oversight

Month in Review: October 1999 Reports, Testimony, Correspondence, and Other Publications

Published by the Government Accountability Office on 1999-10-01.

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

               United States General Accounting Office

GAO            Office of Public Affairs




               MONTH IN REVIEW:
               OCTOBER 1999
               Reports, Testimony,
               Correspondence, and
               Other Publications
               Highlights
               International Monetary Fund: Observations on the
               IMF's Financial Operations. Page 25.

               Mental Health: Improper Restraint or Seclusion Use
               Places People at Risk. Page 13.

               u.s. Postal Service: Challenges to Sustaining
               Performance Improvements Remain Formidable on
               the Brink of the 21 st Century. Page 12.

               International Trade: Implementation and
               Monitoring of the U.S.-Japan Insurance Agreements.
               Page 26.

               Y2K Computing Challenge: Day One Planning and
               Operations Guide. Page 2.




                  ....
               RfS- GAO  Accountab ility' Integrity' Re liability


GAO/OPA-OO-l
If you have questions about the Month in Review, please call
Cleve Corlett, Director of Public Mfairs, at (202) 512-4800. For
information on specific reports, please contact appropriate GAO
staff. GAO publishes the names of key contacts and their telephone
numbers in each report.
Contents



Month in Review:
                   Special Publications                          2
October 1999       Budget and Spending                           2
                   Business, Industry, and Consumers             3
                   Civil Rights                                  4
                   Economic Development                          4
                   Education                                     5
                   Energy                                        5
                   Environmental Protection                      6
                   Financial Institutions                        7
                   Financial Management                          8
                   Government Operations                         9
                   Health                                       13
                   Housing                                      15
                   Income Security                              16
                   Information Management                       16
                   International Affairs                        25
                   Justice and Law Enforcement                  32
                   National Defense                             34
                   Natural Resources                            41
                   Social Services                              41
                   Tax Policy and Administration                42
                   Transportation                               43
                   Decisions and Opinions                       44
                   Reports on Agency Rules                      45




                   Page 1                              GAO/OPA-OO-l
Month in Review: October 1999


                       Y2K Computing Challenge:
Special Publications   Day One Planning and Operations Guide

                       GAO/AIMD-1O.1.22,   Oct. 1999 (16 pages).

                       The objectives of a Day One strategy are to (1) position an organization to
                       readily identify problems caused by the Year 2000 date change, take
                       needed corrective action, and minimize any adverse impact on agency
                       operations and key business processes and (2) provide information about
                       an organization's Year 2000 condition to executive management, business
                       partners, and the public. This guide provides a conceptual framework to
                       help government agencies develop a Day One strategy and reduce the risk
                       of Year 2000 problems for agency operations. It builds upon GAO'S earlier
                       Year 2000 business continuity and contingency planning guide, and draws
                       on other sources, including the Social Security Administration, IBM, and
                       the Legislative Branch Y2K Group.

                       Human Resources and Payroll Systems Requirements:
                       Checklist for Reviewing Systems Under the Federal Financial
                       Management Improvement Act of 1996

                       GAO/AIMD-OO-21.2.3,   Oct. 1999 (56 pages).

                       Government agencies are required to implement and maintain financial
                       management systems that substantially comply with federal financial
                       management systems requirements. These requirements are spelled out in
                       the Financial Management Systems Requirements series issued by the
                       Joint Financial Management Improvement Program (JFMIP) and in Office of
                       Management and Budget guidance. This checklist, which reflects JFMJP's
                       revised Human Resources and Payroll Systems Requirements, is intended
                       to assist (1) agencies in implementing and monitOling their human
                       resources and payroll systems and (2) management and auditors in
                       reviewing their human resources and payroll systems to determine if they
                       are in substantial compliance with the Federal Financial Management
                       Improvement Act.


                       Budget Issues:
Budget and Spending    Budgeting for Inflation in Civilian Agencies

                       GAO/AIMD-OO-14,   Oct. 1999 (11 pages).




                       Page 2                                                          GAOI OPA-OO-l
                      Month in Review: October 1999




                      In recent years, the Defense Department (DOD) has seen increases in
                      purchasing power-called inflation dividends-that occur when inflation
                      is lower than had been projected at the time funds were requested. DOD
                      has used those savings to fund a larger program without requesting or
                      receiving additional resources. In light of the military's experience, the
                      question of whether civilian agencies should also identify the effect of
                      lower inflation on their funding requirements has been raised. This report
                      describes how inflation is now treated in budgeting for DOD and civilian
                      discretionary nonpay activities. GAO developed case studies for three
                      civilian agencies: the Bureau of Land Management, the Office of
                      Environmental Management in the Department of Energy, and NASA. GAO
                      also reviewed its earlier work on inflation changes in both civilian
                      agencies and DOD and questioned DOD about how it budgets for inflation.


                      Funeral-Related Industries:
Business, Industry,   Complaints and State Laws Vary, and FrC Could Better Manage the
and Consumers         Funeral Rule

                      GAO/GGD-99-156,   Sept. 23 (72 pages).

                      Comprehensive information on consumer complaints about the funeral
                      industry is unavailable. One reason is that consumers can complain to
                      various organizations about funeral-related issues and can lodge the same
                      complaint with more than one organization. Another reason is that no one
                      organization or combination of organizations collects and compiles all
                      complaints into a single database. Although organizations GAO contacted
                      were able to provide some data, the number of complaints about the
                      funeral industry was generally low compared to complaints about other
                      types of consumer issues. Among the reasons these organizations gave for
                      the relatively low number of complaints was the personal or emotional
                      component of the death care situation. The Federal Trade Commission's
                      (FTC) Funeral Rule requires that funeral providers give consumers
                      accurate, itemized price information and other disclosures about funeral
                      goods and services. During the lastfive years, FTC has taken steps,
                      including distributing compliance guides and working with the funeral
                      home industry, to promote compliance with the rule. FTC maintains that
                      compliance among providers covered by the rule has risen "substanttally"
                      over the years. However, FTC lacks a systematic or structured process for
                      measuring funeral homes' compliance. A GAO analysis of a limited sample
                      of funeral homes found that compliance was indeed high for the rule's
                      core requirement-giving consumers itemized price lists early in their



                      Page 3                                                         GAO/OPA-OO-l
               Month in Review: October 1999




               meetings with funeral home staff- and somewhat lower for the rule's
               other elements. However, it appears that FTC did not always act against
               funeral homes that may have violated the mle and did not always
               document the reason. GAO also reviewed the approaches used by five
               states-California, Florida, Maryland, New York, and Texas- to protect
               consumers who deal with funeral homes and cemeteries and make
               preneed arrangements. Differences were most notable concerning the five
               states' regulatory stmctures and the requirements that these states place
               on death care providers.


               HUD EEOInvestigation:
Civil Rights   Contracting and Process Irregularities

               GAO/OSI-99-6,   Sept. 8 (20 pages).

               In February 1988, the Deputy Assistant Inspector General (IG) for
               Investigation at the Department of Housing and Urban Development (HUD)
               complained that HUD'S IG had discriminated against him because of his
               race. GAO reviewed the equal employment opportunity (EEO) complaint.
               This report discusses (1) whether HUD had awarded contracts concerning
               the EEO complaint to outside firms in accordance with government
               standards and (2) whether HUD'S actions were justified when it deviated
               from its standard EEO process by contracting with firms not on the General
               Services Administration's schedule of contractors.



Economic
Development

Testimony      Flood Insurance: Information on Financial Aspects of the National Flood
               Insurance Program, Stanley J. Czerwinski, Associate Director of Housing
               and Community Development Issues, before the Subcommittee on
               Housing and Community Opportunity, House Committee on Banking and
               Financial Services. GAOII'-RCED-OO-23, Oct. 27 (12 pages).

               The flood insurance program run by the Federal Emergency Management
               Agency paid about $7 billion in insurance claims from fiscal years 1986
               through 1998. In recent years, claims paid by the program have risen as a
               result of a series of storms, creating a greater ill-ain on the program. This



               Page 4                                                            GAO/OPA-OO-l
            Month in Review: October 1999




            testimony discusses the (1) financial results of the program's operations
            since fiscal year 1993, (2) major factors contributing to the financial
            difficulties faced by the program, and (3) actions taken by and plans of the
            Federal Insurance Administration that may affect the program's
            financial health.


            Federal Education Funding:
Education   Allocation to State and Local Agencies for 10 Programs

            GAOIHEHS-99-180,   Sept. 30 (30 pages).

            In fiscal year 1996, the Department of Education spent less than one
            percent of all appropriated program funds on administration for the 10
            programs GAO reviewed. It received $327 million to administer all its
            programs and spent about $23 million on these 10 programs. For nine of
            the 10 programs, the states spent an average of one to 17 percent of the
            funding they received to administer them. Collectively, they distributed
            94 percent of the federal funds they received mainly to local agencies. Like
            the Deprutment, the states spent the money on such activities as technical
            assistance and program evaluation; they are also authorized to spend the
            funds to design curricula and demonstration projects. GAO visited nine of
            the nation's 16,000 schools districts and found that school-level staff and
            district office staff spent very little time administering the programs.


            Nuclear Nonproliferation:
Energy      Status of Heavy Fuel Oil Delivered to North Korea Under the
            Agreed Framework

            GAOIRCED-99-276,   Sept. 30 (29 pages).

            During the 1990s, North Korea's nuclear program was suspected of
            producing nuclear material capable of being fashioned into nucleru'
            weapons. To address this threat, the United States and North Korea signed
            the Agreed Framework in October 1994. In exchange, the United States
            pledged to help North Korea acquire two light-water nuclear reactors for
            electricity generation. The United States also pledged to arrange for
            deliveries of 500,000 metric tons of heavy fuel oil annually until the first
            reactor was completed. The agreement stipulates that the fuel oil is to be
            used for heating and electricity generation. Reports have alleged that
            North Korea has diverted some of the heavy oil for purposes not specified



            Page 5                                                          GAO/OPA-OO-l
                 Month in Review: October 1999




                 in the Agreed Framework, including resale abroad. This is GAO'S fourth
                 report on issues related to the implementation of the Agreed Framework.
                 GAO summarized this report in testimony before Congress; see:


                 Nuclear Nonproliferation: Heavy Fuel Oil Delivered to North Korea Under
                 the Agreed Framework, by Ms. Gary L. Jones, Associate Director for
                 Energy, Resources, and Science Issues, before the House Committee on
                 International Relations. GAOIf-RCED-OO-20, Oct. 27 (11 pages).

                 Nuclear Waste:
                 DOE'S Hanford Spent Nuclear Fuel Storage Project Cost, Schedule,
                 and Management Issues

                 GAOIRCED-99-267,   Sept. 20 (28 pages).

                 The Department of Energy (DOE) is trying to improve the storage of spent
                 (or irradiated) nuclear fuel from its nuclear reactors at its Hanford site in
                 Washington state. The fuel is now stored in water basins a few hundred
                 yards from the Columbia River, where the deterioration of some of the fuel
                 and the water basins has raised health and safety concerns. DOE has a
                 project underway to address these concerns. In 1988, GAO testified that the
                 project was more than four years behind schedule and that its estimated
                 cost had doubled to $1.4 billion. GAO revisited the project to determine its
                 status, what problems might affect achieving current cost and schedule
                 estimates, and whether changes have addressed management weaknesses.
                 GAO found that although DOE is more confident that the project will
                 eventually remove fuel from the water storage basins, uncertainty remains
                 over when the project will be finished and how much it will cost.


Correspondence   Department of Energy: Fiscal Year 1998 Obligations for Fossil Energy
                 Programs. GAOIRCED-99-284R, Sept. 14.


                 Drinking Water Research:
Environmental    Better Planning Needed to Link Needs and Resources
Protection
                 GAOIRCED-99-273,   Sept. 24 (30 pages).

                 Public water systems are faced with regulations far more complex than in
                 the past and whose costs could be significant for both the systems and
                 their customers. Congress made significant changes in the way that the



                 Page 6                                                           GAO/OPA-OO-l
                         Month in Review: October 1999




                         Environmental Protection Agency (EPA) is to set drinking water quality
                         standards for public water systems. This report compares EPA'S budget
                         requests for drinking water research during fiscal years 1997 through 2000
                         with the amounts authorized by law; provides the views of stakeholders on
                         whether EPA will be able to complete the research; and assesses EPA'S
                         drinking water research plans, projected funding, and anticipated
                         accomplishments. GAO summarized this report in testimony before
                         Congress; see:

                         Drinking Water Research: Better Planning Needed to Link Needs and
                         Resources, by Peter F. Guerrero, Director, Environmental Protection
                         Issues, before the Subcommittee on Health and Environment, House
                         Committee on Commerce. GAO/f·RCED·OO-15, Oct. 20 (15 pages).


                         International Finance:
Financial Institutions   Actions Taken to Reform Financial Sectors in Asian
                         Emerging Markets

                         GAOIGGD-99-157,   Sept. 28 (60 pages).

                         Financial crises limit emerging countries' economic growth and foreign
                         trade and strain their ability to repay international obligations. Developed
                         nations, including the United States, have felt the repercussions of these
                         crises through loans to and investments in emerging markets and through
                         diminished exports to these countries. This report focuses on three
                         countries-Indonesia, South Korea, and Thailand-that had been receiving
                         large capital flows, were experiencing financial crises, and were making
                         changes in their financial systems. GAO focuses on the banking sectors in
                         these countries because their economies, like those in most developing
                         and transition countries, relied more heavily on bank financing than on
                         stock or bond issuance or other types of market fmancing. GAO discusses
                         (1) the nature ofthe weaknesses in the countries' financial sectors, (2) the
                         extent to which the countries have achieved reforms in their financial
                         systems, (3) the extent to which the countries have implemented
                         international principles for banking supervision, and (4) efforts by the U.S.
                         government and multilateral institutions to bring about changes the
                         fmancial sectors of these emerging markets.




                         Page 7                                                           GAO/OPA·OO·l
             Month in Review: October 1999




             Financial Management:
Financial    Federal Financial Management Improvement Act Results for Fiscal
Management   Year 1998

             GAO/AIMD-OO-3,    Oct. 1 (29 pages).

             The historic inability of many federal agencies to accurately record and
             report financial management data on both a year-end and an ongoing basis
             for decision-making and oversight purposes continues to be a serious
             problem. To improve the accountability and credibility of the federal
             government and to restore public confidence, Congress passed the Federal
             Financial Management Improvement Act of 1996, which requires auditors
             for each of the 24 major federal agencies named in the Chief Financial
             Officers Act (CFO) to indicate in their annual financial statements whether
             the agencies' financial management systems comply substantially with the
             following three requirements: federal financial management systems
             requirements, applicable federal accounting standards, and the U.S.
             Government Standard General Ledger at the transaction level. GAO is
             required to report annually on the act's implementation. This report
             discusses (1) the compliance of CFO agencies' financial systems with the
             act's requirements, (2) whether CFO agencies' financial statements have
             been prepared in accordance with applicable accounting standards, and
             (3) the agencies' plans to ensure that their systems comply with the
             act's requirements.

             Internal Controls:
             Oversight of Longshore Special Fund Needs Improvement

             GAO/AIMD-OO-15,   Oct. 29 (18 pages).

             The Special Fund established by Longshore and Harbor Workers'
             Compensation encourages employers to hire disabled maritime workers
             by limiting an employer's liability should a disabled worker sustain a
             second injury. The Fund, which is financed primarily by annual
             assessments levied by the Labor Department on self-insured employers
             and insurance carriers, is audited annually. However, the audited annual
             financial statements do not address the potential unfunded liability faced
             by this program, which has been estimated to be as high as $2.5 billion.
             This repOlt addresses (1) the feasibility of actuarially calculating the
             unfunded liability of the Special Fund, (2) whether controls exist to
             prevent inappropriate claims from being referred to the Special Fund,
             (3) whether recipient data are matched against other agencies' databases




             Page 8                                                          GAO/OPA-OO-1
             Month in Review: October 1999




             to reduce the risk of payments being made to ineligible recipients,
             (4) whether there are equitable distributions of assessments among the
             insurance carriers/self-insured employers as compared to their claim
             levels, and (5) the status of changes to the Longshore computer systems.


             General Services Administration:
Government   STAR-PBS'New Program for Tracking and Managing Real Property
Operations
             GAO/GGD-OO-12,   Oct. 12 (27 pages).

             The Public Buildings Service's System for Tracking and Administering
             Real Property (STAR) is a real estate inventory management software
             application that maintains data on projects, leases, buildings, and space
             assessments in an integrated database. The data in STAR are used to
             generate bills for clients for their assigned space, develop budget plans,
             track and manage leases, and evaluate performance. This report discusses
             (1) the functions that STAR performs; (2) whether users were having
             problems using STAR; (3) the steps that the Public Buildings Service has
             taken to address any user problems; and (4) the actions that the Public
             Buildings Service has taken to help ensure that STAR data are accurate,
             reliable, and consistent.

             Managing for Results:
             Strengthening Regulatory Agencies' Performance
             Management Practices

             GAO/GGD-OO-IO,   Oct. 28 (63 pages).

             GAO  gathered information from 23 federal and state organizations that are
             known for using or planning to use various useful practices to improve
             their performance management and measurement processes. These
             practices fall into the following five categories: (1) restructuring the
             organization's management approach to become more
             performance-oriented; (2) establishing relationships outside of the
             organization to boost performance; (3) refining performance goals,
             measures, and targets to better translate activities into results;
             (4) strengthening analytical capabilities and techniques to better meet
             performance management information needs; and (5) assessing
             performance-based management efforts on a continuous basis to identify
             areas for improvement. GAO believes that the practices would be readily
             transferable to the federal financial institution regulatory agencies or other



             Page 9                                                            GAO/OPA-OO-l
            Month in Review: October 1999




            government agencies seeking to improve their implementation of the
            Government Performance and Results Act.

            DC Courts:
            Improvements Needed in Accounting for Escrow and Other Funds

            GAO/AIMD/OGC-OO-6,   Oct. 29 (23 pages).

            The District of Columbia Courts did not properly account for the funds in
            half of its 18 bank accounts during fiscal year 1998, as shown by its
            problems in determining its cash balances and reconciling its accounting
            records to supporting documentation. In addition, DC Courts lacked
            adequate controls and procedures during fiscal year 1998 to help ensure
            that the fines and the fees that were collected were accurately recorded.
            Although DC Courts was authorized to deposit fmes, fees, and penalties
            specified in District Law into the Crime Victims Fund to provide financial
            assistance to crime victims, in fiscal years 1998 and 1999 DC Courts also
            deposited other fines, fees, and penalties into the Fund that should have
            been deposited in the U.S. Treasury.


Testimony   General Services Administration: Status of Efforts to Improve
            Management of Building Security Upgrade Program, by Bernard L. Ungar,
            Director of Government Business Operations Issues, before the
            Subcommittee on Oversight, Investigations, and Emergency Management,
            House Committee on Transportation and Infrastructure. GAOIr-GGD/OSI-OO-19,
            Oct. 7 (16 pages).

            In the wake of the bombing of the Murrah Federal Building in Oklahoma
            City in 1995, the President directed federal agencies to upgrade the
            security of their buildings. The President gave the General Services
            Administration (GSA) responsibility for the buildings under its control, and
            GSA began a multimillion-dollar security enhancement program. GAO found
            that GSA has made progress in implementing GAO'S recommendations. GSA
            told its regions to reassess the security of all of the buildings in its
            inventory by April 1999 (1) to ensure that all of its buildings have been
            assessed and meet the Justice Department's minimum security standards
            and (2) to determine whether the security upgrade information was
            correctly represented in both the upgrade tracking system and the
            accounting system. GSA completed negotiations with the Office of
            Management and Budget and, as a result, has a way to recoup more of its
            building security costs. GSA, however, still lacks completely accurate data



            Page 10                                                          GAO/OPA-OO-l
Month in Review: October 1999




in its upgrade tracking and accounting systems and has not finished
developing outcome-oriented goals and measures for its building security
program. GSA decided on a new risk assessment methodology and is now
evaluating how to implement the methodology in future building security
surveys. Finally, GSA'S recent reassessment of each building was to mark
the restart of the routine physical security surveys that were suspended
because of a lack of sufficient personnel after the Oklahoma City bombing.

Management Reform: Elements of Successful Improvement Initiatives, by
J. Christopher Mihm, Associate Director for Federal Management and
Workforce Issues, before the Subcommittee on Oversight of Government
Management, Restructuring, and the District of Columbia, Senate
Committee on Governmental Affairs. GAOIf-GGD-OO-26, Oct. 15 (15 pages).

GAO'S Performance and Accountability Series outlined the major
management challenges confronting the largest federal agencies and
discussed opportunities to improve their performance. (See
GAO/OCG-99-22SET, Jan. 1999.) Many of these challenges involve longstanding,
difficult problems that will not be quickly or easily solved. In fact,
sustaining major changes will require a cultural transformation at many
agencies. Success in overcoming problems of this magnitude often
depends, at least initially, on whether an agency has a well-thought-out
management improvement initiative to guide its reform efforts. This
testimony discusses six elements that GAO believes are crucial to ensuring
that management improvement initiatives truly take root and solve the
problems they are intended to fix. These elements are (1) a demonstrated
leadership commitment and accountability for change; (2) the integration
of management improvement efforts into programmatic decisionmaking;
(3) thoughtful and rigorous planning to guide decisions, particularly to
address human capital and information technology issues; (4) employee
involvement to elicit ideas and build commitment; (5) organizational
alignment to streamline operations and clarify accountability; and
(6) strong and continuing congressional involvement.

National Archives: The Challenge of Electronic Records Management, by
L. Nye Stevens, Director of Federal Management and Workforce Issues,
before the Subcommittee on Government Management, Information, and
Technology, House Committee on Government Reform. GAOIf-GGD-OO-24,
Oct. 20 (eight pages).

Records generated electronically-such as E-mail messages, word
processing documents, CD ROMS, and web site pages-present special



Page 11                                                         GAO/OPA-OO-l
Month in Review: October 1999




archival challenges for the National Archives and Records Administration
(NARA) and federal agencies. NARA has hied to address agencies' immediate
needs for guidance and direction on electronic records management by
revising its bulleting and other guidance as well as forming a new group to
help answer agencies' questions. Some of NARA'S actions have come about
because of a court decision, which held that NARA'S guidance for the
deletion of electronic records exceeded statutory authority. The Archivist
appealed the decision, and an appeals court reversed the decision. The
Archivist said, however, that NARA would continue to work toward
ensuring preservation and ready access to electronic records.

U.S. Postal Service: Challenges to Sustaining Performance Improvements
Remain Formidable on the Brink of the 21st Century, by Bernard L. Ungar,
Director of Government Business Operations Issues, before the
Subcommittee on the Postal Service, House Committee on Government
Reform. GAOrr-GGD-OO-2, Oct. 21 (29 pages).

The U.S. Postal Service may be nearing the end of an era. Although it has
notably improved its financial position and peliormance delivery during
the last five years, the Service expects declines in its core business in the
years ahead. The growth of the Internet, electronic communications, and
electronic commerce has the potential to substantially affect the Service's
mail volume. The Service confronts challenges in four areas: maximizing
performance in the face of customers' rising demands and choices;
managing employees, the Service's most valuable asset, to maximize
attainment of agency goals and continuously improve employee
performance; maintaining financial viability by controlling costs and
enhancing revenues; and adapting to rapidly changing communications
and delivery environments involving a growing number of competitors.
GAO also stresses the need for the Postal Service to address long-standing
issues involving the quality of data used in ratemaldng.

Competitive Contracting: Preliminary Issues Regarding FAIR Act
Implementation, by J. Christopher Mihm, Associate Director for Federal
Management and Workforce Issues, before the Subcommittee on
Government Management, Information and Technology, House Committee
on Government Reform. GAOrr-GGD-OO-34, Oct. 28 (eight pages).

The Federal Activities Inventory Reform Act of 1998 requires federal
agencies to identify their activities that are not inherently governmental
and make this information publicly available. The implementation of the
act is in the early stages. Many agencies Dave only recently released their



Page 12                                                           GAO/OPA-OO-l
                 Month in Review: October 1999




                 inventories. Many other agencies' inventOlies still have not been made
                 available to the public. This testimony focuses on agencies' progress so far
                 in compiling and releasing their inventories. GAO briefly describes the
                 status of the initial steps taken to implement the act. GAO also highlights
                 some of the questions that are being raised by its examination of
                 inventories at the Department of Commerce, the Environmental
                 Protection Agency, and the General Services Administration.


Correspondence   Indian Gaming Regulatory Act: Land Acquired for Gaming After the Act's
                 Passage. GAOIRCED·OO-llR, Oct. 1.

                 2000 Census: Information on the Implications of a Post Census Local
                 Review Program. GAOIGGD-OO-9R, Oct. 13.

                 Federal Statutes and Executive Orders Applicable to the Public Buildings
                 Service's Leasing Program. GAOIGGD-OO-27R, Oct. 18.

                 Decennial Census: Answers to Hearing Questions on Census Address List.
                             Oct. 29.
                 GAOIGGD-OO-8R,



                 Mental Health:
Health           Improper Restraint or Seclusion Use Places People at Risk

                 GAOIHEHS-99-176,   Sept. 7 (35 pages).

                 Only 15 states systematically alert protection and advocacy agencies about
                 mentally ill or retarded people who have died as a result of improper
                 restraint or seclusion in residential treatment settings. Most agencies
                 receive reports only from state facilities, so that even these reporting
                 systems are not comprehensive. Reports of deaths cannot always be
                 thoroughly investigated because the agencies have had difficulty gaining
                 access to medical records. From partial information from 51 such
                 agencies, GAO identified 24 deaths associated with restraint or seclusion in
                 fiscal year 1998. Fragmentary reporting suggests the actual number may be
                 higher. No federal regulations govern the use of restraint or seclusion in
                 psychiatric hospitals, residential treatment centers for children, or
                 community group homes. Most state regulations do not apply to privately
                 run facilities. Some states have found that reducing the use of restraint
                 and seclusion improves safety for patients and staff alike. The Health Care
                 Financing Administration (HCFA) should extend to people in any treatment



                 Page 13                                                         GAOIOPA-OO-l
            Month in Review: October 1999




            setting funded by Medicare and Medicaid the same policies on restraint
            and seclusion that now protect individuals in long-term care settings and
            hospitals. HCFA should also improve reporting and require staff training in
            applying restraint and seclusion and in alternative ways to deal with
            potentially violent situations. GAO sununarized this report in testimony
            before Congress; see:

            Mental Health: Extent of Risk From Improper Restraint or Seclusion Is
            Unknown, by Leslie G. Aronovitz, Associate Director for Health Financing
            and Public Health Issues, before the Senate Committee on Finance.
            GAOfr-HEHS·OO-26, Oct. 20 (eight pages).


            Medicaid Enrollment:
            Amid Declines, State Efforts to Ensure Coverage After Welfare
            Reform Vary

            GAOIHEHS-99-163,   Sept. 10 (60 pages).

            Low-income families are entitled to keep their Medicaid coverage
            regardless of whether they are receiving cash assistance, but welfare
            reform has made it difficult for the states to identify and enroll families
            that qualify for cash assistance and those that are making the transition to
            work. Procedural difficulties with income reporting have limited the
            extent to which families are receiving transitional Medicaid and
            maintaining their eligibility for it; as a result, some are being terminated
            from their insurance despite being eligible. Medicaid enrollment among
            the nonelderly and nondisabled adults and children declined by about
            1. 7 million, or 7 percent, between 1995 and 1997, while welfare
            participation declined by 3.1 million, or 23 percent. This raises questions
            about whether the states have been able to link welfare and Medicaid
            policies in a way that consistently ensures Medicaid coverage for those
            who are eligible for it. GAO recommends that Congress revise the Social
            Security Act to relieve these procedural difficulties. The Health Care
            Financing Administration could also serve as a source of technical
            assistance and help disseminate information on states' best practices in
            implementing transitional Medicaid.


Testimony   Medicare: Better Information Can Help Ensure That Refinements to BBA
            Reforms Lead to Appropriate Payments, by William J. Scanlon, Director of
            Health Financing and Public Health Issues, before the Subcommittee on




            Page 14                                                          GAO/OPA-OO -l
                 Month in Review: October 1999




                 Health, House Committee on Ways and Means.      GAOtr-HEHS-OO-14,   Oct. 1
                 (19 pages).

                 Payment reforms under the Balanced Budget Act of 1997 that sought to
                 curb unnecessary Medicare spending are beginning to have their intended
                 effect, but pressure is building to return to more generous payment
                 policies. Adjustments based on thorough quantitative assessments may be
                 necessary. For home health care, the prospective payment system, a more
                 appropriate tool for the long term than the earlier interim payment system,
                 will likely require adjustment after it is implemented and more information
                 on home health costs, utilization, and users becomes available. The Health .
                 Care Financing Administration is trying to solve problems with access to
                 skilled nursing care facilities under the new system. A need-based
                 payment system, rather than the per-beneficiary cap on payments for
                 outpatient physical, speech, and language therapy, might help target
                 beneficiaries better. Medicare+Choice payments may need to be modified
                 by establishing an appropriate base rate and a risk adjustment method that
                 pays more for serving beneficiaries with serious health problems and less
                 for serving those who are relatively healthy.


Correspondence   Medicare: HCFA'S Approval and Oversight of Private Accreditation
                 Organizations. GAOIHEHS-99-197R, Sept. 30.

                 Medicare: Outpatient Rehabilitation Therapy Caps Are Important Controls
                 But Should Be Adjusted for Patient Need. GAOIHEHS·OO-15R, Oct. 8.

                 Medicare Home Health: Effect on Spending of Limiting Payment for
                 Non-Patient-Care Costs. GAOIHEHS·OO-19R, Oct. 19.


                 HUD'S Fiscal Year 2000 Budget Request:
Housing          Additional Analysis and Justification Needed for Some Programs

                 GAOIRCED-99-251,   Sept. 3 (53 pages).

                 The Department of Housing and Urban Development (HUD) faces a
                 combination of limited funds and organizational changes in fiscal year
                 2000. In April, Congress approved a budget for the U.S. government for
                 fIScal year 2000 and set forth budgetary levels for fiscal years 2001 through
                 2009. Industry groups representing housing and community development
                 practitioners believe that these levels could limit the amount of new



                 Page 15                                                             GAO/OPA-OO-l
                  Month in Review: October 1999




                  budget authority available for HUD'S programs. This report answers
                  questions about HUD'S fiscal year 2000 budget request.


Correspondence    HUD:   Allegations of Conflict of Interest and Misrepresentations Regarding
                  GAO    Review of Bucklin Report Are Unfounded. GAO/OSI-99-19R, Sept. 20.



Income Security

Testimony         Social Security Disability: SSA Has Had Mixed Success in Efforts to
                  Improve Caseload Management, by Cynthia M. Fagnoni, Director of
                  Education, Workforce, and Income Security Issues, before the
                  Subcommittee on Social Security and Human Resources, House
                  Committee on Ways and Means. GAOtr-HEHS-OO-22, Oct. 21 (19 pages).

                  The nation's two major federal disability programs, Disability Insurance
                  and Supplemental Security Income, have long been plagued by serious
                  problems. Applying for benefits is complex and confusing, applications
                  and appeals are backlogged, final eligibility decisions take as long as a
                  year, and the frequent reversal of benefit denials on appeal raises
                  questions about the fairness of decisionmaking. The Social Security
                  Administration's March 1999 disability plan stresses better quality and
                  consistency in decisions and revised operations at hearings offices. These
                  initiatives will require concerted management oversight and diligence.
                  Meanwhile, the agency has exceeded its goals for the past three years for
                  catching up on its overdue disability reviews. However, the state agencies
                  conducting these reviews must balance this large workload with other
                  work, such as determining eligibility for incoming claims. Unanticipated
                  increases in any of the workloads could strain the agencies' ability to keep
                  up the pace.


                  Telecommunications:
Information       FCC Does Not Know if All Required Fees Are Collected
Management
                  GAOIRCED-99-216,   Aug. 31 (32 pages).

                  In 1993, Congress directed the Federal Communications Commission (FCC)
                  to begin recouping the costs of its regulatory activities from the




                  Page 16                                                          GAO/OPA-OO-l
Month in Review: October 1999




telecommunications industry. In fiscal year 1998, more than 70 percent of
FCC'S $222-million budget was offset by the regulatory fees it collected.
This report reviews FCC'S controls for ensuring that required regulatory
and applications fees are paid and provides information on the extent to
which FCC is collecting monetary penalties resulting from enforcement
actions. GAO found that FCC does not lmow if it is collecting all of its
required fees. Regarding regulatory fees, FCC relies on the
telecommunications industry to voluntarily make payments.

Critical Infrastructure Protection:
Comprehensive Strategy Can Draw on Year 2000 Experiences

GAO/AIMD-OO-l,   Oct. 1 (51 pages).

The nation's computer-based critical infrastructures are at increasing risk
of severe disruption. Interconnectivity increases the risk that problems
affecting one system will also affect other interconnected systems.
Although these problems could be caused by natural disasters, such as
earthquakes, and system-inducted problems, such as the Year 2000
conversion problem, government officials are increasingly concerned
about attacks from individuals and groups with malicious intentions, such
as terrorists and nations engaged in information warfare. Critical systems
could be disrupted, sensitive data could be read or copied, and data or
processes could be tampered with. A significant concern is that terrorists
or hostile foreign states could target critical systems, such as those
supporting energy distribution, telecommunications, and financial
services, in order to harm the public welfare. The need to strengthen
computer security in both government and the private sector has been
recognized over the past several years by many groups, including GAO, and
several steps have been taken to address the problem. During 1996 and
1997, federal information security was addressed by the President's
Commission on Critical Infrastructure Protection, which had been created
to investigate the country's vulnerability to both "cyber" and physical
threats. A 1998 Presidential directive recognizes that overcoming
computer-based threats to the country's critical infrastructures requires
new approach involving coordination and cooperation across federal
agencies and among public and private sector groups and other nations.

Financial Management Service:
Significant Weaknesses in Computer Controls

GAO/AIMD-OO-4,   Oct. 4 (20 pages).



Page 17                                                        GAOIOPA-OO-l
Month in Review: October   1~99




The pervasive wealrnesses GAO identified in computer controls at the
Treasury Department's Financial Management Service (FMs) during its
fiscal year 1998 audit undermine FMS' ability to identify, deter, and respond
to computer control wealrnesses in a timely manner. GAO found that FMS
has corrected the risks associated with only 24 of 72 computer control
shortcomings cited in a GAO report issued in July 1998. During the fiscal
year 1998 audit, GAO found new general computer control wealrnesses in
entitywide security planning and management, access controls, systems
software, and application software development and change controls.
Because of the wealrnesses GAO identified, including the lack of an
effective entitywide security planning and management program, billions
of dollars of payments and collections are at significant risk of loss or
fraud, vast amounts of sensitive data are vulnerable to inappropriate
disclosure, and critical computer operations could suffer disruptions.

Information Systems:
The Status of Computer Security at the Department of
Veterans Affairs

GAO/AIMD-OO-5,   Oct. 4 (29 pages).

GAO reported last year that computer controls at the Department of
Veterans Affairs (VA) placed critical operations, such as fmancial
management, health care delivery, and benefit payments, at risk of misuse
and disruption. (See GAO/AIMD-98-175, Sept. 1998.) Since then, VA has tried to
correct some of the wealrnesses GAO cited and has independently begun to
improve its computer security management programs. However, progress
in correcting the shortcomings GAO identified has been inconsistent across
VA organizations, and effons to strengthen local computer security
management programs were not part of a coordinated, departmentwide
effort. In connection with VA'S fISCal year 1998 consolidated financial
statement audit, GAO and VA'S Office of Inspector General continued to find
serious problems with the agency's control and oversight of access to its
information systems. In September 1998, GAO also reported that the
primary reason for VA'S continuing information system control problems
was that VA lacked a comprehensive computer security planning and
management program. A VA working group has developed a plan to
improve information system security throughout the agency and establish
a departmentwide computer security planning and management program.
Because this multiyear plan is at an early stage of development, it is too
soon to assess its effectiveness. As VA implements its computer security
management program, establishing detailed guidance can help ensure that



Page 18                                                           GAOIOPA-OO-l
Month in Review: October 1999




the program's requirements are implemented fully and consistently
throughout the agency.

Year 2000 Computing Challenge:
DEA Has Developed Plans and Established Controls for Business
Continuity Planning

GAO/AIMO-OO-8,   Oct. 14 (59 pages).

The Drug Enforcement Administration (OEA) has managed its business
continuity planning efforts in accordance with the structure and process
recommended by GAO'S business continuity and contingency planning
guide and it has made progress toward completing Year 2000 business
continuity plans. OEA had planned to complete development of its business
continuity plans by early September 1999 and to test them by the end of
November 1999. OEA'S development of its plans is about four months
behind GAO'S recommended date, and its testing milestone is about two
months behind GAO'S recommended date. Despite the progress so far, OEA
is running late and still has many important tasks to complete. Its plans for
completing these tasks leave little time to address any schedule slippage.

Defense Computers:
DOD Y2K Functional End-toEnd Testing Progress and Test
Event Management

GAO/AIMO-OO·12,   Oct. 18 (53 pages).

Complete and thorough Year 2000 testing is essential to ensure that new or
modified systems process dates cOlTectly and will not jeopardize an
organization's core business operations after the millenium. This is
especially true for the Defense Department (000), which relies on a
complex and broad array of interconnected computer systems-including
weapons, command and control, satellite, inventory management,
transportation management, health, financial, personnel, and payment
systems-to carry out its core business functions and military operations.
This report reviews the effectiveness of DOD'S efforts to perform Year 2000
end-to-end tests for its major business functions, including health,
communications, personnel, and logistics. For each functional area, GAO
analyzes reported information on the status and progress of all test events.
GAO also reviews a critical test event in each functional area to determine
whether it was planned and managed in accordance with GAO'S Year 2000
testing guide.



Page 19                                                          GAOIOPA·OO·1
Month in Review: October 1999




Year 2000 Computing Challenge:
FBINeeds to Complete Business Continuity Plans

GAOIAlMD-OO-ll,   Oct. 22 (65 pages).

As of August 1999, the FBI had renovated, tested, and certified as Year 2000
compliant all but one of its 43 mission-critical systems. The FBI had
developed system-level contingency plans for all but two of them. Also, the
FBI had made some progress in its Year 2000 business continuity planning,
but this important effort is running late. Moreover, the FBI lacks many of
the management controls and processes needed to effectively guide its
continuity planning effort in the short time remaining before the Year 2000
deadline. By not using the management rigor and discipline specified in
GAO'S Year 2000 business continuity planning guide, the FBI will be unable
to ensure that it (1) properly focuses its planning effort on the agency's
most critical operations; (2) chooses the best strategies to protect these
operations; (3) has enough resources and staff to implement continuity
plans; and (4) can efficiently and effectively invoke its continuity plans, if
necessary. GAO recommends that the Justice Department clarify its
expectations for Year 2000 business continuity planning for all of its
bureaus and that the FBI establish and implement (1) a plan for developing
and testing business continuity plans and (2) effective controls and
structure for managing Year 2000 business continuity planning.

Year 2000 Computing Challenge:
Financial Management Service Has Established Effective Year 2000
Testing Controls

GAOIAlMD-OO-24,   Oct. 29 (65 pages).

The Treasury Department's Financial Management Service (FMs) has
established effective Year 2000 test management controls for its six most
mission-critical systems. Together, these controls provide the
infrastructure needed for planning, executing, and reporting Year 2000 test
activities, including systems acceptance and end-to-end testing. In line
with GAO'S Year 2000 test guide, FMS hired an independent contractor to
certify that testing was complete and thorough. FMS has also established
effective management controls in performing its portion of selected Year
2000 end-to-end tests. As of October 1, 1999, FMS reported that it had
implemented two of the four systems that did not meet the March 31
deadline set by the Office of Management and Budget for implementation.
For the remaining two, FMS reported that it has (1) renovated and tested



Page 20                                                          GAO/OPA-OO-l
            Month in Review: October 1999




            both, (2) implemented both at two of five sites, and (3) plans to complete
            implementation in early November 1999. Also, FMS has prepared and plans
            to test contingency plans for these late systems as well as its other
            mission-critical systems.


Testimony   Critical Infrastructure Protection: Fundamental Improvements Needed to
            Assure Security of Federal Operations, by Jack 1. Brock, Jr., Director of
            Governmentwide and Defense Information Systems Issues, before the
            Subcommittee on Technology, Terrorism, and Government Information,
            Senate Committee on the Judiciary. GAOrr-AIMD-OO-7, Oct. 6 (11 pages).

            Since the early 1990s, an explosion in computer interconnectivity,
            particularly the growth in Internet use, has revolutionized the way that the
            government and the world communicate and do business. The benefits
            have been enormous. Without proper safeguards, however, this
            widespread interconnectivity poses enormous risks to critical operations
            and infrastructures in such areas as telecommunications, power
            distribution, law enforcement, national defense, and other government
            services. This testimony discusses efforts by federal agencies to deal with
            computer security issues. Recent audits by GAO and agency inspectors
            general show that the government is not adequately protecting critical
            federal operations and assets from computer attacks. This testimony
            provides greater detail on these problems and discusses broader issues
            that need to be considered as a national strategy for critical infrastructure
            protection is being considered.

            Year 2000 Computing Challenge: Readiness of Key State-Administered
            Federal Programs, by Joel C. Willemssen, Director of Civil Agencies
            Information Systems Issues, before the Subcommittee on Government
            Management, Information, and Technology, House Committee on
            Government RefOlm, and the Subcommittee on Technology, House
            Committee on Science. GAOrr-AIMD-OO-9, Oct. 6 (21 pages).

            Programs run by the states provide a host of critical social services, from
            Food Stamps to Medicaid. GAO reported last year that many state systems
            that support federal human services programs were threatened by the Year
            2000 computer problem. (See GAO/AIMD-99-28, Nov. 1998.) More recently, GAO
            testified before Congress that although federal agencies were working
            with their state partners to obtain readiness information and provide
            assistance, much work remained at the state level to help ensure that
            major services were not disrupted. (See GAOrr-AIMD-99-241, July 1999.) This



            Page 21                                                          GAO/OPA-OO-l
Month in Review: October 1999




testimony (1) highlights the reported Year 2000 readiness of 10 key
state-run federal hUman services programs and (2) discusses federal
efforts to assess states' readiness for these 10 programs.

Year 2000 Computing Challenge: State and USAID Need to Strengthen
Business Continuity Planning, by Linda D. Koontz, Associate Director for
Govemmentwide and Defense Information Systems Issues, before the
House Committee on International Relations. GAOrr-AIMD-OO-25, Oct. 21
(20 pages).

The Year 2000 computer problem poses a unique challenge for the State
Department and the United States Agency for International Development
(USAID). Like all organizations, these agencies must remediate internal
computer systems and plan for unexpected disruptions within the United
States. However, they must also assess the Year 2000 status of virtually
every country where the United States has a diplomatic presence and help
to ensure the continuity of vital operations, such as protecting the welfare
of millions of U.S. citizens traveling and living abroad, promoting
economic development, providing humanitarian assistance, and achieving
diplomatic agreements. This testimony discusses efforts by State and USAID
to increase worldwide awareness of the Year 2000 problem, assess
international preparedness, and inform American citizens of risks. GAO also
discusses the agencies' progress in remediating their internal computer
systems and their efforts to prepare business continuity and contingency
plans to help ensure that they can continue to provide critical services.

Year 2000 Computing Challenge: Compliance Status Information on
Biomedical Equipment, by Joel C. Willemssen, Director of Civil Agencies
Information Systems Issues, before the Subcommittee on Oversight and
Investigations and the Subcommittee on Health and Environment, House
Committee on Commerce. GAOrr-AIMD-OO-26, Oct. 21 (33 pages).

Can medical devices, such as magnetic resonance imaging systems, x-ray
machines, and pacemakers, be counted on to work reliably on and after
January 1, 2000? To the extent that biomedical equipment uses computer
chips, it is vulnerable to the Year 2000 computer problem. The Food and
Drug Administration (FDA) is responsible for overseeing and regulating
medical devices. Since the fall of 1998, FDA has been providing information
collected from manufacturers of medical devices and scientific and
research instruments through its Federal Y2K Biomedical Equipment
Clearinghouse. This testimony discusses (1) the status of FDA'S
clearinghouse; (2) compliance status information on manufacturers' web



Page 22                                                         GAO/OPA-OO-l
Month in Review: October 1999




sites referred to in FDA'S clearinghouse; (3) FDA'S efforts to review the Year
2000 activities of manufacturers of computer-controlled, potentially
high-risk devices; (4) the compliance status of health care providers'
biomedical equipment; and (5) compliance testing of equipment.

Telecommunications: Overview of the Cramming Problem, Stanley J.
Czerwinski, Associate Director for Housing and Community Development
Issues, before the Senate Committee on Small Business. GAOrr-RCED-OO-28,
Oct. 25 (22 pages).

Cramming is the inclusion of unauthorized, misleading, or deceptive
charges on a consumer's telephone bill. This testimony, which draws on a
recent GAO report (GAOIRCED-99-193, July 1999), focuses on Intemet-related
cramming directed at small businesses. GAO discusses (1) the extent of
cramming complaints, (2) state and federal regulatory initiatives to protect
consumers from cramming, and (3) state and federal enforcement actions
against companies engaged in cramming.

Y2K Computing Challenge: Nuclear Power Industry Reported Nearly
Ready; More Risk Reduction Measures Can Be Taken, by Joel C.
Willemssen and Keith A. Rhodes, Directors in the Accounting and
Information Management Division, before the Subcommittee on
Technology, House Committee on Science, and the Subcommittee on
Government Management, Information, and Technology, House
Committee on Government Reform. GAOrr-AlMD-OO-27, Oct. 26 (17 pages).

Although progress has been made in readying the nation's nuclear power
plants and fuel processing facilities for the Year 2000 computer problem,
risks remain. In particular, the nonsafety systems at two plants are still not
ready. This is especially troubling for the one with a completion date
scheduled for more than 30 days from now-ever closer to the tum of the
century. In addition, four nuclear fuel facilities were not Y2K ready by
September 1, 1999, and there little information on the Y2K status of all 14
decommissioned plants with spent fuel. Finally, the lack of information on
two key issues-independent review of Y2K testing and emergency Y2K
exercises-and the lack of requirements for Day One planning increases
the Y2K risk to the nuclear power industry. To further reduce the risks, the
Nuclear Regulatory Commission and the nuclear power industry can still
take specific steps to help ensure Y2K safety at plants.

Year 2000 Computing Challenge: Update on the Readiness of the
Department of Veterans Affairs, by Joel C. Willemssen, Director of Civil



Page 23                                                           GAO/OPA-QQ-l
Month in Review: October 1999




Agencies Infonnation Systems Issues, before the Subcommittee on
Oversight and Investigations, House Committee on Veterans' Affairs.
GAOfr-AIMD-OO-39, Oct. 28 (52 pages).


The Department of Veterans Affairs (VA) continues to make progress in
addressing the Year 2000 computer problem. It has established a
moratorium on software changes and has developed a Day One pJan to
minimize the risks associated with the rollover period. However, some
critical tasks remain. For example, inaccuracies in monthly reports from
the Veterans Health Administration's (VHA) ~~dical facilities make it
difficult to determine their progress in renovating facility systems,
telecommunications systems, commercial off-the-shelf software, computer
platforms, and medical devices. Moreover, VHA has not implemented GAO'S
earlier recommendation that it review the test results for biomedical
equipment used in critical care and life-support settings. The Food and
Drug Administration (FDA), for its part, has made progress in making
compliance infonnation on biomedical equipment available to users
through its Federal Y2K Biomedical Equipment Clearinghouse. It is also
conducting surveys to determine the Y2K readiness of manufacturers of
pharmaceutical, biological, and consumable medical products. FDA also
recently addressed GAO'S concern about the lack of independent
verification of critical carellife-support biomedical equipment that
manufacturers have certified as compliant.

Year 2000 Computing Challenge: Federal Business Continuity and
Contingency Plans and Day One Strategies, by Joel C. Willemssen,
Director of Civil Agencies Infonnation Systems Issues, before the
Subcommittee on Government Management, Infonnation, and Technology,
House Committee on Government Refonn, and the Subcommittee on
Technology, House Committee on Science. GAOfr-AIMD-00-40, Oct. 29
(19 pages).

The risk to government operations posed by the Year 2000 computer
problem can be reduced by effective business continuity and contingency
plans. Day One strategies can also help agencies manage the risks of the
rollover period during late December 1999 and early January 2000. GAO
found that the government has made noteworthy progress since early 1998
in business continuity and contingency planning, but more work remains.
With respect to Day One strategies, although 40 percent of agencies
addressed all of the Office of Management and Budget's elements in their
submissions, it is clear that much more work remains.




Page 24                                                       GAOIOPA-OO-l
                       Month in Review: October 1999




Correspondence         Reported Medicaid Year 2000 Readiness. GAO/AIMD-OO-22R, Oct. 5.

                       Reported Y2K Readiness of State Employment Security Agencies'
                       Unemployment Insurance Benefits and Tax Systems. GAO/AIMD-00-28R,
                       Oct. 28.


                       International Monetary Fund:
International Mfairs   Observations on the IMF'S Financial Operations

                       GAO/NSIAD/AIMD-99-252,   Sept. 30 (81 pages)

                       The International Monetary Fund's (IMF) financial operations are
                       supported by quota contributions of its members, special drawings rights,
                       and gold holdings. To supplement these resources, IMF has access to credit
                       lines with member countries, and it can borrow from sovreign
                       governments, central banks, or private entities. For the fmancial year
                       ended April 10, 1999, IMF had about $287 billion in resources consisting
                       primarily of currency holdings of members' national currencies, special
                       drawing rights, and gold holdings. Of this amount, about $195 billion was
                       considered usable, that is, was from members that were strong enough
                       economically to allow their currencies to be used for IMF operations. IMF
                       has not drawn from its working balance reserve in more than 20 years.
                       Consequently, its resources available for lending may be greater than
                       reported. With the end of the gold standard in the early 1970s and the
                       passage of the second amendment to IMF'S Articles of Agreement in 1978,
                       gold's formal role in IMF and in international currency transactions was
                       eliminated. IMF'S gold holdings had a market value of $30 billion as of
                       April 1999. In 1995, IMF examined the effect of selling its gold and investing
                       the proceeds in interest-bearing financial instruments. The decision to
                       hold gold has cost IMF tens of billions of dollars in foregone gains and
                       investment income since 1980. IMF has never formally adopted a method
                       for determining members' initial quotas and subsequent quota increases
                       because it believes that quantitative measures cannot fully reflect the
                       considerations that appropriately bear on each member's position or on
                       the total size of IMF'S resources. As a result, its decisions on quota
                       increases have been matters of judgment that involve quantitative,
                       qualitative, and political considerations. Historically, quota increases have
                       almost always been lower than the increase recommended by IMF staff. As
                       part of its role in the international monetary system, IMF provides
                       balance-of-payments assistance to members when needed. Since the late
                       1970s, there has been an increase in arrears. However, IMF has successfully



                       Page 25                                                           GAO/OPA-OO-l
Month in Review: October 1999




reduced the number of countries in arrears to five as of April 1999. Also,
there has been a greater concentration OfIMF'S resources provided to a
smaller number of countries since the late 1970s. The Year 2000 problem
affects nearly every aspect of the intemational financial systems. Although
IMF has taken steps to mitigate potential damage, it still faces challenges in
providing more Gomplete assurance that its intemal business processes
will continue to function at the date change at the end of the year.

International Trade:
Implementation and Monitoring of the U.S.-Japan
Insurance Agreements

GAOINSlAD-99-209, Sept. 24 (114 pages).

The Japanese insurance market, with $334 billion in annual premiums in
1997, is second in size only to that of the United States. Yet the foreign
share of the Japanese market is only 3.7 percent; the foreign share of the
U.S. market is 10.7 percent. To improve foreign access to the Japanese
insurance market, the United States and Japan have signed two bilateral
insurance agreements. A GAO survey of the 13 U.s. insurance companies
and three brokers in Japan found that all but two think that Japan has
made moderate or better progress in implementing the insurance
agreements. GAO found that Japan has met most of its openess, procedural
protection, and deregulation commitments. Most U.S. companies said that
the agreements have had a positive effect on their ability to compete in
Japan. Nevertheless, nearly half of the companies expressed concem
about Japan's implementation of key commitments, such as speeding
approval of insurance products and rates and limiting the activities of
large Japanese companies in the specialized third sector. The Office of the
U.S. Trade Representative is the principal agency responsible for
monitoring and enforcing the insurance agreements, with assistance
primruily from the U.S. embassy in Tokyo. U.S. officials have noted
Japanese progress in implementing the agreements, but they have also
identified several issues for which they believe Japan has not fully met its
commitments. Japan, on the other hand, believes that it has fully
implemented both agreements. More U.S. insurance companies expressed
favorable views of U.S. govemment efforts to monitor the insurance
agreements than reported favorable views of enforcement efforts.




Page 26                                                           GAO/OPA-OO-l
Month in Review: October 1999




For eign Assistance:
Enter prise Funds' Contributions to Private Sector
Development Vary

GAO/NSIAD-99-221,   Sept. 14 (41 pages).

A decade ago, the United States authorized enterprise funds as an
experimental model to support private sector development in Central and
Eastern Europe as those countries moved from centrally planned to
market-oriented economies. The funds, which are private, nonprofit U.S.
corporations, are supposed to make loans to, or investments in, small-and
medium-sized businesses in which other financial institutions are reluctant
to invest. With the breakup of the Soviet Union in 1991, enterprise funds
were established in the newly independent states. Ten funds now operate
in Central Europe and the former Soviet Union, covering 19 countries with
authorized funding of about $1.3 billion. Enterprise funds receive their
funding through the U.S. Agency for International Development (USAIo),
which has primary responsibility for monitoring the funds' operations.
This report determines (1) whether enterprise funds are assisting private
sector development; (2) what factors have affected the funds' ability to
carry out their activities; (3) whether funds still have a role in private
sector development, in light of other private investment and international
donor efforts; (4) whether the funds are more likely to recoup their
authorized capital; and (5) whether the funds are complying with recent
changing in USAIO'S reporting requirements.

Export Controls:
Better Interagency Coordination Needed on Satellite Exports

GAO/NSIAD-99-182,   Sept. 17 (52 pages).

Since 1992, the Departments of Commerce and State have largely shared
licensing responsibility for the expOlt of commercial communications
satellites. Congress has been concerned about reports that U.S. satellite
companies provided China with sensitive technology useful for improving
China's ballistic missiles. The Departments of Commerce and State
included conditions meant to protect sensitive technology on 43 licensed
commercial communications satellite campaigns by China, Russia, and
Ukraine between 1989 and 1999. Licenses for 35 launch campaigns
included five conditions, while licenses for eight launch campaigns issued
by Commerce between 1994 and 1997 omitted three of these five
conditions. Documents at the Departments of Defense (~OD) and State



Page 27                                                        GAO/OPA-OO-l
Month in Review: October 1999




show that monitoring problems, unauthorized transfers of technology, and
other violations of export controls regulations may have occurred in 14
launch campaigns in China, Russia, and Ukraine, including some of the
campaigns where license safeguard conditions were omitted. These
documents also show that sensitive technology was transfened in at least
three cases and that two of these transfers raised national security
concerns. Recent legislation that returned licensing authority for all
commercial communications satellite exports from Commerce to State
and led DOD to establish a monitoring organization should reduce
confusion in the controls over these exports caused by the shared
jurisdiction. However, some confusion may persist because license
applications received before the transfer of jurisdiction in March 1999 will
still be processed by Commerce, and approved licenses will be valid for up
to two years. Consequently, there will still be a need for the agencies to
coordinate their policies and monitoring of foreign launches. Despite this
need, State, DOD, and Commerce have yet to agree on or establish clear
procedures for each agency to follow in implementing the safeguards
outlined in govemment-to-govemment agreements to
safeguard technology.

Export Controls:
1998 Legislative Mandate for High Performance Computers

GAOINSlAD-99-208,   Sept. 24 (23 pages).

In 1996, the executive branch streamlined its export controls for high
performance computers by removing licensing requirements for most
exports to civilian end-users while focusing control on military and
proliferation-related end-users. This streamlined process made exporters
responsible for determining if they needed to apply for an export license
because they were selling a computer to a military or proliferation-related
end-user. In 1997, however, several high performance computers were
exported to Russian nuclear weapons laboratories and to a military
end-user in China without a license. As a result, Congress required
exporters to notify the Commerce Department of any proposed exports of
high performance computers to countries that pose a concern because of
military and proliferation reasons to determine if these exports need a
license. GAO found that most of the 938 proposed exports of high
performance computers to what were believed to be civilian end-users in
countries of concern have generally been allowed to continue without
export licenses. Post-shipment verifications confinn the physical location
of the high performance computers and, to the extent practical, velify if



Page 28                                                         GAO/OPA-OO-l
Month in Review: October 1999




these are being used as intended. However, there are limitations to
determining end-use. The Commerce Department has completed
verifications on 104 high performance computer exports, or about
27 percent of those verifications required on the 390 high performance
computers exported during fiscal year 1998. Commerce said that all 104
post-shipment verifications were favorable, meaning that the computer
had been seen during an on-site visit and that nothing was inconsistent
with the license or the license exception. However, verification done by
Commerce, but not yet completed, detected the possible diversion of two
computers to a military end-user, in apparent violation of U.S. export
control regulations. The Commerce Department has launched an
investigation of these diversions. Of the 286 high performance computer
exports that have yet to be verified, nearly two-thirds involve exports to
China.

Foreign Assistance:
North Korea Restricts Food Aid Monitoring

GAOINSIAD-OO-35,   Oct. 8 (38 pages).

U.S. policy is that no food aid will be provided to North Korea unless the
aid can be adequately monitored. The World Food Program has
established procedures to track and monitor food aid deliveries in North
Korea. However, the North Korean government has not allowed the World
Food Program to fully implement its procedures and, as a result, it cannot
be sure that the food aid is being shipped, stored, or used as planned.
Specifically, the North Korean government, which controls food
distribution, has denied the World Food Program full access to the food
distribution chain and has not provided reports on food use. Consequently,
the World Food Program cannot be certain that it is reporting accurately
on where food donated by the U.S. government is being distributed in
North Korea. GAO summarized this report in testimony before
Congress; see:

Foreign Assistance: North Korean Constraints Limit Food Aid MOnitOling,
by Benjamin F. Nelson, Director of International Relations and Trade
Issues, before the House Committee on International Relations.
GAOtr-NSIAD-OO-47, Oct. 27 (10 pages).




Page 29                                                         GAOI OPA-OO-l
            Month in Review: October 1999




            Global Health:
            Factors Contributing to Low Vaccination Rates in
            Developing Countries

            GAO/NSIAD-OO-4,   Oct. 15 (31 pages}

            More than 11 million children under age five die each year in developing
            countries; nearly three-quarters of these deaths result from infectious
            diseases. The World Health Organization estimates that the deaths of at
            least four million of these children are linked to their lack of access to
            vaccines. GAO found that although global immunization coverage for six
            diseases originally targeted by the World Health Organization (diptheria,
            measles, pertussis, polio, tetanus, and tuberculosis) has improved
            significantly since the mid-1970s, coverage rates are low for children living
            in the poorest countries, particularly in urban slums and remote rural
            areas. Several interrelated factors have limited the availability of vaccines
            for children in the developing world, including (1) an inadequate health
            infrastructure, (2) the relatively higher cost of vaccines recently
            recommended by the World Health Organization, (3) insufficient
            information on disease burden and vaccine efficiency, and (4) changing
            priorities of international donors. In the 1990s, the U.N. Children's Fund
            and the U.s. Agency for International Development began to reduce their
            level of support for immunization.


Testimony   Trade With the European Union: Recent Trends and Electronic Commerce
            Issues, by Susan S. Westin, Associate Director for International Relations
            and Trade Issues, before the Subcommittee on European Affairs, Senate
            Committee on Foreign Relations. GAOII'-NSIAD-00-46, Oct. 13 (10 pages).

            The sizeable and growing trade relationship between the United States and
            the European Union (EU) is dominated by flows of sophisticated
            manufactured goods and services and extensive cross-Atlantic investment.
            E-commerce has tremendous potential to facilitate trade between the
            United States and the EU, but it also raises many issues, including
            consumer protection and market access. The United States and the EU are
            trying to lower these potential barriers to e-commerce through the
            framework of the World Trade Organization and other forums.




            Page 30                                                          GAO/OPA-OO-1
Month in Review: October 1999




Foreign Affairs: Federal Response to International Parental Child
Abductions, by Jess T. Ford, Associate Director for International Relations
and Trade Issues, before the House Committee on International Relations.
GAOff-NSIAD-OO-44, Oct. 14 (nine pages).


The State Department estimates that about 1, 000 children are abducted
each year from the United States by one of their parents. Shortcomings in
the federal response to these abductions have posed obstacles to
left-behind parents in their attempts to locate and return their children.
The following four issues have received substantial attention: (1) gaps in
federal services to left-behind parents; (2) weaknesses within the existing
State Department case-tracking process, which hinder case and program
coordination; (3) the lack of systematic and aggressive diplomatic efforts
to improve international responses to parental child abductions; and
(4) the limited use of the International Parental Kidnapping Crime Act of
1993 to pursue abducting parents and bring them to justice. The State and
Justice Departments have issued recommendations, which they believe
will address most of the problems. However, several shortcomings raise
questions about the likelihood that the recommendations will be put
in place.

Export Controls: Implementation of the 1998 Legislative Mandate for High
Performance Computers, by Harold J. Johnson, Associate Director for
International Relations and Trade Issues, before the House Committee on
Armed Services. GAOff-NSIAD·OO·53, Oct. 28 (11 pages).

In 1996, the government removed licensing requirements for most exports
of high performance computers to civilian end users but kept a licensing
requirement for countries of concern. This change made exporters
responsible for determining whether they needed to apply for an export
license on the basis oftheir knowledge of the end user's activities. In 1997,
several U.S. exporters shipped high perfOlmance computers to Russian
nuclear weapons laboratories and to a military end user without licenses.
Congress has since required exporters to notify the Commerce
Department of any proposed export of high performance computers to
countries of concern- including China, Russia, India, Pakistan, Israel, and
Egypt- to determine whether a license is needed. This testimony
discusses whether (1) exporters' notifications to Commerce have resulted
in any license applications and what actions have been taken on these
licenses and (2) Commerce is verifying the use of high performance
computers after their export to these countries.




Page 31                                                          GAO/OPA-OO-1
                  Month in Review: October 1999




Correspondence    Foreign Assistance: Issues Concerning the Polish-American Enterprise
                  Fund. GAO/OGC-99-6IR, Sept. 14.

                  Revised Estimate of the Shortfall in U.s. Contributions to the United
                  Nations. GAO/NSIAD-OO-4IR, Oct. 8.


                  Combating Terrorism:
Justice and Law   Need for Comprehensive Threat and Risk Assessments of Chemical
Enforcement       and Biological Attacks

                  GAO/NSIAD-99-163,   Sept. 7 (36 pages).

                  The ease or difficulty for terrorists to cause mass casualties with an
                  improvised chemical or biological weapon depends on the agent selected.
                  Experts agree that toxic chemicals can cause mass casualties and require
                  little if any expertise or sophisticated methods. Most chemical nerve
                  agents, however, are technically challenging for terrorists to acquire,
                  manufacture, and produce. Also, terrorists working outside a state-run
                  laboratory would have to overcome extraordinary challenges to effectively
                  and successfully weaponize and deliver a biological agent and cause mass
                  casualties. Although the intelligence community has issued assessments
                  that discuss foreign-origin and biological terrorist threats, including
                  judgements about which chemical and biological agents would most likely
                  be used, the FBI has yet to produce a formal written assessment of the
                  most likely domestic-origin chemical and biological terrorist threats. GAO
                  believes that a sound national-level risk assessment could provide a
                  strategic guide to help shape, focus, and prioritize federal efforts to
                  combat terrorism. Such an assessment would be done by a
                  multidisciplinary team of experts on intelligence, terrorism, chemical and
                  biological agents, weapons, law enforcement, and health and other
                  experts. The team could (1) generate valid threat scenarios, (2) assess and
                  prioritize scenario risk in terms of the likelihood and the severity of
                  consequences, and (3) determine appropriate countermeasures or other
                  programmatic responses.


Testimony         Combating Terrorism: Observations on the Threat of Chemical and
                  Biological Terrorism, by Henry L. Hinton, Jr., Assistant Comptroller
                  General for National Security and International Affairs, before the
                  Subcommittee on National Security, Veterans Affairs, and International




                  Page 32                                                         GAO/OPA-OO-l
Month in Review: October 1999




Relations, House Committee on Government Reform.         GAOrr-NSIAD-OO-50,
Oct. 20 (eight pages).

Without substantial bacldng from a state sponsors, most terrorists would
have to overcome significant technical and other hurdles to produce and
release chemical and biological weapons capable of killing or injUlwg
large numbers of people. According to experts GAO consulted, except for
toxic industrial chemicals, such as chlorine, specialized knowledge is
needed in the manufacturing process and in improvising an effective
delivery system for most chemical and nearly all biological weapons.
Moreover, some of the components of chemical agents and highly infective
strains of biological agents are difficult to obtain. Finally, terrorists would
face other obtacles in carrying out a successful attack, from unfavorable
weather conditions to personal safety risks. The President's fiscal year
2000 budget proposes $10 billion for counterterrorism programs-an
increase of more than $3 billion over the amount requested for fiscal year
1999. To determine whether the government is spending enough on
counterterrorism and spending this money on the most appropirate
programs, policmakers need the best estimates of the specific threats
facing the United States. The intelligence community has recently
produced estimates of terrorist threats from abroad involving chemical
and biological weapons. GAO recommends that the FBI prepare comparable
estimates for domestic threats.

Community Policing: Observations on the cOPS Program Midway Through
Program Implementation, by Richard M. Stana, Associate Director for
Administration of Justice Issues, before the Subcommittee on Crime,
House Committee on the Judiciary. GAOrr-GGD-OO-33, Oct. 28 (eight pages).

The Community Policing Act of 1994 set aside $8.8 billion through 2000 to
strengthen public safety, including putting 100,000 additional police
officers on the streets nationwide. This testimony reports on the cOPS
grant program midway through its six-year authorization. GAO found that
cOPS grants were not targeted on the basis of greatest need for assistance.
However, the higher the crime rate, the more likely a jurisdiction was to
apply for a COPS grant. COPS office grant monitoring was limited.
Monitoring guidelines were not prepared, site visits and telephone
monitoring did not systematically take place, and information on activities
and accomplishments was not consistently collected or reviewed. Small
communities were awarded most cOPS office grants, but large cities
received larger awards. In accordance with the act, about half the funds
were awarded to agencies serving populations of less than 150,000. As of



Page 33                                                             GAO/OPA-OO-l
                   Month in Review: October 1999




                   June 1997, a total of 30,155 law enforcement positions funded by cOPS
                   grants were estimated to be on the street.


Correspondence     u.s. Customs Service: Update on the Merchandise Processing Fee.
                   GAOIGGD·OO·2IR,   Oct. 7.

                   Immigration Benefits: Second Report Required by the Haitian Refugee
                   Immigration Fairness Act of 1998. GAOIGGD·OO-25R, Oct. 19.


                   Defense Trade:
National Defense   Department of Defense Savings From Export Sales Are Difficult
                   to Capture

                   GAOINSIAD-99-191,   Sept. 17 (22 pages).

                   Last year, the Defense Department (OOD) and its contractors planned to
                   sell to foreign countries defense equipment and services worth about
                   $44.3 billion. One of the U.S. government's goals in exporting defense
                   items is to allow DOD to meet its defense requirements at less cost. To
                   determine whether DOD is maximizing this benefit, GAO reviewed the sales
                   of the following five major weapon systems: the Hellfire Missile, the
                   Advanced Medium Range Air-to-Air Missile, the High Mobility
                   Multipurpose Wheeled Vehicle, the Black Hawk Helicopter, and the Aegis
                   Weapon System. GAO found that although DOD reduced its cost to buy the
                   five weapon systems when the systems were also sold to foreign
                   governments, DOD did not maximize the potential for savings. In addition,
                   Congress lacked information that would have helped it oversee weapons
                   systems acquisitions and export sales.

                   Military Readiness:
                   Full Training Benefits From Army's Combat Training Centers Are
                   Not Being Realized

                   GAOINSlAD-99-210,   Sept. 17 (45 pages).

                   The Army spends about $1 billion annually to operate three combat
                   training centers in California, Louisiana, and Germany. The Army
                   established the centers to increase unit readiness for deployment and
                   warfighting; to produce bold, innovative leaders through stressful tactical
                   and operational exercises; to embed doctrine throughout the Army; to



                   Page 34                                                         GAO/OPA-OO-l
Month in Review: October 1999




provide feedback to Army and joint combined participants; and to provide
a data source for lessons learned to improve doctrine training, leader
development, organizations, and material to help soldiers win in combat.
GAO found that although most units that trained at the training centers in
1998 favorably assessed their training, neither the Army nor individual
units were realizing the full benefits of this training. This is because
(1) many units were arriving ill prepared for the exercises, (2) training was
not as realistic as it could be, (3) the condition and age of pre-positioned
equipment had harmed training at two centers, and (4) neither individual
units nor the Army itself was able to effectively capitalize on lessons
learned from the centers' exercises.

NATO:
Progress Toward More Mobile and Deployable Forces

GAOINSIAD-99-229,   Sept. 30 (34 pages).

NATO revised its strategic concept in 1991 to reflect the reduced threat of a
large east-west military confrontation. The revision called for major
changes in NATO'S integrated military forces, including reductions in size
and readiness; improvements in mobility and deployability for such
contingencies as crisis management, search and rescue, and peacekeeping;
and greater use of multinational formations. Because of instability in and
around the Euro-Atlantic area and the possibility of crises at the periphery
of the alliance, the strategic concept was revised again in 1999 to
remphasize the need for greater mobility and deployability of forces to
meet these potential crises. The United States is able to send troops and
equipment over large distances. Many U.S.-European allies, however, do
not see the need for this kind of capability because during the Cold War
they were planning to fight in place with logistical support provided by
fixed facilities and their civilian economies. This report discusses (1) how
NATO determines its force requirements and each member's contribution to
meeting those requirements and (2) how NATO allies have responded to the
need for greater mobility and deployability in their military forces.

DOD Competitive Sourcing:
Plan Needed to Mitigate Risks in Army Logistics
Modernization Program

GAOINSIAD-OO-19,    Oct. 4 (24 pages).




Page 35                                                          GAO/OPA-OO-l
Month in Review: October 1999




The Anny plans to reengineer its processes and modernize its aging
computers used to manage inventories of parts and equipment supplied to
combat troops. Under its Wholesale Logistics Modernization Program, the
Anny plans to contract with the private sector to reengineer its business
processes and develop a new system. Until the new system is up and
running, the contractor will operate the existing computer system as well.
The Anny intends to accomplish these objectives with the same level of
resources devoted to the existing system. The contractor chosen to do the
work will be expected to make the capital investment needed to develop
the new system, with the expectation that it would be able to recoup its
investment through future operating efficiencies. This report reviews the
Anny's decision to contract for its wholesale logistics management
information system. GAO discusses (1) the Anny's plan to comply with the
requirements of the law and of Office of Management and Budget's
Circular A-76 and (2) the cost uncertainties and other risks that could
affect the future success of the modernization effort.

Contract Management:
DOD Begins New Effort to Improve Reporting of Contract
Service Costs

GAO/NSIAD-OO-29,   Oct. 13 (19 pages).

Although the military is increasing its reliance on contractor SUppOlt,
long-standing concerns still exist about the accuracy and the reliability of
its accounting for the costs of contract services, particularly advisory and
assistance services. Congress has raised concerns that the absence of
accurate and reliable data may hamper oversight. This report discusses the
actions taken by the Defense Department to improve the accuracy of its
reporting of costs for contract services.

Depot Maintenance:
Army Report Provides Incomplete Assessment of
Depot-Type Capabilities

GAO/NSIAD-OO-20,   Oct. 15 (44 pages).

Depot maintenance and repair involves the overhaul, upgrade, and
rebuilding of military systems, subsystems, parts, and assemblies. In
recent years, some depot maintenance worldoads have become
fragmented- that is, some depot maintenance worldoads have shifted to
nondepot facilities- leading to uncertainty about the magnitude of depot



Page 36                                                         GAO/OPA-OO-l
Month in Review: October 1999




maintenance-type capabilities, workforce requirements, and the
distribution of work to public and private sector facilities. In April, the
Army sent Congress a report on the proliferation of depot maintenance
activities at nondepot facilities. GAO determines the extent to which the
Army's report (1) identifies the total amount of depot maintenance-type
work done at local maintenance facilities and the cost efficiency of such
work in view of the Army's overall requirements and (2) addresses plans to
consolidate fragmented maintenance operations. GAO also highlights
continuing challenges the Army faces as it tries to resolve
proliferation issues.

Defense Inventory:
Management of Repair Parts Common to More Than One Military
Service Can Be Improved

GAO/NSIAD-OO-21,   Oct. 20 (22 pages).

The military's initiatives dating to the early 1970s to improve the
management of identical repair parts have been largely ineffective. Many
identical parts continue to be managed by more than one service, even
though opportunities for savings and management efficiencies exist by
using a single manager when there are multiple users of the same part. GAO
believes that the savings from better management of identical parts would
be considerable. Because of planning and management weaknesses, the
Defense Department initiatives have not been successful in moving to an
approach that would result in a single manager performing all inventory
management duties.

Defense Inventory:
Improved Management Framework Needed to Guide Navy Best
Practice Initiatives

GAO/NSlAD-OO-l,   Oct. 21 (27 pages).

Each of the military services is required to send Congress a schedule for
implementing best commercial inventory practices for the acquisition and
the distribution of secondary inventory items. This report evaluates the
Navy's best practices implementation schedule for the acquisition and the
distribution of secondary inventory items, which the Navy sent to
Congress in June 1999. GAO (1) determines the extent to which the
schedule responds to the provisions of the law and (2) identifies specific




Page 37                                                        GAO/OPA-OO-l
Month in Review: October 1999




elements of a management framework needed to effective implementation
and oversight of the Navy's best practice initiatives.

Medical Readiness:
DOD Faces Challenges in Implementing Its Anthrax Va ccine
Immunization Program

GAOINSIAD-OO-36,   Oct. 22 (54 pages).

As of July 1999, the Defense Department (DOD) has vaccinated more than
315,000 servicemembers against anthrax, but supply problems continue to
jeopardize its schedule for vaccinating all 2.4 servicemembers. Moreover,
DOD lacks a contingency plan in the event that these problems are not
resolved in time. DOD has a new recording and tracking system for
vaccinations that is better that the one used during the Gulf War and in
Bosnia, but DOD has not been consistently recording vaccination data in
paper records and in its central database. DOD has used information from
the Vaccine Adverse Event Reporting System to monitor adverse reactions
to anthrax vaccinations. The system relies on medical personnel and
troops to provide needed data. However, DOD has not systematically told
these personnel how to enter needed data into the system. As a result, DOD
could lack data on adverse reactions that is important for monitoring
vaccine safety. DOD has used a high-visibility campaign to educate
servicemembers about the program and has hied to address the
controversy surrounding the program. In addition, it recently expanded its
communications efforts by updating the program's Internet site, opening a
toll-free anthrax hotline, and forming a speakers' bureau of antill-ax
experts. However, a GAO survey of four military installations found that
servicemembers wanted more information on some issues. More than
two-thirds of survey respondents said that the information they received
on the reasons for the program, shot requirements and schedules, and
consequences of refusals was at least moderately helpful. However, more
than half of theservicemembers said that they received either no
information on possible long-term side effects and procedures for
reporting side effects or found that information less than
moderately helpful.

Defense Acquisitions:
Army Purchased Truck Trailers That Cannot Be Used as Pla nned

GAOINSIAD-OO-15,   Oct. 27 (15 pages).




Page 38                                                       GAO/OPA-OO-l
Month in Review: October 1999




The Army has bought 6,700 3/4-ton high mobility trailers as companion
trucks for its 1114-ton trucks. The Army is buying two kinds of trailers: a
cargo trailer, which will be used to cany loose cargo, such as ammunition
boxes, and a chassis trailer, which will be ~ed to permanently attach
towed equipment, such as power generators. The Army has paid a much
higher unit price for the trailers than it originally expected primarily
because it awarded a $50.6-million, five-year multiyear contract to produce
about 7,500 trailers and then decided not to fund the fourth year of the
contract. Most of the 6,700 trailers that the Army has purchased (1) are not
usable because of a safety problem and (2) not suitable because they
damage the light and heavy trucks towing them. In addition to damaging
the truck, the Army found that the trailer drawbar could break, causing a
safety problem. It it breaks, the trailer can disconnect from the truck or
overturn. The Army has placed all 5,696 cargo trailers and 854 of the
chassis trailers into storage until they are modified to correct the
problems. The modifications to correct the trailer drawbar problem
caused more problems with the trailer brakes and more damage to the
trucks. The Army's acquisition strategy underestimated the risks.

Contract Management:
Pilot Program Needed to Improve         DOD   Identification of
Warranty Claims

GAOINSIAD·OO·3,   Oct. 29 (14 pages).

Some commercial airlines have benefited from the use of outside firms to
identify failed engine parts and recover the cost of correcting such parts
from manufacturers. Officials from United Parcel Service, United Airlines,
and America West told GAO that their engine warranty recoveries increased
over internally identified recoveries when they supplemented internal
efforts with an outside firm. In one case, warranty recoveries rose
threefold over recoveries identified internally. So far, the Defense
Department (DOD) has done a limited review of the feasibility of
establishing a pilot program to use commercial sources to improve the
collection of the military's claims under aircraft engine warranties.
However, it has not established one. Experience from the private sector
suggests that contracting for engine warranty administration can improve
warranty recoveries over internal efforts. This includes collecting claims
on past engine repairs even though the warranties are no longer active.
However, it is unknown whether the results achieved by some commercial
airlines can be replicated by DOD because a pilot program has yet to
be implemented.



Page 39                                                           GAO/OPA·OO·l
            Month in Review: October 1999




Testimony   Anthrax Vaccine: Safety and Efficacy Issues, by Kwai-Cheung Chan,
            Director of Special Studies and Evaluations, before the House Committee
            on Government Reform. GAOrr-NSIAD-00-48, Oct. 12 (16 pages).

             Since the Defense Department began vaccinating its 2.4 million solders
             and reservists in 1998, concerns have been raised about the safety and
             efficicacy of the military's anthrax vaccine. The Food and Drug
             Administration discovered problems during its inspection of the facility
             that produces the vaccine, and some ailing Gulf War veterans believe that
             their unexplained illnesses may have been caused by anthrax vaccinations
             received during the war. This testimony discusses (1) the need for a
             six-shot regimen and annual booster shots, (2) the long- and short-term
            .safety of the vaccine, (3) the efficacy of the vaccine, and (4) the extent to
             which problems FDA found in the vaccine production facility in Michigan
             could compromise the safety, efficacy, and quality of the vaccine. GAO also
             discusses the effects of the vaccine on children and pregnant or
             lactating women.

            Chemical and Biological Defense: Observations on Actions Taken to
            Protect Military Forces, by Norman J. Rabkin, Director of National
            Security Preparedness Issues, before the Subcommittees on Military
            Procurement and on Military Research and Development, House
            Committee on Armed Services. GAOrr-NSIAD-00-49, Oct. 20 (12 pages).

            Problems during the Gulf War revealed that U.S. troops were poorly
            prepared for surviving and operating in a chemically or biologically
            contaminated environmented. During the 1990s, GAO issued a host of
            reports and testimony on the ability of U.S. forces to survive and function
            on a contaminated battlefield. This testimony summarizes the findings of
            those reports and testimony and describes GAO'S efforts to update the
            status of the Defense Department's actions.

            Military Real Property Maintenance: Improvements Are Needed to Ensure
            That Critical Mission Facilities Are Adequately Maintained, by
            Kwai-Cheung Chan, Director of Special Studies and Evaluations, before
            the Subcommittee on Readiness and Management Support, Senate
            Committee on Armed Services. GAOrr-NSIAD-OO-51, Oct. 26 (18 pages).

            The Defense Department (DOD) lacks a comprehensive strategy with which
            to manage its maintenance and repair needs. In the absence of a
            comprehensive strategy, each military service sets its own standards for
            maintaining its property, using difference methods to assess property



            Page 40                                                           GAO/OPA-OO-l
                    Month in Review: October 1999




                    conditions, prioritize repairs, and allocate funds for maintenance and
                    repairs. As a result, a barracks rated as "satisfactory" by one service could
                    be rated as "unsatisfactory" by another. Also, bases within services apply
                    their own rating criteria differently. Finally, the services have different
                    maintenance funding goals through 2005 and plan to fund repairs below
                    the levels required to keep facilities at current conditions. Therefore, the
                    backlog of repairs, some rated as "critical," will rise. GAO found several
                    promising practices in the maintenance area among nonmilitary entities,
                    although none of the military services has implemented all of these
                    promising practices. Because the services lack accurate and consistent
                    data, Congress does not know if it is funding maintenance and repairs that
                    will provide the best return on its investment.


                    Forest Service:
Natural Resources   A Framework for Improving Accountability

                    GAOIRCED/AIMD-OO-2,   Oct. 13 (63 pages).

                    The Forest Service must account to the public for its use of the tax dollars
                    appropriated to it to carry out its mission. To do this, the Service needs to
                    provide accurate and timely information on how much it was authorized to
                    spend on specific programs and activities, how it spent the funds, and
                    what it accomplished with the money. This report discusses the status of
                    the Forest Service's efforts to (1) achieve financial accountability,
                    (2) become more accountable for its performance, and (3) better align its
                    budget with its strategic goals and objectives. GAO found that the Forest
                    Service cannot accurately report its expenditures and accomplishments,
                    and its budgetary, financial, and performance data systems are not linked.


Correspondence      Commercial Fisheries: Information on Federally Funded Buyback
                    Programs. GAOIRCED-OO-8R, Oct. 20.


                    Food Stamp Program:
Social Services     How States Are Using Federal Waivers of the Work Requirement

                    GAOIRCED-OO-5,   Oct. 20 (15 pages).

                    Under welfare reform, able-bodied adults between the ages of 18 and 50
                    with no dependents are limited to three months' worth of Food Stamps in



                    Page 41                                                          GAO/OPA-OO-1
                 Month in Review: October 1999




                 any three-year period unless they meet a work requirement or are exempt.
                 States, however, may exempt up to 15 percent of their able-bodied adults
                 without dependents from the work requirement. This report provides
                 information on (1) the measures that the U.S. Department of Agriculture
                 (USDA) used to assess states' requests for waivers to the work requirement
                 for able-bodied adults without dependents, (2) how states have used the
                 waiver provision, and (3) whether USDA and states considered the
                 availability of employment in adjacent areas when deciding which areas to
                 include in a waiver.


                   Employee Evaluation s :
                 IRS
Tax Policy and   Opportunities to Better Balance Customer Service and
Administration   Compliance Objectives

                 GAO/GGD·QQ·l,   Oct. 14 (51 pages).

                 The Internal Revenue Service (IRs) is seeking to transform its
                 organizational culture to one that more fully embraces customer service as
                 a core value. IRS has replaced its old mission statement, which stressed
                 collecting the proper tax at the least cost, with a new one that emphasizes
                 providing world-class customer service by helping taxpayers understand
                 and meet their tax responsibilities and by applying the tax law with
                 integrity and fairness. IRS has undertaken several long-range initiatives to
                 tum the new mission statement into reality. GAO reviewed the extent to
                 which IRS' current employee evaluation system can support the new
                 mission statement during the period IRS will need to revamp its
                 performance management system. To fulfill its new mission statement, IRS
                 will need to depart from the past supervisory practice of emphasizing
                 revenue and efficiency in employee evaluations to one that balances these
                 goals with good customer service. IRS recognizes that making changes to
                 its employee evaluation process will be important in brining about cultural
                 change and establishing customer service as an agency priority. However,
                 because of the magnitude of the changes that IRS is undertaking, it is
                 unclear when such a system will become fully operational and a new
                 employee evaluation process will be put in place. In the meantime, IRS
                 could take better advantage of opportunities within the current evaluation
                 process to reinforce the important of customer service among its frontline
                 enforcement employees.




                 Page 42                                                         GAOIOPA·OO·1
                 Month in Review: October 1999




                 Surface Transportation:
Transportation   Issues Related to Preserving Inactive Rail Lines as Trails

                 GAOIRCED-OO-4,   Oct. 18 (15 pages).

                   The National Trails System Act, as amended, provided carriers with an
                   alternative, referred to as "rail banking," to abandoning unused
                   lights-of-way. Rail banking preserves a right-of-way for the possible
                   restoration of rail service in the future and, in the intelim, makes the
                   property available for use as a trail. Concerns have been raised by some
                   landowners adjoining these lights-of-way about the lack of opportunity for
                   them to either recover the use of that property or to express their views
                   about how the property is being used. This report desclibes the
                   implementation process for rail banking, the extent to which rail-banked
                   property has returned to use as rail lines and the potential for future
                   reactivation of lights-of-way for rail service, and whether rail banking
                 . facilitates the return of these rights-of-way to rail service.

                 Transportation Coordination
                 Benefits and Barriers Exist, and Planning Efforts Progress Slowly

                 GAOIRCED-OO-l,   Oct. 22 (30 pages).

                 For decades, many human services agencies have provided special
                 transportation services for seniors, the disabled, and others through
                 programs funded and administered by the Department of Health and
                 Human Services (HHS). The estimates of overall spending on transportation
                 by HHS programs in fiscal year 1998 ranged from about $2 billion to
                 $3.5 billion. In addition, the Department of Transportation's Federal
                 Transit Administration (FTA) awards grants to local transit operators to
                 provide assistance for general public transportation systems. FTA'S overall
                 expenditures are estimated to exceed $4 billion for fiscal year 1998.
                 Section 3034 of the Transportation Equity Act for the 21 st Century requires
                 GAO to report on federal agencies that provide nonemergency human
                 services transportation.


Testimony        Air Traffic Control: Status of FAA'S hnplementation of the Display System
                 Replacement Project, Gerald L. Dillingham, Associate Director for
                 Transportation Issues, before the Subcommittee on Aviation, House
                 Committee on Transportation and Infrastructure. GAOIf-RCED-OO-19, Oct. 11
                 (13 pages).



                 Page 43                                                         GAO/OPA-OO-l
                 Month in Review: October 1999




                 This testimony provides information on the status of the Federal Aviation
                 Administration's (FAA) implementation of the Display System Replacement
                 project. This system replaces the controllers' workstations and other
                 equipment in the nation's en route centers and is one of FAA'S major
                 projects under the air traffic control modernization program. GAO'S
                 testimony is based on prior reports and testimonies.

                 Intercity Passenger Rail: Amtrak Faces Challenges in Improving Its
                 Financial Condition, by Phyllis F. Scheinberg, Associate Director for
                 Transportation Issues, before the Subcommittee on Ground
                 Transportation, House Committee on Transportation and Infrastructure.
                 GAOIr-RCED-OO-30, Oct. 28 (13 pages).


                 This testimony focuses on Amtrak's overall financial condition, its
                 progress in becoming free of operating subsidies, its use of Taxpayer
                 Relief Act of 1997 funds, and its need for capital investment to improve
                 quality service. The testimony is based on GAO'S July 1999 report on
                 Amtrak's financial condition and its ongoing work for the Committee.


Correspondence   Mass Transit: "Mobility Improvements" Is One of Many Factors Used to
                 Evaluate Mass Transit Projects. GAO/RCED-OO-6R, Oct. 15.


                 GAO'S Office of the General Counsel regularly issues legal decisions
Decisions and    and opinions, reports on major rules issued by federal agencies
Opinions         prior to their implementation, and decisions resolving bid protests.
                 These documents are posted daily and may be downloaded from
                 GAO'S home page on the World Wide Web ( http://www.gao.gov).


                 The following is a list of legal decisions and opinions and reports
                 on agency rules issued by the Office of the General Counsel. In
                 addition to being available on the World Wide Web, these
                 documents may be obtained by using the order form in the back of
                 this publication. Bid protest decisions are not included in this list.


                 Universal Fee Surcharge. B-279796, Jan. 4.

                 Immigration and Naturalization Service-Appropdations, Purchase of.
                 B-280440, Feb. 26.




                 Page 44                                                         GAO/OPA-OO-l
                    Month in Review: October 1999




                    District of Columbia Courts/Criminal Justice Act. B-283599, Sept. 15.

                    National Park Service Soil Surveys. B-282601, Sept. 27.


                    Department of Housing and Urban Development: Requirements for
Reports on Agency   Notification, Evaluation, and Reduction of Lead-Based Paint Hazards in
Rules               Federally Owned Residential Property and Housing Receiving Federal
                    Assistance. GAO/OGC-99-67, Sept. 29.

                    Federal Communications Commission: Review of the Comission's
                    Regulations Governing Attribution Ownership Rule. GAO/OGC-OO-I, Oct. 1.

                    Department of the Interior, Fish and Wildlife Service: Migratory Bird
                    Hunting; Final Frameworks for Late-Season Migratory Bird Hunting
                    Regulations and Migratory Bird Hunting; Late Season and Bag and
                    Possession Limits for Certain Migratory Game Birds. GAO/OGC-OO-4, Oct. 5.

                    Department of the Interior, Fish and Wildlife Service: Migratory Bird
                    Hunting; Migratory Bird Hunting Regulations on Certain Federal Indian
                    Reservations and Ceded Lands for the 1999-2000 Late Season. GAO/OGC-OO-3,
                    Oct. 5.

                    Department of Commerce, National Oceanic and Atmospheric
                    Administration: Endangered and Threatened Species; Threatened Status
                    for Two Chinook Salmon Evolutionarily Significant Units in California.
                    GAO/OGC-OO-5, Oct. 15.




                    Page 45                                                         GAO/OPA-OO-l
II                                           United States General Accounting Office
                                                                                                                                      II
 GAO                                         Document Order Form
                                             U.S. General Accounting Office
                                             PO Box 37050
For ordering single copies only              Washington, DC 20013                   Fill in appropliate boxes, (completely fill in
                                             Fax Number (202) 512-6061              circles), tear out entire form, and mail or fax
(No Cover Page Required)                     Telephone Number (202) 512-6000        order.
                                             INTERNET: info@www.gao.gov
Customer I. O. Number (from mailing label)           Last Name                      First Name                               M.1.

     I I I I I I I I I
Please order by the report number which appears with the title in the text.
     o AIMO-OO-1                       0     NSIAO-OO-19               0   RCEO-99-284R             o T-NSIAO-OO-53
     o AIMO-OO-3                       0     NSIAO-OO-20               0   RCEO/AIMO-OO-2           o T-RCEO-OO-15
     o AIMO-OO-4                       o NSIAO-OO-21               o T-AIMO-OO-7                    o T-RCEO-OO-19
     o AIMO-OO-5                       o NSIAO-OO-29               o T-AIMO-OO-9                    o T-RCEO-OO-20
     o AIMO-OO-8                       o NSIAO-OO-35               o T-AIMO-OO-25                   o T-RCEO-OO-23
     o AIMO -OO-11                     o NSIAO-OO-36               o T-AIMO-OO-26                   o T-RCEO-OO-28
     o AIMO-OO-12                      o NSIAO-OO-41 R             o T-AIMO-OO-27                   o T-RCEO-OO-30
     o AIMO-OO-14                      o NSIAO-99-163              o T-AIMO-OO-39                   o 8-279796, 0110411999
     o AIMO-OO-15                      o NSIAO-99-182              o T-AIMO-OO-40                   o 8-280440, 0212611999
     o AIMO-OO-22R                     o NSIAO-99-191              o T-GGO-OO-2                     o 8-282601, 0912711999
     o AIMO-OO-24                      o NSIAO-99-208              o T-GGO-OO-24                    o 8-283599, 0911511999
     o AIMO-OO-28R                     o NSIAO-99-209              o T-GGO-OO-26
     o AIMO-OO-21.2.3                  o NSIAO-99-210              o T-GGO-OO-33
     o AIMO-10 .1.22                   o NSIAO-99-221              o T-GGO-OO-34              If you do not have an
     o AIMO/OGC-OO-6                   o NSIAO-99-229              o T-GGO/OSI-OO-19          eight digit Customer
     o GGO-OO-1                        o NSIAO/ AIMO-99-252        o T-HEHS-OO-14             10 number and would
                                                                                              like to be put on the
     o GGO-OO-8R                       o OGC-OO-1                  o T-HEHS-OO-22             mailing list for this
     o GGO-OO-9R                       o OGC-OO-3                  o T-HEHS-OO-26             publication, or need to

     o GGO-OO-10                       o OGC-OO-4                  o T-NSIAO-OO-44            make an address
                                                                                              correction, please fill
     o GGO-OO-12                       o OGC-OO-5                  o T-NSIAO-OO-46            out the mailing
     o GGO-OO-21 R                     o OGC-99-61 R               o T-NSIAO-OO-47            information box below.

     o GGO-OO-25R                      o OGC-99-67                 o  T-NSIAO-OO-48

     o GGO-OO-27R                      o OSI-99 -6                 o T-NSIAO-OO-49
     o GGO-99-156                      o OSI-99-19R                o T-NSIAO-OO-50
     o GGO-99-157                      o RCEO-OO-1                 o T-NSIAO-OO-51
     o HEHS-OO-15R                     o RCEO-OO-4
     o HEHS-OO-19R                     o RCEO-OO-5
     o HEHS-99-163                     o RCEO-OO-6R If you do not have a customer 1.0. number, or if you need to make
     o HEHS-99-176                     o RCEO-OO-8R an address change, please print or type the information below.
     o HEHS-99-180                     o RCEO-OO-11 R Name and Organization
     o HEHS-99-197R                    o RCEO-99-216
     o NSIAO-OO-1                      o RCEO-99-251 Street or P.O. Box
     o NSIAO-OO-3                      o RCEO-99-267
     o NSIAO-OO-4                      o RECO-99-273 City, State and ZIP Code
     o NSIAO-OO-15                     o RCEO-99-276
OPR:OIMCIISC                                                                                                GAO Form 441 (11197)


II                                                                                                                 ~II
-------------------------------------------------------------- - ---------Ir-I-II-------:~:~~:-----
                                                                                                                  Required.
                                                                                                                Post Office will
                                                                                                                  not deliver
                                                                                                                without proper
                                                                                                                   postage.




                    u.s. General Accounting Office
                    P.O. Box 37050
                    Washington, DC 20013


                                                       1••1.111 ••• 11'11 ••• 11 ••11.1 ••• 111 •••• 1.1.11"", I, II
Ordering Information

The :f 'lrst copy of each GAO report and testimony is free.
Additional copies are $2 each. Orders should be sent to the
following address, accompanied by a check or money order
made out to the Superintendent of Documents, when
necessary. VISA and MasterCard credit cards are accepted, also.
Orders for 100 or more copies to be mailed to a single address
are discounted 25 percent.

Orders by mail:

u.S. General Accounting Office
P.O. Box 37050
Washington, DC 20013

or visit:

Room 1100
700 4th St. NW (corner of 4th and G Sts. NW)
U.S, General Accounting Office
Washington, DC

Orders may also be placed by calling (202) 512-6000
or by using fax number (202) 512-6061, or TDD (202) 512-2537.

Each day, GAO issues a list of newly available reports and
testimony. To receive facsimile copies of the daily list or any
list from the past 30 days, please call (202) 512-6000 using a
touch tone phone. A recorded menu will provide information on
how to obtain these lists.

For information on how to access GAO reports on the INTERNET,
send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO's World Wide Web Home Page at:

http://www.gao.gov




PRINTED ON
            .    ~(\
                (2]<;:7   RECYCLED PAPER
United States                       Bulk Rate
General Accounting Office
Washington, D.C. 20548         Postage & Fees Paid
                                      GAO
Official Business               Permit No. G 100
Penalty for Private Use $300