was one result of numerous GAO audit reports relat-
  82-245, approved October 31,1951. Under this law,          ing to pricing of negotiated Government contracts.
  GAO has the authority to examine records incident        March 8, 1966. Elmer B. Staats became Comptroller
  to negotiated contracts. This right of the GAO to         General. Mr. Staats, a native of Kansas, served as
  access to contractors’ records was judicially affirmed
                                                            Deputy Director of the Bureau of the Budget (now
  in a landmark opinion in the Hewlett-Packard case
                                                            the Office of Management and Budget) under Pres-
  on November 15, 1967.
                                                            idents Truman, Eisenhower, Kennedy, and Johnson.
October 12,1953. Frank H. Weitzel became Assistant
                                                           October 3, 1969. Robert F. Keller, who had been
 Comptroller General of the United States. Follow-
  ing Lindsay Warren’s retirement on April 30, 1954,         General Counsel of GAO, became Assistant Comp-
 Mr. Weitzel served as Acting Comptroller General            troller General.
  until the appointment of Joseph Campbell and sub-        October 26, 1970. The Legislative Reorganization
  sequently following Mr. Campbell’s retirement on          Act of 1970 requires GAO to cooperate with the
 July 31, 1965, Mr. Weitzel again served as Acting           Treasury and the Office of Management and Budget
  Comptroller General for seven months.                     in developing a standardized information and data
December 14,1954. Joseph Campbell became Comp-              processing system for budgetary and fiscal data; to
  troller General. Before his appointment he was serv-      review and analyze the results of Government pro-
  ing as one of the three commissioners of the Atomic       grams and activities, including the making of cost-
  Energy Commission. Mr. Campbell served until               benefit studies; and to furnish periodic lists of GAO
  July 31,1965, when for reasons of health, he retired.      reports to all committees and Members of Congress.
September IO, 1962. President Kennedy signed into           Department and agency heads are required by the
  law the act which during its progress through the          act to advise the Senate and House Committees on
  legislative machinery became known as the “Truth          Government Operations and Appropriations of the
  in Negotiations” Act, Public Law 87-653. This law         actions taken on recommendations made in GAO
  was designed to enable the departments to conduct         reports.




                                                                                                              155
 EXHIBIT 2




      LEGISLATION ENACTED DURING FISCAL YEAR 1971 RELATING TO THE WORK
                      OF THE GENERAL ACCOUNTING OFFICE

                                                                   U.S. Postal Service
                                                                      Public Law 91-375, August 12, 1970, 84 Stat. 719,
 Home Loan Mortgage Program
                                                                   Postal Reorganization .kt, establishes an independent
  Title I11 of Public Law 91-351, July 24, 1970, 84                establishment of the executive branch, the U.S. Postal
Stat. 451, which created the Federal Home Loan                     Service. Section 2008, Title 39, United States Code, as
Mortgage Corporation contains the following audit                  reenacted by section 2 of this act contains the follow-
and access to records provisions:                                  ing audit provision :
   Sec. 307.                                                       ‘‘$ 2008. Audit and expenditures
                         *     *      *                               “ ( a ) The accounts and operations of the Postal Service
   ( b ) The financial transactions of the Corporation shall be    shall be audited by the Comptroller General and reports
subject to audit by the General Accounting Ofice in accord-        thereon made to the Congress to the extent and at such times
ance with the principles and procedures applicable to com-         as he may determine.” (84 Stat. 741)
mercial corporate transactions under such rules and regula-           Provision is also made for the collection and adjust-
tions as may be prescribed by the Comptroller General of the       ment of debts by the Postal Service and for the refer-
United States. The representatives of the General Accounting
                                                                   ence of any matter which is uncollectible through ad-
Ofice shall have access to all books, accounts, financial rec-
ords, reports, files and all other papers, things, or property
                                                                   ministrative action to the General Accounting Office
belonging to or in use by the Corporation and necessary to         for collection :
facilitate the audit, and they shall be afforded full facilities   ‘‘$2601. Collection and adjustment of debts
for verifying transactions with the balances or securities held       “ ( a ) The Postal Service-
by depositaries, fiscal agents, and custodians. A report on each              “( 1) shall collect debts due the Postal Service;
such audit shall be made by the Comptroller General to the                   “ ( 2 ) shall collect and remit fines, penalties, and for-
Congress. The Corporation shall reimburse the General Ac-                 feitures arising out of matters affecting the Postal
counting Ofice for the full cost of any such audit as billed              Service ;
therefor by the Comptroller General. (84 Stat. 456)                          “ ( 3 ) may adjust, pay, or credit the account of a post-
                                                                         master or of an enlisted person of an Armed Force per-
                                                                         forming postal duties, for any loss of Postal Service
Federal-State Extended Unemployment                                       funds, papers, postage, or other stamped stock or ac-
Compensation Program                                                     countable paper; and
                                                                             “ ( 4 ) may prescribe penalties for failure to render
  Title I1 of Public Law 91-373, August 10, 1970, 84                     accounts.
Stat. 708, Federal-State Extended Unemployment                     The Postal Service may refer any matter, which is uncollect-
                                                                   ible through administrative action, to the General Account-
Compensation Act of 1970, contains the following
                                                                   ing Ofice for collection. This subsection does not affect the
audit provision:                                                   authority of the Attorney General in cases in which judicial
  Sec. 204.                                                        proceedings are instituted.
                        *      *     *                                “ ( b ) In all cases of disability or alleged liability for any     ~




   ( e ) The Secretary shall from time to time certify to the      sum of money by way of damages or otherwise, under any
Secretary of the Treasury for payment to each State the sums       provision of law in relation to the officers, employees, opera-
payable to such State under this section. The Secretary of the     tions, or business of the Postal Service, the Postal Service shall
Treasury, prior to audit or settlement by the Genernl Account-     determine whether the interests of the Postal Service prob-
ing Ofice, shall make payment to the State in accordance           ably require the exercise of its powers over the same. Upon
with such certification, by transfers from the extended un-        the determination, the Postal Service on such terms as it
employment compensation account to the account of such             deems just and expedient, may-
State in the Unemployment Trust Fund. (84 Stat. 711)                         “( 1 ) remove the disability ; or

156
                                                                                                                       EXHIBIT 2

       “(2) compromise, release, or discharge the claim for         spect to the performance during the preceding fiscal year of
     such sum of money and damages.” (84 Stat. 744)                 the functions and duties imposed on them by section 201 and
                                                                    subsection ( a ) of this section. The reports made under this
                                                                    subsection in 1971 and 1972 shall set forth the progress
Federal Credit Unions                                               achieved in the development of classifications under subsec-
                                                                    tion ( a ) of this section. The reports made in years thereafter
  Public Law 91-468, October 19, 1970, 84 Stat. 994,                shall include information with respect to changes in, and
amends the Federal Credit Union Act (12 U.S.C.                      additions to, classifications previously established. Each such
1751-1775) to provide insurance for member accounts                 report shall include such comments of the Comptroller Gen-
in State and federally charted credit unions. Section               eral as he deems necessary or advisable. (84 Stat. 1167)
209 ( b ) contains the following audit provision :                  ASSISTANCE TO CONGRESS BY GENERAL ACCOUNTING OFFICE

   “ ( b ) With respect to the financial operations arising by          SEC. 204. ( a ) T h e Comptroller General shall review and
reason of this title, the Administrator shall-                      analyze the results of Government programs and activities car-
       ‘‘ ( 1) prepare annually and submit a business-type          ried on under existing law, including the making of cost bene-
   budget as provided for wholly owned Government corpo-            fit studies, when ordered by either House of Congress, or upon
   rations by the Government Corporation Control Act; and           his own initiative, or when requested by any committee of the
       “ ( 2 ) maintain a n integral set of accounts, which shall   House of Representatives or the Senate, or any joint commit-
   be audited annually by the General Accounting Ofice in           tee of the two Houses, having jurisdiction over such programs
   accordance with principles and procedures applicable to          and activities.
   commercial corporate transactions, as provided by section            ( b ) The Comptroller General shall have available in the
   105 of the Government Corporation Control Act.” (84              General Accounting Ofice employees who are expert in ana-
   Stat. 1015)                                                      lyzing and conducting cost benefit studies of Government pro-
                                                                    grams. Upon request of any committee of either House or any
                                                                    joint committee of the two Houses, the Comptroller General
Legislative Reorganization                                          shall assist such committee or joint committee, or the staff of
                                                                    such committee or joint committee-
   Public Law 91-510, October 26, 1970,84 Stat. 1140,                      ( 1 ) in analyzing cost benefit studies furnished by any
Legislative Reorganization ,4ct of 1970, reiterates Gen-               Federal agency to such committee or joint committee; or
eral Accounting Office assistance to Congress and pro-                      ( 2 ) in conducting cost benefit studies of programs under
vides for the development of a standardized budgetary                   the jurisdiction of such committee or joint committee.
and fiscal information and data processing system and               POWER A N D DUTIES OF COMPTROLLER GENERAL I N CONNEC-

for the utilization of reports and employees of the                   TION W I T H BUDGETARY, FISCAL, AND RELATED MATTERS

General .4ccounting Office by the Congress as follows :               SEC.    205. ( a ) The Comptroller General shall establish
                                                                    within the General Accounting Ofice such office or division,
PARTOF BUDGETARY       AND   FISCALINFORMATION
                                             AND DATA
                                                                    or such offices or divisions, as he considers necessary to carry
     BUDGETARY A N D FISCAL DATA PROCESSING SYSTEM
                                                                    out the functions and duties imposed on him by the provisions
   SEC. 201. T h e Secretary of the Treasury and the Director       of this title.
of the Office of Management and Budget, in cooperation with            ( b ) The Comptroller General shall include in his annual
the Comptroller General of the United States, shall develop,        report to the Congress information with respect to the per-
establish, and maintain, insofar as practicable, for use by all     formance of the functions and duties imposed on him by the
Federal agencies, a standardized information and data proc-         provisions of this title.
essing system for budgetary and fiscal data.
                                                                    PRESERVATION OF EXISTING AUTHORITIES A N D DUTIES UNDER
             BUDGET STANDARD CLASSIFICATIONS
                                                                             BUDGET A N D ACCOUNTING AND OTHER STATUTES
    SEC.     202. ( a ) T h e Secretary of the Treasury and the
Director of the Office of Management and Budget, in coop-              SEC. 206. Nothing contained in this Act shall be construed
eration with the Comptroller General, shall develop, estab-         as impairing any authority or responsibility of the Secretary
lish, and maintain standard classifications of programs, activi-    of the Treasury, the Director of the Office of Management
ties, receipts, and expenditures of Federal agencies in order-      and Budget, and the Comptroller General of the United States
       ( 1 ) to meet the needs of the various branches of the       under the Budget and Accounting Act, 1921, as amended,
   Government; and                                                  and the Budget and Accounting Procedures Act of 1950, as
       ( 2 ) to facilitate the development, establishment, and      amended, or any other statutes. (84 Stat. 1168)
   maintenance of the data processing system under section
                                                                     PART 3-UTILIZATION   OF REPORTS
                                                                                                   A N D EMPLOYEES
                                                                                                                 OF
   201 through the utilization of modern automatic data proc-
                                                                                    GENERAL        OFFICE
                                                                                          ACCOUNTING
   essing techniques.
The initial classifications under this subsection shall be estab-   ASSISTANCE BY GENERAL ACCOUNTING OFFICE TO CONGRES-

lished on or before December 3 1, 197 1 .                             SIONAL    COMMITTEES     IN   CONNECTION     WITH    PROPOSED

    (b) The Secretary of the Treasury and the Director of the         LEGISLATION    A N D COMMITTEE REVIEW OF FEDERAL PRO-

Office of Management and Budget shall submit a report to              GRAMS A N D ACTIVITIES

the Senate and the House of Representatives on or before              SEC.231. At the request of any committee of the House or
September 1 of each year, commencing with 1971, with re-            Senate, or of any joint committee of the two Houses, the
 EXHIBIT 2

 Comptroller General shall explain to, and discuss with, the           of Representatives or with any joint committee of Congress
 committee or joint committee making the request, or the staff         for any period of more than one year.
 of such committee or joint committee, any report made by the             ( b ) The Comptroller General shall include in his annual
 General Accounting O f i c e which would assist such committee        report to the Congress the following information-
 in connection with-                                                          ( 1) the name of each employee assigned or detailed to
       ( 1 ) its consideration of proposed legislation, including        any committee of the Senate or House of Representatives
    requests for appropriations, or                                      or any joint committee of Congress;
       ( 2 ) its review of any program, or of any activity of any             ( 2 ) the name of each committee or joint committee to
    Federal agency, which is within the jurisdiction of such             which each such employee is assigned or detailed;
    committee or joint committee.                                             (3) the length of the period of such assignment or
                                                                         detail of such employee;
DELIVERY B Y GENERAL        ACCOUNTING       OFFICE   TO CONGRES-
        SIONAL COMMITTEES OF REPORTS TO CONGRESS
                                                                             (4) a statement as to whether such assignment or detail
                                                                         is finished or is currently in effect; and
  SEC.232. Whenever the General Accounting O f i c e submits                 (5) the pay of such employee, his travel, subsistence,
any reports to the Congress, the Comptroller General shall               and other expenses, the agency contributions for his retire-
deliver copies of such reports to-                                       ment and life and health insurance benefits, and other nec-
     ( 1 ) the Committees on Appropriations of the House and             essary monetary expenses for personnel benefits on account
  Senate,                                                                of such employee, paid out of appropriations available to
     ( 2 ) the Committees on Government Operations of the                the General Accounting O f i c e during the period of the
  House and Senate, and                                                  assignment or detail of such employee, or, if such assign-
     ( 3 ) any other committee of the House or Senate, or any            ment or detail is currently in effect, during that part of the
  joint committee of the two Houses, which has requested                 period of such assignment or detail which has been
  information on any program or part thereof, or any activity            completed.
  of any Federal agency, which is the subject, in whole or in
  part, of such report.                                                                       AGENCY REPORTS

  FURNISHING TO CONGRESSIONAL COMMITTEES BY GENERAL
                                                                          SEC. 236. Whenever the General Accounting O f i c e has
                                                                       made a report which contains recommendations to the head
       ACCOUNTING OFFICE OF ITS REPORTS GENERALLY
                                                                       of any Federal agency, such agency shall-
   SEC. 233. At the request of any committee of the House or
                                                                             ( 1 ) not later than sixty days after the date of such
Senate, or of any joint committee of the two Houses, the                  report, submit a written statement to the Committees on
Comptroller General shall make available to such committee                Government Operations of the House of Representatives
or joint committee a copy of any report of the General Ac-                and the Senate of the action taken by such agency with
counting O f i c e which was not delivered to that committee or           respect to such recommendations; and
joint committee under section 232 of this Act.
                                                                             ( 2 ) in connection with the first request for appropria-
FURNISHING TO COMMITTEES AND MEMBERS OF CONGRESS BY                       tions for that agency submitted to the Congress more than
   GENERAL ACCOUNTING OFFICE OF MONTHLY AND A N N U A L                   sixty days after the date of such report, submit a writ-
   LISTS OF ITS REPORTS     ; AVAILABILITY   OF REPORTS TO COM-           ten statement to the Committees on Appropriations of the
   MITTEES AND MEMBERS ON REQUEST                                         House of Representatives and the Senate of the action
    SEC.234. The Comptroller General shall prepare, once each             taken by such agency with respect to such recommenda-
 calendar month, a list of all reports of the General Accounting          tions. (84 Stat. 1170-1171)
 O f i c e issued during the immediately preceding calendar
month, and, not less than once each calendar year, a cumula-              The Capitol Guide Service is established subject to
 tive list of all reports of the General Accounting O f i c e issued   direction, supervision, and control of a Capitol Guide
during the immediately preceding twelve months, and trans-             Board consisting of the Architect of the Capitol and
mit a copy of each such list of reports to each committee of           the Sergeants at .4rms of the Senate and House of
the House or Senate, each joint committee of the two Houses,
each Member of the House or Senate, and the Resident Com-              Representatives to provide guided tours of the interior
missioner from Puerto Rico. At the request of any such com-            of the U.S. Capitol Building. Section 443 ( c ) provides
mittee, joint committee, Member of the House or Senate, or             for special audit of the Board as follows :
the Resident Commissioner from Puerto Rico, the Comptroller
                                                                          ( c ) As soon as practicable after the effective date of this
General promptly shall transmit or deliver to that committee,
                                                                       section but not later than the close of the sixtieth day after
joint committee, Member of the House or Senate, or the
                                                                       such effective date, the Capitol Guide Board shall, out of the
Resident Commissioner, as the case may be, a copy of each
                                                                       assets and property transferred under subsection ( b ) of this
report so listed and requested.
                                                                       section, on the basis of a special audit which shall be con-
  ASSIGNMENTS OF EMPLOYEES OF GENERAL ACCOUNTING                       ducted by the General Accounting Ofice-
      OFFICE TO DUTY W I T H COMMITTEES OF CONGRESS                           (1) settle and pay any outstanding accounts payable
   SEC.235. ( a ) Notwithstanding any other provision of law,             of the United States Capitol Guides,
the Comptroller General may not assign or detail any em-                     ( 2 ) discharge the financial and other obligations of the
ployee of the General Accounting O f i c e to full-time duty on          United States Capitol Guides (including reimbursement to
a continuing basis with any committee of the Senate or House             purchasers of tickets for guided tours which are purchased

158
                                                                                                                       EXHIBIT 2

   and paid for in advance of intended use and are unused),           establishment of a Committee for the Purchase of Prod-
   and                                                                ucts and Services of the Blind and Other Severely
      ( 3 ) otherwise wind up the affairs of the United States
                                                                      Handicapped. The law contains the following provi-
   Capitol Guides,
which exist immediately prior to such effective date. T h e           sion for audit and access to records:
Capitol Guide Board shall dispose of any net monetary                                             “AUDIT
amounts remaining after the winding up of the affairs of the             “SEC.4. The Comptroller General of the United States, or
United States Capitol Guides, in accordance with the prac-            any of his duly authorized representatives, shall have access,
tices and procedures of the United States Capitol Guides,             for the purpose of audit and examination, to any books, docu-
existing immediately prior to the effective date of this section,     ments, papers, and other records of the Committee and of
with respect to disposal of monetary surpluses. (84 Stat. 1192)       each agency designated by the Committee under section 2 ( c ) .
  Authorization is made for audit of organizations con-               This section shall also apply to any qualified nonprofit agency
ducting activities or performing services in or on the                for the blind and any such agency for other severely handi-
                                                                      capped which have sold commodities or services under this
U.S. Capitol buildings ,or grounds with the results of                Act but only with respect to the books, documents, papers,
such audit reported to Congress as follows :                          and other records of such agency which relate to its activi-
 AUDIT OF ACCOUNTS OF CERTAIN PRIVATE ORGANIZATIONS                   ties in a fiscal year in which a sale was made under this Act.”
   SEC. 451. ( a ) Any private organization, except political         (85 Stat. 81)
parties and committees constituted for election of Federal
officials, whether or not organized for profit and whether or
not any of its income inures to the benefit of any person,
                                                                      Grants to States
which performs services or conducts activities in or on the
United States Capitol Buildings or Grounds, as defined by                Public Law 91-596, December 29, 1970, 84 Stat.
or pursuant to law, shall be subject, for each year in which          1590, the Occupational Safety and Health Act of 1970,
it performs such services or conducts such activities, to a           contains the following access-to-records and audit pro-
special audit of its accounts which shall be conducted by the         visions incident to grants to States for occupational
General Accounting O f i c e . T h e results of such audit shall be
                                                                      safety and health activities :
reported by the Comptroller General to the Senate and House
of Representatives. (84 Stat. 1193)                                                               AUDITS

                                                                         SEC.25. ( a ) Each recipient of a grant under this Act shall
                                                                      keep such records as the Secretary or the Secretary of Health,
Emergency Rail Services                                               Education, and Welfare shall prescribe, including records
                                                                      which fully disclose the amount and disposition by such re-
   Public Law 91-663, January 8, 1971, 84 Stat. 1975,                 cipient of the proceeds of such grant, the total cost of the
Emergency Rail Services Act of 1970, authorizes the                   project or undertaking in connection with which such grant
Secretary of Transportation to provide financial assist-              is made or used, and the amount of that portion of the cost
                                                                      of the project or undertaking supplied by other sources, and
ance to certain railroads to preserve essential rail serv-            such other records as will facilitate a n effective audit.
ice and contains the following audit and access-to-                      ( b ) The Secretary or the Secretary of Health, Education,
records provisions :                                                  and Welfare, and the Comptroller General of the United
                                                                      States, or any of their duly authorized representatives, shall
                              AUDIT
                                                                      have access for the purpose of audit and examination to any
   SEC. 8. The Comptroller General of the United States, or           books, documents, papers, and records of the recipients of any
any of his duly authorized representatives, shall have access         grant under this Act that are pertinent to any such grant.
to such information, books, records, and documents as he              (84 Stat. 1615)
determines necessary effectively to audit financial transactions
and operations carried out by the Secretary in the administra-           Public Law 91-616, December 31, 1970, 84 Stat.
tion of this Act. T h e Comptroller General shall make such           1848, Comprehensive Alcohol Abuse and Alcoholism
reports to the Congress on the results of any such audits as          Prevention, Treatment, and Rehabilitation Act of
are appropriate. (84 Stat. 1977)                                      1970, authorizes formula grants to States to assist in
                                                                      alcohol abuse and alcoholism prevention, treatment,
Commodities Produced by Handicapped                                   and rehabilitation programs. As a part of the State
                                                                      plan required of States desiring to participate, a pro-
   Public Law 92-28, June 23, 1971, 85 Stat. 77,                      vision for General Accounting Ofice access to records
amends the Wagner-ODay Act to extend its provisions                   relating to certain report documentation must be in-
relating to Government procurement of commodities                     cluded. (84 Stat. 1851)
produced by the blind to commodities produced by                         Section 502 ( b ) of the act provides General Account-
other severely handicapped individuals through the                    ing Ofice access to records and audit of recipients that

                                                                                                                                159
EXHIBIT 2

are pertinent to grants or contracts entered under other    of the Corporation for any fiscal year during which
than competitive bidding procedures. (84 Stat. 1855)        Federal funds are available to finance any portion of
                                                            its operations. A report of each such audit to Congress
                                                            shall contain such comments, information, and rec-
Public Health Service
                                                            ommendations as the Comptroller General may deem
   Title I of Public Law 91-515, October 30, 1970, 84       necessary to inform Congress regarding the financial
Stat. 1297, Heart Disease, Cancer, Stroke, and Kidney       operations and conditions of the Corporation. (84 Stat.
Disease Amendments of 1970, amends section 909 of            1340-1341)
the Public Health Service Act to include contract re-
cipients as well as grant recipients in the General Ac-     Susquehanna River Basin Compact
counting Ofice audit and access-to-records provision.
(84 Stat. 1300)                                                Public Law 91-575, December 24, 1970, 84 Stat.
                                                            1509, grants the consent of Congress to the Susque-
                                                            hanna River Basin Compact creating the Susquehanna
Military Procurement-C-5A        Aircraft                   River Basin Commission and subjects the financial
                                                            transactions of the Commission to audit by the General
   Public Law 91-441, October 7, 1970, 84 Stat. 905,
                                                            Accounting Ofice in accordance with principles and
the military procurement authorization Cor 1971, estab-     procedures applicable to commercial corporate trans-
lishes a $200,000,000 C-5A aircraft procurement con-        actions and under rules and regulations prescribed
tingency fund and requires that all payments made to        by the Comptroller General of the United States. (84
the prime contractor through a special bank account         Stat. 1534)
be audited by the Defense Contract Audit Agency and,
on a quarterly basis, by the General Accounting Ofice
                                                            Exchange Stabilization Fund
with a report to Congress by the Comptroller General
not more than 30 days after the close of each quarter.         Public Law 91-599, December 30, 1970, 84 Stat.
(84 Stat. 91 1-912)                                          1657, authorizes the General Accounting Ofice to
                                                            audit the administrative expenses of the Exchange
Pacific Island Trust Territory                              Stabilization Fund for the purpose of ascertaining that
                                                            administrative funds are properly accounted for and
   Public Law 91-361, July 31, 1970, 84 Stat. 669, the      that fully adequate accounting procedures and systems
Department of the Interior and Related Agencies Ap-         for control of the funds have been established. The
propriation ,4ct, 1971, contains the usual proviso for      Comptroller General is provided access to records with
audit of the Trust Territory of the Pacific Islands by      the exception of information determined by the Secre-
the General Accounting Ofice of all financial transac-      tary of the Treasury to be of an internationally signifi-
tions of the Trust Territory, including such transac-       cant nature. (84 Stat. 1659)
tions of all agencies or instrumentalities established or
utilized by the Trust Territory. The proviso stipulates
                                                            Community Development Corporation
that the audit shall be made in accordance with the
provisions of the Budget and .4ccounting Act, 1921,            Title VI1 of Public Law 91-609, December 31,
and the Accounting and Auditing Act of 1950. (84            1970, 84 Stat. 1791, Urban Growth and New Commu-
Stat. 673)                                                  nity Development Act of 1970, establishes a Commu-
                                                            nity Development Corporation to administer guaran-
National Railroad Passenger Corporation                     tees and loans in aid of new community development
                                                            by the Secretary of Housing and Urban Development.
   Public Law 91-518, October 30, 1970, 84 Stat. 1327,      Financial transactions of recipients of Federal assist-
the Rail Passenger Service Act of 1970, creates the         ance relating to guarantees, loans, or grants are subject
National Railroad Passenger Corporation and provides        to audit by the General Accounting O f i c e and the
for audit and access to records by the Comptroller          General Accounting Ofice is provided access to records
Ganeral of the United States of financial transactions      of ,such recipients. (84 Stat. 1801)

160
                                                                                                        EXHIBIT 2

Federal Training for State and Local                       of the Merchant Marine Act, 1936, to permit the Sec-
Government Personnel                                       retary of Commerce to accept a price for the construc-
                                                           tion of a ship which has been negotiated between a
  Public Law 91-648, January 5, 1971, 84 Stat. 1909,       shipyard and a proposed ship purchaser if, among
Intergovernmental Personnel Act of 1970, provides for      other things, the shipyard agrees that the Comptroller
access to records and audit by the General Accounting      General shall, until the expiration of 3 years after final
Ofice of recipients of grants for strengthening State      payment have access to records of the shipyard or any
and local personnel administration, and for training       of its subcontractors related to the negotiation or per-
and developing State and local employees. (84 Stat.        formance of any such contract. (84 Stat. 1019)
1927)

                                                           Foreign Aid Program
Rural Telephone Bank
                                                              Public Law 91-619, December 31, 1970, 84 Stat.
   Public Law 92-12, May 7, 1971,85 Stat. 29, amends
                                                           1856, Foreign Assistance and Related Programs Appro-
the Rural Electrification Act of 1936 to provide an
                                                           priation Act, 1971, contains a provision for access to
additional source of financing for the rural telephone
                                                           records of the Inspector General, Foreign Assistance,
program by establishment of a Rural Telephone Bank
subject to the provisions of the Government Corpora-       by the General Accounting Ofice unless the President
tion Control Act in the same manner as if included         certifies that he has forbidden the Inspector General
in definition of “wholly owned Government corpora-         t o furnish the records and the reason for so doing. (84
                                                           m
tion” including audit and report by the General Ac-        Stat. 1862)
counting Ofice of the bank’s financial transactions un-
til 51 percent of the class A stock has been retired and   Department of Commerce-International            Travel
ownership converts to the bank. Thereafter the Bank
will be a “mixed-ownership Government corporation”            Public Law 91-477, October 21, 1970,84 Stat. 1071,
continuing to be subject to audit but not budgetary        amends the International Travel Act of 1961 (75 Stat.
review. (85 Stat. 31, 37)                                  129; 22 U.S.C. 2121-2126) to improve the balance of
                                                           payments by further promoting travel to the United
              ACCESS TO RECORDS                            States. The Secretary of Commerce is authorized to
                                                           make grants to States and private or public nonprofit
                                                           organizations and associations for projects designed to
Cost Accounting Standards Board
                                                           carry out the purposes of the act. A new subsection ( d )
   Public Law 91-379, August 15, 1970, 84 Stat. 796,       is added to section 3 of the act to provide that the
amends the Defense Production Act of 1950 by adding        Comptroller General shall have access to records of
a new section 719 to establish a Cost Accounting           grant recipients pertinent to the assistance received for
Standards Board independent of the executive depart-       the purposes of audit. (84 Stat. 1072)
ments and headed by the Comptroller General of the
United States. The Board is to promulgate standards
                                                           Federal Grants
designed to achieve uniformity and consistency in
the cost accounting principles followed by defense con-       Public Law 91-667, January 11, 1971’84 Stat. 2001,
tractors and subcontractors under Federal contracts.
                                                           Departments of Labor, and Health, Education, and
The Comptroller General is given the right of access
                                                           Welfare Appropriation Act, 1971, contains a require-
to records of contractors and subcontractors relating
                                                           ment that all grant agreements provide that the Gen-
to compliance with cost accounting standards and prin-
ciples. (84 Stat. 799)                                     eral Accounting Ofice shall have access to the records
                                                           of the grantee which bear exclusively upon the Federal
                                                           grant in the case of manpower training activities of the
Department of Commerce-Ship          Construction
                                                           Manpower Administration, Department of Labor (84
  Public Law 91-469, October 21, 1970,84 Stat. 1018,       Stat. 2001) and the economic opportunity program of
the Merchant Marine Act of 1970, amends section 502        the Office of Economic Opportunity (84 Stat. 2018).

                                                                                                                 161
EXHIBIT 2

             ACCOUNTING PROCEDURES                                following officers shall be deemed to have administrative con-
                                                                  trol of appropriations, funds, limitations, or authorizations
                                                                  available within their respective organization units-
  Public Law 91-556, December 17, 1970, 84 Stat.                     ( a ) For the legislative branch:
1442, the Independent Offices and Department of                            The Clerk of the House;
                                                                           The Secretary of the Senate;
Housing and Urban Development Appropriation Act,
                                                                           The Librarian of Congress;
1971, contains the usual provision for approval of the                     The Architect of the Capitol;
General Services Administration operations fund ac-                        The Public Printer;
counting system by the General Accounting Ofice.                           The Comptroller General of the United States;
(84 Stat. 1448)                                                            The Chief Judge of the United States Tax Court;
                                                                           The chairman of any commission in or under the legis-
                                                                        lative branch.
                                                                     ( b ) For the Judiciary:
         APPROPRIATIONS FOR GENERAL                                        The Administrative Officer of the United States
             ACCOUNTING OFFICE                                          Courts.
                                                                     (c) For the executive branch :
                                                                           The head of each department, agency, or corporation
   Public Law 91-305, July 6, 1970, 84 Stat. 376, Sec-                  in or under the executive branch.
ond Supplemental Appropriations Act, 1970, provides                  ( d ) For the municipal government of the District of
                                                                        Columbia:
an appropriation of $499,000 for salaries and expenses
                                                                           The Commissioner of the District of Columbia. (84
and $5,142,000 for increased pay costs of the General                   Stat. 404)
Accounting Ofice. (84 Stat. 383, 388)
                                                                    Public Law 91-382, August 18, 1970, 84 Stat. 807,
   The Comptroller General of the United States is
                                                                  the Legislative Branch Appropriation Act, 1971, a p
deemed to have administrative control of appropria-
                                                                  propriated the following amounts for the GeneraE Ac-
tions, funds limitations, or authorizations available
incident to transfers and certifications authorized by            counting Ofice:
sections 302 and 303 to meet increased pay costs of the               “For necessary expenses of the General Accounting Ofice,
Federal Employees Salary Act of 1970 (84 Stat. 195)               including not to exceed $3,500 to be expended on the certifi-
                                                                  cation of the Comptroller General of the United States in
and the act of December 16, 1967 (81 Stat. 649) :                 connection with special studies of governmental financial
   SEC. 302. Any officer having administrative control of an      practices and procedures; services as authorized by 5 U.S.C.
 appropriation, fund, limitation, or authorization properly       3109 but at rates for individuals not to exceed the per diem
chargeable with the costs in the fiscal year 1970 of pay in-      rate equivalent to the rate for grade GS-18; advance pay-
creases granted by or pursuant to the Federal Employees           ments in foreign countries notwithstanding section 3648, Re-
Salary Act of 1970 and the Act of December 16, 1967 (81           vised Statutes, as amended (31 U.S.C. 529) ; benefits com-
Stat. 649), is authorized to transfer thereto, from the unobli-   parable to those payable under section 91 1 ( 9 ) , 91 1( 11 ) and
gated balance of any other appropriation, fund, or authoriza-     942(a) of the Foreign Service Act of 1946, as amended (22
tion under his administrative control and expiring for obliga-    U.S.C. 1136(9), 1136(11) and 1157(a), respectively); and
tion on June 30, 1970, such amounts as may be necessary for       under regulations prescribed by the Comptroller General of
meeting such costs.                                               the United States, rental of living quarters in foreign coun-
   SEC.303. Whenever any officer referred to in section 304 of    tries and travel benefits comparable with those which are now
this title shall determine that he has exhausted the possibili-   or hereafter may be granted single employees of the Agency
ties of meeting the cost of pay increases through the use of      for International Development, including single Foreign Serv-
transfers as authorized by said section, he shall certify the     ice personnel assigned to A.I.D. projects, by the Administra-
additional amount required to meet such costs for each appro-     tor of the Agency for International Development-or his des-
priation, fund, limitation, or authorization under his adminis-   ignee-under the authority of Section 636(b) of the Foreign
trative control, and the amounts so certified shall be added      Assistance Act of 1961 (Public Law 87-195, 22 U.S.C. 2396
to the pertinent appropriation, fund, limitation, or authoriza-   ( b ) ), $74,020,000.” (84 Stat. 824-825)
tion for the fiscal year 1970: Provided, That any transfer
under the authority of section 302 or any certification made         Public Law 92-18, May 25,1971,85 Stat. 40, Second
under the authority of this section by an officer in or under     Supplemental Appropriations Act, 1971, appropriates
the executive branch of the Federal Government shall be           an additional amount of $120,000 for salaries and ex-
valid only when approved by the Director of the Bureau of         penses and an appropriation of $5,851,000 for in-
the Budget.
   SEC. 304. For the purposes of the transfers and certifica-     creased pay costs of the General Accounting Ofice.
tions authorized by sections 302 and 303 of this title, the       (85 Stat. 49, 57)



162
                                                                                                                                      EXHIBIT 3




                   NUMBER OF AUDIT REPORTS ISSUED DURING FISCAL YEAR 1971'

                                                                                                                      Committees
                                                                                                                      or Members             Agency
                                                                                        Total          Congress2       of Congressa         omcials 4


Civil departments and agencies:
     Civil departments.....................................                               279                65                61               153
     Independentagenci es ..................................                              127                29                46                52
     Legislative branch .....................................                              15                 2                12                 1
    Judicial branch .......................................                                 4                 1    ..............                 3

                                                                                          425                97               119               209

Military departments: 5
    Department cf Defense.. ...............................                               139                35                68                36
    Department of the Army.. .............................                                 90                 7                23                60
    Department of the Navy.. .............................                                 73                 9                17                47
    Department of the Air Force.. ..........................                              155                 1                23               131

                                                                                         457                52               131                274

International activities. ....................................                             75                17                30                28
Government-wide and multiagency activities. . . . . . . . . . . . . . . . . .              14                 6                 7                 I
Organizations outside the Federal Government.. ..............                               4                 1    ..............                 3

       Total..............................................                               975               173                287               515



                                                                        NoITES
   1 A detailed listing of these reports is contained i n the Appen-            House; Members of the Congress from the districts in which
dix, Section 111. Substantially identical reports shown more than               the activities reported are located ; others in the Congrew a8 re-
once in the listing have been counted as one report. A compilation              quested ; the President of the United States as appropriate; t h e
of findings and recommendations in these reports is contained in                agencies reported on ; and others directly affected.
the Appendix, Section I.                                                           a Includes reports addressed to officens of the Congress.
     Reports submitted t o t h e Congress are addressed to the Presf-                Comprises reports addressed to heads of departments or agen-
dent of the Senate and the Speaker of the House of Representa-                  cies, to other officials a t department or agency headquarters, to
tives. Copies are sent to the Director, Office of Management and                department or agency o5cials a t regional or other local offices, or
Budget ; the Senate and House Committees on Appropriations :                    to commanding officers a t military installations.
the Senate and the House Committees on Government Operations ;                       Exclusive of international, Government-wide, and multiagency
the appropriate legislative committees in the Senate and the                    activities which are listed separately.




                                                                                                                                               163
 EXHIBIT 4




          TRANSPORTATION AUDIT AND COLLECTIONS DURING FISCAL YEARS 1962-71


                                                                     Bills of lading and                                        Notices of overchargeissued
                         Fiscal year                                   transportation                    Amount paid                            _____          Total collections 1
                                                                      requests audited                                         Numher             Amount


 1962. . . . . . . . . . . . . . . . . . . . . . . . . . . .                 6,740,370 $1, 185,694,946                          78,003         $29,392,962        $28, 159, 888
 1963. . . . . . . . . . . . . . . . . . . . . . . . . . . .                 7, 114,879 1,320,208,498                           77,833          13, 146,393        15,959,913
                                                                             7,309,834  1,332,550,920                           73, 251         11,362, 179        10,499,464
 1965. . . . . . . . . . . . . . . . . . . . . . . . . . . .                 6,811,821  1, 184,661,622                          70, 199         10, 102,405         9,657,360
                                                                             7,555,366  1,474,220,901                           86,970          10,694,257          8,494,453
 1967 . . . . . . . . . . . . . . . . . . . . . . . . . . . .                8,574,043  1,898,670, 184                         113,010          14,043, 159        12,963,744
 1968. . . . . . . . . . . . . . . . . . . . . . . . . . . .                 7,892,789  2,075, 358, 128                        112,306          15,474,645         14,681,476
 1969. . . . . . . . . . . . . . . . . . . . . . . . . . . .                 9,562,242 2,543,376,957                           100,968          16, 160,947        14, 167, 126
 1970. . . . . . . . . . . . . . . . . . . . . .                             9,282,062 2, 374, 913,448                         108,499          17,708,324         16,314,622
 1971 . . . . . . . . . . . . . . . . . . . . . . . . . . . .                8, 194,208 1,951,280,584                          102,326          16,011, 173        14,847,643

            Total ......................                                    79,037,614              17,340,936, 188            923,365         154,096,444        145,745,689

      1   Includes amounts collected in QAO's adjudication of clalms reported by other Government agencies.




 EXHIBIT 5




                   TRANSPORTATION CLAIMS SETTLED DURING FISCAL YEARS 1962-71

                                                                ~~




                                                        Fiscal year                                                             Numher            Amount             Amount
                                                                                                                                of claims         claimed            allowed


                                                                                                                                26,635         $1 1, 149,021       $6,695,863
1963. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     35,237          13,013,942          6,774,930
                                                                                                                                22,673          19, 133,508        14,985,277
                                                                                                                                28,959          26,974,966         23,495,481
                                                                                                              ..........        29,413          37,130,274         33,440,430
                                                                                                                                26, 133         86,982, 7 12       83,893,435
                                                                                                                                22,829          11,335,870          9,317, 118
                                                                                               .................                13,902          18,879,201         16,336,715
1970 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    13,725          14, 764,352        13,053,245
                                                                                                                                15,957          20,723,867       1 18,865,840


                                                                                                                               235,463        260,087,713        226,858,334

      1 Includes      allowance of $14,070,463 for Military Airlift Command movements audited before payment.




164
                                                                                                                                                                   EXHIBIT 6




 CLAIMS DIVISION SETTLEMENTS AND COLLECTIONS DURING FISCAL YEARS 1962-71


                                                                                               Claims against the United States               Claims by the United States
                                       Fiscal year
                                                                                                    Number             Amount                        Number             Amount
                                                                                                    of claims          allowed                      Of claims           collected 1

1962.............................................                                                     15,097        $50,617,957                    57,247             $6,233,49 1
1963 ............................                                               .........              9,984         31, 141, 152                  47,703              4,528,372
1964............................................                                                       7,450         33,879,969                    43,267              6,410,068
1965....................                                                                               8,296         78,283,755                    41,921              4,070, 156
1966 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           8,274         52,596,937                    33,977              4, 128,554
1967 . . . . . . . . . . . . . . . .                                                                   9,705         46,483,888                    32,208              3,626,693
1968 ............................................                                                     13,812         60,988,960                    16,282              2,938,681
1969. . . . . . . . . . . . . . . .               .......................                            18,690          70, 140,076                    9,750              2,819,450
1970............................................                                                     14,943          55,909,237                    13,201              2,626,961
1971. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            2 8,686        117,782,204                    20,394              2,878,940

           Total .....................................                                              114,937         597,824, 135                 315,950              40,261,366

  1 Includes amount collected by the Department of Justice on claims re-                              them out of the adjudication workload. I t is anticipated that this flgure will
ported to that agency by QAO for possiblesuit.                                                        diminish in future years due to constant efforts on the part of OAO to dis-
  2 This figure does not include 5,234 barred Philippine claims, since Septem-                        courage the filing of this type of claim.
ber 1970, that have been handled under an improved procedure that keeps




                                                                                                                                                                               165
  EXHIBIT 7




                                          U S GENERAL ACCOUNTING OFFICE.
                                  STATEMENT OF ASSETS. LIABILITIES. AND INVESTMENT
                                                  JUNE 30. 1971

                                                                                                       ASSETS

Funds in U S . Treasury:
    Appropriated funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   $4, 108, 889
   Deposit funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  800. 796
                                                                                                                                                                                                  $4.909. 685
Cash onhand and in transit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        213
Employees’ travel advances......                                                                                                                                                                     435. 569
Accounts receivable. . . . .                                                                                                                                                                          97. 584
Inventory of supplies. . . .                                                                                                                                                                          94. 871
Furniture, fixtures and eq           ..........................................................
    Less: Accumulated d
                                                                                                                                                                                                   1.345. 458
Legal Library books (Estimated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        144. 000
Prepaidexpenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            18. 611

               Totalasse ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7,045, 991


                                                                             LIABILITIES AND INVESTMENT

Accountspayable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         $2.607. 132
Accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       1.285. 964
Funds held for others. principally employees’ tax and other payroll deductions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                     800. 796
Liability for accrued annual leave of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                5.832. 898
    Less: Amount to be financed from future appropriations....                                                                                                               5.832. 898

        Totalliabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            4.693. 892
Investment of U.S. Government (Exhibit 8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                              2.352. 099

              Total liabilities and investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   7.045. 991




166
                                                                                                                                                                                            EXHIBIT 8




                                   U.S. GENERAL ACCOUNTING OFFICE
                         SUMMARY OF CHANGES IN INVESTMENT OF U.S. GOVERNMENT
                                  FISCAL YEAR ENDED JUNE 30, 1971

Balance, July 1, 1970.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      $1,639,570
Add :
    Legal Library books (not previously included in investment of U.S.Government). . . . . . . . . . . . . $144,000
    Appropriation for salaries and expenses, 1971. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            79,987,364
    Reimbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               131,187
                                                                                                                                                                                             80,262,551

         Total .............................                                                                                                                                          ... 81,902, 121
Deduct:
    Operating expenses, 1971 (Exhibit 9). . . . . .
    Less: Amount of annual leave earned by employees and included in operating expenses, which
                                                                                                                            .............                            . . . . -474,999
                                                                                                                               ..........                            ....      156,451


                                                                                                                                                                                             79,550,022

              Balance, June 30, 1971 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2,352,099

Composition of balances:
       Investment in:                                                                                                                                                       July 1 , 1970    June 30,1971
           Inventories of supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                              ....                               $64,010           $94,871
           Furniture, fixtures, and equipment. . . . .
           Legal Library books.. . . . . . . . . . . . . . . . .                                                   ...........
       Funds reserved for payment of unfilled orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                 410,640           767, 770

                  Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1,639,570         2,352,099




                                                                                                                                                                                                    167
       449-406 0    - 72 - 12
     EXHIBIT 9




                                                            U.S. GENERAL ACCOUNTING OFFICE
                                                           SUMMARY OF OPERATING EXPENSES
                                                           FISCAL YEAR ENDED JUNE 30, 1971

                                                                                                                                          Em3loyees
                                                                                         Total                  SalariRs                   benefits                   Travel            Other


Office of the Comptroller General.. . . . . . . . . . . .                            $791,013                  $689,812                    $53,907                   $19,477          $27,817
Office of the General Counsel. . . . . . . . . . .                                  3,430,287                3,034,247                     243,639                    14,077          138,324
Office of Administrative Services. . . . . . . . . . . . . .                        2,334, 181               1,758,585                     221,906                    14,290          339,400
Office of Personnel Management. . . . . . . . . . .                                    978,230                  785, 169                    53,677                    47,491           91,893
Office of Policy and Special Stu                                                    2,585,065                2, 187,015                    188,362                    58,747          150,941
Civil Division.. . . . . . . . . . . . . . .                                       11, 771,694              10, 316, 715                   847, 108                  31 1,357         296,514
Defense Division. . . . . . . . . . . . . . . . . . . . . . . . . . . .             6,350,016                5,543,274                     450,670                   185,951          170,121
International Division:
     Washington, D.C. . . . . . . . . . . . . . . . . . . . . . .                  2,978,614                 2,508,219                   209,057                    181,999            79,339
                                                                                   1,817,750                 1,093,380                    143,069                  224,3 18           356,983
     Far East Branch. . . . . . . . . . . . . . . . . . . .                        2,067,357                 1,299,621                   227, 127                  320,163            220,446
Field Operations Division, . . . . . . . . . . . . . . .                          33,684, 711               27, 107,846                2,243,716                 3,588,393            744, 756
Claims Division. ........                               .......                    1, 706, 192               1,538,829                    124,348                     1,546            41,469
Transportation Division. . . . . . . . . . . . . . . . . . . .                     8,669,302                 7,767,242                   635,055                     28,076           238,929
Data Processing Center. . . . . . . . . . . . . . . . . . . . . .                     589,225                   390,358                    31,533                        90 1         166,433

          Total.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      79, 753,637              66,020,312                 5,673, 174                4,996,786          3,063,365
~~                                                  ~




Reconciliation of accrued expenditures for year with total expenses:
    Accrued expenditures. . . . . . . . . . . . . .
    Add :
         Increase in accrued annual leave liability
         Depreciation of furniture, fixtures, and equ                    ................................................
    Deduct:
         Purchases of furniture, fixtures, and equipment. . . . . .                                                                                      .........                  -359,040
         Increasein inventory ofsupplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 -30,862

                      Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   79,753,637




168
                                                                                                                                                                                                 EXHIBIT 10




                                          U.S. GENERAL ACCOUNTING OFFICE
                                   SUMMARY OF SOURCES AND APPLICATION OF FUNDS
                                         FISCAL YEAR ENDED JUNE 30, 1971

Sources of funds :
    Appropriation for salaries and expenses, 1971 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                  $79,987,364
    Reimbursements. .                                                                        .....                            ..........                    .............                              131, 187
    Funds carried over                                                                     aced i                             ut filled in
      current year.. . . . . . . . . . .                                            .........                             ............                          ...........                            410,640
    Receipts for audit services.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        388,602
    Other receipts                                                                ..........                                ...........                     .............                               53,486

                 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      80,971,279

Application of funds:
   Accrued expenditures:
         Expenses . . . . . . . . . .                                                                 ........
         Purchase of furniture                                                                        .................................                                             359,040
                                                                                                                                                                                        -          $79,490,037
      Funds reserved at the yearend for payment of unfilled orders. .                                                           ....                                                                   767,770
      Unobligated balance of 1971 appropriation lapsed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                          156,451
      Funds returned to                                         s for prior year orders exceeded cost or were
        recovered. . . . . .                                     ................                           ..........                                                                                 114,933
      Receipts deposited                ry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                                                             442,088

                 Total.      ..................................                                           ...           ........                                                           .....     80,971,279
                                                                                                                                                                                                 -




                                                                                                                                                                                                           169
EXHIBIT 11


             U . S . G E N E R A L ACCOUNTING O F F I C E REGIONS




170
                                                                                                         EXHIBIT 12




                        DIRECTORY OF THE FIELD OPERATIONS DIVISION
                                      OCTOBER 1971

                    HEADQUARTERS                               Army Audit Staff
John E. Thornton, Director                    202-386-4467     Daniel V. Loesch, Auditor in Charge       317-542-2870
Stewart D. McElyea, Deputy Director                            Fort Benjamin Harrison
Room 6124                                                      Indianapolis, Ind. 46216
U.S. General Accounting Office Building                      Dallas
441 G Street NW.
                                                             Walton H. Sheley, Jr., Regional Manager      214-749-3437
Washington, D.C. 20548
                                                             Deon H. Dekker, Assistant Regional Manager
                                                             Paul C. delassus, Assistant Regional Manager
                 REGIONAL OFFICES
                                                             James J. Jodon, Assistant Regional Manager
Atlanta                                                      Room 500, 1512 Commerce Street
Richard J. Madison, Regional Manager          404-526-6872   Dallas, Tex. 75201
James E. Ballou, Assistant Regional Manager                    New Orleans Subofice
Kyle E. Hamm, Assistant Regional Manager
                                                               Jimmy J. Bevis, Assistant Regional Manager 504-527-61 15
Room 204, 161 Peachtree Street NE.
                                                               Room T-8040 Federal Office Building
Atlanta, Ga. 30303
                                                               701 Loyola Avenue
Boston                                                         New Orleans, La. 701 13
Joseph Eder, Regional Manager                617-223-6536    Denver
Nicholas Carbone, Assistant Regional Manager                                                             303-837-4621
                                                             Irwin M. D’Addario, Regional Manager
Paul M. Foley, Assistant Regional Manager
                                                             J. Philip Horan, Assistant Regional Manager
Louis Lucas, Assistant Regional Manager                      John E. Murphy, Assistant Regional Managcr
Room 1903, John F. Kennedy Federal Building
                                                             Room 7014 Federal Office Building
Government Center
                                                             1961 Stout Street
Boston, Mass. 02203                                          Denver, Colo. 80202
Chicago
                                                               Air Force Audit Staff
Myer R. Wolfson, Regional Manager           312-353-6174       Walter A. Virbick, Auditor in Charge      303-825-6575
Kenneth W. Hitzeman, Assistant Regional Manager                3800 York Street
Medford S. Mosher, Assistant Regional Manager                  Denver, Colo. 80205
Room 403, Custom House Building
610 South Canal Street                                       Detroit
Chicago, Ill. 60607                                          Charles H. Moore, Regional Manager           313-226-6044
  St. Paul Subofice                                          Franklin A. Curtis, Assistant Regional Manager
                                                             Room 2006, Washington Boulevard Building
  Orlaf B. Hylle, Auditor in Charge     612-725-7844         234 State Street
  Room 1407, US.Post Office and Custom House                 Detroit, Mich. 48226
  St. Paul, Minn. 55101
                                                               Cleveland Subofice and Navy Audit Staff
Cincinnati                                                     John A. Dowell, Assistant Regional Manager 216-522-4892
David P. Sorando, Regional Manager            513-684-2107     Room 2933, New Federal Office Building
Walter C. Herrmann, Jr., Assistant Regional Manager            1240 East Ninth Street
Elmer Taylor, Jr., Assistant Regional Manager                  Cleveland, Ohio 44199
Room 81 12 Federal Office Building
Fifth and Main Streets                                       Kansas City
Cincinnati, Ohio 45202                                       Kenneth L. Weary, Jr., Regional Manager      816-374-5056
                                                             Arnett E. Burrow, Assistant Regional Manager
  Dayton Subofice                                            Kenneth F. Luecke, Assistant Regional Manager
  Arthur E. Fulmer, Auditor in Charge       513-255-4505     1800 Federal Office Building
  MCLAGA, Building 11, Room 238, Area B                      91 1 Walnut Street
  Wright-Patterson Air Force Base, Ohio 45433                Kansas City, Mo. 64106

                                                                                                                   171
EXHIBIT 12

  St. Louis Subofice                                          San Francisco
  Clifford I. Gould, Assistant Regional Manager               Alfred M. Clavelli, Regional Manager         415-556-6200
  Room 1740, 1520 Market Street             314-622-4121      Harold J. D’Ambrogia, Assistant Regional Manager
  St. Louis, Mo. 63103                                        Kenneth A. Pollock, Assistant Regional Manager
                                                              Charles F. Vincent, Assistant Regional Manager
Los Angeles
                                                              143 Federal Office Building
Jerome H. Stolarow, Regional Manager         2 13-688-38 13   50 Fulton Street
Samuel Kleinbart, Assistant Regional Manager                  San Francisco, Calif. 94102
Edwin J. Kolakowski, Assistant Regional Manager
Dominic F. Ruggiero, Assistant Regional Manager               Seattle
Room 7068, Federal Building                                   William N. Conrardy, Regional Manager       206-442-5356
300 North Los Angeles Street                                  3086 Federal Office Building
Los Angeles, Calif. 90012                                     909 First Avenue
                                                              Seattle, Wash. 98104
New York
Alfonso J. Strazzullo, Regional Manager       2 12-264-0730     Portland Subofice
Herbert E. Larson, Assistant Regional Manager                   Charles L. Perry, Assistant Regional Manager
Thomas A. McQuillan, Assistant Regional Manager                 Parker Building, 2nd Floor                503-226-1474
Valentine D. Tomicich, Assistant Regional Manager               527 East Burnside
Room 41 12, 26 Federal Plaza                                    Portland, Oreg. 97214
New York, N.Y. 10007
                                                              Washington
Norfolk
                                                              Hyman L. Krieger, Regional Manager           703-557-2151
Walter H. Henson, Regional Manager           703-441-6298     George L. Egan, Jr., Assistant Regional Manager
Ernest W. Taylor, Assistant Regional Manager                  Robert W. Hanlon, Assistant Regional Manager
Room 226,870 North Military Highway                           Penn Park Building
Norfolk, Va. 23502                                            803 West Broad Street
                                                              Falls Church, Va. 22046
Philadelphia
James H. Rogers, Jr., Regional Manager       2 15-597-4333
Milton H. Harvey, Assistant Regional Manager
Maurice Sady, Assistant Regional Manager
502 U S . Custom House
Second and Chestnut Streets
Philadelphia, Pa. 19106




172
                                                             INDEX

                                 A                                 Air Force, Department of the-Continued
                                                                     Decisions involving, 132
    Access to records. (See Records.)                                International activities, 108, 109
    Accounting principles and standards:                             LITE, 135
       Prescribed by the Comptroller General, 45                     Maintenance, repair, and overhaul, 93
       Review and approval of statements of, 6,46                    Research and development, 88
    Accounting systems :                                             Supply management, 92
      Designs, review and approval of, 6,46                        Air National Guard, 75
      Development of, 45
                                                                   Alaska Railroad, 117
         Air Force, Department of the, 46
                                                                   Alcoholism program for Federal civilian employees, 5, 17,
         Defense, Department of, 6, 46
                                                                     80, 159
         Defense Supply Agency, 46
                                                                   American Merchant Marine, 117
         District of Columbia Government, 26
                                                                   Appalachian Regional Commission, 30, 70
         General Services Administration, 162
                                                                   Architect of the Capitol, 81, 132, 158
         Navy, Department of the, 46
                                                                   Armed Forces Institute, U.S.,  96
          Special report to Congress on, 47
                                                                   Army Audit Agency, 88,96
      Reports on:
                                                                   Army Corps of Engineers, 35,36,57,93
         Customs, Bureau of, 70
                                                                   Army, Department of the :
          Immigration and Naturalization Service, 65
                                                                     Army Audit Agency, 88,96
         State, Department of, 110
                                                                     Audit reports issued, 163
          Urban Mass Transportation Administration, 69
                                                                     Claims collection, 5 1
    Accounts, Bureau of, 123
                                                                     Decisions involving, 132
    Accrual accounting in the Federal Government, 43,45
                                                                     Facilities and construction, 93
    ACTION, 47
                                                                     International activities, 104, 109
    Administrative Office of the U.S. Courts, 81
                                                                     Legislative recommendations, 28, 34, 36
    Advisory Council on Urban Transportation, 131
                                                                     Maintenance, repair, and overhaul, 15,93
    Agencies, assistance to, 6,43, 118, 125
'                                                                    Manpower utilization, 96
    Agency for International Development, 47, 101, 103, 106,
                                                                     Military pay and allowances, 95
       132
                                                                     Procurement, 18
    Agricultural Stabilization and Conservation Service, 53, 57
                                                                     Research and development, 12, 16,86,87,88
    Agriculture, Department of:                                      Supply management, 91,92
      Activities transferred to Environmental Protection Agency,     Weapons systems, 34
         73                                                        Army National Guard, 95
      Agricultural Stabilization and Conservation Service, 53,     Army Tank Automotive Command, 91
         57                                                        Army Transportation School, U.S., 118
      Audit reports issued, 53                                     Asian Development Bank, 106
      Automatic data processing activities, 49                     Assistant Comptroller General, new title, 1, 19
      Commodity Credit Corporation, 55                             Atomic Energy Commission:
      Decisions involving, 132                                       Activities transferred to Environmental Protection Agency,
      Farmers Home Administration, 35,55                                73
      Federal Crop Insurance Corporation, 57                         Audit reports issued, 70
'     Financial management system, 47                                Decisions involving, 132
      Forest Service, 29,56,57                                       GAO work in the agency, 17,2 1,70
      GAO work in the Department, 15,53                              Legislative recommendations, 33
      International activities, 103                                  Research and development, 33
      Joint Agency Transportation Study, 118                       Audit reports:
      Legislative recommendations, 29, 34, 35                        Number issued, 5, 163
      Military equipment shipped back from Vietnam, standards          Civil, 53, 163
         for, 93                                                       Defense, 85, 163
    Air Force, Department of the:                                       International, 99, 163
      Accounting systems design, 46                                    Legislative, 81, 163
      Audit reports issued, 163                                        Transportation management reviews, 116

                                                                                                                  173
                                                         INDEX

Audit reports-Continued                                     Claims-Continued
  ToCongress,4, 5, 15, 16, 17, 137, 163                       By the United States, 7, 18, 125, 165
Audit work:                                                   Collection, GAO report on, 16, 51
  Civil operations and programs, 53                           Settlements:
  Defense operations and programs, 83                            General, 7, 121, 165
  International operations and programs, 99                      Transportation, 7, 113, 115, 164
  Legislation enacted during F.Y. 1971 affecting, 156         Waiver of, 125, 126
  Legislative and judicial branches, 80                     Coast Guard, U.S., 69, 133
  Multiagency reviews, 79                                   Commerce, Department of:
  Organizations outside the Federal Government, 81            Audit reports issued, 57
  Other civil departments and agencies, 79                    Census, Bureau of the, 49
 Regulatory agencies, 79                                      Decisions involving, 132
 Transportation management reviews, 116                       Economic Development Administration, 58
Automatic data processing equipment:                          GAO work in the Department, 57
  Acquisition and use, 5, 27, 31, 49, 73                      Joint Agency Transportation Study, 118
    Agriculture, Department of, 49                            Legislation enacted during F.Y. 1971 affecting, 161
    Census, Bureau of the, 49                                 Maritime Administration, 58, 132
    Congress, 11, 13                                          National Bureau of Standards, 50,58, 133
    Defense, Department of, 49                                Secretary, Office of the, 58
    General Services Administration, 31,50, 73, 74          Commission on Budget Concepts, President’s, 43,45
    Government Printing Office, 8 1                         Commission on Government Procurement, 20
    House of Representatives, 13                            Commission on Railroad Retirement, 13
    Postal Service, US., 49                                 Commodities produced by the handicapped, 159
    Social Security Administration, 4Y                      Commodity Credit Corporation, 55
    State, Department of, 110                               Communications, military, administration of, 97
    Treasury, Department of the, 49                         Community Development Corporation, 160
    Veterans Administration, 49                             Comptroller of the Currency, 70
 Training programs pertaining to, 49                        Congress, assistance to the, 4, 11
                                                              Assignment of staff to committees, 4, 12, 20
                             B                                Audits of House and Senate activities, 27,80
                                                              GAO liaison with Congress, 14
Balance-of-payments position, U.S., 102, 103, 104, 109        Hearings, testimony of GAO representatives, 4, 24
Bid protests, 4, 131, 132                                     Legal and legislative matters, 2 1
Bonneville Power Administration, 36, 65                       Legislation, pending, reports an, 4
Budget, Bureau of the, 1,45, 79                               Legislation, recommendations for, 27
   ( S e e also Management and Budget, Office of.)            Reports to, 4,5, 15, 16, 17, 136, 163
Budget Concepts, President’s Commission on, 43, 45          Congressional Research Service, 13
Bureaus. (See other part of name.)                          Contract prices, negotiation of, 89
                                                            Contractor profit study, 4, 14, 16,26,89
                             C                              Contracts, decisions involving, 131
                                                            Corps of Engineers, Army, 35,36,57,93
Capitol Guide Force, 81                                     Cost Accounting Standards Board, 25, 26, 89, 150, 161
Capitol Guide Service, 158                                  Cost accounting systems, 5, 94
Census, Bureau of the, 49                                   Court of Claims, U.S., 117, 135
Central American Common Market, 102
                                                            Customs, Bureau of, 70, 131
Children’s Bureau, 62
Civil Aeronautics Board, 79
Civilian pay and allowances, 95, 129
                                                                                      D
Civilian personnel, decisions involving, 129                Debt claims, 124, 126
Civil Service Commission, US.:                              Debtcollections, 7, 115, 117, 121, 124, 126
  Audit reports issued, 72                                  Decisions, 4, 6, 21, 129, 136
  Automatic data processing training programs, 49           Defense Communications System, 96
  Decisions involving, 131, 132                             Defense Contract Audit Agency, 75, 85, 160
  Financial management system, 47                           Defense, Department of. (See also Air Force, Army, and
  GAO work in the agency, 62, 72                                Navy. 1
  JFMIP, participation in, 47                                 Accounting systems designs, 6, 46
  Performance evaluation program, 147                         Accrual accounting, 45
  Training programs, 49,96, 145, 146                          Audit reports issued, 85, 163
Claims:                                                       Automatic data processing activities, 49
  Against the United States, 7, 18, 121, 165                  Communications, administration of, 97

174
                                                               INDEX

Defense, Department of-Continued                                   Federal Aviation Administration, 68,69
  Contractor profit study, 4, 14, 16, 26, 89                       Federal Bureau of Investigation, 47
  Contract prices, negotiation of, 89                              Federal Columbia River Power System, 36,65
  Cost accounting systems, 5, 94                                   Federal Communications Commission, 79, 132
  Decisions involving, 132, 134                                    Federal credit unions, 157
  Education and training programs, 96                              Federal Crop Insurance Corporation, 57
  Facilities and construction, 93                                  Federal Deposit Insurance Corporation, 6,40, 79
  GAO work in the Department, 16,83                                Federal grants, legislation affecting, 159, 161
  International activities, 103, 104, 106, 108                     Federal Highway Administration, 69
  Legislative recommendations, 28, 29, 33, 35                      Federal Home Loan Bank Board, 79
  Maintenance, repair, and overhaul, 93                            Federal home loan banks, 79
  Manpower utilization, 95                                         Federal Home Loan Mortgage Corporation, 156
  Military assistance training programs, 33, 104                   Federal Housing Administration, 64, 132
  Pay and allowances :                                             Federal Maritime Administration, 73
     Civilian, 95, 129                                             Federal National Mortgage Association, 64
     Military, 95, 134                                             Federal Power Commission, 79
  Procurement, 5, 15,88                                            Federal Prison Industries, Inc., 65
     “Should cost” concepts, 5, 25, 28,88                          Federal Railroad Administration, 69
  Records, denial of access to, 6, 13, 111                         Federal Reserve banks, 70,8 1
  Research and development, 18,33,85,86                            Federal Savings and Loan Insurance Corporation, 79
  Supply management, 9 1                                           Federal-State Extended Unemployment Compensation Pro-
  Training programs, 96                                              gram, 156
  Transportation management reviews, 116                           Federal Trade Commission, 79
  Transportation suits involving, 7, 117                           Federal Water Quality Administration, 30,39,40,64, 73
  Vietnam, phasedown of U.S. military activities in, 92            Financial management in the Federal Government:
  Weapons systems, 5, 25, 27, 83,86                                  GAO assistance to agencies for improvement in, 6,43
Defense industry profit study, 4, 14, 16, 26,89                      Joint Financial Management Improvement Program, 43,
Defense Supply Agency, 46, 91, 127, 132                                47, 118
Department. (See other part of name.)                                Reviews of, 5 1
Deputy Comptroller General, 1, 19                                  Financial savings attributable to the work of GAO, 4
Directory of the Field Operations Division, 17 1                   Financial statements, confidential (Senate Rule 44), 13
Disabled American Veterans National Headquarters, 8 1              Financial statements of GAO, 166, 167, 168, 169
District Court for the District of Columbia, 19                    Food for Peace, 103
District Courts, US., 118, 135                                     Foreign assistance programs, 32, 101, 161
District of Columbia Court of Appeals, 134                         Foreign currency, 5, 33, 103
District of Columbia Government, 26, 72, 132                       Forest Service, 29,56,57

                                E                                                              G
Economic Development Administration, 58                            General Accounting Office:
Economic Opportunity, Office of, 12, 15,47,77, 132, 161              Administrative Services, Office of, 148, 149, 168
Education and training programs, military, 96                        Appropriations for, 162
Education, Office of, 59, 127                                        Civil Division, 9,53,54, 168
Educator-consultants, 146                                            ClaimsDivision, 121, 122, 123, 124, 125, 126, 127, 148,
Electronic data processing. (See Automatic data processing.)            150, 168
Emergency rail services, 159                                         Comptroller General, Office of the, 168
Employees. (See Personnel.)                                          Data Processing Center, 168
Engraving and Printing, Bureau of, 70                                Defense Division, 83, 84,85, 168
Environmental Control Administration, 73                             Evaluation and history, 153
Environmental Protection Agency, 30,39,40, 64, 73                    Field Operations Division, 168, 170, 171
European Branch, GAO, 99, 168                                        Financial and General Management Studies, Division of, 9
European Economic Community, 104                                    Fiftieth anniversary, 1
Exchange Stabilization Fund, 160                                     Financial statements of, 166, 167, 168, 169
Export-Import Bank of the United States, 25,26, 11 1                 General Counsel, Office of the, 6, 129, 130, 168
                                                                     International Division, 99, 100, 168
                                F                                   Joint Agency Transportation Study, 118
                                                                    JFMIP, participation in, 43,47
Facilities and construction, military, 93                           Legislation enacted during F.Y. 1970 relating to the work
Far East Branch, GAO, 99,168                                           of, 11, 19, 156
Farmers Home Administration, 35,55                                  Legislation proposed, effect on, 19

                                                                                                                          175
                                                           INDEX
General Accounting Office-Continued                             Home Loan Mortgage Program, 156
   Legislative Liaison, Office of, 14                           House of Representatives, U.S., 1, 13, 20, 23, 26, 27, 81,
   Manual for Guidance of Federal Agencies, 45, 119, 126, 127     156
   Operating expenses, 7                                        Housing and Urban Development, Deparhnent of:
   Organization, changes in, 7                                    Audit reports issued, 62
  Organization chart, 8                                          Decisions involving, 132
  Personnel Management, Office of, 139, 140, 148, 168             Federal Housing Administration, 64
  Policy and Program Planning, Office of, 7, 9                    Federal National Mortgage Association, 64
  Policy and Special Studies, Office of, 9, 43, 44, 168           GAO work in the Department, 15,62,67
  Program Planning Staff, 9                                       Government National Mortgage Association, 64
  Recruiting, 139, 141                                            Legislation enacted during F.Y. 1971 affecting;, 160
  Regional offices, 170, 171                                      Wage data on residential construction, 67
  Staffing development, 7, 139, 141
  Training, 7, 139, 141, 145                                                                   I
  Transportation Division, 113, 114, 148, 168
General Government matters, decisions on, 134                    Immigration and Naturalization Service, 41,65
General Services Administration :                                Indian Affairs, Bureau of, 65
  Accounting system, 162                                         Interagency and trade programs, 102
  Audit reports issued, 73                                       Inter-American Development Bank, 26, 106
  Automatic data processing equipment, acquisition of, 3 1,      Intergovernmental programs and operations, 48
                                                                 Interior, Department of the:
    50, 73, 74
  Decisions involving, 24, 131, 132                                 Activities transferred to Environmental Protection Agency,
  GAO work in the agency, 73                                          73
  General Supply Fund, 40                                          Audit reports issued, 64
  Joint Agency Transportation Study, 118                           Bonneville Power Administration, 36, 65
  Legislative recommendations, 3 1, 41, 50                         Decisions involving, 132
  Office machines, servicing of, procedures concerning, 78          Federal Columbia River Power System, 36,65
  Procurement regulations, 131                                      Federal Water Quality Administration, 30, 39, 40, 64, 73
  Supply management, 91                                            GAO work in the Department, 64
                                                                   Indian Affairs, Bureau of, 65
General Supply Fund, 40
Government National Mortgage Association, 64                       Land Management, Bureau of, 37
Government Printing Office, 81, 132                                Legislative recommendations, 29,31,36, 37, 38
Government Procurement, Commission on, 20                          Mines, Bureau of, 65
Government Services, Inc., 81                                      National Park Service, 29, 38,56
Grants to States, legislation affecting, 159                       Reclamation, Bureau of, 37, 57, 65
                                                                   Southwestern Federal Power System, 65
                             H                                     Trust Territory of the Pacific Islands, 160
                                                                   Virgin Islands Government, 65
Health, Education, and Welfare, Department of:                     Water resources projects, 37
 Activities transferred to Environmental Protection Agency,     Internal auditing, 49, 51
    73                                                          Internal Revenue Service, 38,39,70, 132
 Audit reports issued, 58                                       International activities, 5, 99
 Children’s Bureau, 62                                             Agency for International Development, 47, 101, 103, 106,
 Decisions involving, 2 1, 132, 134                                   132
 Education, Office of, 59, 127                                     Agriculture, Department of, 103
 Environmental Control Administration, 73                          Audit reports issued, 99, 163
 GAO testimony concerning, 21, 25, 26                              Defense international activities, 103, 104, 106, 108
 GAO work in the Department, 17, 58,67                             Export-Import Bank of the United States, 25, 26, 111
 Joint Agency Transportation Study, 118                            Food for Peace, 103
 Legislation enacted during F.Y. 1971 affecting, 159               Foreign assistance programs, 32, 101, 161
 Medicaid, 5, 61, 62                                               Interagency and trade programs, 102
 Medicare, 5, 61, 62                                               International organizations and institutions, 104
 National Air Pollution Control Administration, 73                 Military assistance training programs, 33, 104
 National Cancer Institute, 59                                     Peace Corps, 47, 110, 111
 National Institutes of Health, 58, 132                            State, Department of, 101, 102, 105, 110
 National Library of Medicine, 58                                  Treasury, Department of the, 105,106,111
 Public Health Service, 21, 25, 26, 93, 134, 160                   U S . Information Agency, 47, 111
 Social and Rehabilitation Service, 61                          International organizations and institutions, 104
 Social Security Administration, 49,61,62, 117                  Interstate Commerce Commission, 79, 117, 135
 Teacher corps, 15, 29, 60                                      Interstate Highway System, 69

176
                                                         INDEX

                            J                                 Management and Budget, Office of-Continued
                                                               Legidation enacted during F.Y. 1971 affecting, 11, 13,
Job Opportunities in the Business Sector program, 5, 15, 66        155, 157
Joint Agency Transportation Study, 51, 118, 135                Recommendations concerning, 16, 50, 79, 89, 95, 103
Joint Financial Management Improvement Program, 43, 47,        Reports to, 6, 18, 136, 137
   118                                                        Manpower Administration, 161
Judicial branch audits, 80                                    Manpower training programs, reviews of, 5
Judicial Conference of the United States, 81                  Manpower utilization, military, 95
Justice, Department of:                                       Marine Corps, 91, 132
  Assistance to, 7, 113, 117, 118, 135                        Maritime Administration, 58, 132
  Audit reports issued, 65                                    Medicaid, 5, 61,62
   Claims reported to for collection, 7, 16, 117, 125, 165    Medicare, 5, 61, 62
  Dacisions involving, 132                                    Metroliner and Turbo-Train projects, 6, 69
   Federal Prison Industries, Inc., 65                        Military Airlift Command, 115
   GAO work in the Department, 65                             Military assistance training programs, 33, 104
   Immigration and Naturalization Service, 41,65              Military pay and allowances, 95, 134
   Legislative recommendations, 4 1                           Military personnel, decisions involving, 134
   U.S. Marshals, 41                                          Military Sealift Command, 113
                             L                                Military Sea Transportation Service, 113
                                                              Military Traffic Management and Terminal Service, 117,
Labor, Department of:                                           118
  Audit reports issued, 66                                    Mines, Bureau of, 65
  Decisions involving, 132                                    Mint, Bureau of the, 41
  GAO testimony concerning, 26,66                             Multiagency reviews, 79, 163
  GAO work in the Department, 66
  Job Opportunities in the Business Sector program, 5, 15,                                N
    66
  Manpower Administration, 16 1                               National Advisory Council on International Monetary and Fi-
  Special Impact program, 66                                    nancial Policies, 105
  Transportation field, assistance in, 118                    National Aeronautics and Space Administration :
  Unemployment data, 58                                         Audit reports issued, 74
Land Management, Bureau of, 37                                  Decisions involving, 132, 133
Legal services, 6, 129, 135                                     Financial management system, 47
  Assistance in the field of transportation, 117                GAO work in the agency, 18, 74
  Assistance to agencies, 135                                   Legislative recommendations, 31, 33
  Assistance to Congress, 6, 21                                 Research and development, 33
  Decisions and other legal matters handled during F.Y.       National Air Pollution Control Administration, 73
     1971, 6, 136                                             National Bureau of Standards, 50,58, 133
  Legislation, pending, 6, 18                                 National Cancer Institute, 59
  Reference assistance, 135                                   National Guard Bureau, 95
Legislation enacted during F.Y. 1971 relating to GAO, 156     National Institutes of Health, 58, 132
Legislation, pending, 4, 18                                   National Library of Medicine, 58
Legislation, recommendations for, 27                          National Park Service, 29, 38,56
Legislative branch audits, 27, 80                             National Radio Astronomy Observatory, 76
Legislative reorganization, 11, 13, 155, 157                  National Railroad Passenger Corporation, 160
Library of Congress, 13,8 1                                   National Science Foundation, 47, 76
                                                              National Water Commission, 131
                             M                                Naval Air Reserve, 95
                                                              Naval Facilities Engineering Command, 93
Maintenance, repair, and overhaul, military equipment, 93
                                                              Navy, Department of the :
Management and Budget, Office of:
                                                                Accounting systems design, 46
 Automatic data processing equipment, acquisition of, 50
                                                                Audit report5 issucd, 163
 Budgetary policies, GAO liaison on, 148, 149                   Contract prices, negotiation of, 90
 Criteria for Government rents prescribed by, 78                Decisions involving, 132
 Fees and charges for furnishing services, guidelines on,       Facilities and construction, 93
    79                                                          International activities, 108
 Government-owned cars, comments on replacement stand-          Maintenance, repair, and overhaul, 95
    ards for, 74                                                Research and development, 86,87,88
 Joint Agency Transportation Study, 118                         Supply management, 92
 JFMIP, participation in, 47                                  Neighborhood Health Services program, 15, 77

                                                                                                                    177
                                                         INDEX

                             0                                Securities and Exchange Commission, 79
                                                              Securities Investor Protection Corporation, 20
Offices. (See other part of name.)                            Selective Service System, 77
Organization for Economic Cooperation and Development,        Senate, US., 20,22,25,80, 158
  99                                                          Small Business Administration, 18, 7 7
Organization of American States, 105                          Smithsonian Institution, 26
Organizations outside the Federal Government, 81, 163         Social and Rehabilitation Service, 61
                                                              Social Security Administration, 49, 61, 62, 117
                             P                                Southwestern Federal Power System, 65
                                                              Special Impact program, 66
Pacific Island Trust Territory, 160                           Staff development, GAO, 139, 141
Panama Canal Company, 132                                     Standardized information and data processing system, 11,
Pay and allowances :                                             13, 155, 157
  Civilian, 95, 129                                           State, Department of:
  Military, 95, 134                                             Accounting system, 110
Payment claims, 121, 126                                        Audit reports issued, 110
Pay, waiver of claims for erroneous payment of, 125, 126        Automatic data processing activities, 110
Peace Corps, 47, 110, 111
                                                                Decisiotls involving, 132
Personnel :
                                                                GAO work in the Department, 110
  Administration, 139
  Assigned to congressional committees, 4, 12, 20               International activities, 101, 102, 105, 110
  Operations, 147                                               Legislative recommendations, 33
  Professional recognition, 146                                 Payment and debt claims, 126
  Recruiting, training, and staff development, 139              Records, denial of access to, 6, 13, 111, 161
  Statistics, 142                                             Supply management, military, 17, 91
Postal Service, U.S., 49, 113, 117, 118, 134, 156             Susquehanna River Basin Commission, 160
Post Office Department, 6, 18,67, 118, 132, 134
Presidential transitions, Federal assistance for, 32                                     T
President’s Commission on Budget Concepts, 43, 45
Procurement, military, legislation affecting, 160             Tax Court, US., 81
Procurement reviews, 5, 15, 85, 88                            Teacher Corps, 15, 29, 60
Public Health Service, 21, 25, 26,93, 134, 160
                                                              Tennessee Valley Authority, 79, 132
                                                              Trade programs, international, 102, 103
                            R                                 Traffic and transportation field, GAO assistance in, 118
Railroad Retirement Board, 62                                 Training and career development, GAO, 7, 139, 141, 145
Reclamation, Bureau of, 37, 57, 65                            Training, intergovernmental, 161
Records, access to:                                           Training programs, military, 95
  Denial of, 6, 13, 79, 11 1                                  Transportation activities, 6, 113
  GAO testimony on, 14, 26, 11 1                                Agencies, GAO assistance to, 118
  Legislation enacted during F.Y. 1971 affecting, 156, 159,     Audits and claims, 7, 113, 115, 164
     160, 161                                                   Collections, 7, 115, 164
Records management, 150                                         Decisions involving, 134
Recruiting, GAO, 139, 141
                                                                Justice, Department of, GAO assistance to, 7, 113, 117,
Regional offices, GAO, 170, 17 1
                                                                   118, 135
Reports :
  Audit. ( S e e Audit reports.)                                Management reviews, 116
  Draft, unauthorized release of, 14                          Transportation, Department of:
  Legislative and legal, 136                                    Audit reports issued, 68
  On claims, 18                                                 Coast Guard, U.S., 69, 133
  On pending legislation, 4, 18                                 Decisions involving, 132
  To Congress, committees, and individual Members, 4, 5,        Federal Aviation Administration, 68, 69
     15, 16, 17, 83, 136                                        Federal Highway Administration, 69
  With classified material, 14                                  Federal Railroad Administration, 69
Research and development, 6, 18, 28, 32, 79, 86                 GAO work in the Department, 68
Rural Telephone Bank, 161                                       Interstate Highway System, 69
                                                               Legislation enacted duringF.Y. 1971 affecting, 159
                            S                                   Saint Lawrence Seaway Development Corporation, 69
Saint Lawrence Seaway Development Corporation, 69               Urban Mass Transportation Administration, 69

178
                                                             INDEX

Transportation management, 5 1                                                                     U
Treasurer of the United States, 70                               United Nations, 104, 105
Treasury, Department of the:                                     U.S. Armed Forces Institute, 96
  Accounts, Bureau of, 123                                       U.S. Army Transportation School, 118
  Accrual accounting instructions, 45                            U.S. Coast Guard, 69, 133
  Audit reports issued, 70                                       U S . Court of Claims, 117, 135
  Automatic data processing activities, 49                       U.S. District Courts, 118, 135
  Comptroller of the Currency, Office of the, 70                 U S . House of Representatives, 1, 13, 20, 23,26, 27,81, 158
  Customs, Bureau of, 70, 131                                    U S . Information Agency, 47, 11 1
  Decisions involving, 132                                       US.Marshals, 41
                                                                 U.S.PostalService,49, 113, 117, 118, 134, 156
  Engraving and Printing, Bureau of, 70
                                                                 U S . Senate, 20, 22, 25, 80, 158
  Exchange Stabilization Fund, 160
                                                                 U S . Tax Court, 81
  Federal Reserve banks, 70, 81                                  Urban Mass Transportation Administration, 69
  Financial management system, 47
  GAO work in the Department, 70                                                                  V
  Internal Revenue Service, 38,39, 70, 132
                                                                 Veterans Administration, 49,78, 127, 132
  International activities, 105, 106, 111
                                                                 Vietnam, 5, 92, 101, 103, 108, 109
  Joint Agency Transportation Study, 118                         Virgin Islands Government, 65
  JFMIP, participation in, 47
  Legislation enacted during F.Y. 1971 affecting, 11, 13, 155,                                    W
     157, 160
  Legislative recommendations, 37, 38, 39                        Water pollution control, 15, 25,26, 39, 40, 73
  Mint, Bureau of the, 41                                        Water resources projects, 37,57
                                                                 Weapons systems, 5, 25, 27, 34,83,86
  Recommendations concerning, 103, 1 11
                                                                 World Bank, 105
  Treasurer of the United States, 70
                                                                 World Bank/International Development Association, 106
Trust Territory of the Pacific Islands, 160
                                                                 World Health Organization, 99




                                                                                                                                   179
                                                                              U. S. GOVERNMENT PRINTING OFFICE , 1972 0 - 4 4 9 - 4 0 6