mVoxx I |75-
t HOUSE OF REPRESENTATIVES
2d Session,;r~i;s:i;is il
HOUE COMMITTEE ON GOVERNMENT
Pritedforthe use of the Commnittee on Government Operations
U.S. GOVERNMENT PRINTING OFFICE
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COMMITTEE ON GOVERNMENT OPERATIONS
JACK BROOKS, Texas, Ch airan
L. H. FOUNTAIN, North Carolina FRANK HORTON, New York
JOHN E. MOSS, California JOHN N. ERLENBORN, Illinois
DANTE B. FASELL, Florida JOHN W. WYDLER, New York
TORBERT H. MACDONALD, Massachusetts CLARENCE J. BROWN, Ohio
WILLIAM S. MOORHEAD, Pennsylvania GILBERT GUDE, Maryland
WM. J. RANDALL, Missouri PAUL N. McCLOSKEY, JR., California
BENJAMIN S. ROSENTHAL, New York SAM STEIGER, Arizona
JIM WRIGHT, Texas GARRY BROWN, Michigan
FERNAND J. ST GERMAIN, Rhode Island CHARLES THONE, Nebraska
FLOYD V. HICKS, Washington ALAN STEELMIAN, Texas
DON FUQUA, Florida JOEL PRITCHARD, Wa gton
JOHNCOYERS, J., Michigan EDWIN B. FORSYTHE, New Jersey
BELLA S. ABZUG, New York ROBERT W. KASTEN, JR., Wisconsin
JAES V. STANTON, Ohio WILLIS D. GRADISON, JR., Ohio
LEO J. RYAN, California
CARDISS COLLINS, Illinois
JOHN L. BURTON, California
RICHARDSON PREYER, North Carolina
MICHAEL HARRINGTON, Massachusetts
ROBERT F. DRINAN, Massachusetts
EDWARD MEZVINSKY, Iowa
BARBARA JORDAN, Texas
GLENN ENGLISH, Oklahoma
ELLIOTT H. LEVITAS, Georgia
DAVID W. EVANS, Indiana
ANTHONY MOFFETT, Connecticut
ANDREW MAGUIRE, New Jersey
LES ASPIN, Wisconsin
WILLIAM M. JONES, General Counsel
JOHN E. MOORE, ktaff Administrator
WILLIAM H. COPENHAVER, A8sociate Counsel
LYNNE HIGGINBOTHAM, Clerk
J. P. CARLSON, Minority Counsel
Th report follows our committee's long-established practice of
publishing yearly its activities report as an interim report after the
first session of each Congress. A separate and final report covering
ivities during both sessions is published at the end of the Congress
d transmitted to the House pursuant to the biennial requirement of
House Rule XII 1(b).
The present report describes fully the committee's jurisdiction and
organization, and details our activities as well as projected programs
for the second session. I believe it attests both our considerable accom-
plishents during 1975 and the high momentum we are carrying into
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Preface ___ .. I
III. .,---Organization ----------- O10
A. Subcommittees ------- --- 10
B. Rules of the Committee on Government Operations-- 11
IV. Activities, first session, 94th Congress -_ --- 16
Summary .16----------- ------ 16
A. Investigatve reports----------------------- 16
B. Committee prints ----- --------------------- 17
C. Legislation ------ ------------------ 17
D. Committee action on reports of the Comptroller General- 19
Part Two. Report of committee activities---- --------------21
I. Matters of interest, full committee ---------------------21
A. Legislation and National Security Subcommittee, Hon.
Jack Brooks, chairman ----------------- ---25
B. Intergovernmental Relations and Human Resources Sub-
Sucommittee Hon. L. H. Fountain, chairman --------- 37
C. Conservation, Energy, and Natural Resources Subcom-
mittee, Hon. William S. Moorhead, chairman---- ----- 45
D. Government Activities and Transportation Subcommittee,
Hon. Win. J. Randall, chairman ------------ _------- 61
E. Commerce, Consumer, and Monetary Affairs Subcommit-
tee, Hon. Benjamin S. Rosenthal, chairman---------- 79
F. Manpower and Housing Subcommittee, Hon. Floyd V.
G. Government Information and Individual Rights Subom-
mittee, Hon. Bella S. Abzug, chairwoman ----- 97
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INTERIM REPORT OF THE ACTIVITIES OF THE
HOUSE CMITEE ON GOVERNMENT OP-
TIO TH CONGRESS, 1T SESSION, 1975
I. Jurisdiction, Authority, Powers, and Duties
The Rules of the House of Representatives provide for election by
the at the co encement of each Congress, of 22 named stand-
ing committees, one of which is the Committee on Government Opera-
tions. Pursuant to House Resolutions 76 and 101 (adopted Jan. 20
and 28, 1975) listing members of committees, the membership of the
Committee on Government Operations ws increased from 42 to 43.
S sets forth the co ttee's jurisdiction, functions, and re-
sponsibilities as follows:
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EsTABLISuMENT AND JURISDICTION OF STANDING COMMITTEES
THE COMMITTEES AND T1HEIR JURISDICTION
SThere l be in the House the following standing committees,
each of which shall have the jurisdiction and related functions assigned
to it by this clause and clauses 2,3, and 4; and all bills, resolutions, and
other matters relating to subjects within the jurisdiction of any stand-
ing committee as listed in this clause shall (in accordance with and
subject to lause ) be referred to such committees, as follows:
l(h) co.i..tE ON GOVER NM EN OPERATIO NS
(1) Budget and accounting measures, other than appropriations.
(2) The overall economy and eficiency of Government operations
Ine c -as 2 (.
and activities, including .Federal procurement.
(3) Reorganizations in the executive branch of the Government.
the States and municipalities, and general revenue sharing.
(5) National archives.
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GENERAL OVERSIGHT RESPONSIBILITIES
2. (a) In order to assist the House in-
(1) its analysis, appraisal, and evaluation of (A) the application,
administration, execution, and effectiveness of the laws enacted by the
Congress, or (B) conditions and circumstances which may indicate
the necessity or desirability of enacting new or additional legislation,
(2) its formulation, consideration, and enactment of such modifica-
tions of or changes in those laws, and of such additional legislation,
as may be necessary or appropriate,
the various standing committees shall have oversight responsibilities
as provided in paragraph (b).
(b) (1) Each standing committee (other than the Committeeon
Appropriations and the Committee on the Budget) shall review and
study, on a continuing basis, the application, administration, execution,
and effectiveness of those laws, or parts of laws, the subject matter of
which is within the jurisdiction of that committee, and the organiza-
tion and operation of the Federal agencies and entities having respon-
sibilities in or for the administration and execution thereof, in order
to determine whether such laws and the programs thereunder are being
implemented and carried out in accordance with the intent of the
Congress and whether such programs should be continued, curtailed,
or eliminated. In addition, each such committee shall review and study
any conditions or circumstances which may indicate the necessity or
desirability of enacting new or additional legislation within the juris-
diction of that committee (whether or not any bill or resolution has
been introduced with respect thereto), and shall on a continuing basis
undertake future research and forecasting on matters within the juris-
diction of that committee. Eachh such committee having more than
twenty members shall establish an oversight subcommittee, or require
its subcommittees, if any, to conduct oversight in the area of their
respective jurisdiction, to assist in carrying out its responsibilities
under this subparagraph.
The establishment of oversight subcommittees shall in no way limit
the responsibility of the subcommittees with legislative jurisdiction
from carrying out their oversight responsibilities.
(2) The Committee on Government Operations shall review and
study, on a continuing basis, the operation of Government activities
at all levels with a view to determining their economy and efficiency.
(c) At the beginning of each Congress, an appropriate representa-
tive of the Committee on Government Operations shall meet with ap-
propriate representatives of each of the other committees of the House
to discuss the oversight plans of such committees and to assist in co-
ordinating all of the oversight activities of the House during such Con-
gress. Within 60 days after the Congress convenes, the Committee on
Government Operations shall report to the House the results of such
meetings and discussions, and any recommendations which it may have
to assure the most efective coordination of such activities and other-
wise achieve the objectives of this clause.
of reviewing and studying on a continuing basis the impact or probable
impact of tax policies afecting subjects within its jurisdiction as de-
scribed in clauses 1 and 3.
AD- DITINAL FUNCTIONS OF COIMITTEES
(c) (1) The Committee on Government Operations shall have the
general function of-
(A) receiving and examining reports of the Comptroller Gen-
eral of the United States and of submitting such recommendations
to use as it deems necessary or desirable in connection with
the subject matter of such reports;
() evaluating the efects of laws enacted to reorganize the
legislative and executive branches of the Government; and
(C) studying intergovernmental relationships between the
United States and the States and muncipalities, and between the
United States and international organizations of which the United
(2) In addition to its duties under subparagraph (1), the Commit-
tee oi Government Ope rations may at any time conduct investigations
of any matter without regard to the provisions of clause 1, 2, or 3 (or
this clause) conferring jurisdiction over such matter upon another
stanig c mittee. Te comittee's findings and recommendations in
any such investigation shall be made available to the other standing
committee or committees having jurisdiction over the matter involved
(and included in the report of any such other committee when required
by clausi 2(1) (3) of t Rule XIi).
Rule XI provides athority for ivestiation and studies, as
ULES OF PROCEDURE FOP COMMITTEES
(b) Each committee is authorized at any time to consider such in-
vestigations and studies as it may cnsider necessary or appropriate in
the exercise of its responsibilities under Rule X, and (subject to the
adoption of expense resolutions as required by clause 5) to incur ex-
penses (including travel expenses) in connection therewith.
(d) Each committee shall submit to the House, not later than Jan-
uary 2 of each odd-numbered year, a report on the activities of that
noon on January 3 of such year.
Power to sit and act; subpen power
duties under this rule and Rule X (including any matte~ referd to
it under clause 5 of Rule X), any committee, or any subcommit-
tee thereof, is authorized (subject to subparagraph (2) (A) of this
(A) to sit and act at such times and placeswithin the United
States, whether the House is in session, has recessed, or has ad-
journed, and to hold such hearings, and
(B) to require, by subpena or otherwise, the attendance and
testimony of such witnesses and the production of such books,
records, correspondence, memorandums, papers, and documents,
as it deems necessary. The chairman of the committee, or any member
designated by such chairman, may administer oaths to any witness.
(2) (A) A subpena may be issued by a committee or subcommittee
under subparagraph (1) (B) in the conduct of any investigation or
activity or series of investigations or activities, only when authorized
by a majority of the members of the committee, and authorized sub-
penas shall be signed by the chairman of the committee or by any mem-
ber designated by the committee.
(B) Compliance with any subpena issued by a committee or subcom-
mittee under subparagraph (1) (B) may be enforced only as au-
thorized or directed by the House.
Use of committee funds for travel
(n) Funds authorized for a committee under clause 5 are for ex-
penses incurred in the committee's activities within the United States;
however, local currencies owned by the United States shall be made
available to the committee and its employees engaged in carrying out
their official duties outside the United States. No appropriated funds
shall be expended for the purpose of defraying expenses of members of
the committee or its employees in any country where local currencies
are available for this purpose; and the following conditions shall ap-
ply with respect to their use of such currencies:
(1) No member or employee of the committee shall receive or
expend local currencies for subsistence in any country at a rate in
excess of the maximum per diem rate set forth in applicable Fed-
(2) Each member or employee of the committee shall make to
the chairman of the committee an itemized report showing the
number of days visited in each country whose local currencies
were spent, the amount of per diem furnished, and the cost of
transportation if furnished by public carrier, or, if such trans-
portation is furnished by an agency of the United States Govern-
Th committee also exercises authority unde a numbr of congrs-
:5 U.S.C. sec. 2954
Information to committees of Congress on request
An executive agency, on request of the Committee on Govern-
members thereof, or on request of the Committee on Government
Operations of the Senate, or any fie members thereof, shall sub-
mit any information requested of it relating to any matter within
the jurisdiction of the committee. (Sept. 6, 1967; Public Law 89-
554; 80 Stat. 378, 413.)
31 U.S.C. see. 53(b)
Investigations and reports by Comptroller General
tions and reports as shal be ordered by either House of Congress
or by any committee of either House having jurisdiction over
revenue, appropriations, or expenditures. The Comptroller Gen-
eral shall also, at the request of any such committee, direct assist-
ants from his office to furnish the committee such aid and informa-
tion as it may request. (June 10, 1921; ch. 18, title III, see. 312;
42 Stat. 25.)
31 U.S.C. sec. 60
Analyses of executive agencies expend itures by Comptroller Gen-
eral; reports to congressional committees
The Comptroller General is authorized and directed to make
an expenditure analysis of each agency in the executive branch of
the Government (including Government corpporations), which, in
2 or legislation imposing duties specifically on the committee, see, for example, sec. 203
S o ederal Property and Administrative Services Act of 1949, s aamended
(40 U.S.C. 484(6e)), relating to negotiated disposal of Federal surplus property. It requires
tha explanatory statement be sent "to the appropriate committees of the Congress" in
advance of negotiated disposal under that act of all real and personal property (with
limited exceptions) whose fair market value exceeds $1,000. The present statutory lan-
guage sts from a 1958 amendment (Ac of July 2, 1958; 72 Sta. 288). In the legislative
n t amendment, the Committee on Government Operations was specifically men-
tioed as the appropriate committee of the ouse (H. Rept No. 173, 85th Cong., pp. 3-5).
ee 41 CR 101-47.30412(). Previousy, under the original language of this provision
S of the A y 12 1952 66 'Stat. 53), it had likewise been the Government
s Cs fu on to receive sue hexplanatory statements. Cf. H. Rept. No.
Sse 14(a) of the Housing and Urban Developmet Act of
1969, as amendedUrn Developmet Act of 1970 ( Pblie Law 91-609,
Dec. 31, 1970), relating to disposition f surplus land for low- and modera'te-income hios-
ing. See also 304 of the Intergovernmental Cooperation Act of 1968 (Public Law 90-
77), under whh executive agenes must furnish each year to the Committees an Gov-
ernment Operations summary reports of special or 'technical services provided to local
governments. See also 2 U.S.C. sees. 191-194, relating to oaths and testimony before a
**"i" *~U, ; . *
the opinion of the Comtroner Genera, will bl
to determine whether public funds have been economically and
efficiently administered and expended. Reports on such analyses
shall submitted by the Coptroller enera, time te,
to the Committees o Government Ope o, t e Apppa-
tions Committees, and to the legislative committees havinc
jurisdiction over legislation rating to the operations of he re-
spective agencs, of the two Houses. (Aug. 2, 1946; ch. 3, tle
II, 206; 60 Stat. 837.)
For other requirements which relate to General Accounting Office reports to Congress
and which affect the committee, see sees. 232 and 236 of the Legislative Reorganization Act
of 1970 (Public Law 91-510).
SII. Historical Background
The comimitte was initially named the "Committee on Expendi-
htres in the Executive Departments." Its antecedents are summarized
in Cannon's Preedents of the House of Representatives, vol. VII, sec..
2041, p. 831 (1935), as follows:
This committee was created, December 5, 1927, by the consolida-
tion of he eleven o ittees on Expenditues in the vario
Departments of the Government, the earliest of which has been
in existence since 1816. As adopted in 1816, the rule did not in-
lude the committees for the Departments of Interior, Justice,
Ariculture, Commerce, and Labor. The committees for these
Deartments date, respectively, from 1860, 1874, 1889, 1905, and
The resolution providing for the adoption of the rules of the T0th
Congress discontinued the several committees on expenditures and
transferred their functions to the newly created Committee -on Ex-
pendit res in the Executive Departments:
On March 17, 1928, the jurisdiction of the committee Was
further enlarged by the adoption of a resolution, reported fromi
the' Committee on Rules including within its jurisdiction the in-
dependent establishments and commissions of the Government.*
From 1928 until January 2, 1947, when the Legislative Reorganiza-
tion Act of 1946 became effective, the committee's jurisdiction was set
forth in Rule XIL 34, of the House Rules then in force (H. Doc. 810,
78th Cong., 2d Sess. (1945) ), as follows:
POWERS AND DTTIES OF CO.T.I.TEES
S34. The examination of the accounts and expenditures of the several
departments, independent establishments, and commissions of the
Government and the manner of keeping the same; the economy, just-
Scorrectness of such expenditures their confority with ap-
propriation laws; the proper application of public moneys; the
security of the Government against unjust and extravagant demuands;
retrenchment; the enforcement of the payment of moneys due to the
United States; the economy and accountability of public oficers; the
abolishment of useless offices, shall all be subjects within the jurisdic-
i ittee on Expenditures in the Executive Departments.
e laive Reorganization Act of 1946. section 121(b), as
adopted in paragraphs (a), (b), and (c) of Rule XI, 8 of later Rules
of the House (XT, 9 in the 93d Congress), provided:
Examples of the wide-ranging scope of the committee's jurisdietion may be found in
COMMITTEE ON GOVERNMENT OPERATIONS
(a) Budget and accounting easures, other than apppriations.
(b) Reoranizations in the execitive branch of the Government.
(c) Such committee shall have the du of-
(1) receiving and examining reports of the Comptroller Gen-
eral of the United States a of ibmitting such recommendations
to the ouse as it deems necessary or desirable in connecon with
the subject matter of such reports;
(2) studying the operation of Government activities at al
levels with a view to determining its economy and etliciency;
(3) evaluating the effects of laws enacted to reorganize the
legislative and executive branches of the Government:
(4) studying intergovernmental relationships between the
United States and the States and municipalities, and between e
United States and international organizations of which the United
States is a member.
(d) For the purpose of performing such duties the committee, or
any subcommittee thereof when authorized by the committee, is
authorized to sit, hold hearings, and act at such times and places with-
in the United States, whether or not the House is in session, is in
recess, or has adjourned, to require by subpena or otherwise the attend-
ance of such witnesses and the production of such papers, documents,
and booksand snd to take such testimony as it deems necessary. Subpenas
may be issued under the signature of the chairman of the committee or
of any subcommittee, or by any member designated by any such chair-
man, and may be seved by any person designated by any such chair-
man or member.5
The 1946 Act contained the following proviso:
Provided, That unless otherwise provided herein, any matter
within the jurisdiction of a standing committee prior to January 2,
1947, shall remain subject to the jurisdiction of that committee or
of the consolidated committee succeeding generally to the
jurisdiction of that committee.
This proviso was omitted from the Rules of the House adopted
January 3, 1953.6
Under the Constitution (Art I, sec. 5, cl. 2), "Ech House may de-
termine the Rules of its Proceedings." Omission of the proviso made
no substantive change, since the scope of the committee's jurisdiction
prior to January 2, 1947, was embraced within the committee's
jurisdiction as stated in existing rules and precedents.
The committee's membership, which was fixed at 21 when it was con-
solidated on December 5, 1927, was increased to 25 when the Legisla-
tive Reorganization Act of 1946 became effective on January 2, 1947.
In 1951, the committee's membership was increased to 27.7 From
1953 until January 1963, the committee's membership remained at 30.8
Pursuant to H. Res. 108, 88th Congress, adopted anuary 17, 1963, the
committee was enlarged to 31 members. In the 89th Congress the mem-
5Paragraph (d) was adopted by the House Feb. 10, 1947..
*H. Res. 5, 83d Cong. (99 Cong. Ree. 15). Cf. rules in H. Doe. 564, 82d Cong., 2d sess.,
p. 328 and In H. Doe. 739, 81st Cong.. 2d sess.. p. 326.
H. Res. 60, 82d Cong., 1st sess. (97 Cong. Ree. 184).
8 H. Res. 98, 83d Cong. (99 Cong. Ree. 436) ; H. Res. 84th Cong. (101 Cong. Ree. 484) ;
H. Res. 89. 85th Cong. (103 Con. Bee. 412) : H. Res. 120, 86th Cong. (105 Cong. Ree. 841) ;
I. Res. 137, 87th Cong. (107 Cong. Rec. 1677).
hership of the com ittee as increasd to 34 through passage of H.
Res. 114, January 14,1965. The committee membership in the 90th and
91st Congresses of 35 was first established by H. Res. 128, 90th Con-
gress approved January 16, 1967. The committee membership in the
92d Congress of 9 was established by H. Res. 192, approved
February 4, 1971. It was raised to 41 by H. Res. 158, adopted
January 24, The committee membershi of 42 was established by
H. Res. 1238, adopted July 17, 1974. As stated above, it was increased
to the present 43 by H. Resolutions 76 and 101, adopted Jan. 20 and
ptember 28, 194, the moneys appropriated to the co
mittee were, by House resolution in each session of Congress, available
for expenses incurred in conducting studies and investigations author-
ized under Rule X 9 whether made within or without the United
States. In the 94th ongress, these matters are covered in paragraphs
(m and (n of clause 2 of Rule XI, as set forth above. The funds for
the com ttee's studies and oversight functions during the 1st session
of the 94th Congress are provided by H. Res. 295, ar. 21, 1975. (H.
The committee's name was changed to "Committee on Government
Operations" by House resolution adopted July 3, 1952.10 The Con-
gr ioa eord indicates the reasons underlying that change in
name were, in part, as follows:
This committee is proposing the indicated change in the present
title, in view of the fact that it is misleading and the committee's
functions and duties are generally misunderstood by the public.
In suggesting the proposed change the committee based its deci-
si on what it considers to be the major or primary function of
the committee under the prescribed duties assigned to it to study
*'" i i to it to study
"the operations of Government activities at all levels with a view
to determining its economy and efficiency." It was the unanimous
view of the members of the committee that the proposed new title
would be more accurate in defining the purposes for which the
committee was created and in clearly establishing the major pur-
pose it serves.
* ,, ,"' . ..... -.....
ee items under (1) in footnote 3, of the final calendar of the committee for the 93d
Congress (Dee, 31, 1974).
S(98 CongRe. 9217). T Senate had made a similar change
2,ter onferences between the chairmaof the House and Senate
ditures i the Executive Departments t insure that oth Houses
would adopt the change in name. S. Res. 280, 82 Cong (98 Cong. Rec. 1701-1702). See
also ong., 2d p. (May 3, 1948).
SL o F 1 1 om the chairan, Senatette e on Expenditures in the
Executie Dpar ts, Snatr MClella to ator Hayden (98 Cong. Rec. 1702)
In order to perform its functions and to carry out its duties as fully
and as effectively as possible, the committee under the leadership of its
chairman, the Honorable Jack Brooks, of Texas, at the beginning of
the 94th Congress, established seven standing subcommittees, which
cover the entire field of executive expenditures and operations. The
new names, chairmen, and members of these subcommittees are as
Legislation and National Security Subcommittee. Jack Brooks,
chairman; members: John E. Moss, Benjamin S. Rosenthal, Jim
Wright. Don Fuqua, William S. Moorhead, James V. Stanton.
Michael Harrington, Frank Horton, John N. Erlenborn and
Intergovernmental Relations and Human Resources Subcommit-
tee, L. H. Fountain, chairman; members: Don Fuqua, Edward
Mezvinsky, Barbara Jordan, John L. Burton, Robert F. Drinan,
Glenn English, Elliott H. Levitas, John W. Wydler, Clarence
J. Brown, and Alan Steelman.2
Conservation, Energy, and Natural Resources Subcommittee,
William S. Moorhead, chairman; members: Dante B. Fascell,
Leo J. Ryan, L. H. Fountain, John L. Burton, Torbert H. Mac-
donald, Fernand J. St Germain, Richardson Preyer, Gilbert
Gude, Paul N. McClcskey, Jr., and Edwin B. Forsythe.
Government Activities and Transportation Subcommittee, Wm.
J. Randall, chairman; members: Cardiss Collins. Glenn
English, Bella S. Abzug, Richardson Preyer, David W. Evans,
Floyd V. Hicks,3 Les Aspin,3 Charles Thone, Edwin B
Forsythe, and Willis D. Gradison, Jr.
Commerce, Consumer, and Monetary Affairs Subcommittee, Ben-
jamin S. Rosenthal, chairman; members: Cardiss Collins,
Robert F. Drinan, Elliott H. Levitas, David W. Evans, An-
thony Moffett, Andrew Maguire, Edward zvinsky, Garry
Brown, Willis D. Gradison, Jr., and John N. Erlenborn.
Manpower and Housing Subcommittee, Floyd V. Hicks, chair-
man; members: Wm. J. Randall, Fernand J. St Germain, John
Conyers, Jr., James V. Stanton, Barbara Jordan, Les Aspin,4
Jim Wright,5 Robert W. Kasten, Jr., Joel Pritchard, and Alan
SThe chairman and the ranking minority member of the committee are ex-officlo members
of all subcommittees on which they do not hold a regular assignment.
2 Appointed to subcommittee Oct. 9, 1975.
3 Appointed to subcommittee Feb. 25, 1975.
Appointed to subcommittee Feb. 24, 1975.
s Appointed to subcommittee July 17, 1975.
Rank on subcommittee reversed Oct. 9, 1975.
Gove-rnment Information and Individual Rights Subcommittee,
BellaS.Abugchairwoman; members: Leo J. Ryan, John Con-
yers, Jr., Torbert H. Macdonald, John E. Moss, Michael Har-
rington, Andrew Maguire, Anthony offett, Sam Steiger,
Clarence J. Brown, and Paul N. McCloskey, Jr.
B. RULES OF THE COMMITTEE ON GOVERNMENT
Rule XI, 1(a) (1) of the House of Representatives provides:
The Rules of the HIouse are the rules of its committees and
ding commitee of the House shall adopt written rules
governing its procedure. ** *
n ac dance with the foregoping, the Committee on Government
Operations, on February 4, 19, adopted the following as the rules
Rule .--Applicatio. n of Rules
t we the terms "full committee" and "subcommittee" are
S to, the following rules shall apply to the Committee
on Government Operations and its subcommittees as well as to the
[See House Rule XI, 1.]
Rule .- Meeting
The regular meetings of the full committee shall be held on the
third Thursday of each month at 10 a.m., except when Congress has
adjourned. The chairman is authorized to dispense with a regular
meeting or to change the date thereof, and to call and convene addi-
tional meetings, when circumstances warrant. A special meeting of the
committee may be requested by members of the committee in accord-
ance with the provisions of House Rule XI, 2(c) (2). Subcommittees
shall meet at the call of the subcommittee chairmen. Every member
of the committee or the appropriate subcommittee, unless prevented
by unusual circumstances, shall be provided with a memorandum
ing (1) the purping or hearing; and (2) the names,
titles, background and reasons for appearance of any witnesses. The
minority staff shall be responsible for providing the same information
on witnesses whom the miority may request.
establish a quorum. If the chairman is not present at any meeting of
h+s+~i'.Ja^^|^^lJJf~i~c j^A||j^ BIl: d -t y A.ljXfIic-JlML 'UJ
party on the committee or subcommittee who is present shal preside at
[See House Rule XI, 2 (h).]
Rule 4.-Committee Reports
Bills and resolutions approved by the committee shall be reported
by the chairman in accordance with House Rule XI, 2(1).
Every investigative report shall be approved by a majority vote of
the committee at a meeting at which a quorum is present. Supple-
mental, minority, or additional views may be filed in accordance with
House Rule XI, 2 (1) (5). The time allowed for filing such views shall be
three calendar days (excluding Saturdays, Sundays, and legal holi-
days) unless the committee agrees to a different time, but agreement on
a shorter time shall require the concurrence of each member seeking to
file such views. A proposed report shall not be considered in subcom
mittee or full committee unless the proposed report has been available
to the members of such subcommittee or full committee for at least
three calendar days (excluding Saturdays, Sundays, and legal holi-
days) prior to the consideration of such proposed report in subcom-
mittee or full committee. If hearings have been held on the matter
reported upon, every reasonable effort shall be made to have such hear-
ings available to the members of the subcommittee or full committee
prior to the consideration of the proposed report in such subcommittee
or full committee.
Rule 5.-Proxy Votes
A member may vote by proxy on any measure or matter before the
committee and on any amendment or motion pertaining thereto. A
proxy shall be in writing and be signed by the member granting the
proxy; it shall show the date and time of day it was signed and the date
for which it is given and the member to whom the proxy is given. Each
proxy authorization shall state that the member is absent on official
business or is otherwise unable to be present; shall be limited to
the date and the specific measure or matter to which it applies; and,
unless it states otherwise, shall apply to any amendments or motions
pertaining to that measure or matter.
[See House Rule XI, 2(f).]
Rule 6.-Roll Calls
A roll call of the members may be had upon the request of any
[See House Rule XI, 2(e).]
Rule 7.-Record of Committee Actions
The committee staff shall maintain in the committee offices a
complete record of committee actions including a record of the roll-
call votes taken at committee business meetings. The original records,
or true copies thereof, as appropriate, shall be availale for public
inspection whenever the committe offices are oen for public business.
The staff shall assure that such original records are preserved with no
le 8.-Subomm ees; Referrals
There shall be seven subcommittees with appropriate party ratios
which shall have fixed jurisdictions. Bills, resolutions, and other
matters shall be referred by the chairman to subcommittees within
two weeks for consideration or investigation in accordance with their
fixed jurisdictions. Where the subject matter of the referral involves
the jurisdiction of more than one subcommittee or does not fall
withi any previously assigned jurisdiction, the chairman shall refer
the matter as he may deem advisable. Bills, resolutions, and other
ma referred to subcommittees may be reassigned by the chairman
wh n his judgment, the subcommittee is not able to complete its
[See House Rule XI, 1(a) (2).]
Rule 9.-Ea Of)cio Members
The chairman and the ran'king minority member of the committee
shall be ex officio members of all subcommittees. They are authorized
to vote on subcommittee matters; but, unless they are regular mem-
bers of the subcommittee, they shall not be counted in determining a
subcommittee quorum other than a quorum for the purpose of taking
Except as otherwise provided by House Rule XI, 5 and 6, the chair-
man of the full committee shall have the authority to hire and dis-
charge employees of the professional and clerical staff of the full
committee and of subcommittees subject to appropriate approval.
Rule 11.-Staff Direction
Except as otherwise provided by House Rule XI, 5 and 6, the staff
i shall be subject to the direction of the chairman of the
full committee and shall perform such duties as he may assign.
Rule 12.-Hearing Dates and Witnesses
chairman of thefull committee will announce the date, place,
and subject matter of all hearings at least one week prior to the comn-
mencement of any hearings, unless he determines that there is good
cause to begin such hearings at an earlier date. In order that the chair-
and hearing plans, each subcommittee chairman shall notify him of
meemet of harings, inluing th ate, pace, subject matter,
and the names of witnesses, willing and unwilling, who would be
called to testify, including, to the extent he is advised thereof, wit-
nesses whom the minority members may reuest. The minority mem-
bers shall supply the names of witnesses they intend to call to the
chairman of the full committee or subcommiee t earliest pos-
sible date. Witnesses appearing before the committee shall, so far
as practicable, submit written statements at least 24 hours in advance
of their appearance.
[See House Rule XI, 2 (g) (3), (g) (4), (j), and (k),]
Rule 13.-Open Meeting8
Meetings for the transaction of business and hearings of the com-
mittee shall be open to the public or closed in accordance with Rule
XI of the House of Representatives.
[See House Rule XI, 2(g).]
Rule 14.-Five-MInute Rule
A committee member may question a witness only when recognized
by the chairman for that purpose. In accordance with House Rule XI,
2(j) (2), each committee member may request up to five minutes to
question a witness until each member who so desires has had such
opportunity. Until all such requests have been satisfied, te chairman
shall, so far as practicable, recognize alternately on the basis of
seniority those majority and minority members present at the time
the hearing was called to order and others on the basis of their arrival
at the hearing. Thereafter, additional time may be extended at the
direction of the chairman.
Rule 15.-Investigative Hearings; Procedure
Investigative hearings shall be conducted according to the pro-
cedures in House Rule XI, 2(k). All questions put to witnesses before
the committee shall be rlevant to the subject matter beore the
committee for consideration, and the chairman shall rule on the
relevance of any questions put to the witness.
Rule 16.-Stenographic Record
A stenographic record of all testimony shall be kept of public hear-
ings and shall be made available on such conditions as the chairman
Rule 17.-TV, Radio, and Photographs
When approved by a majority vote, an open meeting or hearing of
the committee or a subcommittee may be covered, in whole or in
part, by television broadcast, radio broadcast, and still photography,
or by any of such methods of coverage, subject to the provisions of
House Rule XI, 3. In order to enforce the provisions of said rule or
to maintain an acceptable standard of dignity, propriety, and de-
corum, the chairman may order such alteration, curtailment, or dis-
continuance of coverage as he determines necessary.
Rule 18.-Additional Duties of Chairman
The chairman of the full committee shall:
(a) Make ilale to other committees the findings and rec-
ommendations resulting from the investigations of the committee
or its subcommittees as required by House Rule X, 4(c) (2);
(b) Arrange such meetings, designate participant and submit
such reports to the House as may be necessary to carry out the
coordination of oversight activities and reporting requirements
under House Rule X, 2 (c)
ch rview and studis on th impact or prbable
impact of tax policies affecting sujects within the committee's
jurisdiction as required by House Rule X, 2(d);
(d) Submit to the Committee on the Budget views and estimates
required by House Rule X, 4(g); and
(e) Prepare, after consulttio with subcommittee chairmen
andthe mority, a udget for the committee which shall include
an adequate budget or the subcommittees to discharge their
li .. s ? .,. -
IV. Activities, First Session, 94th Congress
1. In the first session of the 94th Congress, the committee approed
and submitted to the House of Representatives 5 investigative reports
and one special oversight report. In addition, the committee issued
2 committee prints.
2. In the first session of the 94th Congress, 381 bills and resolutions
were referred to the committee and were studied. Of these, the com-
mittee reported 7 and 3 were enacted into law. The 7 bills reported
actually represent committee consideration of 18 other bills which are
identical or related to the measures reported.
3. Pursuant to its duty of studying reports of the Comptroller Gen-
eral, the committee received officially and studied 213 such reports
during the first session of the 94th Congress. These reports and 144
other executive communications were referred to the committee under
clause 2 of the rule XXIV of the House of Representatives.
4. In 1971, the legislative calendar of the committee was prepared
and published for the first time with the use of a computer, which was
established and perfected by the House Information Systems Office.
The computerized calendar is operated in conjunction with that Office
and their Bill Status system. The superior convenience, efficiency, and
accuracy of the new system results in approximately a 50-percent
savings over the previous system.
The significant actions taken by the committee with respect tohese
and a considerable number of other matters are discussed in detail
A. INVESTIGATIVE REPORTS
During the first session of the 94th Congress, the Committee on Gov-
ernment Operations approved and submitted to the Congress 5 reports
of an investigative nature and one special oversight report. At the
close of the session six additional investigative reports had been ap-
proved by subcommittees and were awaiting full committee considera-
tion. A number of other reports were in preparation and a number of
investigations were underway. These will be considered by the subcom-
mittees and the full committee during the second session.
For convenience, the published reports are listed here with the names
of the originating subcommittees. A more detailed discussion of the
material will be found in part two below in the breakdown of the com-
mittee's activities by subcommittee:
Special report to the House (H. Rept. 94-61): "Oversight Plans
of the Committees of the U.S. House of Representatives. A Re-
port by the Committee on Government Operations." (Full
First report (H. Rept. 94-376): "Housing for the Elderly: The
Federal Response." (Manpower and Housing Subcommittee.)
Second report (H. Rept. 94-385) : "Attempted Unauthorized Pro-
curement of Computers by Department of the Army." (Leg-
islation and National Security Subcommittee.)
Third report (H. Rept. 94-41 : "Federal Preparedness To Deal
With the Natural Gas Shortage Emergency This Coming Win-
ter." (Conservation, Energy, and Natural Resources Subcom-
Fourth report (H. Rept. 94-563): "Federal Aviation Administra-
tion's Procurementof the Electronic Voice Switching System."
(Government Activities and Transportation Subcommittee.)
Fifth report (94-564): "ImprovedProcedures Needed by FAA
for Implementing NTSB Safety Recommendations." (Govern-
ment Activities and Transportation Subcommittee.)
B. COMMITTEE PRINTS
Two committee prints, resulting from work by the full committee
staff were issued during the first session of the 94th Congress as
"Rules of the Committee on Government Operations, House of
Representatives, Together With Selected Rules of the House of
Representatives (Including Clause 2 of House Rule XI)." (Full
committee.) (March 1975.)
"Freedom of Information Act and Amendments of 1974 (P.L
93-502) Source Book: Legislative History, Texts, and Other
Documents." Committee on Government Operations, U.S.
House of Representatives, Subcommittee on Government Infor-
mation and Individual Rights. Committee on the Judiciary,
U.S. Senate, Subcommittee on Administrative Practice and
Procedure. (Full committee.) (March 1975.)
The legislative jurisdiction of the Committee on Government Opera-
tions covers a wide range of important governmental operations. The
committee receives all budget and accounting measures other than
appropriations; all measures relating to the overall economy and ef-
ficiency of Government operations and activiies, including fderal
procurement, intergovernmental relationships and general revenue
sharing (the latter subject was formerly within the jurisdiction of
the Committee on Ways and Means) and the National Archives (for-
merly within the jurisdiction of the Committee on Post Office and
Civil Service); all reorganization plans and bills providing for the
establishment of new departments in the executive branch; and most
other reorganization legislation, examples of which are legislation to
systematize the creation and operation of Federal advisory committees,
and bills to establish new commissions and agencies, such as the En-
ergy Research and Development Administration, the Federal Energy
Administration, the Commission on Government Procurement, the
Cabinet Committee on Opportunities for Spanish-Speaking People,
and the Consumer Protection Agency. It also receives legislation deal-
ing with the General Services Administration, including the Federal
Property and Administrative Services Act and special bills authoriz-
ing the Administrator of General Services to make specific transfers
of property, plus legislation dealing with the General Accounting
Office, with the Office of Management and Budget, with the Adminis-
trative Expenses Act, with the Travel Expenses Act, with the Employ-
ment Act of 1946, and with the Wagner-O'Day Act relating to the sale
of products and services of blind and other handicapped persons. In
addition, the committee has jurisdiction over the Freedom of In-
formation provisions of the Administrative Procedure Act.
Rule X, 2(b) of the standing Rulesof the House, requires the com-
mittee to oversee and review the administration of all laws in its
legislative jurisdiction, and report to the House thereon by the end
of each Congress. The present report outlines the extent and nature
of the committee and subcommittee activities constituting that review.
During the first session of the 94th Congress, as noted above the
committee studied 381 bills and resolutions referred to it and reported
7 to the House. The 7 bills reported actually represent committee con-
sideration of 18 other bills identical or related to the measures reported.
The reported measures are discussed more fully in part two below.
However, they are listed here for convenience in the order of approval
by the committee and with the name of the subcommittees which ini-
tially considered them:
H.R. 2302, to revise certain provisions relating to per diem and mile-
age expenses of Government employees and disabled veterans, and for
other purposes (Legislation and National Security Subcommittee, H.
S. 172 (H.R. 4834), to revise certain provisions of title 5, United
States Code, relating to per diem and mileage expenses of Govern-
ment employees and for other purposes (Legislation and National
Security Subcommittee, H. Rept. 94-104; Public Law 94-22).
H.R. 1244, to establish procedures and regulations for certain pro-
tective services provided by the U.S. Secret Service (Legislation and
National Security Subcommittee, H. Rept. 94-105, Pt. II).
H.R. 6692, to authorize appropriations for the period July 1, 1976,
through September 30, 1976 (Legislation and National Security Sub-
committee, H. Rept. 94-282; Public Law 94-144).
S. 200 (H.. 7575), to establish an Agency for Consumer Protection
in order to secure within the Federal Government effective protection
and representation of the interests of consumers, and for other pur-
poses (Legislation and National Security Subcommittee, H. Rept.
H.R. 8948, to amend the Accounting and Auditing Act of 1950 to
provide for the audit, by the Comptroller General, of the Internal
Revenue Service and of the Bureau of Alcoho Tobacco, and Firearms
(Commerce, Consumer, and Monetary Affairs Subcommittee, H. Rept.
H.R. 9924, to direct the National Commission on the Observance of
International Women's Year, 1975, to organize and convene a National
Women's Conference, andfor other purposes (Government Informa-
tion and Individual Rights Subcommittee, H. Rept. 94-562; Public
D. COMMITTEE ACTION ON REPORTS OF THE
Rule X, 4(c) (1) (A), of the rules of the House, imposes the duty
upon this committee to receive and examine reports of the Comptroller
General referred to it and to make such recommendations to the House
as it deems ncessary or desirable in connection with the subject matter
of the reports.
In discharig this responsibility, all reports of the Comptroller
General recei by the committee are studied and analyzed by the
staff and referred to the subcommittee of this committee to which has
been assigned general jurisdiction over the subject matter involved.
The committee has received a total of 213 General Accounting Office
audit reports to the Congress for processing during the first session of
the 94th Congress. After preliminary staff study, these reports were
referred to subcommittees of this committee as follows:
Legislation and National Security Subcommittee ----------------------- 75
Intergovernental Relations and Human Resources Subcommittee------ 43
onse on Energy, and Natural ResourcesSubcommittee--------- 25
Govt Activities and Transportation Subcommittee -- -------- 17
Commere, Consumer, and Monetary Affairs Subcommittee-------------- 16
Manpower and Housin ubmmttee-_--------------- -24
Government Information and Individual Rights Subcommittee ---------- 13
Total (first session)--------------------------------------- 213
The Comptroller General has made a number of special reports to
the comittee or its subcommittees which are not included in the above
Furthermorein implementation of section 236 of the Legislative
Reorganization Act of 1970, the committee now regularly receives
GAO reports which are not addressed to Congress but which contain
recommendations to the head of the Federal agency. These are gen-
erally reports to the agency heads. The committee also receives from
the agency heads their written statements of actions taken with respect
to such recommendations, as required by section 236.
Periodic reports are received from the subcommittees on actions
taken with respect to individual reports, and monthly reports are made
to the chairman as to reports received. During the session, the subcom-
mittees used the reports to further specific investigations and reviews.
In most cases, additional information concerning the findings and
endations f the Comptroller General was requested and re-
ceived fro the administrative agency involved, as well as from the
General Accounting Office More specific information on the actions
taken appears in part two, below.
Complete files are maintained by the committee on all Comptroller
Generas reports received. Detailed records are kept showing the sub-
the port is referred, the date of referral, and the
The committee will review all of the Comptroller General's reports
received during the Congress in the light of additional information
obtained and actions taken by the subcommittees, and determinations
will be made whether specific recommendations to the House are neces-
PART TWO. REPORT OF COMMITTEE ACTIVITIES
I. Matters of Interest, Full Committee
Pursuant to the direction of the chairman, the staff of the committee
handles a large number of matters alone or in cooperation with sub-
committee staffs. The subjects cover legislation, investigation, research,
procedures, and administration. There is close coordination between
the full committee and subcommittee staffs, including cooperative re-
view of draft committee reports. Among the more significant matters
involving special work by the full committee staff are the following:
1. Oversight Plans of the Committees' of the U.S. House of
In adopting the Committee Reform Amendments of 1974, the 93d
Congress recognized there were serious shortcomings in what is one
of the most important congressional functions-oversight of Federal
programs and agencies.
The requirement first set forth in the Legislative Reorganization
Act of 1946 that each standing committee exercise a continuing study
and review of the statutes under its jurisdiction and the executive
agencies and departments responsible for administering them, was
made far more explicit by the 93d Congress.
In a further effort to strengthen the overall oversight function of
the House, it included in the reform amendments a nrovision now in-
corporated in clause 2(c) of rule X, which reads as follows:
At the beginning of each Congress an appropriate repre-
sentative of the Committee on Government Operations shall
meet with appropriate representatives of each of the other
committees of the House to discuss the oversight plans of such
committees and to assist in coordinating all of the oversight
activities of the House during such Congress. Within 60 days
after the Congress convenes, t Committee on overnent
Operations shall report to the House the results of such meet-
ings and discussions and any recommendations which it may
have to assuire the most effective coordination of such activi-
ties and otherwise achieve the objectives of this clause.
:i"ii :, :!! * ,* ,, ', "_ '' : -- *. *', -" . "- , .
The committee met this assignment and issued its report to the
House. For details see House Report No. 94-61.
2. CIA Employment of Outside Legal Counsel.
On direction of Chairman Brooks an inquiry was initiated into
CIA use of outside legal counsel. Several communications were sent by
the Chairman to the Director of the Central Intelligence Agency in-
quiring into the reasons, purposes, and authority for employing pri-
vate legal counsel to represent his agency before congressional
committees investigating that agency. The Director suggested that
his own General Counsel was not in a position to take on the added
responsibilities nor give his undivided attetion to House and Senate
investigations because of his other extensive duties. These and other
responses received from the committee's preliminary inquiry were
found to be insfficient. In the meantime, and since the Select Com-
mittee on Intelligence has shown determination in investigating as-
pects of the CIA's operatios, including its expenditures of money,
copies of all correspondence and reports on this subject were referred
to the Select Committee for their further review.
3. Travel Allowances for Government Employees.
The full committee assisted the Legislation and National Security
Subcommittee in preparing for the hearings and the subsequent re-
porting of a bill (H.R. 4834) relating to per diem and mileage ex-
penses of Government employees. Statutory maximum travel
allowances were last revised in 1969. Because of increases in food,
lodging, and other costs, the committee agreed that the maximum
rates should be adjusted to better cover the expenses incurred. The bill
which was signed into public law in May of 1975 (P.L. 94-22) raised
the maximum actual expense reimbursement from $40 to $50 per day
and the maximum per diem rate for Federal employees from $25 to
$35 per day. It also raised the maximum mileage allowance for pri-
vately owned automobiles from 12 cents to 20 cents per mile. (See
A, II, A, I below.)
4. Appropriations for Fiscal Year Transition.
The full committee assisted in preparing legislation (H.R. 6692)
for the authorization of appropriations for the fiscal year transition.
The purpose of the bill was to provide a general authorization for
approriations for the programs and activities of the Federal Govern-
ment during the transition period occasioned by the coming change in
the fiscal year in 1976. This legislation covered the period from July 1
through September 30, 1976, and was signed into public law in Decem-
ber of 1975 (P.L. 94-144). (See A, II, A, 2 below.)
5. Agency for Consumer Protection.
In June of 1975 the full committee assisted in the preparation of
legislation to establish an Agency for Consumer Protection (H.R.
7575). Its goal is to give consumers effective representation in the
Federal establishment by protecting their interests in proceedings
and activities of Federal agencies and courts when decisions may sub-
stantially affect their interests. The full committee reported the bill
in July of 1975 and is presently awaiting action by the Senate. (See
A, II, A, 4 below.)
6. Renegotiation Board Amendments.
In 1969 and again in 1971 the committee held hearings relating to
the operations of the Renegotiation Board and issued several reports
on the Board's efficiency and effectiveness. Legislation as introduced
(H.R. 10680) and referred to the General Oversight and Renegota-
tion Subcommittee of the Committee on Banking, Currency, and
Housing which provided for the permanency of the Board, giving it
subpena powers and increasing the penalties for violations of the filing
requirements. Because of the prior investigation by this committee
into the Board's activities, Chairman Brooks made several recommen-
dations to strengthen the bill while testifying before the General Over-
sight and Renegotiation Subcommittee.
7. Functions and Duties of the Comptroller General.
The full committee is analyzing proposed draft legislation to revise
and restate certain functions and duties of the Comptroller General of
the United States. (Executive Communication No. 1272) A bill has
also been introduced byChrman Brooks and referred to the Commit-
tee on House Administration that includes a provision allowing the
Joint Committee on Congressional Operations to nominate and the
Speaker of the House and the President pro tempore of the Senate,
upon majority vote of each House, appoint the Comptroller General
for a period of ten years.
8. Automatic Data Processing.
The committee maintains oversight over the compliance of P.L. 89-
306, known as e Brooks Act, which was designed to encourage com-
petition in the Federal procurement of data processing equipment. The
full committee has assisted in several areas relating to this subject, the
first being the preparation of a report by the Legislation and National
Security Subcommittee entitled "Attempted Unauthorized Procure-
ment of Computers by Department of the Army". Ongoing investiga-
tions include the procurement of ADP services by the Federal Trade
Commission and a computer contract entered into by the Federal En-
ergy Administration. (See A.I.A. 1 and D.I.B. 2 below.)
9. White House Employment.
During the 93d Congress, the Government Activities Subcommittee
held hearings and issued a report entitled "Expenditure of Funds in
Support of Presidential Properties". In conclusion, the report indi-
cated that in many cases public funds were used to procure unnecessary
items and services. Because of the committees investigation, the full
committee drafted amendments to a bill that clarified the existing au-
thority for employment of personnel at the White House (H.R. 6706).
One amendment of particular interest was offered by Chairman Brooks
which authorized a GAO audit of expenditures for reception, enter-
tainment, and representation expenses. The amendment was accepted
on the House floor.
z s .,,,I
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B ,, ~i;; lar~,i ~"i
A. LEGISLATION AND NATIONAL SECURITY
Hon. JACK BROOKS, Chairman
A. INVESTIGATIONS RESULTING IN FORMAL REPORTS
1. "Attempted Unauthorized Procurement of Computers by Depart-
.mn of the Ary." House Report No. 94-385, July 23, 1975.
Second Report by the Committee on Government Operations.
a. Summay.-In a contract executed in 1967, the Army ordered a
prototype computer system (ALPHA) from International Business
Machines Corporation (IBM). In the process of experimenting with
prototype system, it was determined that nine additional IBM 360/65's
would complete ALPHA. In 1973, the Army contracted to lease the
nine systems. It then accepted an IBM offer to sell the nine systems for
$4.3 million each with, among other discounts, a $1.6 million discount
Four systems were purchased at the discounted price and two were
actions to be "unauthorized" and "not consistent with" the Brooks Act,
which was designed to encourage competition in the Federal procure-
ment o dta processing ipment and to develop efficient and eco-
nomica use of data processing equipment. The Army then asked the
General Services Administration for permission to procure the remain-
isystems on a sole source basis from IBM. It alleged that additional
contractual paymets approximating $15.1 million, if all nine were not
procured from IBM made a competitive procurement more expensive
than continuance of the "unauthorized" contract. Upon being advised
of GSA's intention to grant Army's request, the chairman of the
subcommittee objected and scheduled hearings on the matter.
Immediately following the hearings, IBM waived any rights it
might have had to damages, and the Army agreed to competitively
procure the remaining three systems. On July 16, 1975, GSA informed
the Government Operations Committee that awards had been made
The committee found that the Army entered into an unauthorized
The committee recommended that the Department of Defnse de-
velop policies and procedures to enable it to be at all times in compli-
ance with the Brooks Act and other applicable requirements; that
the GSA expand its eorts to prevent illeal acquisiti of computers;
and that all Federal agencies develop cies and procedures to pre-
vent the substitution of used compute rough the utilization of a
lease-purchase transaction under the Federal Supply Schedule.
b B-We estimate a saving to the Government of $15.1 mil-
lion as a result of this investigation.
systems necessary to complete ALPHA were competitiveprocured,
the Army would owe it $15.1 million in penalty payments. This was
derived from IBM's estimate: That the $1.6 million discount per sys-
tem for each of the six purchased systems was contingent upon pur-
chase of nine systems, a total of $9.6 million; that the discount of an
input output device was contingent upon purchase of nine systems,
amounting to $1.6 million; and that "bundled services" chargeable to
the remaining three systems if not purchased from IBM, would result
in an additional payment to IBM of $3.9 million.
c. Hearinq.-A hearing was held April 28, 1975; the transcript has
B. OTIR INVESTIGATION
1. Irregularities in Navy Contract for West Coast Salvage Services.
a. Summary.-The subcommittee undertook an investigation of the
procedures followed and the circumstances surrounding an award of a
contract by the Navy to maintain its salvage capability on the Wst
Coast. It was found that the Navy failed to properly follow clearly
mandated laws and regulations requiring competition in the contract
award; that a draft of the Request for Proposals was available to one
competitor six months before the others and that changes were made
in the RFP apparently in response to suggestions from that competi-
tor; and that these and other factors indicated favoritism and a pre-
determination on the part of the Navy to award the contr to a
particular company. It was also found that after the General Account-
ing Office in a protest decision recommended the termination of the
contract award and new negotiations on the contract, the Navy pro-
crastinated for nearly ten months before beginning to carry out the
GAO recommendations, and then only after the subcommittee sched-
uled hearings on the matter. It was further found that the GAO
practice of rendering protest decisions but failing to see if its recom-
mendations are being observed by the contracting agecy s
careful restudy to prevent contracting agencies from ystlly
ignoring the GAO's recommendations. The subcom tee pr e
number of recommeinations which, if adhered to, wold. very likl
avoid a repetition of the procdures complained agns is cot t
award. A draft report has been approved by the subc tt is
pending for action before the Full Committee.
b. Benefts.-It is not possible at this time to estimate specific mone-
tary saving from this investigation but in as avy,
result of the subcomittee's efforts, has indicated that t will teine
the contract and enter into new negotiations, a major f sud
procurement procedures and for competiion among biders has been
c. Hearings.-A hearing was held on September 4, 1975. The tran-
script, entitled "Navy Contract for Salvage Services, West Coast,"
has been printed.
2. Acquisitionby General Services Administration of Property at
Laguna Niguel, California.
a. ma.The subommittee undertook an investigation into
the acquisition of a building by the General Services Administration
at Laguna Niguel, Calfornia The building owned by the Rokwell
International Corporation and appraised at $20 million, was obtained
by an exchange of properties and equipment owned by the Air Force
that were declared excess to Air Force needs after negotiations for the
exchange had begun. The circumstances surrounding the exchange sug-
gested that it may not have been in harmony with the intent of
Congress in assignig responsibility for the acquisition of Federal
buildings, or in the exchange provision of the Federal Property and
Administrative Services Act. It raised a question as to whether the
exchange was in the best interests of the Government.
The subcommittee found that the GSA used bad judgment in
acquiring the Laguna Niguel building inasmuch as the exchange of
properties was first initiated by Rockwell International Corporation,
which had no need for the building and had been unable to sell it.
The GSA proceeded to acquire the building without first establishing
a need for it and without having sufficient firm commitments for use
of the space. Informatin which GSA received from certain other
Federal agencieshould have indicated to GSA that the location of
the building was inappropriate for use as a Federal office building,
and in fact, an Office of AManagement and Budget memorandum char-
acterized the building as a "white elephant" even though OMB subse-
quently approved the acquisition. The subcommittee also found that
GSA either misrepresented or did not fully present the facts when
committees of Congress inquired into the exchange, and that GSA
took advantage of the law permitting exchange of properties to cir-
cumvent the customarjr need for congressional action in acquiring the
The subcommittee recommended that the GSA submit to Congress
within 120 days proposals for the utilization of Laguna Niguel, along
with a plan for its disposal if no feasible alternative is available,
and that the Air Force should only declare property excess to its needs
as it determines and not as other agencies, such as GSA, may deter-
miine for it. It also recommended that the Congress consider legisla-
tion to prohibit tivr disposal of Government property by exchange
unless the acquisition of the property resulting f rom the exchange
has been specifically authorized by congressional action under cerai
circumstances. A draft report has been approved by the subcommittee
and is pending foraction before- the Full Committee.
b. Benefit.-It is not possible, at this time to estimate the specific
c. Hearings.-A hearing was held October 7, 1975; the transcript
has been printed.
3. Access of Service Secretaries to Military I nformatio.
a. Sunmary.-The subcommittee conducted an investigation into
allegations that the Secretaries of the military deprtments he
Army, Navy, and Air Force-within the Department of Defense did
not by right have access to all military information. Although the
Secretaries are responsible officers of their departments, the question
was raised as to whether or not the Secretaries could make proper
budgetary, procurement, and other decisions if they are denied access.
to information on which such decisions must necessarily be based.
Statutes and directives governing the organization of the Depart-
ment of Defense and its constituent units were reviewed and it was
found that the Secretaries of the military departments are not in the
chain of command, which chain runs from the Secretary of Defense
to the Joint Chiefs of Staff and the unified military commanders. It
was also found that civilian control of the military departments could
be severely hampered by the lack of access to information. A draft
report with specific findings and recommendations is being prepared
for the consideration of the subcommittee and, if approved, will be
submitted to the Full Committee for action.
b. Benefits.-It is not possible at this time to determine specific
monetary savings from this investigation. It is believed, however,
that in addition to calling attention to an apparent anachronism in
the organization of the defense establishment, the investigation may
result in a strengthening of civilian control of the military.
c. Hearings.-A hearing was held on September 10, 1975; the tran-
script has been printed.
4. National War College Restoration Contract.
a. Summairy.-The subcommittee undertook an investigation of
alleged irregularities in awarding and administering a contract for
the repair of the ceiling of the National War College. The contract
was awarded by the Military District of Washington under proce-
dures which smacked of favoritism and a lack of competitive bidding.
The original contract was for a payment of $65,000, but by numerous.
subsequent amendments, escalated to nearly $2 million.
The subcommittee found an amazing laxity in the administration
of the contract by the MDW, that payments were based on inadequate
submissions, that the company was not bonded as is normally required
for such contracts, and that warning signals of various kind were
ignored by the contracting agency. A draft report with specific find-
ings and recommendations is being prepared for the consideration of
the subcommittee and, if approved, will be submitted to the Full Com-
mittee for action.
b. Benefits.-It is not possible at this time to estimate the specific
monetary savings that may result from this investigation. It is ex-
pected, however, that an effort will be made to recover any funds that
may have been improperly paid to the contractor. It is also antici-
pated that the Army will exercise greater care in the future in the
award and administration of contracts let by its component units in
view of the continued surveillance which the subcommittee will exer-
cise over these matters.
Heaig.A hearin was held on December 9, 1975; the tran-
script is being printed.
5. Reiew of the s, Procedures, and Policies of the General
mma.-The subcommittee undertook an oversight review of
the operations of General Accounting Office and whether or not it
was following the will of Congress. It had learned that the Comptrol-
r General ha indicated in a brief submitted to the court that the
General Accounting Office was an independent agency of the Govern-
ment. This seemed to contradict the view long held in the Congress
tha the AO was an arm of the Congress and assisted the Congress
in carryng out its law-making and oversight responsibilities.
During the hearing the Comptroller General presented in detail
Sjustification for his position but assured the Congress that a mis-
undestding of his intentions had occurred. Other aspects of the
agency's operations were scrutinized and numerous questions were
an d report with specific findins and recommendations
is being prepared and will be presented to the subcommittee for its
cosideration.If approved, the report will be submitted to the Full
Committee for action.
b. Bees-I is not possible to estimate specific monetary savings
from this investigation. It is likely, however, that the General Ac-
counting Office will be more sensitive to its proper role in the future
as a relt of t investigation and the continuing oversight to follow.
c. Hearings.-A hearing was held on December 10, 1975; the tran-
6. Investigation into Procedures Followed in the Evacuation of Ameri-
cans and Others from Vietnam.
[ i_ ofo te
a. Summa y.-The subcommittee undertook an investigation of the
procedures followed in the evacuation of Vietnam, which was initiated
y by concern that American officials unduly delayed the final
evacuation, possibly resulting in a loss of dollars, equipment, and other
that my hve been saved, and producing a disorganized if
not chaotic removal of many Vietnamese. It seems likely tha this
could have been avoided had more timely action been taken. Because
of the sensitive condition involved at the time of the hearings, the
subcommittee conducted them closed session. This investgation is
I ' is
still in process. The State Department has delayed in supplying neces-
sary witnesses requested by the subcommittee.
c. Hearings.-Hearings were held on April 15 and April 24, 1975;
inasmuch as they were held in executive (closed) session, they will
B. Ss UNDER REVIEW
1. Inquiry into the Department of Defense's response to a GAO report,
"Need for More Effective Management of Transportation Data
2. Investigation of a troop training contract with Saudi Arabia.
3. Inquiry to the Secretary of State concerni
of insensitive conduct and attitudes on the part of American rep-
-4. Inquiry into criteria used by the Department of Defense to deter-
mine which bases or depots are to be closed or cut back (M
. Inquiry into the Department of Defense failure to follow GAO
recommendations regarding possible savings in the Marine Corps
6. Inquiry into the Department of the Army's determination of respon-
sibility for the failure to eliminate material involving surveillance
of civilians from Army files.
7. Inquiry submitted to the Secretary of Defense concerning a dispute
between a defense contractor and a union in California (Member
8. Inquiry into the response of the GAO to a request for assistance by
a ember in ascertaining the effects of the closing of Hamilton
Air Force Base (Member request).
9. Inquiry into the procedures used by the Air Force inthe involuntary
separation of Air Force officers (Member request).
10. An explanation was requested and received from the Department
of the Army on a report that an "incentive sign" was used by an
Army unit in the Canal Zone that was offensive to local residents.
11. Inquiry into the contracting-out policies at the Army Support Ac-
tivity, Lakehurst, New Jersey.
12. Inquiry into the safety record of the C-5A plane (Member
13. Inquiry made of the Department of State-AID reason and neces-
sity for making a loan to Syria to expand the water supply system
of the city of Damascus.
14. Analysis made of the report and recommendations of the Commis-
sion on the Organization of the Government for the Conduct of
15. Inquiry made into the policies, practices, and costs involved in the
procurement of major weapon systems by the Department of
Defense and the pattern of escalation and cost overruns in those
16. Inquiry made of the Department of Defense concerning the pro-
posed transfer of helicopter repair from the Naval Repair Facility
at Pensacola, Florida to the Army Depot at Corpus Christi, Texas
17. Inquiry made into the policies and procedures of the State Depart-
ment and U.S. Consulates abroad in the handling of foreign
exchange (Member request) .
18. Review made of the Department of Defense response to GAO
recommendations regarding the operation of the three military
19. Inquiry made into the inventory of the Department of Defense of
fixed-wing aircraft for passenger service.
20. Inquiry made on the response of the Department of the Navy to
decision of the General Accounting Office on a contract award
protest by the Acurex Corporation.
1I. ll" ';;! Legislation'
A. NEW MEASURES
1. H.R. 4834, To revise certain provisions of title 5, United States
Code, relating to per diem and mileage expenses of Government
employees, and for other purposes.
nd date.-House Repot No 94-104, March 20
employees from $25 to $35 per day; raises the maximu actual expense
reimbursement from $40 to $50 in unusual circumstances and in des-
h-cost s; raises the maximum mileage allowance for
privately owned automobiles from 12 cents to 20 cents per mile, with
corresponding increases for motorc cles and airplanes; for travel out-
side the continental United States itincreases the maximum reimburse-
from $18 $21 per day plus the prescribed
locality per diem rate; makes other tecnica and clarifying changes
in the law; gives the Administrator of eneral Services the authority,
now conferred upon each Federal agency head, to provide Government-
wide uniformity in the setting of rates of per diem and mileage al-
lowances up to th maximum established by law and to prescribe the
conditions of travel and reimbursenent for all Federal employees; and
increases theper diem allowance for Senate employees from $35 to $50
e. Legiative statu.-HR. -4834 was reported by the committee on '
19 and passed the House on April 1, 1975. Immediately
ji &, *
thereafter the proceedings were vacated and S. 172, a similar bill,was
passed in lieu with an amendment substituting the languae of H.R.
4834. Subsequently, the Senate passed S. 172, as amended, with an
additional amendment providing changes in the travel allowance of
Senate employees. The House agreed to the Senate amendment on
May 1975, and the bill was signed into Public aw 94-22 on May 19,
d. Hearings.-A hearing was held on H.R. 3575, a similar measure,
on March 4 195; the transcript is printed. No further hearings were
2. H.R. 6691, To authorize apopriations for the period July 1, 1976,
a. Report number an date.-House Report No. 94-282, June 11,
b. Sunmary of measure.-H.R. 6692 provides a general authoriza-
tiofor propritions for programs and 'activities of theFederal
Government from July 1 through September 30, 1976, the transition
A + +%
June 16, 1975. It passed the Senate without amendment on December
1, 1975, and was signed into Publi Law 94-144 on Der
tective services provided by the United States Secret Service.
a. Report number and date.-House Report No. 94-105, Pt. 2, April
o. Summary of measmre.-H.R. 1244, the "Presidential Protection
Assistance Act of 1975," centralizes responsibility for the exture
,of funds for the protection of the President and others wh protec
tion is directed by law in one agency-the United States Secret Serv-
ice; enables the Secret Service to obtain assistance from other
ments and agencies but with reimbursement to the assisting agencie
limits full-time security to only one property each which may be de
ignated by the President and other protectees; and places a limitation
of $10,000 on expenditures on any other propertyot in Government
ownership or control unless a resolution of approval is adopted by the
Appropriations Committees of Congress.
c. Legislative status.-H.R. 1244 was referred jointly to the Judici-
ary Committee and the Government Operations Committee. It was re-
ported by the Judiciary Committee on March 20 (Report 94-105, Part
1) and was reported by the Government Operations Committee on
April 22, 1975 (Report 94-105, Part 2). It passed the House under
suspension of the rules on May 5, 1975, and is pending for action in the
d. Hearings-A hearing was held on April 10, 1975; the transcript
4. H.R. 7575, To establish an Agency for Consumer Protection in
order to secure witthn he Federal Government effective protec-
tion and representation of the interests of consumers, and for
a. Report number and date.-House Report No. 94-425, together
with Additional and Minority Views, July 30, 1975.
b. Summary of measure.-H.R. 7575, the "Consumer Protection
Act of 1975," creates an Agency for Consumer Protection to represent
the interests of consumers; requires the assistance and cooperation of
other Federal agencies; details and limits the authority of the Admin-
istrator in representing consumer interests in other Federal agencies
and the courts; authorizes the Agency to receive and handl consumer
complaints; directs the Agency to gather and disseminate consumer
information; places strict limitations on the disclosure of trade secrets
or other confidential information; requires all Federal agencies to
take into consideration the interests of consumers; defines those inter-
ests; and transfers to the Agency the Consumer Product nformati
Coordinating Center now in the GSA.
c. Legislative status.-H.R. 7575 was reported by the committee
on July 30, 1975 and passed the House on November 6, 1975. Immedi-
tely thereafter, the proceedings were vacated d S. 200, a similar
bill, was amended to incorporate the language of H.R. 7575 and
passed in lieu thereof. S. 200, as amended, is pending for action in
d. Hearings.-Hearings were held on June 17, 18, 19 and 20, 1975;
the transcript is printed.
amended version that was adopted as Public, Law 94-22, approved
on May 19, 1975. For further detail, see (Legislation).A..
Budget ad Accounting Act of 1921 (42 Stat 20) and Budget and
Accounting Procedures Act of 1950 (64 Stat 832).
These measures were intensively reviewed during the consideration
of legislation to authorize appropriations for the period July 1, 1976
through September 30, 1976, which became Public Law 94-144,
approved on December 9, 1975. See II (Legislation).A.2.
Section 20(e) of the Federal Property and Administrative Serv-
ices Act of 1949 (40 U.S.C. 484).
This section of the Property Act was intensively reviewed during
the subcommittee's investigation of the acquisition by the General
Services Administration of prperty at Laguna Niguel, California.
Other Current Activities
A. GERAUN O EPT
Dur the first session of the 94th Congress, a total of 75 General
Government-Owned Properties," B-165511, March 3, 1975.
b. Benefits.-See I (Investigations).B2. above.
B. Orn REoros OR STATEENTS
IV. Committee Prints
V. Prior Activities of Current or Continuing Interest
known requirements (see. 608 of the 1961 Foreign Assistance Act, as
and Government Information Subcommittee was assigned jurisdiction
f the program.
In early 1971, tthe revolvin fun had decl well below the $5
million level as a result of dcit operatios for
ment review of the entire ro a within AID r d eonclu n
that the program was no longer viable and should be liquidated. AID
appeared on the verge of acting on a recomendation to that effect.
The congressional mandate that excess propertybe used wherever
practicable in lieu of new procurement suggested that the fullest justi-
fication must exist before an administrative termination of this pro-
gr activity. Therefore, sta membersofthe subcmm ee at
full committee, including the minority staff, met with AID officials in
May 1971 to discuss thebleak financial picture of the excess propert
revolving fund and whether AID should cut off the program. Because
the committee staff members had extensive experience in the operation
of this program, they expressed the view that some additional effort
to retain and improve the program seemed warranted; and a number
of suggestions were made.
In August 1971, AID decided to continue the program on a modified
basis, at least for the remainder of the fisca year 1972, and to take
certain steps to bring operating expenses and earnings into line. These
included closing down acquisition and rehabilitation activity in
Europe, consolidatin the loistics center office in the central office,
reducing staff, and, very importantly, establishing a flexible pricing
policy with respect to service charges for rehabilitation.
As thus reconstituted, the section 608 program performed effectively
in fiscal years 1972, 1973, 1974, and 1975. From an unbalanced figure
of $4.374,000 at the end of fiscal year 1971 (representing a $626,000
deficit in the $5 million revolving fund), the fund as of December 31,
1975, had risen to $8.008.705 (a surplus of $3.008,705). The total
original acquisition cost of excess property issued under the program
rose from $7.2 million in fiscal year 1971 to an annual average of
$15.2 million in fiscal years 1972,1973,1974, and 1975.
Examples of acquisition and use of excess property are: Packaged
disaster hospitals-acquired 114 units from HEW having an original
acouisition cost of $3.4 million and made them available for use in
AID-financed project and program humanitarian assistance at a de-
livered cost of $.8 million. Medical and dental supplies and equip-
ment-acquired items from HEW having an original acquisition cost
of $6.9 million and made them available to eligible recipients (in-
cluding $.9 million for AID's foreign disaster relief program) at
a cost of only 6 percent of the original acquisition cost. Zaire-recon-
ditioned construction and road building equipment and machine tools
having an original acquisition cost of $1.1 million for less than half
the current market cost. Nicaragua-furnished 70 knockdown flatcars,
gondolas, and boxcars of foreign configuration having an original
acquisition cost of $412.000 at a delivered cost of $95,000.
b. Benefits.-Since AID's policy has been to ecourage dollar saving-
rather than dollar stretching in funding programs where excess prop
ertv is used, the continuation of excess property issues results in a
saving of loan and other program funds through avoidance of new
procurement. AI estimates that in many instances the cost of equiva-
lent new property would have been twice the cost to the recipient of
the excess property issued.
2. Return of Unneeded Overseas Property for Further Use by Fed-
eral Agencies and for Donation in the United States.
A recommendation by the committee in House Report 865, 90th
Congress, resulted in an operation that soon was returning consider-
able property from Germany and the Far East to the United States
for further Federal use, or for donation to educational, public health,
or civil defense activities. Before this, the property was sold as surplus
Program. The first important result was the arrival in August 1970
of an entire shipload of property (9,000 measurement tons) returned
to the west coast from Japan and Okinawa.
Since the initial shipment in August 1970, much additional over-
seas property has been returned for further Federal utilization or
donation. Under Public Law 91-426, September 26, 1970, 40 U.S.C.
e. 512 (a measure considered and approved by the committee), the
return of unneeded overseas property was elevated to a full-scale Fed-
eral program under regulations established by GSA. GSA and
"HEW have stationed onsite representatives in the Pacific area and
in Europe to select property for their respective utilization and dona-
tion programs. Return transportation costs are born by the user, be
it Federal agency or donee.
As of December 1975, GSA has returned a total of five full ship-
loads of property, and has made and continues to make separate ship-
ments b container van or miscellaneous cargo shipments. Of the
-amount returned, $38 million worth of property, at original acquisi-
tion cost, has been transferred directly to other Federal agencies and
$77 million has been made available for donation to education, public
health, and civil defense activities. At least $4 million of the inven-
ory on hand in Government warehouses not yet distributed can be
expected to be transferred for further Federal utilization. This totals
approximately $42 million in property which has been or will soon be
transferred to Federal agencies since the inception of the Overseas
It is anticipated that the original acquisition cost of the property
returned under this program will total over $150 million in 1976. Of
course, current prices of comparable new property would generally be
3. Executive Branch Response to Recommendations of the Commis-
sion on Government Procurement.
a. Summary.-The subcommittee has been monitoring, in coopera-
tion with the Office of Management and Budget and the General Ac-
counting Office, the progress of results achieved under all ten recom-
-nendation categories of the Commission on Government Procurement.
b. PreViou8ly unreported benefitw.-Undetermined at this time.
a. Summary.-This is a matter of continuing interest, having been
transferred to this subcommittee from the former Foreign Operations
and Government Information Subcommittee. A hearing on this sub-
ject is being planned for early in the second session of the 94th
b. Previously unreported benefits.-Undetermined at this time.
VI. Projected Program for the Remainder of the 94th Congress
(1) Investigations and legislation summarized above will be con-
tinued until completion.
(2) Special attention will be given to the following:
(a) The effect on competition in Government contracting of the De-
fense Department's policy of providing Government-furnished equip-
ment to defense contractors.
(b) A review of the status of delinquent debts owed to the United
States by other countries.
(c) The development of a single statute for all Government procure-
ment activities, with particular attention to the procurement sections
of the Federal Property and Administrative Services Act and the
Armed Services Procurement Act.
(d) The development of legislation required to further the transi-
tion from the current fiscal year to the new fiscal year decreed by the
(e) The development of legislation providing further access by the
General Accounting Office to the records of Government contractor
and providing the Comptroller General with subpena powers and the
authority to seek injunctions against illegal expenditures.
(f) A review of the State Department's response to the report of the
Commission on the Organization of the Government for the Conduct
of Foreign Policy.
(g) A review of the organizational structure of the Department of
(h) A review of the major weapon systems acquisition in the De-
(i) A review of the utilization by the Defense Department of pri-
vately-owned research organizations.
(j) An inquiry into the policies of the Defense Department relat-
ing to contractor overhead expenses.
(k) A review of procedures and practices in foreign military sales,
with particular emphasis on certain case studies.
(1) An inquiry into the safeguarding of military weapons stocks
(m) An inquiry into the Defense Department's refusal to follow cer-
tain recommendations of the General Accounting Office relating to
transportation data systems.
(n) A review of the policy of the Defense Department in providing
funds to defense contractors for research and development.
(o) A review of the operations of the three military service train-
(p) An inquiry into the irregularities of the award of a contract for
receivers by the Department of the Army.
(q) An inquiry into the operational effectivene of the -5A plane,
including cost overruns and plane modifications.
[ i- .i :i ,' : .. .
B. INTERGOVERNMENTAL RELATIONS AND HUMAN
Hon. L. H FOUNTAIN, Chairman
S. .f ':i "' ** *** 01 S
A. INVESTIGATIONS RESULTING IN FORMAL REPORTS
B. OTHER INVESTIGATIONS
SPrevention and Detection of Fraud and Abuse in HEW Programs.
a. S mary.-This investigation is examining the resources and
procedures utilized by th Department of Health, ducation, and Wel-'
fare (HEW) to prevent and detect fraud ad abuse in its programs.
The Departent of Health, Education, and Welfare currently is
responsible for about 300 separate programs involving expenditures inl
eess of $118 billion annually-more than a third ofthe entire Federal
budget Although HEW has over 129,000 full-time, permanent em-
entities sh a taes, localities, educational instittions, fiscal
agets, intermediaries, carriers and grantees.
Disclosures in the ubcommittee investigation to date include the
(1) Because of the magnitude and complexity of its activities, ag-
gravated in many instances by lack of direct control over expenditures,
HEW's operations present an unparalleled danger of enormous loss
through fraud and program abuse
(2) HEW has no central sources of information concerning fraud
and program abuse, and basic data needed by both Congress and the
Department for effective action to combat such activities is simply not
(3) Fraud and abuse in HEW programs are undoubtedly responsi-
ble for multi-million dollar annual losses. HEW officials were unable to.
provide information oni which a reliable estimate of the specific amount
of such losses could be based.
(4) HEW has no central unit with the overall authority, responsi-
bility and resources necessary to insure effective action against fraud
and program abuse. The fraud and abuse units it does have are
scattered throughout the Department in a haphazard, fragmented and
inefficient fashion. Some major programs have no units; other units
exist mostly on paper.
(5) Personnel of most fraud and abuse units lack independence be-
cause they report to officials who are directly responsible for the pro-
may be reluctant to make honest and thorough reports that could em-
II L0ii[By;~^u^^ -.,*~~j~.B ,Malmtppwl'^.a~,jf.*^f al:a-
i~fllliM il ^A'^ih:^'vi cifryii^'tci.T if T 'j^it~i^ (jiaiiil a; ''Mici@ flsien ro~ ovit*" ^l~k^-o t"X."t~x"'s
f1~t~t*.l'yW'-j'lqil *'Bl'~1.^ltI|i~~ .Ity-.-li; )~.^".sX'v -wlV
i .*ilrMI Illl^ll"l<^ DlATfC^l^Toit'' Tti~ ~ ~8 'n'''lAlt.ABBJf'"I~wyit.itkt*'
|l /AL i~gAOHl *S- ^yB.c3('i
_I'- *s~llT'l.tSrl f *Ttt Y 'Mii 3BTBi'i *(l'."l't-ti'i "I'P T *' A('t'' '.nl'
|c .*jCWIB i.,y;~ |,^jflij~~ *j iilyHJB,mSA ..*Ul~u.wf
(6) Most fraud and abuse units report top officials, usually
at a relatively low level. There is little incentive for such officials to re-
port deficiencies in their own program to the Secretary or to initiate
prompt and vigorous corrective action which may involve public
laundering of their own dirty linen. As a result, there is little assurance
that the Secretary will be kept informed of serious fraud and abuse
problems, or that action necessary to correct such problems will be
(7) HEW's investigative resources are ridiculously inadequate. Al-
though HEW has more than 129,000 full-time employees, it has only
10 investigators in its central unit-and the unit has a ten-year backlog
of uninvestigated cases.
(8) There are serious deficiencies in HEW's procedures. There has
been no Departmentwide policy for referral of possible fraud cases for
investigation, nor is there any such policy for referral of investigative
results for prosecution. There have been instances in which it has taken
JIEW as much as five years or more to take corrective action after
deficiencies in program regulations became apparent.
Five days of hearings were held as part of this investigation, on
April 22 and 30, May 15 and 22, and June 24, 1975. The hearings have
b. Benefits.-The subcommittee investigation disclosed and docu-
rnented the urgent need for strengthening HEW procedures and re-
sources for prevention and detection of fraud and program abuse.
The nature of the subcommittee's findings and preliminary recom-
,nendations for corrective action were called to HEW's attention in
an August 6, 1975, letter from the subcommittee Chairman. A compre-
hensive report on the investigation is expected to be ready for full
committee action early in 1976.
It is expected that the subcommittee will give further attention to
deficiencies in the procedures and resources used by HEW to prevent
and detect fraud and program abuse during 1976 in connection with its
consideration of legislation to establish an Office of Inspector Genera
for the Department of Health, Education, and Welfare.
). Safety and Effectiveness of New Drugs.
a. Sunmary.-The subcommittee continued to monitor the various
activities of the Food and Drug Administration for assuring thesafety
and effectiveness of drugs intended for human use.
During 1975, the subcommittee reviewed selected FDA regulatory
activities relating to the use of advisory committees in the evaluation
of nonprescription drugs as well as new drug applications for prescrip-
tion drugs, the advertising and promotion of prescription drugs, and
the implementation of the statutory requirements ith respect to the
safety and effectiveness of new drugs.
b. Benefits.-Numerous actions have been taken by FDA to correct
regulatory deficiencies brought to its attention by the subcommittee. It
is anticipated that further improvement in policies and procedures
will result from the subcommittee's continued surveillance of FDA
operations. This.should contribute to greater health protection for the
public and greater economy and efficiency within the agency.
3. Use of Advisory Committees by the Food and Drug Administration.
a. Summary.-The subcommittee initiated an investigation of FDA's
use of advisory committees during the 93rd Congress with the objec-
they were being utilized and FDA's compliance with the Federal Food,
Drug, and Cosmetic Act in instances where advisory committees par-
ticipated in the regulatory process.
earing held b the subcommittee in 1974 were concerned with
the use of advisory committees in the regulation of prescription drugs.~
In 1975, the investigation was broadened to include advisory com-
mittees concerned primarily with the regulation of nonpresc riptio
May 12 and October 31, 1975. The hearing records have been printed.
b. Benefit8.-Some improvement in the management of FDA ad-
visory committees has been achieved in response to the subcommittee's
igation. A report on the use of advisory committees by the Food
nd Drug Administration approved by the subcommittee on Decem-
ber 4, 1975, is scheduled for full committee consideration. It is an-
ticipated that the report, when issued by the committee, will result
in the more effective and efficient use of advisory committees, the elim-
instion of unnecessary expenditures, and improved compliance with
both the Federal Advisory Committee Act and the Federal Food,
Drug, and Cosmetic Act.
4. Intergovernmental Fiscal Relations.
a. Summay.-n a series of hearings structured to obtain basic
and comperhensive information on the fiscal and institutional rela-
tionships among the levels of government in the American federal
sys the subcommittee took testimony from leading scholars and
ernment exon the various subes included in the hearin
anda. These hearings were intended to provide perspective for the
subcommittee's subsequent consideration of legislation to extend the
Federal general revenue sharing program. Hearings were held on July
S1, 11 15, 22 23 and 24, 1975. The hearing record is being printed.
ing the committee in its work on general revenue sharing, will be of
value to the Congress when it considers future legislation for assistin
State and local governments.
5. Administration of the Medicare and Medicaid Programs.
a. Summary.-The sbcommitte cotinued to examine selected as-
processin operations. The ubittee inveigatin dis-
closed serious deficiencies in the awarding of data processing sub-
contracts, and led to changes designed to obtain greater competition
Sof such s ontracts
In 1975, the subcommittee investigation disclosed other administra-
tive deficiencies in the Medicare and Medicaid programs. For example,
although Federal expenditu fo Medicaid ttale nearly $7 lio
in fiscal 1975, the subcommittee found that only one HEW employee
was working full time to combat fraud and abuse in the program
Twenty-one States were reported by HEW to be inactive in fraud
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and abuse detection and investigation. The subcommittee foud little
or no coordination be n p r
and Medicaid programs in the inv ation of f
abuse, even though the same individual may often be involved in fraud
or abuse affecting both programs.
Administration of the Medicare and Medicaid p was re-
viewed in hearings on May 15 and 22, 195.
b. Beneft.-A lthough more remains to be done, su tial sav-
ings are being realized through reduced data processing costs. Data
processing cost reductions totaling more than a million dollars an-
ually have been projected at two large carriers as a result of termina-
tion of existing subcontracts. A claim for at least several hundred
thousand dollars is expected to be filed under provisions of another
subcontract allowing recovery of administrative costs in excess of
HEW officials have assured the subcommittee that they will provide
more vigorous Federal leadership and surveillance in the control of
Medicaid fraud and abuse, and that a substantial Federal effort will
be initiated to improve State program management.
6. Administration of Guaranteed Student Loan Program.
a. Summary.-The subcommittee examined selected aspects of the
administration of the Guaranteed Student Loan Program (GSLP)
by the Department of Health, Education, and Welfare.
The subcommittee inquiry, which is continuing, disclosed serious
problems in the GSLP, many of which are at least in part due to or
aggravated by administrative deficiencies. Under current forecasts,
loan defaults under the Federally-insured program are expected to
total more than a billion dollars, almost a quarter of the amount
loaned. The subcommittee found one instance in which a lender had
more than $1 million in insured loans, 100% of which were either in
default or delinquent. Despite the high default rate, there apparently
has never been a law suit against a delinquent borrower. In some in-
stances, borrowers have been reluctant to repay their loans because they
feel the training they received was worthless or had been misrepre-
In one regional office, investigations are curently being conducted
into possible misconduct by employees involving alleged faud, mis
appropriation of loan -monies, kickbacks, gratuities, and conflicts of
interest. During subcommittee hearings in June 1975, it was reported
that more than 50% of the workload of the HEW Office of Investiga-
tions consisted of student loan matters.
Testimony at subcommittee hearings indicated that the .computer
system which had been used by the Office of Education (OE) for the
student loan program had not worked and that the General Account-
ing Office had refused to certify the accuracy of fiancl state ts
for the program. Moreover, the testimony further indicated that t
guaranteed student loan program-as well as other OE programs
had been operated for lengthy periods of time without adequate
Administration of the Guaranteed Student Loan Program was
reviewed at a hearing on June 24, 1975.
'~ ~ ~ ~ ~ ~ ~ ~ ~ ~6 '~ ~"., ;. ''*')''. *'...**'.'** *'
b. Benefts.-It is expected that the subcommittee investigation
will result in significant improvement in the administration of the
Guaranteed Student Loan Program.
7. Administration of the ADCProgramG
a. hummary.-The subcommittee initited an investigation of the
the assistance of about 11 million persons. The subcommittee is exam-
b. Benefits.-It is expected that substantial money savings, as well
a administrative improvements, will result from this investigation.
A. NEW MEAsuREs
1. H.R. 6558 and related bills to extend and revise the State and Local
Fiscal Assistance Act of 1972 (P.L. 92-512), commonly known
a. Report number and date.-This legislation is still under subcom-
I. Summary of measure.-H.R. 6558, prop by the President,
iih September30, 1982) at a cost of $39.85
billion. The subommittee has before it 40 other bills, some of which
ge e present revenue sharg progam
e. Legislatie stat.-Hea rings have been completed and the bills
and testimony are being analyed preparatory o subcommittee action
12; and December 2, 1975. The hearg record will be printed.
III. Other Current Activities
A total of 43 General Accounting Office reports to the Congress
were referred to the subcommittee. They were studied by the subcom-
mittee staff and considered in connection with the subcommitte's in-
B. OTHER REPORTS O STATEMENTS
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nlrIV. Committee Prints
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V. Prior Activities of Current or Continuing Interest
1. FDA Regulation of Diethylstilbestrol (DES) as a Feed Additive..
a. Sumnary.-On December 10, 1973, the committee issued a report
entitled "Regulation of Diethylstilbestrol (DES) and Other Drugs
Used in Food Producing Animals" (House Report No. 93-708) based
on the subcommittee's comprehensive investigation of this subject.
This report dealt with the extensive use of DES, a known cancer-
mittee made a number of recommendations aimed at timely enforce-
ment of existing laws intended to protect the pubic from exposure to
Following the subcommittee's hearing, FDA acted to ban the use of
DES as a feed additive and as an animal iplant, but these actions
were later overturned by a Federal court because FDA had not fol-
lowed proper procedures.
The subcommittee has continued to monitor the results of the U.S.
Department of Agriculture's sampling program for DES residues in
cattle and sheep, a program which uses an unapproved testing method
contrary to the statutory requirements.
In January 1975, the subcommittee chairman advised FDA of the
increasing incidence of DES residues being found in animal livers by
the USDA, and urged revocation of the new animal drug application
for DES on the grounds that an approved, practicable testing method
was not available.
FDA announced in December 1975 that it was withdrawing ap-
proval of the DES application, giving as a reason the non-availability
of a practicable testing method and offering holders of approved ap-
plications an opportunity to request a hearing on the regulatory
b. Previously unreported benefits.-When finally implemented,
FDA's ban on the use of DES in cattle and sheep production will
eliminate a potent cancer-causing drug from our food supply and
thereby contribute to the Government's "war against cancer."
2. CCC Grain Storage Activities.
a. SumSmary.-The subcommittee examined grain storage activities
of the Department of Agriculture, giving particular attention to rates
being paid for storage of Government grain in commercial facilities.
b. Previously unreported benefits.-The subcommittee's investiga-
tion was a contributing factor in action taken by the Department of
Agriculture to reduce storage rates approximately 19 percent. Esti-
mated savings because of this reduction durinig fiscal year 1975 were
Total savings because of the reduction during fiscal years 1961-1975
are estimated at $567,217,588.
3. Government-Financed Exports of Agricultural Commodities.
a. Summary.-In past years, the subcommittee devoted consider-
able attention to programs involving Government-financed exports of
agricultural commodities. Although no formal reports on this subject
were issued, several hearings were held and a number of informal
recommendations have been made to the Department of Agriculture.
b. Previouly unreported benefits.-In accordance with action
urged by the subcommittee, price review procedures for commodities:
sold under Public Law 480 programs were changed to provide for re-
view of prices prior to approval of sales, rather than months later
after the commodities had already been delivered and USDA funds.
paid out to finance them. As a result of the changed procedures, ac-
cording to reports from the Department of Agriculture, estimated sav-
ings during fiscal year 1975 were $719,979. Total savings prior to fiscal
year 1975 are estimated at more than $4,427,000.
VI. Projected Program for the Remainder of the 94th Congress:
During the second session of the 94th Congress, it is expected that
the subcommittee will complete its consideration of legislation to ex-
tend the State and Local Fiscal Assistance Act of 1972 (general
revenue sharing) and of proposed legislation to establish an Office of
Inspector General for the Department of Health, Education, and.
Welfare. In addition, the subcommittee will continue to review se-
lected programs and activities of the departments and agencies under
its jurisdiction, with particular attention being given to the following:
(1) Prevention and detection of fraud and abuse in HEW pro-
(2) Administration of student financial assistance programs.
(3) Administration of the medicare and medicaid programs.
(4) Effectiveness of Federal research and prevention programs
in the health field.
(5) Administration of the Aid to Families with Dependent Chil-
dren program (AFDC).
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R ;i"-"'. A'E
C. CONSERVATION, ENERGY, AND NATURAL RESOURCES
Hon. WILuLIA S. MOORHEAD, Chairman
A. INVESTIGATIONS RESULTING IN FORMAL REPORTS
1. "Federal Preparedness To Deal With the Natural Gas Shortage
Emergency This Coming Winter." House Report No. 94-412,
July 25, 1975. Third Report by the Committee on Government
Operations, Together With Additional Views.
a. Summary.-This report represents the assessment of the Com-
mittee on Government Operations of the state of Federal prepared-
ness to deal with the predicted natural gas shortage emergency of the
winter of 1975-76. The report reviews the administrative history of
the Federal Government as it has sought to cope with this problem
and makes special note of those opportunities that exist to overcome
potentially serious problems of natural gas supply and distribution.
The committee's report made the following findings and recom-
Federal agencies are not prepared at this time with advance plans
to cope with adverse effects on employment and industrial production
even in areas they know now will be hard hit. There is too much of a
Natural gas is increasingly in demand and has become increasingly
Natural gas curtailments over the winter of 1975-76 will create
emergency situations affecting many industries, especially in the Mid-
west and East.
Natural gas emergency preparedness responsibilities are dispersed
throughout the executive branch and are often duplicative.
Coordination of emergency preparedness among the executive branch
agencies is haphazard and often ad hoc.
1. All cognizant Federal departments and agencies should move
immediately on a top-priority basis to take whatever steps are neces-
sary within the scope of their legal authority to prevent or alleviate
the impact of this coming winter's natural gas shortage on those States
and areas expected to suffer most. If necessary, the President should
take preventive action under the criteria of the Defense Production
Act and other legal authorities to declare certain regions as potential
economic disaster areas before the fact and marshal the Federal Gov-
ernment's resources accordingly.
2. Emergency preparedness authorities should be clarified as they
relate to future natural gas emergencies.
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3. Departments and agencies with major responsibilities relating-
to natural gas should prepare memorandums of understanding or other
documents delineating their respective duties which bear on naturar
4. Collection of data on natural gas supply and demand, availability
of alternative fuels, and capability to use alternative fuels, together
with assessment of impact of natural gas curtailments, should be ac-
complished on a continuing coordinated systematic and timely basis.
5. Because the natural gas emergency of 1975-76 will be a recurring
problem, and because no effective emergency planning or coordinatinc
mechanisms exist, and because neither the FPC nor the FEA or any
other Federal agency has authority to take full necessary action in the
face of a natural gas emergency, the President should propose and the-
Congress should give immediate consideration to legislation which
(a) Establish clear responsibility for preparing contingency
plans for natural gas shortages and other natural gas emergencies
(b) Establish clear responsibility for the coordination and
focus of national efforts to deal with immediate and long-term
shortages of natural gas; and
(c) Establish authorities to control the production, shipment,
and distribution of natural gas on a coordinated national basis as
necessary to deal with natural gas shortages.
6. The Federal Power Commission and the Federal Energy Ad-
ministration should take appropriate action consistent with their
emergency preparedness responsibilities, including litigation in Fed-
eral courts, if necessary, to compel natural gas producers to comply
with the Natural Gas Act and regulations to deliver natural gas to-
b. Benefts.-This investigation has resulted in initiation of new,.
and redirection of a number of older, Federal agency procedures con-
cerned with natural gas supply and distribution. (1) The Energy Re-
sources Council moved to effect greater Federal interagency effort to
provide more detailed analysis of probable effects of a gas shortage
(2) An intensive public education program was initiated. (3) The
Federal Energy Administration (FEA) established a Natural Gas
Office intended to coordinate all Federal activities. (4) The Federal
Power Commission (FPC) took responsibility to closely monitor gas
storage and expedite pipeline construction. (5) Jointly, FEA and
FPC are reviewing electric utility practices.
In addition, the Department of the Interior proposed new regla-
tions to provide for the allocation of natural gas or defense purposes,
consistent with the provisions of the Defense Production Adt of 1950,
as recommended by the committee.
Other benefits which may result from the investigation are: Future
shortage conditions will receive much greater advance preparation
when the FEA, the FPC, the Department of the Interior, and other
cognizant Federal departments and agencies clarify emergency pre-
paredness authorities relating to natural gas emergencies as recom-
mended by the committee.
e. Hearings.- The transcript of the June 12 and 26, 1975, harings,
entitled "Federal Preparedness To Deal With the U.S. Natural Gas
the transcript of the November 5 and 6,
195, hearings, entitled "Pro Reports on Coping With a Possible
Shortge Winter," have been printed.
1. Im.provin Bureau of Re lamation Procedures for Computing In-
ing Ofice, is examining the Bureau f Reclamation's procedures for
auditing and reporting costs and ceilings for water resource projects.
justification to or authorization by Congress. Such legislation usually
contains a provision allowing for normal fluctuations in construction
costs including increases in the costs due to inflation. At the subcom-
mittee's request, the GAO examined ethods employed by the Bureau
to compute inflation on three water resource projects: the Garrison
iversion Unit in North Dakota, the Colorado River Storage Project,
ad the Fryingpan-Arkansas Project in Colorado.
The GAO found several maor problems with the Bureau's cost
indexing procedures, the most serious being a procedure which pro-
vided that completed contracts be kept in the cost ceiling and indexed
authorization of a project; (2) an instance where the current estimated
cost of a project was computed using outdated figures, resulting in
understated costs; (3) a practice of improperly inflating the cost ceil-
ing of a project by acquiring vastly larger tracts of land at much higher
prices than origally estimated; (4) an instance where the Bureau
continued to index for inflation those costs which were incurred by a
private entity; and (5) an instance where the Bureau was planning to
add an additional feature to a project without prior congressional
approval ($45 million Leland Bench feature of the Colorado River
In recomputing the authorized cost ceiling for projects based on
-recommended procedures contained in the report, GAO found two of
the three projects to be in excess of their spending ceiling by a total of
A hearing was held on December 8 to examine the GAO's findings
and to questionInterior Department officials as to action being taken
to improve their procedures. During the course of the hearing, Interior
sistency in the Bureau's indexing procedures; to narrow the definition
of a project "feature" so that certain expended costs could be excluded
cost ceiling of projects as part of each project's budget justification;
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Interior Department oficials also admitted in the course of question--
ing by the Chairman that the estimated cost of the Bonneville Unit of
the Colorado River 'Storage Project had been understated by $63.7
million and that the appropriate adjustments were being made. In ad-
dition, the officials agreed that the $2.2 million in inflation computed
since 962 on preauorization costs for the Garriso Project wa
erroneously included in the cost ceiling for that project and that neces-
sary corrections had been made. Finally,the Department agreed that
inflation had been erroneously computed for the comp
Gorge feature of the Colorado River Storage Project, causing an over-
statement of the authorized cost ceiling for that project by $14. il
lion. It was indicated that this would be corrected.
b. Benefits.-The changes agreed to by Interior in the subco
tee's hearing represent a total reduction of $17.5 million in spending
authority for the three projects examined. In addition, Interior a
to correct the estimated cost of the Bonneville Unit o the Colorado
River Storage Project by $63.7 million so as to repor more accurat
the expected construction costs of that project.
In the event the Bureau of Reclaatin makes the neces rev
sions in its cost accounting procedures as recommended by the
as the subcommittee expects they will-a total reduction of il-
lion would result in the authorized cost ceilings for the three projects
examined. In addition, the current estimated costs for the projects
would be increased by a total of $91.9 million, resulting in a more
accurate presentation to Congress of the true costs necessary to com-
plete construction. If the GAO recommendations are applied to all
Bureau projects, it is expected that the results will be a substantial
reduction of the cost ceilings, and a more accurate reflection of the
estimated costs, for projects presently under construction.
Final Bureau agreement with the GAO recommendations would
also require the Bureau to return to Congress for authorization to
build the presently planned, but unauthorized, $45 million Leland
Bench feature of the Colorado River Storage Project.
Improvements in Bureau reporting to Congress on inflationary in-
creases in spending authority and estimated project costs will result
in closer congressional scrutiny of a multibillion dollar public works
program and improved information for making appropriations and
budgetary decisions. It will also allow Congress to more accurately de-
termine whether a particular project is over its authorized cost ceiling
and in need of reauthorization. Furthermore, it will diourage the
Bureau from adding expensive unauthorized features to projects on
the basis of overly inflated project cost ceilings and understated esti-
mates of costs. Finally, more accurate project cost-benefit ratios should
2. Federal Involvement in the Development of Eastern Oil and Gas
a. Summary.-On May 8, 1975, the subcommittee held hearings on
the development of vast gas and oil supplies to be found in the Devon-
ian and Mississippian shale formations. The so-called eastern shales
extend from Texas through large areas of the Midwes and East into
western New York State. Two major U.S. companies-Dow Chemical
U.S.A. and the Columbia Gas System-described their pioneering
work in attempts to develop these shales as a source of fuel in an en-
vironmentally sound way. Dow estimated that, in ichigan alone the
neath just Ohio, West Viriia, Pennsylvania, Kentucky, and New
York. Testimony before, the subcommi ee showed the need for the
ldevelopment of new, sophisticated technology to tap these resources
and more attractive economic incenties to o so.
b. Benefts.--Largely as a result of the subcommittee's hearings and
the national interest it stimulated, Congress and the Energy Research
and Development Administration were encouraged to assist industry
in plans to develop these resources. These fors have the very rea
potentiality of billions of dollars in balance of payments savings and
added tax revenues for the nation in future years.
3. Federal Energy Administration Compliance and Enforcement
ummary.-During 1975, with the assistance of the General Ac-
counting Oflice, the subcommittee investigated the compliance and
enforcement eforts of the FEA regarding alleged overcharges and oil-
price manipulations by industry. These included the agency's record
of administrative action on its own notices of probable violation and
remedial orders. In addition, FEA activities involved with monitoring-
an estmated $2 billion of industry "banked costs" and potential viola-
tions totaling between $1 and $2 billion revealed through spot re-
finery auditing practices were investigated. ("Banked costs" represent
increased costs urred by the company but not passed through to the
consumer. Such costs may, however, be passed on to the consumer at a.
b. Bemepts.-The, subcommittee's investigation resulted in increased
emphasis being given by the FEA to strengthened procedures and
reallocation of existing manpower involved with the refinery audit
eforts of the agency. In addition, procedures developed for processing
notices of probable violation and remedial orders were reviewed and
subsequently revised to reduce undue delay of decision. It is antici-
pated that the investigation will further stimulate FEA action to
4. Investigation of Environmental and Economic Implications of the
Garrison Diversion Unit Irrigation Project in North Dakota.
a. Summaqr/.-The subcommittee has continued its investigation,
Unit irrigation project in North Dakota. The project, which is 20
miles of drains. The project's 1965 authorizing legislation set a spend-
The Canadian government has formally objected to continued con-
property in Canada. In the course of Its investigation, the subcommit--
tee learned that the Bureau of Reclamation had been withholding
significhnt information from the State Department, the public, and
the Congress concerning possible alternatives under consideration
within the Bureau to ameliorate Canadian concerns.
Objections have also been raised by the Council on Environmental
Quality, the Environmental Protection Agency, the Minnesota Pollu-
tion Control Agency, and various environmental organizations, citin
such problems as increased flooding, destruction of wildlife habitat and
naturally occurring wetlands, and inundation of six Federal wildlife
refuges. Landowners in the path of the project have also complained
vigorously of ill treatment by the Bureau of Reclamation.
Full-scale investigation of the Garrison Project was prompted by
the public concern over the impacts of the project on neighboring
States and Canada and the lack of substantive information available to
the Congress to evaluate the need to continue funding for the project.
:It was agreed during the House debate over the 1976 Public Works
Appropriations bill that the subcommittee would hold hearings on the
-Garrison project with the intention of obtaining the facts and report-
ing formally to the Congress.
The subcommittee conducted two days of hearings on the Garrison
Project, one in Bismarck, North Dakota, to obtain local testimony,
and a second in Washington to hear from involved Federal agencies.
b. Benefits.-The subcommittee's investigation will provide a factual
basis for the Congress to utilize in future decision-making regarding
the Garrison Diversion Unit. Congressional oversight will be im-
proved, and Congress will be better able to weigh and evaluate the
costs and benefits of the project. It should also help to resolve the water
-quality dispute with Canada, cause the Bureau of Reclamation to
reassess the environmental effects of the project on wildlife, wetlands
and refuges, and improve the treatment of displaced farmers and land-
owners. Information concerning project alternatives previously un-
known to the State Department and Congress, important to negotia-
tions between the United States and Canada, was revealed by the
subcommittee in the course of its investigation.
c. Hearings.-Hearings were held by the subcommittee on Septem-
ber 15, 1975, in Bismarck, North Dakota, and November 19, 1975, in
Washington, D.C. Transcripts are to be printed.
5. Synthetic Gasoline.
a. Summary.-On September 23,1975, the subcommittee heard testi-
mony from Dr. Murry A. Tamers, a nationally recognized physical
chemist from the Life Sciences Center of Nova University at Fort
Lauderdale, Fla. Dr. Tamers described his new process to produce
synthetic gasoline extenders-namely, benzene-from non-petroleum
feedstocks. This process, if found industrially feasible, could have pro-
found economic and international implications in helping America to
achieve greater energy independence in an environmentally sound way.
Dr. Tamers and Nova University had sought a relatively modest
grant from the Energy Research and Development Administration
(ERDA) to finance a bench project to help determine future prospects
for the process. Upon investigation by the subcommittee, it was found
that the grant aplication had been handled in a most irregular man-
ner. The proposal was rejected 10 days prior to the final deadline or
the receipt of outside peer reviews. There was also reason to suspect
possible conflicts of nterest and bias entering into it rejection. ERDA
could produce no formal decision paper or detailed economic analysis
supporting its decision.
The subcommittee chairman protested the handling of the grant
application and urged it e reconsidere by ERDA on its merits
and in a fair and business-like manner more refletive f the type of
proper deliberation of a Federal agency. ERDA agreed to do so and
nvited Dr. Tamers on December 17, 1975, to re-submit his proposal.
The subcommittee plans t press for substantial internal reform in
handling imaginative and challenging proposals submitted by respon-
b. Benefts.-Dr. Tamers again submitted his proposal to ERDA on
January 13, 1976. If such a process, or one similar to it, is feasible and
developed, the United States could drastically reduce the importation
of foreign crude oil, or, in the event of another boycott, have an
alternative maj or source of gasoline. Although such benefits and the
monetary savings are strictly conjectural and prospective in nature,
the subcommittee doubts anyone would ever question they could occur
a. ummary.-The subcommittee conducted an investigation into
the need to discontie preconstruction planning and to deauthorize
the Nebraska Mid-State Division of the Pick-Sloan Missouri Basin
Project. During the eight years since the irrigation project had been
authorized by Congress, the Bureau of Reclamation has failed to meet
the 140,000-acre signup requirement because most of the farmers in
the irrigation rea already have privtely-owned irrigation equip-
ment. In addition, the project would destroy the Platte River wildlife
refuge which is a prime refuge for whooping crane and other migra-
tory waterfowl. The area is uinder consideration by the Fish and Wild-
life Service for inclusion in the National Wildlife Refuge System. In
its investigation, the subcommittee discovered that the Deputy Assist-
ant Secretary of the Interior for Program Development and Budget
had recommended deauthorization of the project in an April 16, 1975,
memorandum to the Under Secretary of the Interior. In June the
Chairan of the subcommittee asked the Secretary of the Interior for
his decision on the recommendations contained in the Deputy Assistant
Secretary's memorandum. The Department's reply indicated a Secre-
tarial decision had not been made on deauthorization due to disagree-
ment among high-level officials within Interior over the disposition of
Mid-State. The subcommittee then requested GAO to examine the,
Mid-State project to determine whether the project should be rede-
After a November 4, 1975, referendum in Nebraska, in which local
voters overwhelmingly rejected the project, Chairman Moorhead
again wrote the Secretary on November 13 requesting a reportonsteps
for dealthorization. In reply. the Department indicated its agreement
that deautorization of the Mid-State Project w in order and indi-
for fiscal year 1976 would not be necessary.
b. Benefits.-The subcommittee's action has led to of
preconstruction planning of an irrigation project which would have
a. r Fu.t
d g economic and environmental resuts y h in t bti
a timely commitent from the Department of the Interior to phase
out and deauthorize the Mid-State project, the subcommittee helped
assure the saving of $600,000 budgeted for preconstruction plan1 ng
for Mid-State for fiscal year 1976 and an estimated 178 million was
saved in future construction costs. Also, the subcommittee's actions
prevented the destruction of the Platte River wildlife refuge which
could have resulted from project construction. This ec is of
incalculable value to the State of Nebraska and to the ti on.
i. Laser Fusion.
a. Swmmary.-On June 3, 1975, a hearing was held by the sub-
committee as part of an investigation into the policies and proce-
dures of the Energy Research and Development Administration
(ERDA) concerning laser fusion R&D.
The growing shortage of fossil fuels is spurring the search for alter-
iiative sources, and testimony revealed that while laser fusion activities
-originated in weapons R&D, fusion power holds great promise for
improving the national energy situation in the near term with syn-
thetic natural gas. Along with laser isotope separation, fion power
in the long term, if developed successfuly, could produce electricity
with a fuel that is virtually inexhaustible.
b. Benefits.-Early involvement of the private sector in developing
and demonstrating the economic feasibility of laser fusion can expedite
the accomplishment of national energy goals. The subcommittee's i-
vestigation helped accelerate decisions by the Energy Resear and
Development Administration to renew and expand existing R&D
research contracts aimed at increased industrial participation in the
laser fusion program. Differing management philosophies within
ERDA in part had hindered the achievement of this objective. The
subcommittee's investigation has assisted in moving towards the resol
tion of this problem.
8. National Park Service Management of Concession Operations.
a. Summary.-The subcommittee continued the investigation into
the National Park Service's management of concession operations
which was begun during the d Congress by the Conservation a
atural Resources Subcommittee and a subcommittee of the Perma
nent Select Committee on Small Business. Valuable assistance was pro-
vided in this investigation by the GAO, which prepared a report en-
titled "Concession Operations in the National Parks-Improvement
Needed in Administration." The GAO report concluded that:
(1) The Park Service should improve their monitoring and evalua-
tion of concession operations.
(2) Park Service policies discourage competition in awarding con-
cession contracts, to the detriment of small businesses.
(3) The Park Service has not kept track of concessioner prices to be
certain that they are appropriate.
(4) The Park Service does not have sufficient information to deter-
mine whether existing concessioners are performing satisfactorily.
Together with the Subcommittee on Energy and Environment of
the Committee on Small Business, the subcommittee held hearings on
July 25 and 28 concerning National Park Concessions. Testimony was
-received from the GAO, the National Park Service, and concessioners.
Transcripts of these hearings have been printed. In addition, staff
members representing both subcommittees have held numerous meet-
ings with Park Service officials and representatives for concessions.
The subcommittee was preparing a report on concession operations
r early c eration in the second session
b. Bee -As a result of the investigation by the subcommittees
and the GAO, the Park Service has begun to hire additional staff to
manage concession operations both in its Washington office and at the
field level with considerable improvement in efficiency expected. In
addition, the Pa Service is reviewing most of the major features of
its concessions management efort in order to determine what improve-
ments are ry. This should result in better services being pro-
vided to National Park visitors by concessioners.
9. vy-duty Vehicle Emissions.
a. mmay.-The subcommittee investigated the Environmental
Protection Agency's program to control air pollution from heavy-duty
vehicles, which includes gasoline and diesel-powered trucks weighing
in excess of 6,000 pounds.Under title I of the 1970 Clean Air Amend-
ments, EPA has the authority to establish emission standards for all
new vehicles or engines designed for use on streets or highways. These
vehicles emit up to ten times more carbon monoxide and hydrocarbon
Compared to 1976 model automobiles. It is clear that heavy-duty ve-
icles are becoming an increasingly important source of air pollution
compared to smaller motor vehicles, which are being forced to comply
with fairly stringent emission standards. In fact, transportation
sources account for almost half of all air pollution.
S ctee advised EPA that the agency is moving much
too slowly in requiring heavy-duty vehicle manufacturers to control
air pollution. The EPA agreed to announce a Notice of Proposed Rule
vehicle emission standards.
inthe rfuturei r to set mor sie he
b. Benefits.-As pollution control for heavy-duty vehicles is ac-
elerated, it will improve air quality in our large cities and will provide
better protection of human health and welfare. Considerable cost say-
ings in many fields, such as public health, should result.
10. Construction rants-EPA Audits
a. Sitmmary.-The Environmental Protection Agency undertook au-
dits of a number of municipal waste treatment facility construction
grants following reports early in 1975 of irregularities involved in the
expenditure of funds made available through these grants. Although
an mterim report was released by the Agency, the final audit reports
were not forthcoming. The Chairman of the subcommittee urged the
ease early in 1976. The Agency assured the subcommittee that it is
Completing a revision and reform of its audit procedures. The Agency
11. Construction Grants Program- ate of Obligations.
a. Sumvmry.-The Environmental Protection Agency administers_
title II of the Federal Water Pollution Control Act, pursuant to which
$18 billion of Federal grant assistance is authorized to be obligated
for the construction of municipal waste treatment facilities. During
the course of a hearing of the subcommittee on April 24, 1975, the
Chairman ured the Administrator of the EPA to exert his efforts to
accelerate obligations in that program. The Administrator agreed to-
do that and to aim at a target of $400 million per month
b. Benefts.-Following the hearing, the rate of obligation rose from
$280 million per month to over $400 million per month. Although the
EPA has slipped below that target, it is endeavoring to meet and hold
the $400 miion obligation target. By increasing the obligation rate
for construction grants, communities are better able to proceed with
needed, and legally required, waste treatment facility construction.
thus improving the quality of our water and aiding the economy
through accelerated construction activity.
12. Investigation of Adequacy of U.S. Geological Survey Regulations
Concerning Inspection of Oil and Gas Operations of the Outer
a. Summary.-The subcommittee, with the assistance of the GAO,
is continuing to investigate the need for more frequent inspection of
oil drilling activities on the Outer Continental Shelf to reduce in-
cidence of spillage. On January 9, 1976, the Chairman of the subcom-
mittee urged the U. S. Geological Survey-which has responsibility
for inspecting oil and gas rigs on the OCS-to comply with certain
unfulfilled recommendations contained in two previous General Ac-
counting Office reports to the subcommittee(B-146333, June 29, 1973,
and February 26, 1974). In these reports the GAO had recommended
that guidelines and recommendations be promulgated to increase the
frequency and formalize the inspection and control of certain types of
drilling rigs. The Department had previously assured the subcommit--
tee and GAO that regulations would be issued by June 1974, but this
deadline has not been met; The subcommittee has urged immediate
promulgation of the necessary regulations.
b. Benefits.-Regulations to tighten and increase the frequency of
inspections of oil rigs would help control and eliminate many small
but chronic discharges of oil into the ocean environment. This would
have benefits in terms of improved fish and waterfowl habitats anJ
would provide considerable saving in terms of oil clean-up costs that
would otherwise be required at the expense of Federal, State and local
governments and the oil industry.
13. Interior Department's Game Range Transfer.
a. Summary.-The Interior Department announced in February
1975 that it intended to transfer administration of the Charles M..
Russell Wildlife Range in Montana, the Charles Sheldon Antelope
Range in Nevada, and the Kofa Game Range in Arizona to the Bureau
of Land Management (BLM). Prior to this decision, these three game
ranges were jointly administered by the BLM and the Fish and Wild-
life Service. The subcommittee staff conducted a thorough investiga-
tion in order to determine the basis for this decision, which culminated
in a report of staff findings which was inserted into the Congressional
ecord by Chairman Mooread on July 23,1975. At the same time, the
House Appropriations Interior Subcommittee and the House Mer-
chant Marine and Fisheries Committee moved to block the transfer.
The House eventually passed legislation which would require that
oint administration of th ranges be continued. Subsequently, a U.S.
District Court judge enjoined the Department from carrying out
the game range transfer until an environmental impact statement is
b Benefts.-The subcommittee's efforts to prevent the transfer of
the three game ranges to BLM should result in better protection of the
wildlife resources on the valuable public lands. In addition, it prevents
the Department from establishing a precedent for transferring other
units of the Nationl Wildlife Refuge System from the Fish and
Wildlife Service to the Bureau of Land Management.
14. Mining in National Parks and Monuments.
a. Summary.-The National Park Service has traditionally per-
-mitted mining in a number of national parks and monuments. When
mining in Death Valley National Monument accelerated during 1975,
ational attention focused on the threatened destruction of the view
from Zabriske Point in Death Valley. (Earlier concern had been ex-
pressed about possible mining activities in Glacier National Park.)
The Chairman of the subcommittee wrote to the Acting Secretary of
the Interior questioning the legal basis on which the Department
acted in regard to Death Valley and urged the Secretary to reexamine
that legal basis and the Department's policy relating to mining in
the National Parks. He also requested that the Department endorse
legislation which would prohibit such mining in the future.
The Chairman of the subcommittee also urged the chairman of the
House Committee on Interior and Insular Affairs to give priority
Attention to legislation which would prohibit future mining in na-
tional parks and monuments.
b. Benefits.-The Chairman's letters helped focus further attention
on the issue of mining in the national parks. That attention assisted
in the identification of the need for legislation in this area. The House
Parks and Recreation Subcommittee has reported favorably to the
House Interior and Insular Affairs Committee legislation which
would prohibit mining in the national parks and monuments. Al-
though the Department of the Interior persists in the opinion that they
now lack the legal authority to prohibit mining in the national parks
and monuments, it did endorse legislation which would so prohibit
15. Dredge and Fill Regulations.
a Summary.-On May 6, 1975, the U.S. Army Corps of Engineers
published in the Federal Register (40 F.R. 197166) four alternative
sets of regulations which would govern the Corps' regulatory pro-
gram for dredge and fill operations. New regulations were required
to be published by order of the court in DO v. allaay, et al.,
(D.D.C., March 71, 1975) in which plaintiffs cited a report of this
Mexico, House Report No. 1396, 93d Cong., 2d sess. (1974). The C rps
gable waters," thereby eliminating most wetlands from the scope or
the regulations. The Corps' favored option was clearly at odds with
EPA on June 10, 1975, and urd th two agencies to work together
on their regulations and to eneavor to find common ground so
the final regulations would provide the needed protection for wet-
lands and avoid undue administrative burdens.
b. Benefts.-At the subcommittees request, the reprntatives of
the Corps and the EPA assured the chairman that they would work
together to develop regulations for the dredge and fill de-
signed to provide a consistent EPA-Crps program which would be
administratively workable and which would provide the protection of
waters and wetlands required by the law On July 25, 1975, the Corps
published regulations meeting those objectives.
16. Administration by the Interior Department and Its Agencies of
Departmental Conflict-of-Interest Regulations.
a. Summary.-The subcommittee, with the assistance of the General
Accounting Office, is continuing to examine the adequacy of the In-
terior Department's administration of its regulations ad sttutory
instructions relating to conflicts-of-interest. In response to the snb-
committee's request, the GAO filed a formal report (B-103987,
180,228, 118678) to the subcommittee on December 2, 1975, which re-
vealed several instances where Interior officials held securities that po-
tentially conflicted with their duties as caretakers of the nation's public
domain. The Interior offices reviewed in the report included the
Bureau of Land Management (BLM), Bureau of Mines, Mining En-
forcement and Safety Administration (MESA), Office of th
Assistant Secretary for Energy and Minerals, and the Office of the
Assistant Secretary for Land and Water Resources. The study showed
that the 1,400 MESA officials were not required to file disclos
statements at all, pursuant to a Solicitor's opinion.
A previous report, done for the subcommittee by GAO (B-118678)
and dated March 3,1975, reviewed financial disclosure procedures being
employed by the U.S. Geological Survey. The report found that the
Survey's disclosure system was not effective.
b. Benefits.-As a result of the GAO's findings, the Department of
the Interior has issued new guidelines requiring all employees to file
financial disclosure statements. The Department has also indicated
that MESA officials will be required to file statements. It is expected
that this action should improve the climate within Interior for ob-
jective decision-making concerning the use of natural resources.
17. Annexation of Rural Electric Cooperatives.
a. Summary.-The subcommittee investigated the policies of the
Rural Electrification Administration (REA) to determine the actual
and potential loss of customers by rural electric coopera throug
annexations by municipalities and subsequent condemnation by utili-
ties serving the municipality. The cooperatives which are threatened
by annexation and condemnation feel that REA should recommend ii-
tervention by the Justice Department in those areas where the economic
well-being of cooperatives is in jeopardy. The REA agreed to meet
with Justice Department officials regarding a potential condemnation
acion aaint te K iusko County, Indiana, Rural Electric
".-The com of Fostr City in San Mtex
. B f-TheE appea to be incasin awa of h
subcomitee is continuing t onit d evel ens in this area.
18. Foster City-Corps of Engineers Permits.d es, the FPA
a. SumOry.The community of Foster City in Saoe Maittee
County, California, requested a permit of the U. S. Army Corps of
Engineers to further fill an area adjacent to San Francisco Bay which
fhad been diked since 1961. The permit had been pending for several
years and had been the subject of numerous government proceedings.
In ad io to ae, reonal andthe F. ederal EPA,
te S. r rs of ns ad U. S. Fish and Wildlife
Service were all in ed in eterminintrthe pending p i
should be approved. On September 12and 13, 195, the subco ittee
inspected the area an d ohearings in Foster City to hear represen-
tatives of State, local, and Federal agencies. A complicated and time-
b. Be|flts.-Representatives of the Corps and of the U.S. Fish-
nd Wildlife Service, identified procedural reforms which could ex-
the subco ttee that they will ork together to simplify and ex-
pedite th permit process for greater economy and efficiency. Tech-
niques for integrating State, regional, and Federal agency procedures
ilso were identified.
a. Summary.-In 1969 the House Committee on Government
Operatios approved an exchange whereby the General Services
Administration (GSA) would take over Glen Echo Park in
1ontgomery County, Maryland, in exchange for land it owned in
Washigton. One of the conditions which the committee imposed be-
fore it appoved this land exchange was that Glen Echo must be-
The GSA attempted to transfer Glen Echo to the Interior Depart-
ment so that it would be operated as part of the National Capital
Parks system. However, the Office of Man-gement and Budget
(OMB) attempted to block this transfer because they wanted the
At the, urging of the subcommittee and with the assistance of the fulfl'
committee staff, the OMB on December 5, 1975, approved the transfer
of Glen Echo to National Capital Parks. Official transfer by GSA is-
b. Bnefts.-Asa unit of the National Capital Parks system, Glen
Echo will continue to be staffed and operated in a manner that will
20. Landmark Serices Preparation for the Bicentennial.
a. Sy.-In order to determine whether te Landmark
Services Tourmobile, a motorized tour service concession operation in
the National Capital Parks, would be ready to cope with the expected
influx of visitors during the Bicentennial, the subcommittee examined
Tourmobile's plans for providing the necessary additional services to
the visitor during 1976. The Park Service's willingness to require
Landmark to provide an adequate number of Tourmobiles to meet the
anticipated demand was also investigated.
b. Benefits.-Both Landmark and the Park Service agreed that
additional Tourmobile service must be made available to the visitor
during 1976. Hopefully, the efforts by the subcommittee to draw at-
tention to the need for Landmark to be prepared for the influx of
visitors expected this year will also improve the quality of service
which it provides under a Federal concession.
II. Other Current Activities
A. GENERAL ACCOUNTING 'OFFICE REPORTS
Twenty-five General Accounting Office reports to the Congress were
received by the subcommittee.
1. "Better Overall Planning Needed To Improve the Standard of
Living of White Mountain Apaches of Arizona," August 12, 1975,
The Department of the Interior's November 10, 1975, response to the
GAO report failed to address the substantive recommendations con-
cerning improved coordination by the Bureau of Indian Affairs of
Federal assistance programs affecting Indian reservations. On
November 18, the Chairman of the subcommittee wrote to the
Secretary of the Interior, indicating that the Department's response
was inadequate and requesting a more substantive response to include
the following: (1) address the need for formulating and implementing
an overall plan for coordination of Federal Indian assistance pro-
grams; (2) state specific steps that will be taken by BIA and the
Department of the Interior to develop a coordination plan to effec-
tively and efficiently integrate Federal programs affecting the White
Mountain Apache reservation; (3) provide for a continuous evalu-
ation of the effect of Federal programs on the standard of living at
Indian reservations; and (4) provide for an annual progress report to
Congress on Indian living standards. The subcommittee is continuing
to pursue this matter.
2. "Proposed Move of St. Helens Ranger District Headquarters from
Pine Creek in the Gifford Pinchot National Forest to Yale,
Washington," July 8, 1975, B-125053.
This report examined the inordinate expense involved in a proposal
to move a local Forest Service ranger headquarters from Gifford
Pinchot National Forest to Yale, Washington. It recommended that
the Secretary of Agriculture have the Forest Service reconsider
its decision to move the station, recognizing all pertinent costs.
In response to the report, the Department of Agriculture concurred
with the GAO's recommendation and indicated that the cost and
benefits of the move would be reconsidered. The Chairman of the
subcommittee, as a matter of routine follow-up to department re-
sponses to GAO reports, requested on October 24 that Agriculture
inform the subcommittee of the estimated date of completion of the
supplemental cost/benefit analysis and provide the subcommittee with
a copy of the analysis. As a result, the Department set a January 31,
committee staff will review the analysis.
A reversal of the Forest Service's decision to relocate the Ranger
Station would save an estimated $131,500 in moving costs and would
prevent the abandonment of Forest Service facilities at St. Helen's
III. Projected Program for the Remainder of the 94th Congress
The following will be the subject of investigations and reports:
(1 Refuse to Energy (solid waste and resource recovery).
2 Revisions of Project Independence.
3 Federal Nuclear Power Activities.
4) Coal: Its Energy and Environmental Implications.
5) Cost Ceilings for Water Resources Projects (Bureau of Recla-
mation and Corps of Engineers).
(6) Outer Continental Shelf Oil and Gas Development Impacts
on Coastal Areas.
(7 Excess Lands Enforcement by the Bureau of Reclamation.
(8 Clearcutting in National Forests (National Forest Service).
(9 Conflict Among Federal Agencies over Deep-seabed Ocean
(10) Bureau of Land Management Oversight Hearings.
++F + +++ + ++ + + + '++++++++++ ++
+ + + +:" + + .... .. .. ++ +++ ++++ + :++ : : : + + +++++ + L + +
4i 4U; .
44 4 4 4
D. GOVERNMENT ACTIVITIES AND TRANSPORTATION
Hon. Wa. J. RANDALL, Chairman
A. INVESTIGATIONS RESULTING IN FORMAL REPORTS
.. Federal Aviation Administration's Procurement of the Electronic
Voice Switching System.
a. Summay.-On August 14, 1974, the subcommittee then under the
Chairmanship of Hon. Jack Brooks conducted hearings involv-
ing FAA's award of a $t7 million on ctract to Philco-For Corp. for
the development and production of 22 units of the electronic voice
switching system. The EVS system was designed by FAA to provide
interconnections for voice communications between air traffic control
personnel in en route traffic control centers, flight service stations, con-
trol towers, remote controlled air/ground facilities, and other fa-
cilities. The system was designed to provide a semiiautomated, flexible,
control which would improve upon the existing interphone/intercom
system operated by A.T. & T. FAA's procurement request called for
bids on both a prototype model and 21 production models to be de-
livered over a period of approximately 4 years. Specifications for the
procurement were general in nature-permitting a bidder- a wider
discretion in proposing the hardware and equipment configuration for
FAA, rejecting the advice ofits own general counse's office, and
that of DOT's Office of Installations and Logistics, solicited a quest
for procurement which combined both the procurement of the proto-
I ,e o. 's tal u .
type-and production models together. Since the prototype was to be
procured on a "cost-plus" basis this presented the possibility that the
successful bidder would use the "cost basis in the prototype phase to
finance the research needed to perfect the production models. Such a
procurement would also tend to deny FAA effective cost competition
on the production models once the design and development were
Essentially, two companies were in competition for the procure-
ment-Philco-Ford and North Electric Co. FAA's technical officials
determined that North Electric was far more technically qualified to
develop the EVS system. However, their recommendation was over-
ridden and the award was made to Philco-Ford, although FAA should
have questioned at the time of the award whether Philco-Ford was
deliberately bidding too low. I
Following the award, the earlier warning signs materialized. Philco-
Ford delayed negotiating subcontracts, canceled out the vital com-
puterized central switching system, failed to develop acceptable designs
to meet FAA's specifications and fell 3 years behind the delivery
schedule. It so began negotiating price reases with FAA- ne-
gotiations initiatd in part by FAA's proposed changes in certain
specifications. In the course of price negotiations tied to the proposed
changes, the price rose to approximately $05 million-a figure which
grossly exceeded the price bid by any competitor in the original
As a result of the rampant price increases and growing delays, the
FAA canceled the contract at the time the subcommittee's hearings
were announced. At the hearings, the FAA dministrator acknowl-
edged that his agency will have to overhaul its procurement procedures.
Benefits.-The hearings, by forcing the cancellation of the con-
tract, could ultimately save the Government $50 to $100 million. The
publicity given deficiencies in FAA's procurement practices should
also cause a major reappraisal and improvement in procurement
policies and procedures.
c. Hearings.-Hearings were held in Washington, D.C. on August
14, 1974. Hearing transcript has been printed.
2. Improved Procedures Needed by FAA for Implementing NTSB
a. Sum.wry.-On March 25, 1975, a hearing was held by the sub-
committee on FAA procedures for implementing NTSB safety recom-
mendations. Officials from the Federal Aviation Administration, the
National Transportation Safety Board, the General Accounting Office,
as well as Representative Ralph M. Metcalfe (D-Ill.) testified regard-
ing the need for improved communications and coordination between
FAA and NTSB, and for expedited FAA implementation of high
priority NTSB safety recommendations.
Between fiscal year 1970 and fiscal year 1974, NTSB issued 655 safety
recommendations. As of August 29, 1974, NTSB classified 222 of these
as "open," in that they had not been implemented or rejected by FAA.
NTSB and FAA also did not agree on which recommendations were
"closed" and which were "open." For example, during fiscal year 1973,
FAA classified 40 recommendations as "closed" which NTSB had
classified as "open."
In July, 1974, FAA developed an NTSB Safety Recommendations
Digest and FAA status log to monitor FAA response to safety recom-
mendations. GAO witnesses testified that these monitoring logs did not
contain updated and accurate information. The logs showed that action
deadlines had been set by FAA and then bypassed, and that in many
cases deadlines had been set so far in the future that FAA consequently
"lost" safety recommendations.
In September, 1974, the NTSB Chairman and the FAA Administra-
tor met to arrange quarterly meetings between the Director, Bureau of
Aviation Safety, NTSB and the Associate Administrator for Safety,
FAA. These meetings were designed to discuss problems of FAA im-
plementation and to facilitate NTSB-FAA communication on the cur-
rent status of NTSB recommendations and FAA responses. NTSB
witnesses testified that these meetings are important and should be
GAO witnesses also testified that the average time required by FAA
to process formal rule changes in response to NTSB recommendations
is 28 months, and can be as long as years and 4 months. This delay. i
due to a preoccupation with petitions for exemptions from existing
Sing in the FAA's Ofice of General
In lieu of formal rulemaking procedures, FAA also responds to
NTSB reommendations with nonmandatory public issuances or inter-
nal directives. FAA has no system of "feedback" to determine whether
these publi issuances effeti implement recommendations. Te sb-
ptio for various FA issuances is 10,000 and 38,000, while
there are 700,000 pilots in the United States.
th hearing, NTSB revised its organization and procedures
to facilitate monitoring of FAA responses. Following a study in late
197 full-time positions were established within NTSB to coordinate
this monitoring program. Further, on February 21, 1975, NTSB pub-
Order 640 under which a safety recomendation can be
"closed" only by foral actio of the Board. NTSB also began clas-
ifying its safey recommendations in order of urgency: Class I, 11,
and-III recommendations. Prior to the issuance of the report, the FAA
tookcertain steps to impove procedures. FAA designated 30 high
projects for expedited processing by its regulatory
council. Bi-weekly meetings were held on a high level within FAA
to identify ways of accelerating the formal rulemaking process. FAA
also approved and began to implement a major streamlining
reorganzation of Flight Standards Service.
The Committee report recommended that (1) the quarterly meetings
between FAA and NTSB be continued and encouraged; (2) The FAA
keep its monitoring logs current and avoid assigning completion dates
too far in the future; (3) that FAA reduce delay in rulemaking pro-
cedures; and (4) that FAA review the use of public issuances and
establish procedures to monitor the effectiveness of these issuances. In
response to the recomendations of the report, FAA has made the
quarterly meetings with NTSB permanent.
Further, FAA has updated its monitoring logs with current infor-
as "open" and has further identified those requiring expedited action.
FAA is also reviewing its use of public utterances with a view toward
establishing an effective monitoring system.
b. Beneflts-More reliable implementation of measures designed to
protect human life should result.
c. Hearins-The hearing transcript has been printed and a report
3. Selection and Training of FAA Air Traffic Controllers.
and training of FAA air traffic controllers (ATCs). Officials from
3-Iear training course and become FAA journeymen. In fiscal year
| i|; r"1 '** l *1 *..r '' '**' **
1975 there were approximately 1,55 such trainees Because of the
high attrition rate, FAA must ng into basic training more traine
than are required to fill all journeymen positions 3 years later. The
cost of this 3-year training is approximately $55,000 per student. The
attrition rate represents an annual to the ooo
$13.8 million. Though some attrition is inevitable, FAA selection and
training procedures and policies are in large part respons ile for th
problem. First, in its screening process FAA does not use tests which
easurre behaviors required of controllers on the job. Instead, FAA
trises selection criteria which favor candidates Fwith certain employtlr
experiences. These experiences are not necessarily valid indicators of
the apti s and skills needed by ATCs.
Moreover, such criteria may discriminate selectively against minor-
ity applicants who have not been afforded access to this experience.
Second, since in 1970 FAA eliminated the use of a pass/fail system
during its 8-week training course at the FAA Academyi it has no
current means of eliminating trainees who perform unsatisfactorily.
Finally, once the trainee is sent to an FAA facility for the remainder
of his training, the FAA facility may not terminate an unsuccessful
trainee until after he has been with the FAA for nearly three years.
During the 3-year period, an FAA ATC traine e receives fll pay, per
diem, and travel expenses.
FAA also does not sufficiently utilize aptitude tests in order to place
trainees in FAA facilities where they are best suited to work.
Because trainees are hired by FAA facilities rather than by the
FAA Academy, large and uncoordinated fluctuations in hiring occur
which cause the Academy to be underutilized at times, and over-
utilized at others. These fluctuations cause unnecessary expense, and
approximately $1 million could be saved by smoothin trainee
Radar equipment available at the Academy for ATC trainees is old,
expensive to operate, and difficult to maintain. The actual radar dis-
play used by trainees is approximately 30 years old. e
b. Benefits.-FAA has become more aware of the need to eliminate
inefficiencies in its selection and training procedures. If Committee
recommendations are implemented by FAA, nearly half of the $13.8
million lost annually by FAA through trainee attrition would be
recovered, and $1 million in Academy operating costs could be
saved. FAA has already indicated its concurrence with these
recommendations.d i .
c. Hearings.-A hearing transcript has been printed, and a report
tion and training procedures and (1) improve screening procedures;
(2) terminate as early as possible unsuccessful traiees at the FAA
Academy and at FAA facilities; (3) institute a centrally-directed
system of coordinated hiring; and (4) install more up-to-date radar
training simulators at the FAA Academy.
4. Transportation of Hazardous Materials by Air.
a. Summary.-On October 8, 1975, a hearing was held by the sub-
committee continuing its investigation into the policies and proce-
dures of the Department of Transportation in regulating the trans-
portation of hazardous materials by air. Officials from the Department
of Transportation (including oficial from the FAA and the Ma-
terials TransportatioBureau), the National Transportation Safety
Sthe Air Line Pilots Association testi-
93-633 the Hazardous Materials Transportation Ac.
Testony revealed that at least 75 percent of all hazardous ma-
teriails shipments transported by air are in noncompliance with regula-
$ esct n's
cannot be dealt with adequately in the event of an emergency. In its
lidation of the regulations the MTB has proposed to
impement in part the recommendation of the DOT Task Force on
azardous Materials in Air Commerce that additional materials be
prohibited from cargo-only and passenger-carrying aircraft.
AA wasquiestioned extensively on its exemption-issuing proce-
dures. Effective October 16, 1975, DOT issued new exemption proce-
dures to implement Section 107 of the Hazardous Materials Trans-
portation Act, nine months after the Act went into effect. FAA's
trt t issue exemptions has been transferred to the MTB. The
subcommittee requested and received numerous copies of exemptions
granted by FA and DOT before and during this period. Exemptions
had been granted by FAA and DOT without an opportunity for
public comment and without an adequate safety analysis. The NTSB
ttified tt even the new exemption procedures do not require an
applicant to submit an adequate safety analysis. The subcommittee
has made arrangements with the MTB to monitor exemptions issued
under the new procedures.
FAA was also questioned on its implementation of Section 108 of
the Hazardous Materials Transportation Act. The FAA's imple-
mentation allows th transportation of radioactive materials on
passenger-carrying aircraft for purposes of industrial research.
FAA inspection and enforcement programs were examined. From
a review of FAA enforcement actions taken in response to a major
hazardous materials incident, it appears that FAA does not process
its enforcement actions expeditiously.
Finally, FAA was questioned extensively on its surveillance of
exempted air taxi operators. Following the hearing, the subcommittee
conducted a field study of one air taxi operator exempted to trans-
port hazardous materials for U.S. Government agencies.
b. Beneflts.-FAA, DOT and Congress have become more aware
of the inherent dangers in the transportation of hazardous materials
by air. DOT's new exemption procedures, finalized after the hearing,
have provided DOT with the means for eliminating the weaknesses
in the exemption-issuing process. The Secretary of Transportation,
upon request, clarified the Department's interpretation of Section 108
of the Hazardous Materials Transportation Act. FAA has been made
unsolved. Increased safeguards to human life should result.
c. Hearivgs.-A hearing was held on October 8. 1975. The hearing
transcript has been publish7ed. A report is being printed.
B. OTHER INVESTIGATIONS
1. nterstate Commerce Commission-Activities in Motor Trucking
a. Sunmary.-Early in 1975, a good deal of criticism appeared in
print concerning the Interstate Commerce Commission's regulatory
activities, policie, and administration, particularly with respect to
motor-vehicles. The criticisms included rigidity against evolutionary
pressure and innovation, excessive delay in processing cases, and
wasteful restrictions on truck routes and cargoes. The subcommittee
selected three among several leading issues for the focus of its inquiry.
(1) Gateway Elimination. Where one carrier has two separate
irregular-route authorities that overlap, it often wants the right of
direct Point A to Point C movement in order to avoid circuitous travel
through Point B, a so-called "gateway" city common to the two routes.
(2) Reducing Empty Backhauls. The problem occurs when a car-
rier's authority is not broad enough to permit it to carry certain
available commodities back on the return trip.
(3) Delay in the Regulatory Process. Such delays, commonly nine
months and more in motor-carrier cases, can be costly to carriers, ship-
pers, and the consumer. The prospect of delay discourages a carrier
from seeking or protecting rights and opportunities through the
In order to learn what was being done and what could be done about
such problems through enlightened policies, resourceful administra-
tion, and effective, efficient use of staff and budget resources, the sub-
committee held a hearing May 1, 1975. Testimony was received from
the Chairman and the Vice-Chairman of the Commission, as well as
from the Deputy Under Secretary, Department of Transportation.
Testimony covered the above three issues.
(1) Gateway Elimination. Following the 1973 energy crisis, ICC
issued new regulations which authorized irregular route motor com-
mon carriers to use a direct route which is less than 20 percent shorter
than its authorized gateway route, requiring only a letter of notifica-
tion to that effect. As of April 22, 1975, 22,000 notifications and appli-
cations had been received by ICC. and 17.000 processed. ICC also
instituted changes in its Superhighway and Deviation Rules to au-
thorize regular route motor common carriers to traverse routes which
are up to 20 percent shorter rather than 15 percent shorter as before.
(2) Redumcin Empty Backhauls. ICC witnesses stated that only
7 percent of all vehicle miles for regulated motor common carriers
of !reneral commodities were "empty" as opposed to loaded. ICC's
position is that TCC regulation is not responsible for the majority of
empty backhaul miles, but that the empty backhaul problem isthe
result of general geographic and economic factors. DOT testified that
the ratio of "emotv" over "loaded" miles is actually 27 percent rather
than 7 percent. DOT pointed out that a major problem is "underload-
ing" of trucks. and that private carriers are restricted from trans-
porting commodities for their affiliates on a for-hire basis and are
forbidden to lease trucks to regulated carriers for periods shorter than
.30 days. DOT testified that through its rate bureaus and entry con
trols, ICC forces competition by services rather than by price, and
therefore creates excess capacity and inefficient use of transportation
(3) Regulatory Lag. ICC operates under strict statutory require-
ments. ICC case load is lare: 8,783' formal cases, 10,000 informal
cases, and 10,000 gateway elimination cases were filed with the Com-
mission in fiscal year 1974. Under ICC procedures, average processing
time in oral hearing cases is 19.9 months. Under "modified procedure"
(without benefit of oral hearing) the average processing time is 9.1
authorities" for no more than 30 days.
It increasingly uses rulemaking proceedings to promulgate general
standards and eliminate the need for formal hearings. In fiscal year
1971 there were 44 such proceedings; whereas in fiscal year 1974 there
were 68. ICC witnesses testified also as to the administrative burdens
of complying wtih the National Environmental Protection Act and
the Administrative Procedure Act. The testimony also brought out
distinct philosophical di~erences between DOT and ICC as to the
approach to transportation regulations, the Department asserting a
policy of development role in accordance with the 1966 Department
of Transportation Act (49 U.S.C. 1651(c)). ICC witnesses empha-
sized the agency's long-time regulatory role as basically evolutionary
in character. The DOT position emphasizes deeper, more basic
b. Beneflts.-Testimony as well as later ICC actions make clear that
the Commission has made an efort to respond to some of the criticism
and has an active, often innovative, program of procedural and sub-
stantive reforms. For example, the hearings disclosed that data relat-
ing to empty truck mileage adduced by ICC and by DOT were in-
complete or incompatible. The Commission has now begun an ex-
tensive survey to collect new load data from check points in the Inter-
state Highway System. In June, a Blue Ribbon Staff Study Panel
charged with reviewing internal procedures and substantive rules and
to propose modernization and reform submitted 61 recommendations,
a large number of which are designed to simplify and expedite the
Commission's regulatory process. Some have been adopted.
ICC, DOT and Congress have become more aware of the many
problems in ICC'regulatory policies and procedures. At a hearing
before this Committee's Legislation and National Security Subcom-
mittee, the Commission's Vice Chairman testified that Congressional
interest, from which the Commission obtains a better idea of what is
expected, has helped the Commission move "in the right direction"
(hearing on H.R. 7575, June 20, 1975).
2. Automatic Data Processing-GSA Implementation of Public Law
a. Summary.-In September 1975, the subcommittee initiated a
study of GSA's implementation of Public Law 89-306 (40 U.S.C. 759)
often referred to as the Brooks Act. This statute directs the Adminis-
trator of General Services to coordinate and provide for the economic
and efficient purchase, lease, and maintenance of automatic data proc-
essing equipment by Federal agencies and confers on him the sole
authority to procure automatic data processing (ADP) equipment
for the Government. The Administrato may delegate his procue-
ment authority to other agencies hen he deems appropriate for
reasons of economy, efficiency, security, or defense. When
authority is delegated, GSA retains responsibility for insuring that
procurements are both economically valid and competitive.
The primary objective of this stud is to evaluate GSA's effective-
ness in proviing for the economic coordination and acquisition of
ADP resources with emphasis on the competitive process in
In conducting this inquiry the subcommittee, assisted and sup-
ported by the full committee staff is examining GSA's internal organ-
zation, the effectiveness of procedures used by GSA to carry out its
responsibilities under Public Law 89-306, and SA's working rela-
tionships with OMB and other executive agencies. Assistance of a
GAO representative is being utilized. As of June 301, 1975, the Govern
ment had an inventory of 8,649 computers and the total value of all
ADP equipment was over $4.3 billion. The cost of ADP equipment
and maintenance acquired during 1975 is estimated at $830 million
over the life of the equipment.
When an agency needs ADP equipment, it requests procurement
authority from GSA. GSA reviews the request and in 90 percent of
the cases delegates procurement authority to the requesting agency.
In the remaining case, GSA does the procurement for the agency. In
granting a delegation of procurement authority, GSA generally places
restrictions on the agency designed to insure that GSA and OMB
regulations are followed and that the procurements are competitive to
the maximum practical extent. However, GSA does not follow up to
insure that the restrictions are followed. Some agencies do not strictly
adhere to the restrictions possibly coroomising the competitiveness
of their procurements.
Much of the ADP equipment acquired under delegations is not ob-
tained on a competitive basis. In Fiscal Year 1975, GSA gave agencies
399 delegations of procurement authority. Of these delegations, 210
were for sole source procurements, the antithesis of competitive pro-
curements.' Over the past three years, there has been a significant in-
crease in both the number of sole source procurements requested by
agencies and approved by GSA. In Fiscal Year 1973, 88 sole source
procurements were requested and 47 approved. During Fiscal Year
1975, 275 sole source procurements were requested and 210 approved.
Additional noncompetitive procurements are made when agencies
specify a. computer made by a specific manufacturer or a firm which
has obtained the computer from the original manufacturerfor resale
or lease to other organizations. This type of procurement called "make
and model," falls between fully competitive and sole source and pro-
vides marginal or very limited competition. In most make and model
procurements, the original equipment manufacturer is awarded the
contract on what is practically a sole source asis. During Fiscal Year
1975. approximately $67.7 million worth of ADP equipment was ob-
tained through procurements where a specific computer was required.
1 In these eqow. the procuring agency decides to obtain the ADP equipmnt from a ingle
supplier, so that there is no competition.
The ornal ipent m uacturer supplied $59.3 million of this
GSA could substantially improve its implementation of Public
Law is a serious lack of competitiveness in ADP equip-
ment procurements which, in the long run, could lead to increased
tigation is continuing in an effort to define more fully
pbm of lack of competitiveness, to develop possible
solutions, and to assess GSA's performance as Government-wide
manager of ADP resources.
On October 1, 1975, the Comptroller General issued a report en-
titled "Furher Action Needed to Centralize Procurement of Auto-
matic Data Processing Equipment to Comply with the Objectives of
Public Law 89-06" (B-115369). The report suggested that GSA
move toward the single purchaser concept. Background information
fmthis report is being used to assist study of the matters under
particular subcommittee investigation.
b. Benefits.-They are difficult to determine at this stage of the in-
quiry,but large savings could result if recommendations on improv-
ing competition and GSA procurement of ADP are developed.
rsnt to a Committe request, GSA will begin shortly a new noti-
ii system to advise te Committee of major ADP procurements.
Included in these notifications will be information on the type of
equipment r services being acquired, cost, type of procurement, and
justification for noncompetitive procurements.
3. NearMi;dair Coihsions.
a. u.On December 16, 1975, the subcommittee reopened
ings the subject of near midair collisions. Hearings had been
held i 1971 entitled "Aircraft Collision Avoidance Systems", and
ewe public interest arising out of a series of near idair col-
lisions in November-December, 1975, mandated a renewed look at the
f the FAA in developing a useful collision avoidance system.
ess at the hearing was the new Administrator of the FAA,
Dr. John McLucas. He described the new conflict alert system which
Stly installed in all FAA en-route control centers, and
Sthat the FAA was going to report wihin one month on
their evaluations of several types of aircraft collision avoidance
On November 26, 1975, a midair collision was averted by a margin
whave approached 20 feet. This incident, in which many
people were injured as a result of violent evasive action taken by one
of the pilots, was the first in a series f near midair collisions, with
some 5 others being reported in the succeeding seventeen days.
At issue is whether the art now is sufficiently developed,
(as it was not in 1971), to offer a functioning collision avoidance sys-
tem at a feasible price. The FAA will be required to choose between
two dssimilar types of eaipment, either a ground based or an a ir-
plane contained system. The subcommittee will review the activity
of the FAA in this reard, and attempt to better define both the prob-
lem and the most viable solution.
Also of concern to the subcommittee was the seeringlv uncoordi-
+ ... + ""+,+"' '" '. ".+: ".,'" :: '+ : ++ +. ''" ' + 'e ... .. "" '+
@++ ++ ++++++~~ ~ ~~~~' + + +:' ++ .+++++,+++++,,-
area of the United States. Staff investigations are laying the founda-
tion for hearings into FAA-military cooperation, and constructive
steps which could be taken to remedy, as muich as is possible, the
presently disjointed situation.
b. Benefts.-A greater degree of safety and confidence in the real
of air travel will result. The increasing amount of exposure which re-
sutlts from ever increasing density and complexity of air traffic will be
lessened. The ultimate benefit will be the saving of human lives which
otherwise might lhav been lost.
B. OTHER INVESTIGATIONS
4. ICC-Compliance with General Accounting Office Regulatory
a. Summary.-Recent amciieiioiilis to the Federal Reports Act (44
U.S.C. 3512) provide for General Accounting Office learance of pro-
posals by independent Federal regulatory agencies to conduct or spon-
sor the collection of information. ICC requested clearance of a new
annual performance report to be filed by household goods carriers and
furnished to prospective customers. (See 39 F.R. 44514, December 24,
1974.) GAO determined that the report would be an unduly burden-
some requirement within the time available. Later, on receipt of more
information from ICC, GAO withdrew its objection. At the same
time, however, it pointed out to the Commission that it actually had
promulgated a final reporting requirement prior to GAO's having
reviewed it. This would be inconsistent with 44 U.S.C. 3512. The
subcommittee wrote to the ICC Chairman on March 6, 1975, and re-
quested a response concerning the apparent failure to observe the
proper procedures. The Chairman replied March 24, 1975.
b. Benefits.-The ICC Chairman, responding to the subcommittee
on March 24, 1975, stated that ICC was working with GAO on ways
to avoid such potential conflicts in the future. He added he was con-
fident there would be no recurrence of the type of circumstances which
precipitated the instant matter. Since 44 U.S.C. 3512 is recognized to
be somewhat ambiguous as to the effect of GAO's withholding clear-
ance, it becomes incumbent on both GAO and the regulatory agencies
to approach clearance reviews in a reasonable and cooperative manner.
(See GAO's general statement of policies, requirements, and proce-
dures set out at 39 F.R. 24345, July 2, 1974.) The subcommittee's
action in this case should further this approach.
5. DOT Certification of the SST Concorde.
a. Summary.-On July 24, November 13 and 14, and December 9
and 12 hearings were hefd by the subcommittee on the procedures by
which the Department of Transportation evaluated for certification
the Anglo-French supersonic transport, the Concorde. Witnesses in-
eluded Members of Congress, prominent scientists, officils of the
FAA, and ultimately, the Secretary of Transportation.
The chief area of concern was that there appeared to be insta
in which data unfavorable to the aircraft was presented either as
favorable, or not presented at all. Official DOT and FAA documents
contained conflicting statements as to the noise characteristics and
potential for atmospheric contamination which could be presented by
" "' o" *ar" u" w Tl .
operai of the Cncorde. In an efort to determine whether allega-
tions of intentional misrepresentation of the facts had validity, wit-
nesses who had been engaged in the departmental evaluation process
were questioned, and several areas of clear dispute were developed. A
graphic example was the representation of the noise which could be
expected to be generated by the SST. A 1973 DOT information brief
e wou be perceived as "several times as loud"
as the Boeing 707 or the 1McDonnell-Douglas DC-8. In the Draft
Environmental Impact Statement prepared by the FAA, the Con-
corde was described as "roughly comparable" to those same aircraft.
In November of 1975 the Secretary of Transportation stated that the
Concorde would be perceived as more than twice as loud as the 707 or
In addition, scientists who had been retained by DOT to study the
ission efects of the airplane testified that their findings had been
watere down and underplayed in the official DOT report of find-
ings of their study. These charges were denied by DOT witnesses who
t that th had an obligation to present a balanced picture. The
rits are in the process of being printed, and work on
a draft rept hs begun. The report is expected to focus on the
vity of th DOT an FAA in evaluating innovative an pro-
gressive developments in air travel.
b. Benefts.-The American people are entitled to unbiased and
impartial consideration of matters which could affect the environment.
f attention will be aid by the DOT and FAA in the
future when subjects potentialy aecting the quality of life are be-
fore them for evaluation.
1949 to permit the donation of Federal surplus
personal property to the States for public purposes, and for the
a Report mber and date.-None.
b. Smary of measure.-In efect this bill is a reorganization meas-
ure. It would consolidate management or several Federal personal
ropty dtrution pog and bring them within the General
broaden the purposes for which such property may be donated to in-
elude education, public health, public safety, conservations, parks
and recreation, and economic development. More types of beneficiaries
State and local governments, Indian tribes, and nonprofat public health
and educational institutions. Project grantees of Federal agencies
would also be eligible,. with those needing the property for scientifica
bilities would include an annual report to Congress covering the en-
The need for such legislation arises because of the proliferation of
Federal property assistance activities being handled by many different
agencies. This has created duplication and waste, as well as problems
of manament and accountability. Property acquisition efforts of
multiple Federal agencies and roperty recipients are in competition.
ore and more, recipients of excess property are enjoying a greater
advantage over recipients under similar programs based on surplus
property. As a result, some statutory programs that apply to all (not
just some) States are being threatened by the inadequately con-
trolled preempting of desirable property from older but equally
worthy programs. (For discussion of investigative activities relating
to these problems, see I.B.. above.)
c. Legislative status.-Following hearings, several rfecting
amendments and supplementary materials developed in preparation
for anticipated subcommittee markup.
d. Hearings.-Two full days of hearings were held September 20,
and October 2, 1975. Witnesses included representatives of GSA,
DHEW, Commerce, GAO, National Governors' Conference, National
Association of State Agencies for Surplus Property, Eastern Indians,
and private individuals. Hearings to be printed.
2. H.R. 4574, H.R. 2265, et al., To amend Title 44, United States Codes,
to strengthen the authority of the Administrator of General Serv-
ices with respect to records management by Federal agencies, and
for other purposes.
a. Report nurmber and date.-None.
b. Summary of measure.-The bill is intended to strengthen the
Administrator of General Services in his ability to guide and assist
Federal agencies with respect to records creation, maintenance and
use, and disposition. Twelve such bills were introduced by a total of
71 Member sponsors. Similar bills had been introduced during the
Under H.R. 4574, the Administrator may recommend that the head
of an executive agency take specific action with respect to records
management. This can be raised to the level of an order if GSA takes
the noncompliance by the other agency to a new five-member records
review board to be created by the bill. Under H.R. 2265, the Adminis-
trator may himself issue an order. The affected agency head would
be able to appeal such an order to the new review board. Both bills
contain detailed definitions of "records manageme nt" and other
terms, as well as statements of objectives and responsibilities for the
Administrator which expand less detailed provisions in the current
The legislation followed an August 13, 1973 report of the Comp-
troller General (B-146743) entitled "Ways to Improve Records Man-
agement Practices in the Federal Government," which had pointed
out that in seven years since 1966 the costs of Federal paperwork had
grown from $8 billion to $15 billion a year and that record holdings
had grown from 26 million cubic feet to 30 million cubic feet. In its
report to this Committee (September 20, 1973), GSA had co~nurred
with GAO's recommendations, which were nonlegislative. In Feb-
ruary 1975, early sponsors of these bills, including Messrs. Archer,
Horton, McKay, and White, declared the need for a more preise
g '^ .: .... .. ..
definition of "records management", and clearer, fuller statements.
itrant agencies to improve records practices was also
c. Legislative status.-A hearing was held on July 11, 1975, at which
Congressman White, the Archivist of the United States, and a GAO
representative testified. Statements were received from interested
Members and outside persons. Although the Archivist testified in
support of the bill, he was not able to present the official position of
the Administrator of General Services or the Office of Management
and Budget, neither of which had yet submitted the requested writ-
ten comments. After prolonged reexamination of the structure of
the measures, GSA advised in December that it was proposing cer-
tain changes, principally in connection with the enforcement aspects
of the bill. The subcommittee is awaiting submittal of the final agency
d. Hearing.--One day of hearings held July 11, 1975.
3. H.R. 2532, To amend the Federal Property and Administrative
Services Act of 1949, as amended, to provide for the disposal
of surplus real proprty to States and their political subdivi-
sions, agencies, and instrumentalities for economic development
a. Report nmber and date-None
S a f ,e.- is bill and 11 identical bills have the
objective of assisting State or local entities boost their economies where
e coig f Federal facility le to severe unemployment. Trans-
fers of surplus real property, including any improvements, would be'
made by the Secretary of Commerce on his determination of need and
approval of the transferee's utilization plans. The Administrator of
General Services would have the discretion whether to assign the prop-
erty to the Secretary for such pu Transferees wul include
d lo gov ents, tribes, an ceain nonprfit or-
through allowing partial refunds of purchase money paid to similar
types of community purchasers who had bought surphis real prop-
erty from the Government after Janary 1, 1967 Property transferred
would be subject to a 40-year restriction to economic development use.
Sponsors of the bills cite the need in a time of high unemployment
andagging economic development for promoting transfer and rede-
velopment of surplus Federal real property to replace job losses from
,,,closing of Federal facilities that directly and indirectly hadiovided
sale of available surplus Federal realty for economi development.
Agency witnesses voiced interest in a restructured proposal to ac-
complish this, a suggestion which the subcommittee chairman indi-
cated might be an acceptable approach. The affected Federal agencies
have prepared such a proposal, which is now being studied by the
Office of Management and Budget.
d. Hea ing-.-One day of hearings held October 22, 1975.
B. REVIEW or LAWS WITHIN C 'MITTEE URISDICTION
1. Federal Property and Administrative Services At of 1949.
As discussed under part I.B. and II.A. above, the subommi
engaged in numerous investigations involving the administration of
this law, including the disposition of excess and surplus real and per-
sonal property and the procurement of ADP equipment by Govern-
2. Archival Administration, Pursuant to Title 44, United States Code.
The subcommittee's examination of management of records is dis-
cussed in part II.A., above (H.R. 4574).
III. Other Current Activities
A. GENERAL AccouINTING OFFICE REPORTS
a. Sumwmwry.-During the first session of the 94th Congress, 17
General Accounting Office reports to Congress were referred to the
subcommittee. Of these, 3 dealt with the General Services Adminis-
tration, 2 with the Department of Transportation, 1 with the Federal
Aviation Administration, 2 with the Federal Highway Administra-
tion, 1 with the United States Railway Association, 1 with the St.
Lawrence Seaway Development Corporation, 2 with the National
Aeronautics and Space Administration, 1 with the Civil Aeronautics
Board and 3 with multiple agencies.
In addition, GAO report B-101646, entitled "Use of Government
Excess Personal Property by Non-Federal Entities," was prepared
at the request of the subcommittee in connection with its investiga-
tion into the problems of the Federal excess and surplus property pro-
grams. H.R. 9152, now being considered by the subcommittee, is de-
signed to meet these problems. (See II.A., supra.)
GAO report B-115369, entitled "Further Actions Needed to Cen-
tralize Procurement of Automatic Data Processing Equipment to
Comply with Objectives of Public Law 89-306," was given particular
attention by the subcommittee in connection with its investigation of
the Federal Government's automatic data processing needs and opera-
tions as well as GSA's coordinating and procuring roles.under Public
Law 89-306 (section 111 of the Federal Property Act). For further
discussion, see part I.B., supra.
B. OTHER REPORTS OR STATEMENTS
During the first session of the 94th Congress, a total of 44 explana-
tory statements of proposed negotiated disposals (including ex-
changes or leases) of Government surplus property were referred to
to section 203(e) (3) (6) of the Federal Property and Administrative
Services Act of 1949. See (40 U.S.C. 484(e) (3) (6); also 40 CFR 101-
45.304-2(c) 10145.491 with respect to personal property, and 40
As pointed out in the subco ittee's hearings on H.R. 2532, the
value of such property is very great. For instance, since January 1967,
there have been some 370 sales to public bodies (comprising about 20
percent of all sales) which generated over $185 million in sales pro-
ceeds. The subcommittee takes seriously its duty to review such pro-
posed disposals carefully to determine that statutory and regulatory
conditions applying to such disposals are observed and that the Gov-
ernment receives fair value and confers no unfair advantage to the
property transferees. The w, of course, does not accord to the sub-
committee or the Fu.Committe any veto power over proposed dis-
to entail other serious disadvantages to the Gaverentiof cGnclsions
At the psubcmibtee and Full Committee l 4ls 1 at ds have cof-
a. we t, GSA has taken certain steps to tighten policies and improve-
(1) -On May 167 1975, the Administrator svised the Full Commit-
State law riestrictsthe rate, payable by public bodies).
statements were brought to the attention of GSA. In some instances,
even the prescribed format (40 CFR 101-47.4911) was not being fol-
ernment-owned machinery and equipment to a defense plant-owner
that has been leasing the property from the Government. Where the
partment indicates that the property can be declared surplus if it is
such disposals, including information whether the items to be disposed
of comprise all the Government-owned machinery and equipment'at
the facility inquestion and whetherthe property is part of a Defense
Department Plnt Equipment Packarge (PEP). Difficulties inherent
in contued to be stued by he
rmin wheter otedu or other legislative authoty d
,better effect the disprocsd.
EXPLANATORY STATEMENTS RELATING TO ASSIGNMENT OF SURPLUS
REALTY TO DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FOR
OW'AND MDERATE INCOME HOUSING
During the first session of the 94th Congress, the Committee receive
two such statements from the Administrator of General Services. The
two statements, 44 explanatory statements referred to above, were not
submitted pursuant to statutory requirement, but pursuant to an un-
dr ding (GSA letter of March 4, 1970,to the Committee) that an
xplanatory statement would be sent whenever GSA proposed to as-
sign toLthe Department of Housing and Urban Development surplus
real property to be sold or leased for low or moderate income housing.
Section 414 of the Housing and Urban Development Act of 1969
(40 U.S.C. 484b) authorizes DHUD t make such disposals at "fair
value" which is intended to be less than "fair market value."
Section 414 requires DHUD to notify the'House and Senate Govern~
ment Operations Committees but only after the sale or lease. Such
notification is also sent to the House Banking, Currency and Housing
ommittee and to the Senate Banking, Housing, and Urban Affair
When in October 1975 the subcommittee received GSA's explaa-
tory statement concerning a DHUD request that GSA assign to it 80
acres and 36 housing units in Mono County, California, further infor1
ation was requested. (The case is discussed under II.B., supra.) In-
quiries were directed to several agencies, including DHUD. A com-
munication from DHUD noted that the section 414 program was a
modest one and that only four projects had been the subject of such
transfers. The Department then disclosed that its files did not indicate
whether the Committee notifications required by section 414 ad been
submitted and advised that a summary of the four transfers was being
AGENCY REPORTS O DISPOSALS OF FOREIGN EXESS PROPERTY
During the 1st Session of the 94th Congress, the subcommittee re-
ceived by referral from the Full Committee 16 executive communica-
tions transmitting individual reports to Congress by Federal agency
heads concerning disposals of foreign excess property. Section 404(d)
of the Federal Property Act (40 U.S.C. 514(d)) requires these reports.
In House Report 865, 90th Congress, the Committee recommended
that the section 404(d) reports by Federal agency eads be reviewed
with the objective of achieving more detail and greater uniformity of
presentation. In 1973, GSA issued Standard Form 365 "Annual Re-
port-Disposal of Foreign Excess Property", with preparation in-
structions. Experience with the new form indicates that the submit-
ting agencies are still not providing adequate detail, particularly those
disposing of large quantities of property. On December 4, 1975, the
subcommittee wrote to the Assistant Secretary of Defense (Comp-
troller) indicating the need for more information about excess prop-
erty disposal operations than what had been provided on the SF 365
and requesting the Department to work with the subcommittee to im-
IV. Committee Prints
V. Prior Activities of Current or Continuing Interest
See Section III., A.
VI. Projected Program for the Remainder of the 94th Congress
The subco ittee will continue to exercise its jurisdiction in three
principal areas in the coming year. They are:
a. Air Sfety. -The study of Department of Transportation han-
dling of the certification of the SST Concorde will, after one further
hearing, be reduced to a formal report. Collision avoidance and air
traffic coordination studies will continue. Operations of the FAA Acad-
emy, reported upon in the first session, will continue under review.
b. Surp1a Property.-Legislative and investigative studies concern-
ing the proper and equitable distrbution of Federal surplus property
will continue, with hearings and reports anticipated in several areas.
The continuing review of explanatory statements regarding disposal
of excess real property will be emphasized.
c. Procurement.-Procedures by which the Federal Government pur-
chases and leases property will be eamined, with a particular em-
phasis on competitive bidding and contract management.
I~ ; "i '
; %"i;l" ;;""in r s ii";l n~si
I I ;
COMMERCE, CONSUM;ER, AND MONETARY AFFAIR
n.B A S. RSENTHAL, Chairman
SFederal Trade Commission Condominium Decision and Operations.
a. Summary.-On Mar 24, 197 as part of a new budgetary re-
exmination process, the Federal Trade Commission voted 3 to 2 to
terminate it 0ont investigation of unfair and decptive ats
and practices in the sale of condominiums. The decision was based
on the recommendations of the FTC's Office of Policy Planning and
Evaluation (OPPE), an office created by the Commission in 1970 to
set budgetary priorities. The Commission's Bureau of Consumer Pro-
howeverhadrecommended that the condominium in vestiga-
tion not be cut back.
The FTC decision caused concern among consumer groups, condo-
minium. owners throughout the country and state and local officials,
particularly in Florida where 250,000 condominium units have been
built in the -last 5 years and where, it has been alleged, "More people
anywhere else in the United Sttes."
individuals and grousp argued that the budgetary review process that
bttressed the T ecision was inefficient and faulty for the follow-
ing reasons: First, because the condominium abuses reported to and
investigated by the Commission involved major examples of deceptive
advertising and other abuses prohibited by the Federal Trade Com-
mission Act; second, because condominium-related abuses affect large
numbers of individuals, involve substantial dollar expenditures by-
thee individuals and serious ir the ue and resale potential
of units; third, because state laws, particularly in Florida provide
inadequate remedies to damaged condominium purchasers; and, fourth,
because the FTC's traditional and new statutory authority to require
the rescission or revision of contracts in violation of the FTC Act,
The subcommittee examined the procedures and policies which led
to the decision, particularly the effectiveness and efficiency of the Office
of Policy Planning and Evaiuation and the relevani y of its application
other FTC consumer rotection programs.
Hearings were held on April 20, 1975. Testimony was received
NI" ""'" iitl ~ i ~ IE
and numerous consumer groups and condominium owners. The tran-
script of those hearings will be printed and a report is in preparation.
b. Benef.-As a result of the committee's intervention and in-
vestigation, the FTC reopened and expanded its investigation Septem-
ber of 1975 with a view to determining "the possibilities for consumer
redress with particular emphasis on reformation of contracts or res-
titution." The reopening of the Federal Trade Commission investi-
gation should result in a marked improvement in the practices as-
8ociated with the sale of condominiums. If the Commission success-
fully brings its cases against developers in Florida and elsewhere
who have been proved to have violated the Federal Trade Commission
Act, then the economic benefits to condominium purchasers could run
to the tens of millions of dollars.
2. Ingredient Labeling and Recalls of Alcoholic Beverage (Bureau of
Alcohol, Tobacco, and Firearms, Treasury Departments).
a. Summary.-On November 11, 1974, the Bureau of Alcohol, To-
bacco, and Firearms (BATF) of the Treasury Department an-
nounced its decision to withdraw its published proposals for the in-
gredient labeling of distilled spirits, beer and wine products. BATF
had had such a labeling requirement under consideration since
September of 1972.
In 1974, the Food and Drug Administration and BATF had en-
tered into a Memorandum of Understanding that formalized a pre-
vious transfer of FDA's primary authority over the labeling of
alcoholic beverages to BATF. This arrangement, which was designed
as an efficiency measure in recognition of the overall regulatory
authority that BATF exercises for the alcoholic beverage industry,
recognized that the Federal Food, Drug and Cosmetic Act requires
ingredient labeling for alcoholic beverages. Nevertheless, BATF de-
clined to require such labeling.
The subcommittee also concerned itself with BATF's policies and
procedures with respect to the recall or withdrawal of alcoholic
beverages from the marketplace. Like other categories of food prod-
ucts, alcoholic beverages are occasionally withdrawn from the market
or their shipment halted because of labeling deficiencies, adulteration,
purity questions and the like. The subcommittee was interested in the
absence of any systematic public announcement of such actions.
A hearing was held by the subcommittee into these issues on No-
vember 19, 1975. The hearing will be printed and a report is in
b. Benefts.-As a result of the subcommittee's investigation and
concern over BATF's responsibilities under various statutes to re-
quire ingredient labeling of alcoholic beverages, the Food and Drug
Administration announced that it would no longer defer to BATF
on the subject of ingredient labeling and that it was, in fact, requir-
ing such ingredient labeling to become effective on January 1, 1977.
As to the procedures governing the recall of alcoholic beverages and
publication of such recalls, BATF announced that immediately, it
would publish the names of companies in violation of statutes admin-
istered by BATF "where the violation involved consumer deception
where Bureau determines that public release will serve as a deterrent
against violations in a particular market area." BATF also an-
nounced that the BATF Bulletin, published on a monthly basis,
would contain instances involving mislbeling, gross underproofing
or underfilling or other similar violations; and in withdrawals in-
olvin agrat consuer deception, uusally large quantities of
a deficient prduct, or an imminent health hazard," "BATF head-
quarters will issue an imediate press release."
The FDA announclment and BATF revised disclosure procedures
will provide the American consumer with important basic informa-
tion (1) about the ingedients contained in the products he consumes
and (2) the wholesomeness and quality of the alcoholic beverages
he consumes and the. manufacturing practices of alcoholic beverage
3. Commerce Department Payment to the National Advertising Coun-
cil for Promotion of the Free Enterprise System.
a. may.-The subcommittee conducted an investigation into
the legality and propriety of the award of a contract by the Depart-
promotion of the American free enterprise system. At the time of the
subcommittee's inquiry, the Commerce Department had already ex-
pended or obligated $239,000 for the completion of Phase I of this
o tion-a study of the attitudes of Americans toward our economic
system and the preparation of a booklet explaining the system.
The subcommittee's investigation disclosed that of the $239,000
spent or obligated for the free enterprise promotion, $150,000 came
from the reserve funds of the Economic Development Administration,
w s f on is to eliminate unemployment; and $89,000 came from
funds reserved for the Office of Minority Business Enterprise, whose
function is to coordinate Federal efforts toward establishing, preserv-
ing and strengthening minority businesses.
in y also disclosed that consumer groups and labor groups
had been inadequately consulted by the Commerce Department and
the Ad Council, ptior and subsequent to the initiation of the campaign.
received by the subcommittee indicated, as well, that the
impetus for the campaign had come in a speech by the Chairman of
the Board of Procter and Gamble Company and that the advertising
agency assigned to carry out the campaign was the advertising agency
for Procter and Gamble.
A hearing was held by the subcommittee on July 30,1975. The hear-
ing will be printed. A report is in preparation.
b. Beets.The subcomittee's investigation raised important
questions as to the legality and propriety of utilizing funds earmarked
for ecific purposes (i.e., the reduction of unemployment and the pro-
motion of minority business enterprise) for unrelated purposes. The
investigation also raised questions as to the propriety of the expendi-
ture/txpyers' dollrs for ctivities that could be considered the re-
sponsibility of private enterprise. It is anticipated that as a result of
the subcommittee's work, the Commerce Department and perhaps other
1the risu"a e of the $2 b.ill. The issuance was first proposed by the
+++++++~ ~ ~ ~ ~~~~i~ 81C1 ++ +++++ +++:++:++++++++++ :.
Treasury Departments Bureau of Engraving and Printng in 19
Law 8836 of June 4, 19 Under the Federal Reserve Act, the Secre-
tary of the Treasy determines both the desig and denom
of currency to be printed. Manufacture is the resof the
Bureau of Engraving and Printing and distribution into general
circulation falls within the purview and operations of the Federal
The subcommittee's inquiry disclosed that there are marked advan-
tages in resurrecting the $2 bill. It has been specifically estimated that
a rentroduction of the $2 bill would save the United S e
ayproimately $7 million per year. A May1975 study by the Haard
Graduate School of Business Administration nluded that reintro-
duction of the $2 bill was feasible and that it would result in sustan-
tial savings to the Treasury and benefits to consumers and business.
In June of 1975 the subcommittee communicated with the Trasury
Secretary and the Chairman of the Federal Reserve Board urgingi-
mediate action to reintroduce the $2 bill and enumerating the sub-
stantial advantages that would accrue upon such an issuance. On No-
vember 3, 1975, the Secretary of the Treasury announced approval of
the plan for reintroduction of the $2 bill and scheduled the initial dis-
tribution for April 13, 1976.
b. Beefts.-Based on its inquiry and the studies by the Bureau of
Engraving and Printing and Harvard, the subcommittee estimates that
resuance of the $2 bill will save the American taxpayer $35 million
over the next 5 years. If inflationa pressures continue to increase th
cost of the printing of paper money, the resulting savings would un
dobtedly be higher in succeeding years. The reintroduction will assist
consumers and it will be advantageous to the banking ad business
communities by effecting economies in the handling, distribution and
storage of paper currency.
5. Adequacy of Federal Agencies Studies Into National Impact o a
New York Default.
a. Summary.-Given the magnitude and likely far-reaching effects
on the banking system and the economy itself of a aultby Nw
York City on its outstanding debt obligations, the suttee ini-
tiated an inquiry into the adequacy of executive branch evaluations
of such a default. The subcommittee undertook this inquiry in the c
text of its oversight responsibilities for the Federal bank
agencies, the Council of Economic Advisers and the Department of th
The purpose of the investigation was to determine wthr th
agencies had appropriately and thoroughly analyzed the impact of de-
fault on their own operations and activities under the vanabling
The subcommittee's inquiry found evidence that analysis of a New
York default was inadequate. For example, although the
tionship between New York State an New Yor City financing was
evident as early as July of 1975, the Comptroller of the Currency and
the Federal Deposit Insurance Corporation failed to consider bank
holdings of New York State and New York State agency
in their evaluations. One possible result of that omission
been arious uderstimtion of the impact of default on the solvency
of banks across the country. Evidence also indicated that the Coiuncil
f I~Eedoynio Advisers and the Federal Reserve Board may have in-
dq ly lte the impact of dfault on the Nation's efforts at
mic recovery and n international confidence in U.S. money
rin O r November 7, 1975. They will
printed. A report is in preparation.
dated their surveys -of banks holding New York securities. The result
was that the number of banks known to be holding significant amounts
Of such obligations increased from 546 to 954 across the eibfntry. The
,sbcommaittee' work in thig area clearly assisted the Congress and the
Ations f the F ral Gverment as they relate to the financial emer-
Sf n increasing number of America's urban communities.
itled, "Cities inanal Emergencies" the
Advisor sion on lntergovernnental Relations identified 30
ities with serious scal problema number that is undobtedy much
arg today given the state of our national economy The subcom-
mittee examined the following issues: How should the operations of
relvat Federal agencies adjust to the financia emergencies of our
urbaicoiftunithiths To what extent do Federal monetary and fiscal
policies, practices and procedures contribute to the money crises of
oucities Are the ex ination and audit policies and procedures of
scal ondition of ur cities? Are the operations of relevant Federal
bankiig ageniie sensitive to the, complex interrelationships between
bank solvency and thg financial needs of cities?
committee in this area contributed significantly to public and con-
sionai arriate rle o the Feerl
Government in resolving municipal fi cal crises.
mary. The subcommittee conducted 'an inquiry into the ,
Mines its priorities, whether it ha.s addressed itself to the most sig-
the private sector. And, whether the Council is sufficiently independent
to accomplish its objective.
The inquiry revealed that the Councis principal thrust has been
in the area of evaluating the inflationary impact of Federal regula-
tion-particularly that directed toward the environment and con-
sumer protection. Little evidence was presented as to he secific ac-
complishments of the Council with respect to minimizing infationary
actions in the private sector.
Hearings were held on September 17 and 23, 1975. The hearings will
be printed. A report is in preparation.
8. Oversight Hearings Into the Operations of the Internal Revenue
a. Summary.- In early 1975, the subcommittee initiated a compre-
hensive and in-depth investigation into the operations of the Internal
Revenue Service. The anticipated scope of these hearing includes the
Intelligence, Inspection (Internal Security), Audit and Collection
operations and activities of the Service. The oversight inquiry has-
examined or will examine, additionally, the interrelationship between
the Internal Revenue Service and the Department of the Treasury,
specific Intelligence and Inspection projects, both national and inter-
national, and the manner in which IRS audits corporate tax returns.
Specific Intelligence and/or Inspection operationsand activities
examined by the subcommittee include "Operation Sunshine," "Oper-
ation Leprechaun," "Projects Tradewinds/Haven," "Treasury-Nar-
cotics Trafficking Tax Program," and the interagency relationships
between the Justice Department and the Treasury/IS. The subcom-
mittee's inquiry has focused on the efficiency and economy of IRS
operations. Hearings held on May 14 and 22, June 20 and 24, July 8,
29 and 31, September 11, October 6, November 4,6 and 11 and Decem-
ber 15, 1975. Hearings will be printed. A report is in preparation.
b. Benefits.-As a result of the subcommittee's investigation the
IRS has made significant changes in its rules, regulations and prac-
tices designed to insure the effectiveness of its intelligence-gathering
operations and the safeguarding of the civil liberties of American
taxpayers. Specifically, the subcommittee's investigation has resulted
in changes in intelligence information gathering; use of informants,
use of undercover agents, use of confidential or undercover funds, use
of "administrative summonses," "termination of the tax year," and
In the area of more effective intelligence-gathering, the subcom-
mittee's efforts contributed to an IRS-Justice Department agreement
relating to the use of IRS agents in the Organized Crime/Strike
Force program; the restoration of the Intelligence Project Haven;
and, greater efforts at expediting the IRS-Campaign Contributions
9. Federal Reserve Board's Consumer Information Policies and Its
Use of the FBI To Investigate a Leak of Consumer Information.
a. Summary.-The subcommittee initiated an inquiry into the
Federal Reserve Board's policies, practices and procedures with re-
spect to the receipt, treatment and dissemination of information and
data developed by its staff or received from member financial institu-
tions, which might be useful to consumers. The inquiry also examined
b. Bemlts.-As a result of the subcommittee's inquiry, the Federal
Reserve Board has undertaken to develop a comprehensive consumer
information and dissemination program. The subcommittee intends t
purue the ec o cn er nran with the Board and the
10. Operations of t .he Federal Bank Regulatory Agen ci
a. S ary.The subcommittee has undertaken a cmprehensive
and in-depth review of the efficiency, effectiveness and adequacy of the
examination and supervisory functions of -the Federal bank regula-
tory agecies. These agencies-the Federal Reserve System, Comp-
roller of the urrency, Federal Deposit Insurance Corporation and
the Federal Home Loan Bank Board-regulate almost 20,00 institu-
tions with assets aggregating over a trillion dollars.
Concern has been expressed in many quarters-including the Fed-
eral Reserve Board--over the adequacy of Federal bank regulation.
The fundamental issue to be pursued by the subcommittee is whether
regulatory procedures and practices of the banking agencies are effi-
cient and adequate. The subcommittee will be focusing very closely
on selected loa transacions n the real estate area, on roblem
-banks and on failed banks. Specifically, the subcommittee will explore
whether the procedures and practices of the Federal bank examiners
are adequate for identifying and evaluating questionable banking
practices; and whether the supervisory and regulatory response to in-
formation and data generated by the examination process is adequate.
b. Benefts.-Although the subcommittee's investigation is in its
very early stages, it has already helped precipitate a reevaluation of
performance by the Comptroller of the Currency and other Federal
S.I. Les lation
1. H.R. 8948 a bill to end the Accouing and Auditing Act of
1950 to provide for the audit by the Comproller General, of the
Internal Revenue Service and of the Bureau of Alcohol, Tobacco,
Treasury. The purpose of the legislation is to resolve the longstanding
BATF over the right of GAO to gain access to all records necessary
""~ """~";"""" tire"
ently govern any such unauthorized disclosure of tax information.
Moreover, the final aut ity of the
Section 6406 of the Internal Revenue Code to make decisions regard-
ing the merits of any claim presented under the Internal Revenue laws
is not disturbed.
c. Passed the House of Representatives on October 20, 1975.
d. Hearings held on May22 and September 11, 1975. The Septem-
ber 11, 1975 hearing entitled, "Amending the Accounting and Audit-
ing Act of 1950" has been printed. The May 22, 1975, hearng will b
B. REVIEW OF LAWS WITHIN COMMITTEE'S URISDICON
Following, is a listing of laws within the subcommittee's oversight
jurisdiction which were reviewed by the subcommittee during over-
(1) Accounting and Auditing Act of 1950 (64 Stat. 834; 31 U.S.C.
(2) Bureau of Alcohol, Tobacco, and Firearms, Department of the
Treasury, created by Treasury Department Order No. 221 (Transfer-
ring functions, powers, and duties over Alcohol, Tobacco, and Firearms
from the Internal Revenue Service) ;
(3) Bankholding Company Act of 1956 (70 Stat. 133; 12 U.S.C. 1841
et seq.) ;
(4) Bankholding Company Act Amendments of 1970 (84
1760; 12 U.S.C. 1841 et seq.) ;
(5) Banking Act of 1933 (48 Stat. 162; U.S.C. various sections)
(6) Bankruptcy Statutes;
(7) Budget and Accounting Act of 1921 (42 Stat. 20);
(8) Commerce Department Act of March 4, 1913 (37 Stat 1736; 15
U.S.C. 150) ;
(9) Comptroller of the Currency Office Act of February 25, 83 (1
(10) Council on Wage and Price Stability Act of August 24, 1974
(88 Stat. 750);
(11) Bureau of Engraving and Printing Act (31 U.S.C. 415);
(12) Federal Deposit Insurance Act (64 Stat. 873; 12 U.S.C. 1811-
(13) Federal Reserve Act (38 Stat. 251. Title 12 and 31 U.S.C.);
(14) Federal Trade. Commission Act (38 Stat. 717; 1l U.S.C.
(15) Housing Amendments of 1955 creating the Federal Home Loan
Bank Board (69 Stat. 640; 12 U.S.C. 1437);
16) Internal Revenue Act of 1862 (12 Stat. 432; 26 U.S.C. 3900);
(17) Internal evenue Code of 1939 as amended;
(18) Office of Minority Business Enterprise, Department of Con-
ierce, created by Executive Order 11625, October 13,1971;
(19) Overas Private Investment Corporation Act of December
30. 1969 (83 Stat. 805; 22 U.S.C. 2191);
(20) Public Works and Economic Development Act of 1965, creat-
ing the Economic Development Administration, Department of Com-
nerce (79 Stat. 552; 42 U.S.C. 3121).
.L "" Other Current Activities
A. GERN.I AccouTmoG OFICE REPORTS
During the first session of the 94th Congress,the Subcommittee had
referred to it 16 GAO reports for formal action.
IV. Committee Prints
V. Prior Activities of Current or Contiuiung Interest
1. "Income Tax Return Preparation-IRS and the Commercial Return
Preparer; IRS Taxpayer Assistance Services." House Reort No.
93--60, October 19, 1973. Eighth Report by the Committee on
a. Beginning in April of 1972, the predecessor subcommittee-Sub-
committee on Legal and Monetary Affairs-conducted a review of the
oprations of IRS as they relate to taxpayer assistance programs and
IR overview of commercial preparers of Federal income t returns.
The Commerce, Consumer, and Monetary Affairs Subcommittee hear-
in into the same subject matter represented a followup of this prior
Herings were held by the Commerce, Consumer, and Monetary
Affs Su mittee on December 15, 1975. They will be printed.
b. Previously unreported beneflts.-The Federal Trade Commis-
sion and the Internal Revenue Service, pursuant to the Legal and
Monetary Affairs Subcommittee recommendation, cooperated fully to
eliminate false, deceptive and misleading advertising by commercial
XI. Projected Program for the Remainder of the 94th Congress
The subcommittee intends to pursue vigorously its oversight investi-
gations into the adequacy of Federal bank regulation and its investiga-
tion into the operations of the Internal Revenue Service. Additionally,
the subcommittee intends to hold extensive consumer protection over-
sight hearings into the operations of the Federal Trade Commission
and the Consumer Product Safety Commission Additional hearings
into other subjects will be undertaken as necessary.
'.: : . . . . .
."' ,,: ,:::~l l~~~l '" ;i Ii1 .. l iU A
-r, a I n nsr
B~eidlI i~X~~ "
,; ~ ,,
F. MANPOWR AND HOUSING SUBCOMMITTEE
HON;,. FLOYD V. HicKs, Chairman.
A. INVESTIGATIONS RESULTING IN FORMAL REPORTS
1. Housing for the Elderly: The Federal Response." House Report
No. 94-376, June 22, 1975. First Report by the Committee on
*a. Summay.-Durin the 92d and 93d Congresses, the Special Stud-
i Subcommittee, the predecessor of the Manpower and Housing
Subcommittee, investigated the problems of the aging, and fire safety
violations in nursing homes. earings were held during eight days
of he second session of the 93d Congress to assess the effectiveness of
Federal housing programs in meeting the needs of this country's
low income elderly. These hearings also examined the inter-relation-
ship between elderly housing and institutioalizatio to determine
whether more effective housing program, coupled with supportive
services, could enable some of the elderly now being institutionalized
to live independently. While many of the elderly can live in housing
that does not provide special architectural features or access to services,
services or how the cost of providing these services compares with the
cost of institutionalization. However, the need is considerable and is
growing, as the older American age group is increasing faster than
19, American in 9 will be over 65, compared to 1 in 25
at the beginning of the century. We should assure that government-
supported housing being constructed for the elderly contain the nee-
arhitetural fatres and be supported by appropriate health
and personal services. The conditio of lderly housing is even more
In its report based on these hearings, H.R. 94-376, the Committee
recommended that the Administration on the Aging should lead the
wective needs of the aging.
This information would be similar to that required from grant appli-
cants under Sec. 104(a) (4) of the 1974 Housing Act (P. L. 93-383).
To fit procurement programs to the needs of the elderly requires a rea-
sonably accurate stratification of the potential demand for various
lii~:~ eIII :~.r~ ~ ~ ~~~ ~~~,
In rural areas, the low income elderly are in worse straits
than in the cities. The Committee recommended that Farmers Homes
Administration should ake greater use of Sec. 504 home repair au-
thority so that existing rural housing stock can be kt in adequat
repair and ts provie eet housing for the rural elerly
b. Benefits.-A significant number of the elderly now institutional-
ized could live independently if elderly housing and supportive serv-
ices were available. In the majority of cases, monetary savings would
accompany the undoubted benefits in the quality of elderly life that.
independent living provides. The os of istitutionalization ranges
up to $70 1 a day in some States, and the Federal Government is obliged
to provide 50 to 80 percent 2 of this. Although elderly living at home
or in elderly housing projects do receiv Governent benefits, the cost.
to the taxpayer is far less than paying for institutionalization includ-
ing expensive medical services and other care that may not be needed..
The cost benefits cannot be precisely calculated, because Federal agen-
cies have not constructed enough eldery housing supported by ser-
ices to permit accurate comparison. All of the experts who testifie
at the hearings, however, were in agreementthat the tremendous social
benefits to the elderly who continue to live independently would be
accompanied by significant cost savings if expensive nursing home
spaces could be released to those who really need them.
c. Hearings.-Hearings, entitled, "Specialized Housing an Alter
natives to Institutionalization," were held in the 93d Congress, wit
witnesses from Federal agencies and community oraniztio testify-
ing in Seattle and Tacoma, Washington, August 28, and 29, 1974,.
and other Federal officials and experts in aging testifyg in Wash-
ington August 12, 13, and 14 and November 19 and 20, 1974. The hear--
ings were printed.
B. OT ER INVESTIGATIONS
1. Safety in the Federal Woplae
fa. Summary.-The safety of workplaces has been the subject of in-
creasing concern as Congress and the public have become aware that
workers sometimes become injured orie because of c etabl
hazards. The Federal Government is the largest employer in the coun
try. Unlike private industry, Federal workplaes are not inspe
by the Occupational Safety and Health Administration; but by Execu-
tive Order, Federal workers are to be provided an equivalent evl of
safety. Indeed, the President has said that the Federal Governmet.
should be an exeiplary employer in this regard.
Because certain high-risk occupations account for a disproportionate.
number of injuries or illnesses, the subcommittee invest t t
eal Government's safety and healt efforts n large indust
ties such as shipyards, arsenals and air rework failities. trips
were made to a number of these activitis, and agencies with major-
industrial operations, including the military departments andthe T -
nessee Valley Authority, testified on their safety and health programs
The subcommittee's investigation was directed toward determining.
whether the Federal Governient was.providing a level of i~ safety equiv--
alent to that deoanded of the private sector and to idntify. ares
1 Hearings, p. 279, 281.
2 Hearings, p. 298, also 301.
operate saftyan health programs. Several thousand people work in
the fields of saet and industrial hygiene. Their mission is to mini-
mize accidents and occupation illnesses, thus reducing lost work-
time, compensation payments, and the human suffering that accom-
panies disabling injuries and accidents.
The hearings disclosed a lack of high level support for safety and
health programs. Further, there is a need for clearer lines of authority.
Today, there is duplication of training facilities, computer analysis
of accident data, safety publications, and audio-visual training ma-
terial among these agencies. The size of the Federal workforce and its
integral uty permits data to be developed on a scale that may not be
possible in the private sector. However, agencies have yet to take full
advantage of this pportunty.
Payment of compensation for injuries or illnesses by the Federal
trial efficiency, and many preventable accidents lead to destruction of
costly equipment and materials. Fl
c. Hearings.-Witnesses ]included safety and health officials with
daily contact with safety problems at the installation level, ranking
oficials with safety policy responsibilities in the Department of De-
fense, the Military Departments and the Tennessee Valley Authority,
and representatives of employee unions at both the local and national
levels. The hearings, which were held in Charleston, South Carolina, on
and 1, 1975, have been printed.
. Alegd Personnel Abuses in the, Community Services Adminis-
a. /8fwnry.--After receiving a number of well-documented pro-
tests about personnel abuses in the Community Services Administra-
the subcommittee began hearings on these abuses. Those hearings dis-
Sni hich is respon-
sible for distribution and monitoripg of $00 million i rants Iand
lative requirements were impeding rather than furthering careful
t ti tt t ti t t it
lAdministration is of critical importance to the progras it administers
to help the poor. The subcommittee also found that the advocacy func-
tion is severely crippled by current uncertainty as to whter C.
will be assimilated into HEW or remain independent. Evidence was
uncovered that rather than being able to plead the cause of the (r
before other agencies, the CSA had been effectively out of ir
A report has been prepared and is awaiting action by the ull
b. Benets.-The hearings set into motion some immediate corrective
actions, including a Civil Service Commission review of Schedule C
appointments that showed that only four of 18 wereproper both as
excepted appointments and at the present grade. The agency ac-
celerated efforts to complete its roposed reorganzation, which had
been under discussion for several months.
For the CSA to discharge its responsibilities effectively, an organi-
zation structure that reflects its current mission is critical. High-level
positions unfilled for long periods result in the agency functioning
without adequate direction from the top. Personnel abuses uncovered
during the hearings drain away salary money, waste high level posi-
tions authorized for individuals who are expected to contribute to
agency operations, and damage the morale of employees who witness
favoritism to some hile others are overworked. The reduction of un-
necessary political appointments and the alignment of grades with
responsibilities has already resulted in savings of several thousand
dollars from the payroll. Greater savings are possible when the agency
begins to operate in a way that permits it to monitor grants as it should
and provide needed assistance to grantee organizations.
c. Hearings.-The Director of the Community Services Adminis-
tration, members of his staff, representatives of the employee union,
and cognizant officials of the Civil Service Commission testified in
hearings on July 9, 10, and September 8 in Washington. The hearings
entitled, "Alleged Personnel Abuses in the Community Services Ad-
ministration," have been printed.
3. Mortgage Servicing and HUD Property Management.
a. Swumary.-As the result of the expansion of Government hous-
ing programs, principally through insurance of single- and multi-
family mortgages, the Department of Housing and Urban Develop-
ment became an insurer of mortgages worth billions of dollars. At the
same time, a combination of poor underwriting, graft, corruption
improper servicing and sales problems have resulted in the loss of
over a billion dollars, by HUD's own figures. The Federal Government
owns over 60,000 houses at this time, on which it paysover $25000,000
a year in property taxes, and has accepted mortgage assignments for
over $2.6 billion worth of apartment houses. The subcommittee's ob
jective in holding the hearings was to determine whether th epar
ment's activities were minimizing the losses incurred i the disposition
of this huge inventory, and also whether it was acting to keep cquisi-
tions of homes and apartments to the absolute minimum. The subcom-
mittee heard Departmental witneses from both the central ce and
the field. It also took testimony from organizations that. pl a
significant role in the Federal housing programs, such as the Federal
National Mortgage Association, the Mortgage Bankers Association,
the Savings and Loan League and non-profit counselin agencies.
-Homeown'ers and local Government officials testified about the impact
that HUD programs were having on their communiities.
Several reports are being drafted covering various aspects of the
Complex activities of this ageincy. The subcommittee has also followed
up with the Justice Department concerning its activities to recover
money diverted from programs administered by HUD and received
the Attorney General's -comments. HUD has been asked to comment on
the Justice Department suggestions.
The subcommittee also looked into allegations of improper suspen
sion of Detroit demolition contractors by HUD. Members of the'
Michigan congressional delegation were apprised of the. results of this
b. Benef#ts.-The Department of Housing and Urban Development
is presently losin over $7,000 per home whenever foreclosure forces
HUD to pay off theinsurance and re-sell or destroy the home.
Recovery on multi-family sales is only about half the amount the pro-
ject was insured for, in addition to the interest paid on Treasury boar-
rowing that is tied up while HUD owns these buildings. "As is" sales
sometimes accelerate the blight of communiities, and boarded-up or
bandoned buildingshae been a target for vandals and a community
eyesore. A fractional reduction in the number of foreclosures through
better servicing of these loans can lead to savings of millions of dollars.
More efficient management of multi-family units and speedier sales of
those units that are foreclosed will add millions more to the savings
column. Beyond these hard dollar savings are the immeasurable benJe-
fits to communities, homeowners and tenants whenever sound housincg
remains livable and stays in the hands of homeowners and project
sponsors rather than reverting to the Government.
e. Hearings.-The hearings were held in Washington, and included
the Secretary of HUD and other Departmental witnesses, reprisenta-
tives of the Mortgage Bankers Association, the Savings and Loan
League, the Department of Justice, counseling and homeowners
organizations, representatives of local government. Fourteen days of
hearings, including seven days in July, four days in September and
three in October, will be printed.
a. Smmary.--Following up on recommendations made in a Com-
Alcoholism Programs for Federal Employees,") the subcommittee
asked the General Accounting Office to gather information on em-
ployee alcoholi programs throughout the Federal Government as
an indication of levels of agency compliance With the requireients if
P.L. 91-616, the Comprehensive Alcohol Abuse and Alcoholism Pre-
S. yj i6i'' iir 'i Tm "i y
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while increasing employee efficiency. The survey requested of GAO
should provide further mformation to identify those Federal agencies
that have been dilatory in implementing this legislation.
5. Control of Hazardous Materials Used in the Federal Worplace
stallations as well as information uncovered in the OS in
in acient protection of wrkers from ha
stances used in Federal workplaces. An investigition into this matter
is under way, and hearings may be held.
b. Benefts.-Occupational illness is the least understood and t
difficult to idetify of ny sfety or health problem. Constant intro-
duction of new materials into products used by Federal installations
may require better safeguards of employee health. The
savings through reducing illness and Federal compensation payments
are considerable, especially since the hazards fro new hem wi
increase unless adequate safeguards are developed.
6. Alleged Personnel Abuses in ACTION.
a. Sum y.-After receiving complaints of personnel abuses in
ACTION and a Civil Service Commission investigative report on
these abuses, the subcommittee began an inquiry into the past per-
sonnel practices of this agency and its cooperation with the Commis-
sion. The investigation is continuing.
b. Benefits.-The Civil 'Service Commission's report cited violations-
of personnel regulations and improper political acts, including de-
struction of records. The major benefits of such an investigtion would'
occur through corrective action that would put the most qualifed
people in available positions. This increases efficiency and saves
money, although no figure can be attached t the value ofreestablish-
ing the integrity of an agency's personnel operations.
a. Summary.-Following passage of the 1974 Amendments to the
Wagner-O'Day Act, which provided permanent authorization for
the Committee for the Purchase of Products and Services for the
Blind and Other Severely Handicapped, the subcommittee continued
to support the efforts of the Cand interested non-profit
agencies to develop the National Industries for the Severely Handi-
capped (NISH) to represent all the severely handicapped. These
efforts have resulted in an inc in contracts for workshops em-
ploying the severely handicapped. In aition, the subcommittee
responded to inquiries from bers of Congress on behalf of con-
stituents from proft-making industry about designation of a portion
of Government procurement of paperclips and wiping rags for pro-
estalihe that the size of the procurement designated for the handi-
capped workshops would not have significant adverse effects on the
b. Benets.-Th subcommittee will cone activ-
ities of the newly ished NISH to determine whether workshops
emloing the severely handicapped are receiving an adequate share