# Of The Government B.io6190 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Agao%3A6a7216df81cb2f2f ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text I ON APPROPRIATIONS HOUSE OF REPR Significant Audit Findings In T Departments ties Of The Government B.io6190 BY THE COMPTR, OF THE UNITED’S COMPTROLLER GENERAL OF THE WASHINGTON. D.C. UNITED STATES 20848 B-106190 The Honorable George H. Mahon Chairman, Committee on Appropriations House of Representatives G” Dear Mr. Chairman: This report contains significant audit findings developed during our audits and other examinations in the civil departThese findings pertain ments and agencies of the Government. for the most part to matters on which we believe administrative action, and in some cases legislative action, is required to achieve greater economy or efficiency in Government operations, Some findings and recommendations on which the departments and agencies have reported that corrective action was being t.aken also have been included because we have not yet observed the effectiveness of the reported action. This compilation is made in response to the request that information of this type be made available to your Committee before the commencement of appropriation hearings at each session of the Congress. Concurrently with the release of this we are sending to the departments and agencies copies report, of the sections specifically applicable to them so that they may be in a position to answer any inquiries which may be made on these matters during the appropriation hearings. A report on significant audit findings partment of Defense and the three military being submitted separately. Sincerely involving departments yours, Comptroller General of the United States the Deis Contents Page . DEPARTMENTOF AGRICULTURE Agricultural Stabilization and Conservation Commodity Credit Corporation Export Marketing Service Farmers Home Administration Food and Nutrition Service Soil Conservation Service 1 Service and . DEPARTMENTOF COMMERCE National Oceanic and Atmospheric Administration 13 15 DEPARTMENTOF HEALTH, EDUCATION, AND WELFARE Health Services and Mental Health Administration National Institutes of Health Office of Education Social and Rehabilitation Service Social Security Administration 17 19 20 22 24 31 DEPARTMENTOF HOUSING AND URBAN DEVELOPMENT Community Development General Insurance Housing Production and Mortgage Credit Interstate Land Sales 33 35 38 39 46 DEPARTMENTOF THE INTERIOR Bureau of Reclamation Geological Survey Southwestern Power Administration 47 49 50 52 DEPARTMENTOF JUSTICE Law Enforcement Assistance 53 55 57 Administration DEPARTMENTOF LABOR Manpower Administration Occupational Safety and Health n 4 3 6 9 10 11 Administration 59 65 DEPARTMENTOF STATE, AGENCYFOR INTERNATIONAL DEVELOPMENT 67 DEPARTMENTOF TRANSPORTATION Department-wide Federal Aviation Rdminis':ration National Highway Traffi c Safety Administration National Railroad Passenger Corporation (AMTRAK) 77 79 80 82 83 DEPARTMENTOF THE TREASURY Internal Revenue Service International Financial Affairs U.S. Customs Service 87 89 90 92 ATOMIC ENERGYCOMMISSION Director of Regulation 95 97 DISTRICT OF COLUMBIA GOVERNMENT courts Department of Corrections Department of Environmental Services Department of Highways and Traffic Department of Human Resources Executive Office of the Commissioner Page 99 101 102 103 104 105 106 ENVIRONMENTALPROTECTIONAGENCY 107 EXPORT-IMPORTBANK OF THE UNITED STATES 113 FEDERAL COMMUNICATIONSCOMMISSION 119 GENERALSERVICES ADMINISTRATION Automated Data and Telecommunications Federal Supply Service National Archives and Records Service Public Buildings Service 123 125 126 128 130 Service INTER-AMERICAN FOUNDATION 133 NATIONAL AERONAUTICSAND SPACE ADMINISTRATION 137 0 FFICE OF ECONOMICOPPORTUNITY Economic Development Division Experimental Research Division External Audit Division Office of Legal Services State and Local Government Division 141 143 145 147 149 151 OFFICE OF MANAGEMENT AND BUDGET 153 RENEGOTIATION BOARD 157 TENNESSEEVALLEY AUTHORITY 161 UNITED STATES CIVIL SERVICE COMMISSION 165 UNITED STATES POSTAL SERVICE 171 VETERANS ADMINISTRATION 175 VARIOUS DEPARTMENTSAND AGENCIES Civil Service Commission, Off'ice of Management and Budget, and Department of Labor Department of Agriculture and Department of Health, Education, and Welfare Department of Agriculture; Department of Health, Education, and Welfare; Department of Justice; Department of the Treasury; and Office of Management and Budget Department of Agriculture; Department of Health, Education, and Welfare; Department of Labor; Office of Economic Opportunity; and Office of p4anagement and Budget 181 l - 1 182 183 185 187 1 Page VARIOUS DEPARTMENTS AND AGENCIES (continued) Department of Agriculture and Department of the Interior Department of Agriculture, Department of State, and Agency for International Development Department of Commerce; Department of Defense; General Services Administration; Department of Health, Education, and Welfare; Department of Labor; and Veterans Administration Department of Commerce, Department of the Interior, and Office of Management and Budget Department of Defense, General Services Administration, and Tennessee Valley Authority Department of Defense and Department of State Department of the Interior, Department of Agriculture, Department of Defense, and the General Services Administration Department of Justice and Department of State Department of Justice and Department of the Treasury Department of Labor and Department of Health, Education, and Welfare Office of Management and Budget, Corps of Engineers, Department of Housing and Urban Development, and Department of Transportation Office of Management and Budget and General Services Administration 189 191 193 197 199 201 205 207 209 211 213 215 DEPARTMENTOF AGRICULTURE Contents Page AGRICULTURALSTABILIZATION AND CONSERVATIONSERVICE AND COMMODITY CREDIT CORPORATION Need intensifies to amend legislation to reduce Government losses on the peanut price-support program Fees for processing price-support loans and storage facility and equipment loans not related to actual costs EXPORT MARKETING SERVICE Russian wheat sales and weaknesses in Agriculture's wheat export subsidy program FARMERSHOMEADMINISTRATION Ways to improve effectiveness of rural business 3 3 4 6 management of 6 loan programs 9 9 FOOD AND NUTRITION SERVICE Need for more accurate information on schools not participating in the school lunch program and on the cost of lunches served under the program 10 SOIL CONSERVATIONSERVICE Progress in meeting important objectives of the Great Plains Conservation Program could be improved 11 1 10 11 DEPARTMENT OF AGRICULTURE AGRICULTURAL STABILIZATION AND CONSERVATION SERVICE AND COMMODITY CREDIT CORPORATION . Need intensifies reduce Government peanut price-supnort to amend legislation losses on the program to In May 1968 GAO reported to the Congress that the Commodity Credit Corporation (CCC) had lost about $270 million on the peanut price-support program between 1955 and 1966 and would lose at least $248 million over the next 5 years 9 1967 through 1971. At that time GAO recommended that the Department develop for the Congress’ consideration a program to more effectively control peanut production. Because the program was not changed and CCC incurred greater losses, GAO reassessed the program to determine what should be done to effectively control production and reduce losses. In an April 1973 report to the Congress, GAO stated that the Agricultural Adjustment Act of 1938, as amended, requires the Secretary of Agriculture to control peanut production on the basis of demand but specifies also that he authorize annually not less than 1,610,OOO acres for growing peanuts. The sponsors of the act had expressed hope that this acreage would be sufficient on all occasions to supply the edible trade without any substantial surplus. Since 1955, however, fewer than 1,610,OOO acres have been needed annually to satisfy commercial demand because advances in farm technology have increased yields per acre by an average of 70 pounds a year. An average of 1,015,OOO acres annually would have produced the necessary supply during 1967 through 1971. Under the program, CCC has to buy the surplus peanuts and store them until they are sold. CCC sells them for significantly lower prices than it From 1967 through 1971 CCC recovered through sales 53 perpays for them. cent of its cost of buying surplus peanuts and lost $279 million on the program, a 66-percent increase over the loss of $168 million from 1962 through 19 66. In March 1972 the Department’s Agricultural Stabilization and Conservation Service (ASCS), which administers the program for CCC, if the present program were continued, losses from 1973 projected that, through 1977 would total $537 million, a 92-percent increase over the losses incurred between 1967 and 1971. . Although GAO made no recommendations to the Department, it recommended to the Congress that the Agricultural Adjustment Act of 1938 be amended to rescind the minimum acreage provision to give the Secretary more flexibility to adjust production so that it will be consistent with commercial demand. Although the Department agreed that such a change could help bring peanut production more in line with demand, it said that it was not completely satisfied that the change was the most desirable solution in the long run. It said further that it was studying GAO’s recommendation and possible alternatives. 3 DEPARTMENT OF AGRICULTURE AAGRICULTURAL STABILIZATION .\ND CONSERVATION SERVICE AND CObiblODITY CREDIT CORPORATION (continued) GAO recognized demand more in line would not preclude of the Department’s that alternatives existed for bringing production and but noted that removal of the minimum acreage provision any actions the Secretary may wish to take as a result study of alternatives. (B-163484, Apr. 13, 1973.) Fees for processing price-support and storage facility and equipment not related to actual costs loans loans GAO examined into the fee assessment policies concerning its processing of price-support loans equipment loans authorized under CCC programs, and practices of and storage facility ASCS and Title V of the Independent Offices Appropriation Act of 1952 and Circular No. A-25 of the Office of Management and Budget state that Government activities which provide identifiable recipients with special benefits or privileges should be financially self-sustaining to the maximum extent possible. The act states that fair and equitable fees should be prescribed which consider direct and indirect costs to the Government, value to the recipients, public policy or interest served, and other pertinent facts. Circular No. A-25 states that, in addition to those costs directly related to the activity, the cost to the Government should include a proportionate share of an agency) s management and supervisory costs and that the cost of providing the service should be reviewed every year and fees should be adjusted as necessary. GAO’s review showed that ASCS charged fees for processing loans--established in 1969 and based on 1967 information--that directly.related to the costs which should have been recovered charge for processing storage facility and equipment loans. antiually.review its costs to process these loans. .. that In a’ July ASCS: 1972 report --Systematically storage facility for recovering fullest extent public policy, --Review the costs as necessary. to the Secretary of Agriculture, price-support were not and did not ASCS did not GAO recommended establish fees for processing price-support loans and and equipment loans on a basis that would provide the related costs, including overhead costs, to the possible and would consider value to the recipient, interest served, and other pertinent facts. of these activities every year and adjust the fees ASCS replied that, although it did not totally agree with GAO’s recommendat ions, it would review its loan-fee arrangements. On May 31, 1973, ASCS issued a directive to its State and county offices ordering an increase in price-support loan service fees, beginning with loans made in the 1973 4 l DEPARTMENTOF AGRICULTURE AGRICULTURALSTABILIZATION AND CONSERVATIONSERVICE AND COMMODITYCREDIT CORPORATION(continued) crop year. However, ASCS rescinded these increases on June 22, 1973, in response to Executive Order 11723, dated June 13, 1973, which froze certain prices for a maximum of 60 days. ASCS officials advised GAO in September and August 1973, respectively, that: --The price-support loan service fees were no longer frozen under Phase IV guidelines and it was considering increasing such fees for the 1974 crop year. --The matter of establishing a fee for processing storage facility and equipment loans was still under consideration. (B-163484, July 13, 1972.) DEPARTMENT OF AGRICULTURE EXPORT MARKETING SERVICE Russian wheat sales and weaknesses in Agriculture Is management of wheat export subsidy program The President announced the sign ing of an agreement with Russia on July 8, 1972, making $750 million in credit available for 3 years for purchasing various U.S. grains. By then Russia was already purchasing U.S. wheat. Within a few weeks, cash and credit wheat sales to Russia, heavily subsidized by the U.S. Government, approximated $700 million, the largest private grain sales in U.S. history. I 1 The wheat export subsidy program began in 1949 to help the United States meet its obligation to export wheat at prices agreed to under the International Wheat Agreement. The program’s major objectives are to generally insure that U.S. wheat is competitive in world markets and to reduce Government wheat inventories. The Export Marketing Service establishes daily subsidy rates for wheat. The Service has maintained a zero subsidy rate for all types of wheat since September 22, 1972, allowing wheat prices to seek their own levels, but, during the preceding 4 months, rates ranged from a few cents to as high as 51 cents a bushel, Before its suspension, the program incurred about $4.3 billion in subsidy costs for exporting about 10.5 billion bushels of U.S. wheat. There is little doubt that the program has been instrumental in competitively pricing U.S. wheat moving into export markets. GAO reported to the Congress that the large sales of U.S. wheat to Russia and other exports in the summer of 1972 caused a dramatic rise in the price of U.S. wheat. Hard Winter wheat sold at gulf ports for $1.68 a bushel in July brought $2.49 a bushel in September and even more later. An export goal of 650 million bushels and a fiscal year 1973 budget estimate of $67 million in subsidy mushroomed to 1.1 billion bushels in exports and over $300 million in subsidy. tbtaling addition Agriculture claims that about $457 million to other benefits. the U.S. Treasury as a result of the will accrue wheat sales net benefits to Russia in Agriculture is committed to pay over $300 million in subsidies on the Russian and other export sales. GAO expressed the belief that many of these sales would have been made even with reduced subsidies and that Agriculture should have responded more rapidly to the available information and reduced or eliminated the subsidies sooner. Wheat export subsidy 6 program After October 1971 the key determinant in establishing daily wheat subsidy rates was the export target price. The difference between the target price and the domestic price was the daily export subsidy rate. Maintenance of a low target price throughout the period of the Russian sales and for 6 1 DEPARTMENT OF AGRICULTURE m * EXPORT MARKETING SERVICE (continued) several subsequent Government to pay weeks was a crucial excessive subsidies. factor in obligating the U.S. GAO questioned the maintenance of a low target price in view of available intelligence reports and analyses indicating adverse Russian crop conditions. Agriculture also knew that the United States was the dominant wheat supplier and that purchasers of large supplies had to come to the United States. Agriculture officials recognized early in 1972 that the world wheat situation was changing but decided against increasing the export target price for several reasons. GAO expected to find a detailed analysis to support such a major policy decision, but it seems to have been based largerly on intuitive judgments made by Agriculture officials. Speculating in subsidy registrations Changes made in 1967 to the basic wheat export subsidy program, ting subsidy registrations at exporters’ options, and other program in effect at the time of the Russian wheat sales tended to minimize and created an environment whereby exporters could make substantial Although Agriculture sought to increase the flexibility for exporters price U.S. wheat competitively in international markets, the program appropriate administrative controls. permitfeatures risks profits. to lacked Some exporters making sales in August 1972 registered weeks later at higher subsidy rates. In five examples, of about $604,493 was paid. Had exporters been required the subsidy would have been $286,188, the dates of sales, sales several a total subsidy to register on or $318,305 less. Export the program exporters. no evidence competition Marketing Service had allowed excess Carrying-charge officials profit contend there is because of intense that among payments In addition to the basic export subsidy, Agriculture provided a carrying-charge subsidy to cover the estimated costs of owning wheat for future delivery, The subsidy registration date, instead of the sale date, is used to calculate subsidy entitlement. In 28 instances totaling about $360,000, had the sale contract dates rather than the registration dates determined the carrying-charge subsidies, the payments would have been about $350,000 less. Program h evaluation needs Despite annual subsidy outlays of millions not comprehensively evaluated the wheat export evaluations indicating that the subsidy program dismissed by operating officials. 7 of dollars, Agriculture subsidy program. Limited was not fully effective has were DEPARTMENT OF AGRICULTURE EXPORT MARKETING SERVICE (continued) GAO examined several pertinent statistical relationships indicative of program effectiveness. It concluded, on the basis of making U.S. wheat competitive in international markets, that Agriculture seemed to have paid greater subsidies than the marketplace required. Other agricultural economists questioned the need for subsidy payments and suggested that the program needed to be completely reevaluated, The major GAO recommendation to the Secretary of Agriculture was that the wheat,export subsidy program be reviewed in its entirety and that its reinstatement be predicated on a meaningful justification for its existence. ment tion The Secretary of Agriculture said GAO’s study would help the Departimprove the program. The Secretary agreed with GAO’s major recommendabut took issue with GAO on some other observations and conclusions. GAO suggested that the Congress should consider requiring that agencies develop definitive ground rules so that expected benefits from exports can be appropriately weighed against their impact on various segments of the domestic economy, (B-176943, July 9, 1973.) DEPARTMENT OF AGRICULTURE FARMERS HOME ADMINISTRATION Ways to improve .rural business c It /’’ I */: effectiveness loan programs of The Economic Opportunity Act of 1964, as amended, authorized several One of these programs-special programs to combat poverty in rural areas. the Economic Opportunity Cooperative Loan Program--administered by the Farmers Home Administration (FHA) provided loans to cooperative associations in rural areas. Although the program was terminated could be helpful to FHA in administering dustrial loan programs authorized by the on June 30, 1971, GAO’s findings the new rural business and inRural Development Act of 1972. GAO found that many economic opportunity cooperatives encountered problems, such as weak management and adverse market conditions, and therefore failed to stay in business or became delinquent in their loan repayments. Not all problems encountered by the cooperatives could have been foreseen. Many problems, however, could have been identified and corrected had FHA required adequate determinations of the economic soundness and feasibility of cooperative projects and had FHA improved its policies and procedures for supervising and evaluating cooperatives’ activities. In accordance with GAO’s recommendations for implementing the business and industrial loan programs authorized by the Rural Development Act of 1972, FHA stated that it (1) was preparing regulations that would require applications for loan assistance to include feasibility studies, marketing agreements, management evaluations, and an analysis of the adequacy of working capital, (2) had taken steps to provide employee training, (3) had considered additional staffing of new types of professional and technical skills, and (4) would, when practical, express program objectives in specific goals and use such goals to periodically measure program effectiveness. fiscal FHA plans to year 1974. implement (B-114873, the new business May 2, 1973.) 9 and industrial loan programs in DEPARTMENTOF AGRICULTURE FOODAND NUTRITION SERVICE Need for more accurate information on schools not participating in the school lunch program and on the cost of lunches served under the program Food and Nutrition Service (FNS) statistics showed that, in fiscal year’ q 1972, 82,900 schools, with about 45 million students enrolled, were partici-‘, However, FNS data also showed that, / pating in the school lunch program. schools, with about ‘I* early in the 1971-72 school year, about 24,900 eligible 8.7 million students enrolled, were not participating in the program. About 18,100 of these schools did not have any type of food service; and FNS identified at least 4,400, with 1.4 million students enrolled, as needy schools. An FNS survey in March 1972 showed that about 1.5 million needy students attending participating schools were not eating free or reduced-price lunches, GAO found that some schools did not participate because they lacked the equipment and facilities to prepare and serve the food and others did not participate for reasons based on local preference or on special local conditions not susceptible to Federal persuasion. FNS did not have reliable data concerning which schools needed assistance and the extent of their needs. Such data would help FNS resolve these problems and determine the assistance or changes in administrative policies or legislation needed to enable such schools to participate. GAO also found that FNS had not sufficiently guided the schools on how to compute accurate per-lunch costs which FNS needs to insure that Federal reimbursements do not exceed the actual cost of lunches, as required by existing legislation. GAO recommended that actions be taken to obtain better information on schools needing assistance and the extent of their needs, promote the school lunch program, and define reimbursable costs, The Department generally agreed with GAO’s conclusions and described actions that were being taken to implement the recommendations, (B-178564, June 29, 1973.) 10 DEPARTMENT OF AGRICULTURE SOIL CONSERVATION SERVICE Progress in meeting of the Great Plains could be improved II * important Conservation objectives Program The Soil Conservation Service (SCS), Department of Agriculture, combats climatic hazards in the Great Plains by helping farmers, ranchers, and other landowners and operators voluntarily carry out planned soil and water conservation practices through technical assistance and direct cost sharing under contracts of from 3 to 10 years. In June 1973 GAO reported to the Congress that progress in converting unsuitable cropland to permanent vegetative cover and reseeding badly depleted rangeland had been less than expected in view of the program’s legislative history, which stressed the importance of meeting these needs. To provide for greater progress before the program’s scheduled expiration in 1981, GAO recommended that SCS (1) revise its fund allocation system to insure that program funds are used, to the extent practical, for highest priority work first and (2) increase a $25,000 administrative limitation on any one contract to recognize cost increases since the limitation was established and to increase the rate of achieving important program objectives. GAO also noted a conflict between the program and certain features of the commodity price-support programs and suggested that the Congress explore with the Department the feasibility and desirability of enacting legislation to provide additional incentives for farmers to convert unsuitable cropland to permanent vegetative cover, giving consideration to disincentives resulting from commodity price-support programs. In response --Had the to GAO’s studied and will fund allocation continue system, Department to study the feasibility giving due consideration --Had recognized the inadequacy of and was reevaluating the limitation of conservation practices. t the recommendations, the $25,000 in view The Department did not comment on the conflict commodity price-support programs. SCS headquarters agreed that the conflict was one of the significant progress of achieving program objectives. (B-114833, 11 stated that SCS: of revising to priorities. limitation per of the increasing contract costs between the program officials, however, constraints on the June 28, 1973.) and DEPARTMENTOF COMMERCE Contents Page NATIONAL OCEANIC AND AT!IOSPHERIC ADIIINISTRATION Continuation of the Fish Protein Concentrate yield only limited benefits 13 15 Program would 15 DEP.I\RT!IENT OF CO?QIERCE I;.\TIONXL OCE-\YIC Continuation Fish Protein r;ould )-ield .YiD .JIT\IOSPHERIC XDI\IIYISTR.4TI@N of the Concentrate only limited Program benefits .\t the request of the Chairman, Subcommittee on Fisheries and Wildlife Conserration, House Committee on !Ierchant !larine and Fisheries, GAO reviewed the Fish Protein Concentrate (FPC) Program administered by the Administration’s Sational Yarine Fisheries Service, Under this program a Governmentoiined experimental plant \ in the Ei:dr:rnl PUBLIC BUILDINGS SERVICE Participation certificates sold at higher interest those obtainable for long-term Government bonds 123 1 :! 6 of tab papf:r 1.:ti 130 rates than 6 ! GENERAL SERVICES AD#INISTRATION AUTOMATED DATA AND TELECOMMUNICATIONS SERVICE Opportunities for of local telephone improving ‘service manageme’nt - The Federal Telecommunications System (FTS) , which is managed by the General Services Administration (GSA), provides, among its many services, intercity and local telephone service. As part of this telephone service GSA manages over 400 switchboards in the United States. At 153 of these switchboards GSA manages 4,634 local service trunks, costing an estimated $989,000 annually. Periodic traffic studies provide a measure of the traffic volume, which, in part, determine the number of local service trunks required at a switchboard. However, limitations of these studies restricted their usefullness to GSA’s management for achieving optimum economical and efficient service and providing it on an equal basis to all customers. GSA and telephone company studies (1) were not performed at all switchboard locations, (2) had not included all local trunks managed by GSA and (3) sampling periods were too limited at some locaat each location, tions. Also, telephone company studies were not frequent enough to disclose seasonal changes and growth or decline trends. The different methods used to convert traffic volume into trunk requirements produced dissimilar results when applied to the same statistics. For example, GAO estimated that one method would require 78 fewer trunks-costing $25,400 annually-than those proposed by telephone companies using another method at 10 selected switchboards. However, telephone company reports did not include sufficient detailed information for GSA to independently evaluate or recompute the information. GAO proposed that the Administrator methods and procedures for determining with telephone companies for improved (3) instruct regional offices on the conversion to trunk traffic studies, changes, and (4) expand and implement of GSA (1) establish standard trunk requirements, (2) negotiate traffic studies and statistics, evaluation and/or performance of requirements, and implementation of internal control procedures. GSA’s response to material included in this report was in general agreement with GAO’s findings. GSA is currently preparing a report of actions taken in response to this report. (B-146864, Mar. 19, 1973.) 125 GENERAL SERVICES ADMINISTRATION FEDERAL SUPPLY SERVICE Opportunities the nrocurenient for savings in ‘of ‘tab ‘naner GAO examined into the procedures for procuring marginally punched, continuous forms (tab paper) because an estimated $100 million is spent annually by the Government for tab paper for use with over 6,700 computers at 1,700 locations. GSA is responsible for procuring the Government’s tab paper but has delegated authority to the Government Printing Office (GPO) to procure most of the tab paper. GSA purchases and stocks six commonly used tab paper forms. GPO annually awards contracts against which installations place orders, within prescribed dollar limitations, for tab paper not available from GSA stock. The GPO contracts are awarded to all responsive suppliers on a nationwide basis. GAO examined fiscal year 1971 tab paper purchases of $6.5 million that were made by 45 installations. The most favorable prices for tab paper were obtained by six installations purchasing their tab paper in volume under competitive contracts. Prices paid by the six installations were about $500,000, or 22 percent, less than the lowest prices available under the GPO contracts for the same volume of paper. Most year from requirements installations procure their tab paper periodically throughout the the GPO contracts rather than estimating their annual tab paper and purchasing in volume under competitive contracts. Although installations are required to obtain their tab paper from the lowest priced supplier under the GPO contracts, more than half of the installations obtaining tab paper under the GPO contracts had made purchases from other than the lowest priced supplier. On total orders against GPO contracts of $2.2 million, GAO found that the prices exceeded those of the lowest priced suppliers by $54,000. If this condition is representative of all reported orders against GPO contracts totaling $11.8 million for the year ended November 1971, the costs of tab paper were $300,000 more than if purchased from the lowest priced sources. In addition, some installations were purchasing carbon tab paper when narrow-carbon paper may have use. Installations used GPO contracts to purchase $600,000. If narrow-carbon paper had been adopted $600,000 cost could have been reduced by $172,000, To realize the opportunities for savings in Government’s tab paper GAO suggested that GSA: --Instruct installations to determine and GSA or GPO use this information competitive contracts or authorize contracts directly. 126 higher priced, widebeen suitable for their wide-carbon paper costing for use in all cases, the or 28 percent. the procurement of the their annual tab paper needs to make volume purchases under the installations to award such * GENER4L SERVICES ADMINISTRATION FEDERAL SUPPLY SERVICE (continued) --Consider, in conjunction with GPO, a more competitive awarding the GPO contracts, such as making awards of used types of tab paper on a geographic basis to the offering the lowest prices for each type of paper or number of multiple suppliers to be awarded contracts basis. method of the more common lY single supplier by limiting the on a nationwide --Instruct heads of departments and agencies to establish procedures for systematic monitoring and internal reviews of recent and ongoing procurements to identify use of other than the lowest priced paper suitable for installations’ needs. GSA agreed with our suggestions, but GPO was concerned that the methods GAO had proposed for awarding the GPO contracts would not result in more competition and lower prices. GAO recognizes that other alternatives may be available. GAO believes, and GSA agrees, that efforts should be made to develop a method of awarding the GPO contracts under more competitive conditions. 127 GENERAL SERVICES ADMINISTRATION NATIONAL ARCHIVES AND RECORDS SERVICE Ways to practices improve records in the Federal management Government GAO reviewed the effectiveness Service (NARS) of GSA in improving Government because of the substantial preparation, handling, and storage. costs of paperwork have increased Similarly, the Government’s record cubic feet and now total about 30 Records Centers are at an alltime As a result, feet. storage space panded by 30 percent. of the National Archives and Records records management programs throughout the increases in the costs of paperwork GAO estimated that, since 1966, Federal from $8 billion to $15 billion a year. holdings have increased by about 4 million million cubic feet. Holdings by Federal high and now total over 11.5 million cubic has become critical and may have to be ex- * 1 NARS has had limited success in persuading agencies to correct weaknesses in their records management programs. One reason is that NARS identifies needed improvements and recommends rather sweeping changes without showing corresponding savings, a factor of vital concern to agency management. Another reason for the limited success is that NARS has never exercised the authority contained in Public Law 90-620 to report to the or the Office of Management and Budget (OMB) , a President, the Congress, particular agency’s poor records management program, even though the NARS evaluation teams consistently have found serious weaknesses in agencies’ programs. In addition, NARS could be more effective in minimizing the time that records are stored in Federal Records Centers by establishing closer surby developing a better method veillance of agency records control schedules, of evaluating the validity of the record retention periods specified by agenties, and through better procedures for removing from storage those records that are eligible for disposal. GAO suggested that NARS and --Point out how agencies NARS recommendations. GSA: could save money if --Develop criteria describing circumstances nesses or deficiencies in agency records President, the Congress, or OMB. --If an agency fails after a reasonable time nesses in its records program on the basis form the President, the Congress, or OMB. --Monitor schedule agencies showing they would implement when NARS would report management programs to to of correct serious this criteria, more closely to see that they maintain retention periods for all their records. - - Develop, on a pilot basis, a method to evaluate at centers and to provide agencies with feedback lishing more realistic retention periods. 128 weakthe weakthen in- an up-to-date records usage patterns as a basis for estab- l GENERALSERVICES ADMINISTRATION NATIONAL ARCHIVES AND RECORDSSERVICE (continued) --Revise procedures at centers are destroyed promptly. GSA and NARS have suggestions. (B-146743, initiated Aug. so that a program 13, 1973.) 129 records to eligible implement all for of destruction the GAO GENERAL SERVICES PUBLIC BUILDINGS Participation at higher obtainable ADMINISTRATION SERVICE certificates interest rates for long-term sold than those Government bonds Section 5 of Public Law 92-313, dated June 16, 1972, authorized GSA for 3 years to enter into purchase contracts with private developers who would finance and construct public buildings to GSA specifications. GSA would make periodic installment payments during the contract period to amortize construction and financing costs. At the end of the contract period--not to exceed 30 years--title to the building would transfer to the Government. In sponsoring Public Law 92-313, GSA asked the Congress in 1971 for purchase contract authority for 3 years as a stop-gap expedient that would eliminate the construction backlog of about 60 projects estimated to cost These projects had been authorized by the Congress about $750 million. for Federal construction but had not been funded. In addition to the 60 buildings authorized by Public Law 92-313, GSA requested approval in under purchase contract arrangeJanuary 19 73 for construction and funding, ment , of three Social Security Administration payment centers estimated to cost $110 million, GSA has been obtaining most of its financing through the sale of 30year participation certificates by the GSA trustee, the First National City Bank of New York. At the time GAO first wrote to GSA on February 27, 1973, about its method of financing, GSA had sold $396 million of participation certificates, By the end of March 1973, GSA had sold another issue of certificates. All together GSA has sold three issues of participation certificates amounting to $522.5 million. The first, amounting to $196.5 million, was sold in increments from October 30 through November 3, 1972, and had interest rates varying from 7.125 to 7.4 percent; the second, amounting to $200 million, was sold on December 13, 1972, and had an interest rate of 7.15 percent; and the third, amounting to $126 million, was sold on March 14, 1973, and had an interest rate of 7.5 percent. The issues were sold at a total discount of about $4.6 million, which resulted in an overall effective interest rate of 7.25 percent on the first and second issues and 7.90 percent on the third issue. Public Law 92-313 and its legislative history are silent concerning the financing with participation certificates. The Comptroller General has ruled, however, that this method is within the framework of the law. Also, the Attorney General has advised GSA that the certificates are general obligations of the United States, backed by its full faith and credit. On the basis of market conditions at the time GSA participation certificates were issued, GAO estimated that the Treasury could have issued longterm Government bonds for about 3/4 of 1 percent less than the effective interest rate for the certificates. The additional interest costs associated with the $522.5 million of participation certificates is about $3.92 million a year, which amounts to $117.6 million for the 30-year term. 130 GENERAL SERVICES PUBLIC * * BUILDINGS SERVICE ADMINISTRATION (continued) Because of the potential interest savings that would be possible by financing the GSA purchase contract program through Treasury borrowings, GAO’s February 27, 1973, letter to GSA suggested that GSA consider seeking change in the law that would provide for the remaining financing by direct Treasury borrowings. , a GSA concurred with GAO that direct Treasury borrowings would be more economical than participation certificates or the variety of financing GSA stated that, to remedy methods used by certain other Federal agencies. the Administration has sponsored the proposed Federal Financing the problem, Bank Act of 1973. GSA stated that enactment of this proposed legislation (S. 925, Feb. 20, 1973) is intended to accomplish the objectives GAO proposed for GSA; it will accomplish the same objective for other Federal agencies as well. The purpose of the legislation is to (1) insure coordination of the financing needs of Federal and federally assisted borrowing programs with overall economic and fiscal policies of the Government, (2) reduce the costs of Federal and federally assisted borrowings from the public, and (3) insure that such borrowings are financed in a manner least disruptive to the private financial markets and institutions. A Federal financing bank would be established to carry out the legislaThe bank would be subject to the general supervision and direction of tion. the Secretary of the Treasury. Federal agencies would be required to submit their financing plans for approval to the Secretary of the Treasury, who would be the chairman of the bank’s board of directors. Since GAO first brought $126 million of participation issues in calendar year 1974 this matter certificates to finance to its attention, GSA has and is scheduled to sell the remaining projects. sold more GAO does not believe that enacting the proposed legislation would result in any sizable savings for GSA because it would have sold most, if not all, of its participation certificates before the proposed legislation could be enacted and implemented. Two features of the proposed legislation may affect interest savings on any GSA financing remaining at the time of passage. First, according to Senate Report 92-853, dated June 12, 1972 (on an earlier version of the proposed legislation), the proposed legislation would not require the bank to lend to any agency nor require any agency to borrow from the bank. Therefore, even if the legislation is passed, GSA could, with the approval of the Secretary of the Treasury, continue to sell its participation certificates to the public. Second, interest on GSA’s certificates and Treasury obligations is not subject to State and local income taxes; under Senate bill 925, interest on the proposed bank securities would be. This would tend to increase the interest rate on the bank’s securities. (Letter dated February 27, 1973, to Acting Administrator of General Services). 131 INTER-AMERICAN FOUNDATION Contents Page Need to clearly Foundation define the role of the Inter-American 135 l . 133 INTER-AMERICAN Need to clearly define of the Inter-American L * FOUNDATION the role Foundation The Congress created the Inter-American Foundation (IAF) to social development shortcomings in prior U.S. assistance efforts America. IAF was to provide assistance primarily through private principal participators in the development would be United States American private groups. rectify in Latin channels; and Latin GAO reported to the Congress that IAF assisted Latin American private groups, but not U.S. private groups. IAF relies solely on Latin American groups to conceive and implement development efforts. IAF also provides assistance on easy terms primarily in the form of grants, rather than loans, and has softened the prior practice of requiring the recipient to obtain matching funds. GAO expressed the belief that these practices beneficial participation by others, namely private be excluded and they may be setting the stage for stimulate Latin American effort. GAO recommended proach to provide assistance through private U.S. a greater variety of assistance terms specifically objectives. IAF its role believed introduce the chance that U.S. organizations, will losing opportunities to that IAF broaden its aporganizations and to use tailored to development informed GAO that it opposed changing its approach and perceived to be limited to promoting Latin American experimentation and its approach to be appropriate for that role. GAO believes that IAF was established to do more, that much of IAF’s assistance actually went for nonexperimental projects, and that IAF should therefore reconsider the propriety of its approach. The Congress may wish to consider whether IAF’s intended role is adequately defined and understood. (B-135075, July 23, 1973.) 135 NATIONAL AERONAUTICS AND SPACE ADMINISTRATION Contents Page . f Need for Shuttle annual Allocation programs of congressional the costs of review common of estimates support services 137 for the Space to benefiting 139 140 NXTIONXL AERONAUTICS Need for annual congressional of estimates for the Space n . AND SPACE AD~IINISTRATION review Shuttle Senator Walter F, I!ondale requested GAO to review cost estimates released by the National Aeronautics and Space Administration (NASA) on Yarch 15, 1972. NASA said that its cost estimates indicated that the Space Shuttle would cost about $5.2 billion less than alternative expendable systems for performing the same mission. The Space Shuttle is a proposed manned space transportation system which would be sent into orbit and returned to earth to be reused on other flights. For the most part the alternative systems are outgrowths of existing systems which have been used on other space missions. GAO was not certain that the Space Shuttle was economically justified (is less costly when the time value of money is considered), even though NASA’s calculations showed that it was, GAO did not believe it prudent for the Congress to place too much confidence in the projected savings. GAO conclusions were based on (1) uncertainties related issues involving alternative systems and (2) uncertainties costs and savings attributed to payloads in the life-cycle Shuttle, particularly in the number of payloads. cost to nine cost in the estimated costs of the Space GAO also concluded that the’choice of a launch system should not be based principally on cost comparisons and cited five related issues GAO be(1) the priority the Nation lieves should be considered in the decision: places on space programs, (2) the value of new technology that might result from the Space Shuttle, (3) the need for the unique capabilities the Space Shuttle offers, (4) the prestige the United States might get from its developnen t , and (5) the merits of an extensive manned space flight program. NASA agreed that cost for deciding on whether to vehicles. However, it has alternative would be least . comparisons select the chosen the costly. were Space Space not necessarily the best basis Shuttle or the expendable Shuttle and maintained that this To enable the Congress to reach the most prudent decision on the funding of the Space Shuttle or the alternative expendable systems, GAO recommended that the Congress consider the future space missions used in NASA’s economic analysis of the Space Shuttle to determine whether these missions are a reasonable basis for space program planning at this time. In addition, GAO recommended that, as part of the NASA authorization and appropriation process, the Congress review the estimates for the Space Shuttle annually, .giving due consideration to the appropriateness of the missions used in making those estimates. GAO testified on this matter at the request of the Subcommittee on Housing and Urban Development, Space, Science, Veterans, Senate Committee the Subcommittee on Yanned Appropriations, on June 12, 1973, and before 139 on Space 1973. Flight of (B-173677, Allocation of benefiting of the House June 1, the costs programs of Committee 1973.) common on Science support and Astronautics on June 26, services The Chairman of the House Committee on Science quested GAO to review the distribution of costs for among the various programs administered by NASA. and Astronautics common support reservices GAO determined that NASA had directed its Marshall Space Flight, Manned Spacecraft, and Kennedy Space Centers to include in the Apollo Program all costs for common support services although various other programs benefited from these services. This practice resulted in a substantial overstatement of Apollo Program costs and in understatements of the costs of the other benefiting programs. n (c To measure the significance of the overstatement of Apollo costs caused by NASA’s practice, GAO analyzed the common support costs charged during the period July 1, 1970, through February 29, 1972, to the fiscal year 1971 and fiscal year 1972 Apollo program at two of the centers. Based on GAO’s analysis, it appears that the costs of the Apollo program were overstated in NASA accounting reports by about $85 million and the costs of the benefiting program were understated by a like amount. NASA stated to the Congress. ing total program change its budget that it revealed this practice in its budget justifications NASA also stated that it was studying means of accumulatcosts for internal management purposes and the need to practices for common support costs. NASA subsequently informed GAO that it would accumulate data on a pilot basis in the institutional support area in an attempt to identify the ultimate benefiting project or program. However, basic appropriation and program structure would remain unchanged and accounting procedures revised only to the extent necessary to provide for the accumulation and reporting of such data for internal management purposes. NASA also stated that subsequent to its further evaluation of this matter it would be in a position to know whether changes would enhance its ability to manage and whether an accompanying change to the budget or appropriation structure should be recommended. It further stated that any such proposed change would be based on a number of considerations and would evolve not as the result of some specific study but rather as part of NASA’s normal budget process and continuing dialogue with the Office of Management and Budget and the Congress. (B-158390, Mar. 9, 1973.) 140 ‘c OFFICE OF ECONOMICOPPORTUNITY Contents Page . I ECONOMICDEVELOPMENTDIVISION Economic development programs in Bedford-Stuyvesant under the Special Impact program have had a visible but limited impact 143 EXPERIMENTAL RESEARCHDIVISION Question on merits of performance contracting traditional methods remains unanswered 145 EXTERNALAUDIT DIVISION Need for more effective audit in education versus 145 147 147 activities OFFICE OF LEGAL SERVICES Improvements needed in Legal Services operations and administration STATE AND LOCAL GOVERNMENT DIVISION Noncompliance with grant conditions 149 program grantees' 149 and OEO and other 141 143 requirements 151 151 OFFICE OF ECONOi:IIC OPPORTUNITY ECONOMIC DEVELOPMENT DIVISION Economic development Bedford-Stuyvesant have had a visible L programs under the but limited in Special impact Impact program GAO reported to the Congress in August 1973 on its evaluation of the results of the Office of Economic Opportunity’s (OEO’s) experimental Special Impact program in Bedford-Stuyvesant, Brooklyn, New York, and the manner in which the program was being managed. Special Impact programs are intended to create training and job opportunities, improve the living environment, and encourage the development of local entrepreneurial skills in urban areas with large concentrations of low-income residents or in rural areas having substantial migration to such urban areas. Legislation has been submitted to the Congress which would transfer responsibility for administering Special Impact programs from OEO to the Department of Commerce. GAO believes that information in this report on the accomplishments and problems of the Bedford-Stuyvesant Special Impact program should be of interest to the Congress in considering this legislation. The Special Impact program in the Bedford-Stuyvesant community was the first and largest such program to be sponsored by the Federal Government. The program was started in 1967 with two nonprofit corporations as sponsors. GAO reported that, as of June 1972 and after more than 5 years of Fedthe program had a visible but limited impact on Bedforderal funding, Stuyvesant, although some of the activities and projects underway could, in The program has time, have greater effect on the area. --created program --initiated exteriors -I identified employment opportunities through a comprehensive which recruited, counseled, and developed jobs new housing of existing developments residences; and local solved and renovated manpower residents; interiors and problems; --established benefits; neighborhood and centers to --provided commercial facilities use. community activities, for the for facilitate delivery of program cultural events, and The program fell short of its goals in areas relating to development of minority-owned businesses and in attracting outside industry to create jobs for residents. Even though the sponsors through their housing program had a significant number of housing units planned or under construction, only a small number of units were constructed and rehabilitated. 143 OFFICE ECOJ401\IIC DEVELOPMENT DIVISION OF ECONOMIC OPPORTUNITY (continued) Even if the sponsors had substantially met program goals, it is doubtful because of its limited scope, would have had more than a that the program, minimal impact on the area’s problems, particularly those relating to jobs and housing . * GAO recommended that the sponsors, OEO, and the Department of Commerce-if responsibility for administering the Special Impact program was transferred to Commerce--consider this report in determining the future strategy of the Bedford-Stuyvesant program. OEO generally agreed with GAO’s findings and conclusions, Commerce said the report could be useful to it if it becomes responsible for administering the program. (B-130515, Aug. 20, 1973.) 144 * QFFICE ESPERISIENTAL RESEARCH DIVISION Question on merits in education versus remains unanswered + OF ECONOPIIC OPPORTUNITY of performance traditional contracting methods An OEO report released in June 1972 stated that OEO’s performance contracting in education experiment clearly indicated that the firms operating under performance contracts did not perform significantly better than the more traditional school systems. “Performance contracting” has been defined as an agreement between a local education agency, such as a public school, and a private educational firm, known as a “learning system contractor.” The OEO experiment, conducted during the 1970-71 school year at an estimated cost of $6 million, was designed to assess the overall impact of remedial reading and mathematics programs conducted by private educational firms. These programs were carried out under performance contracts for students from low-income families performing well below average in the subjects relative to national norms. GAO evaluated the experiment because of its potential impact in education and reported to the Congress that, because of a number of shortcomings in both the design and implementation of the experiment, the question of the merits of performance contracting versus traditional educational methods in improving the reading and mathematics skills of poor children remained unanswered. These shortcomings included: --The experimental and control groups achievement levels and socioeconomic and family income. --OEO’s t design did not provide --OEO’s design periods. did not call for for were not comparable characteristics, monitoring coordinating control the length in such initial as race groups. of instructional As part of its overall assessment of the impact of the experiment, OEO initially intended to report the results of the experiment on a schooldistrict-by-school-district basis by use of comparisons between the experimental and control programs and among the programs of the six educational firms. The experiment was designed to provide data for such an analysis. OEO did not report the results of the programs in this manner because it found no significant differences between the results of the majority of the programs and because it was unable to determine the cause of apparent successes and Consequently, much of the failures on an individual school-district basis. data collected on this basis was of little or no use. In addition, OEO’s nonobservance otherwise questionable actions involved tering and settling contracts indicated in OEO’s procurement practices. of 145 Federal Procurement Regulations and in selecting contractors and administhe existence of serious weaknesses OFFICE,OF . EXPERIMENTAL RESEARCH DIVISION ECONOMIC OPPORTUNITY (continued) If OEO had performed a cost analysis of the prospective contractors’ proposals; that is, related the contractors’ proposed costs to the tasks required in the request for proposals, OEO would have identified costs which were low in relation to the requirements and requirements for which no cost estimates were provided. OEO should have explored the financial stability of all the educational firms before committing itself to large fund advances without any assurances that the firms could repay advances in excess of earnings at the end of the In the case of one firm, final settlement negotiations contract period. apparently resulted in a lessening of the uncollectible advances by increasing the proposed payments to that firm. OEO’s research and development activities to HEW’s National Institute of Education in many of the observations and conclusions in the Institute and local education authorities conducted in the future. in education were transferred GAO believed that August 1973. this report will be of value to if similar experiments are OEO believed that its June 1972 report contained a comprehensive analysis of the results of the experiment and that many of the problems pointed OEO beout in the GAO report were appropriately noted in OEO’s report. lieved that its report provided a useful perspective within which the overall performance contracting experiment might be judged. (B-130515, May 8, 1973.) 146 * * EXTERNAL AUDIT DIVISION Need effective for more In April 1973 accountants + audits OEO. b OFFICE OF ECONOMIC OPPORTUNITY audit activities GAO reported to the of local antipoverty Congress on the adequacy agencies which received of public grants from The Congress requires that each local antipoverty agency have adequate accounting and internal control systems. It requires also that these agencies be audited yearly to insure that the systems are adequate and that funds are spent in accordance with law, regulations, and grant conditions. OEO, rather than auditing about 1,500 antipoverty agencies (or grantees), required the grantees to arrange with qualified accountants--generally certified public accountants--to audit their activities. Deficiencies controls not issued control in accounting disclosed in About 60 percent in fiscal year deficiencies. systems and audit reports of over 1,000 1970 reported GAO reviewed audit reports on grantee operations no major accounting system or internal 27 reports from this group. Of the 27, 17 failed to disclose significant deficiencies in the financial operations of OEO grantees. Rather than include them in their formal audit reports, some public accountants informally reported such deficiencies to their grantees-clients. The deficiencies included inadequate controls over cash, payroll, travel expense, procurement, consultant services, and property and two cases of misappropriations of funds. Public affected accountants+ by other independence may be services to grantees-clients In 10 cases the public accountants performed services for the grantees which could affect their independence. These services included functions such as day-to-day and/or periodic normally performed by grantees+ employees, bookkeeping. Although the accounting profession’s ethical standards permit accountants to perform many of these services, the fact that these accountants did not always include significant grantee financial management deficiencies in their audit reports raises a question whether the independence of some accountants may have been impaired. Independent auditors guidance and training -- need The types of findings noted ants need additional OEO guidance OEO’s audit requirements. by GAO indicate and additional 147 that some public accounttraining to comply with OFFICE OF ECONOMICOPPORTUNITY EXTERNAL AUDIT DIVISION (continued) Although uniform standards for auditing Government programs have been developed by a committee consisting of GAO, OEO, and seven major Federal grantor agencies, there is a continuing need for orientation and training programs for public accountants on audits of Federal grantees. A Need for strengthening contractual relationship independent accountants with Several of the accountants said their allegiance and responsibility GAO holds that OEO should require to the grantee rather than to OEO. grantees to strengthen the contractual arrangements with the auditors see that auditors are held responsible for their work. is and to OEO’s audit organization did not effectively monitor the adequacy of public accountants’ audits, and audit reports with monetary and/or nonmonetary audit exceptions had been closed without OEO’s regional offices verifying whether corrective actions promised by the grantees actually had been taken. GAO made several recommendations activities. OEO informed GAO that tions but that their implementation (B-130515, Apr. 4, 1973.) staff, it to OEO for strengthening its audit generally agreed with GAOss recommendamay, in some cases, require additional 148 OFFICE JFFICE OF ECONOXIC OPPORTUNITY OF LEGAL SERVICES lmn rovement s needed in Legal Services program grantees’ operations and administration * l GAO reported to the Congress in March 1973 on its evaluation of the results of OEO’s Legal Services program grantees’ operations and the manner in which they were administered. This program seeks to provide representation which will benefit the poor and help alleviate their problems. GAO reviewed seven standard program grantees operating in five States and Puerto Rico which employed attorneys to provide legal services and the Wisconsin Judicare project, under which legal services provided by private attorneys were paid for by the project from OEO funds. Standard program grantees GAO reported that standard program grantees could increase grams ’ effectiveness if they developed clearer and more detailed achieve program goals and if OEO developed a reliable system to on grantees’ accomplishments. their proplans to gather data GAO noted only limited achievements by most grantees in the economic development and law reform program goal areas. This happened partly because the grantees had neither clearly defined objectives and priorities set operating plans to achieve these goals. nor GAO had considerable difficulty interpreting and analyzing results reported by the grantees. They had not defined their objectives in operational terms. Their records were inadequate and the confidentiality of the attorney-client relationship precluded GAO from reviewing certain records. Adequate data was not available to determine the actual number and types of cases handled, to measure achievements in some program goal areas, and to compute the average cost for cases handled. Standard program grantees need to improve their management and administration so they can use resources more effectively and efficiently. Grantees need to improve their (1) determinations of persons’ eligibility legal assistance, (2) documentation of non-Federal contributions, and controls over client deposits. Wis cons in for (3) Judicare Although the Wisconsin Judicare project was established in 1966 as an alternative method of providing legal services to the rural poor, it was not designed to test its own effectiveness or its effectiveness in comparison to Wisconsin Judicare Consequently, standard Legal Services program grantees. has not been evaluated in depth and standard methods of delivering legal services and the value of the judicare concept remain in question. 149 OFFICE OFFICE OF LEGAL SERVICES OEO did --A --A not OF ECONOMIC OPPORTUNITY (continued) establish: systematic method of extracting each type of legal case handled, sults and for comparing Wisconsin grantees 0 model collecting GAO noted operations. --Private nomic standard data the following attorneys development. --Services provided were limited to --Private Legal Services for comparison attorneys were information, such as the cost needed for documenting judicare Judicare with standard program program grantee having to Wisconsin Judicare. problems relating involved very to little Wisconsin in in education, advocacy, and a narrow spectrum of target-area were not involved in appellate law of re* a system for * Judicare’s reform and eco- economic development residents. actions. GAO noted also that the management and administration of the judicare project should be improved in areas relating to documentation of judicare payments to private attorneys, client eligibility, and non-Federal contributions. OEO generally concurred in GAO’s recommendations and promised to take corrective actions so that it could bequeath to the proposed successor organization-the Legal Services corporation--a mechanism that would effectively meet the legal needs of the poor. (B-130515, Mar. 21, 1973.) 150 OFFICE OF ECONOMICOPPORTUNITY STATE AND LOCAL GOVERNMENTDIVISIONNoncom@iance with grant conditions -1-and OEO and other requirements -P At the request in June 1973 on its the California State ic Investigations of 2 :! Members of Congress from California, GAO reported examination of charges made about certain activities of Economic Opportunity Office--an OEO grantee. and evaluations The California State office did not comply with the special. conditions of the 1972 grant which prohibited investigations and unilateral evaluations. The OEO San Francisco regional office was aware that the State office was conducting unilateral evalua.tions and found them useful for assessing grantet performance. OEO did not try to prevent the State office from conducting evaluations or to modify the restrictions in the grant. The OEO San Francisco regional office apparently was unaware of the State office’s investigative activities. OEO headquarters informed GAO, however, that it was aware that the State office was performing investigations and evaluations and thus it may be said that it implicitly waived these prohibitions. Professional staf- oua~ifications - GAO’s examination of the State officess professional staff qualifications showed that it was questionable as to whether almost half of the professional staff met certain education and/or experience requirements contained in the State office’s written job descriptions. However, because the ambiguous terminology of the job descriptions could be broadly interpreted, GAO could not conclusively determine whether the employees met the job qualifications. Consultant contracts and unexpended carryover funds The State office spent at least $60,657 of technical for consultant services during program year 1972 without so. Moreover D the State office’s internal controls over inadequate. T funds to do were Although OEO established a policy in April 1970 of requiring grantees to return prior years9 unexpended funds to the Treasury or reprogram the funds to reduce Federal funding of grantees’ operations, the policy was not required by law and the OEO permitted the State office to keep its prior years V unexpended funds, Non-Federal -.- I assistance the authority contracting contributions The State office9s recorded non-Federal contributions greatly exceeded OEO’s requirement. However p the majority of these claims were questionable and the State office’s non-Federal contribution may have been deficient for the 1972 program year. GAO reported that the State office could meet its non-Federal contribution requirement if OEO’s Office of General Counsel determined that the funds spent by the State office under an OEO migrant program were allowable o OFFICE OF ECONOMIC OPPORTUNITY STATE AND LOCAL GOVERNMENT DIVISION (continued) After this report was released, the Comptroller General issued a decision on this matter at Senator Alan Cranston’s request. In a July 1973, decision, the Comptroller General stated that the funds expended the State office under the OEO migrant program did not constitute valid claims against the non-Federal contributions requirement. 20, by GAO recommended that OEO’s Acting Director see that the corrective action proposed by the State office and the OEO San Francisco regional office was taken. OEO’s Acting Director indicated to GAO that corrective actions were begun in response to specific identified problems and that OEO would continue to monitor the actions taken. (B-130515, June 14, 1973.) 1.52 * * OFFICE OF MANAGEMENTAND BUDGET Contents Page Better management needed in civil agencies over selection of in-house or contract performance of support activities 153 155 OFFICE OF MANAGEMENT AND BUDGET Better management needed in civil agencies over sele.ction -of in-house or contract performance of support activities . As stated in Office of Management and Budget (OMB) Circular A-76, the Government’s policy for obtaining certain products and services is to rely on the private enterprise system unless the national interest requires a Government agency to provide them directly. GAO made a review to determine whether selected civil agencies were adhering to the circular requirements in obtaining commercial or industrial The review was conducted at selected installations products or services. within the Atomic Energy Commission, the Bureau of Reclamation, the Federal Aviation Administration, the Department of Labor, the General Services Administration, the National Institutes of Health, and the National Aeronautics and Space Administration. GAO encountered a widespread failure by Federal civil agencies to adhere to this policy and to the detail procedures required by the circular. In its report to the Congress, GAO stated that the agencies have not supported justifications for in-house performance of activities nor have they inventoried and/or reviewed significant activities in accordance with circular requirements. GAO also observed that generally (1) the inventoried activities have not been converted to contract as a result of reviews prescribed by the audit groups have not reviewed the agencies’ implecircular, (2) internal mentation of the circular,,and (3) the agencies’ instructions implementing the circular do not contain sufficient guidance. GAO’s recommendations, which generally parallel those of the entire Commission on Government Procurement, are that a new approach and stronger implementation are needed to achieve consistent and timely Government-wide application of Circular A-76. GAO recommended that OMB take steps to apply the circular more vigorously and comprehensively and appoint a senior OMB member to devote full time to this matter. This appointee would be assisted by an interagency task force. factual In official content. comments to (B-158685, the report, agency July 31, 1973.) c. 155 officials agreed with its / RENEGOTIATION BOARD Contents Page Objectives of the Renegotiation Act could be more fully attained by strengthening provisions of the act and improving procedures of the Renegotiation Board 157 159 RENEGOTIATION Objectives of the Renegotiation Act more fully-attained by strengthening of the act and improving procedures the Renegotiation Board / BOARD could be provisions of The Renegotiation Board is an independent agency created under the Renegotiation Act of 1951 to eliminate contractors’ excessive profits on defense and space contracts and related subcontracts. In renegotiation, the Board requires contractors to refund to the Government those portions of profits determined to be excessive. Each contractor whose total renegotiable sales in a fiscal year exceed $1 million must file a report. GAO’s review objectives of the strengthening the certain provisions GAO recommended --Develop be used weighted tion of of the operations Renegotiation Act procedures of the of the act itself. that the of the Renegotiation could be more fully Renegotiation Board Renegotiation guidelines to show specifically in excessive profit determinations and include in the renegotiation the rationale for decisions. Board attained and by showed that by strengthening Board: how the statutory factors are to be applied and files adequate documenta- --Give greater consideration to the rate of return in generating renegotiable sales and use industry for more objective and broader based analyses. on capital averages --Assign contractors ’ filings which show seemingly reasonable (especially in borderline cases) to the regional boards for review to insure that contractors are not escaping excessive determinations because inaccurate data was submitted. to employed to provide profits further profit --Establish liaison with the Armed Services Board of Contract Appeals and other claims settlement review groups to insure that contractors are reporting accurate data on pending and paid claims. --Consider forwarding price determinations tions. l for use of procurement offices and on the Board’s analyses of data on excessive such determina- The Board stated that it was engaged in an intensive program, still unfinished, the results of which were to some extent evident in GAO’s reThe improvements include (1) guidelines for screening contractors’ port. filings, (2) actions to develop written guidelines for determining excessive profits, and (3) a system of automatic data processing techniques to provide a basis for more broadly based analyses of cases in both screening and fullscale negotiation. GAO recommended that the Congress: 159 RENEGOTIATION --Require standard significant BOARD the Board to obtain and analyze profit and cost data on commercial articles and services to determine whether amounts of profits are escaping renegotiation. --Determine whether the new, durable, productive equipment valid since the rationale for the exemption--the release Government stockpile of such equipment--has not occurred. --Amend the act to penalize contractors failing to file penalty could be patterned after that of the Internal ice ; that is, the Board could charge interest on the profits for the period the filing was late or charge if no excessive profit determination was made. --Revise the penalty provision to hold contractors furnishing all data required by the Board and show reasonable cause why they did not furnish --Consider whether the minimum amount of excessive the Board does not require refunds is appropriate whether the Board has clearly stated its if so, tablishing minimums and whether these objectives (B-163520, May 9, 1973.) 160 exemption of the on time. The Revenue Servexcessive a fixed amount responsible to have the the data. for contractors profits below which under the act and, objectives for esare being attained. is TENNESSEEVALLEY AUTHORITY Contents Page Alternative to requirement for repayment of Federal 161 investment 163 TENNESSEE VALLEY AUTHORITY Alternative repayment ‘L 4 of to requirement for Federal investment At the request of the Chairman, Subcommittee on Public Works AppropriaHouse Committee on Appropriations, GAO reported on an alternative tions, method for the Tennessee Valley Authority (TVA) to use in repaying the Federal investment in TVA’s electric power system. This alternative repayment method would treat the Federal investment in TVA as equity and, therefore, require a payment to the Treasury as a return on the investment. The principal amount of the investment, however, would ,The annual rate of return on the investment would be based on not be repaid. the average interest rate payable by the Treasury on its total marketable public obligations as of the beginning of each fiscal year and therefore would not result in any net interest cost to the Treasury to have the investment outstanding. GAO estimated that, should the method, TVA’s power customers could 1974 through fiscal year 2014 without (B-114850, Apr. 27, 1973.) Congress adopt the alternative repayment save about $287 million from fiscal year any net interest cost to the Treasury, 163 UNITED STATES CIVIL SERVICE COMMISSION Contents Page . A Improvements needed to increase the effectiveness employees incentive awards program of the Government Unclaimed Fund benefits in the Civil Service 165 Retirement 167 168 CIVIL SERVICE COF~MISSION Improvements needed to increase the effectiveness of the Government Employees Incentive Awards Program Incentive Awards Program to GAO reviewed the Government Employees’ determine whether cash performance awards (lump-sum special achievement and quality increases) and cash suggestion awards had been effective in Of the more couraging employees to help improve Government operations. 1,900 randomly selected employees responding to a GAO questionnaire, 56 cent indicated that the Incentive Awards Program had not motivated them During fiscal year 1972, Government agencies granted a better job. --over $16 million --$4.6 million --42,570 for quality $17 million. pay, for these 91,161 56,606 special employee achievement suggestions, awards, and increases having an estimated first-year Since these increases are reflected in awards will eventually cost the Government The Civil Service Commission reported measurable benefits lated to special achievements and adopted suggestions. not determined for quality increases. GAO’s review ties, representing Service Commission. --Cash was made in 10 civilian a cross-section of the GAO found that: performance awards --There was no clear distinction special achievement award and is much more expensive. between a quality the criteria increase, --Many employees why specific awards --About quality tions. one-fourth increase Employee participation increased by actively suggestions promptly. told of Federal civilian employees award because of restrictions --Quality increases Commission although awards. I and Defense departments Federal Government and inconsistently. not are not officially the agencies in the promoting cost of subsequent years’ much more. of $315 million Related benefits used were had been awards enthan perto do and agenin the Civil for granting although the were rewere a latter granted. are not eligible for in Commission regula- included in the program by the contacted treated them as incentive suggestion award and publicizing portion this of the program could be portion and by processing Further, the Commission’s annual report on the incentive awards program did not present a complete picture because it did not include the substantial costs of quality increases and program administration and may have significantly overstated measurable benefits. Also, neither the Commission nor the agencies had made reviews of sufficient frequency or depth to identify problems in the program. 167 the CIVIL GAO recommended --Establish performance that criteria has the SERVICE COMMISSION Chairman, limiting cash clearly improved Civil Service performance Government Commission: awards to operations. employees whose --Revise standards to clearly distinguish between the level of performance needed to receive a special achievement award or a quality increase so that quality increases will be relatively more difficult to obtain, --Emphasize specific the importance of reasons for awards. --Include consider ineligible quality increases as part of creating a comparable value for quality increases. --Insure gestions that agencies promote and publicize are processed promptly. the --Increase quality curacy the usefulness of the Commission’s increase and administrations costs of reported benefits and costs. annual report and by improving by identify strengths --Make reviews and weakness and es. evaluations keeping necessary employees well informed of the the Incentive Awards Program and award for employees who are now to program and program that sug- including the ac- The Commission said that GAO’s report presented a clear and accurate perspective on the Incentive Awards Program and that it believed GAO’s conAs a result, the Commission clusions and r&commendations were constructive. certain corrective actions and will said it had taken, or planned to take, fully discuss with agencies the approaches to be taken to deal with the Nov. 1, 1973.) problems identified by GAO,. (B-166802, Over a quarter million former Federal employees, most of whom are well have not applied for annuities or refunds of their beyond retirement age, contributions totaling about $26 million to the Civil Service Retirement are not claimed, the Civil Service Fund. Under current law, if the benefits Commission must maintain records on the contingent liability for claims in perpetuity . . GAO tests indicated that current addresses could be located for many of the people entitled to those benefits. Accordingly, GAO recommended that the Commission seek approval from the Congress to finance, out of interest income of the Retirement Fund, a program to locate former employees with balances in the fund amounting to $100 or more and to settle their claims. GAO also recommended that the Commission propose legislation providing for a statute of limitations permitting the destruction of retirement records when it would be statistically sound to conclude that no claims would be made. Further, l CIVIL GAO recommended Commission for SEjWICE to the Congress that such spending authority On October 30, This law, providing (including the Civil $641,000 to finance Retirement Fund and does not provide for Dec. 20, 1972.) it COMM.SSION consider favorably the and enabling legislation. requests of the 1973, Public Law 93-143 was signed by the President. fiscal year 1974 appropriations to independent agencies Service Commission), authorizes the Commission to spend a program to locate former employees with balances in the to settle their claims as proposed in our report. The law the statute of limitations recommendation. (B-130150, 169 UNITED STATES POSTAL SERVICE Contents Page Prototype mechanized system should be proved before expanding to additional facilities Cost comparison leading to decision to purchase leased postal did not conside’r local real estate taxes forgone Airmail Improvement Program initiated without the benefit of studies to determine whether the program would be economical 171 system 173 facility 173 market 173 UNITED STATES POSTAL SER’iJICE Prototype mechanized system should before expanding system to additional be proved facilities The letter mail code sort system (LMCSS) is designed to sort letters automatically by means of a machine-readable code imprinted on the envelopes. The Postal Service plans to install these systems in 179 strategically loat a cost of about $7 million cated, large-volume postal facilities by 1978, The Postal Service believes that LMCSS will reduce mail for each facility. processing costs by about $1 billion a year. GAO reviewed the operating and testing of a prototype LMCSS at the Cincinnati, Ohio, Post Office. In a report to the Postmaster General, copies of which were sent to cognizant congressional committees, GAO questioned the Postal Service’s plan to procure, in the near future, new and advanced system equipment for installation at four facilities before fully demonstrating GAO noted that a complete LMCSS had not been installed or tested; the system. the partial LMCSS was not meeting Postal Service performance standards; and the partial LMCSS was more costly than the existing letter sorting system. A Postal Service official advised GAO that the Postal Service recognized the need for satisfactorily demonstrating the LMCSS equipment before making a major capital investment and that expanding the LMCSS would be delayed pending such a demonstration. (B-114874, Nov. 8, 1972.) Cost to purchase leased postal consider local real estate facility taxes did not forgone At the request of Congressman James A. Burke, GAO reviewed the economics of a decision by the Postal Service to abrogate an existing lease arrangement and purchase the South Boston Postal Annex Addition in Boston, Massachusetts. GAO reported that, in determining that purchasing was more economical than leasing, the Postal Service did not consider real estate taxes forgone by Boston as a cost of ownership. Including real estate taxes forgone in the cost comparison showed an advantage of leasing over purchasing of about $3.6 million. After GAO’s review, the Postal Service changed its policy and now considers the effect of removing property from local tax rolls, so that its (B-145650, policy is consistent with that of other Federal agencies. Dec. 29, 1972.) F t ] the benefit whether the of market studies to determine program would be economical The Postal Service’s Airmail Improvement Program objectives are to arrest and reverse the decline in airmail volume and thus increase revenue by offering improved service, This was the first program for which the Service established delivery standards. not In August performed 1973 GAO reported to a market study before the Congress it initiated 173 that the Service had the program; delivery $ UNITED STATES POSTAL SERVICE standards were not being met; and increased costs associated with the program were not being offset because anticipated increased airmail volume had not materialized. On the bases of interviews with large mailers, GAO believed that there was a need to reevaluate the program to determine (1) whether it could be modified to better meet customer needs and, in turn, to increase participation or (2) whether it should be curtailed, In response to GAO’s recommendations, was examining possible program modifications customer needs. (B-114874, Aug. 6, 1973.) 174 the Postal Service stated that it and making surveys to determine VETERANS ADMINISTRATION Contents Page I Better use of outpatient improve health care services delivery to and nursing veterans 175 care bed facilities could 177 VETERANS ADMINISTRATION Better use of outpatient services and nursing care bed facilities could improve health care delivery to veterans v The Veterans Administration (VA) outpatient program for medical and dental activities and the number of veterans treated have increased significantly over the last decade,. GAO reviewed VA’s health care delivery system to determine if better use of outpatient clinics could improve the care provided to veterans. The outpatient program has helped shorten the length of hospital stay; however, opportunities exist to further improve the program. On the basis of a random sample of 420 patient medical records, which were reviewed by the treating physicians at six hospitals, GAO estimated that about 146,000 or 15 percent of the 1 million hospital days furnished at these hospitals during fiscal year 1971 could have been avoided. GAO found that: --Less than 10 percent of the hospitals received outpatient hospitalization. patients care for admitted to diagnostic --Many patients could have been discharged been made of outpatient facilities or if had been available. to --Poor planning and surgical facilities coordination unnecessarily --Utilization evaluating review matters committees placed relatively related to more efficient --Outpatients cause the often had appointment use had facilities admissions with hospitalization. little patient available emphasis care. use modern dentistry concepts on be- extensively that: --Dental clinic productivity personnel and using more --At some clinics VA dentists reduced the amount of time --Dental reduce hospital lengthened if greater care bed the six before to wait many hours to see a VA physician scheduling system was inadequate. Some VA dental clinics do not increase professional productivity, GAO found of earlier nursing each of testing could be improved than one chair per performed administrative they devoted to dental clinic efficiency could be improved the number of broken appointments. --The number if resources of by using more paradental dentist where possible. veterans referred among neighboring to private VA stations 177 if steps duties work. were which taken to dentists could be reduced were better coordinated. VETERANS ADMINISTRATION G.1\0 made various recommendations designed clinic scheduling, productivity, and efficiency erally, VA agreed with GXO and said it would (B-167656, Apr. 11, 1973.) 178 to improve hospital and review procedures. Gentake corrective action. VARIOUS DEPARTMENTSAND AGENCIES Contents Page . CIVIL SERVICE COMMISSION, OFFICE OF MANAGEMENTAND BUDGET, AND DEPARTMENTOF LABOR Improvements needed in conducting the survey of non-Federal salaries used as basis for adjusting Federal white-collar salaries DEPARTMENTOF AGRICULTUREAND DEPARTMENTOF HEALTH, EDUCATION, AND WELFARE Processed fruits and vegetables: need for better controls and improvement in sanitation in some plants 183 183 185 DEPARTMENTOF AGRICULTURE; DEPARTMENTOF HEALTH, EDUCATION, AND WELFARE; DEPARTMENTOF LABOR; OFFICE OF ECONOMICOPPORTUNITY; AND OFFICE OF MANAGEMENTAND BUDGET Problems limiting progress of Federal programs affecting migrant and other seasonal farmworkers -187 DEPARTMENTOF AGRICULTURE, DEPARTMENTOF STATE, AND AGENCYFOR INTERNATIONAL DEVELOPMENT Better use could be made of U.S. assistance and other support to the Philippines 4 181 DEPARTMENTOF AGRICULTURE; DEPARTMENTOF HEALTH, EDUCATION, AND WELFARE; DEPARTMENTOF JUSTICE; DEPARTMENTOF THE TREASURY; AND OFFICE OF MANAGEMENT AND BUDGET A single agency needed to manage port-of-entry inspections-particularly at U.S. airports DEPARTMENTOF AGRICULTUREAND DEPARTMENTOF THE INTERIOR Additional actions needed to minimize adverse environmental impacts of timber harvesting and road construction on forest land I 181 185 187 189 189 191 191 DEPARTMENTOF COMMERCE;DEPARTMENTOF DEFENSE; GENERALSERVICES ADMINISTRATION; DEPARTMENTOF HEALTH, EDUCATION, AND WELFARE; DEPARTMENTOF LABOR; AND VETERANSADMINISTRATION Opportunities for reducing the cost of constructing and operating health facilities 193 DEPARTMENTOF COMMERCE,DEPARTMENTOF THE INTERIOR, AND OFFICE OF MANAGEMENTAND BUDGET Need for a national earthquake research program 197 197 193 DEPARTMENTOF DEFENSE, GENERALSERVICES ADMINISTRATION, AND TENNESSEEVALLEY AUTHORITY Improvement needed in use of formal advertising procedures for procurement 199 DEPARTMENTOF DEFENSE AND DEPARTMENTOF STATE Need for tighter control over U.S. commitments to other nations Desirability of improved reporting on U.S. contributions to NATO Payment of phantom troops in the Cambodian military forces 201 201 202 202 199 VARIOUS DEPARTMENTSAND AGENCIES C o n t e n t s (continued) Page DEPARTMENTOF THE INTERIOR, DEPARTMENTOF AGRICULTURE, DEPARTMENTOF DEFENSE, AND THE GENERALSERVICES ADMINISTRATION Need for Federal agencies to improve solid waste management .-. practices DEPARTMENTOF JUSTICE AND DEPARTMENTOF STATE Progress toward and improvements needed in preventing illicitly reaching the United States 205 205 207 heroin from 207 DEPARTMENTOF JUSTICE AND DEPARTMENTOF THE TREASURY Heroin being smuggled into New York City successfully 209 209 DEPARTMENTOF LABOR AND DEPARTMENTOF HEALTH, EDUCATION, AND WELFARE Problems in operating certain training programs in Appalachian Kentucky under the Manpower Development and Training Act 211 OFFICE OF MANAGEMENT AND BUDGET, CORPSOF ENGINEERS, DEPARTMENTOF HOUSINGAND URBAN DEVELOPMENT,AND DEPARTMENTOF TRANSPORTATION Differences in administration of relocation assistance program OFFICE OF MANAGEMENT AND BUDGETAND GENERALSERVICES ADMINISTRATION Revisions needed in financial management policies of the Federal Government's Automatic Data Processing Fund 180 211 213 213 215 215 VARIOUS (Civil Service Improvements needed survey of non-Federal basis for adjusting DEPARTMENTS AND AGENCIES Commission, Office of Management and Department of Labor) conducting the salaries used as Federal white-collar and Budget, in salaries . The principle that salaries for Federal white-collar employees should be comparable with salaries paid in private enterprise for the same levels of work is established by law. GAO is reviewing the comparability process for adjusting Federal white-collar salaries because it is desirable that an independent assessment be made and because it costs about $420 million a year for each l-percent increase in pay. The first phase of the review was completed during fiscal year 1973 and dealt with the design and conduct of the annual survey of non-Federal salaries. The survey is used as the basis for assessing and adjusting Federal white-collar salaries. In its report on this phase of the review, GAO stated that the adoption of the comparability principle and the provision for annual review and adjustment have generally advanced the evolution of Federal white-collar salary determination. The resultant pay adjustments have, on the whole, significantly narrowed the spread between Government and private sector average salary rates determined by the annual survey. There is, however, a need to supplement and strengthen the design and data-gathering process of the annual survey to better accomplish the basic purposes for which the principle of comparability was adopted. Further, more emphasis should be given to compensate evaluation and research in order that timely changes in the comparability process can be made. In the annual survey, it would not be feasible to survey every Government job to determine its average salary in the private sector. Instead, a An arithmetic select group of positions at various work levels is surveyed. mean of the private enterprise rate for each work level is computed. These means are the bases used to assess and adjust Federal rates. GAO reported that the occupational composition of the jobs selected for survey were not sufficiently representative of the variety of Federal jobs The job mixes at certain of at the GS-5, GS-7, GS-9, and GS-15 work levels. those levels contained disproportionate numbers of jobs which were highly and this resulted in an upward bias of the averpaid in the private sector, age work- level rates. Although the annual survey is designed to estimate the national salary rates in the private sector for selected jobs comparable to those in the the scope of the survey includes only the salaries of about Federal sector, Employees of State 25 percent of non-Federal sector white-collar employees. nonprofit organizations, and some industries are and local governments, excluded. The rationale for many of the exclusions no longer seems valid. Including a more representative cross section of the non-Federal sector would allow the survey to reflect, proportionately, employment and pay for each of the major segments of the non-Federal sector. 181 VARIOUS (Civil Service With respect for the comparability errors to determine a need to: --Clarify to Commission, Office of Management ‘and Department of Labor) and Budget, the actual conduct of the survey, GAO observed a need process to include a means of measuring nonsampling the degree of data reliability. Further, GAO reported certain --Reevaluate certain the job-matching --Provide DEPARTMENTS AND AGENCIES additional job definitions. surveyed technique. jobs to see guidance and training if to they are susceptible data collectors. to GAO’s report contained a number of recommendations to the Director, Office of Management and Budget; Chairman, Civil Service Commission; and the Secretary of Labor. Agency officials were generally in accord with the message of GAO’s report. The Civil Service Commission, with approval of the Office of Management and Budget, has requested a supplemental appropriastudy of the feasibility of implementing tion of $760,000 for a “crash” GAO’s recommendations along with numerous other matters relating to Federal compensation policies and procedures, The Bureau of Labor Statistics also agreed that the recommended improvements in its conduct of the salary survey were needed and requested $600,000 for fiscal year 1975 to make the needed changes for incorporation into the March 1976 survey. (B-167266, May 11, 1973.) 182 VARIOUS DEPARTMENTS AND AGENCIES (Department of Department of Health, Agriculture Education, and and Welfare) Processed fruits and vegetables: need for better controls and improvement in sanitation in some plants t- HEW, has primary Federal responThe Food and Drug Administration (FDA), sibility for inspecting foods--except for meat, poultry, and egg products-and for insuring that foods entering interstate commerce are safe and wholesome and that adulterated and misbranded products are removed from the market. The Agricultural Marketing Service (AMS), Department of Agriculture, provides grading services in fruit upon request and on a reimbursable basis, To receive the service, a plant must be and vegetable processing plants. maintained under sanitary conditions. A 1953 agreement between AMS and FDA arranged for carrying out activities having common or related objectives. Need to control processed fruits vegetables which may be adulterated and From January 1, 1970, through March 31, 1971, about 15 billion pounds of fruits and vegetables were subject to AMS grading. During that period, AMS identified about 39 million pounds in 132 plants that did not meet U.S. grade standards because the products had excessive foreign materials--such as worms, insects, oil, rust, and paint flakes--or because the products had been packed under unsanitary conditions. GAO found that AMS, in accordance with its normal procedures, did not control such products but left their disposition to the processors. Also, FDA did not routinely obtain from AMS information on these products which might have been adulterated. In July 1971 GAO asked FDA to investigate specific production lots which did not meet U.S. grade standards. Of 31 lots investigated, FDA reported that 2 which had been shipped in interstate commerce were adulterated; 3 had been destroyed or diverted for use as cattle feed; and the rest had been shipped from the plants and were not available for sampling or could not be traced. I The agreement between FDA and AMS was revised in May 1972 to provide that, whenever AMS found a production lot to be hazardous to health, it would report this information to FDA. However, the revision did not cover potentially adulterated products other than those considered hazardous to health. Potentially adulterated products include those that consist, in whole or in part, of any filthy, putrid, or decomposed substance; those that are otherwise unfit for food; and those that have been prepared, packed, or held under unsanitary conditions whereby they may have become contaminated by filth. In h under obtain a February 1973 the authority of from Agriculture report to the Congress, the Federal Food, Drug, necessary information 183 GAO recommended that (1) and Cosmetic Act, routinely for FDA to take appropriate FDA, VARIOUS DEPARTMENTS AND AGENCIES (Department of Agriculture Department of Health, Education, action against all processed fruits grade standards for reasons which, products adulterated and that (2) tion on a timely basis. and and Welfare) and vegetables which failed to meet U.S. under FDA standards, would render the AMS cooperate in providing such informaJL HEW said it concurred in the recommendation and would work with AgriculAgriculture replied that AMS’s grading service was ture to implement it. voluntary and that its minimum guidelines for foreign material were more restrictive than FDA’s. Agriculture expressed the belief that, if AMS reported to FDA all products which failed to meet AMS’s grade and quality standards, the participating plants would be disadvantaged by being subjected to standards different from those applied to nonparticipating plants. In April 1973 Agriculture reported, however, that it was developing amendments to its agreement with FDA to provide that products which failed meet U.S. grade standards and which might have been adulterated would be (1) made to comply with the standards, (2) diverted for processing into other products, (3) voluntarily disposed of for nonfood purposes, or (4) reported to FDA. t to In August 1973 an AMS official advised GAO that the agencies had agreed on the amendments and that the revised agreement would be published in the Federal Register . AMS does not notify FDA of plantsfrom which its grading service has been withdrawn, suspended, or terminated Conditions revealed by GAO visits to fruit and vegetable processing plants and AMS sanitation reports and grading records showed that some plant managements were not taking appropriate and timely actions to correct known sanitation deficiencies and that some AMS employees were not effective in having plant managements maintain their plants under sanitary conditions. Under its 1953 agreement with FDA, AMS was not required to and did not notify FDA of plants where grading service had been denied or withdrawn because of sanitation deficiencies. During GAO’s review, AMS took action which should improve plant sanitation conditions. In August 1973 an AMS official told GAO that AMS and FDA had agreed to amend their agreement to provide that the denial or withdrawal of inspection services would be reported to FDA. He stated also that the revised agreement would be published in the Federal Register. (B-164031 (2)) Feb. 21, 1973.) 184 - VARIOUS DEPARTMENTS AND AGENCIES (Department of Agriculture; Pepartment of Health, Education, and Welfare; Department of Justice; Department of the Treasury; and Office of Management and Budget1 *i ‘t A single agency needed inspections--particularly to manage port-of-entry at U.S. airports In May 1973 GAO reported to the Congress that the inspection resources of the four Federal agencies responsible for inspecting persons entering the United States-Immigration and Naturalization Service, Department of Justice; Bureau of Customs, Department of the Treasury; Public Health Service, Cepartment of Health, Education, and Welfare; and Department of Agriculture--are strained by the increases in the number of arrivals, particularly at international airports. The situation is further aggravated by the uneven distribution of arrivals during both the day and year. The increases in and concentration of air arrivals and the present four-way division of inspection functions contribute to management problems, At Kennedy International Airport, in New York, for example: --The agencies locations. must staff --The agencies work shifts have different and for billing --The agencies have different sults in wide disparities work. --The pressure inspections and in supervise inspections policies airlines and procedures for services. at four for pay scales for overtime work pay for inspectors performing to quickly process arrivals at peak traffic periods. dilutes the separate establishing which resimilar quality of The four agencies recognized that a fragmented approach to inspections will not allow a more efficient and effective inspection system to develop. Attempts to improve the system have been frustrated due to the difficulties of multiagency cooperation. GAO recommended that the Director, Office of Management and Budget (OMB), in cooperation with the four agencies, should implement single-agency management of port-ofentry inspections. Immigration, Customs, and Agriculture agreed with GAO’s recommendation. I / However, and emphasized miology could single-agency in a particular HEW did not agree with the concept of single-agency management that only experienced inspectors understanding disease epideadequately carry out their inspections. GAO pointed out that management would not eliminate experienced judgment or expertise inspection function. On March 28, 1973, the President transmitted to the Congress a reorganization plan which included a proposal to transfer Immigration’s inspections to Customs . This would be a significant first step in eliminating the fragmented inspections management. Although the plan was approved, the VARIOUS DEPARTMENTSAND AGENCIBS [Department Health, Education, and Welfare; Department of Justice; Department of the Treasury; and Office of Management and Budget) transfer was not carried out. OMB informed GAO in June 1973 that it did not believe the reorganization plan was the appropriate vehicle for the transfer. OMB, however, had no objection to GAO's conclusions and recommendations. (B-114898, May 30, 1973.) 186 VARIOUS DEPARTMENTS AND AGENCIES (Department of Agricult,ure; Department of Health, Education, and Welfare; Department of Labor; Office of Economic Opportunity; and Office of Management and Budget) Problems limiting progress of Federal programs affecting migrant and other seasonal farmworkers t In February Federal programs sonal farmworkers New York, Texas, is administered sonal tion, 1973 GAO reported to the Congress on the impact of major to improve the living conditions of migrant and other seain six agricultural areas in California, Florida, Michigan, Federal participation in these programs and Washington. by the Departments of Agriculture, HEW, and Labor and OEO. The Federal Government provides funds to help migrant farmworkers improve their living conditions through health, housing, and day-care programs. and other manpower, seaeduca- although the Federal Government’s programs provided GAO reported that, needed services for many of the estimated 199,000 migrant and other seasonal farmworkers and dependents, the amount of funds made available in relation to the target population, which OEO estimates at 5 million, and the magnitude of their problems have limited the programs’ effectiveness. Although the funding of programs has increased and larger amounts are expected to be made available in the future, budgetary constraints will almost certainly continue to limit progress in meeting these farmworkers’ needs. GAO also reported --Administrators more effectively families. that: need to improve the operations of their aid migrant and seasonal farmworkers programs and their to --Federal assistance directed to problems of migrant and other seasonal farmworkers is administered by four executive agencies on a fragmented basis through numerous programs, each having separate legislative authority and intent. I * Federal agencies operating the programs generally agreed with GAO’s recommendations and said action had been, or would be, taken accordingly. In response to GAO’s recommendation concerning the need for developing an overall plan and a common direction of effort among Federal agencies operating these programs, OMB said that it was working with the,agencies on what sort of interagency coordination might be necessary. (B-177486, Feb. 6, 1973.) 187 VARIOUS (Department of DEPARTMENTS AND AGENCIES Agriculture and Department of the Interior) Additional actions needed to minimize adverse environmental impacts of timber harvesting and road construction on forest land - Two Federal agencies--the Forest Service, Department of Agriculture, and the Bureau of Land Management (BLM), Department of the Interior--manage about 660 million acres of federally owned land for a sustained high-level output of forest resources to meet public demands without impairing land productivity. Both agencies are required to consider environmental values in making land management decisions. ii In March 1973 GAO reported to the Congress that procedures and practices followed by both agencies in planning timber sale and road construction projects did not insure that the expertise of resource specialists was obtained and used to minimize the adverse impact on forest resources. In many instances in which timber-harvesting and road construction projects caused serious damage to forest resources and the environment, project planners either had not obtained or had not followed the advice of resource specialists. To minimize adverse environmental impact of decisions relating to land management, GAO recommended that the Forest Service and BLM (1) require project planners to obtain and use the expertise of resource specialists in planning and designing each timber sale and road construction project or, when such expertise is not obtained or used, document the reasons therefor, (2) require that the resource specialists* views and recommendations be made part of the project planning documents for review by supervisory officials, and (3) identify and analyze where and why needed assistance from resource specialists could not be obtained and explore ways to provide such assistante. Agriculture generally agreed with GAO’s conclusions Forest Service’s national instructions had been or were require engineering representatives to call on appropriate ists while planning and constructing roads. Agriculture the national instructions covering timber sale planning out were being revised to require that needed skills be mented, and made available to district rangers and that made of the use or nonuse of specialists or the failure cialists’ advice. and stated that the being modified to resource specialstated also that and timber sale layidentified, docud.ocument.ation be to follow the spe- Interior said that BLM had installed procedures which met most of GAO’s recommendations but that these procedures had not yet been fully implemented at the field level. However, those procedures make the use of resource specialists optional rather than mandatory. GAO believes that additional actions are needed to strengthen BLM’s new procedures to require that the expertise of specialists be obtained and used when it is not, to document for supervisory review why it was not conor, sidered necessary, was not available, or was not used. (B-125053, Mar. 20, 1973.) 189 i 1 I VARIOUS DEPARTMENTS AND AGENCIES (Department of Agency Better use could be made U.S. assistance and other support to the Philippines Agriculture, Department of State, for International Development) and of Direct U.S. economic and military assistance programs to the Philippines However, less visible averaged $68 million annually from 1965 through 1971. such as sugar premium payments, favorable but larger forms of dollar flows, have averaged about $388 miltariff agreements, and U.S. military spending, lion annually. These latter means stem from programs of the U.S. Government and are not necessarily directed to the serving specific U.S. interests orderly development of Philippine economy, t assistance programs--based on the criGAO reported that I-J.S. economic terion of self-help--have achieved little success in bringing about much The influence of needed social and economic changes in the Philippines. these programs has been lessened by inadequate Philippine Government support. GAO found that over the years the Agency for International Development (AID) has planned technical assistance grant and direct loan programs on the assumption that the Philippine Government would provide adequate local currency support to carry out the various agreements. In 1965 GAO reported that Philippine Government support was inadequate. There has been some improvement but this problem still persists. For other types of dollar inflows to the Philippines States, GAO observed that U.S. payments of $485 million 130 percent of the world price of sugar during the past U.S. sugar quota system have not provided much assistance ment of the Philippines and its people. by the United over and above 7 years through the toward the develop- GAO recommended that (1) the Secretaries of State and Agriculture develop methods to direct at least part of the sugar premium payments to economic development and social reform programs and that (2) the Secretary of State impress upon the Philippine Government the need for such use. In providing direct assistance, the United States should more effectively insure that Philippine funds will be available when needed before it turns over U.S e a portion of the receipts from resources to joint projects. For example, U.S. sugar trade could be used for this purpose. * * The Department of State said that any attempt to use the benefits accruing to the Philippines from the sugar legislation to implement U.S. policy objectives would be tenable anly if done without detracting from the main purposes of U.S. sugar policy. AID cited various assistance projects for which it stated that Philippine financial support had been adequate. It agreed that Philippine local currency support and program implementation continue to be problems but that these problems have become less serious in recent years. 191 VARIOUS (Department DEPARTMENTS AND AGENCIES of Agriculture, Department of State, Agency for International Development) and In view of the magnitude of the indirect assistance provided to the Philippines through sugar premiums and the great interest of the United States in assisting with the economic and social development of the PhilipGAO expressed the belief that the United States should act to impress pines, upon the Philippines the potential better use of a portion of these funds. GAO stated in its report that the Congress may wish to review this matter with the Departments of State and Agriculture and AID. (B-133359, Mar. 2, 1973.) 192 -L t VARIOUS DEPARTMENTS AND AGENCIES (Department of Commerce; Department of General Services Administration; Department Educat ion, and Welfare; Department of and Veterans Administration) Opportunities constructing . for reducing and operating Defense; of Health, Labor; the cost of health facilities GAO undertook a comprehensive Pursuant to a law enacted by Congress, study of the costs of constructing and operating health facilities and reported to the Congress on ways to reduce these costs for facilitFes built with assistance provided under the Public Health Service Act. GAO also examined ways in which the demand for facilities could be reduced or eliminated. Constructing operating tunities cilities, fication different and health facilities In a November 1972 report to the Congress, GAO identified many opporfor improved planning, construction, and operation of health faincluding advance analysis of specific health care needs, identiof alternative sources of funds, reuse of building designs, and construction techniques. Hospital planners generally do not evaluate on a life-cycle basis alternative construction techniques, material, designs, and operating systems. Many hospital administrators and architects, in efforts to-curb the. rising cost of hospital construction, search for obvious savings in initial construction. These initial savings often preclude later savings in operations and maintenance that exceed the initial cost savings. initial hospital To demonstrate construction for detailed the impact that certain alternatives and life-cycle costs, GAO selected study. The demonstration showed --Initial construction costs of the as much as 8.6 percent lower than built. --Life-cycle incorporating hospital. I b redesigned those of costs of as much as $10.4 million the improvement alternatives the would have on a recently opened that: facility facility would have been that was could have been into the redesigned saved by GAO recommended that the Secretary of HEW (1) compile and publish information on the essential factors to be considered in project planning, (2) explore the feasibility of reusing hospital designs, (3) adopt a common set of construction requirements for HEW-administered programs, (4) develop and disseminate a scientific base of knowledge on construction requirements, and (5) require that the fast-track and total concept approaches be considered for health facility projects assisted under the Public Health Service Act. 193 VARIOUS DEPARTMENTS AND AGENCIES (Department of Commerce; Department of General Services Administration; Department Education, and Welfare; Department of and Veterans Administration) Defense; of Health, Labor; GAO also recommended that HEW establish the capacity to provide lifecycle cost data to health facility planners and require that applicants for Federal funding justify the use of construction techniques, materials, designs, and operating systems which differ from those recommended by HEW. GAO recommended further that, until HEW establishes the capacity to provide life-cycle cost data to health facility planners, HEW should encourage planners to consider the information presented in this report, along with local operating conditions and costs, in identifying the alternatives for life-cycle analysis that are likely to be the most appropriate for inclusion in the facility. Demand facility for health construction GAO also identified and studied ways in which health facility construction could be avoided by either reducing the demand for such facilities or increasing the productivity of existing facilities. The study showed that the demand for hospitals and, to a lesser extent, other health care facilities could be reduced and that, by more efficiently using existing facilities, millions of dollars in construction costs would not need to be spent. These results could be attained by (1) placing greater emphasis on preventive medicine, (2) making more appropriate use of various types of health care facilities, (3) increasing the use of more efficient and economical medical care delivery systems, (4) using more effective utilization review techniques, (5) changing health insurance incentives that emphasize inpatient care, (6) sharing more hospital services, (7) organizing more efficient and economical health care systems, and (8) strengthening the role and increasing the capabilities of areawide health planning agencies. GAO made a number of recommendations to the Secretary of HEW calling for these changes. In implementing these changes, GAO recommended that HEW solicit the cooperation of other Government agencies, private health organizations, and medical professionals and assume leadership in these areas. Some health care providers have changed traditional health care demand and utilization patterns, decreasing the need to construct acute care and other types of health facilities. The economic benefits emanating from these changes and the means by which such changes have been effected, as discussed in GAO’s report, should be of particular interest to the Congress. Accordingly, GAO recommended that the Congress consider these matters when it considers legislative health care proposals, such as those providing for the reorganization of the existing health care delivery system and for programs on national health insurance. ‘194 . VARIOUS DEPARTMENTSAND AGENCIES (Department of Commerce; Department of Defense; General Services Administration; Department of Health, Education, and Welfare; Department of Labor; and Veterans Administration) HEW, 5 other Federal agencies, and 17 private organizations were The agencies requested to review and comment on all or parts of the study. (B-164031(3), Nov. 20, and organizations generally concurred in the report. 1972.) * 195 VARIOUS (Department the Interior, * 3 Need for research a national program DEPARTMENTS AND AGENCIES of Commerce, and Office and Budget) Department of of Management earthquake After the Alaska earthquake in 1964, Federal agencies developed and Earthquake researc [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Agao%3A6a7216df81cb2f2f. Public record. Not legal advice.