oversight

Need To Strengthen Financial Accountability to the Congress

Published by the Government Accountability Office on 1977-03-31.

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

e    REPORT OF THE
     COMPTROLLER GENERAL
     OF THE UNITED STATES
                                                            ,~~~\~~~~~~~~~~~
                                                                LNL10029’




     Need To Strengthen Financial
     Accountability To The Congress

     Smithsonian           Institution



    Two private corporations       established by the
    Smithsonian     should be dissolved because they
    avord Federal       laws governing     appropriated
    funds and because their functions             can be
    readily carried out within       the Smithsonian
    organization.     The Congress should be kept
    better    informed     on Smithsonian       financial
    matters, including proposed uses of its private
    funds.




    GGD-7743
                                 COMPTROLLER      GENERAL    OF     THE       UNITED   STATES
                                               WASHINGTON.   D.C.     20548




    B-133332
.




    The Honorable       Robert    C. Byrd,  Chairman
    The Honorable       Ted Stevens,     Ranking
      Minority      Member, Subcommittee       on
      the Department        of the Interior       and
      Related      Agencies
    Committee      on Appropriations            -
    United    States    Senate
          This report       covers     the results       of part of the work
    we are performing          at the Smithsonian            Institution           in
    response     to your joint         request    of June 14, 1976.
                                                                                9
           Our review       disclosed      three    specific        problems         that
    have to be resolved:              (1) the Smithsonian's               distribution
    of Federal     funds to private,           nonprofit        corporations            there-
    by avoiding      fiscal      year and civil        service         restrictions,
     (2) the need for congressional               approval         of reprograming
    of funds within         the Salaries        and Expenses           appropriation,
    and (3) the need for the Congress                  to be informed               of the
    Smithsonian's        planned      use of private         funds.
            Smithsonian        officials       disagree      with our position
    that    they should        not use private,           nonprofit        corporations
    to disburse         Federal      funds,    contending       that     the corpor-
    ations       enable    them to operate          programs      efficiently         and
    effectively.           We believe       the Smithsonian           should     not
    channel       appropriated         funds through       the corporations             in
    order     to use them in a way that                it clearly         could not if
    the funds were spent directly.
           We are recommending          to the Smithsonian          Board of
    Regents     that    the Smithsonian         Research   Foundation     and
    Smithsonian        Science   Information        Exchange   be dissolved
    and that      the Smithsonian       justify      to the Congress      the
    exemptions       from existing      laws it believes        necessary
    to run effectively,          and with a minimum of red tape,
    programs      now funded     through      these corporations.
B-133332


        As you know, section      236 of the Legislative      Re-
organization     Act  of 1970 reguires      the head of a Federal
agency to submit a written         statement    on action taken on
our recommendations        to the House Committees on Govern-
ment Operations      and the Senate Committee on Government
Affairs    not later    than 60 days after the date of the
report,    and the House and Senate Committees on Appro-
priations    with the agency's       first  request for appro-
priations    made more than 60 days after the date of
this report.      We will be in touch with your office           in
the near future      to arrange for release of the report
so that the requirements         of section    236 can be set in
motion since we think the Smithsonian            as the recipient
of appropriated      funds should comply with section         236.
      The report contains     information   on a number of
other topics    in which you expressed interest.      Work
is continuing     on the Smithsonian's    cash management
and banking practices     and the fiscal    policies of the
National   Gallery of Art.




                             Comptroller  General
                             of the United States




                                2
                                   CONTENTS

                                                                  -Paue
I



        DIGEST                                                       i

    .   CHAPTER
           1      INTRODUCTION                                      1
                      Scope of Review                                4
           2      AVOIDANCE OF RESTRICTIONS ON THE USE
                    OF APPROPRIATEDFUNDS                            5
                       Why the Smithsonian       Research
                          Foundation     was established            5
                       What the Foundation       does               0
                       Financial     operations        -           12
                       Conclusions                                 13
                       Agency comments and our
                          evaluation                               13
                       Smithsonian     Science Information
                          Exchange                                 15
                       Agency comments and our
                          evaluation                               18
                       Recommendation to the Board of
                          Regents                                  18
                       Recommendation to the Secretary             19
                  THE CONGRESSNEEDS MORE INFORMATION ON
                    SMITHSONIAN FINANCES                           20
                       Reprograming of operating    funds:
                         The Congress needs to be informed         20
                       The Congress needs to know how
                         Smithsonian   private funds are
                         to be used                                24
                       Conclusions                                 30
                       Recommendations                             31
                       Agency comments                             31
                  ESTABLISHMENT OF FACILITIES AND THEIR
                    IMPACT ON FEDERAL FUNDING REQUIREMENTS         33
                      Cooper-Hewitt   Museum of Decorative
                        Arts and Design                            33
                      Chesapeake Bay Center for Environmental
                        Studies                                    40
                      Conservation   and Research Center           43
                      Smithsonian   Tropical Research Institute    45
                      Conclusions                                  47
                      Agency comments                              47
                                                                        Page
    CHAPTER
        5      OTHER MATTERS                                             48
                   Museum support facility                               48
                   Conclusion                                            50
                   Smithsonian  expanding          research    role      51
.                  Travel by Smithsonian           officials             53

    APPENDIX
        I      Letter   from the Committee        on Appropriations
                  requesting   review                                    55

        II     Application     of salary and expense funds for
                 fiscal    year 1976 and the transition   quarter        57
      III      Summary of travel    for     assistant secretaries
                 and above for fiscal        years 1974, 1975,
                 1976, and transition        quarter                     62

        IV     The role of the Secretary          of the Smithsonian
                 Institution                                             65

        V      Letter  dated March 21, 1977,          from Secretary
                 of the Smithsonian                                      75

        VI     Principal      officials      of the Smithsonian
                  Institution        responsible    for administering
                  activities       discussed     in this report         110
COMPTROLLERGENERAL'S REPORT                       NEED TO STRENGTHENFINANCIAL
TO THE SUBCOMMITTEEON THE                         ACCOUNTABILITY TO THE CONGRESS
DEPARTMENTOF THE INTERIOR                         Smithsonian Institution
AND RELATED AGENCIES
COMMITTEE ON APPROPRIATIONS
UNITED STATES SENATE
DIGEST
------
About 90 percent of the Smithsonian's    funds come from the
Government; 80 percent   in direct appropriations  and
10 percent  in grants from Federal agencies.
In requesting      GAO to review the Smithsonian         Institution's
fiscal   practices      and policies,    the Chairman and the Ranking
Minority    Member of the Appropriations          Subcommittee expressed
concern over the management and accountability                of Federal
funds.    This report covers the results           of reviews of selected
Smithsonian     activities.       Work is continuing     on other reviews
requested    by the Subcommittee.          The results   of that work will
be reported     on separately.        (See app. I and p. 4.)
GAO identified      three   specific       problems   that   have to be
resolved.
DISTRIBUTION OF FEDERAL FUNDS
---11-m-                                                                .
--I_- PRIVATE NONPROFIT-CORPORATIONS
TO
TO AVOID FEDERAL RESTRICTIONS----
                             -
The Smithsonian       established      the Smithsonian        Research
Foundation--     a private     nonprofit   corporation--to        distribute
Federal funds as a means of avoiding               restrictions      on the
use of appropriated        funds.      Funds channeled through the
Foundation      are treated     as private    funds in the hands of
recipients,      many of whom are Smithsonian            employees,      to be
spent without      regard to restrictions,          such as civil
service     laws and fiscal      year limitations.
Funds appropriated   by the Congress for the following
activities  are channeled through the Foundation:
      --Research     Awards Program.
      --Academic      and Educational        Programs.


                                                              GGD-77-43

                                       i
          --Special    Foreign    Currency        Program.
          --Woodrow    Wilson    International        Center   for   Scholars.
    About $2.3 million        was disbursed       by the Foundation      during the
    15 months ended September 30, 1976.                GAO's discussions      with
    Smithsonian     officials       show that a common reason given for
l
    disbursing     funds through the Foundation            is their desire to
    avoid the restrictions           placed on appropriated       funds.     In
    this connection        we noted that while both private           and Federal
    funds are expended by the Smithsonian               on some of these pro-
    grams, only Federal money is disbursed               through the Foundation.
    The Foundation--       consisting      of three employees and .fully con-
    trolled    by the Smithsonian--         serves no function      of consequence
    other than as a device that attempts to avoid restrictions
    relevant    to appropriated         funds.    The Smithsonian     should not
    use funds channeled through the Foundation                in a way that it
    clearly    could not if it spent the funds directly.
    The Smithsonian   Science Information     Exchange was not specifi-
    cally established    as an independent    corporation   solely     to
    avoid Federal restrictions     on the use of appropriated        funds.
    However, its corporate     form accomplishes     that purpose.       GAO
    believes  that there is no need for it to be operated          inde-
    pendent
          .  of the Smithsonian.     (See pp. 15 to 18.)
    REPROGRAMINGOF FUNDS:
    A CONTINUING PROBLEM
    For years the Smithsonian     established    a contingency    fund
    at the beginning    of each fiscal     year by withholding    about
    2 percent of the amounts budgeted for certain          line items
    under the Salaries    and Expenses appropriation.         The con-
    tingency  fund amounted to about $1 million        in fiscal
    years 1974 through 1976.      During the course of each year,
    the fund was allocated     to various programs and projects.
    Other reprogramings    of the Salaries     and Expenses appro-
    priation  also took place.
I   The Smithsonian    did not inform the Appropriations         Com-
    mittees of Salaries     and Expenses reprograming       accomplished
    through the contingency     fund or otherwise,      although    the
    Committees had expressed their desire to approve repro-
.   gramings.    Smithsonian   officials  indicated     that they were
    unsure of what actions     required  congressional      approval,
    and the matter was never satisfactorily         resolved    with the
    Committees.


                                             ii
The contingency     fund was abolished     in fiscal       year 1977 in
response to congressional      directives.         However, the
Smithsonian    can still,   as a matter of law, reprogram funds
among programs, projects,      and line items covered by its
lump sum Salaries      and Expenses appropriation.           The Appro-
priations    Committees and Smithsonian        need to reach an
understanding     as to which reprogramings         require    Committee
approval.     Otherwise the Congress has no assurance that
appropriated    funds will be spent as it intended.
In fiscal   year 1977 the Smithsonian       requested   the Committees'
permission   to reprogram a total      of $765,000 of its Salaries
and Expenses appropriation.        As of February 14, 1977, not
all requests had been approved.         The basic question    of
which reprograming     actions  require   approval had not been
resolved,   although   the Smithsonian    and the Committees were
working to develop guidelines       governing    the types of repro-
gramings requiring     Committee approval,
NEED TO INFORM
---             THE CONGRESSOF
          1_1__---
THE PLANNED USE OF PRIVATE FUNDS
Because       the Smithsonian     receives    private as well as Federal
financial        support,   it has a degree of flexibility         not
enjoyed       by Federal departments       and agencies.      The Smithsonian
is able       to undertake programs and acquire facilities             with
private       funds without prior       congressional    approval,    even
though      these may eventually        impact on the level of Federal
funding       required    to support the Smithsonian.
The Cooper-Hewitt     Museum in New York City is an example of
a new undertaking     initially    planned to be financed       solely
with private    funds but now requiring       continuing    Federal
support.     (See pp. 33 to 39.)       The large stake the Govern-
ment has in the activities        of the Smithsonian     dictates     the
need for the Smithsonian        to keep the Congress informed of
major new programs and directions,         even when formal congres-
sional approval     is not required.
Private   funds are used for the same or similar          purposes as
funds appropriated        by the Congress.     The Smithsonian   does
not provide     the Appropriations      Committees with information
on the planned uses of its private         funds and, as a result,
the Committees cannot fully         assess the impact of their
budgetary    decisions     on Smithsonian  programs and activities.
A greater    recognition     of the Congress'     need to know by
Smithsonian     officials    would go a long way to dispel


                                       iii
        congressional  concerns over the lack of accountability,   and
        do much to preserve   the operating flexibility the Smithsonian
        desires.
t
        RECOMMEtiDATIONS
        GAO recommends that    the Board of Regents,        Smithsonian
.       Institution:
             --Dissolve   the Smithsonian         Research Foundation  and
                the Smithsonian   Science        Information Exchange.
             --Provide     the Appropriations     Committees with,infor-
                mation on the planned use of private         funds when
                appropriation    requests     are submitted.
             --Establish,     in conjunction with-the   appropriate
                congressional    committees, clear policies     govern-
                ing the use of Federal and private      funds.
        GAO also recommends that     the Secretary,       Smithsonian
        Institution:
             --Propose   and justify      to the Congress the exemptions
                from existing   legislation      that the Smithsonian
                believes   it needs to run effectively,       with a
                minimum of red tape, the programs now funded
                through the Smithsonian         Research Foundation
                and the Smithsonian       Science Information    Exchange.
             --Continue  working with the Appropriations      Committees
                to reach a common understanding     as to the types of
                budget reprograming  actions   the Committees wish to
                approve in advance, and, in the interim,      continue
                seeking Committee approval    of all reprograming
                actions.
        AGENCY
        --     ACTIONS AND
        UNRESOLVEDMATTERS
.
        The Smithsonian    does not agree with GAO's position         or
        recommendations    to dissolve    the Smithsonian    Research
        Foundation    and Smithsonian    Science Information     Exchange.
    .   Smithsonian's    position   is that the Foundation      and the
        Exchange were both created with the approval of the
        Regents, the knowledge of the Congress, and meet the
        requirements    of law.    Smithsonian   officials   believe
        that the programs administered        by the Foundation     and



                                            iv
     the Exchange are administered   more efficiently       and effectively
     independent of the Smithsonian.
a.   The Smithsonian    generally    agrees with GAO's conclusions     and
     recommendations    concerning    the reprograming   of funds within
     the Salaries    and Expenses    appropriation   and with the need to
     inform the Congress of the       planned use of private    funds.
L




                                            V
                                      CHAPTER 1
                                    INTRODUCTION
t

          The Chairman and the Ranking Minority       Member, Senate
    Subcommittee on the Department of the Interior          and Related
l
    Agencies,   Committee on Appropriations,     reguested     that we
    review various   activities    of the Smithsonian    Institution,
    Washington,   D.C.      (See app. I.)
            The Congress created the Smithsonian       Instituti.on    in 1846
    to carry out the terms of the will of James Smithson of England,
    who had bequeathed his entire         estate to the United States "to
    found at Washington,        under the name of the Smithsonian        Insti-
    tution,    an establishment      for the  increase and   diffusion     of
    knowledge among men."
            After accepting     the trust property       for the United States,
    the Congress vested responsibility            for administering      the trust
    in the Smithsonian       Board of Regents composed of the Chief
    Justice,      the Vice President,      three Members of the Senate,
    three Members of the House of Representatives,                and nine
    citizen     members appointed     by joint    resolution    of the Congress.
    The Board of Regents elects          the Secretary      of the Smithsonian,
    who is the-chief       executive   officer.      The Secretary    is assisted
    by an Executive       Committee consisting       of the Assistant      Secre-
    taries     for Science, History      and Art, Public Service,        Museum
    Programs, and Administration;            the Treasurer;    the Director     of
    Support Activities;        the General Counsel; and an Executive
    Assistant.
           The Smithsonian       has become one of the world's              leading
    research     centers and largest        museum complexes.           The   Smith-
    sonian engages in a wide variety              of activities,        such as
    conducting      basic research,      explorations       and investigations;
    preserving      for study and.reference,          items of scientific,
    cultural,     and historical      interest;     maintaining        exhibits
    representative       of the arts, American history,              aeronautics,
3   space exploration,        technology,       and natural      history;     and
    engaging in programs of education              and cooperative         edu-
    cational     research with national          and international
    organizations.
1
           The Smithsonian     receives financial     support from both
    Federal and private      sources.   Federal funds are appropriated
    annually    for expenses of the various       Smithsonian   museums and
    educational     and research centers.      Excess foreign    currencies



                                              1
    are appropriated          for a separate         program     of academic           grants
    for overseas        research     projects.         Federal     funds are also
    appropriated        for renovation          and restoration         of buildings
    and for construction            and improvements.            Additional          funds
    are received        from Federal       agencies      and private         institutions
    in the form of research             grants      and contracts.           Private        funds
    are derived       from gifts,       investment        income,     the Smithsonian
    Associates      Program,       museum shops,        concession        fees,     and
    other    revenue      producing     activities.          The following          table
    summarizes      the Smithsonian’s            sources     of funds for the last
    3 fiscal     years.




c




                                               2
                                                                                                                       .




                                                           Smithsonian's Sources of Funds
                                                         For Fiscal Years 1974 through 1976



                                              Fiscal year 1974                   Fiscal year 1975      Fiscal year 1976(note   a)
      Source of funds                         Amount    Percent          .       Amount   Percent           Amount  Percent
      Federal    appropriation            $ 86,923,OOO                        $ 92,421,ooo       79     $121,076,000
      Federal research grants
        and contracts(note  b)                 9,996,OOO     - 9                12,292,ooo       11       15,512,OOO
             Total     Federal    funds $ 96,919,OOO           92             $104,713,000       90     $136;588,000
      Private    funds                         8,954,OOO           8            11,007,000       10       16,999,OOO
w            Total Federal and
               private funds              $105,873,000        100             $115,720,000      100     $153,587,000
                                           -----------        ---              -------m--m      --       -----------
                                                                                                   t
    a/Includes       new fiscal   year transition        quarter       - July     through    September 1976.
    b/The Smithsonian        classifies      these funds private             funds.
     At September 30, 1976, the Smithsonian    had a total                                of
4,625 full-time  employees  --3,487 on the Federal payroll                                and
1,138 on the private   payroll.
SCOPE OF REVIEW
       'We reviewed selected           aspects of the Smithsonian              Insti-
tution's     fiscal     policies      and practices,        selected    activities
of its affiliated           nonprofit    organizations,         and other matters
of interest       to the Subcommittee.            In addition        to reviewing
Smithsonian       activities      conducted     in Washington,         D.C., we -
visited    the following         Smithsonian      facilities:
       --Conservation        and Research          Center,      Front      Royal,
          Virginia.
       --Cooper-Hewitt        Museum, New York;              New York.                          i

       --The Chesapeake Bay Center for Environmental
          Studies near Annapolis, Maryland.
       --The museum support           facility,        Silver      Hill,
          Maryland.
       --The Smithsonian         Tropical         Research      Institute,
          Panama.
      In response to requests  from the Subcommittee,                               audit
work at the Smithsonian   is continuing.  The principal                               areas
of review are
       --banking      and cash management practices                     and
       --financial       management at the National                 Gallery
           of Art,
The results        of this   work will       be covered         in later       reports.




                                            4
                                         CHAPTER 2
                           AVOIDANCE OF RESTRICTIONS ON
.
                           THE USE OF APPROPRIATEDFUNDS

I
            The Smithsonian     established     the Smithsonian     Research
    Foundation--a      private,   nonprofit     corporation--to     disburse
    appropriated      funds.    Funds channeled through the Foundation
    are treated     as private     funds by the recipients       and spent
    without    regard to restrictions,         such as civil    service    laws
    and fiscal     year limitations,       governing    the use of appro-
    priated    funds.
            The Foundation-- consisting    of three employees and fully
    controlled    by the Smithsonian --serves-no       function    of consequence          i
    other than as a device that attempts          to convert Federal funds
    into private    money.   The Smithsonian      did not adeguately      inform
    the Congress or obtain its approval         to establish      the Foundation
    and operate independent      of civil   service    laws and fiscal     year
    limitations.      In our opinion    the Smithsonian      should not use
    funds channeled through the Foundation           in a way that it clearly
    could not if it spent the funds directly.
    WHY THE SMITHSONIAN RESEARCH
    FOUNDATION WAS ESTABLISHED
            Before fiscal      year 1966, Smithsonian          scientists      received
    research grants from the National                Science Foundation.           Grant
    funds received        from Federal agencies are treated               as private
    funds by the Smithsonian,             just as they are when received              by
    colleges     and universities.           However, the Independent          Appro-
    priations     Act of 1966 precluded           the National     Science Foun-
    dation from transferring            funds to a governmental           unit that
    receives     direct     appropriations      for research without          receiv-
    ing, in each individual            case, specific      permission      from the
    Bureau of the Budget.            Beginning with fiscal         year 1966, the
    Smithsonian      has requested        and received     research funds from
    the Congress to replace the funds previously                   received      from
    the National        Science Foundation.
          In hearings before the Senate Appropriations     Subcommittee
    in March of 1965 the Secretary  offered  the following    expla-
    nation of how the research funds would be spent.




                                               5
            "We intend to allocate     this money in exactly
     the same way as when the National       Science Foun-
     dation gave it to us.       We will have to set up
     research panels to advise and judge the requests
     for grants and the same standards       of excellence
     we anticipate     will prevail  as when the National
     Science Foundation     awarded them to us in the
     open market, as it were.       Other scientists    were
     requesting    these moneys from all over the country."
     In response to a question    raised in the hearings     on the
1967 budget request the Secretary     responded in pertinent    part:
              "Under a statute,    under the Independent
      Appropriations     Act for 1966, the National
      Science Foundation      was precluded  from trans-
      ferring    funds to any other agency of the
      Government for research and grants without,
      in each individual      case, specific   permission
      of the Bureau of the Budget.
              "AS a result    of that, we requested         last
      year a sum representing         the average of the
      amount our individual        scientists       have been
      granted by the Foundation,           just as they might
      have obtained     grants at other institutions
      anywhere in the country,          and this sum repre-
      sented $350,000.        We feel that these projects
      are of such scope and depth as individual
      research projects       that they are not viewed as
      ordinary    research undertakings          which would be
      supported    by our conventional         funding means.
      Prior to 1966, members of our staff               were per-
      mitted to submit these proposals              to the National
      Science Foundatiofi:        under present law they
      cannot do so except in special             cases.    As a
      result,    our scientists     submit these grant pro-
      posals to review panels within             the Smithsonian.
      The grant is for an appropriate              period of time.
            "The funds are intended   to serve          a special
      purpose for a project    rather than for          the on-
      going institutional   normal funding we           request.
      We feel this small amount of research             money
      would be most advisable.
              'I* * * These funds together  with the base amount
      of $350,000 appropriated      for 1966 will be admin-
      istered     on the same basis as were the grants re-
      ceived from the National      Science Foundation."


                                   6
          A paper prepared for the Executive    Committee of the Board
    of Regents in deciding    whether the Smithsonian   Research Foun-
    dation should be established     states
          "In order to achieve the same degree of flexi-
          bility    in administering      these special    funds
          independent       of fiscal year limitations       or civil
          service     requirements;    it is proposed to establish
          a research      foundation   to receive,    disburse,    and
          account for the funds granted to projects             which
          have been competitively         selected   for a research
          award.      The foundation     will have a corporate
          structure      composed entirely      of Smithsonian        -
          personnel."
          The paper    concluded     by stating
          "In addition     to financing     and administering
          research projects       formerly   funded by the NSF,
          it is contemplated        that the foundation     may also
          prove useful for other special          programs such as
          visiting   fellowship       awards or cooperative    pro-
          jects in field     biology."
    The Executive   Committee approved the proposed establishment
    of the Foundation  which was then presented   to the Board of
    Regents for approval.
           At the Board of Regents meeting a discussion              on why the
    Foundation    was needed took place.         A question     arose as to
    whether the Foundation        could be established       without   congres-
    sional   approval.      The Secretary    responded that the Foundation
    was in effect      a special   bank account through which funds would
    be administered       in the same way other grants for research              are
    administered.       These funds would be expended and replenished
    each fiscal     year and this system would simplify            administrative
    procedures    in the financing      of scientific     projects    by Smith-
    sonian scientists.         The Board of Regents approved the estab-
    lishment    of the Foundation      and in June of 1966 it was
    incorporated      in the District    of Columbia as a private          non-
.   profit   corporation.
           In hearings    held in March 1967--the        first     hearings     held
    after    the Foundation     was created--the   Subcommittee Chairman
    asked with respect to the research awards program, "Just what
    is this program?"        In the Secretary's    response,         no mention was
    made of the Foundation        or the Smithsonian's         need and intent       to
    operate independent        of fiscal   year or civil       service    requirements.



                                             7
     The Smithsonian's   General Counsel stated               that receiving
the research funds through the appropriation                 process created
the following  problems:
      --Federal     employees cannot receive   Federal grants,
         which in effect     made Smithsonian  Federal employees
         ineligible    to participate   in the program.
      --Research       assistants    must be hired from the civil
         service     rolls    which limits    Smithsonian   scientists'
         flexibility       in operating    their   research projects.
      --Appropriated    funds must be obligated   within      1 year
         which allowed the Smithsonian     little flexibility        in
         operating   the research awards program.
        Funds for other Smithsonian    programs have been channeled
through the Foundation.      Smithsonian     officials      contend that
agreements with the Foundation       obligated      funds and that when
funds are transferred     to the Foundation       by means of these
agreements the appropriated      funds become private          funds and
restrictions     on the use of the appropriated         funds no longer
apply.
WHAT.THE FOUNDATION DOES
      The Foundation's       Board of Directors    is composed entirely
of Smithsonian   officials      appointed   by the Secretary   of the
the Smithsonian    Institution,      who is Chairman of the Board
and President   of the Foundation.        He appoints  all other officers
of the Foundation     and the Board of Directors.
        The stated purpose of the Foundation              is to cooperate       with
the Smithsonian         in encouraging,      sponsoring,      aiding,    or conducting
scientific     research;      studies     in education,     the arts, and the
humanities;      training     persons in any of these areas; and making
gifts I grants,       contracts,     for any of these purposes.             However,
the Foundation        has three employees and its actual functions                 are
set out i-n annual agreements between the Foundation                     and various
bureaus o'f the Smithsonian.              The agreements'covering         the last
3 fiscal    years-- 1974-76--provide          essentially      for the Foundation
to do no more than disburse             funds and maintain         records supporting
the following       programs.
       1. Grants and fellowships   awarded to Smithsonian   employees
or other individuals    for study and research  and charged to Smith-
sonian’s  Salaries   and Expenses appropriation  for the Office of
Academic Studies and the Research Awards Program.



                                         8
            2. Grants awarded to Smithsonian      employees for research
    in foreign     countries   and charged to United States'   excess
    foreign    currencies    appropriated  to the Smithsonian  for its
    Special Foreign Currency Program.
           3. Grants, stipends, and fellowships     awarded to various
    individuals  by the Woodrow Wilson International      Center for
    scholars.
           4. Miscellaneous   Smithsonian   activities     funded from
    the Salaries   and Expenses appropriation,        such as Smithsonian
    conferences,   lectures,  seminars,   and educational      activities;
    internships;   and the Foundation's    administrative      fees.
          The Foundation     does not perform scientific        research,
    does not provide educational        services,    does not get involved
    in decisions    on the use and allocation        of funds, and does not
    have responsibility      for supervising      the programs.     In short,
    the Foundation      does not provide    any management function,      of
    consequence.
            Smithsonian   program   officials  were asked why funds for
    their    particular   program   were channeled through the Foundation.
           The Office of Academic Studies awards fellowships              to
    individuals      in the academic world to study and conduct research
    at the Smithsonian.        The program officer     stated they use the
    Foundation      because of the flexibility      it provides.     It was
    explained     that the Office of Academic Studies operates            its
    program on a calendar year rather          than fiscal     year basis;
    consequently,      the fiscal  year limitation     on Federal funds
    creates     a problem.    To resolve this problem,       its funds are
    transferred      in a lump sum to the Foundation       by means of an
    agreement,      usually  at the end of each fiscal       year.   This is
    presumed to be a valid obligation          of funds, converts      the
    funds into private       money, allows the Office of Academic
    studies     to avoid the year-end limitation       on the funds, and
    permits     the Office to award grants after the close of the
    fiscal    year for which the funds were appropriated.
          Besides Federal funds, the Office of Academic Studies
    has some private     funds it awards to fellows.    According    to
    the program officer,      the private  funds are not transferred
.   to the Foundation      but are handled by the Office directly.
           The Office of International            Programs is responsible       for
    operating     the Smithsonian's        Special Foreign Currency Program.
    The purpose of this program is to award grants for research
w   in foreign      countries    where the United States has.excess
    foreign   currency.        Only the grants awarded to Smithsonian
    employees are administered           through the Foundation.         The Office
    of International        Programs directly       administers     the grants to
    other individuals.          The Director      of the program was asked why
    the Foundation       administered      the awards to Smithsonian         employees.
    He stated that he understood             that Federal grants cannot be
    awarded to Federal employees and that by channeling                  grants to
    Smithsonian      employees through the Foundation            the Federal funds
    became private       funds and the problem no longer existed.               The
    excess foreign       currency    appropriation      is available    until
    expended, and the use of the Foundation               offers    no benefit    in
    avoiding    fiscal     year limitations.
            The Woodrow Wilson International     Center for Scholars awards                       =
    fellowships    to individuals  to conduct scholarly      research  in various
    disciplines.     The Center's  Assistant   Director   for Administration
    stated that it uses the Foundation       because the Center lacks admin-
    istrative    capabilities.
          The Center's      agreement with the Foundation             provides      a lump
    sum to be used to support individual               grants designated         by the
    Center.     In addition     to awarding fellowships           with Federal funds,
    the Center has private         funds that support fellowship             awards.       The
    Foundation    administers      Federal funds, but the Smithsonian's                 Grants
    and Insurance      Administration      Division      administers     private     funds.
    We asked the Center’s        Assistant      Director    for Administration          why
    the Foundation      is used to administer          the fellowships        supported      by
    Federal funds and not the private              funds.     He explained       that at
    one time the Foundation          administered      all fellowships       but the
    Smithsonian    informed him that the Smithsonian                should administer
    the private    funds.      The Treasurer       of the Smithsonian         acknowledged
    that it was the Smithsonian's            intent    to have the Foundation           only
    administer    Federal funds.        It should be noted that by transferring
    the Center's     funds to the Foundation,            the fiscal    year limitation
    on their-use     is eliminated.
          The following    chart shows the amount of Federal funds that
    have been transferred      to the Foundation  during the last 3 fiscal
    years, including    the transition   quarter.




                                              10
                                                                                                     Fiscal      years
                                                                                                                   1976 and
                Program                                             1974                          1975        transition  quarter                    Total

Special    Foreign   Currency(note      a)    $1,563,729.69                                    $314,879.00                     $192,294.00       $2,070,902.69
Research Awards Program(note           a)                        429,750.oo                     450,000.00                      535,ooo.oo        1,414,750.00
Miscellaneous      grants(note   b)                              276,794.OO                    157,670.38                       254,010.OO          688.474.38
  Total Awards for Smithsonian
    purposes                                      2,270,273.69                                  922,549.38                      981,304.OO        4,174,127.07

Office    of Academic Studies          '                         495,661.OO                     582,844.OO                      750,075.oo        1,828,580.00
Woodrow Wilson International
 Center for Scholars                                             386,543.29                     488,OOO.OO                      559,029.oo        1,433,572.29
   Total awards to non-
     Smithsonian employees                                       882,204.29     1,070,844.00                    1,309,104.00                      3,262,152.29
   Total funds transferred        to
     the Foundation                           $3,152,477.98                    $1,993,393.38                  $2.290.408.00                      $7,436,279.36
                                                  w-m---------                  ------------                    ------------




a/Awards made to Smithsonian           research                  scientists.
b/Awards made for various activities,      including  Foundation administrative                                                          fees;
  Smithsonian conferences,    seminars, lectures,    and educational activities;
   internships ; and research consultants.
     FINANCIAL OPERATIONS

1            The primary purpose of the agreements with the Foundation
     is to establish         a means to keep program funds from lapsing                at
     the end of the fiscal         year, and to overcome civil           service     law
     restrictions       applicable     to the hiring   of research assistants.
w    The agreements provide          for the Foundation      to administer        funds
     to grantees      subsequently      designated   by the Smithsonian.            While
     the Foundation       performs some housekeeping         services      in admini-
     stering      the funds, the cost of those services             represents      a
     small portion       of the total     funds transferred       to the Foundation:
     in fact, many of the services            the Foundation      is obliged      to
     perform under the agreement are actually               performed'by       the
     Smithsonian      itself    under a separate contract         with the
     Foundation.
             The Smithsonian   purports    to obligate    its appropriations
     at the time it signs agreements with the Foundation.                  Under
     the agreements,      the Smithsonian    conveys through the Foundation,
     to those that the Smithsonian         designates,    funds that otherwise
     clearly    would become unavailable.        The following      tabulation
     shows the dates selected       fiscal   year funds were considered
     obligated    under the agreements,      and the period of performance
     for the Research Awards Program and various             miscellaneous     pro-
     jects sponsored by the Office of Academic Studies.

         Date of             Fiscal year                          Period of
        obligation
               ---        funds obligated                        performance       Amount
        Research Awards Program:
         6/20/?4                       1974             6/30/74      to 6/30/75    $450,000
         6/30/75                     - 1975             6/30/75      to 6/30/76     450,000
        Office     of Academic    Studies:
         6/30/73                       1973             fiscal      year   1974      185,000
         6/28/74                       1974             fiscal      year   1975      397,000
,.       g/30/76                       1976             fiscal      year   1977       80,517
            In many cases the specific   research projects     were made to and
4    accepted by the recipients    on various dates after the end of the
     fiscal   year in which the funds were considered      obligated.




                                              12
           We noted a number of other obligations               recorded for mis-
    cellaneous      contracts     awarded to the Foundation.           A total    of
    $57,000 was obligated          in fiscal     years 1974 through 1976 under
.   the Urgent Anthropology          Program, but as of late February 1977
    no research projects          had been selected.         The obligations      had
    been recorded       in late June of fiscal         years 1974, 1975, and
    1976, and late September 1976, covering                the transition      quarter.
    Thus, the funds were being accumulated               by the Foundation
    awaiting     a decision     by the Smithsonian       to undertake      the pro-
    ject.     In another instance        the Smithsonian       recorded on
    June 24, 1974, an obligation             of $103,000 of fiscal        year 1974
    funds covering        reimbursement      to the Foundation      for admini-
    stering    foreign     currency grants in fiscal          year 1975.      The
    above-cited      transactions      served as a device to hold onto
    funds after their availability             lapsed.
    Hiring of employees outside
                             --
    ;Sf Civil Service System
          Congress has provided      the Smithsonian     through the Research
    Awards Program, with funds for individual          research projects     by
    Smithsonian    scientists.    The Research Awards Program is funded
    as part of the Smithsonian       Salaries    and Expenses appropriation.
    some of the funds in the Research Awards Program are used to
    hire research assistants      for Smithsonian     scientists,   without
    regard to the restrictions       of the Civil    Service System.     This
    is justified    by the Smithsonian      because the funds used to pay
    the assistants     have been channeled through the Foundation..
    We question    whether Congress would approve of this treatment
    of appropriated      funds to hire non-civil     service employees.
    CONCLUSIONS
            The Smithsonian      Research Foundation      was established      to
    overcome restrictions         placed on appropriated      funds, and
    civil    service   rules.     It is not used to administer         the
    private     funds received      by the Foundation--only      the appro-
    priated     funds.     Except for its "virtue"       of overcoming the
    effect    of-laws    that typically    attach to appropriated         funds,
    the Foundation       appears to serve no useful function           that could
    not be performed by the Smithsonian           itself.
    AGENCY COMMENTSAND OUR EVALUATION
           The Smithsonian's    comments pertaining      to the Foundation
    contend that:      (1) full notification      of the purposes for
    establishing    the Foundation     was provided    to the Board of
    Regents and the Congress,      (2) the Foundation       performs



                                          13
    economically,  management functions of consequence,  and,
    (3) the agreements between the Smithsonian   and the Foundation
    meet legal requirements.
*
            Smithsonian     officials    believe     that our criticism      should
    be tempered by the fact that six Members of the Congress,
    including     members of.the       Smithsonian's       oversight    and appro-
    priations      committees,      were serving     as Regents when the
    Foundation      was approved.       While this is true, we do not
    equate approval        by the Board of Regents with approval             by
    the Congress.         Nonetheless,     the Smithsonian        never adequately
    informed the Congress of the creation                 of the Foundation     or
    of its intent       to operate independent          of fiscal     year and
    civil    service    requirements,      although     it had the opportunity
    to do so during appropriation             hearings.
          The Smithsonian  relies  on the same facts to support                  its
    conclusion  that there was full disclosure    to the Regents                 and
    the Congress as we do in concluding    that there was not.
           Our criticism         is muted by the fact that there is nothing
    to suggest that appropriated               funds were spent on anything          but
    the programs authorized.               Nonetheless,     the Smithsonian     should
    have presented        to the Committees its case for operating               out-
    side the normal appropriations                and civil    service   law restric-
    tions.    Assuming the Committees would have been swayed by the
    Smithsonian      justification,         they then would have had the options
    of approving       the concept of the Foundation,              or granting    exemp-
    tions from civil         service     laws and providing        no year appropriations.
    Since the Smithsonian            has never obtained        congressional    approval
    for the Foundation,            we believe     it should not use funds channeled
    through the Foundation            in a way that it clearly          could not if it
    spent the funds directly.
            The Smithsonian      takes exception       to the statement         that the
    Foundation    performs no management function                 of consequence.      The
    Smithsonian     listed    several administrative            functions    performed
    by the Foundation.         However, it must be recognized               that the
    Foundation    contracts      back with the Smithsoni,an to provide
a   many administrative         functions     because it lacks such capabilities.            _
    Consequently,       the Foundation      maintains    little        more than a house-
    keeping operation        and its primary function             is the disbursement
    of funds.     The fact that private           funds expended on the same
*   programs are administered            by the Smithsonian          and not by the
    Foundation    demonstrates        that the Foundation           exists  to avoid
    restrictions      applicable      to appropriated       funds.




                                              14
           Smithsonian officials  believe   that the Foundation     administers
    its programs more economically      than would otherwise    be the case.
    we do not believe   this issue is particularly     relevant   to the dis-
*   cussion and did not make a detailed       analysis of the costs involved.
    However, we do not see how the workload would differ         with the
    form of the organization.
            The Smithsonian    states that the Foundation           is legally      con-
    stituted    and the agreements between the Smithsonian               and the
    Foundation     are legally    binding.       We are not questioning        the
    legal standing      of the agreements or the Foundation.              Even
    assuming the agreements and the Foundation               meet legal require-
    ments, does not lead one automatically               to the conclusion       that
    it was proper for the Smithsonian             to create the Foundation          to
    operate its programs independent             of fiscal    year and civil
    service    requirements    without     clear    approval   from the Congress.
                                                                                           i ;
    SMITHSONIAN SCIENCE INFORMATION EXCHANGE
                                         -
            The Smithsonian         incorporated      the Smithsonian      Science
    Information        Exchange in June 1971 as a private,               nonprofit
    corporation        in the Oistrict        of Columbia. It was organized
    to facilitate         effective     planning,    management, and coordi-
    nation of scientific            research activities         sponsored by
    governmental         and private      agencies and individuals;           to
    provide for exchange of information                  about basic and
    applied     research      projects      and proposals     in physical,
    medical,      biological,       social,    and engineering       sciences:
    and to encourage scientific               research,    train persons
    for such activities,            and make grants or contracts            to
    accomplish       any of these purposes.
            In April 1971 the Smithsonian   notified   the Appro-
    priation    Committees that it intended to incorporate        the
    Exchange and that such action had the approval          of the
    Office of Management and Budget.       The reasons    given   for
    incorporation    were to
           --continue     Exchange operations         without    disruption
           --provide   flexibility to the Exchange as it                built
                                                                                           -   I




              revenues from user charges
           --eliminate      the requirement     to convert       the Exchange's
              staff    to civil  service    status.




                                                                                               I




                                             15
           The Smithsonian     pointed out that the Smithsonian        staff
    would retain      full control    of the Exchange through majority
    membership on the Exchange's Board of Directors,             and that
.   the primary concern of the Board would be with overall
    policy   and program decisions,        public relationships,
    resource planning      and the management of the Exchange's
.   fiscal   affairs.
           The Exchange is managed by a Board of Directors               which is
    assisted   by an Advisory Council.          The Assistant     Secretary     for
    science of the Smithsonian         serves as Chairman of the nine-
    member Board, and the Secretary           and two other employees of
    the Smithsonian    are also Exchange Directors.            The President
    of the Exchange is elected         by the Board of Directors         serves
    on the Board and appoints        the other officers        of the
    Exchange subject    to the Board's approval.             An Advisory
    council   of 22 members,     nominated     by  the  Chairman    of the            i
    Board and appointed       by the Secretary       of the Smithsonian,
    advises the Board of Directors          regarding     the Exchange's
    technical   and scientific      functions     and related    policy
    matters.
            The working relationship        between the Smithsonian           and
    the Exchange has been embodied in a series of substantially
    identical     annual agreements under which the Exchange,
    as contractor,        is to maintain     the Exchange as the National
    repository     of ongoing scientific         research.       Maintenance
    functions     include negotiating        for input,      codifying    and
    indexing    incoming projects,       storing     materials,       and improving
    data bank processes         for handling     records.       The Smithsonian
    transfers     funds appropriated       by Congress for the Exchange's
    necessary expenses as the contract              price under these
    agreements.        Funds for the Exchange were no-year appro-
    priationsl/      until   fiscal  year 1975 when they became available
    for obligation        on only a l-fiscal-year         basis.      The Exchange
    charges fees to both Federal and non-Federal                   users of its
    services    in accordance with directives             from the Congress
    and the Office of Management and Budget.

          The total  funds      available  to the Exchange during            each
    of the last 3 fiscal        years ended September 30, 1976,
    were as follows:
0
    L/ No-year     appropriations   are available         until   expended
       without     regard to fiscal    year.




                                            16
                                                             Fiscal       year
                                               1974             1975                   1976(note      a)

Appropriations                             $1,695,000      $1,805,000            $2,461,000
User fees                                   - -416,273          834;003           1;519;714

 Total     funds      available            $2,111,273      $2,639,003            $3,980,714
                                            ------m-v       ---------             ---------
    a/   Includes       transition          quarter.

            Although     the above tabulation            shows that       a substantial
    amount of the Exchange’s             financial       support      comes from
    user fees,       it should    be noted that          a large      part 0.f such
    fees are received         from Federal          agencies.       In fiscal
    year 1976, for example,           about       $1.1 million        of the fees
    came from Federal         agencies.         In that      year,    then,   about
    90 percent       of the Exchange’s         financial        support     came from
    the Federal        Government    either       in the form of direct           appro-
    priations      or user fees.
          Appropriated            funds transferred           under agreements  with
    the Smithsonian            are private     funds        in the hands of the
    Exchange.
                                                               .
           Since the Exchange          is a private,       nonprofit   corporation,
    it does not have to comply with              Federal      statutes   such as
    fiscal    year limitations         and civil     service     and Federal
    procurement    laws,      applicable     to the use of appropriated
    funds.
              Before    the incorporation              of the Exchange          as a private
     body in 1971, all             or parts       of its present         functions       were
     carried      out beginning          in 1950 by sundry            organizational          units
     indirectly        connected       with the Smithsonian,               the National
     Science      Foundation,         and a number of other              Federal       agencies.
     These earlier         organizations            obtained    their      operating       funds
     through      grants    and contracts            from Federal        agencies.
     User fees-were          instituted         in 1969. The same situation
     prevailed       then as it does today--the                 Federal        operating
     funds and user fees were considered                       private       funds     in the
     hands of the predecessor                 organizations         without       the
     restrictions         applicable        to Federal       funds.




                                     -.-

                                                      17
AGENCY
--     COMMENTSAND OUR EVALUATION
       Smithsonian     officials     believe     that any recommendation      to
dissolve    the Exchange's corporate           form, as we propose should
be based on a clear demonstration              of the operational    benefits
that such a change would bring.              They believe    that the Ex-
change is well run now and.fully              accountable    to the Congress.
They expressed concern that there would be severe impacts on
the Exchange's      staff     and loss of flexibility        to the Smithson-
ian to adjust the Exchange's operations,                if the staff  was
converted     to civil     service   status.
        Our remarks about the Exchange's corporate        form do not
speak to the efficiency       of the organization     but to the gues-
tions of accountability       and control.    From the Smithsonian's
justification     for incorporation    it is clear that the Exchange
is controlled     by the Smithsonian,      and-is almost wholly sup-
ported with Federal funds.
        While we can agree that the Smithsonian             provides    the
Congress with much information             on the Exchange's activities,
we do not necessarily         equate this with effective          congressional
control     and accountability.         The fact that the funds appro-
priated     to the Smithsonian       were made l-year      funds by the
Congress in 1975 but still           become no-year funds in the hands
of the Exchange demonstrates            the impact the Exchange's
corporate     form has on congressional           control.    In our view
the nature of the services           provided     by the Exchange and the
fact that it is partly          financed    by user fees, of and by
themselves,      do not justify       a corporate     form of organization.
In reaching      this conclusion       we are aware of the Exchange's
history     and that its incorporation          by the Smithsonian      was
made known to the appropriate             congressional    committees
beforehand.
RECOMMENDATION
        --   TO THE BOARDOF REGENTS
       We recommend that the        Board of Regents dissolve       the Smith-
sonian Research Foundation          and the Smithsonian     Science Infor-
mation Exchange.      Further     we recommend that their       operations
be carried    out as part of      the Smithsonian's     regular   organi-
zational   structure.




                                          18
RECOMMENDATION TO THE SECRETARY,
SMITHSONIAN INSTITUTION

     We recommend that       the Secretary:
     --propose    and   justify       to the Congress the exemptions
        from existing       legislation      the Smithsonian   believes
        it needs to     run effectively,         and with a minimum
        of red tape,      the programs now funded through the
        Smithsonian     Research Foundation          and the Smithson-
        ian Science     Information        Exchange.




                                     19
                                            .
                                  CHAPTER 3
                          THE CONGRESSNEEDS MORE
                  INFORMATION ON SMITHSONIAN FINANCES

          The Congress    needs to receive          better       information     on
         --the reprograming   of funds            appropriated        for   salaries
             and expenses and                                                          %
          --the use of private      funds        to finance       Smithsonian
              activities.
          Without full and complete information  the Congress cannot
    assess the impact its budgetary   decisions will have on the Smith-                    i
    sonian nor does it have assurance that the funds are spent as
    intended.
    REPROGRAMINGOF OPERATING FUNDS:
    THE CONGRESS
         -      NEEDS ?!%-BE INFORMED
           For years the Smithsonian    set up a contingency         fund from
    its appropriation     for salaries  and expenses to meet extra-
    ordinary   expenses that might occur during the year.              The con-
    tingency   fund was established    by withholding       about 2 percent
    from some line items in the Smithsonian's         final    salaries    and
    expenses budget.      In each of the last 3 fiscal        years, 1974-76,
    the contingency    fund amounted to about $1 million.
           Using the contingency    fund and other budget reallocations
    resulted     in some of the major budget categories        and subcategories
    within   the Salaries   and-Expenses appropriation        receiving   more and
    some less than the amounts the Smithsonian           had allocated    following
    congressional     budget approval.     The reallocated      funds were
    all used for purposes authorized         by the Salaries     and Expenses
    appropriation.      However, the approval      of the Appropriations       Com-
    mittees was'not obtained      because Smithsonian.officials         were unsure
    of which budget reprograming       actions,    if any, the Committees
    wanted to approve in advance.
           The contingency     fund was abolished        in fiscal year 1977.  Re-
.   programings    continue,     but requests      for approval have been sent to
    the Appropriations       Committees.     Still,    the Smithsonian  and the Com-
    mittees   need to reach an understanding           of the type of actions
    that require     advance Committee approval.




                                            20
Reprograming of funds not
approved by Committees
-----_
        In recent years the Congress has favored lump sum appro-
priations     for Federal agencies stated in terms of broad object
categories,      such as the Salaries and Expenses appropriation of
the Smithsonian.
        In justifying     requests      for appropriations      for salaries
and expenses (operating           funds) the Smithsonian        breaks down
the amounts requested          into six major budget categories:
(1) Science,        (2) History     and Art, (3) Public Service,
(4) Museum Programs, (5) Special Programs, and (6) Admini-
strative     and Support Activities.           Under each of these major
categories,       there are generally         5 to 13 subcategories       totaling
about 50 budget line items.               The Smithsonian     remains free,
as a matter of law, to depart from its budget justifications
and congressional        expressions       concerning    them, so long as
its use of funds is within            the broad scope of the Salaries
and Expenses appropriation            and does not violate        any limiting
provision     of the appropriation          act. The Appropriations         Commit-
tees have consistently           expressed the desire to approve in
advance budget reprograming             actions    by agencies,    including
the Smithsonian,        covered by the Department of the Interior
and Related Agencies Appropriations                bill.    .
        The Smithsonian       obtained     advance approval on a number of
occasions     for reprograming         its Construction          and Improvements
and Repairs and Renovations              appropriations.         Also, the staff
of the House and Senate Appropriations                   Committees were advised
by the Smithsonian          in 1971 of its practice            of establishing
a contingency       fund to meet pressing            emergency needs or oppor-
tunities.       Smithsonian     officials       stated that because the
Committee staffs        did not respond they assumed the use of the
contingency      funds was approved.          They told us that they were
unsure of which Salaries            and Expenses reprogramings,             if any,
the committees wanted to approve.                   As a result,      they had not
obtained    approval      for reprogramings          within    the Salaries    and
Expenses appropriation.             Smithsonian's        reallocations      have
been within      the broad purposes of the Salaries                  and Expenses
appropriation.
        While it would appear to be simple enough to                clarify  the
situation    through a dialogue     with the Committees,            the Smith-
sonian officials      indicated  that discussions   were           held but they
never obtained      a clear understanding    of what was           required  of them.




                                         21
           Commonly, during the congressional         review and approval
    process the Smithsonian         budget request was reduced in total
    without   identifying     what major category     or subcategory     should
    be adjusted.        Consequently,    the Congress did not generally
    provide   the Smithsonian       with an approved final    allocation
    to budget categories       of the amounts appropriated       for salaries
?   and expenses.
           A limited   exception to this general rule occurred      in
    fiscal   year 1975. The conference   report directed      the Smithsonian
    to provide     the House and Senate Committees on Appropriations
    a report showing the Smithsonian's      final allocation-    by program
    area of the amount the Congress authorized       for salaries     and
    expenses,
           The following  table compares by major budget category
    the amounts obligated     by the Smithsonian with the allocations
    reported   to the Committees.




                                       22
                                           SALARIES AND EXPENSESAPPROPRIATION
                                                    FISCAL YEAR 1975
                             . Allocation                            Obligations    in    Difference    as
        Major budget                of                            excess of or less (-)      percent of
          category            appropriation         Obligations     than allocations         allocation
     Science                   $26,520,000          $26,790,716        $ 270,716                1.0
     History and art            11,468,OOO           11,183,502         -284,498                2.5
     Public service              2,084,OOO            2,210,445           126,445               6.1
     Museum programs              5,329,ooo           5,078,014         -250,986                4.7
     Special programs             5,186,OOO           4,785,052         -400,948                7.7
     AdmirkitratiVe    and
        support services        20,119,000           20,618,016          499,016                2.5

        Total                  $70,706,000          $70,665;745        $ -40,255
hl                              -..---------         ---------          ------
w
           No approval of these budget reprogramings           was obtained,
    although   the Senate report on the appropriations           bill  stated:
          "No funds shall be reprogramed         from approved projects
          and programs within    activities        without   a written    request
          from the agency involved       requesting     specific    approval."
0         (Underscoring  added.)
    Current status of
    YZprograming
    -             authority
            In response to congressional        directives,    the Smithsonian
    did not establish      a contingency     fund from its fiscal      year 1977
    appropriation.      Instead,    reprograming      within the Salaries
    and Expenses appropriation         has been requested      from the Appro-
    priation    Committees.
            In this connection,     the Smithsonian    requested  the Appro-
    priation     Committees'   approval   to reprogram a total    of $765,000
    of its 1977 appropriation         and has proposed guidelines     to the
    Committees as to what items should be subject            to advance Committee
    approval.      This is a major improvement over the situation          that
    existed    in prior years where the Congress received         no information.
    Until the proposed guidelines         are approved by the Committees or
    some other direction       given, the Smithsonian      should continue    to
    obtain approval      of all salaries     and expenses reprbgraming     actions.
          We believe  also that it is only realistic          for the Committees
    to give the Smithsonian     some flexibility      in reallocating     funds
    among budget categories     and that formal Committee approval
    should be limited    to reprograming      actions   above a specified
    amount and thereby likely      to impact on the accomplishment
    of program goals.
    THE CONGRESSNEEDS TO KNOWHOW
    SMITHSONIAN PRmmE FUND~YZETO              BE   usm
            The Smithsonian    receives  private     as well as Federal
    financial-support.       Because of its dual funding,       the
    Smithsonian      has a degree of flexibility       not enjoyed by
    Federal departments       and agencies.     The Smithsonian    is
    able to undertake programs and acquire facilities              with
4   its private      funds without prior    congressional     approval.
    Also private       funds can and are used for the same or
    similar     purposes as appropriated      funds.




                                       24
            The committees of the Congress have never requested
    and are not furnished         with information       on the planned
    uses of Smithsonian        private    funds when considering          appro-
1   priation     requests.    However, Congress receives          historical
    information      on the uses of Smithsonian          private    funds.
    Without complete information            on the Smithsonian's        financial
    plans,    the Congress does not know in advance the full                  level
s   of program funding and cannot fully              assess the impact of
    its budgetary      decisions     on the activities       of the Smithsonian.
    Accordingly,      we believe     the Smithsonian      should provide the
    Committees on Appropriations            with its private      funds budget
    when it submits its appropriation             requests.
    Classification      of private   -- funds
            The Smithsonian    classifies      its private     funds as either
    restricted    or unrestricted.        Restricted   private     funds have
    been designated      for specific      purposes by the donors.
            Unrestricted      private      funds fall       into three categories:
     (1) general funds,         (2) special        purpose funds, and (3) auxiliary
    activities       fund.    The general funds are those private               funds
    that are not designated            for any specific          purpose and are expended   .
    by the Smithsonian          as it deems necessary.              The special  purpose
    funds consists         of funds, including           the net income from certain
    revenue producing         activities,         reserved for use by a particular
    bureau of the Smithsonian              in accordance with the wishes of the
    donor or decisions          by Smithsonian         management. The auxiliary
    activities       fund consists        of funds from various         other Smith-
    sonian revenue producing              activities       and are expended at the
    discretion       of Smithsonian        management.
           The following     schedule shows the source of restricted  and
    unrestricted     private   funds during the 15-month period ended
    September 30, 1976.




                                          25
              ,       ,                                                                                              4




                                                                 Unrestricted
                                                                  Auxiliary           Special
                                      Tbtal            General    activities          purpose           Restricted
                                      -------------------(OOO         omitted)-----------------------

Investment
Gifts        income                  $ 3,511        $1,370
                                                         82         -                  $         4        $ 2,137
                                       5,918                                                                5,498
Net income from revenue
  producing activities                4,537                       a/$4,537                   338
Concessions  and miscellaneous
Federal research    grants          1 3,032           1,241       -                    b/1,078                 713
  and contracts                       15,512                                                             c/15,512
     Total                           $32,510        $2,693              $4;537           $1,420           $23,860
                                      ------          A----             -----              -w--w           ------
      a/Includes   net income or loss from revenue producing activities, such
         as Smithsonian Associates and magazine program, museum shops, and
         product development.                                         1
      b/Includes   income from various revenue producing activities  designated
         by management to be retained for use by the bureaus generating the
         income, such.as restaurant   concessions, parking fees, and theater
         receipts.
      c/Grants and contracts      from Federal agencies are treated              as private
         funds when received     by Smithsonian.
    Private   funds generated     from
    revenue   producing  actlvltres
.           The Smithsonian       engages in a number of auxiliary         revenue
    producing    activities,       including    the sale of books, photos,        and
    other articles;        restaurant     concessions;   parking facilities;       and
.   special    events for which fees are charged.              These private    fund
    activities     are carried       on by the authority     of the Smithsonian
    Board of Regents in furtherance             of its educational    mandate.
           The following    chart summarizes the net income or loss
    from these auxiliary      revenue producing activities for the last
    3 fiscal   years.




                                           27
            Z      1




                                            Auxiliary Activities
                                             Net Income or Loss
                                                      Net income or loss (;)-
                                 Fiscal year 1974 Fiscal year 1975 Fiscal year 1976 (note a)
                                 -------------------(OOO         omitted) ------------------

Museum shops                          $ 226               $ 417         $ 216
Smithsonian press                         -89                -96          -192
Smithsonian associates       t         1,590               1,968         4,267
Performing arts                           104                -79          -119
Product development (note b)                37                218           580
Other (note c)                            -98               A120          ;215
    Total                             $1,770             $2,308         $4;537
                                       -----              -m-m-          -----

     a/Includes   transition   quarter.                             1
    b/Royalties  from the sale by manufacturers of licensed products
      developed in concert with Smithsonian staff and related to the
       national collections.
    c/Includes     Traveling Exhibitions,     Belmont Conference Center, Photo
       Sales, "Commons" Restaurant, Center for Short Lived Phenomena, Special
       Publications     and Television    Programs.
          Receipts from auxiliary       activities        are placed in the
    Smithsonian's     general unrestricted        private    funds and expended
    at the discretion      of Smithsonian     management.
.
            ,Appropriated      funds support the Smithsonian's               revenue
    producing     activities       by paying for such expenses as
    heat, light,       maintenance,      repairs,     janitorial       services      and
.   supplies,     guard services,       and other costs relating               to the
    operation,      maintenance,      and administration           of the Smithsonian
    Institution       buildings     and grounds.        In a 1972 opinion,
    we agreed that the Smithsonian               could retain       the gross receipts
    as private      funds but believed         that the books should be main-
    tained in such detail           as to show clearly          the gross amount
    of such receipts         so that full disclosure            could be'made to
    the Congress       of the amounts       received      from these operations.
           The Smithsonian     provides      the Congress with general
    financial    information    on auxiliary        fund activities      in the
    Secretary's     annual report.       Little     information     is provided
    the Congress by Smithsonian          management on activities          whose
    revenues are retained       by the bureaus generating             the revenues
    and included      in the special     purpose private        fund.    The Treasurer
    informed us that until        recently      these revenues were insignificant.
    Revenues from some of these activities                are now substantial,
    however, and these revenues are used to support activities
    for which the Congress appropriates               funds. For example, in
    fiscal    1976 and transition       quarter     receipts    from the theater
    and parking fees at the popular new Air and Space Museum
    were $273,000 and $356,000,          respectively.         Ninety percent
    of the parking      fees go to the Smithsonian's            General
    unrestricted      Funds and 10 percent to the Museum as compen-
    sation for its efforts        related      to the garage operations.
    Policies     governing
    financing     decisions         -
            The Smithsonian    has no formal policy       for determining     the
    purposes for which or circumstances            in which Federal or pri-
    vate funds will be used.          However, as a general practice        appro-
    priated    funds are used for constructing,         ope'rating,   maintaining,
    restoring,     and renovating     Smithsonian's    buildings;   and main-
    taining    the National    Collections.      Direct expenses of auxiliary
    activities     such as the Associates       program and museum shops,
4   are funded from private        funds.
         In this connection          when determining    whether         an employee will
    be Federal or private,          the decision    is generally         based on the source




                                             29
    of funding of the bureau where the individual               is employed.
    For example, the Museum of Natural           History     is predominantly
    federally     funded, and the majority       of the employees are on
,   the Federal payroll.         In contrast,  the Freer Gallery       of Art
    is predominantly        supported by private     funds and its employees
    are for the most part, on the private            payroll.      A mixture of
i   Federal and private        employees work in the administrative           area
    and engage in activities          relating to both Federal and private
    funds.     Administrative       employees often have the option of
    either    being a Federal or private       employee.
          Even with these general  financing    policies    private funds
    and appropriated   funds are used for the same or similar       purposes.
    Appendix II shows the uses made of both Federal and private
    funds in fiscal   year 1976 and the transition       quarter.
            The Appropriations     Committees reeeive this type of his-
    torical    cost information     regularly     as part of the appropriation       z
    process.      However, this information        is of limited    usefulness
    in making funding decisions          for the future.      We believe    the
    Committees should receive         information     on the planned use of
    private    funds for the upcoming year.           Without this information
    the total     level of funding by program and activity            is not
    disclosed     to the Committees and it cannot accurately                -
    assess the impact of its budgetary            decisions   on the
    Smithsonian's      activities.
    CONCLUSIONS
           The large stake the Government has in the Smithsonian
    dictates   the need for the Smithsonian to keep the Congress
    informed on
          --reprograming     actions    so that the Congress has assurance
              that funds are spent      in accord with its budgetary
             decisions   and
          --planned     private    fund use so that the Congress        can
             accurately      assess the full  impact its actions        have on
             Smithsonian      programs.
          The Smithsonian   has a long tradition     of private   financing
    and independence.     The Congress has not reviewed the private
    funds budget in the past.      In our view, the mixture of Federal
    and private   funding in so many Smithsonian       activities   makes a
    review of the Smithsonian's      Federal budget of and by itself
    inadequate.     Simply stated,   there can be no assurance under
    the present set up that congressional        budget actions   will have
    the intended effect.



                                       30
            The long-run    answer for the Smithsonian    is to establish
     clear policies      on the appropriate  use of Federal and private
     funds and provide the Congress with its private         funds fore-
*    cast when requesting      Federal funds. Smithsonian    officials
     expressed a willingness      to do this but indicated     that the
     decision   would have to come from the Board of Regents.
.+   RECOMMENDATIONS
           We recommend that       the Secretary:
           --Continue    to work with the Appropriations  Committees to
              reach a common understanding   as to the type.s-of budget
              reprograming   actions  the Committees wish to approve in
              advance.
           We recommend that       the Board of Regents:
           --Establish,   in conjunction     with the appropriate           con-
              gressional committees,     clear policies  governing           the
              use of Federal and private      funds.
           --Provide  the Appropriations    Committees with            infor-
              mation on the planned use of private      funds          at the
              time appropriation   requests  are submitted.
     AGENCY     COMMENTS
              I-P
             The Secretary       stated that the Smithsonian         fully  concurs
     in the conclusion         that the Smithsonian        requires    some admini-
     strative      flexibility      in reallocating     funds among budget
     categories       and with the recommendation          that the Smithsonian
     work with the appropriation             subcommittees     to arrive   at a
     mutually      agreeable     understanding      as to the reprograming
     actions      above some amount that the committees would want to
     approve in advance.
            He said the Smithsonian    is anxious to continue        discus-
     sions with the subcommittees      to develop guidelines        which will
     provide Congress with the.necessary       level of'control       yet offer
     the Smithsonian   some administrative     flexibility      given the
     number of line items in the Smithsonian's           budget, the more
     than 2-year period over which any fiscal           year's  budget is
.    developed and carried      out, and the number and variety         of
     needs that arise over this period as the Institution              attempts
     to meet its responsibilities.




                                         31
              Concerning     Smithsonian     private    funds, the Secretary    stated
       that the management of the Smithsonian               has been and is willing
       at all times to furnish         fully    to the Congress any and all facts,
.t     financial    or otherwise,      about its operations.        He recognized
       that in some areas, notably           nonfederal     funds expended under
       the immediate direction         of individual       bureaus, reporting   of
4      additional    details    may be desirable.
              The Secretary      also said that providing        the Congress
       budget projections        of the Smithsonian's      trust     fund, as
       recommended by the GAO, can be furnished              with the con-
       currence of the Smithsonian         Board of Regents which.approves
       all such budgets.         Such projections,    however, should be re-
       ceived by the Congress with the understanding                 that they do
       not have the same degree of reliability             as, for example,
       estimates     for Federal appropriations,        since the projections
       of trust    fund income and expenditures-depend             in part upon
       future    economic conditions,       numerous management decisions,
       the personal      circumstances    and decisions      of important     donors,
       and a host of other variables           which are not predictable        with
       certainty    so far   in   advance.
              The Secretary  said that the Smithsonian     will
       endeavor to set forth more clearly     the policies      by which
     . decisions   are made on the use of federally     appropriated
       funds and the limited     trust funds available    to the Board
       of Regents.




                                             32
                                  CHAPTER 4

            ESTABLISHMENT OF FACILITIES               AND THEIR IMPACT
                    ON FEDERAL FUNDING REQUIREMENTS

      This chapter provides  an overview of four facilities,  the
Federal and private   funds used to support each, and the reasons
why the Smithsonian   became involved   in each facility.
        Increased   Federal support is the frequent       byproduct    of new
Smithsonian      undertakings,   whether or not initially       launched with
private     money.    The Congress needs to be fully      informed of new
programs and directions        in a timely manner.
COOPER-HEWITTMUSEUMOF
DECORATIVE ARTS AND DESIGN
       The Cooper-Hewitt      Museum of Decorative      Arts and Design in
New York City is devoted to the study of historical                 and contem-
porary design.       Its collections    currently    span 3,000 years and
include over 100,000 objects,        including    textiles,      drawings,
wallpaper,   furniture,     jewelry,  glass, ceramics,         and silver.    The
Museum has materials      devoted to architecture,          urban planning,     and
industrial   design.
        The collections      are supported    by a decorative    arts and
design library       encompassing a reference       library,   a rare book
library    of about 25,000 volumes, picture           archives  of over one
and one-half      million    items, and archives      on color and light,
patterns,    materials,      symbols, sensory and technological
data, interiors,        advertising,    and typography.
      Cooper-Hewitt  opened its         doors to the public      as a
Smithsonian   museum on October         7, 1976.




                                  .- .-.--_.   -. -



                                               33
       From its inception    in 1897 as the Cooper Union Museum for
the Arts of Decoration,     until     1963 the Museum was funded and
operated by the Cooper Union for the Advancement of Science
and Art, a philanthropic       organization.      However, in June 1963
the trustees    of Cooper Union announced that space and funds
needs of their Schools of Art, Architecture,             and Engineering
had forced them to consider        discontinuing     the Museum, with the
possibility    that the collections       and reference    materials   would
be dispersed     and the Museum as an entity        would cease to exist.
In July 1963 the trustees       closed the Museum to the public.
       Soon after the closing,      a group of individuals-formed
the Committee to Save the Cooper Union Museum. The Committee,
inquiring   why the Museum was being discontinued,            was given
three reasons by the trustees:           (1) there had been a decline
in the use of the collections         in relation     to the school's
own educational    program,     (2) the Museum's location       at Cooper
Sguare provided    insufficient     space and was somewhat remote
from New York's museum and gallery          center,     and (3) the pro-
posed discontinuance       would free needed funds that could be
used to enhance the other educational            programs of the Cooper
Union.
      In November 1963 the Cooper Union trustees   accepted an
offer from the American Association   of Museums to form an inde-
pendent committee to seek a solution   which would preserve  the
Museum intact  in New York, with space and funds sufficient
to permit its revitalization.
       The Smithsonian    was generally      aware of these develop-
ments but it was September 1964 before the preservation
committees made an inquiry        as to whether the Smithsonian
might be able to aid the Museum. The Smithsonian                informally
responded that although-the        decorative       arts were a major
concern of the Smithsonian's         National     Collection   of Fine
Arts, and the preservation        of the Cooper Union Museum might
therefore    require   some affirmative       action by the Smith-
sonian,   such action would be discussed            only if there were
no organization      in New York City able and willing          to help
the Museum continue      as an entity.




                                     34
          In January 1965 the Committee to Save the Cooper Union
    Museum wrote to the Smithsonian   Board of Regents explaining
    that in the 18 months of the Committee's        existence    it had
    been-unable   to find any New York institution,        suited and
    equipped for the responsibility,   interested        in preserving
    the Museum as an entity.
          Efforts by the American Association of Museum's
    Committee to find help for the Museum were similarly
    unsuccessful  and it also turned to the Smithsonian  as a
    last possible  source of help.
           The Smithsonian    Regents decided that the preservation
    of the Cooper Union Musuem was a proper Smithsonian             concern
    and in January 1965 authorized       negotiations     for the transfer
    of the Museum to the Smithsonian.         Acquisition     of the Museum
    was to be conditioned      on adequate assurance of sufficient
    funds from private     sources to provide      for the continuing
    operation    of the Museum in New York without        burden to the
    public    and private  resources  of the Smithsonian.
          Negotiations     between    the Smithsonian   and the Cooper
    Union lasted     until  October    1967.   An agreement was signed
    and later validated      by the    New York State Supreme Court in
    May 1968.     The Smithsonian       took control  of the Museum on
    July 1, 1968.
           The Cooper Union transferred          to the Smithsonian    the
    Museum's collections,       library,    and endowment funds (estimated
    at that time to be $300,000).           In addition,      Cooper Union
    agreed to provide      the Smithsonian       $100,000 a year for
    3 years.      The agreement required       the Smithsonian     to main-
    tain the Museum in New York City, unless it became financ-
    ially   or otherwise     impossible.     The agreement further
    provided    for a lease arrangement        between the Smithsonian
    and the Cooper Union, whereby the Museum could remain in
    the original     Cooper Union building         rent free for 3 years.
    In addition;     the Smithsonian     received      a pledge of $200,000
    annually    for 4 years from the Committee to Save the Cooper
c   Union Museum.

t
            At the time the agreement was signed the Smithsonian's
    stated policy        was that the Museum would be supported     by the
.   community of interests         which it served in New York and
    elsewhere.       The direct    and indirect   costs to the Smithsonian
    would be kept to the minimum necessary            to maintain admini-
    strative     control    and policy  direction   of the Museum's future
    course.
            From July 1968 until         its official      opening to the general
    public     in October 1976, the Cooper-Hewitt              Museum allowed
    visits     by scholars,      educational      groups, and other organi-
    zations on request.            The Museum held several          in-house
    exhibitions       as well as staging         some off-premises         events.
    In addition,       it loaned many art objects           to other museums,
    moved the Museum from Cooper Union to the Carnegie Museum,
    studied      and cared for the collections,            and developed
    future    programs.        The total     cost of these activities            was
    $4.2 million--       $2.9 million      in Smithsonian      private       funds
    and $1.3 million         from Smithsonian-appropriated             funds.
    The following        chart shows the source of funds for Cooper-
    Hewitt through September 30, 1976.                 The figures       for
    private      funds include gifts,         income from endowment funds,
    and private       unrestricted      Smithsonian     funds.




                                            36
                   I     t




                                 Operating Funds                                                                       Special Projects      .      Bldg. Renovation
                             Appropriated                                                                          Appropriated                  Appropriated
       Fiscal Year             (note a)      Private                                                                 (note a)      Private         (note a)     Private
                             ---------------------------------(thousands)--------------------------------
                                                                                 I


     1969-73                      $ 303.0                                                               $1,332.9        -          $254.4          $ 63.0       $ 179.4
     1974                           169.0                                                                  190.3                     71.6            20.0          164.4
     1975                           253.0                                                                  227.8                    122.9                        1,123.l
     1976                           546.0                                                                  347.8   *    -           369.3            76.0          995.0
     (includes trans-
LJ
4       ition quarter)
           Total           $1,271.0                                                                     $2,098.8        -          $818.2          $159.0       $2,461.9
           (through
           Sept. 30, 1976)
            a/Includes obligations of other Smithsonian units made on behalf of Cooper-Hewitt, such
            -as libraries and protection services.
             Before the Smithsonian      Institution    signed the agreement
     to acquire the Museum in October 1967 it had not notified
     the appropriate       congressional    committees of its intentions     to
     acquire the Museum. Signing of the agreement was not a sudden
.A   or unplanned action.         It was preceded by over 2 years of nego-
     tiations.     Furthermore,     the Smithsonian    did not notify  the
     Congress even after the signing           until  an inquiry  was made
     by a Member of Congress.
             Smithsonian   officials,     while agreeing      that some formal
     notice should have been given to the appropriate                 congressional
     committees,     nonetheless      said that there was no attempt to
     keep the negotiations         or the signing       of the agreement a
     secret.      They pointed to articles         that appeared in the
     New York Times, one in 1965 which referred               to a proposal
     to transfer     the Museum to the Smithsonian,           and another in
     October 1967 which reported           the transfer.        Before the
     negotiations      were initiated,       approval..to   negotiate   was
     given by the Smithsonian          Board of Regents, of which six
     members are also Members of Congress.
            In January 1972, the Carnegie Corporation    of New York
     gave   the Andrew Carnegie Mansion and the adjoining     Miller House
     and grounds, comprising    the entire block from 90th to 91st
     Streets on Fifth Avenue, to the Smithsonian      to house the Cooper-
     Hewitt Museum.
            Under the terms of the gift,          the Smithsonian     is free to
     sell the property      if it becomes necessary.           In that event,
     the Smithsonian     would be reimbursed         for all expenditures     it
     had made on the property,        and the remaining        funds would be
     divided   equally   between the Smithsonian           and the Carnegie
     Corporation.      As of September 30, 1976, the Smithsonian             had
     spent approximately       $2.5 million     in private     funds and $159,000
     in Federal funds in renovating          the Carnegie property.         About
     $235,000 of the private       funds were in the form of grants from
     Federal agencies including        $195,000 for the installation          of
     air conditioning     and humidity      controls     in the Museum.
            Renovation of the Carnegie Mansion, which houses the
     Museum, has been completed.       There is no plan to renovate the
     Miller   House which is used as a classroom and study area and
     to store art objects.     According    to Smithsonian   officials,    Fed-
     eral money will probably     be requested   for repairs     to the
     two buildings    as they become necessary     in future years, but
     there are no plans for such a request through fiscal            year 1978.
           For fiscal       years 1969 through 1971, about $147,000 in
     appropriated     funds were spent for Cooper-Hewitt.       The Smithson-
     ian first    explicitly      identified funds for Cooper-Hewitt  in its

                                 _. -.-   _..-

                                          38
    budget for fiscal       year 1972, and for fiscal           years 1972 through
    1975 $625,000 from the Salaries           and Expenses appropriation          line
    items for libraries,        plant services,      registrar,      protection
.   services,     and Assistant     Secretary    for History       and Art were
    used on Cooper-Hewitt.          In fiscal    year 1976 Cooper-Hewitt
    was added as a specific         line item in the Smithsonian's
    Salaries     and Expenses appropriation         budget request.
    When discussing      the use of appropriated         funds for Cooper-
    Hewitt,    the Smithsonian      stated:    "the programs of Cooper-
    Hewitt should be operated with nonappropriated                  funds, and
    appropriated     funds should insofar        as possible       be limited
    to the protection       and preservation       of the collections         and
    property."
          Appropriated    funds for Cooper-Hewitt      have increased
    substantially     over the last 3 fiscal    years, 1974-76.      The need
    for protection     and maintenance  services    increased   as the Museum            _
    was readied for its public opening.
            Cooper-Hewitt  requested    Federal appropriations       totaling
    $616,000 for operations       in fiscal   year 1977, $367,000
    directly    as a budget line item and $249,000 from other Smith-
    sonian departments,      such as Libraries     and Protection      Services.
    The fiscal     year 1978 budget justification        to the Congress
    included    $377,000 for Cooper-Hewitt       operations.     Smithsonian
    officials    estimate  that $248,000 will be spent by other Smith-
    sonian units in support of the Museum for a total             Federal cost
    of $625,000 in 1978..
           According    to the Assistant     Secretary    for History      and
    Art, the 1978 budget request for Cooper-Hewitt               should be
    representative      of requests    for the foreseeable       future.      He
    told us there are no plans to increase             the number of federally
    salaried    personnel    at Cooper-Hewitt     or to expand the list         of
    operating     expenses which require      Federal funds.        Acquisition
    of objects     for the collections,      exhibitions,      and special
    projects    will continue    to be financed       by private    funds.
            Smithsonian      officials      estimate       that in -fiscal   year 1977
m   Cooper-Hewitt       will raise $699,000 from all sources other
    than Smithsonian,          including      $150,000 in admission fees,
    $115,000 from memberships,               $180,000 from benefit         receipts,
c   and $100,000 from classes,                These funds will be used to
    support all the programmatic                activities      of the Museum,
    which the Smithsonian             estimates     will cost $823,000 in
    fiscal    year 1977.         The difference         will be raised in
    special     contributions         or supplied       from Smithsonian
    private     funds.
    CHESAPEAKEBAY CENTER
    FOR ENVIRONMENTALSTUDIES
            In 1962 the Smithsonian       was bequeathed a 368-acre
    tract     of land just south of Annapolis,         Maryland,    known
    as the Java farm.           In 1964, the Secretary    of the Smith-
    sonian proposed use of the tract           for biological     research
    and education.         The proposal   was approved by the Smithsonian's
    Board of Regents and the Center was established               in 1965.
    The Smithsonian        purchased adjoining     tracts   of land with
    private     funds to have an area large enough to be represen-
    tative     of.the   region and to protect      the shoreline     o-f the
    Rhode River watersheds.           As of February 1977 the Center
    consisted       of about 2,600 acres with 14 miles of shoreline
    on the Rhode River, which flows into the Chesapeake Bay.
    Of the 2,600 acres, 1,700 are owned by the Smithsonian
    and the remainder         is covered under covenants of restricted
    uses.
           Federal funds were first          used to support the Center
    in fiscal     year 1966.      The Center first      appeared as a separate
    item in the Smithsonian          budgetkin   fiscal    year 1974.   In prior
    years the Center had appeared in the line item justification
    for the Office of Ecology.
                 .
           The Smithsonian      is a member of the Chesapeake
    Research Consortium,        formed to define and coordinate
    research contributing         to the better management of the Bay's
    environmental       system.     Other members of the consortium        are
    The Johns Hopkins University,            the University    of Maryland,    and
    the Virginia      Institute     of Marine Science.
            According    to the director     of the Center the major
    research currently        financed with Smithsonian      appropriated
    funds is a study of how the Rhode River estuary works and
    interacts     with its watershed.        The directer  stated     that
    the continuous       monitoring    of the flow, content,     and pro-
    perties    of the estuary's       water has intrinsic    value, because
c   it provides      a framework from which various       applied    research
    projects     can evolve.
          Appropriated  funds are also used to manage the Center
    and to support and maintain     the facilities.  Much of the
    research is carried    out under grants and contracts  from
    other Government and private      agencies.




                                         40
            In October     1976 there   were 19 research       projects
    underway,     15 of which were funded        by Smithsonian        private
    funds,    Federal    agencies,    or private   organizations.           Four
.   were funded with money appropriated            to the Smithsonian.
    The research      performed    at the Center     is discussed
    further    in chapter      5.

           The source of funds        and costs     to   operate   the   Center
    are   shown on the following        page.




                                                                                   i




                                           41
                                                                CHESAPEAKEBAY CENTERFOR
                                                                  ENVIRONMENTALSTUDIES


                                           Fiscal year 1974                   Fiscal year 1975              Fiscal year 1976
                                    Appro- Federal                  Appro-       Federal              Appro- Federal
                                    priated research Private        priated      research Private     priated research Private
            Object class             funds      grants  funds        funds        grants   funds       funds      grants  funds
       Salaries and benefits        $250,800 $203,700 $26,600 $323,200 $143,800             $40,500 $392,900 $104,800 $34,500
       Travel                       . 6,600     9,400   4,300    5,500    3,500                  300   6,900    2,800    -
     ; Transportation   of things                  300   -                                                500   1,400    -
E   I; Rent, communications,
          utilities                   22,000        600     -        37,200         -                  40,900     1,900        600
    , Printing                            800       500     -            900          400     2,100     1,600        800     -
       Other services                 66,700    82,700    22,900     47,200       45,000     12,800    62,900     8,600    10,900
       Supplies and materials          6,700    22,300        700    35,700       15,6pO      1,500    50,000    40,000     3,200
       Equipment                      20,900    52,700        600    28,600       39,000         -     41,000    35,700      -
       Construction   (Education
         Building)                      i’
                                                          24,400       -          . -       176,800      -                  1,300
            Total                   $374;500 $372,200 $79;500 $478,300 $247,300 $234,000 $596;700 $196,000 $50;500
                                     -___---  -------  -----   w---w-   ---NV-   m----m-  -w-w---  -w----w  --w-w-
    -CONSERVATION---
                 AND RESEARCHCENTER

c           The Conservation     and' Research Center in Front Royal,
    Virginia,    is a rural annex of the Smithsonian's       National
    Zoological     Park.    The Center is used for breeding      endan-
    gered wildlife       species and for associated   conservation      and
    research    efforts.      The Center is located on a 3,150-acre
    site.
            Before becoming part of the Smithsonian,         the Front
    Royal site was used by the Department of Agriculture               for
    beef cattle     research.   In 1973 the site was declared          excess
    property     by the Department of Agriculture,       and in.fiscal
    year 1974 the National      Zoo began using the property          under a
    temporary     use permit granted by the General Services Admini-
    stration.      The property  was officially    transferred      to the
    Smithsonian     Institution  in July 1975.-
           The National       Zoo has been searching            for a breeding        farm
    site for about 14 years.             Possible       site locations        in
    Maryland and Virginia          had been considered,             but the Front
    Royal site was determined             to be superior        because of its size,
    location,     and facilities.           The facilities        include     19 resi-
    dences, a conference          center,     an administration          building,
    several    animal barns, a commissary,               various     workshops,     and
    miscellaneous     sheds and storerooms.                It should be noted that
    the Appropriations         Committees were kept informed of the
    Smithsonian's     intentions       to acquire a breeding             farm.
           According    to the Director    of the National      Zoo, catching
    wild animals to replace animals that either             die or are unable
    to adapt to zoo conditions         is difficult    because of declining
    wild animal populations,        legal restrictions      against obtain-
    ing some species from the wild, and the prohibitive               price
    of many species.       He stated that the National         Zoo did not
    have enough space to keep adequate numbers of many species
    to build breeding      herds, but the Center has the space
    required    for successful     breeding of many wildlife       species
    that are -difficult      to breed under normal zoo conditions.
            The Center's  breeding herds have been formed through
    cooperative    arrangements   with several   zoos which share the
    offspring.     The Center's   animal population   has grown from
    25 in 1974 to 96 in 1976.
          The Center is administered      by a curator-in-charge,          two
    conservation    project    officers, an-administrative      assistant,
    and a secretary.        The Center has 22 full-time     employees.
.   Five temporary employees are hired to harvest grass, hay,
    and alfalfa    during the spring and summer. The Center's
    staff  increased     from 4 in 1974 to 22 in 1976.
          The Center's     funding      since         its     inception            is shown in
    the following   table.

                                                            ---           Fiscal
                                                                            years
                                                                                 1976-andr-
                                              1974
                                              --              1975        transition     quarter
                                              -------------(thousands)------------
    Operating    funds:
         Federal appropriation                  $80               -$276                 $     473
         Private    funds
                                                $G
    Repairs,    renovation    and
      construction      (Federal)
         (note a)                                -                  125                     1,110

                         *                       -
                                                $80                $421
                                                                    --                  $1,651
                                                                                         w-w
                                                 --                 m-B                  -w-w-
    a/No   private    funds   have been expended                   for     these     purposes.

          The funds for renovation      and construction     were used
    to install   fencing,  to renovate    several buildings,      to con-
    vert the granary to a commissary,       and to make minor repairs
    to barns.    In fiscal   year 1977 it is estimated       that Federal
    funds of approximately      $440,000 will be required       to operate
    the Center.
           Master planning       for the Conservation          and Research Center
    is scheduled to be completed by mid-1977.                    Preliminary     estimates
.   indicate    -that renovation        and construction       at Front Royal will
    cost $10 million        over the next 10 years.            The bulk of the
    $10 million      will go toward preparing          the site for animals.
    However, a $2 million          visitor   and education         center is planned.
    The public     does not now have access to the Center; opening it
    to the public       would require      additional     facilities,       such as
    parking   lots,     restrooms,      and a visitor     transportation        system.
    A visitor     center would require         additional      staffing     and operat-             .
    ing funds.




                                         44
    SMITHSONIAN TROPICAL RESEARCHINSTITUTE
           The Smithsonian      Tropical      Research Institute        is a
    bureau of the Smithsonian           Institution     devoted to
    promoting   research,     education,        and conservation      in the
    tropical   zones of the world.            The Institute       is head-
    quartered   in the Panama Canal Zone where it maintains
    a number of facilities         including       the biological
    reserve and field      station     on Barro Colorado Island.
           In 1923 the Governor of the Panama Canal Zone-
    designated       Barro Colorado Island as a reserve and
    delegated      its supervision     to the Institute    for
    Research in Tropical         America, an agency of the
    National      Research Council.      Until 1940 the Island
    was supported        by a number of biologists      and their
    universities.         It became apparent at this time that
    the Island was becoming a major center for tropical
    research.
            To keep the Barro Colorado Island as a center
    for tropical        research,    the Congress passed
    legislation       placing     the Island and its research
    activities      under the U.S. Government.           This act
     (20 U.S.C. 79b) established            the Canal Zone
    Biological      Area as an independent        governmental
    entity     with its own board of trustees.             In July
    1946 the Island was transferred             to the Smithsonian
    Institution       as one of its bureaus to be the principal
    tropical      basic research center in the Western Hemisphere.
    The Smithsonian         Tropical    Research Institute      was created
    by the Smithsonian          in April 1966.      The Institute     includes
    the Barro Colorado Island,            and certain    marine labora-
    tories     on both the Atlantic         and Pacific    coasts.
            The funds to operate the Institute          come from
    appropriated      funds, donations      from individuals,     univer-
    sities,     and foundations,     and fees from visiting
.   scientists.       Financial    support is derived      also from
    research grants and contracts           from Federal agencies
    and private     firms.      The following     chart shows the
    cost of operating       the Institute      for the last 3 fiscal
    years.
                                                      SMITHSONIANTROPICAL RESEARCHINSTITUTE
                                                                 COST SUMMARY

                                      Fiscal year 1974                Fiscal year 1975                 Fiscal year 1976
                              Appro-       Federal            sAppro-      Federal              Appro-      Federal
                              priated      research Private    priated     research Private     priated     research Private
       Object class             funds       grants    funds     funds       grants    funds      funds       grants    funds
                               -1
Salaries and benefits       $ 795,478 $69,534 $ -           $ 943,607 $39,954 $         330 $1,064,969 $52,698 $ 8,587
Travel                          38,916        -      3,794      40,186       -      10,996       50,748       -      15,954
Transportation    of things       6,807       -          55       6,666      -          380        7,972      -           15
Rent, communications,
   and utilities                42,814        -                 63,110       -           20      74,426       -           34
Miscellaneous                     1,884         412  5,791        8,157     5,170    8,685         6,216        389 14,077
Other services                  66,945          996 16,055     123,815      1,145 25,457        107,154         528 18,732
Supplies and materials        103,951        3,556   1,597     115,661      1,648,   2,968      182,615      1,341    2,520
Equipment                      27,751        .-      7,296    - 49,829       i       9,502       45,222       i      11,513
    Total                  $1,084,546   $74;498 $34;588 $1,351,031       $47,917 $58,338 $1;539,322      $54,956 $71;432
                            --------     ----a   ----a-  --------         ------  ------  --------        ---I--  ------
    CONCLUSIONS
          The scope of the Smithsonian's     activities      has grown and
*   will continue  to grow.    This is entirely      consistent   with the
    Smithsonian's  mandate to increase     knowledge among men.
    However, a byproduct    of new undertakings      by the Smithsonian
    is growth in the amount of Federal support required.
           In our view the fact that the Smithsonian   has private
    funds with which it can launch new programs should not be
    viewed as justification    for less than full and timely
    disclosure   of new programs to the Congress.    The Government
    has too large a stake in the Smithsonian     for it to be
    otherwise.
    AGENCYCOMMENTS
          The Secretary     stated that the    Smithsonian   completely
    respects    the congressional    need to   be promptly   informed of
    Smithsonian    plans that might involve      substantial    new Federal
    expenditures.      He agreed that more     comprehensive    and timely
    communication     with the appropriate     congressional    committees
    is essential     and that this will be     done.




                                     47
                                       CHAPTER 5
                                    OTHER MATTERS

          The Committee requested  information    on several               other
    matters.   Each is discussed  separately   below.
    MUSEUMSUPPORTFACILITY
             The museum support facility        is a proposed complex of
    buildings     to be constructed      in Silver   Hill,    Maryland.     The
    facility     would be constructed      in several      phases over a
    period of years.       When completed it would provide           approx-
    imately 1.9 million      square feet of space for (1) the
    expanding national      collections,      (2) support and maintenance
    services,     and (3) research by and training           of conservators.
    It would permit museum space presently            used for storage
    to be converted      to exhibition     halls.
    The storage     problem
          The Smithsonian's       collections      now include well over
    70 million    objects-and     specimens,      of which only a small
    percentage    is on display      while the vast majority           is in
    storage.     According    to  Smithsonian      officials,     collections
    are growing at a rate of about one million                items annually.
    Smithsonian     officials    predict     that collections      will
    increase    2 to 5 percent annually.
           The Smithsonian         stores most of its collections              in its
    various museums. With the growing quantity                     of collections
    it has become increasingly              difficult   to find the space neces-
    sary to house collections.               The Smithsonian       has been storing
    bulky items, primarily            those for the National          Air and Space
    Museum, on a 21-acre site in Silver                Hill,     which was acquired
    from the General Services Administration                    in 1959.      Presently
    there are 2.7 one-story,            prefabricated     metal storage
    buildings-on       the site.        Smithsonian    officials      said that
t   storing    collections       in these facilities          was inadequate
    because they lacked humidity                and temperature      controls
    essential     for conservation          purposes.
           In fiscal   year 1976 the operating     costs of the Silver
    Hill storage facility       were about $1.4 million    and a staff
    of about 69 employees was assigned there.           Renovation   and
    construction     at Silver    Hill cost $450,722 in fiscal     years
    1974-76.     No private    funds were used.



                                           48
Plans   for   the new facility
        Several years ago the Smithsonian            determined   that
greatly    expanded facilities          were needed for collection
storage and laboratory           space.     In May 1968 the Regents
of the Smithsonian         approved the construction         of a museum
support facility,         subject   to authorization      and appropriation
of funds by the Congress.             By December 1969 the Smithsonian
had developed     initial      plans for a museum support facility.
       Over the last few years the Smithsonian,          with t-he
help of consultant      studies,    developed further    plans for
the facility,   including      site selection,    analy sis of space
requirements,   definition       of growth rates,   and advance plan-
ning and design for the first          phase.
       A consultant's    study estimated         that the first          phase
would cost about $40 million          for a building          of 545,000
square feet.      The design concept provided             for storage
space in single-story       buildings      which would provide
future expansion by use of relatively               inexpensive
double decking.       It also provided        for office        and re-
search space in a multi-story           building.        The buildings
were designed to allow for reasonable               flexibility         and
to satisfy    the Museum of Natural          History's       collection
requirements     through the end of the century.                Since
1969 the Smithsonian       has spent about $183,000 in Federal
funds for support facility         planning.
       Public Law 94-98, dated September 19, 1975, authorized
the Smithsonian      to plan the museum support facility        and
authorized    the appropriation    of planning   funds.    Bills    to
authorize    construction    af the facility   were introduced      during
the second session of the 94th Congress, but no action was
taken.
        In its fiscal     year 1977 budget, the Smithsonian
requested. $500,000 to begin the design of phase one.                 The
Congress did not approve the design money requested                for the
support facility        in fiscal    year 1977.     The House Appropriations     -
Subcommittee stated that it fully            supported    the need for and
desirability       of the facility,      but recommended that the project
be delayed because of the project's             large future   year costs.
The Senate Appropriations           Subcommittee suggested that the
project      be reexamined by the Smithsonian         because of the
project's      high costs.




                                        49
      The Smithsonian     scaled down the first      phase's original
size and cost projections.        The Smithsonian      is seeking $325,000
in its fiscal    year 1978 budget to develop specifications            to
begin the design for a first       phase building      estimated    to
cost about $21 miliion.        The scaled down version        is esti-
mated to cost about one-half       the original    proposal     and
has reduced the area from 545,000 square feet to 338,000
square feet.      The Smithsonian    anticipates    that the facility
will meet the Institution's       most urgent space needs through
1986, whereas the earlier       more ambitious    plans were estimated
to satisfy    space requirements     to the year 2,000.
         Sixty-one    acres of land adjacent      to   the Silver   Hill
storage facility         have been tranferred     by   the General Services
Administration        to the Smithsonian,     which    is trying  to acquire
an additional        21 acres to be part of the        museum support
facility       site.
        Related to the need for a museum support facility                 is a
collections      policy    and management study now underway.            The
study, requested        by the Office of Management and Budget, is
assessing     the effectiveness       of the Smithsonian's      collection
management policies         and practices   and providing      a projection
of future     space needs.       The Smithsonian    has never performed a
comprehensive       study of its collections       practices    in relation
to long-range       planning    and the study should provide         infor-
mation pertinent        to future   space requirements       in the museum
support facility.          The study is being conducted by Smith-
sonian personnel        and it is estimated     that will be completed
in the fall of 1977,
CONCLUSION
      The first   phase of-the    museum support facility       is designed
to meet what the Smithsonian       believes   are its most pressing
needs-- those of the Museum of Natural        History.    The original
proposal   for a $40 million     complex was.expected     to satisfy
the Museum's storage needs through the end of the century.
The Smithsonian's     latest  proposal    for a $21 million     facility
is estimated    to satisfy   the Museum of Natural     History's
needs only through 1986, a few years after construction
is completed.




                                   50
            Under its present collections    acquisition     and disposal
    policies    and practices, the Smithsonian      is continuously
    adding to its collections      inventory  and its storage needs will
.   inevitably    grow.
            The thorough review of the Smithsonian's        collections
    policies      now underway is an essential     first step in pro-
    jecting     future    storage requirements.    It should provide
    valuable      information    and serve as a guide for effective
    collections       management by the Smithsonian.
    SMITHSONIAN'S -EXPANDING RESEARCHROLE
           The Committee was concerned that some of the Smithsonian's
    research efforts    might duplicate other Federal research.
           Since its establishment,      the Smithsonian  Institution   has
    been involved    in various    types of research activities.      Scienti-
    fic research at the Smithsonian         covers a broad spectrum from
    research pertaining      to animal behavior    to the study of outer
    space.
          The Smithsonian's       research        role has grown as shown by the
    types of research     installations           located in this country
    and abroad.
          --The Chesapeake Bay Center for Environmental             Studies,
             near Annapolis,    Maryland,   was established       to advance
             man's knowledge of his environment.           Its primary pur-
             pose is to contribute     to the rational       use of land and
             water resources    through research,      educational    programs,
             and the dissemination     of information.
          --The Tropical        Research Institute    in Panama is a research
             organization       devoted to advanced studies       and support of
             tropical     biology,    education,   and conservation.
          --The.Fort     Pierce Bureau, located  at Link Port         between
             Fort   Pierce and Vero Beach, Florida,.carries           out
             research    in marine biology  and geology.
          --The Conservation   and Research Center located     in Front
             Royal, Virginia,  conducts research  relating   to the
             study of the reproductive   behavior and biology    of
             rare and endangered animals.
          --The Radiation     Biology Laboratory,    located       in Rockville,
             Maryland,  studies    the effects   of sunlight       on living


                                       --.

                                             51
            things.      Its scientists     are interested       in how and why
            plants    respond to the different        quantities     and qua-
            lities    of radiant    energy.
          --The Astrophysical     Observatory,     located  in Cambridge,
.            Massachusetts,    has a number of research projects
             underway pertaining    to the study of outer space.
             The Mount Hopkins Observatory        in Arizona is an adjunct
             of the Astrophysical     Observatory.
            Research is also carried     on at various   Smithsonian   museums.
    For example, The Center for the Study of Man, located            in the
    Natural      History Museum, coordinates   a worldwide program of
    interdisciplinary      studies  in the human sciences.
            The Smithsonian     contends that it concentrates         in the area
    of basic research which does not conflict             with research per-
    formed by mission-oriented           Federal agencies.     We obtained
    listings    of all ongoing research projects           and discussed    the
    problems of duplication          with the directors     of the Smithsonian
    Tropical    Research Institute        and the Chesapeake Bay Center
    for Environmental       Studies.
           At the Chesapeake Bay facility  most of the research
    projects   were sponsored and paid for by other Federal agencies
    which have the prime responsibility     for insuring    that the
    research is worthwhile.    None of the projects      sponsored and
    paid for by the Smithsonian.seemed    to duplicate . the projects
    of the other Federal agencies.
           The Director   advised us that the major research currently
    financed   with Smithsonian-appropriated        funds is a study of
    how the Rhode River estuary works and interacts           with its water-
    shed.    The Director    stated that this work does not duplicate         any
    research being done by others.         In this regard,     the Smithsonian
    is a member of the Chesapeake Research Consortium,            formed
    to define and coordinate       research contributing     to the better
    management of the Bay's environmental          system.   Other members
    of the consortium     are The Johns Aopkins University,         the Univer-
    sity of Maryland,     and the Virginia    Institute    of Marine Science.
           According     to the Director      of the Chesapeake Center, every
    proposed research project           supported with Smithsonian        funds
    must go through a review process before it is approved.                     It
    was explained      that this process screens proposed research pro-
    jects for possible        duplication     of research.    Each proposed
    research project        is reviewed by the Director       and Associate
    Director    for Scientific        Programs for scientific     quality     and
    possible    duplication.        In addition,    we were informed that
    many of the proposed research projects              are sent to the
    Smithsonian     Science Information         Exchange to assure that
    there is no duplication.


                                           52
            As of October     1976 there were 34 research          projects   in
    process    at the Smithsonian       Tropical     Research   Institute,    19 of
    which were funded        with Smithsonian-appropriated            funds at a
    cost of $568,906.         The remaining      15 research    projects,
.   costing    approximately      $190,000,    were either    funded       by
    private    organizations      or Federal     agencies.
            The Director          stated       that duplication           of research        is
    very unlikely            because     there      are no Federal          agencies      engaged
    in basic       tropical       biology        research.       In addition,         the
    Assistant        Director       informed        us that     duplication        is unlikely
    because      there       are few scientists             doing tropical         research.
    For projects          to be funded           by the Institute,           the Director
    reviews      the proposed          projects        to determine         whethe,r    there
    may be duplication.                 This     determination        is    made   on   the
    basis     of correspondence              received       from other       researchers
    describing         their     projects,         and information          which is on
    record      with the Science             Information        Exchange.

    TRAVEL BY --
              SMITHSONIAN              OFFICIALS
           At the request    of the Committee,      we obtained     infor-
    mation     on the travel   for the last   3 fiscal    years of the
    Secretary,      the Under Secretary,    and Assistant     Secretaries.
           The Smithsonian’s      travel   regulations        conform                to
    the Federal    Travel    Regulations     and apply      to travel
    financed    by both private       and Federal     funds.
            We noted that         the Smithsonian’s           general     practice     is
    to charge       travel     expenses       to Federal      funds    if the employee
    is on the Federal           payroll       and to private        funds     if he is
    on the private          payroll.        The Secretary,         a private      employee,
    used private         funds for travel           expenses     except     for one
    foreign     trip     made in each of the last               3 fiscal      years on
    research      projects      which were charged            to appropriated         excess
    foreign     currencies.           Appendix      III  contains      a summary of
    travel    for the last           3 fiscal     years    for the positions
    of Assistant         Secretary       and above.      All of the officials
    shown are-on         the Federal        payroll     except    the Secretary.
i
             The summary shows that    the Secretary  was in a travel
    status     147 days in fiscal   year 1974, 89 days in fiscal
    year 1975, and 125 days in fiscal        year 1976 and the
    transition     quarter.
            The Smithsonian    provided     us with a memorandum (see app. IV)
    explaining    the role of the Secretary.          In addition     to describ-
    ing his responsibilities,          it refers   to purposes    for which travel
    is necessary,      such as:




                                                      53
      He is responsible   for executive  direction     of
      bureaus and centers of the Institution       which are
      located  in various   parts of the United States
      and abroad.
(2)   He serves on scientific            and other research com-
      mittees  of the Nation           as well as internationally.
(3)   He participates    in programs and activities     through-
      out the United States in connection      with raising
      private    funds and attends official   functions    here
      and abroad as the representative      of the Smithsonian.
(4)   Traditionally,        he has been expected to write and
      publish     scholarly    papers, often requiring   field
      work in foreign        countries.
                                                                          i
The Smithsonian      also    stated     that
'* * * the Secretary         has exercised    continuing      responsi-
bility     for carrying    out the duties of his office           even
during periods of absence from his office.                 His re-
sponsibilities       frequently    involve  meetings and dis-
cussions outside        of office    hours both here and abroad.
The Secretary      has a staff    of principal      assistants     who
are organized      for advice and assistance         in the effec-
tive execution       of the Institution's      broad programs,
with guidance from the Secretary."
They said    that   Litchfield,        Connecticut
"* * * is a regular      place of duty for the Secretary,
as arranged with the Board of Regents, where he
maintains   a residence,     office,      library,       and water-
fowl preserve.      While there,        he conducts research,
writes official     reports,     receives      and sends official
correspondence,     receives     official      visitors,     and
maintains   daily contact with the Washington office
by telephone     and exchange of correspondence."




                                  54
                                                                                                                    APPENDIX I           .
      . . APPENRIX I                                                                                                              e ..




                                                                       COMMITT&Z              ON   APPROPRIATIONS

                                                                             i!i’ASHINGTON.           D.C.     20510      ’   .




                                                                             June 14, 1976



                                                              L
                          .   .




            Iz;e Honorable        ‘E3ner B. Staats’
            coqptro11er
                      ck-leralof the                                  i’ :
              United   States                                         ..


                                                                                                                                                  i

. .
            Deary. staats:
                    Ttte Corm&tee, in conducting annual budget hearings’ aqd developins
            appropriation     recoxendations     has experienced a grmtig      cor,cern over the
            mmgemznt aqd accountability          of Federal funds mde atilable         to the                                                .*
            Smithsonian Ins titutioa      . lie wish to rec_tlest a gmeml review by your
            Dfi‘ice of ,~thsonian       fiscal  practices   and pokkies  with the s~eci13c
            Dbjective     of detemtiing     whether these fIznds 2-e effectively      and prqerly
            utilized     for the purposes for which they were appmpriated.
                  this request in no way should be constmed to %ply any suqicion
          . of’ wongdooin~ or deliberate       iqropriety.     Ekcause o’f its unique status,
            hmever,    the 3zLthsonI.a~ has not undergone tne usual Fedeti          retie+& azd
            examinations      accoLMed most gave-mint      zgmcies . This can be attributed
            in pmt to the fact that the Smithsonian is governed bjr a Board of                -
            Regents cozqorised, arm% others, of the Chief Justice and Knke,rs of
            CO~SS.        tither,      private  support for’ the Institution   kas once a rime
            doi&nant factor,       leading to a trad,ition   of independence.

                  Recent testimow    has detemJned that Federal support in ihe fom
            of ap~ro@+tions      and grants now. accounts for about. 90 percent of the
      c     InstYwtion’s    funding.    Certainly the tiLthso&m    should be as accost-
            able to the Congress 2s any other Federal agency or orgazization.

                   Without l&&tin&       the scope of the GAO review of the SithsonizqTs
      I     fiscal   policies     2nd practices,     WC wish to direct   your attention   to a~
            internal    f’undir!! accost     disclosed   during the Comittee ;s ?&mh 23,
            1976, bud&et hearinrrs . !ihls account has been called mriousl:r            the
            Secretzyis      Reserve-Fmd,      the Contizgeney -Fbnd, and, rmre rec&tly       ,
            the I:‘orXng Furd.        Cene,rd.ly, assessments are made on t,he allocation
            of appropriations       to various tits      of the Snithsonian   with the mnics                                      ,
                                                                                   -..


                                                      L
                                                          .       1
                                                                      55
       8 APPENDIX I
                                                                                            APPENDIX I
     I 1 *..



                                                   -2-
 .                                                                              .
   being held for use at Secretary S’, Dillon Ripley’s                discretion for pro$am
   or activities.      ‘iM.s use is not necessarily          associated svith the origin~
 _ purpose of ths appropriations          as allocated     in the CUmittee reports accom-
   par-q&~ the appropriation       bills.     %til     this year the precise use of these
   f’unds lr;2s not reported to the Congress.

             The Smithsonian l-125 irdicated  a willin,g=~ess to revamp its procedures
     with respect to this contingency account so that the Coxxittee ~~311 be fully
     informd   in the future,     A close emxination     of past practices    9s needed to
     help the Comittee     develop future requirerents     and recomndations.

             Other patters of specif%c interest            to the ComLttee 3nclude the
    %ithsor!Lanls     travel practices,     particularly      ths reportedly        extensive
. . travel   of   the Secretary  he=    axd  abroad;     plans    for   construction     of a large
    rmseum support facility      in k’zyland;      use of the new Front Royal Cmter in
    suppo-rt of the Xatior.al Zoolo@cal Park; the expmdin~ Smithsonian research
    role, M-?Ich often appeax duplicative            and involves such operations            as the
    Tropical Research Center in the Panma Canal Zme uld the ChesapeaLe Eay
    Bmim-mental       Center; the rxmner in which private             fmds me used LTI con-
    junction    t,%th Federal fading;     and practices        involvir~~~ the establishxnt          of
    new units and facilities       with private      funds that involve an obligation             of
    future Federal suppoti.                                                                             t

             In thk latter     case, the Comittee    is concerned over the                mmer irk
     which the %Lthsoniaq       established   the CoopeN+.4,tt   Xusem~ in               X2;.: York
     city.   This nex facility      now rmuires   Federal support, and we                felt there
     was inadequate prior notice ar ,d -advame consultation       xLth the               ComLttee.
               W. IMght     Dye? of the Subcozxittee          staff    cafe be reached on 2211-7262
     if    any additional   infomation-is  needed.




                                                                                                             t
                                                              \                                             i
                                                                      chma.n,       izJiOCQtii&
A-                                                                      on the Departzmt  of
          Department of Interior                                        Interior md Related
          and Related Agencies                                          Agencies




                                                         56

     RCB:Db
                                                         SMITHSONIAN
                                                         -----IIcIcI--           INSTITUTION
                                                                                          --
                                         APPLICATION     OF SALARY AND EXPENSE FUNDS FOR
                                                   I~-~~--c---------Y----
                                         FJSCAL YEAR 1976
                                         ---II-----L          AND TNE TRANSITION--------
                                                      -Ii-l-l------               QUARTER

                                                               --
                                                                         Federal          funds
                                                                                    -------e-              -I-  Private -- funds
                                                                                          Grants &
     Detailed
     ---            budget
                  ------c---      categories                   Appropriated
                                                               --L---w--                  contracts
                                                                                          ---              Unrestricted
                                                                                                                  ----        Restricted
                                                                                                                              -----e-m
     Science:
     ----Assistant     Secretary                   for
              Science                                     I$          543,615      $            539,685          $ 27,195       $        63;732
           National   Museum of
            Natural            History                          13,162,515                 1,189,024              191,537              471,780
          Environmental      Science
             Program                                                   252,994
          Astrophysical      Observatory                            4,942,447              8,517,366                   72,930          273,670
ul
-4        Tropical     Research
             Institute                                              1,785,101                        729          41,848                 3'8 449
          Radiation     Biology Lab                                 2,057,390                   116,098          1 2,898                 10:735
          Office of International
             Programs                                                 373,416                    31,063                65,365
          Chesapeake Bay Center                                       653,495                   213,070                57,223            27,036
          National     Air & Space
                Museum                                              6,689,206                   176,454           303,300              265,375
          Center for the Study
             of Man                                                    500,490                  301,353            13,645               47,929
          National      Zoological   Park                           7,802,933                    22,192           135,398               43,827
          Fort Pierce Bureau                                                                                            30             601,170
          Interdisciplinary        Com-
                munications              Program                                            1,492,626                  23,302            11,988
          Research Awards Program                                     153,566
          Science Other                                         -----I                 ---        71700           --                -----I
                   Subtotal                                 $38,917,168            $12,607,360                   $934,671       $1,855,691
                                                               Federal
                                                      ---m-.----GTanFs&- funds              --v------Private   funds
                                                                                                                 -e....--
     Detailed         budget
     ------------w---m---      categories             Appropriated
                                                      ..,.-.-II------       contracts
                                                                            --I---          Unrestricted
                                                                                            ---------             Restricted
                                                                                                                  -l----I
     History       and--- art:
     -'--AsZZant              Secretar.y       for
                History       and Art                        173,939                                63,859
            Joseph Henry Papers                              125,142             65,131                                         (3,044)
            Office      of American
                Studies                                       67,896             19,144                                         14,436
            National       Museum of
                HiStOry       and Technology             6,938,550               58,901           207,509                      642,702
            National       Collection          of
                Fine Arts                            1 2,902,271                 18,880           180,457              44,348
            National       Portrait        Gallery       2,190,247              100,888            55,546              31,850
            Hirshhorn         Museum                     1,999,198                    100          48,275                4,968
ul          Freer Gallery           of Art                   573,089             47,066                            1,463,667
a3          Archives       of American           Art         410,750                                     850          316,546
            Cooper-Hewitt           Museum                   341,777             80,871                  322          684,231
            American       Revolution          Bi-
                centennial        Programs               5,827,504          -                       25,680
            Office      of Academic          and                                                L
                Educational         Programs                 604,808                                     500                    13,179
            Hillwood                                                                                                           518,803
            woodrow Wilson            Inter-
                national       Center      for
                Scholars                                                         44,038              80,754                    654,921'
            Belmont       Conference         Center                                                318,353
            History       and Art Other                   -     i                 1,100               i
                                                       ---II            --I_                      ----v            ----d-.--




                   Subtotal                          $22,155,171        $       436,119         $982,105'        $4,386,607
                                               Federal      funds
                                                 --PA---------                            Private
                                                                                   -I--------------     funds
                                                             Grants &
Detailed
---              budget
               --------   categories     Appropriated
                                         ---mm--              contracts
                                                             --------              Unrestricted
                                                                                         ---              Restricted
                                                                                                          ------
Public service:
-------
        AssisEa??E-Secretary       for
           Public Service                     175,273                                     14,944                -
        Anacostia     Neighborhood
           Museum                             667,393                (2,821)              34,107               68,287
        International      Exchange
           Service                            216,012
        Division     of Performing
        Arts                              1,518,555           1,776,713             1,197,057           1,782,616
     Office of Public Affairs                485,157                                   207,139                -
     Smithsonian    Institution
        Press                                 811,707                                   503,518                 8,882
     Office of Symposia and
        Seminars                                  66,150              3,738                    290             43,258
     Office of Elementary and
        Secondary Education                   133,186                          L
                                                                                             308               20,158
     Mail Order Department                                                              85,399                  -
     Smithsonian    Magazine                                                       16,344,945                   -
     Smithsonian    Resident
       Associates         ,                                                         1,684,227                   -
     Museum Shops                                                                   5,016,193                   -
     Office of Membership and
        Development                       -----             ---1-m
                                                                                      2,503,511
                                                                                   ---I_-             - -I--        130
               Subtotal                  $4,073,433        $1,777,630          $27,591,638            $1,923,331
                                                 --      Federal  funds
                                                           ---- p----1                    Private
                                                                                   ----------          funds -------
                                                                   Grants &
      Detailed        budget    categories       Appropriated      contracts       Unrestricted                  Restricted
                                                                                                                 -------      x
      ------------                               ------w-w         --.%..---                                                  H
                                                                                                                              l-4

      Museum programs:
      -----t-------                   '
              Assistant      Secretary      for
                 Museum Programs                       184,703            24,331
              Office of Museum
                 Programs                              276,970                               11,013                19,727
              Office of Building          Manage-
                 ment (South Group)                    687,506
              Office of the Registrar                  220,525
              Conservation      Analytical       1
                 Lab.                                  695,361
              Smithsonian      Institution
                 Libraries                         2,399,744                                     637                 4,599
              Office of Exhibits          Central 1,234,857                                  (2,455)                 -
0-J           Traveling      Exhibition
0                Service                               155,498           169,306            309,097                30,461
              Smithsonian      Archives                308,396
              National      Museum Act Program 976,080
              Major Exhibition          Programs       247,155       '     -
              HOrtiCUltUral       Services
                 Division                              639,934                                2,628                  -
              Other Museum Programs                -------       ----I- 1,300       ---_I               ------




                     Subtotal                    $8,026,817      $       194,937   $        321,361    $           62,787
                                                      --         Federal
                                                             -----------    funds                     Private      funds
                                                                              Grants    &
     Detailed
     -w-m--           budget -- cateEi.es I-          Appropriated
                                                      --------                contracts
                                                                             ----m-         Unrestricted             Restricted
     Administrative
     --------                     and
       Support        AmviEs;:
       ---lii~~iced~~~e-Secretary                               200,947                               154,200              54,997
               Secretary's           Files                       69,218
               Office      of Special         Assis-
                   tant    to the Secretary                     107,636                           1,586,603                 3,359
               Secretary's           Research      Lab           40,185            1,618              47,485               45,191
               office      of the Under
                   Secretary                                    309,061                                    8,616
               Travel      Services        Office                81,786
               Support       Activities                t        201,310                                25,413               ;,756
               Office      of General         Counsel           426,374                                13,593
               Office      of the Treasurer                 1,169,746                                 151,533              11,668
    II         Office      of Personnel
                   Administration                               887,781
               Office      of Audits                            280,385
               Office      of Equal
:   j              Opportunity                                  217,734
               Office      of Printing          and                                           I
                   Photographic           Services          1,045,343                                 137,036
               Office      of Supply         Service            606,234
               office      of Management
                   Analysis                                     304,734
               Office      of Protection
                   Services                                 8,703,940                                      6,676
               Office      of Facilities
                   Planning                                     859,378
               Office      of Plant        Services       13,963,416                                      19,869
               Office      of Computer
                   Services                                     761,211         542,076                   33,626               250
               Reserve       Fund                      ------II_              ----                                         11;576

                          Subtotal                         30,236,419          543,694
                                                                              w-u-           -a-2,184,650               128,797
                                                                                                                     -m---
                          Total                      $103,409,008
                                                      -------              $15;559,740
                                                                            --              $32;014.425
                                                                                            .    .  -r
                                                                                                                    $8,357,213
                                                                                                                     ---1-m
                                                      -----------           ----------       ----------              -w-w-----
                                                                     ,


                                                                          SMITHSONIAN------------
                                                                          ------               INSTITUTION
                                                          SUMMARY
                                                          -L--
                                                                      OF  TRAVEL
                                                                        ------11     FOR    ASSISTANT
                                                                                          ---------         SECRETARY'S
                                                                                                              ------
                                    AND     ABOVE
                                    ------------------- FOR    FISCAL  YEARS     1974,    1975,      1976
                                                                                       --~~~c------------I- AND   TRANSITION                                     QUARTER                    P

                                                                                                    Fiscal FuTi-worki~-daysana----l~--------I-
                                                                                                               year 1974                                                                    E
                                    ---~-----~-------I-----                                                                                                                                 f;
                                   No.        of         Full      working       days         on         nonworking      days-on                          Type of
                                                                                                                                                          ----------      funds used        E
      Traveler
      --------                     Trips
                                   ---               .official --------------
                                                                         travel(note                d) ----e--1-
                                                                                                       official     travel(note
                                                                                                                           --------               e)      Federal
                                                                                                                                                          -------             Private
                                                                                                                                                                              -m-w-         +


Secretary     (note    f)                40                              103                                      -c/147                                a/S    4,377             $ 8,306
under Secretary                          12                               26                                           41                                      2,720                  527
Assistant     Secretary
   for Science                           18                                33                                              45                                  3,295                1,310
Assistant     Secretary
   for History      & Art                16                      I         21                                              29                                  2,173
Assistant     Secretary
   for Museum Programs                   17                                48                                              65                            b/    6,518
Assistant     Secretary
   for Public     Service                 5                                25                                              33                                  2,157
Assistant     Secretary
   for Administration                    .w.                                                                          --                                      -s-11               ----
                                    --                                   ---
 cn Total    Assistant              108
                                    --                                   --256                                        36Q                                 $21,240
                                                                                                                                                           --                    $10,143
                                                                                                                                                                                  -----
 h, Secretary      & above          ---                                  B-e                                          ---                                  -----1                 ------
                                                                                                 .
a/Federal        funds    are   appropriated                excess             foreign       currency.
b/Federal        funds consist           of        both   appropriated                   excess      foreign       currency              and salaries            and expenses
- operating         funds.
c/Due to illness           while    traveling               abroad             an additional             30 days      was required                for     medical         care      and
- slow journey           home.                                                                                                                                                              x
                                                                                                                                                                                            F
d/Based       on 5-day week,        Monday-Friday;                       excludes          travel       commencing              after       4:OO p.m.          or     terminating           2
                                                                                                                                                                                            c
   prior      to 1O:OO a.m.                                                                                                                                                                 5;
                                                                                                                                                                                            I--
                                                                                                                                                                                            I-
e/Based       on 7-day     week,    Monday-Sunday.                                                                                                                                          t-
r/The     Secretary's       travel does not include                               time spent           at   Litchfield,                 Connecticut,           as follows:
    1974,    75 days;      1975, 89 days;  and 1976,                              130 days.
                       t               f




                                                                                                                                                                           H
                                                                                                  Fiscal ---worEingaayz-~-~--.---.-
                                                                                                             year 1975                                        ----         l-4
                            -I--_I----------                                               ----Fufn:                                                  I__-                 H
                            No.                oi   Full       working          days             and nonworking       days            Type of          funds used
                            trips-                  on
                                                    I----- official           travel
                                                                                ---                 on    official
                                                                                                 II---------l      travel             PeaiieraT
                                                                                                                                      -----                PrEaEe
                                                                                                                                                           ----_
Secretary     (note    f)              31                                66            .                            89                $ 4,710                $9,321
Under Secretary                            5                              6                                          6                                               434
Assistant    Secretary
   for Science                         10                 1              32                                         45                b/2,763
Assistant    Secretary
   for History      & Art              15                                36                                         55                        1,971
Assistant    Secretary
   for Museum Programs                 16                                37                                         60                        4,036
Assistant     Secretary
   for Public     Service              10                                27                                         35                        1,914
Assistant     Secretary
   for Administration             --                              a-                                          ---                      ----                   --L_




     Tota Assistant                    87                          204                                        29b
                                                                                                              --                      $15,394
                                                                                                                                       --I-                  $9;755
                                                                                                                                                              ---
OI   Secretary   & above           =f
                                                                  ---
                                                                                                              ---                      ------                 -----
hJ                                                                 --a
                                                                                                                              H
                                                                                                                              w
                          II                     Fiscal
                                       1------Iv-----myear 1976 and -a-transition     ---quarter      (15 months)
                                                                                                    ---------a-               l--l
                                                               FurI work?Eg-?&ys
                          No.     of   Full working days      and nonworking         days          Type of -- funds used
                          Trips
                          ---          on official  travel     on official        travel           FeaeraT
                                                                                                   -----          EYiYzi'fe
                                                                                                                  -----_
 Secretary    (note f)       48                      90                      125              g/S     2,644       $25,400
 Under Secretary              1                       4                        4                                       669
 Assistant    Secretary
   for Science               10                      45                       62                      3,175            702
 Assistant    Secretary                     1
   for History     & Art     22                      45                       56                   b/3,067          1,774
 Assistant    Secretary
   for Museum Programs       21                      66                       89                     8,733
 Assistant    Secretary
   for Public Service         7                      50                       66                     2,093
 Assistant    Secretary
   for Administration      -- 2                    -- 2                     -- 2                    ---- 175       II-
m     Total Assistant      111                     302
                                                   --                       404'
                                                                            --                     $19,887
                                                                                                    ----          $28,545
                                                                                                                   ----
ab    Secretary    & above z                       ---                      ---                     ------         u-----
,                                                                                                                             .

    APPEN3IX IV                                                                                         APPENDIX IV

           -The   Role     of the Secretary              of the Smithsonian                Institution


                     The Secretary           of the Smithsonian                  Institution            is by law

    also     the Secretary           of the Board           of Regents.             He is elected                  by

    the Board         of Regents           and is paid          from      non-Federal             funds.

                     The founding           act provides           that     the Secretary                shall      be

    in charge         of the buildings           and property              of the Institution,                    shall

    record        the proceedings             of the Board             of Regents,             shall     .perform

    the duties        of librarian          and of keeper              of the museum,                  and may

    with     the consent         of the      Board       of Regents’         employ        assistants.

                     The   Smithsonian           was      explicitly         established               as a chari-

    table     non-profit         corporation           to carry         out the trust            responsibilities

    of the IJnited         States      independent           of the Government                    itself.           It

    receives         the support           and assistance              of each     of the branches                       of

    the Government               without       becoming          a part      thereof.            The acceptance

    by the Institution            of increasing            amounts          of directly           appropriated

    funds      has    not changed           the basic       independent            authority             of the Board

    of Regents.

                     Provision        was made           in the formal            creation             of the

    Smithsonian            for   programs          in the areas             of concern           that       have         since

    occupied         the Institution           through       succeeding           generations                --    art,

     science,        his tory,       research,           museum           and library           operations,

    publications           and lectures,           and exhibitions               in museums                 and art

    galleries.




                                                           65
                                                                                                               .

APPENDIX IV                                                                                          APPENQIX IV




                 The      Secretary         is responsible                to the Board            of Regents

for     all    of his     activities        and     serves          as Secretary            of the Board             of

Regents          as well       as of the Executive                   Committee,               the Permanent

Committee,              and the Investment                  Policy        Committee.

                 Administratively,                  the Secretary              is responsible            for        the

formulation             and execution             of programs,                legislative        proposals,

budgetary          proposals           , their      justification          and execution.                This

includes         direct       participation           in the consideration                    of fiduciary

affairs,         the portfolio          management               of the funds           of the Institution;

recruitment             for    and appointments                to principal             professional               and

administrative                positions;          program           planning       and the determination

of objectives             of Smithsonian              activities;         review        and approval                of the

exhibition          and educational               programs;            participation             in the delibera-

tions         of numerous           comztnittees,           both      Federal         and non-Federal;

providing          information             to the public            through        publications          and other

media;          and representing                 the interests          and responsibilities                   of the

Institution         before         the Congress,              the Executive              Branch,         the public,

learned          societies,         educational           institutions,             scientific      organizations,

and other          bodies         international          and domestic.

                  Traditionally,              in connection            with      scientific        and other

research           programs,            the Secretary               of the Institution             has    served

as an office            holder,        member          of committees,                 or administrative

adjunct         to many        of the senior           learned          societies           of the Nation           as well




                                                         66
.


    APPEUDIX IV                                                                                                APPENDIX IV


    as internationally.                    For          example,           the Secretary               is a member

    of the National               Academy               of Sciences,              a Trustee          of the Kennedy

    Center,         a Trustee             of the National                  Gallery       of Art,          Chairman              of

    the World          Wildlife           Fund          U.S.      Appeal,           and President             of the Inter-

    national        Council         for     Bird         Preservation.                 A number              of related

    activities         include       the Harvard                    University          Visiting          Committees

    in special         fields       such      as zoology                 or astronomy              and astrophysics

    on which         the Secretary                 has         served       for     nearly       15 years;           the

    consortia          involving           activities             in the Panama                Canal        Zone      (first

    undertaken            with     Carnegie               Corporation,               Harvard           University,              and

    the American                Museum           of Natural               History       in the 1930’s)                or with

    allied       institutions         conducting                  astronomical               research         in South

    America          or in observatories                         within      the United            States.           Other       mem-

    berships          of the Secretary                    on boards,              commissions               and committees

    are      set forth      in the attached                      appendix.

                     Of particular               significance                in addition           to the traditional

    responsibilities               of the Secretary                      is that      he also        serves          in a pro-

    motional          and representational                          capacity         on behalf          of the Institution.

    This       involves          a constituency                  of approximately                  1,000,      000 Associate

    members,              and requires                  visits      to cities        around-the             United         States,

    lecturing,           holding          meeting          s , and otherwise                  participating            in pro-

    grams         in connection              with         raising         private      funds        and      seeking           support

    for      the Institution.
                                                    .




                                                                    67
.   ’
        APPENDIX IJ                                                                                          APPENDIX Ii



                          Throughout             the history            of the Institution             the Secretary

        has been          responsible              for    the day-to-day                operations        of a scientific

        nature         related         to fields         of research         in which          the Secretary           is a

         specialist.

                          All    eight      Secretaries           have       been       distinguished         men       in

         science         and each          has     pursued        his      scientific         career      after      becoming

        Secretary.               Joseph       Henry         was    a physicist;            Spencer        Fullerton           Baird,

        a naturalist;             Samuel          Pierpont        Langley,            a physicist        of astronomy

        and aeronautics;                  Charles          Doolittle        Walcott,          a geologist;          Charles

         Greeley         Abbot,          an astrophysicist;                Leonard          Carmichael,              a physio-

        logical        psychologist;               and S. Dillon            Ripley,         an ecologist          and an

         ornithologist.

                          The     Secretary     has traditionally     been expected    to write    and
                                .
         publish        scientific      papers,    books,     and other material    of a scholarly

         nature.          It is difficult           in recent           years,      with       the volume           of work      of

         the Institution,               to have          such   field     work        occupy      prolonged          periods

         of time,         but as recently                 as the 1950’s            such     research         was      undertaken

         for   several           months          at a time        in areas         such     as Panama             or Peru.

                          At     such     times,          however,          the day-to-day              administrative

           work        of the Secretary                  is designated            to an Acting          Secretary,           who

         has      so been        designated              by the Chancellor                as provided         for     in the

         Act      of May         13,     1884.

                           The Secretary                 has    assembled           a staff      of principal          assistants,

         known         as the Secretary’s                  Executive             Committee,            who are        organized




                                                                  68
APPENDIX IV                                                                                               APPENDIX IV

                                                                     .



 for     advice         and assistance              in the effective                    execution       of the

 Institution’s            broad        programs.                  These          are    Assistant        Secretaries

 in the fields            of Science,             History           and Art,            Museum         Programs,

 Public      Service,           and Administration,                         a Treasurer,               a General

 Counsel,          and an Executive                     Assistant.                The     support       and      staff

 services          required            to provide           administrative                  and specialized

 support          are    also     well     established               and are            under       a Director           of

 Support         Activities.

                   The     Secretary             has     continuing              responsibi,lity          for       carrying

 out the duties               of his     office        even        during         periods       of physical              absence

  from      his     office;       his     decisions               on a variety            of matters          are        based

 on public          contacts           outside         official          hours         and away       from       his      official

 post     of duty;        he has freedom                   for      self-supervision                  and responsibility;

 and he is not under                     the provisions                  of the annual             and sick         leave      act.




                                                            69
                   -.    e   ,   ._                 --            _.^                                         ^.




                                                _        .    .    -.               _                    .-        --     .   --   _-     .




                FiPPENDIX IV                                                                                                                      APPENDIX IV




Consell         Iat erzational                      de la CCasse,                         xonozary                      LMember

Cooper       Ornithological                                  Society

Cornell         Laboratory                      of Orr5t:?ology

interzatiozal                Council                for           Bird        Preservztion,                        President

titernational                Wild          1Vateriowl                       Association,                  Director

Ornit~olo,cical                       Society                of New Zealand

?a CT+l’ic Tropical                      Ijotanical                     Gardens,              Emeritus                   Trustee
                                                                                                                          s
Socigte       0 rnf:hologique                                de ‘razce,                  Xonorary                  Fellow


South      ,L-frican         Ornithological                                 Sociei;j-,        Corresponding                             hIember

Wildliie         Preservation                                Trust          international

World       Wildlife         Fund,                       Board of Directors
                         Chairman,                         U. S. Appeal

Zoological              Society             of tidia,                       Honorary           Fellow




                                                                        -      -




                                                                                                    70
                       _ _ _     - _ _ _ - _ - .                                    - _      ^ I .
                                                                                                                                 _ _ . - -        _ - _   -    _ -      .
                                                                                                                                                                                              .          .               -
                                                                                                            _       _ ___.   --.-_.                                     _
                *
                .r

                                                   APPENDIX IV                                                                                                                           APPENDIX IV




    .

                Government
    L

                Advisory                            Collncil             on ;-:istozic               “reservation                            (Desk                   kiterior)

                Americ                                  Folkliie          Center
                                                           . .
                 Federal                           Cowcil   on the Arts                      2nd E-lumanitics
                                                      Xationzl   Council                      on the Arts
                                                      N2tional   Council                      on the ZXumznities

                     Tedeid                        Comcil    ior Science 2nd Tec’hnology
                                                      inter- Agency     CommlLLr
                                                                               *L+e on X~ki'Jle                                                               Science            and Zngkeering

                     institute                      of X-C;lseux              Services,                Governing             3oard                                   (HEW)

                     SUpie?Xe                       CO zrt         Eistoric2l             Society,           Advisory                             3o2rd

                                                                                                                                             .
                     White       Eio~Lse, Committee                                           L e Preservation
                                                                                          io? “h                                                          of

                     White       h’ocse                     I-:istoriczl           As s ociation,               Soar6                            oi Directors
                                                                     -    ’




                     Smiths            onian

                     -4rchives                          of -4merican             Art,       Trustee
r
        I

                     Cooper-,. ‘-‘ewitt                            hkseum           oi Decorative                    ,4&s                        and Design,                     Advisory          3o2rd
            .
                     Freer                 Gallery                 oi Azt,       Visiting               Committee

                     Joseph                        H.     Eir$&orn    Museum    and Scul$ure                                                      Garden,                   Trustee
                                                           Nominating   Conxmitiee

                      J. F.            Kennedy   Center                          ior the Performing     Arts,   Trustee
                                             Executive                           Comkttee,     Xominating     Committee,                                                              r’ine       Arts       Committee

                      Nz’iional                     J-ir        azld Space         Museum                Advisory                3oard’

                      National                      Axxed            I’orces        ,Museum               Advisory                           Qoard

                      National                          3oard       of the Smiths                    onian Ass ociates


                                                                                                                             71
                                                                                                        _ --     _ .-_._    _._.                     .._.
           c


           ..
                         APPENDIX IV                                                                                               APPEI\lDI X IV.



         Xatioiial     Collection           oi ?Ixe          Arts             Commission
     .
         Xational      Gallery    of Art,    Trustee
                           3xecu:ive      Coz..x?.ee,                            Fina;lce        Committee

         Xa;io ilal    ,30r+ra it G2Xery                  Commission

         Reading       is FT;Sdam~~;tal,       National                          Advisory         3oard
                           Ese chive     I3 oar d

         %oard of Regents     and Esecu:ive    Commiktee
         Smithscnian   hstro+ysical      Observatory,    Visiting                                         Corxxittee
         s miths onian Coucil

         Smithsozllzr?         Reseerc’n          Fo-udatiox

         Smithsozk2-3          Science         kformation                     Exchange,          Inc.




         African      J-rt,     1lUS   eUiT1      Of     (ZiO,?Orary              Trustee)

         -4merican        Security         and Trust     Com?2cy,    %ozrd                              of Trustees
                           Trust         2,-.d kvestment     Committee

=_ 7
         America-Xepl                Society                            -..

         American         Associa5on               ior      the Advar:cement                     of Science

          Cairitz     Fouzidation,             i’ne      ,Uorris              and Gwendolyn,,              Advisory        i3oard
 L
          Federal       City      Council

          George      TV2sh~i~gton             University,                    %ooard. of Trustees
                          S ti3ildin~           COlTGX        ‘ttce           on Academic      -4ffairs

          Xztional      Academy          of Sciences

          S2tional       Society       oi Arts           2x6 Letters,                A&isory            Collncil

          32val      IXisto5cal        Toud2:ion,                      Iionorar?;       Vice       PresiGent

          Peri2 s ylvatia         Avenue         Develo?mezt                      Corporation,            3ocd      of Directors

                                                                                            72
                                                                                                    _-      _.                                                  _ .-
                                                                                                                          .                  -. _-   __.--._ -___-


                         APPENDIX IV                                                                                                APPENDIX IV



    .       Fnilosophical             Society          of Washington

            Xoneer        "0-~~25Orl,                 33carS       oi    Directors             .


            - lited     St2teS        C2?it01         I<istcrical           Socie?y,         Honorary            3oard        of Trustees
        .
            Washington           Institute         of Toreign              Affairs


                                                         f
            h?is cellane        ous

            American         Aczdemy             in Rome

            -4merican        -4ssociation               of ,Museums

            America          Znsti?&e           of Architects,                  %onorary            Member

            Americ2n          Izstikte          oi Biologi:al-               Sciences

            American          Museum            in.    Britah,             Member         of Council

            Arts      Council         of Great          Britain,           Cozzmittee              of Honor

            Association           of Science             Museum             Directors,             Member

            Foreign        Relaticzs,            iNember                of Council       on

            Z’orm2n        School,         Trustee
                                                                    -- -
            French        Institute,         Alliance            Fr2nc’eise,             Honorary         Trustee

            Haxv2xd         3oard .of Overseers,                          Committee           to Visit        Department            of Comparative
                                zbology
L


            Intexnationzl             Congress               of Systematic             and Evolutionary                  l3iology

            intexz2tional             Council          of Uuseums,                   U. S. K2tional              Committee

            Charles        Lindbergh            Mernorizl                Fz.zd,       Xonoxary           CO- Chairman

            Museum          of Tine        Arts,       Soston,             Visttor       to Department               of Zgy?t        2nd 4ncient      Near
                                 Ezstera           -45-t

            KaYon           3stitute         fox Texiorming                     Art s of india           (501%bay),           LMember       of Advisory      ad.

             ?ilgrims        of the United                States                        73
                             -                 .-- -. -..- -              -..-..     .._.      _ .-~.___
              .

         w.
    ,*            .
                                     APPENDI'X IV                                                                                       APPENDIX IV
    .c



              National                   3 ook Committee

              Kew                York      Academy          of Sciences                                                                                 .


              Xew                York      Zoologic            Society

              Zesearc:?                    Corporation,          Director

              Royal                Oak Foundation,               Trustee

                  Society            of the Cincixi2ti’             of tl3.e State             of Cor,?ecticut,          ~0Ilorar      9 Member

                  Society            ior    the Str;dy       of Xvolution

                  Society               oi Systematic           Zoology

                  Systemetic                 Collections,          .Xem3er             oi the Coderence                 of Directors

                  Wedge             Xztomologic2l               3esearch             ?oundation,             Patron

                      White        Memorial           louzd2Son,             Trustee




                      Winterihcr             Museum,           The Xe~.ry             Francis         du?ont,         Trustee

                      Yale       Uciversity
                                           JOpeL*s-
                                              -c L.&en ZEwards                      College        Fellow,      PeaSody         Museum     Associates

                      Yale        University      Library       =               -
                                            ~onora.ry     curator,                   Coe Collection,              Ornithological         Books


                      Conservation                 and Ornithology
A
                      An.erican             Ornithologists          Union

                      Association              Ornitoiogica          de 12 Plata,                  Honorary       Fellow

                      Bombay             Natcral      Eistory       Socieky,                Life   Fellow

                      Eritis’h          Ornithologists           Union,

                      Charles            Darwin       3ozzidation         ior        the G21232gos             isles,     I%ecutive       Committee
    APPENDIX V                                                                                     APPENDIX V




                                           S3IITHSOSIAS             IXSTITl7l’IOS

A                                             liG/iz’nr        ton, a   c: 2u.zf?u
                                                           J
                                                               mx
                                                                                          March   21,   1977
    Mr.    Victor    L. Lowe
    Director,      General   Government                   Division
    General      Accounting   Office
    Washington,        D. C. 20548

    Dear    Mr.          Lowe:

             Fundamental      to any analysis        of the specific       Smithsonian          opera-
    tions to which your report          is directed      is a clear understanding                of the
    unique charter       and functions      of the Institution.        The following           *‘Outline
    of the Origin      and Development         of the Smithsonian           Institution”       will,   I
    believe , explain      the nature     of the Institution,       clarify       the responsibilities
    of the Board of Regents          and the Congress          for its welfare,           and detail the
    significance      of both private     and federal       support    in its achievements               since
    its origin     in 1836 with the acceptance           of the private        bequest      from
    Mr.     Smithson.     This will provide        the essential       context        for the specific
    comments        which follow.                                                                              *.

            Fifty         years ago Chief Justice    Taft,                     speaking     as Chancellor      of the
    Smithsonian            Board of Regents,    observed                      that:

                    11
                     .  . .  many people suppose this private          research
            establishment       to be a part of the Government.          . . .
            I must make clear,          gentlemen,      that the Smithsonian
            Institution     is not, and has never been considered            a govern-
            ment bureau,         It is a private   institution   under the guardian-
            ship-of the Government.           I1

    This characterization       of the Smithsonian     and its relationship     to the Govern-
    ment refers     to the legal foundations     of the Institution    in the will of James
    Smithson    and the Act of July I, 1836, which accepted             the bequest.

           Smithson,       in bequeathing       the whole of his property         “to the United
    States of America,           to found at Washington,         under the name of the
    Smithsonian     Institution,       an establishment       for the increase       and diffusion
    of knowledge     among men, I’ created           a charitable      trust under the terms       of
    which the United        States would serve as trustee            for purposes      not limited   to
    the national   interest        but for the benefit   of all mankind.        By the Act of

                                                               75
                                                                                                                  .   :
                                                                                        APPEilDIX V

  Juiy 1, 1836, Congress            accepted    the Smithson    trust    on these terms,    on
  behalf    of the United     States,    and pledged the “faith       of the United States”
  to carry     out the purposes        of the trust.   Consonant      with its commitment
  to the trust,      Congress     has, from the start,       supplemented       the trust
  resources      with federal      funds and property.

            This unique       combination        of a privately-endowed              institution,
  administered         by the Board of Regents              independent        of the Government
  itself,     a.nd the continuing        support      of the United       States,     as trustee,        in
. gezaerous fulfillment           of its pledge,        has made possible           the remarkable
  achievements          of the Institution.         It has engendered           contributions         from
  private      donors     which were inconceivable               in 1836.      The great national
   collections      now cbnsist       largely     of private       gifts,  and continuing          private
  additions      to the Smithsonian’s           independent         trust  funds have tiintained
  “he Institution’s        central     resource       for initiative      and integrity.          The
  Congress,         on its part,     has responded          mi”& the very         substantial      federal
  support      which has been essential              to the growth        of the Institution         and to
  many of its far-reaching               services      to the public      for over a hundred             years.           i


           Since 1846, the Enstitition               has greatly    benefitted  from the unstinted
   efforts   of the six Congressional                members     of its Board of Regents.’     In this
  regard,     the following  paragraph,               from   a Smithsonian     publication in 1906,
  is still pertinent.

                  “It is probable            that no class of&e              -4merican      people
           appreciate          the work of the Institution                  more fully than the
           members          of Congress.              This has been clearly              shown by
           the uniform           liberality       with which,          throughout      many suc-
            cessive      terms,        regardless           of changes       in the political
            completion           of the administration,                they have supported          its
           policy;      by the discrimination                  with which they disseminate
           its reports;          by the ju-dgment             with which they select their
           representatives.upon-its                    Board       of Regents,      and above all,
           by tne s c~-~pulous              care with which they protect                 the Institution
           in its independence                 of political       entanglements.           That the
           Institution        has accomplished                so much in the past is Largely
           due to the support                which it has received             from these practical
           men of business,                and through          them by the people of the
           United       States.       It is to such support               f&at it will owe its
           efficiency        in the future,           and it seems right that every                oppor-
           tunity      should be taken to explain                   its operations       to the public.
           No intelligent           American          can fail to appreciate            the benefits
           which the highest               interests        of ‘the American         people receive
           through       the proper           administration           of the Smithsonian         bequest.”




                                                          76
                                                                                                                        _.-..   ..--
    APPENDIX V                                                                          -- AlJPtNUlX ‘V       - --.


                The unique nature        of the Smithsonian     has been 2 mystery         to
      many,      and doubting      voices have occasionally        been raised,      but through-
      out its one hundred          and forty   years there has been 2 broad           consensus
      in Congress       which has respected         both the letter    and the spirit     of the
       original    bequest.      Congress     has consistently     maintained     the integrity                         of
      the Institkion’s       trust   purposes     and its independence       of the admitistration
      of civil government.

               In 1923, President    Harding     suggested    the inclusion     of the Smith-
      sonian     in a new Department     of Education     and Welfare,      but the Joint Com-
      mittee     on Reorganization    concluded:

                      “The Smithsonian          Institution        is one of the chief educa-
               tional    establishments         under the Government,                and the sug-
               gestion     that it should be incorporated                  in the department       of
               education       and relief     seems,        at  first   blush,    to be entirely
               logical.      5ut the institution          is effectively        a corporation
               established        under the terms           of a private       bequest.     It is only
               quasi-public         in character.         Its growth        and its splendid      success
               have been due not less to private                     benefactions     than to public
               support;      and there is every reason                 not to endanger       its develop-
               ment by altering          its relationship           to the Government,          or by
               superseding         the arrangements            under which it has so greatly
               prospered.       ‘l

             More recently,   the Comptroller                      General,   in a letter  to the
     Secretary   of the Smithsonian  Institution                     on September     1, 1?61, stated:

                      “However,          there is for consideration                 in this instance          the
               unique nature           of “he Smithsonian           Institution        and of the property
               appropriated          for its uses and purposes.                   . . . From          time to
               time the functions             of the Smithsonian              have been increased               by
               laws     placing      under its control           additional        establishments            or
               authorizing         it to extend its activities               into additional        fields,       but
               its organization            and powers        with respect          to tie subject         matter
                of il;s. creation       have remained            substantially         unchanged.           (See
,              2t) U.S. G. 41-57).              . . . By the act of June 28, 1955, 69 Stat.
                189, the Congress              authorized       the construction             of ‘a suitable
               building      for a Museum            of History       and Technology.             . . for the
               use of the Smithsonian               Institution,       ’ at 2 cost not to exceed
               $36,000,       000.      While the cost of this building                   is covered         entirely
               by appropriations             from the general             treasury,         we find nothing
               in the act to indicate             any intention         that the building          when complete




                                                                 77
                                                                                                                                          .   --
                                                                                                                                     .-
                                                                                                     ,_   ^____._A.___       -----

                                                                       _   _.   __-   _---   -   -




APPETIDIX V                                                                                  APPENDIX V



          shall not be as much             the property      of the        Institution,       and
          subject      to its control       to the same extent,               as the huildings
          originally       constructed        from funds of the            Smithson       trust.
          In effect,      the building       is appropriated       to       the Institution         and
          dedicated       to the trust       purposes,     without         qualification         or
          restriction.       ‘I


          In the course        of its development,          which has paralleled              the growth
  of the nation,      tie Institution       has been faithful        to its trust       mandate       and,
 at the same time,           has achieved        a great many of the specific                 objectives
 which its Congressional              supporters       since 3ohn Quincy Adams                  have
 envisioned.        The achievements            of the S,m.ithsonian,         nationally        and inter-
 nationally,      are due in-essential           part to the energy          and discretion          with
 whi&      successive       Boards      of Regents,       Secretaries,        and staff have used
                                                                                                                                                   i
 the independent         trust    resources      to venture      into new fields          “for the increase
 and diffusion       of knowledge         among men” and to encourage                   the private       gifts
 without     which the national          museums       would scarcely          exist.       The judgment
 of Congress       in assigning        to the Board       of Regents       and Secretary          the respon-
 sibility    for selecting       the most appropriate           of the myriad          opportunities
 offered     to the Institution       has repeatedly        been vindicated           and reaffirmed            in
 tie very substantial           appropriations        of federal       resources       to the Smithsonian.

          Set forth in the        following      “Outline’~       is the basic history        of the
 Smiths onian.       All the       major    actions      of the Congress           with regard     to the
 ?&tit&ion      from    1836      to 1883 are noted.              During     this period    the principle
 of federal     support   for       the independent         trust     establishment      was recognized
 by the Congress,        and       the Institution’s        expansion        to its present     scope was
 begun.




                                                                                                                         P




                                                         78
                                 .     .   _             - -     .   .   -   - I - - . _




..   . APPENDIX V                                                                                           APPENDIX--i
                    OUTLIXE          OF TKE         ORIGIN               AND               DEVELOPMENT

                           OF THE              SMITE-LSONIAN                 INSTITUTION



             I.      The   Smi”&son            beouest         to the United                  States   2s   trustee

             In 1826, James Smithson,    2n English  scholar    and scientist                                            of inde-
        pendent  means,  drew up his will and provided    therein:

                     ‘5 the case of the death of my said nephew without              leaving a
             child . . . I then bequeath          the whole of my property     . . . to the
             United    States of America,         to found at Washington,    under the name
             of the Smithsonian      Institution,      an Establishment   for the increase
             and diffusion    of knowledge        among men. It

              Smithson     died in 18’29. His nephew died                                    without  issue in 1835.           In
                                                                                                                                      i   ;
        December       1835, President    Jackson transmitted                                    to Congress  2 report           on
        ‘Lhe bequest,    stating:

                     “The Executive    having   no authority   to take any steps for
             accepting   %e trust   and obtaining   the funds,    tile papers  are com-
             municated    wi”& a view to such measures        2s  Congress    may deem
             necessary.   I’


             II.     The Act of 1836, pledging     the faith                                  of the United     States
                     to the execution of ‘he trust

              John Quincy Adams,      2s  chairman  of the Select Committee                                            appointed
       by tie House to consider      the bequest,  prepared    the bill which                                         became
       the Act of July 1, 1836, add the unanimous         committee     report,                                        which
       includes    the following statements:

                     “To the acceptance        of this bequest     and to the assumption
             and fulfilment     of the high and honorable         duties  involved in tie
             performance      of the trust     committed     with it, the Congress     of the
             United    States in their   legislative     capacity   are alone competent.      ”

                     “Of all the foundations       of establishments         for pious or chari-
             table uses,     which ever signalized        the spirit    of the age, or the
              comprehensive       beneficence    of the founder,       none can be named
             more    deserving     of the approbation       of mankind     than this. ”




                                                               79
        .--     _-   _   _   .-   ---   _.L_   -.     -   --   --   ..--    -   ..,_-_.    -    .-    -   -     .   -.   .-   .-.-.   _   _   .__




.. APPENDIX V                                                                                   ;                                             APPENDIX V


             “To furnish    the mea&       of acquirisg   knowledge     is, therefore,
        the greatest    benefit   L&at can   be conferred    upon mankind.        It pro-
        longs life itself,     and enlarges    the sphere    of existence.    l’

             “It is, &hen, a high 2nd solemn     trust   which the testator     h2s
        corrnzitted   to the United   States of America,     and its execution
        devolves    upon their   Representatives    in Congress     duties  of no
        ordinary    importance.    ”

            “In the commission        of every trust,      there is 2n implied       tribute
       of the soul to the integrity       and intelligence      of the trustees;     2nd
       there is also an implied        call for the faithful      exercise    of those
       properties   to the fulfilment      of the purpose       of the trust.   ”

              “Your      Committee       are fully persuaded,          therefore,      that,   with
       a grateful        sense of the honor        conferred      by the testator       upon the
       political      institutions     of this Union,        the Congress       of the United                                                              i
       States,      in accepting      the bequest,        will feel in all its power         and
       plenitude       the obligation       of responding       to the confidence        reposed
       by him,       with all the fidelity,        disinterestedness          and perseverance
       of exertion        whi&     may carry      into effective       execution     the noble
       purpose       of an endowment          for the increase        and diffusion       of knowledge
       among men, I1

        The Senate           report                 o.n this               same                bill           states     in part:

              “The corm-nit-tee        suppose      it unquestionable           ‘chat the executory
       bequest      contained       in Mr.     Smithson’s        will,     of his whole property
       to the United        States,     in tie event that has occurred,                   for tie pur-
       pose of founding          at Washington,          under the name of the Smithsonian
       Institution,      an establishment            for the increase          and diffusion        of
       knowledge       among men; -*1s by the law of England                       2 valid    bequest;
       that t-he United        States will be entertained              in the court of chancery
        of England     to assert       their    claim to the fund as trustees,                 for the
       purpose      of founding       the &aritable         institution       at Washington         to which
       it is destined       by the donor,         and that that court will decree                 that the
       fund shall be paid and transferred                   to the United         States,     or their
       lawfully     authorized        agent,    leaving     it to    the   United     States   to apply
       the property        to the foundation          of the intended         charity      at Washington
       2nd to provide         for the due administration                 of the fund,       so as to
       accomplish        the purpose         of the donor. ‘*




                                                                                          80
        . .-      _---   . - -_.._--._~_. _. ~. .--_ .                  _-.   -~

    APPENDIX V                                                                              APPETIDIX V

                    “The fund given to the United      States by Mr. Smithson’s        will
               is nowise   and never     can become   part of their revenue.      T-hey
                can not claim or take it for their     own benefit.   They   can   only
.              take it as trustees,     to apply to the charitable  purpose    for which
               it was intended     by the donor. ”

                      “Upon the whole,       the committee         are of opinion that it is with-
               in the competency         of the Government           of the United       States,    that it
               well comports       with its dignity,       that,    indeed,     it is its duty to assert
               in the courts     of justice     of England      the claim      of the United       States to
               the legacy bequeathed          to them by Mr.          Smithson’s        will,   for the pur-
               pose of founding       at Washington,        under the name of ‘The-Smithsonian
               Institutidn,   1 an es’ablishment        for the increase          and diffcsion        of
               -knowledge    among men,         and  LLhat  provision       ought    to  be   made    by
                Congress    to enable the Executive            to assert     and prosecute         the claim
               with effect.   ”    .
                                                                                                                             i
            The Act of July 1, 1836, 5 Stat.               64, pledged         i&e faith of the United
     States      that all the monies         or other funds which might                be received      for,   or                ’
     on account      of L&e legacy,        should   be  applied,       in    such  manner     as   Congress
     should direct,        to the purpose       of founding       and endowing         at Washington,
     uoder the name of the Smi”&sonian                 Institution,         an establishment        for the
     increase      and diffusion      of knowledge       among men.             The Act required         the
     Treasurer        of the United      States to account          separately      from all other accounts
     of his office for all sums received               by him in virtue           of tie bequest.         And
     it made the first        appropriation       from federal         funds for the benefit          of the
     trust,    in the amount       of ten thousand       dollars,       to defray      fhe expenses        of pros-
     ecuting     the claim and of obtaining           possession          of the funds.

          With regard    to the pledge   of the faith of the United                         States,     John    Quincy
     Adams,   in a lecture    given zin Boston in 1839, states:

                     “Having       drawn with my own hand that Act, as it stands with-
               out the alteration           of a word,        upon the Statute book,         it has given me
               heartfelt      satisfaction       that although         there were members             averse     to
               the acceptance           of the bequest,         the Bill was unanimously              reported
               by 2 Committee             of nine members             of the House of Representatives;
               that it was adopted,             without      a proposal       of amendment       or a word of
               opposition       by both Houses            of Congress,         and approved      by the then
               President        of the United        States.       It has delighted       me yet more to find
               that the full import           of that pledge          of faith has been understood             and
               felt,    by the Agent,         commissioned            for the recovery       of the funds,        and
               by the present          President        of the United        States and the Heads of
               Departments.             In my own judgment               the mere naked acceptance              of the
               bequest,       would have imposed               upon the United        States the moral
                obligation      of all that was promised                in the pledge of faith;        but to this
                moral      obligation      I was desirous           of adding a sanction        equivalent       to an
                oath before        God,     and   such     I  considered       the pledge   of  faith    in  the   Bill. ”

                                                                   81                                                                I
     -APPENDIX V                                                                            APPEND-IX V------


          TTT,     The    Investment      of the trust      funds   in State     stocks      in   1838

           On the basis of “the Act of 1836, and Adams’                   report,     the English        Court
3    of Chancery,       in htay 1838, adjudged          tie Smithson        bequest      to the United
     States . On July 7, 1838, the last day of the session,                       Congress       attached
    a rider   to the appropriations           act for the Military        Academy,         directing       the
    investzment      of the Smithson      funds in stocks         of States bearing         not less than
    five per cent interest         and the investment          of accruing      interest     in like manner.
    Adams     protested      in vain.    The funds, in excess           of half a million         dollars,
    arrived     in the United     States on September            1, 3838, and were so invested                 by
    the Secretary        of the Treasury.        During     the next eight years           many of these
    State stocks      declined    substantially      in value.

          Iv.      The payment         of exoenses       from   the trust      funds   in     1839

           The Act of 1836 had appropriated          ten thousand     dollars   of federal-funds
     for the expenses    of securing     the bequest      in L&don,     and in 1837 an additional                   i
    five *thousand dollars      was appropriated       for this purpose.      After   receipt    of
    the trust   funds in September        1838, the Secretary       of the Treasury      requested
    tie opinion    of L&e Attorney     General   whether      any of the expenses      involved
    in bringing    tie bequest    to the United   States should be paid from the trust funds.

         After   stating   the provisions    of the Act of 1836, accepting       “he bequest
    and pledging     the faith of the United    States to apply the monies       and other
    funds which might        be received  to carry    into effect the provisions     of I-;he will,
    the Attorney     General    says:

                  “From      these provisions    it appears      to me that Congress        intended
          that there    should be no diminution         of the funds bequeathed       for tie
          purpose     specified    in said will,   but that &he whole,      whatever     they
          might    amount     to, should be applied      to carry    into effect the intention
          of the Testator;       and when the object       of the bequest    is considered,       it
          cannot be supposed         +&at Congress     would ad in any other than a liberal
          spirit.

                “My opinion    therefore       is, that the amount          of the whole money,       .
         and other funds received         by the Agent      of the United        States under the
         Act of 1st July 1836 without         reduction,     constitute       the Smithsonian     fund,
         for be purposes     specified      in said Smithson’s         will; and that the whole
         expenses  of prosecuting        said claim,     receiving      and transporting      the
         same to this country,       including     any additional       expenses       which may
         have been incurred      here,     ought to be defrayed         out of the appropriation
         made by Congress.      ”




                                                      82
                                                                            . - _. _   _---.     -.    .- ...._                       -
    . . APPENDIX V                                                                              APPEZDIX V

            Since the prior   appropriations       were insufficient,    the Secretary     of the
      Treasury    in December      1838 requested      an additional   ten thousand    dollars
      to cover   such expenses      on the principles    laid down by the Attorney        General.
      However,     in March   1839, Congress        added “he following     sentence   to the
I     Civil  and Diplomatic    Act:

                 “For  carrying         into effect the acts relating  to the Smithsonian
            legacy,   $10, 000,        to be paid out of the fund arising    from that legacy.                           I1

            Later      in   1839,   John   Quincy     Adams        wrote    in his     diary:

                  “The private       interests      and sordid        passions      into which that fund
            has already     fallen      fill me with anxiety           and apprehensions--that           it will
            be squandered        upon cormorants              or wasted in electioneering             bribery                 .
             . . . &he investment            of the whole fund, more than half a million                       of
            doIlars,    in Arkansas          and Michigan        State stotks;         and tie dirty     trick
            of filching   the ten thousand            dollars    from-the      fund last winter        to pay
            for the charges        of procuring         it --all   are so utterly        discouraging        that                 i
            I despair    of effecting        anything      for the honor of tie country,              or even
            to accomplish       the purpose         of the bequest--the           increase      and diffusion
            of knowledge      among men. ‘I

      In March    1843, an additional  amount    of $3,815.73    was appropriated                                 from
      federal  funds to pay the remaining     expenses    of securing  the trust.

            V.      The Act of 1846, establishing                the Institution       in perpetuity
                    and restoring the trust   funds

            After    eight years   of debate,     Congress,      in the Act of August      10, 1846,
      9 Stat.     102, * “for the faithful     execution    of said trust,   according     to tie
      will of the liberal     and enlightened      donor,”     constituted  the President,        the
      Chief Justice,      and other officials:

                  “an ‘establishment,        t by the name of the ‘Smithsonian      Institution, ’
            for the increase      and diffusion      of knowledge     among men; and by that
            name shall be known and have perpetual                succession,  with the powers,
            limitations,      and restrictions,      hereinafter    contained, and no other. I1
4
             Perhaps     as a result     of John Quincy Adams!          appeals     to conscience,
      the Act declares        that the entire      amount    of the bequest,       without     deduction
      for expenses,        is on indefinite     loan to the Treasury          at six per cent interest
      from September          1, 1838.      The amount      of $242, 129, being the interest                 .
      which would have been paid from September                    1, 1838, to July 1, 1846,
       [uncompounded),         is appropriated       from federal    funds for &e erection             of
       suitable   buildings      and other expenses       of the Institution.        A permanent         appro-
      priation    of the interest      accruing     after July 1, 1846, is made “for the perpetual
      maintenance        and support      of the said institution.     ” A portion         of the public
      Q   The permanent     provisions            of the Act of 1846 were reenacted                      in the
          Revised  Statutes   of 1875,           Sections  5579-5594,  and now are                     found in
          20 U.S. C. $541-67.
                                                            83
                                                 .--   ._.. .._.. ..-                        APPE.?161:: “.- -- .-      ...   -.-
         APPEXDIX v

        g rounds    wLthin the city of Washing             ton, belonging   to the United  States,             is
        appropriated      to the Institution for           a site for its building.    And Section             5 of
        the Act reiterates      that:

                   .
                    11
                       . .  all moneys     recovered    by, or accruing      to, the institution,
              shall be paid into the treasury        of the United   States,      to the credit    of
              the Smithsonian     bequest,     and separately    accounted      for,   as provided
              in the act approved      July first,   eighteen  hundred     and thirty-six,
              accepting    said bequest.     ”

              VI.        The continuing       responsibility            of the Board   of Regents     and
                         the Congress      for the Smithson               trust

                By the Act of 1846, Congress              established      the Institution-in       its present
        form     and provided         for the administration        of the trust,      independent        of the
        Government          itself,    by a Board of Regents         and Secretary,          to whom is assigned
        broad     discretion        to determine     the most appropriate         means of increasing             and dif-
        fusing     knowledge        among men.        The reasons       for creating       a board     of distinguished
         individuals      from      the three branches       of the Government           and from      the citizenry     of
         the United      States to carry        out these unique      trust responsibilities           of the United
        States are set forth            in the House debate precedin, * the passage                of the Act in 1846:

                  “Very      considerable      latitude      of control,      as to tie means        to be used,
              is given to the board of managers,                  and the e’nds to be aimed at are
              described       in comprehensive           terms.      But the most ample guarantee
              for the wise and faithful           use of this discretionary             power is obtained          in         *
              the fact,     that the board till         consist    of the Vice-President            of the United
              States,    the Chief justice          of the Supreme          Court,    three Senators,         three
              members        of the House,        and six others         to be chosen by joint resolution
              of the two Houses,           who are required          to submit      to Congress       annual
              reports     of the operations,          expenditures         and condition      of the institution.
              In addition       to all this, -there is reserved             the power      to alter   and amend
              the charter,         as the res-tits     of experience         may render       necessary      or
              expedient.          All these provisions         seem to be wise,           and make it almost
              impossible         that any abuse or misapplication                of the fund can ever take
              place. ‘I .                                                                                   0

A
               Implicit  in these reporting     and amending       provisions     of the Act of 1846
        is the commitment         of the Congress   itself    to assist    and protect    the progress
        of the Smithson      trust and to maintain     its independence        from    the three branches
        of the Government.          The House report       of March     3, 1855, on the Smithson       fund,
         states in part:

                   “Regard     for the memory    of the.dead  who conferred     upon our
              citizens     the bezefit of the fund,   and upon our nation    the honor of
              its administration,      no less than a mere     self-respect,    will ever lead



.   I



                                                                  84
            __ ..-       _                                             _.   .- _. ..-.        .- .- .   . -- -.. - -
  APPE?dDii V                                                                            APPEEDiX V
      this nation,     through    its representatives,        to guard with peculiar
      vigilance     the sacred      trust involved     in the bequest    of 1Mr. Smithson,
      and carefully      and diligently       to watch the progress      of the Institution
      in the fulfillment       of tie noble wishes       of the founder,    and the just
      expectation      of mankind       in its regard.    ”
                                                                                                                                  t
            “The Gover-nment         of the United States,          in accepting       the great                                  !
      trust    conferred,      pledged itself      to carry      out the objects        of the founder,
      to administer        the funds with a distinct          reference       to the requirements
      of the will,      and to keep the institute,          which bears         the name of the
      founder,      separate      in all its relations      from any and every other;              to                             j
      give it a distinct       and substantive        existence,       and.insure       independence                   ..         :
      and efficiency        to its operations.      ‘?                                                                  .         ,
                                                                                                                                  I
                                                                                     .
      VII.       The   statutory     plan   for   the Institution

        During      the Lodg debate preceding          the Act of 1846, various           groups      in
Congress        had proposed        that the Smithsonian         should be a national         university,       .               i i
an agricultural         school,     a normal     school,     a school for the blind,         a national                           L
library,       a botanical    garden,     a national      observatory,        a chemical     laboratory,
a popular       publishing      house,   a lecture    lyceum,       or a national      museum       of arts                       I
and sciences.           So-roe of the proponents         focussed      on the “increase        of knowledge,”                     ‘1
some on its “diffusion:*while              o&ers     emphasized         that the trust was not intended                     :     ,;
to benefit       the United     States only, but the world           at large.     Although      the university                    ;
and school proposals             were abandoned        on the theory        that education      was a field
reserved        to the States by the Constitution,             the Act of 1846 achieved            passage by                     ;
providing       for most of the other proposals              in the one Institution:                                              ‘i
                                                                                                                                   i
           “Section     5. . . . the board         of regents     . . . shall cause to be
      erected      a suitable    building,     of plain and durable         materials       and
      structure,      without     unnecessary       ornament,      and of sufficient         size,
      and with suitable         rooms      or halls for the reception          and arrange-
      ment,      upon a liberal       scare,   of objects    of natural     history,      including                               I
      a geological       and mineralogical         cabinet;    also a chemical         laboratory,
      a library,      a gallery     of art,   and the necessary         lecture      rooms      . . . .‘I

           l’section     6. . . . in proportion        as suitable      arrangements       can
      be made for their reception,              all objects    of art and of foreign        and
      curious      research,      and all objects      of natural    history,     plants,   and
      geological      and mineralogical          specimens,      belonging,      or hereafter
      to belong,       to the United States,        which may be in the city of Washing-
      ton, in whosesoever            custody    the same may be, shall be delivered
      to such persons          as may be authorized          by the board      of regents     to
      receive      them,     and shallbe     arranged      in such order,        and so classed,
      as best to facilitate         the examination       and study of them . . . . *’




                                                   85
    .     .                                                      .._..      .   .._     .---_   __i_.-._-_ _. __    _. - - _.I .- .-I.-_- --
          APPSDIX               V                                                                      APPENDIX V


                    “Section    8. . . . And the said regents           shall make,   from the
              interest     of said fund, an appropriation,         not exceeding    an average
              of twenty-five      thousand   dollars   annually,     for the gradual     forma-
+             tion of a library      composed     of valuable    works pertaining      to all
              departments       of human knowledge.       I1

                   “Section  9. . . . of any other moneys     tihich have accrued
               .     the said managers
                     l      .             are hereby authorized     to make such dis-
              posal as they shall deem best suited for the promotion        of the pur-
              pose of the testator   . . . .I’

                    “Section    10. . . . the author    or proprietor     of any book,       map,
              chart,    musical    composition,  print,     cut, or engraving,       f,& which
              a copyright     shall be secured    . . . shall       , . . deliver        . . . one
              copy of the same to the librarian         of tie Smithsonian      Institution     . . . . I’

              It is evident that this broad range of fun&ions         could not be supported
        solely by the annual income         of $30,000.    The two most influential     factions
        which had emerged        during  the long debate were the national      library    and
        national   museum    groups.     They had joined     forces to pass the Act of 1846,
        but each intended     thereafter    to capture  the entire  resources    of the Institution.

              VIII.             The   redefinition   of the Institution’s       basic      functions

               The first       Board     of Regents     was appointed         shortly     after the passage         of
        +he Act in August            1846, and by the turn of the year it had elected                     a distic-
        guished      s cienfist     as Secretary,       selected      the site on the Mall,            and authorized
        the construction           of a very large rlcastle”         estimated        to cost about $250,000.
        The iacome          problem      was immediately          apparent,       and it was agreed that
         construction        should be spread         over a period        of several       years    in order to
        accumulate         interest     for addition     to the endowment.             An uneasy       compromise
        was worked          out with the library        and museum          factions     (both     of which were
        represented          on the Board      of Regents}       whereby       one-half      of the trust   income
        would be spent on the library                and museum         functions      and the other half on
        scientific      research       and publications.

               A bitter      and protracted       struggle      between     the factions      ensued,      and in
        1855, after        investigations       and reports       by both Houses        of Congress,         the
        national     library      function    was dropped.         At the same time the building                was
        nearing     completion,          at a cost of $325,000         (not including      the federal       appro-
        priation     of $7,000       in 1852 for planting         and finishing     the roads and walks
        around    the building).           It was necessary        to decide whether          tie Institution       could
        afford   to accept the government               collections,       as provided       in the Act of 1846,
        and whether         the resulting      museum       would be appropriate           to the basic purposes
        of the     trust.




                                                                 86
         _    -.                          . .           _-- - _. _-_- _ ._. __-
                                                 __-_.____                          ..--. -~
APPEZDIX V                                                                          APPEiiDIX V

           The House report         of March      3, 1855, quoted above,        includes    comments
on the museum        concept       in terms      of the requirement       of the trust   that the
Institution    be not limited         to local   or national   functions:

               *‘We have,   all around us, libraries    and museums,    by
        which what is known of literature        and science    may be
        diffused,    so far as the influence   of those libraries   and muse-
        ums extends;      but it can not be denied that such an influence
        is necessarily     quite limited.  ”

                “A museum         for the Smithsonian             Institution       should be of
        a kind to assist         the student        and the master            in natural    studies
        and enable them to pursue                 thei r inquiries          to the full extent of
        attained     results,       that they may increase               the amount       of that
        kind of knowledge            -- may add to what is already                   known; and
        when they shall have completed                    that commission             and their
        reports     shall have satisfied             the Instit+tion         that something       is
        contributed       to the previous           amount     of knowledge          in their
        particular      branches,         then the Institution           shall cause these
        contributions         to be printed        in an appropriate            manner     and
        copies to be distributed              to the various         libraries       of the country
        and the scientific           associations       throughout          the world,     thus
        diffusing     knowledge         among men. ”

           This concept      of the research        and publication    functions     of the museum
was clearly         within  the basic purposes         of the trust,    but the additional       role
as curator         of the national   collections      was also urged upon the Institution.
Although        much of the museum          material     which had been accumulating             in
Washington,          at the Patent   Office      and elsewhere,      was of importance         to the
scientific       research    of the Institution,       much was of lesser        interest,    and
there was a real danger that the expense of care and maintenance                            alone
would      etiaust     the entire  income       of the trust.     In 1858 the following       agree-
ment was implemented,              as summa rized         in Secretary     Henry’s     annual report
to the Congress:

               “It will be recollected         that by the law of Congress           incor-
        porating     this Institution     Iall   objects    of art and’of foreign       and
        curious     research,       and all objects       of natural  history,    plants,
        and geological        and mineralogical          specimens    belonging     to or
        hereafter      to belong to the United States which may be in the city
        of Washington,         in whosesoever         custody    the same may be, shall
        be delivered       to such persons        as may be authorized          by the Board
        of Regents       to receive    them. 1

                “The law thus givin g to the Smithsonian      Institution   all specimens
        illustrative    of nature   and art to be found in the several      offices     and
        departments       of government    was not ‘construed    as rendering       it obliga-
                                                -

                                                        87
                     - -.-     .         .-.._                                            --- .---. . _..   -.       .--
  APPENDfX
         V                                                                           APPETiDIXV

      tory of the Regents          to’accept   these objects      if they considered      it
      inexpedient     to do so. Inasmuch,            then,   as this collection    was
      neither    essential    to the plan of organization           nor directly   sub-
      servient    to the comprehensive           purpose     of the donor in regard        to
      a world-wide       benefit,      it was the ultimate      decision    of a majority
      of the Board that it ought not to be accepted                 and that no part of
      the donation      ought to be expended          in the care of property.     belonging
      to the government          of the United     States. I’

             ‘9x1 L&e meantime        a very large amount            of specimens       of natural
      history     had accumulated         at the Institution        from numerous         exploring
      parties      sent out by the general          government;         and as these collections
      had been made under the direction                  of the Institution,       and their
      preservation        was of the highest         importance        to the natural     history      of
      the country,       it was finally       concluded      that if Congress       would make
      an appropriation         for the t ransfer       and new arrangement             of &&e articles
      then in Ihe Patent         Office,    and continue        the annual appropriation
      previously       made for their        care and exhibition          while in charge        of the              i
       Comzmissioner         of Patents,      the Institution      would,     under these condi-
      tions,     become     the curator       of the national      collections.       This proposi-
      tion was agreed to by tie government,                     and the contemplated          transfer
      has accordingly         been made, VI

        On the basis of this understanding,               Congress    in 1857 and 1858 appro-
priated    a total of $18,000       for the expenses         of moving    and installing the                     .
government        collections.     At the same time,the            annual appropriation    ($4,000)
fbr the care of the government-              collections,     which had begun in the 1840’s,
was transferred          to the Lnstitution.

      Ix.     The growth       of the Institution       through     federal     appropriations
              and private      gifts

       The principle       of annual appropriations         support      was thus established,
but the amount        remained       more   or less the same until after the Civil War.
In 1869, Chancellor          Chase and Representative            (later   President)      Garfield
pointed     out to’congress        that the annual cost to tie Institution            of the govern-
ment collections         had grown to over $10,000,            and suggested        that the Covern-
ment should take them back if it was unwilling                   to pay the expense.           In 1870,
appropriations        increased      to $20,000;   in 1873 to $30,000.            By 1877 the
amounts      appropriated       for the benefit    of the trust      since its acceptance          in
1836 totalled      $346,000,       not including   the payments         of interest     on the trust
endowment       and the value of the federal          property       donated to the Institution.




                                                      88
                                                                                                                                                  i^__-.   .-   _   .-.   -   _   _   -   .   ._
                             .i..   -.   _   _   ___.   _   ___   -.   _   ..__   _   .   _   ~-    .~   _   ._.   --   -   ..A.   .   ._   ---
    ._-.     .   _.__.   -




           APPENDIX
                  V                                                                                                                                 APPENDIX
                                                                                                                                                           V


                    In 1878, the annual appropriations            for the first    time equalled       the
           expenditures      from the Institution’s      trust funds.      In 18’79, $250, 000 was
           appropriated      for the construction      of the new building        for the National
k
           Museum,       now known as the “Arts         and Industries      Building.     ” With the
           staffing    and opening of the buildin      g in   188  1 the annual     appropriation
           more than doubled,       and by 1883 appropriations            were providing          for more
.          than eighty     per cent of the Institution’s       annual expenses.

                     During     the last hundred.years            of the Institution’s        growth,      the
           federal     appropriations         have doubled and redoubled                many times.          At the
            same time,         substantial     private     contributions       to the trust funds,          although
           largely     for restricted        purposes,       have continued         to provide.&        essential
           portion     of the Institutionls         resources,        mrying     from     ten to thirty      per cent
           annually,       throughout      this period.        This financial         support    has been but a
            small fraction        of the value of the additions             to the collections        from      private
                                                                                                                                                                                                           i
            sources.                                                                                                                                                                                   i




                  Between         1836 and 1846, Congress                   could,    perhaps,        have set up the
         Smi’;hsonian        2s 2 small,          self-sufficient         resezrch       organization          completely
       . divorced      from nation21           interests.          ,However,       the Congressional             leaders
         of that day, and since,               with the concurrence                of the Board         of Regents,
         determined         that the Institution             could also serve national               interests       within
         its trust     mandate.           In order      to achieve       these more limited               objectives
         without     violating        the broad purposes              of the Smithson         trust     to which       Congress
         had -aledged the faith of the United States,                         it was necessary             from    the start
         to supplement           the original        trust     resources        with, federal      funds and property.
         This continuing           commitment            of national       support     to an independent             and
         disinterested         trust     organization          has called forth very substantial                   addition-
         al contributions           from     private       individuals       and organizations.               Thk result
         has been to give this trust                 created       for the benefit       of mankind           a scope
         which     the founder          could not have foreseen               and, at the same time,                 to
         “promote        the general         welfare”        of- the United       States without          compromising
         the moral        and legal obligations               which     Congress       accepted.




                                                                                                                                                                                                           -i
                                                                                                                                                                                                   _            I
                                                                                                   89
         -_          .    .   -   . .   -.   ^   .   --   2    _..   .--    ._   _   .   .-   .-.-.   -   -




APPENDIX V                                                                                                    APPENDIX V


                    SMITHSONIAN                               RESEARCH               FOUNDATION




         In substance,     the Report      suggests   that the Foundation      is not a
properly     constituted     entity,   that its contracts      may not be valid obligat-
ing documents,         and, therefore,      the administration      of Foundation
programs      might not be in accord          with the fiscal    and civil service    laws.

           The historical       outline    set forth    earlier      in this letter     describes
the basic authority           of the Board of Regents             to incorporate       the Foundation.
This authority          was further      confirmed       when the Congress            and the Office       of
Management            and Budget approved          the incorporation         of a similar       organiza-
tion,     the Smithsonian         Science Information            Exchange,      Inc.,    and the admin-
istration        of its program       under a contract         obligating    appropriated         funds.
The type of contract            employed      to provide      for the administration            of research
projects        and fellowships       by the Foundation           has been in use for many years                           *
throughout         the Government,          and is recognized          as a valid obligating         docu-
ment.        It is a truism      that appropriated         funds,      when properly       contracted,
become         the funds of the contractor,            subject,      not to the laws governing           the
 expenditure         of appropriated       funds,    but to the rules of accountability               appli-
 cable to federal         contracts.       The employees           of tie contractor       are not sub-
jected by the contract            to the. civil service         laws.

        The Report      states that                           “the Foundation    does not provide   any manage-
ment function      of consequence.                              ” Since there are few facts stated in support
 of this opinion,    the following                             s urnrnary of the history  of the Foundation  and
the operation     of its principal                            programs    may be helpful.

          In the exercise        of its statutory      responsibility       for the internal      manage-
ment of the Institution,            the Board of Regents has authorized                  the numerous
administrative         organizations        and arrangements           necessary     to carry     out the
programs        and activities       of the Institution.         For many years the Institution,
as an independent          trust    establishment,         has contracted       with Government
agencies       an’d other organizations          for the execution         and funding      of a variety
 of special     research      and scholarly        functions.       Eleven years ago the Board                             _
 of Regents      authorized       the incorporation         of the Smithsonian        Research      Foun-
dation as the most efficient              and appropriate         way to provide       for the admin-
istration      and accountability         of one or more special           programs        which Congress
had approved         and funded.




                                                                           90
APPENDIX
       V                                                                             APPENDIX
                                                                                            V

        -4t the meeting        on May 11, 1966, of the Executive    Committee                          of
 the Board     of Regents,      the following recommendation     was discussed                         and
 approved:

        “SMITHSONLrlN            FOUNDATION             FOR     EDUCATION            AND     RESEARCH

             “For     a number       of years prior           to FY 1966 Athe Institution
        received      funds from the National                Science Foundation           for a
        continuing      series     of special      research        projects      of individual       staff
        members.          These projects          differ     from more routine            curatorial
        work in that they are based on individual                        research     objectives        to
        be achieved       within     specific     periods       varying     from a few months              to
        several     years,      and they are selected              by a competitive         process        on
        the basis of merit.            Each     project      is  planned      and  funded     as  a
         separate     unit which includes           tie special        equipment,        short term
        technical      assistance,       travel,      etc.,     n_ecessary      to achieve      the
        research       objective     within     “he stated period.             The funds received
        by grants from the NSF are administered                           by the private       side of
        the Institution       with an individual            account     for each project.

               “In FY 1966 and FY 1967 these projects                  are being financed          by
         direct    appropriations     to the Institution,          which,       as reported     to
          Congress,       are to be administered           and expended          in the same
         manner      as the grants    received       from the NSF (See Senate Hearings
         on H.R.       14215, 89th Cong.,         2nd Sess.,       Part II, pp. 1500-1501).
         In order to achieve the same degree                  of flexibility       in administering
         these special       funds independent         of fiscal    year limitations          or Civil
         Service     requirements,       it is proposed         to establish        a research
         foundation      to receive,    disburse,        and account        for the funds granted
         to projects      which have been competitively               selected       for a research
         award.       The foundation      will have a corporate              structure     composed
         entirely     of Smithsonian      personnel.

               “Nonprofit     foundations      of this type have been established                 by
         many colleges        and universities,        particularly        state universities,
         for-the    flexible   administration        of research       projects.        In 1959, the
         NIH incorporated         its ‘Foundation       for Advanced          Education      in the
         Sciences’;       and in the Bell Report        (1962) the Director            of the 33ureau
         of the 33udget recognized           the advantages         of the nonprofit        corpora-
         tion for the administration            of federally      financed      research.

              “The transfer       of funds from a Smithsonian         appropriation      to
         tie proposed      foundation     account    for the purpose    of financing
         research     projects    is consonant      with our established      practice    of
         receiving     approximately       ten million    dollars  annually    fr mn the
         appropriated      funds of Government          agencies  in the form of grants


                                                     91
                                           .     -    .._.                   __      -    . -.   --_   - .-- -- -._-._-.-.   ._--

APPENDIX V                                                                               APPENDIX V


         and contracts     for the performance          of scientific  research        by the
         Institution   as a private    organization.        The authority      for tie
         Smithsonian     to use appropriated         funds to finance     scientific
         research    by contract    is found in 41 U.S. C, 252(c); and 42 U.S. C.
          1891 provides     that such research         may also be financed          by grants,
         where it is deemed to be in furtherance               of the objectives       of the
         agency.

               “Ln addition    to financing    and administering       research    projects
         formerly     funded by the NSF, it is contemplated              that the foundation
         may also prove useful          for other special     programs       such as visiting
         fellowship     awards    or cooperative     projects    in field biology.     ”

      The proposal            was approved           by tie   full   Board        of Regents     at its meeting
on May 17, 1966.

          The Smiths onian Research                   Foundatiod          (SRF) was duly incorporated                          i
under the laws of the District                    of Columbia         in June 1966, and shortly               there-
after    received       formal      recognitioxl       from the Internal           Revenue        Service      as an
exclusively        charitable,         scientific,       literary,        and educational         organization
tax-exempt        under Section           501(c)(3)       of the Internal        Revenue       Code.      Under
its first     contract,       the SRF agreed to be responsible                      for “the “Research               .
Awards       Program       ‘* for which funds had been appropriated                         to replace       the
earlier     grants      received       from the National             Science Foundation             for the special
research       projects       of individual         SI scientists.          At the 1966 Hearing           before
the Senate Subcommittee                  on Appropriations              this program        was presented
with tie understanding               that the funds would be administered                        in the same
manner       as the grants         received        from the National            Science Foundation.               By
its contract,the          SRF accepted           the binding        legal obligation        to provide       the
administrative           services       and advice necessary                to individual      researchers
and the reports           and fiscal       accountability          required      of grantees        of federal
funds.      Its accounts         are subject         to audit by independent              auditors,      and by
the General        Accounting         Office,       at its discretion,

          The recurring             cycle for the Research            Awards    Program       begins in
November;,         when the Foundation              solicits     project   proposals,      of scientific,
cultural,      artistic,       or educational         intent,     from any qualified       professional
staff member           of the Institution.           The SRF Executive           Director      reviews      each
proposal      for appropriateness              under the Foundation’s            charter.        He aids and
assists     the scholar          in the preparation           of tie proposal,      and he may suggest
modifications          either      to the proposed         plan of work or to the budget.              Pro-
posals must be received                  by March       and may be accepted           or rejected      at the
discretion       of the Executive           Director.         Those accepted        are forwarded         to
the appropriate           office      in the Institution,        which,   in turn,     submits     them in




                                                     92
    APPENDIX V                                                                                APPENDIX V

    May to a qualified     review    comzmittee     whose expert members          are drawn
    largely  from the academic        world.     No Smithsonian       or Foundation     individ-
    ual is involved    in any judgment       concerning     the scholarly   merits    of any
    proposal    after it is presented     for panel review,       nor is any expert mem-
    ber of the panel an employee         of the Institution     or Foundation.

             The periods         of these special       research       projects       vary from         one to
.   four years,         and the budgets       range from a few hundred                 dollars       to about
    $30, 000, to cover the costs of the equipment,                        supplies,       travel,       research
    assistants,        and other requirements             specifically       justified      for the particular
    project.        The review       panel ranks the projects             in order of merit             and recom-
    mends awards            for as many as can be funded within                   the estimated           amount
    of appropriations           for the Program.            As soon as practicable-&fter                  the appro-
    priation      is available,      normally     after July first         in the past,         the total amount
    for the recommended              projects    is contracted         to the Foundation,              and the
    Foundation         makes the awards         to the individual          scholars.          In several      recent
    years,      funds have been available,’             and have been contracted,                  for partial     or
     complete       funding    of the Program         prior   to the end of the fiscal               year in June.

            The Foundation            is then responsible       for administering          all fund dis-
    bursements        through      its own account       and voucher        check system,        purchasing
    equipment       and supplies,          processing   travel     documents       and vendor      payments,
    hiring    qualified     individuals       for the approved       research      assistants,      and pro-
    viding insurance          where necessary.           All expenditures        are audited      annually,
    and periodic        reports      on each contract       and the projects        thereunder      are
    furnished      by the Foundation           to the federal     contracts     office.    .In a particular
    cycle,    the last project          will be closed out about five years after the cycle
    began.

              With regard       to another      program     administered      by the Foundation,              for
    several      years prior       to 1968, the Smithsonian           had received        appropriations
    for visiting      fellowships.        The Fellowship        Program      was administered              by
    the National       Academy        of Sciences     under a contract       which was identical              in
    its basic provisions           with the contracts        executed     by NASA,       the Department
    of the Army,          and o&her agencies,         to have the Academy           administer        visiting
    scientist      programs       for them.        In 1968, it was determined           that the Insti’cution-
    wide Fell’owship         Program        could be more efficiently         and economically              admin-
    istered      by contract      with “he Smithsonian         Research      Foundation.         The     proce-
    dures for selection,            administration,       and fiscal     accountability       are substan-
    tially    the same as for the Research               dwards     Program.

             Appropriations       have been approved      annually     for about forty pre-
    doctoral     and postdoctoral      visiting fellows.     This program       for one-year
    fellowships      is advertised    in September,      and in March      the very numerous
    applications      are sent to eight committees,         consisting     of Smithsonian    schol-
    ars in the eight discipline        areas for which fellowships          have been offered,



                                                          93
                                       .

                                           -----..   _   ----.-I        -,--.--.     _--   .----_   ._.---._   -.__   . . . .   .-    _-.._   -   ._   -__-      --..


APPiNiii       V                 -.                                                                                                   APPENDIX V                        -   .---

which rank ‘he applications           in order   of merit     and recommend        appointments
and alternate     s . Notices     of awards    are sent out in March-April,             and
acceptances      are received      in May or June.         As soon as funds are available,
a contract    is executed     with the Foundation         for the total amount necessary
for the administration        and accounting       for these approved       fellowships.       A
few fellows     will begin their year in the late s ummer,              the majority      in the
autumn,     and a few as late as February             of the following    year.     Each program-
cycle thus covers       a period     of about two and one-half         years from tle adver-
tising  to the completion       of “the last fellowship       in the cycle.

         In 1967 and in 1970, the Foundation                agreed to accept responsibility
for administering         two additional       and similar      programs:      the foreign       currency
research     grants     to Smithsonian        scholars,     and the Woodrow         Wilson      Center
Fellowships.         These programs          have the same characteristics,               involving
research     projects      or fellowships       of varying    duration    unrelated     to ‘rhe calen-
dar or fiscal      year,    funded by lump-sum            annual appropriations.            The spe-
cialized    administration         provided    by “he Foundation        to fulfill  the particular
requirements        of these programs          is the same as has proved            effective,       eco-
nomical,     and fully accountable          for the Research         Awards      and Fellowship
programs.

         The clear objective            of Congress       in appropriating         funds for these spe-
 cial programs         is that they shall be administered                  in a manner       appropriate       to
the special      term and requirements               of the individual        project      or fellowship.
The valid obligation           of the annual appropriation               for each of these programs,
by contract       with the Foundation,            guarantees       “he continuous         funding    and
 single-purpose          administration        of each project        or fellowship        according      to its
particular      term.       Similarly,      the limitations        of the contract         assure    that the
temporary        research       assistant     authorized      for a particular         project     will not
become      part of &the regular          Smithsonian       staff,    for which other funds are
appropriated,         and that no program            funds will be used and no commitments
made for this purpose              beyond those required            and approved         for ‘he specific
research      project.

           Information     was        supplied                to   the             GAO     auditors             which                indicates                that
during    the first     ten years       of the specialized          administration        of the Research
Awards      Program        by the Foundation,            the administrative          cost was about
$500,000      less than it would have been under the federally                         mandated       over-
head rates for all grants             (like those from the NSF) and contracts                     received
by the Smithsonian           from Government              agencies     during     the same period.
It is believed       that further      analysis     would show similar              economies      in the
other programs           administered         by the Foundation.            The Foundation         achieves
these economies           by keeping       its staff to the minimum              consistent     with its
basic legal and professional                responsibilities         and procuring        a number      of its
technical      service     requirements         by contract        from various        Smithsonian




                                                                   94
                                                                                                          .   .-. .-
    APPENDIX V                                                                                      APPENDIX V


    support    a ctivitie s.        In June 1976, the Foundation           reduced    its staff by three
    when it determined             that’certain  bookkeeping        services     could be provided
    more    economically           by the Smithsonian’s      fiscal    office with its computerized
c   systems.

              The Foundation              derives       its operating        income     by means of a negotiated
    fee provided          for in the contract              for each program.             This overhead           income
    rate is determined                according        to the generally          accepted      principles       of reim-
    bursement          for costs incurred               in the administration            of a number         of contracts,
    where the indirect                costs of administering              an individual        contract      cannot be
    identified.         After      a review        of the labor and time involved                  in administering
    the Foundation*            s programs         , a two-tier        system has been established:                  at
    present       programs           requiring       stipend      issuance      and income         withholdings        are
     charged       8- l/Z% by contract;              research        contracts,       involving       equipment,
     supplies,       travel,       and some payroll              administration,         are charged          13-l/2%.
    The overhead            income         covers     “he salaries        and benefits        of Foundation         admin-
    istrative       employees;           the cost of Institution            technical      services;      unemploy-                I
                                                                                                                              i,
    ment and workmen’s                   compensation           for all Foundation          employees;         a general
    liability      policy     for all Foundation              employees;        a severance         fund for the
    administrative             staff; purchases            of office    supplies      and equipment;           and official
    travel      related      to the Foundation              business.

            The Foundation’s             Board and staff have,                for eleven years,              sought to
    assure     that the operations            of Lhe Foundation            would be in accordance                  with
    the highest      professional         and accounting           standards,         and consonant            with the
    trust purposes         of the Institution         itself.       To maintain         these standards,              peri-
    odic outside       review      is extremely         helpful,       and the recent           discussions         with
    the GAO audit staff have already                    suggested        a number         of improvements              in
    the administration           of these special programs.                      However,        there is nothing
    in this brief      section       of the Report        concerning         the operations           of the Founda-
    tion to indicate       how the Boa-rd of Regents                  might have exercised                 its discretion
    more responsibly            with regard        to ‘hese important              programs,           or to spell out
    in what way some other unspecified                       method       of administration             would be more
    appropriate,        more effective,           or more accountable.                   Indeed,      the “Recom-
    mendation       to the Secretary”           appears       to recognize          that,    if the suggestions
    of the Report        are adopted,         these programs             cannot be run effectively                  without
    additional     legislation        to provide       exemptions         from existing           legislation.
    Since the present           arrangement          of eleven years            standing      is properly          author-
    ized by the Board of Regents                 and is efficient           and fully accountable,                and
     since the programs             regularly     funded by the Congress                   have proved          valuable
    and productive,          it is difficult     to perceive          how implementation                 of the recom-
    mendations        of the Report         would result         in substantial          improvement            in these
    programs.         On the other hand, further                  advice as to any technical                   problems
    mentioned       in the Report         would be appreciated.


                                                                                         .


                                                             95
- _   -   -   ‘ . .         .   .   . -     .   .   .

                                                        _ _ _   _   _    - - -   . _ - -


                                                                                                                         -   . . _




          APPENDIX V                                                                                                                        APPENDIX V


                   These research           and fellowship     programs,        though modest        in amount,
          have been extremely             important     to the Institution’s       basic mandate        for the
          increase      of knowledge.          The fellowships      have greatly        expanded     the use of
          the national      collections,       and the availability       of special      research     support
          has made it possible            to compete      more successfully          in the academic        com-
          munity     for scholars        and curators      of the highest      attainments.        The Institution
          would welcome          an opportunity       to discuss     with the GAO and the appropriate
           Congressional        committees        any alternative       administrative        procedures      that
          would preserve         and enhance the effectiveness               and economical        operation      of
          these programs.


                      ‘..                 SMITHSONLAN                                      SCIENCE   NFORM4TION                  EXCHANGE

                   The Report        does not adequately        set forth the history    of the Exchange.
          It gives the impression           that the present       mode of operation     of the Exchange
          originated       wi”h its incorporation         in 1971.    As in the case of the Smithsonian                                                  z
          Research        Foundation,     ‘the Exchange      was incorporated       to maintain    an activity
          formerly       funded by the National         Science Foundation       in the form most appro-
          priate    to its particular       requirements.        However,     the Exchange      was created
          in 1969-50,         outside the Smithsonian,         as a unit under the administrative
          charge      of the National     Academy       of Sciences,     and funded entirely     by contract:

                    Ln 1953 the Exchange             came under the aegis of the Smithsonian                   at the
          request      of the Academy            and the government          agencies     which had set up the
          Exchange        to assist      them in their        growing    programs       of support     for independ-
          ent scientific       research.           The Smithsonian’s         acceptance      of a limited     admin-
          istrative      responsibility         for the Exchange         was unrelated       to the Institution’s
          own programs.             It was accepted          as a service      to the national     and international
           science     community,          with-the     clear understanding         that it would be maintained
          as a separate         organizatiok,         funded by contract,         with its program         require-
          ments determined              by its user organizations            and with the authority         for its
          budget,      staff,    space,     equipment,         expenditures,      and operations        vested in
          its Director.

                                           “History                     and Function                 of Science   Information         Exchange

                                          “The SIE was established             in 1949. Originally          called the
                                    Medical     Sciences     Information        Exchange,       it was created      by an
                                    interagency      agreement         among the Departments             of tie Army,
                                    Navy,     and Air Force,         the Atomic       Energy      Commission,       the
                                    Veterans’      Administration,         and the Public         Health   Service    and
                                    funded out of their         separate     budgets.      In 1953 the National
                                    Science Foundation           joined in its support,          the Exchange      was
                                    renamed      the Biosciences         Information      Exchange,        and it was
                                    put under the aegis of the Smithsonian                  Institution.


                                                                                                          96      ,
                                                                                 __

    APPENDIX V                                                                          APPENDIX V


                “In general,     its function        is to serve the participating
         Governrnent        agencies,        and the scientific      community,        by
4
         facilitating     ‘the prompt         exchange     of information      about their
          current     research      activities.     ’ -4s its former      names imply,
         “he Exchange        began by concentrating             on supplying      informa-
         tion about basic research               in the life sciences,       chiefly    medi-
          cal and biological.

               “In 1960 the National           Aeronautics      and Space Administration
         and the Federal         Aviation       Agency were added to the list of
         supporting       agencies     and the Exchange         was once again renamed,
         this time the Science Information                 Exchange     to reflect      the fact
         that it had broadened           its scope to include       research        in the
         physical      sciences,      such as ‘chemistry,         physics,      mathematics,
                                                                                     --
         engineering        sciences,       earth sciences,      materials,        /and/
                                                                                   --
         electronics,’        ”

                                                    pg.       67, House   Report  No. 1729,
                                                    August    10,     1964, “Administration
                                                    of Research        and Development      Grants”


              “Summary         and Recommendations

              “The     committee       concludes      that:

              II
                 1. Continued     Federal   support      of SIE is deemed to be
         warranted.       The committee      is convinced         that,  with better
         cooperation     on the part of the various           Government      agencies,
         SIE’s holdings     can be made substantially             complete.     Its serv-
         ices,    both to the sci&tific     community         at large and to research
         administrators,       are clearly    useful:     as a tool for coordination
         and avoidance      of needless    duplication,        it has already     demon-
         strably    paid for itself    many times       over.

                “2.     The SIE should continue               to be operated       within    the
         Smithsonian          Institution.       While some benefits            might     certainly
         accrue        should it be brought           into the Federal        system      proper
         by making         it an in-house        facility     of an agency such as the
         National        Science      Foundation,         it seems best to keep it set apart
         lest the easily          documented        possibility     of interagency         rivalry
         affect     its efficacy        as an interagency         coordinating        service.     ”

                                                     pg. 90,      House    Report     No.    1729,
                                                     supra.



                                                          97
                                                                                                                                   i




                                                                     _   _   - .   .   I _ . .   . - _ .   _ _ . .   - _




APPENDIX V                                                                                                 APPENDIX V

            “The history         of BSiE may be traced                   back to the disso-
      lution    of the wartime           Office      of Scientific        Research         and
      Development           (OSRD) in 1946, at which time a number                                 of
      Federal      agencies        then undertook            their     independent         support
      of research         in the medical           sciences.          Information         exchanges
      were established            within      various       agencies,        the largest           of
      which was the Office              of Exchange             of Information         of the Public
      Health     Service.        When the amount                 of research       supported           by
      Federal       agencies       in the medical            field had grown from
      $4.3 million         in 1946 to $33 million                 in 1949, with correspond-
      ing growth        in the number            of research          organizations,             investi-
      gator s and related            multiply-       submitted         proposals,        it be-came
      imperative         that research           project       information        be coordinated
      in order to prevent             unknowing          duplication         of sponsorship.
       The Medical          Sciences       Information           Exchange       was then founded
      as a cooperative           venture        in July 1950 within             the Division           of
       Medical      Sciences,        National       Re sear cl-i Council.             Support         and                  4
       administrative          policy     for the Medical             Sciences      Information
       Exchange        (MSIE) was considered                   the joint responsibility                of
       the six participating            Federal        agencies.          In the fall of 1953
       the National        Research         Council       urged that the MSIE be shifted
       to the Smithsonian            Institution;        it was then renamed                the Bio-
       Sciences      Information         Exchange          to take into account               its exTan-
       sion in the fields          of biology        and psychology.              Until the
       consolidation         into the SIE, BSIE was still governed                            and funded
       by the seven original              supporting          Federal       agencies.       ”
                                                                                                                               ,
                                                                                                                                       I
                                                      pg. 75, Senate Report        No. 263,                                            /
                                                      May 18, 1961,     “Coordination         of
                                                                                                                                 !
                                                      Information    on Current     Scientific
                                                                                                                               ! ;
                                                      Research    and Development
                                                      Supported   by the United      States Government”                        ; i
                                                                                                                                  !
                                                                                                                               i II
             “The Bio-Sciences         Information         Exchange   is an independent                                        : I
       establishment       located    in Washington,          D. C., administratively                                             I
                                                                                                                               i I
       attached     to the Smithsonian        Institution,      and following   the                                               I
                                                                                                                               i /
       September       22, 1960, action by Smithsonian,               now a division                                       -
       within    the recently     founded    Science Information          Exchange.   ”

            lrPolicies    of BSIE are determined     by a governing      board                                                 ; I
                                                                                                                                 !
       which,     until recently,    was composed    of two representatives                                                      /
       from    each of the seven participating      Federal   agencies     and the                                               i
       Smithsonian      Institution.    These were:    Atomic   Energy     Comxnis-                                                    i

                                                                                                                               : !




                                                      98
                                                                 . --

    APPENDIX V                                                                              APPENDIX V

         sion, the Departments              of the Army,       Navy,     and Air Force,
         Public     Health    Service,       Veterans’     Administration,         and the
         Nztional      Science      Found2tion.        BSIE operations       have been
         funded by these same agencies                  out of their    operating     budgets.
         The Governing          Baard operated          under an ‘agreement’          which
         served      2s 2 charter       outlining    the responsibilities         of the
         Exchange       2nd the services          it may offer granting         agencies    2nd
         individual      scientists.       Non-Federal        cooperating      agencies
         were not represented             on the Governing        Board. ”
                                                                                                           :’
                                                                                                           ;!
                                                      pg. 73,      Senate        Report    No.    263,
                                                      supra.                                -
                                                                                                           ,j
                “The Smithsonian           Institution      has experience           in the opera-
         tion of such facilities           by having provided           its auspices        to the
         BSIE for the past 7 years.                   On the other hand, Smiths onian
         has apparently           considered        that responsibility          for assuring
         BSIE effectiveness            lay with the Governing              Board.       It is true,
         however,        that since an information              exchange        involves      2 service,
         Smithsonian         has the advantage           in itself   not being a primary
          contributor       to or user of the service              and thus has no special                 ::
         interest      that may be considered              in competition           with other
         participants.           Moreover,        the Smithsonian          Institution     has a
          stature     in the scientific        community        that distinguished           it from
         a Federal        entity. ”                                                                        i


                                                       Pg. 187,         Senate    Report    No.    263,
                                                       supra.

               II . . . the Foundation         has given consideration             to the
         matter      of governing      and advisory         instrumentalities        for the
         SIE and of represent2tion             by non-supporting            as well as support-
         ing participants.          Extending      the present       technique     of having
         two representatives           of each supporting           agency on the BSIE
         Governing        Board would result          in a most unwieldy          policy   and
c        management          group for the enlarged             Exchange.      In striving    to
          create a service        of national      proportions,        there would be consid-
         erable merit        in trying    to provide       for some type of participation,
         at least of an advisory           nature,     by organizations         which are not
         providing      financial     support.

              “Consideration     of a solution     somewhat   along the following
         lines is suggested.      Provide     in the SIE charter   for 2 Govern-
         ing Board     comprised    of one member       of each Federal   Depart-




                                                        99
                    .. _                                                   ^     _. .   _         . _   -_ - - -.____._

     APPENDIX V                                                                             APPENDIX V
            ment or independent             agency which contributes           funds for the
            support      of the Exchange,         and one for Ahe Smithsonian
            Institution,      each member         to have one vote.          Each support-
            ing agency       should,     of course,     exercise      its own judgment     in
            &the designation       of its official    representative,         with the under-
            standing,      however,       that each such representative             should be
            able to speak for his agency wi”z respect                    to funding   and
            similar      management         problems.

                   “To provide      technical      advice and guidance        on substantive
            problems,        an Advisory        Panel is suggested       for each major
            field covered        by the SIE and for which there is an Associate
            Director.        These     Panels     would be advisory        to and designated
            by the Governing          Board,      and membership        need not be restricted
            to supporting        organizations.         NSF proposes        a Life Sciences
            Advisory       Panel,     a Physical      Sciences    Advisory     Panel,      and a
            Social Sciences         Advisory      Panel.     While having       continuing      status,
                                                                                                                          i
            these Panels         would meet and function          very largely       on an ad hoc
            basis,      as problems       arise which warrant         their   individual      atten-
            tion.      The size of each Panel,           tenure    of membership,          and
             similar     matters     would appear relatively           easy to resolve,         if
            there is agreement           on this type of structure.           This suggested
             structure      seems to offer the best compromise                 of the differing
            views which have been expressed                  about governing        and advisory
            bodies.

                  “To implement        these views,      the NSF recommends             that first
            attention     be given to the charter         of SIE.    To assist    in this phase
            the Foundation         has prepared      a draft SIE charter,       based on the
             BSIE charter,        for review    by appropriate       Federal    agencies.       After
             such review      it is hoped that a working          meeting    can be convened
            to agree on an SIE cliarter           which would be acceptable            to the
            agencies      concerned.       June 30, 1960, is suggested           as an appro-
            priate    target    date for ratification       of the SIE charter.     I’

                                                       pg. 191,     Senate     Report       No,     263,
                                                       supra.

              The charter     recommended        by NSF was agreed to on September          22,
6.   1960, and is set forth at pg. 192 of the same Senate Report               No. 263.       The
     seven-member         Governing     Board of the Exchange,      consisting    of repre-
     sentatives     from the six major       granting   agencies and the Smitfisonian,        has
     responsibility     for policy    and general     management   directions,      The Director
     of the Exchange       is responsible     for the direction  and coordination      of all




                                                     100
    _                                  -.          ..---   _-     ...    . ...---, -..-   -.-- -.. .- .-.- -   _- -- -. - -. _.-- -.......- .__.


        APPENDIX V                                                                                     APPENDIX V

        SIE operations,         He is authorized        to appoint Associate        Directors     for
        appropriate      scientific      areas as determined        by the Board; to prepare           the
        annual budget; to determine             needs for staff,      space, and equipment;           and
        to approve    expenditures.           The charter    provides      that the Exchange        is to
        be funded through          contracts    or grants between        the signatory      agencies     and
        the Smithsonian        Institution,     and that the function        of the Smithsonian       is
        to “provide     financial      and administrative       services      as required     for operations
        of the SIE. ‘I

                For all of its 27 years the Exchange          has maintained        its own offices
        in downtown     Washington,     and its self-contained        operation    with its own
        employees     supervised     by its Director    in cooperation       with its user organiza-
        tions has been supported        and approved     throughout      by both the legislative
        and exe cutive branches       . In 1968-69,    the NSF, which was then the single
        funding agency,      requested    the Exchange     to charge user fees to both non-
        federal   and federal    users.     At about the same time,          NSF recommended
        that its appropriation      for the Exchange      be transferred       to the Smithsonian’s
        federal funds budget.

                The Smithsonian       agreed to accept responsibility      for the Exchange’s
        appropriation    on condition      that the Exchange    would be incorporated       in
        order to continue     its independent       operation by contract.     This was approved
        by the Office of Management           and Budget and the Appropriations         Comroittee.
        Since 1971 an entirely       separate    line item has been included      in.the Smith-
        sonian appropriation      bill to fund the contract     with the Exchange.

                 Under its corporate           charter     the Director         of the Exchange          (now
        entitled    “President”)         continues     to be responsible           for the entire       day-to-day
        management         of the Exchange,          including       personnel      and procurement.              His
        planning     and implementation            of the programs           of the Exchange         in coopera-
        tion with its user organizations                is carried       out through      the SSIE Advisory
        Council.       The ministerial         and audit responsibilities              of the Smithsonian
        are fulfilled     through     its contracts        with the Exchange           and through        the
        President’s       reports    to the Exchange’s            Board of Directors.             The member-
        ship of the Board normally              includes      four representatives            from the Smith-                               .
        s onian,    one from NSF, one from NM,                     the chairman        of the SSIE Advisory
n       Council,      and the President         of the Exchange.             Although      Smithsonian        officers
        serve on the Board,           it is the Board,          rather     than the Smithsonian,            that is
        legally    responsible      for the independent             corporate      obligations      of the Exchange.
        The Board approves            general      policies,      but the day-to-day           operations       of the
        Exchange,       such as personnel           actions      and related      workload       management,
        are the functional        and legal responsibilities               of the executive        officers     of
        the Exchange.




                                                            101
APPENDIX V                                                                       APPENDIX V


        It is apparent      from this summary           of the history,     organization,      and
operation     of the Exchange        that the Smithsonian         does not “control”       the
Exchange      in the ordinary       sense of the word.          The operations      of the
Exchange      are controlled       by the restrictions        on the appropriation,        by the
mandatory       provisions     of the federal      contract    with the Exchange,         by the
decisions     of the President        of the Exchange       and user organizations          on pro-
grams, by the requirements              of the procurement         laws embodied       in the
contracts     with federal      users,     and by the complete        accounting     and reporting
procedures       necessary      for audit,     by the GAO and others,          and for the
Appropriations         Committees’       review.      An example      of the latter    is the follow-
ing table submitted        to the Appropriations          Committees       as pa;rt of the
Exchange’s       budget justification        for fiscal   year 1977.             .




                                              102
                                                                       II


                                    F        t




                                                                                                  Table I

                                                            SSIE Processing              Workload and Sources of Revenue


                                                                                         Actual              Actual               Actual             Projected        Pro jetted
                                                                                         FY 1973             FY 1974              FY 1975            FY 1976          FY 1977
             Processing        Workload

                   Input Volume y                                                        05,530                 102,368           125,533                130,000          136,000
                   output
                      Report Volume y                           502,856                 348,600                 605,300           671,000                805,200          085,700
                      Contract5                                                                                                             *
                        - No. active during FY                     ”          3.6               15                       13                     18               20               21
                        - Average $ cost ($0001             $               0.6     $        14.2           $          0.5    $        27.5          $        39.4    $       42.4

             Sources of Revenue & Total             Cost5
P
0       :          Federal Support -3' ($000)               $l.,600.0               $1,600         .O       $1,695.0
W
                   User Revenues ($0001
                     Search Products                               230.9                   213.9                   305.9
                     Contract Services                             148.3                   216.3                   110.4

                       Total    User Revenues                      379.2                   430.2                   416.3      1      034 .o              1,163.4

                       Total    Costs of Operation          $,l,???,            2   $2,030.2                $2,111.3          ,s2,6!?.0;             $3,X07:4


             Distribution        of Total   Costs

                   Federal Support                                 81%                     79%                     80%                68%                   63%             60%
                   User Revenues                                   19%                     21%                     20%                32%                   37%             40%

              l/     Notices of Research Project5           indexed.
              y/     Notices of Research Project5           disseminated in the form of SSIE search products.
              T/     Federal support per Notice of            Research Project indexed has been reduced by 19% during period shown.
            * e/     Includes contract  support to          the National Cancer Institute  under the Internntional  Cancer Rrse:lrch Il:rta
    W                Bank program.
    A
             _ _    ..                                                                ..              _ ._
    APPENDIX V                                                                             APPENDIX V


             This portion       of the Report,       commenting       on the Exchange,         recognizes
    that the Exchange         performs       a valuable    public    service,    that it is efficient
    and economical,         and that its long-standing            mode of operation       has the
1   approval     of Congress.          Nevertheless,      the Report       recommends        that the
V    separate    organization        of the Exchange,       which    has   been   fundamental       to its
    highly    specialized      functions     for all of its 27 years,         be dismantled.        This
    recommendation,           supported       only by a vague reference          to “effective      con-
     gressional     control     and accountability,      I1 is not explained        or analyzed      in the
    Report,     and is clearly        unwarranted.

              The Report      contains    no evidence,        for there is none, that the pervasive
     controls    available     to the Congress        and exercised      by it throbghout        the life
    of the Exchange         have not been effective.             The Report    makes     no reference
    to the extensive        Congressional        studies    which have comprehended             all aspects
    of the Exchange.           On the basis of the full financial           and program       informatiqn       ‘I



    regularly      supplied     to the legislative       and the- appropriations        committees,
     Congressional        approval     and support       of the separate      operation    of the Exchange
                                                                                                                ;:
    has consistently        been reaffirmed.                                                                    :’




             This recommendation            is made without       any attempt        to analyze     the
    effect its implementation           would have on the essential            ability    of the Exchange       :’


    to adjust its staff levels         and procurements         rapidly    to meet ohanges in user
    demand s. The Report             is silent   on the unjust     results    that would follow         from    ii


    mandatory       conversion      to federal    status of the many employees                of long
     service    to the Exchange.         Moreover,       the Report      apparently      disregards       the
    long-standing      policy    and practice      of the Government         to obtain and administer
    many specialized         services      and functions     by contract,       which practice        was
    approved      by both the executive        and legislative       branches      as one of the basic
     conditions    under which the Smithsonian              agreed to assist        the Exchange.

                                                                                                                +I
              It should be observed,           although      there has not been time for a                      ;t:,
    detailed     study of this unexpected            recommendation,            that its implementation         ::.:
    would likely        diminish      both accountability          and control.        The presently
    identifiable      indirect      costs of the Exchange            would disappear         into the general
    expenses       of Smithsonian         support    activities.       The   unified     r e sp ons ibility
    and accountability           which is now clearly            vested in the President           and other
    executive      officers      of the Exchange       would be dispersed             to various     Smith-
     sonian units sudh as the personnel                and procurement            offices.

            The Exchange     has greatly     benefitted     from the continuing   interest    of
    the Congress     over nearly   three decades,          which has encouraged     its growth
    in its present   form and helped resolve            the complex  problems    of informa-
    tion transfer.     Problems    continue,     such as the incompleteness         of coverage
    in a number    of areas because      input to the Exchange        from   some agencies       is




                                                  104
                                                                   _
                                                                                        .   .              -.

          APPENDIX V                                                                            APPENDIX V

          variable.       But these are problems            relating   to program,        not to organization.
          A review      of the roles     of “he Exchange         and its potentials      for the future     was
          recently     presented     by the President          of the Exchange      at the request         of the
     *.   President’s       Committee      on Science       and Technology       Policy     as a part of its
    .      current    study of information         di s s emination.     As in the past, the Smithsonian
          will appreciate       any opportunity        to participate     in the continuing      examination,
          by L&e executive       branch,     the GAO, and the legislative             and appropriations
           committees       of Congress,       of the development         of the Exchange       and the advan-
          tages or possible        improvements          in its operations.


                         NFORMLATION            ON SMITHSONIAN            FINANCES               -

                    This section       of the Report      first    describes     the reprogramming          of
          operating        funds with regard        to the establishment           of a contingency     fund
           capability.        The Report      concludes       that the Institution      requires     some ad-min-
          istrative      flexibility    in reallocating        funds among budget categories             and
          recommends            that the Smithsonian         work with the appropriation            subcommittees
          to arrive       at a mutually      agreeable      understanding        as to the reprogramming
          actions      above some amount that the committees                     would want to approve         in
          advance.

                   The Institution     fully    concurs     in this conclusion           and recommendation
          and is anxious       to continue      discussions      with “he subcommittees               to develop
          guidelines    which will provide           Congress       with the necessary           level of control
          yet offer the Institution          some administrative           flexibility      given the number
          of line items     in the Smithsonian’s          budget,       the more than two-year            period
          over which any fiscal         year’s      budget is developed           and carried       out, and the
          number     and variety     of needs that arise           over this period          as the Institution
          attempts    to meet its re sponsibilities.              It might be added that the Office of
          Management       and Budget has-urged             the Smithsonian            to work out such a
          procedure     with the Congress.

                   This section    of the Report     also deals with the various         types of trust
          fund income      and the expenditure       thereof   by the Institution,     pointing  out
I
          &at annual reports        on the subject     are regularly      supplied   to the Congress.
          It recommends,        however,     that information       on the planned use of trust      funds
           should be provided      to appropriations        committees     at the time appropriation
          requests     are submitted     and that clear policies        should be established      govern-
          ing the use of federal       and trust funds.

                   As has already        been demonstrated     by the complete         cooperation      with
          GAO auditors         reviewing     Smithsonian   operations,      by the annual submission
          to Congress       since 1971 of comprehensive           financial    reports    and by numerous
          informative      letters     to Congressional    committees       over the years,        the man-
          agement     of this Institution      has been and is willing       at all times     to furnish



                                                        105
                                                               ^

     APPENDIX V                                                                                 APPENDIX Y
     fully to the Congre s s any and all facts,            financial      or otherwise,       about its
     operations.        Currently     it is recognized     that in some areas,          notably    non-
     federal     funds expended       under the immediate         direction     of individual     bureaus,
     the amount       of such funds has increased          in tile past year or two to the point
     where    reporting      of additional    details   concerning       them may now be desired.
,
     If so, such information           will be provided      in the future.
‘1


               Budget projections           of the Institution’s        trust     funds for two years            in
Y
     advance,       as recomrnendedby              the G-40, can also be furnished                    to the
      Congress       with tie concurrence            of the Smithsonian            Board of Regents             which
     approves       all such budgets.           Such projections,            however,         should be received
     by the Congress           with the understanding              that they cannot be viewed                with the
      same degree          of reliability     as, for example,            estimates        for federal       appro-
     priations,        since the projections           of trust fund income             and expenditures
     depend in part upon future               economic        conditions,       numerous         management
     decisions,        the personal       circumstances           and decisions          of important        donors,
     and a host of o”&er variables               which are not predictable                  with certainty        so far
     in advance . At the same time,                   it should be-respectfully               pointed     out that,
     in order to assure            “&at Smithsonian          is to continue        its operations          under the
     direction      of its Board of Regents              as it has done so successfully                  for the past
      130 years,        the provision       of advance       planning      information         to the Congress
      should be for the purpose              of assisting       its appraisal         of Smithsonian          operations
     without     limiting     the statutory       responsibilities           of the Regents.

                Jn this respect,          the Institution       .will indeed endeavor         to set forth
     more       clearly      the policies        by which decisions         are made      on the use of federally
     appropriated          fixnds and the limited          trust funds available         to the Board of
     Regents.          It should be emphasized               that all funds,     both federal        appropriations
     and trust funds,             are always used for purposes                consonant      with the Smithson
     gift.      The flexibility        provided       by the combined         employment         of federal      and
     trust     funds has been of immense                  value to the Institution         in the attraction
      of national        collections,        the- carrying      out of important      research        efforts,     the
     ability     to take advantage             of valuable     opportunities,      and the initiation          of
     fruitful,      innovative        activities    ,

                                  ESTABLISHMEIQ                OF NEW        FACILITIES

             This portion      of the Report     briefly     describes    four centers        of
     Smiths onian activity       : Cooper-Hewitt          Museum,      Chesapeake       Bay Center
     for Environmental         Studies,    National      Zoological    Park’s    Conservation           and
     Research      Center,    and the Smi’ihsonian         Tropical    Research      Institute.         While
     these activities      have been under the Smithsonian’s               stewardship        for periods
     ranging    from three years         in the case of the Conservation            and Research
      Center to over thirty         yeers in the case of the Tropical           Research         Institute
     and thus should not be categorized              2s   newly established,       the Institution
     completely     respects      the Congressional         need to be promptly        informed          of
     Smithsonian      plans that might involve           substantial    new federal       expenditures.



                                                         106
                                                      _ .




 APPENDIX V                                                                                  APPENDIX V


We agree that         more   comprehensive      and timely   communication                      with
the appropriate         Congressional     committees    is essential.    This                   will be
done.

          Regretfully,      the Report        does not evaluate            the many and varied
benefits,      as compared         with the costs,          which have accrued            to the American
public from the programs                cited in this section            of the Report.          These bene-
fits include      the acquisition        of valuable        private     collections      and property,
“he development          of a national       preserve        for the study and documentation
of environmental          systems,       the conservation             of endangered        wildlife    species,
and the gaining        of important         and practical         insights     into the biology       of the
tropics,      an area whose floraand             fauna are of dramatic              significance      to the
entire     Western     Hemisphere.            It is recognized,           however,      that the GAO had
limited     time to review         the effectiveness            of these programs           as suggested
in the Senate request.              Consequently,          the Institution        would be pleased to
provide      any further      information         required       by- the Congress.


                                       OTHER       MATTERS

        Informational        items      reported       in this section          include      the proposed
Museum       Support     Center,      the    types    of   research        conducted         by   a number      of
Smithsonian        bureaus,      and travel        by Smithsonian            officials.         Of special
importance       to the future       of the Institution          is the Support            Center project.
The Institution        welcomes       the opportunity           afforded       by this Report           and by
the appropriation         hearings       on the fiscal         year 1978 budget to elaborate                   on
the benefits      that this Center          will provide        for the management                  and preserva-
tion of the national        collections,         and for the training              of conservators.            With
 regard   to the two research             programs         identified      for special          review,    the
 Chesapeake       Bay Center        and the Tropical            Research          Institute,       the Smithsonian
is pleased     that the Report-addresses                 the concern,            shared by “he Institution,
that their    work does not duplicate                activities       carried       on elsewhere.


                                           CONCLUSION

        In their    letter     of June 1976, which initiated            this GAO review,
Senators      Byrd and Stevens          specifically      requested     a determination        of
whether     Smithsonian         appropriations        “are effectively      and properly       utilized
for the purposes         for which they were appropriated”                  (emphasis       added).
While the Sm.i”&sonian            is TZD st appreciative        of the diligence,        the objectivity
and the courtesy          of the GAO staff engaged in this study,                it regrets     that so
little  attention     was devoted        to the first     of these questions,        the effectiveness
with which appropriations              have been used.          Admittedly,      in an enterprise
as complex        and varied       as the Smithsonian,          no simple     quantitative     measure
                                                                         .-&-._--._   _.   _   -   ._-_   _._.   __   _   _   _




APPENDIX V                                                                                     APPENDIX V

of effectiveness   suggests    itself.      Nevertheless,       it seems not unreason-
able to conclude   this letter    by asking whether          the people of the United
States --and indeed of the world--have             been well served by the Institution’s
use of the funds available      to it in recent       years.     How well has the Smith-
sonian fulfilled its obligation        to increase     and diffuse   knowledge  among men?

         A full catalog        of Smithsonian           achievements        over the past decade
would be tedious           and out of place here.              Never”heless,        it might     be noted
that the national         collections       have been enriched            by a number        of spectacular
gifts,    among them the C. S. Johnson                     and Hirshhorn        collections      of art, the
Lilly    collection      of coins,      the Cooper        Union collections         of decorative       arts
and design,        and the Dibner          collection      of rare books,        manuscripts,        and
instruments         in the history        of science       and technology.         Six new museums--
the National        Portrait      Gallery,      the Renwick,        the Anacostia         Neighborhood
Museum,         the Hirshhorn         LMuseum and Sculpture              Garden,      the National      Air
and Space Museum,               and the Cooper-Hewitt              Museum--have           been opened to
the public,       and are now enjoyed by millions                   of visitors      each year.       The                         i
National      Collection       of Fine -4rts,        for the first     time in its long history,            has
been ;Jstalled         in an appropriate          setting,     and the century-old          Arts and
Industries       building     has been refurbished             and air-conditioned           for the enjoy-
ment of the public and the safety of its exhibits.                          The National        Zoological
Park is in “he midst             of a long-planned          program       of modernization         and
beautification,         and badly-needed            space for public        enjoyment       and education
has been added to the Museum                    of Natural      History.

         During    the same period,       the Smi”hsonian       has developed         new ways of
bringing     enlightenment      and pleasure      to additional    millions      of visitors,        and
to others who never visit          Washington.       The Festival       of -4merican        Folklife
has helped to awaken an interest             in the folkways     and ethnic roots of all
the peoples      who make up this country.           The National        Associates       program,
and its Smithsonian         magazine,      have brought      the Institution      closer     to mil-
lions of Americans         throughout    “the country,      as has the expanded           Traveling
Exhibition      Service.

         Have these dramatic           successes     in the diffusion        of knowledge      been
achieved     at tie expense        of the increase       of knowledge?         Emphatically         not.
The Smithsonian         tradition     of research      in the sciences,        humanities,        and
art has also been well served               during these years,          and constitutes      the founda-
tion upon which all other Smithsonian                activities      rest.    Whether      one thinks
 of the pioneering       work of the Smithsonian             Astrophysical       Observatory,         of
the definitive      Encyclopedia        of North American          Indians,     or of the Freer
Gallery’s      studies    of ancient     bronze,   it is clear that the Smithsonian                con-
tinues to attract      first-r    ate scientists     and scholars,         and to provide       a
 setting   in which they can freely           and fruitfully      pursue    work of incalculable
value to all mankind.
             _   ._.. _   . .   ..--_ . - _.._-..__ -. __.---.-   ..     _. .__-._ - ._    ~_.              _ _.

APPENDIX V                                                                                       APPENDIX V


        Finally,   it should be emphasized          that every     one of the achieve-
ments mentioned        above was in one way or another             made possible     by
support    from both the public         and the private    sector.     This is the tradi-
tion of “;he Smi’ihsonian     Institution,     and has been for more than 130 years.
It is a tradition    that adds immeasurably           to the effectiveness     of tie funds
granted    to the Institution    by the Congress.

                                                                       Sincerely          yours,
                                                                       c ,s
                                                                                      i            :?
                                                                       --:L:~.‘.i..        _            :**
                                                                                                         ‘- .
                                                                       S. Dillon    Ripley                      ’ ~-   ’   . _
                                                                          Secretary
                                                                                                                            ,




                                            709
    APPENDIX VI                                                               APPENDIX VI




                      PRINCIPAL     OFFICIALS      OF THE SKITHSONIAN         INSTITUTION
                          RESPONSIBLE FOR ADMINISTERING                 ACTIVITIES
                                     DISCUSSED IN THIS REPORT



    SECRETARY                                                                FROM‘-           -TO
          S. Dillon      Ripley                                              1964           Present
    UNDER SECRETARY
              --
          Robert      A. Brooks                                              1973           1976
    ASSISTANT
            --     SECRETARIES                                           .
          Robert A, Brooks           (The Assistant       Secretary)         1972           1973
          Charles  Blitzer         (H istory     and Art)           _        1968           Present
          David Challinor          (Science)                                 1971           Present
          Paul N. Perrot          (Museum Programs)                          1972           Present
          Julian  T. Euell         (Public     Service)                      1972           Present
          John F. Jameson          {Administration)                          1976           Present
    TREASURER
          T. Ames tJheeler                                                   1968           Present
i   GENERAL COUNSEL
          Peter    G. Powers                                                 1964           Present




                                                 ._.__

                                                   110
AN EQUAL OPPORTUNITY       EMPiOY ER

       UNITED STATES                              POSTAGE   AND    FEES   PAID

 GENERALACCOUNTINGOFFICE:              U.   S.   GENERAL    ACCOUNTING           OFFICE

   WASHINGTON, D.C. 20548

        OFFICIAL  BUSINESS
                                                                     THIRD CLASS
  PENALTY   FOR PRIVATE   USE,$JOO