oversight

Audit of Ford-Carter Presidential Transition Expenditures

Published by the Government Accountability Office on 1977-12-23.

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

                         DOCUlEBT REBSOE
05953 - B13663391   Rf 450       ,l   Xi177
audit of Ford-Carter Presidential Transition xpenditures.
GG-78-36; B-149372; -158195. December 23, 1977. Released
December   , 1977. 41 FPp. *  appendices (17 pp.).
Report to Rep. ack Brooks, Chairman, House Committee on
Government Operations; by Elmer B. Staats, Comptroller General.
Contact: General Government Div.
Budget Function: General Government: Executive Direction and
    Management (802)
organization Concerned: General Services dministration.
Congressional Relevance: House Committee on Government
    Operations. Re,. Jack Broaks.
Authority: Presidential Transition act of 1963 (3 .s.c. 102).
    Forer Presidents Act of 1958. Civil Service Retirement act.
    Federal Employees Compensation Act. Federal deployees Group
    Life Insurance ct of 1954. ederal Employees Health
    Benefits Act of 1959. P.   94-499. P.L. 94-363. P.L. 94-438.
    P.L. 95-550. 40 .S.C. 4'0.
          The Presidential Transition Act of 1963 authorized the
appropriation of 900,000 for each Presidential transition and
authorized the se of Government employees on a reimbursable or
nonreisbursable basis. Oct.ber 1976 amendments to the act
authorized the appropriation of up to 2 million for the
incoming administration and up to 1 million for the outgoing
administration. The amendments also deleted the authority to
provide Government employees on a nonreimbursable basis. The
Gerald Ford-Jimmsy Carter transition as the first to test the
workability of financing a transition entirely with Presidential
Transition Act funds. Findings/Conclusions: as of August 31,
1977, about 1.7 illion of the $2 illion appropriated for the
incoming Carter administratioa had been obligated, leaving an
unobligated balance of about S300,000. At the same time, about
$635,000 of the 1 illion appropriated for the outgoing Ford
administration had been obligated, leaving an uncbligated
balance of S365,000. ost of the problems encountered by the
incoming administration involved use of a checking account in a
private bank under control of te Carter/Mondale transition
staff. It was more than 4 months after the end of the transition
period before the records pertaining to this account were
released. False authorizations were used to obtain cash advances
of about $18,000 for 69 indivi.dals; this subterfuge was used
because the General Services Administration payroll system was
not fast enough to accoamodati the needs of some staff meahers
for salary paymens, A longer presidential transition period
provided President Ford with several advantages not available to
former Presidents. Recommendations: The Congress should amend
the Presidential Transition Act to: delete rovisions dealing
with outgoing administrations, add provisions dealing with
military and chartered aircraft, and include approva of
expenditures by General Services administration. All services
provided to forer Presidents should be covered in the Former
Presidents Act. The Congress should amend the Foreer Presidents
Act to: remove restrictions concerning total salaries and
travel, clarify other provisions, and ake provisions for the
services to be furnished a former Vice President. (RBBS)
REPORT TO THE
HOUSE COMMITTEE
ON GO VERNMENT OPERATIONS
BY THE COMPTROLLER GENERAL
OF ThE UNITED STATES



Audit Of Ford-Cartcr
Presidential Transition
Expenditures

The Ford-Carter transition was the first to
test the workability of financing a transition
entirely with Presidential Transition Act
funds. Overall, the concept worked well but
some mistakes were made and problems en
countered in administering the funds pro
vided. Future administrations can profit from
the lessons learned.

Changes to the Presidential Transition Act
and the Former Presidents Act would avoid
recurrence of some problems and would im-
prove the administration of theose laws p.in-
cipally by

     --placing responsibility for transition ex.
       penditures solely with the Administra-
       tor, General Services Administration
       and
     --providing all services to an outgoing ad-
       ministration through the Former Pres-
       idents Act.


GGD-78-36                                          DECEMBER 23, 1977
            GOMrrtOU.Ln GNENAL OFr TH UNITLD STArrT
                       WMa*NTON, m.  am




B-195372
B-158195
                                                      DEC 2   1977



The Honorable Jack Brooks, Chairman
Committee on Government Operations
House of Representatives

Dear Mr. Chairman:

     This is in response to your letter of April 30, 1977,
requesting us to audit the expenditu're of funds appropriated
for the Ford-Carter Presidential transition.

     We believe that this transition demonstrated that a
change in executive power financed entirely by Federal funds
appropriated specifically for that purpose is a viable concept.
Some p-oblems were encountered and mistakes made in adminis-
tering the funds for both the incoming and outgoing adminis-
trations. We believe future administrations can profit from
the lessons learned and we have recommended changes in the
Presidential Transition A:t anrd the Former Presidents A-t to
avoid some of the problems encountered.

     A draft of this report was provided to the General
Services Administration and others for comment on November 3,
1977. Comments had not been received from the General Serv-
ices Administration at the time this report was finalized.

     No further distribution of this report will be made before
30 days unless you publicly announce its contents earlier.
                                     SCly         you




                                     Comptroller General
                                     of the United States
    COMPTROLLER GENERAL'S REPORT           AUD T T OF FORD-CARTER
    TO THE COMMITTEE ON GOVEhNMENT         PRESIDEriIAL TRANSITION
      OPERATIONS                           EXPENDITUREC
    HOUSE OF REPRESENTATIVES


    DIGEST

    The Chairman of the House Government Operations Committee
    asked GAO to audit the expenditure of funds appropriated to
    carry out the Ford-Carter presidential trasi.ition.

 The Presidential Transition Act of 1963 authorized the appro-
 priation of not to exceed $900,000 for each Presidential
 Transition.  It also authorized the use of Government employ-
 ees on a reimbursable or nonreimbursable basis.

    Presidential Transition Act funds were made available for the
    first time in 1964 when $72,000 was provided to the newly
    elected Vice President.

 The first use of Transition Act funds for both incoming and
 outgoing administrations was in 1968-69 when $450,000 was
 mdde available to each.  In addition to the $450,000 in
 Transition Act funds, about $1 million in private funds were
 used by the incoming Nixon administration during the transi-
 tion period.  The outgoing Johnson administration in 1968-9
 and former President Nixon in 1974-5 had, in addition to the
 Presidential Transition Act funds, the assistance of employ-
 ees provided by Government agencies on a nonreimbursable basis.

 The October 1976 amendments to the Presidential Transition
 Act authorized the appropriation of not t  exceed ^? million
 for the incoming administration and not to exceed .! million
 for the outgoing administration.  The amendments also deleted
 the authority to provide Government employees on a nonreimburs-
 able basis.

    The Ford-Carter transition was the first to test the workabil-
    ity of financing a transition entirely with Presidential Tran-
    sition Act funds. Overall, the Ford-Carter transition proved
    that this concept is sound.

    Some mistakes were made and problems encountered in admin-
    isterinq the funds provided. GAO believes that future dmin-
    istrations can profit from these mistakes and has recommended
    some changes in the law to avoid some of the problems.




T      yrAjSfe.
             Upon removal. the eport   i
coer date should be noted hereon.                       GGD-78-36
 STATUS OF APPROPRIATION

As of August 31, 1977, about $1.7 million of the $2
appropriated for the incoming Carter administration million
                                                     had been
obligated leaving an unobligated balance of about $300,000.
GAO has determined that some additional amounts for
                                                     the use
of military aircraft and the payment of employment
                                                    taxes
should be charged to the appropriation (see p. 26 and
                                                       p. 20)
which will reduce the unobligated balance.

As of August 31, 1977, of the $1 million appropriated
                                                       for
the outgoing Ford administration about $635,000 had
                                                     been
obligated leaving an unobligated balance f about $365,000.
GAO has determined that an additional amount for the
                                                      use
of military aircraft should be paid from this appropriation
which will reduce the unobligated balance.  (See p. 26)

PROBLEMS OF THE INCOMING
ADMINISTRATION

Checking account in
private bank

Most of the problems encountered by the incoming admini-
stration involved the use of a checking accrunt in a
private bank under the control of the Carter/Mondale
transition staff. About $330,000 in transition expend-
itures were made from this account.  About $252,000 of
this amount was advanced by GSA to the transition staff
for various purposes. Most of the balance came from
                                                     col-
lections from the press and the Secret Service for the
use of space on chartered flights.

The expenditures from this account were not reviewed
                                                      by
GSA prior to payment and it was more than 4 months
                                                    after
the end of the transition period before the records per-
taining to the checking account were turned over by
                                                     the
transition staff to GSA. The use of this account resulted
in several problems which could heve been avoided.

    --Collections from the press and Secret Service
      B.ounting to about $87,000 were deposited in
      the checking account and used for transition
      expenses.  Under existing laws these collections
      should have been deposited as miscellaneous re-
      ceipts in the General Fund of the Treasury.
      (See p. 16) GAO believes the law should be
      amended to provide for the use of such collec-
      tions for transition purposes in the future.

                           ii
              --Federal law does not authorize the payment
                of salary before it is earned and the agree-
                ment between GSA and the transition staff
                outlined the procedures for placing individ-
                uals on the transition payroll.    These pro-
                cedures were not followed for payments of
                $10,850 to 18 people from the checking
                account which were classified as salary
                advances. One advance was made to a person
                who never was put on the transition payroll.
                The other individuals who received advances
                had worked long enough to have earned all or
                part cf the advance at the time it was made.
                Most advances were made before the employees
                received their first paychecks, but a few
                were made afterwards.   All of the advances
                were repaid but some were not repaid for
                several months: the last repayment was made
                in ay 1977.    (See p. 17)   oine of the short-
                term cash needs of these pople could have
                been met with travel advance:.

              --Lump sum per diem payments of $500 each
                were made to about 130 staff members who
                worked in Washington, D.C., but whose
                residences or places of business were
                elsewhere.  The transition staff did not
                follow Government regulations concerning
                employee entitlement to per diem payments.
                (See p. 18)  Based on the length of time
                the employees were on the transition pay-
                roll it appears that most could have re-
                ceived larger per diem amounts had the incom-
                ing administration chosen to authorize per
                diem for each day they were in Washington,
                D.C.

              --Questionable payments were made for such
                items as a staff Christmas party, a dinner
                for the press, and repair of an employee's
                car damaged while he was on transition
                business.  The costs of the Christmas party
                were refunded.  (See p. 20)

              --Payments of about $87,000 were made for
                casual labor that provided services such
                as handling the mail and courier services.
                No income or social security taxes were
                withheld from the wages of these employees.
                The required social security tax returlns


Iej.S$tipet                         iii
       were not filed nor were the required
       taxes paid. (See p. 20)
Salary advances made
from a casn imprest fund
False authorizations for travel to Annapolis, Maryland,
were used to obtain cash advances of about $18,000 for
59 individuals. CAO was told by a member of the transi-
tion staff that the subterfuge of travel advances was
used because the GSA payroll system was not fast enough
to acccm"~date the n-eds of some transition staff members
for salary payments.
GAO found that GSA expedited the first payroll and some
subsequent ones for the transition staff. The principal
hold up in salary payments was the transition staff's
delay in providing GSA with necessary payroll data,
The advances for the purported trips to Annapolis were
made by a GSA cashier from a cash imprest fund maintained
at one of the transition offices. GAO obtained contra-
dictcry stories as to who suggested the use of the imprest
fund to obtain the salary advances. A transition staff
member maintains that the GSA transition liaison suggested
it; he denies that he did.
Most of the advances were made to transition staff members
after they had worked for a period of time but before they
received their first paychecks. A few advances were made
after employees started receiving regular paychecks. All
advances have been repaid. Most repayments were made about
1 month after the employees received their first paychecks;
a few were not repaid until 3 or 4 months afterwards.
Six advances, subsequently repaid, were paid to individuals
who never were put on the transition payroll.  (See p. 21)
PROBLEMS OF THE OUTGOING
ADMINISTRATION
Period of availability
of funds

The Transition Act nroides that services will be provided
to a former President for a period of 6 months after he
leaves office. However, the appropriation act providing
the additional $2.1 million authorized by the 1976 amend-
ments to the authorizing act stated that the funds would


                             iv
be available through September 30, 1977.   On the basis
of a 1969 GAO decision, GSA advised the former President's
staff that the language in the appropriation act would
prevail.  The longer period of availability provided former
President Ford, as it had former President ohnson, with
several advantages not available undl: the Former Presi-
dents Act such as '.he authority to retain a larger staff,
use office space in mre than one location, and the author-
ity to pay for the travel cf more staff members.   (See p. 25)
USE OF MLITARY AIRCRAFT
PY BOTH INCOMING AND
OUTg3iNG ADMINISTRATIONS

Military aircraft under the control of the White  ouse
Office were provided to both administrations.  Part of the
cost of the flights provided the former President were
charged to the Secret Service but ne Fluik of the costs
were absorbed by the Air Force.

There is no authority in the Presidential Transition Act
for a Government agency to incur expenditures to provide
services on a nonreiinbursable basis. GAO has therefore
advised the White House Office that any costs not reim-
bursed should be billed to (1) the Secret Service for the
space it occupied on flights used by the President-elect
or Vice President-elect and their families and (2) GSA
for payment of the rest of the costs from Transition Act
funds.  (See p. 26)

Pecommendations to the Conqress

GAO believes that some of the problems encountered during
the Ford-Carter transition could be minimized in the future
by changes in the authorizing legislation. To this end,
GAO is making several new recommendations and repeating
recommendations in its December 1975 report on presidential
transitions which were not included in the 1976 amendments
to the Transition Act.  (See p. 31)

If the recommendations are adopted

          --the Presidential Transition Act would apply
            only to the incoming administration,

          --expenditure of transition funds would have to
            be approved in advance by the Administrator of
            General Services, except for minor cash expenses,
            and



 ,bee~t
  _                                v
       --the use of military aircraft
                                       on a reimburs-
         able basis for transition purposes
         authorized and collections rcom      would be
                                          the press
         and others for trips on chartered
         would be available for use in       flights
                                         he. transition.
  All services aailable to the
                                outgoing administration would
  be provided under the Former
                               Presidents Act.
       --Funds would be available to
                                      the former
         President and Vice President
         they leave office through the from the time
                                         remainder of
         the fiscal year--a period of
                                       8
         10 days--thereafter funds wou)a months and
                                           only be
         available to the former President.
      --The President would be required
                                         by law to
         include in the budget request
                                       for the fiscal
        year in which his regular term
                                        of office ex-
        pires sufficient funds to pay
                                       for the benefits
        and services authorized for him
                                         and the Vice
        President by the Former Presidents
        requirement would overcome the      Act.  This
                                        natural reluc-
        tance of a President seeking reelection
        request funds which would only           to
                                        become avail-
        able if e were defeated.

      --Expenditures would have to
                                   be approved in
        adva&ce by the Administrator
                                     of General
        Services, except for minor cash
                                        expenses.
AGENCY COM2NTS

 The Carter/Mondale transition
                               director (see app. III) agreed
 with most of GAO's recommendations.
                                       He disagreed, however,
with GAO's recommendation that
 to require that all obligations the Transition Act be amended
                                  and expenditures be approved
by the Administrator of General
                                  Services, except for minor
cash expenses.   He suggested instead that the
to make the President-elect's                   law be amended
                               designee solely responsible
for the use of transition funds
                                  by the incoming administra-
tion. He als, suggested that
                               the act be amended to provide
funds for a small staff to wind
                                  up transition matters after
the Presidential inaugural.

A Ford transition staff official
                                   agreed with all of GAO's
recommendations.   (See app. IV)
amendment whereby obligations      He suggested one additional
                               could be incurred prior to the
time a President leaves office
facilities would be available    s that certain necessary
                               on the day he leaves office.


                             vi
                  C o n t e n.t s



DIGEST                                                i
CHAPTER

  1        INTRODUCTION                            1
                Presidential Transition Act
                  of 1963                         1
                Scope of review                   3
  2       HOW FORD-CARTER TRANSITION ACT
            FUNDS ERE SPENT                       4
               Carter/Mondale transition          4
               Ford transition                    8
               Rockefeller transition            11
  3       PROBLEMS ENCOUNTERED IN ADMINI-
            STERING TRANSITION ACT FUNDS         14
               Checking account in private
                 bank                            14
                    Collections for use of
                       chartered flights         16
                    Salary advances              17
                    Per diem payments            18
                    Other questionable
                       expenditures from
                       the checking account      20
                    Casual labor                 20
               False travel authorizations       21
               Period of availability of
                 Transition Act funds to
                 former Presidents               25
               Furnishing of military air-
                 craft to incoming and
                 outgoing administratior.s       26
  4       CONCLUSIONS, RECOMMENDATIONS, AND
            AGENCY COMMENTS                      29
               Conclusions                       29
               Recommendations to the Congress
                 for changes in legislation      31
                    Presidential Transition
                      Act                        32
                    Former Presidents Act        34
               Agency comments                   39
                    Cdrter/Mondale               40
                    Ford                         41
APPENDIX
      I     Letter from House Committee
                                        on
              Government Oprations request-
              ing review
                                                     42
  II       Suggested additions and deletions
              to laws pertaining to Presidential
              transitions and former Presidents
                                                    43
 III       'Fev*-   from Director, Carter/Mondale
             transition staff dated December
                                             13,
                                                    5i
  IV       Letter from Special Asistant
             former President Ford dated to
             November 29, 1977
                                                    59

                     ABBR.VIATIONS

GAO        General Accounting Cffice
GSA        General Services Administration
                        CHAPTER 1

                       INTRODUCTION


     The Chairman, ouse Committee on Government Operations,
requested that we audit the expenditure of funds
                                                  appropriated
by Congress for the Ford-Carter Presidential transition
provide a report on bcth the incoming and outgoing       and
                                                    admini-
stzatons describing the purposes for which funds
                                                   were used
and the manner in which they were administered;
                                                 identifying
any transition problems; and commenting on the
                                                adequacy of
the basic legislation under which transitions are
                                                   carried
out.  (See pp. I)

PRESIDENTIAL TRANSITION ACT
OF 1963

     The purpose of the Presidential Transition Act
                                                     of 1963
j3 U.S.C. 102(note) approved March 7, 964) is
                                                to promote
the orderly transfer of executive power in connection
the expiration of the ter;, of office of a President   with
                                                     and the
inauguration of a new President.

     The Presidential Transition Act of 1963 authorized
appropriation of not to exceed $900,000 for each        the
                                                 Presidential
Transition. It also authorized the use of Government
                                                      employ-
ees on a reimbursable or nonreimbursable basis.

     Presidential Transition Act funds were made available
for the first time in 1964 when $72,000 was provided
                                                      to the
newly elected Vice President. The first use
                                              of Transition
Act funds for both an inco-ing and outgoing adninistration
was in 1969-9 when $450,030 was made available
                                                to each.
In addition to the $450,000 in Transition Act
                                               funds, about
$1 million in private funds were used by the incoming
                                                       Nixon
administration during the transition period. The
                                                   ouLgoing
Johnson administration in 1968-9 and former President
in 1974-5 had, in addition to the Presidential         Nixon
                                                Transition
Act funds, the assistance of employees provided
                                                 by Govern-
ment agencies on a nonreirAbursablc basis.

     Public Law 94-499 approved October 14,   1076, amended
the Transition Act by:

    --Increasing the maximum amount authorized to
      be appropriated for one transition from
      $900,000 to $3,000,000.  It authorized the
      appropriation of not to exceed $2 million
      for services and facilities to be provided
       to the President-ele.:t and Vice President-
       elect and $1,000,000 for services and
       facilities to be provided to the former
       President and former Vice President.
     --Deleting the authority to detail Government
       employees to either the incoming or outgoing
       administrations on a nonreimbursable basis.
     --Deletin4 the $100 per diem limitation for
       experts and consultants,
     The maxima;tm amount authorized, $3 million, was appro-
priated to carry out the Ford-Car'er transition. Public
Law 94-363 approved on July 14, 1976, appropriated $900,00O
and Public Law 4-438 approved on September 30, 1976, pro-
vided the additional $2.1 illion.
     The ord-Carter transition was the f:rst to test the
workabili:y of financin a transition enti.:ely with Presi-
dential Tansition Act fnds.
     The act authorize3'the Administrator of General Services
to provide each President-elect and Vice President-elect the
necessary serv'.es and facilities for their preparations for
the assumption of official duties. The President-elect and
Vice President-elect may designate an assistant to make on
their behalf such designations or findings of necessity in
connection with services and facilities provided under the
act. The uthorized services and facilities include:
    --Suitable office space appropriitely equipped
      with furniture, furnishings, ofice machines
      and equipment, and office supplies at such
      place or places within the United States as
      the President-elect or Vice President-elect
      shall designate,
    --Compensation of office staffs at rates not to
      exceed GS-18. Any employee of any agency of
      any branch of Government may be detailed to
      such staffb on a reimbursable basis at the
      same rate of compensation s his regular
      employment.
    --Procurement of services of experts or
      consultants.
    --Travel expenses and subsistence allowances.


                              2
     --Communications services.
     --Printing and binding.
     --Postage.
     The Administrator may use Transition Act funds only to
pay obligations incurred by the President-elect and Vice
President-elect from the day following the general election
to the day of inauguration.
     The Transition Act also authorizes the Administrator to
provide each former President and former Vice President, for
a period not to exceed 6 months from the expiration of their
terms of office, the same services and facilities provided
to the President-elect and Vice President-elect for use in
winding up the affairs of their respective offices.
SCOPE OF REVIEW
     We examined the authorizing legislation pertaining to
assistance provided to the incoming and outgoing administra-
tions under the Presidential Transition Act and reviewed the
obligation and expenditure of funds provided to assist
President-elect Carter, Vice President-elect Mondale, former
President Ford, and former Vice President Rockefeller. Our
work included discussions with General Services Administra-
tion (GSA) officials responsible for administering the ex-
penditure of funds appropriated to carry out the act and
officials of the incoming and outgoing transition staffs.




                               3
                       CHAPTER 2
                    HCW FORD-CARTER
             RANSITION ACT FUNDS      ERE SPENT

      Of the $1 million appropriated for the services
 cilities to be providet to former President            and fa-
                                              Ford and former
 Vice President Rockefeller, the former President
 cated $905,000 and the former Vice President      was allo-
                                               $95,000.
 $2 million appropriated to the incoming administration The
 not divide6 between the President-elect and              was
 elect.                                       Vice President-

     The status of the funds as of August 31, 1977,
poses for which expenditures                          the pur-
                                ere made by the incoming and
outgoing administrations, and the procedures
                                               used to admini-
ster these funds are di.,judsed in the following
                                                  sections.
CARTE:R/MONDALE TRANSITION
      On November 15, 176, GSA and
 tion Planning Group entered into nthe  Carter/Mondale Transi-
                                     agreement
 in a fair amount of dtail the procedures for setting forth
 services made available under the provisions obtaining the
 tion Act. Mr. Jack . Watson, Jr. was designatedof the Transi-
 President-elect's representative for the transitionas the
Mr. G. C. Gardner twas designated as GSA's              and
transition staff. Mr. Walter Kallaur was liaison      to the
                                            appointed Carter/
Mondale Transition Administrator and was authorized
Mr. Watson to approve payments of transition            by
                                               funds. An
additional agreement between GSA and the transition
telephone services was signe;. on November 17,          staff on
                                                 1976.
      The transition period for the incoming administration
began on November 3, 1976, and ended on January
GSA records show that as of August 31, 1977,       20, 1977.
gated for Carter/Mondale were as follows:      the  funds obli-




                             4
Funds available                               $2,000,000

Funds obligated -
     Salaries and wages                            946,248
     Personnel benefits                             67,578
     Travel and transportation                     360,339
     Telephone and telegraph                       106,460
     Office space                                   48,525
     Rental of office equipment
       aid furniture                                45,175
     Commercial services                            52,229
     Supplies and miscellaneous
       expenses                                     26,724
     Postage                                        25,035
     Printing                                       14,456
     Services rendered by other
       Government agencies                            9,355

          Total obligated                         1,702,125(a)

          Unobligated balance                 $     297,875(b)


Note (a) - We increased expenditures recorded by GSA by
           $86,491 collected for :he use of chartered
           aircraft and spent for transition purposes
           and decreased expenditures by $1,516 for a
           refund of transition funds spent on a staff
           party. (See pp. 16 and 20).

     (b) - This balance will be reduced by payments or
           the use of military aircraft and employment
           taxes not previously paid on employees' wages.
           The exact amounts had not been determined as
           of October 15, 1977.

     The following is a brief description of the purposes
for which the appropriated fundbs ,ere used.

Salaries and wages $946,248

     Salaries totaling $847,974 were paid to a total of
312 staff employees who worked for varying periods during
the transition.   During the first week of the transition
period, 97 employees were hired and 95 more were hired
during the second week. At the end of the transition period,
301 individuals were on the payroll.   In addition, four em-
ployees were detailed from other Government agPncies on a
reimbursable basisa at a cost of $11,180.



                                5
     The Transition Planning Group also hired several hundred
employees which it classified as casual laborers who generally
worked for short periods. Most of these employees provided
courier service and processed large quantities of mail re-
ceived after the election and were paid a total of $87,095.
Personnel benefits $67,578
     The Planning Group's employer share of personnel bene-
fits includes costs for health services, life insurance
premiums, social security taxes, and contributions to the
civil service retirement fund. Personnel benefits were not
paid on the wages of casual laborers.
     Section 3(a) of the Presidential Transition Act of 1963
provides that notwithstanding any other law, persons receiv-
ing compensation other than those detailed from Government
agencies shall not be held or considered to be employees of
the Federal Government except for purposes of the Civil
Service Retirement Act, the Federal Employees Compensation
Act, the Federal Employees Group Life Insurance Act of 1954,
and the Federal Employees Health Benefits Act of 1959. We
were told by the transition staff that employees were given
the coice of being covered by the retirement and other bene-
fits cited in the act or b social security. No deductions
of any kind including social security or income taxes were
made from the wages of casual laborers.
Travel and transortation     $360,339
     Expenses were incurred for travel, including airfare;
per diem and taxi fares; chartered aircraft and buses; car
rentals; and freight chages. Lump-sum per diem payments
of $500 each were made to employees who lived outside of the
metropolitan Washington, D.C., area and began working in
Washington, D.C., after the election of the President and
Vice resident. (See discussion on p. 18) Military air-
craft were also used but the cost of providing such air-
craft was not charged to the Transition Act funds. (See
discussion on p. 26)
Telephone and telegraph $106,460
     The telephone agreement between the Planning Group and
GSA provided that charges would be made for a one-time in-
stallation of about 250 lines in the New Executive Office
Building and the HEW North Building, continuing local
service, Iong distance calls made over commercial lines or
the Government's Federal Telecommunication System, and
three telecopying machines.

                                6
Office space S48,526
     Office space, furniture, and office equipment were
furnished at no cost for the principal transition offices
locatd on part of the third floor of the New Executive
Office Building, Washington, D.C., NW.; part of the fifth
floor of the HEW North Building, Washington, D.C., SW.;
and in the Federal Building located in Americus, Georgia.
Offices at 716 Jackson Place, NW. and 730 Jackson Place, NW.,
Washington, D.Z., were also used occasionally. GSA charged
the Planning G:oup for guard services, moving expenses, and
miscellaneous construction which was designed primarily to
improve security in the New Executive Office Building and
the HEW North Building in Washington, D.C. The Planning
Group also incurred costs for the rental of mobile officer
used in Plains, Georgia. Space in a motel in Americus,
Georgia, was rented for a few weeks at the beginning of the
transition period and was used both for office space and
living quarters by the Planning Group. The total costs of
the motel rentals are included in travel ad transportation
expenses.
Rental of office equipment
and furniture $45,175
     Office equipment and furnishings needed by the Plannirg
Group in addition to those items supplied by GSA without
charge were rented from commercial suppliers. For example,
an automatic data processing computer terminal was leased.
Commercial services $52,22
     The services included in this c.cegory were for the
cost of professional accounting services, a press clipping
service, some temporary labor, automatic data processing
consultation, services to a small business liaison team,
and catering service at a foreign policy briefing.
Supplies and miscellaneous
expenses $26,724

     This expenditure consisted principally of office sup-
plies purchased from GSA setlf-service stores and commercial
suppliers, subscriptions to ewspapers and a technical
publication.
Postage $25,035

     This expense consisted of rental of a post office box,
purchase of postage stamps, postage for a postage meter, and


                              7
the cost of penalty mail billed to the Planning Group by
the Postal Service on the basis of estimated usage.
Printing $14,456

     Printing costs consisted primarily of printing of
letterhead stationery, envelopes, and cards.
Services rendered by other
Government agencies$,35

     The Department of State billed the Planning Group for
expenses in connection with President-elect and Mrs. Carter's
stay in Blair House. The Smithsonian Institution charged
the Planning Group for services rendered in connection with
a foreign policy conference.
FORD TRANSITION

     On December 13, 1976, GSA and the Ford Transition Office
entered into an agreement effective January 21, 1977, setting
forth the procedures for obtaining the services available for
use in winding up the affairs of the former President. Ad-
ditional agreements relating to payroll and telephone serv-
ices were entered into on December 13, 1976, and January 5,
1977, respectively.

     The former President designated three individuals to
act in his behalf in connection with the services and facili-
ties provided under the act.

     The amount obligated by the Ford Transition Office as
of August 31, 1977, totalled $583,815 as shown in the ol-
lowing tabulation.




                             8
Funds available                                $905,000

Funds obligated -
     Salaries and wages                         307,231
     Personnel benefits                          26,219
     Travel and transportation                   94,095
     Telephone and telegraph                     33,840
     Office space, furniture,
       and equipment                             71,261
     Supplies and expenses                       11,748
     Printing                                    31,736
     Postage                                      2,820
     Commercial services                          4,865

          Total obligated                       583,815

          Unobligated balance                  $321,185(a)


Note (a) - This balance will be reduced by a payment for the
           use of military ircraft (see p. 26) and addi-
           tional obligations incirred through September 30,
           1977.

     The following sections contain brief descriptions of
the purposes for which the Transition Office used appropri-
ated funds.

Salaries and wages $307,231

     Salaries and wages totaling $295,705 were paid for vary-
ing periods to 27 employees and $11,526 was paid for four
individuals detailed from the Armed Services on a reimburs-
able basis to the staff of the former President.  For the
payroll period ending on August 27, 1977, 18 employees were
on the Transition Office payroll.

Personnel benefits $26,219

     Employees of a former President are not considered to
be Government employees but are eligible for the retirement
and insurance benefits available to Government employees.
The ransition Office's share of personnel benefit costs
includes payments for health services, life insurance pre-
miums, social security taxes, and contributions to the re-
tirement fund.  Social Security taxes were paid for four
employees; civil service retirement contributions were made
for the other employees.




                                 9
Travel and transportation $94,095

     Expenses were incurred for airfare, For diem, and other
travel expenses; moving expenses for transition material.;
car rentals; and freight charges.  Military aircraft were
also made available to former President Ford but not charged
to ransitio., Act funds.  (See p. 26)

Telephone and telegraph $33,840
     The telepnonl, service: agreement between the Transition
Office and GSA provides that charges were to be made for a
one-time   nstallation of equipment and lines at the transi-
tion offices at 734 and 736 Jackson Place, NW., Washington,
D.C.; continuing local service; and long distance calls
made over commercial lines or the Federal Telecommunications
System. Communications services were also provided for a
temporary office in Vail, Colorado.

Office space, furniture,
and equipment $71,261
     Office space, furniture, and office equipment were pro-
vided at no cost by GSA to the Ford transition staff at
three locations on Jackson Place, NW., in Washington, D.C.
Rent was paid from transition funds f    the rental of offices
in Palm Springz, California, and fcr I: ilities, landscaping
and swimming pool maintenance required y the rental lease.
Transition funds we.e also used to rent temporary office
space in Vail, Colorado. Some office equipment and furnish-
ings were rented from commercial suppliers and some were
purchased.

Supplies and miscellaneous
expense $11r749--

     This expense consisted of office supplies purchased
principally from GSA self-service stores, and subscriptions
to newspapers, magazines, and a technical publication.

Printing $31,736

     The amount expended consisted primarily of the cost of
printing acknowledgment cards, letterhead stationery, and
envelopes.

Postage $2,820

     This expense consisted of the cost to rent a post office
box, purchase postage stamps, stock a postage meter machine,


                             10
                                             Transition
and for penalty mail which was billed to the
                     Service on an estimated use basis.
Office by the Postal

Commercial services $4,865
                                              of office
     Services obtained included installationfor
equipment, beeper communications, research      a speech by
the former President, and janitorial services.

ROCKEFELLER TRANSITION

     On December 22, 1976, an agreement was entered into
                                             Officr effec-
between GSA and the Rockefeller Transition           'r ob-
tive January  21, 1977, setting forth procedures
                                for winding  up  tl.  affairs
taining the services available                           re-
of the former  Vice President.  Additijnal  agreements
                                                 also  entered
lating to payroll and telephone services were
into on the same date.

      The former Vice President designated two individuals
to act   n his behalf in connection with the services and
faci)   ies provided under the act.

     The amount obligated by the Rockefeller Transition
                                               as shown
Office as of August 31, 1977, totalled $51,292
below.
                                                  $95,000
Funds available

Funds obligated -
     Salaries arid wages                           39,425
     Personnel benefits                             2,544
     Telrphone and telegraph                        3,103
     Rental of equipment                            2,741
     Commercial services                            1,035
     Travel and transportation                        915
     Supplies a J miscellaneous
        expenses                                       663
                                                       792
     Printiti¶j                                         74
     Postige

           Total obligated                          51,292

           Unobligated balar.e                     $43,708(7'


                                                       obli-
 Note (a) - This balance may be reduced for additional
            gations incurred through September 30, 1977.




                                 11
      The following sections contain
 the purposes for which the Transitionbrief descriptions of
                                        Office used appro-
 priated funds.
 Salaries and wages $39,425

      Salaries and wages totaling
 employees who worked for various $31,198  were paid to five
                                  periods of time and $900
 was paid to a concultant. Another Government
 reimbursed $7,327 for the services of one      agency was
                                            employee detailed
 to the transition staff.

 Personnel benefits $2,544
      The Transition Office's share of personnel
 includes payments for health services,            benefits
                                        life insurance
 premiums, social security taxes, and contributions
 retirement fund. Social security taxes               to the
 three employees who worked short periods were paid  for
 service retirement contributions were madeof time; civil
 employees.                                  for the other

Office space

     Office space, furniture,
vided at no cost by GSA at 730 and office equipment was pro-
                                Jackson Place, NW., Washingtcn,
D.C. The office was losed and the premises
June 1977.                                    vacated in early

Telephone and telegraph $3,103

     The telephone services agreement between
Office and USA provided that charges would     the Transition
time installation of equipment and lines    be made for a one-
                                          at 730 Jackson
Place, NW., Washington, D.C.; continuing
long distance calls made over commercial local service; and
ment's Federal Telecommunications System. lines or the Govern-
Rental of equipment $2,741
     Office equipment needed by the Transition
dition to the equipment furnished at no         Office in ad-
rented from commercial suppliers.       cost by  GSA was

Commercial services $1,035
     Services obtained included primarily planning
                                                   and dec-
orating the Transition Office.




                              12
Travel ad transportation $915

     Expenses were incurred for   zfare for several round-
trips to New York, local taxi fares, air freight of p! inted
matter, and delivery charges for office equipment.

Supplies and miscellaneous
expenses ,-663

     This expense consisted of office supplies purcha:ed
principally from GSA's self-service store and subscriptions
to newspapers.

Printing $792

     Costs included primarily printing of letterhead station-
ery ard envelopes, and abels.

Postage $74

     This expense consisted of the rental of a post office
box and the purchase of postage stamps.




                             13
         he   -od        .       t -: r ?   L       u               t                 .,?n.-t.a'-.,tat
                                                                                                 'th        chaniqe
in executive power financd .t'.rci- y bt?Jnd.                                                     dppropr ated
under t:he Presilde,tial T'raosl in .,-. .- a                                                   iahle concept.

     Some problems were encountc.red n micFtakes n:ade in
administerino thh Transition ct fund; for both the inco'ming
                                                                         r.
and outqoinq        adrlnistration,:.                    i'A;                    ijsinriscrration;s           can
                                                     ]
profit Iroi, the lessons lea;rn.:                           :                 cic-'rer.,n       in    the law will
avoid    some of tht.        ;rlem:,            en'o;'          s       .,'      .


        T'he prcole:.:       for the C              !.. .
                                           >I:,');,i L. tr 3n:;It ior funds
involvfed (1) the             ;,:, nf          a,.',         in a .ri ivte
                                                        t- '.f:
                                                           :.;:r                 bank
under the- 'ontr'.           o     t  to'.r
                                     . :                 -ro       whic    £oroe
-iuestidable x-;.              w          -x",,lt!.C:
                                         ...      ,:   2rr r-~'oF          hry GAc
ultii l 'onq  [,fter t.e tran.--;-:    : : ;:               end end !2) the
use    f f .-  tr. v"! aut l;.r:,'.:        3 t,':: 'i:: i .ll":'Lr'     advances.

        The prob'em      ],nvolvirl,            t        iLi,.! t .:                     .ion
                                                                                          t           funds was the
use of the fund.- as a.thor ize    -,v
                                     y                                    i"    .;rouriation act until
September 30, 1977, or abrult 2-..                              ;       :ront::; beyond the 6-month
period provided by the tr,dn.;itti-,'                                   t    It. islation.

      An additional problr;m inolv:r  .  ,,th the incoming and
outgoing administration: wa-:    h u;e of Tiii.tary aircraft
by the President-elect, Vice irci^ lnt-,iect and their
staffis and former President Ford' without ,charge to Transi-
tion Act funds.

CHECKING ACCOUNT IN
PRIVATE BANK

     Most of the mistakes an'd preh!:-!, s in                                              the use of   ransi-
tion funds by the lncomin   a(minl:triton                                                  .rvolved the use
of a checking account in a rL'IVte,     Ank:.                                              'Mr. Gardner for
GSA and Mr. Watson for the Cartvr/.Monrile                                                 staff signed an
agreement on Novemnhbr It, l7[,, outl ini:                                                 the povinions of
the Transition        Act and theo pr:)c : :.                                    to b          Jrsed     in paying
the expenditures autrior i'1       t: h-' ,iot.   On the  ame day,
GSA approved the  .;uance ot ,. i.-.T       Leas'.ury chec drawn on
the Transition Act fun i     <,; l,
                                  ',~i;l1e i          to the Carter/
Mondale transi-,on Flann:.;                     .;rl;;              t',r ,tirJlUtIn                      te Union
First     ational     tank of                                           Drasn.(.ton,
                                                                        D..     n November 19, 1976,
another U.S. Treasury check for $10,000 was issued for de-
posit in the same account. Accompanying each check was a
GSA letter advising the planning group that the funds ad-
vanced for deposit in the checking account could only be
spent in accordance with the provisions of the Transition
Act.
      During the balance of the transition period GSA ad-
vanced additional sums, eventually totaling about $252,000,
to the Carter/Mondale staff for deposit in the checking
account. Each advance was preceded by a request from thp
transition staff describing the purpose for which the re-
quested funds would be used. With each advance GSA sent a
letter reminding the transition staff that the funds could
only be spent for authorized purposes and would have to be
accounted for by the transition staff. The funds were re-
quested for a variety of purposes with the largest amounts
requested for chartering aircraft for the President-elect,
the payment of wages to so-called "casual labor," and the
payment of per diem to staff members working in Washington,
D.C., whose homes were elsewhere.
      The se of the checking a3c2unt resulted in many prob-
lems in th, use of transition funds which could have been
avoided. GA did not review the propriety of the expendi-
tures from the checking account until more than 4 months
after the ene of the transition period when th3 transition
staff turned over its checking account records to GSA. GSA
maintained   hands-off attitude toward the expenditures from
the checking account; once it advised the transition staff
of the provisions of the act, it believed it was up to them
to observe them. In contrast, GSA adopted stric' standards
on the disbursements which it approved before payment. It
questioned many payments and tie certifying officer obtained
approval from its General Counsel on a.y questionable items.
     In GSA's post audit of the expenditures from the check-
ing account it questioned some of the expenditures and b-
tained some refunds. A post audit of this type, however, is
not as effective as an examination prior to payment. The
obtaining of additional documentation, justifications, or
refunds 4 or 5 months after the expenditure may not be pos-
sible and is often unfair and expensive.

     In our discussion with the Carter/Mondale transition
staff their position was that since they had been designated
to represent the President-:!ect and Vice President-elect on
matters relating to financing the transition their decisions
on the propriety of expenditures should prevail. The position



                          15
 of GSA officials seemed to be that they advised
 tion staff of its respbnsibilAty for the proper the transi-
                                                 use of the
 funds and if any problems developed it would be
 tion team's responsibility.                     the transi-

      Some of the problems which resulted from the
                                                   ',se of the
 checking account are discussed below.
 Collections for use
 of chartered flights
       The Cater/Mondale transition
  in the transij2on period that during taff advised GSA early
                                        the Presidential camp-
 aign it had been its practice to collect from
                                                 the press and
 the Secret Service the cost of any transportation
 personnel accompanying the candidate. Mr. Gardner,furnished
 liaison, told us that he aised Mr. Kallaur            the GSA
                                                that GSA would
 not get involved in any bi'ling and collection
 during the transition. Mr. Gardner agreed to procedures
 trarsition staff with funds to pay the          provide the
 chattered flights but left it up to the full  cost of any
                                           transition staff to
 do the billing and collecting from the press
 Service. Mr. Gardner told us that he remindedand the Secret
 that any collections would be Federal funds.     Mr. Kallaur

      We were told by the transition
 to chartered aircraft it provided thestaff  that in addition
 transportation. We were also advised press    with ground
                                        that the billings to
 the press were computed at 150 percent
 to cover the cost of both air and groundof transportation
                                             first-class airfare
 that the billings to the Secret Service were computed      and
 100 percent of first-class airfare bocause no            at
portation was furnished. The collections from ground trans-
amounted to $86,491 and were deposited in the these billings
Under existing law these collections should have checking account.
ited as miscellaneous receipts in the General       been depos-
Treasury. As indicated in chapter 2, the reuse   Fund of the
lections by the transition team did not result of these co;-
ligation of appropriated funds. However, the in an over ob-
                                                 availability
of these additional funds permitted the transition
make expenditures from the checking account without staff to
GSA to advance additional funds and justifying         requesting
which they were to be used.                       the purpose  for

     It is not clear when GSA first became aware of
tent of the collections from the press              the ex-
                                       and Secret Service and
the fact that hey were being deposited in the
count and used for transition purposes. In     checking ac-
                                            any event, about
10 days after the end of the transition period
                                               the Carter/
Mondale transition staff sent GSA a report prepared
                                                    by a

                             16
public accounting firm showing in summary form the source
and use of the checking account funds. GSA advised the
transition staff that the report was not an adequate account-
ing of the use of transition funds and began pressing for a
derailed rnort.
     At the end of the transition period there were many out-
standing billings to the press and salary advances to be col-
lected as well as unpaid bills which the transition staff
wanted to pay before closing the checking account. On June 6,
1977, the transition staff turned over the checking account
records to GSA.
     GSA questioned some expenditures including some for
which the transition staff obtained refunds. GSA also re-
quested CA0 to determine whether the collections from the
press ana Secret Service should have been deposited in mis-
cellaneous receipts of the Treasury or retained in the Tran-
sition Act appropriation. The law (3] U.S.C. 484) provides
that unless otherwise provided all monies received for the
use of the United States are to be deposited in the General
Fund of the Treasury. We advised GSA that there is no
authority in the Transition Act to retain these receipts
and that the amounts collected should be deposited as mis-
cellaneous receipts in the General Fund of the Treasury.

     The Carter/Mondale transition staff believes it is un-
fair not to permit the use of monies collected to offset
transportation expenses. In our opinion, present law does
not permit such offsetting but we believe it should.
Salary advances
     Federal law does not permit the payment of salary before
it is earned. The agreement betweeen SA and the transition
staff outlined the procedures for placing individuals on the
transition payroll. Tese procedures were not followed for
payments from the checking account classified as salary ad-
vances. Advances of $10,850 were made from the checking
account to 18 people. One advance was made to a person who
was never placed on the transition payroll. The other indi-
viduals who received advances had worked long enough to have
earned all or part of the advance at the time it was made.

     One advance was made on November 17, 1976, with the
others being made in December 1976 and January 1977. Most
of the advances were made to employees before they received
their first paycheck but 4 of the 21 advances were made after
the employees received their first paychecks. All of the



                            17
advances have been repaid but some weri not repaid for
seve:al months; the last repayment was made in May 1977.
     In addition to the salary advances from the checking
account several individuals received advances from the 1976
Democratic Presidential Campaign Committee, in the early
days of thextransiticn. The largest of such advances was
for $2,000 to one individual who also received two salary
advances amountinl to $1,000 from the checking account.
GSA reimbursed the Campaign Committee for the salary a-
vances and other expenditures on April 8, 1977, by a
Treasury check dras,. on the Transition Act funds. The
salary advances we:e recovered from the employees by refunds
from them or by offsets to their salary payments.
Per dien payments

     The Transition Act permits the payment of travel ex-
penses to staff members at their duty station if it is
different thdn their principal pl!ce of business or resi-
dence. Many of the Carter/Mondale transition staff assigned
to Washington, D.C., came from other parts of the country.
Beginning on December 10, 1976, the Carter/Mondale transi-
tion staff prepared $500 per diem checks for issuance to
its Washington, D.C., staff whose places of business or
homes were not in the metropolitan area.  During the transi-
tion period 126 checks wer issued for this purpose.

      On December 11, 1976, after most of the $500 per dem
checks had been prepared but not issued, Mr. Kallaur re-
quested Mr. Gardner to issue a check for $75,000 to be de-
posited in the private bank checking account mintained by
the Carter/Monda]e group. Mr. Gardner in a letter dated
December 16, 1976, refused to issue the check for the lump
sum payments and outlined the procedures employees were to
follow to receive reimbursement under Government travel
regulations. On December 20, 1976, however, a check for
$82,500 was issued for deposit in the checking account.
In a letter accompanying the check Mr. Gardner agreed with
the transition staffs' proposal to pay the employees the
average daily cost of lodging plus $16 a day for meals and
miscellaneous expenses not to exceed $35 per day. He also
agreed that each employee would continue to receive these
payments until they totaled $500 or the employee permanently
relocated in the Washington, D.C., area, whichever came
first.

     The Carter/Mondale transition group did not require the
payment of travel expenses in accordance with Government
travel regulations. Each eligible employee was advised that


                          18
he or she could reteive per diem up to $35 per day until
payments total $50t or until the employee relocated in
Washington, D.C., whichever came first. All of the employ-
ees who received the $500 payments merely signed statements
saying that their residence was outside the Washington, D.C.,
area before coming to work for the transition staff and that
they had worked in Washington, D.C., for at least 15 days
before obtaining a permanent residence.
     Under Government travel regulations these employees may
have been entitled to receive more than $500 each. For pay-
ment of travel expenses, Washington, D.C., had been desig-
nated by GSA as a high rate geographical area with a pre-
scribed maximum daily rate of $50.   For temporary duty travel
at high rate areas the employee is normally entitled to re-
imbursement for actual and necessary subsistence expenses up
to the maximum daily rate. To obtain reimbursement the
employee must itemize the amounts spent each day for meals,
lodging, and other authorized expenses. Receipts must be
provided at least for lodging.
     In some circumstances a per diem rate ot to exceed
$35, which was authorized for these employees, may be pre-
scribed in lieu of actual subsistence for high rate aieas,
if it is determined that certain factors are present such
as the availability of low cost food or lodging to the em-
ployee. When such a determination is made, tn employees
should be entitled to per diem for each day they were in
Washington, D.C., before obtaining a permanent residence;
the $500 limitation imposed for these employees was arbi-
trary and not in accordance with Government travel
regulations.
     The employees who received the $500 per diem payments
in December 1976 did not prepare the usual travel vouchers
showing the specific days for which they claimed per diem
and the average daily cost of lodging. Instead they merely
signed statements to the effect that they had been in the
Washington, D.C., area at least 15 days before obtaining a
permanent residence. Presumably some were here longer and,
even assuming a $35 a day per diem rate, could have received
more than $500 had the incoming administration authorized
the payment of per diem for each day they were employed away
from their homes. Also, employees entitled to actual sub-
sistence or per diem payments are entitled to receive travel
advances for their expenses but o travel advances were made
to these employees. The use of travel advances would have
provided these employees with funds and may have avoided
some of the financial problems ecountered by the transition
staff. (See p. 21)


                            19
 Other questionable expenditures
 from the checking account

      Summarized below are some other uestiunable expendi-
 tures from the checking account. As noted, for one item
 a refund was received.
      $1,516         In December 19:'6 payments totaling
                     $1,516 were made for a transition
                     staff Christmas party. On May 17
                     and 18, 1977, the transition staff
                     obtained a refund of $1,500 from
                     the Democratic National Committee
                     Services Corporation and $16 from
                     one transition staff employee which
                     was deposited in the checking account.
     $480            A payment of $480 was made for a
                     Thanksgiving dinner provided to mem-
                     bers of the press and their families
                     in Plains, Georgia. This payment was
                     approved by the press secretary and
                     the trar ition administrator.
     $392            Transition funds were used to pay for
                     the repair of damages to the car of
                     an employee who worked on the transi-
                     tion staff. We were told by a staff
                     member that the employee wcrked as a
                     courier for the transition staff and
                     that the car was damaged while he was
                     on transition business.
Casual labor

      The November 15, 1976, agreement signed by GSA and the
Carte-/Mondale representative provided the procedures for
placing employees on the transition payroll. These proce-
dures were not applied to so-called "casual labor," princi-
pally employees paid at hourly rates for such tasks as
typing, opening mail, and providing courier service. At
various times during the transition period GSA transferred
funds for deposit in the checking account to be ud    for pay-
ing these employees. A total of $87,095 was paid for casual
labor.
     The Carter/Mondale staff prepared the casual labor pay-
rolls which consisted basically of the employees name, social
security number, hourly rate, hours worked, and amount paid.
These employees were paid by checks drawn on the checking


                             20
account and no deductions were made for Federal or State
income taxes, or social security taxes.
     The Carter/Mondale transition staff prepared and sub-
mitted to the Internal Revenue Service, Wages and Tax state-
ments (forms W-2) for most of the casual labor employees
which showed the wages paid and that no income or social
security taxes were withheld. Forms 1099 (statements of
miscellaneous income) were submitted for a few employees
classi ied as casual labor. As of October 15, 1977, neither
GSA nor the Carter/Mondale transition staff had filed the
employment tax forms nor paid the taxes required by law for
the wages paid to these employees. We advised GSA that the
required social security tax returns should be prepared and
the taxes due paid on the wages of these employees.
FALSE TRAVEL AUTHORIZATIONS
     In order to provide some of its employees with salary
advances, and avoid some of the problemr of what the transi-
tion staff perceived as an unresponsive payroll system, the
transition staff resorted to the use of false travel author-
izations for the payment of so-called travel advances' of
about $18,000 to 69 members of the transition team for trips
from Washington, D.C., to Annapolis, Maryland. The trips
were never intended to be made and the advances wer- simply
a device to speed-up salary payments to some transition
team members. The payments of the advances were made by a
GSA imprest fund cashier stationed in the HEW Building, one
of the transition team locations. The cashier had a fund
of $10,000 and was instructed to make no single payment for
more than $300.

     Most of the false travel authorizations were approved
by Mr. Jonathan Stein, who worked for Mr. Kallaur the transi-
tion staff administrator. Some were signed as authorized by
transition staff members in one of the various transition
groups. The requests for travel advances, generally for $30
but some for smaller amounts, were in all cases signed by the
employee who received the advance as requestor and signed by
an approving official, in most cases Mr. Stein.
     The tansitior. administrator contends that the use of
false travel authorizations and advances was resorted to
because the GSA payroll system was unresponsive to the im-
mediate needs of ome transition team members for salary
payments. He also contends that Mr. Gardner knew that the
imprest fund was going to be used for salary advances. He
stated that he asked Mr. Gardner for funds to place in the
checking account in a private bank to make such advances


                              21
and that Mr. Gardner refused saying that the Carter/Mondale
team had $10,000 available in the petty cash fund and it
should be used.   The only reason given by the transition ad-
ministrator as to why the use of false travel authorizations
and advances was used to make salary advances is that no read-
ily available system existed for obtaining salary advances from
the imprest fund but there was one for travel advances.
     Mr. Kallaur also maintains that Mr. Gardner must hve
known about the false travel advances because he approved
the petty cash reimbursement vouchers for the advances made
for 74 trips to Annapolis. He claims further that the im-
prest fund cashier also must have known about the true pur-
pose of the advances since she was stationed with the transi-
tion team at the HEW building and could see that some of the
people who received the advances did not travel,
     Mr. Gardner denies that he ever told Mr. Kallaur to use
the imprest fund for salary advances. Because of the pub-
licity concerning these advances, the GSA certifying officer
prepared a statement in which he relates that in late Novem-
ber 1976 when the i:nprest fund cashier presented her first
reimbursement voucher he brought to Mr. Gardner's attention
the fact that most of the funds had been used for travel
advance. for trips to Annapolis and that Mr. Gardner said
he would dscuss them with Mr. Kallaur.
     Mr. Gardner told us that he did not discuss the pur-
pose of the numerous advances for trips to Annapolis with
Mr. Kallaur. He stated he would have had no reason to
question them since they were approved by Mr. Stein who
was authorized to do so. He also told us that in approving
the reimbursement vouchers he did not check all the support-
ing documents.
     The certifying officer's statement says that early in
December 1976 he asked Mr. Stein about the Annapolis trips
and that Mr. Stein told him that there were no trips to
Annapolis and that the payments were actually salary advances.
The certifying officer said that prior to this discussion
with Mr. Stein, Mr. Gardner had approved an imprest fund
reimbursement voucher which included about 10 Annapolis
advances. The certifying officer told us that because
Mr. Gardner signed the reimbursement vouchers he assumed
that Mr. Gardner had approved the use of the imprest fund
for salary advances.
     In any event, no action was taken by GSA to discontinue
the use of the imprest fund for the Annapolis advances which
continued to be made through the end of December 1976. About
$22,000 was spent from the imprest fund of which about $18,000
was for Annapolis travel advances.
                             22
     GSA made an ert    to expedite the payroll payments to
the Carter/Mondale    nsition staff.  Records were not
maintained, however,  o record the step by step handling of
each payroll.  Some of the payroll documents were dated,
others were not. Where dates were missing we had to rely
on a summary prepared by GSA based on the recollections of
the employees involved.

     The first transition payroll was preceded by the transi-
tion staff giving GSA forms 52 (request for personnel action)
shortly after the beginning of the transition period.  When
these forms are completed GSA prepares forms 50 (notification
of personnel action) which are entered in the payroll system.
These documents should show all pertinent payroll infor-
mation such as entered-on-duty date, rate of pay, deductions,
social security number, etc. but according to the summary
prepared by GSA it was not until November 2, 1977, that it
received from Mr. Kallaur all of the information necessary
to complete these documents for the first payroll.

      The GSA summary shows that its personnel office completed
the forms 50 for 160 employees and sent them to its payroll
section on Saturday, November 27, 1976, and for an additional
four employees on Monday, November 29, 1976.   To complete the
payroll process and obtain the paychecks from Treasury, GSA
must obtain either a time card or a certification showing
the hours worked by each employee. Mr. Kallaur furnished
GSA with the required certification for the first payroll on
 'ovember 30, 1976.

     The payroll documents for the first payroll showed
entered-on-duty (EOD) dates for chese employees as either
November 14 or 16, 1976, and covered the pay period ended
November 20, 1976. The entered-on-duty dates for some of
these employees was later changed to November 3, 1976, and
the additional salary due was paid on a later payroll.
Mr. Kallaur told us that the first payroll did not show an
EOD date of November 3 1976, for these employees because
he was told by GSA that the payroll could be most easily
processed if it only covered a 2-week period.

     GSA uses an automated system for the regular payrolls
it prepares.  Under this system the payroll checks are
usually delivered to the employees or their banks about
8 workdays after the close of the pay period, provided that
the required payroll information is received within a day
or two after the end of the. pay period. To provide expedited
service when necessary, GSA can prepare a supplemental pay-
roll manually and get the checks to the employees within a
day or two. This manual procedure was used for the first
transition payroll.

                            23
      For the 164 employees listed on the certified payroll
documents received by the GSA payroll section on November 30th
it obtained Treasury checks dated November 30th totaling about
$37,000 which were delivered to Mr. Gardner on December 1,
1976.   Mr. Gardner told us that all transition paychecks were
delivered to Mr. Kallaur on the same day he received them.

     The first transition payroll processed through GSA's
regular computer procedures covered the pay period ending
December 4, 1976. The payroll checks for this period amount-
ing to about $111,000 were dated December 13, 1976, and
available for delivery to the employees on December 15, 1976.
The next payroll covering the pay period ended December 1,
1976, was processed on a supplemental payroll.   The checks
for this period amounting to about $240,000 were dated
December 21 and available for delivery to the employees on
December 22, 1976. There were two additional regular com-
puter run payrolls and several small supplemental payrolls
prepared during the transition period which ended on
January 20, 1977.

      Included in the people receiving Annapolis advances were
six individuals we could not find on the transition payroll.
Mr. Stein and Mr. Kallaur told us that there was some inde-
cision on whether some employees would be on the Inaugural
staff, the Democratic National Committee staff, or the transi-
tion staff and that some travel advance payments went to
people who never served on the transition staf. Other than
these six, most of the individuals who received these ao-
vancres had  orked long enough to cover all or part of the
salary advance at the time it was made.

      Most cf the 69 individuals who received Annapolis travel
advances rceived only one dvance; sir received two. Most
of the advances were made to transition staff members after
they had worked for a period of time but before they received
their first paychecks.   A few advances were made after em-
ployees started receiving regular paychecks. All of the ad-
vances have, been repaid, but none were repaid immediately
after the employees received their first paychecks.   A few
repaid the advances within 2 or 3 weeks after their first
paychecks but most took about a month and a few were not
repaid until 3 or 4 months after they received their first
paychecks.

     Four individuals who received Annapolis travel advances
also received salary advances through the checking account.
(See p. 17)

     The Department of Justice requested and obtained from
GSA information on the use of te false travel authorizations

                          24
by Carter/Mondale staff members.    we were advised by an
official of the Department of Justice that this matter was
still under consideration.

PRRIOD OF AVAILABILITY OF
-RNSITIN ACT FUNDS TO
FORMER PESIDENTS

     The Transition Act provides that the GSA Administrator
shall provide each former President, for a period not to ex-
ceed 6 months from the date of expiration of his term of
office, services and facilities of the same general character
as that authorized by the act for a President-elect.    lne
6-month period specified in the act expired on  July 20,  1977,
for former President Ford but, because of the  wording in   the
law appropriating funds for the Ford-Carter transition,
Transition Act funds were available to former President Ford
ani former Vice President Rockefeller through September 30, 1977.

     The first former President to be covered by the provisions
of the Transition Act was former President Johnson who left
office in January 1969. The law appropriating funds to carry
out his transition (P.L. 90-550) stated that the funds would
remain available until June 30, 1970. The Chairman of the
House Appropriations Committee advised us that the intent of
the Committee was to make the Transition Act funds available
through June 30, 1970, and requested our Office to rule on
whether this intention would prevail over the 6 month limi-
tation in the authorizing legislation.    e was advised that
the language in the  appropriation act would prevail and that
the funds would be available through June 30, 1970.

     The appropriation act which provided the Transition Act
funds for former President Nixon specified that the funds
appropriated would only be available through February 8, 1975,
6 months after he resigned.

     The appropriation ect (P.L. 94-438) which made available
the additional $2.1 million in transition funds authorized by
the 1976 amendments to the Transition Act, however, specified
that the funds appropriated were to remain available until
September 30, 1977. GSA advised the former President's staff,
based on our 1969 decision, that the Transition Act funds
would remain available until September 30, 1977.

      The contradiction in the period of availability specified
 in the authorizing legislation and the appropriation acts re-
 sulted in several problems which should be resolved. The
 Former Presidents Act of 1958, authorizes the appropriation
 of funds for services and staff provided to a former President.

                                   25
Funds for these purposes become available 6 months after the
expiration of his term of office as President. That act
also authorizes the payment of a pension to former Presidents,
currently $66,000 a year, which begins as soon as he leaves
office. On hay 4, 1977, GSA obtained a supplemental appro-
priation of $107,000 to carry out the provisions of that act
as it applied to former President Ford. About $50,000 of
this amount was required to pay the former President's pen-
sion from January 20, 1977, through September 30, 1977, while
the remainder was available concurrently with the Transitior
Act funds from July 21, 1977, through September 30, 1977.

     The availability of Transition Act funds for more than
6 months provided several advantages to former President Ford,
as it did to former President Johnson, that would not be
available under the Former Presidents Act. For example, the
Former Presidents Act limits the office space provided to a
former President to just one location whereas the Transition
Act does not.   Also, total staff salaries under the Former
Presidents Act were limited to $96,000 a year whereas there
is no limit o the total salaries authorized under the
Transition Act.   Also, the funds provided under the Former
Presidents Act can be used for travel of only the former
Fresident and no more than two members of his staff.   There
is no limit on te number that can travel under the provisions
of the Transition Act.

      Although Transition Act funds would also have been avail-
able to former Vice President Rockefeller after July 2,   1977,
he closed his only office in Wshington, D.C., before that
date.

     We have included in chapter 4 (p. 34) a recommendation
to clarify the period of availability and to prevent overlapping
of Transition Act and F rmer Presidents Act funds.

FURNISHING OF MILITARY
AIRCRAFT TO THE INCOMING
AND OUTGOING ADMINISTRATIONS

     The Transition Act authorizes the payment of the travel
expenses found necessary by the incoming and outgoing Pesi-
dent and Vice President.  Both administrations paid for the
use of both regular commercial and charter air flights during
the transition period with Transition Act funds. In addition,
President-elect Carter, Vice President-elect Mondale, various
other persons involved in the transition, and former Presi-
dent Ford used military aircraft. The cost of these trips
was not chaqcd to Transition Act funds.



                               26
     The Air Force has developed standard costs per flight
hour for the type of aircraft used by the incoming and out-
going administrations. We were advised by the White House,
which controls the assignment o  the aircraft used, that on
the basis of these standards the cost of the flights furnished
to the incoming administration during the transition was about
$133,000 and the cost of the flights furnished to former
President Ford through May 15, 1977, was about $98,000.

     The Air Force absorbed the cost of the flights furnished
to both the incoming and outgoing administrations except for
$25,000 which was charged to the Secret Service.  Secret
Service agents traveled with the President-elect, Vice
Fresident-elect and the former President on these flights
but the Secret Service was only charged for the air service
provided the agents who accompanied the former President.
Public Law 94-524 enacted October 17, 1976, requires the
Secret Service to reimburse the Air Force for any service
provided in connection with protecting a President-elect and
Vice President-elect.

     We believe it was the intent of the October 14, 1976,
amendments to the Transition Act (P.L. 94-499) that the
funds authorized to be appropriated would be used to pay for
all of the necessary expenses of a transition. Prior to the
enactment of this amendment, for example, the services of
Covernment employees could be furnished to both the incoming
and outgoing administrations on either a reimbursable or
non-reimbursable basis.  The amendment, in addition to au-
thorizing the appropriation of additional funds for each
transition, provided that the services of Government employ-
ees could only be provided on a reimbursable basis.  In our
opinion, the 1976 amendment to the act removed the only
authority for the expenditure of Government funds for transi-
tion purposes, other than those provided pursuant to the
Transition Act.  The costs incurred by the Secret Service
noted above are for protective not transition purposes.

     In assigning the military aircraft to former Presi-
dent Ford, the White House relied on a memorandum dated
January 25, 1977, prepared by the Office of Legal Counsel,
Department of Justice, which concluded that the President
tad authority t assign such aircraft to a former President
for either official or personal use.   We have reviewed the
legal citations on which this conclusion was based and do
not believe that the President has the authority to assign
such p:  es without reimbursement.

     We have advised the White House Office that the Secret
Service should be billed for its share of the costs of the


                              27
flights provided the incoming administration and that the
remaining costs of the flights provided to either the in-
coming or outgoing administrations be billed to GSA for
payment from Transition Act funds.
     These additional charges will not result in an over-
obligation of Transition Act funds. To clarify the authority
to use military aircraft for transition related purposes and
to make certain that all approprilate costs are charged to
Transition Act funds or Former Presidents Act funds, we recom-
mend in chapter 4 (p. 31) appropriate amendments to both acts.




                              28
                          CHAPTER 4

                 CONCLUSIONS, RECOMhENDATIONS,
                     AND AGENCY COMMENTS

     The Ford-Carter transition was the first to test the
workability of financing a transition entirely with Presi-
dential Transitio.l Act funds. Scme mistakes were made and
problems encountered in administering the finds provided
but we believe it was demonstrated that a change in executive
power financed entirely by funds appropriated under the
Presidential Transition Act is a viable concept. We believe
future administrations can benefit from this experience and
with better cooperation between GSA and future transition
staffs, we believe the concept of Federal financing of
transitions will work even better. We are recommending
some changes in the law to avoid some of the problems.
CONCLUSIONS
      The unavailability of private funds, which could be
made available quickly and used without regard to the
restrictions in the Transition Act and Government regu-
lations, undoubtedly contributed to some of the problems
encountered in administering the financing of the incoming
Carter/Mondale administration. Other factors which created
problems were related to the dual responsibility delegated
by the act to GSA and the transition staff. The act
authorizes the Administrator of GSA to provide upon request,
each President-elect and Vice President-elect with office
space, staff, and certain services enumerated in the act.
The act also provides that each President-elect and Vice
PresiJent-elect may designate an assistant to make on their
behalf such designations or findings of necessity in con-
nection wi'h services and facilities provided under the act.

     The Carter/Mondale transition staff believed that if
their designee determined an expenditure was necessary to
the transition, GSA should make the expenditure. GSA
believed, however, that it had the final responsibility
for determining if a proposed expenditure was authorized
by the act. What was adopted was a dual system which didn't
work well.

     GSA and a representative of the President-elect signed
an agreement on November 15, 1976, which outlined in a
fair amount of detail the provisions of the act and the
procedures to be followed in obtaining through GSA the
services authorized by the act. The agreement was negated

                             29
 to a large extent, however, by giving the transition
 sole control of a checking account through which      staff
                                                  more
 $329,000 of transition expenditures were made without than
                                                         rior
 GSA approval.

      Although GSA advised the transition staff
 transfer of funds to the checking account that with   each
                                                 it
 only be spent in accordance with the provisions of could
 act, it made no effort during the transition perioa the
 if its instructions were followed. It was more        to see
                                                  than
 4 months after the inauguration before the records
 supporting the expenditures from the checking  account
 were turned over to GSA.

     GSA questioned some of the expenditures. A post
audit of chis type, however, is not as effective
                                                 as an
examination prior to payment. The obtaining of additional
documentation, justifications, or refunds 4 or 5
after the expenditure may not be possible and is months
unfair a                                         often
           expensive.
     Concerning the false travel authorizations for the
trips to Annapolis, we obtained contradictory stories
to whether the use of these false authorizations was as
done with the knowledge of GSA's transition liaison.
There is nothing in the written record to show that
                                                     he
approved use of the imprest fund to obtain salary
                                                  advances.
What is clear, however, is that GSA's liaison approved
without question reimbursement vouchers for the
                                                imprest
fund of which $18,000 of a total of $22,000 was for
advances for trips to Annapolis.                     travel

     The transition staff advised us that i resorted
the false travel authorizations only because the      to
                                                 GSA
payroll system could not accomodate the urgent needs
some staff members for salary cecks.                 of

      GSA made a special effort to get salary checks to
the transition staff as quickly as possible.   Initially,
the major delay in making the salary payments was
transitions staff's delay in providing GSA with    the
                                                 the
information on salary rates and time worked. Several
the payrolls were paid on supplemental payrolls which of
enabled the employees to receive their checks within
a few days after the end of the pay period instead
the normal 8 workdays lag. Also, as noted on page of
some of the transition staff received advances after24
they received their first pay checks.

     The use of travel advances for employees stationed
in Washington, D.C., whose home or place of business was

                                 30
elsewhere might have relieved some of the cash shortage
problems of the employees.

     In our opinion, the problems encountered in the Carter/
Mondale transition suggest two solutions which might be
adopted in future transitions.  We believe the preferable
solution would be to make it clear in the act that except
for payments from a small imprest fund, no payments of
Transition Act funds can be made without the prior approval
of the Administrator of GSA or his representative. We
have made a recommendation to accomplish this.

     The other solution would be to make the President-
elect's designee solely responsible for the use of the
transition funds and remove most of the restrictions in
the act which cite various laws concerning the purposes
for which the funds may be used.  The only major require-
ment would be that the funds could only be used for
transition purposes and that a report be submitted to
the Congress after the transition period detailing the
purposes for which the funds wre used.

     To resolve the problem of the period of availability
of Transition Act funds for former Presidents, we are
recommending that the Transition Act be amended to remove
the provisions pertaining to former Presidents and Vice
Presidents.  We are also recommending amendments which
would make funds appropriated undet the Former Presidents
Act available as soon as a President and Vice President
leave office. The adoption of these recommendations would
mean that funds appropriated under the Former Presidents
Act would be available during the balance of the fiscal
year in which they leave office--8 months and 10 days.
Thereafter funds would only be provided to d former
President.

RECOMMENDATIONS TO THE CONGRESS
FOR CHANGES IN LEGISLATION

     We issued a report to the Congress dated December 24,
1975, on "Federal Assistance For Presidential Transitions:
Recommendations For Changes In Legislation."  On October 14,
1976, the Transition Act was amended to include two of the
amendments recommended in that report; an increase in the
funds authorized for the incoming administration and deletion
of the provision which permitted the detailing of Federal
employees to former Presidents on a nonreimbursable basis.
The act as amended also prohibits the detailing of Federal
employees to the incoming administration on a nonreimburs-
able basis and authorized the appropriation of additional
funds for the outgoing admi.istration.

                                  31
      We believe some of the problems encountered in the Ford-
 Carter transition would be minimized in future transitions
 by changes in legislation. We are also repeating in
 chapter the recommendations in our prior report which this
                                                        were
 not enacted.
 PRESIDENTIAL TRANSITION ACT

      We believe this act should deal solely with the
 tance to be provided the incoming administration. Forassis-
 intents and purposes the transition period is over when all
 the new President takes the oath of office. A former
 President may be more active in the months immediately
after he leaves office but the type of activities on which
he needs.assistarce do not change materially. Presently,
the assistance provided to a former President is provided
in two laws whose provisions are similar but not identical;
the Former Presidents Act and the Presidential Transition
Act. A former President's pension is paid from Former
Presidents Act funds and begins as soon as he leaves office;
the other services provided by that law begin 6 months
after he leaves office and are subject
not included in the Transition Act. Alsotoassome limitations
                                              described
on page 25, on two occasions both Transition Act and
Presidents Act funds have been available concurrently Former
for similar services.

     Delete provisions dealing
     with outgoing administration
     We believe the needs of a President-elect and a former
President are sufficiently different to justify legislation
separating the authority for the assistance to be
each. We therefore recommend that the Presidentialprovided
                                                    Transition
Act be amended to
     --Delete section 4 dealing with services and facilities
       provided to former Presidents and former Vice Presi-
       dents and that part of section 5 authorizing the
       funds to be appropriated for such services and
       facilities.
     Add provisions dealing
     with military and chartered aircraft
     During the Ford-Carter transition extensive use was
made by both the incoming and outgoing administrations
military aircraft. Part of the cost of using these air-of
craft by the Former President was charged to the Secret
Service but the balance of the costs was absorbed by the
Air Force. We have advised the White House and GSA to
                                                        make

                               32
the appropriate adjustments to harge part of the cost of
the flights used by the incoming administration to the
Secret Service and the balance to Transition Act funds.
     In addition to the military aircraft, private planes
were chartered by the incoming administration principally
on flights used by the President-elect, the Vice President-
elect or lembers of their families entitled to Secret
Service protection. The transition staff collected part
of the cost of the chartered flights from the Secret
Service and the press who occupied space on these flights.
The collections were deposited in a checking account in
a private bank and used for various transition expenses
but because there was no authority in the Transition Act
to retain these collections we advised GSA subsequently
that these collections should be deposited to miscella-
neous receipts in the general fund of the Treasury.
     We believe that the Transition Act should be amended
to clarify the act concerning (1) the authority to use
military and chartered aircraft for transition purposes,
(2) the appropriation to be charged for the cost of using
military aircraft, and (3) the disposition of collections
from the Secret Service, the press, and others for the use
of space on chartered aircraft. We therefore recommend
the ct be amended by
     --Adding at the nd of Section 3(a) (4) dealing with
       travel expenses a provision stating that when
       requested by the President-elect or Vice President-
       elect or their designee, and approved by the Presi-
       dent, Government aircraft may be provided on a
       reimbursable basis to assist in the transition.
       Also, add a provision that when requested by the
       President-elect, Vice President-elect or their
       designee, aircraft may be chartered for transition
       purposes and that any collections from the Secret
       Service, the press, or others occupying space on
       such chartered aircraft be credited to the Transi-
       tion Act appropriation.
     Approval of expenditures by GSA
     Many of the problems encountered in administering the
Transition Act as it pertained to the incoming administration
involved the use of a checking account in a private bank.
The use of this account permitted the transition staff to
use transition funds without the usual GSA prepayment
review.



                              33
     In our opinion, it is the intention of the act that
the Administrator of GSA be responsible for determining
whether any proposed obligation or expenditure is authorized
by the act and meets the usual requirements of Government
regulations pertaining to travel, payroll, etc. It is
our view that the provision in section 3(e) dealing with
the designation of an assistant was ntended merely as a
device to relieve the President-elect and Vice President-
elect of the many details involved in requesting services
and facilities. It was not intended to dilute the Adminis-
trator's responsibility for determining whether proposed
obligations or expenditures are authorized by the act.
The use of a private checking account avoided the usual
GSA prepayment scrutiny and resulted in several problems
discussed in chapter 3.
     To avoid similar problems in future transitions, we
recommend that the act be amended to
     --Add at the end of Section 3(e) a provision that,
       except for the national security expenditure pro-
       vision in that sectioni and expenditures from a
       small imprest fund, obligation and expenditure
       of transition funds may only be made with the
       prior approval of the Administrator or his designee.
FORMER PRESIDENTS ACT

      The deletion of section 4 of the Transition Act would
mean that all services to be provided a former President
would be covered in the Former Presidents Act and there
would be no provision for providing services to a former
Vice President after he left office. In our December 24,
1975, report we therefore made several recommendations,
which we are repeating here, to ()    em¢,ve some of the
restrictions in the act concerning total salaries and
travel, (2) clarify some of the provision of the Former
Presiden[L Act, and (3) make provisions fear the services
to be furnished a former Vice President.
     Staff salaries
     The Former Presidents Act, as of September 30, 1977,
limited to $96,000 per year the total salaries that could
be paid to the staff of a former President. Public
law 95-138 enacted October 18, 1977, increased this limit
to $150,000 during the first 30 months that staff assis-
tance under the Former Presidents Act is authorized.
After 30 months the limit reverts to $96,000 a year.
During the first fiscal year of a transition a former


                           34
President usually requires a laraer staff than in succeeding
years.  We believe that the ceilin should be removed so
that the staff requirements of a former President could be
adjusted through the appropriation process to meet particular
circumstances as they develop.  The Former Presidents Act,
unlike the Transition Act, does not permit the detailing of
Government employees to assist a former President.  We
believe he should be permitted to se suck staff on a
reimbursable basis during the fiscal  ear in which the
transition occurs.  We therefore recommend that the Former
Presidents Act be amended to

     --Delete the ceiling on the annual salaries that can
       be paid to a former President's staff and add a
       provision athorizlnc the detailing of Government
       employees on a reimbursable basis during the fiscal
       year in which the transition occurs.

     Travel

     The Former Presidents Act  oe not mention travel as
an authorized expense, but te fiscal year 1969 supplemental
appropriation act stated that a former President and no
more than two members of his staff were authorized there-
after to use Former Presidents ct unds to pay travel
expenses.

     We believe that the authorizing legislation rather
than an appropriation act rhould authorize travel expenses
of a former President and his staff.  Control of the amount
authorized for travel can be obtained through the appropria-
tion process, and we ae recommending that the Former Presi-
dents Act be amended to include the authority needed to
authorize the travel of a former President and his staff.
In effect, this would result in te deletion of the limita-
tion restricting travel to just two staff members.  If the
Transition Act is mended as recommended above, the Former
Presidents Act would also cover the period immediately
after a President leaves office when travel by more staff
members may be required.  We therefore recommend that the
Former Presidents At be amcnded to

     --Add a provision authorizing the travel of a former
       President and members of his staff.

     As noted in chapter 3, the cost of military aircraft
used by former President Ford was not charged to Transition
Act funds and the  ssiqnmnert of these aircraft was based on
a Department of Justice determination thet such aircraft
could be assigned for either official or personal purposes.
We do not believe that the President has the authority to

                           35
assign military aircraft to a former President without
reimbursement. During the transition the former President
also traveled on some occasions on chartered flights on
which part of the costs were paid by the Secret Service.
The collections from the Secret Service were deposited in
miscellaneous receipts.

     To clarify the authority for the use of military
or chartered aircraft by a former President, the appropria-
tion to be charged, and the disposition of any receipts
from the Secret Service and others accompanying a former
President, we recommend the addition of a provision stating
that

     --When authorized by the President, Government air--
       craft may be used by a former President for tran-
       sition purposes.   When deemed necessary for pro-
       tective purposes chartered aircraft may also be
       used by a former President in winding up the affairs
       of his Presidency.   The cost of either Government
       or chartered aircraft shall be paid with Former
       President Act funds and any collections from the
       Secret Service or others for the use of space on
       chartered flights deposited to the credit of the
       Former Presidents Act appropriation.

    Clarification or modification
    of provisions

     In our 1975 report, e made several other recommenda-
tions to clarify or modify the provisions of the act.

    Concerning a former President

     --Transfer to the Former Presidents Act the mre
       specific provisions of the Transition Act concerning
       employee benefits and authorized services.

     --Add a provision authorizing the appropriation of
       funds to pay the xpenses of moving the personal
       effects of a former President from the W.ite House
       to a place of his choice in the United States.

    --Add a provision specifically authorizing the use of
      funds appropriated under the act for 3 months after
      a former President's death to allow for the orderly
      closing of his office.

    --Add a provision specifically authorizing the appro-
      priation of funds to pay GSA the Standard Level
      User Charge for space provided to a former President

                              36
      beginning with the fiscal year following the fiscal
      year in which a President leaves office. The cost
      of space is usually one of the major costs of the
      services provided a former President. The law
      requires GSA to charge for use of space provided
      at rates determined in accordance with 40 U.S.C.
      490(j) but also permits GSA to waive such charges
      when it determines that to charge for space would
      be infeasible or impractical. GSA has waived such
      charges on the space provided former President Nixon
      a:d intends to waive them on the space provided
      former President Ford under the Former Presidents
      Act.

     Because a former President will probably need office
space in Washington, D.C., as well as one other location
during the fiscal year in which he leaves office, we are
making a new recommendation hich would
     --Authorize the furnishing of office space in
       Washington, D.C., and one other place during the
       fiscal year in which a President leaves office.
       The Former Presidents Act limits office space to
       just one place and this limitation would rmain
       in effect during subsequent years.
     Widows' pensions
      We are also making a new recommendation concerning
the pension payable to the widows of former Presidents.
The Former Presidents Act as enacted in 1958 provided
for a pension of $25,000 a year for a former F:esident
atid $10,000 a year for the widows of former Presidents.
In 1971 the act was amended to provide that the pension
of a former President would be equal to the salary of a
Cabinet officer, at that time $60,000 a year, and the
pension of the widow of a former President, $20,000 a year.
Because of increases in the salaries of Cabinet officers
a former President now receives $66,000 a year but the
pension of widows of former Presidents remains at $20,000.
We believe it would be appropriate to establish the widow?'
pension on a flexible basis similar to that of former
Presidents. In 1971 the widows' pension was established
at a rate which was one-third of a former President's
pension.
     We are therefore making a new recommendation that
     --The pension authorized for widows of former Presi-
       dents be established at one-third of the annual
       rate authorized for former Presidents.
                            37
    Approval of expenditures by GSA

     During the Ford-Carter transition both the former
President's staff and the former Vice President's staff
were provided with Transition Act funds for deposit in
checking accounts in private banks.  The amounts advanced,
$5,000 and $2,000, respectively, were relatively small
and we noted none of the problems encountered in the use
of the much larger checking account made available to the
Carter/Mondale staff.  These smaller accounts were operated
on an imprest basis, i.e., for minor expenses which were
submitted to GSA frequently for approval and re' bursement
to the checking account for the amount expended.

     To-prevent any problems which might arise from the
use of such checking accounts in the future, however,
we are  ecommendinq that the former Presidents Act
be amended to

     --Limit the expenditures that can be made without
       prior GSA approval to those made from a small
       imprest fund.

     Concerning a former Vice President

     We recommend that the provisions of the Transition
Act concerning the services to be provided a former Vice
President after he leaves office be transferred to the
Former Presidents Act with a few changes.

     As noted in chapter 3, in twL of the last three
Presidential transitions there has been a conflict between
the authorizing legislation and the appropriation acts
as to the period Transition Act funds are available to the
outgoing administration. The deletion of section 4 of the
Transition Act as recommended would remove this conflict
as far as a former President is concerned because the
funds would be provided on a fiscal year basis. For ease
of administration we believe the services authorized for
a former Vice President should also be available during
the remainder of the fiscal year in which he leaves office--
8 months and 10 days--rather than the 6 months provided
in the Transition Act. We therefore recommend that the
amendments to the Former Presidents Act provide that

     --The services and facilities that will be authorized
       by the act for a former Vice President will be pro-
       vided during the fiscal year in which he leaves office.




                             38
     Other changes recommended are

     --Under the Transition Act a former Vice President
       can be furnished office space at any place or places
       in the United States. The Former Presidents Act
       limits a former President to office space in just
       one place and we are recommending that the law be
       amended to provide that during the fiscal year in
       which a President leaves office that he be provided
       office space in Washington, D.C., and one other
       place. We recommend that a similar limit be placed
       on a former Vice President.

     --Add a provision authorizing the shipment of the
       personal effects of a Vice President and his family
       from the official Vice Presidential residence in
       Washington, D.C., to a location in the United States
       selected by him.

     Providing funds to the outgoinq administration

     The removal from the Transition Act of the authoriza-
tion for an appropriation of not more than $1 million to
assist the outgoing administration, as recommended above,
would mean that funds would have to be available under
the Former Presidents Act as soon as the outgoing admini-
stration leaves office.   There is a natural reluctance on
the part of an administation with a President running for
reelection to request funds under the Former Presidents Act
which would only become available to him if he is defeated.
This reluctance is overcome in the Transition Act   y a
provision which requires a President to request an appro-
priation for each fiscal year in which his term will expire.
We believe that a  imilar provision should be added to the
Former Presidents Act. We therefore recommend the addition
of a provision to require

     --The President to include in the budget transmitted
       to the Congress for the fiscal year in which his
       regular term of office expires, a proposed appro-
       priation providing sufficient funds to carry out
       the provisions of the Former Presidents Act as
       it wculd apply to him and the Vice President.

AGENCY CONMENTS

     On November 3, 1977, we requested comments on a draft
of this report from the Administrator of GSA, the Director
of the Carter/Mondale transition staff, and former Presi-
dent Ford's transition representative.  GSA had not furnished


                              39
us with its comments at the time this report was finalized.
Summarized below are the comments from the Carter/Mondale
and Ford officials.
Carter/Mondale
     The Director of the Carter/Mondale staff said that he
agreed generally with ouL recommendations. (See app. III.)
He did not agree, however, with our recommendation that the
Transition Act be mended to require that expenditures of
transition funds b, approved in advance by the Administrator
of GSA. He suggestJe instead that the President-elect's
designee be solely responsible for the use of the fnds
as discussed on page 31.
      We believe that better control of transition funds
would be obtained if all obligations and expenditures
were processed through GSA personnel familiar with the
la-is and regulations governing the use of Government
fuls.
     Of the $1.7 million in obligations incurred by the
incoming administration, $1.4 million was processed through
GSA's normal procedures. Most of the mistakes and problems,
however, involved the use of the checking account controlled
by the incoming transition staff.
     Our recommendation envisions the use of a small imprest
fund by an incoming administration for expenses that need
immediate payment. By keeping the fund small, however,
GSA would be able to review th- fund's expenditures when
it needed replenishment. Any problems should be identified
at that time and corrected before they become major problems.
     The Director of the Carter/Mondale transition staff
also suggested that the act be amended to authorize funds
to maintain a small staff after the Presidential inaugural
to wind up the financial affairs of the incoming administra-
tion. If our recommendations are adopted, GSA would have
the full responsibility of accounting for the expenditure
of transition funds and there should be no need for a
transition staff after the inaugural.
     The Director of the transition staff also stated that
our eport should tress that (1) the transition planning
group had accounted for all the money spent, (2) all its
expenditures were for transition-related purposes, (3) all
advances, regardless of the procedures used, had been
repaid, and (4) there was sufficient unexpended transition
funds to settle any unresolved matters requiring additional
charges to the Transition Act appropriation.
                          40
Ford

     A special assistant to former President Ford advised
us that he agreed with all our recommendations. (See
app. IV) He suggested one additional change in legis-
lation to permit the obligation of transitio funds avail-
able to the otgoing administration before a President
leaves office. He said such authority is needed to provide
some items, such as telephones and equipment, immediately
after a President leaves office. We did not change our
recommendations to include this suggestion but it might
be considered by the Congress if changes in the Transition
Act are considered.




                               41
                APPENDIX I                                                                                               APPENDIX I
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a.0         O........           .April                                                   30   1977
L''&
 &'  ASnWIS.            .....                             _         Is

 BAtA *&aWL,.           V       .




                        The Honorable Elmer B. Staats
                        Comptroller General of the United States
                        Washington, D. C. 20548

                        Dear General:
                             L st tll, the Congress enacted legislation to increase the funds
                        available for the transition from one presidential admir';tration to
                        another. As you know, the funds were to cover the incoming administration
                        between election day and the Inauguration, and the outgoing administration
                        for a 6-month period following the Inauguration.
                             We are now approaching the end of the transition period. It would
                        be helpful for the General Accounting Office to audit the expenditure
                        of the funds appropriated by Congress pursuant to that legislation
                        for both the incoming and outgoing administrations. I would appreciate
                        your providing the Committee on Government Operations with a report
                        describing the purposes for which the func, were used, the manner in
                        which they were administered, any problems of which you are aware, and
                        your comments on the adequacy of the basic legislation under which
                        this program is carried out.
                                             W;th best wishes, I am




                                                                                                      k Brooks
                                                                                                  Dhairman




                                                                                   42
APPENDIX II                                            APPENDIX II


                 SUGGESTED ADDITIONS AND DELETIONS
                             TO LAWS
              PERTAINING TO PRESIDENTIAL TRANSITIONS
                      AND FORMER PRESIDENTS

PRESIDENTIAL TRANSITION ACT OF 1963
     "Section 1. That this Act may be cited as the 'Presidential
Transition Act of 1963.'
     "Section 2. The Congress declares it to be the purpose of
this Act to promote the orderly transfer of the executive power
in connection with the expiration of the terms of office of a
President and the inauguration of a ew P-esident. The national
interest requires that such transitions in the office of Presi-
dent be accomplished so as to assure continuity in the faithful
execution of the laws and in the conduct of thile affairs of the
Federal Government, both domestic and foreign. Any disruption
occasioned by the transfer of the executive power could produce
results detrimental to the safety and well-being of the United
States and its people. Accordingly, t is the intent of the
Congress that appropriate actions be authorized and taken to
avoid or minimize any disruption. In addition to the specific
provisions contained in this Act directed toward that purpose,
it is the intent of the Congress that all officers of the Govern-
ment so conduct the affairs of the Government for which they ex-
ercise responsibility and authority as (1) to be mindful of prob-
lems occasioned by transitions in the office of President, (2) to
take appropriate lawful steps to avoid or minimize disruptions
thaz might be occasioned by the transfer of the executive power,
and (3) otherwise to promote orderly transitions in the office of
President.
     "Section 3. (a) The Administrator of General Services, re-
ferred to hereafter in this Act as 'the Administrator,' is
authorized to provide, upon request, to each President-elect and
each Vice-President-elect, for use in connection with his prepara-
tions for the assumption of official duties as President or
Vice President necessary services and facilities, including--
     "(1) Suitable office space appropriately equipped with fur-
niture, furnishings, office machines and equipment, and office
supplies, as determined by the Administrator, after consultation
with the President-elect, the Vice President-elect, or their
designee provided for in subsection (e) of this section, at such
[ ] 2 deletion                   43
italics = suggested changes or additions
APPENDIX II                                            APPENDIX II


place or places within the United States as the President-elect
or Vice-President-elect shall designate;
     "(2) Payment of the compensation of members of office
staffs designated by the President-elect or Vice-President-elect
at rates determined by them not to exceed the rate provided by
the Classification Act of 1949, as amended for grade GS-18:
Provided, That any employee of any agency of any branch of the
Government may be detailed to such staffs on a reimbursable
basis with the consent of the head of the agency; and while so
detailed such employee shall be responsible only to the
President-elect or Vice-President-elect for the performance of
his duties; Provided further: That any employee so detailed
shall continue to receive the compensation provided pursuant to
,aw for his regular employment, and shall retain the rights and
privileges of such employment without interruption. Notwithstand-
ing any other law, persons receiving compensation as members
of ofice staffs under this subsection, other than those de-
tailed from agencies, shall not be held or considered to be em-
ployees of the Federal Government except for purposes of the
Civil Service Retirement Act. the Federal Employees' Compensa-
tion Act, the Federal Employees' Group Life Insurance Act of
1954, and the Federal Employees' Health Benefits Act of 1959;
     "(3) Payment of expenses for the procurement of services of
experts or consultants or organizations thereof for the
President-elect or Vice President-elect, as authorized for the
head of any department by section 15 of the Administrative Ex-
penses Act of 1946, as amended 5 U.S.C. [55a] 10,-;
     "(4) Payment of travel expenses and subsistence allowances,
including rental of Government or hired motor vehicles, found
necessary by the President-elect or Vice President-elect, as
authorized for persons employed intermittently or for persons
serving without compensation by section 5 of the Administrative
Lxpenses Act of 1946, s amended 5 U.S.C. 73b-21 5703(b)-(d),
5707 as may be appropriate; when requested by the President-elect or
I'ice President-elect or their designee, and approved by the President,
Gover.n-ent aircraft may be provided for transition pposes on a reim-
bursabe basis; wen requested by the Prcsident-elect, Vice President-elect,
or their designee aircraft may be chartered for transition purposes, any
collcctionr from the Secret Service, press, or others occupying space Ot
chartered aircraft shall be deposited to the credit of the Presidential
?ransition Act appropriations;
     "(5) Communications services found necessary by the President-
elect or Vice President-elect;
     "(6) Payment of expenses for necessary printing and bind-
ing, notwithstanding the Act of January 12, 1895, and the Act
of March 1, 1919, as amended 44 U.S.C. [111] 50i.
                                    44
 APPENDIX II                                                 APPENDIX II


      "(7) Reimbursement to the postal revenues in amounts
equivalent to the postage that would otherwise be payable on
mail atter referred to i subsection (d) of this section.
      "(b) The Administrator shall expend no funds for the pro-
vision of services and facilities under this Act in connection
with any obligations incurred by the President-elect or Vice-
President-elect before the ay following the date of the general
elections held to determine tho electors of President and Vice
President in accordance with title 3, United States Code, sec-
tions     and 2, or after the inauguration of the President-elect
as President and the inauguration of the Vice-President-elect
as Vice I'rosident.
       "(c) The terms 'Prosidoent-elect' and 'Vice-President-elect'
as used in this Act shall Ineta such persons as are the apparent
successful candidates for te Of-fice of President and Vice
I'resikdelit, respectivec, as ascertained by the Adwinistrator
followin.g the general elections held to determine the electors
of President and Vice President in accordance with title 3,
United States Code, sections 1 and 2.
      "(d) ach P'resident-elect shall be entitled to conveyance
within the United States aid its territories and possessions of
all mail nttter, including airmail, sent by him in connection
with his prepzarutions for the assumption of official duties as
President, and such mail matter shall be transmitted as penalty
mail as provided in title 39, United States Code, section [1152]
30.!,  I.ach Vice-President-elect shall be entitled to conveyance
within the United States lnd It s territories and possessions of
all mail matter, including airmail, sent by him under his written
autograph signature in connection with his preparations for the
assumption   of official      lduties Ias Vice President.
      "(e) liach P'resident-elect and Vice-President-elect may
design:ate to the Administrator an assistant authorized to make
on his behallf such designations or findings of necessity as mlay
be roquiredl in connection with the services and facilities to
he provided under this Act.     Not more than 10 per centum of the
total expetiditures under this Act for any President-elect or
Vicc-l'rec:ident-clect may he made upon the basis of a certificate
by him or the assistant designated by him .ursuant to this sec-
tion that such expenditures are classified and are essential to
the ntion;al security, a:ll tlltt they accord with the provisions
of sul:.ections (a), (b), alnd (d) of this section. A other
  zliiar.",')t and xpenditu,-eo, om,o,opt from a araZZ impreat fund which nau
fe oataliolwd, roay ontly t, r,uda      th the prior approvat of the Arnnistra-
~t'orv).a,lio     iLoi .45


                                       45
 APPENDIX II
                                                        APPENDIX II


       "(f) In the case where the
  cumbent President or in the case President-elect      is the in-
                                    where the Vice-President-elect
  is the incumbent Vice President, there
 of funds for the provision of services shall be no expenditures
  incumbent under this Act, and any funds and facilities to such
                                            appropriated for such
 purposes shall be returned to the general
                                               funds of the Treasury.
       ["Sec. 4 The Administrator is authorized
 request, to each former President and each           to provide, upon
 for a period not to exceed six months from former Vice President,
                                                the date of the expi-
 ration of his term of office as President
                                               or
 use in connection with winding up the affairs Vice President, for
 necessary services and facilities of the           of his office,
as authorized by this Act to be provided      same general character
                                             to
Vice-Presidents-elect. Any person appointeu Presidents-c.ect
                                                     ·
                                                                      and
serve a former President or former Vice           o.   detailed  to
                                            President under authority
of this section shall be appointed or detailed
wiih and shall be subject to, all of                 in accordance
                                        the
of this Act applicable to persons appointed  provisions    of section 3
authority of that section. The provisions        or  detailed   under
August 25, 1958 (72 Stat. 838; 3 U.S.C.         of the Act of
subsections (a! and (e) shall not become 102, note), other than
to a former President until six months       effective with respect
his term of office as President.]         after the expiration of

     "Sec. [514 There are hereby authorized
to the Administrator such funds as naay be     to be appropriated
                                            necessary for carry-
ing out the purposes of this Act, except
any onu Presidential transition            that with respect to

      [(1)] not more than $2,000,000 may be appropriated
            the purposes of providing services and         for
                                                    facili-
            ties to the President-elect and Vice President-
            elect under section 3. [and]
      [(2) not more than 1,000,000 may be appropriated
            for the purposes of providing services
            facilities to the former President and and
                                                    former
            Vice President under section 4.]
The President shall include in the budget
Congress, for each fiscal year in hich     transmitted to the
                                         his regular term of of-
fice will expire, a proposed appropriation
purposes of this Act.                       for carrying out the




                                46
APPENDIX II                                                   API'ENDIX II


Former Presidents Act of 1958
      FORIER PRESIDENTS and Vice Presidents: ALLOWANCE: SELECTION,
        COMPENSATION, AND STATUS OF OFFICE STAFF; OFFICE SPACE;
        WIDOW'S ALLOWANCE, TERMIINATION; "FORMER PIESIDEN'r"
        "and Vice President" DEFINED
     "(a) Each former President shall be entitled for the
remainder of his life to receive from the United States a one-
tary allowance at a rate per annum, payable monthly by the
Secretary of the Treasury, which is equal to the annual rate
of basic pay, as in effect from time to time, of the head of
an executive department, as defined in section 101 of title 5,
United States Codc. However, such allowance shall not be paid
for any period during which sch former President holds an
appointive or elective office or position in or under the Fed-
eral Government or the government of the District of Columbia
to which is attached a rate of pay other than a nominal rate.
     "(b) The Administrator of General Srvices shall, without
regard to the civil-service and classification laws, provide
for each former President an office staff. Persons so employed
[under this subsection] shall be selected by the former P'rcsi-
dent and shall be responsible only to him for the performance
of their duties. Persons 80 mployed shall         not be oonsidrtid to be
employees of the Federal Government except for    the purpooao of the Civil
Service Retirement Act, the Federal EkpZoyees'    Compensation Ao, th
Federal Emnployees' Group Life Inourance Aot of   1954, and the Fderal
Dnployees' Health Benefits Act of'1959.    Each    former President shall
fix basic rates of compensation for persons emploed for him
under this paragraph [which in the aggregate shall not exceed
$96,000 per annum except that for the first 30-month period
during which a former President is entitled to staff assistance
under this subsection, such rates of compensation shall not ex-
ceed $150,000 per annum]. The annual rate of conpenlsation pay-
able to any such person shall not exceed the highest annual
rate of basic pay now or hereafter provided by law for posi-
tions at level II of the Executive Schedule under section 5313
of title 5, United States Code.
      During the fiscal ear i: Lhih a President leavu offiT'ea any em-
ployee of any branch of the Gooervnmnt may be detailed to th'i former
President's staff on a reimburocabZla sz3ios with te consent of the head
of the agency; and while co dt.[,'l;d1 ouch a.ployeeo shall ,, reonsibZe
only to the former President for te prfcrm2nce of his dution; any em-
ployee so80 detailed shalt continue to receive the ompnonation provided




                                     47
APPENDIX II                                                APPENDIX II



pursuant to law for his regular employment, and shatz retaia th'? rights
and privi7 cjs vJ such employment without interruption.

      "(c) The Administrator of General Services shall furnish
for each former President suitable office space appropriatcly
furnished and equpped, as determined by the Administrator,
[at such] in Washington, D.C., and at one other place within the
United States as the former President shall specify durin3 the
fiscal year, in which he eaves office; thereafter office pace ii. be
provided in ust one place. Beginning with the fiscal year followin the
fiscal year in which a President leaves office funds authorized to be
appropriated luder this act shalt be available to pay the eneral Services
Administration or other executive agency providing space to a forner
President, as authorized by this act, at rates determined in accorance
with the provisions of 47 ,V.S.C. 490 (j) and (k).

      Funds appropriated to carry out the provisions of this act shall
be available for the payment of expenses for the procurveent of services
of experts or consulZtauts or organizations thereof, as autwrized foiJ
the head of any department by section 15 of the Adinistritiv- Een.es
Act of 1946 (5 U.S.C. 309(b)) as found necessary by the former Pretsi-
dent; the payme t of travel expenses and subsistence allounces, ic2a1ud-
ing rental of Government or hired motor vehicles, in accordance with the
provisions of chapter 57 of title   5 of the United States Code; whter,
authorized by the President, ,c;,::ernnet aircraft mry ibe ud ! y a folrnc
President to assist him in winding up the affairs of his office. Wire
deemed necessary for protective purposes chartered aircraft may also
used by a fo2er President to assist him in winding up the affairs o
his presidency. The cost of either Government or chartered aireraf
shall be paid with Former Presidents Act funds and any collection, xn
the Secret Service or others for the ue2 of space on chartered fl iffrts
deposited to the credit of the Former Presidents Act appropriation~ com-
munications services fund necessary by the former President; ard rayrnent
of expenses for necessary printing and binding, notwithstandinJ th';Act
of January 12, 1895, and the Act of March 1, 1919, as amended (.14 U.S.C.
501).

      "(d) Fands appropriated to caurry out the provisions of thi' act shall
also be available to rimburse the Postal Service for the cqu:ivt'ent arozt
of postage on franked mail sent by a former IPresident and widows of for-
mer Presidents as authorized in 39 U.S.C. 3214 and by forr:evr Vtic!-Pcsidents
as authorized in tbiscction (g) of this Act.

       ["(c)]    (e) The Administrator of General Services shall provide for
the movermeint of the personal effects of a former President ant his feriZly
from the Executive Residence in Washington, D.C. to a location in the
United States selected by him.



                                     48
APPENDIX II                                                 APPENDIX II


      "(f) Funds appropriated to oarrbo4t the provisi-ns of this act shall
be available for 3 months after the death of a former President to permit
the orderZy closing of his office.

       "(g) The Admbnistrator shall fLa nish for each fomner Vice President,
for a periol not to exceed the end of the fiscal year in which his term
of office ezpried, with the serviceo and facilities needed to wind up the
affairs of his office. The service# and facilities shall consist of suit-
able office space appropriately furnished and equipped, as determined by
the Administrator in Washington, D.C., and one other place within the
United States as a former Vioe-Presidont shall specify; an office staff
selected and responsible only to the former Vice President at pay rates
which do not exceed the rate provided by the ClassificationAct of 1949 as
 nmended, for grade GS-18. Such epoyees shallZZ not be considered to be
employees of the Federal Government except for the purpooes of the Civil
Service Retirement Act, the Federal Eptoyees' Compensation Act, the
Federal Eptloyees' Group Life Ineuranoa Act of 1954, and the Federal
Employees' Health Benefits Act of 2959. Provided, that any employee of
any agency of any branch of the ,ovornment may be detailed to uch taff
on a reimbursable basis with the oonsent of the head of the agency; and
while so detailed such employee shall be responsible only to the former
Vice-President for the performance of his duties. Any employee so
detailed shallZZ continue to receive the compensation provided pursuant to
law for his regular employment, and halt retain the rights and privileges
of such employment without interruption.
      Payment of expenses is authorined for the procurement of services of
experts or corsultants or organinations hereof as authorised for the head
of any department by ection 15 of the Acbinitrative Expenses Act of 1946,
as amended (5 U.S.C. 3109(b)).
      Payment of travel epensee and subsistence alZowances, including
rental of Government or hired motor .vhioles,found necessary by the
former Vice-President in accordanio with the provisions of chapter 57 of
Title 5 of the United States Code; comuonications services found necessary
by the former Vice-President i authorized.
      Payment of expenses is authoried for necessary printing and bind-
ing, notwithstanding the Act of January 12, 1895, and the Act of March 1,
1919, as amended (44 U.S.C. 501); conveyance within the United States and
its territoriesand possessions o' all mail matter, includirg airmail,
sent by him under his written autograph segnature; the shipment of his
personal effects and those of hi fmily Jo)w the official Vice PresidentiaZ
Residence in Washington, D.C. to a location in the United States selected
by him.

      ["(e)] "(h) The widow of each former President shall be
entitled to receive from the United States a monetary allowance


                                     49
APPENDIX II                                                 APPENDIX II


 at a rate [of $20,000 per annum]         euz to one-third of the rate
per annu   authorized by ection (a)of this act for former Presidents,
payable monthly by the Secretary of the Treasury, if such
widow shall waive the right to each other annuity or pension
to which she is entitled under any other Act of Congress. The
monetary allowance of such widow--
      "(1) commences on the day after the former President
           dies;
      "(2) terminates on the last day of the month before
             such widow--

             "(A) dies; or
             "(B) remarries before becoming 60 years of age;
                  and
     "(3) is not payable for any period during which such
widow holds an appointive or elective office or position in
or under the Federal Government or the government of the
District of Columbia to which is attached a rate of pay other
than a nominal rate.
      ["(f)]    "(i)" As used in this section, the term 'former
President' and 'former Vice-President' mears a p son

      "(1) who shall have held the office of President or Vice-
President of the United States of America;
     "(2) whose service in such office shall have terminated
other than by removal pursuant to section 4 of article II of
the Cnstitution of the United States of America; and
      "(3) who does not then currently hold [such office] the
office of President or Vice President."

       (j)The President shall incltude in the budget transmitted to the
Congress, for each fiscal yea., in which his regulta terri of office will
expire, a proposed appropriation providing funds to carry out the pro-
visions of this act as it would apply to him and the Vice President.
      (k)Except for expenditures from a small imprest fund obligation
any expenditure of Former President. Act funds may only be made with the
prior approval of the Administrator or his designee.




                                     50
APPENDIX III                                      APPENDIX III

                                          December 13,   1977




Mr. Fred J. Shafer, Director
Logistics and Communications Division
United States General Accounting Office
Washington, D. C.  20548

Dear Mr. Shafer:

On November 3, 1977 the General Accounting Office sent us
a draft report entitled "Audit of Ford-Carter Presidential
Transition Expenditures."  Having served as Director of the
Carter-Mondale Transition Planning Group, I appreciate the
opportunity to conment on that portion of the report which
relates to he Carter-Mondale aspect of the Transition.

GAO concluded that the transition experience following
Jimmy Carter's victory in the 1976 Presidential election
demonstrated the soundness of public financing of the
transition process.  We agree.

GAO also made several suggestions which merit attention.
Generally I agree with your recommendations but would make
certain observations:

     1. Requiring prior GSA approval of all Transition
expenditures would be needlessly burdensome.  Perhaps more
importantly, it would transfer responsibility for expending
Transition funds from the incoming to the outgoing adminis-
tration.  This responsibility, which includes authority to
establish the Transition's priorities, should clearly rest
with the President-elect.  The "dual responsibility" problem
created by the present legislation (and addressed in your
draft report) should be resolved by making the President-
elect's designee solely responsible or use of the funds,
as suggested at page 42 of your draft.

     2. You rightly recor.mend that travel reimbursements
paid by the press and Scret Service be available for use
by the Transition.  Such an arrangement is essential to
insure that the full amount appropriated by Congress be
available for Transition purposes (see attachment).




                            51
APPENDIX III
                                                      APPENDIX III


       3. I also recommend amending the
 to permit ise of the appropriation for Transition  legislation
                                        wrapping up Transition
affairs after January 20. An enterprise as difficult
complex as a Presioantial Transition cannot responsiblyand
its books on that date. It must insure proper             close
staff and vendors and collect any amounts which payment  to  all
                                                 might be due
the government for various reasons. A Transition
be able to maintain a small staff to address        team should
                                              these
issues for several months following January 20.      and similar

      As the first incoming Transition team to operate
                                                        under
an ertirely federally funded program, we encountered
problems, as GAO noted in the draft report.            certain
these problems--most of which were technical I have addressed
                                              in nature--in
the attachment to tis letter.
If I can be of further assistance, please contact
                                                  me.
                             Sincerely,



                                 ack H. Watson, Jr.




                            52
APPENDIX III                                    APPENDIX III

                       ATTACHMENT



Despite the difficulties of dealing with varying and comp x
regulations which govern spending by federal agencies, the
financial record of the Carter-Mondale Transition was impres-
sive.  Not one cent of federal money was unaccounted for.

During such a hectic and trying period, there were problems,
of course, and GAO has pointed to them.  Many of the problems,
however, were exceedingly technical and resulted from honest
but differing interpretations of the Transition Act and other
statutes and regulations.  I think it is fair to say that the
draft GAO report overemphasizes the few problems and gives
only passing mention to two important facts:

     1) That this transition, like all others, occurred
        in an atmosphere which was markedly different from
        that found in the federal bureaucracy generally;
        and

     2) That, despite these circumstances, the Carter-
        Mondale Transition fully accounted for and
        appropriately spent its federal financial
        allotment.

As GAO noted, the 1976 transition was the first financed
wholly with federal funds.  In effect, the Carter-Mondale
Transition served as a "shakedown cruise" for the new system.
It worked well, and we would expect future transitions to
be even smoother.

ISSUES

GAO has raised certain questions concerning the Carter-
Mondale Transition:

     -- Whether air charter reimbursements from the media
        and Secret Service should have been deposited in
        the United States Treasury;

     -- Whether taxes should have been withheld and employer's
        taxes paid for casual laborers; and

     -- The extent to which the Transition Group should have
        paid for military aircraft used during the transition
        period.

The balance of this attachment will address these and related
issues.

                             53
 APPENDIX III                                       APPENDIX III
      Charter Reimbursements

 During the Presidential election car.paign, Jimmy
 other candidates developed the practice--perfectlyCarter nInd
                                                     legal
 and logical under the federal election laws--of billing
 both the press and Secret Service for seats they
                                                   occupied
 on charter aircraft.  Had there been no such billing, the
 candidates themselves would have given the reporters
                                                       and
 Secret Service agents a free ride.  During the transition,
 the media and Secret Service continued to travel aboard
 charter flights with the President-elect and Vice
                                                    President-
 elect.

Given CAB regulations--which require that charters
                                                    be fully
prepaid by the organization arranging the charter--the
Transition Group had no alternative but to pay for
                                                    the
entire charter, then seek reimbursement from the
                                                  media and
Secret Service.  There was no practical way for these
travelers to pay their respective shares directly
                                                   to the
carrier.

GAO, citing 31 U.S.C. 4d4, believes that the money
                                                       reimbursed
by the press and Secret Service--some $87,000--should
                                                           have
been deposited directly in the federal Treasury.
cisely, it contends that the Transition was wrong     More   re-
                                                      in rclaii:in
the money.  Our reasoning was that Congress--which granted
the fixed sum of $2 million for our entire transition--
intended that all of that $2 million should be available
for transition purposes.  We continue to believe that Congress
did not contemplate our being unable to recoup money
for charter aircraft used, in part, by the press         spent
                                                  ,-1    Secret
Service.

Because there is considerably more than $87,000 remaining
in the Transition fund, this question is academic.
to conclude the matter expeditiously, we will not    In order
                                                   ca]lenge
GAO's understanding of the law. We agree with GAO,
                                                     however,
that the law should be amended explicitly "to provide
the use of such collections for transition purposes    for
                                                     in the
future."

     Casual Labor

The Carter-Mondale Transition employed a number of
                                                    short-
term casual laborers to handle mail and provide courier
services.  We considered these individuals to be independent
contractors not subject to withholding and related
                                                   require-
ments.  The question is a close one, however, and we hve
no objection to treating these individuals as regular
employees.



                               54
APPENDIX III                                    APPENDIX II
     Military Aircraft

GAO has suggested that Transition funds should be used to
reimburse the Defense Department for military aircraft
utilized during te transition.   We agree that the Transi-
tion should be the source of payment for all transition-
related flights by the President-elect or Vice President-
elect or members of the Transition staff.  The Justice
Department has advised us, however, that the Transition
need not pay the Defense Department for any flights
unrelated to official transition business. We are analyzing
our records to insure that these principles have been
correctly applied.

     Other Issues

GAO has also inquired about (1) $2,400 disbursed for
"questionable" purposes; (2) whether certain salary and
travel advances were processed properly; (3) whether money
expended for staff per diem was processed in accordance
with GSA regulations; and (4) whether our records were
available for review by GSA.

It is significant to note that GAO has questioned the
propriety of only $2,388 in transition expenditures,
approximately one-tenth of one percent of the Transition
budget. Most of thTs amount--$1,516--was for a Christmas
party for Transition staff  for which the Transition was
reimbursed by the Democratic National Committee prior to
the GAO audit. The balance was related to legitimate
Transition business.

GAO implies that the Transition Group violated regulations
which prohibit payment of salary before it is earned.
In fact, as GAO's repore discloses, such advances were
made on only a few occasions. Moreover, these advances,
like all others made during the transition, were repaid
in full.  There was certainly no pattern of consistent
violation of the regulation in question.

With respect to another advance category, GAO criticizes
the use of an Annapolis travel destination to obtain
expedited advances for members of the Transition staff.
Although there was certainly no attempt to deceive anyone
(GSA officials were ful. y aware of the practice) and even
though the Justice Department's Civil Division has investi-
gated the situation and found no basis for pursuing it
(see attachment), the practice presented an unfortunate
appearance. We earnestly believe, however,that some
method must be found for providing expeditious advances
to those new Transition employees whose current, pressing
human needs must be considered.
                             55
APPENDIX III                                    APPENDIX III

GAO has also questioned our use of lump sum per diem payments
of $500 to eligible workers. No one has suggested that the
individuals in question were ineligible for such per diem;
indeed, one of GAO's criticisms appears to be that the
employees could have been paid substantially more. The
basic criticism appears to be that we cut too much red tape.
Siince the payment of per diem was efficient and since itand
saved money, we believe that the criticism is unfounded
excessively technical.

Finally, GAO suggests that the Transition was tardy in
making its records available to GSA for inspection. The
simple fact is that our books were always open and available,
from the first day of the transition to the present.   GSA
could have examined them at any time.

CONCLUSION

The transition worked well. We spent federal money appro-
priately and generally in accordance with established
governmental practices.  A few problems arose because of
ambiguities in the law, but none of a serious nature.

Going beyuod the minor questions of procedure, I respect-
fully suggest that GAO's report should stress the following
substantive points:
                                               Grcup
     1) The Carter-Mondale Transition Planning
        has accounted for every penny of the money it
        spent;

     2) All its expenditures were for legitimate
        transition-related purposes;

     3) Every advance which was disbursed, regardless
        of the procedure utilized, has been repaid in
        full; and

      4) To the extent that certain matters are still
         being resolved, there are sufficient unexpended
         funds remaining in our Transition account to
         cover all contingencies.




                              56
   APPENDIX III                                             APPENDIX III




                                          Yparretnt
                                            o .7tc
BABi:JRrE":^
  r:c>>^^  .. ....       ~           July.. 1,    19J7
     ClLJ:C.L
BAB:JRE:KSG:pah
46-16-1350




             ;:r. Herman W. Barth
             Iz=ting General Counsel
             Gen.eal Services Ad-inistration
             lashington, D.C.   20405

             Da-r     r. Barth:

                  I wish to inform you that the Civil Division
            of the Department of Justice has completed
                                                        its
            in-.estigation in the matter of the Carter/Mondale
            transition Group Travel Advances to Annapolis,
            iaryland.   Our investigation disclosed no evidence
            of monetary damage to the United States or
                                                        other
            factors warranting the insitution of civil
                                                        suit,
            and, accordingly, we have closed the Division's
            file.

                     Thank you for your cooperation in this regard.

                                                 Very truly yours,



                                          BBARA ALLEN BABCOCK
                                       Assistant Attorney General




                                     57
APPENDIX    IV                        .                            APPISUIX IV



                 Or7lc   or
           GERAILD       . IO1DI)


                                               November 29, 1977




                  Dear Mr. McAuley:
                  The draft o   the proposed report on the Audit
                  of the Ford-Carter Presidential Transition
                  Expenditures has been reviewed and I
                                                        feel
                  recommendations for changes in legislation the
                  sound, valid and definitely needed.         are

                 One additional suggestion to consider
                                                        would be
                 the addition of language which would
                 the satisfaction of expenses (or the  allow  for
                                                       obligation
                 of expenses) incurred prior to the legal
                                                           date the
                 appropriation becomes available for
                                                      disbursement.
                 The reason for such language is to allow
                 establishing of certain contracts prior    or the
                                                          to the
                 date a transition office comes into
                                                      existence.
                 Examples of this need would be contracting
                 post office box, telephone service,          for a
                                                      an automobile
                 or the delivery of office equipment.

                 My compliments on a thorough and well-prepaied
                 report.

                                           Sincerely,



                                           Richard L. We ekanp
                                           Special Assistant
                                             to President Ford

                 Mr. Charles McAuey
                 United States General Accounting Office
                 Washington, D. . 20548


             (11'9o17)
                                          rq