[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
                  AGRICULTURE, RURAL DEVELOPMENT, FOOD
                  AND DRUG ADMINISTRATION, AND RELATED
                    AGENCIES APPROPRIATIONS FOR 1998

========================================================================

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                              FIRST SESSION
                                ________

     SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG 
                  ADMINISTRATION, AND RELATED AGENCIES

                     JOE SKEEN, New Mexico, Chairman

JAMES T. WALSH, New York               MARCY KAPTUR, Ohio
JAY DICKEY, Arkansas                   VIC FAZIO, California
JACK KINGSTON, Georgia                 JOSE E. SERRANO, New York
GEORGE R. NETHERCUTT, Jr., Washington  ROSA L. DeLAURO, Connecticut
HENRY BONILLA, Texas                   
TOM LATHAM, Iowa                       

 NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

  Timothy K. Sanders, Carol Murphy, John J. Ziolkowski, and Joanne L. 
                       Orndorff, Staff Assistants
                                ________

                                 PART 1

                          AGRICULTURAL PROGRAMS
                                                                   Page
 Secretary of Agriculture.........................................    1
     Office of the Chief Economist
     Office of Budget and Program Analysis
 Office of the Inspector General..................................  263
 Departmental Administration......................................  429
     Office of the Chief Financial Officer
     Office of the Chief Information Officer
     Office of Communications
     Office of the General Counsel
     National Appeals Division
                                ________

         Printed for the use of the Committee on Appropriations
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE

 41-029 O                   WASHINGTON : 1997

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             For sale by the U.S. Government Printing Office            
        Superintendent of Documents, Congressional Sales Office,        
                          Washington, DC 20402                          



                       COMMITTEE ON APPROPRIATIONS                      

                   BOB LIVINGSTON, Louisiana, Chairman                  

JOSEPH M. McDADE, Pennsylvania         DAVID R. OBEY, Wisconsin            
C. W. BILL YOUNG, Florida              SIDNEY R. YATES, Illinois           
RALPH REGULA, Ohio                     LOUIS STOKES, Ohio                  
JERRY LEWIS, California                JOHN P. MURTHA, Pennsylvania        
JOHN EDWARD PORTER, Illinois           NORMAN D. DICKS, Washington         
HAROLD ROGERS, Kentucky                MARTIN OLAV SABO, Minnesota         
JOE SKEEN, New Mexico                  JULIAN C. DIXON, California         
FRANK R. WOLF, Virginia                VIC FAZIO, California               
TOM DeLAY, Texas                       W. G. (BILL) HEFNER, North Carolina 
JIM KOLBE, Arizona                     STENY H. HOYER, Maryland            
RON PACKARD, California                ALAN B. MOLLOHAN, West Virginia     
SONNY CALLAHAN, Alabama                MARCY KAPTUR, Ohio                  
JAMES T. WALSH, New York               DAVID E. SKAGGS, Colorado           
CHARLES H. TAYLOR, North Carolina      NANCY PELOSI, California            
DAVID L. HOBSON, Ohio                  PETER J. VISCLOSKY, Indiana         
ERNEST J. ISTOOK, Jr., Oklahoma        THOMAS M. FOGLIETTA, Pennsylvania   
HENRY BONILLA, Texas                   ESTEBAN EDWARD TORRES, California   
JOE KNOLLENBERG, Michigan              NITA M. LOWEY, New York             
DAN MILLER, Florida                    JOSE E. SERRANO, New York           
JAY DICKEY, Arkansas                   ROSA L. DeLAURO, Connecticut        
JACK KINGSTON, Georgia                 JAMES P. MORAN, Virginia            
MIKE PARKER, Mississippi               JOHN W. OLVER, Massachusetts        
RODNEY P. FRELINGHUYSEN, New Jersey    ED PASTOR, Arizona                  
ROGER F. WICKER, Mississippi           CARRIE P. MEEK, Florida             
MICHAEL P. FORBES, New York            DAVID E. PRICE, North Carolina      
GEORGE R. NETHERCUTT, Jr., Washington  CHET EDWARDS, Texas                 
MARK W. NEUMANN, Wisconsin             
RANDY ``DUKE'' CUNNINGHAM, California  
TODD TIAHRT, Kansas                    
ZACH WAMP, Tennessee                   
TOM LATHAM, Iowa                       
ANNE M. NORTHUP, Kentucky              
ROBERT B. ADERHOLT, Alabama            

                 James W. Dyer, Clerk and Staff Director




   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 1998

                              ----------                              

                                      Wednesday, February 26, 1997.

                        SECRETARY OF AGRICULTURE

                               WITNESSES

DAN GLICKMAN, SECRETARY OF AGRICULTURE
RICHARD ROMINGER, DEPUTY SECRETARY
KEITH COLLINS, CHIEF ECONOMIST
STEPHEN B. DEWHURST, BUDGET OFFICER

                            Opening Remarks

    Mr. Skeen. The committee will come to order. We will go on 
the record. Today, we have before us Secretary Glickman. Mr. 
Secretary, is it all right if I call you Dan?
    Secretary Glickman. Yes, you may.
    Mr. Skeen. It's a little awkward saying Mr. Secretary all 
of the time to somebody I've known as long as you. Besides, 
you're my next door neighbor.
    Secretary Glickman. Mr. Fazio has to call me Mr. Secretary.
    Mr. Skeen. Okay. Mr. Secretary, I want to welcome you here 
before the committee. I believe you know everyone here. It's 
nice to have a former colleague before us who is so well-
respected by all sides of the political spectrum.
    We're here today to look at how you spend the taxpayers' 
money. We all want it to be spent wisely so we get a good 
return on our investment. This holds true whether we're looking 
at research, rural housing, WIC, or contract payments.
    And Mr. Secretary, I've looked at your statement. The third 
paragraph mentions balancing the budget by the year 2002. Now, 
we're all for that, but as you know we're here to deal with a 
shorter-term problem. We deal with the budget one year at a 
time. Savings projected for the years 2001 and 2002 are all 
well and good, but we have a very serious problem facing us in 
fiscal year 1998 as you well know and understand.
    Let me sum up the problem. The Farm Bill let a mandatory 
crop insurance program for agent commissions convert to a 
discretionary cost. This is a $200 million problem. You're 
asking for nearly a $400 million increase for WIC. Welfare 
reform has taken away any provision which we have used in 
recent years to save more than $300 million from the Food Stamp 
Program.
    Those three things cause us to face a $900 million problem 
in discretionary spending in 1998, not in 2002. Our allocation 
for discretionary spending has gone down from $14.6 billion to 
$12.9 billion since 1994. The President's request for this bill 
in fiscal year 1998 is $14.1 billion. This is not in the cards 
under any agreement.
    All of this is my way of telling you before we get carried 
away with the joys of coming into the year 2002, we have a huge 
problem right now with the discretionary budget for the 
Department of Agriculture. It is also my way of telling you 
when we get down to making reductions in your proposal, don't 
be surprised.
    On that wonderful note, we will turn it over to you, Mr. 
Secretary and we are delighted to have you here. I want to say 
this too. Thanks to our cooperation, we didn't have any 
shutdown the last time we went through this exercise. Let's 
keep it rolling.

                       Statement of the Secretary

    Secretary Glickman. Thank you, Joe. And to Vic Fazio and 
George Nethercutt, I thank you very much for having us again. 
As you know with me are my partner, Rich Rominger, the Deputy 
Secretary.
    Mr. Skeen. Very familiar.
    Secretary Glickman. Very familiar. And then two of our 
finest career employees who are also very familiar with you, 
our Budget Director Steve Dewhurst, who has been here--how many 
times?
    Mr. Dewhurst. About twenty.
    Secretary Glickman. Twenty times. And Keith Collins who has 
probably been here almost as many times; not quite.
    Mr. Skeen. They possess great institutional memory.
    Secretary Glickman. That's correct. Plus they know a lot 
about the Department and its programs. Let me just make a 
couple of points.
    First of all, I appreciate the committee's work. Your 
committee enabled us to get a budget the last couple of years. 
In one year when the rest of the Government was shutdown we 
were not. We were often viewed as if we were preferred or 
something was wrong with the Department of Agriculture?
    And I told them--in fact when I would make speeches--I 
would say that the appropriations process worked when it came 
to agriculture. It was because of your leadership that it 
worked.
    I also understand the nature of the budget problems. But I 
have to come here to give you some of the priorities and then 
try to let you work with us to figure out how to spend within 
those priorities.

                      FOUR FUNDAMENTAL PRIORITIES

    There are four fundamental priorities in this budget. One 
is expanding economic and trade opportunities. We had record 
exports last year. This year exports will be down a little bit, 
but they will be record again in the years to come. So, that is 
one area.
    Ensuring a healthy, safe, affordable food supply is number 
two. We had our implementation of our Hazard Analysis and 
Critical Control Program--HACCP--rules that we're undergoing 
now to continue to provide safe, healthy, nutritious, and 
affordable food.
    Number three is managing our natural resources in a 
sensible way. The 1996 Farm Bill emphasizes conservation as 
much as anything else in terms of the programs for the future.
    And the fourth priority is reinventing Government and 
saving taxpayers money. So, I do want to tell you that when we 
submitted this budget to you, even though in your judgment it 
is higher than what you would like to see, it was necessary for 
us to make difficult decisions to restrain, reduce, and 
redirect spending.
    I was just talking to one of your colleagues outside about 
recent possible decisions to further downsize the Farm Service 
Agency--FSA--faster than maybe what Congress had intended. I 
have talked to Congressman Dickey about this particularproblem. 
And so, I think it does indicate that we are in the process of trying 
to set priorities. I should also point out that through recent changes 
in legislation, USDA also contributes to balancing the budget through 
reductions in mandatory spending. The 1996 Farm Bill reduces budgetary 
exposure by providing strict payments; definite payments to farmers 
which are set over a seven-year period by law.
    Implementation of the USDA portion of welfare reform also 
is projected to save nearly $3.5 billion in 1998 and $21 
billion over five years. But there are some adverse affects 
that we have to deal with in this budget exercise; and 
particularly, quite frankly, if the Congress were to adopt the 
Balanced Budget Amendment I think it would affect our response 
to natural disasters.
    I was out in California. We responded in the Dakotas. And 
the fact is natural disasters require emergency action from the 
Government. It is one of the places that people demand action 
from their Government.
    I think the pressure on Food Stamp benefits in time when 
we're in recession are times that are the greatest worry for 
me. With the inflexibility of what an amendment might do, as 
well as the intense pressures to reduce valuable programs for 
our farm and rural clientele, I worry given the demographics of 
the country and the Congress.
    There are just not that many people living in rural 
America. And the pressures on programs affecting rural America 
would be hit, I think, just doubly hard given the priorities 
that we face.

                         DISCRETIONARY SPENDING

    But in any event, the current request for this committee is 
$13.2 billion for discretionary spending. As you say, that's 
about a half billion above the level for 1997. We are proposing 
legislation that would increase user fees, particularly in meat 
and poultry inspection; as well as limiting reimbursements to 
private insurance companies.
    With the effect of this legislation, we're proposing a 
discretionary budget of about $12.7 billion which is about the 
same as the 1997 level. I would also note that the total staff 
year levels, Federal and Non-Federal, associated with the 
budget are down substantially.
    We are projecting a total staff year requirement of just 
under 110,000 for 1998 compared to nearly 130,000 in 1993. The 
President's budget indicates significant further reductions in 
staff through the year 2002. And as I said, this is somewhat 
controversial, even in our own states, in terms of at what 
speed do we accomplish that?
    Also associated with the 1998 budget we're requesting a 
supplement of $100 million for the Women; Infant and Children--
WIC--Program to prevent a large drop in participation and 
ensure a smooth transition between 1997 and 1998.
    We've also requested a $6.2 million supplemental for the 
Nutrition Education Training Program to restore funds lost from 
the Welfare Reform Act. That Act removed the mandatory funding 
status of the program, leaving it with no funds. These 
supplementals are fully offset, including a $50 million 
rescission in budget authority for the Public Law 480, Title I 
Program.

                    ECONOMIC AND TRADE OPPORTUNITIES

    Now, if I might just quickly talk about the priorities I 
mentioned. The first priority is economic and trade 
opportunities. As you know, the 1996 Farm Bill provides farmers 
the flexibility to plant for the market rather than government 
programs; to deal with the added risk of farming brought about 
by this legislation; the variability of prices.
    Perhaps dairy has been the most classic example, but the 
price swings have been greater in the last year than I think 
we've seen for some time, to deal with this variability where 
we are expanding crop insurance tools as a part of our 
commitment to maintain a safety net for producers.
    Last year we worked with the private industry in developing 
a pilot program for revenue insurance which protects farmers 
against price declines, as well as, production losses. This 
program is being continued in 1997. And for 1998 we are 
proposing that revenue insurance be offered nationwide.
    Our legislative proposal will be budget neutral in this 
area and will provide for a comprehensive set of improvements 
in the Crop Insurance Program. These include changes in the 
reimbursement rates for delivery expenses, and the statutory 
limit on loan losses, as well as, administrative changes that 
would strengthen program compliance. Of particular interest to 
this committee is our proposal to change both the amount of 
discretionary funds needed to operate the program and the range 
of expenses that would be paid with such funds.

                               SAFETY NET

    As a part of our safety net proposal, this committee also 
should be aware, not as a part of the budget proposals 
directly, but indirectly, we are requesting that the 
authorizing committees give us authority to extend commodity 
loans in certain circumstances, allow for managed haying and 
grazing of Conservation Reserve Program--CRP--acreage, increase 
planting flexibility; and, provide for flexibility in the 
timing of production flexibility contract payments.
    We're also proposing legislation to improve farm credit 
services. Also, we're requesting appropriated funds to expand 
the collection and dissemination of weather data for 
agricultural areas.
    But we believe there is not enough current, accurate, up-
to-date weather information guiding farmers as to variability 
of weather conditions. So, we need more accurate weather 
forecasts and observations which would help producers mitigate 
the adverse impacts of weather-related events.
    On the farm credit front, we continue to provide essential 
financial support for those who cannot obtain credit elsewhere. 
Therefore, we are requesting that these programs be funded in 
1998 at a level of about $2.8 billion in loans and guarantees.

                     SOCIALLY DISADVANTAGED FARMERS

    Portions of both direct and guaranteed farm operating and 
ownership loans would be targeted at the beginning to socially 
disadvantaged farmers. We are also requesting that $5 million 
be appropriated for 1998 to continue the outreach program for 
Socially Disadvantaged Farmers.
    Only $1 million was appropriated for 1997. And we have just 
allocated an additional $4.5 million in funding for 1997 from 
the Fund for Rural America which was set-up in the 1996 Farm 
Bill. Our outreach efforts will help ensure that members of 
these groups receive the training and management assistance 
necessary to remain in farming.

                               TRADE AREA

    In the area of trade, as I said before, we had nearly $60 
billion in export sales last year. It is critical we continue 
our trade expansion efforts. Changes in domestic farm programs 
have made America's farmers and ranchers more dependent than 
ever on exports to maintain and expand their income.
    In addition, although many tariffs and trade barriers have 
been lowered, we continually face new challenges in our efforts 
to access new markets such as what I call phonysanitary and 
phytosanitary measures not based on sound science or concerns about 
genetically engineered products, particularly in Western Europe.
    Competition in international markets also remains keen. Our 
budget proposals continue our strong commitment to export 
promotion and growth; about $7.7 billion in 1998. In the case 
of the Export Enhancement Program, we propose full funding on 
levels permitted under the 1996 Farm Bill of $500 million or up 
from $100 million in this past year's appropriations. We also 
propose continuing the Market Access Program--MAP--at last 
year's levels as well.

                           Rural Development

    In the area of rural development, rural America continues 
to face persistent poverty, lack of basic amenities, and 
limited economic opportunity. The 1998 budget provides funding 
for several key Administration initiatives to address these 
problems, including the EZ/EC or the Empowerment Zone 
Enterprise Community Initiative, the Water 2000, the 
President's National Home Ownership Initiative, and the 
Administration's National Information Super Highway Initiative.
    The 1998 budget provides funding for over $9.1 billion in 
loans and grants under our rural development programs which is 
about $1 billion more that can be supported with the 1997 
appropriation. This includes $1 billion for single family 
housing direct loans.
    Further, we are proposing that $689 million of the budget 
authority which is enough to support an estimated $2.5 billion 
in loans and grants, be provided under the Rural Community 
Advancement Program--RCAP--that was authorized by the 1996 Farm 
Bill.
    This approach allows greater flexibility for matching 
funding to state and local priorities, and it provides block 
grants to states to have the opportunity to administer those 
programs similar to those conducted under our ongoing programs. 
Further, the Fund for Rural America is being used to provide 
$100 million in additional funding for critical rural 
development programs and high priority research for 1997. We 
would like to propose a technical correction in the Farm Bill 
to move up the release date making another $100 million 
available in 1998.
    In research, as many of you know, the research functions of 
the USDA will have to be reauthorized this year. But we are 
requesting a total of $1.8 billion for the research, education, 
and economics mission area in 1998. This is critical to 
expanding economic and trade opportunities, as well as ensuring 
a safe, healthful, and affordable food supply.
    And so this is a very high priority for us to make sure 
that our research is adequately funded; particularly as it 
relates to the long-term global competitiveness of the United 
States.
    In 1998, we will conduct the Census of Agriculture for the 
first time and thereby expand significantly its role as an 
information provider. Although USDA has been appropriated 
funding for the Census in 1997, the authorization legislation 
to transfer the function from Commerce to USDA has not been 
passed. I urge you to support swift passage of this legislation 
to provide the funds needed to conduct the Census in 1998.
    In marketing and inspection, we're making excellent 
progress in combating many plant and animal pest and disease 
programs such as brucellosis. The 1998 budget proposes 
increased funds for pest detection activities such as Karnal 
bunt and the Agricultural Quarantine Inspection at the borders.
    In addition, we have several proposals regarding packer 
market competition and poultry industry compliance as 
recommended by our Advisory Committee on Agricultural 
Concentration. Some new user fees in the marketing and 
inspection area are proposed to recover specific federal costs 
in delivering these programs.

                     IMPLEMENTING THE HACCP SYSTEM

    The next priority is a healthy, safe, and affordable food 
supply. As you know, we're implementing the HACCP system; a 
science and performance based system. We believe that it's 
working very well. We're doing our best to work cooperatively 
with both large and small packers to get them to comply.
    For 1998 we are requesting a budget of $591.2 million which 
is a $17.2 million increase over the 1997 level to maintain 
inspection and continue making investments in technology, 
training, and science. This budget builds on our 1997 budget, 
which you approved, which maintains a front line work force 
capable of rigorous, client-based inspection.
    This is an important point that I'm sure the committee is 
going to focus on. Legislation will be proposed to recover the 
direct cost of providing inspection to slaughter plants which 
is estimated at $390 million in 1998.
    This user fee proposal assures that the resources will be 
available to provide the level of inspection necessary to meet 
the demand for such services without being subject to annual 
budget pressures. This action will also reduce the pressure to 
trade off investment and improving inspection with the need to 
meet legislative requirements for providing inspection.
    Separating the cost of inspection from the cost for 
administering the program will permit the agency to focus more 
on the investment in science and technology to improve the 
effectiveness of the program.

                 ADMINISTRATIONS FOOD SAFETY INITIATIVE

    As a part of the President's recently announced food safety 
initiatives, we are also requesting $9.1 million for research, 
education, and improved inspection systems used for pre- and 
post-harvest food safety research and improve the capability to 
trace back a food born illness.
    The public continues to be concerned about these 
activities. We believe that they will lead to increased food 
safety. In support of the implementation of the Food Quality 
Protection Act of 1996; a major piece of legislation that you 
passed. We are requesting that an increase of $10.2 million be 
made available to the Agricultural Marketing Service--AMS--to 
administer the Pesticide Data Program.
    We believe that funding for the program, in this service, 
is preferable to the current funding arrangement through the 
Environmental Protection Agency--EPA. I had mentioned this to 
you before. This program is very important to ensure that there 
is accurate monitoring of pesticides. It's supported by all 
parties, both consumer groups and industry, and it is one that 
we believe needs to be in our budget frankly.

                             FOOD PROGRAMS

    In the area of food programs, we are obviously interested 
in WIC. We are proud to say that WIC has grown to full 
participation, achieving a long-standing bi-partisan goal. A 
budget of $4.1 billion request is proposed to provide adequate 
resources to support full funding participation of 7.5 million 
participants by the end of 1998.
    We will continue to work with the states to improve case 
load management and to operate the program within available 
funds. We've requested full funding of $7.8 billion for 
theSchool Lunch and the Child Nutrition Programs. We have stepped up 
our nutrition education activities designed to help schools serve more 
nutritious meals and teach children healthier eating habits.
    We are also requesting $12 million for a new human 
initiative in 1998; with additional increases each year until 
the initiative reaches $53 million in 2002. Virtually all the 
human nutrition research in government is done through the 
Department of Agriculture.
    Several places: Baylor Medical School, University of Texas 
in Houston, Tufts in Boston, San Francisco, University of 
Arkansas. This is the premier research in human nutrition in 
the world. And we are doing it out of USDA laboratories. At the 
Texas Medical Center in Houston I visited labs where they were 
able to improve the absorption of vitamins and minerals for 
premature babies and allow them to be released from the 
hospital earlier.
    So, these are programs that we think ought to justify some 
additional funding. Also, in the nutrition assistance area we 
are working actively with states to implement welfare reform. 
We plan to offer modest legislative changes to the authorizing 
committees to moderate the harsher aspects of welfare reform.
    The legislation would provide a softer landing and extend a 
helping hand to anyone able and willing to work, but unable to 
find a job. That proposed legislation would add $845 million in 
98 and $3.3 billion over five years. Also, in the food area I 
want to call to your attention the leadership role we are 
taking on behalf of the Federal Government to promote food 
rescue in gleaning around the country.
    It is estimated that we throw away 15 to 20 million meals 
into the garbage; from institutional servings of food that is 
not saved; 15 to 20 million meals a day. Now, the Congress 
passed the Bill Emerson/Good Samaritan Act last year which will 
be very profoundly helpful in relieving people of liabilities 
so they can donate food.
    That has already had some significant effect. Major food 
chains are beginning to make donations. So, this is a program 
we can help without costing the taxpayers any money whatsoever.

                              CONSERVATION

    I want to just briefly talk about conservation and saving 
some money. I will be done in about five minutes. Common sense 
management of natural resources is high on our agenda. The 1996 
Farm Bill does a lot of things; extending the Conservation 
Reserve Program--CRP, Wetlands Reserve Program, and it changed 
how conservation, cost share, and land retirement programs are 
funded. CCC--Commodity Credit Corporation--funds are now used 
on many of these programs instead of direct appropriations. We 
face a critical year in deciding the fate of 21 million acres 
that are coming out of expiring CRP contracts. The revised CRP 
will target only our most environmentally sensitive land so 
that we get the maximum environmental benefit for each dollar 
spent.
    Less environmentally sensitive land better suited for 
planting crops will be returned to production. Using CCC funds 
our goal is to reach and then maintain the 36 million acre 
maximum enrollment established by Congress, but that will not 
be done in one year. That will take us some time to accomplish.
    In conjunction with CRP, CCC funds will be used to enroll 
an additional 212,000 acres into the Wetlands Reserve Program 
during 1998, bringing total enrollment to about 655,000 acres 
which represents about two-thirds of our goal.
    We are requesting appropriated funds of $821 million for 
our Natural Resources Conservation Service--NRCS--to carry out 
conservation technical assistance and water shed work we do 
along with state and local partners.

                          SAVINGS TO TAXPAYERS

    Finally, I would like to address how we are reinventing the 
good and saving taxpayers money. We continue to implement the 
reorganization authorized by Congress in October 1994. We have 
already consolidated agencies and restructured the headquarters 
and some field offices. Our initial efforts have resulted in 
substantial savings and reductions in employment. Our 
projections indicate that we will achieve savings of more than 
$4 billion by 1999 and nearly $8 billion by the year 2002.
    We are continuing to close and collocate field offices to 
streamline operations to provide more efficient services. I 
will have to tell you I wrote you all in the last few days 
indicating that there are no specific plans that I have 
approved on further reductions, although some will be needed. 
But there is great fear out there that we've already made the 
decisions on reducing the field offices.
    Those decisions have not been made to date. Further, 
streamlining and downsizing, however, is also dependent on 
better management of technology resources. USDA's total Federal 
and county employment in 1996 was over 16,000 below its 1993 
level.
    By the year 2000, it will be more than 26,000 below the 
1993 level. So, if people are looking for a place in Government 
where cuts have been made, this is it. And USDA's employment 
today is lower than it has been at any time in the last 30 
years. And that trend is going to continue.
    I will have to tell you, that while efficiencies can result 
in a lot of that, it does create a significant amount of stress 
within the ranks when you're doing that kind of major massive 
reduction. Besides reorganization, we are also working to 
combat fraud and reinvent administrative processes.
    Several initiatives are underway. You are all aware of the 
Electronic Benefit Transfer--EBT--Program for Food Stamp to 
reduce errors and to reduce trafficking. And that's operational 
in 18 states and under development in all other states. We are 
also stepping up our management integrity efforts on child 
nutrition and WIC.
    To site another example of reinvention, we have moved from 
a costly inefficient system of managing single family direct 
housing loans to a program using state-of-the-art technology 
which reduced regulations and fewer staff. This new centralized 
servicing system is known as DLOS--Dedicated Loans Origination 
and Servicing. It is expected to save over $400 million in 
taxpayers money over the next five years while increasing 
service to borrowers and reducing delinquencies.
    Similar opportunities must be found for the Department to 
manage the substantial changes and responsibilities in the farm 
service area imposed by the Farm Bill. The 1998 budget includes 
substantial further reductions in staffing at USDA, including 
the service centers, largely because the budget numbers have 
come down.
    These reductions continue through fiscal year 2002. In 
fact, the President's budget has us going to 2000 service 
centers by the end of 1999. Right now, we have about 2,650 Farm 
Service Agency--FSA--Offices. Now, those aren't all field 
service centers. But the Department will be challenged to meet 
these targeted reductions while maintaining a high level of 
service to our clients.
    We'll do everything we can to meet the challenges. 
We'restudying our county-based activities to identify options and to 
improve efficiency and enhance coordination of our efforts. I would 
have to tell you, after serving in the Congress for 18 years and coming 
to the Department, I don't know how other agencies are organized, but 
this particular Department is organized in a very stove-piped 
operation.
    Every Under Secretary, every agency operates, has 
historically operated separate and apart from the rest of the 
agencies and the rest of the Department. For example, Rural 
Development, to the Natural Resources Conservation Service, to 
the Farm Service Agency. So, one of the problems we have in 
terms of managing and downsizing in the Department is trying to 
implement what we call a USDA spirit, not a Farm Services 
Agency spirit or a Natural Resources Conservation Service 
spirit.
    And it is tough. When I ask people where they work and they 
say I work for the Farm Service Agency, I say, no you don't. 
You work for the United States Department of Agriculture--USDA. 
But that has been a phenomenon in this Department for 60 years 
now.
    And in order to make these major management changes, reduce 
payroll, consolidate computer acquisition and the other kinds 
of major things, we must get people to think that they are 
working for a common agency and that the four-letter word 
``turf'' doesn't guide everybody's perspective. And that is a 
constant challenge for us.

                              civil rights

    Finally, I want to mention the issue of civil rights. I 
want to sincerely thank the committee for its help last year in 
honoring our request for $1.5 million to help strengthen our 
staff resources in this area. We have many activities underway 
to reduce the existing backlog of Equal Employment Opportunity 
and program discrimination complaint cases in the Department; 
and, to ensure that the same situation does not occur in the 
future.
    I am not proud of the backlog or the fact that we do not 
clearly have the best record in Government in handling Equal 
Employment Opportunity cases or program discrimination cases. A 
few months ago, I created a Civil Rights Action Team to do a 
thorough audit of USDA's Civil Rights issues and provide me 
with recommendations for improvements.
    I also asked our Inspector General to look at it as well. 
We held a series of listening sessions around the country to 
gather information and hear the concerns of employees and 
program participants. Deputy Secretary Rominger and I attended 
all of these sessions or basically all of them.
    I have received the team's report with recommendations for 
improvement. They are profound recommendations. I'm going to 
have a press conference on Friday to talk about what we can do; 
and, what the Congress is going to have to help us do. But the 
fact of the matter is, I am committed to making positive 
changes at USDA to ensure that both our customers and our 
employees are treated fairly and with dignity. It's something 
we need to do much better.
    Mr. Chairman, this completes the remarks I want to make. As 
I said when I started my remarks, I know it doesn't get any 
easier every year for you to develop and pass the agriculture 
appropriations budget, given all of the competing demands. I 
would tell you this, by and large the state of American 
agriculture is excellent.
    The projections for exports are high. Farm income is up. 
The land grant colleges tell me they're seeing a renewed 
interest of younger people pursuing agricultural careers. Some 
aspects, particularly dairy, for example, have been hurting 
very badly. But by and large, things are better today in 
agriculture.
    I think that is owed to the ingenuity of the American 
farmer, perhaps the optimism from the 1996 Farm Bill may have 
something to do with it. But we have a lot to be proud of in 
terms of the workload of both USDA, as well as, this committee. 
Thank you very much.
    [Clerk's note.--The Secretary's written testimony appears 
on pages 198 through 224. Secretary Glickman's, Mr. Rominger's, 
Mr. Collins', and Mr. Dewhurst's biographical sketches appear 
on pages 196 through 197. The Office of the Secretary's 
explanatory statement appears on pages 225 through 235. The 
Office of the Chief Economist's explanatory statement appears 
on pages 236 through 253. The Office of Budget and Program 
Analyses' explanatory statement appears on pages 254 through 
262.]

                    nafta expansion to include chile

    Mr. Skeen. Thank you very much, Dan. I appreciate the 
breadth, the depth, and the whole dimension that you had to go 
through to put this thing together because it's a good report. 
We may have some differences in there, but we're still working 
on trying to go in the same direction.
    Talking about exports brings to mind, I know, from the news 
reports, the Administration wants to go ahead on the North 
American Free Trade Agreement--NAFTA--expansion to include 
Chile. You've just recently, I think today, had the President 
of Chile here and the opportunity to visit with him. Can you 
give us a timetable for these negotiations to expand, the NAFTA 
negotiations, and some indications of the prospects for U.S. 
agriculture?
    I see also that Chairman Smith, in his recent visit there 
said that while Chile exports about $400 million annually to 
the United States they maintain a wide variety of obstacles to 
U.S. imports or exports.
    Secretary Glickman. Well, the President of Chile is here. 
In fact I was with President Clinton when he welcomed him. We 
had a little meeting. Agriculture was actually the first 
subject brought up at that meeting. We have agreed to establish 
a consultative process to deal with some sanitary and 
phytosanitary issues which have to be resolved.
    One is wheat. The Chileans have made it extremely difficult 
to get our wheat into Chile. They have requirements that are 
far greater than most countries in the world and they are not 
necessary. Another one is poultry; where it has been difficult 
for us to get our poultry in as well. The Chileans want to get 
other items into the United States. So, we have agreed to a 
consultative commission.
    I am somewhat encouraged that we will get these matters 
resolved on a higher bi-lateral level. I mentioned to the 
President of Chile that the extent to which these agricultural 
issues are resolved will have a lot to do with the Congress' 
interest in pursuing Fast Track. And that was basically based 
on my history here.
    The President does want to move ahead on this. And I think 
we should. But it is clear that agricultural issues have to be 
worked out. So, I'm going to go to Chile sometime soon. I 
talked to Bob Smith. I think Bob Smith did some good when he 
was down there.
    Mr. Skeen. I agree. I think he did too.
    Secretary Glickman. But, it is our desire to move ahead on 
Fast Track.
    Mr. Skeen. Dan, in that same vein, we noticed that any 
country you visit, particularly from the southern hemisphere, 
would like to trade with us. But then they don't want our goods 
because of something with the inspection process or things of 
that kind. So there isstill home turf issues in most respects. 
We'd like to get that opened up.

                         field office closings

    Let me switch to a totally different subject. That's the 
field office closings. We have been swamped with calls mostly 
from USDA employees about closing offices. I know you mentioned 
that in your dissertation. Can you tell me what's going on 
there specifically?
    We all know you had a long-term plan to consolidate and go 
from 3,500 to 2,000. Now, all of a sudden people are talking 
about 1,500 and saying the reason is a lack of funding. I'll be 
the first to say that money is a real problem, but in this case 
closing offices is more a reflection of USDA reorganization and 
Farm Bill changes rather than from a lack of funds.
    Secretary Glickman. Let me answer it the best way I can and 
then I'd ask Steve Dewhurst to answer it as well. We started in 
1994 with the Reorganization Act. We have closed or 
consolidated approximately 1,200 county locations. The goal was 
to get down to 2,500 USDA Service Centers.
    These were places farmers could go to where USDA would be 
located, not just at a Farm Service Agency office, but a farm 
service center of USDA. We're down to about 2,600 or 2,650 
service centers, which includes some separate Farm Service 
Agency offices. The goal was to reduce down to 2,500.
    Mr. Skeen. That is more of an all service?
    Secretary Glickman. Yes, an all service center. Now, it is 
easier said than done. I go back to this issue of turf. You 
have the Farm Service Agency which is largely composed of 
Federally paid county employees. This does not occur anywhere 
else in the Government of the United States.
    You have people working for the government who are not 
Federal employees, but their pay checks come from Uncle Sam. 
That's the way it's been since the 1930's with the county 
office employees. And merging that system with, let's say with 
NRCS rural development who are all Federal employees tends to 
create an arrangement that is cumbersome.
    Moreover, it tends to rekindle the turf battles that come 
between them. I'm just telling you, it's a big challenge to do 
that. However, we're still doing pretty well given the 
uniqueness of the challenge we are faced with. In fact, they're 
doing better at the county level making those decisions 
sometimes, than they do at the Federal and State levels in 
making those same kinds of decisions.
    But in any event, we've reduced Federal staffing in the 
Farm Service Agency by 16 percent and county office staffing by 
15 percent, and staffing in rural development by 16 percent. 
This is all between fiscal year 1993 and 1996. And staffing in 
the NRCS has been reduced by about 14 percent.
    Now, as a result of the 1996 Farm Bill there are a lot of 
changes in what these agencies are going to do. In the Farm 
Service Agency there is going to be less micro-management for 
example in proving yields and bases. However, on the other 
hand, the 1996 Farm Bill resulted in signing up 98 percent of 
the eligible farm areage in the United States. Participation 
was well up from the 70 to 75 percent of the farms which signed 
up in the past. So, there was more work required as a result of 
the 1996 Farm Bill in terms of paperwork and interaction with 
producers than we'd ever seen before.
    But at the same time, over the long term there probably 
won't be as much work. So, we must take a hard look at the 
budget and try to review all levels--headquarters, regional, 
state, and field--and adjust everything we can in an effort to 
achieve the staffing changes projected in the budget.
    Now, the President's budget, based on the numbers in the 
Farm Service Agency does provide that we would get down to 
2,000 service centers at the end of 1999. Some of our State 
Directors then went out and decided well, it may not be as 
efficient to have 2,000 offices with this many people because 
you will have too few people in each field office.
    Maybe what we ought to do is have fewer field office 
centers, more people in each one, and do it in such a way so 
farmers aren't terribly inconvenienced. They came up with some 
sort of formula which says that one service center couldn't be 
any more than 20 or 25 miles from another service center. That 
was kind of the theory.
    So, then they prepared an unofficial working draft of thier 
analysis. I'm not sure, but in some of your counties where you 
don't have field office centers they may be 100 miles apart.
    Mr. Skeen. Well, for every mile we have to go we count it 
as two.
    Secretary Glickman. Okay. This is particularly an acute 
problem, I would say, to Mr. Kingston and Mr. Dickey in states 
in the south where you have lots of counties and lots of county 
offices. That's where the impact would probably be felt the 
most. But it would also be felt in Kansas and in other mid-
western states.
    The State Directors came up with the idea that maybe we 
ought to do 1,500 offices. They then sent requests out to their 
state offices asking them to come up with which offices they 
would close if we went to 1,500. And needless to say, I've 
heard from about 50 Members of Congress already and hundreds of 
letters. What are you doing to us?
    So, I sent a letter out to everybody saying, no, we're not 
reducing the service centers to 1,500. The budget does provide 
that we go down to 2,000 which will require further closings, 
assuming that you approve this budget. We are going to have 
further consolidations and closings, but I commit to you today 
that we will not engage any plan without coming to you and 
giving you notice and getting your comments and assistance in 
working through the numbers on it.
    It is clear, in some parts of this country we have field 
offices very close to each other. In this modern world of 
computers and fax machines, you don't need the same kind of 
office structure that we needed in 1935. We have been reducing 
it during this time period. But there ought to be various 
factors to go into this decision, in terms of, convenience and 
the nature of the crop in the area, and those kinds of 
concerns.
    So, my answer would be no formal plan on the books. I 
haven't approved anything else. The President's budget does 
require us to go down to 2,000 by the end of FY 1999.

                          usda computerization

    Mr. Skeen. You mentioned computerization. How is that 
program coming along? It's been a very serious problem in the 
past.
    Secretary Glickman. I will ask Rich Rominger to comment on 
computers.
    Mr. Rominger. You're correct. That has been a problem in 
the past when we had every agency developing their own computer 
system. We now have a process and a plan. In fact, we have a 
moratorium right now on any new systems until we have a 
department-wide architecture in place.
    Mr. Skeen. You're networking.
    Mr. Rominger. So that they can network. That's correct. 
We're getting on top of it and we're making good headway.
    Mr. Skeen. Thank you. Let's try to stay as much to the 
five-minute rule as we can. I'd appreciate it. Mr. Fazio.
    Mr. Fazio. Thank you, Mr. Chairman. Ms. Kaptur wanted me to 
say that she is sorry she couldn't be here today. She has a 
family illness that prevents her. But it's really my privilege 
to be able to welcome both Danny Glickman and Rich Rominger, 
long time friend and constituent and good friend and colleague. 
I really am pleased to be able to, for the first time in my 
years in Congress, be directly engaged with this budget because 
I've been indirectly involved with it for a long time.
    I did want to chime in on the Chairman's comment on Chilean 
membership in NAFTA. In California, I think I can tell you if 
we can't get some help on the wine issue with Mexico and the 
preferential treatment that Chile has there, we will have a 
much harder time getting the votes that traditionally come from 
our state on this issue. I just thought I'd put that on the 
record and remind everybody of our frustration.
    Mr. Skeen. No threat intended.

                      electronic benefits transfer

    Mr. Fazio. Danny, we had a very good presentation from the 
Inspector General a couple of weeks ago. Among the things that 
he highlighted for us was the evolution of EBT as a way of 
getting benefits to people through the Food Stamp Program 
particularly.
    I didn't realize it but in the Welfare Reform Bill we took 
a real step forward by assuming liability at the federal level 
for lost cards that I think were impeding the states from 
wanting to take on what has obviously given us some real 
savings.
    I wonder if you could comment on how quickly you might be 
able to complete the implementation of Electronic Benefit 
Transfer around the country because the savings to federal 
taxpayers is truly astounding and the service to the 
beneficiaries is significant as well.
    Secretary Glickman. Right now, about 15 percent of Food 
Stamp recipients use the card. The goal is to have full 
implementation by 2002. Currently, EBT is operating statewide 
in Utah, Texas, South Carolina, New Mexico, and Maryland.
    It's partially operational in Pennsylvania, New Jersey, 
Connecticut, North Dakota, South Dakota, Minnesota, Illinois, 
Iowa, Kansas, Ohio, Louisiana, Colorado, and Wyoming where it 
is expected to be fully operational within a year. Actually 
North Dakota, South Dakota and Kansas are expected to go 
nationwide actually next month.
    So, in all other states EBT is in various stages of 
planning and implementation. So, that's about the best I can 
tell you on that. Our budget has $4.5 million to support EBT 
implementation. Actually, that's a reduction of $2 million from 
1997. But a large part of that, however, was was due to the up 
front expenses that have already occurred.
    Mr. Fazio. One of the concerns that was expressed though is 
a reluctance on the part of states to put up the additional 22 
cents a card that would give you the fraud proof approach, the 
approach that many of the credit card issuers are providing 
with individual signature.
    I'm hopeful that can be also pursued because I think there 
is no question we will benefit greatly from reduction in fraud, 
both costs to the states and in most cases federal.
    Secretary Glickman. I don't know if Mr. Viadero talked 
about how they monitor Food Stamp fraud with the EBT card. But 
properly on-line, you can determine within seconds excessive 
utilization anywhere. While you can still fraudulently use EBT 
cards, the opportunities for immediate auditing are there. So, 
it really is a very positive thing.
    Mr. Fazio. You also indicated that relatively few 
fraudulent marketers of food under the Food Stamp Program 
exist. But we could really go a long way to saving money if we 
would require a bond up-front when people go into business. 
Some of the people who have been going into business simply to 
rip us off obviously would not succeed if we required that.
    Is there any willingness to consider the way you might 
prevent fraudulent operations? Most of the markets who are 
providing Food Stamps successfully have been in business and 
would have no problem. It's the fly-by-night operator we're 
worried about.
    Secretary Glickman. Yes. First of all, I don't know whether 
legislatively we can require a bond without a change in 
statute. I think the reluctance has been in a lot of cases that 
many of the people that use Food Stamp are in smaller stores. 
So, the question is coming up with an affordable type of bond.
    On the other hand, most of these stores make their money on 
selling food through the Food Stamp Program. That cost would 
probably be a very small part of their activity.
    Mr. Fazio. We really ought to investigate this because 
there is a tremendous percentage of the fraud occurring in a 
few places which appear, in retrospect, to be set-up simply to 
rip us off. We're not trying to impede a smaller market. There 
has got to be some sliding scale or something that would relate 
to the size of the establishment, the amount of food sold or 
what have you.

                          school lunch program

    I wanted to ask you a question about the School Lunch 
Program. The dietary guidelines for Americans have been a watch 
word for the program apparently. And USDA has proposed a rule 
that's going to allow schools to serve yogurt as an accredited 
food item in the program.
    Apparently, this is a very significant issue. We have a lot 
of teenage girls who are not getting an adequate amount of 
nutrition in the program. Given the benefit to the dairy 
industry, as well as the nutrients in yogurt, this would be a 
significant addition to the program.
    I wondered why this decision has been held up for so long. 
There is a tremendous cross-section of support from the 
American Food Service Association, dietetic groups all the way 
across to the people who provide this as a product.
    Secretary Glickman. Well, first of all, the rule is still 
under review. As you can imagine, it is fairly controversial.
    Mr. Fazio. Perhaps you can enlighten us about the 
controversy.
    Secretary Glickman. Well, I think a part of the controversy 
has to do with using yogurt as a meat substitute. It has been 
viewed by some folks in the livestock industry as an attempt to 
remove meat from the program. That's not the intent at all. But 
to do that, we wanted to make sure that if we're going to go 
down this road which we have proposed, both meat and yogurt 
have to be considered to supply important nutrients in the 
diet.
    So the rule would allow yogurt to be credited towards the 
meat requirement in school lunches and breakfasts. Something 
that's also permissible, right now is called New Menus. So, my 
own belief is that yogurt is not likely to gain much of a level 
of acceptance in the substitute for meat, so it would have a 
marginal impact on the meat market.
    But when you're considering a rule like this, you have to 
consider its impact on other food choices as well. But we did 
propose the rule and we're still considering it. However, I am 
not sure what the current state of affairs is, whether the 
comment period is closed or not.
    Mr. Fazio. The comment period is closed, but I think the 
decision has been in abeyance for quite awhile. And I guess my 
question reflects the frustration of people who thought you 
were right the first time and want to assure you. They still 
do.
    Secretary Glickman. Okay.
    Mr. Fazio. Mr. Chairman, I think I'll wait for the next 
round. Thank you.
    Mr. Skeen. Thank you, Mr. Fazio. Mr. Walsh.

              class i differential price structure report

    Mr. Walsh. Thank you, Mr. Chairman. Mr. Secretary, it's 
good to see you. I have some questions I'd like to ask about 
the Federal milk marketing order process. The one issue that I 
wanted to talk about a little bit is this Price Structure 
Report which affects Class I differentials.
    Apparently, there was a report put together by people who 
were brought together to discuss this from the private sector 
and from academia and so on, and they submitted a report. 
Apparently the report was favorable to the northeast and the 
southeast.
    As you know, the reason for these Class I differentials is 
that in the mid-west most of the milk goes into cheese 
production.
    Secretary Glickman. Right.
    Mr. Walsh. Whereas in the east and the southeast, most of 
it is fluid milk or for milk at the table. So, in order to keep 
milk fresh you have to transport it over long distances 
quickly. There are costs to that and that's why we have these 
Class I differentials in a nutshell. But this price structure 
report has been held up. I was just wondering what the status 
of that report is and what's your Department's position on it?
    Secretary Glickman. Okay. I'm going to ask Keith Collins to 
respond more directly. But first, just let me tell you that 
there is a bigger picture. This is a part of the whole process 
of reforming the milk marketing order structure which Congress 
required us to do in the 1996 Farm Bill. Both in terms of 
consolidation of orders, as well as, to deal with the pricing 
structure including Class I, as well as, the other classes of 
milk.
    Needless to say I don't have to tell you that if the wisdom 
of Solomon were required in anything I've ever done in life, 
it's required in the milk marketing order process. You could 
get 50 states together and they would have 10,000 different 
opinions on how to price milk.
    And the differential you've talked about is perhaps one of 
the greatest ones where people from the upper mid-west feel 
theologically and religiously against the differential existing 
at all.
    Mr. Obey. Solomon never lived in the mid-west.
    Secretary Glickman. By the way, I want you to know that I 
did not cause your physical problem. I've been hearing about 
this lately. In any event, I might ask Keith Collins to 
respond.
    Mr. Collins. As a part of the order reform time table we 
had planned to issue a report on a price surface in early 
December 1996. The report we planned to issue however was not a 
report prepared by academics. We hired two academic 
institutions to advise us; Cornell University and Texas A&M. 
They did provide reports to us. That was raw material for our 
own task force to produce its own report, which I might say, 
differed from the reports that were submitted by the 
universities.
    Mr. Walsh. Say that again. The reports submitted by the 
Universities were raw material for your report?
    Mr. Collins. That is correct.
    Mr. Walsh. But your report differed from their conclusions?
    Mr. Collins. Yes. It did.
    Mr. Walsh. What information did you draw upon to give a 
counter opinion? The mid-west?
    Mr. Collins. No. The people who assembled our report were 
people who were milk marketing order administrators from around 
the United States. They are our experts in the Department's 
Dairy Division in the Agricultural Marketing Service. Their 
report was submitted for Departmental clearance.
    And at the Department we decided that we wanted to look at 
some options. The report that's about ready to be released now 
will include some options for a pricing surface which we will 
then seek public comment on.
    Secretary Glickman. Here is the problem. Congress said 
reform the system. We however, opened this process up to obtain 
greater input across regional lines. Although we had a lot of 
people pulling their hair out about doing something different, 
we had virtually no responses of what I would call formal 
legitimate proposals submitted to us.
    So, I decided I needed more in order to make this decision. 
And that's basically what the hang up has been. But we're about 
ready to release the report fairly soon.

                         class i differentials

    Mr. Walsh. Well, let me just refer to a statement that I 
believe was attributed to you. It was before the Senate last 
year in which you I believe, said, ``Class I differentials 
should be substantially reduced or eliminated.'' Is that still 
your position?
    Secretary Glickman. I think I said something like that, 
yes.
    Mr. Walsh. And that is your position and the report will 
reflect that opinion?
    Secretary Glickman. No. I think the report is going to 
reflect options. After all, I've got to do something that's 
best for the country as a whole. I would have to tell you that 
the differentials, particularly the size and the scope of the 
differentials have disturbed me.
    And I've said so publicly. But we have to come up with 
sound alternatives to that, that do not prejudice other regions 
of the country as well. But yes, I did make that statement or 
something like that.
    Mr. Walsh. I see.
    Mr. Collins. Can I just add to that? We are bound in this 
reform process to adhere to the Agricultural Marketing 
Agreement Act of 1937 which requries that we use classified 
pricing in milk. Classified pricing means that you're going to 
have different values based on use which implies that there 
will be differentials. So, a part of the Secretary's statement 
in which he said ``elimination'' is probably not feasible.
    Secretary Glickman. What he is saying there is that I said 
something that was not possible to do because of the 
statute,since he knows more about it than I do. I did make it a point. 
To the extent possible, I thought the variations in differentials ought 
to be reduced if it could be done without doing harm elsewhere. But I 
have to live by the earlier statute.
    Mr. Walsh. It would seem that, based on the information 
that I have here, the cost to get fluid milk to market, in the 
northeast and southeast, is probably about twice the cost, at 
least based on the report that was provided by Cornell and 
Texas A&M.
    Mr. Skeen. What was that University again?
    Mr. Walsh. Texas A&M great school. And I think you should 
follow the recommendation, Mr. Chairman.
    So, there really is a differential in terms of cost to 
getting the product to market. And I just end by assuring you 
that the religious fervor that's felt in the mid-west about the 
problems with those differentials, there is an equally strong 
religious fervor against the small group of cheese 
manufacturers in Green Bay setting the price of the milk all 
over the country that northeastern farmers don't think really 
helps them.
    Secretary Glickman. I would agree that the furor against 
the cheese exchange is not limited to only one part of the 
country. We are, right now working very vigilantly trying to 
find a substitute for the cheese exchange.
    I've gone up with Senator Spector to Pennsylvania. And 
Congressman Obey and the other Members of the Wisconsin 
delegation met with me. There seems to be a general feeling 
that there needs to be another way to compute the price of 
cheese as a part of the basic formula price.
    Mr. Walsh. Thank you, Mr. Secretary.
    Mr. Skeen. I want to thank you too. Along the same line of 
questioning and a point of personal privilege, the number one 
agricultural product out of New Mexico today is dairy. It used 
to be beef cattle. I sat for one afternoon while some of their 
experts were telling me how they arrive at the price of milk.
    To this day I cannot tell you at all. I thought I could 
pick-up on it very quickly, but I think you have to be born 
into that. But we do appreciate Southern California moving to 
New Mexico.
    Mr. Obey, I know you have another engagement. So, we're 
going to let you have your shot. Besides that, we're on a very 
good topic for you.
    Mr. Obey. Thank you, Mr. Chairman. Mr. Secretary, I do need 
to inform you that I asked the President last night to fire 
you.
    Secretary Glickman. I heard that.

                       green bay cheese exchange

    Mr. Obey. I make that point for the Gentleman from New 
York--three weeks ago I was at the Secretary's Office with a 
delegation of Wisconsin farmers complaining vociferously about 
what was happening at the Green Bay Cheese Exchange. Secretary 
Glickman made me do a lot of heavy lifting for those farmers.
    We then went into a press conference. Midway through that 
press conference I felt a sharp pain and discovered I had a 
strangulated hernia and went right to the hospital and had 
surgery. And I told the President last night that I know you 
got the short straw and you couldn't attend the State of the 
Union address, but it's a hell of a note when a Cabinet Officer 
makes certain a Member of Congress can't attend that State of 
the Union address either.
    Let me simply ask you, Mr. Secretary, three basic 
questions. First of all, where are we with respect to 
evaluating the situation at the Green Bay Cheese Exchange and 
finding a different approach to a price discovery mechanism?
    Secretary Glickman. Keith, do you want to tell them the 
status of this?
    Mr. Collins. Yes. Right now, we're in a public comment 
period. The Secretary put out a call for public comments to be 
received at the Department until March 31st. We've started to 
receive some. At this same time, we are also doing our own work 
to look at what can be done.
    The issue here is can the Secretary do something by using 
his discretionary authority or does he have to go through 
formal rulemaking as required under Milk Marketing Orders? For 
us to do something without going through formal rulemaking, 
which is what most people want and what essentially the Senate 
resolution on this issue asked for. We have to find clearly 
that the cheese exchange price is defective; and, we have to 
find an alternative that remedies the defects. So, those are 
the two issues that we're working on right now.
    Secretary Glickman. Right now, we don't have an alternative 
yet. There are options to try to get some futures market 
trading in cheese. And those are being reviewed by some of the 
futures exchanges. The option would be is whether we could do 
it ourselves and we're looking at that as well.
    Mr. Collins. The issue is finding an accurate, reliable 
representative market value of cheese. Right now, there is only 
one market in the United States that produces that and that's 
the market that's under attack.
    Mr. Obey. Well, let me simply say that Mid-western farmers 
feel just as strongly as farmers anywhere else that it ought to 
be under attack because it's a cock-a-mamie system that has 
resulted in incredible irrationalities. And I hope that we can 
continue to work with you to move it forward.
    I would simply note in response to the Gentleman from New 
York's comments that I think our objection to the milk 
marketing order system is number one, that times have changed 
since 1937. I mean, I remember reading about the actions of 
Congressman Jerry Boila who represented my district in 1937 
when these differentials were debated at length in the 
Congress.
    The issue hasn't change a heck of a lot, but the economy 
certainly has. And I think it well-merits change. Secondly, I 
would simply make the point that you also have the fact that 
Congress itself meddled with that process by legislatively 
adding to those differentials two farm bills ago--or was it 
three? I think it was two.
    So, the differential was not one that was established 
solely by administrative action, which I think also 
demonstrates that it was politically manipulated on the Floor 
of the House of Representatives.

                       fsa field office staffing

    Let me go to the FSA situation. It is certainly a logical 
extension of the passage of the Farm Bill which mandates that 
government get out of agriculture in many respects. It's 
certainly a logical extension that holds from that, that you 
will have fewer services and, therefore, you need fewer people 
and fewer offices.
    I would simply ask two things. That number one, the 
regional impact of that should wind up being fair. Secondly, is 
ittrue that you are planning to cut the number of folks in 
those positions by about 65 percent? Is that true, long-term?
    Secretary Glickman. By the year 2002, 65 percent from what 
number are we talking about? From the figure of 1993 to the 
figure of 2002, we're talking about 65 percent of the staff 
years within the Farm Service Agency? Steve, is that right?
    Mr. Dewhurst. No. We're talking about county office 
employees which are a part of the staffing of the Farm Service 
Agency. When we began this process in 1993, we had in the 
county offices 14,953 staff years of employment. Based on the 
projections in the President's budget by the year 2002 we would 
have in those offices 4,879 staff years of employment; or, a 66 
percent reduction.
    That reduction, of course, has become a lot steeper now 
into the future because of the Farm Bill and the other things 
that have been done which produced changes in the workload in 
that area.

                          fsa federal staffing

    Mr. Obey. Is it true that Federal staffing would be reduced 
by about 14 percent over that same period?
    Secretary Glickman. Federal staffing over that same period 
in the Farm Service Agency comes down about 22 percent.
    Mr. Obey. Twenty-two percent.
    Mr. Dewhurst. I can give you the numbers. I should say in 
our own defense that the Federal staffing in that agency is 
largely attributable to our Farm Credit Programs. The budget 
projections for the farm credit programs are for relatively 
stable programs for farm ownership and operating loans.
    Secretary Glickman. What happened, as you know, as part of 
the reorganization the old agriculture credit people used to be 
in Rural Development in the former Farmers Home Administration. 
They're now in the Farm Service Agency. They largely make up 
the Federal employees.
    Mr. Obey. Well, I have some other questions I'd like to 
submit for the record. I ask that you expand on that in your 
reply for the record.
    [The information follows:]

[Pages 22 - 23--The official Committee record contains additional material here.]


    Mr. Obey. And I would simply again urge that you do as much 
as you can to deal with the necessity to change that milk 
marketing order system to reflect the fact that the world is a 
bit different now than it was in 1937.
    Thank you, Mr. Chairman. I appreciate the time.
    Mr. Skeen. Thank you, Mr. Obey. Mr. Dickey.
    Mr. Dickey. Mr. Glickman, I'd like to just kind of go over 
your presentation; kind of give you a grade. I think you're 
reading a lot better.
    Secretary Glickman. Thank you.
    Mr. Dickey. You really are. You mentioned Arkansas without 
calling it Ar-KANSAS. I want to thank you for that.
    Secretary Glickman. It was tough.
    Mr. Dickey. I know. I understand that. And you said, ``I've 
got just five minutes to go,'' and you went 11 minutes and 41 
seconds.
    Secretary Glickman. That's about what you do; isn't it?
    Mr. Dickey. I'm asking the questions.
    Secretary Glickman. Sorry.
    Mr. Dickey. Now, I'd like for that not to count on my time. 
That was just introductory. Is that possible?
    Mr. Skeen. You have a free ticket.

                         field office closings

    Mr. Dickey. Well, I thank you, sir. Thank you. I like this. 
For the record, Mr. Glickman, I appreciate you talking to me 
the other day about the closures. Will you say again on the 
record what you said to me about that we've got some time?
    Secretary Glickman. Well, what I've said was is that the 
fear out there at the field office level that we have come up 
with a proposal to further reduce offices, it's on paper and 
ready to go is not accurate. I have not approved any such 
proposal. I've said that the budget requires us to get down to 
about 2,000 service centers by fiscal year 2000.
    We're about a little over 2,600 right now. So, obviously 
some further closings are going to happen; but, there is no 
formal plan out there to achieve that. While there have been 
some discussions between the national office and the state 
offices on how you could get down to 1,500 offices total which 
is below what we've even talked about doing.
    And Mr. Obey asked about this before. One of the things our 
people did, as they looked at these numbers for the year 2002 
was to ask themselves, what would happen if you had fewer field 
offices. Could you have more people serving in a larger 
geographical environment?
    And that's one of the reasons they've talked about getting 
this down from 2,000 to 1,500 in order that you wouldn't have 
to have this massive reduction of people. You'd have large 
offices with somewhat larger staffs. So, that's a possibility. 
However, we are not in a position to decide how further 
reorganization will specifically affect each state, state-by-
state.
    We're going to have to come up to you, talk to you about 
that, look at our budget numbers, and make that judgment 
accordingly.
    Mr. Dickey. What period of time is involved?
    Secretary Glickman. We're currently on the road to 2,500 
service centers right now. The budget asks us to go to 2,000. 
But that budget is based upon what the appropriations process 
does. Therefore, the best thing I could tell you is that there 
is a big employment change. For fiscal year 1998 in this 
appropriations bill we're estimating about 9,879 county office 
employees which is down about 1,900 from where it would be the 
current fiscal year.
    Then you're talking about going down another 5,000 over the 
next four fiscal years if you keep going down this road. So, 
that's kind of the time line that would be used if we were to 
go down this road, unless you decided that you wanted us to 
slow it down or move it in some other direction.

                           county committees

    Mr. Dickey. The problem that I'm hearing more and more is 
about taking away the committees. Now, the committees are not 
any financial burden on the USDA; are they?
    Secretary Glickman. I'm sorry I don't have the number. 
There is some expense. I think we pay a per diem or some kind 
of minimal expense figure to the committees, butit's not a big 
part of our budget.
    Mr. Dickey. Well, when those folks select those people, 
that's a serious thing in my part of the country. And it's sort 
of like keeping the local school board. I just wanted to 
express that to you because it's been expressed to me, and 
folks aren't sure we're getting that word up here.
    Secretary Glickman. I agree with you. We do not want to 
destroy or make incapable the county committee system from 
operating or functioning. Now, I will tell you this. There is 
probably going to be some growing discussion of the issue of 
county office versus Federal employees out there.
    As you know, the people who work on those county committees 
are paid by the Federal Government, but they're not Federal 
employees. And I suspect that you're going to find some serious 
effort to make them Federal employees. One reason is you've got 
the Rural Development employees who work in the same offices 
that are Federal employees.
    They all get their checks from the same place. And I think 
that item is one that you probably will hear discussed from us 
or other sources as well. But regardless of what happens, it's 
not going to take way the ability of the county committees to 
make decisions on farm programs and those kinds of things.
    Mr. Dickey. So, Mr. Secretary, what you're suggesting maybe 
is you're going to come up with a plan and then we're going to 
approve it here?
    Secretary Glickman. Well, let me put it to you like this. 
With the current numbers, we're going to come up with a plan. 
We're then going to come to you and discuss the plan. 
Obviously, we're going to work closely with you on the plan.
    We have to administer the dollars that you give us in the 
best way possible, but you will not be surprised by any of our 
decisions. Whatever we do, we'll make sure you're not going to 
be surprised. We're going to work with you on this.
    Mr. Dickey. But I want you to know now that if you leave 
all of the employees in the Fourth District of Arkansas the 
same, I'm not going to object and you don't need to even run 
anything by me. Do you understand that?
    Now, as we are cutting and reducing, the farmers are taking 
a lot of the load, and they keep mentioning this--that over the 
years the agriculture program has just taken cut, after cut, 
after cut. And here they come with the FSA cut.

                             export markets

    Is there any corresponding effort being made to get us new 
markets or to secure our markets, say, in the EU and in that 
area? Are we really using the weight that we have as a country 
to help these farmers?
    Secretary Glickman. That's a good question. The ultimate 
safety net is access to our markets because one out of every 
three acres that we grow in this country goes in foreign 
markets. Last year we hit record exports of just under $60 
billion. Within our budget we're proposing in the Foreign 
Agricultural Service an increase in CCC short-term guarantees. 
We're proposing the Export Enhancement Program be fully 
implemented pursuant to the Farm Bill. So, we're proposing 
about $600 million more in actual international programs and 
activities geared specifically to the export credit and 
promotion programs, than we had last year.
    The Farm Bill takes away a lot of the basic program 
support. Our two alternatives are to keep pushing on the export 
side, as well as, developing a risk management program that 
effectively protects people against price volatility.
    That's why we proposed this revenue insurance which has 
worked well on a pilot basis in Iowa and in Nebraska. We're 
trying to make that go nationwide as well. The other side of 
the coin is that the main farm program payments which used to 
be under this committee in previous years, is under another 
committee.
    Those are program payments that we fully support under the 
Agricultural Market Transition Act--AMTA. But the downside of 
that is that everything else is getting cut. But we've 
supported the integrity of keeping those payments as provided 
over the seven years of the Farm Bill. So, there is nothing in 
the President's budget that changes that.
    Mr. Dickey. Mr. Secretary, I don't know if this is a proper 
characterization, but what I think the farmers want from our 
government and your agency in particular, your Department, is 
to have an advocate over there. Now, we can talk all we want to 
about how we've got this much money. We're planning to do this. 
But you've got to have some force and some leverage.
    I think I'm really just saying this without knowing how you 
might do it, but if you'll just come out of the corner swinging 
for us when it comes to the EU. You know, the cattle situation 
over there in the European Union.
    What are you all talking about when I'm talking? When I'm 
talking, don't you all be visiting like that.
    Secretary Glickman. He's trying to help me answer your 
question.
    Mr. Dickey. I know. I know. But I really wonder, is there 
anything that I can take back?
    Secretary Glickman. Let me give you one example. Chickens 
are important in your state, as I recall.
    Mr. Dickey. They're a small item.

                       chicken exports to russia

    Secretary Glickman. Okay. This past year, the United States 
of America, basically through commercial sales, sold nearly $1 
billion worth of chickens to the Russians.
    Mr. Dickey. Okay.
    Secretary Glickman. Ten years ago our level of exports to 
Russia was zero. Today, a third of all of our poultry exports 
go to Russia. Nearly 25 percent of what the Russians buy from 
us--airplanes, pharmaceuticals, etc.--are chickens. This was a 
market that was nothing ten years ago. In the last recent year, 
there was an effort to keep our chickens out of Russia.
    Mr. Dickey. That's right.
    Secretary Glickman. On the basis that they were not as 
sanitary as those chickens produced inside of Russia. We 
thought that, that was probably not an accurate reflection of 
the state of affairs.
    Mr. Dickey. Well, that's what I'm talking about right 
there.
    Secretary Glickman. We decided to work it. Now, the 
industry working with a bipartisan Congressional delegation and 
the Administration worked together to keep that Russian market 
open. Quite frankly, the relationship between the Vice 
President and the Prime Minister of Russia, Mr. Chernamerden--
they have a commission going--was very helpful in seeing that 
happen.
    There is an example of a market that started from zero ten 
years ago that is not the most significant market that wehave, 
we've a number of examples like that.

                             european union

    Mr. Dickey. How about cattle in the EU, European Union?
    Secretary Glickman. The EU will not buy our cattle that are 
fed with any grain that's been treated with hormones. We've 
filed a petition with the World Trade Organization on that 
because our meat is perfectly safe. It's purchased by the 
Japanese and by people all over the world. The Europeans, won't 
do it.
    We also have this pending problem with genetically modified 
organisms, BT--Bacillus Thuringiensis--corn. All these things 
that we think are safe, by using sound science have been shown 
to be safe. We worry that these countries are using these 
sanitary and phytosanitary barriers really as a way to keep our 
products out and not necessarily as a way for justifiable food 
safety.
    But I guess my point to you is, the ultimate safety net is 
selling our product into the export market. Ninety-six percent 
of the people in the world live outside of the United States of 
America. That's where our markets are.
    Mr. Dickey. I just want to say one other thing. Keep it up 
on the chickens; will you?
    Secretary Glickman. Okay.
    Mr. Dickey. Just keep it up. Thank you, Mr. Chairman.
    Mr. Skeen. We don't mean to cut you short on your chickens, 
Mr. Dickey.
    Mr. Dickey. Thank you. I know. I'm not offended.
    Mr. Skeen. Mr. Serrano.
    Mr. Serrano. Thank you, Mr. Chairman. Mr. Secretary, 
welcome. I bring you greetings from all the farmers I represent 
in the South Bronx. It is interesting. I probably represent 
more people who used to live on a farm, either in Puerto Rico 
or in the south, than a lot of other people do.
    I'm fascinated by the whole chicken and cheese 
conversation. We, in New York City probably eat more cheese 
than most other places, but we don't put them on franks or 
wieners or hot dogs or whatever you want to call them. Yankee 
Stadium uses that quite a bit.

                        programs in urban areas

    Along those lines, Mr. Secretary, a couple of people have 
wondered what the heck I am doing on this committee. But we 
know the Department does quite a bit in the urban areas. For 
the record, I'd like you briefly to tell us some of the 
programs that do take place in the urban areas, that affect the 
urban areas of this country.
    Secretary Glickman. The total number of our budget that 
goes into food and nutrition programs is about 60 percent. And 
that, of course, is primarily the Food Stamp Program. While the 
Food Stamp Program is affected by welfare reform, I believe it 
has maintained itself as the primary Federal entitlement 
program for transfer income via food assistance.
    In addition to that, the School Lunch Program provides 
nearly half of the commodities served in about 100,000 school 
lunches at schools around the United States. These commodities 
come from USDA's Women, Infant, and Children [WIC] Program, 
which we're asking for an increase. These are the commodity 
distribution programs that we're talking about.
    These programs consume a big chunk of our budget dollars. 
There are more dollars that actually go into food and nutrition 
programs than actually go into traditional farm programs as a 
result of this Department's function in that area.
    I might also say we inspect meat and poultry. So, every 
constituent of every Member of this committee wants to have 
safe meat and poultry. We think it's the safest in the world. 
We think it's one of the reasons why people here aren't like 
the Europeans in terms of the scares that exist in other parts 
of the world when there are food safety problems.
    By and large people have confidence that our food safety 
system works well. So, that is obviously a big part of our 
budget as well. Those two are just part of the answer to you. 
There is a lot more that we do. In our conservation area, a lot 
of water quality. It is not in the jurisdiction of this 
subcommittee, but the U.S. Forest Service.
    I participated in Urban Resources Partnership Grants in 
your district, I think a year or two ago.
    Mr. Serrano. Bronx Restoration.
    Secretary Glickman. Parks restoration. Some of that may be 
in the NRCS, but most of that would probably be in the Forest 
Service.
    Mr. Serrano. Right. I appreciate that. In fact, I'm very 
active with the Bronx Restoration Corporation which has taken 
the Bronx River and included the community and the children, 
the school children, from the area and brought about a whole 
new outlook on the environment in the area. I do commend you 
for it.
    There is one part of your testimony that----
    Mr. Walsh. Would you yield?
    Mr. Serrano. Yes.
    Mr. Walsh. Just for a point of information. One of the 
things that USDA does and have been very, very helpful 
throughout the country, particularly in New York State and New 
York City, is the Watershed Protection Plan.
    There is a tremendous amount of money going in to make sure 
that New York City doesn't have to build billions of dollars in 
infrastructure to filter that water. It is the best water in 
the world. And the USDA is doing a lot to keep it that way.

                              civil rights

    Mr. Serrano. In fact, our water is bottled and sold at 
Macy's. In the Bronx, you can get it from the tap. It's 
amazing.
    There is from your testimony something that concerns me. 
First of all, let me tell you that on this whole issue of civil 
rights, I commend the stand you've taken and the fact that by 
this Friday you will tell us how you intend to deal with this 
issue.
    But the GAO report indicates that this has been going on 
for quite a while. Why did it take so long to reach such a high 
level where a decision will be made and this will be attacked 
as it should be? Because you have to understand something, Mr. 
Secretary. Many of us deal with these issues on a daily basis, 
but if any one had ever brought up the issue of discrimination 
in farming or in programs available to farmers, that was the 
last thing we'd expect; education, employment, the military 
recently; never in farming.
    Farming is so much a part of the communities most affected. 
We heard about the African American community. We know that 
there have been problems with the Hispanic farmers complaining 
and Asian Americans and so on. Why did it take so long? Was 
there a desire on the part of some people just not to discuss 
the issue or was it an issue that just didn't sell in this 
country and no one ever discussed it before?
    Secretary Glickman. It's a hard question to answer. 
We'vebeen getting reports for 30 years on this. There have been lots of 
them. Lots of them have gathered dust. There have been some improvement 
in some areas. But I must tell you that this is a long-festering 
problem. Most of our employees are honest and capable and want to do 
the right thing.
    A part of it, I suspect, has to do with the nature of USDA. 
It is an agency that is stove-piped. It's very decentralized. 
Decision-making is often at the local level. That's the way 
Franklin Roosevelt and others intended it to be. But it is 
harder to establish department-wide solutions than I suspect in 
other agencies. The other point I would make is during the last 
15 or 20 years it's been very, very hard for smaller and family 
size operators generally to cope in agriculture.
    We have seen a massive trend towards consolidation and 
concentration in agriculture generally. Smaller and mid-size 
producers, whatever their color or race, but as a general 
proposition minority farmers that tended to fall within that 
category had been hurt disproportionately because of economic 
trends as well.
    And then when you overlay that with an insensitivity on the 
part of some employees it is a prescription for great 
difficulty. I've created this action team within USDA. A career 
African American has lead the team. He's come up with a report 
that has multiple recommendations for us.
    Some are things I can do myself, however, there are other 
things you're going to have to do here. And that's a political 
decision within the Congress to deal with. But we are going to 
make changes in that Department. I'm telling you that right 
now.
    Mr. Serrano. And that was my final question. You believe 
that after Friday you will set a tone for behavior that will 
begin to turn this around?
    Secretary Glickman. Yes. Again, I can't tell you I'm going 
to snap my fingers and it's all going to be miraculously 
changed over night. But it's a comprehensive set-up, 
organizational issues within USDA, personnel evaluation type 
issues, commitment on the part of managers, some just treating 
fellow human beings decently which you can't legislate. A 
combination of all of these things that I think will be 
helpful.
    For example, and I don't want to prejudge the report, but 
you have vast areas of this country where you have 40, 50, 60 
percent farmers in a county that are minorities. And yet you 
find no minority members on the county committee; none. I mean 
it's not right. We're not going to engage in any quota kind of 
behavior here, but we are going to try to make sure that the 
process is fair.
    I like the county committee system. I think it works great. 
It's one of the most democratized system in the world; but, 
you've got to have people participating in it who are subject 
to its rules. Those are some of the things that we're going to 
try to do as a part of this reporting requirement.
    Mr. Serrano. Well, I encourage you to do so. I know you 
certainly have our support in turning this around. Thank you.
    Mr. Skeen. Thank you. Mr. Kingston.
    Mr. Kingston. Thank you, Mr. Chairman. Mr. Secretary, it's 
good to have you back with the committee.
    I'll skip my FSA questions because I think we've passed 
that around. I would agree to everything that was said.
    Secretary Glickman. I would say your state, because of the 
numbers of counties, is one that we will particularly have to 
work with you on. I think Georgia has the most counties of any 
state.
    Mr. Kingston. We have 159 counties and they are small.
    Secretary Glickman. But from the size, you've got probably 
more per square mile than any place else.
    Mr. Kingston. It's interesting. I had a farmer complaining 
to me last week that he goes to his FSA office probably 40 
times a year and it's a 21-mile drive. I'll bet for the 
Chairman, his farmers would jump at such a short distance. But 
it is just a different way of looking at things.

                             sugar program

    Let me ask you about sugar. We had adopted a conference 
report last year asking your Department to issue a report twice 
a year discussing raw prices, the ratio of raw cane and beet 
sugar to see if they're sufficient to prevent forfeitures. That 
the stock to use ratio was sufficient to ensure stable and 
adequate supplies to consumers and so forth.
    To-date, I don't believe a report has been issued. Do you 
know anything about this report?
    Secretary Glickman. I regret to say, I don't know the 
specific report. We may have issued something, I'm not sure. We 
do, as you know, issue estimates every month.
    Mr. Kingston. This was something that was adopted by the 
House and Senate Conferees last year. It was, I believe, report 
language in the Appropriations Bill.
    Secretary Glickman. I can only say we will have to check on 
that.
    Mr. Kingston. If you could look into that. To my knowledge 
a report has not been issued. We would just like to see that. 
As soon as you can, let us know when it will be coming out.
    Secretary Glickman. Okay.
    [The information follows:]

[Pages 32 - 45--The official Committee record contains additional material here.]


                              karnal bunt

    Mr. Kingston. Karnal bunt spores have been detected in the 
southeast. Tests remain inconclusive and no bunted kernels have 
been found in the regions' wheat, but there is a great deal of 
speculation and hysteria about the fact that the USDA and APHIS 
plans to regulate areas where only spores have been found. Is 
that going to be the case that USDA is going to start 
regulating?
    Secretary Glickman. First of all, Karnal bunt, is a wheat 
disease that is not particularly serious from a public health 
point of view. It has no effect on humans. Unless you have a 
lot of bunted kernels, it doesn't have much affect on the wheat 
itself either.
    Mr. Dickey. Bunt? Like in baseball?
    Mr. Kingston. He wakes up ever 20 minutes. You won't hear 
from him for awhile.
    Secretary Glickman. If he had it in his state, he probably 
would be up with you right now.
    Mr. Kingston. He'd still be asking questions.
    Secretary Glickman. The fact is, however, that I don't 
think the disease is a very serious public health or plant 
health problem. Its affect on quality appears only when there 
are high levels of infection. However, it does pose a great 
risk to our wheat exports because half of our wheat crop is 
exported and half of that is shipped to countries that say we 
cannot ship wheat to them from counties where Karnal bunt is 
known to occur (sic).
    So, we've got this kind of problem where on the one hand it 
is not that serious technically. However, on the other hand the 
trade is too important to our wheat industry not to deal with 
it. What we've done to-date is, even where we've found spores 
with Arizona being the prime state; a little bit in California 
and a little bit in New Mexico, we've provided compensation in 
those areas where we've been able to identify the fields that 
it comes from.
    We're going to make sure that comparable levels of 
compensation are provided to the people in the Southeast. What 
we're trying to do is get the world to recognize that Karnal 
bunt is not a monumentally catastrophic problem and to get our 
importing nations to do that.
    I was in South Africa last week as a part of a trip with 
the Vice President. South Africa had stopped taking our wheat. 
And we did agree that they would take wheat that had been twice 
tested negative. That's about $35 million worth of wheat trade 
a year.
    We're currently working with the Chileans right now on the 
same kind of situation. If I were a wheat producer anywhere and 
we found, spores, I would also feel like probably your 
constituents do and others. But we've got this problem where 
wheat that has lost its value export is wheat that has 
virtually no value at all. I'm encouraged by the fact that more 
countries are encouraging--the relaxation of regulatory 
restrictions on Karnal bunt. Again, this is a very high 
priority for me personally.
    Mr. Kingston. Okay. One other question. The National Plant 
Board, the American Farm Bureau, and the National Association 
of State Departments of Agriculture have urged that it should 
be deregulated and classified as a minor disease. Will you move 
in the minor disease or the major? It sounds like you're going 
in the minor area.
    Secretary Glickman. I would like to move towards the 
deregulation of it, but I have to get the agreement of our 
importing nations to do that as well. We've got to continue to 
push in that direction. The fact of the matter is, I don't 
think it's a major disease substantively. But as long as it 
keeps our wheat from being sold in the world market place it 
remains a major disease from a trade perspective.
    Mr. Kingston. And you will bring that up at the 
International Plant Protection Convention?
    Secretary Glickman. Yes, I will.

                            tobacco program

    Mr. Kingston. Another question; I believe that the 
President's budget or FDA's budget has asked for $34 million in 
tobacco regulation? I believe that's correct. Is that the case 
for FDA? Can you guys comment on that because traditionally 
they have not been getting money to regulate.
    You don't want to comment on that? I wanted to understand.
    Secretary Glickman. The only think I can tell you is we 
intend to continue to operate the tobacco programs within USDA 
as we always have.
    Mr. Kingston. Yes.
    Secretary Glickman. That's the best I can tell you.
    Mr. Kingston. It might be something that you want to see 
what they're doing and what kind of duplication there may or 
may not be. I don't know. I'm concerned about that.

                              wic program

    The other thing is on the WIC Program, I know that you're 
asking for a $400 million increase. On WIC, I believe the 
consumers can buy the formula by the can as opposed to the 
case. Is that correct? Do any of you know?
    The reason why I asked that is a retailer brought that up 
to me. He said, you know, if you have a baby you're going to 
buy formula by the case anyhow. And by the case it's less 
expensive per unit than it is by the can. But that the WIC 
regulations allow you to buy it by the can.
    And I'm thinking if that is true, if that is the case and 
there is not an advantage to it, then maybe we should look into 
changing the law and requiring it to be purchased by the case. 
Babies will take formula at least to a year old. And that might 
be something that we want to look into. Maybe you can look into 
it.
    Secretary Glickman. We'll let you know exactly what the 
purchase requirements are for the formula.
    [The information follows:]

[Pages 48 - 52--The official Committee record contains additional material here.]


    Secretary Glickman. I know there has been some discussion 
in the past about the lack of competition among the formula 
manufacturers, but I'm not familiar with this issue.
    Mr. Kingston. Because of the political sensitivity, it 
seems like any time you have a WIC criticism you're anti-
children which I think keeps the program from being a better 
program. When the administrators guard it so carefully that 
they don't want any criticism, I think they're ultimately 
hurting the people that they're allegedly trying to help.
    So, that is a possible something we can have a dialogue on. 
Also, we've had nutrition experts testify before this committee 
that mother's milk is almost always better for the baby, even 
if the baby is eating junk food than is formula. I know there 
are lots of people who are making money selling this formula 
and so forth.
    But I think WIC should continue to push efforts which I 
understand are ongoing already in terms of encouraging mothers 
to nurse their own babies.
    Secretary Glickman. That is a part of the program.
    Mr. Kingston. Yes. And I really commend you for that. I 
think you're heading in the right direction. But I think that 
we have to open this up and be very frank and specific that if 
we're worried about the children we should let them do that as 
much as possible.
    Thank you, Mr. Secretary and Mr. Chairman.
    Mr. Skeen. Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman. How are you Mr. 
Secretary?
    Secretary Glickman. Fine.
    Ms. DeLauro. It's great to see you. I will just say that we 
continue to miss you here; your thoughtfulness, but your wit 
and your singing as well.
    Secretary Glickman. I could sing my testimony. Mr. Dickey, 
however, might make fun of me.
    Ms. DeLauro. Like my colleague, Mr. Serrano, I often get 
the questions about why am I serving on this committee. But in 
fact I do have dairy farmers in my district in the State of 
Connecticut.

                              wic program

    Let me ask about two or three questions that have to do 
with the WIC Program. There is a high priority that's placed on 
the WIC Program as evidenced by this year's budget submission. 
It's popular. It gets bipartisan support. It's often been 
talked about as the gateway to other kinds of health and social 
services which I'd like you to comment about.
    Second, with regard to WIC, as I understand it, it 
currently serves about 7.4 million people. I want to address 
that issue first and then a couple of other issues about WIC 
and supplemental funding for 1997. It appears that many 
participants could be forced out of the program by the end of 
the year. Can you comment on the enrollment effect of the 
requested supplemental funding and how have enrollment 
expectations or price changes affected the WIC funding?
    Secretary Glickman. Well, I'm going to ask Steve Dewhurst 
to respond to the enrollment issues. But I would say WIC is, on 
a bipartisan basis, one of the most effective Government 
programs because the record does show it has quantifiable 
results including fewer premature births among pregnant women 
who are more likely not to get health care without this 
program.
    It's a delivery system. Once you get referrals of WIC 
participants to other types of health care facilities it allows 
WIC participants to get not only the basic food needs, but 
health needs, dental assistance, counseling, drug and alcohol 
abuse counseling.
    It's one of the few delivery systems where you're actually 
getting a physical benefit that people use. It plays a vital 
role in linking a lot of people who need the help into the 
community as a whole.
    In fact, the President is very interested in how to get 
welfare to work and in some way getting this continuous 
information flowing through a variety of programs, including 
WIC. A lot of people touch WIC Programs that don't touch any 
other kind of Federal type of assistance program. It saves 
money. I think you know the specifics. Our estimates are that 
it saves about $3 in Medicaid for every WIC dollar spent on a 
pregnant woman. It is one of the reasons why it's on a 
bipartisan basis. People believe in it very strongly.
    Now, on the participation, I will ask Steve to explain the 
numbers.
    Mr. Dewhurst. The program, as you know has been growing. In 
1993 there were about 5.9 million people on the WIC Program. 
The Administration has committed to a target of 7.5 million 
people, and funding for 7.5 million people in the program. We 
achieved a level somewhat over 7.4 million in October and 
November of the past year.
    We're now looking at data for December which we are 
receiving from the States. It appears that the number is down 
just slightly to about 7.3 million for seasonal reasons. The 
appropriation we have for fiscal year 1997 may only support 
roughly 7.2 million people in the program on an average basis.
    As you can see, the participation level for all three of 
the first months of this fiscal year was above that level. 
Therefore, the Administration has requested a supplemental 
appropriation this year of $100 million, which if provided, 
will permit us to support the current level in the program 
throughout the remainder of this fiscal year and then set the 
basis for continuing on in fiscal year 1998 to achieve the full 
7.5 million participants that's been the target.
    Ms. DeLauro. Without the supplemental funding, what number 
of people would be forced off the program?
    Mr. Dewhurst. We went out to the States, the Food and 
Consumer Service did, with some very detailed instructions in 
terms of analyzing their funding availability and their case 
load requirements.
    Those reports have been coming back in this week. We don't 
know the results yet. Obviously the level that we have can't be 
sustained. We will not know until we look at every State's 
report what the exact magnitude of the problem is.

                               sugar cap

    Ms. DeLauro. Okay. I'd like to keep in touch with you on 
that issue. Let me ask a further question on WIC, and it has to 
do with the sugar cap. USDA raised the possibility some months 
ago that it might alter the sugar cap for breakfast cereals 
approved under the WIC Program.
    Again, as I understand it there has been an avalanche of 
negative comments from parents, teachers, health professionals, 
and child care groups. What's come out of some of that 
commentary is that the WIC diet is a supplementary diet 
designed to be nutrient dense.
    And for this reason there are limited amounts of sugar, 
fats, sodium in terms of the content. There appears, and this 
is my view, that there is no rational reason for adding more 
sugar calories to a prescriptive diet that's designed for 
under-nourished children.
    Can we expect that the retention of the sugar cap will be 
proclaimed by the Department in the near future?
    Secretary Glickman. I would say this, we're not going to 
make any rules changes over night. I think the question here 
has to be answered by good science. So, what I'm going to do is 
ask the Agricultural Research Service and the Food Nutrition 
and Consumer Services to conduct a comprehensive review of the 
nutrient analysis and sugar issues within the WIC Program and 
come back to me.
    Let me tell you how this issue kind of came up. One of the 
cereal companies wanted to serve--I think it was Raisin Bran--
within the WIC Program. And because of the sugar content of the 
bran, because it's sugar coated, the bran in that cereal, after 
adding the raisins in would up the grams more than the WIC 
limits.
    So, the cereal company said, wait a second. If weoffered 
free raisins in the program so when you left with the bran that was 
basically sugared up a little bit and you offered raisins, they could 
take the raisins. So, why couldn't you offer Raisin Bran in the cereal. 
I responded, why don't you all make your bran without sugar, so then 
you could put the raisins in there and meet the gram limits. I'm sure 
that my understanding of how a cereal company does business is pretty 
limited. They laughed at me. We haven't looked at these rules for a 
long time.
    So, I agree that we should look at the whole issue of 
nutrient analysis components, as well as, sugar within the 
program. But what we do has got to be based on good science and 
good nutrition. And it will be. I think what some of the 
companies have said, is take a look at these in the modern 
world of how diets actually are.
    We're going to do that. But I'm not going to do anything to 
jeopardize the nutritional quality of what is served and is a 
part of the WIC Program.
    Ms. DeLauro. I appreciate that. We went through a whole 
round of commentary about national nutrition standards in the 
last session of this Congress. I happen to think that nutrition 
is key, particularly in the WIC Program that we're talking 
about.
    The American Dental Association, as I'm sure you know, is 
very, very concerned about altering the sugar cap because of 
the effect on tooth decay. We also know what is common with 
youngsters and low income youngsters. I just might add that the 
1995 dietary guidelines for Americans advises the American 
public to ``choose a diet moderate in sugars.''
    There is a whole variety of commentary that suggests that 
we should not fiddle around with what we have, with what is 
working. We ought to maintain this cap, hold on to it, and not 
be revisiting this issue every year or so.
    Secretary Glickman. I agree, but I also think you have to 
look at issues of refined versus natural sugars. Fresh fruits 
are high in sugars, but it's considered to be a natural sugar 
and not as harmful to the teeth.
    We've got to make sure that even though we don't want to go 
above the cap, we also have to make sure that the rules are 
modern in a world where we're encouraging people to eat fresh 
fruits and vegetables. So, I think we can do all of the above.
    Ms. DeLauro. Okay. Thank you. Thank you, Mr. Chairman.
    Secretary Glickman. When I said to serve the bran raw, they 
didn't think it was very tasty.
    Ms. DeLauro. It's the amount.
    Mr. Skeen. In this connection, Mr. Secretary, could I ask 
that Steve provide us with copies of the State responses you've 
asked for as to how and why they can have 7.4 million 
participants within available funds? We'd like to have those 
responses by the end of the week if possible.
    Secretary Glickman. We will provide you with everything we 
have.
    Mr. Skeen. I appreciate that.
    Secretary Glickman. I assume we've gotten them all back, 
but I don't know for sure.
    Mr. Skeen. I think it's vital to this question about what 
we're going to do on WIC and the funding on it.
    [Clerk's note.--The information is to lengthy to reprint. A 
copy is retained in Committee files.]
    Mr. Skeen. Thank you, Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Bonilla.

                   FEDERAL DISASTER EMERGENCY PROGRAM

    Mr. Bonilla. Thank you, Mr. Chairman. Welcome, Mr. 
Secretary. I want to once again thank you for last year during 
that horrible drought we had in Texas for being so responsive 
to what we needed. I will never forget working the phones with 
you and Charlie Stenholm and trying to figure out what we could 
possibly do. It was a horrible situation. We're getting some 
rain down there now, but not enough yet. But we appreciate what 
you did for us in Texas.
    Secretary Glickman. I'd like to just mention, as long as 
you raised that issue.
    Mr. Bonilla. Sure.
    Secretary Glickman. We have a real problem having to do 
with emergency assistance. As you know, we no longer have a 
Federal disaster emergency program. So, what we did in Texas 
with the drought and in North and South Dakota during the 
blizzards was use an emergency grain reserve of limited 
quantity and monetized it to try to provide some relief.
    The Emergency Grain Reserve is virtually exhausted or will 
be very soon. There is not going to be anything really left if 
we have another drought or another disaster problem. I think we 
had a total of 30 million bushels of grain total. So, we've 
used nearly half of it already.
    Mr. Bonilla. I appreciate you letting me know about that, 
because even though it was a small amount last year, it's gone 
now. Every little bit helped back then.

                               USER FEES

    I want to start out, Mr. Secretary, talking about the user 
fees for meat and poultry inspection. This is an idea that has 
come up year-after-year and has never really gone anywhere. Do 
you think there is any reason to believe this time that the 
authorization committee will feel any different about user fees 
and approve them?
    Secretary Glickman. I'll just tell you from my perspective 
over here because when I was in the House I used to be somewhat 
reluctant about these as well. I'll tell you from over on this 
side of the aisle. We have an extremely tight discretionary 
budget and I've talked to the Chairman about this.
    We are implementing HACCP now. Fifty percent of the sales 
of American agriculture are in livestock, and out of that, 80 
percent are in cattle. But 50 percent are tens of billions of 
dollars a year. The public has confidence that the system works 
and a part of that is that the meat and poultry inspection 
system is good.
    We're changing it and we're going to try to make it better. 
So, I have a problem on the one hand of wanting to make sure 
that we have an adequately funded and financed meat and poultry 
inspection system that the public has confidence in that they 
will buy meat and poultry and not be scared every time there is 
a newspaper story. On the other hand, not having enough 
discretionary dollars to fund our priorities.
    What we said was we would propose fees to pay in-plant 
inspection. The industry usually comes back and says, look, 
this is a public purpose function. The taxpayers ought to pay 
it. We're going to have to pass the costs along to the 
consumer. We expect the cost could be about a half cent a pound 
according to what our economists tell us, if we did implement 
this kind of thing.
    I think the public would agree to pay that if they felt it 
was going to maintain a safe meat and poultry inspection 
system. It's kind of like we pay an airplane ticket tax which 
supports the operation of part of the airport and airways 
construction funds. It may be slightly different. I don't know. 
My point to you is if we can't get it the normal way through 
the discretionary funding mechanism then I have to look at 
other options.
    The livestock industry is probably worth almost $100 
billion a year. It is the largest part of American agriculture. 
Therefore, we must make sure the public continues to have 
confidence that the system is safe. If this doesn't work, 
you've got to find the money somewhere else.
    Mr. Bonilla. Do you have any concerns at all, that since 
the ratio would be something like 70/30, with 70 percent being 
paid through users fees, that the public might wonder about a 
program that is in essence being funded by those who are being 
inspected?
    Secretary Glickman. Well, no, not really. I think that as 
long as the inspectors and the process remain under Federal 
regulation, I don't think that's a problem. I think the real 
issue here, quite frankly, is whether the industry will put on 
a full court press to try to stop it because they'll make the 
argument it's a general public purpose function of government; 
and, they'll have to pass the cost on to consumers. My response 
to that is, then we've got to find the money to pay for it 
somewhere else.
    Mr. Bonilla. In reference to that, the argument then is 
whether or not it is a public responsibility and, since they 
are the beneficiary, the public ought to pay for it. The ratio 
again being 70/30, can I ask you how you got to that ratio?
    Secretary Glickman. The in-plant I guess is 70 percent 
versus the rest of the inspection cost. Is that right Steve?
    Mr. Dewhurst. Yes, sir. The way it would work is, the plant 
would pay for the cost of the inspectors that are in the plant. 
The taxpayers would pay for everything above that level; the 
laboratory service, the overhead, and supervision which 
essentially is roughly 30 percent of the costs. That's how that 
ratio came about.

                               User Fees

    Mr. Bonilla. What about the question of if this were to 
take place then you'd have the industry paying more. What kind 
of safeguards would be in place to make sure there wouldn't be 
run away costs since the industry wouldn't have control over 
how the money is spent? How would we know that they would have 
to continue paying a higher rate?
    Secretary Glickman. I presume the expenditures would still 
have to go through the appropriations process. Is that right, 
Steve?
    Mr. Dewhurst. Yes, sir. Even user fee programs are subject 
to annual review within the budget process and review by this 
committee. We present all of those programs in our explanatory 
notes. So, there would be both the oversight of the industry in 
terms of reacting to the costs that they might be paying and 
oversight from the Government in terms of reviewing the budget 
every year the same way we do now.
    Mr. Bonilla. Okay. I want to move on to another subject 
real quick. It's more of a parochial concern. I'm not sure if 
the Secretary has actually heard about this yet. There is a 
situation going on in Reeves County. I spoke with your office 
about it, Mr. Secretary, and it may relate to a more widespread 
problem nationwide.

                        Reeves County FSA Office

    One of the FSA offices in my district in Reeves County has 
been under investigation by the USDA for mistakes which affect 
the payment levels of farmers under the new Freedom to Farm 
Act. The mistake involves miscalculations in CAVs when farmers 
enrolled in the AMTA program. Final 1996 AMTA payments were due 
September 30th. And the first 1997 payments were due January 
15th.
    Because of the ongoing investigation, neither of these 
payments have been made to a number of producers in this 
county. Banks, farm equipment dealers, and creditors in 
addition to the farms are being put in a terrible bind over the 
hold-up of these payments.
    First of all, I'm concerned that this may be a systemic 
problem beyond my district. We heard from the Inspector General 
two weeks ago that payments under the AMTA program will 
continue to be evaluated. Is this the kind of problem we can 
expect to take place as field office staff continues to be cut 
or is Reeves County's problem an isolated incident?
    Secretary. Glickman. To date, we have not seen the problem 
exist in very many other places. I can't tell you whether it 
may not exist in other places, but it seems to be a rather 
unusual problem. Let me just give you some background. In early 
September during a routine review of the AMTA contracts, the 
Texas State FSA office discovered a number of discrepancies in 
Reeves County.
    They sent in a jump team to review all of the records. They 
immediately ran into problems with adjusted crop acreage basis, 
CRP contract acreage, and altered documents. At this point, the 
balance of the producer payments were suspended. Approximately 
80 percent of the 1996 final payments have been made; about 
$750,000, but no 1997 advance payments have yet been made.
    So, we brought in the Inspector General, as well as the 
Office of General Counsel. Here is what I can report to you. 
The General Counsel has advised that until a further 
determination has been made on the discrepancies, payments will 
not be issued because of statutory provisions, including the 
90-day rule.
    We may not be able to collect over payments that are 
issued. That's what we're looking at right now. We are 
currently unsure of the extent to which documents have been 
altered and the extent of producer involvement in these 
problems.
    Next week, on Monday, a team of FSA employees from other 
states and a representative from our General Counsel's 
Officehere will go to Reeves County to determine how we can most 
expeditiously determine eligible payments. And I understand the 
seriousness of these financial circumstances that affect individual 
farmers and ranchers who may have nothing to do with the problems 
there.
    However, it is something that we're trying to work on as 
fast as we can.
    Mr. Bonilla. I appreciate that, Mr. Secretary. My 
understanding is that they're trying to reconstruct a lot of 
files there. It is frankly a mess. I'm just wondering if there 
is any way, and maybe you've answered this already, why we 
can't start at least making some temporary payments to the 
producers that we're obligated to make under AMTA and if 
adjustments need to be made to crop acreage basis if they can 
be made at a later time. That can then be done as the records 
reflect this need.
    Because as I've said here and as you've acknowledged, these 
producers got caught in the crossfire and it's not their fault. 
It's an office that's run amuck and is a mess. And we 
understand that. But I wish there was something we could do for 
them.
    Secretary Glickman. Early next week there is going to be a 
team down there. I'll ask them to report to me to see if there 
is some way that we can make partial payments. We'll try to do 
that. We're very aware that this money can be the difference 
between economic life and death, particularly as we get close 
to the time that we have to prepare the land for planting and 
that kind of thing. So, I'll do my best on it.

                           TEXAS STATE OFFICE

    Mr. Bonilla. One final question on this. The Texas State 
Office of USDA submitted a proposal in 1996 to correct this 
problem which has never been acted on. What's the status of 
this plan? Would the plan have started a clean slate by using 
the CAB submitted at the beginning of 1996? And I wonder if 
you've heard of this?
    Secretary Glickman. I don't know anything about that. We'll 
check on it.
    Mr. Bonilla. Okay, Mr. Secretary, thank you very much. 
Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Latham.
    Mr. Latham. Thank you, Mr. Chairman. I want to welcome the 
Secretary here.
    Secretary Glickman. You're in your new capacity.
    Mr. Latham. Right.
    Secretary Glickman. You used to be a lot further away.
    Mr. Latham. That's right. We're more up close and personal 
here. I will have to tell you, I really appreciated what you 
said about the future of agriculture as far as exports.
    I would hope that you and the rest of the administration 
will work with us when we get to the floor to build support in 
Congress for exactly that because we had some real tough 
battles last year and some close votes. We need to work 
together and make sure that we can get everything done that we 
both understand has to be done for the future of agriculture.

                       FSA FIELD OFFICE CLOSINGS

    I don't want to spend a lot of time on this but, on the FSA 
offices, the administrator here in Washington apparently has 
sent memos to Iowa. And you say there was no plan, but they're 
saying that they are going to close 35 offices by October and 
another 15 by August or October of 1998. I know Mr. Kingston is 
gone, but they've identified the counties and everything 
already. I guess it has caused a great deal of concern 
obviously, which you're well aware of. You say there is no 
plan, but still there are specific numbers out there.
    Secretary Glickman. I will tell you a couple of things. 
I've seen the memo or the letter that went out. And I thought 
to myself it's too bad that it wasn't constructed in a way that 
says there are several options being looked at over the next 
few years to deal with the Farm Service Agency and one of the 
options is this, but it hasn't been decided yet. But it didn't 
go out that way.
    All I can tell you is that you will not be surprised. We 
will talk to you before we implement any plan. There will be 
further reductions, but we are not at any stage yet where 
anything has even come up the pike into the Deputy's office or 
my office to review yet. And a lot of it is based upon what the 
appropriations bill does.
    I think it is fair to say if you will look at our budget 
proposal this year which projects to go down to 2,000 offices 
by the year January 1, 2000, there will be further closings. 
That's probably an accurate statement.
    Mr. Latham. Well, and I think with the Farm Bill, there 
should not be as many hours needed over a period of time 
because we're not measuring every tenth of an acre. We 
shouldn't have the paperwork over a period of time either. I 
guess that subject leads into what my question is going to be 
about. I know when these memos were sent out, there is a 
tremendous infrastructure in the Department and through all of 
the employees.

                         INFORMATION TECHNOLOGY

    And the fax machines must have been running overtime 
because instantaneously every person in every office in the 
country was alerted that this was going on. And there were, 
something like action memos, put out to call their Member of 
Congress obviously. Do you know how much money is being spent 
in the Department in the budget this time for information 
technology, I mean, the hardware?
    Secretary Glickman. A lot. Mr. Dewhurst might be able to 
give you the specific amounts.
    Mr. Dewhurst. I actually have a table on that. In the 
Department in total in fiscal 1998 we'll spend about $1.2 
billion on information technology.
    Mr. Latham. Would that include the Forest Service as well?
    Mr. Dewhurst. Yes. It includes all of the component 
agencies of the Department. As the Secretary says, the largest 
single component of our Information Resources Management [IRM] 
spending is the U.S. Forest Service which has almost $300 
million of that total, but there are large investments in other 
agencies as well, such as the Natural Resources Conservation 
Service.
    Secretary Glickman. That includes the investment we're 
making in EBT around the country for Food Stamp. It also 
includes the computer support for the Farm Service Agency and 
all of the other things we will do.
    Mr. Latham. And I guess that raises some real concerns from 
past history in the Department. Isn't there supposed to be a 
moratorium in place? You're talking about $1.2 billion, but 
there is a moratorium in place?
    Mr. Rominger. Yes, there is a moratorium in place.
    Mr. Latham. Except for the $1.2 billion?
    Mr. Rominger. No. This is the proposed budget for this 
year. But there is a moratorium in place until we get a 
Department-wide architecture in place so that the systems that 
we buy from now on will be compatible; and will be ableto talk 
to each other and that will provide the information that we need. We 
know that, that was not the case in the past, but that's what we're 
working on right now. We're making some good headway.
    Mr. Latham. Is it true you can't E-mail from the south 
building to the north building?
    Mr. Rominger. It's true that we have more than one E-mail 
system in the Department.
    Secretary Glickman. I think you can do it, but you have to 
go through several different circuits to do it. If I may just 
respond.
    Mr. Latham. You hand deliver the E-mail over there.
    Secretary Glickman. No. You don't need to hand deliver the 
E- mail. This goes back to a point I raised earlier concerning 
functional perceptions, you have a very stove-piped Department. 
For example, on the service centers. I wish I could tell you 
why we can't just move all of these agencies together at the 
county office level and why they can't operate in a compatible 
information system with each other.
    Some are doing it right now. But as a general proposition, 
the perceptual functional structure is not of one Department, 
but of 12, 13 or 14 Departments of Government. So, that's one 
of the reasons why Congress was correct on asking us to have a 
moratorium on the purchase of new information technology for 
the time being.

                           infoshare program

    Mr. Latham. The InfoShare program, spent $115 million and 
it wouldn't work. That's why the moratorium is there. You spent 
$115 million doing that and finally threw up your hands. Is 
there anyone in charge? Is there anyone responsible for seeing 
to it that it works?
    Mr. Rominger. Yes. Under the legislation that Congress 
passed for a Chief Information Officer. We have a Chief 
Information Officer and that's her full-time responsibility to 
make sure that the systems are fixed. And that's what we're 
doing.
    Mr. Latham. I'm not sure if the accountability is there. I 
don't know whether you need an information officer or someone 
who has total accountability and authority to do it--a Chief 
Executive Officer or something. Because obviously after $115 
million, it's like the IRS spending $4 billion and throwing up 
their hands on a system.
    Secretary Glickman. One of the things I will tell you, 
again, and I don't mean to beat this dead horse. One of the 
things I have found is that in USDA the administrative function 
of the Department is not really delegated to be centrally 
coordinated in one shop.
    We have an Assistant Secretary of Administration. But when 
you compare this to other Departments of the Federal Government 
our Assistant Secretary for Administration does not have the 
same kind of authority. What you tend to have is a lot of the 
purchasing information system, Congressional Affairs 
communications. They're all located in each separate agency.
    I'm not wringing my hands about it. We're going to do our 
best to give that person more authority over cross agency 
problems like information technology.
    Mr. Latham. Does that take an act of Congress to do that?
    Secretary Glickman. I don't think so.
    Mr. Latham. Administratively, can't you hold somebody 
accountable for the whole thing?
    Secretary Glickman. We can. Let me give you one example. In 
USDA we have separate departments of Congressional Affairs, 
separate departments of communications in each agency. Quite 
frankly, to a large extent that's the way the appropriations 
process has set it up over the last 40, 50, or 60 years. I 
suspect that you have a lot of that separation in a variety of 
management functions.
    This is something that I, as Secretary, will have to get a 
handle on. We have a Chief Financial Officer and a Chief 
Information Officer. But from a management perspective, you do 
need a CEO or COO, Chief Operations Officer, in the Department 
who has the authority to tell mission areas and work with them 
on computer acquisition so they can't just do these on their 
own and other kinds of things. This is something that's not 
historical with the Department of Agriculture.
    Mr. Rominger. But that's what we are doing now. We have, in 
addition to having a Chief Information Officer, an Executive 
Information Technology Investment Board which I chair. And that 
Board meets to approve any of the investments that we're going 
to make concerning information technology. The members of that 
Board are the other sub-Cabinet officers.

                         information technology

    Mr. Latham. So, for the first time, you do have some 
executive review over the whole thing in terms of in 
technology. That's fairly new.
    I'm real concerned that the same thing is going to happen 
again if you don't have your 27 agencies, or whatever it is, 
working together in a common purpose with somebody who has some 
authority over all of them, making sure they understand.
    I think the Forest Service in the case of the Rocky 
Mountain Station has done a very good job as far as internally 
in that they're able to quantify the cost of the services that 
they give out. I mean right now, you can't tell us apparently 
how much it cost you to write a Farm Bill check or anything 
else.
    Mr. Rominger. The Forest Service has a ways to go.
    Mr. Latham. But apparently, they're way ahead of everyone 
else from what I understand. If we could do something or you 
have suggestions for the appropriations bill or something else 
that we can do to make somebody accountable and vested with the 
authority to make the system work with all agencies, I want to 
work with you. Thank you.
    Mr. Rominger. Thank you.
    Mr. Skeen. Mr. Nethercutt.
    Mr. Nethercutt. Thank you, Mr. Chairman. Mr. Secretary, 
gentlemen I'm sorry I had to leave earlier. I had another 
subcommittee meeting. But I'm glad to be back and ask a few 
questions.
    Mr. Secretary, when you were here right after you were 
appointed to this position, my memory is that I asked you what 
your priorities were and you stated that they were research, 
export enhancement, and regulatory relief. Are those still your 
priorities? Not in any necessary order, but are those high on 
your list?
    Secretary Glickman. They're high on my list. I would say 
that exports, trade, and economic opportunity is the highest 
things that we can do to have a climate for agriculture that's 
strong both here and around the world. Also, clearly nutrition 
and food assistance, those are also very high priority as well.

                     adequate funding for research

    Mr. Nethercutt. I heard you testify before I left 
thisafternoon that research must be adequately funded. That is your 
position. I notice in a quick review of the geographic breakdown of the 
Agriculture Research Service that you increased the level of funding 
for 17 states. You level-funded 11 states and the rest are reduced 
slightly.
    These were only two instances in the documents on page 9-41 
through 9-45 that you eliminated Agriculture Research Service 
stations. One of those ARS Service stations is in my state.
    Secretary Glickman. Sorry about that.
    Mr. Nethercutt. I'm very sorry about it because it was a $2 
million reduction in a state that exports 90 percent of its 
wheat overseas. We have a tremendous balance of trade from our 
state. The elimination of the station at Prosser really causes 
a major problem for the pea and lentil industry. They are very 
interested in it. I'm very interested in it. Pea and lentil 
disease is studied there, conducted there, minor crops, big 
issues.
    I know you're conferring and trying to figure out what 
happened.
    Secretary Glickman. Go head. I apologize.
    Mr. Nethercutt. I don't mean to ambush you with it. I'm 
just concerned about it because we can't just go buy a research 
person next year or the year after. Research in my judgment is 
a high priority of this subcommittee. It should be. I would 
like to have you explain why you selected the Prosser Station 
for termination.
    Secretary Glickman. I was just trying to figure out what we 
did with that research station. We terminated, I guess, two ARS 
facilities; one in Mandan, North Dakota and one in Prosser, 
Washington. The projects were to be transferred to Miles City, 
Montana; Pullman, Washington; and Aberdeen, Idaho.
    Again, tell me what the Prosser station does.
    Mr. Nethercutt. A lot of pea and lentil research; disease 
studies for peas and lentils. We have a lot of peas and lentils 
in my district. Prosser is not in my district. But it's close 
enough that agriculture in my district really relies on this 
research station. I won't beat it to death, other than to say, 
would you kindly take another look because it is really 
important to my district.
    We're fearful as we search for researchers in the Pacific 
Northwest that we're going to lose. You can't eliminate 
researchers one year and then get them back the next. It's a 
long term process. We're delighted to have a wheat research 
facility at Pullman and we do a lot of great research there at 
Washington State University.
    I would be grateful if you'd reexamine the termination of 
the Prosser station.
    The other thing I wanted to chat with you about is export 
enhancement. I believe you've testified that you're asking for 
$500 million.
    Secretary Glickman. Which is the maximum under the 1996 
Farm Bill.
    Mr. Nethercutt. Right. We had $100 million in EEP last 
year.
    Secretary Glickman. This year.

                       EXPORT ENHANCEMENT PROGRAM

    Mr. Nethercutt. This year. Yes; correct. My memory is that 
we only used about $2 million relative to wheat. Again, I'm all 
for Export Enhancement funds, but what has been your policy? It 
seems that your policy has been not to use them. If that is the 
case, why is that we need $500 million if we're not using $100 
million?
    Secretary Glickman. We had very tight markets last year. We 
didn't need to use the Export Enhancement Program--EEP--as much 
last year in order to be market competitive. In addition to 
that, the program is used as a way to meet trade distorting 
activities by other countries. It does appear to us that the 
European Union, at least in recent months, has been opening the 
door to heavy subsidization. We're talking about billions, and 
billions, and billions of dollars of subsidies there. 
Therefore, we want to have it in our arsenal.
    I don't want to have to go down the road, quite frankly, of 
using export subsidies. It's market distorting. It's 
inconvenient. And in many cases, it's almost impossible to 
administer. On the other hand, we'll fight fire with fire. And 
I've said that before. That's about the best answer I can tell 
you.
    We've had some of the tightest markets we have had in 
generations in the last year. They've loosened up some. Maybe 
Mr. Collins might have just a couple of things to say because 
it is an important subject.
    Mr. Nethercutt. This subject is important to me. I believe 
I wrote you a letter about it and said, why don't you use EEP. 
I think we had a condition in Egypt if I'm not mistaken where 
we felt we were being competitively disadvantaged and it might 
send a signal to our foreign governments who want to help their 
farmers that the United States is vigilant about open trade and 
we're going to be careful about that.
    Mr. Collins. I think the main concern has been that during 
the past year, 1996, we saw wheat prices, in cash markets, go 
to over $7 per bushel. It set an all-time record, monthly 
record, in May. Those kinds of wheat prices are pretty hard to 
justify to the American public, while subsidizing exports. I 
would point out that in January, our most recent data for U.S. 
farm-level prices for wheat were still around $4 a bushel which 
is still at the target price level. Again, it's still hard to 
justify export subsidies at those price levels.
    Our own stocks are extremely tight. We have a 25 percent 
reduction in exports this year that we foretold just on the 
basis of our own restricted supply, not on the basis of being 
out subsidized by foreign competitors. We expected that decline 
because of our limited supply.
    Now, as we move through the rest of this year, we're going 
to have to see what happens with the 1997 crop. If we were to 
have a huge harvest combined with the record crops we've seen 
in foreign countries and wheat prices were to plunge and the 
European Union were to continue a heavy subsidization of their 
exports, then the Secretary would have to be in a position to 
really take a hard look at EEP.
    But at the moment we are still in a tight situation. By the 
end of this marketing year, U.S. and global wheat supplies will 
actually be tighter than they were at the start of the 1995/96 
season in which we set the all-time record wheat price. So, 
it's not a world that's awash in wheat at this point.
    Mr. Nethercutt. I thank you. I am concerned that if we have 
this weapon in our arsenal, there should be a willingness to 
use it. And given at least the last year, I was concerned about 
why we're seeking more money for EEP in a very tight budget as 
all of us struggle to meet all of the needs of agriculture.
    I believe my time has expired but I do have a few more for 
the next round.
    Mr. Skeen. Go ahead.
    Mr. Nethercutt. Vic, do you mind?
    Mr. Fazio. No, go ahead.

                              wic program

    Mr. Nethercutt. I know there has been discussion today of 
WIC. It is a good program. It helps people. In fact I was just 
out in my district a week ago and visited my own WIC office in 
Spokane, one of them, and had a very nice visit.
    It was now Senator Durbin and I who proposed to this 
subcommittee the amendment that allowed you, as Secretary, to 
use carry-over WIC funds deemed to be in excess, for other 
purposes, limited purposes, within your budget in order to meet 
other needs. I think it was rural water and sewer programs.
    Secretary Glickman. Some rural development functions.
    Mr. Nethercutt. And that seemed to me to make sense since 
we did have a carry over in WIC. Can you verify for the record 
whether in fact FCS, in light of that amendment and that 
concern perhaps within the agency about carry over, and wishing 
to use that carry over, did or did not notify the various 
states across the country who would use WIC funds to spend that 
money and enhance enrollment in the WIC Program?
    Secretary Glickman. You mean to avoid the carry over?
    Mr. Nethercutt. Exactly. Because now we see another, what 
is it, $300 million sought in this budget. My own WIC office in 
Spokane stated this same reason.
    Because we had a tough winter, it wasn't that tough, but we 
did have some floods and the birth rate went up. Therefore, the 
case load went up. Therefore, we need $300 million more.
    My fear is, that the integrity of the program seems to me 
now to be somewhat in jeopardy. And I think it's drawing the 
attention of others who want to be sure that this program works 
well. That it meets the needs that are there, but isn't 
excessive and isn't endless in terms of cost.
    This desire sometimes in government that we say, we've got 
a program, come and use it so we can perpetuate our existence. 
I don't know how you want to respond, but I guess what I'm 
worried about is that there is going to be an investigation 
that says, yes, there is mismanagement.
    I think you've stated in the past that you want to look at 
the management, but only until it's fully utilized. Fully 
utilized may be endless. So, again, balancing budget 
requirements with efficiency in programs seems to me a high 
priority.
    I'm just wondering if you can dissuade me of the notion 
that there is some promotion going on here, self-promotion in 
order to have self-perpetuation, in order to spend more money, 
in order to put more pressure on programs that we really didn't 
need to spend money on?
    Secretary Glickman. I will let Steve answer first.
    Mr. Dewhurst. Mr. Nethercutt, in terms of what happened 
earlier in this current fiscal year 1997, you are correct in 
that the Food and Consumer Service--FCS--sent a notice to 
states having to do with the allocation of WIC funds for this 
year. It assumed again, as in 1996, that there would be some 
transfer from the WIC Program to Rural Development.
    That was done for two reasons. We know that interest rates 
were affecting our Rural Development Programs and driving those 
program levels lower than we had anticipated in the budget. We 
were trying to preserve some options to try to deal with that 
situation.
    In fairness, it had not become entirely obvious to us at 
that point that the WIC case load was growing quite as large as 
it was. It seemed reasonable at that point to warn states that 
there might be that transfer. Well, it wasn't long after that 
notice went out that we were getting WIC data in for September, 
then October, and November. It became clear that the case load 
was building up and that the feasibility of a transfer to Rural 
Development really wasn't going to appear this year given those 
numbers.
    And I don't remember the dates. However, at a later date 
last fall FCS did put out a second notice which gave the states 
a revised allocation which was slightly higher because it did 
not anticipate a rural development transfer.
    Secretary Glickman. I can't tell you whether they were out 
promoting the spending of WIC in some way. I do know that the 
WIC Program, like any other program, I'm sure that there are 
some that have problems with the administration of it. Our goal 
is to try to alleviate those.
    By and large the case load has been growing because of 
natural demographic and economic factors. You can trace that 
regionally to those parts of the country that have been 
struggling the most. Quite frankly, as a result of the welfare 
reform changes, there are probably going to be additional 
people wanting to use the WIC opportunities for them; 
particularly parents with newborns.
    I think it is a very important program as a part of the 
mix. But it should not be immune for us to making sure it's 
being administered appropriately and correctly.

                           income eligibility

    Mr. Nethercutt. I'm glad because I looked at the 
eligibility levels, income eligibility, accept to 185 percent 
of poverty. And this is no picnic for sure. But for fiscal year 
1996, I'm informed $28,860 for a family of four and $33,707 if 
the mother is pregnant. In my community, the average income is 
about $25,000. That covers an awful lot of people.
    Again, don't misunderstand. I'm willing to help people in 
need, but I guess the question becomes can we afford to help 
everybody even at those levels which, again, for some aren't 
high, but for others are.
    Mr. Dewhurst. If I could say a couple of things?
    Mr. Nethercutt. Sure.
    Mr. Dewhurst. One, of course, is that the eligibility for 
the program is largely set by statute.
    Mr. Nethercutt. Sure.
    Mr. Dewhurst. Another thing that makes the numbers in this 
program so hard to predict is that when you use those income 
figures and use Census data, it appears that there are about 
11.5 million people in the country who could qualify for the 
program on the basis of income.
    So, when we make an estimate that full funding will produce 
something like 7.5 million on the program, we're assuming that 
between 30 and 40 percent of the people who are income-eligible 
for the program will not ultimately participate; either because 
they could not pass the nutrition risk criteria which is the 
other part of the program, or they simply chose not to 
participate. So, there is a lot of discounting that goes on 
before we get to that number.
    There is some fair debate in the management of the program, 
particularly with respect to the nutrition risk criteria and 
how well that's enforced at the clinic level. I think there are 
some folks in the Department working hard to get a better 
handle on the enforcement ofthat criteria.
    Mr. Nethercutt. Well, thank you. Do I have any more time?
    Mr. Skeen. I'm going to let Mr. Fazio go ahead at this 
point. Then I'll wind up here and I'll come back to you.
    Mr. Nethercutt. Thank you.
    Mr. Skeen. Okay.

                                exports

    Mr. Fazio. Thank you, Mr. Chairman. I wanted to get back to 
this issue of exports. The trend is up in terms of our dollar 
value of export crops, but I think the trend is down in terms 
of Congressional support.
    When OPIC was defeated on the Floor of the House I think it 
was a premonition that maybe we're going to have additional 
problems. You know, we've always struggled with the MPP 
Program. The authorization is quite low compared to past 
history.
    I wonder if you could, Danny, kind of put on the record for 
us why you think, particularly in the aftermath of GATT, market 
promotion programs are increasingly important in light of the 
reduction in subsidies that other countries long have had to 
their growers. It seems to me they're transferring much of that 
budgetary support to the promotion of those growers' exports. 
Some people are saying it's a distinction without a difference. 
But the point is it's happening. We're up against some very 
stiff competition.
    Secretary Glickman. Last year I went to Indonesia. I went 
to a farmer's market outside in an open air stall. I saw this 
enormous collection of apples. I went there and they were 
Washington State apples.
    We now sell, I think, more apples in Indonesia than we do 
in all of Europe largely because of the Washington State Apple 
Commission's expert marketing and their affiliation with the 
Market Access Program which gave them some seed money to do 
this kind of thing.
    That was just one example of how you penetrate markets. And 
I think the Congress has changed the program enough in recent 
years so that it is not oriented as much to large companies. 
It's helping more small- and medium-sized companies. It is 
having a remarkable effect and it does make a difference.
    Perhaps we need to do a better job of working with the 
people who use the program to develop the case studies so that 
it can be in your hands and you can see the kind of effect. To 
this day, every time you talk about this program, you always 
hear the same anecdotal stories that you would have heard ten 
years ago. McDonald's is getting benefits to sell hamburgers 
overseas. That's not how the program is being used.
    Mr. Fazio. Right.
    Secretary Glickman. We proposed basically a flat line 
program for this year. We think it's very worthwhile. It's a 
drop in the bucket compared to the agricultural contribution to 
the trade balance. Our agriculture exports gross about $60 
billion. Our net is somewhere around $28 billion. Agriculture 
is the largest positive contributor to our balance of trade. 
The money that goes into promotion is like a postage stamp 
compared to the operation of a business the whole year.
    Mr. Fazio. The last I checked, the EC was doing ten times 
as much.
    Secretary Glickman. Yes. I think that somebody told me that 
we spend as much on our market promotion as France spends alone 
on the promotion of their wines around the world; the 
government of France is what I'm talking about. Again, I think 
we need to use the program carefully so we don't benefit 
entities that don't need the assistance from a brand name 
perspective.
    For example, one of the highest and fastest growing areas 
is in fresh fruits and vegetables. There is a lot of 
competition for those markets. I was just in South Africa. 
There is a growing opportunity for them to sell in the markets. 
While we don't want trade barriers to exist, you've got to 
somehow do your best to get your product and the information 
about your product to the rest of the world.
    Mr. Fazio. I think in California we've determined that 
about 80 percent of our wine grape growers who have varying 
sizes of acreage are marketing their products through probably 
four or five of the largest wineries. So, if you want to help 
most of the small growers, you've got to work through the 
people who've got the economic capability to compete in 
international markets.
    It's frustrating when all we hear about is the large winery 
and not about people who are really benefitting who are the 
farmers who this program was put together for. I think we're 
going to need a lot of help. I think we're in for a real tough 
time, not only because of all of the cries of corporate 
welfare, but because these programs are harder and harder to 
support when you're up against other programs like we've talked 
about today that have broader support in the Congress.
    Secretary Glickman. If I may just mention, the biggest 
threat to world trade and agriculture is the use of these, what 
I call, phony sanitary and phytosanitary measures. Sometimes we 
get hit because we let some products in like we did with 
avocados recently under a limited review.
    But I would point out that Mexico just announced the 
purchase of cherries. The thing is, you've got to make these 
decisions based on good science. If you don't then you'll have 
new trade barriers worse than the old trade barriers. But while 
you do that and while you open barriers, you cannot give up 
your ability to try to promote your product. That just is not 
sound in terms of growing these markets.

                      food quality protection act

    Mr. Fazio. Let me move on. The specialty crop agriculture 
we've been talking about here is very dependent on EPA for 
approval of pesticides. We've had, as you know, the passage of 
the Food Quality Protection Act which was a landmark bipartisan 
effort to get rid of the Delaney clause.
    And now, we've created a whole new world. We really don't 
know where we're going to end up in this regard. I know this is 
not directly in your purview, but I'm really pleading with the 
Department to get engaged in what EPA is doing to implement 
that law.
    I heard, for example, that now EPA is going to be asking 
that they be given purview to all of the issues of plant 
breeding because in fact we're going to deal with our pesticide 
application programs through integrated pest management. And 
one of the most effective ways of doing that is to breed plants 
that are resistant to pests.
    But this is a whole new piece of turf for EPA. And I 
sometimes question whether they really understand the reality 
of what they are holding in the palm of their hand in terms of 
power over American agriculture. We've already, as you've 
indicated, tossed this hot potato back and forth in budgetary 
terms here. But I'm very concerned about getting USDA directly 
involved in sorting out some of the issues that suddenly have 
shown up on EPA's radar screen and are going to be more 
important than many of the issues we've talked abouthere for 
the farmers I represent.
    You remember that meeting we had in the Farm Bureau in Yolo 
County, Dan, last year. They were far more focused on some of 
the programs that you only deal with peripherally at the 
Department.
    Mr. Rominger. We are involved with EPA. I was involved in 
several of the meetings when they were developing how they were 
going to implement the Food Quality Protection Act. We do have 
an ongoing group as well, our Pesticide Group, under the 
leadership of Lon Hatamiya, Administrator of our Agricultural 
Marketing Service who meets regularly with EPA.
    We do share your concerns about the implementation of the 
Food Quality Protection Act because we've got a new set of 
things to work on now. We need to make sure that we have the 
resources to be able to work with EPA and the implementation 
there. So, having money for the Pesticide Data Program is a 
part of that as well.
    Mr. Fazio. Well, the people who seem to be the most upset 
about the loss of those funds were people who were engaged in 
the collection of that data to help agriculture make its case 
to the consumer.
    Mr. Rominger. Right.
    Mr. Fazio. As you point out, we can lose a lot of money; 
whether it be an apple scare, or whether it be a mad cow 
disease. We're all terribly vulnerable to this kind of market 
impact. It's a permanent loss of market share. I hope we can 
continue to support these programs even if they are 
inconvenient given the budget dilemmas we face.

                         NRCS FLOOD ASSISTANCE

    I just wanted to end by saying how much I appreciate the 
work of the NRCS with the flooding we've had out in California. 
You've had some very stellar performers among your people on 
the ground out there. We really benefitted from some of the 
work that they did on an emergency basis; working particularly 
on levies that are not core project levies that are important 
to agriculture and to rural communities.
    Do you happen to know, by the way, whether there is any 
possibility that the NRCS is going to have any funding in the 
supplemental that I know is working its way through because of 
flood-related activity?
    Secretary Glickman. Steve.
    Mr. Dewhurst. I think so. I suspect there will be some. 
We've submitted estimates to the Office of Management and 
Budget, but I don't know at this point what the decisions will 
be.
    Mr. Fazio. But we will certainly weigh in to see if we can 
help you in that regard. The point I would want to reiterate is 
that you've got some really good people who deserve to be 
recognized for the service they've rendered the department and 
the people you serve out there.

                         FUND FOR RURAL AMERICA

    Lastly, the Fund for Rural America has sort of become the 
place everybody is told to go for money. How do you fend all 
that off, Danny? How are you going to allocate your 100x3?
    Secretary Glickman. We've actually done our allocation.
    Mr. Fazio. What's your rationale?
    Secretary Glickman. We did a third designated for research; 
a third designated for rural development, by law; and then a 
third was basically my discretionary funds. And I divided that 
into research and rural development.
    Mr. Fazio. Based on George's recognition of your three 
earlier priorities, how about some export promotion in there.
    Secretary Glickman. We have some research on 
competitiveness, and telecommunications infrastructure research 
in rural areas. A lot of the work went into areas that we've 
had problems generally in terms of the budget process like 
Section 502 housing loans; that kind of thing.
    For example, distance learning and medical link grants. We 
had more applications than you could even dream of from around 
the country. So, in the normal process we could only take a 
few. We just started going down the list. We took more of those 
because there were a lot of rural communities that wanted to 
get into hooking up medical links to large medical centers; 
that kind of thing. But it's $100 million. It's not a lot you 
can fund out of there.
    Mr. Fazio. Yes. I understand the backlog and demand for 
some of these rural development projects, for example, water 
systems.
    Secretary Glickman. Water and waste disposal.
    Mr. Fazio. Incredible.
    Secretary Glickman. The backlog is large.
    Mr. Fazio. Do you know what it would be?
    Secretary Glickman. The backlog is what, Steve?
    Mr. Dewhurst. I understand it is, at least, twice what we 
have on an annual basis.
    Secretary Glickman. Several billion dollars.
    Mr. Fazio. I've heard several billion, yes. So, the bank is 
closed. Is that what you're telling us.
    Secretary Glickman. The bank is closed this year although 
the application process is open for--some of these projects are 
going to be dealt with on a competitive grant basis.
    Mr. Fazio. I thank you, Mr. Chairman. I appreciate your 
testimony.
    Mr. Skeen. I thank you. You can always try the credit card 
route. Mr. Nethercutt, we will let you go now and then wind up.
    Mr. Nethercutt. Thank you, Mr. Chairman. Very quickly; I 
don't mean to hold you up.
    Mr. Skeen. We've belabored the Secretary I think quite a 
bit this afternoon.

                                EEP/MAP

    Mr. Nethercutt. As a follow-up to our discussion about 
export enhancement and market promotion, I agree with your 
comments. I think it's very important.
    I notice that there was a reduction in funding for the 
Foreign Market Cooperator Program, which really is a program 
that individual producers participate in growing markets for 
U.S. agriculture, commodities, wheat, corn, peas, lentils, 
forest products, and other things.
    I don't know if there is an explanation for that relative 
to your----
    Secretary Glickman. I'm sure this is related to the tight 
discretionary budgeting. But I'd ask Mr. Dewhurst to give you a 
specific answer.
    Mr. Dewhurst. Yes. That's what it is. We just ran out of 
money. The budget for the FAS is set for them to absorb some 
costs that had previously been paid by the Commodity Credit 
Corporation because those costs used to be on the mandatory 
side of the budget. Now, they're considered to be on the 
discretionary side of the budget.
    FAS ends up with a very restricted discretionarybudget 
including some additional costs they have to absorb within the total. 
The net result is a reduction in the Cooperator Program. There just 
wasn't anything we could do to avoid that, given the numbers that we 
were working with.
    Mr. Nethercutt. Well, maybe we can massage it here. It is a 
good program. It's a contributing program by producers which is 
a cost-sharing concept. It's not a bad one. It's a private-
public partnership arrangement.
    Final question, can you for the record advise what the 
status of the U.S. talks with China are relative to TCK. And 
maybe that's out of your jurisdiction. What can you tell us?
    Secretary Glickman. Well, the USTR Ambassador Barshefsky 
and I continue to raise this subject. I can't give you any 
absolute date for resolution now. I will do that. I will tell 
you that I went with the President to Manilla at the APEC 
Conference. We sat there with President Jon Jemin around this 
little room.
    The first subject that was brought up was Tilletia 
Controversa Kuhn--TCK. And we talked to the Chinese about it. 
And as the President was leaving, I said, as he was talking 
through an interpreter, we've got to work through this TCK 
problem. This is a serious problem.
    He was smiling and he stopped. And he understood what I 
said. And he said, well, maybe we need to grind the wheat 
differently. At least that's what I thought he said. You know, 
I'm not sure. But he heard enough TCK to know this is a real 
problem for us.
    When I was in China, we continued to raise the issue. It 
is, again, I'm not sure, if it is a failure of communication in 
terms of a technical view of the world as much as it's a trade 
issue. But it has been like pulling teeth to get it resolved. I 
will have to tell you that. I'll try to get you a more recent 
report on it. But it is raised all of the time with the 
Chinese.
    [The information follows:]

                             China and TCK

    U.S. and Chinese authorities continue to work on this important 
issue at both a policy and technical level. Deputy Under Secretary 
James Schroeder accompanied a team from the U.S. Trade Representative's 
Office to China last fall to make clear that resolution of this long-
standing problem is a priority for us in China's accession to the World 
Trade Organization. USDA and USTR officials continue to raise the issue 
with the Chinese at every appropriate juncture.
    A high-level technical team from China, composed of a number of 
representatives from different Chinese state entities, came to the 
United States in November 1996 to meet with industry and USDA 
representatives to understand the U.S. grain system better and to 
discuss the basis for recent problems. As a result, the Chinese now 
have a much clearer understanding of the fact that there is no way the 
United States can guarantee the absence of TCK in future shipments and, 
therefore, China's stance of zero tolerance is unworkable. We believe 
this clarification will form the technical foundation for a resolution 
of this issue.

    Secretary Glickman. In fact, when we talk about WTO 
exclusion, this subject is always talked about; TCK with it.
    Mr. Nethercutt. Good. Well, thank you for your work and for 
your time today, all of you Gentlemen. We're very grateful. 
Thank you.

                            TRADE SITUATION

    Mr. Skeen. Thank you. I want to wind this up, Dan, by 
telling you a little story about this trade situation which is 
very bothersome. I know it is a very important aspect and a 
very important program.
    I had the opportunity to do a little visiting in Australia 
and New Zealand. They consider us a threat. All you could hear 
was the euphonious names of EEP and DEIP; Export Enhancement 
Program and Dairy Export Incentive Program. Of course, they 
have a lock on Southeast Asia in most agriculture categories.
    I told them that's not the problem. You folks won't buy our 
chickens or many of our ag products. They said, well, they're 
not sanitary. And I said that's baloney. We've got better 
standards than you folks have ever experienced in your entire 
history. We can ship you the chickens, but you're afraid we're 
going to get in your wheat market with EEP funds.
    But the thing that's really the problem for both the 
Australians and the New Zealand folks and to us in the United 
States is the European Economic Community. It has been 
abstinent and has barred the importation of American beef, even 
in the face that they've got the mad cow disease running 
rampant all over the place, but they still don't want American 
beef which is probably the most wholesome product we ship out 
of this country. It's well-inspected.

                         ANIMAL GROWTH HORMONES

    Now, they're--the EU--complaining about the beef hormones. 
We're saying, all we want to know is what can USDA do, what can 
we do to help you overcome this situation with the Europeans, 
particularly the French? And we don't want to get into the 
diplomacy part of it or mess up somebody else.
    But we want to enhance our exports because it's vital to us 
and our economy. We need those dollars. We need that income.
    Secretary Glickman. We have filed a case that should be 
heard sometime this spring. We hope they will render a decision 
that goes our way.
    Mr. Skeen. Well, just on the hormone situation. There is no 
test for that kind of hormone anywhere in the world and they 
keep using this as a barrier. Any way to overcome that?
    Secretary Glickman. One is if we got a WTO decision which 
indicates that it's safe and good science prevails, that will 
probably be the most helpful thing to us. You may not be aware 
of this, but I was in Rome for the World Food Summit.
    And I had an interesting thing happen to me. We had a news 
conference, and I was there with our former colleague Tim Worth 
and others who are now at the State Department. We were up 
there having this news conference talking about world food and 
some protesters from the European Community took off all their 
clothes, stood up on a table, and had an alternative news 
conference.
    Mr. Skeen. That was public revelation; wasn't it?
    Secretary Glickman. Well, let me put it to you like this. 
They lost interest in me.
    Mr. Skeen. You didn't try to compete?
    Secretary Glickman. No. Then they threw seeds at us. It 
could have been kind of rough. The seeds were nongenetically 
modified barley, I think, which were natural. I got more 
attention doing that than frankly anything else I've gotten in 
this job.
    What struck me about this is that we have a growing problem 
with a lot of these issues, especially with what new technology 
is doing. How we deal with consumers in certain parts of the 
world who have a cultural reluctance to deal with things that 
they don't think are natural.
    That is coupled with the fact that some of these 
governments use this as a trade restriction as well. The 
Europeans do not have the confidence that their institutions 
work like ours. For example, if our FDA, our USDA, or our CDC 
says something is safe, by and large the Americans think 
they're safe.
    Not true over there. And the hormone issue kind of feeds 
into that. The fact is, it's safe. Virtually, everybody else in 
the world will buy our beef. Virtually, everybody else in the 
world raises their beef like we do. They also eat a lot of 
beef. There is a lot of meat that comes in that is, in fact the 
same as ours as well.
    They don't like to publicly admit it. But it in fact 
happens. It is a tough nut to crack because both culture as 
well as trade protectionism. All we can do is just keep 
pouncing on it all the time. I'm worried about the beef forum. 
I'm also worried about biotechnology corn, biotechnology soy 
beans.
    Mr. Skeen. Absolutely.
    Secretary Glickman. You know, all of this stuff that we're 
going to have as we come down the pike.
    Mr. Skeen. Well, it's the same genre. They'll use any 
excuse possible because, you know, for years we got out of the 
trade business. We were so happy feeding our population because 
we had a growing population. We had a great food source. Food 
is the cheapest item and most abundant item we have. The most 
successful agricultural program anywhere in the entire world, 
with low population and great agricultural production.
    That's why we don't have civil wars and all of that sort of 
thing that goes on in every other country. We're letting these 
folks beat us. We've decided to get back in the trade business. 
Quite frankly, they don't want us in there. Well, I think it's 
time that we asserted ourselves and said, let's cut out the 
baloney and let's start shipping beef.
    Secretary Glickman. Good. You might want to sell some 
bologna too.
    Mr. Skeen. I've seen some trying to come back into the U.S. 
and the USDA was picking it up. Folks were bringing it in, in 
their suitcases.
    Secretary Glickman. Yes. And our dogs, our beagles at the 
airport.
    Mr. Skeen. Your dogs and the new scanning devices over 
there honestly are really great. It beats the machinery. That's 
worthwhile. We were in Miami Airport over there and saw them; 
just one group of people coming off of several flights. There 
were three huge garbage containers with stuff they were 
bringing in just in suitcases; plants, sausage, and bologna.
    Dan, we want to thank you and the entire group over there. 
You always make a great presentation. We worked you long and 
hard. We could offer you a drink of water. We want to thank you 
very much.
    Secretary Glickman. Thank you, Mr. Chairman.
    Mr. Skeen. We appreciate the work that you're doing. We 
want to be helpful. We are adjourned.
    [Clerk's note.--The following questions were submitted to 
be answered for the record:]

                        Secretary of Agriculture

                             public affairs
    Mr. Skeen. Would you please update the table that appears on pages 
99, 100, and 101 of last year's hearing record, showing the number of 
professional and clerical staff from each agency assigned to public 
affairs activities and the cost by agency, to include the 1998 data.
    [The information follows:]

[Pages 76 - 78--The official Committee record contains additional material here.]


                         congressional liaison
    Mr. Skeen. Update the table that appears on pages 103 through 107 
of last year's hearing record showing a breakout of congressional 
relations activities to include fiscal year 1998.
    [The information follows:]

[Pages 80 - 84--The official Committee record contains additional material here.]


                       export enhancement program
    Mr. Skeen. Every year, you provide a table for the record that 
shows the total value of bonuses paid, by exporter, since the inception 
of the EEP. Would you please update this table for us again this year?
    [The information follows:]

[Pages 86 - 89--The official Committee record contains additional material here.]


                       st. petersburg model farm

    Mr. Skeen. A total of $2.4 million in CCC funds has been spent on a 
model farm outside of St. Petersburg, Russia. Is this farm still in 
operation? Is USDA currently involved in the farm? If so, how?
    Response. Yes, the farm is still in operation. Although USDA's 
Extension Service has oversight of the program and makes periodic 
assessment visits, the farm has been turned over to the Russians, and 
they are adapting to managing a demonstration/research farm. The farm 
will focus on further development of an Information and Consultative 
Service, which is analogous to our own Extension Service, at the oblast 
and rayon levels.
                      ccc export credit guarantees

    Mr. Skeen. For the record, provide a list of the countries that 
have been the major recipients of GSM-102 and GSM-103, the commodities 
that were sold to those countries, and the value of the commodities 
that were sold to those countries for fiscal years 1995 and 1996.
    [The information follows:]

[Pages 91 - 97--The official Committee record contains additional material here.]


                       loan resolution task force

    Mr. Skeen. Former Secretary Espy created a Loan Resolution Task 
Force whose purpose was to resolve delinquent loan accounts with an 
indebtedness of $1 million or more. What is the status of both the Task 
Force and the number of delinquent loans?
    Response. The Task Force was established in 1994 to resolve large-
size delinquent farm credit loans. Ultimately, its universe was 
narrowed to include only million dollar loans. In its first year the 
Task Force portfolio consisted of 907 delinquent accounts totaling 
$1.05 billion in principal. By the time the Task Force ended on 
September 30, 1996, 515 accounts had been resolved. The Federal 
Government recovered $131.3 million on the total outstanding principal 
of $566 million or about 23 cents for each dollar of principal 
outstanding. Early estimates indicated recovery would be about 10 cents 
on the dollar.
    All remaining 392 delinquent accounts were transferred to the Loan 
Servicing and Property Management Division of Farm Credit. At the State 
level, the State Executive Directors will be responsible for ensuring 
that resolution of delinquent accounts continues to be a high priority. 
At the end of fiscal year 1996, there were 480 delinquent million-
dollar accounts. This is comprised of the 392 accounts transferred from 
the Task Force and 88 accounts that were not included as they became 
delinquent after the Task Force was established. The status of the 480 
remaining delinquent million-dollar accounts follows:

[Page 99--The official Committee record contains additional material here.]


                       loan resolution task force

    Mr. Skeen. How many loans have been written off and how many have 
been restructured?
    Response. Since its inception on October 1, 1994, the Loan 
Resolution Task Force has resolved 515 delinquent accounts owing more 
than $1 million. A total of 391 accounts were resolved through 
writeoffs and a total of 62 accounts were resolved through a 
restructuring of the debt.
    Mr. Skeen. When the Task Force was originally established, there 
were about 7,000 cases. The Task Force is responsible for 834 cases. 
The remaining 6,166 cases were turned over to state and county offices 
for servicing. What is the status of these cases?
    Response. Since March 1995, the 6,166 cases have been returned to 
the respective Farm Service Agency county offices to be serviced by the 
Agriculture Credit Managers under the supervision and direction of the 
State Executive Directors. The remaining cases are now part of the 
total county office existing case loans and are managed with all the 
other problem accounts. They are not tracked separately at the State 
and national levels but are included in the total numbers serviced.
    Mr. Skeen. Please update the tables that appear on pages 86 and 87 
of last year's hearing record, showing the amount of direct farm loans, 
direct housing loans, and rural development insurance fund loans that 
have been written off the books since fiscal year 1985, to include 
fiscal year 1996.
    [The information follows:]

[Page 101--The official Committee record contains additional material here.]


    Mr. Skeen. What is the current error rate in processing loan 
servicing applications?
    Response. As we reported last year, our estimate of the error rate 
in processing loan servicing applications is based on Secretary Espy's 
suspension of foreclosures from March, 1993 to February, 1994 in order 
to allow for an extensive review to determine if the Agency was 
complying with its own due process procedures. It was determined that 
the Agency had a 35 percent error rate. An extensive review of this 
nature has not been conducted since that time due to costs and other 
factors. However, as a result of the review that was conducted, the 
Agency developed and distributed a checklist to its field offices to 
ensure that the most common loan servicing mistakes are avoided in the 
future. The Agency also provided training to its loan officers on the 
identified discrepancies. We are confident that the error rate in 
processing loan servicing applications today has significantly 
decreased.
                           tobacco activities

    Mr. Skeen. For the record, please provide a copy of the most recent 
updated tobacco table that shows the related administrative expenses 
for carrying out the tobacco program.
    [The information follows:]

[Pages 103 - 105--The official Committee record contains additional material here.]


                         options pilot program

    Mr. Skeen. The pilot options program was started as a way to see if 
commodity options might be used in place of, or in conjunction with the 
CCC price support programs. Give us an update on the program. Since the 
1996 Farm Bill did away with the price support programs, what impact 
has this had on the program?
    Response. The Options Pilot Program was implemented in 1993, 1994, 
and 1995. The program was not implemented in 1996, and we do not 
anticipate implementing the program in subsequent years. The goal of 
the program was to use the futures market system to provide farmers 
with protection equivalent to the deficiency payments and price support 
loans. For example, the Department would provide producers a subsidy 
sufficient to purchase put options with strike prices equal to the 
target price. Most producers would purchase and sell the subsidized 
option in the same day, in effect locking-in an amount equal to the 
anticipated deficiency payment. The utility of the program for this 
purpose has diminished with provisions of the 1996 Farm Bill which 
replace variable deficiency payments with fixed production flexibility 
contract payments. However, the use of the futures market as a risk 
management tool is becoming increasingly important. For example, we are 
proposing legislation which will allow us to accelerate the development 
and implementation of revenue insurance products which combine price 
protection, based on futures market transactions, and yield protection, 
based on traditional crop insurance models.

              empowerment zones and enterprise communities

    Mr. Skeen. You provided a list of empowerment zones and enterprise 
communities that had been selected, to date, for the record last year. 
Would please provide an updated list for this year's record.
    Response. Mr. Chairman, the list is unchanged from last year's.
    The three Empowerment Zones are:
    1. LKentucky Highlands--serving Clinton, Jackson and Wayne Counties 
in Kentucky.
    2. LMid-Delta--serving Bolivar, Sunflower, Leflore, Washington, 
Humphries, and Holmes Counties in Mississippi.
    3. LRio Grande Valley--serving Starr, Cameron, Hidalgo, and Willacy 
Counties in Texas.
    The Enterprise Communities are as follow:
    1. Chambers County, Alabama.
    2. Greene and Sumpter Counties, Alabama.
    3. Mississippi County, Arkansas.
    4. Imperial County, California.
    5. Jackson County, Florida.
    6. LMacon Ridge (Catahoula, Concordia, Franklin, Morehouse, and 
Tensas) Parishes in Louisiana.
    7. Lake County, Michigan.
    8. North Delta (Panola, Quitman, and Tallahatchie Counties), 
Mississippi.
    9. City of East Prairie and Mississippi County, Mississippi.
    10. Mora County, New Mexico.
    11. Halifax, Edgecombe, and Wilson Counties, North Carolina.
    12. Greater Portsmouth (Scioto County), Ohio.
    13. Lock Haven, Pennsylvania.
    14. Beadle and Spink Counties, South Dakota.
    15. Fayette and Haywood Counties, Tennessee.
    16. Accomack and North Hampton Counties, Virginia.
    17. LCentral Appalachia (Roane, Braxton, Clay, Nicholas, and 
Fayette Counties), West Virginia.
    18. McDowell County, West Virginia.
    19. Scott and McCreary Counties, Tennessee.
    20. Northeast Louisiana Delta (Madison Parish), Louisiana.
    21. Robeson County, North Carolina.
    22. Yakima County, Washington.
    23. Williamsburg and Florence Counties, South Carolina.
    24. Josephine County, Oregon.
    25. McCurtain and Choctaw Counties, Oklahoma.
    26. Crisp and Dooly Counties, Georgia.
    27. LCentral Savannah River (Burke, Hancock, Jefferson, McDuffie, 
Taliaferro, and Warren Counties, Georgia.
    28. Watsonville, California.
    29. Arizona Border Region (Cochise, Yuma, and Santa Cruz Counties), 
Arizona.
    30. Eastern Arkansas (Cross, Lee and St. Francis Counties), 
Arkansas.
    Mr. Skeen. Also for the record, please provide a list of all USDA 
accounts where funds are spent for these zones as well as how much has 
been spent.
    [The information follows:]

[Page 108--The official Committee record contains additional material here.]


                       usda americorps activities

    Mr. Skeen. Please update the table that appears on page 72 of lasts 
year's record on USDA Americorps activities.
    [The information follows:]

[Page 110--The official Committee record contains additional material here.]


              under secretary/assistant secretary offices

    Mr. Skeen. Provide tables similar to the ones provided on pages 66 
through 70 of last year's hearing record that lists current staff on 
board in each of the OSEC offices, the position title, the grade level, 
the pay costs associated with each position, the identify of the 
appointment, and how they are funded for fiscal years 1996 and 1997.
    Response. The following table lists current staff on board in each 
of the OSEC offices, the position title, the grade level, and the pay 
costs associated with each position. The table also identifies 
Presidential Appointments with Senate Confirmation-PAS, Schedule C, 
Non-career, Career positions, and how they are funded. Details are 
those positions which are not funded by OSEC, as shown in the table. 
The table reflects staff on board as of September 30, 1996, for fiscal 
year 1996 and as of February 26, 1997, for fiscal year 1997.

[Pages 112 - 117--The official Committee record contains additional material here.]


                                  ebt

    Mr. Skeen. What percentage of food stamp benefits are currently 
being delivered by EBT?
    Response. Currently about 16 percent of food stamp issuance is made 
through EBT. EBT is operational in eighteen States right now. By the 
end of fiscal year 1998 we anticipate that about 40 States, 
representing 55 percent of food stamp purchasing power will have EBT in 
operation.
                         wic eligibles estimate
    Mr. Skeen. Please submit a copy of the Department's most recent 
estimate of WIC eligibles for the record.
    [The information follows:]

[Pages 119 - 121--The official Committee record contains additional material here.]


                    wic month to month participation

    Mr. Skeen. Update the table that appears on page 52 of last year's 
hearing record showing the monthly participation levels of the WIC 
program to include fiscal year 1996, and to date in fiscal year 1997.
    [The information follows:]

[Page 123--The official Committee record contains additional material here.]


  statutory advisory committees, panels, task forces, commissions etc.

    Mr. Skeen. Provide a list of the statutory advisory committees, 
panels, task forces, commissions, etc. that were eliminated as well as 
the new ones that were established in the 1996 Farm Bill.
    Response. The 1996 Farm Bill did not eliminate any statutory 
advisory committees, panels, task forces, commissions, etc. Following 
is a list of the new ones established by the 1996 Farm Bill.
    Safe Meat and Poultry Inspection Panel.
    Edward R. Madigan United States Agricultural Export Excellence 
Award.
    Water Rights Task Force.
    Commission on 21st Century Production Agriculture.
    Natural Resources Conservation Foundation.
    Conservation of Private Grazing Land Advisory Committee.
    Task Force on Agricultural Air Quality.
    National Agricultural Research, Extension, Education, and Economics 
Advisory Board.
    Strategic Planning Task Force.

                          advisory committees

    Mr. Skeen. The fiscal year 1997 appropriations bill included 
language that not more than $1.0 million may be expended on advisory 
committees, panels, task forces, commissions, etc. For the record, 
please provide a list of all activities that were funded. Indicate 
those that are mandated by law and those that are discretionary as well 
as the funding level of each.
    Response. I will provide for the record a listing of those advisory 
committees, panels, commissions and task forces that are subject to the 
$1 million limitation.

[Pages 125 - 126--The official Committee record contains additional material here.]

                            private counsel

    Mr. Skeen. Were any outside private counsels hired by the 
Department in fiscal year 1996? Does the Department plan to hire any 
private outside counsels in fiscal year 1997? If so, please provide a 
brief description of the nature of the work that they are performing 
for the Department and the amount spent for this service.
    Response. The Rural Housing Service (RHS) annually contracts with 
private attorneys throughout the country for judicial foreclosures of 
RHS single family housing loans. In fiscal year 1997 RHS has continued 
to contract for judicial foreclosure services with private attorneys. 
Private attorneys are used to judicially foreclose in Florida, Hawaii, 
Idaho, Illinois, Louisiana, Maine, New Jersey, New Mexico, Ohio, 
Oklahoma, South Carolina, South Dakota, and Wisconsin.
    The Farm Service Agency (FSA) used private attorney to foreclose 
farm loan program loans in Louisiana in fiscal year 1996 and continues 
to use private attorneys for farm loan program farm foreclosures in 
Louisiana in fiscal year 1997. The total cost for fiscal year 1996 was 
$142,110, and the cost so far in fiscal year 1997 is $56,695.

                      conservation reserve program

    Mr. Skeen. Update the table that appears on page 63 of last year's 
hearing record showing the total cost of the CRP program since its 
inception to include fiscal year 1996 actuals and fiscal year 1997 
estimates.
    Response. A summary of costs, by fiscal year, since the inception 
of the program, including both cash outlays and the value of CCC 
commodity certificates issued for rental payments follows.

                                          CONSERVATION RESERVE PROGRAM                                          
                                             [Dollars in thousands]                                             
----------------------------------------------------------------------------------------------------------------
                                                                                   CCC commodity                
                           Fiscal year                             Cash outlays    certificates        Total    
----------------------------------------------------------------------------------------------------------------
1986............................................................          23,146  ..............          23,146
1987............................................................         267,024         409,969         676,993
1988............................................................         291,477         759,067       1,050,544
1989............................................................       1,372,205         -13,509       1,358,696
1990............................................................       1,513,092          -3,507       1,509,585
1991............................................................       1,630,977  ..............       1,630,977
1992............................................................       1,669,275            -178       1,669,097
1993............................................................       1,689,602            -251       1,689,351
1994............................................................       1,735,587            -268       1,735,319
1995............................................................       1,732,342            -237       1,732,105
1996 \1\........................................................       1,732,194             -50       1,732,144
                                                                 -----------------------------------------------
    Total.......................................................      13,656,921       1,151,036      14,802,708
----------------------------------------------------------------------------------------------------------------
\1\ Outlays in FY 1996 include funds from the appropriated account ($1.730 billion) and the CCC account ($1.946 
  million).                                                                                                     

                    p.l. 480 cargo preference costs

    Mr. Skeen. Your proposed program level for P.L. 480 is $990 
million. How much will be spent for cargo preference in fiscal year 
1998? How much are you spending this fiscal year?
    Response. USDA pays two-thirds of the ocean freight differential 
costs incurred in carrying out Titles I, II and III of P.L. 480. The 
Maritime Administration, Department of Transportation, is responsible 
for the remaining one-third of the ocean freight differential costs.
    For fiscal year 1998, USDA's cargo preference costs for P.L. 480 
are estimated at $31.0 million. For fiscal year 1997, the estimate is 
$33.9 million.
                              karnal bunt

    Mr. Skeen. What is the status of the Karnal Bunt issue today?
    Response. We are continuing to deal with the infestation in the 
Southwest and indications from the National Survey that Karnal bunt 
exists in the Southeast. With survey data, we can clearly demonstrate 
where the disease is and is not. Because of this, we have largely 
maintained market access for U.S. wheat from non-affected areas. To 
date, negotiations have been successful with several significant 
markets, including Germany and Italy. (Based on subsequent development, 
we have determined that Karnal Bunt is not located in the Southeast.)
    Mr. Skeen. How much has been spent to date on Karnal Bunt 
compensation?
    Response. Since March 1996 we have paid out $13 million in 
compensation.
    Mr. Skeen. What are your projections for the future?
    Response. The budget includes an increase of $4.5 million for 
increased pest detection activities by APHIS. These funds will enable 
them to follow-up the program operations in areas regulated for Karnal 
bunt and to conduct the National Survey.

                         fund for rural america

    Mr. Skeen. Please provide a table showing the levels of funding, 
both program level and budget authority, for the Fund for Rural America 
along with the levels of funding for those activities provided for in 
the FY 97 and requested FY 98 budget.
    Response. The information for fiscal year 1997 follows. We have 
made no decisions on how to use the Fund for fiscal year 1998.

[Page 129--The official Committee record contains additional material here.]


                  rural community advancement program

    Mr. Skeen. The Rural Community Advancement Program (RCAP) may 
provide approximately $57 million in grants to states, territories and 
federally recognized Indian tribes. The Inspector General has informed 
the Committee that several state Attorneys General have refused to 
allow their state institutions to cooperate with him in investigations 
of possible waste, fraud and abuse in the state mediation program. Can 
you give us your full assurance that any entity receiving money under 
the RCAP will cooperate fully with the Inspector General, the GAO, and 
the Committee on Appropriations in auditing the use of this money?
    Response. I cannot give you my full assurance that others would 
cooperate with us in investigations. But, I can give my full assurance 
that unless those terms were agreed to by the State, in a grant 
agreement, that the State will not be a participant in the RCAP 
program.
                             fsis user fees

    Mr. Skeen. Did you consult with industry and consumer groups before 
developing the plan for user fees in the FSIS budget?
    Response. No, we did not consult with industry and consumer groups 
before developing the plan for user fees in the FSIS budget. However, 
we plan to meet with them in the near future to discuss issues 
pertaining to the collection of such fees.
    Mr. Skeen. Implementation of the FSIS user fees requested by the 
Administration will require authorization. What is the Administration's 
plan for securing that authorization and what will be your role in the 
plan?
    Response. The Administration will be submitting a legislative 
proposal for consideration by Congress in the near future. We are 
planning on briefing appropriate congressional committees on 
alternative fee structures, the impact of fees on consumers and 
producers, and a regulatory strategy to ensure assessment of fees by 
October 1, 1998.
                           codex alimentarius

    Mr. Skeen. What is the total Department budget for activities of 
the Codex Alimentarius?
    Response. For 1996, USDA agencies spent approximately $377,000 on 
Codex Alimentarius activities. Of this amount FSIS spent $246,000 for 
three staff years, operating expenses, and equipment to accomplish 
activities as the coordinator of Codex functions in USDA. FSIS and FAS 
contributed $53,000 for meetings, in addition to the $25,000 
contributed by FDA for these meetings. Travel to Codex meetings for all 
USDA agencies accounts for $65,000. An additional $13,000 is used to 
train U.S. delegates in CODEX administrative procedures. For 1998, the 
budget includes an increase of $100,000 within FSIS for additional 
staffing, work associated with an increased number of meetings, and 
improved coordination on food safety and science issues.

                         campaign contributions

    Mr. Skeen. According to the Center for Responsive Politics, of 50 
law firms, corporations, organizations and other groups, USDA employees 
contributed the third largest amount to President Clinton's reelection 
campaign from January 1995 to mid-1996. What precautions does the 
Department take to make sure that these contributions are collected in 
compliance with applicable campaign finance and federal employment 
statutes?
    Response. The Department has no statistics on the level or amounts 
of political campaign contributions made by USDA employees in support 
of candidates for elective office at the National, State, or local 
levels. Whilesome limitations remain on the political activities in 
which Federal employees may engage under the recent revisions to the 
Hatch Act, Federal employees have always been permitted under the law 
to make campaign contributions in support of candidates for elective 
office. The Department plays no role in encouraging or discouraging 
such contributions by its employees. The Department does, however, 
actively educate its employees, by means of briefings and periodic 
written reminders, of the limitations placed on Federal employees under 
the law. For example, while employees may generally engage in partisan 
political activities, and may make contributions in support of 
political candidates, they may not do so while on official duty, or 
while in Federal buildings or on government premises, or in any manner 
in which they are identified as Federal employees while engaged in such 
activities.
                    food assistance for north korea

    Mr. Skeen. Please describe the food aid program that the 
Administration is proposing for North Korea, including dollar amounts, 
specific tonnages, and the schedule of delivery.
    Response. In response to a World Food Program appeal for 100,000 
metric tons of food assistance for North Korea, the United States 
Government recently decided to provide about 27,000 metric tons of U.S. 
corn-soy blend, corn, and rice at a cost of $10 million. This 
assistance will be provided under P.L. 480 Title II through the World 
Food Program as emergency food aid for children under age five and 
flood victims; it is expected to arrive in North Korea during the 
second half of May.
    Mr. Skeen. What assurances do we have that this food aid will go to 
those who deserve it and not to the North Korean military?
    Response. The World Food Program will monitor distribution to 
ensure that the aid reaches those in need. The World Food Program, 
which has an office in North Korea, has demonstrated its ability to 
monitor the distribution of food aid in the country. The monitoring 
procedures for this assistance will be essentially the same as for our 
contribution in June of last year.

                     service centers for home loans

    Mr. Skeen. In inaugurating the service center for home loans in St. 
Louis, you have said that the new center will save the taxpayer more 
than $250 million in the first five years and $100 million per year 
thereafter. That would mean a savings of $50 million in FY `98. Your 
budget justification shows a savings of $15.5 million for 
administration of loan and grant programs because of the new center. 
Where are the other $34.5 million in savings? From which accounts will 
additional $200 million in savings come in the next four fiscal years?
    Response. We have estimated that DLOS will save taxpayers more than 
$250 million from FY 1997 to 2001, and $100 million per year 
thereafter. However, the $250 million in savings is not evenly 
distributed over the five years. The estimated savings from the DLOS 
service center are greater in the later years because many of the costs 
associated with the conversion of the portfolio are incurred up front, 
and then the savings build in the later years. The $15.5 million 
savings from FY 1998 is consistent with our original estimate of $250 
million in savings overall. Our analysis assumes that about two-thirds 
of the savings from implementing DLOS are mandatory savings from 
earnings on escrow payments, fees, and reduced default and foreclosure 
costs. These savings will occur in the Rural Housing Insurance Fund 
liquidating and financing accounts for existing loans. The other third 
of the estimated savings would be discretionary savings from a number 
of sources, reflecting the operating efficiencies from the DLOS system. 
These savings would occur in the salaries and expense account for the 
Rural Housing Service.

                 limiting response to natural disasters

    Mr. Skeen. Your testimony says a balanced budget amendment could 
limit the Department's ability to respond to natural disasters. Could 
you describe the specific language in the balanced budget amendment 
which would cause this problem and give some examples?
    Response. The balanced budget amendment would impose both 
procedural barriers and budgetary pressures that would constrain the 
Government's ability to provide timely disaster aid. Section 1 of the 
amendment would require a ``supermajority'' approval of both the House 
and Senate to appropriate supplemental disaster assistance, if the 
budget is otherwise in balance, and could prevent us from dealing 
expeditiously with natural disasters. For example, when Hurricane Hugo 
caused billions of dollars in damage in 1992, Congress was able to 
respond effectively by appropriating $2.7 billion in emergency 
supplemental assistance. Further, we believe that reductions in 
spending driven by the amendment could threaten the viability of the 
crop insurance program and other on-going disaster assistance programs. 
In an overwhelmingly urban America, crop insurance, market transition 
payments, conservation reserve program payments and other farm programs 
are vulnerable. As I have indicated before, when political push comes 
to financial shove, under a balanced budget amendment, critical farm 
programs are sitting ducks.

                          proposed legislation

    Mr. Skeen. Your testimony describes a wide range of proposed 
legislation for various USDA programs including the safety net for 
farmers, user fees and rural development programs. Can you provide us 
with a timetable as to when all of this legislation will be presented 
to Congress?
    [The information follows:]

                                                                        
------------------------------------------------------------------------
                                               Approximate date to the  
                   Title                              Congress          
------------------------------------------------------------------------
Amendments to secure the farm bill safety   Late April.                 
 net.                                                                   
USDA omnibus bill.........................  To be determined.           
Fund for rural America--technical           Late April.                 
 correction.                                                            
User fees for marketing agreements and      Late April.                 
 orders.                                                                
APHIS omnibus user fees...................  Late April.                 
User fees for standardization activities..  Late April.                 
License fees..............................  Late April.                 
User fees for meat, poultry and egg         Late April.                 
 products inspection services.                                          
Salvage timber sales......................  Late April.                 
Food Stamp Amendments Act.................  Early April.                
Aquaculture under NAP.....................  To be determined.           
Issuing payments expeditiously............  Early May.                  
Dairy indemnity program payments..........  To be determined.           
Census of agriculture.....................  Early May.                  
Extend cooperative services to              To be determined.           
 nonagricultural cooperatives.                                          
Facilitiate privatization of the rural      Late May.                   
 telephone bank.                                                        
------------------------------------------------------------------------

                       export enhancement program

    Mr. Skeen. You are proposing a $400 million increase in the Export 
Enhancement Program. As your testimony indicates, U.S. agricultural 
exports set another record last year with very little use of the EEP. 
Why do you expect to use EEP so heavily next year? Please identify the 
countries where EEP will be used and what commodity exports the program 
will support.
    Response. The goal of inducing competitors to negotiate an end to 
unfair trading practices has been strongly advanced, but not entirely 
resolved by the Uruguay Round Agreement. Limits on direct export 
subsidies are a major accomplishment, but the fact remains that the 
Agreement allows those limited export subsidies to continue and, 
furthermore, does not address the differential pricing practices of 
monopoly export organizations like the Canadian and Australian wheat 
boards.
    EEP allows us to compete with these monopolies and the export 
subsidies that the European Union will continue to grant. Allocations 
for July 1996-June 1997 EEP programming were announced last summer at 
the maximum allowable levels under the Uruguay Round Agreement, and 
made wheat, wheat flour, barley, barley malt, rice, vegetable oil, 
eggs, and frozen poultry eligible for programming during this period. 
However, prevailing market conditions have not warranted the use of the 
program during the past year. Unfortunately, the responsible restraint 
by the United States has been tested by renewed subsidization by the 
European Union, which began in September 1996. We believe it is 
extremely important that we maintain a strong position in order to 
protect our agricultural trade interests. Resumption of EEP is an 
option we may need to consider and we have, therefore, provided for EEP 
at the maximum level permitted by the 1996 Farm Bill. The commodities 
which could be made eligible for programming are the same as those 
which are eligible for the 1996-1997 period. Countries which would be 
targeted for EEP programming during fiscal year 1998 will not be 
identified until the 1997-1998 allocations are announced.

                           p.l. 480 tonnages

    Mr. Skeen. Please provide a breakdown by titles of the 3.2 million 
metric tons of commodity assistance proposed for P.L. 480 activities 
for fiscal year 1998.
    Response. Based on current price projections, the budget request 
will support programming of 634,000 metric tons of commodities through 
Title I, 2,423,000 metric tons through Title II, and 155,000 metric 
tons through Title III. These tonnages are on a grain equivalent basis.
    Mr. Skeen. You estimate 3.2 million metric tons for fiscal year 
1997 also. Does this level include the proposed rescission of $50 
million from Title I?
    Response. The estimate of 3.2 million metric tons for 1997 does 
include the effect of the proposed rescission for the Title I program. 
The rescission is estimated to lower Title I commodity shipments by 
about 200,000 metric tons.
                              market news

    Mr. Skeen. Your budget for the Agricultural Marketing Service 
proposes increases for expanding foreign market news reporting. Isn't 
this a responsibility of the Foreign Agricultural Service?
    Response. International market news reports of the type generated 
by the Agricultural Marketing Service (AMS) are not the responsibility 
of the Foreign Agricultural Service (FAS). FAS commodity-related 
reports are typically focused on historical and projected production 
outlook, including acres planted, animal numbers, etc., as well as 
status and changes in agricultural policies and trade leads. AMS 
international market news reports provide time-sensitive daily, bi-
weekly, or weekly wholesale price information. On a very limited basis, 
for example, we have already begun reporting prices for selected fruits 
and vegetables at key wholesale markets in Mexico on a twice-weekly 
basis. Similarly, we are reporting wholesale prices for U.S. and 
Australian beef, along with domestic beef, in Japan. These limited data 
are being well received by U.S. industry. We have found substantial 
interest among AMS market news users for expanded international market 
coverage through our customer survey efforts.
    Mr. Skeen. You are proposing a separate budget of $4,828,000 for 
the Chief Information Officer including a transfer of $4,498,000 from 
Departmental Administration. The table accompanying the request does 
not show an increase in staff for FY '98. Why is the additional money 
necessary?
    Response. The additional funding of $330,000 is needed to partially 
fund anticipated pay increases and fund a small immediate staff for the 
Chief Information Officer to enhance the leadership and coordination 
capabilities of the office. It is my understanding that the staffing 
increase was reflected in FY 1997 and funded within available resources 
at the expense of other IRM activities including some of the new 
requirements of the Clinger-Cohen Act.

                     status of amta implementation

    Mr. Skeen. Title I of the 1996 Farm Bill, the Agricultural Market 
Transition Act (AMTA), authorizes the Secretary of Agricultural to 
enter into Production Flexibility Contracts with eligible landowners. 
In exchange for annual contract payments totaling at least $5.8 billion 
in 1998, producers agree in the contracts to comply with Highly 
Erodible Land and wetland provisions of the Food Security Act. Please 
review for the Committee the status of AMTA implementation?
    Response. Final regulations for the AMTA program were published in 
July of 1996. Singup opened May 20, 1996, and closed July 12, 1996. 
Advance payments on 1996 crop contracts were made beginning 30 days 
after signup. Final payments on the 1996 crop were made by September 
30, 1996. A total of 1.7 million farms and 207 million acres were 
enrolled in the program in 1996. Given the fact that the farm bill 
wasn't enacted until April of 1996, the successful implementation of 
such a massive program in such a short time represented a tremendous 
effort on the part of FSA and other staff of the Department. Work has 
continued this year as advance payments on the 1997 crop were made at 
the option of the producer on either December 15, 1996, or January 15, 
1997. About 800,000 contracts have been modified for the 1997 crop. 
Payments of about $5.2 billion have been made on the 1996 crop, and 
about $3.3 billion in advance payments have been made on the 1997 crop.
    Mr. Skeen. What is the magnitude of the AMTA workload for the Farm 
Service Agency and the Natural Resources Conservation Service?
    Response. The planting flexibility provisions and multi-year 
contract provisions of the new farm bill are expected to substantially 
reduce workload requirements at the field office level. An analysis by 
the General Accounting Office (GAO) of commodity program provisions 
similar to those enacted in the 1996 Farm Bill concluded that the 
changes could reduce FSA workload in 1998 by up to 13 percent from 1995 
levels. Most of the reduction would be at the county office level. 
Excluding conservation and credit activities, tobacco program 
activities, referenda, and a share of related administrative functions 
for these activities, AMTA workload for FSA non-federal county staff in 
1998 would total about 7,130 staff years. Based on an earlier analysis 
of conservation technical assistance, compliance workload in NRCS 
county offices directly associated with AMTA enrollment would total 
roughly 1,500 staff years.
                         staff year reductions

    Mr. Skeen. The department has reduced the number of staff years by 
more than 16,000 since fiscal year 1993. Provide a table for the record 
that shows by fiscal year and agency, the staff year reductions that 
have occurred.
    [The information follows:]

[Page 134--The official Committee record contains additional material here.]


                    production flexibility contracts

    Mr. Skeen. On page three of your statement, you state that nearly 
99 percent of eligible producers entered into production flexibility 
contracts. How does this compare with the percentage of producers that 
participated in the price support programs?
    Response. In 1996, a total of 210 million acres were eligible for 
production flexibility contracts, of which 207 million acres were 
enrolled (99 percent). In 1995, a total of 210 million acres were 
eligible for the support program, of which 166 million acres were 
enrolled (79 percent). In terms of the number of farms, in 1996 1.9 
million farms were eligible for production flexibility contracts, of 
which 1.7 million were enrolled (88 percent). In 1995, a total of 1.9 
million farms were eligible for support payments, of which 0.9 million 
farms were enrolled (47 percent).
    Mr. Skeen. I continually hear that because of the changes in the 
1996 Farm Bill the Administration is concerned about the adequacy of 
the safety net for producers. The changes in the Farm Bill are what 
producers wanted and lobbied for. They wanted the shift from price 
support programs to a production flexibility contract so they could 
make planting decisions based on global market demand. Where does the 
concern about an adequate safety net originate?
    Response. The Farm Bill substituted fixed payments for payments 
that varied with market prices so that when prices were high payments 
were low and when prices were low payments were high. The Farm Bill 
also reduced the role of Government in managing supply in order to 
maintain fair and stable prices. It's now the case that when farm 
prices fall there will be less the Government can do to either 
stabilize prices or to compensate for lower prices with higher 
payments. But the commodity programs are only a small part of the 
changes in farming that change the risks farmers face. Farming risk is 
changing through the process of industrialization of agriculture and 
reorganization, concentration, and globalization of markets. Changes in 
technology, environmental and health concerns, and rapid spread of 
pests and disease are other essential factors to consider. Producers 
are responding and contributing to these changes by finding new ways of 
doing business, using new technologies and practices, and making new 
financial and other commitments. Government has a role in helping 
farmers understand and deal with these changes, and we give a high 
priority to enacting legislation that will improve crop insurance, 
commodity lending programs, and other risk management programs.
    Mr. Skeen. Would you please submit a detailed description of why 
the 1998 budget projects CCC outlays for commodity price and income 
support programs will increase from about $5.0 billion in 1997 to $6.2 
billion in 1998.
    Response. Outlays for program crops (feed grains, wheat, cotton and 
rice) increase by $0.3 billion between 1997 and 1998, from $5.6 billion 
to $5.9 billion. Outlays for nonprogram crops (soybeans, tobacco, 
dairy, peanuts and other commodities) increase by $0.9 billion over the 
period, from $0.6 billion to $0.3 billion.
    Program crop outlays increase because producers refunded $1.1 
billion for prior year deficiency payments in 1997, while no refunds 
will be received in 1998. Outlays for production flexibility contracts 
decrease as payments, adjusted for prior crop year payments, fall from 
$6.3 billion in 1997 to $5.7 billion in 1998. The net effect is an 
increase of about $0.5 billion in direct payments for program crops in 
1998. Other changes in outlays for program crops in 1998 included a 
reduction of about $0.4 billion in marketing loan outlays and an 
increase of about $0.2 billion in outlays for cotton marketing 
certificates and other expenditures.
    Nonprogram crop outlays increase largely because outlays for the 
tobacco program increase from net receipts of $0.7 billion in 1997 to 
net outlays of $0.1 billion in 1998, reflecting low placements and high 
repayments in 1997and the reverse in 1998.
  direct farm loans/beginning and socially disadvantaged farmers and 
     
                           ranchers

    Mr. Skeen. What is the level of direct farm credit loans that are 
targeted to beginning and socially disadvantaged farmers and ranchers?
    Response. Direct operating loans for beginning farmers are targeted 
at 25 percent for years 1996-1998, 30 percent in year 1999, and 35 
percent in years 2000-2002. These funds are targeted until September 1 
of each year. After that, the targeting is removed and any remaining 
funds may be used for any applicant that qualifies for this program. 
For direct farm ownership loans, all years are targeted to beginning 
farmers at 70 percent, of which 60 percent is set aside for down 
payment loans until April 1. Beginning farmer funds are targeted until 
September 1. After that, the targeting is removed and any remaining 
funds may be used for any applicant that qualifies for this program. 
Guaranteed operating loans are targeted at 40 percent, for all years, 
until April 1. In all years, the guaranteed farm ownership is targeted 
at 25 percent until April 1.
    On August 1, guaranteed operating unsubsidized funds must be moved 
to fund direct farm ownership beginning farmer down payment loans. On 
September 1, guaranteed operating-unsubsidized funds must be moved to 
fund direct farm ownership beginning farmer loans. Once these transfers 
of funds have been accomplished and allotted to States, any funds not 
used by the end of the fiscal year must be returned to Treasury and 
cannot be transferred to any other State or loan program.
     
                 crp competitive bid process

    Mr. Skeen. The budget request assumes a competitive bid process 
will be used to enroll nearly 19 million acres of new and expiring 
acres into the Conservation Reserve Program. How much of the 19 million 
acres will be new acres and how much will be reenrollments of expiring 
acres?
    Response. We cannot determine this until we evaluate all CRP offer 
data. Each offer will be evaluated based on the environmental benefits 
index. Only the highest ranked offers will be enrolled into CRP. We 
cannot speculate on what the breakout on new versus reenrollment acres 
will be. Based on the offers received and reported through the second 
week of signup, 23% of the offered acreage is acreage not currently 
enrolled in the CRP.
     
                   crp rental payment rates

    Mr. Skeen. You anticipate CRP rental payments to increase to $2.2 
billion in 1998. Why is this the case when new contracts will be based 
on lower prevailing rental rates?
    Response. We are not sure where the $2.2 billion for rental 
payments originated. Outlays in fiscal year 1998 do not include rental 
payments on new acres enrolled in the signup occurring March 3 through 
28, 1997, and therefore do not reflect the new market-based rate 
system. The total estimate for outlays in fiscal year 1998 is $1.951 
billion which includes rental payments of $1.668 billion, cover costs 
of $246 million, and technical assistance of $38.3 million which 
includes $23.5 million funded by appropriated funds. Per-acre rental 
payments may not necessarily decrease in the future because (1) land 
values are higher now than they were 10 years ago when much of the 
current CRP lands were enrolled and (2) maximum acceptable rental rates 
on individual tracts of land offered for enrollment could be higher or 
lower than maximum rates used during earlier signups.
     
                        emergency fund

    Mr. Skeen. The President's budget proposes the establishment of a 
new $5.8 billion contingent reserve for emergency funding requirements 
resulting from various disaster assistance needs. USDA has two programs 
that would be eligible to receive emergency funding from this reserve 
account, the Emergency Conservation Program and the Watershed and Flood 
Prevention Operations Program. How much of the $5.8 billion do you 
anticipate would be used for these programs?
    Response. The proposed contingent reserve for emergency disaster 
relief funding could be used for certain designated disaster relief 
activities including the flood prevention and emergency conservation 
program activities of the Department referred to in your question. The 
$5.8 billion proposed in the fund is based on historical average 
spending for the programs it is to support. But, the 10 year average 
expense for the two programs you mentioned is $26.4 million per year 
for the emergency conservation program activities and $61.7 million per 
year for the emergency watershed program activities. So that may be a 
rough guide to the average amount we might expect to use for them over 
a period of years.
     
               crop insurance delivery expenses

    Mr. Skeen. Submit for the record a copy of the analysis conducted 
by the Office of Risk Management and the GAO in support of the 
legislative proposal to reduce the reimbursement rate for delivery 
expenses of the crop insurance program.
    Response. The GAO Report regarding the legislative proposal to 
reduce the reimbursement rate for delivery expenses is currently in 
draft status and subject to change. GAO advised RMA that the report 
could not be released at this time. We would be pleased to provide you 
with a copy once the report has been released by GAO.
    Mr. Skeen. Describe in further detail the proposal to make a 
portion of the overall reimbursement rate discretionary.
    Response. Let me begin by saying that we tried to be fair to the 
agents and to avoid having to tell the insurance companies how much 
they would be allowed to pay their agents. As you know, sales 
commissions have been paid out of the FCIC Fund, which is a mandatory 
spending account, although still subject to appropriation. However, 
current law requires that they be treated as discretionary spending 
beginning in 1998. This adds a fairly large amount of money, $203 
million, to the discretionary account. We would have to negotiate with 
the companies on how that money would be allocated.
    Our proposal recognizes that the delivery expenses, in total, not 
just sales commissions, may have been too high. Consequently, we are 
proposing that the statutory ceiling on delivery expenses be reduced 
from 28% to 24.5% of the premium on multi-peril coverage, which applies 
to production risks. For revenue insurance, which has a higher premium, 
because it applies to price as well as production risks, the rate will 
be somewhat less, but the amount will be at least as much as the amount 
paid on multi-peril coverage. We estimate that delivery expenses under 
our proposal would be $417 million, compared to $460 million under 
current law, which is a savings of $43 million, net of about $10 
million in additional cost for an increase in business.
    We wanted to take these savings on the discretionary side of the 
budget in order to reduce the burden of the shift to discretionary 
spending that is required by current law. The 10.5 percentage point 
limitation we are proposing represents about 43% of the 24.5 percentage 
point rate. It would result in $150 million of the $417 million total 
for delivery expenses being treated as discretionary, and save $53 
million from the $203 million in discretionary spending that would be 
required under current law.
    As I mentioned earlier, while we wanted to reduce delivery 
expenses, we did not want agents to have to bear more than a fair share 
of the reduction. We wanted this to be a matter of negotiation between 
the agents and their companies, without our getting into the matter. 
So, our proposal provides for eliminating the distinction in current 
law that subjects only the sales commission portion of delivery 
expenses to discretionary spending ceilings.
     
                    market access program

    Mr. Skeen. Page nine of the statement states that, in 1996, 56 
percent of MAP funds for promotion of branded products was made 
available to small entities. What is the Department's definition of a 
small entity?
    Response. The Department follows the Small Business 
Administration's Small Business Size Regulations. Under these 
regulations, SBA establishes the appropriate size standards applicable 
to particular Standard Industrial Classification--SIC--codes. SBA 
determines which concerns qualify as small under the appropriate size 
standard. This process often includes a self-certification procedure by 
which a concern certifies its size eligibility.
    Mr. Skeen. Briefly describe the MAP program improvements that have 
been made to broaden participation, clarify participation criteria, 
strengthen evaluation and accountability, and simplify program 
requirements.
    Response. Consistent with the Administration's commitment to 
streamlining government activity, new MAP regulations were published on 
February 1, 1995, that increased flexibility and simplified program 
requirements for the participants. The revised regulations also 
reflected public comments and changes made by the Omnibus Budget 
Reconciliation Act of 1993. Specific changes in the final rule include: 
(a) U.S. exporters no longer need to show that a U.S. agricultural 
commodity faces an unfair trade practice in an overseas market; (b) 
small businesses and cooperatives are accorded priority consideration 
in the allocation of brand promotion funding; (c) application and 
allocation approval criteria are clarified; (d) procedures for 
appealing compliance findings are added; and (e) paperwork requirements 
have been reduced by simplifying contracting standards and procedures 
and streamlining the format for various program documents.
    With regards to evaluation, FAS allocates funds in a manner that 
effectively support decision-making initiatives of the Government 
Performance and Results Act (GPRA) of 1993. FAS considers a number of 
factors when reviewing MAP proposals, several of which relate to export 
performance, both past performance and projected export goals. In fact, 
in the MAP competitive allocation process, 60 percent of the total 
weight relates to export performance.
    In addition, each participant is required to conduct an annual 
program evaluation to determine the effectiveness of the participant's 
strategy in meeting overall goals. Participants must identify goals to 
be met within a specified time, a schedule of measurable milestones for 
gauging success, plans for achievement, and results of activities at 
regular intervals. The evaluation results are analyzed by FAS and help 
guide the development and scope of a participant's program.
    With these changes in place, program management and accountability 
have been strengthened. For example, over the last 6 years compliance 
findings against program participants have decreased and repayments by 
program participants for unauthorized or inappropriate expenditures 
have been less than 1 percent of the total MAP funding level, a clear 
indication that these steps are working.
     
                   food recovery foundation

    Mr. Skeen. On page 15 of the statement you talk about a proposal to 
promote food recovery through creation of a non-governmental, 
charitable foundation. Please describe this initiative in further 
detail.
    Response. I would be happy to explain this low-cost, large-gain 
proposal--something that creates a non-governmental, charitable 
foundation to serve public purposes, not a new bureaucracy.
    The formal proposal itself is circulating within the Administration 
for comment and should be ready for formal transmittal to the Congress 
within a few weeks. The foundation would be provided with seed money, 
not more than $500,000 annually, from the Federal government for 3 
years with the expectation that the private sector and volunteer 
efforts will be self sustaining within that time. Thus, the total cost 
to the taxpayers will be $1.5 million. The intent is to foster a 
substantial increase in the proportion of excess food recovered and 
provided to needy persons principally by coordinating and stimulating 
non-governmental effort. With the billions in food going to waste right 
now, with this foundation and the Bill Emerson Good Samaritan Act, I 
think I can assure you that we can increase donations by at least $50 
million a year.
    Ultimately, I think the foundation will do much better than that. 
Further, foundation activities will improve recipient nutritional 
status, help coordinate and help inspire citizen altruism by providing 
more effective outlets for their efforts, and increase the nutritional 
status and knowledge of all who are touched by the program.
     
             new mandatory conservation programs

    Mr. Skeen. You make the statement in your testimony that while the 
Farm Bill created new mandatory conservation programs funded through 
CCC, their technical assistance was not included as part of this 
funding. The law for these programs clearly states that CCC funding 
shall be used to provide technical assistance. Please submit where it 
states that technical assistance must be provided through discretionary 
funds.
    Response. Except for the new Environmental Quality Incentives 
Program (EQIP) for which the new Farm Bill explicitly authorizes the 
use of CCC funds for technical assistance and other purposes, our 
understanding is that CCC funding of conservation technical assistance 
is subject to limitations imposed by Section 161 of the 1996 Act. 
Basically Section 161 amended Section 11 of the CCC Charter Act to 
limit the total CCC funding transferred or allotted to other State and 
Federal Government agencies under reimbursable agreements to the total 
of such obligations in fiscal year 1995, which was $45.6 million. Also, 
the new Farm Bill did not explicitly provide for the use of CCC funds 
for technical assistance, except for EQIP. And, while it did not 
preclude use of CCC funds for technical assistance necessary for the 
CCC funded conservation programs, it effectively limited the amount of 
funds available for such use through the limitation imposed by Section 
161. Since many of the activities subject to the new cap on 
reimbursable agreements present in the 1995 base period are still 
necessary and important, the level of CCC funds available for 
conservation technical assistance is clearly constrained. Conservation 
activities were not funded by CCC in the 1995 base period and the 
utilization of CCC funds by NRCS, FS or other public agencies for 
conservation technical assistance, except for EQIP, represents a new 
use which must be balanced against traditional uses of the limited 
funds available under the cap.
    The Farm Bill mandated CCC funding for EQIP at $200 million per 
year for specific purposes including technical assistance so we have 
concluded that the specific provisions for EQIP apply to it rather than 
the general limitations which affect CCC funding of technical 
assistance for the other CCC funded conservation programs.
    Funding needs for conservation technical assistance, which cannot 
be met without the limits on CCC funding discussed above, would need to 
be provided through discretionary funding.
     
                    census of agriculture

    Mr. Skeen. Funding was provided to USDA in the fiscal year 1997 
appropriations bill for Census of Agriculture work in anticipation that 
authorizing legislation needed to transfer the function from the 
Department of Commerce to USDA would follow. This legislation did not 
occur. Have you met with Chairman Smith of the authorizing committee to 
discuss this issue? What is the likelihood of legislation passing this 
year?
    Response. No, I have not yet spoken to Mr. Smith, but members of my 
staff have had several conversations with authorizing committee staff. 
Last year the legislation was passed by the House, and we are very 
hopeful that the legislation will pass Congress during this session.
    Mr. Skeen. If you don't get the legislation needed to transfer the 
functions of the Census, what happens?
    Response. NASS has funding for the Census, and has received the 
transferred program positions and staff from the Census Bureau. We can, 
through cooperative agreements with the Department of Commerce, conduct 
the Census of Agriculture. However, without the authorizing 
legislation, USDA will have to rely on Census employees for certain 
steps in the process and will not have the flexibility or control to 
make the best use of the resources provided to conduct the upcoming 
Census. As long as USDA has theappropriations but not the authority, we 
must depend on the Bureau of the Census to help us produce information 
that USDA will ultimately be held accountable for--information that is 
highly valued by the agricultural community. More specifically, the 
lack of the authorizing legislation will: raise the costs because of 
the overhead UDSA will have to pay the Bureau of the Census, reduce the 
timeliness of the release of the results because NASS employees will 
not be able to review the census data, and prevent NASS from adopting 
planned efficiencies such as the utilization of the State Statistical 
Offices (SSO's) and improvements in the mailing list. For 1997 and 
future censuses, current legal restrictions also prevent the Census 
Bureau from furnishing NASS with detailed program files that are 
integral to the program transfer and needed for effective data edit and 
future mail list development.
     
                         karnal bunt

    Mr. Skeen. There are now nine States that have been affected by 
Karnal Bunt. The APHIS budget request includes an increase for Karnal 
Bunt activities including additional surveillance work. Is it safe to 
assume that additional surveillance work will lead to more discoveries 
of the presence of Karnal Bunt spores and fungus?
    Response. We are not sure whether or not these additional surveys 
will yield more discoveries. But it is essential that we continue this 
work in any case. Even if we do not detect any additional evidence of 
Karnal bunt, the negative surveys would enable us to certify that wheat 
we are exporting has originated from areas where Karnal bunt is not 
present. Therefore, we would be able to maintain our market share, as 
well as the confidence of our trade partners. (Subsequent investigation 
has shown reports of Karnal Bunt in five Southeastern States to be 
ryegrass smut.)
    Mr. Skeen. The program cost about $50 million last year, most of 
which came from CCC emergency funding. Do you have any estimates as to 
what the future costs of this program will be?
    Response. A total of $36.7 million was made available in FY 1996, 
not all of which was used in that year. An additional $34.8 million can 
be used in FY 1997. The Budget requests an additional $4.5 million for 
pest detection activities in FY 1998 primarily for Karnal bunt 
regulatory enforcement the conduct the National Survey, and research 
and overall control methodologies for future pest outbreaks.
    Mr. Skeen. For the record, describe what happens when Karnal Bunt 
is detected in an area, for both spores and the fungus?
    Response. Currently, if we detect only spores in an area, we are 
not taking regulatory action if there is any difficulty in verifying 
that the spores are from Karnal bunt. It we detect bunted kernals, 
though, we would have conclusive evidence that the Karnal bunt fungus 
is present in that area. At that point, we would propose adding that 
area to the current Federal quarantine area that we have already 
determined to be infested.
    Mr. Skeen. The presence of Karnal Bunt doesn't pose a health 
hazard. I understand that India has agreed to accept wheat shipments 
regardless of the presence of Karnal Bunt. Is this an indication that 
other countries might do the same or is India an isolated case?
    Response. India is an isolated case. In that country, Karnal bunt 
is widespread in all wheat-growing areas. Other countries have Karnal 
bunt present in some wheat-growing areas, but not to the same extent as 
India. In Mexico, for example, Karnal bunt is limited to the northwest 
coastal area of the country, while other wheat-growing areas remain 
free. Therefore, Mexico still places restrictions on wheat-imported 
from the United States.
    Skeen. Are you looking at whether or not you should declare Karnal 
Bunt a minor disease?
    Response. We have initiated plans for an international conference 
this summer to consider whether the status of Karnal bunt should be 
changed. By that time, APHIS will have the results from pathogenicity 
tests performed on spore samples from the southeastern United States. 
We will be asking Mexico and Canada to sponsor the conference, possibly 
through the auspices of the North American Plant Pathology Organization 
(NAPPO). Hopefully, this conference will provide all countries the 
opportunity to review the available data and create rational and 
objective standards for the international movement of grains affected 
by various smut diseases. The suggested conference title is, ``The 
International Conference on Regulatory Issues Related to Smut in Small 
Grains in the United States''.

                         mexican hass avocados

    Mr. Skeen. Mr. Secretary, as you know, the California Avocado 
growers objected to the final rule you issued on February 5, lifting 
the quarantine of Mexican avocados. Nevertheless, they have decided to 
work with the Department of Agriculture to try to make your rule work. 
Of course, there was a prohibition against any meetings with USDA 
during the rulemaking process. Now that the rule is published, I would 
expect APHIS to work closely with the domestic avocado industry, just 
as APHIS has historically done with the livestock industry. Do you 
agree on the need to have APHIS meet regularly with U.S. avocado 
growers to implement the rule?
    Response. As you know, this decision was made only after careful 
consideration of the rulemaking process. Every opportunity for public 
involvement in this rulemaking process was extended. And, we remain 
committed to continue working with Federal and State officials, and the 
private sector to ensure that imported agricultural products meet plant 
and animal health standards comparable to those for products produced 
within the United States.

                      food quality protection act

    Mr. Walsh. On August 3, 1997, the President signed the Food Quality 
Protection Act. Since that time have you or a member of your immediate 
staff met with the Environmental Protection Agency to discuss your role 
in the implementation of this new law? (There is a concern that USDA is 
not devoting enough resources and manpower to implementing this new law 
and that since EPA is devoting adequate resources to this they will 
quickly assume the predominate role in implementing this law which may 
have adverse effects for agriculture specific concerns.)
    Response. Several meetings have been held by USDA officials in the 
Office of the Secretary and the concerned program agencies with EPA 
officials since the FQPA was enacted. The Deputy Secretary has served 
on the Food Safety Advisory Committee with the EPA Deputy Administer 
and other key staff to discuss implementation of the Act. Additional 
meetings have been held to exchange information about our respective 
roles and the program adjustments that may be needed to respond to the 
new pesticide risk assessment requirements. The USDA FY 1998 budget 
reflects specific program requests to meet our responsibilities under 
the FQPA, such as restoration of the Pesticide Data Program, a special 
survey of food consumption by infants and children, and the development 
of pest control technologies needed by agricultural producers.
    Mr. Walsh. Is there any structure within the Office of Secretary to 
coordinate policy formulation, resource allocation and communication 
with high level officials with EPA in implementating the Food Quality 
Protection act as well as internally within USDA? Does your FY 1998 
budget proposal reflect this structure? If so, how?
    Response. The USDA has recently taken steps to establish better 
coordination of science and technical issues with the EPA regarding the 
Food Quality Protection Act and other issues. A technical coordinator 
position has been established in the Agricultural Research Service that 
will receive guidance from the Office of the Secretary for policy 
direction. This office will track program performance of USDA agency 
activities, monitor resource allocation, and serve as the primary point 
of contact for EPA. This new senior management position and as well as 
an additional policy person to be announced soon will provide enhanced 
oversight and visibility to the Office of the Secretary of Agriculture 
in monitoring performance under the Food Quality Protection Act.
    Mr. Walsh. What are your policy objectives in implementing the Food 
Quality Protection Act in FY 1998 and does your budget reflect all the 
resources you need to achieve those objectives?
    Response. The Food Quality Protection Act provides that the 
Secretary of Agriculture become broadly engaged in the implementation 
of the Act and the Department is committed to fulfill this mandate. The 
USDA FY 1998 budget request is designed to implement those obligations 
by establishing programs to provide critical data needed to perform 
exposure assessment to pesticides and the development of new methods to 
control pests on major and minor crops. The specific programs that 
address these requirements are included in the FY 1998 budget requests 
of the USDA agencies. If the increases requested for FY 1998 are 
allowed, it will be possible to fulfill the mandates of the Food 
Quality Protection Act.
    The program increases for food exposure assessment are as follows:
    Pesiticide Date Program AMS $9.815 million. This request will 
return program funding to AMS to carry out residue testing on various 
agricultural commodities in trade to better estimate actual occurrence 
of pesticides inthe food as consumed. This data is a valuable tool in 
facilitating U.S. agricultural exports and reassures our customers of 
the high quality of our products. The PDP is also the source of 
information about national estimates of pesticide residue levels in 
food so that Government agencies can conduct realistic dietary risk 
assessments to the requirements of the FQPA.
    Food Consumption Survey of Infants and Children, ARS $6 million. 
Currently available food consumption surveys do not provide sufficient 
sample sizes to adequately estimate pesticide intake by children in 
various age groups. The requested survey will complement the 
consumption data collected in our 1994-1996 study by adding additional 
children to make the intake estimates statistically valid.
    We will provide a table which will reflect the program increases to 
develop new technologies for pest control, including Integrated Pest 
Management and related programs.

[Pages 142 - 143--The official Committee record contains additional material here.]


                              1998 budget

    Mr. Walsh. The Crop Insurance Reform and Reorganization Act of 1994 
created the new Farm Service Agency (FSA). The intent of Congress was a 
one stop service center for farmers, with Federal farm programs 
administered by the FSA elected county committee system. If the 1998 
budget is approved, what would be the effect on:
    A. The present FSA Farmer Elected Committee system?
    B. FSA County Offices?
    Response. The 1998 budget does not specifically impact the current 
FSA Farmers Elected Committee System which was established by the USDA 
Reorganization Act of 1994. However, because the budget limits the 
level of funding FSA will have available for salaries and expenses, it 
is possible that FSA will ultimately need to reduce its number of 
county offices. If so, the number of county or area committees FSA uses 
may also decrease. The 1994 Act requires that committees be elected 
from voters in a county or area. As areas served grow in size, the 
number of committees needed to represent the producers in the area 
served should decrease. No plans have yet been approved concerning 
where the potential office closures, if any, will be located, and 
consultations with Congress will also need to occur. FSA and other 
program delivery agencies face a different future today than they did 
one year age. The 1996 Farm Bill significantly changed FSA workload 
requirements and further study is needed. Throughout 1997, we plan to 
examine additional opportunities USDA has available for facilitating 
greater efficiencies in the field service centers. This will include 
consideration of the Budget's goal that by the end of 1999, the number 
of USDA service centers will be about 2,000 rather than the 
approximately 2,500 envisioned under earlier plans. The total number of 
FSA offices within the potential 2,000 service centers has not yet been 
determined. To assure that USDA provides the best service possible to 
our customers, any decisions to close USDA filed offices or reduce an 
agency presence in a USDA service center must be done in coordination 
with all the agencies located at the site or in the area, including the 
Farm Service Agency, Rural Development and Natural Resources and 
Conservation Service.
    Mr. Walsh. If the 1998 budget is approved, what would be the effect 
on other USDA county offices--NRCS, Cooperative Extension, Rural 
Development?
    Response. As stated in the budget, we expect to reduce the number 
of county based USDA Service Centers about 500 by the end of 1999. 
Changes in the number of locations where each agency would be present 
will be reviewed in the context of the review of overall plans for the 
service centers. The budget projects only very modest reductions in 
staff levels for NRCS and Rural Development in contrast to FSA. The 
Cooperative Extension office situation, of course, will depend on 
extent of State and local support and decisions made at that level.
    Mr. Walsh. If the above employee reductions are made effective, the 
USDA would be required to develop regional or area FSA offices. Will 
other USDA agencies be combining their county offices then an FSA 
office is combined?
    Response. We plan to review plans for the county based agencies and 
the service centers over the coming months. The budget anticipates that 
the number of service centers will likely be reduced by at least 500 to 
about 2,000 by the end of 1999. Clearly, the proposed reductions in FSA 
staff in particular will generate a need to consider reduction in the 
number of offices we have no intention currently to abandon the service 
center concept. So, even if a full time FSA presence was not maintained 
at every service center, the center may remain open with NRCS and RD 
presence and provisions would be made to serve FSA customers from those 
centers. However, the likelihood of some reduction eventually in the 
number of service centers contemplated in the budget implies a 
potential for reduction in the number of regular local officesites for 
the agencies which operate from the service centers.
    Mr. Walsh. The fiscal year 1998 Appendix to the budget states ``the 
number of field office service centers would be reduced from 2,500 to a 
maximum of 2,000 by the end of 1999.'' Given this statement, why is the 
Government determined to close 1,000 field offices by October 1998?
    Response. The Department has been closing and consolidating offices 
as part of its streamlining efforts to improve efficiency as well as to 
enhance services through one-stop service centers. This effort which 
began before the 1996 Farm Bill, has been targeted toward reducing the 
number of county based field offices from about 3,700 to about 2,500 
service centers. This streamlining plan included closing over 1,000 of 
the original offices. Since the Farm Bill has altered the anticipated 
workload for the programs to be administered by the service center 
agencies somewhat and the budget situation has tightened further, the 
President's budget has indicated a goal of 2,000 service centers in the 
future would be appropriate. So, the need for reducing the number of 
field offices is even stronger today than was when the original 
streamlining plan was developed. Therefore, we will be re-evaluating 
our plans in the coming months.
    No specific plans have been approved concerning the number or 
agency composition of the proposed 2,000 USDA service centers should it 
be determined that the reduction to 2,000 service centers is necessary. 
Any preliminary office closing numbers beyond the original plans to 
achieve 2,500 service centers reflect internal agency contingency 
planning and are not approved USDA plans. For example, FSA has been 
doing some contingency planning regarding the number of field offices 
with an FSA presence which could be maintained under different funding 
scenarios and those plans may include the possibility of reducing the 
number of FSA sites below 2000. However, no plans for such reductions 
have been approved. Furthermore, any reduction in FSA locations would 
not necessarily mean a reduction in the number of service centers since 
some centers could be maintained with NRCS and/or RD staff. We firmly 
believe that we need to thoroughly review how we do our business and 
evaluate the number of offices we need to serve our customers in light 
of the 1996 Farm Bill program changes and the funding we will likely 
have available for 1998 through 2002. We think we can deliver our USDA 
services more effectively and efficiently, taking into account future 
workload requirements and technological advances that would improve our 
program delivery.

                            office closings

    Mr. Walsh. In New York State, the proposed plan would close FSA 
offices in my district. One plan being reviewed is the combination of 
FSA offices in Seneca and Cayuga Counties into one regional office. If 
NRCS is not required to move into the new regional office, the farmers 
will be required to make two stops: One to FSA and the other to NRCS. 
Where is the service to the farmer?
    Response. The basic thrust of the Department's plans for the 
delivery of county based programs is to consolidate services in one-
stop service centers to facilitate service convenience for our 
clientele. So plans for office consolidation will be reviewed in this 
broader context so that we can minimize any inconvenience for the 
customer. No decisions have been approved concerning the closing of 
additional specific FSA offices and those decisions will not be made 
until this broader review has been made.
    Mr. Walsh. Where is the savings for the taxpayer?
    Response. We believe that in the long run, savings should be 
possible through combining local offices into single service centers 
and, unless it can be shown otherwise upon further review, that is the 
approach we are following. If circumstances are such that cost savings 
and services to our customers can be enhanced through other approaches, 
we will, of course, consider alternative arrangements. But I believe 
that the one-stop shopping concept is a good one for both our clients 
and the taxpayers.
    Mr. Walsh. Recently, a credit implementation team, headed by the 
FSA's Program Division Director, identified a need for at least 20 more 
loan officers and 12 more technical support staff members to work on 
ag. credit delivery needs. Proposing a reduction in FSA employees who 
administer commodity and conservation programs, while forecasting a 
need for people to adequately deliver ag credit programs does not make 
sense. Why isn't the agency looking at accelerating training for new ag 
credit positions and realigning the work force to meet those 
challenges? Shouldn't this situation be addressed before office 
closures and RIF's?
    Response. FSA has been and is currently, employing additional loan 
officers from within the agency and has implemented a national training 
program to ensure uniformity in the delivery of farm credit services. 
Each State Executive Director has developed and is currently 
implementing a plan to fully integrate the ag. credit program into all 
FSA county offices, using all available Federal and non-Federal 
employee resources. Because FSA is a new agency, the level of 
integration varies by State. The individual State plans, however, are 
designed to ensure that producers are served timely and by adequately 
trained employees. Office closures and reductions in force of employees 
will be the result of agency and USDA plans to create more efficiencies 
in the program delivery system and to acknowledge both the workload 
changes resulting from the 1996 Farm Bill and the funding constraints 
we anticipate we will be faced with.

                           county committees

    Mr. Walsh. If this budget is approved, is it the USDA's plan to 
submit legislation that would change the role of FSA's farmer elected 
county committee system and their authority to administer Federal farm 
programs?
    Response. The budget for fiscal year 1998 will have no direct or 
immediate effect on the committee system. The committees would continue 
to function in 1998 as they have in the past. Of course, potential 
future reductions in the number of service centers and other potential 
changes in field office operations have some effect on the number of 
committees and the details of their operations, but no fundamental 
changes are anticipated in the budget. However, the Civil Rights Action 
Team, which I recently appointed, has been reviewing the county 
committee system in the context of representation of and service to 
minority producers and their report, which I believe will be announced 
on February 28, will include some recommendations for legislation to 
modify some aspects of the committee system. I plan to follow up on 
those recommendations and will make them available to this committee 
when they are released.
    The report by the Civil Rights Action Team recommended that 
legislation be proposed to remove the county committees from making 
farm loan determinations; to convert county non-Federal employees, 
including county executive directors to Federal status; and to provide 
for the appointment of two voting members to county committees to 
represent members of groups who are otherwise under-represented on the 
elected county committee. These proposals, which are now being 
developed and reviewed in the Department, will address some of the 
concerns raised by the civil rights report. While the proposal would 
remove the county committees from their role in hiring and supervising 
county office staff, it would not alter their traditional authority to 
administer farm programs other than for farm credit loan programs.

                  farm service agency county employees

    Mr. Walsh. Is the goal of the proposed legislation to change all 
remaining FSA non-Federal employees to civil service status?
    Response. I believe that will be one of the potential 
recommendations of the Civil Rights Action Team. In any case, the issue 
is something we will be reviewing in the near future. One of the 
complications faced in the Department's reorganization and streamlining 
has been this area of non-Federal versus Federal county office 
employees. We now have employees working side-by-side in the FSA county 
offices and in the service centers under the two different systems. A 
more uniform employee system may have some advantages.
    Mr. Walsh. If it is, will the conversion take place before or after 
the proposed fiscal year workforce reduction?
    Response. The timing of any possible conversion of the non-Federal 
workforce to Federal status would depend ultimately on when and if 
legislation would be enacted and the provisions of the legislation, 
which are not yet known. I would note that, since fiscal year 1998 will 
begin this October 1 and workforce reductions for 1998 would need to 
begin early in the fiscal year, there is not much time to effect a 
conversion before that time.
    Mr. Walsh. How will the conversion effect the career status of 
current FSA non-Federal employees?
    Response. While it is premature to speculate about the specifics of 
any possible changes, I would not want to endorse any changes which 
would be inherently adverse to the status of our non-Federal employees. 
They have an outstanding record of performance and service to our farm 
program clientele. Although some staff reductions are necessary, we are 
committed to providing the best employment conditions possible for 
those who remain to continue the vital functions needed to administer 
the FSA programs.

                  county committees and loan problems

    Mr. Walsh. Much has been said recently about the role of FSA's 
County Committees regarding the delivery of farm programs to minority 
and low income farmers. Due to the 1994 USDA reorganization 
legislation, FSA County Committees have determined eligibility for ag 
loans since January 1, 1996. Does the USDA have the actual number of 
problem cases that occurred after January 1, 1996?
    Response. Actually the FSA used Agricultural Credit Teams to 
perform the functions of the former FmHA and its county committees for 
a transition period which extended into 1996. It wasn't until late in 
1996 that the FSA county committees became actively involved in the 
farm credit functions.
    We have continued to receive complaints about problems with loans 
and other programs since January 1996 and most likely some of them 
originated with activities before that time and some likely are recent. 
I do not believe we have data on the number of problem cases attributed 
specifically to eligibility determinations made by the FSA committees 
as opposed to decisions made by employees either before or after 
January 1996. If I find otherwise I will provide the information to 
you. Clearly the FSA county committees, under the new system, have 
dealt with farm loan issues for only a very short while, but I believe 
the Civil Rights Action Team has reviewed the situation and will have 
some suggestions regarding the county committees' role in loan program 
issues. And, as I indicated previously the team's recommendations will 
be made available to this Committee. Likewise, if we do find some data 
related to the actual numbers of problem cases, I will also make it 
available.
    On February 28, 1997, the USDA Office of the Inspector General 
published its Evaluation Report for the Secretary on Civil Rights 
Issues--Phase I,Report No. 50801-2-Hq(1). In the report OIG identified 
an FSA backlog of 241 complaints of which 230 were related to farm loan 
programs involving minority and socially disadvantaged farmers. In 
determining the number of outstanding farm program complaints, OIG also 
reviewed information on the number of closed farm program complaints 
since 1993. Of the 230 outstanding complaints, 67 were filed after 
January 1, 1996. The report also listed some 49 complaints for which no 
date could be determined as to when the cases were filed.
    Mr. Walsh. In addition, how many of these complaints occurred under 
the former FmHA Committee system prior to 1996?
    Response. I believe it is safe to say that the majority of the 
problem cases regarding farm loans for minority and low income farmers 
originated in prior years under the former FmHA system or during the 
transition period. The new FSA committees have only been in operation a 
short while as we just discussed.
    Mr. Walsh. If there are isolated incidents of County Committee 
abuse, why didn't the appropriate State Executive Director address the 
situation and/or remove the County Committee from office?
    Response. The State Farm Service Agency Committee is responsible 
under the regulations to ensure that County Committee actions are taken 
and are proper. The State Executive Director, acting with the authority 
of the State Committee, is responsible for investigating allegations 
concerning incidents of abuse. Documented evidence of abuse has and 
will continue to lead to disciplinary action against County Committees 
or any committee member. FSA has and will continue to suspend or remove 
from office committee members who abuse their authority or fail to 
carry out their duties and responsibilities.
    Mr. Walsh. OMB believes that the passage of the FAIR Act has 
reduced the workload in FSA county offices. In particular, OMB feels 
the seven-year Market Transition Program has eliminated the annual 
sign-up farmers once participated in. A county in my district has over 
800 Market Transition contracts. As many as 600 contracts do not have 
continuous lease agreements to operate rented land. This means farmers 
must come into the office every year to change or update contracts. In 
addition, many farmers rent new land, purchase or sell land every year. 
Successors-in-interest contracts must be created or updated in these 
instances. Why doesn't FSA receive proper workload credit for the 
maintenance of these contracts?
    Response. It is true that only a portion of the farms are 
``Designated'' for the entire seven-year period. There is, however, an 
additional percentage of farms which have an annual lease that is re-
leased to the same operator. Those farms require only a small amount of 
updating and do not require nearly the equivalent amount of work as the 
initial signup. Additionally, the payment process for this program has 
been greatly simplified by reducing both the number of payment cycles 
per year and the number of checks issued per producer. The compliance 
requirements for this program, although not eliminated, provide for 
reduced acreage reporting. Those acreage reports can be greatly 
summarized, which requires less time. Reduced acreage reports, in turn, 
mean reduced spotchecking and field work.
    FSA county offices complete a workload report at the end of each 
fiscal year. This report allows county offices to report the actual 
work completed during the year and to estimate total workload for the 
upcoming fiscal year, including information on maintaining Market 
Transition Program contracts.

                           county committees

    Mr. Dickey. Mr. Secretary, my constituents believe the Farm Service 
Agency (FSA) farmer-elected country committee system has served them 
well. The committee is elected by the farmers in the county by a 
plurality vote. Every farmer in the county can nominate a candidate and 
each farmer receives a ballot. This system was created because Congress 
recognized that micro-management from Washington would not serve the 
specific needs of rural America. Do you think this system should be 
replaced by one that is less democratically accountable and has less 
local control?
    Response. I agree that the farmer-elected county committee system 
has served the majority of our producers quite well. It has provided 
some of the practical ``grass-roots'' involvement in program design and 
implementation which has helped make out programs effective and 
tailored to the real needs in rural areas. However, there have been 
some unfortunate instances where the interests of minority or female 
producers have neither been adequately represented or served by the 
committees. And while FSA has appointed minority advisors to address 
this problem, we have concluded that this system is not effective. The 
Civil Rights Action Team, which I appointed, will make some specific 
recommendations to address this issue which will be announced on 
February 28. I anticipate following up the team's report with a 
legislative proposal to enhance minority representation on the 
committees while not substantially altering the basic nature of the 
committee system.
    The report by the Civil Rights Action Team, Civil Rights at the 
United States Department of Agriculture, February 1997, included a 
recommendation that legislation be proposed to amend the 1935 Soil 
Conservation and Domestic Allotment Act to add two voting members of 
groups who are otherwise under-represented on the elected county 
committee. Selection of the two members should be based upon 
recommendations from under-represented groups in the county to the 
State executive director and the State committee. The report also 
recommended that the committees not be involved in farm credit program 
loan determinations and that county non-Federal staff be converted to 
Federal station. This would remove the committee's from the process of 
hiring and supervising personnel, but would not alter their traditional 
programmatic roles with regard to farm income and price support 
activities and certain conservation program activities.
    Mr. Dickey. According to the non-Federal county employees in my 
district, under the preliminary budget allocation for FSA offices from 
FY 1997 to FY 2002, the Federal staff would stay rather steady at about 
95.6 percent of its current level. But, non-Federal county staff would 
be slashed to 41.6 percent of its current level. These cuts will result 
in more FSA management and support level employees than county office 
employees. While the county offices will clearly have reduced workloads 
under the 1996 Farm Bill, shouldn't more of the budget burden be borne 
by Federal support staff so that service at the field office level 
doesn't suffer?
    Response. The FSA has been making staffing reductions over the past 
several years. From FY 1993 to the current FY 1997, the Agency has 
reduced total staffing 21 percent. These reductions reflect an overall 
19 percent reduction in Federal staff years, including 27 percent at 
Headquarters, and a 22 percent reduction in non-Federal staff years. As 
you stated, FY 1998 and the years through FY 2002 reflect major 
proposed decreases in FSA non-Federal staff years. The FY 1998 budget 
proposes a reduction of 2,119 staff years for FY 1998, of which 269 are 
Federal staff years and 1,850 are non-Federal staff years. It should be 
noted that although non-Federal staffing is being reduced by the 
programmatic impacts of the 1996 Act, the projected FY 1998 
Federalworkforce of 5,877 includes approximately 2,265 employees at the 
county level performing Agricultural Credit program workload for direct 
and guaranteed loans. Furthermore, there are an additional 1,463 
Federal FTE's at the State office level, including personnel that 
support farm credit activities as well as CCC activities, that perform 
program oversight, supervisory, and other support functions. There is 
some concern as to the magnitude of these reduced FSA county staffing 
levels by 2002 relative to projected Agency workload beyond 1998 
because we want to assure service delivery to producers. We intend to 
do an independent study this year to see if there are additional 
opportunities to achieve efficiencies to balance acceptable service 
delivery with reduced staffing.

               farm program workload and staff reductions

    Mr. Dickey. A General Accounting Office (GAO) audit dated May 22, 
1996, found that FSA would need 1,495 fewer county employees to 
administer the Freedom to Farm Act through 2002. Why are the county 
office staff being considered for cuts so far below the recommendation 
from GAO?
    Response. I believe the GAO analysis was based on an earlier 
version of the farm bill, so it is not a fully up-to-date assessment. 
However, we agree with the basic thrust of the GAO report that the 1996 
Act will reduce FSA workload. For example, the pre-Farm Bill FY 1997 
President's Budget Estimates prepared in January 1996 included county 
workload staffing needs of 13,224 FTE's for FY 1996. Following passage 
of the 1996 act in April 1996, FSA performed an internal workload 
analysis that showed lower staffing needs for 1996, down to an 
estimated 12,835 county office FTE's. The actual FTE's worked for 1996 
were 12,738. FSA's analysis also showed declining workload for FY 1997 
and for FY 1998. None-the-less it is fair to say that our budget 
proposes substantial staff reductions in 1998 and beyond which not only 
reflect the workload reductions made possible by the Farm bill, but 
also that the reductions reflect the Administration's intent to make 
maximum efforts to further increase efficiency and reduce costs. 
Therefore, as mentioned in the budget, we will be initiating an 
independent study this year of how such efficiencies might be 
accomplished.
    Mr. Dickey. The way the cuts are distributed between and within the 
States will not doubt be a great controversy, and apparently there will 
be hearings on this issue at the authorizing committee. In deciding how 
to distribute the cuts, it seems workload levels should be the 
determining factor. Workload can be accurately estimated on a county by 
county basis. Shouldn't this data be used in deciding which office to 
close rather than some arbitrary criterion such as a minimum 25 mile 
limit between offices?
    Response. Workload levels reflect the staffing resource needs at a 
given location and not necessarily whether a physical presence is 
needed. A large workload office is generally more efficient than a 
small workload office because of the numbers of employees available to 
perform specialized services and the general efficiencies associated 
with volume transactions. A criterion such as a minimum 25 mile limit 
between offices reflects an assumption associated with all producers 
having reasonable access to service. In the 1930's when most USDA 
offices were established, local transportation was limited. Today, with 
the significant improvements in transportation and the technological 
capabilities available, the distance a producer would travel to receive 
services can be increased without any significant hardship. Workload is 
certainly an important factor in determining staff levels for field 
offices and will be considered in the Department's analysis of ways it 
will operate within budget realities and how it will apply staff 
reductions. However, other factors must also be considered to assure 
that USDA provides customers the best service possible. Any decisions 
to close USDA field offices, or reduce an agency presence within a USDA 
service center must be done in coordination with all agencies involved, 
including the Farm Service Agency, Rural Development and Natural 
Resources and Conservation Service.
    Mr. Dickey. In your prepared testimony, you indicated that the $100 
million supplemental request for WIC programs is to ``prevent a large 
drop in participation.'' Could you explain further what you mean by 
that?
    Response. When we prepared the 1998 budget, September 
participation, the last month of fiscal year 1996, was 7.4 million. 
Given the cost of the food packages and the expectation that WIC carry 
out will be drawn down some, we saw the potential for participation to 
drop as low as 7.0 million by the end of 1997.
    Simply put, the Administration believes that unless $100 in 
supplemental funding is provided to WIC in FY 1997, States may not be 
able to sustain their current caseload levels in fiscal year 1997.
    Mr. Dickey. Beyond preventing a drop in participation, what is the 
rationale for the supplemental request and what would be the 
consequences if the supplemental funds were unavailable?
    Response. Our rationale for requesting the supplemental really is 
simple. We are committed to full funding WIC, serving about 7.5 million 
eligibles by the end of fiscal year 1998. This goal would be 
compromised by participation fall off forced by lack of funds.
    Food and Consumer Service historical data suggests that States 
usually underspend their grants, due to correctly cautious management 
and to the uncertainties of rebate cash flows, fluctuating demand for 
service and unanticipated food cost changes. This has resulted in carry 
over funds from one year to the next, While States will work harder 
than ever to fully use their grants this year, and should reduce carry 
over, program history suggests that carry over will be about 2.5 
percent. If there is no supplemental, States may not be able to sustain 
their current caseload levels in fiscal year 1997.

               animal and plant health inspection service

    Mr. Kingston. Mr. Secretary, recognizing that Karnal Bunt has yet 
to be discovered in the southeast, does the most recent rule for 
regulating Karnal Bunt, the October 4, 1996, rule, allow for 
quarantines or surveillance areas to be put in place based on the finds 
of ``suspect'' spores?
    Response. No, it does not, We will not take regulatory action until 
proof exists that Karnal Bunt is present. We are examining wheat lots 
for bunted kernels and conducting pathogenicity tests with spores 
recovered from the southeast to determine the presence of the disease. 
At this time, no evidence of Karnal Bunt has been observed in the 
southeast other than the teliospores. If there is a need to regulate, 
we are considering classifying areas that may be regulated in the 
southeast as surveillance areas. As a result, the only significant 
requirement for wheat farmers would be a single test of wheat shipments 
leaving the regulated area. Wheat testing negative could move 
interstate and internationally without restrictions.
    Mr. Kingston. Looking at your budget request, I see that APHIS has 
requested a $4.5 million increase for the pest detection programs. In 
your justification for this increase, it is stated that the dollars 
would be used ``to ensure that the U.S. wheat crop remains free of 
Karnal Bunt'' and that ``the increase would enable the Agency to 
provide assurance to all trade partners that Karnal Bunt is not present 
in major wheat producing areas of the United States.'' Given the fact 
that spores have been found from coast to coast, are you saying that 
``eradications'' of Karnal Bunt is your agency's goal, and if so, how 
do you plan to fund such an eradication strategy?
    Response. As a regulatory agency, APHIS considers eradication a 
reasonable first objective in dealing with a new quarantine pest. When 
Karnal Bunt was first detected in March 1996, this position was 
strongly supported by various industry groups, State departments of 
agriculture, and officials involved in international trade. Currently, 
our program is guided by four main goals: (1) to protect U.S. export 
markets; (2) to protect U.S. wheat producers in Karnal Bunt free areas; 
(3) to provide the best possible options for producers in regulated 
areas; and, (4) to maintain the best possible information on where 
Karnal Bunt is located. Our budget includes funding for these 
activities.
    Mr. Kingston. Can USDA/APHIS' pathogenicity tests distinguish 
between Karnal Bunt spores and the rye grass spores found in Oregon?
    Response. The pathogenicity tests underway are designed to 
determine if the rye grass pathogen infects wheat. We are developing 
other tests to distinguish the two pathogens based on physical and 
chemical properties.
    Mr. Kingston. If you find a bunted kernel in a field that is 
double-cropped, are you going to place any restrictions on planting, 
movement and/or cleaning of equipment for the rotated root crops, such 
as peanuts or onions?
    Response. If we find a bunted kernel in a field that is double-
cropped, we would place restrictions only on soil movement. The term 
``soil'' generally refers to large clumps or clods; dust or road film 
is not considered to be soil. Field-packed fruits and vegetables and 
fruits and vegetables that meet normal industry standards for 
cleanliness are not considered to be contaminated with soil.

                       pilot program for peaches

    Mr. Kingston. The USDA intends to initiate a pilot program for 
peaches in South Carolina and Georgia by 1999 under which crop 
insurance would be based on the costs of production. Please address the 
possibility of expediting the process, to make it available for the 
1998 crop.
    Response. USDA has committed to working with peach growers to 
determine if a revenue-based insurance plan that covers part of a 
grower's costs of production is feasible. Risk Management Agency (RMA) 
has been meeting with Southeast peach growers to determine what kind of 
crop insurance model would best be suited to the needs of Georgia and 
South Carolina growers. Growers from the two States have not yet 
reached a consensus on the model that they feel would be most 
appropriate for them, but meetings are ongoing and a decision should be 
reached this spring. If it is determined to be feasible, it is unlikely 
that the cost and revenue information necessary for the development of 
an actuarially sound program can be collected and submitted by growers 
in time for a 1998 crop year program that would need to be sold in the 
fall of 1997.

                   food safety and inspection service

    Mr. Latham. Last year the red meat industry petitioned USDA on the 
inequities between red meat and poultry inspection programs. These 
inequities estimated $3 billion competitive advantage to poultry over 
the pork and beef industries. What beyond the February 4 final rule on 
fecal contamination has the Department made to eliminate these 
inspection inequalities?
    Response. We are considering a number of regulatory reform measures 
to ensure that any inequities that may exist between meat and poultry 
inspection are corrected. Any action we take will be subject to public 
comment and rulemaking.
    Mr. Latham. Where is the Department concerning the other five 
outstanding petition issues?
    a. Elimination of the allowance for added water;
    b. Requirement of identical standards of identity for poultry and 
red meat;
    c. Requirement of the same sanitation requirements for inspection;
    d. Elimination of the disparity with respect to added water in 
processed meat and poultry products;
    e. Requirement of disclosure in the ingredient statement of the 
presence of detached skin.
    Response. We are currently evaluating these petitions and will be 
responding to them in the near future.
    Mr. Latham. What impact would new meat and poultry inspection user 
fees have on HACCP and consumer confidence?
    Response. The Administration believes that expanding the authority 
for the collection of user fees is essential to the successful long-
term implementation of meat, poultry, and egg products inspection 
reforms, including HACCP. The collection of user fees will permit the 
agency to achieve dual goals of ensuring that the demand for on-site 
inspection services are met and the implementation of reforms to 
improve food safety are completed. Ensuring adequate inspection 
coverage and improving inspection processes will give consumers greater 
confidence in the safety of the American food supply. Some have 
indicated that the collection of user fees will compromise our ability 
to fulfill our obligation to ensure the safety of the food supply. This 
is not so. We currently collect fees for overtime and holiday 
inspection services, which does not affect the manner in which we carry 
out our inspection responsibility.
    Mr. Latham. It is my understanding that the Department is looking 
to reduce the number of USDA Service Centers by 500 over five years. 
What are the time frame, criteria, and rationale for this reduction?
    Response. The original plan was to establish about 2,500 USDA 
Service Centers. However, the 1996 Federal Agriculture Improvement and 
Reform Act (FAIR Act) provisions and budget considerations have caused 
us to reevaluate the plan. I have asked each of the involved USDA 
agencies, as well as our Service Center Implementation Team, to provide 
some recommendations as to how we can organize within the FY 1998 
budget levels. While we have made a general commitment to reduce the 
number of our service centers, we have made no decisions about 
individual offices. The Service Center Implementation Subcommittee of 
the National Food and Agriculture Council, comprised of the agency 
leaders of the service center partner agencies has been asked to 
develop the time frame and criteria for this reduction.
    Mr. Latham. There are also rumors that the selection process for 
office consolidation and closing may have a political component to it. 
Would you reassure the Committee that will not be the case.
    Response. The current streamlining plan was based on an index of 
workload and operating efficiency. The analysis included six basic 
criteria: Program Delivery Cost; Service Group (Customer Base); 
Complexity; Geographic Service Area; Collocation Status; and Workload 
Intensity and Productivity of the Office. Based on this analysis, the 
Secretary of Agriculture determined the number of Service Centers that 
would be allocated to each State. The State Food and Agriculture 
Council, comprised of the state level service center agency heads, was 
asked to review the analysis and determine which offices would be 
closed.
    Let me assure you that there has not been, and that there will not 
be a political component to determining office moves and closures. Our 
main goal in this process has been to improve customer service and, at 
the same time, reduce costs to the taxpayer. Criteria for future 
reductions will be designed with those goals in mind.

               food quality protection act implementation

    Mr. Latham. What are your policy objectives in implementing the 
Food Quality Protection Act for FY 1998?
    Response. The Food Quality Protection Act provides that the 
Secretary of Agriculture become broadly engaged in the implementation 
of the Act and the Department is committed to fulfill this mandate. The 
USDA FY 1998 budget request is designed to implement those obligations 
by establishing programs to provide critical data needed to perform 
exposure assessment to pesticides and the development of new methods to 
control pests on major and minor crops.
    Mr. Latham. Does your FY 1998 budget request reflect all the 
resources you need to achieve those objectives?
    Response. The specific programs that address these requirements are 
included in the FY 1998 budget requests of the USDA agencies. If the 
increases requested for FY 1998 are allowed, it will be possible to 
fulfill the mandates of the Food Quality Protection Act.
    The program increases for food exposure assessment are as follows:
    Pesticide Data Program, AMS $9.815 million. This request will 
return program funding to AMS to carry out residue testing on various 
agricultural commodities in trade to better estimate actual occurrence 
of pesticides in the food as consumed. This data is a valuable tool in 
facilitating U.S. agricultural exports and reassures our customers of 
the high quality of our products. The PDP is also the source of 
information about national estimates of pesticide residue levels in 
food so that Government agencies can conduct realistic dietary risk 
assessments to the requirements of the FQPA.
    Food Consumption Survey of Infants and Children, ARS $6 million. 
Currently available food consumption surveys do not provide sufficient 
sample sizes to adequately estimate pesticide intake by children in 
various age groups. The requested survey will complement the 
consumption data collected in our 1994-1996 study by adding additional 
children to make the intake estimates statistically valid.
    We will provide a table which will reflect the program increases to 
develop new technologies for pest control, including Integrated Pest 
Management and related programs.

[Pages 153 - 154--The official Committee record contains additional material here.]


                impact of reduction in delivery expenses

    Mr. Latham. What is the Department's estimate of the impact of the 
proposed cuts in administrative operating expenses for the delivery of 
the crop insurance program in the following areas: services to farmers, 
rural employment, competition, risk management education, and program 
integrity?
    Response. The General Accounting Office (GAO) recently concluded an 
audit of expenses associated with the delivery of the crop insurance 
program. The audit was performed at the request of the Congress in the 
Federal Crop Insurance Reform and Departmental Reorganization Act of 
1994 (the 1994 Act). The GAO audited expenses for the 1994 and 1995 
years. The GAO found that current reimbursement rates exceeded delivery 
expenses. This suggests that there are opportunities to achieve savings 
in the reimbursements paid to companies without having an adverse 
effect on program delivery. Further, we expect that competition among 
the companies will help reduce costs.
    The risk management education effort is funded directly out of the 
mandatory spending Federal Crop Insurance Corporation (FCIC) Fund. The 
reduction in reimbursements paid to the companies should not effect 
this effort. There is no indication that farmers, rural development or 
program integrity will be affected by proposed cuts.

                       pilot program for peaches

    Mr. Latham. Does the Department or the Risk Management Agency have 
plans to reduce the regulatory and administrative costs of the program 
in a commensurate amount, as required by law, to the cut being proposed 
in the budget--a full 21 percent below the 1996 level?
    Response. Since enactment of the law referred to, Risk Management 
Agency (RMA) has worked continuously to identify, evaluate and 
implement ideas that would simplify the administration of the Federal 
Crop Insurance program. We have sought suggestions from farmers, 
reinsured companies, FSA's local offices, and the general public. We 
have evaluated these ideas against the other requirements of the FCIC 
Act that require that the program be managed in an actuarially sound 
manner.
    We have worked with all the reinsured companies and with their 
industry associations to evaluate the ideas presented. Of over 100 
ideas presented, we and the industry have agreed on the merit of 
implementing 38. Of these, 27 have been successfully implemented and 11 
are still in progress. While it is still too early to be able to report 
definitively on the value of the savings generated from the ideas, we 
anticipate that both RMA and the companies will benefit.
    Further, we would note that there is evidence to suggest that the 
companies have been overcompensated for delivery in the program, which 
is the reason we are proposing that the reimbursement rate for delivery 
expenses be reduced.
                         information technology

    Mr. Latham. Do you feel that your Chief Information Officer has the 
authority she needs to ensure that the various agencies within USDA 
properly analyze their missions and program delivery systems before 
spending any more money on hardware?
    Response. It is a responsibility that I expect the Chief 
Information Officer--CIO--to execute vigilantly. We believe that the 
overall decision making structure that we have put into place--the new 
CIO, the new IRM Board and Investment Review Board, and the capital 
planning process that we are developing will ensure that this is done. 
During the interim, the moratorium and waiver approval process provides 
for this check. The CIO is and will be a key individual in both these 
processes. The CIO is responsible for determining whether the agencies 
have done the proper analysis prior to allowing an agency to proceed 
with an acquisition. The responsibility remains with the agencies to 
conduct this analysis.
    The CIO position is relatively new. As part of our continuing 
modernization effort, we will be looking at all of the authorities and 
responsibilities and making adjustments as necessary to ensure success.
    Mr. Latham. Who is the one person who is responsible for making 
sure that USDA agencies engage in the business re-engineering that GAO, 
OIG and OMB all agree is badly needed?
    Response. Ultimately, that one person is the Secretary. In turn, I 
hold my subcabinet and Agency heads accountable for continually 
improving their program delivery and business processes in conjunction 
with the promise to deliver the best service at the lowest cost. 
Specifically, the CIO has the responsibility to review the program area 
regarding business process re-engineering--BPR--prior to approval of 
information technology acquisitions. This will ensure that funds being 
expended and systems being acquired are for updated processes and not 
for those which have yet to be re-engineered. This helps ensure the 
best value for our dollar. However, the business process re-engineering 
activity itself is the responsibility of the program organizations.
    Additionally, the Modernization of Administrative Processes office 
has an overall responsibility to identify the business reengineering 
process for USDA and to carry out BPR for administrative systems.
    Mr. Latham. Are you aware of the activity-based costing study 
completed by the Forest Service's Rocky Mountain Station?
    Response. The Rocky Mountain Station has been in a unique situation 
for the last 13 years as one of the first organizations within the 
Forest Service to provide administrative services to a variety of 
Forest Service and external federal agency customers in Fort Collins. 
Historically, charges for services provided were based on yearly 
negotiations between Station and customer managers. This type of 
charging methodology, while useful in the past, has proven to be 
inadequate due to workload increases at the same time that budget and 
staff were being reduced. The need to insure that all costs for 
services rendered are recovered from each customer is crucial to the 
Rocky Mountain Station.
    Given this situation, the Rocky Mountain Station management 
embarked on a study to determine the cost of services in certain 
administrative areas and to identify inefficient business processes 
using Activity Based Costing (ABC) as a tool. As a result of the ABC 
study, the fiscal year 1997 Pricing Plan for administrative services 
provided by the Rocky Mountain Station was developed. Pricing of 
services is based on the cost of providing the service by the Station 
administrative staff. The Pricing Plan provides a description of each 
service that is available from the Rocky Mountain Station 
administrative units and unit price for each service. Also included in 
the Pricing Plan are service quality standards that describe the level 
of timeliness and quality the customer can expect from each service.
    One objective of pricing services in this way is to operate the 
Station administrative support units more like a business. One in which 
services provided are paid for by the customer on a unit price basis. 
The unit price is based on units that are measurable and trackable.
    Mr. Latham. Why has this shining example not been extended 
throughout the Forest Service and the rest of USDA?
    Response. We will certainly review the success of this initiative 
and try to use some of the information learned as we review other 
opportunities to streamline administrative processes throughout the 
Forest Service and the Department.
    Mr. Latham. What is the cost to FSA to cut an AMTA check or to 
process a farm loan application for a farmer?
    Response. Although FSA does not have an accounting system that 
allows us to accurately calculate a cost for the processing of a 
specific activity such as writing an AMTA check or processing a farm 
loan application for a farmer, we continually strive to design or 
revise our administrative systems, including ADP operations associated 
with processing producer payments, to be as efficient as possible.
    FSA is currently working with a contractor to examine the 
feasibility of a centralized process for checkwriting which could make 
that process, for certain types of payments, more cost-effective.
    The cost of writing an AMTA check, were it calculable, would depend 
on whether it was issued in the initial signup or in a subsequent year. 
For example, some of the functions associated with providing an AMTA 
check to a producer in the initial year of the contract included 
establishing basic eligibility through review and approval of payment 
limitation information, lease agreements, and compliance with the 
Sodbuster/Swampbuster provisions. Contract shares had to be calculated 
and signatures obtained for all producers with an interest in the 
contract. In contrast, producers in subsequent years with minimal or no 
change to the contract would require only a cursory review of the 
information prior to issuing the check. On the other hand, revised AMTA 
contracts would require virtually the same process as the initial year 
of the contract before a check could be issued. As can readily be seen, 
there could be a wide range of costs and functions associated with 
issuing an AMTA administrative process.
    Likewise, the functions involved in processing a farm loan 
application are also variable, and include interviewing potential 
borrowers; performing credit reviews through references and reports; 
preparing the Farm and Home Plan; and determining eligibility. The 
amount of time involved, from initial contact to the closing of a loan, 
varies greatly from one individual to another since each application is 
based on the individual involved, and also varies greatly with the type 
of farm loan being applied for.
    Mr. Latham. What is the per care cost of NRCS to perform a wetland 
delineation?
    Response. An average per acre cost of a delineation to NRCS would 
be very difficult to estimate and may not be very meaningful or 
representative. Requests for delineations from farmers range from 
staking a small wetland in the field, requiring a few hours, to several 
days in the field on very large tracts where clients desire resource 
data on their wetlands. The fixed costs associated with servicing 
delineation requests, regardless of size or complexity, include: 
collecting and evaluating soils, hydrology and vegetative data, 
evaluating previous or planned manipulations of hydrology, viewing and 
interpreting aerial photos, other remotely sensed data and visiting the 
site to confirm and/or stake-out the delineation.

                              food stamps

    Ms. DeLauro. Saturday's Washington Post detailed the effect of the 
welfare law on food stamp recipients. Many who have been on food stamps 
for three months and who have not found jobs are losing their benefits. 
I appreciate the revisions to the welfare law proposed in the 
agriculture budget because I am concerned that in many communities 
there may not be enough jobs for those who may lose their benefits. 
Could you comment on how the administration's proposal would address 
the lack of sufficient job opportunities for food stamp recipients?
    Response. The Administration proposes refinements to certain 
Welfare Reform changes made last year, since our growing economy may 
not be enough to create jobs for able-bodied program recipients, and 
Welfare Reform only gives them 3 months of benefits while they look. We 
would increase the funding available for job training slots and would 
also allow the unemployed more time to find jobs before losing food 
stamp benefits.
    The Administration proposal would limit participation of unemployed 
able-bodied adults 18 to 50 years of age, who have no dependents, to 6 
months within a 12 month period. Currently they are limited to 3 months 
within a 36 month period.
    We also propose to increase the amount of food stamp Employment and 
Training funding, which is directed at 18 to 50 year old able-bodied 
adults without dependents. Further, we would require States to direct 
increasing portions of funds toward the 18 to 50 group. We will impose 
tough sanctions on those people who refuse to work, while protecting 
those who are willing to work, but have been unable to find jobs. These 
changes will add about $200 million to program costs in 1998 and $2.4 
billion through fiscal year 2002 by keeping about 600,000 of the 
affected recipients on the rolls in 1998, declining to an estimated 
180,000 in 00.
    Under the current law, we are reviewing State requests for work 
requirement waivers under the new provisions. Waivers can be granted 
for areas with an unemployment rate at or above 10 percent, or with 
insufficient jobs, to date, 41 States have applied for waivers for 
about 800 of their total 2,600 counties. We have approved waivers for 
28 States and 500 counties, and the remainder are pending.

                            child nutrition

    Ms. DeLauro. I have worked hard to protect child nutrition programs 
and especially the School Lunch program. Could you tell me how your 
Team Nutrition proposal will improve the quality of the meals children 
eat?
    Response. The School Meal Initiative is the most sweeping nutrition 
education, training and technical assistance effort in the history of 
the Child Nutrition Programs. Team Nutrition and the Nutrition 
Education and Training (NET) programs work together in a two-pronged 
approach to improving children's health--one on the supply side, and 
the other on the demand side.
    Team Nutrition and NET help States with extensive training and 
technical assistance for the food service professionals responsible for 
operating the school lunch program to help them improve the nutritional 
quality of meals they supply to the Nation's school children. Team 
Nutrition and NET also help with nutrition education to children--
encouraging the children to eat the meals that are provided--and, not 
incidentally, to make wise nutritional decisions in and out of school. 
Nutrition education is designed to be fun and to deliver consistent 
messages to children where they live, learn and play. The children are 
the demand side. Each side must work together to improve the quality of 
meals--and we believe that they are.

                              food safety

    Ms. DeLauro. Secretary Glickman, in your testimony, you mention 
food related illnesses due to the pathogen Campylobacter. In recent 
years, we have heard about and many people, including unfortunate 
victims in my district, have experienced illnesses due to the E. coli 
bacteria. could you tell me more about Campylobacter and explain how 
the new food safety initiatives will address these threats to the 
safety of our food supply?
    Response. Campylobacter is the most frequently identified cause of 
acute infectious diarrhea in developed countries and is the most 
commonly isolated bacterial intestinal pathogen in the United States. 
It has been estimated that between 170,000 and 2.1 million cases of 
campylobacteriosis occur each year with an associated 120 to 360 
deaths. Several prospective studies have implicated raw or undercooked 
chicken as major sources of Campylobacter infections. Unpasteurized 
milk and untreated water have also caused outbreaks of the disease.
    We reached a milestone last July with the publication of the final 
rule for Pathogen Reduction and Critical Control Point (HACCP) systems. 
This rule is expected to contribute significantly to reducing foodborne 
illness in the United States by targeting and systematically reducing 
harmful bacteria on raw products, as well as other likely hazards.
    To build on this success, the President's food safety initiative, 
requests funds for FDA, CDC, and USDA's food safety monitoring 
research, education, and inspection activities. Specifically, USDA's 
budget includes additional funds for pre-and post-harvest food safety 
research undertaken in Federal laboratories, cooperative research and 
extension programs with land-grant universities, and improved traceback 
of foodborne illness associated with Campylobacter with the Centers for 
Disease Control and Prevention. These research and education programs 
will address issues related to pathogen detection and safe food 
handling practices. Information gained from these efforts will be made 
available to industry and consumers through technology transfer and 
education programs.

           hazard analysis and critical control points system

    Ms. DeLauro. Secretary Glickman, also with regard to food safety, 
could you describe how the Hazard analysis and Critical Control Points 
(HACCP) systems represent an improvement on earlier food inspection 
regimes?
    Response. The current inspection system does not directly target 
and systematically reduce harmful bacteria on raw product, nor does the 
current system equip our inspectors with the scientific and regulatory 
tools they need to ensure slaughter establishments are meeting an 
acceptable standard for food safety performance with respect to such 
bacteria. Our HACCP rulemaking provides the framework for significantly 
improving food safety by incorporating science-based preventive 
controls into industry production processes and achieving an acceptable 
level of food safety performance with respect to harmful bacteria. It 
will equip inspection personnel with the scientific and regulatory 
tools they need to ensure that slaughter establishments meet specific 
standards and will reinforce all establishment's responsibilities for 
producing safe product.

[Pages 159 - 183--The official Committee record contains additional material here.]


  implementation of the government performance and results act (gpra)

    Mr. Skeen. GPRA, known as the Results Act, requires each executive 
agency to issue, no later than September 30, 1997, a strategic plan 
covering at least five years. In addition to a mission statement 
grounded in legislative requirements, the plans are to contain general 
goals and objectives that are expected to be outcome or results 
oriented (such as to improve literacy) as opposed to output or activity 
oriented (such as to increase the number of education grants issues.)
    What progress is the agency making in developing its strategic 
plan, including defining its mission and establishing appropriate 
goals?
    Response. The Office of the Chief Economist (OCE) has submitted its 
strategic plan to the Office of the Chief Financial Officer. The 
strategic plan identifies OCE's mission and articulates results-
oriented goals that are in accordance with GPRA and the guidelines set 
by the Office of Management and Budget (OMB).
    Mr. Skeen. Has the agency identified conflicting goals for any of 
its program efforts. If so, what are the performance consequences of 
these conflicting goals and what actions--including seeking legislative 
changes--is the agency taking to address these conflicts?
    Response. OCE has no program implementation responsibilities. Goals 
outlined by OCE support critical Department's missions for crop and 
weather information reporting and analysis and regulatory review. OCE 
has subjected its proposed goals to a rigorous review and evaluation 
process and its strategic goals are compatible.
    Mr. Skeen. Strategic plans must be based on realistic assessments 
of the resources that will be available to the agency to accomplish its 
goals. As you are developing your strategic plan, how are you taking 
into account projected resources that likely will be available--
especially as we move to a balanced budget? What assumptions are you 
making?
    Response. Consistent with the Administration's effort to produce a 
balanced budget, OCE's five-year strategic plan realistically assume a 
modest reduction in available resources. OCE will make every effort to 
achieve its strategic plan while streamlining its operations and 
increasing the productivity of its staff. Completion of the plan 
willrequire redirecting OCE resources and may require additional budget 
authority with the realization that OCE initiatives will be reviewed in 
the context of USDA-wide priorities.
    Mr. Skeen. How are you ensuring that your goals are realistic in 
light of expected resources?
    Response. OCE goals are realistic and essential for it to achieve 
its mission and carry out the responsibilities delegated to it by the 
Secretary of Agriculture. Where stated goals include objectives that 
would require increased levels of resources, these additional resources 
are clearly identified.
    Mr. Skeen. For Congress, the heart of the Results Act is the 
statutory link between agency plans, budget requests, and the reporting 
of results. Starting with fiscal year 1999, agencies are to develop 
annual performance plans that define performance goals and the measures 
that will be used to assess progress over the coming year. These annual 
goals are to measure agency progress toward meeting strategic goals and 
are to be based on the program activities as set forth in the 
President's budget.
    What progress have you made in establishing clear and direct 
linkages between the general goals in your strategic plan and the goals 
to be contained in your annual performance plans? OMB expressed concern 
last year that most agencies had not made sufficient progress in this 
critical area.
    Response. The OCE strategic plan submitted to the Office of the 
Chief Financial Officer identifies the linkages between general goals 
and performance goals. In the appendix section of the strategic plan, 
OCE references each performance goal to a specific general strategic 
goal.
    Mr. Skeen. More specifically, how are you progressing in linking 
your strategic and annual performance goals to the program activity 
structure contained in the President's Budget? Do you anticipate the 
need to change or modify the activity structure to be consistent with 
the agency's goal?
    Response. OCE's strategic and performance goals are compatible with 
the program activity structure contained in the President's Budget. 
Because the strategic plan covers a five-year period, OCE recognizes 
the possibility that changes or modifications in its activities may 
occur, especially, if funding levels are insufficient or support from 
other agencies is inadequate. It is for this reason that OCE has 
developed certain objectives whose realization are clearly contingent 
on the availability of resources.
    Mr. Skeen. Overall, what progress has your agency made--and what 
challenges is it experiencing--defining results-oriented performance 
measures that will allow the agency and others to determine the extent 
to which goals are being made?
    Response. OCE's performance measures are results-oriented, based 
upon the feedback from reviewers of the plan. A major challenge will be 
to accurately interpret indicators of service quality, effectiveness, 
and amount or proportion of need that is being met because of the broad 
range of OCE clients and customers, which range from the Secretary to 
individual subscribers of OCE information publications.
    Mr. Skeen. If applicable, what lessons did the agency learn from 
its participation in the Results Act pilot phase and how are those 
lessons being applied to agency-wide Results Act efforts? What steps is 
the agency taking to build the capacity (information systems, personnel 
skills, etc.) necessary to implement the Results Act?
    Response. OCE was not a participant in the Results Act pilot phase.
    Mr. Skeen. The Results Act requires agencies to solicit and 
consider the views of stakeholders as they develop the strategic plans. 
Stakeholders can include state and local governments, interest groups, 
the private sector, and the general public, among others. Who do you 
consider your agency's primary stakeholders and how will you 
incorporate their views into the strategic plan?
    Response. OCE faces a broad demand for its analytical and 
information products and services. Stakeholders include the Secretary, 
other Cabinet officials, the White House, Congress, other USDA 
organizations and Federal agencies, farmers, ranchers, agribusiness, 
commodity traders, exporters, food processors, farm input suppliers, 
and others.
    There are a variety of channels through which stakeholders' views 
have been and will continue to be incorporated into the strategic plan. 
One channel is the feedback that stakeholders, such as the Secretary 
and others provide when briefings and analytical products are 
presented. Another is the annual Data User Conference in which OCE 
participants. At these conferences, stakeholders, who use OCE 
publications, provide feedback concerning service quality, 
effectiveness, and amount or proportion of need that is being met. 
Feedback on information needs is also solicited at the Department's 
annual Outlook Forum that is organized by OCE. Also, feedback is 
provided to OCE by agencies developing regulations under the new USDA 
statutes and through agencies' participation in OCE training and 
advisory activities.
    Mr. Skeen. For the Results Act to be successful, agencies with 
similar missions, goals, or strategies will need to ensure that their 
efforts are coordinated. What other Federal agencies are you working 
with to ensure that your strategic plans are coordinated?
    Response. The accomplishment of OCE strategic and performance goals 
depends on the involvement and cooperation of a number of other 
agencies. This assumed interdependence among OCE and other agencies is 
critical for OCE to successfullycarry out its mission. Within USDA, OCE 
works primarily with the Economic Research Service, National 
Agricultural Statistics Service, Farm Service Agency, Agricultural 
Marketing Service, Risk Management Agency, Foreign Agricultural 
Service, Grain Inspection, Packers and Stockyards Administration, 
Natural Resources Conservation Service, Forest Service, Agricultural 
Research Service, Animal and Plant Health Inspection Service, and Food 
Safety and Inspection Service. Outside the Department, OCE regularly 
works with the National Weather Service, National Aeronautics and Space 
Administration, National Oceanic and Atmospheric Administration, Food 
and Drug Administration, the Department of State, the Department of 
Labor, the Office of Management and Budget, and the President's Council 
of Economic Advisors.
    Mr. Skeen. What steps have you taken to ensure that your efforts 
complement and do not unnecessarily duplicate other Federal efforts?
    Response. OCE's mission and responsibilities are unique within and 
outside the Department. In those limited cases of possible duplication 
of effort, such as surveying stakeholders, OCE has advised agencies, 
such as the National Agricultural Statistics Service and Economic 
Research Service, that it would like to work with them in obtaining 
feedback from their stakeholders, who, in many cases, are also OCE 
stakeholders. Also, OCE conducts training and resource development 
programs for other agencies to support regulatory development reform 
objectives.
    Mr. Skeen. The Results Act requires agencies to consult with 
Congress as they develop their strategic plans. Since these plans are 
due in September, now is the time for agencies to begin the required 
consultations. What are your plans for congressional consultation as 
you develop your strategic plan?
    Response. All USDA mission areas/agencies have prepared draft 
strategic plans which are currently being reviewed by the Under/
Assistant Secretary, the Senior Policy Staff and the Secretary. Upon 
completion of the review, the Department plans to provide copies of the 
strategic plan (including an overall Departmentwide Executive Summary 
and the strategic plans for individual mission area/agencies) to 
relevant Congressional Committees. Thereafter, we will look forward to 
meeting with members or staff to discuss our strategic plan and to 
solicit your input and advice on refinements to that plan. We plan to 
provide copies of the Department Strategic Plan to the following 
committees:

          House Agriculture Committee
          House Appropriations Committee
          House Economic and Educational Opportunities Committee
          House Government Reform and Oversight Committee
          House Resources Committee
          Senate Agriculture, Nutrition, and Forestry Committee
          Senate Appropriations Committee
          Senate Energy and Natural Resources Committee
          Senate Governmental Affairs Committee

    Mr. Skeen. Which Committees will you consult with? How will you 
resolve differing views?
    Response. In addition to the House and Senate Appropriations 
Committees, the House Committee on Agriculture and the Senate Committee 
on Agriculture, Nutrition, and Forestry are the most likely committees 
with which OCE will consult. OCE would work with Senior Policy Staff of 
the Department and Congressional staff to arrive at a satisfactory 
resolution of any differing views.
    Mr. Skeen. In passing the Results Act, Congress sought to 
fundamentally change the focus of Federal management and decision 
making to be more results-oriented. Organizations that have 
successfully become results oriented typically have found that making 
the transformation envisioned by the Results Act requires significant 
changes in what they do and how they do it.
    What changes in program policy, organization structure, program 
content, and work process has the agency made to become more results-
oriented?
    Response. OCE management and staff have held extensive discussions 
about the results-oriented focus of GPRA. Also, OCE has drawn on the 
results of internal surveys and on recommendations given at outside 
GPRA meetings to develop a set of measures to best implement results-
oriented goals. Although OCE has not needed to initiate changes in 
program policy, it has made changes in its organizational structure in 
terms of assignments of personnel to monitor the progress toward 
completing performance indicators and objectives.
    Mr. Skeen. How are managers held accountable for implementing the 
Results Act and improving performance?
    Response. Managers will be responsible for accomplishing general 
goals through the fulfillment of performance goals and related 
objectives, the indicators of which are measured by the results 
achieved. Output is no longer considered a stand-alone indicator of the 
successful fulfillment of individual responsibilities.
    Mr. Skeen. How is the agency using Results Act performance goals 
and information to derive daily operations?
    Response. Each member of OCE has been provided with a copy of 
strategic and performance plan goals and objectives. When annual 
reviews are made of how successfully the organization progressed toward 
achievement of goals, OCE individuals will be evaluated on how well 
they helped achieve these goals.

                 Office of Budget and Program Analysis

            breakout of resources for obpa's responsibility

    Mr. Skeen. Please update the table that appears on page 671 of last 
year's hearing record showing a breakout of resources for the areas of 
OBPA responsibility to include fiscal year 1997 actuals and fiscal year 
1998 estimates.
    [The information follows:]

                      U.S. DEPARTMENT OF AGRICULTURE--OFFICE OF BUDGET AND PROGRAM ANALYSIS                     
                                             [Dollars in thousands]                                             
----------------------------------------------------------------------------------------------------------------
             Key Areas                   SY        FY 1996         SY        FY 1997         SY        FY 1998  
----------------------------------------------------------------------------------------------------------------
Program review/policy analysis....           28        2,231           28       $2,335           27       $2,297
Budget preparation, presentation                                                                                
 and execution....................           25        1,996           25        2,077           24        2,024
Legislative reporting and                                                                                       
 regulatory analysis..............            9          717            9          748            9          757
Administrative management and                                                                                   
 automated systems................           10          791           10          826           10          840
    Total.........................           72        5,735           72        5,986           70        5,918
----------------------------------------------------------------------------------------------------------------

                              organization
    Mr. Skeen. Provide a tree chart that shows the organization of the 
office.
    [The information follows:]

[Page 188--The official Committee record contains additional material here.]


                  personnel compensation and benefits

    Mr. Skeen. Your budget request includes a reduction of $152,000 and 
two staff years in fiscal year 1998, yet the total for personnel 
compensation and benefits only decreases by $7,000. What is the reason 
for this?
    Response. The budget request includes a reduction of $152,000 and 
two staff years for personnel compensation and benefits in fiscal year 
1998. However, this amount is offset by a requested increase of $84,000 
to cover part of the anticipated fiscal year 1998 pay raise, and 
$61,000 which was reprogrammed to help absorb the remaining pay raise. 
The net result is a decrease of $7,000 in personnel compensation and 
benefits.
                   object class 25.2, other services

    Mr. Skeen. Provide a sub-object class breakout for object class 
25.2, other services, for fiscal year 1996, 1997 and 1998.
    [The information follows:]

                      U.S. DEPARTMENT OF AGRICULTURE--OFFICE OF BUDGET AND PROGRAM ANALYSIS                     
                                             [Dollars in thousands]                                             
----------------------------------------------------------------------------------------------------------------
                        Service                             1996 actual       1997 estimate      1998 estimate  
----------------------------------------------------------------------------------------------------------------
Contractual Services and Agreements....................                $24                $31                $23
Equipment/Software Maintenance.........................                 24                 24                 22
Training...............................................                 27                 25                 15
Telephone Equipment....................................                 13                  0                  0
Office Furniture.......................................                  6                  0                  0
Other Services.........................................                 12                  5                  5
    Total..............................................                106                 85                 65
----------------------------------------------------------------------------------------------------------------

  object class 25.3, purchases of goods and services from government 

                                accounts

    Mr. Skeen. Why does object class 25.3, purchases for goods and 
services from government accounts increase from $45,663 in fiscal year 
1996 to $81,000 in fiscal year 1997?
    Response. In fiscal year 1996, there were charges totaling $36,554 
that were inadvertently placed in object class 25.2. If these charges 
had been correctly placed in 25.3, the total coast would be $82,217. 
The actual cost for fiscal year 1996 is $82,217, which is compatible 
with fiscal year 1997's estimated cost of $81,000.

                         legislative proposals

    Mr. Skeen. How many legislative proposals were sent to Congress in 
fiscal years 1995 and 1996 and to date in fiscal year 1997? How many 
were enacted into law?
    Response. USDA has sent a total of 14 legislative proposals since 
fiscal year 1995. We submitted nine in fiscal year 1995, five in fiscal 
year 1996 and none for fiscal year 1997. We plan to forward approved 
fiscal year 1997 budget related proposals in the future. Our records 
indicate two proposals were enacted into law, PL 104-307, Wildfire 
Suppression Aircraft Transfer Act of 1996 and PL 104-127, Federal 
Agriculture Improvement and Reform Act of 1996.

                      code of federal regulations

    Mr. Skeen. The Department's goal to eliminate or reinvent 11,700 
pages in the Code of Federal Regulations is about 60 percent complete. 
When will you complete this goal?
    Response. USDA is fully committed to this initiative and we expect 
it to be completed in late 1999.

                            the 1997 buyouts

    Mr. Skeen. What is the status of buyouts at the Department for 
fiscal year 1997?
    Response. As of January 15, 1997, the Department has used a total 
of 1,554 buyouts, which is approximately 69 percent of the number of 
buyouts proposed in the Department's Streamlining Plan. Net savings 
from these buyouts for fiscal year 1997 are estimated to be over $11 
million.
    Details of the Department's buyouts follow:

Farm Service Agency...............................................   939
Rural Development.................................................   430
Natural Resources Conservation Service............................   106
Food Safety and Inspection Service................................    53
Departmental Administration.......................................    14
Forest Service....................................................     7
Economic Research Service.........................................     3
National Appeals Division.........................................     1
Office of Communications..........................................     1
                        -----------------------------------------------------------------
                        ________________________________________________
    Total......................................................... 1,554

              staff year reductions and the 1996 farm bill

    Mr. Skeen. Your office provided analysis of the reductions in force 
needed due to the farm program changes made by the 1996 farm bill. 
Briefly summarize the results of this analysis and provide the 
Committee with a more detailed copy for the record.
    Response. The 1996 Farm Bill made a fundamental shift in farm 
policy away from the production-oriented programs to support farm 
income, to one of fixedproduction flexibility contract payments. These 
production-oriented programs had been the linchpin of agricultural 
policy in recent years. This change meant fewer Farm Service Agency--
FSA--staff were needed, particularly at the field office level.
    In the fall of 1996, we developed an analysis of the costs and 
savings associated with the separation of 1,339 FSA staff years. The 
number of staff years used was based on a workload review completed by 
the Farm Service Agency. The analysis presented three scenarios: one 
assuming that all separations would be achieved through buyouts; a 
second one assuming that all separations would be achieved through a 
reduction-in-force-RIF; and a third one assuming a combination of 
buyouts and RIFs. The results of the analysis indicated that despite 
the initially high cost of buyouts, over a five-year time frame, the 
use of buyouts rather than RIFs resulted in total higher savings to the 
Federal Government. This is largely due to the buyouts attracting 
employees at higher grade levels so that the salary and benefit savings 
associated with these employees were greater over time. RIF's are 
likely to affect lower graded employees as a result of ``bumping and 
retreating'' rights. Further, no relocation, out placement or training 
costs were associated with the buyout approach since buyouts could be 
more closely targeted to specific positions or locations where 
downsizing would be needed. Copies of the three scenarios are provided 
for the record.

[Pages 191 - 193--The official Committee record contains additional material here.]


                        the usda budget summary

    Mr. Skeen. What is the cost to print and distribute the USDA budget 
summary document? How much of these cost are recovered through fees?
    Response. The cost to print the USDA 1998 Budget Summary was 
$11,550. No costs are recovered through fees.

             government performance and results act (gpra)

    Mr. Skeen. GPRA, known as the Results Act, requires each executive 
agency to issue, no later than September 30, 1997, a strategic plan 
covering at least 5 years. In addition to a mission statement grounded 
in legislative requirements, the plans are to contain general goals and 
objectives that are expected to be outcome or results oriented (such as 
to improve literacy) as opposed to output or activity oriented (such as 
to increase the number of education grants issued).
    What progress is the agency making in developing its strategic 
plan, including defining its mission and establishing appropriate 
goals?
    Response. OBPA has defined its mission and developed a draft 
strategic plan with goals, objectives and performance measures.
    Mr. Skeen. Has the agency identified conflicting goals for any of 
its program efforts? If so, what are the performance consequences of 
these conflicting goals and what actions--including seeking legislative 
changes--is the agency taking to address these conflicts?
    Response. We have not identified any conflicting goals for any of 
our program efforts.
    Mr. Skeen. Strategic plans must be based on realistic assessments 
of the resources that will be available to the agency to accomplish its 
goals. As you are developing your strategic plan, how are you taking 
into account projected resources that likely will be available--
especially as we move to a balanced budget? What assumptions are you 
making? How are you ensuring that your goals are realistic in light of 
expected resources?
    Response. OBPA developed its strategic plan based on the FY 1998 
Budget and the outyear funding and staff year levels in the FY 1998 
Budget.
    Mr. Skeen. For Congress, the heart of the Results Act is the 
statutory link between agency plans, budget requests, and the reporting 
of results. Starting with fiscal year 1999, agencies are to develop 
annual performance plans that define performance goals and the measures 
that will be used to assess progress over the coming year. These annual 
goals are to measure agency progress toward meeting strategic goals and 
are to be based on the program activities as set forth in the 
President's Budget. What progress have you made in establishing clear 
and direct linkage between the general goals of your strategic plan and 
the goals to be contained in your annual performance plans? OMB 
expressed concern last year that more agencies had not made sufficient 
progress in this critical area.
    Response. Due to the nature of our mission, the general goals in 
our strategic plan are the same as the goals in our annual performance 
plan.
    Mr. Skeen. More specifically, how are you progressing in linking 
your strategic and annual performance goals to the program activity 
structure contained in the President's Budget? Do you anticipate the 
need to change or modify the activity structure to be consistent with 
the agency's goals?
    Response. OBPA has only one program activity in the President's 
budget so we do not anticipate any need to change or modify our program 
activity structure.
    Mr. Skeen. Overall, What progress has your agency made--and what 
challenges is it experiencing--defining results-oriented performance 
measures that will allow the agency and others to determine the extent 
to which goals are being met?
    Response. We have defined results-oriented performance measures for 
each of our goals. Many of these measures, however, are qualitative due 
to the nature of our mission. We plan to do an internal performance 
assessment which will allow us to make a descriptive statement of 
sufficient precision to allow for an accurate, independent 
determination that the performance goal was achieved.
    Mr. Skeen. If applicable, what lessons did the agency learn from 
its participation in the Results Act pilot phase and how are those 
lessons being applied to agency-wide Results Act efforts? What steps is 
the agency taking to build the capacity (information systems, personnel 
skills, etc.) necessary to implement the Results Act?
    Response. OBPA was not a participant in the Results Act pilot 
phase.
    Mr. Skeen. The Results Act requires agencies to solicit and 
consider the views of stakeholders as they develop the strategic plan. 
Stakeholders can include State and local governments, interest groups, 
the private sector, and the general public, among others. Who do you 
consider to be your agency's primary stakeholders and how will you 
incorporate their views into the strategic plan?
    Response. OBPA's customers include the USDA agencies, USDA policy 
officials, the Office of the Secretary, OMB, and Congress. These 
entities will be provided an opportunity to review OBPA's strategic 
plan and their view will be incorporated, as appropriate.
    Mr. Skeen. For the Results Act to be successful, agencies with 
similar missions, goals, or strategies will need to ensure that their 
efforts are coordinated. What other Federal agencies are you working 
with to ensure that your strategic plans are coordinated? What steps 
have you taken to ensure that your efforts complement and do not 
unnecessarily duplicate other Federal efforts?
    Response. The mission of OBPA is unique. OBPA provides centralized 
coordination and direction for the Department's budget, legislative, 
and regulatory functions, as well as providing analysis and evaluation 
to support the implementation of critical USDA policies and programs. 
OBPA does not have any direct program implementation responsibilities, 
and therefore, does not have any programs that duplicate other Federal 
efforts.
    Mr. Skeen. The Results Act requires agencies to consult with 
Congress as they develop their strategic plans. Since these plans are 
due in September, now is the time for agencies to begin the require 
consultations. What are your plans for congressional consultation as 
you develop your strategic plan? Which Committee will you consult with? 
How will you resolve differing views?
    Response. All USDA Agencies have prepared draft Strategic Plans 
which are currently being reviewed by the Senior Policy Staff and the 
Secretary and later by OMB. Upon completion of the review, the 
Department plans to provide copies of the Strategic Plan (including an 
overall Departmentwide Executive Summary and the Strategic Plans for 
individual Mission Areas/Agencies) to relevant Congressional 
Committees. Thereafter, we will look forward to meeting with Members or 
Staff to discuss our Strategic Plan and to solicit their input and 
advice on refinements to that Plan. Copies of the Department's 
Strategic Plan will be provided to the following Committees:
    House Agriculture Committee.
    House Appropriations Committee.
    House Economic and Educational Opportunities Committee.
    House Government Reform and Oversight Committee.
    House Resources Committee.
    Senate Agriculture, Nutrition, and Forestry Committee.
    Senate Appropriations Committee.
    Senate Energy and Natural Resources Committee.
    Senate Governmental Affairs Committee.
    Mr. Skeen. In passing the Results Act, Congress sought to 
fundamentally change the focus of Federal management and decisionmaking 
to be more results-oriented. Organizations that have successfully 
become results-oriented typically have found that making the 
transformation envisioned by the Results Act requires significant 
changes in what they do and how they do it. What changes in program 
policy, organization structure, program content, and work process has 
the agency made to become more results-oriented?
    Response. OBPA was a results-oriented organization prior to the 
passage of GPRA. Although OBPA has not made changes in its 
organizational structure or program content, we have made changes in 
personnel duties to place more emphasis on achieving results.
    Mr. Skeen. How are managers held accountable for implementing the 
Results Act and improving performance?
    Response. As part of the annual performance appraisal process, 
results oriented outcomes are included in the performance elements of 
all OBPA managers. Managers are responsible for achieving these 
performance elements and annual performance appraisals are based on the 
level of achievement attained. OBPA expects in the future that 
managers' performance elements will track and be fully consistent with 
the elements in the OBPA GPRA annual performance plan.
    Mr. Skeen. How is the agency using the Results Act performance 
goals and information to drive daily operations?
    Response. Actually, OBPA's daily operations are not likely to be 
changed by the Results Act performance goals and information. OBPA has 
always strived to fulfill its mission and modified its operations if 
the goals were not being accomplished. However, the Results Act will 
bring a greater discipline to the monitoring and evaluation of whether 
the organization's mission is accomplished efficiently and effectively.
                                 ______
                                 
                              Dan Glickman

                     u.s. secretary of agriculture

    Birthday: November 24, 1944.
    Birthplace: Wichita, Kansas.
    Sworn In: March 30, 1995.
    Dan Glickman was sworn in as the 26th U.S. Secretary of Agriculture 
on March 30, 1995. Prior to his confirmation, Glickman represented for 
18 years Kansas' 4th Congressional District in the U.S. House of 
Representatives.
    During his congressional career, Glickman developed a reputation 
for being an inquisitive and thoughtful legislator. Whether the issue 
was fighting for improved airline safety or serving as a chief 
architect of the last four farm bills, Glickman has been a vocal 
advocate for the people of Kansas and the country.
    As he begins his service as Secretary of Agriculture, Glickman will 
bring with him the experience gained by serving nearly two decades on 
the House Agriculture Committee, including six years as chairman of the 
Subcommittee on General Farm Commodities and its predecessor, the 
Subcommittee on Wheat, Soybeans and Feed Grains.
    He is widely recognized as a leading spokesman for American 
agriculture. In addition to his work on farm bills in 1977, 1981, 1985 
and 1990, Glickman led the way in areas such as expanding trade in 
agriculture goods, food safety, and reinventing the USDA. Glickman was 
the original author of House legislation to streamline and reorganize 
the USDA.
    In recognition of his hard work and leadership, in January 1993 the 
Speaker of the House appointed Glickman to serve a two-year term as the 
Chairman of the House Permanent Select Committee on Intelligence. This 
appointment made Glickman the first full committee chairman from Kansas 
in 40 years.
    As chairman of the intelligence committee, Glickman pursued 
policies to ``de-mystify'' the intelligence community by holding open 
hearings, pushing the intelligence community to publicly explain its 
functions in the post-Cold War era, and reducing the number of 
classified documents. In addition, Glickman launched a major committee 
investigation into the Aldrich Ames spy case.
    Glickman's legal experience and his seat on the Judiciary Committee 
enabled him to become a leader in the battle to make reasonable reforms 
in general aviation product liability laws. He also devoted 
considerable time to finding ways to strengthen lobbying disclosure 
laws, revamp the administrative law judge corps and develop effective 
ways to combat crime. He was the author of a 1987 law that created 
criminal penalties for violence directed at religious property and 
practice.
    Prior to being elected to Congress in 1976, Glickman served as 
president of the Wichita, Kansas School Board; was a partner in the law 
firm of Sargent, Klenda and Glickman; and served as a trial attorney 
for the U.S. Securities and Exchange Commission. Glickman received his 
B.A. in history from the University of Michigan and his law degree from 
The George Washington University. He married Rhoda Yura of Detroit in 
1966. They have two children, Jon, 25 and Amy, 22.
                                 ______
                                 

                          Richard E. Rominger

                    deputy secretary of agriculture

    Richard E. Rominger was nominated for the post of deputy secretary 
of agriculture by President Clinton, and was sworn in on May 12, 1993.
    As deputy secretary, Rominger assists the Secretary in supervising 
the activities of the U.S. Department of Agriculture, one of the 
largest and most diverse departments in federal government. USDA's 
mission includes management of traditional farm programs, domestic food 
assistance, research and education, agricultural marketing, 
international trade, meat and poultry inspection, forestry and rural 
development.
    Rominger is a family farmer who worked with his brother, sons and 
nephews to raise alfalfa, beans, corn, rice, safflower, sunflowers, 
tomatoes, wheat and other crops in California. He served in government 
as director of the California Department of Food and Agriculture from 
1977 to 1982. During that period, he served terms as president of the 
Western Association of State Departments of Agriculture and the Western 
U.S. Agricultural Trade Association. He also was on the board of 
directors for the National Association of State Departments of 
Agriculture.
    Rominger was on the board of directors of American Farmland Trust 
from 1986 to 1993. He is active in a number of professional 
agricultural organizations concerned with soil and water policy, 
education, research and development and marketing.
    He was selected Agriculturalist of the Year at the California State 
Fair in 1992, and throughout his career he has received numerous other 
awards including the Distinguished Service Award by the California Farm 
Bureau Federation in 1991.
    Born in Woodland, Calif., Rominger received a Bachelor of Science 
Degree in plant science from the University of California at Davis. He 
is married to the former Evelyne Rowe. They have four children, Rick, 
Charlie, Ruth and Bruce.
                                 ______
                                 

                     Biography of Keith J. Collins

    Mr. Collins is Chief Economist of the U.S. Department of 
Agriculture and is responsible for the Office of the Chief Economist, 
the World Agricultural Outlook Board, and the Office of Risk Assessment 
and Cost-Benefit Analysis. During 1993 and 1994, Keith was Acting 
Assistant Secretary for Economics which included responsibility for the 
Economic Research Service and the national Agricultural Statistics 
Service. As Chief Economist, Mr. Collins is responsible for the 
Department's agricultural projections and forecasts and advises the 
Secretary on economic implications of alternative programs, 
regulations, and legislative proposals. Mr. Collins, a member of the 
Senior Executive Service, received the Presidential Rank Awards in 1990 
and 1992.
    Mr. Collins, a native of Connecticut, holds degrees from Villanova 
University and the University of Connecticut and a Ph.D. in economics 
and statistics from North Carolina State University.

                     Biography of Stephen Dewhurst

    Stephen B. Dewhurst is currently Director of the Office of Budget 
and Program Analysis and Budget Officer for the U.S. Department of 
Agriculture.
    Mr. Dewhurst first joined the Department of Agriculture in 1966 as 
a budget analyst. Since that time, he has served in a number of 
positions as a program and budget analyst for a variety of USDA 
programs in the Office of Budget and Program Analysis and its 
predecessor organizations. Mr. Dewhurst has twice been cited by the 
Department for superior performance and was the Secretary's 1979 
nominee for the William A. Jump Memorial Award. He was recently a 
recipient of the Presidential designation as a Meritorious Executive in 
the Senior Executive Service. He is currently the President of the 
American Association for Program and Budget Analysis. During the period 
1968-1970, her served as an enlisted man in the U.S. Army with the 
Judge Advocate General's Corps. He was awarded the Army Commendation 
Medal for his service in legal assistance office, Fort Knox, Kentucky.
    Mr. Dewhurst is a native of New York City. In 1964, he received a 
Bachelor of Arts Degree in Political Science from the George Washington 
University and in 1967 he received a Juris Doctor Degree from the Same 
University.
    Mr. Dewhurst is a member of the D.C. Bar and the American Bar 
Association. He presently resides with his wife, Miriam and his two 
sons in Falls Church, Virginia.

[Pages 198 - 262--The official Committee record contains additional material here.]


                                      Wednesday, February 12, 1997.

                    OFFICE OF THE INSPECTOR GENERAL

                               WITNESSES

ROGER C. VIADERO, INSPECTOR GENERAL
JAMES R. EBBITT, ASSISTANT INSPECTOR GENERAL FOR AUDIT
CRAIG L. BEAUCHAMP, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS
DELMAS R. THORNSBURY, DIRECTOR, RESOURCES MANAGEMENT DIVISION
DENNIS KAPLAN, BUDGET OFFICE, DEPARTMENT OF AGRICULTURE

                            Opening Remarks

    Mr. Skeen. I want to welcome you all here today.
    We always like to kick-off our hearing schedule with your 
testimony because you're involved with all our agencies and 
programs. The Department can provide the subcommittee with 
valuable information as we get ready for the agency budget 
hearings.
    Before you begin, I want to welcome back our returning 
Members of the subcommittee: Ms. Kaptur, from Ohio who I'm 
happy to announce is our new ranking Member; Mr. Walsh from New 
York; Mr. Dickey from Arkansas; Mr. Kingston from Georgia; Mr. 
Nethercutt from Washington; Mr. Fazio from California; the 
distinguished Chairman of the Appropriations Committee, Mr. 
Livingston from Louisiana; and the distinguished Ranking Member 
of the Appropriations Committee, Mr. Obey from Wisconsin.
    I would also like to introduce our four new Members of this 
subcommittee: Mr. Latham from Iowa; Mr. Bonilla from Texas; Mr. 
Serrano from New York; and returning for a second term, Ms. 
DeLauro from Connecticut.
    We want to welcome them aboard.
    With that, I'll turn over the microphone to you, Roger, and 
I would ask that you be as brief as possible in your opening 
remarks. We've read your statement. It will be published in its 
entirety. We have five Members, including Mr. Walsh, who is the 
new Chairman of the Legislative Branch Subcommittee who will 
have to leave. They have a meeting that is starting at 1 p.m., 
but they are going to have to have a little forbearance and 
give us at least 10 minutes of their time.
    So, they'll have to leave in about 30 minutes or so for 
another hearing, but they would like to have a chance to ask 
you some questions before they go. I know you want to show a 
short video, so, maybe we could do that and then get right to 
the questions.
    Mr. Viadero. If it's all right with you, we're proposing 
since time is limited and other Members have to go on and 
attend to other business, if they have questions as we complete 
the sections that we go through, we'd be happy to entertain 
those questions at that time.
    Mr. Skeen.  That's fine, Roger. Would you introduce your 
panel?
    Mr. Viadero. Yes, sir.
    Good afternoon, Mr. Chairman and Members of the committee. 
I am pleased to have this opportunity to visit with you today 
to discuss the activities of the Office of Inspector General. 
I'd like to introduce the members of my staff who are with me 
today. Mr. James Ebbitt, Assistant Inspector General for Audit; 
Mr. Craig Beauchamp, Assistant Inspector General for 
Investigations; and Del Thornsbury, our infamous Director of 
Resources Management.
    The Office of Inspector General was established to prevent 
and detect fraud, waste, and abuse of the Department's more 
than 300 programs and operations. We also keep you and the 
Secretary informed of our problems and deficiencies and report 
criminal violations to the Attorney General.
    We have a diverse staff of auditors, criminal 
investigators, and other personnel in offices throughout the 
country to carry out these activities. I am proud to say that 
in fiscal year 1996, we continued to more than pay our own way. 
In the audit arena we issued 282 audit reports and obtained 
management's agreement on 1,627 recommendations.
    Our audits resulted in questioned costs of $1.5 billion. 
Management also agreed, as a result of our audit work, to 
recover $11.4 million and put $264.7 million to better use. 
Additionally, our investigative staff completed 956 
investigations and obtained 738 convictions.
    Investigations also resulted in $71.5 million in fines, 
restitutions, and other recoveries. Still, our auditors and 
investigators can continue to recover and save money for the 
taxpayers only if we have the tools that are needed to perform 
these duties.
    For several years, we have been required to absorb 
increases in personnel costs, which has forced us to limit our 
replacement hiring and has extensively limited the funding we 
have available for other necessary items such as travel and 
specialized law enforcement equipment. As an example, in 1993, 
we had 875 employees on board. Now, we have only 745, a 
reduction of 130 in less than 4 years.
    At this level, we are able to only deal with crisis issues 
needing immediate audit and investigative attention. Many 
critical issues, including agency concerns, simply must be put 
on hold because there are just no more people to do these jobs. 
This is especially disconcerting in the investigative arena 
where it is critical to address issues as quickly as they are 
brought to our attention.
    We currently have a backlog of approximately 1,400 cases, 
many of which we have had to decline during the past year, 
primarily because we don't have the staff to do the work. 
Adequate funding for our office makes good sense because we 
create a Government that works better and produces positive 
results.
    While I recognize that there are difficult budget times and 
every agency must do more with less, I believe the Office of 
Inspector General cannot continue to provide sufficient service 
and assistance to you, the Congress, and the Department of 
Agriculture and its agencies without being provided adequate 
resources.
    And I request that our proposed funding level be approved. 
I believe that resources allocated to the Office of Inspector 
General are very cost effective in view of the money we save 
the taxpayers, not to mention the important role we serve in 
helping to protect the nation's food supply.
    Before I move on to specific investigative audit areas, I'd 
like to update the committee on our progress in implementing 
our new forfeiture authority. With the committee's support, we 
are now authorized to receive proceeds from forfeiture actions 
arising from our investigations.
    In the past year, all of our special agents received 
specialized training on this new law enforcement tool and how 
it could be used. Extensive administrative control systems were 
established to monitor and track forfeiture actions, and any 
proceeds identified to be provided to this Government.
    These are now all in place and operational. While over $10 
million has been identified for possible forfeiture to the 
Government as a result of our investigative actions since this 
office has been provided with the authority as of November 
1995, to date, this agency has not received any funds from 
these proposed forfeitures.
    We are continuing, however, to work with the Department, 
the Office of Management and Budget, and the Departments of 
Treasury and Justice to ensure the Office of Inspector General 
receives its equitable share of proceeds from these proposed 
forfeited assets as approved by you. I'd also like to mention 
that in recognition of my agency's standing as a law 
enforcement arm of this Government, we were the only Office of 
Inspector General requested to provide security at the Summer 
Olympics this past year in Atlanta.
    Sixty of my agents worked on this special security 
assignment in Atlanta for approximately 1 month under the 
auspices of the Department of Justice at a cost to this office 
of nearly $700,000 of which Justice reimbursed a mere $256,000, 
causing a $444,000 budget shortfall which we had to absorb from 
other budget lines.
    In fiscal 1997, we are focusing our audit efforts on the 
Department's financial accounting systems, on credit programs, 
civil rights implementation and compliance with the Farm Bill, 
and the Food Stamp Program, including its electronic benefits 
transfer project.
    Our investigative priorities include the timely and 
thorough investigation of threats to the health and public 
safety, employee integrity issues and fraud in the Department's 
loan, regulatory and benefit programs. We continue to spend the 
greatest portion of our time and resources on the Food Stamp 
Program.
    So, let me tell you about some of our efforts in that 
particular area. The EBT system, Electronic Benefits Transfer, 
is designed to replace food coupons and other federal benefits 
with electronic delivery of those systems.
    The national strategy includes expanding EBT services to 
all States by fiscal year 1999. Under agreement with the 
President's Council on Integrity and Efficiency, we were 
assigned the lead to review EBT systems that deliver state-
administered programs, including the Department of 
Agriculture's Food Stamp Program, the Special Supplemental 
Nutrition Program for Women, Infants and Children, commonly 
called WIC, the Department of Health and Human Services Aid to 
Families With Dependent Children, which is now called Temporary 
Assistance to Needy Families under Welfare Reform, and the 
State's general assistance programs.
    Currently, 15 States have operational EBT systems which 
issued approximately $1.4 billion in Food Stamp benefits during 
fiscal 1996. Five of the States operate statewide. Program 
spending levels for fiscal 1996 were about $22.8 billion for 
Food Stamps, $4 billion for the WIC Program, and $16.9 billion 
for Temporary Assistance to Needy Families.
    We are very supportive of EBT and firmly believe it will 
reduce trafficking by recipients, as well as make trafficking 
by retailers easier to detect and investigate. EBT takes Food 
Stamps off the streets and keeps the benefits in the hands of 
those who need them.
    I want to show you some pictures of our work involving Food 
Stamp trafficking that we were able to detect using EBT 
safeguards. This first picture is in the back counter of a 
store, the McKean and Westwood Grocery Store in Baltimore, 
Maryland. They kept cash and pistols--the arrows point to the 
pistols--there while conducting Food Stamp trafficking 
transactions.
    We found that one of the owners had instructed his 
employees to add $3 and change to all trafficking transactions. 
I'm sure you can all read that. Just tell us which way the 
``E'' goes. They added $3 and change to every transaction. If 
you can't see up there, I'll read it for you.
    The first transaction was $120. And what the traffickers 
did was to add $3.89 to it. As you can see, we find that down 
that whole sheet of paper there on that chart. All transactions 
show an additional amount of $3.29, $3.89, et cetera, which was 
very peculiar. We were able to target the traffickers based 
upon being able to detect the even amounts. Very rarely totals 
come out to even amounts when we buy groceries. So, they added 
$3 and change; nice twist. A total of $745,623 or 92 percent of 
all Food Stamp transactions exceeding $20 at that store 
included this $3 and change. And that's during an 18-month 
period, I'd like to add. That's three-quarters of a million 
dollars in 18 months.
    The next chart shows transactions indicating the $3 and 
change tactic used by the store. For instance, the transaction 
which we just mentioned was $120. It got billed out for 
$123.89.
    OIG's highest investigative priority has always involved 
health and safety issues affecting the Department and its 
programs, especially those which may endanger the wholesomeness 
of the American food supply.
    For example, during a joint investigation with California's 
Department of Food and Agriculture, we found that chickens were 
slaughtered in a filthy facility using equipment that was 
contaminated by rats, fecal matter, other decomposing chickens 
and the presence of cats and dogs in the immediate slaughter 
area.
    The equipment used for slaughter consisted of a plywood 
table with deep scar marks, the barrels under it, and a knife 
with a rusted blade. The table was adjacent to a row of wire 
cages which were covered with an accumulation of matted 
feathers and also contained decomposing chickens which had been 
present for an undetermined length of time.
    The plastic barrels contained feathers and what appeared to 
be chicken fat or feather oil. No hot water supply was 
available to allow for clean up. During the course of the 
investigation, IG agents observed uninspected adulterated 
poultry products being entered into commerce in order to be 
sold to the public for human consumption.
    The owner, along with his wife and brother, were indicted 
for violations of the Federal Poultry Products Inspection Act. 
This case is currently awaiting trial. We also had a video that 
was about an hour and a half long on the search warrant. The 
video showed most disgusting, most deplorable conditions. And 
just to think that this food entered our food chain--that's the 
most disgusting part.
    I want to show you some pictures taken by our agents during 
the time of this investigation. The picture on the left 
demonstrates the slaughter facility. That's the slaughter 
house, folks, the piece of plywood there. And there is the 
great slaughter instrument to the right. It's just an old 
knife. It's pretty well rusted and blood stained; absolutely 
deplorable. The Company ceased operations after a search 
warrant was executed.
    In another investigation closer to home here in 
Pennsylvania, the driver of a rendering truck delivered spoiled 
meat, bones, grease, and floor sweepings from his truck into a 
meat market. The spoiled meat was washed, trimmed, ground, 
mixed with other waste products, and made into ground beef or 
beef patties and sold to the public.
    I'd like to take some time to show you the photographs on 
this investigation. The one on the left is just a rendering 
bin, if you will, that was dropped off at the food processor. 
And that has the floor sweepings and other miscellaneous debris 
in there, in addition to the bones and adulterated meat. The 
picture on the right is just a picture of the truck with the 
barrels of these waste products before they're dumped into the 
dumpster on the left. During the course of this investigation, 
the driver of this truck encouraged a witness to lie to IG 
special agents in order to thwart the investigation.
    Eventually, the driver pled guilty to the sale of 
adulterated meat and conspiracy, and following a trial was 
convicted of witness tampering. The meat market pled guilty to 
selling adulterated meat and was sentenced to 1 year of 
probation and fined $10,000.
    Also, the presiding judge prepared a public notice stating 
how the market violated the Federal Meat Inspection Act and 
sold adulterated meat products, which he ordered to be 
published in a local newspaper.
    At last year's hearing, Mr. Chairman, I advise (advised) 
this committee of a concern regarding our authority. I want to 
update you on this very sensitive issue. The Texas Attorney 
General instructed Texas Tech University officials to deny 
Office of Inspector General access to Mediation Program 
records, asserting that such records were confidential under 
Texas law.
    We have issued Inspector General subpoenas to obtain the 
records and litigation regarding our subpoenas is pending. In 
the Northern District of Texas there is also a criminal 
investigation underway now.
    In our audit work, we identified a potential conflict of 
interest for three of the four full-time Mediation Program 
employees. We also identified excessive grant reimbursements to 
the University for salary reimbursement for individuals who did 
not work in the Mediation Program and were ineligible for such 
reimbursement.
    During our continuing review of the State Certified 
Mediation Programs, we were denied access to Mediation Program 
records for the Michigan, North Dakota and Minnesota Mediation 
Programs. We continued to meet with the Farm Service Agency 
Administrator and other departmental officials to discuss 
resolution for these issues.
    Another area that has been of major concern to this agency 
during this past year has been the flight safety of Forest 
Services Airtankers. These are the large multiengine aircraft 
used by the Forest Service fire fighters to drop fire retardant 
chemicals to suppress or extinguish wild fires.
    They play a significant role in the Forest Service's Fire 
Fighting Program to save the national forests and reduce the 
Government's timber loss. There have been several fatal crashes 
of these planes. We found that the Forest Service sometimes 
allowed airtankers to fly hazardous fire fighting missions with 
broken or malfunctioning equipment; that risk management 
guidance set forth in the Forest Service's own Aviation Safety 
Plan was not being followed, resulting in necessary maintenance 
not being performed.
    Let me show you some photos here. That's a picture of a C-
130A dropping fire retardant over a wild fire in a national 
forest. The second photo shows a Lockheed P2V airtanker on July 
29, 1994, prior to the crash later that day in the Lolo 
National Forest in Montana, killing both the captain and 
copilot. So, we have the before and we have the after 
photograph.
    In another case, follow-up was not reported to determine 
the impact of information reported by the National 
Transportation Safety Board concerning the cause of at least 
one fatal Forest Service airtanker crash. According to the 
NTSB's brief of the accident, the most probable cause of the 
accident was deemed to be fuel leakage due to O-ring failure.
    Upon receiving the NTSB's conclusions, the Forest Service 
Aviation Safety manager determined that no action was needed 
and simply filed the report away. When we became aware of this 
potentially dangerous situation, we recommended that Forest 
Service inspectors immediately check O-rings on similar 
airtankers to ensure the same problems would not cause another 
fatality.
    In December 1996, the Forest Service submitted a plan to 
address our recommendations. Once the specific actions outlined 
in this plan are in place and operating, we believe that the 
Preseason Inspection Program and Overall Air Safety Program 
will be more effective.
    Now, if you will bear with me, I have a 3-minute video 
tape. It's an interview I did with Congressman Menendez on CNN 
regarding this matter.
    Mr. Skeen. If you would hold that in abeyance for about an 
hour to let some of the subcommittee----
    Mr. Walsh. I really don't have anything to ask. Certainly, 
I would thank the committee for providing testimony. It has 
also been very leading and very aggressive. We applaud that. I 
chair the legislative subcommittee--we try to spread the wealth 
around a little bit. So I'll go over there now and get started. 
Thank you.
    Mr. Skeen. Thank you, Mr. Walsh. Mr. Viadero you can go 
ahead with your video.
    [Video shown.]

                             Forest Service

    Mr. Viadero. The purpose of taking the time--and I 
understand that this committee does not appropriate funds for 
the Forest Service. However, this committee appropriates funds 
for the Office of Inspector General. And I'm charged with also 
auditing and investigating incidents in the Forest Service. And 
that's taken this year approximately 10 to 15 percent of both 
my time and my money to do these investigations. So, we're 
really running very, very close to the wire, folks, of being 
antideficient. And I am asking if we can, Mr. Chairman, if you 
could make a recommendation, if you see fit to refer this over 
to the Interior Appropriations Committee. They might give us a 
bit of help here financially.
    Mr. Skeen. I know that committee and I'll assure you that 
we will. I'd like to ask Ms. Kaptur, who is our Ranking Member, 
do you have to go?
    Ms. Kaptur. Thank you, Mr. Chairman. I do have a conflict 
as does Mr. Walsh. I'll stay here for awhile. That's all right. 
I'll stay for awhile with you, Mr. Chairman.

                        APHIS--Animal Treatment

    Mr. Viadero. We have one concluding area we'd like to 
mention. It has to do with the Animal and Plant Health 
Inspection Service, APHIS, which is responsible for regulating 
the use of warm blooded animals in research, exhibition and 
commerce in order to ensure their humane treatment.
    We found that the broad wording of APHIS' regulations has 
allowed a wide variety of individuals to obtain animal 
licenses. 64 percent of the licensees we visited did not 
exhibit their animals, but instead maintained them as personal 
pets. In some instances, we found large and dangerous animals 
that were housed in enclosures that were inadequate to contain 
them. In one such case, a licensee's pet tiger had to be shot 
to prevent it from escaping to the surrounding neighborhood.
    I'd like to show you a couple of pictures here too. The 
first two photographs are of a cougar in a small, inadequate 
cage; in one case, in the basement of a personal residence. The 
next photograph demonstrates the news media's interest in the 
welfare of these animals.
    The photograph is an article discussing a file in Roy Boy's 
Tatoo Parlor and Gym in Gary, Indiana, where the fire fighters, 
much to their amazement, discovered a basement full of full-
grown dangerous animals: two Bengal tigers, a five-foot 
alligator, and a rather large albino python.
    The photograph in the news article shows one of the actual 
Bengal tigers. Based on our recommendation, APHIS is working to 
amend its regulations to: one, restrict the definition of an 
exhibitor to exclude pet owners; two, require that applicants 
meet standards of knowledge and experience before being 
licensed to exhibit; and three, limit the ability of licensees 
to obtain additional large or dangerous animals without APHIS' 
approval.
    In addition to these examples of our activities, my written 
statement also includes additional examples of the results of 
many of our audits and investigations of this Department's 
varied programs.
    Mr. Chairman, this concludes my presentation. And I will be 
more than pleased to respond to any questions.
    [Clerk's note.--Mr. Viadero's written testimony appears on 
pages 328 to 392. Mr. Viadero's, Mr. Ebbitt's, and Mr. 
Beauchamp's biographical sketches appear on pages 325 through 
327. The Office of the Inspector General's explanatory 
statement appears on pages 393 through 428.]
    Mr. Skeen. Thank you very much, Mr. Viadero.
    I'd like to yield to Mr. Latham, who is also on the 
Legislative Branch Subcommittee. I know his time is 
constrained, so if he has any questions or a statement to make.

                          payment limitations

    Mr. Latham. I thank the Chairman very much.
    And I guess I just have one question. In the 
accomplishments section of your budget submission, you refer to 
a review of the payment limitation and it's continued 
circumvention.
    How much do you estimate as being paid out over the 
limitation? And what producer groups or programs or 
participants are the worst offenders?
    Mr. Vaidero. Well, I'm going to put Mr. Ebbitt on the spot 
for this one, Mr. Latham.
    Mr. Latham. Thank you.
    Mr. Ebbitt. Mr. Latham, we really don't have an estimate of 
how much, how many dollars are involved in this particular 
scam. Historically, we have found where producers are 
approaching the payment limitation level, the $40,000 or the 
$50,000 level. That's when it happens.
    That's when they will work with, frequently with family 
members, with other tenants, with sharecroppers to setup a scam 
to evade the payment limitation. Now, we find these cases. 
Frequently, the agency will refer them to us where they have a 
question. Frequently, the neighbor down the road will say, I 
know that the unit that my neighbor has created is not a fair 
situation or it is not reality. And that's essentially how we 
find these cases.
    We also do, periodically, we do computer runs of the Kansas 
City--the Department's data in Kansas City to look for people 
that are at or close to a level. And we will take samples of 
those cases and go out and take a look to see what is going on 
there.
    But there isn't any number out there that I can give you 
that says we have so many producers and so many dollars 
impacted. What we do see is that over the years, every time 
Congress has attempted to tighten that regulation, producers 
have found ways to evade it and that continues to this day.
    Mr. Latham. I guess I'm trying to get a little more 
specific. Is there any type of producer that is more apt to be 
involved in this? I mean, by commodity or region.
    Mr. Ebbitt. Well, in the farm payment arena you get to the 
limit very quickly on cotton and on rice. Historically, we have 
found bigger problems for those couple of crops. Corn, in mid-
America corn--not as many producers will reach the level as 
quickly. We have found cotton and rice to be a bigger problem. 
By type, it's people that are bumping up against the limit that 
begin to look for ways to evade it.
    Mr. Latham. I think for now, Mr. Chairman, that's all the 
questions. Thank you.
    Mr. Skeen. Thank you, Mr. Latham. Ms. Kaptur. I apologize 
for not taking you first.
    Ms. Kaptur. Oh, no, that's all right. I understand. Being 
on the other subcommittee also, I know some of the constraints. 
So, I think it's important you get there.

               agricultural market transition act (amta)

    Thanks Mr. Chairman. I wanted to thank the Inspector 
General for his testimony. One of the issues I'm interested in 
which is referenced in your testimony, but you didn't speak 
about it here and that's the monitoring that you're doing of 
the Agricultural Market Transition Act.
    One of the efforts that I led here last year was to require 
that farmers plant or engage in conservation practices in order 
to receive any kind of program payments under the law. In your 
testimony you discuss a three-phase effort to assess the 
implementation of the Act. And you talk about a third phase 
under which you will examine internal controls over conversion 
and contract acreage to nonagricultural use, planting 
flexibility, and protection of contract acreage from weeds and 
erosion.
    Could you enlighten me a little bit on what you're going to 
look at there and if your efforts will help assure me that any 
benefits under the Act will go to those that are actually 
engaged in production or conservation?
    Mr. Viadero. Mr. Ebbitt.
    Mr. Ebbitt. Sure. I would hope that we can give you that 
assurance, Ms. Kaptur. When the Farm Bill passed and the AMTA 
provisions of the Farm Bill, we began immediately to look at 
how the Department implemented the new bill and the 
corresponding regulations to go with that. We gave them some 
early feedback on control issues that we were concerned about. 
We're pushing them to get these control issues into the 
regulations.
    I would point out that in our assessment, the Department 
has done a very good job of implementing the new Farm Bill, of 
getting the producers signed up. They did it in a very tight 
time frame under some tough conditions that some county 
officers were working under. We were out there at the same 
time, on-site, looking at this activity and we found that they 
did a good job.
    Specifically, on compliance activities, we looked at how 
farmers have signed into this long-term agreement; how they are 
carrying it out; and how they are fulfilling the promises under 
that agreement. We have staff out there right now in all 
regions of the country specifically looking at what farmers are 
doing under the contract, whether they are maintaining the land 
in conservation uses or in crop production as required under 
the contract. We're looking to make sure that a new Holiday Inn 
or a new parking lot hasn't been constructed on this land that 
we have a long-term contract on.
    So, that assessment is underway right now. We will be 
reporting periodically on what we find out there. As those 
reports come out, of course, we will share them with this 
committee.
    Ms. Kaptur. thank you very much. I appreciate that. We just 
want to make sure that the provision is followed for the 
betterment of all.
    Mr. Viadero. Yes.

                 Allegations of Discriminatory Lending

    Ms. Kaptur. I wanted to ask, in the backlog cases that you 
have under your jurisdiction, there have been allegations of 
discriminatory lending practices by USDA. How many of the 
backlog cases that currently exist are discriminations?
    Mr. Beauchamp. From an investigative side, we are not 
looking at those as a criminal activity. We're looking to do an 
audit there.
    Mr. Viadero. The bulk of our cases would be Food Stamp 
cases, food safety inspection cases, APHIS cases, employee 
integrity cases, timber theft cases; things like that; more of 
a finite criminal area if you will.
    Ms. Kaptur. Do you have any recommendations from your own 
perspective on what the Department could do to ensure that all 
individuals have equal access to USDA programs; equal treatment 
in the delivery of those programs? Do you see any role for 
yourself as an Inspector General in assuring that?
    Mr. Viadero. As I recall at a secretarial staff meeting, 
the people from the Farm Services Administration are taking a 
look at that particular issue in line with the new Farm Bill. 
We would normally review this after it's up and running for 
about two or three years to see how it's doing. We'll go back 
in and monitor it, and report back to you in 2 or 3 years as to 
how it's phased in.
    Ms. Kaptur. All right.
    Mr. Ebbitt. If I could, we also have a review underway 
right now looking at exactly how does the Department and its 
agencies handle cases of discrimination that have been filed 
either by a producer or by a Department employee. And we are 
looking at the handling of those cases and how efficiently, the 
Department handles them and makes decisions regarding those 
cases.
    And that, I think, gets specifically to your question of 
equal access and whether farmers and producers that apply for 
the Department's programs are being treated fairly. And the 
Secretary, of course, has spoken on that. He has a task force 
underway in the Department right now looking at that particular 
issue. He asked the IG to look at the handling of these cases. 
And that's what we have underway right now.
    We anticipate a report towards the end of the month 
regarding our assessment of the processing of these cases in 
the Department.
    Mr. Kaptur. I would very much appreciate for the record if 
you could provide a summary, how you view your role on the 
discrimination issue.
    Mr. Viadero. As soon as we--and forgive me. I 
misinterpreted the type of request you just mentioned. We're 
just finishing up Phase I of this review. And we are in 
discussions with the Secretary awaiting his official response 
to our report. As soon as we get that official response, each 
Member of this committee will receive a copy of that report.
    Ms. Kaptur. Thank you very much.
    Mr. Viadero. Yes, ma'am.
    Mr. Kaptur. And I would appreciate, just for my own 
purposes and for purposes of the record, if your office could 
give us a clear sense of how you view your role in the 
Department in trying to deal with these discriminatory charges 
that have been leveled against the USDA.
    Mr. Viadero. Yes, ma'am.
    [The information follows:]

    The Secretary asked me to review the process for handling 
complaints of discrimination of the loan programs within the 
Department and primarily at the Farm Services Agency. We are 
looking at the process in the Department for handling these 
cases, who is responsible for taking action to resolve these 
cases, and the timeliness for completing action on these cases. 
After this phase of our review is completed, we intend to visit 
selected locations around the country where discrimination 
complaints have been more prevalent to do some on-site analysis 
of how loan applications and other USDA program activities are 
handled for minority farmers as compared to non-minority 
farmers. When our work is completed for these activities, we 
will provide the committee with our reports.

                  unsanitary poultry and beef products

    Ms. Kaptur. In contrast to the other parts of USDA that are 
also working on this. Okay. Thank you.
    I wanted to ask you also on the films that you showed us 
there are pictures about the chickens that were being 
slaughtered in unsanitary situations and also the beef patties 
that were reprocessed and so forth.
    Who was the buyer in each of those instances? In other 
words, the chickens were slaughtered, who bought those? Were 
they only in California? Was it a California retail store? Was 
it a mom-and-pop store? I guess what I'm getting at, does it 
tend to occur in the parts of the economy that are largely you 
would say serving the low and moderate income communities as 
opposed to suburban areas?
    Mr. Viadero. As I understand the chickens, the bulk of 
those went to restaurants.
    Mr. Beauchamp. They sold the chickens largely to 
restaurants and very small markets in the city.
    Ms. Kaptur. In San Francisco?
    Mr. Beauchamp. It's a city in California.
    Ms. Kaptur. A city in California. And what about the beef 
patties?
    Mr. Beauchamp. The beef patties were sold at a market, a 
fairly large market near Philadelphia.
    Ms. Kaptur. Is it a retail chain or is it a ma-and-pa?
    Mr. Beauchamp. It was a retail market. It was not a chain. 
It really varies when you look at these types of cases. We 
testified, Roger testified last year, about a large sausage 
manufacturer in Oakland, California, Coast Packing Company, 
that had multi-million dollar contracts with the Defense 
Department and also had large retail sales all over the 
country.
    They were also taking in bad meat from renderers until we 
shut them down with a search warrant. And that was a fairly 
large operation.
    Ms. Kaptur. Explain to me why those respective States 
wouldn't have shut those down before you arrived on the scene?
    Mr. Beauchamp. Well, this was a crime that they were not 
aware of. It's a crime that violates the Federal Meat 
Inspection Act or, in the case of the video, the Federal 
Poultry Products Inspection Act. So, the Department has an 
enforcement responsibility. The States often also share that 
responsibility, and we work closely with the States, if it's a 
violation of State law.
    Mr. Viadero. The poultry issue was a joint investigation 
with the State.
    Ms. Kaptur. Are you at liberty to say how you found out 
about that in either case?
    Mr. Viadero. At this point it might jeopardize the criminal 
proceedings, ma'am.

                   electronic benefits transfer--wic

    Ms. Kaptur. Okay. On the review of the Electronic Benefits 
Transfer for Food Stamps and the WIC Program; what type of 
monitoring do you do of WIC? We have had such substantial 
increases in the dollars going out in that program for the last 
several years. To what extent have you been monitoring the WIC 
Program?
    Mr. Viadero. Well, on WIC, as it relates to EBT, first of 
all, I don't know the exact location, Ms. Kaptur, where WIC is 
operating on Electronic Benefits Transfer. It's very limited 
right now around the country.
    Ms. Kaptur. Very limited.
    Mr. Ebbitt. As far as distribution of WIC by Electronic 
Benefits Transfer. It's probably going to be better. I mean, 
EBT generally has made these programs better from a control 
standpoint and making sure that the people get the food that 
the program is trying to get out there to the right people.
    As far as other areas in WIC, eligibility; we've looked at 
eligibility requirements over the years and how states do in 
making sure that they determine eligibility correctly. And, 
again, generally they've done a pretty good job. We haven't 
found major problems in determining eligibility.
    One area over the years where we have had a problem is with 
the WIC voucher. And the same thing happens as was demonstrated 
on the Food Stamp chart where the retailer increases by $3 the 
actual purchase amount. On WIC vouchers, it's normally a not-
to-exceed amount on the voucher.
    And the person would go in and spend $20, $25 on food and 
the retailer marks up $28 or $30 on the voucher. It processes 
through and he gets $30 for a $25 purchase. We have pushed over 
the years very hard for the Department to propose rules to get 
better monitoring. And the Department has been slow on getting 
that accomplished.
    It hasn't occurred yet. We're looking for stronger 
monitoring efforts of those vouchers. Having said that, again, 
EBT will go a long ways towards getting that better monitoring. 
You can see what's happening much easier with EBT than you can 
with those vouchers.

                       backlog--food stamp cases

    Ms. Kaptur. And a final question for this round; of the 
backlog cases that you have, 1,400, what categories do those 
fall under? Are most of those Food Stamp?
    Mr. Viadero. Yes. The vast majority of them are Food Stamp 
operations. It is also critical to note that I have about 225 
agents I place in the field. That covers seven regions. 
Personally, I'd like to get out and do more WIC work. I'd like 
to do more farm work.
    And the bulk of our Food Stamp work, we open very few Food 
Stamp cases in the major metropolitan areas for under $1 
million. So, we have to be selective in what we take even in 
Food Stamps due to the limited number of resources that we can 
put in the field to investigate them. So, we're only taking the 
best of the--or the most mileage of the Food Stamp cases.
    Ms. Kaptur. Explain something to me. In my own community, 
our prosecutor takes several Food Stamp cases to court every 
year. Is the difference that the IG would concentrate on those 
for the million dollars or more and the smaller cases are left 
behind?
    Mr. Viadero. Well, we also do the ones that are interstate 
because we find people as groups that will deal in trafficking 
Food Stamps on an interstate basis. That's something that the 
State would be precluded from, if you will. So, we're doing 
interstate operations too where Food Stamps are issued in one 
State and trafficked in another and perhaps are cleared in an 
authorized or in an unauthorized store in yet another State. 
And that's the type of data base that we're putting together. 
So, we're putting together the intelligence base and doing a 
targeted selection of major traffickers.
    And these, again, are very protracted and very time 
consuming and cumbersome cases in line with the paperwork 
that's involved. This is the best white color crime I've seen 
in 29 years in law enforcement right here in agriculture.
    Ms. Kaptur. And in the case of prosecutors, local 
prosecutors taking on some of these cases, how would you 
distinquish between what they do and what you do? I hear what 
you're saying about interstate and the large volume.
    Mr. Viadero. Well, we do our best to investigate every case 
that comes in. And if it doesn't meet the federal prosecutive 
guideline, we refer it to the State for prosecution. Also, many 
of the states have State law enforcement bureau benefits where 
they get reimbursed from USDA for doing this, the SLEB 
agreements.
    Mr. Beauchamp. Another breakdown is the type of Food Stamp 
crime. Most of the country prosecutors or State prosecutors are 
investigating or prosecuting recipients who make false 
applications for state benefits. Because of the way the Food 
Stamp Program is set-up where the States, the country welfare 
offices, are responsible for certifying recipients, they are 
also largely responsible for the investigation of recipient 
fraud. That's where the vast majority of those prosecutions 
are.
    At the Federal level, we're responsible for authorizing 
retail stores where recipients can go to use their Food Stamps. 
We're also responsible for the redemption of the Food Stamp 
coupons for the Federal Reserves. So, in OIG we target the 
retail store.
    Mr. Viadero. As an example, 2 years ago, almost 3 years ago 
now, we prosecuted a case in Baltimore involving three stores 
and a city market. It was an EBT case. We actually took only, 
six defendants out of the three stores. However, we referred 
7,500 recipient fraud cases to the States' Attorney. The 
Assistant States' Attorneys were not happy to see their case 
load increase by 7,500 in about a half an hour.
    Ms. Kaptur. I thank you for that clarification. Mr. 
Chairman, I'll suspend at this point.
    Mr. Skeen. Thank you, Ms. Kaptur. Mr. Kingston.

                    aphis, animal cases--legislation

    Mr. Kingston. Thank you, Mr. Chairman.
    After the animal cases, you said that you had made 
recommendations to APHIS who had drafted legislation. One of 
the things I cannot stand, and I think many Members of Congress 
and the public can't stand, is when unelected Washington 
bureaucrats set rules, policies and regulations that should 
come under the purview of elected legislative bodies on a 
State, Local or a Federal level.
    How much of that is going on? Because I mean they're 
talking about bringing individual pet owners under their law 
which I know they have the right to do, but still I frankly 
would like to undo as much of their right as possible and 
return that to elective bodies.
    And this gets to be a philosophical question, but I really 
am very interested in stopping that interagency, frankly, 
bureaucrat elitism. And I'm not saying that you're being 
elitist about it because you're doing what always has been 
done. But for APHIS to go out and do this, I think is mildly 
heavy-handed. I think it should come through us or through 
State government; State elected government.
    Mr. Viadero. Well, to agree with you from my position as 
the IG, again, we have no--we're prohibited statutorily from 
having program responsibility. I'd be happy to work with any, 
if not all, of you to correct this.
    The main concern here is the proper treatment of these 
animals, because every time we let out an audit report 
involving animals, this is our most highly sought after audit 
report. It has to do with pets and animals. I think it's fair 
to say that and some of the tigers can weigh up to 500 pounds; 
keeping a 500-pound animal in a basement with no light and in a 
small cage is inhumane.
    Mr. Kingston. I'm not discussing the merits of it. I'm 
talking about the mechanics of it.
    Mr. Viadero. I'd be happy to work with you and see if we 
can come up and do a legislative fix with this.
    Mr. Kingston. How can we make it so that when you're making 
recommendations to other departments that they come to us 
before they go off creating more laws? This is just a 
tremendous problem nationally. We lose freedom because, I mean 
let's say there are 100 people who abuse tigers in America, 
which is probably extremely generous.
    Does that mean that the other 260 million of us have to 
lose a freedom to keep a tiger because some APHIS inspector is 
going to come up with, the perfect solution? Anybody who would 
keep the animals in a basement I think is a creep. I'm in 
agreement with you.
    Anyone who cares about the animal probably would not own an 
animal. But, you know, in America where there are the Ted 
Turners in the world; I think he owns a grizzly bear or 
something like that. You have these people who like to own 
animals and have the ability to own animals, I think they 
should have that right without it being a Federal law that they 
have to, let them do it locally on a State level. That's what 
I'm saying. Again, it's a philosophical question. But what 
could you recommend to Congress to keep bureaucratic agencies 
from year-after-year writing new laws on top of existing laws 
and giving them more power which should go through elected 
bodies, hearings, votes, public scrutiny and so forth?
    Mr. Viadero. You're right. It's a philosophical question 
and I think for minds bigger and better than mine, but I'd be 
happy to meet with you and discuss it and see if we can work 
something out.
    Mr. Kingston. Well, I think it might be something the 
committee would like to know about also. So, why don't you 
respond in writing and maybe carbon other Members. Maybe I'm 
the only one out on a tear, but I don't think I am. And I'm 
only picking on you because you're sitting here and brought it 
up. So, let me say that.
    Mr. Viadero. That's all right. My ribs don't hurt. I had 
another meeting before this. The issue, Mr. Kingston, we have 
seen, again, in dealing with the APHIS issue, in particular, 
we've seen where States have neglected their right, 
particularly at the puppy mills.
    They've abdicated their rights and controls. And we see 
that these animals continue to be abused. But I'd be happy to 
meet with anybody. Again, this is a tough question and I'll get 
back to you in writing on it.
    [The information follows:]

                     Recommended APHIS Legislation

    A private citizen may own an animal, without an APHIS 
license, State and/or local laws permitting. APHIS only becomes 
involved when the person wishes to exhibit the animal to the 
public. What we found was that some individuals circumvented 
State and/or local laws prohibiting the ownership of such 
animals by obtaining an exhibitor's license from APHIS. In many 
of the jurisdictions included in our review, obtaining the 
APHIS exhibitor's license overrode State and/or local laws.
    We recommended regulatory changes that would permit APHIS 
to deny licenses to applicants whose possession of exotic 
animals would violate State or local laws and would require 
applicants to meet minimum standards of knowledge and 
experience regarding animals to be exhibited. Our 
recommendations regarding legislation related to our previous 
audits of provisions of the Animal Welfare Act covering the 
humane care and treatment of warm blooded animals wholesaled as 
pets, or used for research. This would grant APHIS the 
authority to deny license renewals or suspend or revoke 
licenses when serious violations occur, something APHIS can not 
now do without a lengthy administrative process.

                       forest service--airtankers

    Mr. Kingston. Okay. And I would appreciate that.
    Also, on the forestry inspection; I'm glad that you are 
doing this on the airplane, the airtankers and so forth. And it 
sounds like you're very much on top of the issue. It's 
deplorable that your recommendations were originally ignored.
    However, I'm sure that the Forestry Department has another 
side of the story. And have they had the opportunity to talk to 
that? We don't, as you say, control their spending. The 
Chairman, and did you say the Ranking Member also, or a couple 
of people from this committee will be involved in that?
    Mr. Viadero. Well, they had the opportunity when we issued 
the audit report. And they responded back within seven days and 
concurred with all of our findings and recommendations. That 
was their primary arena with which to take exception to that 
report.
    Mr. Kingston. They just pled guilty and shrugged off the 
two----
    Mr. Viadero. Well, I didn't say guilty. They did nolo on 
it.
    Mr. Kingston. That is outrageous.
    Mr. Viadero. They continue to tell us that they're working 
very aggressively to take care of these recommendations.
    Mr. Skeen. Is that the Forest Service?
    Mr. Viadero. Yes, the Forest Service.
    Mr. Kingston. Yes. He was in the Forest Service.
    Mr. Kingston. I hope, Mr. Chairman, that some of you on the 
proper committee raise some cain and get a little pain out of 
them for that.
    Mr. Skeen. You have our promise.

                           olympics security

    Mr. Kingston. The final question I had was your agreement 
with the DOJ on the Olympics security, $700,000, and your 
shortfall of $440,000, what was the original agreement? Was it 
dollar-for-dollar reimbursement?
    Mr. Viadero. The agreement was that we would be reimbursed 
for our costs. However, when we met with the Deputy Attorney 
General on this, she stated that she only had so much in this 
pot of money that was given to her for this special 
appropriation for the Olympics and it came out as a 
reimbursement per agent. That's how she did it.
    She took up the total number of agents that were assigned 
there from all Federal agencies and just divided it up by the 
number of agents. Unfortunately, they're claiming they didn't 
get the same--the amount of appropriation that they were 
expecting.
    Mr. Kingston. You know, Mr. Chairman, it's real interesting 
because the Olympic Organizing Committee had a huge surplus, 
which, as I understand, they gave away in the forms of bonuses 
to some of their key people.
    Mr. Viadero. Yes, sir; my question too.
    Mr. Kingston. There, again, if you had a recommendation on 
that. I wonder how many other agencies such as yours got a 
shortfall and how much the taxpayers are expected to pickup 
while these folks have kind of feathered their own nests and 
done it very adequately.
    Now, having been critical and frank with you on a couple of 
issues, let me conclude in saying that you guys are doing a 
good job. And I appreciate the hard work that you do. You are 
on the front line of so many of our intentions.
    Mr. Chairman, I yield back.
    Mr. Skeen. Thank you, Mr. Kingston. Mr. Fazio.
    Mr. Fazio. Thank you, Mr. Chairman.

                            ebt--nationwide

    1I'd like to followup on the questions that Ms. Kaptur is 
asking about Electronic Benefits Transfers. We only have five 
States that have really gone full bore into this, reading 
quickly through your testimony.
    Mr. Viadero. Right; that are on-line statewide.
    Mr. Fazio. On-line.
    Mr. Viadero. We have several other States that are on 
either within a region in the State or a small group of 
counties or an individual county that is still testing it out.
    Mr. Fazio. Do you think it would be helpful to the Federal 
taxpayers if every State were on EBT and all of our benefit 
programs were handled by fraud proof at least theoretically 
fraud proof, techniques like EBT?
    Mr. Viadero. Oh, most definitely so. And, again, as I 
mentioned to the Chairman and Ms. Kaptur, 2 years ago, when we 
first started coming up here, I mean, this was the greatest 
thing. We all have a proprietary interest in EBT because in 
1999 our pensions will be on EBT. So, I have a very proprietary 
interest in EBT in that the controls are in place and working.
    The interesting part is we've presented, and it took us 
awhile to get the people's attention. The basic cost of an EBT 
card, just a plain card, is $1.70. The cost of a smart card, if 
you will, these new debit cards, whatever you want to call 
them, with state-of-the-art control----
    Mr. Fazio. Holograms.
    Mr. Viadero. Holograms; the whole thing. The holograms, 
including the ability to put in, monitor, change and adjust the 
fraud profile as the market changes costs $1.92 or, what? A 22 
cents difference in the card, of which half of that is 
reimbursable from the Food and Consumer Services to the State 
as a reimbursable cost.
    So, we're talking 11 cents a card; basically 11 cents a 
family and yet that seems to be a very difficult selling point 
to the States.
    Mr. Fazio. Well, that's what I was getting at. We seem to 
be making very little progress in expanding EBT around the 
country. It seems to me that we have far more incentive to do 
this. We are holding the largest bag in this process. The 
states are being asked to spend the money to implement a system 
that is basically for our benefit. Haven't we got perhaps our 
priorities out of whack if we're not willing to provide some 
additional incentive to them; perhaps financial, perhaps legal? 
I don't know.
    Mr. Viadero. I think it's going to reduce their case load 
too with EBT.
    Mr. Fazio. Well, they have some benefit to gain as well.
    Mr. Viadero. I mean, it's greatly going to reduce their 
case load because they don't need issuing points anymore for 
stamps.
    Mr. Fazio. Right.
    Mr. Viadero. Those are a lot of jobs at issue there as 
well.
    Mr. Fazio. But what is taking, in your opinion, so long to 
make this the universal application of benefits that everybody 
has talked about, but which they never seem to quite 
accomplish?
    Mr. Viadero. We don't handle the contract. Treasury handles 
the contract on EBT. And that seems to be an issue with the 
financial management section for the Department of Treasury as 
to whether they're going to go to a RFP or use an invitation 
for expression of interest.
    Mr. Fazio. What is the subtlety I'm missing there?
    Mr. Viadero. One is you have to go through the bid process. 
And one is, if we've done business with you before, in order to 
trim the process down by a few months.
    Mr. Fazio. I understand that a part of this dilemma is that 
the banking industry wants in on the ground floor. They want to 
control EBT. I've noticed that in my State, many of the banks 
are moving into the supermarkets, closing branches, firing 
tellers, and putting ATM's in the supermarkets.
    This is all part, I think, of a game plan to bring the 
benefit user into the bank's net. There are obviously other 
entities in the private sector that would like to do this work 
and perhaps are losing out because of the Treasury take-over of 
the control of this issue.
    Do you have any information you might bring to this 
discussion?

                               ebt losses

    Mr. Ebbitt. Mr. Fazio, if I could; one point that I think 
broke the log jam a little bit on EBT was the Treasury 
regulation referred to as Regulation E. And I'm not an expert 
on that by any means. But in effect what that regulation says 
is, your own personal credit card, if you lose it and somebody 
uses it, you're limited to a $50 responsibility on that card.
    The big question was similar for EBT, if that card is lost 
or stolen, who is going to be responsible for the benefit level 
that may be abused and misused. States didn't want the 
responsibility, certainly. The private sector didn't want that 
responsibility either. And the Welfare Reform Bill laid off 
that responsibility, if you will, back to the Federal 
Government.
    And so, having broken that log jam in welfare reform, we 
now have 19 States stepping up to the plate working now with 
vendors on EBT contracts. We have five statewide. We have about 
eight others at selected locations in their States. So, the log 
jam does seem to be moving. I think we're going to see a lot 
more come on much quicker.
    1999 is the goal nationwide to have everybody on-line. I 
don't think that's going to happen, but I think you're going to 
see an awful lot of movement in the next year, year and a half 
towards that end.

                              ebt--savings

    Mr. Fazio. Well, this 11 cents cost would remove much of 
the risk in this whole area that we've just talked about.
    Mr. Viadero. Yes. That's correct.
    Mr. Fazio. Who would be responsible for liability will be 
much less an issue once we spend a little bit more to make 
these cards a little bit more foolproof from the standpoint of 
illegal use. Am I correct?
    Mr. Viadero. Well, it's such a great system. This is an 
editorial comment. With such a great system, we're arguing over 
the cost of less than a First Class postage stamp to secure the 
benefits and safeguard them.
    Mr. Fazio. And for the benefit of all of us, how much do 
you estimate we would save by getting rid of the amount of 
fraud that exists in the current system?
    Mr. Viadero. Well, let's start by saying we eliminate in 
excess of $50 million a year just in printing Food Stamps. 
That's a start.
    Mr. Fazio. That's a start.
    Mr. Viadero. Not counting these centers for distribution 
and other things.
    Mr. Fazio. That's correct.
    Mr. Viadero. Just in printing costs.
    Mr. Fazio. Yes; that's not bad. If we took that savings and 
invested it to some degree in maybe providing some incentives--
--
    Mr. Viadero. Like these budgets?
    Mr. Fazio. No, no, no, no. Don't be too self-interested. In 
perhaps giving the states that are most strapped or reluctant 
to move forward, it would come back to us very quickly, 
wouldn't it, in savings?
    Mr. Viadero. I would assume so. Yes, sir.
    Mr. Fazio. Has anybody ever proposed that?
    Mr. Viadero. Well, I had a conversation with one State. The 
total benefit that they would have to put up for this was less 
than $10,000 for the State. And the State controller was 
adamant. He wouldn't move. And he said to me, well, what's 
going to make me move?
    I said, well, when Mike Wallace shows up at my office at 8 
a.m. on Monday, I'm just going to refer him to you and ask him 
why fraud is rampant in your state. That state has now signed 
up for their $10,000 and they are covering that 11 cents cost.
    Mr. Fazio. Good. So, the 60-Minute factor will come in to 
help.
    Mr. Viadero. I would say so. Yes, sir.
    Mr. Fazio. Yes. Well, it seems to me that anything we could 
do, I'd be interested in your suggestions, editorially or 
officially, to move this process along. It's only in the 
interest of every Federal taxpayer that we put this system in 
place.
    And I would think it is in the interest of many of the 
beneficiaries, particularly children, who are seeing funds 
diverted to other purchases that are not legal under the law 
and which are made with the cash that people obtain from the 
misuse of Food Stamps.
    Mr. Viadero. It's interesting to note that the heavier 
users of Food Stamps benefits like the larger cities, the 
larger industrial states, if you will, that have the 
concentration of Food Stamp recipients, are more than willing 
to go along. They see the need for it.
    It's those areas of the country that really haven't seen 
much in the area of Food Stamp trafficking, that haven't been 
exposed to the same fraud, that are a bit reluctant to assume 
those extra costs.
    Mr. Fazio. Well, I can tell you in representing rural 
committees, we have fraud in them as much as we do in the urban 
communities. And I think just because it doesn't appear quite 
as easy for us to obtain, it's there.
    Are you convinced that in providing Food Stamp benefits, 
for example, through EBT that you are doing what the industry, 
the retail market industry, wants or do you find, in some 
cases, they are benefiting from the misuse and therefore are 
somewhat ambivalent about implementation of this?

                         food stamps/compliance

    Mr. Viadero. Well, about 80 percent, 75 to 80 percent, of 
the Food Stamp benefit is transacted in about 15 percent of the 
stores; the large food chains.
    And if you're going to have an incident of Food Stamp 
trafficking let's say at a Giant, or an Albertsons store, or a 
Von's store in California, you're going to find that on an 
entrepreneurial basis, that is a deal set between the cash 
register operator, the checkout person, and the individual.
    And that's going to be as a matter of convenience. We find 
no systemic issues in the large chain stores. They are, by and 
far, the cleanest of the operations if you will. The issues go 
to those stores that are basically, unauthorized or the stores 
that have minimal food stuffs on the shelves.
    We did a sweep 2 years ago where we went into some stores 
and the cans on the shelf were there so long they were rusted 
together. There was a bag of potato chips. We don't do 
compliance. That's up to the Compliance Section of FCS to go in 
and do that. We started this go around 3 years ago with FCS.
    We also made other recommendations, such as, we would like 
to see a store that participates in the program, if they're not 
in business for a minimum of 1 year to post a bond like they do 
in other USDA programs and also supply us with their tax 
returns. If it's a 1040, we don't want the whole thing--we just 
want the Schedule C.
    We have one investigation now where the individual--I'll 
give you a rough figure. CPA stands for ``can't pass 
arithmetic'' for me. This individual claimed $50,000 in food 
sales, yet transacted more than a million dollars' worth of 
Food Stamps. Something is wrong here. Okay.
    And when we asked to see the documentation, he also 
happened to give us his tax return. And this man had such nerve 
as to claim an EIC, an Earned Income Credit. So, he also got an 
Earned Income Credit. I mean, that's taking with two hands.
    Mr. Fazio. Yes; chutzpah.
    Mr. Viadero. Or something like that, yes.
    Mr. Fazio. Yes.
    Mr. Viadero. This guy just took with two hands. He got very 
greedy.
    Mr. Fazio. Yes.
    Mr. Viadero. And these are the type people that we're left 
with. These are the ones we have to get. Okay; whether or not 
they're trading in commerce for gasoline or to make rent 
payments. That's something else. That's not legal. That's 
violation of the program. EBT will help prevent that.
    Mr. Fazio. Have you proposed this bonding concept for 
start-up?
    Mr. Viadero. Yes.
    Mr. Fazio. And what's happened to that proposal?
    Mr. Viadero. In fact, coincidentally, the Department 
revisited that issue with me 2 weeks ago. And we're hoping that 
will be rolled into the Welfare Reform amendments. The bonding 
and the Certificate of Incorporation or business license, if 
you will. We want to make sure that they are a viable entity 
before they get issued an authorized Food Stamp redemption 
certificate.
    The big issue is when somebody sees that ``We Accept Food 
Stamps'' sign on the door, it should be a matter of trust that 
this store has met certain standards. And we don't see this, 
therefore, as a right that every marketer has. It's something 
you earn.
    I take it as a drivers license in a State. Every State 
says, driving in my state is not a right. It's a privilege. And 
I think it should be a privilege. It should be an honor to be 
an authorized Food Stamp store.

                            wic--eligibility

    Mr. Fazio. Just briefly on WIC. The State directors will 
come in and testify. I've had some communication with my own in 
California. They indicate that USDA food price projections fall 
below the actual cost of food for them, the actual prices that 
they have to pay. And that there is a great discrepancy between 
what the eligible population is determined to be by USDA versus 
the State.
    These are the kinds of issues that I'm sure bedevil us in 
every State as we try to figure out what is appropriate. And 
this of course has been already indicated as going to be one of 
the major concerns of this subcommittee this year.
    Is this an area you have any information about or could 
help us with? We don't want to just take anecdotally what we're 
hearing. On the other hand, if there are flaws in the data that 
USDA is using that make it impossible for the program to work 
as intended, we should know about it. Could you comment?
    Mr. Ebbitt. Mr. Fazio, we don't have any information 
regarding the cost of food. I mean, USDA does various market 
basket studies to look at what costs are. But we haven't really 
gotten into that.
    Mr. Fazio. I suppose it would vary from one metropolitan 
area to another, right?
    Mr. Ebbitt. Cetainly, it will.
    Mr. Fazio. Because the cost of food will vary depending on 
a lot of other factors.
    Mr. Ebbitt. That's correct. Regarding eligibility, 
historically there has been more recipients, more people that 
technically would be eligible for WIC, but there hasn't been 
money there to provide that benefit.
    WIC is not an entitlement as Food Stamps have been. And 
therefore, they do have people that could be determined 
eligible if the State had more money available. And 
historically, that's been true.
    Mr. Fazio. Is it possible you could do some work in this 
area to help this committee in the future iron out some of 
these, what apparently seem to be disagreements that we can't 
resolve?
    Mr. Viadero. We'll get in contact with the Office of the 
Chief Economist and see what we can work out, Mr. Fazio, and 
report back to you.
    [The information follows:]

    State-level estimates of income-eligible infants and 
children in 1994 were used in the funding formula to determine 
each State's share of the 1994 national total of income-
eligible infants and children. This percentage share was used 
to determine a State's ``fair share'' of the fiscal year 1996 
food funds. For example, for a State with 1 percent of the 
national total of income-eligible infants and children, the 
fair share would be 1 percent of total food funds. Since food 
costs vary from State to State, it is possible for national 
USDA food price projections to fall below the actual prices 
some States experience.
    The discrepancy between what the eligible population is 
determined to be by USDA versus the State is likely a 
difference in the methodology used. For USDA, WIC eligible 
population is determined by using a technique known as 
shrinkage. Shrinkage is a statistical approach which combines 
information from survey samples with other data. For the State 
eligibles estimates, shrinkage was used to combine income data 
from the Current Population Survey (CPS), prepared by the 
Census Bureau, with other State-level economic data which has 
been demonstrated to have value in predicting the prevalence of 
low-income infants and children. This additional State-level 
data provided more information to use in developing an 
eligibles estimate. The ``shrinkage'' estimate that results 
from the combination of the CPS with this additional data 
provides an estimate of income eligibles that is more precise 
than the CPS sample estimates taken alone. I am not aware of 
how individual States have determined their eligible 
population.
    Estimates of persons eligible for the WIC program are used 
for several purposes. They provide an indication of the number 
of persons who would participate in WIC if the program was 
expanded. As such, the eligibles estimates are the basis for 
developing program budget estimates used in the President's 
budget request and the Congressional budget process. Finally, 
the eligibles estimates provide a basis for estimating program 
coverage--that is, for determining what share of the eligible 
population the program is currently reaching.

    Mr. Fazio. Thank you.
    Mr. Skeen. Thank you Mr. Fazio. Mr. Nethercutt.

                         EBT--Number of States

    Mr. Nethercutt. Thank you, Mr. Chairman, Mr. Viadero. 
Gentlemen, thank you for being here. I just want to follow up 
on Mr. Viadero's comments on an inquiry about EBT.
    And I notice on page 9 of the testimony makes reference 
that 15 States have operational EBT systems. Five of the 
systems operate statewide. An additional 30 States have sought 
the EBT processor and are currently negotiating contracts. FCS 
anticipates the system is coming on-line in 1997 and 1998.
    Can you give us, just for the record, a little better 
indication of how many States and when in that 1997, 1998 
period; I mean, that's 45 States which is pretty good. I know 
we're all impatient. But maybe there is more information that 
will clarify specifically when you expect them to come on-line.
    Mr. Viadero. Okay. Currently, 13 States have operational 
long-line Food Stamp EBT systems.
    Mr. Nethercutt. So, is this a mistake, the 15 states in the 
testimony; just for my record-keeping here?
    Mr. Viadero. No sir. We also have two States that are 
operational off line.
    Mr. Nethercutt. I got you. Sorry.
    Mr. Viadero. There are two types of EBT. I call it an EBT 
one and a son of EBT. They have the open and the closed system. 
The open system will allow you to take benefits across state 
lines. And those are generally done by the financial 
institutions at particular banks. The closed systems are done 
by nonbanking institutions. And they're only good within the 
individual States. So, we have 13 that are open and two that 
are closed for a total of 15 States.
    Mr. Nethercutt. With regard to the additional 30, is there 
a better indication of when you expect those?
    Mr. Ebbitt. What I would suggest Mr. Nethercutt, that is 
really, it's a moving target. It changes every day. Missouri, 
for example; Missouri has been wanting to--they were going to 
come on-line last October. For a variety of reasons, problems 
with vendors getting everything set and so on; they've 
experienced a lot of delays.
    But within the Department, FCS has--they keep that running 
total. And we can certainly pull that out and get it up to you, 
current as of today, what is the understanding as to when these 
other States are going to come on-line.
    Mr. Nethercutt. Sure, That would be helpful. Thank you so 
much.
    [The information follows:]

[Pages 286 - 287--The official Committee record contains additional material here.]


                 fns--discrepancies disclosed in audit

    Mr. Nethercutt. The other line of inquiry I want to pursue 
is with regard to an issue that came before this subcommittee 
the last 2 years relative to the Food and Consumer Services 
audit that was done in your investigation which found some 
rather startling discrepancies and some practices within that 
agency that were troubling.
    Can you provide please some update as to where that audit 
has been and what your findings are as of today versus what you 
found, and what I was particularly concerned about, in the last 
2 years.
    [The information follows:]

    Our audit of the fiscal year (FY) 1994 Food and Nutrition 
Service (renamed Food and Consumer Service (FCS) in 1995) 
financial statements resulted in a disclaimer of opinion. This 
opinion was based on the agency's inability to support $14 
billion of operating and program expenses and over $3 billion 
of nonoperating charges. Although the Food and Nutrition 
Service lacked accounting support for certain line items on its 
financial statements, we found no evidence of misuse of funds 
or other improprieties.
    Due to extraordinary efforts on the part of the FCS' 
employees preparing the FY 1995 financial statements and OIG 
staff auditing these statements, we were able to render an 
unqualified (clean) opinion. This effort was required due to 
many of the accounting and internal control weaknesses 
identified in the FY 1994 financial statement audit continuing 
to exist.
    We are currently auditing the FCS FY 1996 financial 
statements. To date we have found that FCS has continued to 
address and correct accounting and internal control weaknesses 
identified in prior audits; however, it is too early in the 
audit process to determine what opinion can be rendered on the 
FY 1996 statements.

                   audit of fcs's financial statement

    Mr. Viadero. For, fiscal year 1994, as you are well aware, 
we rendered a disclaimer of opinion for the Food and Consumer 
Services. A disclaimer of opinion is no opinion. We couldn't 
render one. It sort of was non-auditable, if you will.
    For fiscal year 1995, the Food and Consumer Services 
received a clean opinion, an unqualified opinion. Now, a lot of 
that had to do with luck. And, again, I'll take luck over 
substance any time I can get it. I'd like to take credit for it 
on a personal basis because we put in a Management Advisory 
Service.
    We offered that to FCS, and they reimbursed us for the cost 
of one of our auditors who was a long-time auditor of FCS prior 
to being reassigned. He was intimate with the system. He went 
in and offered a guiding hand. Also, FCS changed their 
financial management.
    And I'd like to say Mr. Chris Martin, the Regional 
Administrator for the Northeast Region for FCS and Marlane 
Evans who is the Regional Inspector General who audits the 
Northeast Region, they already had a working relationship over 
several years.
    They went in and collectively they talked. They argued. 
They straightened things out. So, FCS has come light-years in 
its financial management. That is not to say they still do not 
have major problems. Particularly, we gave them an unqualified 
opinion in their financial statements. However, they got a 
rather significant write-up on the Internal Controls Review. 
And they are working as we speak to correct that. I think the 
biggest thing we can say is yes, we have FCS's attention.
    And FCS is working with us and we're working with FCS. So 
finally, there is a dialogue there and both agencies are 
meeting. And we're working to get them even a better opinion in 
the internal controls.

                financial statements--internal controls

    Mr. Nethercutt. Is it my memory that, that was like a $39 
billion number. And we were sort of looking for $13 billion?
    Mr. Viadero. Yes. It was almost $18 billion as it turned 
out to be.
    Mr. Nethercutt. That's an unconscionable amount of money 
that I'll give the benefit of the doubt in terms of whether it 
was lost or not spent properly. That's highly questionable with 
regard to the management under that agency. So, I'm just 
wanting to be sure for the public's confidence that there is 
some answer for the fact that there was this disappearance.
    Mr. Viadero. I think it's safe to say that the money wasn't 
purloined, peculated, or otherwise embezzled. I think it's also 
safe to say that their accounting system was almost non-
existent.
    Mr. Nethercutt. Yes.
    Mr. Viadero. That's the area that we took remedial action 
with and we brought everybody up to speed. And everybody 
understood, or hopefully everybody understands. We'll know with 
the current fiscal 1997 financial statements. The audit is on 
the way.
    Mr. Nethercutt. Okay. Well, I'll look forward to their 
testimony here; whoever will be in the chair.

                         INVESTIGATIONS BACKLOG

    The final thing I want to just inquire quickly. I wrote 
down that you have a 1,400 case backlog. You've got 225 agents 
covering seven regions. What in that 1,400 case backlog--I 
assume you set priorities.
    Mr. Viadero. Yes, sir.
    Mr. Nethercutt. So, what are we as a subcommittee to glean 
from the 1,400 case backlog? Are those just suggestions of 
impropriety? Are they investigations that are ongoing? How 
serious are those 1,400 relative to the other work that you're 
doing? Maybe you could just give us your perspective on that.
    Mr. Viadero. First of all, there were no food safety 
inspection cases. Whatever we have in the Food Stamp arena, if 
we have a food safety case, the food safety case moves to 
number one. There is nothing more important than the safety of 
the food chain here. Then we'll prioritize it within that.

                            INTEGRITY CASES

    Another prime example of a priority case indicator, if you 
will, would be integrity cases; particularly involving ranking 
USDA officials. We're fortunate that we have very, very few of 
those. And then we'll go into the Food Stamp cases and the 
Export Enhancement Program, et cetera, et cetera. And we'll 
prioritize them within that arena.
    It's on a regional priority basis because it costs more 
money than I have just to relocate agents on temporary duty 
because of the rates of per diem in some of the cities. New 
York is about $200 a day now.
    Mr. Nethercutt. Well, thank you. My time I'll respect here, 
Mr. Chairman.
    Mr. Skeen. Thank you, Mr. Nethercutt. Mr. Bonilla.

                              EBT--LOSSES

    Mr. Bonilla. Thank you, Chairman.
    Roger, it's nice of you to come by and say hello before the 
hearing. I enjoyed getting a chance to go over a couple of 
things that were going to be presented in testimony here today, 
and I look forward to working closely with you in the future on 
whatever issues of mutual importance.
    I wanted to follow up on some things that other Members 
have brought up earlier. First, Mr. Fazio asked a good question 
about how much money we could save if all states moved to the 
EBT system.
    My question, more specifically, is with the current losses, 
the fraud that hovers at about $2.4 billion; you mentioned 
earlier that we could save money on printing costs and so forth 
which is all of the administrative stuff. But with regard to 
the illegal stuff, how much could we drive that $2.4 billion 
down and save in that area if all of the states went to the EBT 
system?
    Mr. Viadero. Well, if I can, we come out with a figure that 
estimates the fraud and abuse at about $3 billion.
    Mr. Bonilla. $3 billion.
    Mr. Viadero. Yes. EBT will reduce it because what we end up 
with EBT is that it eliminates a lot of preliminary field work 
in these investigations; we know the who, the what, the where, 
the when, and the how much, because the computers fortunately 
don't get overtime. They work on weekends. They don't have sick 
leave, et cetera, et cetera.
    And the computer, we can modify to build in a fraud profile 
such as it might say that Mr. Skeen would normally purchase his 
groceries between 4 p.m. and 9 p.m. Now, all of a sudden, we 
notice Mr. Skeen purchasing--and he normally does this at a 
major food chain.
    Now, all of a sudden Mr. Skeen is out in a small 
convenience store at 3 a.m. purchasing $300 in food. Ms. Kaptur 
shows up at the same store at 3:01 a.m. for $200, and Mr. Fazio 
at 3:03 p.m. for another $500. First of all, nobody in these 
stores is capable of ringing up that much in groceries in a 
minute.
    That's the $3 and change that we mentioned.
    Mr. Skeen. I'll tell you what, the three of us have a 
smooth operation.
    Mr. Viadero. That's why you're the chairman.
    And it gives us this ability to better talk at these 
institutions and also report back to FCS Compliance people to 
go out and do a review. And I think it's safe to say a quotable 
quote from Former President Dwight Eisenhower when he was the 
Commander-in-Chief of Allied Forces in World War II. He said 
that the unaudited or the uninspected, if you will, 
deteriorates. And this is true.
    It has taken some 35 years for this system to get in the 
condition it's in. FCS has approximately 50 Compliance people 
that are charged with going out and visiting these stores. And 
we have about 200,000 stores. This system will, if you will, 
provide a therapeutic enforcement, because these people will 
know when they've been found out because this will then tailor-
make these inspection lists, if you will, for FCS.
    However, this does not negate the need for FCS to go out 
prior to the issuance of the authorization as a Food Stamp 
redeemer. They have to visit the stores first. They have to 
verify that there is a store there. And I'd be happy to supply 
the Sweep Report for the record for each of you, since you 
weren't on the committee at the time we went out to seven major 
metropolitan areas and found an error rate.
    [Clerk's note.--The report is too lengthy for reprint. A 
copy is retained in Committee files.]
    Mr. Viadero. Basically, 30 percent of the stores just 
didn't belong in the system. They just didn't belong or didn't 
exist and still had the Food Stamp redemption certificate.

                    fraud in the food stamp program

    Mr. Bonilla. So, then using your figure of $3 billion in 
fraud and abuse, do you think if all of the States someday went 
to the EBT Program, we could eliminate most of that? Two-thirds 
of that?
    Mr. Viadero. Well, I don't want to eliminate it at all 
because then you don't need an IG.
    Mr. Bonilla. No. That's just for the Food Stamp Program.
    Mr. Viadero. Oh. The States are mandated by 1999 to be on-
line. So, they're going to be coming up on-line rapidly. Again, 
of the remaining states, of those approximately 30 States, that 
we've talked about, they are all seeing the light. They're 
coming up on-line.
    I would hope that we get it to a manageable figure. A 
manageable figure to me would be less than a billion dollars. 
But I think any time we can get in and save $2 billion a year, 
that's a lot of bucks. And I think if we come up on our 
learning curve, and FCS comes up on their learning curve, and 
we better use these machines, we'll be able to get that much 
more work done.
    Mr. Bonilla. Okay, Roger. Now, touching on something my 
friend Mr. Nethercutt asked about in terms of the cases that 
you can't get to and what the priorities are in getting to 
those cases. I heard you say, which is good, that you put food 
safety at the very top. What about the overall audit 
priorities? Being a new Member of the committee, how do you 
establish the priorities after food safety?

                           annual audit plan

    Mr. Viadero. Well, by statute, we have to publish an annual 
audit plan. And if you want to see paper, I invite you to come 
down and participate with the Regional audit IGs down at the 
office in July. It's unbelievable to prioritize the work that 
has to be done.
    In fact last week, we had a week where we did the mid-year 
plan to see where we were. So, this is published and it is 
supplied to each Member of the committee, the annual audit plan 
and the methodology as to how we go about saying what's 
auditable.
    Again, the high risk areas are number one. As the risk goes 
down, they'll get a lesser priority. However, the reality of it 
is we always end up doing things to put out fires. The fire 
fighting suppression that we do on the audit side is generally 
referred to by Members of Congress.
    They'll have a particular need. They'll have a particular 
incident that was reported to them and they want reviewed. 
Please remember that you folks up here are our clients. The IG 
works with the Congress or for the Congress here. And we report 
technically to the Secretary, but we also report to you folks; 
sort of that unique dual reporting responsibility.
    I think it is more than fair to say that the big issues 
that are reported to us we audit; such as what Ms. Kaptur was 
referring to. We dropped everything or virtually everything to 
get this civil rights review done for the Secretary. This is an 
important issue. The Secretary has been up here. He has 
testified. He's come out in the press with it. That, needless 
to say, was a priority issue for us.

                          wic--vendor activity

    Mr. Bonilla. Let me move now to WIC briefly. With the 
Administration requesting $378 million in new money for WIC, do 
you feel it is time that the WIC Program should be added to the 
priority list in terms of being audited to make sure that the 
money they're now getting is being properly used before a 
commitment is made to give a huge amount of additional funds to 
this program?
    Mr. Ebbitt. Yes, Mr. Bonilla. In fact, as I mentioned 
earlier, we're concerned about vendor activities. I think if 
there is a problem in WIC, it's there. Again, with vendors and 
how they're handling those vouchers that are out there right 
now. And as I mentioned, we had pushed the Department to 
publish stronger regulatory procedures and how they monitor the 
activities of retailers.
    And they haven't done that. And we have waited for some 
years now for them to publish these regulations. They haven't 
done it. So, we're going to go back out and look at the 
retailers's side; look at how States working with the Federal 
Government monitor and control what's coming back through 
stores. And with the additional monies there, I mean the time 
is right now to do that.

                  texas agricultural mediation program

    Mr. Bonilla. Very good. I have one final question, Roger. 
We touched on this. Rather, you touched on it in your testimony 
and we talked about it in my office.
    In regard to the investigation of the Texas Agricultural 
Mediation Program, if the Texas Tech Program cannot be funded 
until all issues in the audit report have been resolved, what's 
the purpose of recertifying the program? And how much money is 
at issue here. What's the annual funding for the mediation 
program?
    Mr. Viadero. Well, your question is the exact same question 
we had. It is funded. It was funded as of January 27th. The 
Administrator of the Farm Services Agency released the funds, 
unconditionally released the funds. We had asked that, as a 
condition of this funding, this $2 million fund; Mediation, 
ladies and gentlemen, was funded--the $2 million for the 
operation of the program.
    And that's just for the Mediation Program. The larger issue 
is the loan portfolio that, that $2 million creates. Okay. The 
Administrator of FSA released the funds on January 27th. We had 
asked that as a condition of these funds, these agreements with 
the State, that an audit statement be put in there that this is 
all based upon the State's allowing the Inspector General to 
come in and review the mediation files. What we have here for 
the benefit of the Members, I'm being estopped.
    My office is being estopped from being able to use its 
authority under the Inspector General Act which clearly states 
that the Inspector General has the right, the authority to go 
in and look at any records, programs, writings, diminution, 
anything related to the Department of Agriculture and/or its 
programs.
    The States are asserting an alternative dispute resolution 
statute that says that due to confidentiality, my office cannot 
go in and see which farmers--what they did in mediation. And 
this gets back to the classic hog story. As we mentioned one 
farm submitted a farm and home plan where his sows were 
yielding five to six pigs, which is normal as I found out.
    Again, remember I'm from the South Bronx. So, hogs and sows 
are a little different for me. All of a sudden 1 week later he 
comes upon with a new farm and home plan for mediation where 
these same sows are yielding 16 pigs. So, the quick question 
there is we solve pork production in America. And I thought we 
should clone those--grab those pigs and get them cloned so we 
can do genetic research on them.
    We wanted to go in and look at the mediation files. We were 
estopped from looking at them because they asserted the 
confidentiality statute. I offered to the Texas Mediation 
Program at Texas Tech University the use of the State auditors 
to assist us in this, so they could participate with us and see 
what we were looking at.
    I also want to remind the Members, my office regularly 
handles sensitive security and national security issues. And if 
we can handle national security issues and secrets, I think we 
can handle individual farmer's records in rural America. We're 
not keeping anybody's records. We're not making them public.
    We routinely handle tax files which to me would be more 
confidential than mediation records. So, in line with Texas 
estopping us and the posture they've taken, we now have three 
other states--North Dakota, Michigan, and Minnesota taking the 
same posture and estopping us from going in and reviewing these 
files.
    The next result is as of January 1st with the new Statement 
on Auditing Standards, which for the very first time makes 
auditors responsible for the detection and reporting of fraud; 
however, I cannot guarantee with any certainty that here is not 
a fraud going on there.
    Therefore, I would be in the position, for instance, and we 
might get to this this year, of disclaiming an opinion on the 
financial records for the record. And that would include the 
entire USDA Financial Statement.
    The minimum amount at risk is the Farm Loan portfolio of 
$12 million. I cannot--I can't go to sleep at night knowing 
that I'm personally responsible for reporting to the 
readership, which, number one, is you; and number two, the 
taxpayer of America, that there isn't something going wrong 
with these billions of dollars. And that's going to ring a 
bell. At least it should ring a bell to the readership that 
there is the possibility of something going on there.
    Mr. Bonilla. Thank you very much.
    Mr. Viadero. Sure.
    Mr. Bonilla. We'll be talking more about this. I appreciate 
your time. Thank you, Chairman.

                   Food Stamps Ineligible Recipients

    Mr. Skeen. Thank you. Roger, I notice we are talking about 
something like $2.4 billion in loss in the entire Food Stamp 
Program. And this is made up generally from inaccurate 
information, and updating information on recipients, mistakes, 
or mistaken and erroneous information given by the beneficiary.
    In addition to that, I understand we have people in prison 
where their food is taken care of, but they're still on the 
Food Stamp Program.
    Mr. Viadero. On the Food Stamp Program; yes, sir.
    Mr. Skeen. What are we going to do? What is being done to 
update this situation?
    Mr. Viadero. Well, I'm happy to say that the Department of 
Agriculture does not certify the recipients. That still is a 
State function. I'd also like to say with a great deal of pride 
one of my agents in the Northeast Region, who at this time has 
been working with the States of Maryland and Virginia looking 
at their respective inmates.
    GAO also went out and did a rather nice study. Again, 
that's not to say that many of the people that are incarcerated 
that receive Food Stamps mailed to the house or picked up by 
the house that the household still is not in need of the Food 
Stamps. It's just that the people that are incarcerated are 
still listed as the recipient.
    Mr. Skeen. At least there should be some control on that 
kind of a situation.
    Mr. Viadero. I more than concur, sir.
    Mr. Skeen. But this would have to be done by the State 
itself.
    Mr. Viadero. Yes, sir. FCS is pushing them to make these 
matches now.
    Mr. Skeen. So, something is being done about this.
    Mr. Viadero. They're trying, sir. Yes, sir.

                               forfeiture

    Mr. Skeen. Very good. On forfeiture, you mentioned that you 
haven't had any transfers of money or goods from the forfeiture 
program at all. What's holding it up?
    Mr. Viadero. Well, what's happening is we have people in 
one department say we're not entitled to an equitable share.
    Mr. Skeen. Is this at GAO?
    Mr. Viadero. No. I'm happy to say GAO is not guilty. This 
is the Department of Justice.
    Mr. Skeen. Oh, the Justice Department is guilty?
    Mr. Viadero. Yes, sir.
    Mr. Skeen. We're going to have to do something about 
Justice. How much money is involved that you think should be 
attributed to your benefit?
    Mr. Viadero. At this time we have approximately $10 million 
in assets subject to forfeiture, of which OIG would claim a 
share.
    Mr. Skeen. $10 million?
    Mr. Viadero. Yes.
    Mr. Skeen. What would you do if you had that money?
    Mr. Viadero. The first priority would be to go out and get 
the proper equipment for the people that I have such as the 
technical surveillance equipment. Because any time we run a 
surveillance right now, we have to do it step-and-fetch-it, and 
beg, borrow, and steal from the larger investigative agencies 
such as the Secret Service and the FBI. The next thing we would 
do is get better training for people. It's been a while these 
people have been trained.
    And that's not to say that they're not trained, okay. But I 
would like to give them better training. I'd like to get them 
out to do, particularly some white collar crime training; some 
extensive legal training; some support training. The training, 
just to train the agents in forfeiture, was in excess of 
$150,000. That was for the training.
    Mr. Skeen. For investigations?
    Mr. Viadero. No. That was for the agency, sir. Yes, sir. It 
included the printing of the manuals, the per diem costs, 
bringing people from the regions for the training. It was about 
$152,500 to get everybody trained because that's an important 
thing, especially with the way many Federal agencies are being 
looked at and abusing some of the rights of individuals under 
forfeiture.
    As we've stated here and as you folks concurred, we will 
not do a Judicial forfeiture unless it's court-ordered. And 
there is a big distinction between seizure authorities of OIG 
and that of the other agencies in that context. We will not 
move on those forfeitures unless it's directed by a U.S. 
District Judge or a Magistrate Judge.
    Mr. Skeen. That's your backup.
    Mr. Viadero. Well, sir. I think they're the independent 
third arbiter here.

                             budget--fte's

    Mr. Skeen. You're asking for a $2.231 million increase in 
your budget and this is primarily for what, investigators?
    Mr. Viadero. Well, as I mentioned, when I hire, if I hire 
one investigator, I hire one auditor. And I still--even with 
that $2 million plus, I still cannot come up to my staffing 
level, my authorized FTE.
    Mr. Skeen. What is that level?
    Mr. Viadero. My authorized FTE was 811, sir.
    Mr. Skeen. What do you have?
    Mr. Viadero. I have 745 at this time.
    Mr. Skeen Okay. Does anyone else have any other questions?
    Ms. Kaptur.

                           white collar crime

    Ms. Kaptur. I know we have a vote on.
    I just wanted to thank the Inspector General for excellent 
testimony and for fine work. I did want to have you elaborate 
on a comment you made when I was asking you questions before. 
You said you've done investigatory work in other agencies. And 
prior to coming to the Department of Agriculture, but you said 
it was the worst criminal activity that you've seen.
    Mr. Viadero. No. I said it's the best white collar crime 
I've seen.
    Ms. Kaptur. All right. Could you elaborate on that. What do 
you mean by that?
    Mr. Viadero. This is some of the finest white collar crime, 
from an investigative standpoint, it's almost stimulating, Ms. 
Kaptur. I must tell you that this is not nickel and dime white 
collar crime. With the program fraud that is going, seeing some 
of the companies that we've been dealing with, we're not just 
dealing in the street.
    This is a very unique operation. We deal Food Stamps in the 
street and we deal program fraud in the board rooms of some of 
the largest corporations in America. And with 29 years in the 
business, this is the best work I've ever seen.

                        banco nationale scandal

    Ms. Kaptur. Foreign Agricultural Service, the largest fraud 
settlement in history of USDA. It was a conspiracy case. Can 
you add anything to what's in the testimony on that? $25 
million, am I reading this right; $25 million to the U.S. 
Government in civil penalties?
    Mr. Viadero. Mr. Beauchamp shepherded this one through 
personally. So, I'll let him do it.
    Mr. Beauchamp. That was an investigation that came out of 
the Banco Nazionale del Lavoro scandal concerning food sales to 
Iraq. This was the latest prosecution, although other cases are 
still going on. The Company was the Continental Grain Company.
    Ms. Kaptur. Ah, that's what I wondered.
    Mr. Beauchamp. And its affiliate. It is a European 
affiliate.
    Mr. Skeen. She'd make a good agent for you.
    Ms. Kaptur. Thank you, Mr. Chairman. Would you provide me 
with more detail on that case for the record?
    Mr. Skeen. We would like to have it.
    [The information follows:]

                        Banco Nationale Scandal

    On November 22, 1996, the Continental Grain Company 
(Continental) and Arab Finagrain Agri-Business Trading, Ltd. 
(Arab Finagrain), a foreign-based affiliate of Continental, 
agreed to a civil and criminal settlement in U.S. District 
Court for the District of Columbia concerning the sale of 
agricultural commodities to Iraq. Arab Finagrain pled guilty to 
a criminal information which charged it with conspiring to 
defraud USDA and was sentenced to pay a $10 million criminal 
fine. At the same time, Continental paid the Government an 
additional $25 million to resolve the Government's civil claims 
against it and Arab Finagrain in connection with the 
investigation. The criminal information charged that Arab 
Finagrain fraudulently participated, through Continental, in 
USDA's Export Credit Guarantee Programs which are funded by the 
Commodity Credit Corporation. Through those programs, USDA 
provides payment guarantees to qualified exporters which sell 
their goods on credit to importers in designated countries. The 
programs were established to expand foreign markets for 
domestic agricultural goods by reducing the risk of doing 
business in developing countries. The OIG investigation which 
led to the criminal and civil action found that from 1987 
through 1990, Arab Finagrain caused Continental to register for 
and obtain export credit guarantees for sales of agricultural 
goods to Iraqi government agencies. The investigation showed 
that Arab Finagrain, a Swiss-based company in which Continental 
owned a majority interest, fraudulently used Continental to 
register the commodity sales with USDA because Arab Finagrain, 
which had no office or presence in the United States, was not 
eligible to participate in the export credit programs.

    Mr. Skeen. Mr. Fazio.
    Mr. Fazio. No Thank you, Mr. Chairman.

                            Closing Remarks

    Mr. Skeen. Thank you very much. We're going to go vote. We 
appreciate your testimony. We appreciate the work that you're 
doing. Thank goodness somebody is watching where it's going.
    Mr. Viadero. Thank you, sir.
    Mr. Skeen. Thank you all very, very much. We are adjourned.
    [The following questions were submitted to be answered for 
the record:]

                           Inspector General

                         high error rates--fcs
    Mr. Skeen. The Food and Consumer Service's 1995 error rate 
reduction plan outlined a number of actions to provide states with 
error rate reduction assistance and to monitor the states' progress. 
Have you conducted any follow-up audits and investigations to assess 
the effectiveness of this plan? If so, what did you find? If not, do 
you plan to do any follow-up work?
    Response. We are just completing an audit of FCS' reinvestment of 
quality control penalties. The reinvestment program is designed to 
require State agencies to reinvest penalty funds into corrective action 
efforts to bring down high error rates. This is an important piece of 
FCS' efforts to reduce error rates since it sanctions States for 
excessive error rates and seeks to have States reinvest penalty amounts 
into program functions that should reduce error rates. Our report will 
be completed in about a month, and we will provide it to the Committee.
                       high error rates--new york
    Mr. Skeen. At last year's hearing you told the Committee you had a 
joint operation going with the New York State Inspector General to 
address the high error rate in New York City. What is the status of 
this joint effort and what impact has it had on reducing the City's 
error rate?
    Response. New York State's Inspector General had asked us to 
participate with him in a review focusing on possible dual 
participation by people enrolled in alcohol and drug rehabilitation 
programs. After our initial meeting, New York State's Inspector General 
has not been in a position to proceed with the review. We are presently 
in New York City following up on our previous audit of case file 
documentation. The documentation of establishing a household's 
eligibility and determining the level of program benefits is one of the 
key areas in reducing error rates. The report will be completed this 
spring, and we will make it available to the Committee.
                    food stamp certification process
    Mr. Skeen. Mr. Viadero, in fiscal year 1995 you told the Committee 
that you had made some recommendations to the Food and Consumer Service 
on ways to improve the food stamp certification process, thereby 
reducing State's error rate, and that they had agreed to take 
corrective action. At last year's hearing you told us that you were 
going to give the states time to implement the corrective actions and 
initiate a follow-up audit during fiscal year 1996. What were the 
findings of this follow-up audit and what impact have these actions had 
on reducing state's error rate?
    Response. When we conducted our nationwide audit of FCS's error 
rate reduction activities (report issued December 20, 1995), we found 
that more FCS involvement in corrective action planning and monitoring 
of State's as called for in its FY year 1995 error reduction plan was 
needed to reduce errors. Although FCS had performed administrative 
reviews of States' corrective action plans, assisted States with error 
reduction strategies, and established sanctions for high error rates, 
the past actions have not led to downward trends in the overall error 
rate. As a result, we recommended that FCS ensure that regional 
offices: (1) develop with the States specific corrective action 
initiatives applicable to each State's circumstances; and (2) follow 
through with periodic onsite monitoring of States' implementation of 
the approved corrective action initiatives. In an effort to allow 
States ample time to implement the corrective actions, we have not yet 
conducted a followup audit. However, a followup audit will be planned 
for fiscal year 1998.
                         food stamp legislation
    Mr. Skeen. Of the recommendations that you made to the authorizing 
committee for improving the food stamp program, how many were 
incorporated into either the Farm Bill or the Welfare Reform Bill?
    Response. Seven of the 10 recommendations I discussed before the 
U.S. House of Representatives Committee on Agriculture regarding 
``Enforcement of the Food Stamp Act'' on February 1, 1995, have been 
incorporated into the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (Welfare Reform bill). They include 
authority to request income and sales tax records; require site visits 
by FCS to retailers in the process of being authorized; periodic 
reauthorization of retailers; allow for the forfeiture of proceeds, 
property used in the transaction, or to facilitate the commission of an 
applicable violation; immediate suspension of a retailer effective the 
date of notification of disqualification; permanent disqualification of 
a retailer at the Secretary's discretion; and require retailers to be 
disqualified from the Food Stamp Program for the same length of time as 
the disqualification period from the Special Supplemental Nutrition 
Program for Women, Infants, and Children program.
              resources devoted to the food stamp program
    Mr. Skeen. During fiscal year 1996, what percentage of your 
investigative and audit resources were devoted to the food stamp 
program? What percentage of your fiscal year 1997 resources will be 
devoted to food stamp activities?
    Response. In FY 1996, Investigations devoted 46 percent and Audit 
devoted 11 percent of their available resources to the food stamp 
program. We expect these activities to continue at approximately the 
same level in FY 1997.
              resources used to monitor food stamp program
    Mr. Skeen. Please update the table that appears on pages 203 and 
204 of last year's hearing record, which shows how much of your budget 
is spent on monitoring the food stamp program, to reflect fiscal year 
1996 actuals and fiscal year 1997 estimates.
    [The information follows:]

           Budget Spent on Monitoring the Food Stamp Program

                Fiscal year                                      Amount
1991.................................................       $11,225,000
1992.................................................        12,839,000
1993.................................................        13,775,000
1994.................................................        18,600,000
1995.................................................        19,743,000
1996.................................................        17,952,000
1997*................................................        17,900,000
*Estimated
                     questionable ebt transactions
    Mr. Skeen. Your office assisted the Food and Consumer Service in 
the development of a computer package to assist in identifying 
Electronic Benefit Transfer (EBT) traffickers. The nationwide system 
was scheduled to be operational in July 1996. Have your completed your 
evaluation of its effectiveness? What were your findings?
    Response. FCS deployed its Anti-fraud Locator EBT Redemption 
Transactions nationwide system for identifying questionable EBT 
transactions in the fall of 1996 for States operating on-line EBT 
systems and in January 1997 for the two States operating off-line EBT 
systems. We have not begun an evaluation of this system. However, we 
have consulted with and provided comments to FCS on the implementation 
and operation of this system.
                            recipient fraud
    Mr. Skeen. When we asked you last year if more State and local 
resources were needed to combat recipient fraud, you stated that as 
soon as additional EBT systems were brought on-line you would be in a 
better position to assess the effectiveness of state and local 
investigators and the necessary level of resources that should be 
committed to fighting fraud in the program. Give us an update on this 
situation.
    Response. Currently, we have not been able to assess the need for 
additional State and local resources to investigate food stamp 
recipient fraud. There are 15 States that have operational EBT 
systems--13 on-line and 2 off-line--an increase of 4 States since 
December 1995. An additional 30 States are expected to begin delivering 
food stamp benefits through EBT by FY 1998. As more States implement 
EBT systems, we will be in a better position to assess this issue.
                               ebt fraud
    Mr. Skeen. At this time last year your office had 97 open 
investigations in six states involving EBT fraud. This number was up 
from 48 open cases the year before. What is your current number of open 
investigations of EBT fraud? Can you give us a synopsis of these cases 
and tell us why there are so many?
    Response. Since my testimony of last year, OIG investigations of 
EBT trafficking have resulted in 57 indictments, 45 convictions, and 
monetary results of $2.8 million.
    At present, we have 35 open investigations involving EBT fraud. 
These cases are located in Maryland, Ohio, New Mexico, Texas, 
Minnesota, and New Jersey.
    EBT allows us to identify fraudulent activity in a store after it 
has occurred. Also, we are now able to analyze transaction data and, 
using a number of investigative techniques, estimate an amount of fraud 
at the particular store under investigation. This gives us another tool 
by which to successfully prosecute cases which we were previously 
unable to prove using food stamp coupons.
    As the number of States that have EBT increases, we will continue 
to see an increase in these type of cases. Last year, EBT in Texas 
expanded to include Houston which dramatically increased the number of 
individuals and authorized retailers utilizing EBT. As the indictments 
and convictions of persons who traffick in EBT increase, we believe the 
knowledge that we can detect EBT trafficking patterns will act as a 
deterrent to EBT trafficking.
                  retailer eligibility--non ebt states
    Mr. Skeen. How does allowing states to expand their EBT systems 
into non-EBT states diminish FCS' control over retailers eligibility to 
transact EBT benefits?
    Response. States that do not operate an EBT system have not 
performed onsite visits to ensure authorized FSP retailers in their 
State continue to meet FSP requirements. A regional consortium proposed 
to allow retailers, nationwide, who adopt the QUEST mark, a quasi-EBT 
network, to accept EBT benefits without entering into a agreement with 
the State agency as required by FSP regulations. This agreement is 
required to address certain areas relating to EBT participation, 
liabilities, manual transactions, etc. Also, both FCS and OIG are aware 
that the listing of retailers authorized to participate in FSP includes 
retailers who are no longer in business, retailer who do not meet the 
minimum eligibility requirements, and locations with multiple 
authorizations. Before FCS allows a retailer to accept EBT 
transactions, FCS must have adequate assurances that the retailer is a 
legitimate business concern and meets FCS' program requirements.
                           ebt cards security
    Mr. Skeen. Currently, what controls have been installed on EBT 
cards? Why isn't FCS taking your recommendations and incorporating 
adequate safety features?
    Response. Currently, the security controls we recommended and 
supported by the Secret Service and other oversight bodies are not 
installed on EBT cards nor do current FSP regulations require them. The 
controls we recommended include fine-line printing, holograms, multi-
color cards, and expiration dates. In current operational systems, the 
EBT card includes the following elements: recipient name, card number, 
signature panel, and magnetic strip. FCS has proposed regulations that 
address our concerns and incorporate adequate safety features. These 
regulations are currently being reviewed by the Office of Management 
and Budget.
                   ebt contractor operating controls
    Mr. Skeen. What is being done to address concerns raised over 
operating controls established by EBT contractors?
    Response. During our initial EBT audit work, we focused on being 
proactive and identified potential areas of concern related to 
protection of personal data of FSP recipients and sensitive retailer 
information residing at the EBT contractor. These recommendations were 
to make FCS aware of potential problems that might occur. As a result, 
we are continuing to monitor and work with FCS in establishing controls 
by EBT contractors. We are also working with OMB to develop ``agreed to 
audit procedures'' that will be used by auditors conducting audits at 
EBT vendors. Such procedures will allow for consistent coverage of EBT 
operations at vendors.
                             ebt card cost
    Mr. Skeen. There has been some talk about deducting the cost of the 
EBT card from a recipient's benefits. This would be about $2.00 per 
card. Does FCS have the authority to do this?
    Response. FCS regulations allowed the State agency, with FCS' 
approval, to impose a replacement fee which could not exceed the cost 
to replace the EBT card. The recent Welfare Reform Act gave FCS the 
authority to allow States to collect this fee by reducing the 
recipient's monthly allotment. FCS does not have the authority nor are 
they allowing States to impose a fee to issue an initial EBT card. 
Also, FCS regulations do not allow States to charge recipients 
transaction fees to use their food stamp benefits.
                          ebt card safeguards
    Mr. Skeen. What would an EBT card cost to have adequate safeguards 
included in it?
    Response. The bid for the Southern Alliance of States, a coalition 
of eight States, indicated the proposed card specifications would cost 
an additional 22 cents per card or three-fourths of 1 cent per case, 
per month. A two-State project area, with a significantly lower case 
load than the Southern Alliance of States, has verbally quoted 
approximately 3 cents per case per month by its EBT contractor for the 
enhanced features.
                       reducing food stamp fraud
    Mr. Skeen. Maryland was the first state to implement an EBT program 
statewide for food stamps. Give us a comparison of the level of fraud 
that occurred in the coupon program and the EBT program in Maryland.
    Response. In the past, we were not able to measure the level of 
fraud that occurred using food stamp coupons. Currently, through an 
analysis of computerized data, EBT allows us to readily identify 
potential fraud of both retailers and recipients. However, we have not 
determined the level of fraud occurring in the EBT program in Maryland 
or any other EBT State. We continue to strongly support the EBT 
initiative and believe getting food coupons off the street goes a long 
way toward preventing street trafficking.
                      fcs retailer tracking system
    Mr. Skeen. What were the results of your review of the Food and 
Consumer Service's redesigned retailer tracking system at the 
Minneapolis Computer Center, a system used to monitor over 200,000 
authorized retail stores?
    Response.  Our review concluded that, although FCS has made 
progress in reducing retailer food stamp trafficking, much work 
remains. We believe that the FCS National Office needs to modify its 
strategy to include more direction, guidance, and oversight by the 
national and regional offices. Without this, both FCS' long-term and 
short-term efforts will continue to be fragmented and less effective 
than desired. FCS' plans for combating trafficking have focused on 
compliance activities instead of developing strategies to prevent it. 
FCS needs to emphasize the role of field offices with their onsite 
preauthorization visits as a first line of defense in preventing 
problem retailers from entering the Food Stamp Program.
                             rolling stores
    Mr. Skeen. What action has the Food and Consumer Service taken to 
address the problems with ``rolling stores'' in the food stamp program?
    Response. In response to the recommendations in our FY 1995 audit 
on ``rolling stores,'' FCS agreed to evaluate the need for such trade 
routes in all large cities and metropolitan areas in the region. 
Further, as part of its overall plan, it was to remove ``rolling 
store'' operations from certain counties in the Southeast Region and 
examine on a case-by-case-basis throughout the region the continued 
operation of the stores. Until we perform a followup audit, we do not 
know what action FCS has taken. A followup audit in Louisiana is 
included in our FY 1997 plan.
                            food stamp cases
    Mr. Skeen. Provide a table similar to the one that appears on page 
205 of last year's hearing record showing the number of food stamp 
cases that were issued, the number referred to the Department of 
Justice, and the number accepted by the Department of Justice, for 
fiscal year 1996.
    [The information follows:]

 U.S. DEPARTMENT OF AGRICULTURE--OFFICE OF INSPECTOR GENERAL FOOD STAMP 
                       PROGRAM REFERRALS, FY 1996                       
------------------------------------------------------------------------
                                      Cases     Referred to  Accepted by
           State by DOJ               issued        DOJ          DOJ    
------------------------------------------------------------------------
Arizona..........................            9            2            0
Arkansas.........................            3            3            1
California.......................           57            8            2
Colorado.........................           15            5            1
Connecticut......................           10            4            0
Delaware.........................            3            2            1
District of Columbia.............            1            0            0
Florida..........................           69           26           23
Georgia..........................           12            9            8
Hawaii...........................            2            1            1
Illinois.........................           27           10            6
Indiana..........................           10            4            0
Iowa.............................            1            0            0
Kansas...........................           50            6            3
Louisiana........................           36           16            0
Maryland.........................           16           11            9
Massachusetts....................            6            6            6
Michigan.........................            8            4            4
Minnesota........................            1            0            0
Mississippi......................            4            1            1
Missouri.........................           22           17            9
Nevada...........................            1            1            0
New Jersey.......................           23           15            2
New Mexico.......................            3            0            0
New York.........................           71           41            9
North Carolina...................           10            8            7
Ohio.............................           14            7            4
Oklahoma.........................           10            0            0
Oregon...........................            4            1            1
Pennsylvania.....................           33           12            5
Rhode Island.....................            1            1            0
South Carolina...................            1            1            1
South Dakota.....................            1            1            1
Tennessee........................            1            1            0
Texas............................          118           81            0
Virginia.........................           18            4            2
West Virginia....................            9            2            1
                                  --------------------------------------
      Total......................          680          311          108
------------------------------------------------------------------------

                         monitoring wic funding
    Mr. Skeen. An audit you did reviewing the disqualification of 
stores that are both a retailer for the food stamp program as well as a 
vendor for the WIC program showed that procedures utilized by FCS field 
offices and WIC state agencies were inadequate. The results being that 
violation-prone retailers and vendors were not always sanctioned and/or 
disqualified from participation in all FCS programs. You also found 
that FCS procedures provide only minimal guidance to the WIC state 
agencies for removing disqualified retailers and vendors. Can you tell 
the Committee how much WIC funding is going to sanctioned and/or 
disqualified retailers and vendors?
    Response. We are not aware of how much WIC funding is going to 
sanctioned and/or disqualified vendors. However, in our audit of five 
WIC State agencies, we questioned $8.7 million--$3.8 million to WIC 
violators who were not fully investigated and adjudicated, $3.7 million 
to WIC disqualifications not timely referred, and $1.2 million for 
appeals process that delays or prevents FSP withdrawals.
    Mr. Skeen. Are WIC benefits slated to be included on the same EBT 
card as food stamp benefits?
    Response. Yes. Currently, Wyoming is operating an off-line EBT 
system with WIC benefits in seven counties. Also, the Southern Alliance 
of States, a regional consortium of eight States, will be conducting a 
feasibility test in three States utilizing an on-line system to issue 
WIC benefits.
                              wic program
    Mr. Skeen. Now that we are talking about WIC, give us a rundown on 
the audit and investigation work you are doing in this program?
    Response. In terms of EBT, we are currently reviewing the Wyoming 
EBT system. We are evaluating the adequacy of the established controls 
and an assessment of whether it is functioning as designed. We have a 
number of ongoing audits in the WIC program including: Nutrition 
Education Costs Charged, Puerto Rico; Integrated Statewide Information 
System, California; Administrative Costs, California; and 
Accountability of Vouchers, Minnesota. In addition, we are planning 
audits of WIC Food Delivery Systems--Vendor Compliance and 
Administration and Management of the Virginia WIC Program. We currently 
have seven open WIC program investigations. During fiscal year 1996, we 
obtained two convictions and $131,220 in monetary results.
    Additionally, WIC violations are often discovered during our 
investigations of food stamp trafficking and charged in the same 
indictment. However, since the investigations were initiated as food 
stamp cases and tracked as such in our management information system, 
we are unable to specifically identify WIC program statistics from 
these cases.
                           welfare reform act
    Mr. Skeen. Your office is reviewing draft regulations and issue 
papers that FCS is preparing to comply with the Welfare Reform Act. 
Give the Committee a complete description of this review.
    Response. We are reviewing all draft documents that FCS will issue 
either to its regional offices or State agencies that are related to 
provisions of the Welfare Reform Act. For the FSP, we have reviewed and 
commented, as appropriate, on questions and answers and policy 
memorandum related to certification policy issues, guidance for 
conducting quality control reviews, implementation of the retailer 
provisions, disqualifications and collection of overissuances, 
eligibility of noncitizens, recipient claims retention rates, guidance 
for States seeking waivers, employment and training programs, and 
eligibility of able-bodied adults without dependent children. We have 
also reviewed and commented on the following draft FSP regulations: 
recipient claims regulations and collection standards. These are the 
only FSP regulations, as of this date, that have begun the approval 
process within the Department. For the other FCS programs, we have 
reviewed and commented, as appropriate, on advisory memorandums related 
to reimbursement for meals served in the Child and Adult Care Food 
Program and Summer Food Service Program; implementation of Commodity 
Distribution Programs; changes to the Child and Adult Care Food 
Program, Summer Food Service Program, the National School Lunch and 
School Breakfast Programs; and WIC-related provisions. We have also 
reviewed an interim rule related to Child Nutrition and WIC 
Reauthorization Act amendments.
                       financial statement audits
    Mr. Skeen. Please update the table that appears on page 207 of last 
year's hearing record showing which financial statement audits you 
contract-out and which you do in-house as well as the cost of each 
audit to include fiscal year 1996 actuals and fiscal year 1997 
estimates.
    [The information follows:]

        COST OF FINANCIAL STATEMENT AUDIT ACTIVITY DURING FY 1996       
------------------------------------------------------------------------
                                          Method of                     
          Audited agency                 performance       FY 1996 cost 
------------------------------------------------------------------------
FCIS (now Risk Management Agency).  Contract............    \1\ $218,000
RTB (now part of RUS).............  In-House \2\........         244,000
CCC...............................  In-House............         981,000
FCS...............................  In-House \3\........       1,487,000
FS................................  In-House............         970,000
RECD (now Rural Development)......  In-House............         905,000
Consolidated......................  In-House............         418,000
------------------------------------------------------------------------
\1\ Contract amount plus other costs incurred by OIG.                   
\2\ Audit of RTB's FY 1995 operating results was contracted out. FY 1996
  is being performed in-house, and FY 1997 will also be performed in-   
  house.                                                                
\3\ The cost of audit activity during FY 1995 was $1,138,000 or $349,000
  less than FY 1996. Additional efforts were needed during FY 1996 to   
  adjust and validate FCS's financial information so that its statements
  for the year ending September 30, 1995, could receive an unqualified  
  opinion.                                                              
Except for FS and USDA's consolidated statements, costs should be       
  approximately the same for audit activity during FY 1997. FS was not  
  able to produce auditable financial statements for the year ending    
  September 30, 1996. Consequently, we could not perform an audit of its
  statements, and the scope limitation restricted our ability to audit  
  USDA's consolidated statements. The audit resources are being used to 
  participate in a coordinated effort between FS, OIG, and OCFO to      
  develop and implement a corrective action plan which achieves         
  financial health within FS.                                           

                          ccc financial audits
    Mr. Skeen. What was your cost of performing audits of CCC financial 
statements and what was the reimbursement from CCC? Why doesn't the 
reimbursement cover the full cost of doing the audit?
    Response. Our in-house cost to perform audits of CCC's financial 
statements during FY 1996 totaled $981,000; whereas, the reimbursement 
from CCC for audit work performed during FY 1996 was only $795,000. In 
FY 1997, the reimbursement from CCC has been increased to $842,000, 
although we expect the audit cost to be approximately the same for FY 
1997. The reimbursement estimates are developed well in advance of when 
the audits are performed and the actual costs have been higher.
                             reimbursements
    Mr. Skeen. Please update the table that appears on pages 207 and 
208 of last year's hearing record showing the reimbursement received 
and the actual cost of the audit for CCC, FCIC, and RUS, to include 
1996.
    [The information follows:]

                                        OIG AUDIT COSTS AND REIMBURSEMENT                                       
----------------------------------------------------------------------------------------------------------------
                                                                                     In-house/                  
                           Audited agency                            Fiscal year   contract cost   Reimbursement
                                                                                        \1\                     
----------------------------------------------------------------------------------------------------------------
CCC................................................................         1991      $1,183,000        $675,000
                                                                            1992       1,017,000         723,000
                                                                            1993         832,000         752,000
                                                                            1994         827,000         741,000
                                                                            1995         931,000         857,000
                                                                            1996         981,000         795,000
FCIC...............................................................         1991         218,000         200,000
                                                                            1992         277,000         208,000
                                                                            1993         255,000         216,000
                                                                            1994         210,000         210,000
                                                                            1995         225,000         225,000
                                                                            1996         218,000         170,000
RUS................................................................         1991         184,000         175,000
                                                                            1992         231,000         210,000
                                                                            1993         236,000         233,000
                                                                            1994         189,000         170,000
                                                                            1995         175,000         175,000
                                                                            1996         244,000         170,000
----------------------------------------------------------------------------------------------------------------
\1\ Contract amounts plus other costs incurred by OIG.                                                          

              amounts spent on outside public accountants
    Mr. Skeen. Please update the table that appears on page 213 of last 
year's hearing record showing the amount of funds expended for outside 
public accountants hired under contract, to include fiscal year 1996 
actuals and fiscal year 1997 estimates. Also, provide an explanation 
for the increases which occurred over the years.
    [The information follows:]

                     Contracted Public Accountants

                Fiscal year                            Contract amounts
1989.................................................          $102,000
1990 \1\.............................................           774,000
1991 \1\.............................................         1,937,000
1992 \1\.............................................         1,660,000
1993.................................................           338,000
1994.................................................           258,000
1995 \2\.............................................           396,000
1996 \2\.............................................           397,000
1997 est.\3\.........................................           166,500

\1\ Includes FCS Child and Adult Care Food Program contract audits.
\2\ Includes audits of tobacco manufacturers.
\3\ RBT audit previously contracted out, now being performed in-house.
                           rural development
    Mr. Skeen. RECD received a qualified opinion due to the absence of 
supporting documentation for estimates used to determine its allowance 
for subsidy on direct and guaranteed loans obligated in fiscal year 
1991. You were working with RECD to develop a method that will provide 
adequate support for the elements included in computing the subsidy 
estimates and reestimates. What is the status of this issue?
    Response. OIG and OCFO entered into an agreement to identify a 
methodology that managers and financial auditors could use to document 
and support the assumptions and cash flows used to establish and 
reestimate loan subsidy cost. A sensitivity analysis of each of the 
data elements used to establish the credit subsidy has recently been 
completed. Based on that analysis, alternative sources of data will be 
established for the most sensitive elements. The final report from the 
study is presently being completed. Agency officials have initiated 
actions towards correcting the problems we identified, and we are 
working with them to develop a sound and verifiable methodology for 
estimating and reestimating loan subsidy costs in the future.
                             credit reform
    Mr. Skeen. You were also involved in a government-wide task force 
on credit reform requirements. What is the status of this initiative?
    Response. Our audit staff has actively participated in the 
government-wide credit reform task force. A member of our staff was 
cochairperson of the audit subgroup and took an active role in 
developing issue papers drafted by the task force. An issue paper 
finalized by the task force details a model information store concept 
that can be used to provide adequate support for elements included in 
computing subsidy estimates and reestimates. The task force also 
recommended changes in financial statement reporting requirements that 
were incorporated into OMB Bulletin 97-01, ``Form and Content of Agency 
Financial Statements.'' In addition, issue papers are being drafted to 
address preparing and auditing direct loan and loan guarantee subsidies 
under credit reform and the timing of subsidy reestimates. These issue 
papers are expected to (1) address the actions necessary by agencies, 
such as Rural Development, to fairly state the loan subsidy costs on 
their financial statements and (2) provide guidance to auditors on 
internal control and substantive procedures to be used when auditing 
the loan subsidy costs. The task force began operating in mid-1995 and 
expects to finalize the draft issue papers in mid-1997. At that time, 
it is expected to occasionally meet as issues arise.
                               infoshare
    Mr. Skeen. The Department's InfoShare project has changed direction 
many times. It is now being managed through the USDA Service Center 
Implementation Initiative. At last year's hearing you stated your 
office was assessing these changes and plan to increase coverage of the 
project. Tell us your analysis of the current project.
    Response. The Field Service Center Implementation project has 
evolved from the technology-driven InfoShare project to an approach 
that is more closely related to the business processes and needs of the 
partner agencies. The project has recently become more focused on the 
identification, analysis, and reengineering of those business 
processes. Spending on information resources for the partner agencies 
has largely been restricted to the installation of telecommunications 
needs such as LAN, WAN, or voice that are deemed necessary for the move 
by the partner agencies from individual field office locations to 
collocated USDA Service Centers. Presently, OIG is assessing the 
adjustments made in Service Center implementation as a result of the 
FAIR Act, Rural Development's Direct Loan Origination and Servicing 
System, the departmentwide moratorium on information technology 
investments, budget constraints of the current fiscal year, and 
projected constraints for FY 1998.
                           confidential funds
    Mr. Skeen. Update the table that appears on pages 208 and 209 of 
last year's hearing record showing the amount spent for confidential 
operational activities, to include fiscal year 1996 actuals and fiscal 
year 1997 estimates.
    [The information follows:]

                   CONFIDENTIAL OPERATIONS ACTIVITIES                   
------------------------------------------------------------------------
                     Year                        Available      Spent   
------------------------------------------------------------------------
1990..........................................      $87,000      $67,151
1991..........................................       89,000       42,445
1992..........................................       95,000       89,500
1993..........................................       89,000       42,445
1994..........................................       95,000       83,995
1995..........................................       95,000       80,577
1996..........................................       95,000       69,337
1997..........................................   \1\ 95,000       95,000
------------------------------------------------------------------------
\1\ Estimated through the end of the fiscal year.                       

    Throughout the year, as we conduct day-to-day investigations, we 
often have a need for more confidential funds than appropriated for 
this purpose. During our numerous undercover investigations, we utilize 
confidential informants whom we pay for important information 
concerning criminal activity. Because these needs vary so greatly 
depending on the particular workload, the $95,000 limitation can 
restrict the agency's investigative flexibility.
                                hotline
    Mr. Skeen. How many complaints did you receive through the hotline 
in fiscal year 1996?
    Response. The hotline received 4,674 calls, letters, and walk-ins 
in FY 1996.
                           hotline--responses
    Mr. Skeen. How many were you able to look into; how many were 
referred to an agency; how many were referred to the Department of 
Justice; and how many went unanswered?
    Response. OIG inquired into 245 of the hotline complaints received 
in FY 1996, 6 of which were referred to the U.S. Department of Justice 
for prosecution. We referred 4,216 complaints to the appropriate USDA 
agency. Of the complaints referred, we requested a response on 950; 
2,515 complaints concerning food stamp recipients were forwarded to the 
Food and Consumer Service for corrective action with no response 
required; and 751 were minor violations that required no response back 
to us. Of the remaining complaints, 146 were referred to other law 
enforcement agencies for action. No action was taken on 67 complaints 
because they contained insufficient information.
                         raisin crop insurance
    Mr. Skeen. Your investigation into the raisin crop insurance 
program revealed that the reconditioners who can profit from buying 
raisins at salvage prices and reconditioning them for resale are the 
same people who determined if a raisin crop is fit only for salvage. 
How is this problem being addressed?
    Response. We recommended that Risk Management Agency (RMA) develop 
and implement a methodology to value raisins sold as salvage using 
historic yields based on defects, including a methodology to pull a 
representative sample of damaged raisins for inspection by the 
Agricultural Marketing Service rather than relying on reconditioners to 
make a determination of whether raisins could be reconditioned.
    In their response to the audit, RMA said it would require loss 
adjusters to select a sample of no more than 10 tons of damaged raisins 
for reconditioning.
    However, if the grower chose not to pick up the raisins, a small 
sample would be taken by hand. This sample would be graded by USDA. A 
procedure developed by a committee of reinsured companies was recently 
implemented for the 1996 crop year.
    In its proposed rule for the 1997 crop year, FCIC included language 
saying that it may require the producer to recondition a representative 
sample of 10 tons of damaged raisins to determine if it meets 
standards. If standards are met, FCIC may require the producer to 
recondition all damaged production. However, we informed FCIC that 
additional wording should be added to its proposed rule that would 
allow FCIC to value damaged production at the maximum dollar amount if 
the producer is required to recondition a 10-ton sample and does not do 
so.
    Also, RMA's Compliance Staff has identified reconditioners who 
bought damaged raisins at salvage prices and then reconditioned the 
raisins and sold them at market prices after stating to insurance 
adjusters the raisins could not be reconditioned. These actions 
resulted in additional crop insurance payments to insured producers by 
FCIC. We are working with the U.S. attorney to pursue possible 
recoupment of damages to the Government resulting from false statements 
made by the reconditioners.
                      gao report on crop insurance
    Mr. Skeen. At last year's hearing I asked you about a GAO report in 
the crop insurance area. It stated that because of a decision at USDA, 
instead of paying farmers who could not plant crops because of adverse 
weather conditions the normal 50 percent rate, they paid farmers at the 
rate of 75 percent without first adjusting the premium rates to account 
for the increase. This decision cost the Federal government about $135 
million in additional claims that cannot be recovered. You were 
reviewing the report. For the record, tell the Committee your 
assessment.
    Response. OIG has not performed an indepth assessment of the 
referenced GAO report which questioned the Department's decision to 
increase the payment rate for prevented planting because of the wet 
weather in 1995. We do agree with the GAO report in that this action 
did increase the indemnity payments, and these additional costs cannot 
be collected unless future insurance premiums are increased by an 
amount that would compensate for these additional FCIC costs. However, 
our understanding from discussions with RMA personnel in Kansas City is 
that the prevented planting coverage was returned to the 50 percent 
rate effective for 1996 and that FCIC did not consider the additional 
losses that were incurred in 1995 when setting the premiums for the 
1996 crop year. We have not evaluated the extent or propriety of 
premium rate adjustments. However, we have scheduled an audit of FCIC 
prevented planting activities for the last half of FY 1998.
                  crop insurance abuse in south texas
    Mr. Skeen. Abuse of the crop insurance program was discovered in 
the south Texas area. The Office of Risk Management is reviewing all 
insurance claims filed in this area for evidence of abuse with 
oversight by your office. What are the findings of this review?
    Response. We performed an onsite review of crop insurance program 
abuses in the Coastal Bend area of south Texas. The four major findings 
include: (1) the use of inappropriate seed viability tests by loss 
adjusters to determine appraised potential; (2) insured crops destroyed 
without consent; (3) crop releases made less than 7 days after 
planting; and (4) acreage not replanted to the same crop when it was 
practical to do so. As of December 5, 1996, the dollar determinations 
of the potential indemnity overpayments resulting from the respective 
procedural or policy violations were estimated to be over $3.2 million. 
The RMA is working to determine appropriate overpayments and claims.
                         crop insurance summary
    Mr. Skeen. Give us a complete rundown on the work you are doing in 
the crop insurance area.
    Response. OIG currently has various audit projects within the crop 
insurance area. These projects include audits of: (1) large indemnity 
payments on 1995 and 1996 crops; (2) establishment of producers' actual 
production histories; (3) almond losses in California; (4) fresh market 
tomatoes in Florida; (4) nursery crop losses; (5) expansion of the Crop 
Revenue Coverage Program; and (6) an evaluation of the Quality control 
process for crop insurance determinations performed by the reinsured 
companies.
    The large claims audit included reviews of apples, apricots, corn, 
cotton, cranberries, fresh market tomatoes, forage production, peanuts, 
plums, potatoes, soybeans, and wheat. The preliminary findings show 
potential overpaid indemnities estimated at $1.1 million as of January 
15, 1997, because of such items as: (1) incorrectly established yields; 
(2) incorrect establishment of units; (3) failure of policyholders to 
retain records for required periods; (4) incorrect acreage reported or 
used; (5) loss occurrence after insurance period expiration; and (6) 
understated production. The evaluation of a statistical sample of 
Actual Production Histories is still being performed. However, our 
survey shows a 38 percent error rate based on judgment sampling of 
those Actual Production Histories for which three companies performed 
self reviews.
    Under the Crop Review Coverage Program review, we reported to RMA 
that it needs to strengthen management controls over the development 
and implementation of privately developed programs like the Crop Review 
Coverage. In addition, we are working with RMA in developing new 
regulations and procedures for this program. All the other audit work 
is still in the developmental stage.
    We currently have 32 open investigations involving the Risk 
Management Agency. During FY 1996, we obtained 10 indictments and 9 
convictions, filed 2 civil suits, and received 8 civil judgments in 
this area. In 1996, our monetary results associated with our work in 
RMA programs totaled over $1.4 million.
                     non-insured assistance program
    Mr. Skeen. At last year's hearing you were just starting audit work 
of the Non-Insured Assistance Program or NAP. What were your findings 
and recommendation?
    Response. We have performed audits of NAP in two States, California 
and Minnesota. We are issuing reports for San Joaquin and Monterey 
counties, in California and one State report in Minnesota In the 
California reports, we recommended that FSA recover up to $1,550,603 
from producers who were overpaid and pay $8,263 to producers who were 
underpaid. We also found up to $569,477 in excess disaster loans should 
be recovered from two of these producers. Errors in payments and loans 
resulted because producers underreported production and FSA county 
office staff made calculation errors.
    In Monterey County, we reviewed 54 producers and determined that 30 
had provided incomplete or inaccurate production evidence and 10 had 
producers whose payments were calculated incorrectly by the county 
office. In San Joaquin County, we reviewed 82 producers and determined 
18 of them underreported their production by providing incomplete or 
inaccurate evidence which enabled them to receive higher payments than 
they were entitled to.
    In Minnesota, we reviewed 1995 NAP alfalfa losses in losses in 
Scott and Nicollet Counties. We questioned $51,000 in payments in 
Nicollet County because the actual production history for 22 of 44 
producers that received 1995 NAP were based on inaccurate and/or 
insupportable production evidence provided by producers. In addition, 6 
of the 22 producers also provided false certifications to the County 
Committee regarding production in 1 or more years since the production 
provided exceeded production already reported and used in prior years 
for the calculation of payments under the old ad hoc disaster 
assistance program.
    We recommended that overpayments be collected and that needed 
administrative controls be implemented. The major weakness is in 
assuring that producers report all production when applying for 
assistance. This was also the major weakness with the old ad hoc 
disaster assistance program. The volume of payments under the 1996 NAP 
appear to be larger, and we plan to initiate some audit work in that 
program before the end of FY 1998.
                  indictments, convictions, and suits
    Mr. Skeen. Of the indictments, convictions, and suits for fiscal 
year 1996, provide a table of the number filed by each agency of the 
Department.
    [The information follows:]

               FY 1996 INDICTMENTS, CONVICTIONS, AND SUITS              
------------------------------------------------------------------------
             Agency                Indictments     Convictions    Suits 
------------------------------------------------------------------------
AMS............................               4               6        0
APHIS..........................               6               3        0
FAS............................               1               3        0
FCS............................             767             609       73
FS.............................               6               2        1
FSA............................             104              53       22
FSIS...........................              10              21        0
Multi-Agency...................               0               3        0
NRCS...........................               4               2        0
OBPA...........................               1               1        0
OIG............................               1               1        0
OO.............................               4               4        0
RBS............................               1               1        0
RHS............................              22              20        8
RMA............................              10               9        2
                                ----------------------------------------
      Total....................             941             738      106
------------------------------------------------------------------------

                 1996 audit and investigations results
    Mr.  Skeen. Please update the table that appears on page 213 of 
last year's hearing record showing the number of audit reports, 
investigative reports, indictments, convictions, and suits filed, to 
include fiscal year 1996.
    [The information follows:]

                                         AUDIT 22 INVESTIGATIVE RESULTS                                         
----------------------------------------------------------------------------------------------------------------
                                                                                    Fiscal year--               
                                                                    --------------------------------------------
                                                                       1992     1993     1994     1995     1996 
----------------------------------------------------------------------------------------------------------------
Audit reports......................................................      412      360      261      328      282
Investigative reports..............................................    1,484    1,267    1,079      974      956
Indictments........................................................    1,040      944      856      967      941
Convictions........................................................      785      982      886      859      738
Suits..............................................................       41       61       84       66      106
----------------------------------------------------------------------------------------------------------------

             electronic data sharing on conservation plans
    Mr. Skeen. As a result of inadequate procedures identified by your 
office within the Natural Resources Conservation Service (NRCS) in 
carrying out the conservation compliance program, NRCS and the Farm 
Service Agency (FSA) agreed to develop and implement an electronic data 
sharing effort to assure more timely revisions to conservation plans. 
Your office was considering this area for follow-up audit work in 
fiscal year 1997. Have you conducted any follow-up reviews to date? If 
so, what did you find?
    Response. No, we have not conducted any followup reviews to date. 
Our followup review of conservation compliance is scheduled to begin in 
March 1997 and will include coverage of the electronic data sharing 
effort.
             controls over production flexibility contracts
    Mr. Skeen. Provide a list of your recommendations to strengthen 
controls over production flexibility contracts that were submitted to 
FSA and NRCS.
    Response. We made four recommendations to the Farm Service Agency 
in our July 11, 1996, management alert. These were: (1) clarify 
existing cash lease procedures to require county offices to obtain the 
landowner's concurrence for the current year which includes precluding 
the designation of shares past 1996 unless a written agreement is 
obtained prior to any future contract approvals; (2) obtain the needed 
documentation for any applicable contracts that have already been 
approved and correct payment designations where appropriate; (3) 
reconsider the criteria for what constitutes a Fruits and Vegetables 
double-cropping history and determine if any other States are using 
trees as double-cropping history; and (4) issue a reminder to the State 
offices to emphasize the importance of obtaining all producer 
signatures and CCC representative approval before issuing payments on a 
contract, obtaining County Office Committee determinations before 
updating the ``person'' and ``actively engaged in farming'' flags, and 
obtaining proper power of attorney forms before allowing an agent to 
sign for a producer or owner.
    These recommendations were made as part of our Phase I, 
implementation of Agricultural Market Transition Act, audit work. FSA 
took corrective action on these recommendations as the audit field work 
was in process by issuing notices and other instructions to its field 
offices. As a result, FSA field offices were to review all contracts 
for the 1997 crop year to assure that shares were properly assigned and 
leases were correct, all contracts were properly signed and approved by 
the County Office Committee, and that proper power of attorney forms 
were on file. FSA also had its State and county offices review Fruits 
and Vegetables double-cropping designations prior to the time the list 
was published in the Federal Register. This review resulted in 
reductions in the number of counties that were designated as double-
cropping counties.
                   agricultural market transition act
    Mr. Skeen. Your assessment of the Agricultural Market Transition 
Act implementation will occur in three phases. For the record, please 
describe each phase and the timeframe for completing each.
    Response. Phase I, implementation of Agricultural Market Transition 
Act, is completed, and a report is being prepared. During Phase I, we 
provided FSA officials with our early findings and recommendations, and 
corrective actions were taken as applicable during the audit. Phase II 
covers the adequacy of controls over software development. We looked at 
1996 data upload activities, computation of payments, and contract 
revisions. As an addition, phase II included a review to determine 
whether producers and/or county office personnel signed up fictitious 
and/or nonparticipating farms to obtain program benefits to which they 
are not entitled. Field work is completed, and the report is being 
prepared. Phase III addresses whether producers were in compliance with 
eligibility requirements. Field work is completed, and the report is 
being prepared.
               attempts to circumvent payment limitations
    Mr. Skeen. Your review of large landowners in two states determined 
that they were using combination leases to circumvent payment 
limitations. FSA agreed to correct this problem by clarifying the lease 
provisions for future payments. Have you conducted any follow-up 
investigations to see if the action FSA took was enough to rectify this 
problem?
    Response. We have not conducted any followup actions to determine 
whether corrective action will be sufficient to rectify the problem. 
OIG and FSA are still working together to agree on the appropriate 
corrective action.
                       list and type of firearms
    Mr. Skeen. For the record, please provide the Committee with a list 
of the type and number of all firearms owned by OIG staff.
    [The information follows:]

OIG owned firearms

Type of firearm:
                                                                  Number
    9mm semiautomatic pistols.....................................   373
    .357 cal. revolvers...........................................    11
    .38 cal. revolvers............................................    52
    12 gauge shotguns.............................................    49
    Miscellaneous rifles and handguns maintained at headquarters 
      for training purposes only..................................    35
                             budget request
    Mr. Skeen. Provide a detailed breakout of your budget request to 
the Secretary; the Secretary's request to OMB; and the OMB allowance?
    Response. Our budget request to the Secretary was $83,805,000; the 
Secretary's request to OMB was $69,000,000; and the OMB allowance was 
$65,259,000.
      use of investigations resources by agency, fiscal year 1996
    Mr. Skeen. Please provide a table similar to the one that appears 
on pages 213 and 214 of last year's hearing record, showing the 
breakdown of the OIG's resources and the percent of each that went 
towards investigations of each agency under USDA for fiscal year 1996.
    [The information follows:]

                           USE OF INVESTIGATIONS RESOURCES BY AGENCY FISCAL YEAR 1996                           
                                             [Dollars in thousands]                                             
----------------------------------------------------------------------------------------------------------------
                                                           Total OIG                  Investigations            
                                                     -----------------------------------------------------------
                                                                                     Percent             Percent
                                                                                     of OIG              of OIG 
                                                       Dollars   Staff-    Dollars   dollars   Staff-    staff- 
                                                                  years                per      years    yrs per
                                                                                     Agency              Agency 
----------------------------------------------------------------------------------------------------------------
RMA.................................................      $616         7      $475        77         5        71
FSA.................................................    17,269       209     7,261        42        75        36
FAS.................................................     1,236        15       475        38         5        33
FCS-FSP.............................................    17,952       195    14,488        81       149        76
FCS--Other..........................................     5,163        65     1,427        28        15        23
AMS.................................................       974        12       222        23         2        17
APHIS...............................................     1,022        12       571        56         6        50
GIPSA...............................................        35         0         0         0         0         0
FSIS................................................     2,230        24     1,712        77        17        71
ARS.................................................        66         1        63        95         1       100
CSREES..............................................       173         2         0         0         0         0
ERS.................................................         0         0         0         0         0         0
NASS................................................         0         0         0         0         0         0
RBS.................................................       457         6        31         7         0         0
RHS.................................................     3,223        37     1,934        60        20        54
RUS.................................................       505         7        64        13         1        14
FS..................................................     3,850        50       476        12         5        10
NRCS................................................       700         8       412        59         4        50
OO..................................................        48         1         0         0         0         0
OP..................................................         0         0         0         0         0         0
OCFO................................................     1,148         0         0         0         0         0
NAD.................................................         0        15         0         0         0         0
OIG (Internal)......................................       380         4       380       100         4       100
Multi-Agency........................................     4,846        65         0         0         0         0
Other...............................................     1,712        18     1,712       100        18       100
OICD................................................        83         1         0         0         0         0
                                                     -----------------------------------------------------------
      Total.........................................    63,688       754    31,703        50       327        43
----------------------------------------------------------------------------------------------------------------

           use of audit resources by agency, fiscal year 1996
    Mr. Skeen. Provide a similar table showing the breakdown and 
percentage by agency for audits.
    [The information follows:]

                                USE OF AUDIT RESOURCES BY AGENCY FISCAL YEAR 1996                               
                                             [Dollars in thousands]                                             
----------------------------------------------------------------------------------------------------------------
                                                           Total OIG                       Audit                
                                                     -----------------------------------------------------------
                                                                                     Percent             Percent
                                                                                     of OIG              of OIG 
                                                       Dollars   Staff-    Dollars   dollars   Staff-    staff- 
                                                                  years                per      years    yrs per
                                                                                     Agency              Agency 
----------------------------------------------------------------------------------------------------------------
RMA.................................................      $616         7      $141        23         2        29
FSA.................................................    17,269       209    10,008        58       134        64
FAS.................................................     1,236        15       761        62        10        67
FCS-FSP.............................................    17,952       195     3,464        19        46        24
FCS--Other..........................................     5,163        65     3,736        72        50        77
AMS.................................................       974        12       752        77        10        83
APHIS...............................................     1,022        12       451        44         6        50
GIPSA...............................................        35         0        35       100         0         0
FSIS................................................     2,230        24       518        23         7        29
ARS.................................................        66         1         3         5         0         0
CSREES..............................................       173         2       173       100         2       100
ERS.................................................         0         0         0         0         0         0
NASS................................................         0         0         0         0         0         0
RBS.................................................       457         6       426        93         6       100
RHS.................................................     3,223        37     1,289        40        17        46
RUS.................................................       505         7       441        87         7        86
FS..................................................     3,850        50     3,374        88        45        90
NRCS................................................       700         8       288        41         4        50
OO..................................................        48         1        48       100         1       100
OP..................................................         0         0         0         0         0         0
OCFO................................................     1,148         0     1,148       100         0         0
NAD.................................................         0        15         0         0        15       100
OIG (Internal)......................................       380         4         0         0         0         0
Multi-Agency........................................     4,846        65     4,846       100        65       100
Other...............................................     1,712        18         0         0         0         0
OICD................................................        83         1        83       100         1       100
                                                     -----------------------------------------------------------
      Total.........................................    63,688       754    31,985        50       427        57
                                                     ===========================================================
Reimbursements:                                                                                                 
    CCC.............................................       795  ........       795       100  ........  ........
    FSA (FCIC)......................................       170  ........       170       100  ........  ........
    RUS (REA).......................................       170  ........       170       100  ........  ........
    Other...........................................       400  ........       400       100  ........  ........
                                                     -----------------------------------------------------------
      Total.........................................     1,535  ........     1,535       100  ........  ........
----------------------------------------------------------------------------------------------------------------

                         rural housing service
    Mr. Skeen. At last year's hearing you told the Committee that the 
Rural Housing Service agreed to management decisions which require that 
all of the $1.36 million in reserve accounts involving several rural 
rental housing projects be restored. What is the status of this issue?
    Response. The Texas State Office of Rural Development issued the 
borrower a demand letter for the $1.36 million in February 1996. In a 
subsequent Administrative Appeal hearing, the National Appeals Division 
reversed the portion of the agency decision requiring immediate deposit 
into property reserve accounts. Other portions of the agency decision 
were upheld, and debarment proceedings against the borrower are now in 
progress.
                            delinquent loans
    Mr. Skeen. What were the results of your review into the servicing 
of delinquent loans that receive both HUD section 8 and RHS section 515 
assistance?
    Response. RHS' Rural Rental Housing projects receiving HUD's 
section 8 assistance generally are in an excess cash condition because 
HUD's method of computing assistance, based upon prevailing market 
conditions, results in much higher subsidies than RHS' cost 
reimbursement methodology. This disparity was highlighted in our 
February 1996 report entitled ``Legislative Proposals to Strengthen the 
Rural Housing Service's Rural Rental Housing Program.'' Due, in part, 
to the availability of unneeded funds, we estimated that 330 projects 
of the 1,329 in our universe had used about $11 million of project 
funds for questionable or unauthorized purposes. Many of the cases we 
identified were referred for criminal investigation.
                               forfeiture
    Mr. Skeen. Give us a complete description on where you stand with 
forfeiture proceedings.
    Response. OIG's forfeiture authorities have expanded in two ways. 
First, appropriations language was passed authorizing OIG to accept 
proceeds from forfeitures resulting from investigations involving USDA 
programs and operations. Second, the Government's authority to seek 
forfeiture of property involved in food stamp trafficking was expanded.
    In light of these statutory advances, OIG has completed a 
comprehensive, mandatory forfeiture training course for every OIG 
special agent. OIG is also working with the Department of Treasury and 
the Department of Justice in order to establish procedures for 
transferring proceeds from forfeiture actions to OIG. Additionally, OIG 
has established accounts to receive these proceeds, as well as fiscal 
controls to ensure financial integrity.
    OIG is exploring three ways to conduct such transfer--through 
equitable sharing, petitions for remission or mitigation, or as a 
participating agency. With respect to the first option, OIG's requests 
for equitable sharing transfers have been denied by Treasury and 
Justice. Regarding petitions for remission, OIG has filed seven such 
petitions with Justice and two with Treasury. Justice has responded to 
one of the seven with a request for additional information; Treasury 
has not responded to date. Finally, with respect to participating 
agency status, Treasury has notified OIG that OIG is prohibited by law 
from becoming a participating agency in Treasury's forfeiture fund. 
Justice has offered OIG participating agency status; however, OIG 
believes transfer through petitions for remission and equitable sharing 
are preferable at this point based on OIG's status as a non-Department 
of Justice agency. The Office of Management and Budget is currently 
working on a solution that can be accepted by the three agencies.
    Mr. Skeen. Has the Court issued its ruling on the legality of 
forfeiting assets through civil cases that were seized through criminal 
cases? If so, what did it rule?
    Response. The U.S. Supreme Court has settled the question regarding 
legality of parallel criminal prosecutions and in rem forfeiture 
actions. Last year, the Court, in United States v. Ursery, 116 S. Ct. 
2135, held that the Fifth Amendment's Double Jeopardy Clause does not 
prohibit the Government from bringing parallel criminal prosecutions 
and in rem civil forfeiture proceedings based upon the same underlying 
offense. The Court held that punishing a defendant for a criminal 
offense and forfeiting the defendant's property for the same offense in 
a separate civil proceeding does not violate the Double Jeopardy Clause 
because in rem civil forfeitures do not constitute ``punishment'' for 
purposes of the Double Jeopardy Clause.
    Mr. Skeen. At last year's hearing you stated that you were working 
on a control system to monitor and track the funds that came into the 
agency through forfeitures. According to your statement this year, 
these controls are now in place and over $10 million has been 
identified for possible forfeiture as a result of your investigate 
work. When do you expect to receive your first transfer of funds?
    Response. Regarding anticipated dates of transfer of funds, Justice 
and Treasury have agreed to accept petitions for remission or 
mitigation filed by OIG. Neither Justice nor Treasury have, however, 
notified OIG of when to expect a final decision on the petitions filed 
in December 1996 and January and February 1997. The Office of 
Management and Budget is currently working on a solution that can be 
accepted by the three agencies.
    Mr. Skeen. Once you receive funds how do you plan to use them?
    Response. OIG plans to use such funds in order to advance its law 
enforcement mission, specifically, for equipment and training of OIG 
special agents.
    Mr. Skeen. Describe the process you go through in a forfeiture 
case. Maybe you could give us an example of one.
    Response. The process OIG goes through in a forfeiture case is the 
same process that applies to all Federal law enforcement agencies. 
There are three types of forfeitures--administrative, civil, and 
criminal. An administrative forfeiture is allowed in limited cases, 
i.e., those involving nonrealty and personal property valued at 
$500,000 or less and any amount of cash and where the individual who 
claims ownership in the property does not contest the forfeiture. Once 
an individual contests the forfeiture, it becomes a civil matter 
decided upon by the U.S. district courts. A criminal forfeiture is a 
forfeiture that results from a criminal conviction for a violation of 
law that includes forfeiture as a penalty for that violation. Criminal 
forfeitures are also decided upon by U.S. district courts. The general 
process is as follows. For any forfeiture, the property at issue is 
seized either before a final decision on the forfeiture--these are 
administrative and civil actions and certain criminal actions--or 
before the final decision--criminal actions. A decisionmaker, either 
Justice or a U.S. district court, rules on the forfeiture after 
interested parties are given an opportunity to contest the action. A 
decision is then issued. Following that decision, third-parties have 
another opportunity to request remission or mitigation--or 
``forgiveness''--of the forfeiture. The property is then disposed of as 
required by law.
    An example of a forfeiture case involving an OIG investigation 
would include an investigation in Louisiana during which we established 
that an authorized retailer was involved in food stamp trafficking. 
Through various investigative methods, such as analysis of business and 
bank records, we identified that assets owned by the subjects of the 
investigation were directly related to the food stamp trafficking. 
These assets were listed as forfeitable property in the indictment, per 
Title 18 U.S. Code, Section 9882(b)(1)(A). Upon presentation to a 
Federal grand jury, we obtained a true bill of indictment.
    The information obtained during the investigation was included in 
an application and affidavit for seizure warrant, which is similar to 
an affidavit for a search warrant. This affidavit was presented to a 
U.S. magistrate who issued the seizure warrant, which is similar to an 
arrest warrant but is for property. Agents from IRS-CID served the 
seizure warrant, ``arrested'' the listed property, and processed the 
necessary paperwork.
    The five defendants pled guilty to various charges including food 
stamp trafficking and money laundering. At sentencing, the judge issued 
a Final Judgment of Forfeiture in which all the assets which had been 
``arrested'' were formally seized and vested to the U.S. Government. 
The assets seized during this investigation included vehicles, boats, 
real estate, and bank accounts.
             fsis's controls over imported meat and poultry
    Mr. Skeen. Your office planned to conduct a survey last year to 
assess FSIS's oversight, policies, and control systems to guarantee 
that countries that export meat, poultry, or egg products into this 
country maintain and enforce inspection procedures and systems that are 
equal to that of the U.S. What were your findings and recommendations?
    Response. In December 1996, we issued a report that identified that 
FSIS has maintained adequate controls over the imported meat inspection 
process, and FSIS has taken steps to ensure that meat and poultry 
imports are produced under inspection systems equivalent to U.S. 
inspection systems. We did identify two issues that FSIS management 
should address in order to maintain the integrity of the imported meat 
inspection process.
    When FSIS determines that a foreign establishment is ineligible to 
import products into the United States, it is based on public health 
reasons; however, the specific reason for the establishment's 
ineligibility is not fully explained. Also, FSIS is in the process of 
reorganizing in order to implement new food safety standards. Under the 
reorganization plan, import inspection responsibilities and support 
functions will be merged with new organizational offices. FSIS will 
need to maintain its control over the imported inspection process since 
some of the functions will not be controlled under one organization as 
it was previously.
    We recommended FSIS develop and implement procedures to specify the 
reason for a foreign establishment's ineligibility and ensure that 
adequate control is maintained over the imported meat and poultry 
process throughout the agency's reorganization. A copy of that report 
is included for your information.

    [Clerk's note.--A copy of the report is retained in 
Committee files.]
                1993 ad hoc disaster assistance program
    Mr. Skeen. What is the status of the collection of over $16 million 
in excess payments through the 1993 Ad Hoc Disaster Assistance Program?
    Response. The actual collections of funds are tracked by FSA and 
the Office of the Chief Financial Officer. We accept management 
decisions when the agency either establishes a claim or justifies 
noncollection. The $16 million was questioned in 45 different audits 
and, as of now, our management system shows that FSA has collected or 
is in the process of collecting $6 million. There are still about $10 
million in recommended recoveries without management decision. This 
would include amounts pending investigations and other legal actions. 
FSA has been advised to delay collection in many instances pending the 
completion of ongoing investigations and/or court actions. some of 
these court actions are just now being completed. In addition, some 
producers have appealed the agency determinations to the National 
Appeals Division, and those cases are tied up or have been reversed in 
the appeal process. Further, it should be noted that some funds will 
not be collected due to such reasons as application of the 90-day rule 
and county committees providing producers with misinformation.
            1994 ad hoc disaster assistance programs--losses
    Mr. Skeen. In your review of the 1994 Ad Hoc Disaster Assistance 
Program, you performed 26 audits covering a total of $13 million in 
loss claims. You identified $5.3 million in overpayments. This is 41 
percent of the total audited. what was the total amount of loss claims 
in the 1994 program? What is being done to recover the $5.3 million?
    Response. The total 1994 loss claims were about $1 billion of which 
we audited $13 million. The $5.3 million is being collected through the 
normal resolution and closure process. OIG accepts managements decision 
when the agency agrees to collect the amount or is able to justify 
noncollection. The office of the Chief Financial Officer tracks the 
collections after we reach management decision.
      alternate agriculture research and commercialization center
    Mr. Skeen. Your office identified potential conflicts of interest 
in board decisions of the Alternative Agriculture Research and 
Commercialization Center (AARC). As a result, the Center established 
several written policies which the board approved to address issues 
raised by the evaluation. Have you conducted a follow-up evaluation? If 
so, have the problems been solved?
    Response. At the time the policies were developed, we reviewed and 
approved of the policies. A followup evaluation is scheduled for the 
second half of FY 1997.
                               equipment
    Mr. Skeen. What was the $1.1 million in Object Class 31, Equipment, 
used for in fiscal year 1996?
    Response. Over $800,000 of this amount was for the replacement of 
obsolete and worn ADP equipment including desktop and laptop computers 
and printers for distribution to our offices nationwide. Other larger 
dollar purchases included telephone replacement systems in two of our 
suboffices for approximately $65,000 and a special law enforcement 
targeting training system for approximately $70,000. The balance of the 
funds was used for the purchase of replacement office equipment which 
was obsolete or broken.
                       insurance and indemnities
    Mr. Skeen. Why does Object Class 42, Insurance and Indemnities, 
increase from $2,016 in fiscal year 1996 to $31,000 in fiscal year 
1997?
    Response. The total for Object Class 42, Insurance and Indemnities, 
fluctuates from year to year: from a high of $42,000 in FY 1991 to a 
low of $2,000 in FY 1996. The $31,000 figure is estimated based on 
prior history in this object class.
                              oig vehicles
    Mr. Skeen. Provide a table that shows the number of vehicles leased 
from GSA, the number commercially leased under GSA approved contracts, 
and the number the agency owns.
    Response. In FY 1996, we leased 152 vehicles from GSA, and 11 
vehicles were commercially leased under GSA-approved contracts; OIG 
owns 33 vehicles.
                reception and representation activities
    Mr. Skeen. You are requesting authority to use up to $2,500 of your 
appropriation level for reception and representation activities. Why 
does the Inspector General need an entertaining budget?
    Response. This authority would permit the Inspector General to host 
official functions for the President's Council on Integrity and 
Efficiency, the International Criminal Police Organizations, the 
International Association of Chiefs of Police, and similar functions. 
Currently, any such expenditures incurred must be paid out of pocket by 
the Inspector General.
              tracking and monitoring of proposed savings
    Mr. Skeen. Every year, based on the results of your audits and 
investigations, you identify and report monetary values that either the 
agency agrees to collect or make management changes that will result in 
savings. Once these amounts are identified, whose responsibility is it 
to track and monitor the agencies to make sure the money that's owed 
the Federal Government is actually collected and the agency has taken 
action on internal changes to save Federal dollars?
    Response. In USDA, the Office of the Chief Financial Officer is 
responsible for the tracking and monitoring of the agencies to make 
sure that the money that is owed to the Federal Government is actually 
collected and that the agency has taken action on internal changes to 
save Federal dollars.
                  law enforcement retirement benefits
    Mr. Skeen. You are requesting an increase of $600,000 to help cover 
the cost of law enforcement retirement benefits under FERS. You state 
that, in fiscal years 1995 and 1996, FERS law enforcement benefits 
increased 33 percent and 70 percent, respectively. Why is this the 
case?
    Response. In FY 1995, FERS law enforcement benefits totaled over 
$2.4 million for OIG--an increase of almost 33 percent from the 
previous year. In FY 1996, FERS law enforcement benefits totaled over 
$4.1 million, an additional increase of over 70 percent. Each year, the 
amount of money needed for FERS law enforcement benefits has increased 
steadily. The ``normal cost'' percentage for law enforcement benefits 
is over 25 percent, and is much higher than the percentage cost of FERS 
nonlaw enforcement benefits. Due to the high cost of law enforcement 
benefits and the lack of resources to absorb these costs, the agency 
has had to operate below its ceiling with fewer special agents, 
limiting its ability to accomplish its mission.
    This problem is compounded by the fact that, by law, all GS-1811 
investigators are required to work an average of 50 hours per week and 
are compensated for such additional work by 25 percent availability pay 
in addition to their regular salary. This increases FERS costs 
proportionately. Further, all new agents are hired as FERS employees, 
with considerably higher cost to the agency. Since most of the 
investigators who have retired in recent years were under the Civil 
Service Retirement System, this has greatly increased the number of OIG 
agents under FERS which is increasing the agency cost.
    Mr. Skeen. What is the percentage increase cost of FERS nonlaw 
enforcement retirement benefits compared to law enforcement retirement 
benefits? Why is there a difference?
    Response. By law, all investigators are required to work an average 
of 50 hours per week and are compensated for such additional work by 25 
percent availability pay in addition to their regular salary. Benefits 
increase accordingly. Additionally, law enforcement benefits are 
calculated at a higher rate than nonlaw enforcement benefits. The 
percentage cost of FERS nonlaw enforcement benefits is about 25 
percent. FERS law enforcement benefits are over 40 percent.
                            oig realignment
    Mr. Skeen. Please provide a more detailed description of how you 
plan to realign your offices to more closely parallel USDA agencies. 
Also provide a table that shows the number of employees in each 
location before and after this realignment.
    Response. We have realigned our headquarters divisions in relation 
to the Department's reorganization of its mission areas. In this 
process, we were able to reduce the number of audit divisions from five 
to four and Investigations divisions from four to three, as well as 
replace four high grade special assistant positions with lower level 
audit and investigative staff. Although USDA mission areas have been 
reorganized and changes in the Farm Bill have impacted our workload, 
our field offices have never been organized along departmental mission 
lines. We did not alter our regional office structure which is 
organized to conduct audits and investigations in particular segments 
of the United States. Audit and investigative workload in the field has 
continued to exceed OIG resources in all areas of the United States; 
however, as available, we transfer personnel between field offices to 
meet the new workload requirements as required. Our overall 
headquarters and field staff did not change.
    Mr. Skeen. Provide a five year table that shows the number of 
supervisors and field auditors at the agency.
    Response. [The information follows:]

                   OIG FIELD AUDITORS AND SUPERVISORS                   
------------------------------------------------------------------------
                                                                Audit   
                  Fiscal year                      Field     supervisors
                                                  auditors    agencywide
------------------------------------------------------------------------
1996..........................................          293           42
1995..........................................          293          138
1994..........................................          322          132
1993..........................................          334          140
1992..........................................          353          145
------------------------------------------------------------------------

                                  adp
    Mr. Skeen. You are requesting an increase of $150,000 as the first 
year of a three-year plan to upgrade your ADP system. What is the total 
cost of this plan?
    Response. OIG's long-range requests are primarily for maintaining 
the current standard of computer services. We have completed the major 
upgrade in headquarters and have purchased most of the hardware and 
software for the regional upgrades. Purchases over the next 3 years are 
expected to be mainly for the replacement of aging desktop and laptop 
personal computers and new software that becomes available which is 
applicable to OIG. The total cost of this 3-year plan is estimated at 
$900,000. Although we expect cost to average about $300,000 a year, we 
are only requesting an increase of $150,000, and the balance will be 
obtained from current funds.
                             audit training
    Mr. Skeen. How much are you spending in fiscal year 1997 for audit 
training?
    Response. We plan to spend approximately $125,000 on training 
programs. In addition, the agency conducts its own entry level audit 
academy and professional development conferences to ensure compliance 
with the GAO requirement that each auditor receive at least 80 hours of 
continuing professional education every 2 years. This is the minimum 
amount necessary to meet this legislative requirement; it does not, 
however, allow for training to allow us to stay current in the computer 
auditing area. That is why we have requested additional training funds 
in our budget request.
                          additional staffing
    Mr. Skeen. The budget request shows an increase in FTE's of eight, 
from 754 in fiscal year 1997 to 762 in fiscal year 1998, but you are 
only requesting funding for an additional three FTE's. How will the 
other five FTE's be funded and what will they do at the agency?
    Response. The other 5 FTE's will be used by OIG to perform its 
personnel servicing function which was previously delegated to the 
Office of Personnel. These positions will be funded by an increase of 
$150,000, of which $100,000 would come from an offset from the 
appropriation for Departmental Administration.
                      texas tech mediation program
    Mr. Skeen. It has been identified that the Texas Tech University 
State mediation program received more than $1.0 million in excess 
payments. What is being done to recover this money?
    Response. FSA plans to have Texas Tech work off the excess payments 
from future transactions in lieu of collecting the money.
    Mr. Skeen. FSA has decided to recertify the Texas Tech mediation 
program for fiscal year 1997 with the caveat that no funding would be 
provided unless all issues identified in the audit report were 
resolved. What is the status of this issue? Is your office involved in 
following this situation?
    Response. We are still working with FSA to ensure that all issues 
presented in the audit report are resolved. However, GSA has approved 
release of mediation funds to all States. In Texas, FSA has agreed, in 
principle, to a ``work out'' program allowing Texas to repay ineligible 
charges from previous years' programs through State funding of the 
current year program. Thus, USDA mediation funds have been approved, in 
effect, for Texas, even though the primary audit finding, access to 
records, remains unresolved.
                        state mediation program
    Mr. Skeen. In the explanatory notes you state four States are 
withholding information needed to conduct audits of the State Mediation 
Program. If you are denied access to this information and these States 
are using Federal funds, who is performing oversight as to how these 
funds are spent and if they are being used in accordance with 
established rules and regulations?
    Response. The mediation officials in the four States continue to 
deny us access to the information. The bottom line is that as long as 
we are denied access to the information, there is no oversight as to 
how the funds are spent and no assurance that Federal funds are spent 
properly.
                       loan resolution task force
    Mr. Skeen. About 150 loan specialists were transferred to the Loan 
Resolution Task Force in October 1994 for a two year period to resolve 
over 7,000 delinquent accounts. The two years are now over. What is the 
status of these accounts? How many have been resolved? How many will 
never be resolved? What is the dollar value associated with all 7,000 
accounts? How much has been recovered to date? What is being done to 
resolve the remaining accounts?
    Response. In October 1994, 7,024 delinquent farmer program accounts 
with outstanding indebtedness (principal and interest) totaling $3.3 
billion were transferred to the Loan Resolution Task Force (LRTF). 
Effective April 1, 1995, over 6,000 farm credit delinquent accounts 
with outstanding indebtedness of less than $1 million were transferred 
back to the State and county offices, and the task force concentrated 
on resolving delinquent accounts in excess of $1 million.
    When LRTF began operations in October 1994, about 860 farmer 
program borrower accounts had an outstanding indebtedness of $2 billion 
and were delinquent more than $1 million each. These accounts were 
transferred from the State and county offices to LRTF. The LRTF 
chairperson stated that it eventually received 907 accounts that were 
delinquent more than $1 million and that it resolved 515 of these 
accounts. The remaining 392 accounts were transferred back to the State 
and county offices effective October 1, 1996, concurrent with the 
termination of LRTF. State and county office personnel, in coordination 
with the Deputy Administrator for Farm Credit, will continue to be 
responsible for resolving delinquent accounts.
    We have not tracked the status of these accounts since they were 
returned to the State and county offices. Accordingly, we are unable to 
provide you with current information or resolution by the State and 
county offices, how many accounts will never be resolved, and how much 
has been recovered to date.
                            olympic security
    Mr. Skeen. Sixty OIG employees were sent to Atlanta this summer to 
assist in providing security at the summer Olympics. This was at a net 
cost to your agency of $444,000. How were these costs absorbed? What 
work failed to get done as a result either through loss of employee 
time and/or money?
    Response. Our special agents provided security at the Olympic Games 
at the request of the Vice President of the United States. In the 
spirit of cooperation, we provided about 25 percent of our criminal 
investigators for this detail. When we committed to send this many 
agents, we understood that the U.S. Department of Justice would 
reimburse our agency for all expenses incurred during the entire 
detail. Only later did we learn that we would receive only partial 
reimbursement. To make up for the unreimbursed costs, we reduced 
spending on travel, training, and technical equipment.
    We ensured that all high priority casework was completed in spite 
of our large contingent at the Olympics. Special agents assigned to 
high priority matters, e.g., food safety issues, or who were required 
for court appearances were not assigned to the Olympic detail. However, 
with a significant percentage of our workforce at the Olympics for over 
a month, many of our lower priority investigations were delayed for a 
comparable length of time.
     minority enterprise financial acquisition corporation (mefac)
    Mr. Skeen. Describe for the record, in further detail, the 
evaluation you conducted on the cooperative agreement between NRCS and 
the Minority Enterprise Financial Acquisition Corporation.
    Response. Our evaluation of the $250,000 cooperative agreement 
disclosed that funds were channeled through the NRCS Alabama State 
office, paid to a Kansas City organization, and ultimately used, in 
part, to benefit pastors and active lay persons of specific religious 
denominations. We found that a Rural Business-Cooperative Service (RBS) 
official took direct personal action to facilitate the award of the 
agreement to MEFAC. For example, the RBS official personally signed 
Request for Reimbursement forms in lieu of requiring signatures from 
MEFAC officials. These forms are intended to be signed by the recipient 
and include a certification that funds have been expended in accordance 
with the terms of the agreement and with applicable laws and 
regulations.
    MEFAC violated the terms and conditions of the agreement with NRCS. 
Although the corporation drew down $150,000 of the $250,000 of the 
cooperative agreement, it did not conduct any regional workshops as was 
required by the agreement. The corporation was not a recognized tax-
exempt organization under Internal Revenue Code 501(c)(3) as stated in 
its proposal and other documentation. Further, the corporation did not 
maintain accounting records to show the disposition of the funds 
received under the agreement. The scattered records which were provided 
in response to our request confirmed material noncompliance with 
regulations for the use of cooperative agreement funds, excessive 
expenditures, and the purchase of other unallowable goods and services. 
As a result of our evaluation, we concluded that neither the Government 
nor the rural communities received value for the $150,000 in Federal 
funds expended. We recommended that NRCS terminate the cooperative 
agreement and recover the funds expended.
    Mr. Skeen. If the purpose of the agreement was the establishment of 
economic development to assist rural communities on business and 
economic issues, why was NRCS involved?
    Response. NRCS was involved because it had legislative authority to 
enter into cooperative agreements. Prior to the execution of the 
agreement, RBS officials believed they did not have legal authority to 
enter into cooperative agreements. Therefore, a decision was made to 
transfer funds from Rural Development through the Rural Business-
Cooperative Service to NRCS.
    Mr. Skeen. You have recommended terminating the agreement and 
recovering the funds. What is the status of this recommendation?
    Response. On December 17, 1996, NRCS initiated the process to 
cancel the cooperative agreement and collect the funds.
             food aid assistance to the russian federation
    Mr. Skeen. What is the status of the $600,000 in misappropriated 
funds and unaccounted for commodities and proper disposition of $3.6 
million of sale proceeds relating to food aid assistance to the Russian 
Federation?
    Response. CCC will establish an accounts receivable for $600,000 by 
April 1997. Following established departmental procedures, OIG is 
asking for documentation showing that an accounts receivable was 
established and a copy of the demand letter requesting repayment of the 
funds. CCC is gathering additional information from the program 
participant concerning the proper disposition of the $3.6 million. By 
April 1997, FAS will decide on an appropriate plan of action.
                         raisin crop insurance
    Mr. Skeen. Your semiannual report says that the raisin crop 
insurance program is subject to abuse and notes that indemnity payments 
of $20.9 million were paid to four companies. What controls have been 
strengthened in the raisin crop insurance program as a result of your 
recommendations?
    Response. As discussed earlier, we recommended that RMA develop and 
implement a methodology to value raisins sold as salvage using historic 
yields based on defects, including a methodology to pull a 
representative sample of damaged raisins for inspection by the 
Agricultural Marketing Service rather than relying on reconditioners to 
make a determination of whether raisins could be reconditioned. RMA 
responded that it would require loss adjusters to select a sample of no 
more than 10 tons of damaged raisins for reconditioning. However, if 
the grower chose not to pick up the raisins, a small sample would be 
taken by hand. This sample would be graded by USDA. A procedure 
developed by a committee of reinsured companies was recently 
implemented for the 1996 crop year. In addition, we also recommended 
that FCIC pay producers for reconditioning costs to encourage producers 
to recondition rather than sell raisins as salvage material. The 
proposed rule for the 1997 crop year included a reconditioning payment 
of up to $125 per ton to insure producers.
    Another control weakness of the raisin policy is that, unlike other 
crop policies, the raisin policy does not limit insured production to a 
producer's history of production. In addition, the insured liability 
for raisins is not established until the raisin crop is delivered or 
the loss is adjusted after damage has occurred. As a result, insured 
raisin producers may be able to inflate insured production in loss 
years to maximize indemnity payments and underreported insured 
production in nonloss years to minimize premium payments.
    We recommended that insured tonnage be limited to a producer's 
history of production and that the insured liability for raisins be 
established prior to loss adjustment.
    In its response to the report, RMA stated that it agrees that 
limiting insured tonnage in loss years would be an effective way to 
prevent some cases of improper inflation of insured liability in those 
years. However, according to RMA, the recommendation requires policy 
change and cannot be implemented for the 1997 crop year. For example, 
RMA will continue its monitoring program which addresses this problem 
directly. RMA believes that the administrative changes will adequately 
protect the program in the interim.
    To address the issue of establishing liability prior to loss 
adjustment, RMA stated that, for 1997, the raisin policy will contain a 
provision requiring an acreage report by the sales closing date. This 
requirement was included in the proposed rule for the 1997 crop year.
                              aarc program
    Mr. Skeen. Your semiannual report says the Department will probably 
lose $800,000 invested in a business enterprise by the AARC program. 
Has AARC followed your recommendations to have no further business 
arrangements with the company pending and investigation? When will this 
investigation be completed? What ``appropriate changes'' has AARC made 
in its project management as a result of this problem?
    Response. AARC agreed with all OIG audit recommendations. AARC 
stated that it had realigned responsibilities for project monitoring 
and was installing an automated system to track the status of each 
client company and compliance with the AARC agreement. OIG will assess 
AARC actions in a followup review later in FY 1997. The investigation 
is on hold pending a decision by an assistant U.S. attorney on the 
Department of Justice's course of action. AARC met with the attorney 
and discussed repayment or rebuilding the facility, which was destroyed 
by fire, as an option to legal action.
               rural housing service's corrective action
    Mr. Skeen. What has the Rural Housing Service done as a result of 
your recommendations regarding two rural rental housing projects as 
identified in your recent semiannual report?
    Response. RHS has agreed to implement all of the recommendations 
made in both reports. Debarment proceedings have been initiated and 
some recoveries made. We are currently working with RHS State office 
officials to develop a timeframe for completion of the corrective 
action.
                      rural rental housing program
    Mr. Skeen. Your office audited 11 multifamily rental projects for 
the poor and elderly in Michigan in FY '94. As a result, you 
recommended that the borrower make reimbursements for unallowable costs 
and that the borrower be debarred from managing any projects in the 
Rural Rental Housing program. What has been the result of your 
recommendations?
    Response. State RHS officials did not agree with the findings and 
recommendations and have not implemented a corrective action plan 
consistent with our recommendations. As a result, RHS has not pursued 
any replacement or debarment of the management company. We are 
currently working with the RHS National Office to reach a management 
decision.
                              convictions
    Mr. Skeen. On page 60 of your semiannual report, you list 71 
indictments and 22 convictions in Foreign Agricultural Service 
activities for a six-month period in FY 1996. Please provide a list 
describing the activities for which these indictments and convictions 
were obtained and the programs with which they are associated.
    Response. The statistics to which your refer, found on the 
Indictments and Convictions table in our Semiannual Report to Congress 
for the second half of FY 1996, reflect a typographical error by the 
printer. The table should have attributed these indictments and 
convictions to the Farm Service Agency rather than the Foreign 
Agricultural Service. During the 6-month period covered in that 
Semiannual Report, there were no indictments or convictions involving 
FAS.
                  rural community advancement program
    Mr. Skeen. The Farm Bill created a Rural Community Advancement 
Program or RCAP. The program would consolidate the funding of 12 
existing programs into the RCAP. Up to 10 percent of this funding could 
go to states as a block grant. If we were to agree with the 
Administration's proposal this would amount to about $56 million in 
block grants to states. What authority will your office have to conduct 
audits and investigations of how this money is spent by the states?
    Response. The Inspector General Act grants OIG authority to access 
information to review all USDA programs which would include Rural 
Community Advancement Program funds. Also, Rural Community Advancement 
Program funds requirement under the single Audit Act of 1984, P.L. 98-
502, and the Office of Management and Budget Circulars A-128 relating 
to State agencies and A-133 relating to nonprofit entities. Reports of 
audits conducted under either the Single Audit Act or the block grant 
statutes are submitted to the OIG Regional Inspector General for Audit 
responsible for the Federal region in which the block grant recipient 
is located.
    Mr. Skeen. Do you foresee any barriers to timely access to 
information on the uses of this money by the states?
    Response. No. We do not foresee any barriers at this time.
    Mr. Skeen. I understand that there are some problems with your 
investigation into the state mediation program. Some people may not be 
familiar with the program so why don't you take a few minutes and first 
tell us how this program operates.
    Response. The FSA Director of the Advisory and Corporate Operations 
Staff is responsible for administering USDA's agricultural mediation 
program, including allocating USDA grant funds. Mediation is a process 
in which a trained, impartial person, or mediator, facilitates 
communication between disputing parties to promote reconciliation, 
settlement, or understanding among them. A mediator has no 
decisionmaking authority. At the State and local levels, mediation 
programs are either administered by State agencies for certified or 
State-administered programs or by FSA State Offices for FSA-
administered programs. Certified State programs are administered by 
State agencies designated or authorized by the State government and 
certified by USDA as meeting the requirements of operating a mediation 
program with which USDA agencies will participate. For those States 
that do not have a certified program, mediation is provided under the 
administration of FSA State Executive Directors. State Executive 
Directors. assign either a third-party contract mediator of FSA 
personnel who have not been involved with the producer/borrower to 
mediate the cases.
    Section 502 of the Agricultural Credit Act of 1987, P.L. 100-233, 
dated January 6, 1988, authorized the Secretary of Agriculture to help 
States develop certified mediation programs. The 1987 Act authorized an 
appropriation of $7.5 million for each of the fiscal years 1988 through 
1991 with matching grants limited to the lesser of 50 percent or 
$500,000 for the cost of any State mediation program.
    The Food, Agriculture, Conservation and Trade Act of 1990, P.L. 
101-624, dated November 28, 1990, extended this authorization through 
FY 1995. The Agricultural Credit Improvement Act of 1992, dated October 
28, 1992, increased the USDA reimbursement to 70 percent. The Federal 
Crop Insurance Reform and the Department of Agriculture Reorganization 
Act of 1994, P.L. 103-354, dated October 13, 1994, extended this 
authorization through FY 2000. Until the 1994 Act, USDA was required to 
participate in mediation to resolve agricultural loan disputes. Section 
282 of the 1994 Act expanded mediation to include wetland 
determinations, conservation compliance, agricultural credit, rural 
water loan programs, grazing on national forest system lands, 
pesticides, and other issues the Secretary deemed appropriate. Section 
275 of this act required that if a USDA certified State mediation 
program is available as part of the informal hearing process, the 
appeal participant will be offered mediation.
    Since 1988, USDA has obligated $19.7 million for State mediation 
programs in 20 States. For FY 1996, there were 19 States with certified 
mediation programs while 31 States used the mediation services provided 
by FSA State offices.
    Mr. Skeen. Now tell us some of the problems you are having.
    Response. The Texas attorney general instructed Texas Tech 
University officials to deny OIG access to mediation program records, 
asserting that such records were confidential under Texas law. We have 
issued Inspector General subpoenas to obtain the records, and 
litigation in this matter is pending.
    We identified a potential conflict of interest for three of the 
flour full-time mediation program employees. A Texas Agricultural 
Mediation official, who is a licensed attorney, had a private law 
practice specializing in farm matters such as delinquent loans, 
appeals, bankruptcy, and reorganization. This official confirmed that 
he sometimes represented USDA borrowers in his law practice. Another 
employee of Texas Agricultural Mediation was also an attorney with a 
private law practice. In addition, an employee on the Texas Tech 
Agricultural Financial Analysis Project had outstanding USDA farmer 
program loans totaling approximately $475,000 and had not taken any 
action in over 10 years to repay or otherwise resolve the delinquency.
    To meet the 50 percent matching fund requirement during fiscal 
years 1989 through 1993, Texas Tech claimed a portion, usually 25 
percent, of the salaries paid to nine university professors and a 
Department chairperson as part of the cost to operate the mediation 
program. Since these individuals did not work with the mediation 
program, Texas Tech received excessive grant reimbursements totaling 
over $485,000 during this period. Texas Tech also claimed a Texas 
Agricultural Mediation official as a full-time employee of the 
mediation program. However, this official routinely taught courses at 
the university, was allowed 10 to 12 hours per week by Texas Tech for 
personal business purposes and routinely served during normal work 
hours as an active member of various professional organizations. His 
salary, benefits, and related indirect costs totaled over $479,000 
during fiscal years 1989 through 1995.
    Texas Tech Mediation Program accounting records showed $347,500 
charged to the ``Mediation Training'' account during FY 1993 through 
the third quarter of FY 1995; however, we could not identify any formal 
training provided to Texas Tech or other mediators.
    We recommended that the FSA Administrator cancel the certification 
of the agricultural mediation program administered by Texas Tech and 
instruct the FSA Texas State Executive Director to implement an 
alternative mediation program--regulations already provide for such a 
program--for Texas borrowers. we also recommended that FSA recover the 
excessive grant funds, clarify the extent and type of mediation 
training required to meet the mediation program certification 
requirement, and evaluate the effectiveness of the agricultural loan 
Mediation Program by determining whether grant funds are being used 
effectively. FSA has decided to recertify the Texas Tech mediation 
program for FY 1997; however, FSA officials stated that the program 
would not be funded until all issues identified in the audit report are 
resolved. During our continuing review of the State-certified mediation 
programs we were denied access to mediation program records for the 
Michigan, North Dakota, and Minnesota mediation programs. We continue 
to meet with the FSA Administrator and other Department officials to 
discuss resolution of these issues.
    Mr. Skeen. If you are denied access to information needed to 
perform your job by anyone using Federal funds--and this includes 
states, private companies, colleges and universities, non-profit 
organizations, etc.--then who is performing oversight as to how these 
funds are spent and if they are being used in accordance with the law? 
What assurances does Congress have that Federal dollars are being spent 
properly?
    Response. All University programs are included in the universe of 
programs to be included in audits required by OMB Circular A-133; 
however, the mediation program is relatively small dollars compared to 
other university programs and, generally, is not selected for testing 
in the A-133 audit. Nevertheless, we were informed by Texas mediation 
officials that neither GAO nor State auditors would be given access to 
records because of confidentiality concerns and State law. The bottom 
line is that there is no oversight as to how funds are spent and no 
assurance that Federal funds are spent properly.
  implementation of the government performance and results act (gpra)
    Mr. Skeen. GPRA, known as the Results Act, requires each executive 
agency to issue, no later than September 30, 1997, a strategic plan 
covering at least five years. In addition to a mission statement 
grounded in legislative requirements, the plans are to contain general 
goals and objectives that are expected to be outcome or results 
oriented (such as to improve literacy) as opposed to output or activity 
oriented (such as to increase the number of education grants issued).
    What progress is the agency making in developing its strategic 
plan, including defining its mission and establishing appropriate 
goals?
    Response. OIG has drafted a strategic plan defining our mission, 
guiding principles, goals, and objectives.
    Mr. Skeen. Has the agency identified conflicting goals for any of 
its program efforts? If so, what are the performance consequences of 
these conflicting goals and what actions--including seeking legislative 
changes--is the agency taking to address these conflicts?
    Response. OIG has no conflicting goals in our program efforts.
    Mr. Skeen. Strategic plans must be based on realistic assessments 
of the resources that will be available to the agency to accomplish its 
goals. As you are developing your strategic plan, how are you taking 
into account projected resources that likely will be available--
especially as we move to a balanced budget? What assumptions are you 
making? How are you ensuring that your goals are realistic in light of 
expected resources?
    Response. OIG has developed its goals based upon its current level 
of resources. Our strategic plan is prepared in line with our budget 
request which was recently submitted to the Committee.
    Mr. Skeen. For Congress, the heart of the Results Act is the 
statutory link between agency plans, budget requests, and the reporting 
of results. Starting with fiscal year 1999, agencies are to develop 
annual performance plans that define performance goals and the measures 
that will be used to assess progress over the coming year. These annual 
goals are to measure agency progress toward meeting strategic goals and 
are to be based on the program activities as set forth in the 
President's budget.
    What progress have you made in establishing clear and direct 
linkages between the general goals in your strategic plan and the goals 
to be contained in your annual performance plans? OMB expressed concern 
last year that most agencies had not made sufficient progress in this 
critical area.
    Response. We have drafted our annual performance plan. We have, so 
far, developed linkages in our strategic plan which depict the types of 
measures and indicators needed to assist us in achieving our general 
goals. Also, we have met with OMB to review our progress under GPRA.
    Mr. Skeen. More specifically, how are you progressing in linking 
your strategic and annual performance goals to the program activity 
structure contained in the President's budget? Do you anticipate the 
need to change or modify the activity structure to be consistent with 
the agency's goals?
    Response. We have developed the conceptual structure to mesh our 
strategic and annual performance goals. Health and safety issues, for 
which USDA is responsible and which are consistent with the President's 
budget, remain our first priority. The prevention and detection of 
fraudulent activity are also very important in our plan. We do not 
believe we will need to change or modify our activity structure to be 
consistent with our goals.
    Mr. Skeen. Overall, what progress has your agency made--and what 
challenges is it experiencing--in defining results-oriented performance 
measures that will allow the agency and others to determine the extent 
to which goals are being met?
    Response. OIG activities do not lend themselves to quantitative 
measurement because each event--audit or investigation--is mutually 
exclusive and unlike those that preceded or follow. Nonetheless, we 
have defined results-oriented performance measures such as percentages 
of planned audits initiated and completed during the fiscal year.
    Mr. Skeen. If applicable, what lessons did the agency learn from 
its participation in the Results Act pilot phase and how are those 
lessons being applied to agency-wide Results Act efforts? What steps is 
the agency taking to build the capacity (information systems, personnel 
skills, etc.) necessary to implement the Results Act?
    Response. OIG was not one of the agencies selected to participate 
in the pilot phase.
    Mr. Skeen. The Results Act requires agencies to solicit and 
consider the views of stakeholders as they develop the strategic plans. 
Stakeholders can include state and local governments, interest groups, 
the private sector, and the general public, among others. Who do you 
consider to be your agency's primary stakeholders and how will you 
incorporate their views into the strategic plans?
    Response. OIG considers the Congress and the Secretary and USDA 
agencies to be our primary customers and stakeholders. We solicit and 
consider their views for incorporation into our strategic plan on an 
ongoing basis. For example, we seek management's views of program 
activity at the start of every audit. We also consider the views of our 
other stakeholders, such as the public, requestors of information under 
the freedom of Information Act, the news media, and others to whom our 
audit and investigate reports are not directly transmitted.
    Mr. Skeen. For the Results Act to be successful, agencies with 
similar missions, goals, or strategies will need to ensure that their 
efforts are coordinated. What other federal agencies are you working 
with to ensure that your strategic plans are coordinated? What steps 
have you taken to ensure that your efforts complement and do not 
unnecessarily duplicate other federal efforts?
    Response. We do coordinate on an ongoing basis with the Government 
Accounting Office and the other Inspectors General during the conduct 
of Governmentwide audits to preclude overlap. In accordance with the 
Inspector General Act of 1978, OIG is the sole entity within USDA 
charged with the conduct of independent audits and investigations. 
Accordingly, no potential duplication exists within the Department.
    Mr. Skeen. The Results Act requires agencies to consult with 
Congress as they develop their strategic plans. Since these plans are 
due in September, now is the time for agencies to begin the required 
consultation. What are your plans for congressional consultation as you 
develop your strategic plan? Which Committees will you consult with? 
How will you resolve differing views?
    Response. OIG prepared draft Strategic Plans which are currently 
being reviewed by Senior Policy Staff for the Secretary, before it goes 
to OMB. Upon completion of the review, the Department plans to provide 
copies of the Strategic Plan (including an overall Departmentwide 
Executive Summary and the Strategic Plans for individual Mission Areas/
Agencies) to relevant Congressional Committees. Thereafter, we will 
look forward to meeting with Members or staff to discuss our Strategic 
Plan and to solicit their input and advice on refinements to that Plan. 
The Department plans to provide copies of the Department Strategic Plan 
to the following Committees:
    House Agriculture Committee
    House Appropriations Committee
    House Economic and Educational Opportunities Committee
    House Government Reform and Oversight Committee
    House Resources Committee
    Senate Agriculture, Nutrition and Forestry Committee
    Senate Appropriations Committee
    Senate Energy and Natural Resources Committee
    Senate Governmental Affairs Committee
    Mr. Skeen. In passing the Results Act, Congress sought to 
fundamentally change the focus of federal management and decisionmaking 
to be more results-oriented. Organizations that have successfully 
become results-oriented typically have found that making the 
transformation envisioned by the Results Act requires significant 
changes in what they do and how they do it.
    What changes in program policy, organization structure, program 
content, and work process has the agency made to become more results-
oriented?
    Response. We have not identified any policy or organizational 
changes which we believe are necessary for OIG. We fully expect that 
the results of the performance goals and other information generated by 
these activities to be beneficial as the process is implemented. We 
have continued to refine our planning process and our program risk 
assessment processes to better identify the most significant areas in 
which to utilize our resources.
    Mr. Skeen. How are managers held accountable for implementing the 
Results Act and improving performance?
    Response. We will establish mechanisms to ensure accountability as 
the process unfolds and will monitor the achievement of our performance 
goals.
    Mr. Skeen. How is the agency using Results Act performance goals 
and information to drive daily operations?
    Response. We have continued to refine our planning and program risk 
assessment processes to better identify the most significant areas in 
which to utilize our resources. We annually update our investigative 
universe through a profiling process and then develop specific issues 
and activities to independently assess by crafting annual strategies. 
These strategic are considered in our daily determinations of where and 
how resources should deployed.
                               infoshare
    Mr. Latham. What steps is the Office of Inspector General taking to 
audit the Infoshare program at the USDA.
    Response. As mentioned earlier to Mr. Skeen, the Field Service 
Center Implementation project has evolved from the technology-driven 
Infoshare project to an approach that is more closely related to the 
business processes and needs of the partner agencies. The project has 
recently become more focused on the identification, analysis, and 
reengineering of those business processes. Spending on information 
resources for the partner agencies has largely been restricted to the 
installation of telecommunications needs such as LAN, WAN, or voice 
that are deemed necessary for the move by the partner agencies from 
individual field office locations to collocated USDA Service Centers. 
Presently, OIG is assessing the adjustments made in Service Center 
implementation as a result of the FAIR Act, Rural Development's Direct 
Loan Origination and Serving System, the departmentwide moratorium on 
information technology investments, budget constraints of the current 
fiscal year, and projected constraints for FY 1998.
    Mr. Latham. Will any of the new FTE's being requested be used to 
further investigate and audit the infoShare program?
    Response. Yes, we have requested an additional 3 FTE's in order to 
provide oversight and monitor the Department's implementation of its 
Service Center initiative, formerly called InfoShare. Due to the 
complexity of this undertaking which spans the business process 
reengineering of the Department's programs to information technology 
acquisitions, a review of this activity will be extraordinarily time 
consuming and demanding.
                          audit of wic program
    Mr. Latham. Has the Inspector General ever done an audit of the WIC 
program? Has anyone ever asked them to perform one?
    Response. OIG has done many audits of the WIC program. As part of 
our annual planning process, we work with departmental agency managers 
to obtain their views concerning coverage they believe would be 
beneficial for their respective programs and operations, and, 
occasionally, we have received requests for audits of the WIC program. 
Currently, audits in process in the WIC program are: Nutrition 
Education Cost Charged, Puerto Rico; Integrated Statewide Information 
System, California; Administrative Costs, California; and 
Accountability of Vouchers, Minnesota. We also have included in this 
year's plan audits of WIC Food Delivery Systems--Vendors Compliance and 
Administration and Management of the Virginia WIC Program.
                                backlog
    Mr. Latham. In the testimony, mention was made of a backlog of 
approximately 1,400 cases, yet no additional staff is requested to 
tackle this problem. How will the FY 98 budget submission help the 
Office of Inspector General cope with this backlog?
    Response. The additional appropriations we requested will allow us 
to hire additional investigators, closer to our authorized personnel 
ceiling. The additional investigative staff-years which would then be 
available would allow us to reduce the current case backlog.
    Mr. Latham. The Inspector General is requesting language in the 
bill to provide him with authority for $2,500 for official reception 
and representation. For what is this money used and why is an increase 
in authority warranted?
    Response. This authority would permit the Inspector General to host 
official functions for the President's Council on Integrity and 
Efficiency, the International Criminal Police Organizations, the 
International Association of Chiefs of Police, and similar functions. 
Currently, any such expenditures incurred must be paid out of pocket by 
the Inspector General.
              food stamps and electronic benefits transfer
    Mr. Fazio. During your oral presentation to the Committee, you 
cited the possible cost-savings for the food stamp program associated 
with total changeover to an electronic benefits transfer (EBT) system.
    For the record, provide a comparison of the estimated level of food 
stamp fraud for states who have instituted an EBT program and those who 
have not. Provide any additional estimates of cost-savings that would 
be accomplished by a total EBT system.
    Response. In the past, we were not able to measure the level of 
fraud that occurred using food stamp coupons that would be needed to 
make such a comparison. Currently, through an analysis of computerized 
data, EBT allows us to readily identify potential fraud of both 
retailers and recipients. However, it will take some time to determine 
the specific benefits of fraud reduction due to EBT.

[Pages 325 - 428--The official Committee record contains additional material here.]


                                           Tuesday, March 18, 1997.

                      DEPARTMENTAL ADMINISTRATION

                               WITNESSES

PEARLIE REED, ACTING ASSISTANT SECRETARY
IRWIN T. DAVID, ACTING CHIEF FINANCIAL OFFICER
ANNE F. THOMSON REED, ACTING CHIEF INFORMATION OFFICER
CONSTANCE D. GILLAM, BUDGET OFFICER
STEPHEN B. DEWHURST, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE


                            Opening Remarks

    Mr. Skeen. The committee will come to order.
    We have with us this afternoon the people who are 
responsible for critical personnel, administrative, financial, 
and information management functions at USDA. In other words, 
the people who are responsible for making that place work. 
We've got all kinds of visionaries, but you've got to have 
functionaries. These folks make it work.
    They are Mr. Pearlie Reed, the Acting Assistant Secretary 
for Administration; Mr. Ted David, Acting Chief Financial 
Officer; and Ms. Anne Thomson Reed, the Acting Chief 
Information Officer. With them today is Ms. Constance Gillam, 
Budget Officer in the Office of the CFO, and also the man who 
needs no introduction, the legendary, the great, wonderful, 
ever present, Stephen Dewhurst, Chief Budget Officer for the 
USDA.
    Steve, how many years?
    Mr. Dewhurst. Well, 1978; 19 years.
    Mr. Skeen. My math is no good.
    Mr. Dewhurst. Nineteen years.
    Mr. Skeen. Nineteen years; very good.
    We have a lot of ground to cover today. So, Mr. Reed, if 
you don't mind, I'll let you lead off. If the three of you 
would like to make short statements so we can get to the 
questions; and as always, your full statements will be inserted 
in the record. So, welcome. Go ahead and proceed.

                Statement of Acting Assistant Secretary

    Mr. Pearlie Reed. Good afternoon, Mr. Chairman. I 
appreciate the opportunity to appear before you today. You 
already have the budget request for the Assistant Secretary for 
Administration. The budget and supporting materials were 
prepared before I assumed the position of Acting Assistant 
Secretary for Administration, about eight days ago.
    Mr. Skeen. You're not responsible for all of it.
    Mr. Reed. None of it, yet.
    In addition to the multitude of administrative and 
management issues that I must deal with on a continuing basis, 
Secretary Glickman has asked me to do two things. They are, 
number one, to provide the leadership for the implementation of 
the Secretary's Civil Rights Action Team Report 
Recommendations.
    There are 92 recommendations, and we are currently 
developing an implementation strategy. Our plans are to 
implement the recommendations that do not require legislation 
by September of this year. Our goal is to get those that do 
require legislation implemented during the first session of 
this Congress.
    The second thing that the Secretary has asked me to do is 
to provide the leadership for better coordination of all 
administration and management functions at USDA. We all agree 
that there are many opportunities for improvements in 
Departmental Administration. I am committed to working with my 
colleagues here at the table today and appropriate others to 
make these much needed improvements. Mr. Chairman, I will close 
by simply thanking you in advance for your support in helping 
us to bring about the changes and improvements that we all 
agree are needed at USDA. Thank you.
    Mr. Skeen. We'll come back with questions later on. Now we 
will hear from Anne F. Thomson Reed, Acting Chief Information 
Officer;

                        Statement by Acting CIO

    Ms. Anne Thomson Reed. Thank you, Mr. Chairman. I will 
submit my testimony for the record and also offer a few 
remarks.
    The 1998 budget request for information technology at the 
Department is about $1.2 billion. This includes the Department 
and all of its agencies.
    Included in this amount are approximately $234 million for 
acquisitions, including equipment and software; $253 million 
for commercial support services, including operations and 
maintenance; $474 million for inter-governmental payments, 
including grants to the States and FTS 2000 services; $326 
million in personnel costs; and $60 million in other services, 
including non-FTS 2000 voice and data communications. 
Offsetting these costs are collections from non-USDA agencies 
of approximately $179 million.

                            adp investments

    Included in the $1.2 billion request are a number of 
projects which include the following notable investments for 
the fiscal year 1998. The Food Safety and Inspection Service is 
asking for $8.5 million for field automation and information 
management to continue to modernize the way it inspects meat, 
poultry, and egg products using technology as a part of its 
modernization effort.
    The Animal and Plant and Health Inspection Service, APHIS, 
is asking for $4 million in fiscal year 1998 for the Integrated 
Systems Acquisition Project to continue to upgrade its existing 
information technology infrastructure. This expenditure will 
support the APHIS mission of ensuring the health and care of 
animals and plants, and improving agricultural productivity and 
competitiveness.
    Nine million dollars is included for Rural Development's 
Dedicated Loan Origination Servicing System which enables Rural 
Development to manage and service its $18 billion portfolio of 
single family housing loans.
    The Forest Service is planning to spend as much as $140 
million for implementation of its Project 615, which addresses 
Legacy System replacement and upgrades geospacial information 
management capabilities.
    Two hundred forty million dollars in grants are provided to 
the States by Food and Consumer Service for information 
technology related to support of the Food Stamp Program and the 
Special Supplemental Nutrition Program for Women, Infants, and 
Children. Fifty-four million dollars will go to implement the 
Electronic Benefit Transfer Program in the States. These are 
but a few examples of how the Department of Agriculture is 
improving its program delivery capabilities through the use of 
technology.

                             office of cio

    USDA established the Office of Chief Information Officer in 
August 1996 to meet the requirements of the Information 
Technology Management Reform Act of 1996, now known as the 
Clinger-Cohen Act. As the Acting CIO, I provide the 
Departmentwide policy guidance, leadership, coordination, and 
oversight of USDA information management and information 
technology investment activities to support USDA program 
delivery.
    Many challenges we face are not unique to USDA, but they 
affect the entire Federal community. However, we recognize that 
some of our efforts in the past have raised concerns among our 
oversight agencies. During the past 6 months, I have set in 
motion a decisive course of action to begin to implement the 
Clinger-Cohen Act and to address the challenges that USDA faces 
in the information technology arena.

                           strategic irm plan

    While much remains to be done, I'd like to share some of 
our activities and accomplishments with you. In accordance with 
the Government Performance and Results Act, we initiated the 
development of a strategic IRM Plan for the Department. The 
approach of this plan was three-fold:
    First, to invest in the planning process and assure that 
information technology, selection, and deployment are based on 
business needs; Second, to invest in the infrastructure to 
improve service delivery for more effective information systems 
and data management;
    Third, to invest in human resources by implementing 
professional development strategies to ensure that skills 
necessary to meet the challenges of delivering programs are 
available. The strategic plan is consistent with the 
requirements of the Clinger-Cohen Act and with our own IRM 
Modernization Plan which was first launched in the summer of 
1995. The two highest priorities of our IRM Modernization Plan 
are to ensure senior policy level accountability for 
information technology investments and priorities, and to 
establish an information technology architecture.

                        it decisonmaking process

    To improve our decision-making process, we have established 
two Boards. One is the Executive Information Technology 
Investment Review Board, EITIRB, which is Chaired by the Deputy 
Secretary and consists of sub-Cabinet Officials from each 
mission area.
    This Board assures that major technology investment issues 
are addressed by the senior policy makers in the Department. 
The second Board is comprised of senior IRM Officials from each 
mission area. They provide technical advice to me and to the 
Executive Board. Because they operate from different 
perspectives for meeting program delivery goals, these Boards 
will bring a much needed balance to decision-making.
    The plan is to use this new decision-making process to 
ensure compliance with our information technology architecture 
and to provide the best value for USDA as we implement the 
decisions for 1998, and as we make decisions for fiscal year 
1999.

                  information technology architecture

    The second priority identified by the Modernization Plan 
and one of the key responsibilities of the CIO, as defined in 
the Clinger-Cohen Act, is the development and maintenance of an 
integrated information technology architecture for USDA. An 
architecture seeks to provide a blueprint or a common framework 
for information technology investments, including standards and 
operating policies that will assure that information can be 
shared more effectively among our agencies and customers.
    At this point, the USDA architecture is a high level 
document which establishes an umbrella, beneath which we now 
need to fill in the pieces. The architecture reflects the 
Department's ongoing effort to develop a more effective process 
for making technology investments that support USDA business 
needs.

                       moratorium on acquistions

    In November 1996, Deputy Secretary Rominger instituted a 
moratorium on significant information technology acquisitions 
and certain telecommunications equipment acquisitions until 
this architecture is developed. This action has constrained 
spending while we bring the architecture development together.
    A waiver process was instituted to avoid unacceptable 
disruption to delivery and mission critical programs. As of 
March 7, 18 waivers have been granted, mostly for 
telecommunications initiatives.

                         year 2000 date change

    Another challenge facing all of us is the year 2000 date 
change. To ensure that hardware, software, and information 
technology application systems are certified year 2000 
compliant prior to the turn of the century, USDA has been 
working to prepare for this possible disruption through an 
integrated, coordinated strategy based on a five phase 
approach: awareness, assessment, renovation, validation, and 
implementation.
    Approximately $35 million will be spent on this effort in 
fiscal year 1998. At the current time, the total USDA 
investment plan for year 2000 related projects is approximately 
$100 million. USDA is also working to establish a 
telecommunications environment that is optimized for maximum 
benefit and cost to the Department as a whole.

                               conclusion

    With the telecommunications architecture as a guide, the 
existing Departmental and agency networks will become a single 
USDA enterprise-wide network, integrated and efficient 
telecommunications utility. To provide leadership and over-
sight for USDA's IT direction, the fiscal year 1998 Office of 
the Chief Information Officer budget request totals $4,828,000.
    This concludes my statement, Mr. Chairman. I'm happy to 
answer any questions which you might have.
    Mr. Skeen. Next we will hear from Mr. Irwin T. David.

                        statement by acting cfo

    Mr. David. Thank you very much. Good afternoon, Mr. 
Chairman and Members of the subcommittee. I appreciate the 
opportunity to appear before you today and to present USDA's 
progress in improving financial management and to present the 
President's budget for the USDA Office of the Chief Financial 
Officer, the OCFO, and the Department's Working Capital Fund.
    With me today is Mr. Allan Johnson, the Associate CFO of 
USDA. Mr. Chairman, Members of the subcommittee, most decisions 
by USDA's policy, program, and management personnel have 
financial implications. When we in the Office of the Chief 
Financial Office improve the quality of the information on 
which such decisions are based, we promote better, more 
effective government.
    In addition to Department-wide financial management, the 
Office of the Chief Financial Officer also coordinates 
implementation of the Government Performance and Results Act, 
GPRA, in USDA. I'd like to very briefly describe some of the 
financial management challenges facing the USDA, and a few of 
our many activities to meet those challenges.

                    financial management challenges

    Currently, USDA operates approximately 67 financial 
management systems with 133 different applications to meet 
various requirements. Weaknesses in USDA's financial management 
systems and practices have not only hampered effective 
decision-making, but have resulted in less than unqualified 
audit opinions on USDA's consolidated financial statements and 
some agency financial statements during the last 5 years.
    The challenge facing my office and the entire USDA 
financial management community is to revolutionize the 
financial management systems and programs of the Department so 
that they are producing quality information for users whose 
needs may differ significantly.
    Accurate, timely, reliable, consistent, and useful 
financial information are the key management requirements for 
effective program delivery decisions and to ensure the 
financial health, efficiency, and effectiveness of USDA and its 
programs.
    This is not an easy task, nor one that can be achieved 
quickly. Further, once we succeed in improving financial 
management at USDA we must sustain or exceed the baseline to 
inspire continued confidence in our ability to manage our 
programs effectively.
    We are asking for a modest increase to meet this challenge. 
The investment we are asking you to make will more than pay for 
itself in terms of management improvements, increased program 
effectiveness, and increased efficiency. Such improvements will 
be seen in many areas, including financial systems, unqualified 
audit opinions on our financial statements and implementation 
of cost management practices.

                           financial systems

    OCFO is leading a major effort to transform its outdated, 
cumbersome, inefficient financial systems into a single 
integrated financial information system responsive to the needs 
of USDA policy, program, and management personnel.
    We have assembled a highly trained interdisciplinary team 
to continue the phased implementation of the Financial 
Information System Vision and Strategy Program--FISVIS--an 
effort that will eliminate many of the current system 
weaknesses and which we have described to this committee in the 
past.
    Implementing FISVIS, however, is just the beginning. The 
standards of the system must be maintained. OCFO must 
constantly update and monitor financial standards and ensure 
that all Departmental financial and mixed information systems 
are consistent with the foundation financial system.

                      audited financial statements

    Until FISVS implementation is complete, however, we are 
systematically addressing USDA's financial management 
weaknesses, working with the General Accounting Office and the 
Office of Inspector General, among others. As I mentioned, 
USDA's consolidated financial statements and several agency 
financial statements have not been able to achieve an 
unqualified or clean audit opinion for the last several years. 
OCFO staff are working directly with USDA agencies, including 
the Forest Service, Rural Development, Farm Service Agency, 
Food and Consumer Service, and the National Finance Center to 
eliminate systems and management weakness. In fact, we have 
formed a unique partnership between the OCFO, the Office of 
Inspector General, and the agencies to resolve many of the 
identified problems. Our target is to achieve an unqualified 
audit opinion for the fiscal year 1998 consolidated financial 
statements.

                            cost accounting

    Cost information is one of the crucial factors for program 
decisionmaking and for judging performance under the Government 
Performance and Results Act. Such cost information must be 
available for programs, activities, functions, organizations, 
and services. USDA is now in the initial stage of the 
implementation of improved cost management practices. And we 
are beginning to see results. For example, one USDA agency that 
provides services to other agencies, both internal and external 
to USDA has revamped its pricing structure based on an analysis 
of its costs. The agency is now more fully recovering its 
costs.
    In another instance, one of our operating programs is being 
redesigned to reduce the cost and improve the quality of its 
services. In other examples, the use of cost management 
principles are aiding in the modernization of administrative 
systems. We are now striving to institutionalize these 
techniques throughout USDA.

                        fiscal year 1998 request

    These are but a few of the examples of our initiatives to 
meet USDA's financial management challenges. To continue our 
efforts to address the financial management needs of the 
Department and to implement the CFO Act, we are requesting a 
budget of $4,718,000. This is an increase of $435,000 over our 
fiscal year 1997 current estimate and consists of an increase 
of $60,000 for one half of pay cost and an increase of $375,000 
to build upon the financial management efforts currently 
underway.
    We plan to use the additional resources in the following 
ways: First, to hire four people who will focus on implementing 
and maintaining the single integrated financial information 
system. In that way, we can provide timely, accurate, 
consistent, reliable, and useful financial information for 
decision makers.
    Second, to achieve and maintain an unqualified audit 
opinion on agency and consolidated financial statements. Such 
an unqualified opinion will ensure the credibility of our 
financial reports and our financial systems.
    Third, to implement cost management procedures 
Departmentwide so we can support management decisions in this 
time of constrained resources.

                          working capital fund

    I'd like now to describe briefly USDA's Working Capital 
Fund or WCF. As I know you are aware, the Working Capital Fund 
is a financing mechanism that allows us to pool resources to 
develop and operate central administrative services. The WCF 
provides 22 centralized administrative services ranging from 
the National Finance Center to Central Copying Services.
    The OCFO manages the largest of central services, the 
National Finance Center, and provides financial oversight for 
the entire Fund. Making our administrative services available 
to other Federal agencies, so-called cross servicing, helps us 
to reduce unit costs by spreading our fixed cost of operations 
over a larger group of users.
    As an example, the average cost of payroll for an employee 
in 1998 at the National Finance Center will be more than 25 
percent less than the cost would have been if we did not cross 
service other entities.

                            cross-servicing

    In the fiscal year 1997, Congress required the OCFO to 
actively market NFC services. We are actively following your 
direction and guidance. In 1996, we began servicing the Federal 
Mediation and Conciliation Service and the Office of 
Congressional Compliance. We are scheduled to add another four 
agencies over the next two years.
    The House side of the U.S. Capitol Police, the U.S. 
Architectural and Transportation Barriers Compliance Board, the 
Federal Housing Finance Board and the Federal Elections 
Commission. We are also pursuing several other potential 
clients for our payroll systems, as well as for other 
administrative payments systems at NFC. We are pursuing a 
number of marketing strategies to make our services more 
visible and appealing to potential users, including the use of 
the Internet. Other WCF activities are also expanding cross 
servicing.
    For example, the National Information Technology Center 
will be expanding its services to the General Services 
Administration over the next two years. And the Consolidated 
Forms and Publication Distribution Center will expand its cross 
servicing activity in fiscal years 1997 and 1998.

                        transition to year 2000

    I want to reiterate what Ms. Reed said about the year 2000. 
We are taking special care to ensure a seamless transition into 
the year 2000. The National Finance Center is pursuing a year 
2000 strategy to prevent any disruption caused by two-digit 
year dates.
    This involves approximately 26,000 programs totalling over 
22 million lines of code. NFC has had a plan in place for over 
a year to deal with this transition, and we are on target for 
completing our plan on time.

                            funding the wcf

    We are not here to ask for money from Congress for the WCF. 
The WCF is entirely cost-reimbursable. We recover all WCF 
operating costs through the charge for goods and services. We 
do not use appropriations to subsidize any of our activities. 
In that respect, the WCF and the services it supports operates 
very much like business enterprises.
    Because we are a business, it is very important that 
customers participate in the oversight of our activities and 
the financial management of the fund. Therefore, last year we 
restructured the way we oversee WCF and its activities. The 
cost estimates provided to you are the result of that 
cooperative oversight process, where customers, service 
providers, and financial managers work together. The WCF is one 
of the real success stories of financial management in USDA.
    I will be pleased to answer questions as you might choose. 
Thank you, sir.
    [Clerk's note--Mr. Pearlie Reed's written testimony appears 
on pages 720 through 735. Ms. Anne Thompson Reed's written 
testimony appears on pages 736 through 745. Mr. Irwin David's 
written testimony appears on pages 746 through 760. Mr. Pearlie 
Reed's, Ms, Anne Thompson Reed's, Mr. Irwin David's, Mr. Ira 
Hobb's, and Mr. Blake Velde's biographical sketches appear on 
pages 713 through 719. The Departmental Administration 
explanatory notes appear on pages 761 through 822. The Office 
of the Chief Financial Officer's explanatory notes appear on 
pages 833 through 868. The Office of the Chief Information 
Officer's explanatory notes appear on pages 823 through 832. 
The Office of Communication's explanatory notes appear on pages 
869 through 881. The Office of General Counsel's explanatory 
notes appear on pages -- through --. The National Appeals 
Division explanatory notes appear on pages 921 through 935. The 
Office of Small and Disadvantaged Business Utilization 
explanatory notes appear on pages 935 through 942.]
    Mr. Skeen. Thank you very much. Let's start with Mr. 
Pearlie Reed. We want to offer you congratulations and 
condolences for taking over this job. The Secretary obviously 
has a great deal of confidence in you. We want to give you all 
the support we possibly can. So, put us on your team.

                    civil rights action team report

    The task you have in front of you just in the Civil Rights 
area, and that's only one part of your responsibility, is very 
demanding. The report by the Civil Rights Action Team has nine 
pages of previous reports and studies on the problems in the 
Department, most of them dealing with the Civil Rights problems 
and personnel and farm operating loans that still exist today.

                            regional centers

    And last year the Department testified that it spent 
$700,000 to start-up six Regional Civil Rights Enforcement 
Centers which you now propose to eliminate. With all this 
background already on record, why wasn't more done and what new 
directions can you take that haven't been taken before to 
resolve this problem?
    Mr. Reed. Mr. Chairman, as I indicated earlier, this is my 
eighth day on the job. And with respect to responding to the 
technical part of your question, I'll ask Ira Hobbs to respond 
to that.
    Mr. Skeen. That will be just fine, Mr. Hobbs. If you'd like 
just take the chair on the end down there and we'll get you a 
microphone.
    Mr. Hobbs. Mr. Chairman, it would be very helpful to me if 
you could repeat the first part of the question. I didn't hear 
it all.
    Mr. Skeen. The report by the Civil Rights Action Team had 
nine pages of reports and studies on the problems in the 
Department. Most of them dealt with Civil Rights problems in 
personnel, in farm operating loans, and we still have that 
problem existing today.
    Last year, the Department testified that it spent $700,000 
to start-up six Regional Civil Rights Enforcement Centers which 
we're now proposing to close down. Give me some idea of why we 
didn't get more done and what new direction can we take that 
hasn't been already taken to solve these problems?
    Mr. Hobbs. I will try to answer that. The six Regional 
Centers that were put into place last year dealt predominantly 
with Title VII cases.
    Mr. Skeen. Explain to us what Title VII cases are.
    Mr. Hobbs. Yes, sir. Title VII cases are cases of 
employment issues where employees within the Department have 
filed complaints against managers or supervisors. It was not 
set-up to deal with problems associated with farm loans.
    Consequently, the problems occurring in farm loan programs 
continued as they had in prior years. I don't think anyone was 
really aware of the magnitude of the problem in farm service 
programs, and to the extent that people were, they did not say 
anything about it.
    I think it has been only within the last year that the 
magnitude of that problem has been uncovered. And I think it's 
been only within the last three months that a proposal has been 
developed to address it.
    There are now two reports: the Civil Rights Action Team 
Report, which I believe that you are aware of and a report by 
the Inspector General's Office. This report which was requested 
by the Secretary, really goes even further in identifying the 
problems and the issues that exist in the farm loan program.
    In terms of the new directions you mentioned I don't really 
think there is a new direction. I think what has happened is 
that there is a new attitude. This new attitude is about going 
in, managing, making the tough decisions, making the tough 
calls, and being prepared and committed to stay the course 
until the problem is corrected.
    Mr. Skeen. So, the problem wasn't apparent going in. It has 
risen after the action was initiated.
    Mr. Hobbs. I think there has been such a hue and cry from 
farmers across the country that the Department was forced to 
look at itself. And in doing so, really started to understand 
the magnitude of the problem in the Farm Service Agency in 
terms of its delivery of program services, as well as the 
volume of complaints that were being filed and alleged by 
consumers that were not being positively responded to.

                            scope of problem

    Mr. Skeen. What's the scope of the problem with the Farm 
Service Agency in so far as loans to minority farmers?
    Mr. Hobbs. I don't know that I can answer that question, 
because I am not in the Farm Service Agency. My experience in 
the last year, is that it's pretty tough. It's bad.
    Mr. Skeen. There is a business plan and it needs to be 
addressed.
    Mr. Hobbs. There is a problem. It needs to be addressed and 
it will require, I believe, a new leadership to address it.
    Mr. Skeen. How many discrimination cases have we had filed? 
Do they have to file them?
    Mr. Hobbs. It is a case that's filed.
    Mr. Skeen. So, they are filed cases.
    Mr. Hobbs. Yes, sir.
    Mr. Skeen. But we're going to recommend eliminating the 
County Committee System and replacing it with some other agency 
or some other form of----
    Mr. Pearlie Reed. Mr. Chairman, I'd like to respond to 
that.
    Mr. Skeen. All right, sir.
    Mr. Reed. The Secretary has gone on record indicating that 
he does not want to eliminate the County Committee System, but 
instead would like to make those improvements that are 
necessary to ensure that the socially disadvantaged are treated 
fairly across the country.

                          legislative package

    Mr. Skeen. The Civil Rights Action Team's Report mentions a 
legislative package to be sent to Congress. When can we expect 
to receive that?
    Mr. Reed. There are approximately 13 of the 92 report 
recommendations that we believe will require action by the 
Congress. We're in the process right now of developing a plan 
to pull all of the appropriate information together for the 
Secretary. I think our time line is to get that done within the 
next 60 to 120 days.
    Mr. Skeen. To whom are you sending it to on the Hill?
    Mr. Reed. The Secretary will send it to the appropriate 
person or persons. I don't know yet who they are.
    Mr. Skeen. As yet to be identified?
    Mr. Reed. I'm sure that the Secretary's legislative folks 
know exactly where it's going, but I don't.
    Mr. Skeen. We don't either.
    Mr. Reed. I will get that answer for you.
    Mr. Skeen. That's why we'd like to get it unscrambled here.
    [The information follows:]

    In accordance with OMB Circular A-19 on legislative 
coordination and clearance, the legislative packages necessary 
to implement 13 of the recommendations in the Civil Action 
Team's Report will be sent to the Speaker of the House and the 
President of the Senate under transmittal letter.

                        reorganization proposal

    Mr. Skeen. The organization chart on page 53 of the Report 
proposes retaining the Offices of the Chief Financial Officer, 
CFO, and the CFO Officer within Departmental Administration. 
What's the status of the proposal and when will this be 
decided?
    Mr. Reed. The background is that the Secretary asked the 
Civil Rights Action Team to broaden its scope to look at all of 
Departmental Administration. He is of the opinion that he has 
five or six different administration type activities stove 
piped directly to his office.
    He asked us to look at that and come forward with 
recommendations that would provide a framework for better 
coordination of all Departmental Administration. The report 
reflects the collective judgment of the Civil Rights Action 
Team. The Secretary has yet to decide how far he will go in 
implementing that recommendation.

                           clinger-cohen act

    Mr. Skeen. Thank you. Ms. Anne Reed, can you please briefly 
describe the Clinger-Cohen Act which establishes the CIO Office 
and the Chief Information Officer position? And tell us what 
that means for the Department.
    Ms. Anne Reed. Yes, Mr. Chairman. The Clinger-Cohen Act was 
designed to strengthen the management attention given to 
information technology; understanding that it is a key tool in 
changing the way in which we do business. The Act required the 
Department to establish a Chief Information Officer.
    It gave more authority to the major departments to manage 
their own information technology, thereby lessening the 
authority that had previously existed in the General Services 
Administration. With that authority, of course, comes greater 
accountability.
    The legislation requires that we establish a capital 
planning improvement process. It also requires that we 
establish an information architecture. It finally requires that 
we focus more on training our individuals. All of this of 
course is very consistent with the USDA's strategic plan which 
I referred to in my owning remarks.
    Mr. Skeen. Does your office and the two oversight boards 
you mentioned have complete authority over the departmental 
purchase, both from appropriated funds and from CCC funds?
    Ms. Anne Reed. The scope of our responsibility is not 
defined by the source of funds. We are charged to look 
intensively at all information technology investments in the 
Department regardless of the source of funds.

                      direct purchasing authority

    Mr. Skeen. Really, do Chief Information Officers in the 
government have direct purchasing authority for their agencies. 
That is, do they have the funds appropriated to them for 
purchasing?
    Ms. Anne Reed. I do not know the answer to that question. I 
will get that for you and provide it for the record.
    [The information follows:]

    In conversations with OMB and with other CIO offices, it 
appears that information technology funds are appropriated 
directly to the programs, agencies or bureaus within 
Departments, rather than to the CIO offices. The programs, 
agencies, or bureaus then decide how the money is to be spent, 
subject to any upper-level management controls which might have 
been placed on information technology acquisitions. CIOs 
generally do not appear to have purchasing authority except for 
their own, immediate offices.

                         year 2000 date changes

    Mr. Skeen. That will be fine. I appreciate you doing that. 
You mentioned a problem of converting computers in the 
preparation for the year 2000. Can you give us an explanation 
for the non-computer person of what the problem is?
    Ms. Anne Reed. The difficulty arose from software 
programming predominately where it's very simply a matter of 
defining a date field. The programmers used two digits instead 
of four. When you change to the year 2000, the machine cannot 
distinguish it from 1900 and all of a sudden all of your dates 
and all of the mathematical equations----
    Mr. Skeen. That's about the same age as some of the 
equipment they've been using.
    Ms. Anne Reed. I think most people felt that maybe the 
equipment and most of those software programs would in fact be 
replaced by the year 2000. People didn't envision that we would 
be living with these systems for as long as we have.
    I think there was a hope that there would be a 
technological fix to the problem, a silver bullet, if you will. 
While there are many tools that do help us, it is still a very 
labor intensive operation. There is no silver bullet.
    Mr. Skeen. With the aggravation of just sitting in these 
hearings through all of the years of my experience in this 
body, when we talk about technology, particularly in the area 
of computerization, and getting ourselves upgraded on this, we 
run into all of these networking problems and other kinds of 
problems. You begin to wonder whether the machines are smarter 
than the people we have working on them--I'm talking about the 
service individuals, the people who sell these to the 
government. IRS is having a problem. We have a problem at the 
Department of Agriculture. It seems to me we need to find some 
way to get some responsible people in there who can clear up a 
mess like that.

                            lessons learned

    Ms. Anne Reed. Yes, sir. I think that one of the things 
that we have learned through the years at the Department of 
Agriculture--and I think it's evidenced in the findings in 
other departments and clearly was one of the premises behind 
the establishment of the Clinger-Cohen Act--is that we truly do 
need to invest a great deal more in planning.
    And, that our planning needs to be focused on what our 
strategic objectives are and how we can then use technology to 
achieve those objectives. We also know that we need to approach 
projects in a more disciplined way. The grand design where we 
try to identify all of the problems and solve them all in one 
full swoop is a solution that is fraught with difficulties.
    We are far better served if we scope the issue into smaller 
chunks and achieve success in smaller bites leading towards 
that broader objective.
    Mr. Skeen. Moving from bites to chunks.
    Ms. Anne Reed. Yes, you could put it that way.

                        cost of year 2000 change

    Mr. Skeen. Let me ask you about the cost of getting these 
changes done. Are they paid by the individual agencies or is 
there a central account for it?
    Ms. Anne Reed. It is financed by each individual agency.
    Mr. Skeen. They're allocated back then to each agency?
    Ms. Anne Reed. Each agency within its appropriation is to 
find the resources to tackle this problem.

                        national finance center

    Mr. Skeen. I think you've done a good job of explaining an 
ongoing problem in just about every agency we've dealt with 
here. Mr. David, let me ask you, you answered a lot of the 
questions we hadn't intended to ask you. But turning to the 
National Financial Center, the NFC went without a Director for 
a long time and now has a Director who will be there only on an 
interim basis. Are we still trying to recruit a Director for 
the long-term?
    Mr. David. Yes, we are, sir. We have issued a vacancy 
announcement. We are in the process of reviewing the responses 
to that announcement. I hope we will be able to appoint a new 
Director in the very near future.
    Mr. Skeen. In the near future?
    Mr. David. I tried to answer that question last year and 
was wrong, but I hope within the next couple of months.
    Mr. Skeen. Well, we don't want to be wrong two years in a 
row. I know it's not your fault.
    Mr. David. We are hoping to make that decision within the 
next couple of months.
    Mr. Skeen. Within the next couple of months.
    Mr. David. Yes, sir.

                            cross-servicing

    Mr. Skeen. Okay. Your testimony indicates that cross 
servicing at NFC is increasing. Has NFC lost any clients for 
cross serving the payrolls? What are their prospects for the 
coming year?
    Mr. David. Well, we have a number of agencies we are 
talking to who are very close to signing up, but they have not 
signed their agreements with us. There are several agencies 
with whom we are having discussions that are still undecided.
    We have not lost any payroll clients. We have lost one or 
two clients for some of our other administrative services. 
There are agencies that have put in their own complete 
accounting systems and have decided that they want to do some 
of their administrative payments.
    We are also seeing some interest in some of our new 
Administrative Payments systems; most notably, the Purchase 
Card Management System, which automates small purchases. Many 
agencies, including all of USDA will be implementing this 
system shortly.

                             house payroll

    Mr. Skeen. Has there been any further talks with the House 
Administration about the House payroll?
    Mr. David. We have not talked with the House about the 
House payroll, but we are implementing the House side of the 
Capitol Police. They are due to come onto the system within the 
next month or so. We are currently in the process of parallel 
testing.
    Mr. Skeen. So, you're going by whatever, like the Police?
    Mr. David. Well, we're happy to take on as rapidly as the 
Administration of the House is looking to identify and provide 
new services.
    Mr. Skeen. When you get to our payroll, we'd sure like to 
hear from you.
    Mr. David. We will look forward to it.
    Mr. Skeen. Thank you, sir. Mr. Fazio.
    Mr. Fazio. Thank you, Mr. Chairman. I was just thinking 
that the only way we can get a pay raise is have our pay taken 
care of in New Orleans and then have the year 2000 thing added 
and then everything will come together.
    Mr. David. Of course, you would not want to be paid at 1900 
rates of pay.
    Mr. Fazio. We'll have to work on this, won't we?
    Mr. David. Yes.
    Mr. Fazio. I have to say that Ed Lombard, the Clerk over at 
the Legislative Branch Committee, is probably one of the 
greatest proponents of your financial center in New Orleans 
that I've run into. He keeps pushing every agency in this 
branch of government into your arms.
    Mr. David. Terrific. And we will be happy to take on all 
comers.
    Mr. Fazio. I'm sure you will. And he will probably make 
sure that eventually they all do come. I just wanted to say 
hello to my friend, Pearlie Reed, and indicate to him that I'd 
like him to, if he would, answer just from his own experience. 
I mean, here is a man who has been, what, a 27-year USDA 
employee?

                         civil rights problems

    If you could, and I know you've got some help in some of 
the questions we had a minute ago about Civil Rights, but tell 
us, if you could from your own experience, what you think the 
problems with USDA and its clients are that have brought us to 
this point where Civil Rights is such a concern.
    I'm interested in you being a bit perhaps more 
philosophical than legal, a little more personal than 
professional. I'd be interested in your--I mean, you've got the 
kind of tenure now.
    You're immune from any kind of vindictiveness on the part 
of anybody. I think you've made your way. Your career is a 
success. Just tell us from your own experience. What's the 
problem and what if anything can we do to be helpful?
    Mr. Reed. Well, I'll try to respond to the later first. The 
thing that you can do to help us is to fully support the 
Secretary and USDA as we go about implementing the 
recommendations that are in the report.
    Some of them are very sensitive, but all of the members of 
the Civil Rights Action Team feel that if the recommendations 
are implemented, we will clean up all of the problems in civil 
rights at USDA.
    Now, to respond to the former, as most of you know, I am a 
product of the limited resource farming community. I was born 
and raised on a small farm in East Arkansas, and my parents 
still live on our farm.
    I come from a family of 18 sisters and brothers. I have 
experienced first-hand both inside of USDA and outside of USDA, 
most of the things that we reported out in our report. The 
problem as I see it is that USDA never had the wherewithal to 
come together and act on the recommendations that the Chairman 
mentioned earlier.
    We have approximately 113 reports listed in our report 
going back to 1965. And 80 percent of the recommendations in 
our report have been made before, but nobody really ever 
followed through. This time, though, I think things are 
different. I think the Secretary is committed and he has 
directed me, the Sub-cabinet, and the rest of the leadership at 
USDA to get on with it.
    And I think after this effort, we will be in a position 
where we won't have to revisit civil rights in this context 
ever again.

                        county committee system

    Mr. Fazio. The Chairman asked, I think, about the question 
of the county employees and the approach that we've 
historically taken to delivering services. And there are those 
who look back at the history of the Department, particularly 
since the Depression, and say that to some extent the problem 
is an outgrowth of the approach that was taken, particularly in 
that region of the country where counties are so prevalent and 
local offices therefore are as well.
    And that there has been maybe a double standard in the way 
those have operated. Yet you respond by saying you don't want 
to do away with that concept in terms of organizational 
structure. Do you believe that it can be done under the 
existing system that we are apparently going to remain wedded 
to?
    Mr. Reed. When I responded to the Chairman by indicating 
that the Secretary has gone on record as wanting to keep it--I 
probably should have said a county committee system, not 
necessarily the country committee system. I think all of us at 
USDA feel that local input into decision-making is very, very 
important, but that local input should be done in a fair and 
equitable way.
    When you look at the details behind some of the 
recommendations in our report, once those recommendations are 
fully implemented, Mr. Fazio, it will not be business as usual.
    Mr. Fazio. Could you tell the committee what those might 
be? We're not all as familiar with it as we'd like. What is 
going to break us into the clear here? What is going to keep 
the benefits of local involvement, but do it in a way that is, 
obviously certainly in terms of participating farmers, color 
blind.

                                nepotism

    Mr. Reed. For example, right now there are allegations and 
there is some truth to them that nepotism is running rampant in 
the county committee, county employee, non-federal employee 
system. One of our recommendations will deal directly with 
that.
    In one or more of our listening sessions individuals 
pointed out where, for example, they were denied an opportunity 
to participate in the Buy Back Program. Just to cite specifics, 
one farmer alleged that he was offered the opportunity to buy 
back his land, say, at $150,000 and he couldn't do it. He found 
out that the land was actually appraised at $100,000. And then 
he found out later that the land was sold at auction for 
$30,000 and the person that bought it was a relative of a 
county committee member.
    Mr. Fazio. They call that insider trading on Wall Street.

                        perception of conspiracy

    Mr. Reed. Yes, and the most disturbing thing to me is, and 
I think the most disturbing thing for all of us should be that 
there is a perception--and we heard it every place we went, 
except when we were on the Navajo Nation--that there is a 
conspiracy by the U.S. Government with USDA being the nucleus 
behind that conspiracy to take land away from the socially 
disadvantaged.
    Mr. Fazio. Some people think that is a continuation of a 
policy that has gone on from about the 1870s right up until 
this entity became a method for doing it.
    Mr. Reed. Absolutely.
    Mr. Fazio. Yes. Well, thank you Mr. Chairman. I know others 
have questions. I might put some more on the record. I 
certainly hope our committee can be of support and help to the 
Department.
    Mr. Skeen. I second that. Mr. Latham.
    Mr. Latham. Thank you, Mr. Chairman.
    Thank you very much. I'll go to Ms. Anne Reed here to begin 
with. We had the opportunity to visit last week. And I 
appreciate very much that chance. I think for the record, 
though, maybe we should go through a little bit about what we 
talked about.

                 authority for adp systems integration

    First of all, my real concern has been and will continue to 
be that we're not maintaining the smokestack mentality that 
we've had. And that someone is in charge and someone has the 
authority to integrate the system at USDA. I just wanted to ask 
you, do you have the authority or the power to successfully 
accomplish the mission, do you think at USDA, of integration; 
to have everybody in the same system?
    Ms. Anne Reed. Through the planning process that we have 
established, I believe that we are significantly strengthening 
our capacity to achieve that kind of integration. With the 
establishment of the Executive Board at the sub-cabinet level 
led by the Deputy Secretary with myself as the Vice Chair, I 
think we can bring focus at the policy level to the decisions 
that need to be made in order to break down those stovepipes.
    At the same time, I think that the work that we are doing 
in developing a Department architecture raises to a higher 
level the kinds of issues that we need to address from a purely 
technical perspective in ensuring that we are achieving greater 
integration across the Department.
    Mr. Latham. Do you have budget authority over the--I get 
different numbers all the time--31 agencies as far as 
procurement? If you don't, would having that authority be of 
great benefit to you?
    Ms. Anne Reed. At the present time, I do not have specific 
budget authority over the information technology budgets of the 
agencies. Some organizations in the private sector have taken 
that strategy as being an effective one in better managing 
information technology and achieving the integration. There may 
be some instances where that makes some sense.
    I personally worry a little bit about separating the 
information technology too far from the mission of the 
individual agencies because we want to make sure that what 
we're doing is using technology to support our mission 
delivery.
    Mr. Latham. Doesn't that just kind of go right back to the 
same hole we're in right now though?
    Ms. Anne Reed. There are certainly some challenges in 
operating within this appropriations structure.

                         procurement moratorium

    Mr. Latham. As I made you aware, last week, you know, we've 
had the moratorium on procurement. And then we just got a press 
release showing a $212 million computer contract was awarded. 
Would you explain to us how that fits into the moratorium?
    Ms. Anne Reed. Yes, sir. The contract that was awarded was 
a contract for support services, not a contract to support any 
new acquisition of technology or new system development.
    Mr. Latham. There is no hardware?
    Ms. Anne Reed. To the extent that there is provision in 
that contract where they could take advantage of acquisition, 
they are subject to the moratorium. It is a task order 
contract. A series of six companies have been given this 
contract. There is no requirement to use those. It's available 
to the agency. It is a multi-agency contract which I think is 
something that we've tried to strive for in breaking down some 
of those stovepipes. If they want to make an acquisition that 
would be a significant upgrade or a new system, it would still 
be subject to the moratorium and would require a waiver from my 
office.
    Mr. Latham. Are the 31 different agencies at the Department 
responsible for their own procurement? I mean like in this 
contract, are they going to individually tell the contractor 
what they want? As an example, not necessarily confined to 
that.
    Ms. Anne Reed. Yes. Not all of the 31 agencies have their 
own procurement office, but they do work with procurement 
offices to execute the contracts. They are all subject to the 
moratorium on any new acquisition that would be a significant 
upgrade or a new system.
    Mr. Latham. I'm still puzzled by a moratorium when we're 
offering new contracts.

                  capital planning improvement process

    Ms. Anne Reed. It's an acquisition based moratorium, not an 
obligation or expenditure based moratorium.
    Mr. Latham. It doesn't sound like that there is a 
coordinated plan in place at the Department then. I mean you're 
still having individual agencies continue to make their own 
decisions by themselves. Their own information technology 
person is making the procurement decisions. Is there a plan in 
place?
    Ms. Anne Reed. This is the effort that we're launching 
through our Capital Planning Improvement Process, where we have 
the Executive Board. The proposals will be submitted to that 
Board which will make the decisions before the budget is even 
sent forward to the Office of the President or on to the 
Congress. So, we will have that Department level review at a 
senior policy level up-front.
    As we transition now through the execution process, we have 
had the moratorium. At the point at which we come out from 
under moratorium, it will only be when we have a new process in 
place for a changed decision-making methodology.
    Mr. Latham. Do you have the tools or the authority to make 
everybody come to the same table? It just doesn't seem--what 
tools do you have to force people to finally recognize that you 
have to have an integrated system? Is there any hammer behind 
anything?
    Ms. Anne Reed. Other than the bully pulpit which, by the 
way, I've been able to use to some effect, the specific 
delegated authority that I have now from the Secretary is one 
of technical approval for information technology projects. 
Every project that exceeds a certain threshold over its life 
cycle must come in to me for approval.
    At any point I can withdraw the technical approval 
authority for those projects and initiatives. So, that is a 
specific delegated authority that I already have. I also have 
the authority to approve the selection of representatives who 
order telecommunications lines and that turns out to be of 
management significance. Because we have multiple numbers of 
people ordering the opportunities for confusion and overlap 
increase. I'm in the process now of significantly reducing that 
number of people, and I do have the authority to do that.
    Mr. Latham. I wish you the best of luck. I think you are 
very competent. I still do not believe that you have been given 
the authority and the power to actually make stuff happen. I 
just don't think it's going to happen. We're going to go down 
the same path that we've spent $115 million on before and threw 
up our hands on. I'm just very concerned that nobody--you have 
the responsibility, but I don't think you have the authority.
    Ms. Anne Reed. I'd be happy to have discussions with you 
and others at a later point in time about what authority you 
think might be appropriate and we can talk about how that----
    Mr. Latham. I will tell you that someone has got to tell 
every agency over there that you will do this. And that going 
off by yourselves and having your own little kingdom is not 
going to work anymore. Otherwise, it's not going to happen.

                         environmental justice

    Just a couple of questions for Mr. Pearlie Reed here. In 
the summary, in the budget summary and justification there is 
reference to environmental justice principles. Would you 
explain that a little bit?
    Mr. Reed. Mr. Latham, I cannot, as I indicated earlier, 
I've been on the job only eight days. I have Blake Velde here 
to respond to that.
    Mr. Velde. Thank you, Mr. Latham. My name is Blake Velde. 
I'm the Director of Hazardous Waste Management. The Office of 
Civil Rights and Departmental Administration led the effort by 
the Department to develop regulations to implement the 
Environmental Justice Executive Order signed by the President 
last year.
    Briefly, the principle of Environmental Justice is that 
minority and socially disadvantaged communities exist around 
and near hazardous waste sites and other areas where management 
practices affected the disposal of hazardous waste. It has 
given them a disproportionate exposure to toxic chemicals 
around the country.
    In an effort to correct that situation the President signed 
an Executive Order that looks into and asks agencies to develop 
a plan and regulations to make sure that their practices and 
their regulations aren't adversely affecting minority and 
socially disadvantaged communities around the country.
    That would also include groups like migrant farm workers 
who might be exposed to pesticides in the fields. It doesn't 
particularly relate to hazardous waste dumps that the 
Department has. Most of our waste sites are abandoned mines 
that are not located in and around populations.

               numerical objectives in affirmative action

    Mr. Latham. Okay. Just one last question. I am very 
concerned too about the Civil Rights issues in this. Does the 
Department use ``numerical objectives'' in its affirmative 
employment program?
    Mr. Reed. I don't know.
    Mr. Latham. Don't feel bad.
    Mr. Reed. What we've found as we went through the Civil 
Rights Action Team process of putting together this report is 
that, as it relates to all of the civil rights, nothing is 
really working. We don't have any really good data systems. Our 
policies need to be updated. But that is an issue that we plan 
to deal with as we proceed with implementing the 
recommendations that are in the report.
    Mr. Latham. Okay. So, the answer is you don't know whether 
they use numerical objectives right now or not. Would you 
submit that if you could please?
    Mr. Reed. Yes, I will.
    [The information follows:]

    Yes, the Department does use numerical objectives in the 
affirmative employment program. Equal Employment Opportunity 
Commission Management Directive, MD-714 supports the use of 
numerical objectives or goals in the affirmative employment 
program planning process in situations where the work force 
representation of a targeted group is less than its 
representation in the civilian labor force.

    Mr. Latham. Also Ms. Anne Reed, I think maybe it would be 
helpful if you could supply for the record the specific budgets 
for each of the agencies; if you could get that by agency at 
the Department please.
    Ms. Anne Reed. Yes, sir.
    [The information follows:]

[Pages 449 - 450--The official Committee record contains additional material here.]


    Mr. Latham. Thank you, Mr. Chairman, very much.
    Mr. Skeen. Thank you, Mr. Latham. Mr. Serrano.

                              civil rights

    Mr. Serrano. Thank you, Mr. Chairman. It is interesting 
listening to my colleague's question on numerical objectives 
and then, being as concerned as I am about this report on the 
Civil Rights issue, it is interesting to know that, 
intentionally or unintentionally, the Department historically 
has had numerical objectives, but in reverse perhaps--keeping 
people from participating in programs and lowering the number 
of people that could participate in these programs.
    Now, Mr. Reed, in dealing with this particular issue over 
the last couple of weeks, the issue of Civil Rights, I have to 
admit that I've learned a big lesson. Coming from a big city, 
New York, my experience with the issue of Civil Rights is 
urban-related. It never dawned on me--I never focused in on the 
fact that even though this agency was created at a time when so 
many Americans worked the land, there were many people who that 
agency later did not take care of properly--farmers. Somehow I 
thought that USDA was probably one of the few that were doing 
everything you're supposed to be doing in this country.
    And yet this report and the conversations over the last few 
weeks and months indicate just the opposite. In answering Mr. 
Fazio's question, you said what you need most from Congress is 
support, what you need from us is to support the Secretary's 
recommendations. And with that in mind, I ask you a question. 
Any time you name someone to be in charge of the Civil Rights 
issue, that means that agency, that department, that community 
is paying attention to the issue and that's good.

                   line of authority for civil rights

    But I do notice that in this particular recommendation, the 
person or persons would answer to the Assistant Secretary for 
Administration. In contrast, in the Department of Education 
there is an Assistant Secretary for Civil Rights all by itself. 
And at HHS the Office of Civil Rights answers directly to the 
Secretary.
    Has USDA inadvertently given Civil Rights, even now that it 
tries to deal with it, a lower priority than other agencies, in 
your opinion? Or if not, then how do we explain the difference 
in treatment in different agencies of this issue?
    Mr. Pearlie Reed. We looked at what's occurring all around 
town. Some agencies have an Assistant Secretary for Civil 
Rights. Some agencies have an Office of Civil Rights reporting 
directly to the Secretary. Other have what we recommended and 
what we currently have in USDA, which is that the Assistant 
Secretary for Administration is the principal policy person on 
behalf of the Secretary with an Office of Civil Rights 
reporting to the Assistant Secretary.
    To make a long story short, as we looked at all of the 
options and what needed to be done in the short as well as the 
intermediate run, we concluded that what we recommended would 
best serve USDA employees and our customers. However, the 
Secretary, in responding to that question coming from other 
quarters, has indicated that he is still open-minded. And what 
he wants is the best fit for USDA.
    Mr. Serrano. And at this time it is your feeling, or the 
Action Team's feeling, that this chart, if you will, is the 
best fit for USDA at this time?
    Mr. Reed. We feel that it is, but more importantly we feel 
that the commitment of the Secretary to follow through and 
delegate the authority and hold people accountable are the keys 
to correcting the problems at USDA.
    Mr. Serrano. Well, when the Secretary was here, he was very 
strong on that issue. He left it clear, orally, that he was not 
going to tolerate anything but total progress and a total turn 
around. And your feeling is that this commitment is legitimate 
and that we can in fact turn these things around if we follow 
the recommendations and support the Secretary on those actions.

                    action on report recommendations

    Mr. Reed. Absolutely. I have taken the Secretary at his 
word. And we're moving ahead expeditiously to implement the 
recommendations.
    Mr. Serrano. With that in mind, several of the Action 
Team's recommendations involve steps to be taken immediately or 
within a short time after the report is released. Is the 
Department moving already on these recommendations? Is it the 
Department's feeling that for some parts of the recommendations 
you first have to hear comments from other places, such as 
Congress?
    I say that, by the way, because if you come to me--the 
beauty of 535 Members is that each one is an individual and 
each one has a history. And each one has a story to tell. Some 
stories are different from others. If you come to me and say 
``I found a Civil Rights problem and I want to solve it. And 
here is what I'm going to do; I need to get with it right 
away.'' I'm going to say ``go ahead and do it.''
    There might be other Members who honestly will say, ``well, 
wait a minute. In doing that you're going to upset this and 
turn around that and maybe we should be commenting on that 
before you do it.'' Do you feel that you have the go ahead to 
do these things and to move ahead without having to check with 
other people in other places?
    Mr. Reed. Both. But we feel this needs to be done in a 
participatory way. This past Saturday and Sunday, I caucused 
with my leadership team, as well as the Civil Rights 
Implementation Team that the Secretary has appointed to follow-
up on these recommendations.
    We developed a strategic plan to begin to implement these 
recommendations. And a part of that will be making sure that we 
touch base with all of the appropriate people to get the right 
advice and counsel, as well as to have the appropriate 
oversight as we move forward in implementing the 
recommendations.
    Of course, a part of this strategy not only involves 
working with Members of Congress, but community based 
organizations, the special interest employees, and customers as 
well.

                           community outreach

    Mr. Serrano. One last thought. I noticed in the report that 
there was talk, as you just mentioned, about community 
organizations. There was talk about reaching out in the media 
to try to deal with these problems. I watch Spanish-language TV 
on a regular basis. And again, it could be that I wasn't 
focusing in on this question. But I see a lot of public service 
announcements from many of the Federal agencies. And I can't 
honestly say that I remember seeing PSAs, from USDA inviting 
people who get their information in Spanish to apply for any 
federal program. Did your report look at that?
    Mr. Reed. Absolutely. In some of our listening sessions, 
that issue was brought out by our customers. And as a part of 
our strategic plan to implement the Report recommendations, we 
want to make sure that we reach all of the appropriate 
communities.
    You will note that the report also indicates the need to 
have people who speak languages other than English 
strategically placed in offices to make sure that we are 
appropriately servicing our customer base.
    Mr. Serrano. Well, I wish all of you a lot of luck. And I 
offer, sir, my personal support. And I know that other Members 
feel the same way. Thank you. Thank you, Mr. Chairman.
    Mr. Skeen. Thank you, Mr. Serrano. Mr. Bonilla.

               problems in implementing new technologies

    Mr. Bonilla. Thank you, Mr. Chairman. Mr. Reed, I'd like to 
just start out by asking about the concern that we've expressed 
over and over again about the lag in the implementation of the 
new technologies just in the facilities themselves at USDA.
    For instance, we've heard that employees in the South 
Building cannot E-mail employees in other USDA locations. My 
question is are there problems similar to this being addressed 
by your Human Resources, Strategic Plan, or are we stuck with 
these situations until the South Building renovations are 
complete in 2005?
    Ms. Anne Reed. Let me take the first part of that question.
    Mr. Bonilla. Sure.
    Ms. Anne Reed. And then I'll defer on the facilities 
question to Mr. Reed. But in fact, E-mail between the buildings 
is no longer a problem. Within the last year we have managed to 
connect allocate of the agencies within the Metropolitan 
Washington area with the exception of the Food and Consumer 
Service. And we are working with them on that.
    Right now, we have the capability to reach through our E-
mail approximately 20,000 people. That includes not just 
Headquarters, but many of the folks in the field. So, we have 
made great progress in our capability to communicate via E-mail 
within the Department, if that answers your question.

                     cost of year 2000 date change

    Mr. Bonilla. I think it does, unless Mr. Reed wants to add 
something. But while you have the microphone, I heard you 
mention earlier the problem with the two zeros at the end of 
2000--on the dates. I didn't hear, maybe I missed it, how much 
it's going to cost to switch your computers over and whether or 
not you expect any problems getting that done before the turn 
of the Century?
    Ms. Anne Reed. We have identified approximately $35 million 
for the fiscal year 1998 that will be used for this purpose, 
and approximately $100 million that will be needed to resolve 
the problem. I would like to be able to assure you 
categorically that we have done everything that is possible to 
be done to solve the problem.
    I will tell you that we're working very hard at it. Most of 
our major organizations have been pursuing it quite 
aggressively. Mr. David, talked a little bit about what they've 
been doing at the National Finance Center. And they're pursuing 
it very aggressively.
    Our larger computer centers I think are better positioned 
than many of our smaller offices. So, I personally have a 
greater concern for the smaller units in making sure that they 
are taking the steps that are necessary. I also have a concern 
about what they call embedded computer chips in our facilities.
    For example, many elevators rely upon computer chips, some 
of which it turns out have this date function in them that 
could cause them to malfunction. So, some of the areas that 
there might be considered peripheral are where I think we need 
to turn more attention. And I intend to do that.
    Mr. Bonilla. I wonder if some of the big computer geniuses 
like Bill Gates are trying to think of some chip or some simple 
answer, this would be magic. Just think of all of the people in 
the private sector as well that are getting ready to spend 
millions and billions of dollars nationally to switch over.
    Ms. Anne Reed. This is a worldwide problem. It's not even a 
government or a business or national one. It is a world wide 
problem. And we have a deadline that will not be deferred.
    Mr. Bonilla. A hard deadline. Did you have anything to add, 
Mr. Reed. I didn't want to cut you off.
    Mr. Pearlie Reed. No. I do not.

                          disaster assistance

    Mr. Bonilla. Let's move on now to disaster assistance. I'd 
like to know what your office is doing, Mr. Reed, in terms of 
disaster relief. I know that your office coordinates with FEMA 
and tried to help us last year with the drought problems that 
we had in Texas. They were horrible.
    We're so excited that we've had a lot more rain this year. 
The drought is not over in some parts of the state, but last 
year was a whole different story. With some of the traditional 
disaster relief programs available to producers being phased 
out of the Farm Bill, do you think producers and USDA field 
staff have been adequately informed of the types of natural 
disaster assistance that will be available in the future?
    Mr. Pearlie Reed. Okay. I cannot respond to that. And 
unless Mr. Dewhurst can, we'll have to follow-up and provide 
that information.
    Mr. Bonilla. I would appreciate that, if you could follow-
up, unless there is something you'd like to say now.
    [The information follows:]

    It is the responsibility of the Farm Service Agency to 
ensure that the USDA field staff keeps the public adquately 
informed of natural disaster assistance that will be available 
in the future.
    The Farm Service Agency has a variety of methods to inform 
the public about natural disaster assistance. The Agency 
encourages staff to make use of all these means. With this 
approach, it is unlikely that producers are not aware of the 
assistance that is available to them.

    Mr. Dewhurst. Well, I might just say that the Department, 
has a wide range of disaster response programs. Some of the 
ones that farmers and rural Americans depend on most have not 
been decreased in legislation. The Emergency Watershed Program 
of the Natural Resources Conservation Service and the Emergency 
Conservation Program of the Farm Service Agency are both 
current programs that have not been decreased.
    The first thing, that farmers want is help from those 
programs. They are authorized. And frankly, they're likely to 
be included in a supplemental request the President will be 
sending to the Congress fairly shortly.
    We don't have a Disaster Payment Program anymore. We have 
some crop insurance alternatives and some other kinds of 
programs. And you raise a very good question about how well 
we're doing in making sure producers are aware of what those 
changes have been and how those new programs work.
    There is money in this budget, particularly in the crop 
insurance area, to continue a major education and outreach 
effort to help producers understand what those programs are and 
how they differ from the past. So, the Farm Service Agency and 
others are doing the best they can to get that word out.
    Mr. Bonilla. And, again, we just want to be prepared 
because we never know when a drought is going to happen again. 
Last year, I think for even those of us who live in cities, it 
was something we thought about all the time because the drought 
was so terrible in all parts of Texas.

                       hazardous waste management

    Let me ask a question now about hazardous waste. Your 
office oversees, Mr. Reed, the Hazardous Waste Management 
Program. Can you clarify exactly what role the USDA plays in 
hazardous waste clean-up and the Superfund sites? Because at a 
glance it seems a little odd that USDA would have an active 
role in this process to start out with.
    Mr. Reed. Blake Velde will respond to that.
    Mr. Velde. Mr. Bonilla, I'm Blake Velde. I'm the Director 
of the Hazardous Waste Programs for the Department. We 
currently have about 1,700 abandoned and inactive mines on 
Forest Service lands that we're addressing. We also have over 
140 landfills in sites on Forest Service lands.
    And also, because of past practices of the Commodity Credit 
Corporation, we're looking at grain storage bins the Department 
leased to store grain in the 1960s and 1970s. Because of the 
management practices at the time, the grain was fumigated with 
carbon tetrachloride, which has contaminated public and private 
drinking water systems in primarily Nebraska and Kansas.
    That's the largest part of the hazardous waste problems 
that the Department is working on. We also have had at some of 
our facilities, notably the Beltsville Agricultural Research 
Center, some hazardous waste practices that were not what they 
should have been. They have resulted in some disposal problems 
that we're currently addressing.
    We only have one facility, the Beltsville facility, that is 
on the EPA Superfund list of worst contaminated sites. The rest 
of them are what EPA considers non-Superfund National Priority 
List sites, but are still required under the Superfund Law to 
be cleaned up.
    We also work under the Resource Conservation and Recovery 
Act, on current hazardous material disposal practices so that 
hopefully we won't create new problems.
    Mr. Bonilla. That is a lot more than the general public 
might initially think that you're involved in at some of the 
clean-up sites.
    Mr. Velde. That's correct, sir.

                          beltsville facility

    Mr. Bonilla. It is funny you should mention Beltsville. I 
have one final question about Beltsville. This would be for Mr. 
Reed. The Strategic Space Fund, mentions that the Beltsville, 
Maryland facility is scheduled to be occupied by January of 
next year.
    Mr. Velde also mentioned that the Beltsville facility will 
eventually be occupied by one or more USDA agencies. My 
question is, has there been a discussion as to which USDA 
agency will eventually reside in Beltsville?
    Mr. Reed. Yes, sir, and Ira Hobbs will respond to that.
    Mr. Hobbs. I am Ira Hobbs, Director of Operations. We put 
forth last week a technical proposal or recommendation to the 
Secretary identifying future tenants for the Beltsville 
facility. A final decision has not been made yet. We expect a 
decision within the next two to three weeks.
    It looks like two to three agencies from within the 
Department will be permanent residents at the Beltsville 
facility.
    Mr. Bonilla. How big is that facility?
    Mr. Hobbs. It will accommodate 1,500 employees; it is 
somewhere in the neighborhood of about 350,000 square feet of 
space.
    Mr. Bonilla. It's a big place.
    Mr. Hobbs. Yes, sir.
    Mr. Bonilla. Thank you very much. Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Nethercutt.

                          advisory committees

    Mr. Nethercutt. Thank you, Mr. Chairman. Ladies and 
Gentlemen, welcome. I noticed as Mr. Bonilla was talking about 
his line of questioning regarding hazardous waste, I was 
looking through your budget documents and noticed that you have 
a lot of advisory committees, and one in particular having to 
do with, task force on agricultural air quality research, among 
others.
    What happens to the recommendations of those advisory 
committees? To what extent are they published? Do you use them? 
Can you cite whether they're doing you any good in the 
administration of the Department? And to what extent are they 
coordinated with other agencies that may be duplicating the 
same kind of subject matter? I know that's a compound question. 
Do the best you can, if you will.
    Mr. Reed. Mr. Dewhurst, I'm going to ask you to handle 
that.
    Mr. Nethercutt. You won, Mr. Dewhurst.
    Mr. Dewhurst. Well, you're correct. We have a number of 
advisory committees in the Department, although there has been 
some reduction in number of those committees in recent years. 
Many of the committees, particularly in the research area and 
in the nutrition area, as well as in the foreign trade area, 
have very formalized sorts of processes where they hold 
meetings and prepare recommendations for the Secretary on a 
variety of subjects.
    And those recommendations are published; particularly in 
the research area. Most of these groups will publish their 
views of what our research priorities ought to be, what kind of 
funding levels we ought to have and so forth. So, most of them 
find a way to provide input into our processes in a fairly 
formal way. And in that way they have some influence on the 
kinds of policies and budgets we recommend to the Congress.

               value of advisory committee recommendation

    Mr. Nethercutt. Are they worthwhile in your judgment? Maybe 
it's not your judgment to make, but in the judgment of the 
panel? Is there any way we can cut back on these? Is there not 
private sector, university based advisory groups that we could 
save some money?
    I don't mean to pick nits with you, sir, but I'm just 
wondering at a time when we're facing tight budgets, the need 
for more efficient administration, I'm just wondering if 
they're valuable, that's good to know. If you think we can do 
something better then----
    Mr. Dewhurst. The Department will next year spend something 
on the order of $1 million on advisory committees. I could tell 
you that's a fairly small percentage of what we do. We don't 
usually pay salaries for advisory committees. We may pay a 
person's travel, although sometimes that's voluntary.
    In the research area, the advisory committees often consist 
of representatives from the Land Grant Universities. The 
purpose of the committee is to bring all of those people 
together and get a set of recommendations in a fairly coherent 
way. So, there are judgments other folks will make about that 
process, but frankly it makes some sense to me that we have at 
least a number of these committees that bring these kinds of 
recommendations.
    Mr. Nethercutt. And the Department does act on their 
recommendations I take it?
    Mr. Dewhurst. Yes. I mean, in fairness we either act on 
them or they know that we haven't and why not. There is an 
interaction that goes back and forth.
    Mr. Nethercutt. I was looking further at the agriculture 
buildings, facilities, and rental payments section of your 
budget documents. I'm wondering--it appears to me your 
personnel compensation in Washington, DC went up from $3.8 to 
$4.3 between 1996 and 1998. I'm on page 213, if it's available 
to you.

                 operation and maintenance of facility

    And I noticed that the communications, utilities, and 
miscellaneous charges went up over double. And your operation 
of maintenance and facilities went way down. It's going to be 
$15 million it looks like in 1998. Is there some reason for 
that? Did your leases run out? Are you not having as many 
facilities or what? I guess I'm trying to understand if you 
have divested yourselves of any buildings or facilities over 
the last year and whether you plan to do so in the future.
    Mr. Reed. Yes, sir. We're going to ask Mr. Hobbs who is in 
charge of that to respond to that question. Ira.
    Mr. Hobbs. I'll try to answer the question.
    Mr. Nethercutt. You may wish to supply it for the record, 
I'm not trying to test your memory.
    Mr. Hobbs. Oh, no. I can supply it for the record. But I 
also think that some of it went down simply because we're 
deferring things from a maintenance standpoint as it relates to 
our efforts toward modernization. And also the deferral of 
certain funds that we're now using in the construction of the 
Beltsville facilities and complex.
    I'm not sure of the one on the personnel cost in terms of 
if that was a big jump. It doesn't seem to my recollection that 
it was. But that's certainly information that we can provide 
for the record.
    [The information follows:]

    The increase in personnel compensation between fiscal year 
1966 to fiscal year 1998 is due to the filling of vacancies, 
within grade increases and annualization of prior year pay 
increases and the anticipated pay increase for fiscal year 
1998.
    The reduction in operations and maintenance is a direct 
result of the completion of the Beltsville Office Facility in 
December 1997 and the anticipated reduced level of minor 
repairs and building maintenance during the initial phase of 
the South Building renovation.

                            cost accounting

    Mr. Nethercutt. Sure. That would be great and I appreciate 
it. Last year at this hearing your agency talked about 
implementing a new cost accounting system for the collection of 
fees. Has this new system been implemented?
    Mr. David. We are in the process of implementing cost 
accounting within USDA which will be useful to us both in 
understanding the costs underlying the services that we provide 
for fee collection, as well as providing information for 
management decisions.
    We are implementing a new financial management system which 
will enable us to improve the identification of costs. That 
system is still in process and has not yet been implemented. 
However, we are undertaking a number of decisionmaking sessions 
with all of our financial management folks, as well as a number 
of our program folks, to better structure the kinds of cost 
information we need for both fee setting, as well as decision 
making purposes.
    One undertaking is the effort to comply with the new 
standards from the Federal Accounting Standards Advisory Board, 
so, our financial statements properly reflect the cost of our 
providing services. Another undertaking is a major educational 
program to help the financial, as well as the program, managers 
to understand the value of cost accounting within USDA.
    Mr. Nethercutt. When will this implementation of the new 
cost accounting system be completed?
    Mr. David. Well, we anticipate that the new financial 
system will be implemented by fiscal year 1999. And as a part 
of that, the cost accounting features will be implemented. 
Quite candidly, it will take some time to then learn how to 
properly use that system. But we will have the basics in place 
under our so-called FISVIS Initiative by fiscal year 1999.

                          vehicle acquisition

    Mr. Nethercutt. Okay. One final question. I'm wondering if 
you can tell the committee about your process of vehicle 
acquisition? Has there been an increase in vehicle acquisition? 
How many vehicles do you purchase annually? What's your 
procedure for doing so, as well as the cost of maintaining the 
vehicle before you decide to sell it? Can you provide, either 
now or for the record, some explanation of the process you go 
through and how you make your purchases?
    Mr. Reed. With your permission, Mr. Nethercutt, we'd like 
to provide that for the record.
    Mr. Nethercutt. Okay. All right.
    [The information follows:]

    First, we determine that we have a need for a vehicle, and 
then we perform a cost analysis to determine the most 
economical way to acquire the vehicle. This could be a 
purchase, a commercial lease, a lease from the General Services 
Administration--GSA--Interagency Fleet Management System, 
excess or a transfer. Once this is determined, the vehicle is 
acquired from the most economical source. Our records do not 
specifically indicate purchases annually. They include 
transfers, acquired from excess, as well as purchases, and that 
figure is approximately 15 percent of the total fleet per year 
and has not changed over the last several years. All purchased 
vehicles are acquired through a consolidated Federal 
procurement coordinated by GSA unless we request and receive a 
waiver to procure through the commercial market. Cost of 
maintaining the vehicle is not usually the only determining 
factor for replacing a vehicle. We basically follow GSA 
standards--Federal Property Management Regulations--and replace 
vehicles based on age, mileage and cost.

    Mr. Nethercutt. I thank you for your work. I thank you for 
testifying. Thank you very much.
    Mr. Skeen. Thank you, Mr. Nethercutt. Mr. Serrano.
    Mr. Serrano. No questions, Mr. Chairman.
    Mr. Skeen. I believe we've about exhausted you and us. We 
want to thank you for your testimony, and thank you for your 
responses to the questions. If we have questions that we might 
want to ask later, we will submit them in writing.
    We thank you very much. We appreciate the work you're 
doing. Mr. Reed, I think if you can withstand this, you can 
take care of just about anything down there.
    Mr. Reed. I appreciate that.
    Mr. Skeen. You have some very good support. Thank you. 
We're adjourned.
    [Clerk's note.--The following questions were submitted to 
be answered for the record. Questions were also submitted for 
the Office of Communications, the Office of the General 
Counsel, the National Appeals Division, and the Office of Small 
and Disadvantaged Business Utilization.]

                      Departmental Administration

                              civil rights
    Mr. Skeen. Secretary Glickman released his Civil Rights Action Team 
report in February. The Report cites numerous studies ranging from 1965 
to 1990 that detailed civil rights problems in USDA. Please tell the 
Committee why so little action was apparently taken.
    Response. In most cases, the previous reports did not include an 
implementation plan outlining proposed actions or milestones for 
completion and responsibility was not clearly identified so managers 
could be held accountable. Finally, few additional resources were 
allocated for implementation.
                         blue ribbon task force
    Mr. Skeen. What were the recommendations from the Department's 1996 
Blue Ribbon Task Force on Equal Opportunity and Diversity? How do they 
compare with the February 1997 Civil Rights Action Team Report 
recommendations?
    Response. The Report of the Blue Ribbon Task Force on Equal 
Opportunity and Diversity contained recommendations concerning 
accountability, underrepresentation, underutilization, complaint 
management, resources and structure. Unlike the Report of the Civil 
Rights Action Team, the Blue Ribbon Task Force's Report did not contain 
specific action items for addressing the underlying problems. An audit 
of all previous reports found that few, if any, of the 1996 
recommendations were implemented or taken seriously.
         minority farmers forced off farms by federal employees
    Mr. Skeen. What is your estimate of how many minority farmers were 
forced off their farms in part by the actions of Federal employees?
    Response. Specific data on minority farmers forced off their farms 
is not available. An extensive study would have to be conducted to 
determine the actual adverse impact on socially disadvantaged minority 
farmers.
    According to the most recent Census of Agriculture, the number of 
all minority owned farms has fallen for numerous reasons. Data reflect 
that there were 950,000 in 1920 to around 60,000 minority owned farms 
in 1992 as compared to 6,454,000 in 1920 to 1,925,300 in 1992 for all 
farms. For African Americans the number fell from 925,000, 14 percent 
of all farms in 1920, to only 18,000, or 1 percent of all farms in 
1992. Although the number of farms owned by other minorities has 
increased in recent years, particularly among Hispanics, the total 
acres of land farmed by these groups has actually declined. Only women 
have seen an increase in both number of farms and acres farmed. During 
this time, the number of non-minority framers has also dramatically 
declined, although at a slower rate. Over time many farmers have chosen 
other careers.
       minority farmers forced off farms by non-federal employees
    Mr. Skeen. What is your estimate of how many minority farmers were 
forced off their farms in part by the actions of non-Federal employees 
that administer Federal programs at the local level?
    Response. We are not aware of any data of this nature, nor can we 
provide estimates. An extensive study would have to be conducted to 
determine this impact.
                           complaint backlog
    Mr. Skeen. The Civil Rights Action Team Report indicated that USDA 
averages 200 new discrimination complaints each year. Last year only 
108 were closed, increasing the backlog of complaints. What is being 
done to eliminate the complaint backlog?
    Response. The Civil Rights Implementation Team--CRIT--is currently 
developing a plan to eliminate the current backlog. CRIT will also 
develop plans to address the underlying issues involved so that these 
problems do not return in the future. We will update you as we develop 
and implement plans to solve these problems.
                             accountability
    Mr. Skeen. One of the themes that runs through the Civil Rights 
Action Team report is the lack of civil rights accountability in the 
Department of Agriculture. How will the Department help ensure 
accountability?
    Response. Secretary Glickman's goal is for all USDA employees and 
customers to be treated fairly and equitably, and with dignity and 
respect. He has already revised and reissued a new Civil Rights Policy 
Statement stating goals and that he will hold Subcabinet and agency 
heads accountable. All USDA employees will be required to have civil 
rights training annually, and all managers will be accountable for 
having a diverse pool of job applicants and a diverse workforce.
                       administering civil rights
    Mr. Skeen. Once in place, will the new civil rights structure and 
program increase the costs of administering civil rights and EEO 
policy?
    Response. USDA has not yet had time to assess the costs of a new 
civil rights structure and program, so we cannot say whether it will 
increase costs. We would assume, however, that over time, costs for 
litigation and claims settlement should be reduced, and there should be 
a significant reduction in the number of complaints.
                              settlements
    Mr. Skeen. Did the Civil Rights Action Team make an estimate of the 
cost of reparations or settlements for past program discrimination?
    Response. The Civil Rights Action Team--CRAT--did not make an 
estimate of the cost of reparations or settlements for past 
discrimination. The Civil Rights Implementation Team will be making 
this estimate within the next few months.
                        civil rights violations
    Mr. Skeen. One of the major contributing factors to civil rights 
violations appears to be the Federally funded non-Federal employees 
involved at the local level with loan and other financial assistance 
programs. What are the plans to address this issue while maintaining 
local involvement so critical to successful implementation of Federal 
agricultural programs?
    Response. USDA is planning to address the issue of non-Federal 
employees by working with the White House and Congress to introduce 
legislation that will change these positions from non-Federal status to 
Federal to assure accountability for civil rights.
                          legislative package
    Mr. Skeen. The Civil Rights Action Team Report refers several times 
to a proposed legislative package. What comprises the legislative 
package and when do you anticipate sending the package to Congress?
    Response. Any future legislative package will be coordinated with 
the White House and Congress. We hope to be able to have a package 
introduced during the current session.
                        independent review group
    Mr. Skeen. Who will be on the independent review group that will 
conduct a review of county committees and county office staffs to 
determine whether nepotism, conflict of interest, or discrimination in 
program delivery exists?
    Response. The independent review group will include stakeholders, 
unions, employee group representatives and others that we identify as 
appropriate members.
                  magnitude of discrimination problem
    Mr. Skeen. What is the magnitude of the discrimination problem? For 
example, how many loans were denied, how many farmers were involved?
    Response. The General Accounting Office found that between October 
1, 1994, and March 31, 1996, 33 percent of minority applications, and 
27 percent of nonminority applicants in the Agricultural Conservation 
Program were disapproved. During the same period, 16 percent of 
minority, and 10 percent of nonminority loans in the direct loan 
program were disapproved.
                              foreclosures
    Mr. Skeen. Will USDA suspend foreclosures? How many foreclosures 
are currently pending, what states are they located in, and how much do 
the loans total?
    Response. Yes, On December 18, 1996, Secretary Dan Glickman 
temporarily halted all foreclosure sales on delinquent farm loans until 
determinations can be made on each case as to whether there is any 
evidence of discrimination or inconsistency in program delivery.
    There are pending foreclosures--accelerated loans--in all 50 
States, including Puerto Rico, the Virgin Islands, and Guam. As of 
April 11, 1997, there are a total of 4,551 accelerated loans.
    According to a report from the Farm Loan Programs, Farm Service 
Agency, the accelerated loans principal and interest total 
$2,000,157,956.
                        debt for nature program
    Mr. Skeen. One of the recommendations from the Civil Rights Action 
Team Report is to fully implement the Debt for Nature program 
authorized in the 1996 Farm Bill. Please describe this program and how 
it will help minority and socially disadvantaged farmers.
    Response. The Debt for Nature Program, part of the original 
Consolidated Farm and Rural Development Act (Sec. 349), 1985, was 
designed to allow the Farm Service Agency (FSA) to substantially reduce 
the amount of a producer borrower's debt in exchange for an 
``easement'' right to the borrower's land for conservation purposes for 
a term not less than 50 years.
    It can be used for: Prevention of the breaking of sod on highly 
erodible grassland or wetland, which would be allowed to revert to a 
more suitable grassland/wetland cover; easements tailored to the 
conservation needs of at-risk plants or animal species; the protection 
of scenic views or historically significant property; Farmland 
Protection easements where development rights could be granted to 
eligible parties; or, the most often used easement with greatest 
potential debt reduction, Full set-aside contracts where all 
agricultural based economic use is limited.
    As amended in the 1996 Farm Bill, the minimum term for a debt 
cancellation easement (50 years) was eliminated and the term easement 
was replaced with ``contract.''
    The value of the easements for minority or socially disadvantaged 
farmers, or any other qualified farmer, is that it provides an 
alternative to losing their land outright if they are caught in debt.
    To date there has been limited acceptance of the program. Fewer 
then 100 easements have been recorded.
                   program discrimination complaints
    Mr. Skeen. The data provided for last year's testimony on program 
discrimination complaints displays a disturbing trend with the number 
of cases received nearly tripling since 1982. Why are the number of 
cases increasing and what is the department doing to address this 
problem?
    Response. Complaints are increasing because the public is becoming 
more educated on what their rights are. We believe that when the 
recommendations in the Civil Rights Action Team report are implemented, 
the problem will be addressed.
          cost of resolving program discrimination complaints
    Mr. Skeen. How much does it cost to resolve a program 
discrimination complaint?
    Response. We do not track specifically the cost for full processing 
to resolution of any individual complaint nor the costs of all 
complaints. Various aspects of complaint processing (particularly the 
fact gathering) are shared with USDA agencies, and these costs are not 
centrally tracked or aggregated. In addition, some personnel perform 
these functions on a collateral basis, while others have a number of 
other civil rights functions to perform. This makes direct attribution 
of costs very difficult. We know that using private sector contracting 
for fact finding and decision drafting would cost approximately $5,500 
per case, plus contract oversight costs.
                           satellite offices
    Mr. Skeen. Do you have an estimate of the number of satellite 
offices that would be needed to meet the needs of underserved customers 
and the associated costs?
    Response. No we do not because relevant data are not available. In 
the Civil Rights Action Team Report there is a recommendation to 
instruct State Food and Agriculture Councils to work with 
representatives of underserved customers to identify locations with 
concentrations of socially disadvantaged customers and determine 
whether full Service Centers or satellite offices are most appropriate 
to meet those customers' needs. This is to be implemented immediately.
             service centers needed on indian tribal lands
    Mr. Skeen. Do you have an estimate of the number and cost of USDA 
full-time Service Centers needed on Indian Tribal lands?
    Response. According to the latest figures available from the 
listing in the Federal Register, there are over 550 federally 
recognized Tribes. Most of the Tribes own at least a small reservation 
(12 acres to 100 acres) but not all would require a full time Service 
Center for their Tribal lands. The Intertribal Agriculture Council has 
advocated for Service Centers for those reservations with lands 
totaling over 100,000 acres.
    Using the threshold acreage of 85,000 acres, there are 72 
reservations meeting the criteria. However, Navajo Nation was counted 
in four separate States (it lies within Arizona, Colorado, New Mexico, 
and Utah) and Duck Valley is contained in Idaho and Nevada. If the 
threshold is raised to 100,000 and the two reservations in multiple 
states are counted as single entities the number drops to 67 full-time 
Service Centers.
    USDA currently has 27 offices on American Indian Reservations under 
the Service Center Concept. By subtracting the existing 27 offices from 
67 (the number of offices that need to be opened using the 100,000 
acres threshold), we get a total of 40.
    The estimated cost for start up for each Service Center is 
approximately $250,000 which is based upon an estimated cost of $70,000 
per employee for staffing/supplies/benefits with a representative from 
Natural Resources Conservation Service, Farm Service Agency, Rural 
Development, and Cooperative State, Research, Education, & Extension 
Service. The office space is provided by the benefiting Tribe per the 
1990 Farm Bill.
    Total is estimated first year start up cost for the 40 full-time 
Service Centers is $10 million.

          40  $250,000. = $10,000,000

    The source for the reservation acreage is American Indian 
Reservations and Trust Areas, 1996, Veronica E. Velarde Tiller, Tiller 
Research, Inc., Albuquerque, NM. Prepared under an award from Economic 
Development Administration, U.S. Department of Commerce. Additional 
references: ``Recommended Placement of NRCS Offices at Tribal 
Headquarters,'' Natural Resources and Conservation Services' memo from 
Alan C. Epps, National American Indian Liaison (NRCS), and Intertribal 
Agriculture Council Memo, ``Potential Placement of USDA Reservation 
Offices Based on Acreage.''
    The reservations listed below meet the threshold of 85,000 acres.

        Reservation                                              Acreage
Arizona:
    Colorado River Indian Tribes Reservation............         269,921
    Fort Apache Reservation.............................       1,664,972
    Gila River Reservation..............................         371,933
    Havasupai Reservation...............................         188,077
    Hopi Reservation....................................       1,561,213
    Hualapai Reservation................................         992,463
    Kaibab-Paiute Reservation...........................         120,840
    Navajo Nation.......................................      16,224,896
    San Carlos Apache Reservation.......................       1,853,841
    Tohono O'odham Reservation (formerly Papago)........       2,774,370
California:
    Hoppa Valley Reservation............................          85,445
Colorado:
    Southern Ute Reservation............................         818,000
    Ute Mountain Ute Reservation........................         595,787
Florida:
    Florida State Reservation (Jointly owned by Seminole 
      Tribe and Miccosukee Tribe 84,914.92).............         104,000
Idaho:
    Coeur D'Alene Reservation...........................         345,000
    Duck Valley Reservation (Idaho 145,545; Nevada 
      144,274)..........................................         289,819
    Fort Hall Reservation...............................         544,000
    Nez Perce Reservation...............................         750,000
Maine:
    Penobscot Reservation...............................         148,525
Michigan:
    Isabella Reservation................................         138,240
Minnesota:
    Bois Forte Reservation..............................         105,284
    Fond du Lac Reservation.............................         100,000
    Leech Lake Reservation..............................         602,880
    Red Lake Band Reservation...........................         837,736
    White Earth Reservation.............................         837,120
Montana:
    Blackfeet Reservation...............................       1,525,712
    Crow Reservation....................................       2,235,093
    Flathead (Salish and Kootenai) Reservation..........       1,244,000
    Fort Balknap Reservation............................         654,000
    Fort Peck Reservation...............................       2,093,318
    Northern Cheyenne Reservation.......................         450,000
    Rocky Boy's Reservation.............................         120,000
Nevada:
    Pyramid Lake Reservation............................         476,689
    Walker River Reservation............................         323,406
New Mexico:
    Acoma Pueblo........................................         378,114
    Isleta Pueblo.......................................         211,045
    Jicarilla Apache Reservation........................         870,580
    Laguna Pueblo.......................................         533,000
    Mescalero Apache Reservation........................         460,679
    Ramah Reservation (Navajo)..........................         146,953
    Taos Pueblo.........................................          95,341
    Zia Pueblo..........................................         121,611
    Zuni Pueblo.........................................         463,271
North Dakota:
    Devils Lake Sioux Reservation.......................         245,141
    Forth Berthold Reservation..........................       1,000,000
    Lake Traverse Reservation...........................         107,245
    Turtle Mountain Reservation.........................         140,107
Oklahoma
    Apache Tribe of Oklahoma............................         231,906
    Cherokee Nation.....................................         124,000
    Choctaw Nation......................................         131,524
    Comanche Tribe of Oklahoma..........................         281,906
    Creek (Muskogee) Nation.............................       1,904,800
    Osage Reservation...................................       1,470,559
Oregon:
    Umatilla Reservation................................         172,140
    Warm Springs Reservation............................         643,570
South Dakota:
    Cheyenne River Sioux Tribe Reservation..............       1,419,504
    Crow Creek Sioux Reservation........................         122,531
    Lower Brule Reservation.............................         240,000
    Pine Ridge Reservation..............................       1,771,082
    Rosebud Reservation.................................         954,572
    Standing Rock Reservation...........................         847,799
    Yankton Reservation.................................         434,942
Utah:
    Goshute Reservation.................................         112,086
    Uintah and Ouray Reservation........................       2,100,000
Washington:
    Colville Reservation................................       1,400,000
    Quinault Reservation................................         208,150
    Spokane Reservation.................................         154,898
    Yakama Reservation..................................       1,372,000
Wisconsin:
    Menominee Reservation...............................         235,000
Wyoming:
    Wind River Reservation..............................       2,268,008
                 environmental justice executive order
    Mr. Skeen. Please provide an overview of how the Environmental 
Justice Executive Order impacts USDA.
    Response. The Environmental Justice--EJ--Executive Order requires 
the Department to implement an EJ program and issue regulations. Those 
regulations are undergoing internal development. EJ can have several 
impacts on USDA programs and USDA customers. In general, EJ refers to 
adverse environmental or health impacts to minority or socially 
disadvantaged communities through the actions or activities of an 
agency. An example of this might be the effect a USDA rulemaking 
regarding the application of pesticides or other agricultural practice 
might have on minority workers that might be disproportionately at high 
risk of exposure to the procedure or chemical. Historically, the 
concept of EJ envolved with the siting of hazardous waste disposal 
facilities in minority or low income areas. The perception was that 
these facilities were intentionally located in these areas. Others have 
argued that the presence of the disposal facility occurred prior to the 
growth and development of minority or social disadvantaged communities 
and that these communities developed in and around the facilities 
because property values were much more affordable. The concept of EJ 
has since expanded beyond the citing of hazardous waste facilities to 
include other adverse environmental and human health impacts upon 
minority or socially disadvantaged populations. The USDA will most 
likely evaluate impacts to farm workers, farm practices in and around 
minority or socially disadvantaged communities, and other appropriate 
programs or activities.
                            on-site reviews
    Mr. Skeen. Did you conduct any on-site reviews or complaint 
investigations regarding civil rights in fiscal year 1996? If so, 
please describe them.
    Response. We did not conduct any on-site reviews or complaint 
investigations regarding civil rights in fiscal year 1996.
                          number of complaints
    Mr. Skeen. Please update the table provided to the Committee last 
year showing the number of complaints of program discrimination you 
received and the number resolved to include fiscal year 1996 actuals.
    [The information follows:]

------------------------------------------------------------------------
                                               Fiscal year              
                                ----------------------------------------
                                   Cases received    Cases resolved \1\ 
------------------------------------------------------------------------
1982...........................                373                   N/A
1983...........................                398                   N/A
1984...........................                479                   N/A
1985...........................                460                   N/A
1986...........................                518                   N/A
1987...........................                576                   533
1988...........................                578                   537
1989...........................                645                   602
1990...........................                651                   681
1991...........................                721                   622
1992...........................                794                   791
1993...........................                824                   688
1994...........................                853                   638
1995...........................                924                   818
1996...........................                196                   118
------------------------------------------------------------------------
\1\ N/A--OCRE did not have a tracking mechanism for this category from  
  fiscal years 1982-1986.                                               

                       examples of usda programs
    Mr. Skeen. Did the Civil Rights Action Team find any examples of 
USDA programs or offices that could be used as models of how USDA 
programs can be fairly administered?
    Response. No, the CRAT did not find any such examples.
               civil rights enforcement regional centers
    Mr. Skeen. Last year's testimony indicated that the Civil Rights 
Enforcement Regional Centers expended almost $700,000 in start-up 
costs. Why didn't the Civil Rights Regional Service Centers address the 
Department's civil rights enforcement needs?
    Response. The problems in the centers were twofold: First, due to 
budget constraints, key positions could not be filled and critically 
needed training could not be provided to staff. Second, the focus was 
on only part of the civil rights program--employment complaints. These 
two factors resulted in reduced service levels and less program 
effectiveness.
                equal employment opportunity complaints
    Mr. Skeen. Please list the number of open Equal Employment 
Opportunity Complaints existing at the end of the four previous fiscal 
years. As of April 1, 1997, how many cases are open?
    Response. The number of open EEO complaints existing at the end of 
the four previous fiscal years were as follows:

          9/30/93--879
          9/30/94--1,046
          9/30/95--1,473
          9/30/96--1,873
    As of March 21, 1997, there were 1,455 open complaints.
                       transfer of eeo counselors
    Mr. Skeen. Last year you completed the transfer of 65 EEO 
counselors from the agencies to the Department. Please explain why you 
are proposing to transfer the EEO counselors back to the agencies.
    Response. Decentralizing the EEO counselors will help make their 
roles within the agencies clearer and will help hold agency heads 
accountable for civil rights.
                         processing complaints
    Mr. Skeen. Last year you reported that the average time to process 
discrimination complaints was 107 days and the average time to process 
employment complaints was 496 days. Please explain how ``processing'' 
is defined. What are the current processing times? What can be done to 
further reduce the processing time?
    Response. For employment complaints, ``processing'' is defined as 
the number of calendar days which elapse between the date a formal 
complaint is filed and the date it is closed within the Department. A 
complaint is considered ``closed'' when (1) a settlement agreement is 
reached, (2) the employee withdraws the complaint, (3) the Department 
issues a decision to dismiss the complaint in accordance with criteria 
established by the Equal Employment Opportunity Commission--EEOC, or 
(4) the Department issues a decision on the merits of the complaint.
    To reduce the processing time, we can first, redouble our efforts 
to reach amicable resolution agreements with employees, even after they 
file formal complaints. If more agreements could be reached early in 
the process, much of the ``processing'' time and expense could be 
eliminated. Second, we can make every effort to streamline our 
procedures. I am placing a new team in charge of the complaint process, 
and I expect them to bring new ideas with them on how to process 
complaints more quickly. Each step of the process will be reviewed to 
improve on how we now approach complaints, from standardization and 
simplification to delegation and empowerment. We need to place less 
emphasis on producing perfect decisions at the expense of timeliness, 
so long as we are confident the decisions are fair and supportable. 
Third, we need to assess the resources allocated to perform this 
function. Do we have enough resources in terms of money, equipment, and 
people? And how can we increase the skills and productivity of those 
who are tasked with complaint processing? These questions should be 
answered as the new management team reviews and implements the 
recommendations of the Civil Rights Action Team.
      offices reporting to assistant secretary for administration
    Mr. Skeen. The Civil Rights Action Team recommends moving the 
Offices of the Chief Financial Officer and the Chief Information 
Officer from reporting to the Secretary to reporting to the Assistant 
Secretary for Administration. Although there may be good reasons to 
make these moves, it is not clear from the report if there are civil 
rights reasons for making these changes in the USDA organizational 
chart. Please explain the underlying rationale for having the CFO and 
CIO report to the Assistant Secretary for Administration. Also, 
reference any organizational reporting requirements stipulated in the 
CFO Act or the Clinger-Cohen Act.
    Response. The CRAT recommendations concerning the financial 
management and information resources management functions of USDA did 
not stem from civil rights concerns. Instead, the Secretary recognized 
that implementation of the CRAT recommendations also provided an 
opportunity to address problems in coordination of administrative 
activities. The initial intent of the CRAT recommendations was to 
reassign financial management and information resources management 
functions currently assigned to the CFO and CIO, respectively, to the 
Assistant Secretary for Administration. In turn, the Assistant 
Secretary for Administration would serve as the CFO and the CIO. This 
model is similar to that used in Treasury and Interior. Section 
902(a)(1) of the Chief Financial Officers Act of 1990 requires the 
Chief Financial Officer to report to the head of the agency. The 
Clinger-Cohen Act amended the Paperwork Reduction Act of 1995 to 
require the Chief Information Officer to report to the head of the 
agency.
                         field service centers
    Mr. Skeen. How much does USDA plan to spend in fiscal year 1998 to 
implement the new Field Service Centers, and what will be acquired with 
these investments?
    Response. In fiscal year 1998, USDA plans to spend $100,610,000 to 
implement the new Field Service Centers. The following is a breakdown 
of the estimated budget:
    $10,750,000--For office closures, relocations, and consolidations.
    $3,660,000--For Change Management/Customer Service training. During 
fiscal year 1997, Change Management/Customer Service training for 
coordinators and facilitators who will train field personnel will be 
completed. These Coordinators/Facilitators have already begun training 
delivery to USDA field staff. USDA expects to provide training to over 
9,000 Service Center employees during fiscal year 1997. The estimated 
fiscal year 1998 budget allows USDA to complete the delivery of this 
training to all field personnel. This training will provide the field 
staff with the necessary skills to deal with change, work cooperatively 
as a team, and improve customer service.
    $6,800,000--For Business Process Reengineering--BPR activities.
    The BPR working group was re-established in December 1996. Since 
then, BPR activities have moved forward on four BPR projects:
    (a) Customer Interface--community outreach and providing 
information;
    (b) Customer Service--assistance with services and benefits;
    (c) Geospatial Information Services;
    (d) Administrative Management.
    The BPR projects will provide the basis for improvements in program 
operations and administrative processes, and future IRM acquisitions. 
Given the resource relatities we face in the President's budget 
projections, we must move aggressively on these projects.
    $79,400,000--For the Information Resources Initiative.
    (a) $50 million for digital ortho-photography and digitization of 
soils data;
    (b) $24.3 million for development and testing of the common 
computing environment shared information system and migration from 
legacy systems;
    (c) $5.1 million for final activities related to the LAN/WAN/Voice 
telecommunications infrastructure.
    Mr. Skeen. How much of this amount does USDA plan to fund using CCC 
money in fiscal year 1998?
    Response. Mr. Chairman, at this time we plan to invest about 36 
million from the CCC for these activities in fiscal year 1998.
                           usda streamlining
    Mr. Skeen. Please update the Committee on the status of USDA 
streamlining.
    Response. Since 1993, USDA has reduced its staff years by 15,900. 
Approximately 6,600 employees left during this period under the 
``Buyout/Earlyout Program.'' The remainder ended their employment for 
other reasons.
                              metrication
    Mr. Skeen. Last year's testimony indicated that the Department's 
agencies were responsible for metrication activities within their own 
agency. Executive Order 12770 called for Federal agencies to develop 
specific time tables and milestones for the transition to metric. 
Please provide the Committee with a table summarizing the metrication 
plan including milestones, dates, and costs.
    Response. Individual USDA agencies are working on a plan to 
incorporate a dual system of metrics and non-metric measurements in the 
programs. At this time, a consolidated Departmental list of time frames 
and milestones for the various agency metric transition programs is not 
available.
                           mediation services
    Mr. Skeen. Is the Department's assistance to the Department of 
State and other agencies with mediation services still provided on a 
non-reimbursable basis?
    Response. These services are no longer provided.
         funding and staff years in departmental administration
    Mr. Skeen. Please provide a table showing the funding and staff 
year levels for each office within Departmental Administration for 
fiscal years 1995 and 1996 and estimates for fiscal years 1997 and 
1998.
    Response. Departmental Administration reorganized in fiscal year 
1995 and, therefore, I have prepared two tables. The first table 
represents Departmental Administration's funding and staff year levels 
in the previous structure and the second table represents Departmental 
Administration in the current structure.

DEPARTMENTAL ADMINISTRATION FUNDING AND STAFF YEARS FOR FISCAL YEAR 1995
------------------------------------------------------------------------
                                                       1995 actual      
                                                ------------------------
                  Staff office                                    Staff 
                                                     Amount       years 
------------------------------------------------------------------------
Personnel......................................      $7,080,198      109
Operations.....................................       3,308,889       48
Information resources management...............       5,928,908       71
Civil rights enforcement.......................       8,505,428      106
Administrative law judges/judicial officer.....       1,576,581       19
Disaster management and coordination staff.....         279,000        4
Modernization of administrative process staff..         144,000        2
Total, Departmental administration.............      26,823,937        2
Unobligated balance............................          48,849  .......
                                                ------------------------
      Total available..........................      26,872,786      359
------------------------------------------------------------------------


                  DEPARTMENTAL ADMINISTRATION FUNDING AND STAFF YEARS FOR FISCAL YEARS 1996-98                  
                                             [Dollars in thousands]                                             
----------------------------------------------------------------------------------------------------------------
                                                          1996 actual        1997 estimate       1998 estimate  
                                                     -----------------------------------------------------------
                       Offices                                    Staff               Staff               Staff 
                                                       Amount     years    Amount     years    Amount     years 
----------------------------------------------------------------------------------------------------------------
Human resources management..........................    $4,262        58    $4,207        49    $4,259        48
Civil rights........................................     2,964        36     2,885        30     2,920        29
Property and procurement management.................     2,888        41     2,997        34     3,034        33
Information resources management....................     4,620        51     4,498        54     4,553        54
Office of Operations................................     7,050        80     8,729        99     8,636        98
Management services.................................     4,687        67     4,620        66     4,678        65
Administration law judges/judicial officer..........     1,467        21     1,508        19     1,527        19
MAP.................................................       209         3       202         3       204         3
                                                     -----------------------------------------------------------
      Subtotal, DA..................................    28,147       357    29,646       354    29,811       349
        Transfer to OCIO............................   (4,620)      (51)   (4,498)      (54)   (4,553)      (54)
                                                     -----------------------------------------------------------
      Revised DA total..............................    23,527       306    25,148       300    25,258       295
----------------------------------------------------------------------------------------------------------------

      transfer of excess property to 1890 land-grant institutions
    Mr. Skeen. Please provide a table showing the amount of property 
that has been transferred to 1890 Land-Grant Institutions, which do not 
fully participate in property programs, for fiscal years 1995, and 1996 
and estimates for fiscal year 1997.
    Response. I am providing a table that lists the original 
acquisition cost of excess personal property transferred to the 1890 
Land-Grant institutions from fiscal year 1995-1997. Based on their 
needs, the institutions fully participate in the excess property 
program. Estimated acquisitions for fiscal year 1997, are expected to 
be approximately $1 million.

[Page 469--The official Committee record contains additional material here.]



                  usda/1890 national scholars program

    Mr. Skeen. Please update the information provided to the Committee 
last year on the USDA/1890 National Scholars program including the 
number of students in the program and the costs of operation in fiscal 
years 1996 and 1997.
    Response. USDA established the Scholars Program in order to 
increase recruitment efforts, employment opportunities, program 
accessibility, partnership, and outreach to all under represented 
groups in order to strengthen work force diversity. In 1992, the 
National Scholars Program was announced to provide scholarships at the 
seventeen 1890 Land-Grant Institutions to attract more students to 
agriculture, food, and natural resource sciences.
    In order to be eligible, National Scholars candidates must be 
graduating high school seniors with a minimum 3.0 GPA, a composite SAT 
of at least 1,000 or ACT of 21, and must plan to attend one of the 17 
Historically Black Land-Grant Colleges and major in Agriculture or a 
related discipline. Candidates must also be U.S. Citizens. Final 
selections are made by USDA based on merit ranking of applicants by the 
Institutions.
    USDA provides full tuition, fees, books, use of a personal computer 
and software, and summer employment, including employee benefits, 
during each of the four undergraduate years. Each scholarship is valued 
between $15,000 and $22,000, per student, per year. The 1890 
Institution provides scholarship recipients with room and board.
    The National Scholars Program provided scholarships for 45 students 
in 1993; 34 students in 1994; 29 students in 1995; and 34 in 1996. 
There are currently 126 students in the program. In fiscal year 1996, 
the cost was approximately $1,173,200. Of this total, $335,200 is for 
tuition, books, and fees; $138,000 is for computers; $120,000 for 
administration of the program; and $580,000 covers salary and benefits 
costs for the students' summer employment.
    In fiscal year 1997, we anticipate an additional 32 to 34 students 
will join the program and that program costs will be approximately 
$1,300,000. Students will be eligible for permanent employment with 
USDA upon graduation. The criteria used to determine how many students 
will be funded is outlined in our agreement with the 1890 Institutions. 
Our agreement provides for 34 scholarships annually, two at each of the 
1890 Institutions.

                      alternative discipline plan

    Mr. Skeen. Update the Committee on the Alternative Discipline Plan 
in terms of number of employees using the plan and its effectiveness.
    Response. USDA's Alternative Discipline program has been in place 
since 1993. An estimated 350 employees, or 35 percent of total 
disciplinary actions in 1996, were handled through alternative 
discipline.
    The alternative disciplinary option has increased the involvement 
of supervisors in dealing directly with their subordinates in 
disciplinary matters, instead of handing off problems to the human 
resource or personnel office to resolve. Because employees must admit 
to their wrong doing before alternative discipline is even considered, 
the majority of employees who enter into an alternative discipline 
agreement complete the terms and conditions of the agreement and do not 
engage in future misconduct. The Department's human resource 
professionals report that the option of alternative discipline has been 
an important tool to resolve workplace conflict in a more professional 
and timely manner and frees up resources to deal with the most serious 
misconduct issues.

                 purchase cards and third party drafts

    Mr. Skeen. Please report on the status of implementing purchase 
cards and third party drafts.
    Response. In fiscal year 1996, we formed a multi-disciplinary 
Purchase Card Implementation Team; increased the number of cardholders 
by 3,941; developed a new streamlined regulation with expanded 
authorities; developed the Purchase Card Management System--PCMS, an 
on-line reconciliation system; developed a number of user aids; and 
began piloting PCMS. In fiscal year 1997, we developed a training 
video; increased the number of cardholders by 2,136 through February; 
developed a multimedia tutorial; moved to a corporate bank platform; 
initiated a check writing pilot; developed an alert system; developed a 
small purchase self-study course; implemented report writing software 
to provide comprehensive management information; completed the PCMS 
pilot; developed PCMS enhancements as a result of the pilot testing; 
implemented an electronic method of distributing PCMS; and developed a 
planning template for full implementation. Full implementation of the 
purchase card program in USDA is expected to begin in summer 1997 and 
be available for cross servicing to other agencies once deployment 
across USDA is fully completed.
    We are currently implementing the recommendations of the 
Modernization of Administrative Processes project office-led purchase 
card and third party draft--TPD reengineering study. PCMS's check 
writing capability will allow us to combine and streamline both the 
purchase card and TPD programs. The processing techniques for either 
the purchase card or TPD transactions will become essentially the same. 
The TPD program is being phased out as the purchase card program, 
including check writing capability, is implemented.
  telecommunications within modernization of administration processes
    Mr. Skeen. The telecommunications component of the Modernization of 
Administrative Processes (MAP) effort was to have begun implementation 
in 1996. Please summarize the process to date.
    Response. Three General Accounting Office--GAO audits reported that 
USDA needs to improve the management of its telecommunications 
investments and resources. As a result of GAO's recommendations, a 
Telecommunications Executive Steering Committee was established in 
October 1995. This Executive Steering Committee, chaired jointly by 
Anne F. Thomson Reed and Irwin T. David, established the 
telecommunications Task Force--TTF to further assess the state of 
telecommunications management in USDA. The TTF found that the processes 
associated with planning, ordering, billing, invoicing, inventory 
control, payments, and management of telecommunications services and 
equipment are in need of reengineering from a Departmental perspective. 
A major recommendation of the TTF was the immediate initiation of a 
project to analyze the broad perspective telecommunications management 
activities within USDA. This recommendation resulted in the initiation 
of the Telecommunications Services Redesign Project.
    Planning for the Telecommunications Services Redesign Project began 
in the first quarter of fiscal year 96. The project was scheduled to 
occur in two phases. A project team of individuals from various 
agencies and the Department was assembled in June 1996, and phase I of 
the project began. During this phase, the team documented the current 
processes, collected customer and stakeholder requirements, and 
researched other practices for managing telecommunications. At the 
beginning of fiscal year 1997, phase II of the project started and is 
ongoing at the present time. Currently, the project team is developing 
recommendations for substantial process improvements, conducting a cost 
analysis of the impact of these redesigned processes, and identifying 
specific business modernization initiatives for implementing the new 
processes. Phase II of the project is scheduled to conclude in the 
third quarter of fiscal year 1997. The first project to begin 
implementing the recommendations will began shortly thereafter assuming 
management's concurrence with the proposed changes is received.
    When all recommendations of the Telecommunications Services 
Redesign Project are implemented, USDA should realize some dramatic 
improvements in the management of administrative activities related to 
telecommunications. Some of the significant objectives identified for 
the project include:
    Integrate telecommunications services management, procurement 
property management, and financial management process to support 
improvements in the quality and reliability of telecommunications 
inventory, usage, and payment data.
    Recommend modifications to the telecommunications management 
processes to take advantage of legislative changes and technological 
improvements.
    Provide necessary information to end users and telecommunications 
managers so that agencies can partner together in the procurement and 
usage of telecommunication resources.

         modernization of administrative processes initiatives

    Mr. Skeen. Please provide a status report on the remaining 
Modernization of Administrative Processes initiatives.
    Response. MAP efforts for fiscal year 1997 are being directed at 
three major administrative business areas: Procurement, Human Resources 
Management and Information Resources Management. Employee Civil Rights 
is to be added by the end of the year.
    MAP successes are improving USDA administrative processes and 
systems. The Purchase Card Business Reengineering effort described in 
question above, has led the way for initiatives currently in progress.
    MAP's Procurement Systems Modernization Project--PSMP has conducted 
a detailed business analysis emphasizing the redesign, streamlining, 
and consolidation of USDA's acquisition processes. The PSMP team is 
examining the many levels of review that can be streamlined or 
eliminated. Process improvements identified by the team will be 
forwarded to USDA's Procurement Executive for evaluation and 
implementation. During fiscal year 1997, the team will make a ``build 
or buy'' determination for developing a new acquisition system. To 
ensure that the new USDA acquisition system represents the best in both 
Government and industry, the PSMP team is now bench marking other 
federal agencies and private industry systems. Current plans call for a 
USDA acquisition system which provides the following core 
functionality: standardized acquisition, full electronic commerce 
integration, acquisition planning, requisitioning, order and contract 
document generation, one time data entry, approvals and work 
assignments on-line, rules, regulations and policies on-line, 
integrated reporting, and direct interface with other administrative 
systems.
    In the human resources business area, MAP has just entered the 
user-test phase of a business modernization initiative on the time and 
attendance records keeping process. In the first quarter for fiscal 
year 1997 the MAP team completed a business case of recommendations 
that clearly define specific cost avoidances and projected benefits. 
Stakeholders were identified and interviews were held with Department 
management and other USDA and external organizations. Some of the 
stakeholders were the Departments of Treasury, Justice, and Commerce. 
Recommendations include exception reporting, whereby an employee who 
works the same schedule each pay period needs not complete a time and 
attendance report. Implementation is scheduled to begin in fiscal year 
1998.
    MAP's Human Resources Management Analysis--HRMA project, to be 
completed by the end of Fiscal year 1997, is a business analysis 
emphasizing redesign, streamlining, and refocusing of the activities in 
USDA's human resources area. Improving the way USDA conducts its human 
resources business is critical in order to address the work force 
reduction and streamlining goals identified in the NPR. The HRMA team 
has assessed the gap between current activities and an ideal human 
resources management system in order to identify activities that are 
inefficient and need to be deleted, or further streamlined. Within the 
business case, the team will recommend a clearly defined and 
prioritized set of projects which, when completed, will move USDA to 
less costly and more effective human resources management. This 
improved human resources system will provide the following core 
functionality: more effective work force planning, faster hiring, 
improved dispute resolution, and a single USDA information system that 
minimizes data entry and provides integrated reporting and interface 
with other administrative systems. When appropriate, MAP will evaluate 
business-driven technology solutions for these process improvements, 
including commercial off-the-shelf, other federal agency solutions and 
best practices in private industry. Project recommendations will 
reflect and support relevant recommendations of the recent Civil Rights 
Action Team Report.
    In the telecommunications business area, a MAP team is now 
analyzing the procurement of telecommunications activities as they 
relate to both services and equipment.
    In addition to those projects, MAP developed in fiscal year 1996 a 
set of architectures for administrative functions in USDA. These 
architectures describe the business, information, and technical 
architectures that support administrative activities. These 
architectures will contribute to the USDA architectures being developed 
by the Office of the Chief Information Officer--OCIO.
    Overall, by the close of fiscal year 1997, it is expected that MAP 
will have begun or designed at least eight business modernization 
initiatives. These will consist of three in procurement; two in human 
resources; one in civil rights; and three in information resources 
management and telecommunications. These initiatives include the full 
range of business improvements and radical redesign approaches. In each 
of these efforts, a definitive list of performance measures will be 
developed against which their success can be gauged. Solutions to 
organizational change issues will be well integrated into project 
design and implementation.
                               map costs

    Mr. Skeen. How much, in total, has been spent on the MAP project?
    [The information follows:]

        Fiscal year                                            MAP costs
1994....................................................      $1,032,000
1995....................................................       2,202,552
1996....................................................       4,442,555
                    --------------------------------------------------------
                    ____________________________________________________
    Total...............................................       7,677,107

    MAP is partially financed through the DA appropriation and the 
USDA's Working Capital Fund--WCF. The annual budget for MAP is as 
follows:

----------------------------------------------------------------------------------------------------------------
                                                                             Working capital                    
                      Fiscal year                         DA appropriation         fund              Total      
----------------------------------------------------------------------------------------------------------------
1997 est...............................................           $202,000         $4,627,000         $4,829,000
1998 est...............................................            204,000          4,627,000          4,831,000
----------------------------------------------------------------------------------------------------------------

                  map and other reengineering efforts

    Mr. Skeen. How does the MAP project relate to the other 
reengineering efforts in USDA? If other agencies within USDA are 
reengineering their administrative processes, how is this being 
coordinated with the MAP program.
    Response. MAP Coordinates USDA reengineering activities through the 
MAP Executive Board which prioritizes and oversees activities 
associated with reengineering administrative processes. The MAP 
Executive Board is composed of senior administrative or financial 
executives from each of the mission areas. In addition, this board, 
chaired by the Assistant Secretary for Administration also includes the 
Chief Financial Officer, the Associate Inspector General, an executive 
from a USDA program area, and a representative from the USDA cross-
serviced clients. This board approves priorities and recommends funding 
for MAP projects.
    The Procurement Systems Modernization Project has coordinated its 
activities with all USDA agencies through the executive board and 
through the USDA Procurement Council.
    Two major USDA projects in the Human Resources area, the Staffing 
and Classification Integrated Personnel System and the Farm Service 
Agencies Administrative Management Reengineering--part of the Service 
Center Implementation Initiative--are closely coordinated with MAP. 
MAP's BPR Manager directly assisted the Service Center Team in 
establishing its business reengineering projects, including the 
administrative management reengineering effort. She continues as the 
Departmental liaison ensuring that Departmental guidelines and 
methodologies are followed.

                         reengineered processes

    Mr. Skeen. How will the reengineered processes be implemented at 
the mission area and agency levels throughout USDA, and what authority 
does USDA have to make agencies implement MAP initiatives and cancel or 
suspend Information Technology projects that are not consistent with 
MAP initiatives?
    Response. MAP uses several mechanisms to partner with agencies to 
ensure that reengineered processes will be implemented. The primary 
mechanisms are the executive leadership provided through the MAP 
Executive Board and the prioritization of MAP funding achieved through 
the Working Capital Fund Process.
    Additionally, when project teams are formed, maximum participation 
is sought from the USDA mission areas. In many cases, USDA agencies are 
signed up as potential ``pilot'' sites, prior to actual initiation of 
the reengineering projects. MAP takes every opportunity to ensure that 
projects are directed towards implementation.
    Business Reengineering projects are chartered for up to two years, 
to ensure continuity and oversight through pilot phases and into the 
implementation phase.
    The Secretary of Agriculture has delegated to MAP the authority to 
coordinate the reengineering of USDA's administrative and financial 
processes. In addition, the Assistant Secretary for Administration, as 
Senior Procurement Executive, may suspend any procurement that is not 
in the best interest of the Department.

                contracting out administrative functions

    Mr. Skeen. Has the Department investigated contracting out any 
administrative functions?
    Response. The Department has investigated contracting out 
administrative functions to the private sector. We have already 
contracted out the administrative portion of the Unemployment 
Compensation activities, building maintenance, and computer center 
operations in our Kansas City Computer Center.

                           procurement reform

    Mr. Skeen. Please update the status report on procurement reform 
submitted for last year's testimony.
    Response. Improvement and streamlining of the procurement process 
has been an ongoing objective within Departmental Administration. We 
currently have underway major initiatives to review and reengineer 
procurement processes within USDA. We continue to implement and support 
the initiatives of the Office of Federal Procurement Policy and are 
expanding our outreach efforts. Some highlights of our activities are:
    As part of our Purchase Card Reengineering efforts, we are 
continuing to train and empower non-procurement personnel to accomplish 
micro-purchases. Purchase card deployment has increased by 34 percent 
in fiscal year 1996, and thus far in fiscal year 1997 has increased by 
18 percent. The new purchase card program includes revised and 
streamlined policies, procedures, check writing capability, and a new 
computer software application. The system includes an alert system to 
notify managers and the Office of the Inspector General of potential 
misuse and a user friendly report writer that provides comprehensive 
management information. We have completed the pilot field testing of 
PCMS at one location in the Agricultural Research Service and two 
locations in the Forest Service. PCMS enhancements are underway to 
insure a successful deployment, which will begin in summer 1997. PCMS 
will be available for cross servicing of other government entities.
    As part of our procurement modernization efforts, an interagency 
team was formed to review and reengineer the remaining USDA procurement 
process. The Procurement Systems Modernization Project--PSMP--Team has 
completed a draft report on reengineering the USDA procurement process. 
Significant process, regulatory and system improvement opportunities 
have been identified and are currently under final review and analysis. 
When implemented, the identified process improvements will provide 
increased savings in the areas of time management, quality, and cost 
avoidance. The initial implementation of improvements designated as 
priorities is scheduled to commence in the third quarter of fiscal year 
1997. Working with representatives of many USDA procurement offices we 
have defined the functional requirements for a new, core USDA 
procurement system. A build-buy analysis will be completed by summer 
1997. We are also beginning to identify the interface requirements to 
link the next procurement system to the Foundation Financial 
Information System and our existing Property System.
    USDA, as a leader in the Javits-Wagner-O'Day Act Program--JWOD, 
advocates and carries out the activities of the Presidential Committee 
for the Purchase From People Who are Blind or Severely Disabled. In 
fiscal year 1996 USDA once again increased its JWOD sales from prior 
years, boosting its purchases of JWOD products and services by 38 
percent over fiscal year 1995. At a volume of $21.9 million, USDA 
trails only GSA, the Department of Defense, and the Postal Service in 
acquisition of JWOD products and services.
    We participate on a Task Force established to advise the Office of 
Federal Procurement Policy in its implementation of the Acquisition 
Workforce requirements of Section 4307 of the Clinger-Cohen Bill--
Maloney Provisions. We are reviewing and will be updating the existing 
USDA training program for acquisition personnel to ensure continued 
improvement in the skills and knowledge of the USDA acquisition 
workforce and to ensure compliance with the Maloney Provisions.
    The Office of Federal Procurement Policy initiative to increase the 
use of performance based service contracting--PBSC methods is an 
opportunity for USDA to achieve increased savings. Initial surveys of 
our agencies indicate that portions of PBSC methods are already used in 
some USDA agencies. We are currently studying the extent to which 
agencies now use PBSC methods and will establish a baseline for further 
training and use of all tools associated with these methods.
    We are currently finalizing the selection of procurement 
performance measures which we will use to assess and review our 
acquisition operation. We are planning to begin implementation of our 
procurement performance measurement plan this fiscal year. The types of 
measures initially selected will be developed with consideration given 
to currently available data collection systems. The measures used will 
continue to evolve and will ultimately be incorporated into our 
Government Performance and Results Act implementation. To minimize the 
resource impact of data collection requirements, we plan to ensure that 
the performance measures and data collection needs are reflected in the 
Procurement Systems Modernization Project efforts.

                     performance management system

    Mr. Skeen. Last year the Department created a new policy concerning 
the performance management system. Please summarize for the committee 
the major changes in the policy, the intended purpose of the changes, 
and results from the implementation of the policy.
    Response. The new performance management system allows agencies 
greater flexibility in designing performance management programs 
tailored to the needs of their organization. It focuses on improving 
individual and organizational performance and provides better linkage 
with the Government Performance and Results Act. The policy also 
provides for as many as five and as few as two summary rating levels, 
e.g., ``Pass/Fail'', which was not included in the old system. To date, 
only two USDA agencies submitted revised performance programs for 
approval. It is too early to evaluate the impact of this policy change.

                   celebration of excellence ceremony

    Mr. Skeen. Did USDA conduct a Celebration of Excellence Ceremony 
for USDA employees in fiscal year 1996 and 1997? If so, what were the 
costs?
    Response. Yes, the cost for the Secretary's Honor Awards ceremony 
was $41,013 in fiscal year 1996. This represented a 57 percent 
reduction in costs from fiscal year 1995 costs of $95,626. Planning for 
fiscal year 1997 Honor Awards in June is underway now. A budget of 
$54,050 is allocated for fiscal year 1997.

               expenditures for special emphasis programs

    Mr. Skeen. Last year the Department spent $235,000 on special 
emphasis programs and that expenditure is expected to increase to 
$295,000 in 1998. Please describe what the funds are used for.
    Response. The role of the Special Emphasis Programs of the 
Department has been primarily focused on Employment issues. Currently 
the Department has six Special Emphasis Programs. They include the 
Federal Women's Program, the Hispanic Employment Program, the Native 
American Program, the African American Program, the Asian Pacific 
American Program, and the Disability Employment Program.
    The Special Emphasis Programs were established through Executive 
Orders to address particular employment concerns. Currently the Office 
of Civil Rights is reviewing the role of Special Emphasis Programs and 
how they can be strengthened to fully incorporate concerns regarding 
program delivery. There is an apparent need for more focus on program 
delivery as it relates to small and disadvantaged farm programs as well 
as other ``outreach'' programs within USDA.

                         classes of employment

    Mr. Skeen. The Departmental Administration staff includes five 
``CA'' grade and four ``AL'' grade employees. What are these classes of 
employment and how are they paid?
    Response. These pay schedules apply to members of our Board of 
Contract Appeals--CA, and to our Administrative Law Judges--AL. The 
1997 rates of pay for members of the Board of Contract Appeals ranges 
from $116,491 to $123,100 per annum, and the Administrative Law Judge 
pay scale begins at $80,552 and ends at $123,100 per annum.

            personnel costs for departmental administration

    Mr. Skeen. Personnel costs for Departmental Administration are 
increasing $619,000 in 1998 but staffing falls by 10 FTEs. Please 
provide an explanation.
    Response. Total personnel compensation and benefits increase by a 
net of $619,000 between fiscal years 1997 and 1998. This increase is 
composed of pay costs and annualization increases for staff on board in 
fiscal year 1997 ($620,000), and costs associated with with-in grade 
increases, promotions, and other compensation ($215,000) for a total 
increase of $835,000, which is offset by a reduction of $216,000 for 
the reduction of 5 staff years in fiscal year 1998.

               advisory and assistance services decrease

    Mr. Skeen. Object class 25.1, advisory and assistance services, 
falls by 47 percent. What is the underlying reason for this change?
    Response. In order to fund our projected payroll, fixed support 
costs, and mission-essential variable costs within the President's 
Budget level, we are reducing other discretionary costs such as 
services under this object class.

                    advisory and assistance services

    Mr. Skeen. For Object Class 25.1, advisory and assistance services, 
please provide details of what services are required. Please also 
provide a list of those providing consulting services for the current 
fiscal year.
    [The information follows:]

  DEPARTMENTAL ADMINISTRATION CONSULTING SERVICES, FISCAL YEAR 1997-98  
------------------------------------------------------------------------
                Contractor                             Subject          
------------------------------------------------------------------------
Professional Pavement Management..........  Parking management.         
Tillman-Ramsey Group......................  EEO/Civil rights complaint  
                                             adjudication.              
------------------------------------------------------------------------

                       decrease in other services

    Mr. Skeen. Object Class 25.2, Other Services falls by 26 percent. 
Why have these costs changed?
    Response. In this austere budgetary environment, we have to 
prioritize each of our resource requirements. In order to fund our 
projected payroll, fixed support costs, and other mission critical 
variable costs within the President's budget. We have reduced our 
projected spending in other discretionary costs, including training. 
Federal and commercial contract services have been substantially 
reduced as a result. I have tasked my managers to do their best to get 
the best benefit from every dollar.

               decrease in the cost of goods and services

    Mr. Skeen. The purchase of goods and services from government 
accounts, object class 25.3, has fallen by $170,000 in 1998. What is 
the cause of this reduction?
    Response. With the exception of pay and fixed expense related costs 
whose estimates reflect their projected costs partially adjusted for 
inflation, projected obligations in virtually every other object class 
have been reduced.
                     decrease in maintenance costs

    Mr. Skeen. Both the operation and maintenance of facilities (object 
class 25.4) and equipment (object class 25.7) have had their request 
reduced in 1998 by a total of $150,000. What has changed that would 
allow the Department to lower its maintenance costs?
    Response. The needs for facilities and equipment maintenance 
haven't gone away, but we are trying to manage our resources in the 
most efficient manner possible and provide funds for mission-critical 
activities.

            decrease for civil rights complaint adjudication

    Mr. Skeen. How does the Civil Rights Action Team Report affect the 
proposed 1998 decrease of $200,000 for civil rights complaint 
adjudication?
    Response. This decrease in the Departmental Administration budget 
was offset by an equivalent increase in the Office of the General 
Counsel budget request in anticipation of increased needs for legal 
support of our complaints adjudication caseload.

                  time and attendance reporting system

    Mr. Skeen. Please report on the nature of and the benefits derived 
from the improvements made in the time and attendance reporting system 
in December 1996.
    Response. The Time and Attendance Business Process Reengineering 
Business Case is currently under review to better determine the 
viability of some of the recommendations on both a short-term and long-
term basis. Once the recommendations stemming from the Time and 
Attendance Business Case are fully implemented, USDA will receive the 
following benefits to the process: streamlined reporting, reviews and 
approvals of time sheets; management by exception reports that will 
allow managers to review a report rather than individual time sheets; 
reduced administrative burden by one staff day per person per year; 
ability to reassign timekeepers to more mission-critical duties; 
decreased volume and complexity of timekeeping data; lower transaction 
error rates; and reduced paperwork.

              proposed paperless personnel request system

    Mr. Skeen. Please provide an overview of the proposed paperless 
personnel request system. Include a timetable for implementation, an 
estimate of the costs, and an evaluation of the benefits.
    Response. The proposed paperless personnel request system will 
electronically link the first line manager with the servicing personnel 
office. After processing the request, the servicing personnel office 
will transmit the data electronically to the USDA payroll/personnel 
system maintained by the National Finance Center--NFC--in New Orleans. 
Significant costs can be avoided by automating this process. For USDA, 
the salary cost avoidance in the servicing personnel offices alone is 
estimated at over $4 million per annum. It is important to point out, 
however, that personnel office staffing cuts have already been taken 
due to our streamlining efforts. This will allow us to maintain the 
pre-streamlining level of customer service with the reduced staff.
    The costs associated with developing and implementing such a system 
for USDA have been estimated at $6.2 million. This estimate was based 
on in-house adaptation by NFC of the Integrated Personnel System 
originally developed by the Forest Service. Due to new guidance from 
the Office of Management and Budget on information technology, USDA is 
also considering various commercial-off-the-shelf options and 
developing new cost estimates.
    The timing of implementation of this system will depend on the 
success of small scale pilot tests of prototype software to be 
conducted in the fall of 1997. Once a system is successfully piloted, 
implementation Departmentwide will be phased in over a two to three 
year period.
                     status of usda reorganization

    Mr. Skeen. Please provide the Committee with an update on the 
status of the USDA reorganization including: reduction in targeted 
personnel categories, senior executive allocations, civil rights 
impacts, implementation of customer service plans, and implementation 
of the President's Labor Management Relations Partnership Councils.
    Response. USDA mission areas reported their status as of October 
1996, in meeting the requirements of the USDA reorganization. This 
report was compiled and analyzed jointly by the Office of the Assistant 
Secretary for Administration and the Office of Budget and Program 
Analysis. USDA mission areas reported significant progress in meeting 
targeted employment goals. USDA currently has an SES allocation of 359 
positions. All of these slots have been allocated and are filled or 
approvals are pending.
    Of the twelve organizations that reported on customer service plans 
in November 1996, all but two had indicated that they have established 
Customer Service Performance standards. These organizations are working 
on their Standards and will be asked to submit an update within the 
next month.
    USDA developed detailed guidance for conducting appropriate and 
accurate civil rights impact analysis for missions areas and agencies. 
This guidance was issued under regulation 1010-1, dated July 3, 1996. 
In addition, the Policy Analysis and Coordination Center--Civil Rights 
has reviewed all mission areas proposals to reorganize and has 
conducted a civil rights impact analysis. This report is currently 
being reviewed and refined within USDA and is expected to be completed 
by April 30, 1997.
    The USDA Labor-Management Partnership Council was formed at the 
Department level in December 1993, two months after the President 
issued the Executive Order requiring Federal agencies to establish 
partnerships with their employee unions. USDA was one of the first 
Departments to begin union-management partnership. In addition to the 
Department level Council, there are over 70 partnership councils 
throughout the mission areas, including those organizations affected by 
the reorganization.
                     early out and buy out options

    Mr. Skeen. How many USDA employees took the early out and buy out 
options in 1996? What were their grades and occupations? How many of 
these employees left positions that had to be refilled? Finally, what 
was the cost to USDA?
    Response. In Fiscal Year 1996, 199 USDA employees took early 
retirement and 225 took a buyout. Their grades and occupations were as 
follows:

[Page 478--The official Committee record contains additional material here.]



                                         USDA BUY OUTS, FISCAL YEAR 1996                                        
----------------------------------------------------------------------------------------------------------------
                                                                              GS-6    GS-11    GS-14   Number of
                                            Occupational    Wage   GS-1 to  to  GS-  to  GS-  to  GS-           
                                               series      grade     GS-5      10       13       15    employees
----------------------------------------------------------------------------------------------------------------
Social Sciences...........................           0          0        0        4        4        0         8 
Personnel Management......................           0          0        3        3        1        1         8 
General Administrative....................           0          2       11       19        9        1        42 
Biological Sciences.......................           0          0        0       47       23        3        73 
Accounting and Budget.....................           0          0        5        9        2        0        16 
Engineering...............................           0          0       12       23        6        1        42 
Legal.....................................           0          0        1        1        4        0         6 
Information and Arts......................           0          0        1        1        2        0         4 
Business and Industry.....................           0          1        1        6        2        0        10 
Physical Sciences.........................           0          0        4        2        0        0         6 
Mathematics/Statistics....................           0          0        2        0        0        0         2 
Equipment & Facilities....................           0          0        0        2        0        0         2 
Printing & Reproduction...................           1          0        0        0        0        0         1 
Industrial Equipment......................           2          0        0        0        0        0         2 
Transportation............................           2          0        0        1        0        0         3 
                                           ---------------------------------------------------------------------
      Totals..............................           5          3       40      118       53        6       225 
----------------------------------------------------------------------------------------------------------------

    Of those taking early outs and buyouts, 147 left positions which 
needed to be refilled by their Agency. However, overall the Department 
reduced its employment ceiling by one for each buyout departure. Buyout 
payment costs to the agencies are estimated to be $2,701,000, offset by 
the salary and benefit costs avoided by early out and buy out actions.

                plans for early out or buy out authority

    Mr. Skeen. Do you plan on using the early out or the buy out 
authority in 1997 or 1998? If so, how many employees do you think will 
use the early out or buy out option?
    Response. To date, 844 Federal and 694 County employees left the 
Department by accepting a buyout. Since the inception of civilian 
agency buyouts in 1994, a total of 6,630 Federal and 1,070 County 
employees left USDA through this mechanism. Of those opting for buyout 
in fiscal year 1997, 20 percent were in supervisory positions, 19 
percent were administrative, and over 86 percent of the total were 
nonminorities. Rural Development led the way with 430 buyouts, while 
the Farm and Foreign Agriculture Service had 215, and the Natural 
Resources Conservation Service had 115.
    Application and departure windows for fiscal year 1997 are closed; 
However, as many as 234 delayed departures, approved under the initial 
buyout legislation, may still occur this year. The Department's buyout 
authority extends for the next three years. Later this year, we will 
examine the benefits of implementing another round of early of early 
out and buy out offers for fiscal year 1998.

                    status of employee express pilot

    Mr. Skeen. Please report to the Committee on the status of the 
Employee Express pilot cost to implement? What are the benefits of the 
new system? When will the pilot be expanded to full implementation?
    Response. Several USDA agencies are participating in the pilot 
testing of the government-wide Employee Express system. The 10,000 
employees in the pilot like the system. They like the Kiosk for ease of 
use and the telephone voice response system for its availability 
directly from home or office. USDA's widely disbursed workforce would 
require too many Kiosks, so USDA joined other participating agencies to 
fund an Internet access option. The Office of Personnel Management--OPM 
projects this option will be available in the Summer of 1997.
    Employee Express eliminates the personnel office as an unnecessary 
layer in employee-initiated actions, such as address changes and 
payroll deductions. Over the past three years, USDA paid OPM 
approximately $300,000 as the Department's share of development and 
maintenance costs. The benefits include greater customer service to 
employees and a reduction in the costly paperwork burden on personnel 
offices. While the paperless personnel system is the long term solution 
to the paperwork burden, Employee Express provides immediate relief to 
overburdened personnel offices and USDA is exploring the cost of 
Departmentwide implementation with OPM. However, many employees 
continue to do business the old, paper-intensive way and do not avail 
themselves of Employee Express. Making the employee Express system 
available to all employees in USDA would allow blanket publicity 
coverage encourage more employees to use it and drive down the cost per 
transaction.

                 savings in worker's compensation costs

    Mr. Skeen. Please make an estimate of the savings in workers' 
compensation claim costs resulting from the automated workers' 
compensation cost management system. When will it be fully operational 
and how much has it cost to develop?
    Response. Most USDA agencies have been using the workers' 
compensation automated case management system since December 1996. It 
is difficult to gauge cost savings at this time since the Department is 
midway through the program year and this system has been operational 
throughout USDA for only three months. It is estimated that claim costs 
will continue to decline an average of $700,000 per year.
    Developmental costs for the workers' compensation automated case 
management system database were less than $5,000. Comparable desktop 
database applications developed by contractors are available for 
approximately $115,000. Comparable workers' compensation databases run 
by mainframe computers average $175,000 per year.

                  agricultural acquisition regulation

    Mr. Skeen. Please provide a status report on the Agricultural 
Acquisition Regulation. How much time and money will be saved?
    Response. The first comprehensive update of the Agricultural 
Acquisition Regulation--AGAR since 1990 was published as a final rule 
on October 15, 1996, and became effective November 14, 1996. This was a 
regulatory reform initiative that resulted in a 17 percent reduction in 
the new version of the AGAR. A copy of the AGAR was submitted to 
Congress as required by the Small Business Regulatory Enforcement 
Fairness Act of 1996. The AGAR is posted under the Departmental 
Administration Home Page on the Internet. We are planning to issue the 
first change circular for the new AGAR by the end of calendar year 
1997.
    It is difficult to quantify the effect of updating and streamlining 
the AGAR in terms of time or money savings. Any cost reductions or time 
savings from revision of the AGAR are spread over numerous contracting 
offices and vendors throughout the United States. Delegating approval 
authority downwards by one or more levels frees time for both front 
line offices and administration by eliminating layers of review. One 
example of this is the review of mistakes in bid alleged before award; 
such mistakes used to be reviewed by the Departmental Senior 
Procurement Executive, but now are resolved by the awarding agency. 
Updating the AGAR to parallel the current Federal Acquisition 
Regulation--FAR makes it easier to refer to AGAR coverage which 
supplements the FAR. The update implements such procurement reforms as 
designation of a Task Order Ombudsman and establishment of a procedure 
for filing protests with the agency. The update reduces the number of 
prescribed clauses and contract provisions in the AGAR from 69 to 45. 
This reduction eliminates redundant clauses and provisions, and allows 
contracting officers flexibility to craft solicitation language.

                       adjudicated eeo complaints

    Mr. Skeen. Of the EEO complaints adjudicated in 1996, how many were 
resolved without materially punishing the individual at fault but a 
payment was made to the party filing the complaint.
    Response. There is no finding of fault when the cases are 
administratively closed. During fiscal year 1996, USDA agencies closed 
387 EEO complaints with 354 settlement agreements. Of the 354 
settlement agreements, 144 included monetary payments to the 
complainant.
                  office of administrative law judges

    Mr. Skeen. Material submitted by the Department shows that the 
Administrative Law Judges had 34 percent fewer hearings and 12 percent 
fewer depositions in 1996 than 1995. Why was this the case? This 
continues a trend from 1994. Has this trend continued in 1997? Does 
this reduction imply that the Office of Administrative Law Judges could 
be scaled back?
    Response. While recent trends continue to reduce the number of 
hearings and dispositions, cases have become more complex. I believe 
that we need to maintain the capability to address future increases in 
caseload while redirecting scarce resources now. As a result, this 
office has kept one Administrative Law Judge and one Attorney-Advisor 
position vacant as the result of attrition and made necessary 
improvements to office automation and case tracking systems.

                     number of credit cards issued

    Mr. Skeen. Please report on the number of credit cards issued in 
1996 and the number issued so far in 1997.
    Response. The number of credit cards issued in 1996 was 3,941 for a 
total of 11,547 active cards at the end of the year. The number of 
credit cards issued through February 1997 is 2,136 for a total of 
13,683 active cards.
                      savings through credit cards

    Mr. Skeen. What are the estimated annual savings achieved through 
the use of credit cards?
    Response. The USDA average administrative processing cost for a 
purchase order totals $77. Using a purchase card, under our purchase 
card procedures, we incur an average administrative processing cost of 
approximately $32. With our reengineered purchase card system, which 
will include check writing, we expect to lower the processing cost to 
approximately $17 per transaction. We have already eliminated the Over-
The-Counter Purchase Order System within USDA, with a realized savings 
of $400,000 annually. Given the volume of USDA procurement 
transactions, the cost avoidance, as you can see from these reduced per 
transaction costs, are significant. Note that this cost avoidance will 
aid USDA to continue the delivery of services given the budget 
reductions the Department is already facing through the end of the 
decade.
                        estimated annual savings

    Mr. Skeen. Please update the Committee on the estimated annual 
savings for each of the following programs: Third Party Draft, USDA 
Recycling, and Improved Property Management.
    Response. The average current administrative processing cost of a 
Third Party Draft--TPD--is $54. This is a reduction from the $77 
average administrative processing cost for a purchase order 
transaction. In fiscal year 1996, USDA processed 41,106 TPD 
transactions for a savings of $945,438. The TPD program is being phased 
out as the new reengineered purchase card program, which includes an 
integrated check-writing capability, is implemented in the Department. 
Purchase card transactions, using the reengineered process, will have 
an administrative processing cost of approximately $17.
    The Department's solid waste recycling program is managed on a 
local level by USDA locations Nationwide. There is no central 
accounting system in place to track dollars saved Departmentwide. 
However, for those USDA offices which are located in General Services 
Administration controlled space and participate in GSA's recycling 
collection program, we have information available on the revenue 
returned to USDA from GSA for the sale of recovered waste materials. 
For fiscal year 95, the first year for which figures are available, 
USDA received $48,134 from the recycling revenue program. Fiscal year 
96 figures have not yet been finalized, but we anticipate that GSA's 
final accounting will show a similar level of participation and 
recycling revenue. In accord with the authorizing legislation, these 
recycling revenue funds will be directed into the operation and 
enhancement of the USDA recycling program, and for other environmental 
and energy conservation purposes.
    In the area of property management, in fiscal year 1996 the 
following practices resulted in cost savings:
    Fleet Credit Card--Due to the expiration of the SF-149, U.S. 
Government National Credit Card, a new fleet credit card has been 
adopted governmentwide. The award of the new contract to Wright Express 
will result in an approximate annual savings of $30,000 to USDA. In the 
past the government was charged $1.50 per credit card issued with a two 
year expiration date. In the new contract this fee has been eliminated.
    Equipment Management Information System/Personal Property System--
Currently, the Department is merging these two administrative systems 
which collect information on motor vehicles and other types of personal 
property. This will result in a one time estimated savings of $95,000.
    Policy Change in the Accountability Threshold--Recently, in 
response to NPR initiatives, USDA raised the accountability threshold 
for personal property from $1,000 to $5,000. The savings from this 
initiative are intangible, but we believe it will reduce the 
administrative burden on current resources which will result in 
administrative savings.
    Agriculture Property Management Regulations--The Departmental 
Property Management Regulations were reviewed and changed, as 
necessary, resulting in a reduction of more than 50 per cent of the 
document. Once the initial distribution of the revised document has 
been completed, we plan to upload the entire document onto the 
Departmental Administration's Home Page for access by all concerned 
parties. Future updates will be handled electronically, providing a 
cost avoidance of approximately $8,500 per distribution.

                    status of kansas city and davis

    Mr. Skeen. Please provide the Committee with a status report on the 
collocation projects at Kansas City and Davis.
    Response. The Kansas City initiative will collocate eight 
agencies--Farm Service Agency, Civil Rights Enforcement and 
Adjudication, Food and Consumer Service, Food Safety and Inspection 
Service, Grain Inspection, Packers and Stockyards Administration, 
Office of the General Counsel, Office of the Inspector General, and 
Risk Management Agency--and require approximately 350,000 square feet 
of rentable space to house an estimated 1,800 personnel. The General 
Services Administration received initial offers in October 1996 and 
lease award is anticipated in June 1997. Occupancy is scheduled for the 
year 2000.
    The Davis project will collocate three USDA State Offices--Farm 
Service Agency, Natural Resources Conservation Service, and Rural 
Development--the Risk Management Agency regional office--and four 
additional agency locations--Agricultural Research Service, Civil 
Rights Enforcement and Adjudication, Forest Service, and Office of the 
Inspector General--in a single facility of approximately 60,000 square 
feet of office and related space. USDA is working with the General 
Services Administration's San Francisco regional office, which awarded 
a lease on February 14, 1997.

                         targeted disabilities

    Mr. Skeen. Please update the information on page 330 of last year's 
hearing record regarding employment of persons with targeted 
disabilities.
    Response. Using the first quarter data for fiscal year 1997, people 
with severe disabilities represent 1.01 percent of the total permanent 
workforce. People with all reported disabilities equal 7,391 or 6.6 
percent of our permanent workforce. As of September 30, 1996, there was 
a total of 1,141 persons with targeted (severe) disabilities employed 
by USDA. As a result of downsizing, USDA's total workforce dropped from 
89,894 (as of 9/30/96) to 89,058 (as of 1/14/97) permanent employment, 
reflecting a net loss of four persons with severe disabilities. Our 
goal is to increase representation of people with severe disabilities 
to 1.37 percent by the end of this fiscal year.

                             motor vehicles

    Mr. Skeen. As a means to reduce costs, USDA is placing a greater 
proportion of vehicles under Department ownership. How many vehicles at 
the Department are USDA owned, how many are GSA leased, and how many 
are commercially leased. How has this changed over the past five years?
    Response. USDA is continuing, whenever funding permits, to purchase 
vehicles in lieu of leasing. As of September 30, 1996, USDA owns 33,393 
domestic vehicles which includes sedans, station wagons, light trucks, 
medium trucks, heavy trucks, buses and ambulances. In fiscal year 1996, 
USDA leased approximately 4,400 vehicles from GSA--which is 
approximately 1,200 less than Fiscal year 1995--and 383 vehicles 
commercially--which is 98 less than Fiscal year 1995. Over the past 
five years the percentage of owned vehicles of our entire fleet has 
risen from 82 percent to the current 87 percent with commercial leases 
varying from 1 to 2 percent and GSA reduced from 16 to 12 percent.

                                                 MOTOR VEHICLES                                                 
----------------------------------------------------------------------------------------------------------------
                                                                                 Commercail                     
                                                            Number owner and     leases and      GSA leased and 
                        Fiscal year                         percent of total  percent of total  percent of total
                                                                  fleet             fleet             fleet     
----------------------------------------------------------------------------------------------------------------
1992......................................................       34,928--82%           501--2%        7,000--16%
1993......................................................       35,196--83%           614--2%        6,400--15%
1994......................................................       34,699--84%           750--2%        5,950--14%
1995......................................................       34,159--85%           481--1%        5,600--14%
1996......................................................       33,393--87%           383--1%        4,400--12%
----------------------------------------------------------------------------------------------------------------

                     distribution of motor vehicles

    Mr. Skeen. Please update the table on pages 330 and 331 of last 
year's testimony showing the distribution of the Department's vehicles 
by agency.
    [The information follows:]

            USDA Domestically Owned Vehicles (as of 9/30/96)

Agricultural Marketing Service................................        56
Agricultural Research Servce..................................     2,973
Farm Service Agency...........................................        11
Animal and Plant Health Inspection Service....................     2,982
Rural Development.............................................        16
Grain Inspection, Packers & Stockyards Administration.........         4
Food Safety and Inspection Service............................         1
Forest Service................................................    16,937
National Agricultural Statistics Service......................        20
Office of the Inspector General...............................        34
Office of Operations..........................................         2
Natural Resources Conservation Service........................    10,357
                    --------------------------------------------------------------
                    ____________________________________________________

        Total Domestically Owned Vehicles.....................    33,393

    In addition to the 33,393 owned sedans, station wagons, light 
trucks, medium trucks, heavy trucks, buses, and ambulances listed in 
the above table, USDA owns and operates various special purpose 
vehicles which include: fire trucks, trash compactors, construction 
equipment, trailers, motorcycles, and snowmobiles. We also operate 232 
vehicles in foreign countries and obtain approximately 4,400 vehicles 
from GSA and approximately 383 vehicles commercially. USDA also owns 
and loans through the Federal Excess Property Program--FEPP--about 
25,000 pieces of fleet equipment made up of trucks, buses, and heavy 
equipment.
                        distribution of aircraft

    Mr. Skeen. Also for the record, provide a similar table showing the 
Department's distribution of aircraft by agency.
    [The information follows:]

       Distribution of Owner and Operated Aircraft (as of 9/30/96)

Agricultural Research Service.....................................     6
Animal and Plant Health Inspection Service........................    23
Forest Service....................................................    42
                        -----------------------------------------------------------------
                        ________________________________________________
    Total Owned Aircraft..........................................    71

    In addition, the Forest Service owns 306 aircraft which are on loan 
to State Forestry organizations and 28 aircraft which are on loan to 
museums. These organizations pay all costs associated with the 
aircraft. The Animal and Plant Health Inspection Service also leased on 
a year-round basis eight aircraft and borrowed six aircraft from 
cooperators. In addition, the Department acquired by contract, charter, 
lease or rental approximately $127 million in aircraft and aircraft 
services which is higher than usual due to a severe fire season.
                             summer interns
    Mr. Skeen. Please update the Committee on the total number of 
summer interns the Department hired in 1996? How many were from 1890 
Land Grant Institutions, how many were from the Hispanic Association of 
Colleges and Universities, how many were from American Indian Colleges, 
and how many were from other Colleges and Universities?
    Response. In 1996, the Department hired 952 summer interns. Of 
these 200 were from 1890 Land Grant Institutions, 124 were from the 
Hispanic Association of Colleges and Universities, 46 were from 
American Indian Colleges, and 582 were from other Colleges and 
Universities.

              historically black colleges and universities

    Mr. Skeen. Please update the table provided to the Committee last 
year (page 333 of Hearings) showing the funds USDA provided to 
Historically Black Colleges and Universities to include fiscal year 
1996 actual and 1997 estimates.
    [The information follows:]

[Page 485--The official Committee record contains additional material here.]


      
                        land grant universities

    Mr. Skeen. Provide a table showing a complete list, by agency, of 
all funds being transferred to each Land Grant University for fiscal 
year 1996 and estimates for fiscal year 1997.
    Response: The total amount for fiscal year 1997 will be about the 
same as the 1996 level. However, a large part of the funds are awarded 
competitively and recipients are not known at this time.
    [The information follows:]

[Pages 487 - 488--The official Committee record contains additional material here.]


                       competitive grants process

    Mr. Skeen. Based on the information in last year's testimony, about 
20 percent of the universities received over 50 percent of the funds 
distributed by USDA. Does the Department monitor the competitive 
process used by the agencies to distribute funds to Land Grant 
Universities? If so, what proportion of the funds are distributed on a 
competitive basis?
    Response: For competitively awarded programs, the Cooperative State 
Research, Education, and Extension Service uses a peer review or merit 
review process to evaluate all proposals submitted regardless of the 
type of institution involved. When assembling panels, CSREES takes into 
consideration the areas being review by the panel and strives to 
constitute the panel with the best qualified experts in that particular 
area. In some of our programs, such as the National Research 
Initiative, we also mail out the proposals to ad hoc reviews to get 
their options on the quality and value of the proposed research.
    The largest CSREES competitive program is the National Research 
Initiative--NRI--and Peer review panel members and ad hoc reviewers are 
selected based upon their training and experience in relevant 
scientific or technical fields taking into account the following 
factors: the level of formal scientific or technical education and 
other relevant experience of the individual as well as the extent to 
which an individual is engaged in relevant research and other relevant 
activities; the need to include as peer reviewers experts from various 
areas of specialization with relevant scientific technical fields; the 
need to include as peer reviewers experts from a variety of 
organizational types, such as universities, industry, private 
consultants, and from diverse geographic locations; and the need to 
maintain a balanced composition of peer review groups with regard to 
minority and female representation, and an equitable age distribution. 
The following table reflects the composition of NRI peer panels in 
fiscal year 1996. The panel membership is very similar to the 
distribution by types of institutions submitting proposals. In fiscal 
year 1996, 71 percent of the NRI proposals were submitted by Land Grant 
Institutions and 71 percent of the panel members were from Land Grant 
Institutions. The process used by the NRI is very similar to the 
process used by the National Science Foundation.
    USDA has established Strengthening Awards component under the NRI 
Program to ensure that faculty of small and mid-sized academic 
institutions with limited institutional success and faculty at 
institutions in USDA-EPSCoR--Experimental Program to Stimulate 
Competitive Reserch--States receive a portion of available funding. 
Small and mid-sized institutions means academic institutions with a 
current total enrollment of 15,000 or less, including undergraduate and 
graduate and full and part-time students. USDA-EPSCoR States are those 
which have had a funding level from the NRI Program no higher than the 
38th percentile of all States, based on a three-year rolling average, 
and all United States Territories and the District of Columbia. 
Proposals submitted under the Strengthening Awards component of the NRI 
undergo merit review by peer panels separate from those panels 
assembled to review Standard Research Grant proposals.
    Several of our higher education grants programs focus entirely on 
enhancing educational opportunities in the food and agricultural 
sciences at institutions other than 1862 Land Grant Institutions. Two 
examples are the Capacity Building Grants Program, under which only 
1890 Land Grant Institutions are eligible to receive funds, and the 
Hispanic Service Institutions Program, initiated in fiscal year 1997, 
under which only institutions with at least 25 percent Hispanic 
enrollments are eligible to receive funds. These are competitive 
programs and proposals submitted by eligible institutions undergo merit 
review by peer panels assembled for each program. A new competitive 
extension program is also being initiated in 1997 for the 1994 
Institutions.
    The Department engages in substantial oversight of competitive 
grant programs through reviews, audits, and assessments. In addition, 
independent organizations such as the National Research Council and 
Federation of American Societies for Experimental Biology have 
assessed--or are assessing--the goals, procedures, and outcomes of 
several of our competitive programs, including the NRI and the 
Biotechnology Risk Assessment Research grant programs.
    In fiscal year 1997, approximately 17 percent of the CSREES 
research, education, and extension program funds are being awarded 
competitively.
    I will provide for the record a table.

        DISTRIBUTION OF NRICGP PANEL MEMBERSHIP FISCAL YEAR 1996

    A. Distribution by Geographical Region.

                                                                        
------------------------------------------------------------------------
                     Area                          Number     Percentage
------------------------------------------------------------------------
Northcentral..................................          105         30.8
Northeast.....................................           57         16.7
South.........................................           80         23.5
West..........................................           99         29.0
------------------------------------------------------------------------

    B. Distribution by Institution Type.

------------------------------------------------------------------------
                  Institution                      Number     Percentage
------------------------------------------------------------------------
Land-Grant....................................          243         71.3
Public/Private................................           38         11.1
Federal.......................................           29          8.5
Inst/Industry/other...........................           31          9.1
------------------------------------------------------------------------

    C. Distribution by Academic Rank.

------------------------------------------------------------------------
                     Rank                          Number     Percentage
------------------------------------------------------------------------
Assistant Professor...........................           53         15.5
Associate Professor...........................          105         30.8
Professor.....................................          124         36.4
Fed/Industry/other............................           59         17.3
------------------------------------------------------------------------

    D. Distribution of Women and Minorities.

------------------------------------------------------------------------
                Classification                     Number     Percentage
------------------------------------------------------------------------
Nonminority males.............................          217         63.6
Nonminority females...........................           83         24.3
Minority male/female..........................           41         12.0
------------------------------------------------------------------------

             implementation of south building modernization

    Mr. Skeen. Please provide further details on the request for an 
additional $5,000,000 requested on page 2-14 of this year's budget 
request package.
    Response. We are requesting $5,000,000 in fiscal year 1998 to 
continue implementation of the South Building modernization under our 
Strategic Space Plan.
    The modernization is now planned to consist of eight primary phases 
ranging in size from about 100,000 square feet to 150,000 square feet 
of office space, with agencies being consolidated into each phase as it 
is completed. The first phase of about 100,000 square feet is scheduled 
to be awarded in September 1997. We plan to request funds for the 
second primary phase of about 150,000 square feet in fiscal year 1999.
    We will need funds in fiscal year 1998 to address badly-needed 
infrastructure improvements to electrical, plumbing, 
telecommunications, chilled water, fire protection and steam systems in 
the South Building. Under the architect-engineer contract now underway, 
a detailed building modernization plan is being completed which will 
provide the detailed engineering analyses, requirements and cost 
estimates for this necessary work. The work elements to be done using 
the fiscal year 1998 funding of $5,000,000 will be defined in more 
detail in this study.
                      one-time relocation expenses

    Mr. Skeen. Please provide a breakdown of the costs, for each agency 
involved, of the one time relocation expenses mentioned on pages 2-14 
and 2-20.
    [The information follows:]

[Pages 491 - 495--The official Committee record contains additional material here.]


                          Advisory Committees

                    advisory committees staff costs

    Mr. Skeen. USDA agencies are allowed to obligate funds for portions 
of salaries and benefits for staff time devoted to support advisory 
committees. Update the table on page 338 of last year's testimony, 
showing the breakout of funds obligated for this purpose by agency.
    [The information follows:]

                     ADVISORY COMMITTEE STAFF COSTS                     
                        [In thousands of dollars]                       
------------------------------------------------------------------------
              Agency                 Salaries     Benefits      Total   
------------------------------------------------------------------------
Food, Nutrition and Consumer                                            
 Services........................           23            4           27
Food Safety......................           45            8           53
Agricultural Research Service....           14            4           18
Cooperative State Research,                                             
 Education, and Extension Service          118           25          143
Grain Inspection, Packers and                                           
 Stockyard Administration........            0            0            0
Animal and Plant Health                                                 
 Inspection Service..............           19            3           22
Agricultural Marketing Service...           21            5           26
Farm and Foreign Agricultural                                           
 Services........................           70           18           88
                                  --------------------------------------
    Total, All Agencies..........          310           67          377
------------------------------------------------------------------------

         cost to department for maintaining advisory committees

    Mr. Skeen. Please identify the total cost to the Department of 
maintaining these panels, commissions, and task forces if the 
limitation of $1,000,000 was lifted, as the Department requests. If the 
limitation is lifted, which advisory committees, panels, commissions 
and task forces would the Department fund and what would be the total 
cost?
    [The information follows:]

[Page 497--The official Committee record contains additional material here.]


                advisory committees unobligated balance

    Mr. Skeen. What did the Department do with the unobligated balance 
of $25,102 for advisory committees from FY 1996?
    Response. These funds ceased to be available for new obligations on 
September 30, 1996.

             advisory committees funded from other accounts

    Mr. Skeen. This appropriation funds all authorized advisory 
committee activities except those included in the Forest Service or 
financed by user fees or other funds. Please provide an update of the 
table on page 339 that lists all committees funded through other 
accounts. Also, explain any additions or deletions to the tables.
    [The information follows:]

           USDA ADVISORY COMMITTEES FUNDED FROM FOREST SERVICE          
------------------------------------------------------------------------
                                                                 1997   
                      Committee title                          estimate 
------------------------------------------------------------------------
Blue Mountains.............................................      $11,750
Allegheny National Forest:                                              
    Northern...............................................        3,300
    Southern...............................................        3,300
Brule River (Wisconsin and Michigan) Study Committee.......            0
California Spotted Owl Federal Advisory Committee..........      250,000
Carp River Study Committee.................................            0
Committee of State Foresters...............................        7,550
Intergovernmental Advisory Committee to the Regional                    
 Interagency Executive Committee...........................      144,970
Little Manistee River Study Committee......................            0
National Urban and Community Advisory Council..............      112,000
Ontonagon River Study Committee............................            0
Paint River Study Committee................................            0
Presque Isle River Study Committee.........................            0
Provincial Interagency Executive Committee Advisory                     
 Committee.................................................      714,597
Sturgeon River (Hiawatha National Forest) Study Committee..            0
Sturgeon River (Ottawa) Study Committee....................            0
Tahquameon River (Hiawatha)................................            0
White River Study Committee................................            0
Whitefish River Study Committee............................            0
Wildcat River Advisory Commission..........................        3,800
Water Rights Task Force \1\................................      143,900
                                                            ------------
      Total, Forest Service................................    1,395,167
------------------------------------------------------------------------
\1\ This task force was added by statute and is expected to be          
  terminated this fiscal year.                                          
                                                                        
Note: Advisory Committees showing zero funding will not meet in fiscal  
  year 1997.                                                            

    All Forest Service (FS) Advisory Boards and Committees are funded 
from regular FS appropriated funds under the Department of Interior and 
Related Agencies appropriations.

    USDA ADVISORY COMMITTEES FUNDED FROM COMMODITY CREDIT CORPORATION   
------------------------------------------------------------------------
                                                                 1997   
                      Committee title                          estimate 
------------------------------------------------------------------------
Advisory Committee on Emerging Markets.....................       30,000
                                                            ------------
    Total, Commodity Credit Corporation....................       30,000
------------------------------------------------------------------------


             USDA ADVISORY COMMITTEES FUNDED FROM USER FEES             
------------------------------------------------------------------------
                                                                 1997   
                      Committee title                          estimate 
------------------------------------------------------------------------
Advisory Committee on Universal Cotton Standards...........        9,500
Burley Tobacco Advisory Committee..........................       39,894
Flue-Cured Tobacco Advisory Committee......................       35,466
National Advisory Committee for Tobacco Inspection Services       44,654
Plant Variety Protection Advisory Board....................        9,785
                                                            ------------
    Total, User Fees.......................................      139,299
------------------------------------------------------------------------

                      current advisory committees

    Mr. Skeen. Please up-date the tables on pages 342 through 344 that 
list all advisory committees that are currently funded, along with the 
memberships numbers, the total cost to the Department, and identify 
which are statutory and which are discretionary.
    [The information follows:]

[Pages 500 - 501--The official Committee record contains additional material here.]



----------------------------------------------------------------------------------------------------------------
                                                                                         Committee       1997   
                      Committee title                       Discretionary   Statutary    membership    estimate 
----------------------------------------------------------------------------------------------------------------
Little Manistee River Study Committee.....................  .............            S           10            0
National Urban and Community Advisory Council.............  .............            S           15      112,000
Ontonagon River Study Committee...........................  .............            S           10            0
Paint River Study Committee...............................  .............            S           10            0
Presque Isle River Study Committee........................  .............            S           10            0
Provincial Interagency Executive Committee Advisory                                                             
 Committee................................................             D   ...........          298      714,597
Sturgeon River (Hiawatha National Forest) Study Committee.  .............            S           10            0
Sturgeon River (Ottawa) Study Committee...................  .............            S           10            0
Tahquameon River (Hiawatha)...............................  .............            S           10            0
White River Study Committee...............................  .............            S           10            0
Whitefish River Study Committee...........................  .............            S           10            0
Wildcat River Advisory Commission.........................  .............            S            7        3,800
Water Rights Task Force...................................  .............            S            9      143,900
                                                           -----------------------------------------------------
    Total, Forest Service.................................  .............  ...........  ...........    1,395,167
----------------------------------------------------------------------------------------------------------------

         research, education, and economics advisory committees

    Mr. Skeen. The Research, Education, and Economics advisory 
committees have increased their costs by 72 percent in 1997. Please 
explain why the costs in this area have increased so much.
    Response. There are three reasons for this increase. First, the 
National Agriculture Research, Education, Extension, and Economics 
Advisory Board, mandated in the 1996 Farm Bill, was established. This 
committee replaced several existing advisory committees and is now the 
principal committee advising the Secretary, the Under Secretary for 
Research, Education and Economics, and the land-grant colleges and 
universities on a broad range of issues relating to research, 
education, and economics programs, including setting long-term and 
short-term National policies and priorities and strategic planning and 
implementation. The increase in the budget of the new committee over 
the combined budgets of the previous committees reflects the broader 
responsibilities of the new committee and the higher resource levels 
needed to fulfill them.
    Second, the responsibility for funding and organizing the Census 
Advisory Committee on Agricultural Statistics was transferred to USDA 
when responsibility for the Census of Agriculture was transferred from 
the Census Bureau to the National Agricultural Statistics Service. 
Third, USDA has assumed responsibility for funding initial work by the 
Dietary Guidelines Advisory Committee leading to development of the 
next guidelines. This funding responsibility rotates between USDA and 
Health and Human Services, and the next guideline efforts will be 
supported by USDA.
                         commodity distribution

    Mr. Skeen. What were the results of the meeting of the National 
Advisory Council on Commodity Distribution last year?
    Response. The Council elected officers, received background 
information on program operations and initiatives, and began developing 
potential recommendations for discussion in more detail at a second 
meeting. The issues discussed at the meeting included improving the 
coordination of commodity deliveries to State agencies and encouraging 
wider use of computer networks. Due to budget constraints, however, a 
second meeting was never held. Authority for the Council expired on 
September 30, 1996.

           reports and recommendations by advisory committees

    Mr. Skeen. Please provide copies of all reports and recommendations 
made by the advisory committees that met in fiscal year 1996.
    Response. Copies of all reports and recommendations made by the 
advisory committees that met in fiscal year 1996 were provided to the 
committee under separate cover.

    [Clerk's note.--The subcommittee has copies of these 
recommendations in their files.]

                  Agriculture Buildings and Facilities

                          strategic space plan

    Mr. Skeen. Please provide a report on the status of the strategic 
space plan. Update the table that appeared on pages 310 and 311 of last 
year's report.
    Response. The goal of our Washington Area Strategic Space Plan is 
to consolidate USDA Headquarters into two Government-owned locations, 
to house our employees in modern and safe facilities, enhance USDA 
operations, and reduce our facility costs. It consists of two major 
projects--the new USDA Office Facility and the modernization of the 
South Agriculture Building.
    The USDA Office Facility, now under construction, is located on 
government-owned land at the Beltsville Agricultural Research Center. 
The facility has been designed as a low-rise campus of four buildings 
with 350,000 gross square feet to house approximately 1,500 employees.
    The contractor was issued Notice to Proceed with construction on 
June 12, 1996. Construction of all four buildings is underway and is 
progressing on-schedule with a planned completion date in December 
1997.
    The sixty-year-old South Agriculture building, eligible for listing 
on the National Register of Historic Places, is in dire need of repair 
and renovation to make it safe, efficient and functional. The required 
renovation work includes fire protection systems; abatement of 
hazardous materials such as asbestos, PCB light fixtures, and lead 
paint; replacement of old, inefficient heating ventilation and air-
conditioning systems; improved accommodations for disabled persons and 
accommodation of modern office telecommunications systems. The current 
plan is to modernize the building in eight primary phases and to 
consolidate USDA agencies into the modernized areas as each 
construction phase is completed. The first phase will include Wing 3, 
and has been funded in fiscal year 1997. The architect-engineer 
contract to develop the concept design for the entire building and the 
contract documents for the modernization of Wings 3 and 4 was awarded 
on January 17, 1997.
    By the end of the South Building Modernization project, with 
funding to be requested in each fiscal year through 2005, USDA 
Headquarters offices will have been consolidated into two locations, 
the Beltsville facility and the downtown Headquarters Complex, 
eliminating our reliance on leased space after all downsizing has 
occurred.
    We have spent about $50 million for planning of this initiative and 
construction of the Beltsville facility since fiscal year 1995, and 
have about $27 million now available in fiscal year 1997 to complete 
the Beltsville project and to began the South Building modernization.
    I will provide a table for the record showing our current 
preliminary cost estimates and schedule for the South Building 
Modernization.

----------------------------------------------------------------------------------------------------------------
                                                                                                      Amount (in
               Fiscal year                           Location                   Description           thousands)
----------------------------------------------------------------------------------------------------------------
1997.....................................  Relocate wing \3\..........  Award phase I construction       $18,505
                                                                         (fiscal year 1997 funding).            
1998.....................................  Backfill wing \3\..........  Complete phase I award             5,000
                                                                         building infra-structure               
                                                                         improvement (fiscal year               
                                                                         1998 funding).                         
1999.....................................  Relocate wing & portion of   Award phase II construction       26,278
                                            head house \4\.              (fiscal year 1999 funding).            
1999.....................................  Backfill wing & head house   Complete phase II..........             
                                            \4\.                                                                
2000.....................................  Relocate wing & portion of   Award phase III (fiscal           26,278
                                            head house \2\.              year 2000 funding).                    
2000.....................................  Backfill wing & portion of   Complete phase III.........             
                                            head house \2\.                                                     
2001.....................................  Relocate wing & portion of   Award phase IV (fiscal year       26,278
                                            head house \1\.              2001 funding).                         
2001.....................................  Backfill wing & portion of   Complete phase IV..........             
                                            head house \1\.                                                     
2002.....................................  Relocate wing & portion of   Award phase V (fiscal year        26,278
                                            head house \5\.              2002 funding).                         
2002.....................................  Backfill wing & portion      Complete phase V...........             
                                            head house \5\.                                                     
2003.....................................  Relocate wing & portion of   Award phase VI (fiscal year       26,278
                                            head house \6\.              2003 funding).                         
2003.....................................  Backfill wing & portion      Complete phase VI..........             
                                            head house \6\.                                                     
2004.....................................  Relocate wing & portion of   Award phase VII (fiscal           26,278
                                            head house.                  year 2004 funding).                    
2004.....................................  Backfill wing & head house   Complete phase VII.........             
                                            \7\.                                                                
2005.....................................  Relocate tail house........  Award phase VIII (fiscal          17,972
                                                                         year 2005 funding).                    
                                           Complete phase VIII........    .........................             
                                                                                                    ------------
      Total..............................  ...........................  ...........................      199,145
----------------------------------------------------------------------------------------------------------------
\1\ Preliminary estimates reflect costs by fiscal year which include design costs, moving costs, furniture      
  costs, and construction costs for appropriate phases.                                                         
\2\ All costs after fiscal year 1998 are presented in fiscal year 1998 dollars, with no adjustment for          
  inflation.                                                                                                    
\3\ Cost estimates are preliminary and for planning purposes only. More detailed costs will be developed as     
  design work proceeds, and will be dependent upon available budgetary resources in annual budget requests.     
\4\ Funding request for Wing 4 has been deferred until fiscal year 1999.                                        
\5\ Costs shown do not include fiscal year 1995 appropriation set aside for design.                             

  renovation of south building and construction of beltsville building

    Mr. Skeen. Last year, you indicated that you expected to award the 
construction contract for Phase I of the South Building renovation in 
September 1997. Do you expect to meet this deadline? If not, why not.
    Response. Yes, we expect to meet this deadline. The South Building 
Modernization design contract was awarded in January 1997. The 
architect-engineer was issued the Notice to Proceed on January 17, 1997 
and site investigations began on January 21, 1997. The current plan is 
to modernize the South Building in eight primary phases and to 
consolidate USDA agencies into the modernized areas as each 
construction phase is completed. The first phase will include Wing 3, 
which has been funded in fiscal year 1997, with the last phase 
completed after final funding for the last phase is requested in fiscal 
year 2005, subject to Congressional approval. We have scheduled award 
of the construction contract for Phase I in September 1997, and we are 
on schedule.
                       beltsville office facility

    Mr. Skeen. Last year your estimate of the Beltsville Office 
Facility cost was $51.2 million. Have the costs changed?
    Response. No, our estimate of what it will cost us to complete the 
Beltsville Office Facility has not changed. Of course, actions will 
continue to be taken for design, construction, tenant fit-out, road 
improvements, moving and other related costs for the facility as the 
project approaches the scheduled completion date in December 1997. 
There may be adjustments in the cost estimate as actual expenditures 
occur.
                                funding

    Mr. Skeen. How much has been appropriated for these projects and 
how much more will you need?
    [The information follows:]

                BUDGET AUTHORITY FOR STRATEGIC SPACE PLAN               
------------------------------------------------------------------------
                                                           Appropriated 
                       Fiscal year                            amounts   
------------------------------------------------------------------------
1995....................................................     $28,622,000
1996....................................................      25,587,000
1997....................................................      23,505,000
1998-2005 estimates.....................................           (\1\)
------------------------------------------------------------------------
\1\ We will need approximately $181 million to complete the South       
  Building Modernization in eight phases. This preliminary estimate     
  includes design, construction, moving, and furniture costs. This      
  estimate is based on fiscal year 1998 costs and does not include      
  escalation for future inflation.                                      

                  headquarters complex rental charges

    Mr. Skeen. Please update the table provided for last year's hearing 
record (page 313) showing the amount GSA charged USDA for the four 
buildings owned by GSA but occupied by USDA to include fiscal year 
1997.
    [The information follows:]

                                       HEADQUARTERS COMPLEX RENTAL CHARGES                                      
                                          [Revised as of Jan. 28, 1997]                                         
----------------------------------------------------------------------------------------------------------------
                                                        Administration   Agriculture      South       Auditors  
                      Fiscal year                          building         annex       building      building  
----------------------------------------------------------------------------------------------------------------
1981..................................................         \1\ NA         \1\ NA        \1\ NA        \1\ NA
1982..................................................         \1\ NA         \1\ NA        \1\ NA        \1\ NA
1983..................................................     $1,859,496       $461,608   $14,225,076      $558,240
1984..................................................      2,077,284        520,032    14,320,032       651,480
1985..................................................      4,009,740        833,448    14,320,032     1,287,040
1986..................................................      4,030,348        838,208    14,146,532     1,287,040
1987..................................................      4,143,192      1,016,304    24,520,656        \2\ NA
1988..................................................      4,873,616      1,195,652    28,546,320        \2\ NA
1989..................................................      4,945,876      1,079,164    29,125,304        \2\ NA
1990..................................................      5,057,796      1,208,180    29,677,452     2,266,420
1991..................................................      5,241,095      1,259,653    30,871,540     2,531,864
1992..................................................      5,736,322      1,346,795    33,473,685     3,443,770
1993..................................................      6,083,883      1,428,235    35,498,563     3,652,899
1994..................................................      6,235,795      1,463,717    36,383,590     3,745,102
1995 \3\..............................................      6,117,877      1,435,956    35,691,417     3,702,278
1996 \3\..............................................      6,245,408      1,465,915    36,443,590     3,772,519
1997 (Estimate) \3\...................................      6,245,407      1,465,914    36,443,589     3,794,119
----------------------------------------------------------------------------------------------------------------
\1\ Prior to the creation of the Rental Payments to GSA Appropriation in fiscal year 1983, agencies were        
  individually charged for space and a Departmental Administration level is not available.                      
\2\ The Auditors Building was vacated for renovation from 1987 until 1989.                                      
\3\ Beginning in fiscal year 1995, USDA no longer pays GSA the value of the rent charged for the D.C. Complex.  
  Instead, the rental payments for non-headquarter's space were increased when USDA assumed responsibilities for
  these buildings and began implementation of the Strategic Space Plan. The amounts shown are the GSA estimates 
  of the value of the building space.                                                                           

                              office space

    Mr. Skeen. How much is USDA paying for office space in the 
Washington, DC area outside of the Whitten Building, the South 
Building, the Auditors Building, and the Agriculture Annex?
    Response. USDA rental cost for office space in the Washington DC 
area excluding the Government owned Headquarters buildings is 
$30,749,925.
                      agencies move to beltsville

    Mr. Skeen. The material USDA submitted in its 1998 budget request 
indicated that agencies would be selected to occupy the new USDA Office 
Facility in Beltsville in early 1997. Which agencies will move to 
Beltsville?
    Response. We are now concluding the decision-making process to 
select tenants for the Beltsville Office Facility. I will provide this 
information to you as soon as we have completed this process.

                              air quality

    Mr. Skeen. What were the findings of the 1996 air quality surveys 
performed in the South Building?
    Response. The IAQ report on which the annual survey of the entire 
South Building noted that the major heating, ventilation and air 
conditioning--HVAC equipment servicing the building is generally at the 
end of its useful life. The report also noted that the equipment is 
being adequately maintained. The recommended improvements by the survey 
included increasing the cleaning frequency, and chemical treatments on 
certain types of cooling equipment; implementation of a hazardous waste 
management plan; and air quality awareness training for operations and 
maintenance employees. These steps are now in either the planning or 
implementation stages.
    Individual air quality surveys indicated that many of the IAQ 
problems in the South Building were associated with poor air 
circulation within offices with modular furniture. The increased use of 
modular furniture has led to increased concentration of employees and 
equipment in these offices. The existing HVAC systems were not designed 
to condition office spaces divided by modular furniture.
    A specific IAQ report associated with the 0400 Mail Room corridor 
noted no contaminants found, but did forward recommendations to reduce 
the infiltration of outdoor exhausts into the area. These 
recommendations are currently in the implementation process.
    Another IAQ report noted that a locker room in the Fitness Center 
experienced problems with standing water and wet carpet. These 
conditions were being caused by deteriorated wall and floor tiles. 
Recommendations forwarded in report were implemented and the conditions 
abated.
               window restoration program--south building

    Mr. Skeen. Please update the table on page 312 of last year's 
testimony that summarizes the South Building window repair program. Is 
that project now complete?
    Response. The window restoration program for the South Building, 
begun in fiscal year 1988, is completed. This concludes the window 
restoration program for the South Building. I am providing for the 
record a table showing the eight phases awarded by USDA and the project 
costs.
    [The information follows:]

                                   WINDOW RESTORATION PROGRAM--SOUTH BUILDING                                   
----------------------------------------------------------------------------------------------------------------
                                                                                      No. of                    
                  Fiscal year                               Location                windows\1\         Costs    
----------------------------------------------------------------------------------------------------------------
1988..........................................  E.W. and Part N. Facades........             700      $1,118,154
1989..........................................  Complete N Facades..............             400         759,200
1990..........................................  Court 2.........................             500       1,236,350
1991..........................................  Court 1.........................             450       1,219,090
1992..........................................  Court 4.........................         \2\ 500       1,344,617
1993..........................................  Court 5.........................         \2\ 500       1,058,742
1994..........................................  Court 3.........................             482         917,220
1995..........................................  Court 6.........................         \2\ 500         964,011
                                                                                 -------------------------------
      Total Costs of Construction to Date.....  ................................  ..............       8,617,384
----------------------------------------------------------------------------------------------------------------
\1\ Number of windows approximate.                                                                              
\2\ Contracts incude masonry repairs.                                                                           

                  rental payments and gsa repair costs

    Mr. Skeen. Please update the table provided for last year's hearing 
record on page 336 showing the amount of rental payments made to GSA 
and the amount spent by GSA for repairs to include fiscal years 1996 
and 1997.
    [The information follows]

Rental Payments to GSA

1985....................................................     $52,766,671
1986....................................................      47,751,006
1987....................................................      48,728,000
1988....................................................      45,857,311
1989....................................................      46,363,000
1990....................................................      44,788,846
1991....................................................      46,120,802
1992....................................................      45,679,002
1993....................................................      44,932,917
1994....................................................      84,465,408
1995....................................................      90,762,069
1996....................................................      90,158,772
1997 Estimate...........................................     100,247,515

Note.--These figures reflect the rental payments for the entire 
Department of Agriculture nationwide (National Capital Region owned and 
leased space and field office locations owned and leased space).
---------------------------------------------------------------------------

Estimated costs of repair contracts awarded by GSA--FY 1985-97

Jamie L. Whitten Building...............................      $3,759,518
Annex Building..........................................       2,033,605
Auditors Building (renovation included).................      13,363,236
South Building..........................................       6,570,167
West Auditors Building (removed from the USDA inventory 
    in 1988)............................................         680,000
                    --------------------------------------------------------
                    ____________________________________________________
    Total estimate......................................  \1\ 26,406,526

\1\ Includes contracts awarded through January 27, 1997.
Note.--USDA is now responsible for operation and maintenance of these 
buildings.
---------------------------------------------------------------------------
                    employees maintaining buildings

    Mr. Skeen. Please provide a table showing the number of Federal 
employees as well as the number of contract employees that maintain the 
Headquarters buildings for fiscal years 1990 through 1996 and estimates 
for fiscal years 1997 and 1998. Also include in this table the cost of 
these employees.
    Response. The following table reflects the number of Federal 
employees working on preventive maintenance in the Headquarters 
Complex. The costs associated with contract employees cannot be 
separated from the total costs of the services of each contract. 
Therefore, the costs shown in the table for contract employees reflect 
the costs for maintenance contracts.

                                             FEDERAL AND CONTRACT EMPLOYEES FOR BUILDING MAINTENANCE CENTER                                             
                                                                    [By fiscal years]                                                                   
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         1990         1991         1992         1993         1994         1995         1996      1997 est.    1998 est. 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal employees..................           11           11           10           10           10           10           10           10           10
Costs..............................     $359,332     $344,235     $352,552     $344,528     $373,399     $385,038     $393,264     $408,407     $420,741
Contract employees.................           35           35           35           35           35           35           35           35           35
Contract costs.....................   $3,026,068   $3,878,347   $3,377,505   $3,664,583   $3,049,979   $2,816,413   $2,959,619   $3,048,408   $3,139,860
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Includes cost of benefits. Actual costs include variables such as overtime and night differential. There was one Federal employee position vacant
  for part of fiscal year 1996.                                                                                                                         

                       Hazardous Waste Management

                            abandoned mines

    Mr. Skeen. Please update the progress made by the Forest Service in 
implementing the recommendations in the OIG audit of Abandoned Mines.
    Response. The Office of the Inspector General's recommendations and 
the Forest Service's responses are as follows:
    Recommendation 1a--Set goals for Region's completion of inventories 
and site investigations.
    Forest Service Response to 1a--The Forest Service established a 
goal of completing inventories by the year 1998. Each Region is allowed 
$200K in the base program funding to conduct site evaluations. It is 
estimated that approximately 40 sites will be evaluated each year. In 
addition, the Forest Service has established a goal of completing 
CERCLA action by 2045.
    Forest Service Response to 1b--The Forest Service believes that 
adequate funding can be made available to allow the above inventory and 
evaluation goals to be met. However, given current USDA/agency budgets, 
the need to proceed to reclaim mines already identified, and the need 
to fund other priorities, it is not considered prudent to shift funds 
from other priority programs.
    Recommendation 2--Concurrent with site discovery, require the 
Regions to transition from the discovery phase to identification of 
viable PRPs and actual cleanup.
    Forest Service Response to 2--The Regions were directed by a letter 
of 7/1/94 to begin giving these aspects of the program greater 
emphasis, and the transition is occurring. In addition, USDA and FS are 
currently working on an initiative which re-emphasizes the current 
policy to actively move forward on cleanups and work with PRPs to 
conduct more cleanups.
    Recommendation 3--In consultation with the Department of the 
Interior (DOI), develop a long-term strategy that integrates all CERCLA 
and other watershed restoration activities into the priorities, 
methodology, and funding needs of the watershed initiative.
    Forest Service Response to 3--The Forest Service will continue to 
participate as members of the ``Inter-Departmental Abandoned Mines 
Working Group'' to advance a comprehensive, coordinated watershed 
approach to reclaiming abandoned mines.
    Recommendation 4a--Coordinate with Regions concerning the methods 
used to estimate cleanup costs and update and revise estimates as 
necessary.
    Forest Service Response to 4a--The Forest Service had identified 
several guides which have application to estimating CERCLA costs and is 
in the process of collecting actual cost data from the field units. In 
addition, the Montana School of Mines has been contacted for 
information on cost estimating.
    Recommendation 4b--Coordinate with UDSA and DOI for sustained 
sources of funding that will be adequate to carry out both CERCLA and 
non-CERCLA cleanup projects.
    Forest Service Response to 4b--Consistent with the Forest Service 
response to Recommendation No. 3 above, the Forest Service will work 
with the ``Inter-Departmental Abandoned Mines Working Group'' and will 
take other actions to obtain sustained sources of funding. A $4.6 
million program is in the FY 1998 President's Budget. In addition, 
CERCLA projects can be funded through an USDA appropriation entitled 
Hazardous Waste Management which finances projects across USDA. The 
Forest Service works with PRPs to conduct cleanups and seeks 
partnerships with other Governmental agencies.
    Recommendation 4c--Determine if additional specialized personnel 
resources will be required. Develop and coordinate personnel 
requirements in conjunction with funding sources.
    Forest Service Response to 4c--With respect to CERCLA, staffing 
levels and skills are reviewed during monitoring trips by the 
Washington Office of the Forest Service. Inadequacies are noted in 
monitoring reports submitted to the Regional Forester of Station 
Director. To the extend funding is available, improvements can be made. 
In addition, we adopted a training policy on June 28, 1995, for 
employees working with hazardous materials. By the end of April 1997, 
over 120 Forest Services employees will have received training as On-
scene Coordinators.
    With respect to non-CERCLA, the Forest Service will survey their 
field offices and, to the extent future budgets allow, try to correct 
any deficiencies.
    Recommendation 5a--Request that OGC determine whether the Forest 
Service has authority to suspend mining operations and, if so, under 
what circumstances. If FS does not have authority to suspend mining 
operations, seek the necessary authority.
    Forest Service Response to 5a--The FS will request such a 
determination from OGC, particularly as it relates to cases where 
operations may be in violation of the CWA.
    Recommendation 5b--Develop and follow a schedule for inspecting 
mines operating under an approved plan of operation at least once each 
year.
    Forest Service Response to 5b--Existing regulations at 36 CFR 
228.7(a) already require periodic inspection of operations. The report 
indicates the problem to primarily involve insufficient staff and 
funding. USDA will support and assist the FS in requesting adequate 
funds to ensure it can administer new and current mining operations 
properly.
    Recommendation 5c--Develop minimum standards or certification for 
mining administrators. Require that personnel receive training on mine 
administration, bonding requirements, and hazardous materials prior to 
being assigned to administer active operations.
    Forest Service Response to 5c--The Forest Service will develop 
standards and appropriate training.
    Recommendation 6--Ensure that bonds are reviewed annually and 
increased as needed.
    Forest Service Response to 6--36 CFR 228.13 only allows bonds to be 
adjusted when a modification of plan of operation is approved. The FS 
will propose a rule change to allow more flexibility in adjusting 
bonds.
    Recommendation 7--Coordinate with OGC to develop a plan that 
includes development and promulgation of regulations for assessing mine 
operators for the costs associated with preparing EA's and EIS'. If 
necessary, submit a remedial legislative proposal to OMB to implement 
fees for this purpose.
    Forest Service Response to 7--The Forest Service will confer with 
OGC and review the current policy under which the FS assumes the costs 
of conducting NEPA analyses in a variety of resource programs. This 
assessment will include consideration of the development and 
promulgation of regulations for assessing mine operators and other 
proponents of commercial uses on National Forest System lands. This 
review should be completed this summer.
    The OIG has concurred with the Forest Service management decisions.

                           performance goals

    Mr. Skeen. Please report on how well the Department performed in 
terms of its hazardous waste management performance goals in 1996.
    Response. The Department did very well in most of its categories. 
However, the Forest Service did not accomplish all that it set out to 
do because of the furlough, funding shortfalls within the Forest 
Service, and the bad fire season last year. The Department identified 
198 new sites what will need further investigation which is 32 percent 
more than we expected. We also completed 46 under ground storage tank 
removals which was 53 percent more than we projected. Underground 
storage tank cleanups were started at 39 sites which was 11 percent 
above our goal and completed 14 tank cleanups which was 40 percent of 
our goal. We initiated 2 natural resource damage assessments as planned 
and completed 1 as planned. We also conducted 4 pollution prevention 
plans and 3 environmental compliance audits. We conducted 90 
investigations which was only 53 percent of our goal. The Office of 
General Counsel provided support on 175 cases and completed work on 4 
settlements. The caseload was affected by an increase in complexity of 
several of the cases. Accordingly, funds have been reprogrammed to 
assist the General Counsel in providing more support to the agencies.

[Page 511--The official Committee record contains additional material here.]


                    funding for cercla, rcra and ppa

    Mr. Skeen. Please provide tables showing the individual budgets for 
fiscal years 1996 and 1997 for complying with the Comprehensive 
Environmental Response, Compensation, and Liability Act (CERCLA), the 
Resource Conservation and Recovery Act (RCRA), and the Pollution 
Prevention Act (PPA).
    [The information follows:]

                              USDA HAZARDOUS WASTE MANAGEMENT CENTRAL ACCOUNT FUNDS                             
                                            [In thousands of dollars]                                           
----------------------------------------------------------------------------------------------------------------
                                                                               Fiscal year 1996                 
                                                             ---------------------------------------------------
                           Agency                                Actual                                         
                                                                 CERCLA    Actual RCRA   Actual PPA     Total   
----------------------------------------------------------------------------------------------------------------
Commodity Credit Corporation................................       $4,350  ...........  ...........       $4,350
Rural Housing Service.......................................  ...........            2          104          106
Forest Service..............................................        7,593          867           46        8,506
Agricultural Research Service...............................          600          980  ...........        1,580
Farm Service Agency.........................................          200  ...........  ...........          200
Office of the General Counsel...............................          665  ...........  ...........          665
Departmental Administration.................................            3  ...........  ...........            3
Food Safety and Inspection Service..........................          190  ...........          100          290
                                                             ---------------------------------------------------
      Total.................................................       13,601        1,849          250       15,700
----------------------------------------------------------------------------------------------------------------


                              USDA HAZARDOUS WASTE MANAGEMENT CENTRAL ACCOUNT FUNDS                             
                                            [In thousands of dollars]                                           
----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal year 1997 estimate            
                                                             ---------------------------------------------------
                           Agency                                Actual                                         
                                                                 CERCLA    Actual RCRA   Actual PPA     Total   
----------------------------------------------------------------------------------------------------------------
Commodity Credit Corporation................................       $1,000  ...........  ...........       $1,000
Rural Housing Service.......................................           35          200  ...........          235
Forest Service..............................................        5,870        1,255  ...........        7,125
Agricultural Research Service...............................        2,944        1,456  ...........        4,400
Program Administration......................................          275          100  ...........          375
Farm Service Agency.........................................          700          500  ...........        1,200
Office of the General Counsel...............................        1,000  ...........  ...........        1,000
Food Safety and Inspection Service..........................  ...........          365  ...........          365
                                                             ---------------------------------------------------
      Total.................................................       11,824        3,876            0       15,700
----------------------------------------------------------------------------------------------------------------

                       underground storage tanks

    Mr. Skeen. Will the Department meet the 1998 deadline to comply 
with underground storage tank requirements? How many of the storage 
tanks that the Department is responsible for still need to be 
addressed? What are the total and remaining costs to fully comply with 
RCRA?
    Response. As of the end of fiscal year 1996, the Department has 
removed, replaced, renovated, or upgraded approximately 2,442 
underground storage tanks (USTs) out of a total inventory of 3,350 
tanks. This total includes USTs that are regulated under either Federal 
RCRA regulations or under State regulations that may be more stringent 
such as heating oil tanks. Most of the remaining identified tanks are 
in compliance or will be in compliance with the established deadline of 
1998. With the exception of the Farm Service Agency (FSA) Farm Credit 
Programs, we anticipate that USDA agencies will complete the removal, 
replacement, or upgrading of all known USTs to meet the 1998 deadline. 
Total additional costs will be included in future budget requests. 
FSA's current policy is that all unregulated UST's will be removed from 
its inventory properties and any associated contamination cleaned up.
    However, some cleanups involving contaminated soils or ground water 
could extend beyond this date. The FSA will continue to have an UST 
program as long as new properties are obtained through foreclosure 
actions. FSA is vigorously trying to identify environmental problems 
prior to loan enforcement actions to reduce the number of contaminated 
properties coming into Government inventory.
    In FY 1996, the FS removed 15 underground storage tanks, completed 
cleanup of 10 leaking underground storage tanks, and presently has 34 
leaking underground storage tank cleanups in progress. USDA may also 
acquire USTs as part of land transfers from the Department of Defense.

                                funding

    Mr. Skeen. The Department is asking for an additional $9,300,000 to 
comply with the Comprehensive Environmental Response, Compensation, and 
Liability Act and the Resource Conservation and Recovery Act. 
Specifically, where will this money be spent and what actions will be 
taken?
    Response.  The USDA currently estimates that over 4,500 sites under 
our jurisdiction, custody or control will require a response action. 
The current estimate to complete this work is approximately, $3.6 
billion. This includes 1,728 abandoned or inactive mines at a cost of 
$1.9 billion and up to 1,000 sites leased by the Credit Commodity 
Corporation at an estimated cost of $1.5 billion. The Department has 
begun an initiative to increase the number of site cleanups by 
potentially responsible parties in order to accelerate the pace and 
share the financial responsibility for cleanup.

                       compliance with state laws

    Mr. Skeen. The Federal Facilities Compliance Act establishes that 
Federal facilities must comply with State environmental laws and could 
be obligated to pay fines and penalties for non-compliance. Provide a 
list of all USDA facilities that are not in compliance with State laws. 
Include in this list the project location, the deadline for compliance, 
and the total cost of compliance.
    Response. USDA is aware of the following sites which are responding 
to complaints or notices of violation for noncompliance with hazardous 
waste requirements of the Resource Conservation and Recovery Act are 
set forth below. The first site is the Plum Island Animal Disease 
Center in Greenport, New York. The second site is the Stored Product 
Insects Research Development Laboratory in Savannah, Georgia. 
Negotiations are underway between regulators and USDA to determine 
responsibility and the amount of fines and to establish compliance 
schedules. The total estimated cost of compliance for both sites is 
$4.5 million. At a third site, located in Texas, APHIS received a 
notice of solid waste violation concerning the improper use and 
disposal of hazardous waste from livestock dipping operations. USDA is 
currently assessing APHIS's potential responsibility in this matter. In 
FY 1996 FS has had no notices of violation or complaints placed against 
them. There are USDA sites in various stages of response actions under 
CERCLA that are not considered to be out of compliance since response 
procedures are being followed.

                         salaries and benefits

    Mr. Skeen. The Forest Service and other USDA agencies charge this 
account for salaries and benefits of staff hours devoted to hazardous 
waste management activities. Provide a table showing the amount charged 
to this account for these activities for fiscal years 1995 and 1996 and 
estimates for fiscal year 1997.
    Response. The amounts charged for salary and benefits in the Forest 
Service--FS--and the Office of the General Counsel--OGC--include all 
salaries and benefits charged to the central account including program 
management, contract administration, and in-house work for CERCLA 
Discovery. I will provide for the record a table of those amounts.

                              SALARIES AND BENEFITS FOR HAZARDOUS WASTE MANAGEMENT                              
                                             [Dollars in thousands]                                             
----------------------------------------------------------------------------------------------------------------
                                                                           Office of   Agricultural             
                        Fiscal Year                             Forest    the General    Research       Total   
                                                               Service      Counsel       Service               
----------------------------------------------------------------------------------------------------------------
1995.......................................................        2,279          577  ............        2,856
1996.......................................................        2,384          591            91        3,066
1997 (est).................................................        2,781          929             0        3,710
----------------------------------------------------------------------------------------------------------------

                           1996 appropriation

    Mr. Skeen. How much of the fiscal year 1996 appropriation was used 
for salaries and benefits and how much was used for actual hazardous 
waste cleanup activities?
    Response. In fiscal year 1996, $3,066,000 was used for salary and 
benefits in support and completion of hazardous waste management clean-
up. The remainder of $11,626,000 was used for clean-up.
                  amounts spent by other usda agencies
    Mr. Skeen. How much from other USDA agencies will be used for 
hazardous waste management activities in 1998? Please provide a table 
showing the amounts proposed to be spent by each agency.
    Response. USDA is in the process of obtaining revised project 
listings from the agencies for fiscal year 1998 funding from the USDA 
central account and individual agency budgets. The following table 
summarizes the preliminary estimates proposed by each agency for the 
total USDA hazardous waste management program of $32.0 million.

               TOTAL USDA HAZARDOUS WASTE MANAGEMENT FUNDS              
                         [Dollars in thousands]                         
------------------------------------------------------------------------
                                   FY 1998 HWM    FY 1998               
              Agency                 central       agency       Total   
                                     account      funding      funding  
------------------------------------------------------------------------
Commodity Credit Corporation.....       $5,000       $3,400       $8,400
Forest Service...................       14,250        2,730       16,980
Agricultural Research Service....        3,700          895        4,595
Farm Service Agency, Farm Credit                                        
 Programs........................  ...........  ...........  ...........
Food Safety and Inspection                                              
 Service.........................          390  ...........          390
Rural Housing Service............          128           22          150
Office of the General Counsel....        1,082  ...........        1,082
Program Administration...........          450  ...........          450
                                  --------------------------------------
      Total, USDA HWM Funds......       25,000        7,047       32,047
------------------------------------------------------------------------

      foreclosures in the fmha inventory requiring cleanup action
    Mr. Skeen. How many foreclosures in the FmHA inventory require 
cleanup action and what is the cost to comply with the law? Please 
describe for us the steps that are being taken to recover these costs 
and tell us how successful they have been.
    Response. Approximately 200 properties of the 1,500 in inventory 
are currently undergoing some level of cleanup. It is estimated that 
about 80 percent of the current inventory properties have had site 
assessments sufficient to identify the source and level of 
contamination from releases of hazardous substances. FSA has about 
3,000 accounts with foreclosure actions pending. They plan to evaluate 
these properties for the presence of hazardous wastes before finalizing 
a foreclosure action. A certain number of these properties will require 
some level of response action. It is difficult to estimate future 
cleanup costs until after the site evaluations are completed. However, 
a very rough estimate is $8 to $12 million.
    At this time, the FSA has no sites where a borrower has been 
identified as a viable potentially responsible party--PRP--with assets 
available for cost recovery under CERCLA. Since these properties have 
been obtained because of non-payments on the loan, the Agency has not 
pursued cost recovery for the expenses incurred for the cleanup of 
hazardous wastes on an inventory property. In these cases, the PRP 
simply would not be a viable party with respect to providing the 
funding to complete the work. The Agency will pursue CERCLA cost 
recovery if it appears that such an action is practical. In the event a 
cost recovery action is pursued, FSA will follow the requirements 
established by CERCLA and the National Contingency Plan.
    The Asset Conservation, Lender Liability, and Deposit Insurance 
Protection Act of 1996 amended the definition of an owner or operator 
under CERCLA to exclude from liability a lender that did not 
participate in the management of the property prior to foreclosure and, 
after foreclosure, seeks to sell or lease the property within a 
commercially reasonable time. The Act also codified the 1992 EPA lender 
liability rule that had been struck down previously by the D.C. 
Circuit. The new lender liability provisions may apply when USDA 
forecloses on defaulting borrowers under USDA credit programs.

                        sites requiring cleanups

    Mr. Skeen. Please update the list provided to the Committee last 
year of all sites that have been identified for cleanup, the total cost 
involved, and the expected completion dates?
    Response. I will provide a copy of the individual agency project 
listings which comprise the $32.0 million request. We will furnish you 
a revised listing when it becomes available.

[Pages 516 - 546--The official Committee record contains additional material here.]


             Government Performance and Results Act (GPRA)

    Mr. Skeen. GPRA, known as the Results Act, requires each executive 
agency to issue, no later than September 30, 1997, a strategic plan 
covering at least five years. In addition to a mission statement 
grounded in means, the plans are to contain general goals and expected 
to be outcome or results oriented (such as to improve literacy) opposed 
to output or activity oriented (such as to increase the number of 
education grants issued).
    What progress is the agency making in developing its strategic 
plan, including defining its mission and establishing appropriate 
goals?
    Response. Departmental Administration has produced a Draft 
strategic plan which contains a mission statement and performance 
goals. The plan is currently in the Departmental review process.
    Mr. Skeen. Has the agency identified conflicting goals for any of 
its program efforts? If so, what are the performance consequences of 
these conflicting goals and what actions--including seeking legislative 
changes--is the agency taking to address these conflicts?
    Response. We did not identify conflicting goals for any of our 
program efforts. No legislative changes are needed.
    Mr. Skeen. Strategic plans must be based on realistic assessments 
of the resources that will be available to the agency to accomplish its 
goals. As you are developing your strategic plan, how are you taking 
into account projected resources that likely will be available--
especially as we move toward a balanced budget. What assumptions are 
you making? How are you ensuring that your goals are realistic in light 
of expected resources?
    Response. We have set realistic goals based on our streamlining 
plan and historical budgetary trends, and outyear resource projections 
under current policy. The accomplishments we expect to achieve reflect 
the current policy level of resources.
    Mr. Skeen. For Congress, the heart of the Results Act is the 
statutory link between agency plans, budget requests, and the reporting 
of results. Starting with fiscal year 1999, agencies are to develop 
annual performance plans that define performance goals and the measures 
that will be used to assess progress over the coming year. These annual 
goals are to measure agency progress toward meeting strategic goals and 
are to be based on the program activities as set forth in the 
President's budget.
    What progress have you made in establishing clear and direct 
linkages between the general goals in your strategic plan and the goals 
to be contained in your annual performance plans? OMB expressed 
concerned last year that most agencies had not made sufficient progress 
in this critical area.
    More specifically, how are you progressing in linking your 
strategic and annual performance goals to the program activity 
structure contained in the President's budget? Do you anticipate the 
need to change or modify the activity structure to be consistent with 
the agency's goals?
    Response. Departmental Administration is in the process of 
developing an annual performance plan linking annual performance goals 
to our draft strategic plan. The annual plan is being developed using 
input from all our offices. As we work through developing the annual 
plan, we recognize the need to schedule activities very carefully, and 
to accomplish our strategic goals within anticipated resource 
limitations.
    Mr. Skeen. Overall, what progress has your agency made--and what 
challenges is it experiencing--results-oriented performance measures 
that will allow the agency and others to determine the extent to which 
goals are being met?
    Response. We have made progress in developing our strategic plan, 
but we have been challenged in our efforts to develop results-oriented 
performance goals and measures. Developing the performance measures for 
our offices is the most difficult part of the process. However, we 
realize the importance of measuring results and are committed to 
developing outcome-oriented performance measures.
    Mr. Skeen. If applicable, what lessons did the agency learn from 
its participation in the Results Act pilot phase and how are those 
lessons being applied to agency-wide Results Act efforts? What steps is 
the agency taking to build the capacity (information systems, personnel 
skills, etc.) necessary to implement the Results Act?
    Response. The most important lesson we learned from the pilot 
projects was to set measurable performance goals. We are using the 
experience of the pilot agencies to guide our strategic planning 
efforts and to assist us in setting measurable, results-oriented 
performance goals. Measurement of some goals will be dependent upon 
data captured from our information systems, and we are working to 
develop that capacity. Some of our personnel have received training on 
strategic planning and performance measurement. We are expanding that 
training through work groups led by the Office of the Chief Financial 
Officer, which is leading GPRA implementation in the Department.
    Mr. Skeen. The Results Act requires agencies to solicit and 
consider the views of stakeholders as they develop the strategic plans. 
Stakeholders can include state and local governments, interest groups, 
the private sector, and the general-public, among others. Who do you 
consider to be your agency's primary stakeholders and how will you 
incorporate their views into the strategic plans?
    Response. The primary stakeholder for DA is our customers, the 
Department agencies and their employees. Other stakeholders include the 
Congress, OMB, our service providers and vendors, and the American 
public. We have worked to incorporate the views of these stakeholders, 
interviewing managers and employees and OMB. We have also spent some 
time considering the cross-cutting issues in Departmental management 
which directly affect DA through personnel, procurement, property 
management and other centralized services we provide.
    Mr. Skeen. For the Results Act to be successful, agencies with 
similar missions, goals, or strategies will need to ensure that their 
efforts are coordinated. What other federal agencies are you working 
with to ensure that your strategic plans are coordinated? What steps 
have you taken to ensure that your efforts complement and do not 
unnecessarily duplicate other federal efforts?
    Response. We have worked closely with other USDA agencies, 
reviewing and providing comments on their strategic plans. We have also 
consulted with agencies outside of USDA, such as the Department of 
Energy, to ensure coordination of effort and to learn from the lessons 
of other Federal participants.
    Mr. Skeen. The Results Act requires agencies to consult with 
Congress as they develop their strategic plans. Since these plans are 
due in September, now is the time for agencies to begin the required 
consultations. What are your plans for congressional consultation as 
you develop your strategic plan? Which Committees will you consult 
with? How will you resolve differing views?
    Response. All USDA Mission Areas/Agencies have prepared draft 
Strategic Plans which are currently being reviewed by an Under/
Assistant Secretary, the Senior Policy Staff, the Secretary and later 
by OMB. Upon completion of the review, the Department plans to provide 
copies of the Strategic Plan to relevant Congressional Committees. 
Thereafter, we will look forward to meeting with Staff Members to 
discuss our Strategic Plan and to solicit their input and advice on 
refinements to that Plan. We plan to provide copies of the Department 
Strategic Plan to the following Committees:
    House Agriculture Committee.
    House Appropriations Committee.
    House Economic and Educational Opportunities Committee.
    House Government Reform and Oversight Committee.
    House Resources Committee.
    Senate Agriculture, Nutrition, and Forestry Committee.
    Senate Appropriations Committee.
    Senate Energy and Natural Resources Committee.
    Senate Governmental Affairs Committee.
    We will evaluate the input of these groups before the plan is 
considered final.
    Mr. Skeen. In passing the Results Act, Congress sought to 
fundamentally change the focus of federal management and decision 
making to be more results-oriented. Organizations that have 
successfully become results-oriented typically have found that making 
the transformation envisioned by the Results Act requires significant 
changes in what they do and how they do ti.
    What changes in program, policy, organization structure, program 
content, and work process has the agency made to become more results-
oriented?
    Response. We have responded to the requirements of streamlining, 
downsizing and performance measurement in a coordinated manner, by 
targeting our resources more carefully than ever toward achieving our 
goals. We have made organizational structure changes to make our 
processes more efficient and coordinated, and streamlined our policy 
functions. We initiated the Modernization of Administrative Processes--
MAP to improve our business processes. Also we have instituted thinking 
about performance goals and measures into our everyday operations.
    Mr. Skeen. How are managers held accountable for implementing the 
Results Act and improving performance?
    Response. MAP is leading the way in DA in strategic planning and 
developing performance goals and measures. MAP staff are assisting 
other DA staff to develop performance goals and measures, and will 
follow with development of annual performance plans to support their 
strategic goals. Managers will be held responsible for achieving annual 
performance goals as part of their performance elements.
    Mr. Skeen. How is the agency using Results Act performance goals 
and information to drive daily operations?
    Response. We have begun an active program to train our staff on 
GPRA goals and objectives, strategic planning and setting performance 
goals and measures. More importantly, we have used the GPRA 
requirements to create an awareness among our employees of the 
importance of setting goals and measuring performance through daily 
activities.
                             ogc resources

    Mr. Lantham. The budget calls for transferring $1 million to the 
Office of the General Counsel for hazardous waste activities. Is any of 
this money used to pursue other potentially responsible parties (PRPs) 
in these cases? How aggressive is USDA at ensuring any private parties 
involved in these cases are held responsible for their share of clean 
up costs?
    Response. In cases where USDA has identified potentially 
responsible parties--PRPs--who may be liable under CERCLA, the Office 
of the General Counsel--OGC--uses resources to pursue PRPs. OGC, along 
with USDA agencies, has successfully secured agreements with 
responsible parties for the conduct of hazardous substance cleanups 
estimated to be worth in excess of $15 million and continues to 
identify and negotiate with PRPs in other cases. OGC and the technical 
staff from USDA agencies work with PRPs at hazardous waste sites to 
ensure that, where possible, the work is conducted by the PRPs, and 
that the PRPs contribute their appropriate share of the clean up costs.

                        administrative services

    Mr. Latham. In your testimony you cite a cost figure for the cost 
of providing administrative services. ($32 reduced to $17 due to 
reengineering) Can the other agencies at the Department give us the 
same type of cost breakdown for the services they provide?
    Response. Under the leadership of the Modernization of 
Administrative Processes--MAP--Office, Business Process Reengineering 
Studies are being done in several administrative areas. This includes 
doing a cost analysis of the current methods of doing business.

                       Chief Information Officer

                  implementation of clinger-cohen act

    Mr. Skeen. USDA has established an Executive Information Technology 
Investment Review Board--EITIRB which was given responsibilities for 
selecting, monitoring, and evaluating Department-wide technology 
investments. What is the timetable for the Board to define and 
promulgate a technology investment review process that conforms to the 
requirements of the Clinger-Cohen Act?
    Response. The CIO has developed a Capital Planning Investment 
Process Guide, which is currently under review in the Department. The 
processes identified in this guide will be used as a pilot during the 
fiscal year 1999 budget cycle. During the coming year, the guide will 
be refined and modified as necessary.

                   technology investment review board

    Mr. Skeen. What is USDA's timetable for having the Technology 
Investment Review Board complete a full review of all of the 
Department's information technology projects using the investment 
review process?
    Response. The OCIO and EITIRB will review the Department's IT 
projects during the fiscal year 1999 budget cycle. This review will be 
supported by on-going project reviews, conducted by the CIO, of the 
Department's major systems. Reports of these reviews will be provided 
to the EITIRB for consideration.
    Mr. Skeen. Will the Investment Board's review result in a ranked 
listing of Information Technology projects using qualitative and 
quantitative criteria including benefits, costs, risks, and risk-
adjusted return on investment.
    Response. As part of the Fiscal year 1999 budget process, and in 
accordance with OMB direction, the Board will rank major systems 
projects. The ranking will be based on an analysis of benefits, costs 
and return-on-investment.

                  goals of improving use of technology

    Mr. Skeen. Please provide a list of goals established for improving 
USDA's use of technology in enhancing the productivity, efficiency, and 
effectiveness of department operations and service to the public, as 
required under the Clinger-Cohen Act.
    Response. As required by the Clinger-Cohen Act and the Government 
Performance and Results Act--GPRA--the Office of the Chief Information 
Officer recently developed a draft Departmental Strategic Plan for our 
Information Resources Management Program. This plan established three 
broad goals: Invest in Planning: Ensure that decisions regarding the 
selection and deployment of information technology are based on USDA 
business needs; Invest in Infrastructure: Implement Department-wide 
information and technical infrastructures which will improve service 
delivery through more effective information and data management; Invest 
in People: Implement a professional development strategy to ensure that 
USDA's staff possesses the skills necessary to meet the challenges of 
effectively delivering programs and services with information 
technology.
    We have developed specific objectives and strategies for achieving 
each goal, as well as performance measures to ensure that progress can 
be assessed.
                  performance measures for technology

    Mr. Skeen. What performance measures will USDA use to assess the 
actual performance and contribution of technology in supporting its 
programs and meeting its operational goals? How will USDA measure the 
return on investment for its technology projects?
    Response. Agencies are developing performance measures for 
information technology which relate to the performance of their 
missions. These measures will be provided as part of the budget 
process. While they are still under development, we expect the 
performance measures to address such issues as: faster deliver of 
service to customers, reduced information collection requirements, and 
reduced cost of service delivery.
    While agencies have been asked to provide return-on-investment--
ROI--analyses, we have not used a standard methodology for ROI in the 
past. We will develop a standard method for ROI measurement as part of 
our Capital Planning and Investment Control process.

                        revising work processes

    Mr. Skeen. The Clinger-Cohen Act requires agencies to benchmark and 
revise their work processes, where appropriate, before investing in 
technology to support them. What are USDA's plans for carrying out this 
provision of the act?
    Response. The Department, in conjunction with the interagency CIO 
Council, has already begun developing a Capital Planning and Investment 
Control process which addresses sections 5122 and 5123 of the Clinger-
Cohen Act. Business process analysis and reengineering will continue to 
be important factors in our decisions to acquire and deploy information 
technologies. In concert with the requirements of the Clinger-Cohen 
Act, the Office of the Chief Financial Officer has drafted the 
departmental guidance for meeting the GPRA requirements. This guidance 
directs our planning efforts, and will help us as we develop 
performance indicators, measures and benchmarks.
    We have been successful in revising work processes prior to 
investing in technology: Our credit card purchase systems have reduced 
costs associated with small purchases; Business process reengineering 
is a major part of our Service Center Implementation strategy, as we 
follow the requirements of recent legislation and the guidance from 
oversight bodies that we review and revise work processes before 
applying technology; Meat inspection processes have been altered and 
will improve food safety. Computerized reporting is an important aspect 
of the new processes; The Modernization of Administrative Processes--
MAP program has been in the forefront of departmentwide process 
analysis and redesign for some time.

           appointment of permanent chief information officer

    Mr. Skeen. What is USDA's timetable for appointing a permanent 
Chief Information Officer (CIO)? Will the CIO report directly to the 
Department Secretary?
    Response. The Secretary has initiated the paperwork to appoint me 
to this position on a permanent basis. I have been in an Acting 
capacity since August 8, 1996. We expect approval of this action in the 
near future.
    The CIO, under the current organization structure, reports directly 
to the Secretary and my appointment has been submitted on that basis. 
As you are aware, the Civil Rights Action Team has recommended that the 
CIO, the Chief Financial Officer, the Service Center Implementation 
Team, and the Office of Small and Disadvantaged Business Utilization 
reporting lines be changed to report to the Assistant Secretary for 
Administration. The Secretary has not made a final decision on the 
implementation of that recommendation at this time.

                          strengthening staff

    Mr. Skeen. What steps does USDA plan to take to strengthen the 
knowledge, skills and capabilities of its staff to effectively manage 
information resources, deal with emerging technologies, develop needed 
systems and manage systems acquisitions? What is the role of the CIO's 
office in accomplishing this?
    Response. The OCIO is currently addressing the issue of appropriate 
knowledge, skills and abilities to address our responsibilities within 
the OCIO. Once we have addressed this issue, we will begin to look more 
broadly at the requirement for USDA.

                    managing information technology

    Mr. Skeen. Please discuss how the Clinger-Cohen Act of 1996, which 
established the Office of the Chief Information Officer, will change 
how USDA manages information technology. Have your responsibilities 
changed and has the system of accountability within the information 
community changed?
    Response. Under the Clinger-Cohen Act, USDA will continue with its 
evolutionary process of addressing information technology as a 
strategic Departmental resource rather than an agency-specific 
resource. We have: created the Office of the Chief Information Officer 
with responsibilities and authorities consistent with those in the 
Clinger-Cohen Act; strengthened the Departmental focus on IRM issues by 
providing better linkage between information technology and program 
delivery; reconstituted the Information Resources Management Council to 
provide the CIO with technical analysis, implementation and selected 
project management assistance; established an Executive Information 
Technology Investment Review Board, whose members are the most senior 
program manages in the Department, to review, prioritize and approve 
significant IT initiatives; and have begun developing a capital 
planning and investment control process.

                               irm budget

    Mr. Skeen. Please describe how the Department plans to spend $1.2 
billion in 1998 for information resources management by updating the 
table shown on pages 383 through 386 of last year's testimony. Breakout 
expenditures by agency and by major IRM expenditure category, including 
personnel.
    [The information follows:]

[Pages 552 - 578--The official Committee record contains additional material here.]


                       appropriated and ccc funds

    Mr. Skeen. For each expenditure category, show how much of the $1.2 
billion will come from appropriated funds and how much will come from 
CCC funds.
    Response. Attached is an exhibit which breaks out the information 
technology expenditures for 1998 by funding source. The fiscal year 
1998 CCC expenditures total $106 million for the Farm Service Agency. A 
further breakdown of these funds by expenditure category is provided 
below:

[Pages 580 - 581--The official Committee record contains additional material here.]


                       consolidation of irm staff

    Mr. Skeen. With the consolidation of mission areas authorized by 
Congress in 1994, has USDA consolidated IRM staff within and across 
these mission area? If so, where did such consolidations take place and 
what was saved or is expected to be saved from consolidating IRM 
staffs?
    Response. USDA has consolidated IRM staff across agencies and 
mission areas where program functions supported by IRM were combined. 
For example, the Farm Service Agency was created by combining the 
functions of the Agricultural Stabilization and Conservation Service, 
Farmers Home Administration and Federal Crop Insurance Corporation, and 
its IRM staff is a consolidation from these previous agencies. Other 
consolidations were accomplished in the Research, Education and 
Economics, Rural Development, and Marketing and Regulatory Programs 
mission areas. Most IRM functions now are in a ``lead agency'' within 
each mission area.
    USDA has saved the cost of over 900 staff years by consolidating 
and reducing IRM staffs. In Fiscal Year 1994 we had 7,116 IRM-related 
staff. As of Fiscal Year 1996, USDA's total IT staffing was 6,197, or a 
reduction of over 900 staff years.

                      contractor support services

    Mr. Skeen. How much of the $1.2 billion fiscal year 1998 
information technology budget does USDA plan to spend on contractor 
support services? How many contracts were in place and how much was 
spent or is planned to be spent in fiscal years 1996 and 1997?
    Response. USDA plans to spend $253 million of the $1.2 billion 
fiscal year 1998 information technology budget on contractor support 
services.
    USDA spent $182 million in fiscal year 1996 for contractor support 
services and plans to spend an additional $215 million in fiscal year 
1997.
    During fiscal year 1996, there were 360 Information Technology 
support services contracts in place; $253,187,000 was obligated against 
these contracts. During Fiscal Year 1997 (to date) there are 232 
support services contracts, against which $116,634,000 has been 
obligated.
                     irm support service contracts

    Mr. Skeen. Please provide for the record a list of all IRM support 
services contracts for 1997 and 1998. For each contract, provide 
information on its cost, length and purpose.
    Response. The following attachment is a listing of the IRM support 
services contracts for fiscal year 1997. Fiscal Year 1998 information 
is not available at this time.
    [The information follows:]

[Pages 583 - 598--The official Committee record contains additional material here.]


                   Fixed Asset Plan and Justification

    Mr. Skeen. For what projects identified in the fiscal year 1998 
budget did USDA prepare a fixed asset plan and justification, as 
provided for under part 3 of OMB's circular A-11?
    Response. At this time, the Department has not been able to 
complete these reports. In view of its relationship to the current 
development of strategic planning and capital asset review 
methodologies, we plan to incorporate this requirement beginning with 
the fiscal year 1999 budget. We will provide a copy to the committee 
when it is available.
                               ccc funds

    Mr. Skeen. USDA's budget summary shows that the Department plans to 
spend $110 million in CCC funds for information technology in fiscal 
year 1997 and another $106 million in fiscal year 1998. The legislative 
cap for use of CCC funds for fiscal years 1997-2002 is $275 million, 
which means that USDA would have only about $60 million left under the 
CCC cap for the remaining 4 years. Please provide a breakout of how 
USDA plans to spend CCC funds on information technology in fiscal years 
1997 and 1998.
    Response. Although FSA's CCC budget is for $110 million in fiscal 
year 1997 and $106 million in fiscal year 1998, only $109 million and 
$104 million, for fiscal year 1997 and fiscal year 1998 respectively, 
apply against the ADP cap. The other small amount applies against the 
separate Section 11 reimbursable cap. This table shows, by project, how 
FSA has budgeted to obligate CCC funds in fiscal years 1997 and 1998.

       COMMODITY CREDIT CORPORATION INFORMATION TECHNOLOGY BUDGET       
                          [Dollars in millions]                         
------------------------------------------------------------------------
                                            Fiscal year     Fiscal year 
             System/Project                  1997 \1\          1998     
------------------------------------------------------------------------
State and county office automation                                      
 project................................            13.6            10.6
PC's and laptops........................             6.9             4.4
Local area networks.....................             5.0             6.7
Mainframes..............................             4.0             4.0
CORE accounting system..................             3.9             3.4
Integrated management information system             1.8             8.8
Processed commodity inventory management                                
 system.................................             4.8             4.8
County common computing project.........            35.0             7.0
Service center implementation...........            20.5            35.8
Other...................................            13.5            18.7
                                         -------------------------------
      Total.............................           109.0           104.2
------------------------------------------------------------------------
\1\ Of the $109 million budgeted for Fiscal year 1997, OMB has approved 
  the use of $30 million in CCC funds for information technology. FSA is
  working with OMB to obtain approval for the use of additional CCC     
  funds for it.                                                         

    Mr. Skeen. How much in CCC funds did USDA obligate in fiscal year 
1996 under the ADP limitation of $170 million. What were these funds 
used for and what was done with the remaining funds?
    Response. In fiscal year 1996, $148.8 million in CCC funds were 
obligated for information technology purposes. Of that amount, $143.6 
million was under the ADP limitation and the other $5.2 million was 
under the Section 11 limitation on reimbursable agreements. The 
following table is provided to show what the funds were used for.

        COMMODITY CREDIT CORPORATION INFORMATION TECHNOLOGY COSTS       
                          [Dollars in millions]                         
------------------------------------------------------------------------
                                                            Fiscal Year 
                     System/Project                            1996     
------------------------------------------------------------------------
State and county office automation project..............            18.7
PC's and laptops........................................             6.7
Local area networks.....................................             4.0
Mainframes..............................................             2.7
CORE accounting system..................................             3.2
Processed commodity inventory management system.........             3.3
County common computing project.........................             8.0
Service center implementation...........................            90.5
Other...................................................             6.5
                                                         ---------------
      Total.............................................           143.6
------------------------------------------------------------------------

                     ccc report of adp expenditures

    Mr. Skeen. Please provide the latest quarterly CCC report related 
to ADP expenditures.
    [The information follows:]

[Pages 601 - 623--The official Committee record contains additional material here.]


                               moratorium

    Mr. Skeen. USDA's Deputy Secretary invoked a moratorium on new 
information technology activities in November 1996 so that USDA could 
improve its management of information technology. What specifically has 
to occur before USDA lifts the moratorium?
    Response. Deputy Secretary Rominger, who is also chairperson of the 
Executive Information Technology Investment Review Board, announced 
recently that the moratorium will continue until the following 
conditions are met:
    Senior program managers have had an opportunity to review 
thoroughly and understand the information technology architecture:
    A new decision-making process which links IT investments to 
strategic business objectives is in place; and
    USDA agencies have demonstrated a commitment to continue refining 
the architecture.
    Mr. Skeen. When does USDA anticipate being able to lift the 
moratorium?
    Response. The EITIRB is monitoring USDA's progress towards an IT 
architecture and decision-making processes to support sound investment 
decisions and will re-evaluate that progress on a monthly basis.
                     exemptions from the moratorium
    Mr. Skeen. Please provide the categories and amounts of 1997 IRM 
expenditures exempted from the moratorium. Please provide the rationale 
for each exempted category.
    Response. Mr. Chairman, OCIO exempted certain categories of IRM 
acquisitions from the moratorium, but not specific amounts. The 
exemptions are:
    1. Renewals of existing contracts for mission-critical maintenance 
and leases, unless optional enhancements and/or upgrades which cost in 
excess of $250,000 are involved;
    2. Support services contracts for existing mission-critical 
hardware, software and applications, including Year 2000 compliance; 
and
    3. Information technology acquisitions by organizations other than 
USDA agencies but funded by USDA grants.
    The rationale for the first two categories was that on-going, 
maintenance activities for mission-critical programs should not be 
affected by the moratorium. The moratorium should focus on controlling 
purchases of new hardware, new software, new telecommunications 
equipment and services and new development of software until the 
information technology architecture is in place. For the third exempted 
category, these purchases are for use by organizations other than USDA 
agencies, such as for State governments for the Food Stamp Program, and 
will not be part of the USDA information technology architecture.

                          impact of moratorium

    Mr. Skeen. How will the moratorium impact USDA's 1998 plans for 
Information Technology expenditures and how much does USDA now plan to 
spend for the remainder of fiscal year 1997 for information technology 
related items?
    Response. USDA's primary responsibility is the efficient delivery 
of program/mission services. A guiding principal of the moratorium is 
to hold all IT expenditures which are not mission critical. This 
management approach will delay planned fiscal year 1997 expenditures 
while the IT approaches are evaluated. IT initiatives deemed mission-
critical and compliant with USDA's architecture continue to be allowed 
to proceed through a waiver process. When the moratorium is lifted, the 
1998 technology expenditures will proceed as planned, subject to the 
constraints established by the Executive IT Investment Review Board and 
the Departmental Capital Planning Process.
    In the end, the moratorium itself may not affect the level of 
expenditures in either year, only the time table and the specifications 
for what is eventually purchased so that it is within the envisioned 
technical architecture.

                  lan/wan/voice investment suspension

    Mr. Skeen. In January 1997, USDA suspended LAN/WAN/VOICE Project 
installations except for Dedicated Loan Origination and Servicing 
system an emergency sites because USDA did not want to install 
technology in offices which could close. How many field service centers 
will have LAN/WAN/VOICE capability installed by the end of fiscal year 
1997, 1998, and 1999?
    Response. If the suspension of installation of non-Rural 
Development sites were lifted in June 1997, we anticipate that 1,000 
sites could be completed in fiscal year 1997 with the remaining 2,102 
sites completed in fiscal year 1998 under the current plan. These 3,102 
sites include the 2,500 service center offices in the original plan, 
plus other types of offices such as State offices, resource 
conservation and development offices, regional offices, and others.
    The 1998 plan will be reviewed as part of the overall review of 
program delivery needs in the field.

                  lifting the lan/wan/voice suspension

    Mr. Skeen. When does USDA anticipate lifting the LAN/WAN/Voice 
suspension?
    Response. The suspension was put in place because the fiscal year 
1998 President's Budget proposed substantial reductions in personnel 
and number of offices, particularly for the Farm Service Agency. The 
LAN/WAN/Voice procurement and deployment was based on approximately 
2,500 USDA Service Centers. We wanted to avoid installing the new 
system in offices which might be closed or have significantly reduced 
staff. We also wanted any early start-up problems solved before the 
major roll out of the installation began. When these issues have been 
addressed, installations can resume.

                       lan/wan/voice installation

    Mr. Skeen. Please provide the Committee with an estimate of how 
much it will cost, by year, to complete the LAN/WAN/Voice installation.
    Response. During fiscal year 1996, $72.6 million was obligated for 
LAN/WAN/Voice installations. I estimate that $19 million will be 
obligated in fiscal year 1997, assuming the moratorium is lifted, and 
$5.1 million will be obligated in fiscal year 1998 for planned 
installations. Installations will be completed over multiple years.

                       telecommunications savings

    Mr. Skeen. In 1995, the GAO reported that USDA had not acted on 
opportunities to save millions by consolidating and optimizing 
telecommunications and that USDA was not cost-effectively managing its 
$100 million annual telecommunications investment and therefore was 
paying for unnecessary telecommunications services, leased equipment 
not used, and services billed but never provided. What action has USDA 
taken to address GAO's recommendations in these reports, what has been 
saved to date?
    Response. USDA has taken the several actions to specifically 
address the cost reduction issues presented by GAO. I will provide this 
information for the record:

                  usda telecommunications improvements

A. We have completed the USDA optimization/consolidation project--
        aggregation network planning
    Purpose.--To aggregate USDA voice, data and video traffic which is 
located in the same building or region onto a backbone network.
    Objective.--Identify opportunities to optimize/consolidate FTS2000 
telecommunications services for USDA agencies and offices to reduce 
duplication of FTS2000 telecommunications services at locations where 
agencies are co-located in the same building. The project will: 
Provided agencies with site-specific cost reduction recommendations; 
Tracked agencies' decision on recommendations and implementation of 
recommendations; Validated total cost reductions made as a result of 
this project; and Train agency personnel in the USDA Network Analysis 
Process.

            Project accomplishment

    Through February 1997, agencies and/or offices have saved $39,909 
per month by implementing the recommendations made by the Project Team, 
and $23,466 per month by implementing alternatives to the 
recommendations presented by the Project Team. This will result in an 
overall savings to the Department of $2.18 million for the remainder of 
the FTS2000 contract, which is scheduled to end on December 11, 1998. 
If the contract is extended one year, this savings will increase to 
$2.95 million. These figures have been verified by the FTS2000 billing 
data.
    As part of the moratorium declared November 12, 1996, the OCIO has 
revitalized the optimization and concentration activities. The 
following steps were taken:
    1. The USDA Network Analysis model has been refreshed with FTS2000 
data reflected through December, 1996.
    2. A waiver from the OCIO is needed before the ordering of all 
telecommunications circuits, routers, hubs, and equipment for data 
services.
    3. The OCIO has utilized the requests for waivers to aggregate and 
optimize the services at multi-agency sites. Currently Atlanta, Boise, 
Miami, and Washington are being aggregated and optimized. There are 
about twenty other USDA multi-agency sites identified for optimization 
in fiscal year 1997.
B. FTS2000 service aggregation billing disputes (on-going)
    We have filed 42 disputes with AT&T concerning inaccurate service 
aggregation point (SAP) billing for the agencies. Seven of these 
disputes are currently outstanding. However, the resolved disputes (as 
of February 1997) have resulted in one-time credit adjustments of 
$19,920 and a cost reduction of $34,965 per month (or $953,048 over the 
remainder of the FTS2000 contract).
C. Intra-LATA discount tariff agreement (on-going)
    We would like to share with you information on the implementation 
of department-wide discount tariff agreements for intra-LATA voice 
traffic. Use of the FTS2000 contract for this traffic is not mandatory, 
and in most States the local telephone company carries the traffic and 
bills USDA at the normal business rate. We began last fiscal year to 
implement agreements with both FTS2000 AT&T and US West for various 
States. We can now provide you with the resulting savings from those 
agreements and update you on additional agreements which are being 
implemented.
    The actual savings from agreements with both US West and AT&T is 
$123,337.98. This savings is for the months of June through October 
1996 for US West and July through October 1996 for AT&T. During fiscal 
year 1997 these agreements should result in more than $296,000 in 
savings. It should be noted that US West is still adjusting its billing 
system to reflect individual reductions, and agencies should see 
credits in their monthly bills. These agreements were implemented with 
no change in agency services or current billing processes.
    We are continuing to implement agreements with various 
telecommunications companies, as we complete the analysis of their 
discount plans. Currently we are reviewing agreements with Pacific Bell 
for the State of California and Southern New England Telephone Company 
for the State of Connecticut. The estimated annual savings for these 
States is $60,000 for California and $18,500 for Connecticut.
D. GSA shared service locations (on-going)
    In addition to the above actions we have on-going projects which 
are addressing GSA Shared Service locations to verify current usage 
charges and intra-LATA toll charges on GSA local switches to ensure 
cost-effective rates. It is too early to determine actual savings for 
these projects.
    We have also notified GSA of actions they have taken which have 
caused significant cost increases for USDA agencies, such as making 
changes at GSA local switches without ensuring service aggregations 
remain in effect. Currently we are working issues in Boise, Idaho and 
Duluth, Minnesota.
    We are working with GSA Regional Services to improve our management 
of the local telecommunications services provided by GSA. We have 
obtained current detail information from the GSA TOPS database and are 
reviewing this information to reconcile billing and service 
discrepancies. We have supported the Local Service Policy Agreement 
between the Inter-agency management Council and GSA to promote sharing 
of telecommunications resources among government agencies in local 
communities across the country. We have issued internal policy 
requiring USDA agencies to obtain a waiver from the OCIO prior to 
vacating GSA services. Specific locations being addressed include 
Boise, Duluth, Billings and St. Paul.
E. Enhanced geographic network analysis (on-going)
    In anticipation of the migration to a USDA Enterprise Network, we 
have initiated a project to identify, develop and document an enhanced 
network analysis process to be used in the design of the enterprise 
network. This project, which will be completed in August, 1997, has 
already identified opportunities to share telecommunications resources. 
These opportunities include reducing the number of service access 
requirements within a geographical region or operational area, and 
sharing excess or unused service capacity.

         shared benefits of information technology investments

    Mr. Skeen. What is USDA doing under Clinger-Cohen and other federal 
requirements to identify information technology investments which would 
result in shared benefits or reduced costs with other government 
agencies, such as sharing telecommunications networks and data systems?
    Response. In February 1995, A Memorandum of Agreement--MOA--was 
signed by the Office of Information Resources Management--OIRM--the 
predecessor agency of the Office of the Chief Information Officer, and 
its counterpart in the Department of the Interior to facilitate the 
voluntary sharing of DOINet's telecommunications resources where 
appropriate to improve service and reduce costs. Under this MOA, USDA 
Forest Service participates in DOI's Alaska Regional Telecommunications 
Network--ARTNet--which is the first collaborative project in Alaska to 
address Federal agency requirements to develop a high speed data 
network infrastructure which connects the Federal business centers of 
Anchorage, Juneau, and Fairbanks with the lower 48 States.
    USDA participates on, or leads, various cross-cutting information 
sharing initiatives across the Federal Government. Examples of these 
include the International Trade Data System--ITDS), the Benefit Systems 
Review Team--BSRT and the Federal Geographic Data Committee--FGDC.
    Several USDA agencies, including the Agricultural Marketing 
Service, the Economic Research Service, the Food Safety and Inspection 
Service, the Farm Service Agency and the Animal and Plant Health 
Inspection Service are participating in the ITDS project.
    The Food and Consumer Service--FCS has been involved with 
electronic benefits transfer for several years and conducted some of 
the first pilot initiatives for the federal government. The FCS 
participated on the BSRT.
    The Natural Resources and Environment mission area and other USDA 
agencies have participated on, and led, several subgroups of the 
Federal Geographic Data Committee. The Forest Service--FS and the 
Natural Resources Conservation Service have participated in defining 
metadata for government-wide applications. FS has several initiatives 
underway with the Bureau of Land Management and state land management 
organizations.

                 current market technologies and costs

    Mr. Skeen. USDA has many long term procurement contracts in place, 
including those for the Forest Service and APHIS information technology 
modernization efforts. Yet, technology is improving while prices fall. 
What is USDA's policy for ensuring that the information technology 
acquired on those contracts and their associated prices reflect current 
market technologies and costs?
    Response. USDA procurement policies require that all new USDA 
contracts contain language which requires the vendor to periodically 
review and update the included items to reflect current market 
technologies and costs. The Forest Service contract with IBM is 
designed to stay current with both the state of the art technology and 
with current market prices. These objectives are achieved through 
contract clauses which encourage updating the contract technology as 
new technology is developed and through a requirement that contract 
prices not exceed GSA schedule prices for like items. So far, the IBM 
contract has been amended several times to add new servers and 
workstations and to remove items which are obsolete or whose price/
performance is no longer advantageous in comparison to current 
technology. Additionally, IBM has reduced contract prices twice to 
reflect changes in market rates for technology. Finally, we recently 
implemented a major update to the software on all IBM systems Forest 
Service-wide.
    Similarly, the APHIS ISAP contract contains a clause in section H-
Special Contract Requirements which promotes and facilitates obtaining 
current market technologies and costs. Clause H-20 Best Customer Status 
reads as follows:
    The contractor shall ensure that APHIS is assured of ``Best 
Customer Status'' throughout the contract period by: (a) providing 
technology which is current and standards driven, (b) employing a 
pricing plan to obtain competitive marketplace pricing throughout the 
contract life, and (c) employing a Total Quality Management Plan which 
will meet 100 percent of the APHIS expectations created through the 
ISAP contract.
                           year 2000 problem

    Mr. Skeen. As the millennium approaches both the public and private 
sectors are modifying computer programs to accommodate the year 2000. 
Please submit for the record and discuss the highlights of the USDA 
plan to address this issue.
    Response. USDA is approaching Year 2000 through centralized 
planning, management, and oversight at the Departmental level with 
responsibility for execution of Year 2000 strategies occurring at the 
agency level. The USDA Year 2000 Strategic Plan establishes goals and 
objectives, identifies areas of concern, and defines the processes, 
including milestones, which must be completed to ensure uninterrupted 
service delivery at the start of the new millennium. The USDA Year 2000 
Project Manager from the Office of the Chief Information Officer--
OCIO--is working with the USDA Year 2000 Working Group, established in 
1996 and consisting of agency coordinators, which is currently focusing 
on information exchange, sharing of resources and lessons learned, 
establishment of a systems inventory, and monitoring of agency 
conversion plans.
    Through active participation on the CIO Council Subcommittee on 
Year 2000, USDA adopted the Committee's 5-phased approach to solving 
Year 2000 problems. The five phases are awareness, assessment, 
renovation, validation, and implementation and are reflected in the 
strategic plan. A majority of USDA agencies are currently in the 
assessment phase, with others in various stages of renovation, 
validation, and implementation.
    Each agency within the Department is responsible for identifying 
all user interfaces and ensuring that proper data exchanges occur. The 
National Finance Center--NFC in New Orleans has a major role in this 
area because USDA agencies and many external Federal agencies depend on 
NFC for services. In early 1995, NFC recognized its enormous 
responsibilities with regard to Year 2000 and established a team to 
review and assess its administrative and financial systems. These 
systems provide payroll, personnel, financial, property, and 
procurement services to USDA agencies and a significant number of other 
Federal agencies. NFC has completed its applications systems inventory 
and has estimated conversion costs exceeding $11 million. Through its 
re-engineering and modernization program, NFC has also implemented 
standards which ensure all new applications are properly coded for Year 
2000 compliance.
    The National Information Technology Center--NITC--in Kansas City 
provides the computing environment which approximately 50 percent of 
the USDA agencies use for running mission-specific systems. The range 
and mix of software products in NITC's inventory create distinct 
challenges which NITC has recognized and has begun to address. NITC is 
inventorying hardware and software for all platforms including the 
mainframe, the local area network--LAN--personal computers--PCs, and 
UNIX-based, and is reviewing commercial-off-shelf software purchases. 
NITC is working with USDA agencies in implementing upgrades and 
modifications which are Year 2000 compliant.
    The Food and Consumer Service--FCS--which administers 15 food 
assistance programs for USDA, has included Year 2000 compliance 
requirements in its procurement requests for systems design and 
programming efforts since 1988. With its forward thinking, FCS forced 
industry to address Year 2000 issues early and positioned itself to 
ensure continued program delivery. FCS has completed an inventory of 
applications systems with estimated costs of $13 million for 
conversion. FCS has performed risk analyses and developed contingency 
plans.
    These examples of agency efforts are indicative of the progress 
USDA has made in reaching its goal: ``That all USDA mission critical 
programs continue to operate accurately and without interruption after 
December 31, 1999.'' Through continued assessments, agencies have 
identified other priority areas requiring prompt attention for meeting 
Year 2000 functionality. These areas include telecommunications, 
facilities management, security, testing, and testing facilities.
    The USDA Year 2000 Plan also contains specific timetables and 
milestones aligned with government-wide activities and goals. USDA has 
adopted the CIO Council Subcommittee on Year 2000's 5-phase resolution 
process. Each phase has specific milestones and deliverables. The 
Department submitted to the Office of Management and Budget milestones 
based on this 5-phase approach. The timetable and milestones for USDA 
are as follows:

----------------------------------------------------------------------------------------------------------------
                  Phase                                            Measure                            Completion
----------------------------------------------------------------------------------------------------------------
Awareness...............................  Agency Strategy Approved by CIO..........................      11/1996
Assessment..............................  Inventory and Scope Completed............................       4/1997
                                          Renovation Schedule and Plans for Testing................       6/1997
Renovation..............................  Coding Completed.........................................       9/1998
Validation, Testing and Implementation..  Contingency Plans........................................       1/1999
                                          Management Sign-off......................................       9/1999
                                          Final Testing............................................       9/1999
                                          Implementation...........................................      10/1999
----------------------------------------------------------------------------------------------------------------

    We are actively working with OMB in providing quarterly reports 
indicating the status of our mission-critical systems. These reports 
will provide the overall USDA position for Year 2000 compliance. We are 
also updating our Year 2000 plans based on the GAO document ``Year 2000 
Computing Crisis: An Assessment Guide.''

                          impact of year 2000

    Mr. Skeen. What is your assessment of the impact of year 2000 on 
USDA programs? Which agencies and programs will be impacted the 
greatest?
    Response. Year 2000 will have a significant impact on USDA program 
delivery. The use of information technology at USDA is complex. USDA's 
National Information Technology Center--NITC--in Kansas City and the 
National Finance Center--NFC--in New Orleans are responsible for 
storage and execution of many of USDA's major program delivery systems. 
These organizations are actively assessing their business and the risk 
associated with Year 2000 to ensure mission critical programs continue 
to operate accurately and without interruption after December 31, 1999. 
USDA agencies, who ultimately have the responsibility for delivery of 
programs, are identifying areas of risk as they continue to assess 
their systems. The Food and Consumer Service which has the 
responsibility for the Food Stamp Program, started modifications to 
their system in 1988. The NFC, responsible for payroll and personnel 
for USDA and other federal agencies, started working on Year 2000 
activity in 1995. USDA understands the challenge and is moving forward 
to ensure Year 2000 compliance.
    Year 2000's impact will be the greatest on those programs and 
agencies which exchange data with the public and with other Federal and 
State organizations.

                 federal costs induced by the year 2000

    Mr. Skeen. Estimates of Federal costs induced by the year 2000 
problem range between $2.3 billion and $30 billion. Please provide for 
the record a table detailing, by year, the USDA costs and the specific 
activities to be completed in each year.
    Response. Mr. Chairman, I will provide for the record the 
information requested.
    [The information follows:]

    Departmental estimates for Year 2000 conversion costs are:
        Fiscal years                                 Millions of dollars
1997..............................................................   $22
1998..............................................................    37
1999..............................................................    28
2000..............................................................     6
                        -----------------------------------------------------------------
                        ________________________________________________
      Total.......................................................    93

    Components of the cost estimate include the following: re-
engineering efforts; Year 2000 software tools; personal computers 
(tested not compliant); application conversion; hardware upgrades; 
third-party software upgrades; contract support to assist conversion; 
and in-house staff.
    These costs do not include the 50 percent match to the states which 
is provided by the Food and Consumer Service for changes to state 
computer systems. The amount of state assistance devoted to Year 2000 
is not yet known.
                    cost of year 2000 modifications
    Mr. Skeen. How are you financing the cost of making the year 2000 
modifications?
    Response. The USDA agencies will finance these costs from their own 
funds. There is no increase in the OCIO budget for the Year 2000 
project.

             impact of focusing on year 2000 modifications

    Mr. Skeen. What will be the impact of focusing on year 2000 
modifications in terms of other information systems priorities?
    Response. Each agency administrator is responsible for 
understanding the mission and core business of his or her organization 
and the components which are essential in becoming Year 2000 compliant. 
Each agency will perform business impact and risk analysis and provide 
a strategic approach for this challenge to the Year 2000 Program 
Office. As a service organization, USDA must ensure that program 
delivery continues in the most efficient and effective manner.
    Because of the immovable deadline for Year 2000 modifications, 
those modifications may take priority over other information systems 
investments. Our goal at USDA is to continue to deliver programs 
efficiently and effectively; Year 2000 modifications and other 
information systems program all contribute to this goal.

          positions in the chief information officer's office

    Mr. Skeen. You budget consists of a transfer of $4,498,000 from 
Departmental Administration and an additional $330,000 of which 
$275,000 is for three staff years. Are the three positions new? The 
Status of Program material submitted last year indicated that the 
Office of Information Resources Management already provided 
``Department-wide policy guidance, leadership, coordination, and 
direction . . .'' Why are these additional positions required when your 
functions do not appear to have changed substantively?
    Response. The three staff years are for the Chief Information 
Officer and a small immediate staff. The staffing increase was 
reflected in fiscal year 1997 and funded within available resources at 
the expense of other IRM activities, particularly new requirements 
imposed by the Clinger-Cohen Act of 1996. Providing additional funding 
for this staff will free up resources for other such critical 
activities as developing a Capital Planning Process, conducting 
independent validation and verification studies of information 
technology projects, continuing the refinement and implementation of 
the USDA Information Technology Architecture, and coordination of the 
Year 2000 problem.
                         vision for automation

    Mr. Skeen. Please discuss your vision for automating the Department 
of Agriculture. How much will it cost? When will it be in place?
    Response. USDA, like other public and private organizations, is 
faced with business requirements to provide state-of-the-art customer 
service in the Information Age. The mission of USDA's information 
resources management program is ``to strategically acquire and use 
information technology resources to improve the quality, timeliness and 
cost-effectiveness of USDA service delivery to its customers.'' USDA 
has approached this challenge by taking a broad view of its core 
business processes and the associated data, technical, and 
telecommunications framework required to carry them out. USDA has 
recently developed the initial version of the USDA Information Systems 
Technology Architecture--ISTA which addresses this mission. An ISTA 
Implementation and Management Plan is under development. USDA is making 
every effort to continually improve the management of its IT resources 
to respond to a changing business climate.
    USDA's current IT budget is approximately $1.2 billion annually. 
USDA continues to identify opportunities for savings and redirect these 
monies to high priority projects. USDA has recently established the 
Executive Information Technology Investment Review Board to provide 
cross-mission area review of high dollar and critical mission projects. 
USDA is also instituting a Capital Planning and Investment Control 
program to ensure sound IT investments.
    USDA has a broad base of IT resources in use, and most employees 
have computers on their desks or have access to one. Changing customer 
expectations and technology refreshment in an information-intense 
society demands that USDA continuously review and upgrade its IT 
infrastructure. The challenge of applying IT to delivery critical 
mission needs is an ongoing responsibility of the Department.

               staff years for information system support

    Mr. Skeen. How many staff years are devoted to information system 
support in the Department. How has this changed over the past ten years 
and how will it change over the next 5 years.
    Response. We estimate that USDA will have 6,368 staff years devoted 
to information technology and information system support in fiscal year 
1997. The level in fiscal year 1987 was 5,342, and information system 
support staffing peaked at 7,112 in fiscal year 1992. There was a drop 
to about 5,846 in 1995, due to the effects of implementing Secretary 
Espy's reorganization plan for downsizing and streamlining the 
Department. The number of staff years has since grown to approximately 
6,368 this fiscal year as personnel resources are shifted to support 
mission-critical programs through the use of information technology. We 
expect staffing levels to remain fairly constant over the next five 
years.
               executive controls on computer acquisition

    Mr. Skeen. Please give the committee an overview of the executive 
controls on computer acquisition. Are there opportunities to streamline 
computer acquisitions? If so, what are they.
    Response. USDA has a Technical Approval Process in place which 
requires large computer acquisitions--life cycle costs over $25 
million, $20 million or $15 million, depending upon an agency's IT 
budget, be reviewed and approved by a group of USDA oversight 
organizations before the acquisition is initiated. The oversight 
representatives typically include staff from the OCIO, Office of the 
General Counsel, USDA procurement policy, small business 
representatives and Office of Budget and Program Analysis.
    For computer acquisitions less than those requiring Departmental 
approval, each USDA agency is required to have an internal control 
process on computer acquisitions. These processes often include review 
of acquisitions by an agency's IRM Review Board, which includes IRM 
managers in the agency.
    In response to the OCIO's requirement, the three Service Center 
Implementation Team--SCIT--agencies have instituted a coordination 
review process where the three Senior IRM Officials must approve 
computer acquisitions under $25 million in life cycle costs made by any 
of the SCIT agencies to avoid duplication and ensure coordination of 
computer acquisitions.
    The OCIO staff has completed Version 1 of the Information Systems 
Technology Architecture--ISTA. This architecture was crafted by inter-
departmental teams and provides a blueprint, or a framework, for 
building the basic foundations and facilities needed to support day-to-
day activities, and will guide the acquisition and use of technology to 
support mission delivery. The foundation blocks for this architecture 
are contained in strategic plans which establish program and 
administrative priorities. Several concurrent activities are in 
progress. We have: Established an Executive Information Technology 
Investment Review Board--EITIRB, whose members are the most senior 
program managers in the Department, to review, prioritize and approve 
department-wide IT initiatives; initiated a capital planning and 
investment control process to help us plan and evaluate IT acquisitions 
and deployments; suspended the installation of telephone and data 
communications systems at the field service agencies, except for those 
needed to support the Dedicated Loan Origination and Servicing system--
DLOS--initiative of our Rural Development mission area, until the 
fiscal year 1998 budget issues are clarified. The final budget will 
dictate how many field offices and service centers will be supported. 
We do not want to use taxpayer money to install equipment at locations 
which may move or be closed; strengthened the technical oversight of 
the IT component of the Service Center Implementation initiative by 
relocating oversight to the OCIO; initiated an aggressive independent 
verification and validation process to use outside expertise to review 
key IT plans, projects and initiatives, and provide us with advice on 
how to better strengthen them.
    USDA has implemented ways to streamline the acquisition of IT 
products and services. Examples include: two major Departmentwide 
contracts are available for use by all USDA agencies and contain 
products and services which meet the baseline technical standards which 
are outlined in ISTA; FSA recently awarded a multiple award support 
services contract to six vendors. This contract is for use primarily by 
FSA and NRCS, but one third of the value is reserved for other federal 
agencies. The multiple award streamlines the acquisition process and 
continues to encourage competitive pricing for the government by 
allowing all six vendors to bid on task orders.

                         automation priorities

    Mr. Skeen. Please update the Committee on your top automation 
priorities, how much they will cost, and when they will be implemented.
    Response. I will provide a brief description of our top automation 
priorities for the record. For most systems, maintenance costs will 
continue throughout the project life.

                       usda automation priorities

    The Integrated Systems Acquisitions Project will establish a 
strategic framework for implementing the next generation of information 
systems in the Animal and Plant Health Inspection Service--APHIS. In 
the fall of 1995, a contract was awarded. APHIS has begun a five-year 
phased transition to the new environment of software, hardware, 
telecommunications and support services. Before starting formal 
implementation, APHIS is sponsoring transition activities to prepare 
for the new architecture. Total obligations from fiscal year 1996 to 
fiscal year 2002, are estimated to be $52.3 million.
    Through hardware and software acquisition, Project 615 will refresh 
the Forest Service's--FS--office automation technology and provide that 
agency also with geographical information systems technology. This will 
give FS the infrastructure to change its management of forests and 
rangelands from a single timber focus to a multiple ecosystem focus. 
Through 615's series of contracts, FS will establish an open systems 
environment. Since awarding contract for the GIS, the agency in 1996 
conducted a pilot. Fiscal year 1997 begins the full application phase, 
which by the end of fiscal year 2000 will bring all FS employees on 
line with the new technologies. Total obligations by then should reach 
an estimated $108.3 million.
    In the Food and Consumer Service--FCS, the Food Stamp Program 
Integrated Information System--FSPIIS--is a comprehensive, integrated, 
on-line, menu-driven information system to support administration of 
the Food Stamp Program. Through GSA's Federal Information System 
Support Program and the Small Business Administration's 8(a) Program, 
the FCS is acquiring software development and maintenance for the 
system. FSPIIS will have extensions and interfaces to support things 
like Electronic Data Interchange. In 1994, Business Process 
Reengineering--BPR--had prepared this. From BPR came also an initiative 
to consolidate food stamp forms in fiscal year 1997, which should 
dramatically reduce State and project area reporting burdens, in terms 
of both the number of reporting points--sites--and events. Through the 
year 2002, annual costs of FSPIIS should run near to $2.1 million, for 
a total obligation of $14.8 million.
    Under the Service Center Implementation Team, another top USDA 
initiative will consolidate county offices into local USDA service 
centers equipped with communications and computer-related technology to 
save costs, improve program delivery, and provide one-stop service to 
customers. This is a joint effort by the Farm Service Agency, Natural 
Resources Conservation Service and Rural Development. The 
implementation will support integrated voice and data communications 
infrastructures, reengineered business processes, data sharing within 
current agency systems, and a common computing environment to serve all 
agencies operating in any given service center. The communications 
systems currently being installed will cost approximately $100 million. 
Cost of the fully integrated common computing environment solution 
cannot be determined until the appropriate business process 
reengineering is completed and the technical alternatives to meet these 
business requirements are identified and tested.
    The Food Safety and Inspection Service's Field Automation and 
Information Management initiative, is a project to automate improved 
business processed for the agency and to provide an agency-wide 
information management and sharing network. Total obligations from 
fiscal year 1996 through fiscal year 2002 should equal about $71.5 
million.
    In amending the Housing Act of 1949, Congress in 1988 mandated that 
the then Farmers Home Administration escrow taxes and insurance. To 
comply, the Rural Housing Service has purchased a commercial mortgage 
loan origination and servicing system known as the Dedicated Loan 
Origination and Servicing System. It has a total lifetime obligation 
from fiscal year 1996 to fiscal year 2002 estimated at $54.9 million, 
almost half of which was incurred in fiscal year 1996 and fiscal year 
1997.
    The Foundation Financial Information System--FFIS--lies at the 
heart of the Department's reinvention of financial information systems. 
It will embody uniform USDA financial information standards and will 
interface with all feeder systems. Development of interfaces began in 
fiscal year 1996. Last year, the Office of the Chief Financial 
Officer--OCFO--began to develop interfaces between FFIS and 
Departmental administration payment systems. By October 1997, OCFO will 
have commenced live production in FFIS in several agencies. For fiscal 
years 1997 and 1998, costs were estimated at $7.1 million and $4.1 
million, respectively.

                 business process improvement projects

    Mr. Skeen. Please provide the Committee with an updated profile of 
the business process improvement pilot projects on page 337 of last 
year's hearing record and any conclusions you have reached from them.
    [The information follows:]

            status of business process improveemnt projects

    Geographical information systems--GIS.--Much progress has been made 
in incorporation GIS technologies into USDA business activities. GIS 
technologies continue to be used and improved in the pilot test 
counties. Work studies have been done which verify that substantial 
labor cost savings using GIS technologies in field offices. Current 
activities are focusing on incorporating commercial off-the-shelf GIS 
software for meeting field business applications needs. A major 
Business Process Reengineering effort is underway with the USDA Service 
Center Agencies to implement geoprocessing technologies into service 
center business applications.
    Soils.--The prototype effort to evaluate providing Internet access 
to soils data for the Planetor application is complete. The effort was 
successful and is being used to provide county level data for Planetor 
users. The National Resources Conservation Service has implemented the 
National Soil Information System--NASIS--and is in the process of 
adding the capability to access NASIS via Internet. The focus of the 
National Cooperative Soil Survey is shifting from producing static 
printed soil survey reports to providing a dynamic resource of soils 
information for a wide range of needs. NASIS is the core component of 
this vision and is designed to manage and maintain solid data from 
collection to dissemination.
    Plants.--The PLANTS prototype is completed and PLANTS is 
implemented and in full production. This application provides plant 
information to government and public users via an easy to use Internet 
interface. This is an enormously popular application. It averages over 
250,000 accesses per month and interest is increasing each month. 
PLANTS can be accessed through the Internet at http://plants.usda.gov. 
PLANTS is a database which provides a single source of general 
information about the plant kingdom to researchers and other people 
interested in plants. Standardized plant information, such as common 
names, greatly assist the free exchange of accurate plant-related 
information. The following agencies are cooperative partners in the 
PLANTS database effort: Bureau of Land Management, Fish and Wildlife 
Service, National Wetland Inventory, Geological Survey, National Marine 
Fisheries Service, National Oceanic Data Center, Environmental 
Protection Agency, Smithsonian Institution, National Museum of Natural 
History, and the Interagency Taxonomic Information System.
    Common client.--The Common Client project was renamed Customer 
Information Profile--CIP--in 1995.
    As of mid 1996, CIP was able to transmit updated customer 
information to the FSA S/36 system. Contract work is progressing to 
also update the NRCS FOCS system. No activity is underway to update 
other agency county systems. The CIP pilot system is now active is 
Osage County, Kansas.
    The present pilot CIP application contains information only for a 
single office. This approach ignores customers who do business with 
different offices. A National CIP is planned to combine Customer name 
and address information using national systems originally built for ex-
ASCS and ex-FmHA applications. Work has started to relate similar data 
elements between the County CIP application and the St. Louis-developed 
Guaranteed Loans Application System.

                   service center implementation team

    Mr. Skeen. Last year the Department said that the Service Center 
Implementation Team was working with a Vermont group to develop a GIS 
pilot proposal. What is the status of the proposal and how much has 
been expended up to date?
    Response. During the fall of 1995, the InfoShare Program staff 
identified a potentially beneficial pilot opportunity involving the 
Vermont Center for Geographic Information. However, no funding for this 
project has ever been transferred from USDA.
    The Service Center Implementation Team has a major Business Process 
Reengineering Effort underway to incorporate geoprocessing technologies 
into Service Center business applications. Once the BPR process has 
been completed, pilot sites will be identified to test the reengineered 
business process. We may work with the Vermont group during the testing 
process.
             government performance and results act (gpra)

    Mr. Skeen. What progress is the agency making in developing its 
strategic plan, including defining its mission and establishing 
appropriate goals?
    Response. In accordance with the requirements of the Government 
Performance and Results Act--GPRA, and Department guidance for 
strategic plan development, the Office of Chief Information Officer--
OCIO--recently published a GPRA Strategic Plan for USDA's Information 
Resources Management--IRM--Program. The goals, objectives, and 
strategies included within the plan reflect a Departmentwide IRM 
perspective that has been achieved through a series of discussions, 
planning sessions, and wide review. The plan identifies those issues 
that the Department's IRM community must address over the next five 
years in order to be able to support USDA programs effectively and 
efficiently.
    The OCIO was only recently established within USDA. Organizational 
and budgetary requirements for the office have yet to be fully defined. 
The decision to develop a Departmentwide IRM Strategic Plan in lieu of 
a specific OCIO strategic plan was deliberate and made in consideration 
of new legislative, oversight, and programmatic changes that affect the 
Department's entire IRM Program. The USDA IRM Strategic plan addresses 
the broad number of organizational, procedural, and policy issues 
facing all federal IRM programs and positions the Department for 
transition to an IRM Program that is both more efficient and more 
effective.
    Mr. Skeen. Has the agency identified conflicting goals for any of 
its program efforts? What are the performance consequences of 
conflicting goals and what actions are being taken to address these 
conflicts?
    Response. While the Department acknowledges the need for individual 
agency autonomy, it also recognizes that much can and must be done by 
working collaboratively to meet common goals. The USDA IRM Strategic 
Plan was developed in consultation with senior IRM officials from a 
number of agencies and reflects our effort to collectively address the 
critical issues facing our IRM Program. It calls for new organizational 
structures and Departmentwide initiatives that will require agencies to 
work together to share diminishing resources. This collaboration must 
be balanced against agency demands to meet respective programmatic 
responsibilities and the delivery of critical services.
    Mr. Skeen. How are you taking into account projected resources that 
likely will be available--especially as we move to a balanced budget? 
What assumptions are you making? How are you ensuring your goals are 
realistic in light of expected resources?
    Response. The Department recognizes that we must continue to 
deliver quality services that are important to the American public with 
fewer resources. Reduced budgets for information systems and support 
personnel will require significant changes in our IRM Program. The USDA 
IRM Strategic Plan calls for procedural and organizational changes that 
will lead to closer scrutiny of the way information systems are 
selected and deployed.
    Specific measures called for in the plan, such as, the development 
of a standards-based architecture, executive management involvement in 
system selection, establishment of a Capital Planning and investment 
Control Program, and others, will establish a new environment that will 
allow the Department to leverage its resources more effectively and 
efficiently than previously.
    Mr. Skeen. What progress have you made in establishing clear and 
direct linkages between the general goals in your strategic plan and 
the goals contained in your annual performance plans?
    Response. The Department does not intend to develop Departmentwide 
annual performance plans specifically for its IRM Program. Rather, each 
agency will be required to address the objectives of the USDA IRM 
Strategic Plan in its respective annual performance plan. The Office of 
the Chief Information Officer will carefully scrutinize these plans to 
ensure that initiatives planned by agencies remain compatible and 
supportive of overall IRM Program goals.
    Mr. Skeen. What progress has been made defining results-oriented 
performance measures that will allow the agency and others to determine 
the extent to which goals are being met?
    Response. The USDA IRM Strategic Plan identifies three broad goals, 
and specific objectives for each. For each objective, performance 
measures have been developed that will serve to gauge the effectiveness 
of the objective and the extent to which each has been achieved. These 
performance measures will also serve as guides for individual agency 
annual performance plans as they address IRM-related initiatives.
    Mr. Skeen. What lessons did the agency learn from its participation 
in the Results Act pilot phase, and how are those lessons being applied 
to agency-wide efforts? What steps is the agency taking to build the 
capacity necessary to implement the Results Act?
    Response. The collaborative process is productive, but we need to 
build an institutionalized method for sustaining the GPRA process. 
Developing effective performance measures will require increased 
effort.
    Mr. Skeen. Who do you consider to be your primary stakeholders and 
how will you incorporate their views into the strategic plans?
    Response. The development of a Departmentwide IRM Strategic Plan 
posed several challenges in this regard. The Department recognizes that 
its overall goals is to provide services to a national and 
international community. The multitude of processes involved in 
providing these services have many stakeholders, including, but not 
limited to other Federal agencies, Congress, State Governments, 
interest groups, community-based organizations, and oversight 
authorities.
    It was accepted, during the development of a Departmentwide IRM 
Strategic Plan, that agency representatives who participated would 
reflect the concerns of their respective stakeholders. In particular, 
however, this plan assumes that for a Departmental plan for IRM, the 
major stakeholders would include individual agency IRM programs, 
Congress, and oversight agencies. In consideration of these groups, 
legislation and guidance provided by Congress and oversight agencies 
were carefully considered. Facilitated workshops that included agency 
IRM personnel were held to gather their concerns and ideas.
    Mr. Skeen. What other federal agencies are you working with to 
ensure that your strategic plans are coordinated?
    Response. We are not working with other Federal agencies at this 
time.
    Mr. Skeen. What are your plans for congressional consultation as 
you develop your strategic plan? What Committees will you consult with?
    Response. All USDA Agencies have prepared draft Strategic Plans 
which are currently being reviewed by the Senior Policy Staff, the 
Secretary, and later by OMB. Upon completion of the review, the 
Department plans to provide copies of the Strategic Plans for 
individual Mission Areas/Agencies to relevant Congressional Committees. 
Thereafter, we will look forward to meeting with Members or Staff to 
discuss our Strategic Plan and to solicit their input and advice on 
refinements to that Plan. Copies of the Department's Strategic Plan 
will be provided to the following Committees:
    House Agriculture Committee.
    House Appropriation Committee.
    House Economic and Educational Opportunities Committee.
    House Government Reform and Oversight Committee.
    Hosue Resources Committee.
    Senate Agriculture, Nutrition, and Forestry Committee.
    Senate Appropriations Committee.
    Senate Energy and Natural Resources Committee.
    Senate Governmental Affairs Committee.
    Mr. Skeen. What changes in program policy, organization structure, 
program content, and work process has the agency made to become more 
results-oriented?
    Response. USDA is making significant and fundamental changes in the 
way it selects and manages its information systems. New organization 
structures including the establishment of an Office of Chief 
Information Officer and the formation of an Executive Information 
Resources Investment Review Board will help to develop a more 
corporate-wide and collaborative approach to our IRM Program. The 
formulation of a Capital Planning and Investment Control Program will 
ensure a more rigorous scrutiny of IRM initiatives and the expenditure 
of limited resources. Increased emphasis and procedures that will link 
information systems to program goals will lead to better service and 
greater assurance that information systems are effectively designed. 
And lastly, on an ongoing basis, USDA is examining its IRM processes to 
identify specific work activities that can be made more efficient, with 
an emphasis on customer identified requirements.
    Mr. Skeen. How are managers held accountable for implementing the 
Results Act and improving performance?
    Response. Agency Information Technology budgets will be reviewed to 
assure that they remain consistent with the plan.
    Mr. Skeen. How is the agency using the Results Act performance 
goals and information to drive daily operations?
    Response. It is the Department's intention to look to established 
performance measures to provide the metrics by which information 
systems are evaluated, funded and maintained. Performance measures 
linked to specific program objectives will ensure that information 
resources are properly aligned and achieve the results intended. 
Performance measures will be established during the information system 
planning stage and will be reflective of strategic goals, established 
both at the Department and the agency levels.

                 Office of the Chief Financial Officer

                      request for additional funds

    Mr. Skeen. How will the additional $375,000 you are requesting help 
implement the CFO Act? Is this all for additional FTEs?
    Response: All of the $375,000 will be used for FTEs, including the 
related support costs. The money will help with the implementation of 
those requirements contained in the CFO Act that are awaiting action. 
Furthermore, the money will make significant improvements in the 
implementation of CFO Act requirements that have been initiated but 
which are in need of additional resources before achieving a 
substantive impact. Of particular note are the requirements contained 
in Sec. 902(a)(2), (3), (5)(B) and (D), (7), and (8).
    The additional resources requested will be used to accomplish many 
things. USDA still needs to develop financial management budgets, 
monitor the financial execution of the budgets in relation to actual 
expenditures, and prepare and submit to the Secretary timely 
performance reports. It is expected that this will result in the better 
utilization of scarce resources.
    The additional resources will also be used to (a) review on a 
biennial basis the fees, royalties, rents, and other charges imposed by 
USDA for the services and things of value it provides and (b) make 
recommendations on revising those charges to recover costs incurred. 
This should result in significant additional resources for the 
Department.
    The resources are needed for substantive improvements in order to 
obtain unqualified audit opinions. This will be aided through the 
approval of all USDA financial management systems design and 
enhancement projects, better oversight of the financial management 
activities of USDA programs and operations, and the development and 
maintenance of a single USDA integrated accounting and financial 
management system, including financial reporting and internal controls. 
OCFO needs to ensure that USDA systems comply with (a) applicable 
accounting and internal control standards and requirements, (b) 
policies and requirements prescribed by OMB, and (c) other requirements 
applicable to such systems. If OCFO does not ensure such compliance, 
the systems are not as likely to provide for (a) complete, consistent, 
reliable, and timely information prepared on a uniform basis that is 
responsive to the financial information needs of our managers and 
officials; (b) the development and reporting of cost information; (c) 
the integration of accounting and budgeting information; and (d) the 
systematic measurement of performance.

                  strategic plan and performance plan

    Mr. Skeen. Please provide the Committee with a copy of the USDA 
Government Performance and Results Act strategic plan and performance 
plan.
    Response: USDA is currently in the process of developing a 
Departmentwide plan, which will consist of an Executive Summary and 
individual agency and mission area plans. The draft Executive Summary 
and the draft agency and mission area strategic plans are currently 
being revised. We will provide the revised agency and mission area 
strategic plans for consultation purposes, as part of the draft USDA 
Strategic Plan.

                    stove piping among usda agencies

    Mr. Skeen. One of the concerns expressed by the Secretary during 
his testimony to this Committee in February 1997 was the ``stove 
piping'' that occurs among the USDA agencies. One way to help reduce 
the stove piping is coordination through the strategic planning 
process. Please describe how the Department has coordinated strategic 
planning across mission areas and agencies to reduce agency stove 
piping.
    Response: As part of the process of developing the USDA Strategic 
Plan, we have involved all seven program mission areas and Staff 
Offices in coordination meetings to identify their roles in reaching 
the Secretary's four goals, which are:
    A safe, affordable, nutritious, and accessible food supply;
    Expanded economic and trade opportunities for rural and farm 
residents;
    Sensible management of our natural resources; and
    Good government, providing our services efficiently and 
effectively.
    Program mission areas and Staff Offices are working together to 
develop partnerships and to identify their roles in reaching these 
goals. The Executive Summary of the USDA Strategic Plan will summarize 
how the USDA mission area are coordinating these efforts.
      
                    performance results

    Mr. Skeen. The CFO has included performance goals and measures in 
its budget request. Please provide your performance results for 1996.
    [The information follows:]
Performance results for FY-1996
    Goal #1: Integrate financial management with program management; 
provide timely and reliable financial management information, advice 
and counsel to support informed decision-making.
    Accomplishments:
    Developed financial management training course for program managers 
entitled, ``Financial Management for Non-Financial Managers,'' and 
provided training to approximately 250 non-financial (program) managers 
in USDA.
    Established teams and task force to provide guidance for improved 
financial management of USDA resources, such as the Forest Service 
Financial Health Task Force.
    Provided specific guidance to USDA policy officials and program 
managers on travel management, Federal Assistance awards, cost 
accounting, entitlement regulations, regulatory relief for small 
entities, and other issues which resulted in improved management of 
programs, projects and processes.
    Goal #2: Ensure adequate controls to safeguard assets and manage 
liabilities, revenues and expenditures.
    Accomplishments: Developed and initiated implementation of a 
tracking system for interdepartmental funds transactions, including 
standardization of numbers for reimbursable agreements.
    Led USDA participation in promoting financial management efficiency 
through legislation and projects, such as passage of the Debt 
Collection Improvement Act and its implementation in USDA, 
participation in the Federal Credit Policy Working Group and the Task 
Force on Debt Collection Centers, and expanded use of electronic 
benefits transfer (EBT).
    Goal #3: Foster accountability for financial management performance 
throughout USDA.
    Accomplishments: Developed and initiated implementation of 
activity-based costing methodologies in USDA, including a system to 
document and support assumptions and cash flows used to establish and 
reestimate loan subsidy costs.
    Provided audit follow up guidance to USDA agencies which resulted 
in improved compliance with audit related management decisions as 
reported in the Secretary's Management Report to Congress.
    Assisting agencies in compliance with Federal Manager's Financial 
Integrity Act.
    Goal #4: Lead the effort to implement strategic planning and 
performance measures in USDA.
    Accomplishments: Promoted the development, use and reporting of 
performance measurement and strategic planning by agencies through 
provision of guidance, review, and coordination of strategic planning 
effort, which resulted in submission of draft strategic plans for all 
USDA agencies and mission areas.
    Leading USDA in meeting requirements and time table for GPRA.
    Goal #5: Build a productive, quality-oriented financial management 
workforce.
    Accomplishments: Established key positions in Cost Accounting and 
Financial Standards Administration to promote professional cost 
accounting and financial information standards.
    Provided training to OCFO staff on analytical tools, critical 
thinking and written communications.
    Developed a Human Resources Development Plan for OCFO, and 
initiated implementation.
    Developed and implemented a Tuition Assistance Program.
    Promoted development of Individual Development Plans for all OCFO 
employees.
    Goal #6: Establish a strong, results-oriented, highly-effective and 
professional financial community within USDA.
    Accomplishments: Developed policy for a Continuing Professional 
Education (CPE) program in USDA, and initiated development activities 
to establish a CPE program for financial managers in USDA.
    Established professional training program for accountants and 
financial managers in USDA.
    Goal #7: Develop and maintain financial management information 
systems that are responsive to user and customer needs.
    Accomplishments: OCFO and four additional agencies (FCS, APHIS, FS 
and GIPSA) participated in a production simulation for the Foundation 
Financial Information System (FFIS); OCFO was fully implemented. Full 
implementation of FFIS will be accomplished by FY-1999.
    Improvements to administrative systems: Unified Travel System is 
nearly completed and will be implemented October, 1997; Purchase Card 
Management System was piloted; and Electronic Data Interchange (EDI) 
was implemented for the UTVN (Utility Vendor) system.
    Graphical User Interface (GUI) was implemented on identified 
applications: the Purchase Order (PRCH) system, the Supply Inventory 
(SPIN) system, the Inquiry and Research Information System (IRIS), and 
the Billings and Collection (BLCO) System; The Payroll/Personnel front-
end (SCIPS) system is under development; and completed planning for 
upgrade of the Payroll/Personnel system.
    Implemented, a process for automating the correcting, canceling, 
and updating of historical personnel actions; and Prepared a plan to 
achieve Level 2 of the Capability Maturity Model. This is a method for 
developing, implementing, and maintaining software. It ensures 
participation by the users and documentation by the developers at each 
step of the development and implementation process.
    Goal #8: Provide high-quality customer service.
    Accomplishments: Initiated customer service feedback mechanisms to 
promote better communications between OCFO and customers.
    Developed OCFO Home Page on Internet.
    Initiated development of service standards for the National Finance 
Center.

          performance indicator for video production increase

    Mr. Skeen. The Working Capital Fund performance indicator for video 
production (cost per hour) increases by 25 percent from 1996 to 1997. 
Why does the indicator increase?
    Response. Unit costs for video production increased from $254 in 
1996 to $318 in 1997 due to a different mix of the type of productions 
being made. Generally, work performed in 1997 consists of larger video 
productions that carry with them a higher unit cost. Hourly rates for 
video production services in the Office of Communications' Video and 
Teleconferencing Unit have been unchanged for the last several years. 
The Video and Teleconferencing Unit is able to achieve this by 
implementing an efficient mix of in-house and contract support for 
video production services. This, and the manner in which this unit 
invests in technology and video production equipment, has allowed this 
center to hold the line on rates over the past several years.

           increase in working capital fund object class 25.4

    Mr. Skeen. Please explain the reasons for the $762,700 increase in 
the Working Capital Fund object class 25.4, operation and maintenance 
of facilities.
    Response. The increase in operation and maintenance of facilities 
is due entirely to costs associated with critical maintenance needs of 
the National Finance Center. NFC estimates an increase of approximately 
$776,000 in this cost category. The facility occupied by the Center is 
over 30 years old and current demands on its infrastructure--
electrical, roofing, hearing and cooling--are far in excess of the 
levels of demand for which the facility was engineered. These costs 
must be incurred to ensure the reliable delivery of services to our 
customers. We are making every effort to ensure that the costs are kept 
to a minimum so that we can focus on service delivery.
   increase in the working capital fund operation and maintenance of 

                               equipment

    Mr. Skeen. The Working Capital Fund operation and maintenance of 
equipment (object class 25.7) increases by $1,128,400 in 1998. Why is 
this the case?
    Response. The increase here is due almost entirely to approximately 
$1.1 million in additional costs to be incurred by the National Finance 
Center. These costs are part of the maintenance plan to address 
critical needs of the Center. They include costs associated with 
electrical system upgrades and upgrades to fire alarm systems.

        increase in working capital fund equipment object class

    Mr. Skeen. In 1998 the Working Capital Fund Equipment object class 
(31) increases by $1,052,900. Please provide an explanation.
    Response. The increase represents the increase from fiscal year 
1997 to fiscal year 1998 in capital funds available and allocated among 
WCF activity centers. The amount of funds available each fiscal year 
for equipment purchases is based on the recovery of depreciation 
expenses through billings to the users of WCF Services. Allocations are 
made to activity centers from available capital for the purpose of 
large-scale equipment or system acquisitions. The allocations are made 
on the basis of lease-purchase analyses we perform on proposed 
acquisitions with the funds allocated to those acquisitions where the 
savings are greatest by procuring compared to leasing. The annual 
demand for equipment funding exceeds the availability. The equipment 
items which cannot be funded must be acquired by leasing the equipment, 
generally at a higher cost.

                  request for additional funds at nfc

    Mr. Skeen. The National Finance Center is requesting an additional 
$8,005,000 in funds. Please provide the Committee with information on 
how these funds will be used.
    Response. The National Finance Center was allocated $6,952,000 in 
capital funds for fiscal year 1997. In fiscal year 1998, the capital 
allocation will be $8,005,000. Of this amount, $5.5 million was 
allocated for three major acquisitions--additional direct access 
storage devices, a UNIX operating system, and cartridge tape 
replacement. Direct access storage devices, or DASD, provide easier 
access to larger volumes of data. The investments to be made in DASD in 
1998 complete a four year plan to eliminate obsolete or nearly obsolete 
units. The UNIX system upgrades are necessary to accommodate expansion 
of workload on that system and to allow us to prevent obsolescence, 
improve security, and continue modernization of NFC operating systems. 
Expenditures for cartridge tape replacement are necessary for 
management control of the USDA data repository and to maintain the 
lowest cost, yet most modern operation. Investment in these 
technologies will allow us to eliminate many redundant cartridge tape 
operations. The cost avoidances represented in staff-years, hardware, 
and software exceed investment costs by a factor of three to four 
times.
    Such acquisitions are critical to maintain NFC's competitive edge 
in providing services to users. The remainder of the funds will be used 
for telecommunications equipment and software, and peripheral equipment 
to support mainframe and other computer operations. All costs 
associated with these procurements will be recovered from users of NFC 
services over the life of the assets procured.

             increase of funds for the thrift savings plan

    Mr. Skeen. The National Finance Center is requesting an increase of 
$2,316,000 for support of the Thrift Savings Plan. Why are these 
additional funds needed and how will they be used?
    Response. While we assume for 1998 that the number of accounts we 
maintain will be reasonably constant, we expect that the number of 
transactions per account will increase as more flexibility is offered 
to participants wishing to borrow against their accounts. The increased 
volume of transactions will drive up costs. In addition, system 
development costs, resulting from recent legislative changes, will 
require more resources. Although the Thrift Investment Board has 
contracted out the total redesign of the system, resources will be 
required to work with the contractors. Of course, to the extent that 
demand does not materialize, our estimates for the increase in Thrift 
Savings Plan support costs would be revised downward.
 amounts paid into the working capital fund by current agency structure
    Mr. Skeen. Provide a table that shows, by current agency structure, 
the amount paid into the Working Capital Fund for fiscal years 1995 and 
1996.
    [The information follows:]

[Page 640--The official Committee record contains additional material here.]


                          wcf operating costs

    Mr. Skeen. In addition, update the table on page 393 of last year's 
hearings that compares the operating plan and actual expenditures for 
fiscal year 1991 through 1996.
    [The information follows:]

   WORKING CAPITAL FUND OPERATING COSTS, COMPARISON OF OPERATING PLAN AND ACTUAL EXPENDITURES--FY 1991-FY 1996  
----------------------------------------------------------------------------------------------------------------
                                        1991         1992         1993         1994         1995         1996   
----------------------------------------------------------------------------------------------------------------
Operating plan....................     $145,500     $156,649     $173,890     $187,084     $194,192     $203,322
Actual expenditure................      143,858      153,132      171,174      178,017      184,093      197,389
----------------------------------------------------------------------------------------------------------------

            wcf purchase of computer equipment and services

    Mr. Skeen. How much did the fund contribute toward the purchase of 
computer equipment and services in the Department for fiscal year 1996 
and how much is estimated for these purchases in fiscal years 1997 and 
1998?
    [The information follows:]

                         [Amounts in thousands]                         
------------------------------------------------------------------------
                                                Fiscal year             
           Description            --------------------------------------
                                       1996         1997         1998   
------------------------------------------------------------------------
Computer equipment and services..      $39,151      $41,463      $43,473
------------------------------------------------------------------------

    The above amount includes computer related costs for 
Communications, Utilities, Rentals, Supplies, Other Services, and 
Equipment.

              agencies using the accounting system at nfc

    Mr. Skeen. Last year you reported that the first six agencies had 
begun to assess whether or not they would continue to use their own 
accounting system or begin using the basic accounting system at the 
National Finance Center or the National Computer Center. What did the 
assessment indicate?
    Response. So far, the assessment has indicated that we will be able 
to eliminate at least two systems with a total of three applications, 
plus an additional four applications of other systems during early 
1998. The assessment is ongoing and more systems and applications are 
likely to be identified for elimination.

           AGENCIES' SYSTEMS AND APPLICATIONS BEING ELIMINATED          
------------------------------------------------------------------------
            Agency                      System            Application   
------------------------------------------------------------------------
Animal and plant health         Integrated financial   Agreement        
 inspection service.             management             tracking        
                                 information system.    financial plan. 
Food and consumer service.....  Administrative funds   Administrative   
                                 management system.     funds           
                                                        management.     
Forest Service................  [Central Accounting    Miscellaneous    
                                 System] This is an     payments;       
                                 NFC accounting         program         
                                 system being used by   management plan;
                                 the Forest Service.    project         
                                 It will not be         planning; unpaid
                                 eliminated.            obligations.    
------------------------------------------------------------------------

benefits for providing payroll services to non-federal office employees
    Mr. Skeen. Last year you reported that a USDA team was evaluating 
the benefits and costs of NFC providing payroll service to the non-
Federal FSA county office employees. What did the team recommend?
    Response. The Team did not reach a consensus. However, FSA has 
recently decided to have NFC payroll the non-Federal FSA county office 
employees. Plans are to make the conversion in 1998.

                                staffing

    Mr. Skeen. In last year's testimony you reported that four full-
time employees and no agency personnel were assigned to the immediate 
office of the Chief Financial Officer? Is this still the case?
    Response. Of the six full-time positions assigned to the immediate 
office of the Chief Financial Officer, three are currently encumbered. 
Positions for the Chief Financial Officer, confidential assistant and a 
secretary are currently vacant. No personnel are assigned from other 
agencies.
                      departmentwide travel costs

    Mr. Skeen. Please provide the Committee with a table displaying 
department-wide travel costs for the past five years.
    [The information follows:]
Fiscal year:                                                      Amount
    1992................................................    $222,816,604
    1993................................................     167,143,211
    1994................................................     228,846,718
    1995................................................     216,666,146
    1996................................................     199,405,196

    Please provide an update on the Financial Information System Vision 
and Strategy project, including its current estimated cost and 
completion date.
    Effective October 1, 1996 one of USDA's agencies, the Office of the 
Chief Financial Officer appropriated fund, began live production 
operation in the Foundation Financial Information System (FFIS), the 
core accounting system part of the FISVIS project, using manual 
interfaces to the existing National Finance Center (NFC) payment 
systems. During Fiscal Year 1997 eight other agencies, including one 
NFC cross serviced customer, have or will have begun operating in an 
environment that will simulate a production environment for their 
accounting processing. Our plan is for several agencies to begin live 
production operation in FFIS on October 1, 1997, including automated 
interfaces to the NFC payment systems. Our plan is to have all agencies 
in live production operation in FFIS by the end of Fiscal Year 1998. In 
addition to the implementation of the core accounting system, FFIS, we 
have developed and implemented Department wide accounting standards for 
all USDA agencies, and implemented control mechanisms to monitor and 
approve changes as needed.
    I will provide for the record a table that details the costs 
associated with this project through FY 1998. The table does not 
include $4,735,000 in contract funds contributed to date by the Forest 
Service. I should point out that capital acquisition costs provided in 
the table will be recovered through depreciation charges, which are 
operating costs.

                   WORKING CAPITAL FUND PROJECT COSTS--FISVIS PROJECT THROUGH FISCAL YEAR 1998                  
                                             [Dollars in thousands]                                             
----------------------------------------------------------------------------------------------------------------
                                                                   Fiscal years                                 
                 Operating                 ------------------------------------------------------------   Total 
                                              1993      1994      1995      1996      1997      1998            
----------------------------------------------------------------------------------------------------------------
FISVIS project office.....................         9     2,954     1,315     3,786     4,539     4,539    17,142
FFIS support..............................        47       482     2,055     3,835     6,042     5,642    18,103
Capital...................................  ........  ........  ........  ........  ........  ........  ........
FISVIS project office.....................         0         0     6,925     4,440     2,800     1,014    15,179
FFIS support..............................         0        49       515        34         0         0       598
----------------------------------------------------------------------------------------------------------------

                      financial management review

    Mr. Skeen. In reviewing the agencies' planned financial management 
system changes did the CFO find any cases where the agency did not 
comply with the Financial Information System Vision and Strategy 
initiative? If there were any such cases, how were the cases resolved?
    Response. We have found no cases to date where an agency's planned 
financial management system were not in compliance with the Financial 
Information System Vision and Strategy-FISVIS-initiative.

                          gao report on fisvis

    Mr. Skeen. Has the Department addressed the recommendations made in 
the September 1995 GAO report on FISVIS?
    Response. The Department has completed action on recommendation 1, 
but the implementation of the remaining five recommendations is either 
long-term or ongoing in nature. We originally thought we might be able 
to address recommendation 3 by the end of Fiscal Year 1996, however, 
the task proved to be more complex than estimated. Furthermore, we have 
kept GAO apprised of our progress.
    The six recommendations contained in the GAO report are as follows:
    Recommendation 1: Expeditiously implement the proposed delegation 
of authority to provide the Chief Financial Officer--CFO--with the 
authority to oversee all financial management activities relating to 
the programs and operations of the agency, including approving 
component agency financial management system design and enhancement 
projects.
    Recommendation 2: Require that the CFO (1) establish review teams 
to determine whether USDA's current and future component agency and 
National Finance Center--NFC--financial and mixed systems are in 
compliance with the USDA Financial and Accounting Standards Manual and 
the USDA Financial Management Information Architecture Document and (2) 
take action to bring component agencies into compliance with the 
standards. One way USDA could undertake this task with existing 
resources is to create temporary teams of Office of the CFO, NFC, and 
component agency personnel.
    Recommendation 3: Direct the CFO to develop and implement a 
configuration management policy and version control process to ensure 
that the foundation system baseline software is effectively managed.
    Recommendation 4: Direct the CFO to update the FISVIS strategy to 
include a financial management systems architecture that sets forth the 
financial management needs of USDA's new organizational structure, and 
establish a detailed strategy to meet these needs. This plan should 
also identify opportunities to streamline and/or consolidate financial 
management systems across agencies and mission areas.
    Recommendation 5: Direct the CFO to review each of the component 
agencies ongoing and planned financial management system development 
efforts and report to the Secretary whether each of these efforts are 
necessary, consistent with the FISVIS initiative, and cost-effective 
from a Departmentwide perspective, or whether they should be 
consolidated with other financial management systems or development 
efforts. This would include, but not be limited to, determining that 
the component agencies' needs cannot be met by the Foundation system. 
If the CFO determines that any individual system development effort is 
not needed, the Secretary should suspend it.
    Recommendation 6: Delegate to the CFO authority and responsibility 
for (1) developing a Departmentwide financial management reengineering 
strategy that would include identifying the technical assistance and 
training necessary to successfully carry out reengineering activities 
and (2) reviewing and approving the reengineering of all Departmental 
and component agency financial processes and require component 
agencies' senior financial managers to work with the CFO to ensure that 
their reengineering efforts are planned and managed from a 
Departmentwide perspective.

             foundation financial information system at nfc

    Mr. Skeen. Please report on the performance of the Foundation 
Financial Information System at NFC.
    Response. The Foundation Financial Information System, or FFIS, was 
installed at NFC in January 1995. Prior to selecting FFIS the vendor 
demonstrated through an Operations Capability Demonstration that the 
software could operate in the NFC environment and meet our requested 
system requirements. Since January 1995 we have tested the system by 
processing small volumes of data through it, with the system configured 
to meet our agencies' needs. As we complete the automated links between 
the NFC payment systems to the FFIS, we will process increasing volumes 
of data through the FFIS, and plan an extensive test of the system 
during the summer of 1997 to ``stress test'' the system. During all of 
these tests we monitor the results to predict system performance that 
we can anticipate during live operations, which will commence with 
large volumes effective October 1, 1997. We are confident that the FFIS 
will meet our customer needs, and its performance will be acceptable.

         coordination of financial management systems with nfc

    Mr. Skeen. How are individual agency financial management systems 
coordinated with the overall system at NFC?
    Response. The primary means of coordinating individual agency 
financial management systems with the overall system at NFC is through 
the FISVIS Project. FISVIS is a collaborative team effort with 
representation from OCFO, including NFC, the USDA agencies, and the 
contract firm of American Management Services which has supplied the 
software for the Department's Foundation Financial Information System-
FFIS.
    FISVIS representatives actively participate with representatives 
from the individual agencies to plan for new and reengineered agency 
financial management systems that are capable of interfacing with the 
overall system at NFC. The representatives work as a cohesive team to 
understand the needs of the agencies and the Department and how best 
those needs can be met within the context of FFIS. An implementation 
team exists for each agency scheduled to use FFIS, and each team has a 
full-time dedicated staff. Each implementation team is supported by 
other team members who work full-time on things such as systems 
interfaces, data conversion, reporting, and training. In instances 
where an existing agency financial management system duplicates the 
functions of FFIS, it is integrated into FFIS. When an existing system 
cannot be replaced with FFIS, the representatives develop an interface 
to transfer information from that system to FFIS using standard file 
formats.
    What has been spent in total on FISVIS to date and what is expected 
to be spent in fiscal year 1997 and 1998?
    [The information follows:]

 FINANCIAL INFORMATION SYSTEMS VISION AND STRATEGY PROJECT FY 1993-1998 
                             OPERATING COSTS                            
                         [Amounts in thousands]                         
------------------------------------------------------------------------
                                                Fiscal years            
              Title               --------------------------------------
                                    1993-1996       1997         1998   
------------------------------------------------------------------------
FISVIS Project...................        8,064        4,539        4,539
FFIS \1\.........................        6,419        6,042        5,642
Total............................       14,483       10,581      10,181 
------------------------------------------------------------------------
\1\ Foundation Financial Information System (FFIS) is the system to be  
  operated at the National Finance Center.                              

         consolidation of financial information systems in usda

    Mr. Skeen. Please provide a status report on the progress made to 
date on consolidating the 134 financial information systems in USDA and 
an estimate of the savings.
    Response. On September 30, 1996, USDA submitted its annual 
Financial Management Status Report and 5-Year Plan to OMB in which it 
reported the existence of 67 financial management systems for a total 
of 133 applications. During fiscal year 1996, five systems and six 
applications were discontinued. In addition, 14 systems and 39 
applications are designed for replacement. Five of those 14 designated 
systems are being upgraded, one is being replaced with an existing 
system, and the other eight are being replaced with three new systems 
under development in the Department. In conclusion, four of the eight 
systems will be replaced by FFIS, three by the Farm Service Agency's 
CORE Accounting System, and one by the Rural Utilities Service Loan 
Accounting and Management Information System. As the Department 
continues to move forward with implementing a single integrated 
financial management system, the number of systems that will be 
consolidated, replaced, or merged will likely increase.
    USDA currently tracks dollars and staff-years utilized for 
financial management, but we believe it is not cost effective to try to 
manually segregate, or allocate, those dollars and staff-years that are 
related to savings related to the consolidation of the Department's 
financial information systems. As we implement new cost accounting 
standards, we will do our best to address such requests for more 
detailed information.
 replacement of systems in the foundation financial information system
    Mr. Skeen. How many systems is the Foundation Financial Information 
System supposed to replace, what are the timeframes for completing 
this, and what savings are expected?
    Response. We estimate that four systems and 23 applications will be 
replaced by FFIS. This includes the two systems and seven applications 
being eliminated as a result of our assessment of the first six 
agencies scheduled to implement FFIS, plus another two systems and 16 
applications as the result of assessments of two additional USDA 
agencies. As the Department moves forward with the implementation of 
FFIS, the number of systems and applications to be replaced may 
increase. This is due to the fact that the assessment of USDA agencies' 
needs is an integral part of FFIS implementation, which is still 
ongoing. FFIS implementation is scheduled to be completed in fiscal 
year 1999.
    The four systems that FFIS will replace include the Animal and 
Plant Health Inspection Service's--APHIS--Integrated Financial 
Management Information System, Agricultural Research Service's--ARS--
Location Obligation Tracking System, OCFO's Central Accounting System--
CAS, and Food and Consumer Service's--FCS--Administrative Funds 
Management System. The APHIS, ARS, and FCS systems primarily perform a 
funds control function for their agencies' appropriated funds. The 
annual volume of transactions of these three systems is 1,436; 100,000; 
and 100,000 respectively. OCFO's CAS is used to process almost two 
billion transactions as the core financial system at NFC. CAS is used 
for not only funds control but several other purposes such as the 
general ledger, budget execution, accounting control, and financial 
reporting for the entire Department. That leaves another 500,000 
transactions being processed annually by two applications scheduled for 
elimination that comprise only a small part of NFC's Administrative 
Payments System.
    USDA currently tracks dollars and staff-years utilized for 
financial management, but we believe it is not cost effective to try to 
manually segregate, or allocate, those dollars and staff-years that are 
related to the incremental savings related to the consolidation of the 
Department's financial information systems. As we implement new cost 
accounting standards, we will do our best to address such requests for 
more detailed information.
        cost of contract at nfc with american management systems
    Mr. Skeen. What has been the total cost of the contract at NFC with 
American Management Systems to date? What has the contract procured?
    Response. The contract with American Management Services--AMS--was 
signed in December 1994. Through fiscal year 1997, contract costs for 
work done by AMS will amount to approximately $17.9 million. Under the 
AMS contract, we have procured the baseline FFIS software and installed 
it at the NFC. We have received training from the contractor and 
support from AMS in developing and implementing over 40 data bases for 
our customers' use of the FFIS. We have procured AMS support to work 
closely with our customers to understand their accounting needs, help 
them reengineer their accounting processes, and configure the FFIS 
software to support those processes. We have procured AMS support to 
assist NFC in the development of accounting and processing system 
requirements to take payment information from existing NFC payment 
systems and develop functional accounting records for the FFIS system. 
All of these activities have provided us with the groundwork to 
successfully convert several USDA agencies into a live production 
environment on October 1, 1997.

                   additional costs for ams contract

    Mr. Skeen. Are additional costs for the AMS contract anticipated in 
fiscal year 1998?
    Response. We are expecting to spend $2,600,000 in fiscal year 1998 
for the AMS contract. These funds will be used to convert the remaining 
USDA agencies to FFIS by the beginning of fiscal year 1999. We need to 
work closely with each of the remaining agencies to understand their 
unique accounting requirements and configure their portion of the FFIS 
so that it meets their needs. Some part of the funds will be for actual 
conversion of data from the existing accounting system to FFIS.

                    collection of tax refund offsets

    Mr. Skeen. Did the Office of the Chief Financial Officer assist in 
the collection of tax refund offsets in fiscal year 1996? What was the 
cost to the Department to collect the money?
    Response. The Office of the Chief Financial Officer provided USDA 
agencies with technical assistance, and guidance, and prepared the 
Memorandum of Agreement and related documentation required by the 
Internal Revenue Service. The total cost to the Department to collect 
the $43.1 million was approximately $1.5 million. Of this total cost, 
approximately $736,000 was paid to the Internal Revenue Service and the 
Department of the Treasury's Financial Management Service for offset 
related costs. The remaining costs consisted of staff time.

                 implementation of the cfo act of 1990

    Mr. Skeen. What has been the cost so far to implement the CFO Act?
    Response. USDA has received no additional resources to implement 
the CFO Act. USDA has reallocated resources from other critical 
activities to establish the Office of the Chief Financial Officer and 
to implement new CFO activities. In addition, USDA reallocated 
resources to the Office of the Chief Financial Officer and the Office 
of the Inspector General to prepare and audit the financial statements 
as required by the CFO Act. While the Department tracks the dollars and 
staff years utilized for financial management, we do not have a 
Departmentwide summary that breaks out the costs to implement specific 
requirements of the CFO Act.

                      requirements of the cfo act

    Mr. Skeen. Please update the committee on the progress made in 
implementing the requirements of the CFO Act.
    [The information follows:]
Responsibilities under the CFO Act of 1990
            In Place
    Report directly to the Secretary regarding financial management 
matters.
    Make recommendations to the Secretary regarding selection of the 
Deputy Chief Financial Officer of the Department.
    Provide financial management advice to the Secretary and Subcabinet 
officials.
    Prepare and transmit an annual report on financial management to 
the Secretary and the Director of OMB.
    Prepare and submit to the Secretary and the Director of OMB a 5-
year financial management plan for the Department.
    Prepare consolidated and/or combined agency financial statements 
and work with the Inspector General and other auditors to improve the 
independent review and audit ability of those statements.
            In progress
    Ensure that the data included in financial reports are auditable. 
This includes performance measures.
    Oversee all financial management activities related to the programs 
of USDA and its component agencies.
    Establish financial management policies for the Department and its 
agencies.
    Develop and maintain an integrated departmentwide accounting and 
financial management system. The system is to provide information that 
is prepared on a uniform basis and that is responsive to the financial 
information needs of the Department and agency managers for:
    Financial reporting and internal controls.
    Integration of accounting and budgeting information.
    Systematic measurement of performance.
    The development and reporting of cost information.
    Ensure departmentwide compliance with applicable accounting, 
financial, and systems standards (including the U.S. Government 
Standard General Ledger and core financial systems requirements).
    Establish, review, and enforce throughout the Department internal 
control policies, standards, and compliance guidelines involving 
financial management (including the authority to require and ensure 
timely corrective actions regarding material weaknesses disclosed 
through audit findings and reports under the Federal Manager's 
Financial Integrity Act (FMFIA).
    Establish, in coordination with program managers, departmentwide 
and agency internal control processes; advise the Secretary on the 
accuracy and completeness of the Department's annual FMFIA report; and 
participate with agencies in monitoring and requiring corrective 
actions on reported material weaknesses (especially high-risk areas 
listed in the President's budget).
    Ensure adequate controls over cash and credit management, debt 
collection, inventories, and property, plant, and equipment.
    Direct, manage, and provide policy guidance and oversight of the 
implementation of asset management systems (including cash and credit 
management, debt collection, and property and inventory management and 
control).
    Develop, in coordination with program managers, financial and 
programmatic performance indicators for inclusion in agency financial 
reports and statements.
    Develop financial information standards and definitions for the 
Department and its component agencies, maintain and refine the 
standards, and assist with their implementation.
    Review and approve financial reports and statements prepared by 
agencies for transmittal to the Secretary as well as to the Congress, 
OMB, President, and other external parties.
    Monitor the development of accounting standards by Federal 
Accounting Standards Advisory Board and other central guidance agencies 
and implement those standards throughout the Department.
    Ensure that program information systems provide financial and 
programmatic data (including program performance measures) on a 
consistent, reliable, and timely basis to the Department's financial 
management system.
    Approve the selection of the heads of agency financial management 
activities, in addition to the job descriptions and skill requirements.
    Advise and provide direction to program managers on financial 
management matters.
            Just initiated
    Manage directly, monitor, evaluate, and approve the design, 
budgeting, development, implementation, operation, and enhancement of 
departmentwide and agency accounting, financial, and asset management 
systems.
    Direct, manage, and provide policy guidance for, and oversight of, 
departmental and agency financial management activities, personnel, and 
operations.
    Review, on a biennial basis, the fees, royalties, rents, and other 
charges imposed by agencies for the things of value they provide, and 
make recommendations on revising those charges to reflect the costs 
incurred in providing them.
    Provide guidance and oversight of the approval and management of 
departmental and agency financial management systems design or 
enhancement projects.
    Mandate data and report format requirements (consistent with OMB 
guidance) for program and financial managers throughout the Department.
    Provide departmentwide policy advice on the qualifications, 
recruitment, training, performance, and retention of all financial 
management personnel in the Department to ensure a cadre of qualified 
financial management professionals.
            Not yet initiated
    Develop a departmental financial management budget; approve 
planning, budget formulation, and legislation affecting financial 
management (FTE, salaries and expenses, systems, other equipment) at 
both the departmental and agency levels.
    Participate with agency heads in the annual performance evaluations 
of the heads of component agency financial management activities.
    Monitor the financial execution of the budget of the Department and 
its agencies in relation to actual expenditures, and prepare and submit 
timely performance reports to the Secretary.
    Ensure accurate and timely information on contract disbursements in 
relation to projected costs and actual commitments and test results (if 
any), including cost estimates for major procurements.
    Approve the design of other information systems that provide 
financial and/or program performance data used in financial statements 
to ensure that the CFO's needs are met. Evaluate, where appropriate, 
the installation and operation of systems that provide financial and 
programmatic data (including program performance measures) to agency 
financial management systems.
    Review all major legislative and other programmatic proposals 
(including major procurements and changes in credit programs) in order 
to provide advice to the Secretary and agency heads on Federal cost and 
program benefit estimates.

            staff year levels at the national finance center

    Mr. Skeen. Provide a table showing the staff year levels at the 
National Finance Center for fiscal years 1991 through 1996 and 
estimates for fiscal year 1997.
    [The information follows:]

                      NATIONAL FINANCE CENTER STAFF YEAR UTILIZATION--FISCAL YEAR 1991-1997                     
----------------------------------------------------------------------------------------------------------------
                                                                  USDA       Non-USDA                           
                         Fiscal Year                            activity     activity     TSP \1\       Total   
----------------------------------------------------------------------------------------------------------------
1991........................................................          883          277          198        1,358
1992........................................................          800          368          281        1,449
1993........................................................          750          471          314        1,535
1994........................................................          786          448          379        1,613
1995........................................................          769          407          408        1,584
1996........................................................          662          499          430        1,591
1997 (est.).................................................          597          543          455        1,595
----------------------------------------------------------------------------------------------------------------
\1\ Thrift Savings Plan.                                                                                        

                            cross-servicing
    Mr. Skeen. Please provide a list of all cross-servicing the Center 
performs.
    [The information follows:]

[Page 649--The official Committee record contains additional material here.]


                direct deposit/electronic funds transfer

    Mr. Skeen. Please update the statistics of participation in the use 
of Direct Deposit/Electronic Funds Transfer provided on page 404 of the 
last year's hearing record.
    [The information follows:]

                              PERCENT OF EMPLOYEES USING ELECTRONIC FUNDS TRANSFER                              
----------------------------------------------------------------------------------------------------------------
                                                                                  Pay period                    
                                                             ---------------------------------------------------
                                                                February     February     February    Percentage
                                                                  1995         1996         1997        change  
----------------------------------------------------------------------------------------------------------------
USDA agencies...............................................         84.3         84.2         87.6         +3.4
Non-USDA agencies...........................................         93.6         94.2         95.9         +1.7
Department of the Treasury..................................         88.6         85.6         88.2         +2.6
Average.....................................................         88.8         88.7         91.2         +2.5
----------------------------------------------------------------------------------------------------------------

    As of pay period 2, 1997, checks still being mailed were as 
follows: USDA agencies: 12,069, Department of the Treasury bureaus: 
18,039, and other non-USDA agencies 7,097.

                        impact of the farm bill

    Mr. Skeen. In last year's testimony you said that it was too soon 
to assess the impact of the 1996 Farm Bill on how USDA operates. During 
the past year, have you done any analysis of the changes that will have 
to be made in your information, financial, and management systems as a 
result of the 1996 Farm Bill?
    Response. Analyses are ongoing and several changes have already 
been made to our information, financial, and management systems as a 
result. The Farm Bill revamped conservation programs that were being 
administered by the Farm Service Agency--FSA--and the Natural Resources 
Conservation Service--NRCS. It created some new programs and led to the 
realignment of responsibilities. Many of the resultant changes require 
funding from the Commodity Credit Corporation--CCC--and appropriate 
changes have already been implemented through modifications to existing 
delegations of authority and to the related financial and mixed 
systems. The systems modifications have enabled USDA to effectively 
implement the new conservation programs as required.
    CCC has put in place new funds controls to ensure that the spending 
limitations established in the Farm Bill are not exceeded and new 
reporting mechanisms to report to Congress all CCC expenditures in 
excess of $10,000 for each quarter of the fiscal year. CCC has been 
submitting the quarterly reports as required but is working to improve 
its reporting process.

         cost-benefit analysis of the software systems contract

    Mr. Skeen. What were the principal conclusions of the cost-benefit 
analysis of the software systems contract at NFC required by last 
year's bill? Please identify the contractor who made the analysis.
    Response. Prior to making a final determination to use off-the-
shelf software, USDA compared alternative methods of developing and 
implementing such software. These alternatives were examined as part of 
the USDA department-wide technical evaluation, conducted for all major 
FIPS Procurements. We received assistance in developing the analysis 
from Logicon Fourth Generation Technology, Inc., who not only examined 
cost parameters for an 8-year life cycle but other risk factors as 
well.
    The benefit cost analysis examined three alternatives: Maintaining 
the status quo: the use of a commercial off-the-shelf software (COTS) 
package; and reengineering existing systems.
    Alternative 1, on its face was inappropriate given the status of 
our current system. The 8-year life cycle cost of implementing a 
commercial, off-the-shelf software package, including costs of USDA 
development and operation, ranges from $82 to $90 million (depending on 
the software package which was to be selected) including the cost of 
USDA personnel. The cost of reengineering using NFC personnel was 
approximately $96 million. In addition, use of the off-the-shelf 
software package results in a faster implementation of a proven 
product, compliant with all federal mandates and requirements. As a 
result of the cost-benefit analysis and associated risk analysis, the 
contractor recommended the COTS alternative. This cost-benefit analysis 
has been reviewed by the Department's Chief Economist, who indicated 
that this analysis had been appropriately prepared.
    Mr. Skeen. GPRA, known as the Results Act, requires each executive 
agency to issue, no later than September 30, 1997, a strategic plan 
covering at least five years. In addition to a mission statement 
grounded in legislative requirements, the plans are to contain general 
goals and objectives that are expected an outcome or results oriented 
(such as to improve literacy) as opposed to output or activity oriented 
(such as to increase the number of education grants issued). What 
progress is the agency making in developing its strategic plan, 
including defining its mission and establishing appropriate goals?
    Response. The OCFO Strategic Plan has been completed. We developed 
a mission statement and established goals with input from our customers 
and partners.
    Mr. Skeen. Has the agency identified conflicting goals for any of 
its program efforts? If so, what are the performance consequences of 
these conflicting goals and what actions--including seeking legislative 
changes--is the agency taking to address these conflicts?
    Response. We did not identify conflicting goals for any of our 
program efforts.
    Mr. Skeen. Strategic plans must be based on realistic assessments 
of the resources that will be available to the agency to accomplish its 
goals. As you are developing your strategic plan, how are you taking 
into account projected resources that likely will be available--
especially as we move to a balanced budget? What assumptions are you 
making? How are you ensuring that your goals are realistic in light of 
expected resources?
    Response. We have been reviewing our processes and procedures to 
determine what must be done and what can be eliminated to meet the 
increasing demands for services and accountability, as a result of 
GPRA, the CFO Act, and other legislation. We assume that we will 
receive the additional resources requested for fiscal year 1998. 
Thereafter, we assume that we will receive increases for inflation 
only. However, if these assumptions are incorrect, we will make 
adjustments in the plan.
    Mr. Skeen. For Congress, the heart of the Results Act is the 
statutory link between agency plans, budget requests, and the reporting 
of results. Starting with fiscal year 1999, agencies are to develop 
annual performance plans that define performance goals and the measures 
that will be used to assess progress over the coming year. These annual 
goals are to measure agency progress toward meeting strategic goals and 
are to be based on the program activities as set forth in the 
President's budget.
    What progress have you made in establishing clear and direct 
linkages between the general goals in your strategic plan and the goals 
to be contained in your annual performance plans? OMB expressed concern 
last year that most agencies had not made sufficient progress in this 
critical area.
    Response. We require Annual performance plans to show relationship 
of annual goals to longer-term goals.
    Mr. Skeen. More specifically, how are you progressing in linking 
your strategic and annual performance goals to the program activity 
structure contained in the President's budget? Do you anticipate the 
need to change or modify the activity structure to be consistent with 
the agency's goals?
    Response. We are proceeding to develop annual performance plans 
based on our strategic plan. This plan covers activities that are 
financed from a direct appropriation and from the Departmental Working 
Capital Fund. In the case of activities financed from the direct 
appropriation, there is a single line budget activity in the 
President's Budget, therefore, there is no conflict between the budget 
structure, the Strategic Plan, and annual performance goals. In the 
case of activities from the Departmental Working Capital Fund, we have 
more complicated links between Strategic Plans and budget structure 
because the Fund finances activities in several organizations. However, 
we take care to ensure that we can identify the link between the 
Strategic plan and the budget structure to the greatest extent 
possible. The annual performance goals will reflect this linkage. We 
see no need to revise either the direct appropriation or the WCF budget 
structure at this time.
    Mr. Skeen. Overall, what progress has your agency made--and what 
challenges is it experiencing--defining results--oriented performance 
measures that will allow the agency and others to determine the extent 
to which goals are being met?
    Response. For some activities only output measures are available, 
and the leap from output measures to outcome-oriented goals is very 
difficult. We are attempting to address this challenge. We will use 
customer satisfaction surveys for some of our services to measure 
timeliness and quality.
    Mr. Skeen. If applicable, what lessons will the agency learn from 
its participation in the Results Act pilot phase and how are those 
lessons being applied to agency-wide Results Act efforts? What steps is 
the agency taking to build the capacity (information systems, personnel 
skills, etc.) necessary to implement the Results Act?
    Response. OCFO did not have a pilot program, but we followed 
closely the efforts of those who did. Some were successful in setting 
goals and measuring success, but many discovered how difficult it is to 
set outcome-oriented measures. Of the agencies who participated and 
completed their pilot project, output measures were used in lieu of 
true outcome-oriented measures. The pilots were valuable as instructive 
examples of the difficulty many of our agencies will face.
    Mr. Skeen. The Results Act requires agencies to solicit and 
consider the views of stakeholders as they develop the strategic plans. 
Stakeholders can include state and local governments, interest groups, 
the private sector, and the general public, among others. Who do you 
consider to be your agency's stakeholders and how will you incorporate 
their views into the strategic plans?
    Response. Our customers are largely internal, although we do 
consider the American public to be our ultimate customer. We did 
customer service surveys to determine how our goals should be set and 
what our target should be. We invited customer representatives from 
Departmental Administration and the program agencies to meet with us to 
develop the plan. Several persons attended from each group. 
Representatives attending from stakeholders groups included the Office 
of the Inspector General, Office of the General Counsel, and a non-
profit consortium, the Public-Private Partnership.
    Mr. Skeen. For the Results Act to be successful, agencies with 
similar missions, goals, or strategies will need to ensure that their 
efforts are coordinated. What other federal agencies are you working 
with to ensure that your strategic plans are coordinated? What steps 
have you taken to ensure that your efforts complement and do not 
unnecessarily duplicate other federal efforts?
    Response. OCFO works cooperatively with all of the USDA Agencies 
and with other Federal agencies, largely through our Governmentwide CFO 
Advisory Council, to share information and provide assistance or the 
knowledge gained from experience. We are both givers and receivers of 
experiential information. We work cooperatively with all oversight and 
other program agencies to coordinate efforts where possible. The 
Governmentwide CFO Council meets regularly to share ideas about how to 
improve financial management and strategic planning. The Council has a 
GPRA subgroup working to coordinate information and share the benefit 
of experience, and USDA has been an active participant on that 
subgroup. The result of this involvement is to reduce duplication of 
effort in our Department and others.
    Mr. Skeen. The Results Act requires agencies to consult with 
Congress as they develop their strategic plans. Since these plans are 
due in September, now is the time for agencies to begin the required 
consultations. What are your plans for congressional consultation as 
you develop your strategic plan? Which Committees will you consult 
with? How will you resolve differing views?
    Response. All USDA Mission Areas/Agencies have prepared draft 
Strategic Plans which are currently being reviewed by an Under/
Assistant Secretary, the Senior Policy Staff, the Secretary and later 
by OMB. Upon completion of the review, the Department plans to provide 
copies of the Strategic Plan to relevant Congressional Committees. 
Thereafter, we will look forward to meeting with Staff Members to 
discuss our Strategic Plan and to solicit their input and advice on 
refinements to that Plan. We plan to provide copies of the Department 
Strategic Plan to the following Committees:
    House Agriculture Committee.
    House Appropriations Committee.
    House Economic and Educational Opportunities Committee.
    House Government Reform and Oversight Committee.
    House Resources Committee.
    Senate Agriculture, Nutrition, and Forestry Committee.
    Senate Appropriations Committee.
    Senate Energy and Natural Resources Committee.
    Senate Governmental Affairs Committee.
We will evaluate the input of these groups before the plan is 
considered final.
    Mr. Skeen. In passing the Results Act, Congress sought to 
fundamentally change the focus of federal management and decisionmaking 
to be more results-oriented. Organizations that have successfully 
become results-oriented typically have found that making the 
transformation envisioned by the Results Act requires significant 
changes in what they do and how they do it. What changes in program 
policy, organization structure, program content, and work process has 
the agency made to become more results-oriented?
    Response. We have begun to ask ourselves whether particular 
activities are necessary or worth the staff hours to complete. We have 
begun to implement statistical sampling in our oversight procedures, 
and we have begun making recommendations to our customers where they 
can reduce costs and still provide adequate results. For instance, we 
approached the Office of Inspector General--OIG--with the idea that 
this year we could better use the time usually spent on agency audits 
to work on improving our reporting system deficiencies. OIG agreed, and 
we are proceeding to correct deficiencies we otherwise could not have 
addressed. We believe we are operating smarter.
    Mr. Skeen. How are managers held accountable for implementing the 
Results Act and improving performance?
    Response. We are using annual plans to set goals for accomplishment 
in each Division of our agency and measuring achievement at year's end. 
Goals are negotiated and managers are held accountable through the 
performance management process for reaching their goals.
    Mr. Skeen. How is the agency using Results Act performance goals 
and information to drive daily operations?
    Response. We are using Results Act performance goals and 
information to allow us to better monitor and allocate our time and 
resources where needed, and make progress toward achieving long-term 
goals.

    Supplemental Nutrition Program for Women, Infants, and Children

    Ms. DeLauro. I would like to ask the Chief Financial Officer, Ted 
David, about the financing mechanism for a specific program. One of the 
important topics before the subcommittee this year is the Supplemental 
Nutrition Program for Women, Infants, and Children, or WIC. The 
administration has requested supplemental funding for the WIC program 
for fiscal year 1997, even though some funds were carried over from 
fiscal year 1996 and some funds are expected to be carried over from 
fiscal year 1997.
    Why is there a substantial amount of carry-over money in WIC? Is 
that an indication of management problems?
    Response. It is not consistent with sound management practices to 
operate WIC in such a way that no funds carry forward from one year to 
the next. To ensure that no overspending occurs, States must be 
cautious and expend slightly less than 100 percent of their funding 
allocation.
    States do not know exactly how much they have expended until after 
the fiscal year ends. Many of the WIC vouchers issued to WIC 
participants in the final months of the fiscal year do not come back 
through the State's financial system until the fiscal year is over. 
There are further uncertainties added due to the lagtime for receipt of 
infant formula rebates, which by themselves, average about $100 million 
per month. States have done a great job in getting contracts for 
rebates, with one ``expense'' being additional uncertainty in their 
cash flow.
    Ms. DeLauro. How low do you think carry-over funding can be 
reduced?
    Response. It may be possible that the total unspent recoverable 
amount might be reduced to approximately 2.5 percent of the total 
grant. This amount would equal about $100 million--the level reflected 
in the President's Budget.

                        Office of Communications

                       public affairs activities

    Mr. Skeen. Update the table that appears on page 535, 536, and 537 
of last year's hearing record showing, by agency, the staff levels and 
dollars devoted to public affairs activities to include fiscal year 
1997 actuals and fiscal year 1998 estimates.
    [The information follows:]

[Pages 654 - 656--The official Committee record contains additional material here.]


                       resources and staff levels

    Mr. Skeen. Provide an update on the description, resources, and 
staff levels that appear on page 538 of last year's hearing record.
    [The information follows:]

    Director's Office: Provides information and networking as an 
internal support unit to all of USDA Communications. Also in the 
Director's Office is the Administration Unit which services the 
personnel and budget needs of OC, the Press Secretary and Staff and the 
speech writing unit.
    Staff: 25.
    Budget: $3,450,283.
    Public and Media Outreach Center: Performs news, planning, 
placement and public liaison duties for the Office of Communications.
    Staff: 14.
    Budget: $920,819.
    Video, Teleconference & Radio Center: Provides video productions, 
live video conferences, audio conferences, and 24-hour availability 
service of seven to then news items on USDA's radio news line. Also 
provides through the USDA television news service, news actualities and 
new feature stories covering Department policies and programs.
    Staff: 10.
    Budget: $800,471.
    Design Center: Provides centralized design, leadership and creative 
services establishing and monitoring the visual standards of USDA.
    Staff: 8.
    Budget: $415,749.
    Photography Center: Maintains an extensive centralized USDA Photo 
Library of captioned black and white prints and color slides. Provides 
photographic services.
    Staff: 11.
    Budget: $571,092.
    Printing Management Center: Provides centralized printing to the 
Department and policy guidance to the many field operations. The 
Printing Management Center is the central printing authority, and 
therefore, is the liaison with the Government Printing Office, and the 
Joint Committee on Printing.
    Staff: 8.
    Budget: $483,054.
    Coordination & Review: Provides a desk system of vertical 
coordination within the Under or Assistant Secretary's respective 
program mission areas. Horizontal coordination with the other 
coordinators and other units within OC which enables them to coordinate 
news and other printed and electronic information products of the 
Department for editorial content, design and quality.
    Staff: 19.
    Budget: $1,496,532.

                      communications coordinators

    Mr. Skeen. Six Communications Coordinators were established in 
fiscal year 1995 to assist each Under and Assistant Secretary areas. 
Provide some specific examples of the work each one has done.
    Response. The Communications Coordinators, representing USDA's 
seven mission areas, Departmental Administration and other staff 
offices, work together as a team to coordinate communications on cross-
cutting issues or major initiatives of the Department. Communications 
efforts involve various forms of information for access through the 
Internet and its world wide web, outreach to various USDA constituent 
groups, availability at various meetings of organizations and 
responding to requests for information from the public.
    A major effort was undertaken by the six Communications 
Coordinators to coordinate the USDA-wide, multi-agency effort in 
communicating information to farmers, ranchers, and others about 
implementation of the 1996 Federal Agriculture Improvement Act. Other 
examples of USDA activities or events for which they coordinated public 
communications last fiscal year included: preparations for the 1996 
World Food Summit; drought relief for farmers and ranchers, and 
emergency food and other disaster relief activities; the annual 
agricultural economic outlook forum; agribusiness concentration and its 
affect on producers' markets and prices; Water 2000 projects in about 
35 states; improvement in nutritional value of foods purchased for 
schools by USDA; food stamp anti-fraud initiatives; integrated pest 
management symposium; various environmental events and initiatives; 
science-based food safety initiatives, such as Hazard Analysis and 
Critical Control Points and pathogen reduction initiative; fresh vs. 
frozen poultry issues; food safety regulatory reform initiative; 
release of updated dietary guidelines for Americans; National School 
Lunch Program anniversary; expanding farmers' markets; rural 
development Government-industry initiatives; National Homeownership 
Summit; National Bacillus Thuringiensis Form; energy-related research 
initiatives; U.S.-Canadian Joint Commission on Grain; crop insurance 
reform and other risk management activities; and first memorandum of 
agreement between USDA and a conservation district.
    In addition, the coordinators took on leadership for improving 
internal communications with USDA employees. They were actively 
involved in communication efforts dealing with the reorganization and 
down-sizing of the Department of Agriculture, including efforts in 
consolidating field offices into USDA service centers.

                         press releases issued

    Mr. Skeen. Please update the table that appears on page 540 of last 
year's hearing record showing the number of press releases issued by 
your office to include fiscal year 1997.
    [The information follows:]

Number of News Releases issued by the Office of Communications: Calendar 
Years 1987-1997

1987.............................................................. 1,616
1988.............................................................. 1,720
1989.............................................................. 1,688
1990.............................................................. 1,693
1991.............................................................. 1,442
1992.............................................................. 1,366
1993.............................................................. 1,068
1994..............................................................   983
1995..............................................................   880
1996..............................................................   700
1997..............................................................   500

    The number of news releases issued by the Office of Communications 
has declined. More agency-specific or regional news releases are issued 
by the individual program agencies, and are not issued through the 
Office of Communications. Most of the agency news releases are 
accessible via the agency Internet web sites, and linked to the USDA 
Internet home page administered by the Office of Communications. 
Communications coordinators review and clear any news releases when 
dealing with significant issues.

                             media services

    Mr. Skeen. Were any new media services provided in fiscal year 
1996? Were any previous services deleted?
    Response. In fiscal year 1996, we established the Spanish Media 
Service. This service includes radio, press services, and the 
Secretary's Column to Spanish newspapers. No previous services were 
deleted.

                reimbursements from other usda agencies

    Mr. Skeen. Update the table that appears on page 541 of last year's 
hearing record showing reimbursements from other agencies to include 
fiscal year 1996 actuals.
    [The information follows:]

[Page 659--The official Committee record contains additional material here.]


                          usda visitor center

    Mr. Skeen. What was the number of visitors to the USDA Visitors 
Center in fiscal year 1996?
    Response. Approximately 11,618 people visited the Visitors Center 
in fiscal year 1996.
             object class for director of national services
    Mr. Skeen. Provide an object class and permanent positions by grade 
and staff-years table for the Director of National Services for fiscal 
years 1996, 1997, and 1998.
    Response. I will provide that information for fiscal year 1996. We 
do not have a National Service program in fiscal year 1997 and will not 
have one in fiscal year 1998.

                           [Fiscal year 1996]                           
------------------------------------------------------------------------
       Staff-year and grade            Object class          Amount     
------------------------------------------------------------------------
1  ES-01..........................               1100            $99,875
                                                 1200             19,975
1  GS-15..........................               1100             85,217
                                                 1200             11,078
1  GS-13..........................               1100             56,050
                                                 1200             16,815
                                   -------------------------------------
      Total (3 years).............  .................            289,010
------------------------------------------------------------------------

               funding for director of national services
    Mr. Skeen. Where do funds come from to support this office?
    Response. The Office of Communications received reimbursements 
totaling $215,578 from other USDA agencies. The remaining $73,432 was 
paid out of OC funds.

                        national service program

    Mr. Skeen. Update the table that appears on page 543 of last year's 
hearing record showing a breakout, by agency, of how much is spent in 
support of the National Service program to include fiscal years 1997 
and 1998.
    Response. In fiscal year 1997, USDA did not begin any new 
AmeriCorps Activities. USDA is no longer running any AmeriCorps 
activities, and will not run any in fiscal year 1998. No fiscal year 
1997 funds have been spent on AmeriCorps Activities and no funds will 
be spent in fiscal year 1998.

                   conversion of photographic library

    Mr. Skeen. When do you expect to complete the conversion of the 
entire working collection to photo CD?
    Response. We plan to have a fully functionable digital photo 
library containing 50,000 images on Kodak Photo CD by fiscal year 2000. 
As of October 1, 1996, approximately 20,000 images have been converted.

               computer matching and privacy act of 1988

    Mr. Skeen. Under the Computer Matching and Privacy Act of 1988, 
USDA has entered into a number of matching agreements to identify 
employees who may owe the Federal government money. Two of these 
agreements, one with the Postal Service and one with the Department of 
Defense, are salary offset initiatives. Last year the Committee was 
told that collections through September 1995 were $1,958,505 and costs 
under the agreements were $516,750. Please update these figures for us.
    Response. Through September 30, 1996, collections under the two 
agreements totaled $2,317,603 and costs under the agreements total 
$597,796.
                        salary offset initiative

    Mr. Skeen. What is the status of the Food and Consumer Service's 
salary-offset initiative?
    Response. Food and Consumer Service--FCS--referred all Federal 
employees identified in its first match for which voluntary payments 
were not received to the Federal employing agencies. As of September 
30, 1996, FCS has collected $120,000 from Federal employing agencies 
and voluntary payments. FCS received some payments from Federal 
employees who did not respond to the Food Stamp State Agency, but who 
did not want their employing agency to offset their salaries. FCS 
collected most of the debts referred to the Postal Service for salary 
offset.

             credit alert interactive voice response system

    Mr. Skeen. At this time last year, the final rule to allow USDA 
access to the Credit Alert Interactive Voice Response System with the 
Department of Housing and Urban Development was in the revision/
clearance process. What is the status of this rule?
    Response. The final rule is in the revision/clearance stage, and 
expects to be published by August 9, 1997.

                office of communications' budget request

    Mr. Skeen. Provide a detailed breakout of the Office of 
Communications' budget request to the Secretary, the Secretary's 
request to OMB, and the OMB allowance.
    [The information follows:]

                              OBJECT CLASS                              
                         [Dollars in thousands]                         
------------------------------------------------------------------------
                                        Request   Secretary's           
             Description                   to      request to     OMB   
                                       secretary      OMB      allowance
------------------------------------------------------------------------
Fiscal year 1997 current estimate....     $8,138      $8,138      $8,138
Increases:                                                              
    Restoration of Congressional cuts        179           0           0
    Pay costs........................        211         106         106
    Salary adjustments...............         84           0           0
    Inflation........................         31           0           0
    Program increases................        676         254          35
                                      ----------------------------------
      Total..........................      9,319       8,498       8,279
------------------------------------------------------------------------

                           object class 1100

    Mr. Skeen. Why does object class 11, total personnel compensation, 
increase by $454,000 from fiscal year 1996 to fiscal year 1997 when the 
number of staff-years remains the same?
    Response. Object class 11, total personnel compensation, increased 
by $454,000 because of vacant positions being filled late in the fiscal 
year. Salary costs for the Director of National Service and staff were 
reimbursed in fiscal year 1996, but are part of the appropriation in 
fiscal year 1997.

              object class 2400, printing and reproduction

    Mr. Skeen. Provide a sub-object class breakout for object class 24, 
printing and reproduction, for fiscal years 1996, 1997, and 1998.
    [The information follows:]

                            SUB-OBJECT CLASS                            
                         [Dollars in thousands]                         
------------------------------------------------------------------------
        Object class            Description      1996     1997     1998 
------------------------------------------------------------------------
2410........................  Printing,            $64      $74      $80
                               binding, etc.                            
2420........................  Reproduction,         10       20       30
                               duplicating                              
                               processes.                               
2421........................  Photo service          5       10       10
                               (AD-271).                                
2422........................  Copier service.       48       56       60
                             -------------------------------------------
      Total.................  ...............      127      160      180
------------------------------------------------------------------------

                 increase in printing and reproduction

    Mr. Skeen. Total printing orders decreased from 9,868 in fiscal 
year 1995 to 8,594 in fiscal year 1996. Why do you anticipate printing 
and reproduction to increase in both fiscal years 1997 and 1998?
    Response. The printing costs for fiscal year 1996 were low because 
the USDA News printing costs were reimbursed from other agencies. The 
increase between fiscal year 1997 and 1998 is for the Outreach to 
Underserved Groups. The increase would be used to conduct an initial 
survey to identify the level of knowledge of USDA services and the best 
information channels to reach underserved groups. A staff member would 
then coordinate information outreach from several mission areas and 
package them into information programs and campaigns for each of the 
target audiences.
                     outreach to underserved groups

    Mr. Skeen. You are requesting an increase of $35,000 for outreach 
to underserved groups. The Office of Communications or a predecessor 
has been around since 1913. One would assume that, over an 80 year 
timespan, you would have developed well established contacts and roots 
with certain groups and populations and would be able to shift 
resources to develop contacts and serve other groups and populations. 
Please tell the Committee why this hasn't been done.
    Response. Over the years, the Office of Communications has 
developed well established contacts with certain groups and populations 
and has been able to shift resources to develop contacts and serve 
other groups and populations. However, in fiscal year 1996, we 
established a Spanish Media Service that requires use of equipment that 
we previously had not used. We have set one of our GPRA goals as 
``Conducting three out of town briefings,'' in order to reach out to 
small producers and underprivileged constituents. These individuals do 
not have the resources to come to Washington, D.C., and we have not 
previously been able to reach them via briefings. We would like to talk 
our briefings out to them.

                 cost to produce agriculture fact book

    Mr. Skeen. What was the cost to produce the Agriculture Fact Book? 
How many copies were printed and distributed? What is the cost to 
purchase this book? Submit a copy for the record.
    Response. The Agriculture Fact Book was produced at a cost of 
$12,757.38. Of the 9,369 copies printed, 8,500 were for USDA and 869 
were for the Government Printing Office (GPO) Superintendent of 
Documents. GPO sells the book for $9.50 per copy. We will provide a 
copy of the fact book.

    [Clerks note.--The Agriculture Fact Book is too lengthy to 
print and a copy has been retained in the Committee files.]
           The Government Performance and Results Act [GPRA]
    Mr. Skeen. What progress is the agency making in developing its 
strategic plan, including defining its mission and establishing 
appropriate goals?
    Response. The office of Communications completed its draft 
strategic plan and submitted it to USDA's Chief Financial Officer. The 
plan includes OC's mission and appropriate goals for the 5-year period.
    Mr. Skeen. Has the agency identified conflicting goals for any of 
its program efforts? If so, what are the performance consequences of 
these conflicting goals and what actions--including seeking legislative 
changes--is the agency taking to address these conflicts?
    Response. No conflicting goals were identified, therefore, no 
actions are needed to address such conflicts.
    Mr. Skeen. As you develop your strategic plan, how are you taking 
into account projected resources that likely will be available--
especially as we move to a balanced budget? What assumptions are you 
making? How are you ensuring that your goals are realistic in light of 
expected resources?
    Response. Available resources were projected as constant, i.e. no 
budget increases are expected, no staff increases are expected. Goals 
and objectives are designed so that any new initiative will replace 
activities no longer needed due to decreased value to customers.
    Mr. Skeen. What progress have you made in establishing clear and 
direct linkages between the general goals in your strategic plan and 
the goals to be contained in your annual performance plans?
    Response. We are in the process of establishing linkages, which 
will be completed when the annual performance plans are due.
    Mr. Skeen. More specifically, how are you progressing in linking 
your strategic and annual performance goals to the program activity 
structure contained in the President's budget? Do you anticipate the 
need to change or modify the activity structure to be consistent with 
the agency's goals?
    Response. OC has only one program activity in the budget. 
Therefore, we do not anticipate the need to change or modify our 
program activity structure.
    Mr. Skeen. What progress has your agency made--and what challenges 
is it experiencing--defining results--oriented performance measures 
that will allow the agency and others to determine the extent to which 
goals are being met?
    Response. OC's 5-Year strategic plan will contain results-oriented 
performance measures. This is difficult for a communications 
organization which supports the Department and its program objectives. 
It would be easier to measure output, the more traditional performance 
measure for communications. To really measure communications results, 
surveys or selected publics would need to be conducted to see if the 
messages were received and understood.
    Mr. Skeen. What lessons did the agency learn from its participation 
in the Results Act pilot phase and how are those lessons being applied 
to agency-wide Results Act efforts? What steps is the agency taking to 
build the capacity (information systems, personnel skills, etc.) 
necessary to implement the Results Act?
    Response. We have learned many lessons from the Results Act pilot 
phase. One lesson is that pilot plans should be limited to one-year 
increments; two, that developing a 5-year long-term plan takes the 
management team working together to complete such a strategic plan and 
third; that participation during the pilot phase was too limited and 
needed to include managers.
    Mr. Skeen. Who do you consider to be your agency's primary 
stakeholders and how will you incorporate their views into your 
strategic plan?
    Response. News media, constituent groups, and the general public 
are primary stakeholders, as well as USDA agencies. Regular contact 
with the stakeholders and occasional formal surveys are used in 
determining their views and needs, and are incorporated into OC's 
strategic plan.
    Mr. Skeen. What other federal agencies are you working with to 
ensure that your strategic plans are coordinated? What steps have you 
taken to ensure that your efforts complement and do not unnecessarily 
duplicate other federal efforts?
    Response. Since OC's mission is to serve the Department of 
Agriculture in a support role, coordinating its strategic plan with 
other federal agencies is not necessary. Efforts will be made to ensure 
that efforts within other programs at the Department of Agriculture do 
not duplicate OC's efforts, and that OC's efforts compliment efforts 
elsewhere in the Department of Agriculture. This will be accomplished 
by regular exchanges of communications' plans, overseen by OC 
communications coordinators. Also, OC has responsibility to provide 
coordination and support to other agencies communications officers.
    Mr. Skeen. What are your plans for congressional consultation as 
you develop your strategic plan? Which Committees will you consult 
with? How will you resolve differing views?
    Response. All USDA Mission Areas/Agencies have prepared draft 
Strategic Plans which are currently being reviewed by an Under/
Assistant Secretary, the Senior Policy Staff, the Secretary and later 
by OMB. Upon completion of the review, the Department plans to provide 
copies of the Strategic Plan to relevant Congressional Committees. 
Thereafter, we will look forward to meeting with Members of Staff to 
discuss our Strategic Plan and to solicit their input and advice on 
refinements to that Plan. We plan to provide copies of the Department 
Strategic Plan to the following Committees:
    House Agriculture Committee.
    House Appropriations Committee.
    House Economic and Educational Opportunities Committee.
    House Government Reform and Oversight Committee.
    House Resources Committee.
    Senate Agriculture, Nutrition, and Forestry Committee.
    Senate Appropriations Committee.
    Senate Energy and Natural Resources Committee.
    Senate Governmental Affairs Committee.
    Mr. Skeen. What changes in program policy, organization structure, 
program content, and work process has the agency made to become more 
results oriented?
    Response. OC intends to increase knowledge of the general public 
about the Department's policies, programs and initiatives through 
integration of communications management with Departmental policy and 
program management. Another goal is to improve access to and 
dissemination of information to news media, constituent groups and 
individual customers using the latest and most efficient communications 
technology, methods and standards. OC intends to improve communications 
with the Department's employees by leading and coordinating internal 
communications. OC intends to develop an efficient and effective, 
results-oriented, public affairs community within the Department that 
provides high-quality customer service while fostering equal 
opportunity for employment in OC and agency communications staffs and 
providing equal opportunity for contracting information products and 
services.
    Mr. Skeen. How are managers held accountable for implementing the 
Results Act and improving performance?
    Response. Manager's annual performance plans will be related 
directly to annual performance plans, which will carry out the 
strategic plan. Managers will be responsible for carrying out segments 
of the annual performance plan through their respective staffs.
    Mr. Skeen. How is the agency using Results Act performance goals 
and information to drive daily operations?
    Response. Performance plans of OC employees will reflect goals and 
objectives of OC's performance plans in carrying out the strategic 
plan. Through regular periodic reviews and evaluation of employees' 
performance, managers will focus on progress in accomplishing annual 
performance plans which relate to the goals and objectives of the 5-
year strategic plan. Expected results is that both managers and 
employees will spend work time to achieve described objectives.

                     Office of the General Counsel

                              regulations

    Mr. Skeen. In last year's testimony, you indicated that action had 
been taken on 42 percent of the regulations identified by the 
Department for elimination or revision. Please update the Committee on 
progress in eliminating or revising USDA regulations.
    Response. As of March 31, 1997, USDA has acted on 63 percent of the 
regulations we identified for elimination or reinvention; about 7,400 
pages in the Code of Federal Regulations of our total regulatory reform 
commitment of 11,700 pages. The Department has acted on nearly 4,200 
pages of the 8,100 pages that we proposed to reinvent (over 51% of our 
commitment), and has virtually completed its commitment to eliminate 
3,200 pages of regulations.

                    civil rights action team report

    Mr. Skeen. The Secretary's Civil Rights Action Team Report stated 
that there was a perception that the Office of the General Counsel is 
hostile to civil rights. Information from the listening sessions 
indicated that ``OGC's legal positions on civil rights issues are 
perceived as insensitive at the least and racist at worst.'' How is OGC 
addressing this concern?
    Response. Well, it is unfortunate that such perceptions exist, but 
I really do not feel that they are founded in fact. Nevertheless, it is 
up to us to try to remove these perceptions, wherever they come from, 
as best we can as we do our work. That work sometimes involves 
defending the Department in cases which include claims of 
discrimination filed in administrative tribunals and in Federal court.
    Our standard is to always, always, do our duties fairly and 
impartially in every civil rights issue that we receive. In point of 
fact, despite the fact that there are approximately 530 formal program 
discrimination complaints and 1,450 formal employment discrimination 
complaints on file with the Department, OGC consultation has been 
sought only in approximately 10 program discrimination complaints and 
31 employment discrimination complaints over the last two years. We 
have, and will continue to work with the civil rights staff of the 
Department to craft fair and prompt settlements, within the law, where 
discrimination has occurred.
    Further, I have initiated a number of specific steps to address the 
concerns raised by the Civil Rights Action Team. First, the Secretary 
has approved our proposal to establish a separate Civil Rights Division 
within our Office, and we have taken the initial steps to do that and 
to select an Associate General Counsel with specialized expertise in 
civil rights law. I will be working with the new Associate General 
Counsel for Civil Rights to insure OGC's strong support for the 
Department's civil rights program is evident.
    Second, I have stressed again to all members of the OGC staff that 
removing these perceptions requires proactive work on our part. It is 
not enough to be fair in application of the law; we must act so that 
everyone can see that we treat USDA's employees and customers with 
fairness and with a view towards assuring that their civil rights are 
our highest priority. Finally, I have given my personal assurance to 
the Secretary that our attorneys have and will continue to conduct 
themselves effectively and honorably as they carry out our many and 
diverse responsibilities under the Constitution and the civil rights 
laws, as well as the statutes authorizing the programs which this 
Department administers.
    Mr. Skeen. Another concern the Civil Rights Action Team had was 
that the OGC attorneys who practice civil rights are not required to 
have specialized experience or education in civil rights. How will you 
address this issue?
    Response. The three most senior career attorneys presently 
responsible for the practice of civil rights law within OGC average 30 
years of Federal service. While none of those attorneys has spent his 
entire career practicing in the civil rights area, and they do not 
presently practice full-time in this area, each has very substantial 
experience in interpretation and application of Federal civil rights 
laws. The two attorneys next in seniority who presently practice in 
this area within OGC have 26 and 10 years' service, respectively, and 
these two attorneys presently dedicate a majority of their time to 
civil rights. Further, there are five additional attorneys in our 
General Law Division who spend a portion of their time handling matters 
which arise under the civil rights laws, still other attorneys in that 
Division who participated in the recent analysis of USDA's program to 
determine compliance with the Supreme Court's Adarand decision and 
attorneys in many of our 18 field offices who also provide legal 
services under the civil rights laws on a part-time basis. To suggest 
that we have inadequate expertise with respect to the civil rights 
laws, and how those laws impact USDA programs and activities, is simply 
incorrect.
    Nonetheless, as I described in the answer to the above question, we 
will establish a new Civil Rights Division and concentrate and augment 
our civil rights expertise in that Division.
    Mr. Skeen. The OGC lawyers were also seen, in the Civil Rights 
Action Team Report, as lacking an understanding of the mission areas 
they serve. What is your plan to improve the understanding of agency 
programs by OGC lawyers?
    Response. The reference does appear in the Report that OGC 
attorneys should have ``better understanding of the mission areas they 
serve.'' The Report contained no further explanation of that view, and 
I am at a loss to understand it. The depth of expertise of our 
attorneys regarding the programs whose mission areas they serve, both 
in Washington, D.C. and in our OGC field offices, is truly impressive. 
Our attorneys have thorough knowledge both of the statutes and 
regulations under which USDA programs are conducted, and have had years 
of experience with these programs. They are routinely involved in 
writing or reviewing agency regulations, implementing such programs, 
interpreting the statutory provisions, and assisting in defending 
challenges to such programs which arise in the context of litigation. 
We will continue to strive to develop our expertise with respect to the 
laws authorizing USDA's programs and activities, as well as the civil 
rights laws which likewise apply to all of our undertakings.
    Mr. Skeen. Finally, the Secretary's Civil Rights Action Team Report 
also indicated that OGC's EEO performance was poor because only 5.4 
percent of the lawyers were minorities, there are no minority senior 
executives at OGC, and there were no minority attorneys working on 
civil rights. How will OGC address this issue?
    Response. The Civil Rights Action Team Report stated that ``another 
reason for the perception that OGC is insensitive when it comes to 
civil rights is the lack of diversity among OGC's attorneys''. 
Certainly, since I have been here, the Office of the General Counsel 
has always maintained employment and promotion policies that prohibit 
unlawful discrimination. Of course, we have done mighty little hiring 
over this time, as our numbers have continued to be reduced, from about 
420 when I came to about 360 now. On those few recent occasions that we 
have been able to hire, we have been proactive to assure a broad range 
of applicants, including minority attorneys, were included in the pool 
of applicants. We were successful in recruiting minority employees to 
fill many of these positions. Continued diversification of our attorney 
staff is a goal to which we are committed.

                           user fee programs

    Mr. Skeen. Please update the table on pages 582 and 583 of last 
year's hearing record that lists all the user fee programs for which 
you receive a reimbursement and the amount of the reimbursement to 
include fiscal year 1996 actuals and estimates for fiscal year 1997.
    [The information follows:]

    USER FEE PROGRAMS, FISCAL YEAR 1996 ACTUALS AND FISCAL YEAR 1997    
                                ESTIMATES                               
------------------------------------------------------------------------
                                     Fiscal year 1996   Fiscal year 1997
              Program                    actuals           estimates    
------------------------------------------------------------------------
Perishable Agricultural                                                 
 Commodities Act..................           $618,530           $655,800
Agricultural Marketing Act........              4,230              4,700
Tobacco Inspection Act............              3,054              5,400
Cotton Standards Act..............              1,353              1,300
Plant Variety Protection Act......              6,528              6,600
Voluntary Meat Services...........              2,447              1,200
Research and Consumer Information                                       
 Act..............................             63,714             65,800
Animal and Plant Health Inspection                                      
 Service..........................            189,959            195,200
United States Warehouse Act.......             11,742             10,400
United States Grain Standards Act.             20,072             14,000
Food Safety and Inspection Service             12,588             24,500
                                   -------------------------------------
      Total.......................            934,217            984,900
------------------------------------------------------------------------

                             user fee hours

    Mr. Skeen. Update the table that appears on page 585 of last year's 
hearing showing the attorney-hours spent on each user fee account to 
include fiscal year 1996 actuals and estimates for 1997.
    [The information follows:]

                                  OFFICE OF THE GENERAL COUNSEL USER FEE HOURS                                  
----------------------------------------------------------------------------------------------------------------
                                                                           Fiscal years                         
                                                ----------------------------------------------------------------
                     Agency                                                                           Estimated 
                                                     1993         1994         1995         1996         1997   
----------------------------------------------------------------------------------------------------------------
AMS............................................       12,304       12,528       14,560       10,440       12,528
APHIS..........................................        3,998        6,264        4,160        4,176        4,176
GIPSA..........................................          553        1,044        1,040          418          209
FSA............................................          575        1,044        1,040          209          209
FSIS...........................................            0        1,044          416          209          418
                                                ----------------------------------------------------------------
      Total....................................       17,430       21,924       21,216       15,452       17,540
----------------------------------------------------------------------------------------------------------------

                              staff years

    Mr. Skeen. Please update the table that appeared on page 583 of 
last year's hearing record, showing staff years by appropriation and 
reimbursements, to include fiscal year 1996 actuals and fiscal year 
1997 estimates.
    [The information follows:]

OGC STAFF YEARS BY APPROPRIATION AND REIMBURSEMENTS, FISCAL YEARS 1993, 1994, 1995, 1996 ACTUALS AND FISCAL YEAR
                                                 1997 ESTIMATED                                                 
----------------------------------------------------------------------------------------------------------------
                                                                                   Fiscal Year                  
                                                               -------------------------------------------------
                                                                  1993      1994      1995      1996      1996  
----------------------------------------------------------------------------------------------------------------
Office of the General Counsel.................................       361       367       335       328       329
Allocation from Hazard Waste Management.......................         7         8         8         7        11
Staff under other USDA appropriations:                                                                          
    AMS.......................................................         1  ........  ........  ........  ........
    RHS (Formerly FmHA).......................................        11  ........  ........  ........  ........
    FS........................................................        14        16        15        10         5
    AMS-User Fees.............................................         6         6         7         5         6
    APHIS-User Fees...........................................         2         3         2         2         2
    GIPSA-User Fees...........................................        .5        .5        .5        .2        .1
    FSA-User Fees.............................................        .5        .5        .5        .1        .1
    FSIS-User Fees............................................  ........        .5        .2        .1        .2
                                                               -------------------------------------------------
      Total, Other USDA Appropriations........................        35        27        25        18        13
                                                               =================================================
      Total, Office of the General Counsel....................       403       402       368       353       353
----------------------------------------------------------------------------------------------------------------

                 united states-canada joint commission

    Mr. Skeen. Please report to the Committee on the implementation of 
the recommendations of the U.S.-Canada Joint Commission on Grains.
    Response. The Office of the General Counsel does not have any 
current active involvement concerning the implementation of the 
recommendations of the U.S.-Canada Joint Commission on Grains. The 
Foreign Agricultural Service has been the lead agency in this regard. 
We understand that some progress has been made in the grading and 
regulatory areas, but that there has been little movement on 
implementing the policy recommendations which cover institutions and 
programs such as the Canadian Wheat Board and the Export Enhancement 
Program.
                       attorney hours by category

    Mr. Skeen. Please update the table that appears on page 584 of last 
year's hearing report, showing attorney-hours worked by category, to 
include fiscal year 1996 actuals.
    [The information follows:]

[Page 668--The official Committee record contains additional material here.]


                        attorney hours by agency

    Mr. Skeen. Please update the table on page 585 of last year's 
hearing report showing a breakout by agency of the attorney-hours 
worked for fiscal year 1996.
    [The information follows:]

                   ATTORNEY HOURS FOR FISCAL YEAR 1996                  
                               [By Agency]                              
------------------------------------------------------------------------
                                                   Hours       Percent  
------------------------------------------------------------------------
Agricultural Marketing Service................       25,205            6
Animal and Plant Health Inspection Service....       23,954            6
Commodity Credit Corporation..................        3,081            1
Farm Service Agency...........................       44,883           11
Food and Consumer Service.....................       18,488            5
Food Safety and Inspection Service............       11,459            3
Foreign Agricultural Service..................        5,081            1
Forest Service................................      116,051           29
Grain Inspection, Packers and Stockyards                                
 Administration...............................        8,233            2
Natural Resources Conservation Service........       19,841            5
Rural Business Cooperative Service............        7,451            2
Rural Housing Service.........................       73,594           18
Rural Utilities Service.......................       15,284            4
Other (includes OGC internal management and                             
 several USDA agencies where time spent is                              
 less than 1%)................................       31,511            7
                                               -------------------------
      Total...................................      404,116          100
------------------------------------------------------------------------

                            private counsel

    Mr. Skeen. Last year you indicated that it was too early to 
determine the impact of using private counsel in the Western District 
of Louisiana on the workload of the Little Rock OGC Office. What is 
your assessment of using private counsels? What has been the affect on 
delinquent loan collections?
    Response. The experience with use of private counsel in the Western 
District of Louisiana has been a great success. There are seven private 
attorneys or law firms filing actions in Federal District Court on 
behalf of the Farm Service Agency (FSA). Of the 138 cases referred to 
these counsel, there have been 59 settlement proposals received, 26 
cases paid out and closed, 10 settlement offers denied, and 21 offers 
still pending--several of which will be accepted. Several U.S. 
Marshal's sales had been scheduled, but were canceled because of the 
Secretary's suspension of farm foreclosure sales. The speed and 
efficiency of the private attorneys in collecting FSA's debts has led 
to more voluntary payments on the part of FSA borrowers as the word has 
gotten around that FSA does mean business concerning its loan 
collections.
    Mr. Skeen. Is it possible for the agencies to hire legal counsel 
from the private sector to represent them in cases?
    Response. In order for an agency to hire private counsel to conduct 
or defend litigation on its behalf, the agency must have specific 
statutory authority to do so. For example, such authority is provided 
to the Farm Service Agency by section 331(c) of the Consolidated Farm 
and Rural Development Act (7 U.S.C. 1981(c)) and to the Rural Housing 
Service by section 510(d) of the Housing Act of 1949 (42 U.S.C. 
1480(d)). Otherwise, only the Attorney General has the exclusive 
statutory authority to represent the United States and its agencies in 
court. See 5 U.S.C. section 516.
    Mr. Skeen. Are there plans to expand the use of private counsel to 
other districts or offices?
    Response. When there is a specific need, we have the authority. The 
question is whether U.S. Attorneys are providing adequate service. 
Generally they are, but I suspect that we will need additional private 
counsel assistance when the Secretary's suspension of foreclosures from 
the civil rights review is lifted. We have no specific plans at this 
time.
                           attorney locations

    Mr. Skeen. Please update the table showing the number and locations 
of OGC attorneys appearing on page 586 of last year's hearing record.
    Response. Following is a table showing our attorneys by location as 
of March 31, 1997.

                     Attorney Locations and Positions

Washington, DC................................................       133
Albuquerque, NM...............................................         2
Atlanta, GA...................................................        10
Boise, ID.....................................................         1
Chicago, IL...................................................         5
Columbus, OH..................................................         2
Denver, CO....................................................        13
Greenwood, MS.................................................         1
Harrisburg, PA................................................         7
Juneau, AK....................................................         3
Leawood, KS...................................................         8
Little Rock, AR...............................................         7
Milwaukee, WI.................................................         6
Missoula, MT..................................................         5
Montgomery, AL................................................         3
Ogden, UT.....................................................         3
Portland, OR..................................................        12
Richmond, VA..................................................         3
Sacramento, CA................................................         1
San Francisco, CA.............................................        12
St. Paul, MN..................................................         3
Temple, TX....................................................         5
                    --------------------------------------------------------------
                    ____________________________________________________

        Total.................................................       245

                        civil and criminal cases

    Mr. Skeen. Please update the table that appears on pages 586 and 
587 of last year's hearing record, showing the number of new and 
pending civil and criminal cases, as well as the dollar value related 
to the pending cases, to include fiscal year 1996.
    [The information follows:]

                                            CIVIL AND CRIMINAL CASES                                            
----------------------------------------------------------------------------------------------------------------
                                                                 New cases referred       Pending end of fiscal 
                                                             --------------------------           year          
                                                                                       -------------------------
                                                                 Civil       Criminal      Civil       Criminal 
----------------------------------------------------------------------------------------------------------------
Fiscal year:                                                                                                    
    1992....................................................       14,472          333       28,462          454
    1993....................................................       12,519          273       24,897          475
    1994....................................................       10,449          257       20,715          413
    1995....................................................       22,631          367       29,806          440
    1996....................................................        8,221          156       23,871          389
----------------------------------------------------------------------------------------------------------------


                             DEBT COLLECTION                            
------------------------------------------------------------------------
                                             Pending                    
                                              Cases       Dollar amount 
------------------------------------------------------------------------
September 30, 1992.......................       21,770     4,588,296,100
September 30, 1993.......................       20,379     4,319,226,106
September 30, 1994.......................       13,607     3,858,174,693
September 30, 1995.......................       13,853     4,008,728,604
September 30, 1996.......................       11,891     1,635,944,676
------------------------------------------------------------------------

                            new authorities

    Mr. Skeen. Please provide a list of all new authorities passed in 
the second session of the 104th Congress, as well as a brief 
description of any workload increase related to these new authorities. 
What has been the budget and staffing impact on OGC?
    [The information follows:]

[Pages 671 - 682--The official Committee record contains additional material here.]


    Mr. Skeen. Also, please provide a list of all authorities that have 
resulted in decreases to your workload. Include the budget and staffing 
impacts.
    [The information follows:]

------------------------------------------------------------------------
                                                 Estimated              
          Authority               Impact of       attorney     Dollars  
                                  authority     staff years             
------------------------------------------------------------------------
Federal Agriculture            Repealed                -.05       -4,284
 Improvement and Reform Act     provisions                              
 of 1996 (Pub. L. 104-127).     authorizing                             
                                the                                     
                                Subcommittee                            
                                on Food,                                
                                Agricultural,                           
                                and Forestry                            
                                Research, the                           
                                Joint Council                           
                                on Food and                             
                                Agricultural                            
                                Sciences, and                           
                                the                                     
                                Agricultural                            
                                Science and                             
                                Technology                              
                                Review Board.                           
Clinger-Cohen Act, Division    Increased               -.10       -8,568
 D, Pub. L. No. 104-106.        procurement of                          
                                commercial                              
                                items.                                  
Administrative Dispute         Elimination of          -.10       -8,568
 Resolution Act, Pub. L. 104-   General                                 
 320.                           Services Board                          
                                of Contract                             
                                Appeals.                                
Rescissions Act of 1995 (Pub.  The timber             -2.50     -226,318
 L. 104-19).                    salvage                                 
                                provisions of                           
                                the                                     
                                Rescissions                             
                                Act of 1995                             
                                (Pub. L. 104-                           
                                19), this law,                          
                                which directed                          
                                an expedited                            
                                salvage sale                            
                                program and                             
                                the release of                          
                                certain other                           
                                offered timber                          
                                sales, have                             
                                expired.                                
                                Litigation-                             
                                related                                 
                                activity                                
                                therefore has                           
                                been reduced.                           
                                Advice                                  
                                concerning                              
                                implementation                          
                                of other                                
                                provisions                              
                                involving                               
                                alternative                             
                                timber                                  
                                continues.                              
------------------------------------------------------------------------

                              law library
    Mr. Skeen. Please update the law library expenditures tables on 
page 590 of last year's hearing report to reflect 1996 actuals and 
fiscal year 1997 estimates.
    [The information follows:]

law library costs

Fiscal year:
                                                      Total expenditures
    1986......................................................  $448,655
    1987......................................................   524,103
    1988......................................................   537,826
    1989......................................................   549,451
    1990......................................................   608,280
    1991......................................................   586,983
    1992......................................................   454,518
    1993......................................................   541,416
    1994......................................................   407,885
    1995......................................................   427,083
    1996......................................................   471,977
    1997 Estimate.............................................   456,612
                    fy 1998 budget request breakout
    Mr. Skeen. Please provide the Committee with a detailed breakout of 
your budget request to the Secretary. The Secretary's request to OMB, 
and the OMB allowance.
    [The information follows:]

                     FISCAL YEAR 1998 BUDGET REQUEST                    
------------------------------------------------------------------------
                                      Agency        USDA         OMB    
------------------------------------------------------------------------
1997 Base:                                                              
    1997 Budget Request..........       29,249  ...........  ...........
    1997 Enacted.................  ...........       27,749       27,749
Changes To 1997 Base:                                                   
    Pay cost.....................          702          351          351
    Salary Adjustments...........          473            0            0
    Legal services previously                                           
     funded by the Forest Service          356          356            0
    Overall program trends.......            0          792            0
    Predecisional legal work.....            0          824            0
    Civil Rights Activities......            0          200          200
    General workload increases...            0            0        1,149
                                  --------------------------------------
        Total....................       30,780       30,272       29,449
------------------------------------------------------------------------

               performance goals, measures and indicators
    Mr. Skeen. The performance goals, measures, and indicators you 
included in your explanatory statement raise a number of questions. 
First, the indicator for your annual performance goal of assuring 
responsiveness to the needs of all USDA agency officials is dollars. It 
is not clear what these dollars represent. Are they OGC funding? This 
makes very little sense: The greater your appropriation the better you 
perform. The Committee suggests that you take a serious look at GPRA 
and report to the Committee using meaningful performance goals, 
measures and indicators. If this is how you approach managing OGC, we 
will require that you have an outside management audit.
    Response. The chart to which you refer does not fully and 
accurately describe the performance goals and measures we have 
developed. Let me assure you, we have not developed a strategic plan 
which measures success solely on the amount of the appropriations 
provided to us.
    One of the goals of our strategic plan is to better target the 
limited legal resources of OGC to insure that the foremost priorities 
of the Department are met. Our success in meeting the priority needs of 
Department officials will be assessed by surveying officials of the 
Department in year end reviews. Another goal is to create, staff and 
train a new Civil Rights Division within OGC. We have formulated other 
performance objectives that relate to our goal of increasing the 
efficiency of the Office of the General Counsel. These performance 
objectives concern improving computer and communciation resources and 
developing our workforce. We will assess our performance in meeting 
these objectives through performance measures tied to the objectives. 
Therefore, contrary to the impression you have formed from the material 
in our budget request, our performance indicators are not directly 
related to the amount provided through our appropriations, but rather, 
how well we manage with the appropriation we receive.
                             staffing goal
    Mr. Skeen. You are asking for $1,149,000 increase in your budget to 
``maintain staff and provide predecisional legal work.'' In your 
explanation you state, ``. . . this increase should not be viewed as an 
increase to hire additional staff, but as an increase to maintain 
current staff and provide legal support for USDA programs.'' However, 
the current staffing level is 353 hence the increase in the 1998 budget 
request does indeed increase staffing from 353 to 370. In light of your 
request to increase staffing, how do you plan to meet the OGC staffing 
goal of 333 staff years by the year 2002.
    Response. A bit of history is necessary to answer the question. In 
fiscal year 1993, OGC had a staffing level of 420. Lean budgets in 
fiscal years 1994 and 1995 forced us to dramatically reduce staff and 
carry out the reorganization of the office. At the end of fiscal year 
1996 and after completion of the reorganization, our staffing was 353, 
which then became our staff year ceiling for fiscal year 1997. However, 
the staff year ceiling of 353 is simply too low to adequately respond 
to the demands for legal services that we are receiving from the 
agencies of the Department and we plan to exceed that level in fiscal 
year 1997. We propose to maintain a staffing level of 370 through 
fiscal year 1998, which is our projected number of staff for the end of 
fiscal year 1997. With a staffing level of 370, we can provide an 
adequate level of legal services, in response to demands by our 
clients, if we plan carefully. We will be operating at a staff year 
level considerably lower than that of our fiscal year 1993 staff year 
level of 420.
    The other question is how we will plan to get to the staff year 
level of 333 by 2002. I would say two things about that. First, that's 
a projected number based upon outyear funding assumptions; the real 
question is, how much legal service this Department must have. That's 
what counts. Secondly, I'm optimistic that further improvement in 
technology and greater experience will allow more services to be 
delivered per attorney. I think that we are putting out just about the 
same level--and quality--of work now that we put up when I came on four 
years ago. The Secretary will review these outyear numbers as part of 
the FY 1999 budget process.
                      reduction in legal services
    Mr. Skeen. What will not get done if the funds for additional staff 
are not appropriated?
    Response. If the requested funding is not provided, thus forcing us 
to reduce staff, our best efforts to improve the responsiveness of the 
office will be thwarted. This in turn may cause OGC to be less timely 
in responding to some policy officials. However, the requirements of 
the Secretary's office would take precedence over all others. 
Inadequate budgets will also prevent OGC from improving the overall 
efficiency of the office because it will prevent us from making 
expenditures for technological improvements.
                             legal workload
    Mr. Skeen. What are the options for managing the USDA legal 
workload other than increasing the appropriation?
    Response. I see no viable options for the successful and timely 
management of the entirety of the legal workload of the USDA in the 
absence of an increase of OGC's fiscal year 1998 appropriation, in 
order to allow the current staff year level to be maintained. While the 
Office of the General Counsel has made significant enhancements to its 
ADP environment over the past couple of years, permitting greater 
efficiencies, and increasing the effectiveness of its staff, the 
complexity and volume of the legal demands of the department dictate 
that a realistic staffing level be maintained to facilitate this 
critical effort. Without the requested increases to the OGC 
appropriation, which will permit maintaining staff at or about the 
fiscal year 1997 end strength level, OGC will not be in a position to 
effectively manage the entirety of the Department's legal workoad, and 
may be compelled to reduce legal services in some areas.

                      examples of recent progress

    Mr. Skeen. For each of the examples of recent progress, provide an 
estimate of the cost and lawyer staff years associated with providing 
legal assistance, the number of cases involved, and the outcome of the 
OGC assistance.
    [The information follows:]

[Pages 686 - 696--The official Committee record contains additional material here.]


                      cases before eeo commission

    Mr. Skeen. Provide a table that shows the number of cases OGC 
represented before the EEO Commission for fiscal years 1994, 1995, and 
1996.
    [The information follows:]

------------------------------------------------------------------------
                                                             OGC cases  
                       Fiscal year                          before EEO  
                                                            Commission  
------------------------------------------------------------------------
1994....................................................              47
1995....................................................              43
1996....................................................              34
------------------------------------------------------------------------

                        ams user fee staff year
    Mr. Skeen. What is the reason for an additional staff year this 
year for AMS user fee work?
    Response. The additional staff year increase in fiscal year 1997 is 
an estimate, based on the projected legal services to be provided for 
AMS user fee work.
                          staffing reductions
    Mr. Skeen. What areas of work are not being adequately met because 
of staffing reductions?
    Response. If OGC receives its requested increase of $1,149,000 to 
continue to fund the on-board staff at the end of fiscal year 1997, OGC 
anticipates no requirement to conduct any staffing reductions. Workload 
will continue to be prioritized to accommodate both the Secretary's and 
the client agency priorities.

             Government Performance and Results Act (GPRA)

    Mr. Skeen. GPRA, known as the Results Act, requires each executive 
agency to issue, no later than September 20, 1997, a strategic plan 
covering at least five years. In addition to a mission statement 
grounded in legislative requirements, the plans are to contain general 
goals and objectives that are expected to be outcome or results 
oriented (such as to improve literacy) as opposed to output or activity 
oriented (such as to increase the number of education grants issued). 
What progress is the agency making in developing its strategic plan, 
including defining its mission and establishing appropriate goals? Has 
the agency identified conflicting goals for any of its program efforts? 
If so, what are the performance consequences of these conflicting goals 
and what actions--including seeking legislative changes--is the agency 
taking to address these conflicts?
    Response. The Office of the General Counsel has developed a draft 
strategic plan which conforms to the requirements of the GPRA. That 
plan includes a definition of the agency's mission and includes 
appropriate goals by which to gauge the agency's performance. In the 
course of development of the draft strategic plan, we did not identify 
any conflicting goals.
    Mr. Skeen. Strategic plans must be based on realistic assessments 
of the resources that will be available to the agency to accomplish its 
goals. As you are developing your strategic plan, how are you taking 
into account projected resources that likely will be available--
especially as we move to a balanced budget? What assumptions are you 
making? How are you ensuring that your goals are realistic in light of 
expected resources?
    Response. The strategic plan developed for the Office of the 
General Counsel is based on the assumption that adequate resources will 
be available to carry out the agency's mission. However, agency 
priorities, as reflected in its mission, may be affected by future 
resource levels. In view of the fact that the Office of the General 
Counsel has already carried out a significant downsizing program, which 
included a reduction in staff of 9.5% and contraction of the agency 
field organization, it is clear that further reductions will threaten 
the ability of the agency to provide adequate legal services to USDA 
officials. The assumptions underlying the OGC strategic plan are based 
on a recognition that staffing levels within OGC are unlikely to change 
significantly over the next five years. Therefore, the focus of the 
strategic plan will be to ensure that the Office of the General Counsel 
orders its work in a manner which properly reflects the priorities set 
for the Department by the Secretary of Agriculture, the Under and 
Assistant Secretaries and Agency Heads.
    Mr. Skeen. For Congress, the heart of the Results Act is the 
statutory link between agency plans, budget requests, and the reporting 
of results. Starting with fiscal year 1999, agencies are to develop 
annual performance plans that define performance goals and the measures 
that will be used to assess progress over the coming years. These 
annual goals are to measure agency progress toward meeting strategic 
goals and are to be based on the program activities as set forth in the 
President's budget. What progress have you made in establishing clear 
and direct linkages between the general goals in your strategic plan 
and the goals to be contained in your annual performance plans? OMB 
expressed concern last year that most agencies had not made sufficient 
progress in this critical area. More specifically, how are you 
progressing in linking your strategic and annual performance goals to 
the program activity structure contained in the President's budget? Do 
you anticipate the need to change or modify the activity structure to 
be consistent with the agency's goals? Overall, what progress has your 
agency made--and what challenges is it experiencing--defining results-
oriented performance measures that will allow the agency and others to 
determine the extent to which goals are being met?
    Response. The Office of the General Counsel is working to establish 
the link between the strategic plan and the goals which will be 
contained in the annual performance plans. The performance goals 
articulated in the annual performance plan will be tied directly to the 
goals stated in our strategic plan. Those goals center around making 
the Office of the General Counsel more responsive by ensuring that 
demands for legal services are prioritized in a manner consistent with 
the priorities of the Secretary. In order to respond effectively to 
those priorities, we have also established a goal to improve computer 
technology and communication tools in order to improve the productivity 
of employees of the agency.
    Because the budget for the Office of the General Counsel is 
requested via a single line item in the President's budget, we do not 
anticipate any need to change or modify the activity structure to be 
consistent with our goals.
    We are making good progress in defining results-oriented 
performance measures. The accomplishment of our goals will be measured 
through the use of surveys to determine the extent to which we provided 
legal services to USDA officials consistent with the priorities set by 
those officials.
    Mr. Skeen. If applicable, what lessons did the agency learn from 
its participation in the Results Act pilot phase and how are those 
lessons being applied to agency-wide Results Act efforts? What steps is 
the agency taking to build the capacity (information systems, personnel 
skills, etc.) necessary to implement the Results Act?
    Response. The Office of the General Counsel did not participate in 
the pilot phase of GPRA implementation.
    Mr. Skeen. The Results Act requires agencies to solicit and 
consider the views of stakeholders as they develop the strategic plans. 
Stakeholders can include state and local governments, interest groups, 
the private sector, and the general public, among others. Who do you 
consider to be your agency's primary stakeholders and how will you 
incorporate their views into the strategic plans?
    Response. Primarily, the Office of the General Counsel provides 
legal advice to the Secretary and other USDA officials who are 
responsible for program administration. Our strategic plan identifies 
the Secretary, Subcabinet and agency heads as our primary stakeholders. 
Consultations took place with many of these officials during the 
formulation of the strategic plan.
    Mr. Skeen. For the Results Act to be successful, agencies with 
similar missions, goals, or strategies will need to ensure that their 
efforts are coordinated. What other federal agencies are you working 
with to ensure that your strategic plans are coordinated? What steps 
have you taken to ensure that your efforts complement and do not 
unnecessarily duplicate other federal efforts?
    Response. Another federal agency with whom the Office of the 
General Counsel works on a regular basis is the United States 
Department of Justice, which includes the United States Attorneys. 
Information developed during execution of the actions necessitated by 
our strategic plan will be communicated to the Department of Justice, 
as appropriate.
    Mr. Skeen. The Results Act requires agencies to consult with 
Congress as they develop their strategic plans. Since these plans are 
due in September, now is the time for agencies to begin the required 
consultations. What are your plans for congressional consultation as 
you develop your strategic plan? Which Committees will you consult 
with? How will you resolve differing views?
    Response. All USDA Mission Areas/Agencies have prepared draft 
Strategic Plans which are currently being reviewed by an Under/
Assistant Secretary or Agency Head, the Senior Policy Staff, the 
Secretary and OMB. Upon completion of the review, the Department plans 
to provide copies of the Strategic Plan (including an overall 
Departmentwide Executive Summary and the Strategic Plans for individual 
Mission Areas/Agencies) to relevant Congressional Committees. 
Thereafter, we will look forward to meeting with Members of Staff to 
discuss our Strategic Plan and to solicit their input and advice on 
refinements to that Plan. We plan to provide copies of the Department 
Strategic Plan to the following Committees:
    House Agriculture Committee.
    House Appropriations Committee.
    House Economic and Educational Opportunities Committee.
    House Government Reform and Oversight Committee.
    House Resources Committee.
    Senate Agriculture, Nutrition, and Forestry Committee.
    Senate Appropriations Committee.
    Senate Energy and Natural Resources Committee.
    Senate Governmental Affairs Committee.
    Mr. Skeen. In passing the Results Act, Congress sought to 
fundamentally change the focus of federal management and decision-
making to be more results-oriented. Organizations that have 
successfully become results-oriented typically have found that making 
the transformation envisioned by the Results Act requires significant 
changes in what they do and how they do it. What changes in program 
policy, organization structure, program content, and work process has 
the agency made to become more results-oriented? How are managers held 
accountable for implementing the Result Act and improving performance? 
How is the agency using Results Act performance goals and information 
to drive daily operations?
    Response. While we have not fully implemented the performance goals 
anticipated in the Strategic Plan, it is clear that the process of more 
carefully prioritizing demands for legal services is clearly required 
by the current budget environment. It is a fact of life in the current 
budget climate that increases in staffing to meet constant or 
increasing work loads are unlikely to be forthcoming. Therefore, the 
Office of the General Counsel must carefully plan how legal resources 
will be deployed and agency officials must be educated to understand 
that legal resources are finite. The process envisioned by our 
strategic plan will force both managers in OGC and throughout USDA to 
include in strategic planning processes, planning for how legal 
resources will be used. In other words, USDA officials, within and 
outside of OGC, share a common set of priorities, OGC resources can be 
used more effectively to meet program strategic goals.
    Within OGC, the information gleaned through the consultation 
process will enable managers to better provide an understanding of 
priorities to agency attorneys. This in turn, will regularize the work 
flow and lessen to some extent, the crisis mode of handling agency 
legal work. Crises will still occur, because unforeseen circumstances 
will develop which require quick response by the Office of the General 
Counsel. However, the strategic planning process will give managers a 
better sense of how to order the work of the office.
    Managers will be held accountable for implementing the tasks 
through year end surveys conducted with agency officials which will 
reveal whether managers have done a good job in striving to meet the 
priority needs of agency officials. The results of these surveys will 
be discussed during managers' yearly performance evaluations.
    Informal performance goals similar to those anticipated to be 
developed in the annual performance plan are being used currently to 
ensure close cooperation between agency officials and OGC managers to 
ensure close coordination between the two. The information exchange and 
priority setting activities envisioned by our strategic plan will 
require managers to consult more frequently with agency officials and 
document the results of those consultations. The results of the surveys 
will assist the General Counsel in determining our success in assisting 
USDA officials in meeting their strategic program goals.

                       National Appeals Division

                      final rules and regulations
    Mr. Skeen. At the time of last year's budget hearings, comments on 
final rules and regulations to implement the appeals process were due 
by March 23, 1996. When did they become final?
    Response. The final rules are under review within the Department.
             cost and average length of time for an appeal
    Mr. Skeen. Update the table that appears on page 640 of last year's 
hearing record showing the cost and average length of time for an 
appeal to include fiscal year 1996.
    [The information follows;]

                         COST AND AVERAGE LENGTH OF TIME FOR AN APPEAL FISCAL YEAR 1996                         
----------------------------------------------------------------------------------------------------------------
                                                     Number of                                                  
                                                     decisions    Average number       Costs      Per case basis
                                                      issued          of days        allocated                  
----------------------------------------------------------------------------------------------------------------
Hearing officer determinations..................           3,436              74      $8,910,700          $2,611
Appellant requested director review                                                                             
 determinations.................................             926              24       2,288,681           2,468
Agency requested director review determinations.             213              11         584,683           2,468
    Total.......................................           4,575  ..............      11,784,064           2,575
----------------------------------------------------------------------------------------------------------------

                             active appeals
    Mr. Skeen. How many active appeals do you currently have ongoing?
    Response. As of April 16, 1997, there were 781 hearings outstanding 
and 134 Director reviews pending.
                          statutory time limit
    Mr. Skeen. There is a statutory time limit of 45 days to hold a 
hearing and 30 days to issue a decision after the hearing. Are you 
meeting these deadlines for all appeals? If not, what is the backlog 
and why do you have a backlog?
    Response. We are meeting the deadlines except in cases where a 
waiver is sought by the appellant or an extension is requested and 
granted pursuant to NAD's interim final rules.
                      fiscal year 1996 extensions
    Mr. Skeen. How many extensions were requested in fiscal year 1996 
and how many were granted?
    Response. We cannot provide this information without a manual 
search of the fiscal year 1996 case files. NAD's tracking system does 
not capture this data. 7 CFR 11.8(F) provides that the Hearing Officer 
will issue a notice of determination not later than 30 days after the 
hearing or 45 days in the case of a record review. Upon a Hearing 
Officer's request, the Director may establish a later deadline. 7 CFR 
11.6(a)(3) provides that the Director may delegate such authority to a 
subordinate official of the Division. Requests for extensions are acted 
on by the Assistant Director in each region based upon the 
circumstances of each case.
                            director appeals
    Mr. Skeen. Of the total decisions issued in fiscal year 1996, how 
many were appealed to the Director?
    Response. There were 1,263 Director reviews requested in fiscal 
year 1996. 1,006 reviews were requested by appellants and 257 requested 
by heads of agencies.
                       hearing procedure handbook
    Mr. Skeen. The agency contracted with an administrative law 
consultant in fiscal year 1996 to finalize a hearing procedure handbook 
to ensure that uniform procedures and consistent determinations are 
issued by all staff. What is the status of this contract and handbook?
    Response. The work under this contract has been completed, and the 
handbook was issued to all hearing officers in April 1996.
                               oig audit
    Mr. Skeen. An OIG audit on the quality of administrative appeals 
decisions is expected to be issued in the next several months. What 
were the findings and recommendations of this audit? Submit a copy of 
the executive summary for the record.
    Response. Recommendations pertaining to NAD follow:

Finding No. 2:--NAD hearing officers sometimes substituted their 
            judgment for that of the Agency.
Recommendation 2a:--The NAD director requires hearing officers to limit 
            the scope of NAD hearings by identifying the laws, etc., 
            that the appellant claims the agency did not adhere to, and 
            the evidence that the appellant contends was erroneous or 
            omitted.
Recommendation 2b:--That hearing officers limit their determinations to 
            whether an agency complied with applicable laws, 
            regulations, and generally applicable interpretations.
Finding No. 3:--NAD needs to update its policies and procedures.
Recommendation 3a:--Implement a formal policies and procedures system 
            by combining the current hearing officers manual and 
            various ``NAD Notes'' into a numbered and dated manual.
Recommendation 3b:--Update NAD guidelines to clarify policies and 
            procedures.
Finding No. 4:--NAD's Management Information System (MIS) needs 
            improvement.
Recommendation 4:--Update the MIS in order to provide necessary 
            information to ensure NAD provides appellants timely 
            determinations and complies with legislation time frames, 
            and to provide reports with relevant information to measure 
            the Agencies performance.
Finding No. 5:--Training for NAD and FSA could be improved.
Recommendation 5a:--Provide training to review and hearing staff which 
            is directed toward teaching and reinforcing basic skills 
            needed to conduct hearings and reviews and issue 
            appropriate determinations, and focuses on explaining 
            differences between the authorities of NAD and those 
            granted to the agencies.
Recommendation 5b:--Establish a quality assessment review system.

    A copy of the executive summary follows:

[Pages 702 - 704--The official Committee record contains additional material here.]


     object class 23.3 communications, utilities, and misc. charges

    Mr. Skeen. Why is object class 23.3, communications, utilities, and 
misc. charges, projected to increase from $410,000 in fiscal year 1997 
to $868,000 in fiscal year 1998?
    Response. The increase of $458,000 between fiscal year 1997 and 
fiscal year 1998 is for estimated e-mail accounts, technical support, 
maintenance costs, and line usage for our network systems. We also 
expect our costs to increase after we begin implementing the tracking 
system, automated precedent system, and training program detailed in 
our budget submission. These networks will allow NAD personnel to work 
and communicate with other Department-level officials, program 
participants, agency representatives, and regional offices.
                   object class 25.2, other services
    Mr. Skeen. Provide a detailed breakout of object class 25.2, other 
services, for fiscal years 1996, 1997, and 1998.
    [The information follows:]

------------------------------------------------------------------------
             Service                   1996         1997         1998   
------------------------------------------------------------------------
Contractual services--ADP and                                           
 others..........................         $250         $258         $265
Training.........................           14           36          563
Repair/maintenance of equipment,                                        
 furniture or structures.........           60           62           62
Other services...................           16           17           17
Miscellaneous services (office                                          
 space, typing, and transcription                                       
 services, telephone equipment)..           40           42           42
    Total, OC 25.2...............          380          415          949
------------------------------------------------------------------------

                       object class 31, equipment
    Mr. Skeen. Also provide a detailed breakout of object class 31, 
equipment for fiscal year 1998.
    [The information follows:]

------------------------------------------------------------------------
                        Equipment                              1998     
------------------------------------------------------------------------
NASTRACK ADP and Software...............................            $555
Video and Teleconference Equipment......................             457
Equipment Upgrades......................................              49
    Total, OC 25.2......................................           1,061
------------------------------------------------------------------------

                            tracking system
    Mr. Skeen. You are requesting an increase to either modify the 
current system for tracking participant appeals or purchase a new 
system. The current system was placed in production to only track 
requests for the former Farmers Home Administration. How did the other 
agencies track their requests?
    Response. The current tracking system (NASTRACK) was developed to 
track appeals of the former Farmers Home Administration (FmHA). The 
other agencies' appeal requests were logged and tracked on systems, 
some manual, which are not now being used as a result of the 
reorganization. We would like to put in place a single tracking system 
for all our cases.
                            system location
    Mr. Skeen. Where is this system located?
    Response. The current tracking system (NASTRACK) is located on the 
USDA mainframe computer in Kansas City.
                       automated precedent system
    Mr. Skeen. You are also requesting $25,000 for an automated 
precedent system. Will this system be a part of the tracking system?
    Response. No, this will be a stand alone system as a management 
tool to provide decisional information on prior NAD cases. This system 
will act as a database of decisions to be used by Hearing Officers as a 
resource in making their determinations. This system would be critical 
in ensuring consistent determinations, to the extent NAD decides the 
factual matter of whether an Agency complied with applicable laws and 
regulations in rendering an adverse decision. As expressed in the 
preamble to the NAD Interim Rule, it is not the intention of USDA to 
implement NAD as a formal legal system based on large bodies of case 
law, but a Hearing Officer should not issue a contrary factual 
determination regarding the same appellant in a different matter where 
that factual determination was directly addressed in the other matter.
               hearing and review officer qualifications
    Mr. Skeen. What are the qualifications for a hearing and review 
officer?
    Response. Public Law 103-354 did not establish statutory 
qualifications for hearing and review officers. The hearing and review 
officer series (GS-930) has no grade level criteria, therefore, the 
position was compared to the general attorney series (GS-905) because 
both are in the legal and kindred group, and common processes and 
terminology apply. The Hearing officer position requires a knowledge of 
laws, regulations and policies governing several agencies and the 
ability to analyze and evaluate case records, conduct appeal hearings, 
determine the credibility of witnesses, apply agency rules and exercise 
sound judgment in arriving at decisions. The Review Officer position 
requires a general knowledge of the legal system and thorough knowledge 
of applicable laws, regulations and program operation of all agencies 
whose decisions are adjudicated by NAD. The incumbent must be skilled 
in review and analysis, and in identifying issues, analyzing facts and 
arguments, and presenting rulings and conclusions.
                         quasi-judicial courses
    Mr. Skeen. Where would the quasi-judicial courses be taken by these 
officers?
    Response. There are a variety of sources including, but not limited 
to, local colleges or junior colleges, the USDA Graduate School, the 
National Judicial College, the National Association of Administrative 
Law Judges, and the National Association of Hearing Officials.
                           video area network
    Mr. Skeen. Briefly describe how the video area network would be 
used to train employees.
    Response. A video area network would be used to train our employees 
who are geographically dispersed across the United States, using 
satellite broadcasts from a central location. We expect this system 
will aid in reducing our management travel and training costs.
                             adp equipment
    Mr. Skeen. How much has been spent to date on ADP equipment 
including hardware, software, and support services?
    Response. According to the March 1997 National Finance Center's 
accounting reports, we have spent $5,709 on ADP equipment in fiscal 
year 1997.
                                adp plan
    Mr. Skeen. The budget request includes $49,000 for equipment 
purchases. Describe your ADP plan and the total amount needed to 
achieve your goals.
    Response. Our ADP plan consists of four broad goals that address 
our current and future needs in fulfilling our mission. They consist 
of: 1) data management; 2) equipment upgrades; 3) communications; and 
4) training. Our objectives for fiscal year 1998 are the precedent 
system, an appeal tracking system, and video and teleconferencing 
system. The total amount needed to fulfill our objectives in fiscal 
year 1998 is $1,061,000 in equipment and $445,000 in communication 
expenses.
                       pre-hearing teleconference
    Mr. Skeen. Briefly describe what occurs during a pre-hearing 
teleconference and the impact it has on the hearing process.
    Response. The pre-hearing teleconference includes the Hearing 
Officer, Appellant, and the Agency representative. This conference 
provides an opportunity to narrow the issues, develop the presentation 
of evidence, review procedures, identify to parties' the 
responsibilities, and clarify the burden of proof and relevancy of 
evidence to be presented. Ordinarily, the pre-hearing conference 
significantly reduces the extent of the evidentiary hearing and the 
time necessary to conduct the hearing.
                     civil rights hearing requests
    Mr. Skeen. How many civil rights hearing requests did you receive 
in fiscal years 1995, 1996, and to date in fiscal year 1997? How many 
have been resolved?
    Response. The National Appeals Division does not adjudicate civil 
rights hearings. Our hearings are limited to adverse Agency decisions 
relating to participation in or receipt of program benefits under any 
program of an agency.
                      national training conference
    Mr. Skeen. Where was the national training conference held in 
fiscal year 1996 and how many were in attendance?
    Response. The fiscal year 1996 training conference was held in St. 
Louis, Missouri. One hundred sixteen National Appeals Division 
employees were in attendance.
                            nad privacy act
    Mr. Skeen. Have the NAD Privacy Act regulations been published? 
Briefly describe these regulations in further detail.
    Response. The NAD Privacy Act regulations have not been published. 
They are in the final stages of clearance. These regulations identify 
and contain the name and location of the system of records maintained 
by NAD; the categories of individuals contained in the system; the 
routine uses of records; agency's policies concerning the records, 
including storage, retrieval, access, retention, and disposal; the 
person, including title and address, responsible for the system; the 
method used to notify individuals how to gain access to records about 
themselves; and the source of records in the system.
                     director review determinations
    Mr. Skeen. Describe the requirement for Director Review 
Determinations in further detail.
    Response. An appellant or head of an agency may request in writing 
a review of the hearing officer determination. The Director conducts a 
review to decide whether substantial evidence supports the decision. 
The appellant must submit to the Director a written request, not later 
than 30 days after receipt of the hearing officer determination, to be 
entitled to such a review by the Director. The head of the Agency has 
15 business days from receipt of the hearing officer determination to 
request a Director's review. Either party requesting such review must 
provide specific reasons why the determination is wrong. The Director 
issues a review determination that either upholds, reverses, or 
modifies the determination of the Hearing Officer. The Director may 
remand all or part of the determination to the Hearing Officer for 
further proceedings, to complete the hearing record or to hold a new 
hearing. The Director ordinarily will complete the review and either 
issue a final determination or remand the determination not later than: 
(1) 10 business days after receipt of a request for review of our 
Agency head; and (2) 30 business days after receipt of a request for 
review by an appellant.
                       quality assurance program
    Mr. Skeen. The agency began drafting a quality assurance program in 
fiscal year 1996. What is the status of this initiative?
    Response. NAD's quality assurance program has initiated two 
projects and planned for several more. Some 36 cases that were decided 
in fiscal year 1996 are being reviewed and rated using a newly created 
Quality Assurance Test package. The results of this initial review will 
be used to refine the Test Package and establish a baseline for quality 
control operations and training for the upcoming year. The NAD fiscal 
year 1998 Annual Performance Plan includes a commitment to perform 48 
reviews, and increasing numbers are anticipated in future years.
    The second current quality assurance project is a detailed analysis 
of all recent Director Review cases in which the determination of the 
hearing officer was reversed. The results of this review will be used 
in planning and training activities.
    Future quality assurance projects will include surveys of parties 
to NAD appeals to gauge customer satisfaction and a cost-of-appeals 
study to identify variations in appeals processing and eventual 
adoption of efficiencies to reduce Division costs.

  Implementation of the Government Performance and Results Act (GPRA)

    Mr. Skeen. GPRA, known as the Results Act, requires each executive 
agency to issue, no later than September 30, 1997, a strategic plan 
covering at least five years. In addition to a mission statement 
grounded in legislative requirements, the plans are to contain general 
goals and objectives that are expected to be outcome or results 
oriented (such as to improve literacy) as opposed to output or activity 
oriented (such as to increase the number of education grants issued). 
What progress is the agency making in developing its strategic plan, 
including defining its mission and establishing appropriate goals?
    Response. The NAD Strategic Plan has been completed and delivered 
to the Office of the Chief Financial Officer.
    Mr. Skeen. Has the agency identified conflicting goals for any of 
its program efforts? If so, what are the performance consequences of 
these conflicting goals and what actions--including seeking legislative 
changes--is the agency taking to address these conflicts?
    Response. NAD has identified no conflicting goals.
    Mr. Skeen. Strategic plans must be based on realistic assessments 
of the resources that will be available to the agency to accomplish its 
goals. As you are developing your strategic plan, how are you taking 
into account projected resources that likely will be available--
especially as we move to a balanced budget? What assumptions are you 
making? How are you ensuring that your goals are realistic in light of 
expected resources?
    Response. NAD is concerned that the Federal budget cuts and other 
issues may reduce both appropriations and staff levels. Staff level 
reductions reflected in the current glidepath are slow but steady; 
objectives reflect responses to this expectation by increasing the 
number of cases handled per FTE in regional offices and the number of 
cases assigned to each hearing officer. NAD's performance metrics in 
its Annual Performance Plans will be adjusted to reflect the impact of 
reduced resources. We intend to hold employees accountable to strict 
adherence to statutory time frames, quality, and number of cases 
adjudicated as outlined in their performance elements and standards.
    Mr. Skeen. For Congress, the heart of the Results Act is the 
statutory link between agency plans, budget requests, and the reporting 
of results. Starting with fiscal year 1999, agencies are to develop 
annual performance plans that define performance goals and the measures 
that will be used to assess progress over the coming year. These annual 
goals are to measure agency progress toward meeting strategic goals and 
are to be based on the program activities as set forth in the 
President's budget. What progress have you made in establishing clear 
and direct linkages between the general goals in your strategic plan 
and the goals to be contained in your annual performance plans? OMB 
expressed concern last year that most agencies had not made sufficient 
progress in this critical area.
    Response. NAD has drafted fiscal year 1997 and 1998 Annual 
Performance Plans. We are confident that the annual goals are directly 
linked to, and support accomplishment of, the goals laid out in the 
Strategic Plan. General goal number 2 in the strategic plan states that 
NAD will ``enhance high-quality, rational, timely decision making that 
recognizes the rights of program participants and promotes the lawful 
operation of the agency programs.'' The annual performance goal states 
that NAD will ``increase productivity and ``on-time'' performance while 
decreasing the number of requests for review and cases reversed and 
remanded through quality assurance and surveys.''
    Mr. Skeen. More specifically, how are you progressing in linking 
your strategic and annual performance goals to the program activity 
structure contained in the President's budget? Do you anticipate the 
need to change or modify the activity structure to be consistent with 
the agency's goals?
    Response. NAD's Strategic Goals and those in the Annual Performance 
Plans are consistent with the President's budget which is only one 
activity line. We do not anticipate that any modifications in the 
activity structure will be needed.
    Mr. Skeen. Overall, what progress has your agency made--and what 
challenges is it experiencing--defining results-oriented performance 
measures that will allow the agency and others to determine the extent 
to which goals are being met?
    Response. Because NAD's sole legislative mandate is to hear and 
decide appeal cases within certain time constraints, developing easy-
to-interpret, result-oriented metrics was not difficult. Measurements 
reflect numbers and of cases handled, on-time percentages, and similar 
concerns.
    Mr. Skeen. If applicable, what lessons did the agency learn from 
its participation in the Results Act pilot phase and how are those 
lessons being applied to agency-wide Results Act efforts? What steps is 
the agency taking to build the capacity (information systems, personnel 
skills, etc.) necessary to implement the Results Act?
    Response. NAD was not a GPRA pilot agency.
    Mr. Skeen. The Results Act requires agencies to solicit and 
consider the views of stakeholders as they develop the strategic plans. 
Stakeholders can include state and local governments, interest groups, 
the private sector, and the general public, among others. Who do you 
consider your agency's primary stakeholders and how will you 
incorporate their views into the strategic plans?
    Response. NAD's primary stakeholders include: four statutorily-
defined client agencies (Farm Service Agency, Rural Development, 
Natural Resources Conservation Service, and Risk Management Agency) 
potential appellants (including all participants in programs 
administered by Farm Service Agency, Rural Development, Natural 
Resources Conservation Service, Risk Management Agency and applicants 
for such programs) and advocacy groups that represent appellants.
    Because NAD is a relatively new agency, its proposed rules of 
practice recently were published in the Federal Register for public 
comment. Significant public comment was received concerning many 
aspects of NAD's management and operations. This input was considered 
and used in the development of the Strategic Plan and Annual 
Performance Plans.
    Mr. Skeen. For the Results Act to be successful, agencies with 
similar missions, goals, or strategies will need to ensure that their 
efforts are coordinated. What other federal agencies are you working 
with to ensure that your strategic plans are coordinated? What steps 
have you taken to ensure that your efforts complement and do not 
unnecessarily duplicate other federal efforts?
    Response. NAD is unique with the Department of Agriculture. In 
creating NAD, Congress divested NAD's client agencies of their appeal 
activities and vested the responsibility for appeals arising from those 
agencies' program operations in NAD. Because of this, there can be no 
overlap between NAD's statutory responsibilities, reflected in the 
Strategic and Annual Performance Plans, and those of other USDA 
agencies. NAD has not contacted Federal agencies outside the Department 
in the preparation of its GPRA plans.
    Mr. Skeen. The Results Act requires agencies to consult with 
Congress as they develop their strategic plans. Since these plans are 
due in September, now is the time for agencies to begin the required 
consultations. What are your plans for congressional consultation as 
you develop your strategic plan? Which Committees will you consult 
with? How will you resolve differing views?
    Response. All USDA mission areas/agencies have prepared draft 
strategic plans which are currently being reviewed by the Senior Policy 
Staff and the Secretary and later by OMB. Upon completion of the 
review, the Department plans to provide copies of the strategic plan to 
relevant Congressional Committees, Thereafter, we will look forward to 
meeting with members or staff to discuss our strategic plan and to 
solicit your input and advice on refinements to that plan. We plan to 
provide copies of the Department Strategic Plan to the following 
committees:
    House Agriculture Committee.
    House Appropriations Committee.
    House Economic and Educational Opportunities Committee.
    House Government Reform and Oversight Committee.
    House Resources Committee.
    Senate Agriculture, Nutrition, and Forestry Committee.
    Senate Appropriations Committee.
    Senate Energy and Natural Resources Committee.
    Senate Governmental Affairs Committee.

    Mr. Skeen. In passing the Results Act, Congress sought to 
fundamentally change the focus of federal management and decision 
making to be more results-oriented. Organizations that have 
successfully become results-oriented typically have found that making 
the transformation envisioned by the Results Act requires significant 
changes in what they do and how they do it. What changes in program 
policy, organization structure, program content, and work process has 
the agency made to become more results-oriented?
    Response. NAD has made no changes in program policy, organization 
structure, program contents and work process at this time.
    Mr. Skeen. How are managers held accountable for implementing the 
Results Act and improving performance?
    Response. Performance plans for both managers and staff will be 
revised to reflect responsibility under GPRA. Most GPRA-related 
activities will be critical elements of the performance plans.
    Mr. Skeen. How is the agency using Results Act performance goals 
and information to drive daily operations?
    Response. Annual Performance Plan targets will be reflected in the 
performance plans of employees whose work relates to a given 
performance metric. Accountable employees will be rated on their 
success in achieving the Annual Plan--linked performance standards.

         Office of Small and Disadvantaged Business Utilization

             Government Performance and Results Act (GPRA)

    Mr. Skeen. GPRA, known as the Results Act, requires each executive 
agency to issue, no later than September 30, 1997, a strategic plan 
covering at least five years. In addition to a mission statement 
grounded in legislative requirements, the plans are to contain general 
goals and objectives that are expected to be outcome or results 
oriented (such as to improve literacy) as opposed to output or activity 
oriented (such as to increase the number of education grants issued). 
What progress is the agency making in developing its strategic plan, 
including defining its mission and establishing appropriate goals?
    Response. We have completed a draft strategic plan.
    Mr. Skeen. Has the agency identified conflicting goals for any of 
its program efforts? If so, what are the performance consequences of 
these conflicting goals and what actions--including seeking legislative 
changes--is the agency taking to address these conflicts?
    Response. At this point, none have been identified.
    Mr. Skeen. Strategic plans must be based on realistic assessments 
of the resources that will be available to the agency to accomplish its 
goals. As you are developing your strategic plan, how are you taking 
into account projected resources that likely will be available--
especially as we move to a balanced budget? What assumptions are you 
making? How are you ensuring that your goals are realistic in light of 
expected resources?
    Response. The OSDBU budget is primarily salaries and expenses. In 
light of this, OSDBU manages its available resources to perform its 
duties in the most effective manner possible. Since resources are 
essentially salary based, there is little discretion, OSDBU must alter 
its outreach effort through increased use of automation, decreased use 
of printed materials, and decreased participation in procurement 
conferences outside the headquarters area. With decreased participation 
in conferences, OSDBU will rely on personnel from USDA organizations 
located in the conference area to provide information to the small 
business community. We will also concentrate our efforts on creating 
partnerships with organizations and associations representing the small 
business community's concern.
    We are anticipating that OSDBU will maintain its existing level of 
resources and that the automation of information transferred to the 
small business community will be cost effective and user friendly. If 
resources decline, we will determine what activities yield the greatest 
results, i.e., reaches the greatest number of small businesses for the 
least cost and redirect resources to these areas while severely 
restricting or eliminating resources that are earmarked for less 
productive activities. If resources decline significantly, we would 
join other USDA or other Federal agencies having a need to reach the 
small business community and pool resources to fund an activity that 
would meet the mutual needs of all participating parties.
    As the use of the Internet increases among the small business 
community the level of information transfer contracting opportunities 
at the Department of Agriculture (USDA) should improve and be more 
timely and useful. This should maintain OSDBU's goals to increasing 
small business participation in USDA contracting activities.
    OSDBU selects activities and projects that will reach the greatest 
number of small businesses. Activities are prioritized as to impact and 
funded in rank order (from most effective to least effective activity). 
If resources are severely restricted the same principle would apply as 
far as funding activities. However, OSDBU would revisit its goals and 
objectives and redefine them to be within its current resource 
structure.
    Mr. Skeen. For Congress, the heart of the Results Act is the 
statutory link between agency plans, budget requests, and the reporting 
of results. Starting with fiscal year 1999, agencies are to develop 
annual performance plans that define performance goals and the measures 
that will be used to assess progress over the coming year. These annual 
goals are to measure agency progress toward meeting strategic goals and 
are to be based on the program activities as set forth in the 
President's budget.
    What progress have you made in establishing clear and direct 
linkages between the general goals in your strategic plan and the goals 
to be contained in your annual performance plans? OMB expressed concern 
last year that most agencies had not made sufficient progress in this 
critical area.
    Response. OSDBU can measure the effectiveness of its activities in 
the accomplishment of its goals. One of OSDBU's objectives is to 
identify business opportunities that can be directed to small, small 
disadvantaged and women-owned businesses. The percent of fiscal year 
contracting opportunities made available for small business 
participation and the percentage of the number of contracts and 
contract dollars awarded to small, small disadvantaged, and women-owned 
businesses will be equal or greater than that offered the previous 
fiscal year. Contracting opportunities will be measured by percent of 
contracts/dollars awarded current fiscal year and percent of contracts/
dollars awarded previous fiscal year.
    Mr. Skeen. More specifically, how are you progressing in linking 
your strategic and annual performance goals to the program activity 
structure contained in the President's budget? Do you anticipate the 
need to change or modify the activity structure to be consistent with 
the agency's goals?
    Response. OSDBU has only one activity in the President's budget, so 
we don't anticipate to change or modify our program activity.
    Mr. Skeen. Overall, what progress has your agency made--and what 
challenges is it experiencing--defining results-oriented performance 
measures that will allow the agency and others to determine the extent 
to which goals are being met?
    Response. All OSDBU activities address the goal of increasing the 
participation of small businesses in the U.S. Department of 
Agriculture's (USDA) contracting activities. This is accomplished 
through making more small businesses aware of USDA contract 
requirements and by increasing the number of contract opportunities 
set-aside for small businesses. The performance indicator for these 
activities is percentage of contract dollars awarded to small 
businesses in any fiscal year will be equal to or greater than that 
awarded in the prior fiscal year.
    Mr. Skeen. If applicable, what lessons did the agency learn from 
its participation in the Results Act pilot phase and how are those 
lessons being applied to agency-wide Results Act efforts? What steps is 
the agency taking to build the capacity (information systems, personnel 
skills, etc.) necessary to implement the Results Act?
    Response. We did not participate in the pilot phase.
    Mr. Skeen. The Results Act requires agencies to solicit and 
consider the views of stakeholders as they develop the strategic plans. 
Stakeholders can include state and local governments, interest groups, 
the private sector, and the general public, amount others. Who do you 
consider your agency's primary stakeholders and how will you 
incorporate their views into the strategic plans?
    Response. USDA mission agencies, the small business community, and 
the Small Business Administration, are OSDBU's primary stakeholders. 
OSDBU has worked with these stakeholders to put into place activities 
that will provide timely and useful information to its mission agencies 
and the small business community. These activities are also designed to 
meet the requirements levied by Congress and the Small Business 
Administration.
    Mr. Skeen. For the Results Act to be successful, agencies with 
similar missions, goals, or strategies will need to ensure that their 
efforts are coordinated. What other federal agencies are you working 
with to ensure that your strategic plans are coordinated? What steps 
have you taken to ensure that your efforts complement and do not 
unnecessarily duplicate other federal efforts?
    Response. We have worked with the Small Business Administration to 
ensure that our goals and activities are designed to meet the 
requirements of Congress and the Small Business Administration.
    OSDBU coordinates its efforts with the Small Business 
Administration to accomplish USDA's procurement preference goals. Our 
activities to accomplish USDA's procurement preference goals are unique 
to the USDA contracting environment and in no way duplicates the 
efforts of other agencies to accomplish their respective procurement 
preference goals. Our goals complement and support SBA's overall 
procurement preference goals for the Federal government.
    Mr. Skeen. The Results Act requires agencies to consult with 
Congress as they develop their strategic plans. Since these plans are 
due in September, now is the time for agencies to begin the required 
consultations. What are your plans for congressional consultation as 
you develop your strategic plan? Which Committees will you consult 
with? How will you resolve differing views?
    Response. All USDA mission areas/agencies have prepared draft 
strategic plans which are currently being reviewed by the Senior Policy 
Staff and the Secretary and later by OMB. Upon completion of the 
review, the Department plans to provide copies of the strategic plan to 
relevant Congressional Committees. Thereafter, we will look forward to 
meeting with members or staff to discuss our strategic plan and to 
solicit your input and advice on refinement to that plan. We plan to 
provide copies of the Department Strategic Plan to the following 
committees:
    House Agriculture Committee.
    House Appropriations Committee.
    House Economic and Educational Opportunities Committee.
    House Government Reform and Oversight Committee.
    House Resources Committee.
    Senate Agriculture, Nutrition, and Forestry Committee.
    Senate Appropriations Committee.
    Senate Energy and Natural Resources Committee.
    Senate Governmental Affairs Committee.

    Mr. Skeen. In passing the Results Act, Congress sought to 
fundamentally change the focus of federal management and decision 
making to be more results-oriented. Organizations that have 
successfully become results-oriented typically have found that making 
the transformation envisioned by the Results Act requires significant 
changes in what they do and how they do it. What changes in program 
policy, organization structure, program content, and work process has 
the agency made to become more results-oriented?
    Response. OSDBU has automated, through the use of the Internet, 
most of the information it provides to the small business community. We 
are also in the process of developing an automated centralized vendors 
list that will allow small businesses to register once with USDA and 
have access to all contracting officials within the Department.
    Mr. Skeen. How are managers held accountable for implementing the 
Results Act and improving performance?
    Response. Managers are held accountable for their accomplishments 
through performance ratings of their accomplishments as they relate to 
the accomplishment of the agency's goals.
    Mr. Skeen. How is the agency using Results Act performance goals 
and information to drive daily operations?
    Response. The agency measures the effectiveness of its activities 
in the accomplishment of its goals and implements changes in the 
activity where warranted. Additionally, the agency redirects resources 
from activities that are ineffective to activities that provide greater 
outcome in the accomplishment of its goals.
    The creation of an Internet data base will allow small businesses 
to register with the Department. This data base will then be used by 
all contracting officers to identify small businesses, to provide goods 
and services, and to provide solicitations via e-mail if a procurement 
is a small business or 8(a) set aside. Directing more OSDBU resources 
to those USDA agencies that fail to reach their small business 
preference goals while reducing resources dedicated to those agencies 
that exceed their goals. In the latter case OSDBU would only monitor 
agency activity to ensure accomplishment rate does not increase.

[Pages 713 - 942--The official Committee record contains additional material here.]




                           W I T N E S S E S

                              ----------                              
                                                                   Page
Beauchamp, C.L...................................................   263
Collins, Keith...................................................     1
David, I.T.......................................................   429
Dewhurst, S.B.................................................... 1,429
Ebbitt, J.R......................................................   263
Gillam, C.D......................................................   429
Glickman, Dan....................................................     1
Kaplan, Dennis...................................................   263
Reed, A.F.T......................................................   429
Reed, Pearlie....................................................   429
Rominger, Richard................................................     1
Thornbury, D.R...................................................   263
Viadero, R.C.....................................................   263




                               I N D E X

                              ----------                              

                        Secretary of Agriculture

                                                                   Page
Adequate Funding for Research....................................    63
Animal Growth Hormones...........................................    74
Animal and Plant Health Inspection Service.......................   149
Biographies:
    Secretary Glickman...........................................   196
    Mr. Rominger.................................................   196
    Mr. Collins..................................................   197
    Mr. Dewhurst.................................................   197
CCC Export Credit Guarantee Program..............................    90
Census of Agriculture............................................   139
Child Nutrition..................................................   157
Civil Rights.....................................................10, 29
Class I Differential Price Structure Report......................    17
    Class I Differentials........................................    18
Codex Alimentarious..............................................   130
Committees:
    Advisory Committees..........................................   124
    County Committees......................................25, 145, 147
    County Committees and Loan Problems..........................   146
    Statutory Advisory Committees, Panels, Task Forces, 
      Commissions, Etc...........................................   124
Congressional Liaison............................................    79
Conservation Programs:
    Conservation.................................................     8
    Conservation Reserve Program (CRP)...........................   127
    CRP Competitive Bid Process..................................   136
    CRP Rental Rates.............................................   136
    New Mandatory Conservation Programs..........................   138
Crop Insurance Delivery Expenses.................................   136
Discretionary Spending...........................................     3
Direct Farm Loans/Beginning and Socially Disadvantaged Farmers 
  Ranchers.......................................................   135
Economic and Trade Opportunities.................................     4
Electronic Benefits Transfer (EBT)..............................14, 118
Emergency Fund...................................................   136
Empowerment Zones and Enterprise Communities.....................   106
European Union...................................................    27
Explanatory Statement of the Office of the Secretary.............   225
Export Enhancement Program (EEP)............................64, 85, 132
    EEP/MAP......................................................    72
Export Markets...................................................    26
    Chicken Exports to Russia....................................    27
    Exports......................................................    68
Farm Service Agency:
    FSA Federal Staffing.........................................    21
    FSA Field Office Staffing....................................    20
    Field Office Closings....................................12, 24, 60
    Reeves County FSA Office.....................................    58
    Office Closings..............................................   145
    FSA County Employees.........................................   146
    Farm Program Workload and Staff Reductions...................   148
Federal Disaster Emergency Program...............................    56
Food Assistance for North Korea..................................   131
Food Program.....................................................     7
Food Quality Protection Act:
    The Act.....................................................70, 140
    Implementation...............................................   151
Food Recovery Foundation.........................................   138
Food Safety:
    Administration's Food Safety Initiative......................     7
    Food Safety..................................................   157
    Food Safety and Inspection Service (FSIS)....................   150
    FSIS User Fees...............................................   130
Food Stamps......................................................   157
Four Fundamental Priorities......................................     2
Fund for Rural America..........................................71, 128
Green Bay Cheese Exchange........................................    19
Hazard Analysis and Critical Control Program:
    HACCP System.................................................   158
    Implmenting the HACCP System.................................     6
Income Eligibility...............................................    67
Information Technology......................................61, 63, 155
Inforshare Program...............................................    62
Impact of Reduction in Delivery Expenses.........................   155
Karnal Bunt................................................46, 127, 139
Loan Resolution Task Force......................................98, 100
Limiting Response to Natural Disasters...........................   131
Market Access Program............................................   137
Market News......................................................   133
Mexican Hass Avocados............................................   139
NAFTA Expansion to Include Chile.................................    11
NRCS Flood Assistance............................................    70
Opening Remarks..................................................     1
Options Pilot Program............................................   106
Pilot Program for Peaches........................................   150
P.L.-480 Program:
    Cargo Preference Act.........................................   127
    Tonnages.....................................................   132
    Private Counsel..............................................   127
Production Flexibility Contracts.................................   135
Programs in Urban Areas..........................................    28
Proposed Legislation.............................................   131
Public Affairs...................................................    75
Questions Submitted for the Record:
    Chairman Skeen...............................................    75
    Mr. Walsh....................................................   140
    Mr. Dickey...................................................   147
    Mr. Kingston.................................................   149
    Mr. Latham...................................................   150
    Ms. DeLauro..................................................   157
Rural Community Advancement Program..............................   130
Rural Development................................................     5
Safety Net.......................................................     4
Savings to Taxpayers.............................................     9
School Lunch Program.............................................    16
Service Centers for Home Loans...................................   131
Socially Disadvantaged Farmers...................................     5
Staff Year Reductions............................................   133
Statement of the Secretary.......................................2, 198
Status of AMTA Implementation....................................   133
St. Petersburg Model Farm........................................    90
Sugar:
    Program......................................................    31
    Sugar Cap....................................................    54
Texas State Office...............................................    60
Trade Areas......................................................     5
Trade Situation..................................................    73
Tobacco:
    Tobacco Activities...........................................   102
    Tobacco Program..............................................    47
Under Secretary/Assistant Secretary Offices......................   111
USDA Americorps Activities.......................................   109
USDA Computerization.............................................    14
User Fees........................................................57, 58
Women, Infant, and Children (WIC):
    WIC Eligibles Estimate.......................................   118
    WIC Program..............................................47, 53, 66
    WIC Month to Month Participation.............................   122
Written Testimony of Secretary Glickman..........................   198
1998 Budget......................................................   144

                     Office of the Chief Economist

Biography of Keith J. Collins....................................   197
Cattle Initiative................................................   174
Conservation Reserve Program.....................................   180
Commission on 21st Century Production Agriculture:
    Commission...................................................   169
    Funds to Support.............................................   169
    Object Class Table...........................................   170
    Staff Time Support...........................................   169
Dairy Policy.....................................................   175
Environmental Consequences of Agricultural Production and 
  Agricultural Policy............................................   169
EQIP:
    HACCP/Pathogen Reduction Regulations........................178-180
    Implementation of............................................   180
Explanatory Statement............................................   236
Famine:
    Countries Potentially Threatened by..........................   181
    In North Korea...............................................   181
Government Performance and Results Act (GPRA):
    Implementation of...........................................184-186
    Performance Indicators......................................165-166
Hazard Identification Baseline Contract with UVA.................   183
Hearings Where Chief Economist Testified........................159-160
Impacts of Welfare Reform on Farm Labor..........................   178
Karnal Bunt Compensation Protocol...............................175-176
Livestock and Railroad Industries...............................176-177
Long-Term Projections...........................................181-183
Object Class Explanation:
    21, Travel...................................................   170
    23.1, Rent...................................................   170
    24, Printing and Reproduction Costs..........................   172
    25.1, Consulting Services....................................   172
    25.2, Expenditures...........................................   172
    25.3, 26, and 31, Expenditures..............................173-174
OBPA and OCE Responsibilities Related to Oversight of USDA 
  Policies and Programs.........................................163-164
OCE 1996 Performance............................................166-169
Questions Submitted for the Record:
    Chairman Skeen...............................................   159
Risk Assessment:
    Risk and Benefit-Cost Analyses Differences..................164-165
    Rule Making.................................................161-162
    Staff Time..................................................162-163
Sustainable Development:
    Activities...................................................   161
    Policy......................................................160-161
Weather:
    Services Terminated by the National Weather Service..........   171
    Weather Information Needs....................................   171
Winter Vegetables and Competition with Mexico...................177-178

                 Office of Budget and Program Analysis

Biography of Mr. Dewhurst........................................   197
Breakout of Resources for OBPA's Responsibility.................186-187
Code of Federal Regulations......................................   189
Department of Buyouts for 1997..................................189-190
Explanatory Statement............................................   254
Government Performance and Results Act (GPRA)...................194-195
Legislative Proposals............................................   189
Object Class Explanation:
    25.2 Other Services..........................................   189
    25.3 Purchases of Goods and Services from Government Accounts   189
Organization Chart..............................................187-188
Personnel Compensation and Benefits..............................   189
Questions Submitted for the Record:
    Chairman Skeen...............................................   186
Staff Year Reductions and the 1996 Farm Bill....................190-193
The USDA Budget Summary..........................................   194

                      Office of Inspector General

1993 Ad Hoc Disaster Assistance Program..........................   313
1994 Ad Hoc Disaster Assistance Programs--Losses.................   313
1996 Audit and Investigations Results............................   308
AARC Program.....................................................   319
ADP..............................................................   315
Agricultural Market Transition Act (AMTA)......................271, 309
Allegations of Discriminatory Lending............................   272
Alternate Agriculture Research and Commercialization Center......   314
APHIS:
    Animal Cases--Legislation...................................276-277
    Animal Treatment.............................................   269
Amounts Spent on Outside Public Accountants......................   303
Annual Audit Plan................................................   291
Attempts to Circumvent Payment Limitations.......................   309
Audit Training...................................................   316
Audits:
    CCC Financial Audits.........................................   303
    FCS Financial Statement......................................   288
    Financial Statement Audits...................................   302
    NS Discrepancies Disclosed in Audit..........................   288
    InfoShare....................................................   323
    WIC Program..................................................   324
Backlog........................................................289, 324
Banco National Scandal...........................................   296
Biography--Roger C. Viadero, Inspector General...................   325
Biography--James R. Ebbitt.......................................   326
Biography--Craig L. Beauchamp....................................   327
Budget:
    Additional Staff.............................................   316
    FTE's........................................................   295
    Request......................................................   309
Closing Remarks..................................................   297
Confidential Funds...............................................   305
Controls Over Production Flexibility.............................   308
Convictions......................................................   319
Credit Reform....................................................   304
Crop Insurance Program:
    Abuse/Summary................................................   306
    GAO Report...................................................   306
    Raisin Crop Insurance......................................305, 318
Delinquent Loans.................................................   311
Electronic Data Sharing on Conservation Plans....................   308
Equipment........................................................   314
Error Rates......................................................   297
Explanatory Statement............................................   393
FCS (FNS):
    Electronic Benefit Transfer (EBT):
        Card Cost................................................   300
        Card Safeguard...........................................   300
        Cards Security...........................................   299
        Contractor Operating Controls............................   299
        Fraud....................................................   299
        Losses...................................................
          280, 290...............................................
        Nationwide...............................................   279
        Number of States.........................................   284
        Questionable Transactions................................   298
        Retailer Tracking System.................................   300
        Savings..................................................   280
        Statutes of States Systems...............................   286
        Women, Infant and Children (WIC):........................   274
    Food Stamps:
        Cases....................................................
          275, 300...............................................
        Certification Process....................................   297
        Compliance...............................................   282
        Electronic Benefits Transfer.............................   324
        Fraud....................................................   291
        Ineligible Recipients....................................   294
        Legislation..............................................   298
        Reducing Food Stamp Fraud................................   300
        Resources................................................   298
    Women, Infant and Children (WIC):
        Eligibility..............................................   283
        Monitoring Funding.......................................   301
        Program..................................................   302
        Vendor Activity..........................................   292
Financial Statements--Internal Controls..........................   289
Food and Assistance to the Russian Federation....................   318
Forest Service:
    Airtankers...................................................   277
    Funding......................................................   269
Forfeiture:
    Proceedings.................................................311-312
    Program......................................................   294
FSIS's Controls Over Imported Meat and Poultry...................   313
Government Performance and Results Act (GPRA)....................   321
Hotline Complaints...............................................   305
Implementation of the Government Performance and Results Act 
  (GPRA)........................................................321-322
Indictments, Convictions, and Suits..............................   307
Infoshare Project................................................   304
Insurance and Indemnities........................................   314
Integrity Cases..................................................   289
Law Enforcement Retirement Benefits..............................   314
Leased Vehicles..................................................   314
List and Type of Firearms........................................   309
Loan Resolution Task Force.......................................   316
Minority Enterprise Financial Acquisition Corporation (MEFAC)....   317
Non-Insured Assistance Program...................................   307
OIG Realignment..................................................   315
Olympic Security...............................................278, 317
Opening Remarks.................................................263-268
Payment limitations..............................................   270
Prepared Statement--Roger C. Viadero.............................   328
Questions Submitted for the Record:
    Chairman Skeen...............................................   297
    Mr. Latham...................................................   323
    Mr. Fazio....................................................   324
Reception and Representation Activities..........................   314
Recipient Fraud..................................................   298
Reimbursements...................................................   303
Retailer Eligibility--Non EBT States.............................   299
Rolling Stores...................................................   300
Rural Community Advancement Program.............................319-320
Rural Development................................................   304
Rural Housing Service............................................   311
Rural Housing Service's Corrective Action........................   319
Rural Renting Housing Program....................................   319
State Mediation Program..........................................   316
Texas Agricultural Mediation Program............................292-293
Texas Tech Mediation Program.....................................   316
Tracking and Monitoring of Proposed Savings......................   314
Unsanitary Poultry and Beef Products.............................   273
Use of Audit Resources by Agency, Fiscal Year 1996...............   310
Use of Investigations Resources by Agency, Fiscal Year 1996.....309-310
Welfare Reform Act...............................................   302
White Collar Crime...............................................   295
Written Statement of the Inspector General.......................   328

 Departmental Administration/Chief Financial Officer/Chief Information 
                                Officer

Administrative Process, Modernization of:
    MAP Costs...................................................472-473
    Modernization of Administrative Processes...................471-472
    Procurement Reform..........................................473-474
    Re-Engineering Business Processes............................   473
    Telecommunications Within MAP................................   471
    Time and Attendance Reporting System.........................   476
Advisory Committees:
    Advisory Committee Staff Costs...............................   496
    Advisory Committees Funded From Other Accounts..............498-499
    Commodity Distribution.......................................   502
    Cost To Department for Maintaining Advisory Committies......496-497
    Current Advisory Committees.................................499-502
    Explanatory Notes...........................................796-814
    Reports and Recommendations of Advisory Committees...........   502
    Research, Education, and Economics...........................   502
    Status of Program...........................................456-457
    Unobligated Balance..........................................   498
Agriculture Buildings and Facilities:
    Air Quality.................................................505-506
    Beltsville Project..........................................504-505
    Explanatory Notes...........................................785-795
    Funding for Renovation of South Building and Construction of 
      Beltsville Building........................................   504
    Operation and Maintenance of Facility.......................457-458
    Relocation Expenses.........................................490-495
    South Building Renovation....................................   504
    South Building Modernization.................................   490
    Strategic Space Plan........................................503-504
    Window Restoration Program...................................   506
Aircraft, Distribution of........................................   483
Biographies:
    Pearlie S. Reed..............................................   713
    Anne Thomson Reed............................................   714
    Irwin T. David...............................................   716
    Ira L. Hobbs.................................................   718
    Blake Velde..................................................   719
Civil Rights:
    Accountability..............................................460-461
    Affirmative Action...........................................   447
    Alternative Discipline Plan..................................   470
    Blue Ribbon Task Force.......................................   460
    Civil Rights Enforcement Regional Centers...................437-439
    Civil Rights Problems.....................443-445, 451-453, 459-460
    Complaint Backlog............................................   460
    Complaint Reviews and Investigations..................461, 465, 480
    Debt for Nature Program......................................   462
    EEO Complaints...............................................   462
    Field Service Centers........................................   467
    Foreclosures.................................................   461
    Legislative Package..........................................   461
    Mediation Services...........................................   467
    Minority Farmers Forced Off Farms By Federal Employees.......   460
    Minority Farmers Forced Off Farms By Non-Federal Employees...   460
    Offices Reporting to Assistant Secretary for Administration..   466
    Processing Time of Complaints................................   466
    Property Transfers To 1890 Land-Grant Institutions...........   469
    Satellite Offices............................................   462
    Service Centers Needed on Indian Tribal Lands...............462-464
    Settlements..................................................   461
    Special Emphasis.............................................   475
    Transfer of EEO Counselors...................................   466
    USDA/1890 National Scholars Program..........................   470
    Violations...................................................   461
Colleges and Universities:
    Competitive Grants..........................................489-490
    Historically Black Colleges and Universities................484-485
    Land Grant Universities.....................................486-488
Collocation Projects:
    Kansas City and Davis Collocation Project....................   482
Credit Card Holders..............................................   481
Credit Card Savings.............................................481-482
Department Administration:
    Agricultural Acquisition Regulation..........................   480
    Advisory and Assistance Services............................475-476
    Decreases in Object Classes..................................   476
    Explanatory Notes...........................................761-784
    Funding and Staff Years.....................................467-468
    Government Performance and Results Act......................547-548
    Purchase Cards and Third Party Drafts.......................470-471
    USDA Employment Reduction...................................477-479
    USDA Reorganization..........................................   477
Disabilities, Targeted...........................................   482
Disaster Assistance.............................................454-455
Financial Information System Vision and Strategy (FISVIS):
    Financial Information System Vision and Strategy............642-643
    Financial Information System................................643-644
    Financial Management Review..................................   642
    Financial Management Systems at NFC..........................   644
    Foundation Financial Information System.....................644-645
Hazardous Waste Management Questions:
    Amounts Spent By Other USDA Agencies.........................   514
    Audit on Abandoned Mines....................................509-510
    CCC Grain Storage Site......................................543-546
    Compliance Docket............................................   543
    Compliance With State Laws...................................   513
    Environmental Justice..................................447, 464-465
    Explanatory Noted...........................................815-822
    Foreclosures Requiring Cleanup...............................   514
    Funding for CERCLA, RCRA and PPA............................512-513
    Object Class 25.2--Other Services............................   546
    Performance Goals...........................................510-511
    Role of Hazardous Waste Management..........................445-456
    Salaries and Benefits........................................   513
    Sites Requiring Cleanup.....................................515-542
    Underground Storage Tanks...................................512-513
National Finance Center:
    American Management Systems..................................   645
    Cross-Servicing..............................................   641
    Direct Deposit/Electronic Funds Transfer.....................   650
    Increase For Thrift Savings Plan.............................   639
    NFC Staff Years.............................................647-649
    Request for Additional Funds................................638-639
Metrification....................................................   467
Office of Administrative Law Judges.............................480-481
Office of the Chief Financial Officer:
    Administrative Functions.....................................   473
    Collection of Tax Refund Offsets............................645-646
    Cost-Benefit Analysis of the Software Systems Contract......650-653
    Cost Accounting.............................................458-459
    Explanatory Notes...........................................833-846
    Government Performance and Results Act......................651-653
    Impact of the Farm Bill......................................   650
    Implementation of the CFO Act of 1990........................   646
    Performance Results.........................................636-637
    Request for Additional Funds................................635-636
    Requirements of the CFO Act.................................646-647
    Staffing.....................................................   642
    Strategic and Performance Plan...............................   636
    Stove Piping Among USDA Agencies.............................   636
    Supplemental Nutrition Program for Women, Infants, and 
      Children...................................................   653
    Travel Management............................................   642
    Worker's Compensation Costs..................................   480
Office of the Chief Information Officer:
    Appointment of Permanent Chief Information Officer...........   550
    Appropriated and CCC Funds..................................579-581
    Authority for ADP Systems....................................   445
    Automation Priorities.......................................631-632
    Business Process Improvement Projects.......................632-633
    Capital Planning Improvement Process........................446-447
    CCC Funds...................................................599-600
    CCC Report of ADP Expenditures..............................600-623
    Clinger-Cohen Act...........................................439-440
    Consolidation of IRM Staff...................................   582
    Contractor Support Services..................................   582
    Current Market Technologies and Costs........................   627
    Executive Controls on Computer Acquisition..................630-631
    Explanatory Notes...........................................823-832
    Fixed Asses Plan and Justifications..........................   599
    Goals of Improving Use of Technology........................549-550
    Government Performance and Results Act......................633-635
    Implementation of Clinger-Cohen Act..........................   549
    Information Technology Budgets..............................448-450
    IRM Budget..................................................551-578
    IRM Support Service Contracts...............................582-598
    LAN/WAN/Voice Installation...................................   625
    LAN/WAN/Voice Investment Suspension.........................624-625
    Managing Information Technology..............................   551
    Moratorium...................................................   624
    National Finance Center.....................................441-443
    Performance Measures for Technology..........................   550
    Positions in the CIO Office.................................629-630
    Procurement Moratorium......................................445-446
    Revising Work Processes......................................   550
    Service Center Implementation Team...........................   633
    Shared Benefits of IT Investments...........................626-627
    Staff........................................................   550
    Staff Years for Information System Support...................   630
    Technology Investment Review Board...........................   549
    Telecommunications Savings..................................625-626
    Vision for Automation........................................   630
    Year 2000.................................440-441, 453-454, 627-629
Operation, Buildings:
    Employees Maintaining Buildings.............................507-508
Personnel:
    Celebration of Excellence Ceremony...........................   475
    Classes of Employment........................................   475
    Employee Express Pilot......................................479-480
    Paperless Personnel Request System..........................476-477
    Performance Management......................................474-475
    Personnel Costs..............................................   475
    Summer Interns..............................................483-484
Questions Submitted for the Record:
    Chairman Skeen.............................................459, 549
    GPRA.......................................................547, 662
    Mr. Latham...................................................   549
    Ms. DeLauro..................................................   653
Rental Payments:
    Headquarters Complex Rental Changes.........................504-505
    National Capital Region GSA Space............................   505
    Rental Payments & GSA Repair Costs...........................   506
Statements:
    Acting Chief Financial Officer's Statement..................433-437
    Acting Chief Information Officer's Statement................430-433
    Acting Assistant Secretary's Statement......................429-430
Vehicles:
    Acquisition..................................................   459
    Distribution of Motor Vehicles...............................   483
    Motor Vehicles..............................................482-483
Working Capital Fund:
    Amounts Paid into WCF by Current Agency Structure...........639-640
    Explanatory Notes...........................................847-868
    Object Class 25.4-Operation and Maintenance of Facilities....   638
    Object Class 25.7-Operation and Maintenance of Equipment.....   638
    Object Class 31-Equipment....................................   638
    Operating Costs..............................................   641
    Performance Indicator for Video Production..................637-638
    Purchase of Computer Equipment and Services..................   641
Witness Statements:
    Acting Assistant Secretary for Administration...............720-735
    Acting Chief Financial Officer..............................746-760
    Acting Chief Information Officer............................736-745

                        Office of Communications

Agriculture Fact Book............................................   662
Budget Request...................................................   661
Communication Coordinators......................................657-658
Computer Matching and Privacy Act of 1988........................   660
Conversion of the Photographic Library...........................   660
Credit Alert Interactive Voice Response System...................   661
Director of National Services....................................   660
Explanatory Notes...............................................869-881
Government Performance and Results Act..........................662-664
Media Services...................................................   658
Object Class 11--Personnel Compensation..........................   661
Object Class 24--Printing and Reproduction......................661-662
Outreach to Underserved Groups...................................   662
Press Releases Issued............................................   658
Public Affairs Activities.......................................653-656
Reimbursements from Other USDA Agencies.........................658-659
Resources and Staff Levels.......................................   657
Salary Offset Initiative........................................660-661
USDA Visitor Center..............................................   660
Attorney:
    Hours by Agency..............................................   669
    Hours Worked.................................................   667
    Locations....................................................   669
Cases:
    Before EEO Commission........................................   697
    Civil and Criminal...........................................   670
Civil Rights Action Team Report..................................   664
Equipment Object Class...........................................   695
Examples of Recent Progress......................................   685
Explanatory Notes................................................   882
Forest Service Reimbursement.....................................   694
FY 1998 Budget Request Breakout..................................   683
Government Performance and Results Act (GPRA)....................   697
Hazardous Waste Management.......................................   696
Law Library......................................................   683
Legal Workload...................................................   685
Loan Resolution Task Force.......................................   695
New Authorities................................................670, 683
OGC Priorities...................................................   693
Performance Goals, Measures and Indicators.......................   684
Private Counsel..................................................   669
Questions Submitted for the Record:
    Chairman Skeen...............................................   664
Reduction in Legal Services......................................   684
Regulations......................................................   664
Reorganization...................................................   696
Senior Level Management..........................................   694
Staffing:
    Appropriated and Reimbursable................................   666
    Goal.........................................................   684
    Reductions...................................................   697
U.S.-Canada Joint Commission.....................................   667
User Fee:
    AMS Staff Year...............................................   697
    Hours by Agency..............................................   666
    Programs.....................................................   665
Work Item Tracking System........................................   696

                       National Appeals Division

ADP:
    Equipment....................................................   706
    Plan.........................................................   706
Automated Precedent System......................................705-706
Appeals:
    Active.......................................................   700
    Cost and Average Length......................................   699
    Director.....................................................   700
Civil Rights Hearing Requests...................................706-707
Director Review Determinations...................................   707
Explanatory Notes...............................................921-924
Extensions.......................................................   700
Executive Summary...............................................702-704
Final Rules and Regulations......................................   699
Government Performance and Results Act (GPRA)...................707-709
Hearing and Review Officer Qualifications........................   706
Hearing Procedure Handbook.......................................   700
National Training Conference.....................................   707
Object Class Explanation:
    23.3 Communications, Utilities, and Misc. Charges............   705
    25.2 Other Services..........................................   705
    31 Equipment.................................................   705
OIG Audit.......................................................700-701
Pre-Hearing Teleconference.......................................   706
Privacy Act......................................................   707
Quality Assurance Program........................................   707
Quasi-Judicial Courses...........................................   706
Questions Submitted for the Record...............................   699
Statutory Time Limit.............................................   700
System Location..................................................   705
Tracking System..................................................   705
Video Area Network...............................................   706

         Office of Small and Disadvantaged Business Utilization

Government Performance Results Act..............................710-712