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



 
                 TREASURY, POSTAL SERVICE, AND GENERAL
                     GOVERNMENT APPROPRIATIONS FOR
                            FISCAL YEAR 1999

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

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION
                                ________

  SUBCOMMITTEE ON THE TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT 
                             APPROPRIATIONS

                      JIM KOLBE, Arizona, Chairman

FRANK R. WOLF, Virginia          STENY H. HOYER, Maryland
ERNEST J. ISTOOK, Jr., Oklahoma  CARRIE P. MEEK, Florida
MICHAEL P. FORBES, New York      DAVID E. PRICE, North Carolina
ANNE M. NORTHUP, Kentucky        
ROBERT B. ADERHOLT, Alabama      

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.

      Michelle Mrdeza, Bob Schmidt, Jeff Ashford, and Tammy Hughes,
                            Staff Assistants
                                ________

                                 PART 4

                          INDEPENDENT AGENCIES
                                                                   Page
 Federal Election Commission......................................    1
 General Services Administration..................................  103
 National Archives and Records Administration.....................  443
 Office of Personnel Management...................................  617
 Committee for Purchase From People Who Are Blind or Severely 
   Disabled.......................................................  855
 Federal Labor Relations Authority................................  902
 Merit Systems Protection Board...................................  941
 Office of Government Ethics......................................  965
 Office of Inspector General, OPM................................. 1027
 Office of Special Counsel........................................ 1079
 United States Tax Court.......................................... 1095
                                ________

         Printed for the use of the Committee on Appropriations
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
48-610                      WASHINGTON : 1998
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                       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        ESTEBAN EDWARD TORRES, California   
HENRY BONILLA, Texas                   NITA M. LOWEY, New York             
JOE KNOLLENBERG, Michigan              JOSE E. SERRANO, New York           
DAN MILLER, Florida                    ROSA L. DeLAURO, Connecticut        
JAY DICKEY, Arkansas                   JAMES P. MORAN, Virginia            
JACK KINGSTON, Georgia                 JOHN W. OLVER, Massachusetts        
MIKE PARKER, Mississippi               ED PASTOR, Arizona                  
RODNEY P. FRELINGHUYSEN, New Jersey    CARRIE P. MEEK, Florida             
ROGER F. WICKER, Mississippi           DAVID E. PRICE, North Carolina      
MICHAEL P. FORBES, New York            CHET EDWARDS, Texas                 
GEORGE R. NETHERCUTT, Jr., Washington  ROBERT E. (BUD) CRAMER, Jr., Alabama
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












TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR 1999

                              ----------                              

                                          Thursday, March 19, 1998.

                      FEDERAL ELECTION COMMISSION

                               WITNESSES

SCOTT THOMAS, VICE CHAIRMAN AND CHAIRMAN OF THE FINANCE COMMITTEE, 
    FEDERAL ELECTION COMMISSION
LEE ANN ELLIOTT, COMMISSIONER AND VICE CHAIRMAN OF THE FINANCE 
    COMMITTEE, FEDERAL ELECTION COMMISSION

                  Opening Statement of Chairman Kolbe

    Mr. Kolbe [presiding]. The Subcommittee on Treasury, Postal 
Service, and General Government will come to order.
    I apologize for the delay. Thank you for postponing it in 
order to accommodate my schedule, and we apologize for the 
delay here caused by votes. But, I think, we're probably good 
for a little while here.
    So, we are pleased, this morning, to welcome the Federal 
Election Commission, Chairman Elliott, Vice Chairman and 
Commissioner Thomas, before our subcommittee today. I'm going 
to be very brief in my opening remarks because we are getting 
started late, and so we can get the questions quickly. And, I 
know that both Mr. Hoyer and I have a short timeframe here 
today because we have speaking obligations at noon.
    Commissioners, I appreciate the fact that the Federal 
Election Commission continues to be challenged, both by its 
resources and the workload that comes its way. There's no doubt 
about it, the workloads are up. The issues surrounding 
enforcement are becoming ever more complicated, and public 
scrutiny is becoming greater than ever.
    For the upcoming Fiscal Year, the FEC's requesting $36.5 
million, that's an increase of 15 percent over the current 
Fiscal Year. It also represents approximately the same increase 
in staffing that you're asking for.
    I want to, first, commend you for the resources that you 
are allocating this year in your budget request--the computer 
modernization--to keep that effort on track. As you know, from 
the comments I've made at past hearings, I believe these 
efforts are critical to your ability to meet the growing 
workloads, particularly in the areas of disclosure, as well as 
compliance. I'm not quite as optimistic about some of the rest 
of what I see in the budget request.
    Despite the fact that you tell us that disclosure is one of 
the top priorities of the FEC, the budget doesn't reflect this. 
You request an increase of 34 FTEs and $2.4 million for the 
Office of General Counsel, all of which are dedicated, of 
course, to compliance. But, you're not requesting much of an 
increase, or any increase at all, for disclosure activities. As 
a percent of your total resources, 29 percent goes to 
compliance, only 20 percent goes to disclosure. It just doesn't 
seem consistent with the strategic plan, and I don't think it's 
consistent with what I believe American people need, and that 
is, first, to have information regarding committees and 
candidates and to make sure that we're getting that information 
in the most timely fashion.
    As it relates to the issue of compliance, my concern is 
that all of your energy seems to be dedicated to investigating 
possible campaign finance violations. I don't see, in the 
budget, initiatives that target prevention and deterrence of 
possible violations--educational ways in which we can keep it 
from happening in the first place. And, finally, as I review 
the performance plan, I don't see any true measures of 
compliance. They all seem focused on workloads and outputs. So, 
you'll see in the questions I'm going to have about the current 
compliance rate, not only what the current compliance rate is, 
but what you consider to be an acceptable rate, and how you 
know when we've reached that compliance rate. I look forward to 
hearing the testimony that you have and clarifying some of 
those concerns.
    Before I ask for your opening statement--and, by the way, 
as always, your full opening statement will be placed in the 
record, and if you would summarize it, it would certainly help 
us to get as quickly as possible to the hearing--let me see if 
Mr. Price has any opening remarks before we go to your 
statement.
    Mr. Price. No, Mr. Chairman. I'd just extend my welcome to 
the witnesses and look forward to the testimony.
    Mr. Kolbe. Thank you very much. Commissioner? I'm not sure 
if Commissioner Thomas is going to deliver a statement.

                           Summary Statement

    Mr. Thomas. Thank you, Mr. Chairman, and members of the 
committee. My name is Scott Thomas. I just wanted also to 
clarify, briefly, Commissioner Elliott is here in her capacity 
as Vice Chairman of the Finance Committee. I am Vice Chairman 
of the Commission, and in that capacity, get the honor of 
presenting the budget, most directly. And, of course, Chairman 
Aikins--Joan Aikins--is chairman this year, and she would be 
here but for other commitments that she had to undertake.
    The purpose of our appearing here this morning is, 
obviously, to present our budget request. I will do my best to 
summarize my statement, and, in doing that, I think, maybe the 
best thing would be to just choose a few choice paragraphs from 
our testimony and that will give the flavor of our request.

                         fy 1999 budget request

     We are currently operating with a budget of $31.6 million, 
roughly, and an FTE allowance of $313.5. For the Fiscal Year 
1999, we are asking for an appropriation of $36.5 million, as 
you noted, and an FTE allowance of $360.5. Although this is a 
significant increase, percentage-wise, we believe that it is 
justified. What we are facing, in essence, is a situation where 
we think that we need to have both the technology that this 
committee has helped us achieve in recent years, and staff 
resources. We feel this is crucial because we're starting to 
sense that you need both in order to make sure the laws on the 
book are actually being adhered to.

                           processing reports

    Fiscal Year 1999 will be a pivotal year for the Federal 
Election Commission. During the period running from October 1, 
1998, through September 30, 1999, Commission staff will process 
the financial reports immediately preceding and immediately 
following 1998 congressional elections. At the same time, we 
will begin processing the matching funds submissions by the 
primary candidates for the 2000 Presidential election. Also, we 
will be working on the complaints and audits associated with 
the 1998 election, and still we'll be digging ourselves out 
from under the tremendous compliance fallout of the 1996 
election cycle.

                           compliance program

    So, our focus in this budget request, obviously, is on an 
increase in staff for the compliance component. Investigating 
these extensive allegations of multimillion dollar violations 
involving hundreds of players requires extensive resources. 
There's just no escaping that. Timely and thorough 
investigation of these matters requires human resources more 
than anything else. Analyzing records, taking depositions, and 
drafting reports, interrogatories, subpoenas, and briefs 
associated with these cases, takes auditors, investigators, and 
lawyers. And, yet, in the current Fiscal Year, we are able to 
assign only about 24 FTE to the line attorney function of 
handling enforcement cases.
    Also, our present compliance caseload is substantially 
different than previously experienced. A simple head count of 
the number of cases doesn't reflect the enormous increase in 
the scale of work we now face. Our major cases arecompletely 
different in terms of magnitude than what--than we were dealing with 
just a few years back. One way to quantify that is in terms of the 
number of respondents. The number of respondents, on average, has gone 
up--25 percent--between the Fiscal Year 1995 timeframe and the Fiscal 
Year 1997 timeframe.
    To give you an illustration of what this means--five of our 
largest current cases involve a total of 222 respondents, 
they'll generate an estimated 2.1 million pages of documents in 
discovery, and they will require the assignment of 32 staff, 
commission-wide. We have experienced problems, obviously, 
because of this resource strain. We have discovered that we are 
having to dismiss, regrettably, more cases than we ought to, 
simply, because we aren't able to apply resources to them.
    The longer cases remain unassigned on our enforcement 
docket because of inadequate resources, the more the utility of 
commencing an investigation declines until, eventually, 
activation of that kind of case would not be an efficient use 
of commission resources. Indeed, some of the very serious 
allegations from the 1996 election cycle already have been 
dismissed due to staleness. This is a very troubling situation 
to us.
    The requested budget increment of 37 FTE for the compliance 
program would give us the capacity to better handle this 
extraordinary compliance workload. We could pursue more cases, 
fewer would be dismissed without substantive commission action, 
and those cases activated would be resolved faster.
    Mr. Chairman, that's really the heart of our request. I did 
want to, if I could, right at the outset, address what I think 
is your major concern, and that is that it seems that we're 
putting so much into the compliance program at the agency, and 
not really improving in the disclosure area. Just by way of 
detail, as I looked at the dollar numbers, we're actually, in 
terms of the disclosure component, we're increasing 
expenditures from $6.9 million for that function, to $7.4 
million in the Fiscal Year 1999 budget. So, there is an 
increase there, in terms of the base functions for our 
disclosure effort.

                           electronic filing

    Also, in terms of the electronic filing initiative, itself, 
which we ordinarily have separated out in the budget process, 
and have done so this year, we are planning to spend $563,000 
in the current Fiscal Year. Yet, in Fiscal Year 1999, we're 
planning to spend $1.6 million. So, we are quite clearly, in 
terms of the disclosure effort, putting a lot more resources 
into that, as well. It just so happens that because we have 
been trying to show the committee, as we go along through the 
years, how much money we're putting into those computerization 
initiatives, we've separated out that electronic filing 
component. But, when you consider that, and add that in, it is 
clear that we are really moving upward in terms of our effort 
at that disclosure component, as well. Thank you.
    [The information follows:]

[Pages 5 - 15--The official Committee record contains additional material here.]


    Mr. Kolbe. Thank you very much, Mr. Thomas. Let me see if 
Mr. Hoyer would like to make some opening remarks before we go 
to questions, since he wasn't here at the outset.

                  Congressman Hoyer's Opening Remarks

    Mr. Hoyer. And, I apologize, and I'll be very brief. I've 
read the Chairman's opening remarks. I understand his concern. 
You have just spoken to it and we'll look at it further. I want 
to welcome Mr. Thomas and Ms. Elliott to the hearing. We, 
obviously, as we pursue the consideration of your budget, will, 
again, raise the questions I know in terms of your information 
systems and the status of those updates--I'm pleased to see in 
the Chairman's remarks, that he believes that you're making 
significant progress on that; and, also, make some observations 
about the resources that you have to do what continues to be a 
geometrically increasing workload. But, I look forward to 
working with you to ensure, as I know the chairman wants to, as 
well, not only that we have proper disclosure of who is 
contributing to candidates, but also that the public has quick 
and easy access to that information so they can use it to make 
decisions on elections. I mean, that's, obviously, the entire 
purpose of the statute and the reforms that were effected, to 
have some logical controls, with reference to contributions, 
and have the public informed as to what those contributions 
are.
    So, I look forward to the balance of the hearing and to 
working with you as we move towards, what I presume to be, an 
early markup. Thank you, Mr. Chairman.
    Mr. Kolbe. We certainly hope so. Thank you very much, Mr. 
Hoyer.

                           compliance program

    Let me begin with some of these questions on the issue--on 
the area of compliance. In your own words of your own 
statement, or from the FEC, itself, you said, the greater 
concern is limited scope of the compliance program that fosters 
a belief that there are no consequences for violations of the 
Federal Election Campaign Act. Yet, of course, as you would 
acknowledge, the compliance program really is based on 
voluntary compliance. It has to be just as our tax laws are--
really based largely on voluntary compliance. So, my first 
question is: how do you define compliance? Does the commission 
have a definition for what they consider to be compliance?
    Mr. Thomas. Well, it is not an easy task. It's a bit like 
defining air, but we do, as a basic proposition, try to keep 
various measurements that, I think, are a good way to 
objectively look at whether voluntary compliance is tapering 
off. Anticipating the committee's concern in this regard, I've 
had our folks try to put together some information that might 
be helpful.
    In terms of just objective measurement, though, first,I 
want to start with the statement that we think that overall voluntary 
compliance is very high. We noted in our budget justification document 
that if you look at, for example, the fact that we have about 8,000 
political committees reporting during any particular election cycle, 
only about nine tenths of one percent of those committees end up 
getting referred for some sort of compliance action from our Reports 
Analysis Division. Only about three tenths of one percent of those get 
approved for a ``for cause'' audit. Only about nine one-hundredths of 
one percent, of those committees, end up getting sued by the Federal 
Election Commission. So, overall, from our perspective, we, I think, 
can look at that and say: there is a high degree of voluntary 
compliance. By the same token, though, there are some other 
measurements that suggest, in recent years, compliance is tapering off 
a bit.
    We have provided these kinds of statistics in our budget 
justification document. You can look at and calculate these 
numbers. The number of requests for additional information 
(RFAIs) that our Reports Analysis Division sends out when they 
see something that looks like it might be a problem (the number 
of RFAIs) per report reviewed has gone up between the 1992 and 
1996 cycle, by 25 percent. Now, that would be possibly a sign 
that we're having to send out more RFAIs per report because 
we're finding less voluntary compliance.
    Similarly, if you look at the number of audit referrals 
from the Reports Analysis Division, per report reviewed, you 
see an even more dramatic increase between the 1992 and 1996 
cycle. You see a 99 percent increase in the number of those 
referrals for possible audit. Another statistic that might be 
helpful for you concerns committees that we find are not filing 
reports by election day, and by this I mean candidate 
committees. We end up, under the law, having to publish the 
fact that they have not filed their reports. In terms of the 
number of published nonfiling committees that we saw in the 
1992 cycle, compared to the 1996 cycle, the number we had to 
publish went up by 31 percent.
    So, if you're looking for some measurement of voluntary 
compliance and whether it's tapering off, that's what I would 
offer.
    Mr. Kolbe. Well, that's a measurement I can understand. I 
mean, if you don't file a report at all, that's a pretty easy 
one. And, you're saying if they're no longer active, they're 
supposed to file and tell you they're no longer active, right?
    Mr. Thomas. Yes. The committees we publish, however, are 
committees that are----
    Mr. Kolbe. Active.
    Mr. Thomas [continuing]. And the committees that are active 
in the upcoming election.
    Mr. Kolbe. And, it went up 31 percent--the nonfiling of 
those? That's a whopping jump.
    Mr. Thomas. Yes. And I----
    Mr. Kolbe. Thirty-one percent. What percent overall don't 
file--of the total number of committees?
    Mr. Thomas. Don't file? Well, I guess----
    Mr. Kolbe. I mean, what is the total number of nonfilers?
    Mr. Thomas. The total number, say, in the 1996 cycle----
    Mr. Kolbe. Right.
    Mr. Thomas [continuing]. Was 88, which we published----
    Mr. Kolbe. Oh, just 88.
    Mr. Thomas [continuing]. Out of about 2,000 candidate 
committees, probably.
    Mr. Kolbe. Okay. So, 31 percent jump and that is 
statistically much different than--I thought we were talking 
about much larger numbers than that. In your statement about 
those who you have to send out--what was it called--RA?
    Mr. Thomas. RFAI. Request for Additional Information.
    Mr. Kolbe. Request for additional information. Is that 
because of noncompliance or is that because you've made the 
forms hopelessly complicated, like Congress does with the IRS 
and tax law. [Laughter.]
    Mr. Thomas. Well, I'm not going to say that our forms are 
the easiest thing in the world, but we work very hard to try to 
make them simple and understandable, and, in fact, we're in the 
process of revising the forms to make them even more so. But, 
for the most part, what we're talking about are fairly 
straightforward problems, like there is contributor information 
missing or there is an excessive contribution reported right on 
the face of the report when you do an aggregation with previous 
contributions by the donor.
    Mr. Kolbe. I'm sure you track what it is that most of them 
go out for--your RFAIs--and whether it's related to one 
specific item. You must question whether or not you're asking 
for that information in the right way for the committee.
    Mr. Thomas. We do. Every two years, we take another look at 
our review procedures, and we analyze whether or not they ought 
to be revised. In the last several election cycles, we have 
revised those thresholds to increase the tolerance to allow, in 
essence, more possible problems to go by without sending out a 
request for some sort of clarification. So, if anything, to me, 
that would suggest that when you start seeing these drop offs, 
in terms of voluntary compliance, that those numbers I gave you 
are, in spite of the fact that we are increasing our tolerance 
levels, if you will. I think, it's an even clearer signal that 
there's a slight drop off, and we would say that one of the 
crucial components of getting disclosure is having an effective 
compliance system. You've got to have a credible threat that 
the Federal Election Commission will be able to do something 
about it if a committee does not adhere to the disclosure 
rules.
    Mr. Kolbe. Well, one final question in this round, and that 
is: what are the tools that are available to you to get greater 
compliance levels besides audits and investigations? Are there 
any other tools you have?
    Mr. Thomas. We do. We work very hard on our information 
programs. We are conducting workshops around the country for 
treasurers of committees or any other official who's going to 
be involved with campaigning. They can learn the rules. We have 
workshops for corporations and unions. We have workshops for 
candidate committees. We have workshops for party committees. 
And we try as best we can with those to help the community. We 
also, I would note, Mr. Chairman, have had great success, again 
with your assistance, in promoting the use of computer 
technology to educate the regulated community.
    We have developed a web page, which we are very proud 
of.Anybody in America, who has access to the Internet, can pull off of 
our web page all of the relevant guides about how to comply with the 
laws. Our Information Division has actually won several awards for 
their publications. They are very well written and clear, and they are 
there free of charge, on the Internet, for anybody that wants them.
    So, I guess we've been a success at working on getting 
voluntary compliance to the extent possible because we have 
worked very hard to get that information out there--about what 
the rules are and how they work.
    Mr. Kolbe. Thank you very much. Mr. Hoyer.

                           workload increases

    Mr. Hoyer. Thank you very much, Mr. Chairman. I didn't read 
your statement, and if you've already done this in the 
statement, then don't repeat this; but, clearly, one of the 
debates we've had is that you don't need more money, you need 
better handling of information capability, and, therefore, you 
don't need more money for people. You need it for computers, 
and if your information handling ability was more efficient, 
more effective, you wouldn't need more people. Can you outline, 
if you haven't already done it, the workload projection that 
we've gone over in the past as to why you've had this very 
substantial, sharp increase in workload and, therefore, 
requiring more people: and in that answer, specifically focus 
on why you can't handle the additional workload solely by doing 
more with less through information technology?
    Mr. Thomas. Well, our compliance workload----
    Mr. Hoyer. Yes or no? [Laughter.]
    Mr. Thomas. Part of what I read covered it, and that was--
--
    Mr. Hoyer. You know I'm just teasing you.
    Mr. Thomas [continuing]. The talk about how we have had 
increasing complexity of the types of cases we handle. We are 
now finding that more respondents are being involved in a 
particular case, and that probably reflects a growing 
complexity. We're finding that we are focusing our resources on 
enforcement cases where you have a number of different people 
involved in the allegations at hand. So, it's partly the 
substance of what we're looking at.
    We have, in years past, focused, I suppose, more on the 
fact that there's a huge increase in the amount of financial 
activity in campaigns, and that, in and of itself, drives our 
resources. We didn't focus on that so much this year, but it is 
certainly true. The amount of spending in the 1996 Presidential 
election campaign cycle for Federal elections that we had to 
monitor was $2.7 billion. And, that was----
    Mr. Hoyer. How did that relate to four years prior?
    Mr. Thomas. Four years prior, it was about $2 billion. So, 
it was a significant increase, percentage-wise. And, that 
carries all through our operations. Obviously, our staff has to 
make sure that all of those reports are put into the disclosure 
system, whether in terms of the digitized imaging at our FEC 
operations and on computer systems across America, or on the 
Internet, or, in some cases, in microfilm form. Then the 
reports analysis review folks have to review all that 
information and look for potential problems and send out 
requests for additional information and make referrals and so 
on.
    So, with a larger volume of activity in the process, 
they're going to have to review more, they're going to find 
more problems, going to have to make more referrals to the 
Counsel's office and so on.
    And, likewise, with more financial activity in the process, 
you'll have the Counsel's office receiving more complaints. 
It's just inevitable that with more transactions going on out 
there, and more money coming into the process, there is more 
opportunity for someone to, say, file a complaint, because they 
have heard about a problem with the opposing party or opposing 
candidate.
    So, in every sense, the increase in the volume of financial 
activity for campaigns carries through to our staffing 
requirements.
    Mr. Hoyer. And, specifically, why can't the additional 
volume simply be handled? For instance, if you have two 
candidates--two major parties raising, i.e., soft money, to the 
extent that that's reported, or hard money through candidates--
I don't know how many additional candidates we had--but 
candidates, obviously, are raising a lot more money 
individually. Now, the premise could be whether I deposit $1, 
or I deposit $10, it is a deposit, in effect. And, if I have 
good enough information technology to handle that information, 
the increase, per se, in dollar volume that Steny Hoyer takes 
to run his campaign, as opposed to seven hundred thousand, $1.2 
million, which is $500,000 additional dollars, which gets you 
that $700 million extra from $2 billion to $2.7, but does it, 
in fact, create additional workload. What you're saying, as I 
understand it, is in order to collect that extra $500,000, 
there are more transactions, more people contributing, more 
solicitations, more fundraisers, and, therefore, greater 
oversight being required.
    Mr. Thomas. That's exactly right. And, as I said, we didn't 
include that kind of statistical increase, except in some of 
the charts in our budget justification document. But, we can 
supplement that for the committee, if you would like, to give 
you a sense of how that works.
    Mr. Hoyer. As you know, this has just been a continuing 
debate. Clearly, you're on the right track. Now, the Chairman's 
question--or statement--reflects that, in terms--we all know 
that throughout government, we need to do a better job of 
handling information. IRS is our biggest example in our 
committee of where that's fallen down. But, clearly, it's an 
issue with you, as well. And, you're not alone on that. Most 
agencies of government have not done as well as they could have 
done, or they probably would have hoped to have done, in terms 
of information handling. But, you're still asking for more 
people, and your response to that, as I understand it, is yes, 
because of the growing complexity that cannot simply be handled 
by information technology analysis.
    Mr. Thomas. Yes. The growing complexity results in, as I 
noted, an increased number of respondents. We have also had 
some changes in the laws in recent years, that have the 
Commission having to undertake the kinds of investigations that 
weren't quite as prevalent before. One example: as a result of 
the Colorado Republican Party Supreme Court decision, we now 
have an obligation in cases where there's an allegation of 
excessive spending by one of the party committees, to look into 
whether or not there was, in fact, coordination between the 
party officials and the candidate's officials. We used to 
presume there was such coordination, but now, if we have to 
prove a violation, we're going to haveto prove there was 
coordination. To do that, you have to go out and depose the people 
involved. You have to take statements and so on. That moves into areas 
where staff are necessary. You have to have attorneys and investigators 
and auditors to do those kinds of functions.
    Mr. Hoyer. Thank you. Thank you, Mr. Chairman.

                legislative recommendation on push polls

    Mr. Kolbe. Mr. Price.
    Mr. Price. Thank you, Mr. Chairman. I'd like to turn in the 
exercise of our oversight responsibilities to some of your 
legislative recommendations, especially those having to do with 
disclaimers. You note the increase in so-called ``push-poll'' 
activity in your legislative recommendations, and suggest that 
Congress might want to consider adding disclaimer requirements 
for this kind of activity. You also acknowledge that it's 
rather hard to define exactly what falls within this category. 
How do you define push poll activity, and do you have some 
specific basis for the claim you make that this activity seems 
to be increasing?
    Mr. Thomas. Well, we don't actually have any occasion to 
define push polling, per se. The way that we have gotten into 
the question of how to deal with push polling in terms of 
disclaimers, is that our statute requires a disclaimer if a 
communication to the general public contains either express 
advocacy of the election or defeat of a clearly identified 
candidate, or some sort of solicitation of contributions. As it 
turned out, push polling, as most of us understand it now, 
sometimes involves an effort to go beyond just an innocent 
query of the person on the end of the phone as to what their 
views are on many topics. It starts to move into an area where 
there are suggestions that a particular candidate, who is not 
liked, has done something bad. And, so, there's an effort to 
somehow influence. So,----
    Mr. Price. Well, I think in our experience, it often does 
go beyond that in the way of deception, in that it often 
purports to be a poll, or at least that's the way the 
communication begins. Yet, as one listens to the questions, it 
becomes clear that they're designed to influence, really, 
rather than to elicit opinion.
    Mr. Thomas. I don't know how far Congress can go in terms 
of requiring disclaimers on communications that someone might 
argue has no connection at all with an election, but, with 
regard to most push polls, I think it would be fairly apparent 
that they are involved with a particular election. It might be 
that Congress could change the law and just specify that, in 
cases of any polling that is paid for by a candidate committee, 
or some other registered political entity, there has to be a 
disclaimer. That would take care of this difficulty we have of 
having to analyze in more detail whether there is some express 
advocacy of the election or defeat of a clearly identified 
candidate, or a solicitation.
    Mr. Price. Well, I commend you for the attention you've 
paid to this, and for the recommendation you've made. It's very 
disturbing that it's on the increase because it is almost 
always deceptive activity. It's under the radar screen. It's 
precisely the kind of campaign activity where a disclaimer is 
most needed. And, one would hope that if a disclaimer were to 
be required, then that would, of course, discourage the 
activity, or at least discourage the worst abuses. So, I 
commend you for raising the subject.

                            disclaimer rule

    Let me ask you now about the content of the disclaimer 
requirement we do have, and that you enforce. The disclaimers 
that appear on television ads, for example, let's just focus on 
that. These consist of unreadable, small print lines of type, 
postage stamp size pictures--almost a parody, it seems to me, 
of what one would think of as an effective disclaimer. To what 
extent are you bound in what you require by the law? To what 
extent do you have the flexibility to make those disclaimers 
something more meaningful--that would encourage a genuine 
assumption of responsibility by a candidate or a political 
committee for the material that's appearing on the screen?
    Mr. Thomas. Well, we do enforce the existing statute which 
does require a disclaimer indicating, in the case of a 
candidate's ad, who paid for it. In the case of an ad that's 
paid for by someone else, a disclaimer has to go on and state 
whether it was authorized by a candidate. But, in terms of the 
length of time a disclaimer has to appear on a TV ad, or the 
size of the type, we regulate that, in essence, through the 
concept in our law which says it has to be a clear disclaimer. 
So, we have attempted to borrow the FCC's rule on how long a 
television disclaimer has to be on and how large it has to be. 
Whether we could go beyond that, I'm not quite sure. I'm not 
quite sure, specifically, what you have in mind, whether you're 
talking about requiring an image of the candidate to actually 
appear in the disclaimer, as well?
    Mr. Price. Well, I've made clear, personally, what I would 
like to see. Steve Horn and I and a number of co-sponsors have 
a stand by your ad proposal which we think would improve 
disclaimers greatly. We would require a full screen appearance, 
either in person or a photograph and the candidate's own voice 
saying, ``I'm so and so, running for so and so, and I paid for 
this ad.'' We would require that kind of significant assumption 
of responsibility on the part of the candidate. We're not 
trying to regulate content, we're not breaking new ground 
legally. The disclaimers are already required; we just want to 
make them effective. So, that's my own opinion of what an 
effective disclaimer would look like. What I'm asking you, is 
what kind of flexibility you already have to improve on what I 
think almost anybody would agree is an ineffective disclaimer 
requirement. To what extent are you bound by what the FCC or 
anybody else has done in the past?
    Mr. Thomas. I would say we're not bound by what the FCC has 
said, but I suppose it would take a fair amount of lawyering to 
try to work on whether or not we think we have authority to do 
more. I'm sure part of the legal analysis would be, given the 
fact that the current statute says that the disclaimer has to 
state who paid for it and whether it was authorized, it would 
be a pretty strong argument, I suppose, that going beyond that 
and having the Commission require a picture of the candidate, 
or an image of the candidate, would be problematic. I don't 
mean to be pessimistic, but I'm just guessing that there might 
be some credible argument that that would be going a little bit 
beyond our existing statutory authority. But, that's not to say 
that if some sort of petition for rulemaking were filed, and 
our legal staff looked at it, something couldn't be worked on 
which would be, perhaps, different than what we have now.
    Mr. Price. Well, just one follow-up, if you don't mind, Mr. 
Chairman. The present requirement for a picture, which is 
interpreted to mean a very small picture, is that your 
requirement or the FCC's?
    Mr. Thomas. It's not our requirement. No.
    Mr. Price. But, it is a requirement.
    Mr. Thomas. I believe the FCC's rule does not require a 
picture on a television ad of the candidate in question. Just a 
statement as to who paid for it.
    [Clerk's note--The witness later stated that further 
research indicates that although the FCC's disclaimer rules do 
not require a picture, as a practical matter most candidate ads 
include either a picture or a voice over in order to qualify 
for the lowest unit rate. See 47 C.F.R. Sec. Sec. 73.1212, 
73.1941(b), and 1942.]
    Mr. Price. Well, in most ads, the very small picture does 
appear on screen.
    Mr. Thomas. I think you see some state laws that have gone 
beyond and have non-Federal----
    Mr. Price. No, these are Federal campaigns. We need to 
clear that up and we will do that. Thank you. Thank you, Mr. 
Chairman.
    Mr. Kolbe. Mrs. Meek.
    Mrs. Meek. Okay. Mr. Chairman, how are you?
    Mr. Kolbe. Very well.

                           outreach programs

    Mrs. Meek. I don't have a question. I have a comment. I 
agree very much with the Chairman when he spoke about the fact 
that you have increased your compliance and your disclosure 
methodology. But, hopefully, you will do a strong job in terms 
of educating us in terms of what those rules are, and what 
those regulations are. I think that an outreach program doing 
that would be very helpful. And, I'm sure you're going to do 
that because of what you said in your opening statement. Thank 
you very much.
    Mr. Thomas. Thank you.
    Mr. Kolbe. Mrs. Northup.

                            money laundering

    Mrs. Northup. Yes. Thank you. I'm sorry I was so late 
today. You may have covered some of these.
    There are mainly two issues that I'd like to ask you. One 
is, I understand that PACs are a way of--let me see--it is 
possible for a PAC to raise money from an individual who's 
already given to a campaign, given the maximum, and when they 
give, in a sense, that money is pooled together. But, 
considering the few numbers of PACs that give the maximum and 
the few individuals who have given the maximum, how directly 
would you be able to say that's money laundering? But I do 
believe, on both sides of the political spectrum that there are 
several organizations that are very into what I call money 
laundering. What I want to make sure of is, is that whoever I'm 
running against is playing by the same rules that I'm playing 
by. And, I believe that money laundering is illegal, or it is 
certainly an immoral interpretation of present law. And, I just 
wondered how able you are to identify PACs that try to funnel 
money from previous contributors who have donated previously to 
a candidate and then return to that candidate about an equal 
number of additional money by bringing it in from out of state?
    Mr. Thomas. Well, under the current law, there are 
provisions that we can utilize to try to prevent an obvious 
attempted evasion of the contribution limits. For example, 
under the statute, if someone gives money to a PAC that is 
directed to be for a particular candidate--that is earmarked 
for a particular candidate's benefit--the law says that that 
contribution does have to be treated legally as if it were a 
contribution by that original donor to the candidate. So, the 
question we get into is: was there sufficient indication of 
earmarking or designation to trip that test? Aside from that, 
we have a regulation at 11 C.F.R. 110.1(h) which, in essence, 
says that if you give money to a committee with an 
understanding that that money is, in fact, going to be expended 
on behalf of, or contributed to, a particular candidate, that 
likewise is a contribution that would have to be treated as if 
it's from the individual.
    Mrs. Northup. Is that enforceable?
    Mr. Thomas. Is it enforceable? It is when we find out about 
it.
    Mrs. Northup. Okay.
    Mr. Thomas. Now, in terms of finding out about it, that's 
more difficult. The benefit of having a good disclosure system 
is that someone who's looking closer can sometimes find 
patterns. If you find a pattern of a lot of money coming into a 
particular PAC on a certain date from a bunch of contributors 
who happen to be, perhaps, related in some fashion, and then 
promptly, a similar amount of money going to a particular 
candidate from that PAC, someone can file a complaint, and if 
they've got any sort of information that will help us generate 
that as an enforcement case, it would help, but we can look 
into it that way. For the most part, though, it is something 
that has to be brought to our attention by a complaint.

                             Issue advocacy

    Mrs. Northup. The other thing, though, is I wanted to talk 
about issue ads being charged as in-kind contributions to 
candidates. First of all, I have to tell you I'm not crazy 
about issue advertising because, even if somebody does it on my 
behalf, it may not be the message that I want to give. It may 
not be--it often isn't--how I would define myself to the 
public. I have been just so careful about not ever having a 
conversation that would ever--not allowing anybody in my office 
to ever have a conversation; that everybody understands that we 
are not going to be a partner to issue ads.
    But the risk I take is that somebody that thinks they're 
helping me really doesn't help me, and that actually happens to 
us. My concern is that not only would I be subject to that, and 
I am subject to it--that's a free speech issue, and I 
understand I can't do anything about it, but I'd hate to have 
it charged against me.
    Mr. Thomas. If I somewhere said that we do think we can and 
should regulate issue ads as a general concept, then that's a 
misstatement. We don't. We do, however, have to look at the 
question of whether or not there is coordination with a 
candidate. So if something is not perhaps an express advocacy 
ad, but it, nonetheless, is something where a candidate's 
people have requested it or suggested it, or coordinated in the 
airing of that particular ad, that is a fair definition of an 
in-kind contribution.
    Mrs. Northup. I'm actually talking about what I think is 
your recommendation to us, and that is that issue ads actually 
be considered an in-kind contribution; that we change the law.
    Mr. Thomas. I see. What we're asking in our legislative 
recommendation in that regard is that, if you will, you help us 
try to clarify when there is sufficient coordination to amount 
to an in-kind contribution, and also help us define the line 
between something that someone would agree is pure issue 
advocacy, has nothing to do with the Federal election process, 
and something that, on the other hand, does have to do with 
election process; it's electioneering in purpose and effect in 
every sense.
    Mrs. Northup. I think sometimes with issue ads that they 
think that their purpose is to help Jim Kolbe be elected. They 
think this is the way to do it. Jim Kolbe may see that ad 
ontelevision and be horrified that it defines him to his voters. The 
problem is that, for those people that are just so careful not only to 
go by the letter of the law, but the spirit of it and everything else, 
we have even less chance to influence what the content of the ad is, 
and are more likely to be horrified.
    Mr. Thomas. Rest assured, if there's no coordination, you 
won't have any trouble with the Federal Election Commission.
    Mrs. Northup. Oh, and I'm not worried about trouble. I'm 
just worried about changing the law like you've recommended.
    Mr. Thomas. Oh, your opponent then.
    Mrs. Northup. Oh, I'm very worried about that. [Laughter.]

                         commissioner vacancies

    Mr. Kolbe. We should have time for one additional quick 
round of questions, I think, before we have to go. Let me try 
to focus the question here on a couple of areas. One, about the 
vacancies among the Commissioners--there's been a vacancy since 
October of 1995, I believe. That vacancy includes not only the 
Commissioner spot, but, presumably, the staff that's assigned 
to that Commissioner, but we have funded the Commissioner and 
staff salary in each of those subsequent years. What savings 
were achieved in 1997 and/or 1998 due to these vacancies, and 
how did those savings get applied?
    Mr. Thomas. Well, if you look at what happened in Fiscal 
Year 1997, you'll see that, rather than expending funds for 18 
FTEs, which would pick up six fully-staffed Commissioner 
offices, we ended up funding the equivalent of 15.7, I believe 
it is, FTEs. So instead of 18, we were down at 15.7.
    If you look at a Fiscal Year, you would save roughly 
$300,000 when you take into account the Commissioner's salary, 
the Executive Assistant's salary, and an Administrative 
Assistant's salary. There are only three people in each 
Commissioner's office. So, roughly, $300,000 you would expend 
on any Commissioner office in any one year.
    The current Fiscal Year, it's not clear when this will 
happen in terms of getting new Commissioners onboard, any new 
Commissioner to fill that vacancy, that is, but our current 
planning is that maybe it will happen in early June. In terms 
of savings in this Fiscal Year, staff tells me that, in terms 
of what we have planned for all along, it's going to work out 
to about, I guess it works out to about $200,000, because we 
weren't planning on expending any for the first quarter anyway. 
So roughly $200,000 we're planning on having to work with.
    Mr. Kolbe. So the Commissioner spot, the staff spots are 
not filled when the Commissioner is not there?
    Mr. Thomas. That's correct.
    Mr. Kolbe. What are the consequences of having this vacancy 
in terms of the operations of the Commission?
    Mr. Thomas. Well, we have more difficulty, I suppose, 
getting a fourth vote on some cases. You need four votes to 
take action at the Federal Election Commission, and that has 
not changed even though there is a vacancy. So in practical 
terms, I suppose we have some longer debates and some more 
difficult discussions, because we're trying to come to a 
consensus and get that magical fourth vote.
    Beyond that, you lose, I suppose, whatever benefit of 
additional input you get from an extra person, but, in terms of 
savings, I suppose the bright side is it has given us a little 
financial flexibility, having that extra money that we can pour 
into some of the programs that this Committee and we at the 
Commission feel are essential.

                    department of justice resources

    Mr. Kolbe. I want to ask you a couple of questions about 
the detailees. I understand you've asked for some from Justice. 
How many have you requested, and what's the status of those 
negotiations? Have you gotten any onboard?
    Mr. Thomas. In March of 1997, we asked the Justice 
Department if they would be able to help us by detailing some 
workers. We didn't hear back from them until September. They 
then said, give us a specific request. We then at that point 
sent them a letter saying we would like 32 people, and we 
listed the different kinds of job classifications we would like 
to have help with. So far, they have not responded favorably to 
that request. So that's where we are at this point in Fiscal 
Year 1998, and we haven't received those support services from 
the Department of Justice. I'm sure that they're obviously very 
busy over there, and so it's not as though we exactly expected 
to get it. We hoped we could get it, but so far we have not.
    Mr. Kolbe. If you--you don't expect to get them?
    Mr. Thomas. If I were a betting man, I would say we will 
not get them.
    Mr. Kolbe. But you still have----
    Mr. Thomas. We're still working with----
    Mr. Kolbe [continuing]. Negotiations ongoing?
    Mr. Thomas [continuing]. Them. We have periodic contacts. 
Our General Counsel's office has been the lead on this, and 
they have been staying in contact with the Justice folks.
    Mr. Kolbe. If you got all those that you were asking for, I 
think your budget justification says you wouldn't need 37 of 
the 47 additional positions that you requested?
    Mr. Thomas. Well, I suppose, depending on how we framed the 
request, if we framed the request to give us enough people for 
the full 37 compliance component that we're asking for in 
Fiscal Year 1999, we wouldn't need any of that, if we got them 
from Justice. In terms of Fiscal Year 1998, we had only asked 
them for 32, thinking that, given the timeframe we had, taking 
on 32 would be about all we could handle in terms of providing 
space and all of the backup support and services as well.
    Mr. Kolbe. One final question, and then I'll let Mr. Hoyer, 
and we'll be able to finish this up. Last year we gave you $1.3 
million for litigation, document support. I think that was for 
a contract, I believe, with the DOJ for imaging, coding, 
storing, retrieval related to ongoing operations. What's the 
status of that? Is that happening?
    Mr. Thomas. It has been great. The Counsel's office has 
been able to install the terminals and they've gotten the 
process up and working. It allows them to image and index 
documents in these discovery cases that have hundreds of 
thousands of pages. They tell me they've already imaged and 
indexed 700,000 pages. They project having to image as many as 
2 million using this system. But it has been very helpful and, 
again, it's something that we're happy that the committee has 
helped us along with and pushed us to do; it has been a great 
project.
    Mr. Kolbe. Mr. Hoyer?

                  presidential election campaign fund

    Mr. Hoyer. I have a lot of questions that I won't have time 
for right now. But the question I would ask you is: Tell me 
about the presidential fund. I notice one of your 
recommendations is changing priorities so that conventions 
would be third, rather than first. Can you tell me where we are 
in the fund and how it looks for the next presidential 
election?
    Mr. Thomas. We have prepared some analysis which suggests 
that there will be a shortfall in matching fund payments when 
the first payments are made in January of the year 2000. In 
terms of how drastic that shortfall will be, roughly, we're 
saying we'll have about $25 million available to use for 
primary matching fund purposes on that date, and yet we'll 
probably have a payout obligation of about $60 million. So that 
first payment, based on those kinds of projections, would 
suggest that the candidates will only get about a 42 percent 
ratio payment on what they would otherwise be entitled to.
    Now as receipts start coming in through calendar year 2000 
from checkoffs, we'll eventually be able to make that up by the 
end of the year certainly, and we'll in fact be able to make up 
most of that shortfall probably in the July-to-August timeframe 
of that year, before the conventions.
    But there is definitely a shortfall. There is a structural 
problem, if you will, built into the system right now. Congress 
was helpful and upped the checkoff to $3 several years ago, but 
did not actually at that time index it for inflation. 
Eventually, inflation is just going to catch up, and the 
payouts which are indexed for inflation are going to outpace 
the checkoff receipts coming in.
    So the bottom line, though, for the 2000 election cycle: 
the primary matching fund program is in some jeopardy of having 
a shortfall, but campaigns will probably have to operate under 
those circumstances by getting bank loans to cover expenses 
during that timeframe before they can get the replenishment.
    In the year 2000, I would assume that the situation may be 
more drastic, depending on how many candidates are active. If 
it's an open election, like we have this year, certainly the 
year 2000 suggests that we'll have--I'm sorry, 2004, if I 
misspoke--2004 will be even more problematic.
    Mr. Hoyer. Mr. Chairman, I guess our time is just about up. 
So I'll submit the rest of them.
    Mr. Kolbe. Thank you very much, Mr. Hoyer, for your 
questions.
    Commissioners Thomas, Elliott, thank you very much for 
being here today with us.
    The subcommittee will stand in recess until 2:00 o'clock.

[Pages 29 - --The official Committee record contains additional material here.]


                                           Tuesday, March 24, 1998.

                  U.S. GENERAL SERVICES ADMINISTRATION

                               WITNESSES

DAVID J. BARRAM, ADMINISTRATOR, U.S. GENERAL SERVICES ADMINISTRATION
 DENNIS J. FISCHER, COMMISSIONER, FEDERAL TECHNOLOGY SERVICE
ROBERT A. PECK, COMMISSIONER, PUBLIC BUILDINGS SERVICE

                            Opening Remarks

    Mr. Kolbe. The subcommittee will resume its testimony now 
with Mr. David Barram, Administrator of the General Services 
Administration and his staff; Mr. Peck, who is Commissioner of 
Public Buildings Service [PBS]; and Dennis Fischer, 
Commissioner of Federal Technology Service [FTS].
    Thank you very much for being with us here.
    For the next fiscal year 1999, the General Services 
Administration is requesting an appropriation of $140,735,000, 
a decrease of about $2.8 million below fiscal year 1998. But it 
is also requesting $5.1 billion in new obligational authority 
for the Federal Buildings Fund.
    My colleagues will recall that last year we had a lot of 
discussion about this issue, particularly the revenue shortfall 
in the Buildings Fund. And I am pleased to hear, Mr. Barram, at 
least from your written testimony that we have reviewed, that 
you believe you have successfully corrected the problems that 
led to the shortfall.
    We are certainly going to want to hear more about that so 
that we can monitor that situation. This year, you are facing a 
shortfall in the rental of space activity of the Federal 
Buildings Fund. It is a continuation of a problem that surfaced 
last year. I hope you will be able to tell us what you are 
going to be able to do in this area to improve your ability to 
forecast your needs.
    You have requested new obligational authority within the 
Federal Buildings Fund for new construction projects but have 
not requested any new courthouse construction. If we were to 
follow the recommendations of the Administration it would be 
the second year in a row with no courthouse construction. I am 
very concerned about how many years you can go without keeping 
up with the courthouse infrastructure needs. I recognize that 
the realities of the budget are going to make it very difficult 
to continue this important program.
    We are also, though it is not an appropriations matter, we 
are also following very closely the progress you are making as 
you prepare for new contracts for long-distance 
telecommunications services for the Federal Government.
    So, we look forward to what you have to say to us today. As 
always, your full statement will be placed in the record and I 
hope that you would summarize it very briefly.
    But, before I do that, let me call on Mr. Hoyer, for any 
opening comments.
    Mr. Hoyer. Thank you, Mr. Chairman.
    Welcome, Mr. Barram, and Mr. Peck, Mr. Fischer and other 
officials of the General Services Administration. I share the 
chairman's concern. We have to some degree fallen on bad times 
at GSA in the sense that our investment in our public 
infrastructure is being delayed, perhaps not postponed, well, 
delayed and postponed, not eliminated but certainly delayed.
    And to the extent that we have done this last year, to 
presumably affect the payment of the shortfall in the rental 
receipts which were projected, which I understand now total 
somewhere in the neighborhood of $800-plus million. Maybe a 
little more.
    To the extent that the problem has been substantially 
resolved, I think we need to look very carefully at whether or 
not we can afford to continue to delay very needed Federal 
projects, particularly courthouses. We are talking about 
increasing our law enforcement efforts, we are increasing our 
arrest levels, we are increasing our incarcerations, all of 
which have led to some additional activity in the courts of the 
land at the Federal and State levels. And I share the 
Chairman's concern and we look forward to hearing your thoughts 
on that and we will have some questions on that. But I look 
forward to hearing your testimony.
    You are doing more with less. At least we are doing 
administratively more with less people. I think you have a 31 
percent decline in FTEs since 1993. And to that extent I 
suppose that you mirror to some degree the rest of the Federal 
Government, although perhaps a deeper cut than some others.
    Thank you, Mr. Chairman.
    I look forward to Mr. Barram's testimony.
    Mr. Kolbe. I would ask if any other members of the 
subcommittee have an opening statement or remarks that they 
want to make?
    Okay. Let me begin the questions here.
    Oh, I am sorry, you have not made your statement.
    I am so anxious to get right into it.
    Mr. Wolf. Take that as a hint. [Laughter.]
    Mr. Kolbe. Mr. Barram, of course, your testimony.

                           Summary Statement

    Mr. Barram. Mr. Chairman, and members of the subcommittee, 
thank you. I am Dave Barram, Administrator of GSA and you have 
already said I could put my full statement into the record and 
I am going to do that.
    I would like to make two points today that will maybe take 
four minutes. The first point is an assertion and that is that 
GSA is a successful agency today. Our people have a lot to be 
proud of. It is not your father's GSA, not even the GSA of a 
few years ago. We had to change a lot and we have.
    I could go on and on about that but I will not. You have 
all been very gracious listening to me do that already, so I 
will not do that today. But I believe our change and resultant 
success is driven by two forces. One is that we have committed 
ourselves to our customers to try to thrill them and the second 
is that we are learning how to get satisfaction from having 
tough measures of performance andholding ourselves to it.
    We are going to screw up sometimes, I am afraid, but we are 
confident that we can fix it, that we can get back on the right 
track and be stronger for it.
    The second point is the one you both talked about, our 
budget for new construction. We have discussed it with you 
individually and we should talk about it today in as much depth 
as you would like. You mentioned that this is the second year 
in a row that our budget has no new dollars, essentially, for 
construction.
    This decision reflects a number of considerations. A couple 
I will mention. One is the President's decision to curb 
spending as he drove toward his balanced budget. Second, we now 
have an agreed on willingness, I think, to allocate all the 
available dollars to repairs and alterations. This comes from a 
recognition that the Federal Buildings Fund is capable of 
paying for repairs and alterations or new construction, but not 
both.
    We have an inventory of Federal Buildings at a replacement 
value of $30 billion and we need to keep them up. We have spent 
about $600 million a year over the last nine years in Repairs 
and Alterations, R&A. The private sector benchmarks say we 
should annually spend between 2 and 4 percent of asset value 
which would suggest $600 million to $1.2 billion a year, which 
puts our $600 million at the bottom of that range.
    Even if we were to spend at that $600 million level, we 
have a hill to climb as many of our old and historic buildings 
are behind the curve when it comes to rehabilitation. We would 
need more than the bottom of the range to get where we need to 
go.
    The Congress has asked us to run GSA like a business. That 
means we need to charge enough rent to generate enough money in 
the Federal Buildings Fund to allow us to keep our assets in 
good shape.
    Our customers expect to occupy Class A space when they pay 
Class A rents, so, we need to keep their spaces in Class A 
condition. To do that, we cannot skimp on R&A funds in the 
budget. It is a little like not keeping bridges and roads in 
top condition, it is pay me now or pay me later. And for some 
of our buildings it has been, unfortunately, pay me later. 
Later never seems to come for OPM, Education and a few other 
buildings.
    And all this is before we even talk about new construction. 
For the foreseeable future, I believe we will require 
appropriated dollars to fund new construction. So, I want to 
make the case that we should not raid the R&A account to 
finance new construction.
    That is a stark way to describe the situation, Mr. 
Chairman, but that is how I see it. Last week, the Senate 
Budget Committee decided there should be additional new 
construction in fiscal year 1999, and its budget resolution 
specified that the funds should come out of general 
appropriations. I think that is the right way to do it.
    I have with me today the right people to discuss anything 
that you wish about GSA. Bob Peck is here, Donna Bennett is 
Deputy Commissioner of Federal Supply Service, Dennis Fischer 
from FTS, Marty Wagner, who runs our office of Government-Wide 
Policy, Bill Early, our very able budget director, our new CFO, 
Tom Bloom, Bill Ratchford, your old colleague, Martha Johnson, 
GSA's Chief of Staff and a number of other people from GSA.
    We did leave a few people back at the office, but we have 
enough here to answer any questions that you have.
    Thank you.
    [The prepared statement of Mr. Barram follows:]

[Pages 107 - 119--The official Committee record contains additional material here.]


                        rental of space account

    Mr. Kolbe. Thank you very much, Mr. Barram, for your 
remarks there. Mr. Barram, a couple of months ago in January, 
you submitted a reprogramming request of $243 million to meet 
the contractual and program requirements in the rental of space 
and installment acquisition payments activities.
    Would you explain to us what happened to cause the 
shortfalls in these accounts?
    Mr. Barram. Do you mind if Bill Early answers that?
    Mr. Kolbe. Certainly.
    Mr. Early. Thank you, Mr. Chairman.
    The primary reason was in our rental of space account. As 
we indicated a year ago, we had projections for government 
downsizing that did not occur. We have had a robust real estate 
market where rental rates have gone up higher than projected 
two years ago. And your committee approved reprogramming last 
year in this rental of space account and the full year impact 
this year.
    Those are the major reasons that we need to change our 
priorities, and realign our dollars so that we can pay for our 
leases with the private sector landlords.
    Mr. Kolbe. What is going to happen if you do not get the 
additional money in that rental account?
    Mr. Early. We will have inadequate funds in mid-August to 
pay contracts with our landlords.
    Mr. Kolbe. And what happens?
    Mr. Early. We will be in violation of anti-deficiency 
statutes, which do have criminal penalties.
    Mr. Kolbe. Not a very good option.
    Mr. Early. We would have to abrogate our contracts with our 
landlords.
    Mr. Kolbe. Not a very good option.
    Mr. Early. Not very many choices, no.
    Mr. Kolbe. Where are we reprogramming this from?
    Mr. Early. The reprogramming is primarily from the balances 
that we have in some of our repair projects. Where the projects 
have been completed, schedules would not be impacted and there 
are balances in those accounts that would be made available for 
this.
    Mr. Kolbe. There is a piece of it from your construction 
and acquisition facilities activity; is that going to affect 
any projects now underway?
    Mr. Early. No, sir.
    Mr. Peck. Well, let me put it a different way, Mr. 
Chairman, that is actually good news. That is all from projects 
that have been completed that we brought in under-budget.
    Mr. Kolbe. Those projects are all completed, signed-off, 
done?
    Mr. Peck. Yes, sir.
    Mr. Kolbe. So, that is money that is available.
    Mr. Peck. The bad news for us quite honestly is that a big 
chunk of the rest of the funding source for that reprogramming, 
$142 million, is from our basic repair and alteration program 
and in a year in which we did not have much to begin with.
    Mr. Kolbe. So, this means what Mr. Barram was talking about 
earlier, the $600 million which is going to be cut even 
further?
    Mr. Peck. Right.
    Mr. Kolbe. So, we are really--it is like eating your young 
in a sense almost?
    Mr. Peck. Yes, sir. The problem in our program, of course, 
is that we have two accounts that are just completely non-
discretionary. One is installment acquisition payments. Those 
are like mortgages. You have to pay them. And the other is 
leasing because we have signed on behalf of the Government 
contractual obligations to pay rent.
    And as Mr. Early explained, in this case what is happening 
is that when you project a budget, as we have to in our budget 
system, 18 months in advance, we projected what we thought was 
a generous amount for anticipated increases in the rent levels 
we would pay as we renew leases. About \1/6\ of our inventory 
is renewed every year.
    We thought that the economy would be improving and the real 
estate market would improve to the tune of about 2 percent 
increases in lease rates. It has turned out to be about 3 to 5 
percent increases in leased rates.
    Now, for the fiscal year 2000 budget we will project that 
and hopefully in that year we will be right.
    Mr. Kolbe. Is there anything you can do to improve those 
projections of those rental rates?
    Mr. Peck. Well, I have been in the private sector real 
estate market also. You are trying to project a year and a half 
or two years in advance, actually, what the market is going to 
do and it is just very hard. I think that when we projected two 
years ago that there would be 2 percent increases average in 
new leases people would have thought that was a generous 
amount.
    Mr. Kolbe. What is the amount in 1999 you are requesting 
for new obligational authority for the rental space and is that 
going to be sufficient? Do you have confidence?
    Mr. Peck. In 1999, it is about $2.6 billion. We will be in 
better shape than we were in 1998, I think, by quite a bit.
    But each year, as in 1998, in which you add to the lease 
payments you are making means that you add to the base you will 
be paying in fiscal year 1999.
    In other words, this thing rolls along. What we believe we 
can do in fiscal year 1999 is to come up with an accounting way 
in which we take account of that particular dollar amount that 
you just cannot predict in advance. There is a way to do this 
within the Federal budget system. We have had some discussions 
with OMB about it but I cannot yet present to you a finished 
product for taking better account of that kind of uncertainty.
    Mr. Kolbe. One final question. By reprogramming $142 
million out of your repair and alterations, is there a major 
renovation project that is going to miss getting going this 
year or is it a little bit taken out of an air conditioning 
system here and stairs there and that kind of thing?
    Mr. Peck. It is the latter. We have taken it out of the 
account that is the small projects, below prospectus limits.
    Mr. Kolbe. That is a lot of small projects, $142 million 
that is not going to get done.
    Mr. Peck. Yes, sir. Well, when you have 1,800 buildings you 
have these all over the place. And that is what we basically 
have.
    Mr. Kolbe. Mr. Hoyer.

                          personnel complement

    Mr. Hoyer. By reference you have had a significant 
reduction in personnel. Based upon your being there for some 
period of time, do you have sufficient people to accomplish the 
objectives and responsibilities you have?
    Mr. Barram. Yes. If we improve our ability to get rid of 
old work and do the new work well, we will do a better job of 
doing the right work.
    If we do not, if we just do things the way we----
    Mr. Kolbe. Excuse me for interrupting, we have a vote.
    The subcommittee will be recessed for a vote.
    [Recess.]
    Mr. Kolbe. We will resume. As I mentioned, there will 
apparently be another vote or two, so we may get interrupted 
again.
    Mr. Hoyer, did you need to repeat the question or Mr. 
Barram, in mid-thought, can you resume where you were?
    Mr. Hoyer. Complement of personnel sufficient to carry out 
your duties.
    Mr. Barram. The short answer is yes but we have to work 
real hard at it because as we do more and more new things, 
people need to develop new skills. That takes a lot of 
flexibility in systems; it takes a lot of flexibility in the 
personnel system, something that, in my view, hasn't always 
been a word you associate with personnel systems in the 
government. But we are working hard at it.
    GSA people are under a lot of stress right now--I can feel 
it all around the country--because we are doing some exciting 
things and people are working very hard. We have to learn the 
lesson that all organizations have to learn in this rapidly 
changing time: how to do the A work and not the B work. It is 
really tough.
    I don't know if that answers your question. I think if you 
asked any manager in GSA if he or she wanted more people, that 
person would answer yes.
    Mr. Hoyer. I presume, like all managers, the challenge is 
to identify A and B.
    Mr. Barram. That is right.
    Mr. Hoyer. And the opinion of which is A and which is B 
sometimes differs.
    Mr. Barram. That is right.
    Mr. Hoyer. Okay, I will move on. I am very concerned about 
where we are in terms of complement of personnel in GSA.

                            new construction

    Your 1999 budget, $44 million for new construction, we have 
all talked about it. Is that the right amount?
    Mr. Barram. It is the amount.
    Mr. Hoyer. I stated it as being the amount in my premise to 
the question. Now, is it the right amount?
    Mr. Barram. It is like A and B work. You know, everybody 
has a different opinion. We spent a lot of timewith OMB in the 
budgeting process and this is what we have submitted as the President's 
budget.
    Mr. Hoyer. What was your request to OMB?
    Mr. Barram. It was $570 million.
    Mr. Hoyer. $570?
    Mr. Barram. I think so.
    Mr. Hoyer. We have that list, I think.
    Mr. Barram. The bulk of that, of course, is courthouses 
because that is what we build in this country--courthouses, 
jails and border stations.
    One of the things that I think is really important, and you 
know this very well, we have established in the last couple of 
years a priority list on which courthouses to build and I am 
very pleased, as a relative newcomer to government, to see the 
way the Congress and GSA and the Administration in general and 
the Courts have worked on this because otherwise, it gets to be 
who has the most political power rather than what is the right 
thing to do.
    We have an eight-year program, a long-time program of $8 
billion or whatever it is of building new courthouses in this 
country and we have a list of which come first. So when we have 
the dollars, the idea is this courthouse gets built first.
    Mr. Hoyer. Because our time is brief, let me ask a series 
of quick questions on this.
    A, do you believe the federal judiciary's process of 
setting priorities is appropriate at this point in time?
    Mr. Barram. I think it is, the short answer.
    Mr. Hoyer. Do you believe that the dollars projected for 
construction is for what the public would say is needed space, 
as opposed to gingerbread space? I don't like either one of 
those terms, but I couldn't find any better way to say it. Do 
you know what I mean?
    Mr. Barram. Yes.
    Mr. Hoyer. So that of the $570 million, GSA's view is A, 
this is appropriate, it is priority and it is the proper 
priorities?
    Mr. Barram. Yes. One of the things that we had planned a 
couple of years ago is to spend about $500 million a year every 
year and that would be a reasonable way to do it. We were 
unable to do it in 1998 and the budget says we are unable to do 
it in '99.
    Mr. Hoyer. Have there been discussions about alternative 
means of financing?
    Mr. Barram. Yes. We have had lots of discussions. I think I 
will let Bob answer that.
    Mr. Hoyer. Again, time is brief and we may want to answer 
that for the record.
    Mr. Peck. I will just give you the brief answer. Yes, we 
have looked at lots of different ways, some of which are 
actually done in the government right now. A lot of them don't 
conform to rules that were set down in the Budget Enforcement 
Act of 1990, so there are lots of hurdles you have to overcome 
to try to make any of those things that people do in the 
private sector work in the public sector.
    Mr. Hoyer. Mr. Chairman, if I can, a last question. What 
are we doing on amortizing federal construction projects? What 
is the maximum time you have available to do that under the 
present rules?
    Mr. Peck. Well, we actually do not amortize federal 
construction,
    Mr. Hoyer. It is 100 percent in one year?
    Mr. Peck. Yes, sir.
    Mr. Hoyer. My point being, Mr. Chairman, every state 
government, I presume, and I know Maryland, that purchases 
capital projects amortizes them over--in Maryland it is 15 
years, which is a relatively short period of time We do it 100 
percent up front and it is a real constraint fiscally but it 
also is a real constraint in terms of investment.
    Mr. Barram. I think that is because you don't build nuclear 
submarines in Maryland.
    Mr. Kolbe. I was going to say we do the same with aircraft 
carriers and nuclear submarines--buy them all in one year.
    Mr. Wolf has asked to go next and I will accommodate his 
request.

                           governor's island

    Mr. Wolf. Thank you, Mr. Chairman. I am going to have a 
series of questions for the record but I just want to make the 
record here.
    You would agree that Governor's Island is a treasure that 
we should protect? Is that fair? It is a very historical site--
would you just give us a sentence or two, why it is so 
historical, for the record?
    Mr. Barram. Well, it is a wonderful place and at one time 
or other in its existence it was under seven different flags. 
It has some beautiful old buildings. It has great historical 
significance.
    Mr. Wolf. It looks out on Ellis Island; is that correct?
    Mr. Barram. Yes, it does.
    Mr. Wolf. It looks out on the Statue of Liberty; is that 
correct?
    Mr. Barram. Yes.
    Mr. Wolf. Secondly, how much money did the President 
request for maintenance of Governor's Island in fiscal year 
1999?
    Mr. Barram. $7 million.
    Mr. Wolf. $7 million, and you have a tight budget. Can you 
afford these costs over the next five years, given the rapid 
deterioration taking place over on the island?
    Mr. Barram. It is appropriated funds. We also have talked 
about the value of having it be no-year funds, if we can do 
that.
    Do we think seven is enough?
    Mr. Early. We think that seven is enough but that is for 
this year. There is a recurring need. We would expect to see 
recurring requirements in future budgets, maybe at this level, 
maybe at higher levels. This is the amount we are comfortable 
with for this year.
    Mr. Wolf. I was out on the island about a month and a half 
ago. For the members, they have Coast Guardsmen raking leaves. 
The buildings are beginning to show the effects of weather.
    There has been some interest by only one or two individuals 
in New York City to bring gambling to the island. Do you think 
it would be inappropriate to bring gambling to the island?
    Mr. Barram. Well, I do personally.
    Mr. Wolf. Well, that is all we need to know. [Laughter.]
    And I agree with you.
    The last question is this, and then you can elaborate a 
little bit more for the record.
    Senator Moynihan and Congresswoman Maloney and some others 
have an amendment, have an idea of a concept to set up a 
commission to save the island with people from the Federal, 
state and local governments. My own sense of what should be 
done with Governor's Island, is it should be used for the 
citizens of theNew York State area, for tourism, and for 
citizens from Maryland and Virginia and Arizona or wherever, when they 
come.
    Secondly, a portion of it should be used for the Park 
Service because there are some very historic buildings out 
there. I think one of the oldest buildings in New York City is 
out on the island. The prison out on the island is very, very 
historic.
    And lastly, to take all of the buildings that are not 
historic and allow universities--NYU, Cornell, Fordham and 
other universities--to use them.
    Would you work with the committee and with Senator Moynihan 
and Congresswoman Maloney to work out some mechanism for an 
orderly process for the disposal of the land?
    Mr. Barram. Absolutely. We really welcome it because we 
have the responsibility to dispose of it and we are delighted 
that they are taking such an active role and that you are, too. 
It is a tough task unless we get a lot of people working 
together in some creative ways.
    Mr. Wolf. I thank you, Mr. Administrator.
    Mr. Chairman, thank you very much. I have others I will 
just submit for the record.
    Mr. Kolbe. We will resume our order here. Mrs. Northup.

                             goodwill games

    Mrs. Northup. Mr. Barram, I wanted to ask you about the 
GSA's cooperation with the Goodwill Games. There was language 
specifically in the bill last year about cooperating with the 
Goodwill Games and about the GSA providing services to the 
Goodwill Games, like we do for the Olympics.
    I think what I understand is that for any other services 
besides the ones specifically in the report language, the 
Goodwill Games is interested in reimbursing you. For example, 
if there are printing services that are part of your buildings, 
communication services, whatever, that they could use the GSA's 
facilities and services and then reimburse for them.
    The question is, do we need specific language to allow 
that? And were those contracts always with the memorandum of 
agreement with DOD and GSA in the past or with the Olympics? 
Did you all provide those services directly to the Olympics 
with provisions in the budget, special report language?
    If not, I understand that DOD is no longer doing that. It 
has now been transferred to the Army. But because it just was 
transferred to the Army, they have never done it before; they 
don't have the expertise; they are not prepared to set it up.
    The Goodwill Games are going to be on Long Island this 
summer and I guess there are some people getting pretty 
desperate about that.
    Mr. Barram. We are going to try to give a short answer.
    Mr. Peck. Let me try a short answer. One is we think we are 
close to an agreement with DOD on some cooperation, which will 
allow us to do a couple more things, but I would like to get 
you an answer for the record on what we can do reimbursably 
because that always gets complicated.
    [The information follows:]

                       Support for Goodwill Games

    On March 26, 1998, GSA and DOD signed a Memorandum of 
Understanding concerning coordination and assistance in support 
of national and international special events. Either GSA or DOD 
may provide any of the following services to the other on a 
reimbursable basis in conjunction with that agency's support of 
a national or international special event: waterhouse space, 
furniture, security, administrative supplies, inventory 
management, motor vehicles, telecommunications, and other forms 
of support or services.

    Mrs. Northup. The question that is before us immediately is 
that we have the supplemental going through and there was a 
question about report language and what it should say. There 
was disagreement from the staff about what the exact language 
would be that would be appropriate and acceptable, apparently 
between your committee staff and the committee staff.
    This bill is headed to the floor now but certainly in 
conference committee that report language possibly could be 
accommodated. We just need to know what it is.
    I think, Mr. Chairman, am I right that we are looking for 
that?
    Mr. Kolbe. Yes.
    Mrs. Northup. I think there is just a clarification that we 
really need here.
    Mr. Barram. Bill.
    Mr. Early. As you indicated, the authorities that we are 
aware of are with the Defense Department now, and with the 
Department of Army. GSA does not have the authority to deal 
directly with these nongovernmental entities, even on a 
reimbursable basis, but the Defense Department and now Army do.
    So it is important for us to have that memorandum of 
understanding with them. Absent that, we are not able, without 
new statutory authority, to deal directly on a reimbursable 
basis for those services.
    Mrs. Northup. If the supplemental beats the memorandum of 
agreement in terms of a time level, could the report language 
say pending memorandum of agreement between DOD and GSA that 
reimbursable services would be allowed?
    Mr. Early. We try to be as imaginative as possible but I 
think we would have a problem without clear statute. Report 
language would be inadequate for us to do things where we don't 
have the authority.
    Mrs. Northup. So it would actually have to be bill 
language.
    Mr. Early. Yes, ma'am.
    Mrs. Northup. You are not aware of anything with the 
Olympic Committee?
    Mr. Early. What we have done in the past with Goodwill and 
Olympics and Para-Olympics has been through the agreements with 
DOD. They have been the lead and in many cases under their 
charter we might work directly with those agencies, but the 
reimbursements are all through DOD as the parent.
    Mr. Kolbe. Mr. Istook.
    Mr. Istook. I pass, Mr. Chairman. I have another 
commitment.
    Mr. Kolbe. Mr. Forbes.

                               child care

    Mr. Forbes. Thank you, Mr. Chairman.
    I note in this wonderful brochure you gave the committee 
the kids on Broadway, the GSA Child Service Center, the 
partnership with the City of San Diego and the private sector 
and, of course, I want to thank GSA and Commissioner Peck for 
the help that you all gave us in New York and Long Island with 
the IRS and child care there.
    My question is, Mr. Administrator, first of all, you note 
that GSA has opened three additional child care centers in the 
last year. How many GSA-sponsored child care centers or GSA-
encouraged child care centers exist in the various court 
complexes around the country?
    Mr. Barram. Well, there are 108 or 109 total. In 
courthouses?
    Mr. Forbes. Just the courthouses. Are there child care 
facilities at courthouses?
    Mr. Barram. There are some, yes, a handful, six, seven.
    Mr. Forbes. I would appreciate it if we could have that for 
the record at some point.
    Mr. Barram. Sure.
    [The information follows:]

                   Child Care Centers in Courthouses

    There are fifteen child care centers currently located in 
facilities where there are Judiciary court operations. Only one 
of these--a new courthouse in Kansas City, Kansas--is located 
in a building used strictly as a courthouse. There is also a 
child care center planned for the new Boston Courthouse 
Building which is scheduled to open September 1998.

    Mr. Forbes. My concern, of course, is I think the President 
has laid out that child care facilities is certainly a 
priority. I know your administration, Mr. Barram, and GSA in 
general has a very strong philosophy in favor of encouraging 
child care centers and we do, as I said, appreciate what you 
did with the IRS at Brookhaven Service Center on Long Island. 
These are obviously among the most modest of wage-earners, and 
having a child care facility there, even in the event that it 
is not fully staffed by federal employees but the fact that 
there is a partnership with the private sector, I think, goes a 
long way.
    There is another complex being constructed at Central 
Islip, the court complex there. I was wondering and I would 
appreciate it, if you can't do it now, if you could provide it 
for the record, have there been any discussions about providing 
child care? There are going to be, I think, close to 2,000 
employees when that facility is completed.
    Mr. Barram. There have been discussions. The issue we have, 
the struggle we have, and maybe those are the wrong words to 
use but not all judges feel like it is a good thing to have 
child care in the courthouses, for security reasons. We are in 
extensive and intensive discussions with them about that.
    [The information follows:]

            Child Care Center in Central Islip Court Complex

    Yes, we have had and will continue to have child care 
discussions with the Courts and with the other agencies who 
will be tenants of the facility when it is completed in 2000.

    Mr. Forbes. Because they don't necessarily have to be on 
the site; is that correct? As a matter of fact, I think there 
are some facilities that are within a mile or two, a three- or 
four-mile radius of a site? They aren't always contiguous to 
the site itself.
    Mr. Barram. They don't have to be and a child care center 
has to work economically, too. So the space has to be cost-
effective and the clientele has to be available. So all that 
stuff plays, but it could be close by.
    Do you know anything specifically about the Islip one?
    Mr. Forbes. Well, if you could provide it for the record, I 
would appreciate it. I think, though, for the record, I think 
it has been a public policy decision by the Clinton 
Administration and one that I certainly agree with and I think 
large numbers of the Congress, if not the Congress in general, 
feel that in the current climate, that child care facilities 
are a very, very important undertaking.
    And I understand the cost. We have debated that cost at the 
facility on Long Island in particular but certainly if we can't 
take the lead, as public policy-makers, whether it is on the 
administrative side or on the congressional side, I wonder who 
does take that lead.
    So I would appreciate it very, very much if GSA could look 
seriously at not just the Central Islip courthouse, which I 
encourage you to do, but also some of the other new 
construction projects that may be coming down the pike, because 
this is certainly an area where that ought to be the place 
where leadership starts on the child care question.
    Mr. Barram. Absolutely. We agree.
    Mr. Forbes. And I thank you certainly for your personal 
leadership and, Mr. Peck, for your help in New York.
    Mr. Barram. Let me just say one thing about that brochure 
you mentioned. I only had five because they are actually warm. 
They just came off the printers. So for those of you who didn't 
get one, I will make sure you get one.
    Mr. Forbes. Thank you. Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you very much, Mr. Forbes.
    Mr. Price.

                                fts 2001

    Mr. Price. Thank you, Mr. Chairman.
    I am happy to have you here, and I would like to raise a 
brief question about your FTS 2001 contract procedure. I 
understand the RFP on that went out the middle of last year and 
you are looking now at early 1998; is that right?
    Mr. Barram. It went out at the beginning of this year.
    Mr. Fischer. In the latter part of February we had 
proposals on the technical side in.
    Mr. Kolbe. We need to have you come up and identify 
yourself.
    Mr. Fischer. Dennis Fischer, Commissioner of FTS.
    The RFP closed on March 2 with all the technical proposals. 
The price proposals are due April 2 and we contemplate an award 
in the fall of this year.
    Mr. Price. Award will be in the fall of this year?
    Mr. Fischer. Yes, sir.
    Mr. Price. And how does that relate to the expiration date 
of the FTS 2000 contracts? To what extent do those overlap?
    Mr. Fischer. Well, the existing FTS contract expires in 
December of 1998. We have a unilateral right to extend that for 
six months. Because the transition, given the time line that we 
are on now, will take longer, we will also negotiate with the 
existing providers for transition beyond that until the 
complete transition is made to FTS 2001.
    Mr. Price. Well, as you probably know, some questions have 
been raised about the extent to which the FTS 2001 contract 
procedure is going to be open to all comers and to what extent 
there may be a locking-in taking place or a bias towards those 
who have the earlier contract.
    I just would like to ask you to explain this mandatory use 
issue that has come up with regard to your budget submission 
and to offer whatever assurances you can as to the openness of 
this process.
    Mr. Fischer. Okay, sir. The present contract, FTS 2000, has 
a contractual requirement that calls for mandatory use and this 
subcommittee over the years has been very supportive 
legislatively of helping us enforce that.
    Two years ago the subcommittee approved an extension of it 
because at that time it appeared we would only need it for two 
years. Subsequent to that time, as you mentioned, the RFP 
process was extended. The Telecommunications Reform Act came 
into play.
    What we are asking for is to have that mandatory use 
language on FTS 2000 extended in an open-ended fashion until 
the FTS 2000 contracts are completed.
    Now, the follow-on contracts for FTS 2001 will not be 
mandatory. So agencies will have a choice. The major agencies 
have pledged to stick with us through the initial part of that 
contract as we satisfy the minimum revenue guarantees that are 
in there and we need those revenue guarantees to attract good 
and aggressive and hopefully lower prices than we pay today.
    Mr. Price. Is the effect of that handling of the issue to 
bias the procurement process for FTS 2001 in favor of the 
present contract-holders?
    Mr. Fischer. No, sir, it is not. All it really does is say 
to us that while this old contract winds down, to the extent 
that services need to be provided under it after December 1998, 
that it would be extended to keep that in the envelope until 
the contracts expire.
    Mr. Price. All right, thank you.
    Mr. Chairman, do I have any time remaining or should I wait 
until the next round?
    Mr. Kolbe. You have one minute.
    Mr. Price. Well, I will wait until the next round. Thank 
you.
    Mr. Kolbe. Mrs. Meek.

                       welfare to work initiative

    Mrs. Meek. Thank you, Mr. Chairman.
    I apologize. I was in a full committee meeting. That is why 
I wasn't here to greet Mr. Barram. He certainly has come a long 
way since last year. I notice you have quite a bit of 
information, which I have hurriedly read here.
    I have a question that I hope is germane to what you are 
doing. It has to do with job creation by GSA. I notice you have 
a lot of out-sourcing. You have a lot of contractual 
arrangements with everybody, it seems, throughout the country.
    Have you paid any attention to a welfare-to-work initiative 
with the people with whom you do this contracting?
    Mr. Barram. The people with whom we do this contracting? We 
have a very aggressive welfare-to-work initiative inside of 
GSA. That is a very interesting question. We account for maybe 
$14 billion, I think the number may be, $40 billion in 
contracts with people in the private sector, but we do that by 
having our customers, the federal agencies, make purchases from 
them. We set up contracts and let them purchase.
    We are very aggressive with SBA; we have recently made it 
even easier--in getting our federal agency customers to pay 
attention to small businesses, but I don't know if anybody has 
ever done what I think you are asking.
    Mrs. Meek. You would think there would be some sentiment 
from the top down as far as you are concerned in impressing 
this over the agency.
    Mr. Barram. Well, personally I would have some sentiment 
for it but I would really be careful of it. I would want to 
understand it well because it could end up being a really 
difficult task to figure out how you were doing it. If you 
ended up with requirements and regulations or laws, you could 
spend an awful lot of effort and I don't know whether you could 
get where you want to get. It's a very interesting sentiment.
    I like the way we are going about it in the country with 
doing it inside the federal government in an aggressive way and 
the President challenging American companies to try to make 
welfare-to-work work, but I haven't ever thought about the 
question you asked.

           federal agencies request to move between districts

    Mrs. Meek. My next question has to do with a concern of 
mine. I may have asked you this question last year. I can't 
recall exactly if I asked it or how I asked it.
    What procedures does GSA use when an agency requests to be 
moved from one district, one congressional district, to the 
other? Let me give you an example.
    Members are fairly provincial about having Federal 
buildings moved out of their district into another district.
    Mr. Barram. I hadn't noticed that.
    Mrs. Meek. Yes. Tell me what kind of methodology do you use 
or regulations do you use before you go forward with this kind 
of request?
    Mr. Barram. I will answer that and Bob may want to add to 
that, as well. Here is how I look at it. We have some drivers 
for us and one of them is helping the central cities of America 
stay strong. The President's executive order says to locate in 
the central cities, locate in historical districts and we have 
worked very hard to try to make that happen.
    If an agency wants to move out of a central district into 
another member's district that is not in a central city, we are 
going to work hard with them to try to keep them located 
downtown, not because we like one member over another but 
because it is the downtown central city reason.
    We, I hope, are indifferent to what district it is in.
    Mrs. Meek. He said he is indifferent to which district it 
is in. That is what you said, Mr. Barram?
    Mr. Barram. Except for the two of you.
    Mr. Peck. Obviously----
    Mr. Barram. Let me be clear about this for the record. We 
should be professionally indifferent to which congressional 
district a property is in. We work with our customers, the 
federal agencies, and we focus on the downtowns.
    Mrs. Meek. When Mr. Peck finishes, I will----
    Mr. Peck. There are several ways in which a relocation can 
happen. For example, an agency can decide that it is going to 
consolidate the number of offices it has nationally and instead 
of having 40 field offices, have four. That is not a decision 
that we in GSA look behind, nor can we because we have no 
competence to tell them how to do their business.
    That may mean that some federal employees who are currently 
located in congressional district X are going to go to 
congressional district Y or transfer to another agency or 
whatever. We sort of take the locations as they are given.
    What the Administrator was talking about is absolutely 
right. With respect to relocations within a given metropolitan 
area we have clear policies given to us by the President, which 
are incumbent upon us and the federal agencies to follow. That 
puts us in the position of sometimes trying to enforce 
something that some agencies aren't happy with.
    There is one other factor that I would be remiss if I 
didn't note. We are very strong; we have a fixed inventory of 
federal office space, which we pay on whether it is occupied or 
not. If it is not occupied, we are losing money for the 
taxpayers.
    Our first preference is to locate federal agencies in 
existing federally owned space if we believe that that space is 
productive work space. If it is not productive we ought to 
dispose of it somehow or other. So that is another clear 
preference which sometimes comes into play when we talk to 
agencies about location decisions.
    Mrs. Meek. Mr. Chairman, I would like to go off-record with 
my next statement. I want to be off the record.
    Mr. Kolbe. Off the record.
    [Discussion off the record.]
    Mr. Kolbe. Thank you, Mrs. Meek. We will begin here with a 
second round of questioning.

                         federal buildings fund

    I want to come back to the Federal Buildings Fund and the 
concerns we have about that. How are your revenues in 1998 
matching up to the projections you made so far?
    Mr. Barram. Very good.
    Mr. Kolbe. Very good?
    Mr. Barram. Yes. We have a quarter of the year done and we 
have a quarter of the year revenues.
    Mr. Kolbe. As far as you know, in the budget that has been 
submitted to Congress for fiscal year 1999, have all the 
agencies requested the full amount of their rents?
    Mr. Barram. Yes, sir.
    Mr. Peck. Which I might note is a breakthrough.
    Mr. Kolbe. All agencies have requested the full amount, so 
there is none that is outstanding?
    Mr. Peck. Yes, sir.
    Mr. Kolbe. Are all agencies currently paying their full 
amount of rent?
    Mr. Peck. This year?
    Mr. Kolbe. Yes.
    Mr. Peck. No, sir.
    Mr. Kolbe. Can you tell us which ones are not or provide 
for the record a list of those that are not?
    Mr. Peck. I would rather give you the list so I don't have 
to say it in public.
    Mr. Kolbe. Well, it is going to be in the record.
    Mr. Peck. They are being better.
    Mr. Kolbe. It is going to be in the record. I want the list 
and I want it in the record.
    Mr. Early. Those that are not paying us the full amount 
today are related to not having adequate funds appropriated for 
them to pay us, so they----
    Mr. Kolbe. I want that list.
    [The information follows:]

                     Agencies Not Paying Full Rent

    Several years ago the Department of Agriculture (USDA) 
appropriation bill began imposing limitations on the rent 
payments to GSA, regardless of the volume or value of space 
received from GSA. Additionally, the law stipulated that GSA 
could not decrease service or decline requests for new space 
from these agencies. Due to the perceived intent of Congress, 
USDA and the Food and Drug Administration (FDA) have been 
requesting in their budgets insufficient funds to pay GSA full 
rent. In fiscal year 1998, the loss of income to GSA due to 
these rent limitations is expected to be approximately $43 
million. In fiscal year 1997 and 1998 appropriations bills, GSA 
was instructed to decrease service and decline requests for new 
space from agencies who do not pay GSA full rent. As a result, 
GSA, OMB, USDA, and FDA have worked together to prepare a 
budget which includes full rent payments to GSA from USDA and 
FDA in fiscal year 1999.
    Since the inception of the Federal Buildings Fund (fiscal 
year 1975) GSA has billed trust fund agencies (Social Security 
Administration, Health Care Financing Administration, and 
Railroad Retirement Board) only for the cost of space, not the 
full market rent. The loss of income to GSA is expected to be 
approximately $99 million in fiscal year 1998 and approximately 
$98 million in fiscal year 1999. The policy of billing for 
actual cost arises from report language accompanying the fiscal 
year 1975 Labor, HEW appropriation Bill. This policy is 
currently under review but a final resolution was not reached 
for the fiscal year 1999 budget cycle.

    Mr. Peck. Let me note one other thing. The trust fund 
agencies, by statute, provide us cost but don't provide full 
rent. Again that is a statutory determination.
    Mr. Kolbe. Would you repeat that again?
    Mr. Peck. Social Security and other trust fund agencies pay 
a cost of space but don't pay us the full market rent like 
everybody else.
    Mr. Kolbe. The reason they are not paying full rent in all 
cases is because they have not had the funds appropriated; is 
that correct? Is there any other reason? Are there other 
agencies that are withholding, not paying their rent?
    Mr. Peck. No, sir. But to be fair to you all, the couple of 
agencies that hadn't paid rent before hadn't requested their 
appropriators to give them full rent. There have been other 
cases in the past in which it has been requested and it hasn't 
been provided but currently it is----
    Mr. Kolbe. I definitely want that list. I intend to make an 
issue out of that this year.
    You have requested a little over $5 billion in new 
obligational authority for the Federal Buildings Fund. What is 
your estimate of revenue for this coming fiscal year?
    Mr. Peck. For fiscal 1999 we are in balance. We anticipate 
a small surplus based on our anticipated revenues.
    Mr. Kolbe. You only have the $44 million request for 
obligational authority for new construction projects. Can we 
anticipate that is the level of new construction we are going 
to be able to support in the future?
    Mr. Peck. We have taken a look at the 20 some years that 
the Federal Buildings Fund has been in existence. I have to say 
that if we provide the level of basic infrastructure repair 
that the Administrator talked about, we think that $50 million, 
in some years maybe $100 million--this is our view--of what it 
would be prudent to spend on new construction, compared to the 
requirements to spend on keeping up what you have.
    So that is a pretty good guess about where we think the 
level----
    Mr. Kolbe. Let me see if I understand that statement. You 
are saying if we provide the adequate funding for renovation 
and repair, then $50 million would be about all you would need 
for new construction?
    Mr. Peck. No, sir. I am not saying that is all you would 
need. I am saying that if you run the fund in a businesslike 
way, the amount of construction that the fund can support----
    Mr. Kolbe. Ah, that is all we can support. Now you are 
asking for $668 million in the repair and renovation fund. You 
told us a few moments ago that $600 million to $1.2 billion 
should be spent and you are right at the lower end of that. So 
you are really not asking for anadequate amount for that, are 
you?
    Mr. Peck. No.
    Mr. Barram. We could be confusing you with these two 
answers, and I don't want to do that. We think we have $4.5 
billion of repairs and alterations over a period of eight or 
nine years, which would get us to that $500 million, but that 
we should do that faster if we really were doing it right.
    I want to say what I hear from Bob and he may want to 
disagree with that, but yes, we could, if we think about things 
the way we thought a little bit in the past, we could maybe 
find $50 million or $100 million out of that--we could take $50 
million or $100 million and spend it on new construction but we 
wouldn't be rehabbing as fast as we should.
    Is that fair?
    Mr. Peck. Yes.
    Mr. Kolbe. All right. We are running out of time. We have 
votes called and I want to see if others have other questions. 
I want to ask just one question here.

                             fcc relocation

    You have released some of the relocation money to the FCC 
for moving into the Portals Building. A, have you taken control 
of all of that building? B, has the move started?
    Mr. Peck. The base building is complete and the move has 
not started. That is the short answer. We do not have the 
building yet in shape for the FCC to move in. We have released 
all the funds necessary, however.
    Mr. Kolbe. I thought you were going to take over segments 
of it on six-month or month-long segments.
    Mr. Peck. Mr. Chairman, we had an agreement to begin paying 
rent and to take all the different parts of the building under 
our wing for rental purposes and the answer to that is yes, we 
are now at a point where we are paying rent on it.
    Mr. Kolbe. You are paying rent but you still don't have it 
in rentable condition. Is that what you are saying?
    Mr. Peck. There are parts of the building that are still 
not in a move-in position. It is in a rentable position.
    Mr. Kolbe. When is the FCC going to start moving?
    Mr. Peck. We believe in September.
    Mr. Kolbe. Not until September. I will probably have some 
other questions on that. Thank you.
    Mr. Hoyer.
    Mr. Hoyer. Is GAO still looking at this move?
    Mr. Peck. Yes, sir. As you know, they concluded one report 
and said that they were asked to look into some allegations of 
political influence and they said they had not concluded their 
inquiry on that. But they did conclude their inquiry on the 
question of is it cost-effective for the government to move the 
FCC. There the answer is yes. Did GSA follow all of its laws 
and regulations in signing the lease? The answer was yes.
    Mr. Hoyer. It is my understanding that we tried to cancel 
this procurement. We were taken to court and lost in 1992, and 
then told to reinstate the procurement at the point of 
cancellation. Is that correct and is that why we are at the 
point we are now?
    Mr. Peck. That is correct, sir.
    Mr. Hoyer. Okay. Well, I share the Chairman's concern about 
this project and I am sure we will follow it closely.
    Mr. Chairman, I have other questions. I will submit them 
for the record.
    Mr. Kolbe. Mr. Price.

                      icc/Connecting wing project

    Mr. Price. Thank you, Mr. Chairman.
    We are pressed for time but let me raise the issue of this 
ICC Connecting Wing project that is in your budget request. I 
very much hope that the management problems that the Chairman 
is referring to and the funding difficulties that have gone 
along with that can be resolved . . . because the ICC Customs 
Connecting Wing project is in abeyance and, as I understand it, 
it is costing us money the longer we fail to complete it.
    I wonder if you could just briefly, in the time we have and 
then maybe do a fuller submission for the record, indicate what 
your plans are for that project, which EPA is, of course, 
waiting to occupy.
    We have a situation in North Carolina where EPA is renting, 
I think, in 13 locations now and eagerly awaiting the 
construction of this new laboratory that will let them 
consolidate those operations and operate far more efficiently 
and effectively. And, as I understand it, EPA here in 
Washington has a similar situation where they are scattered in 
rented locations.
    So the completion of this Connecting Wing project--it is an 
$84 million request in your fiscal 1999 budget--this will be 
the last stage in their occupying new space that will let them 
consolidate their operations and, one hopes, operate more 
effectively here, as well.
    Could you clarify for us the priority you give to this 
request and the kind of benefits you expect to reap from it, 
including the kind of rental income that should come in, once 
the project is complete and EPA is occupying this space?
    Mr. Peck. Let me go backwards. I will provide for the 
record--I don't know what we have established as the rental 
rate for the project but I can tell you, since this is the 
second year in a row we have wanted to fund this project, we 
are ready to go. It is a high priority. We are consolidating 
the EPA right now in the Ronald Reagan Building, the Ariel Rios 
Building, and but for this, we can have them pretty much in one 
location in downtown Washington.
    It is a high priority. It is yet another of the Federal 
Triangle buildings which have gone on for now 60 years without 
ever having a major rehabilitation. We can provide tremendously 
productive work space for EPA in the building and we are ready 
to go.
    [The information follows:]

           Rental Income--ICC/Connecting Wing/Customs Complex

    When fully occupied, the complex should provide 
approximately $22.9 million in annual gross revenues to the 
Federal Building Fund and annual operating costs are expected 
to be approximately $5 million.

    Mr. Price. I have information from EPA citing GSA--you tell 
me if this is correct--estimating that a failure to secure this 
$84 million could result in additional operational costs and 
lost rental revenues exceeding $40 million. And then EPA 
estimates itself that it would incur operational costs, 
additional costs, of about $10 million each year that this 
consolidation is delayed. Does that sound correct to you?
    Mr. Peck. That is about right. That would be their rental 
cost. We would probably add to that our cost of having an empty 
building on which we are not collecting rent, and I could 
provide that number for the record, also.
    Mr. Price. Well, that would be helpful if you could provide 
your analysis for the record, just so that we can more 
adequately evaluate this request.
    [The information follows:]

   Impact of Failure to Complete ICC/Connecting Wing/Customs Complex

    If funding to complete modernization of the Interstate 
Commerce Commission Building, the Connecting Wing Building, and 
the U.S. Customs Service Building (the ICC/CW/USCS complex) is 
delayed, there will be a significant financial impact. In 
addition to a cost to EPA in excess of $10 million, we estimate 
the impact on the Federal Buildings Fund to be $43.0 million--
$22.2 million annually in lost revenue; $1.9 million annually 
in minimal building services required to prevent deterioration; 
$12.6 million in added construction costs, temporary building 
system connections and maintenance, and additional design cost 
to update tenant fitout documents; and $6.3 million annually in 
additional rent at the Fairchild and Crystal Gateway Buildings.
    An example of the impact of delayed funding involves 
equipment maintenance costs. Most of the building systems were 
included in Phase II of this project, which is currently being 
completed. Warrantee periods for this type of equipment begin 
immediately after installation. Given a funding delay, at least 
a full year will be lost before these systems experience normal 
usage and maintenance costs will increase. Should the delay in 
funding exceed one year, construction drawings will need to be 
reviewed again for Fire and Life Safety compliance. Any 
required changes must then be reflected in the construction and 
contract documents.
    With receipt of the requested $84 million for the project 
in fiscal year 1999, the complete renovation of the remainder 
of the complex can be accomplished. Phased occupancies are 
planned to occur between November 30, 2000, and December 7, 
2002. When fully occupied, the complex should provide 
approximately $22.9 million in annual gross revenues to the 
Federal Building Fund and annual operating costs are expected 
to be approximately $5 million. Discontinuing leases for space 
that EPA currently occupies is expected to result in an annual 
savings of approximately $20 million.

    Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you very much, Mr. Price.
    Mr. Barram, thank you very much, you and your colleagues, 
for appearing with us today here and for the answers. We will 
have some questions for the record and your early response 
would be helpful to us as we prepare the record.
    This subcommittee will stand adjourned.
    [Questions for the Record follow and the budget 
justification material follows:]

[Pages 137 - 442--The official Committee record contains additional material here.]


                                           Tuesday, March 24, 1998.

              NATIONAL ARCHIVES AND RECORDS ADMINISTRATION

                                WITNESS

JOHN W. CARLIN, ARCHIVIST OF THE UNITED STATES

                              Introduction

    Mr. Kolbe. The Subcommittee on Treasury, Postal Service and 
General Government will come to order. Let me begin by 
apologizing to Governor Carlin and the Archives people, as well 
as the General Services Administration, who are going to follow 
them, for the delay here and to also advise you if I bang the 
gravel in mid-sentence, we will walk across the hall for a 
vote. It is not because we are trying to be rude to you here. 
As you know, we are doing a mark-up and there are a number of 
amendments yet to go.
    Let me begin by welcoming Governor Carlin, who is the 
Archivist of the United States. He will be testifying on behalf 
of the National Archives, the budget request for the National 
Archives and Records Administration.
    Governor, I look forward to your testimony and I agree 
that, and we have talked about this before, for such a small 
agency you have a tremendous amount of responsibility. I 
suppose if you ask most Americans, ``What do the Archives do?'' 
they say, ``Ah, that is where we have the Declaration of 
Independence, the Constitution, the Bill of Rights and other 
historic documents.'' But, as you note in your testimony, you 
touch the lives of Americans in a lot of other ways.
    In this next fiscal year you are requesting $230 million 
for operating expenses. That is a 12 percent increase over the 
amount appropriated in FY 1998. In the current budgetary 
climate, that is a large increase. But based on our initial 
review of your budget, I think there is merit to what you are 
asking for.
    However, the realities of the budget and the 302(b) 
allocations may mean that we are not going to be able to do 
everything that you would like to do. So as we go through this 
process, I hope that you will help us by identifying your 
highest priorities, those items that really are the absolute 
must items for this year.
    In the repairs and restoration activity, we are very 
interested in your plans for constructing new encasements for 
the Charters of Freedom and renovating the National Archives 
Building here in Washington. Because of the costs involved in 
this effort, this is an area in which we will want to work very 
closely with you.
    Governor, we look forward to your testimony. And, of 
course, we will put your whole prepared statement in the record 
so you may summarize it.
    Before you do, let me turn to Mr. Hoyer for any comments he 
might want to make.
    We should just get it out of the way before you begin, Mr. 
Hoyer, that we did have our bet last week and while I won that 
bet, those crabs aren't going to taste as good as I thought 
they were going to taste.
    Mr, Hoyer. There is nothing to say. My friend from 
Connecticut has nothing to say. Only our friend from Kentucky 
will----
    Mr. Kolbe. Governor Carlin definitely has nothing to say.
    Mr. Hoyer. My son-in-law went to the University of Kansas 
and there is no joy in Mudville tonight. However, there is joy 
in Louisville.
    Governor, I will not make an opening statement other than 
to welcome you here before we hear your testimony and I will 
have a number of questions. We need to be brief on this side of 
the table so we can hear what you have to say on that side of 
the table.
    Mr. Kolbe. There are no other opening comments. Governor 
Carlin.

                    Summary Statement of Mr. Carlin

    Mr. Carlin. Mr. Chairman and members of the subcommittee 
and staff, I am John Carlin, Archivist of the United States, 
and I am pleased to present the 1999 appropriation request for 
the National Archives and Records Administration. And thank you 
for submitting my full testimony for the record. I would like 
to obviously briefly highlight here some of the key issues.
    Before I begin I need to introduce my Deputy, Dr. Lew 
Bellardo, and Assistant Archivist for Administrative Services, 
Adrienne Thomas.
    First let me thank you for the opportunity you have given 
me to discuss our request with you, Mr. Chairman, with you, Mr. 
Hoyer, and other members of the committee and also for your 
previous support. With it, we are making progress. From 
beginning to address our electronic records issues, expanding 
our preservation work, and making the improvements at the 
Truman and Roosevelt Libraries, last year's support is becoming 
reality. In addition, the electronic access project you funded 
earlier is showing the positive and practical way to use modern 
technology to carry out our mission. You can be proud, Mr. 
Chairman, of this as one government investment in technology 
that is really helping the customer.
    Now to 1999. This is my third budget hearing and up to this 
point I have emphasized our doing better with existing 
resources, protecting our base funding, and seeking modest help 
for a few specific areas. The base remains essential and we 
must continue efforts to improve our work processes, but that 
does not address what is now clear to me, and that is the huge 
deficiencies that we face in doing what the law requires us to 
do.
    It took me some time to fully comprehend the significance 
of the resource shortfall but when I did, I did not hesitate 
going to the President and asking for the resources I believed 
to be critical for NARA to have any chance of carrying out our 
mission. The President's budget of $246 million, $21 million 
over 1998, represents an important step in providing resources 
we can responsibly invest to address the enormous challenges we 
face. The budget is consistent with our strategic plan as 
revised to conform with the Results Act and complements what we 
are doing in the current fiscal year. Our emphasis is on 
addressing critical records management issues, expanding access 
to the records, and preserving at-risk records.
    Crucial to our mission is successfully promoting better 
front-end records management, which includes dealing with the 
government's quickly expanding reliance on electronic records. 
The problems are that we don't know in any depth what records 
are being created, how those records are being managed, what 
electronic systems are being used, and how those systems might 
be accessible over time.
    Therefore, we are requesting help to expand our contact 
with federal headquarters agencies and to greatly improve our 
work with field agencies, especially those that have had little 
or no contact with NARA staff. We will redesign how we 
identify, appraise, schedule and track records in agency 
custody.
    The results we want will not happen overnight. But these 
resources will allow us to significantly begin the retooling of 
one of NARA's most critical processes, start to get a handle on 
government-wide high priority records management issues and 
begin establishing a true partnership with agencies.
    One established partnership with the Department of Defense 
will develop electronic recordkeeping requirements and certify 
products capable of meeting those requirements which could be 
then shared with all federal agencies. Clearly, sound records 
management has always been important, but with electronic 
records, the risks and pitfalls are much greater. Experts 
believe we have already created an information gap. The 
question now is whether that gap can be contained.
    Access to meet the growing expectations and demands of 
citizens requires not only additional staff but an improved 
technology infrastructure. We will develop a plan to provide 
access to electronic records online. This, when implemented, 
would allow users to do initial research in records regardless 
of format.
    Other resources will allow us to upgrade our internal and 
external communications system, start a replacement program for 
microfilm readers and audio and video players, and place 
research computer terminals in every NARA archival facility and 
presidential library so that researchers visiting NARA can 
access the same information that we can make electronically 
accessible to researchers from their home.
    Additionally, we will be better able to deal with the 
constantly increasing citizen demand for access, which 
accelerates, for example, when independent counsels' 
investigations close.
    Ready access to essential evidence depends on preservation, 
and no preservation work is more important than addressing the 
need to reencase the Charters of Freedom. Resources requested 
would fund the study of the design of the prototype encasement, 
the testing of the prototype and the eventual construction of 
the seven final encasements.
    Other resources would enable us to begin plans for Archives 
I renovation, which makes the charters accessible to the public 
and helps preserve other valuable and heavily used records like 
those from the Civil War. Also, preservation copying of our at-
risk audiovisual collection would be accelerated.
    I would like to show you an example. Mr. Chairman, this 
aerial photo of Tucson, Arizona in the '40s obviously was just 
pulled out of the large inventory we have. It could have been 
somewhere in Maryland, Mr. Hoyer, but it just happened to be 
Tucson.
    This is an aerial photo. The negative is on acetate-based 
material which, over time, disintegrates, turns to vinegar. 
This is just one example of a photo that we consider valuable 
because it is representative of the entire set of photos that 
covers the entire United States done by the Department of 
Agriculture, as well as the Department, in that time, of War.
    Let me show you some other examples. This photo is of 
Generals Eisenhower, Bradley and Patton inspecting Nazi 
accumulations of looted art at the end of World War II. It is 
not only an excellent photo of three distinguished leaders but 
it is further evidence of one of the major issues a lot of work 
is being done on in terms of the Nazi gold issue, which will 
focus on looted art here pretty soon as the work on the 
original material is completed.
    And this additional photograph I share with you, also from 
the World War II era, taken in Geich, Germany. This is evidence 
obviously of the destruction that takes place, as well as the 
reality of being a part of that war. These records are 
obviously valuable but, without help, very much at risk.
    [Clerk's note.--The photographs will be retained in 
Committee files.]
    Another major body of records at risk are the military 
personnel records. Some 8,000 cubic feet of these veterans' 
records are disintegrating because of poor quality paper and 
frequent handling in reference use. An additional 113,000 cubic 
feet salvaged from a 1973 fire are charred, brittle and 
contaminated by mold. In 1999 we would begin work to set up the 
kind of comprehensive preservation program these valuable 20th 
century veterans' records deserve.
    And given the avalanche of electronic records about to 
reach NARA, expanding our own capacity for preserving 
electronic records is a high priority. For example, this chart 
shows that NARA has accessioned approximately 90,000 electronic 
files in the last 26 years from the entire federal government.
    Compare that number to the approximate 1,780,000 files NARA 
will accession annually from just two agencies--the State 
Department and Treasury. And these numbers are for e-mail only. 
Add to that the word processing documents, automated databases 
and whatever else is coming. But let me tell you, folks, being 
overwhelmed is not a choice when the record of our country is 
at stake. Together, these challenges must be addressed.
    [A copy of the chart displayed at the hearing follows:]

[Page 447--The official Committee record contains additional material here.]


    Mr. Carlin. Today I have highlighted only a few of our 
issues, but I welcome questions on any and all, like preparing 
for the change to reimbursable funding in our records center 
program, continuing our nationwide space study, maintaining our 
facilities with the repairs and restoration fund and, of 
course, the exceedingly valuable work done by the National 
Historical Publications and Records Commission (NHPRC). All are 
critical to our mission of providing ready access to essential 
evidence.
    In summary, this budget request could be characterized as 
one of dramatic increases. On the other hand, if one takes into 
account the fiscal history of this agency, the huge explosion 
of government records, the seemingly impossible electronic 
records problems, and, of course, the value of records, I 
conclude that this is a very reasonable investment in the 
democracy we all care so much about.
    Documenting the rights of citizens, holding government 
accountable and preserving the record of the national 
experience is no small task. We accept that challenge and ask 
for your continued support to be successful. Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Carlin follows:]

[Pages 449 - 462--The official Committee record contains additional material here.]


    Mr. Kolbe. Thank you very much for your opening statement 
there. We will stand in recess.
    [Recess.]

                      general records schedule 20

    Mr. Kolbe. We are back for a little while, anyhow.
    Governor Carlin, this Sunday there was an article in the 
Washington Post which said that there is a judge that is asking 
why you should not be sanctioned or held in contempt for 
failing to submit a timely response to demands that you comply 
with the ruling.
    Let me begin by asking about General Records Schedule 20. 
What are the provisions in that that are the subject of this 
lawsuit?
    Mr. Carlin. Basically the lawsuit is over whether or not in 
this case the GSR-20 schedule was inappropriately used. The 
General Records Schedules are used to dispose of what normally 
are administrative housekeeping records, so they are not 
scheduled. we don't sit down and identify specifically whether 
it should be a five-year retention or a ten. The General 
Records Schedule applies across the board to all agencies.
    The issue here dealt with electronic records and 
specifically the disposal of electronic records and whether or 
not there were program records that were being destroyed. That 
is really the main issue in terms of the court action.
    Quite frankly I will tell you, Mr. Chairman, I have no 
problem telling you program records should not be destroyed 
arbitrarily. They should be scheduled. In that sense, from that 
perspective, we concur as an agency with both plaintiffs and 
the court. There are some other complicating factors in this, 
as it takes place in all lawsuits and I would tell you that in 
terms of where you started and as far as missing the deadline, 
I would ask you to talk to the Department of Justice, who 
represents me. I wouldn't pretend to try to explain the 
confusion between the Department of Justice and the court over 
a deadline.
    Mr. Kolbe.  What steps are you taking to comply with the 
judge's ruling?
    Mr. Carlin. We are taking a number of steps. Our strategic 
plan identified, well before this suit, that we needed to make 
changes in how we deal with the up-front issues of appraisal, 
scheduling, dealing with he records at the front end of the 
life cycle. We had, in this budget, starting a year ago, made 
the decision that we wanted to do a total reengineering process 
of that whole front end of the life cycle. To accelerate the 
action, though, when the court decision was made, I appointed a 
working group that my deputy, Dr. Bellardo, heads up and works 
on to address what, in the short run, immediately we could do 
to satisfy the concerns that not only the court had but we had, 
as well.
    And that working group, including individuals from federal 
agencies who have some particular expertise to offer, as well 
as outside consultants, are moving towards a deadline in July 
that would allow us to have something in place no later than 
the first of October to address temporarily this issue as we 
move towards more permanent action.
    Mr. Kolbe. Well apparently one of the things that has 
bothered some of the groups that brought this suit is that you 
have said since the suit was brought and since the ruling was 
made that General Records Schedule 20 still applies. Is that 
true, that you are telling agencies to continue as though the 
court had not ruled otherwise?
    Mr. Carlin. We are advising them on the mammoth amount of 
records that are involved in already scheduled situations that 
yes, but we are saying to the agencies, when you submit new 
schedules, include the electronic records that heretofore you 
were dealing with using the GRS-20, seeing that as a reasonable 
way to proceed, to try to avoid what could be a very 
significant impact on agencies if suddenly there were no 
choices or there was not transition period.

                    charters of freedom encasements

    Mr. Kolbe. I have a whole series of other questions in this 
area that I will submit for the record but just one other 
question, on the new encasements for the Charters of Freedom. 
You are asking for $4 million for design and construction. Is 
that going to cover the entire cost of this project, including 
design and development, testing the prototype, and construction 
of the new encasements?
    Mr. Carlin. Yes, the $4 million will cover what you have 
just started--the design work, the testing of the prototype and 
the building of the actual encasements.
    Now, so that we are really clear here, we are talking about 
the encasement that the record will set in.
    Mr. Kolbe. Not the world around it.
    Mr. Carlin. Not the bed in which the reencased charters 
will lay and be secured.
    Mr. Kolbe. Nor the things that you would need to do to 
comply with the Disabilities Act, those kinds of changes?
    Mr. Carlin. Correct.

               national archives building concept design

    Mr. Hoyer. Thank you.
    Governor, you have a $2 million item for concept design. 
Can you tell me a little bit about that and what the funding 
will be used for?
    Mr. Carlin. The $2 million in the concept design refers to 
the Archives Building in total, the building aspects that need 
to be addressed. We are talking about ADA compliance. We are 
talking about the major building systems that need to be 
updated and changed. We are talking about improvements in the 
humidity and control of temperature, the air that is in the 
stack area. Those are the basics that we are dealing with and 
this will be the first stage.
    I would tell you candidly that the $2 million will take us 
beyond concept design into what will follow in early stages, 
not the total design of the building obviously. We wouldn't 
even come close with the $2 million, but the $2 million will 
take us slightly beyond the concept design of Archives I for 
the renovation. It would also deal with the Rotunda and what 
the Chairman was asking about, where those reencased documents 
will lie, those issues that are involved in that area.
    Mr. Hoyer. Okay. The encasement which you are talking about 
now and the restoration work on the National Archives Building 
downtown, what is the time line involved here? How are they 
related and what is the time line involved?
    Mr. Carlin. The time line is this. We have been able to 
secure an $800,000 grant from the Pew Foundation which will 
allow us to do some very initial exploratory work in terms of 
the research initially that would go into the prototype 
reencasement component. That allows us to get started sometime 
in the next few months and, with your support, to continue that 
in the fall.
    The time line is basically this. We think the work on the 
reencasement, all the way through having the reencasements 
completed and tested could be done by mid-year 2001, which 
would be shortly after the year of the millennium. During that 
time frame in between, we would do a lot of special things to 
call attention to the project, realizing that taking these 
Charters of Freedom off public display for a period of time is 
not going to be popular, but we have no choice.
    And we want to minimize that with a significant educational 
program leading up to what will then be about an 18-month 
period in which the renovation of the Rotunda, if things stayed 
on schedule, and I know this is all hypothetical, could take 
place that would allow, then, in about 2003, for the project to 
be complete if you lay the time line out based on a series, we 
admit, of hypotheticals--when the support comes, et cetera.

                           archives ii space

    Mr. Hoyer. Governor, in the scenario that you refer to, 
when are you going to run out of space at Archives II in 
College Park?
    Mr. Carlin. The original projection, if you go back many 
years was 2004; our projection now would be 2006, which would 
require us, again assuming these numbers hold up, we would want 
to be discussing the issue of expansion of Archives II two 
years from now or in the 2001 budget.
    Mr. Hoyer. When would you start construction. If you are 
talking about 2001 doing planning and design money?
    Mr. Carlin. Correct.
    Mr. Hoyer. We are talking about fiscal year 2001?
    Mr. Carlin.  Yes, fiscal year 2001.
    Ms. Thomas. The design would take about 18 months. We would 
need about eight months to let a construction project and then 
construction would take about 30 months.
    Mr. Hoyer. Mr. Chairman, I don't know whether my time is 
up. I have other questions. Are we doing five minutes?
    Mr. Kolbe. Yes.
    Mrs. Northup.

                records classification/declassification

    Mrs. Northup. Thank you.
    Mr. Carlin, can you give me a simplified explanation of 
declassification of records? Some of the questions that come to 
mind are are some agencies or departments, all of their records 
are classified. Is there, in general, a process? Do they go 
through that process before or after the records come to you? 
And do the agencies make those designations themselves?
    Mr. Carlin. The classification/declassification process is 
basically this. The agencies make the decision to classify a 
record. We are not involved. The agencies really make the 
decision to declassify a record but we are involved to some 
extent because a lot of times the records have already been 
transferred to us.
    In some cases the agencies opt to give us guidance. If they 
give us guidance, then we can, following that guidance, 
declassify those records. We can work with the agencies to make 
it as easy as possible.
    It gets complicated in some area because many times a 
record will be classified by more than one entity; as many as 
five or six is relatively routine. That means in order for that 
record to be declassified, all five, six, depending on how many 
different entities are involved, have to be a part of that 
process.
    Mrs. Northup. If I were the head of an agency, what might 
be really simple is to just say everything is classified. I 
realize there would be some things that clearly aren't 
classified, some things that clearly are classified, but let's 
say everything that is in between. Wouldn't the easiest thing 
to do be to classify it?
    Mr. Carlin. Well, there would be those who would say and 
draw that conclusion that one of our problems is it is very 
easy to classify, relatively speaking. The complicated part 
comes in in declassifying because then you have to make sure 
you are opening something up that should be opened. You can 
classify something that maybe didn't need to be classified in 
the first place.
    For example, presidential itineraries--I learned this in a 
visit to the Carter Library--are classified. They really 
shouldn't need to be classified for a very long period of time, 
yet all the itineraries of the Carters, of routes, are still 
classified because it is easy to classify; it is not so easy to 
declassify, or at least in the eyes of the agencies that is the 
perspective often.
    Mrs. Northup. So I guess my question is what is your role 
or responsibility in getting everything in the correct 
designation?
    Mr. Carlin. Well, as our mission statement states, ready 
access to essential evidence, we believe in access, so whatever 
we can do to facilitate things for the agencies.
    For example, and it has yet to be to the point where I 
would say it is a slam-dunk, going to work real well, but in 
the last year or so we have worked with the CIA in developing a 
scanning technology that allows us to officially scan records, 
for example, from the presidential library system where they 
are scattered all across the country, to go in and scan and 
then--and obviously this can't be done in routine technology 
because we are talking about classified information but then, 
through technology, divide those equities up so that all the 
agencies that are involved in a particular record, not having 
to go to Austin, Texas, can, in their own workplace, proceed to 
declassify it.
    We have tried the project at Johnson. It is now starting 
at, I believe, Kennedy.
    Mrs. Northup. Besides sort of the technical steps, I am 
interested in the reality of how it works. It strikes me that 
every one of us has more on our desks than we can possibly get 
to today, tomorrow or next year. So going back and reviewing 
what I did two years ago and deciding whether it is classified 
or declassified means I have to think about it again, and I 
can't even think about what is on my desk right now.
    And all of that would have the effect of making it very 
laborious and difficult to declassify things in a regular and 
timely manner.
    Mr. Carlin. A couple of things I would share with you. One 
is the President's executive order now working in the third 
year is having a dramatic impact on declassification because 
there is a deadline. In fact, in the last three years, as 
compared to the total work that has been done in, I think, the 
last 25 years, 70 percent of the records that have been 
declassified in that lengthy period of time have happened in 
the last three years because there is a deadline and a great 
deal of emphasis and momentum towards that taking place.
    Also I would remind you that you in your kind wisdom shared 
the Information Security Oversight Office [ISOO] entity, a 
small office that deals at the front end of classification; 
they are now a part of NARA. And in that sense, although we try 
to keep those components separate, they work with the executive 
branch in a lot of detail in terms of how classification and 
declassification really work.
    Mr. Kolbe. Mr. Istook.

                internal revenue service records policy

    Mr. Istook. Thank you, Mr. Chairman.
    Mr. Carlin, I have read some things that indicate that, of 
course, you don't always have the degree of cooperation you 
would like from different agencies and it is a challening task. 
I have read some things in particular about the Internal 
Revenue Service. There has been a great deal of interest, of 
course, in its operations.
    Can you kind of assess for me what the situation is 
regarding the records retention and maintenance and 
preservation policy with the IRS and how that is consistent or 
not consistent with what your agency has recommended or tried 
to do?
    Mr. Carlin. The issue with the IRS has been one of 
difference of opinion as to whether we can have access, actual 
visual access, to appraise records within the Internal Revenue 
Service. They interpret 6103 differently than we have, and that 
has been the issue for decades. A year ago that is where we 
were.
    Some progress has been made in that legislation now working 
its way through the process that has been passed by the House 
and is now in the Senate. We believe if the House version stays 
intact as it relates to us that the issue then will be resolved 
and we will have access for appraisal purposes.
    We have no intent and never have had any intention--and6103 
refers to the privacy issues involved with your filing of 1040s, to put 
it in my language that I understand. We obviously have no interest 
whatsoever in those kinds of records being made public. It is for 
appraisal purposes, to make sure that within the IRS there are not 
other records that are records that should be scheduled for a much 
longer retention period than the 1040.
    Mr. Istook. Let me ask, in follow-up on that, if your 
assessment of the legislation and how it would affect the 
situation is the same as the assessment of the IRS. The last 
thing we want is to try to resolve something and then find that 
there is still a lack of agreement on what it means. So I would 
like to ask you about that.
    Also, if you could describe what are really the practical 
effects of this difficulty that has been long-running between 
your agency and the IRS. Is this just an esoteric matter about 
what happens to millions of copies of 1040s, for which there 
would probably never be any useful purpose, or is there 
something more significant at play? So could you address those 
two parts, please.
    Mr. Carlin. Okay. There is certainly something very 
significant here, Congressman, and let me go to your letter 
question first in that regard. We are talking about a situation 
where I, as the Archivist of the United States, my agency 
cannot come to you and assure you--and I am talking 
hypothetically, not passing judgment--I cannot assure you 
because we have not--my staff has not had direct access, I 
can't assure you the records are being kept that should be 
kept. And until I have that, we are not talking about an 
insignificant issue.
    Records are important, for your purposes in terms of 
holding any agency accountable, you need to be able to have 
access to those records for your purposes.
    So I take it very seriously. This is not an academic 
discussion. We are talking about serious business that impacts 
whether we can do our job and whether we can assure you, as the 
Congress, that the work is being done appropriately and that 
you can be sure that the records are being kept.
    Again, I am not passing judgment. We have had what appears 
to be a technical legal dispute for many years, which is 
hopefully resolved.
    The first question you asked is also very good and one I 
appreciate the opportunity to get on the record. It is our 
understanding that we are in agreement on this. I would 
certainly encourage you to ask the same question, if you have 
the opportunity, with my colleague from the IRS.
    Mr. Istook. It would help if there were maybe an exchange 
of memos between you that you each signed off on or something 
like that.
    Mr. Carlin. We would be very happy----
    Mr. Bellardo. In fact, the comments on the House version 
went through OMB clearance and the two agencies basically were 
in accord on that, in terms of the comments that were sent 
forward and the language that was ultimately drafted.
    Mr. Istook. Even aside from the issue of being able to look 
at any individual 1040, as far as the basic records retention 
and classifying and indexing and accessing situation with the 
IRS, does the National Archives have any assessment of whether 
they even have a system that, whether you can see it or not, 
they can actually keep control of the information and find what 
they want when they need it? Do you have any judgment call on 
that?
    Mr. Carlin. Yes. And in fairness to the Internal Revenue 
Service, I want to assure you this 6103 dispute is not across 
the board. We do have access to a lot of their records, do 
appraise. We recently, within the last year, completed an 
evaluation of all their processes--a little over a year ago 
because they have been working in the last year to make changes 
to accommodate what we felt needed to be changed.
    So much of the operation is very similar to other agencies. 
It is what they choose to associate with 6103 that is in 
dispute.
    Mr. Istook. Thank you.
    Thank you, Mr. Chairman. For the record I would like to get 
copies of those evaluations. That might be useful to us in how 
we are trying to understand what the IRS is doing in their 
information systems. Thank you, Mr. Chairman.
    [The information follows:]

[Pages 470 - 516--The official Committee record contains additional material here.]


    Mr. Kolbe. Thank you very much, Mr. Istook.
    Mr. Forbes.

                       ELECTRONIC ACCESS PROJECT

    Mr. Forbes. Thank you, Mr. Chairman.
    Mr. Carlin, thank you for being here.
    I will admit upfront my bias toward the National Archives, 
as somebody who has spent many, many hours in the hallowed 
halls of that great building.
    Mr. Carlin. We do not object. [Laughter]
    Mr. Forbes. We appreciate the great work that you and your 
staff do there.
    I had one question about the Electronic Access Project 
which, I think, is a very exciting project and will allow, as 
you note in your statement, from the student to those involved 
in military, every citizen in the country to have access to 
many of the great historic documents and a lot of the research 
that is available through your small agency.
    You make reference, I think, that you have got about 40,000 
documents now that have been scanned onto the system and you 
anticipate maybe up to 120,000 in the next fiscal year. It begs 
the question, if you will, sir, the sensitive nature of the 
documents that are being used, scanned, the handling of those 
documents.
    And my question is, first of all, understanding that the 
people within your employ are certainly great protectors of our 
historic documents, I do have a little bit of a concern, I 
guess, as to the volume of those documents being scanned on and 
transferred to electronic capability. And maybe you could talk 
to us a little bit about how the Archives handles that? Are you 
privately contracting for that service to be done and the 
numbers of people that are handling these documents and jut the 
kind of security measures that you are taking to protect those 
documents.
    Mr. Carlin. You ask a very excellent set of questions. I am 
very happy to respond. We obviously have a very serious 
responsibility to protect the record. That is what preservation 
is all about. So, we are very sensitive to what you are asking. 
Obviously, we are not talking about any record that is 
classified. We are not talking about any record that has a 
privacy issue involved.
    We are talking about the most requested records, the ones 
most likely to be of interest to the most people--the 40,000 
headed to 120,000. WE have in our current collection 
approximately 4 billion pages. So, in terms of the quantities 
we are putting up, I refer to it as a very nice brochure. And 
it is of incredible value because theElectronic Access Project 
has two directions. One you make reference to specifically, the 
scanning, the digitization, the getting up there of these 120,000 
documents and we will be there within the year.
    The other element is the catalog, the complete catalog of 
what we have and they come together in this way. The complete 
catalog allows you from a public library anywhere in the United 
States, from your own home, a business, a school to see what we 
have, to know how to access it, but also in many cases there 
will be a linkage to a document that you can look at.
    And we have heard back already from genealogists who say 
this is the most incredible thing to happen for them who are 
not located in many cases right next to where a lot of the 
records are, but can do searches so efficiently and can see an 
example as to whether this is what they are looking for, this 
is what would be helpful to them. And that can be multiplied 
many times over in the classroom for researchers for all kinds 
of purposes.
    But the key is the catalog and we are privately 
contracting. The scanning, the digitization work is all done in 
private contract but we have staff that closely oversees that 
process so that the question you have and the way I answered, I 
can assure you we are taking it seriously. We have not just 
farmed out the records to a private company. They come to our 
facility under our supervision to do the scanning.

                           theft of documents

    Mr. Forbes. One final question. I know that theft has been 
a very big concern of the Archives for many years. Could you 
maybe speak a little bit about how that is going? I know there 
have been some efforts to try to clamp down on the theft of 
documents and pilfering of documents our of the building and I 
know that has been a great concern.
    Maybe you could speak to that?
    Mr. Carlin. Well, you start with the incredible value of 
the records we hold and the obvious responsibility to protect 
those records and the ultimate loss is somebody walking out 
with one. You cannot preserve, make accessible a record that 
somebody else has. So, we take that very seriously.
    You know, it is always a challenge as to where you draw the 
line. You know, to what extent when a researcher comes in, do 
you check things out? We do not allow, for example, a 
researcher to carry a bag into the research room. That does not 
happen. We check researchers when they leave.
    I would say as far as we know we do not have a huge 
problem. It is a problem because the loss of one record is 
significant. The credibility of our agency is at stake. And, 
so, we take security very, very seriously.
    But how far--I mean we want our facilities to feel open and 
a welcome-type atmosphere to researchers as well. And, so, we 
try to balance that set of issues.
    Mr. Forbes. I appreciate it.
    Mr. Chairman, if you could, Mr. Carlin, perhaps if your 
folks could provide for the committee some idea of what the 
level of theft has been in the last year, I think it would be 
helpful to the committee to have an appreciation for that.
    Mr. Carlin. Yes.
    [The information follows:]

 Theft of Documents at the National Archives and Records Administration

    During 1997, a year in which over 331,000 walk-in 
researchers visited NARA research rooms nationwide, NARA only 
had one reported theft of documents from our holdings. In 1989, 
NARA instituted a number of security measures in our research 
rooms that would make the theft of documents extremely 
difficult. We have instituted a ``clean'' research room, 
whereby researchers are not permitted to take anything with 
them into the research rooms. Lockers are provided for the 
researchers' personal effects, and the researchers are issued 
paper and pencils in the research rooms. If they have prior 
research or notes that are essential for their current work, 
NARA staff examine and mark the materials being brought into 
the rooms. Upon exiting NARA facilities, the personal 
belongings of the researchers are searched for hidden 
documents.

    Mr. Forbes. Thank you.
    Thank you. Mr. Chairman.
    Mr. Kolbe. Mr. Price.

        national historical publications and records commission

    Mr. Price. Mr. Carlin, I'm also glad to welcome you and 
your colleagues today.
    I want to join other colleagues on both sides of the aisle 
in commending you on bringing before us a reasonable budget, 
well designed, I think, to achieve your objectives.
    As we discussed in last year's hearing, the downsizing of 
the Federal Government sometimes has had the opposite effect on 
the National Archives, actually creating more work as you have 
to deal with the records of programs and agencies that are 
restructured or eliminated altogether.
    So, I am pleased that this year you are seeking the funds 
that are necessary to meet the increased demands on your 
agency.
    I am particularly pleased with the increase you have 
requested for the National Historical Publications and Records 
Commission Grants Program. Last year, you testified that 
Archives had included a $6 million request for the National 
Historical Publications and Records program in its budget 
submission to OMB, but that that amount was reduced in the pass 
back to just $4 million.
    We had some discussion here, you may recall, of what the 
impact of such a reduction would be, how the Founding Era 
program within that budget would fare in relationship to the 
rest of the budget and so on. A number of us, working with the 
Chairman, were able to provide $5.5 million in the end for that 
program in the House version of the bill. And through the 
Chairman's good efforts we retained that level in conference.
    I want to thank the Chairman and the staff, everyone who 
had a part in that for looking out for this program and 
fighting to maintain the House proposed increase.
    Now, apparently you had better luck this year with OMB on 
this program, and your budget submission includes your request 
of $6 million for NHPRC. If Congress funds the program at the 
$6 million level that is requested, it would mean a 10 percent 
increase over the fiscal year 1998 level and a 20 percent 
increase over the fiscal year 1997 level.
    I would like to ask you how you utilized last year's 
increase. What use you have made of those funds? How would the 
proposed increase this year affect this program in thenumber of 
grant applications you are able to fund? Once again, how do you see the 
Founding Era component of this program in relation to the other 
aspects? Can you tell me what percentage of grant applications you are 
able to fund now as compared to fiscal year 1997; how you would utilize 
this funding increase if granted; and whether you expect to be able to 
increase the matching funds that this money leverages?
    Mr. Carlin. Congressman, the President's recommendation is 
a very positive one for the NHPRC which you specifically 
questioned about now. and obviously, it will help us with all 
of our priorities. The focus for us, as we look at the $6 
million recommendation from the President, is to certainly, 
yes, take care of the Founding Era project. It will allow----
    Mr. Price. The Founding Era project is what percentage of 
that total amount? Approximately what amount?
    Mr. Carlin. We are talking about a significant portion, 
like a $1.5 million to $2 million is a ballpark. We can get you 
an exact number, obviously, but we are talking about a 
significant portion of the total.
    [The information follows:]

 National Historical Publications and Records Commission Founding-Era 
                          Documentary Editions

    During fiscal year 1998, it is estimated that awards for 
the Founding-era documentary editions will total $1,300,000 of 
the $5,500,000 annual budget, or 23.6 percent.

    But $6 million is important in terms of the Founding Era 
project. It allows us to move those projects a little faster, 
potentially; to work with projects, and a lot of them will be 
completed in the relatively near future. Three of the eight 
Founding Era will be finished within the next 5 to 10 years, 
which seems like a long time but these projects started in the 
1940s and 1950s. So, relatively speaking, that is quite soon.
    It will allow us to do more with the States as they work to 
upgrade their programs at the State and local level. The 
matching programs, the re-grant programs, that are educational 
in nature and providing additional training in terms of 
archival works at the local and State level.
    As I have said before and will remind you today, that is 
critical for us at the Federal level, not just because the 
NHPRC was set up to do that, but as I stated last year, a lot 
of the Federal work is done there. And if you do not have how 
the States use the Federal dollars, how the local communities 
use those Federal dollars, you do not have a complete record, 
certainly not a complete record at the practical end where the 
programs were really used. And, so, that component is 
important.
    The third area we emphasize is link to our electronic 
records programs. We have the opportunity of working with 
States to try new ideas, to partner and to do research and the 
$6 million recommended by the President certainly allows us in 
each of those three key components to do more than we would 
have if it was $5.5 million or $5 million or less.
    Mr. Price. Do you have any figures as to the number or the 
percentage of meritorious grant applications you are able to 
fund?
    Mr. Carlin. That is difficult to answer because of the 
tremendous amount of screening work done State-by-State. They 
do not all come to us. We get the projects I am talking about 
that come from the States, which is a significant number just 
in terms of numbers, because their grants are very small 
relative to the documentary editing projects. We do not see 
them all. The States have a volunteer advisory committee that 
works with their individual States for applications and we get 
the best that they look at. And then we fund, depending on the 
appropriation, in the neighborhood of I would say 60 percent. 
Would that be a ballpark?
    Mr. Price. Well, in your testimony last year, you noted 
that you were authorized, I believe, at a $10 million level. 
But you said that $6 million seemed about right in terms of 
what you could handle and what you would like to fund.
    Whatever information you can furnish to the subcommittee 
for the record I would like to see as to the trend line and the 
number of projects funded, the percentage that come before you 
that you are able to fund. Just to give some perspective on the 
universe of applications you are working with and what you are 
able to do with those in terms of support.
    Mr. Carlin. We will be very happy to do so.
    [The information follows:]

     National Historical Publications and Records Commission Grant 
                          Applications Funded

    In fiscal year 1996, the Commission received 138 proposals 
requesting a total of $9,913,281. With an appropriation of 
$5,000,000, the Commission was able to fund, in whole or in 
part, 94 of these proposals.
    In fiscal year 1997, the Commission received 120 proposals 
requesting a total of $9,355,235. With an appropriation of 
$5,000,000, the Commission was able to fund, in whole or in 
part, 102 of these proposals.
    In fiscal year 1998, the Commission received 132 proposals 
requesting a total of $10,816,601. With an appropriation of 
$5,500,000, the Commission estimates that it will be able to 
fund, in whole or in part, 103 of these proposals. Final 
figures for fiscal year 1998 will not be available until mid-
September.
    States awarded regrant funds also receive proposals, but 
these proposals are evaluated at the local level, rather than 
by the Commission itself. As an example, a regrant project 
currently taking place in North Carolina received 47 proposals. 
Utilizing $50,000 in regrant funds, eight of these proposals 
were funded.

    Mr. Price. Thank you.
    Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you, Mr. Price.
    Mr. Wolf.
    Mr. Wolf. I have no questions, Mr. Chairman.
    Mr. Kolbe. I have no further questions.
    Mr. Hoyer, do you have any questions on a second round 
here?

                           electronic records

    Mr. Hoyer. I have some other questions but I just want to 
ask one because I know we want to end this so that we can get 
to GSA because our time is constricted.
    You mentioned, of course, the managing of the electronic 
information. You point out this chart where there was a court 
case involved. It seems to me that we really have to come to 
grips with a policy as to what, as you have discussed, is a 
record that ought to be kept and what is a record that 
throughout history would never have been kept in the past but 
now that everything electronically is being either recorded or 
put on E-mail or something of that nature this explosion to 
which you refer, which is an incredible explosion--when we talk 
about 90,000 files of everything to date, and then just two 
departments--and what is the time frame there?
    Mr. Carlin. I would say annual on the departments.
    Mr. Hoyer. Annually, I am not sure what is that, 20 times 
or I mean 2,000 times is what that is? How are we going to deal 
with that retention of information and if we do deal with the 
potential of the information, how in Heaven's name are we going 
to deal with it in terms of having it categorized so that we 
can recover important information as opposed to being deluged 
in what I presume is an awful lot of day-to-day, 
administrative, non-historical activity that all of us 
participate in? Sort of like this question. [Laughter.]
    Mr. Carlin. Well, let me point out that the chart 
hypothetically because we are projecting, we cannot way an 
exact number, only represents what we would guess is the 2 
percent. That is not representative of total volume. It is 
apples and apples over there in terms of the portion that we 
would declare permanent.
    So, you are talking about an incredible amount from which 
to sort through.
    Mr. Hoyer. So, that what you are saying is that if--what is 
the percentage? Twenty percent?
    Mr. Carlin. No, 2 percent.
    Mr. Hoyer. Okay, 2 percent. So, if you are talking about 
90,000 is 2 percent of X and 1.7 million is 2 percent of X, the 
X volume to which you are referring is an incredibly large 
volume of information that you will have to deal with. I do not 
know whether we will have the Budget of the United States 
sufficient to give you the resources to do that.
    Mr. Carlin. Well, let me help this a little bit by 
reminding all of us that what we really need to do is to get in 
the position where technology allows us to do this. It is not 
like we are looking at statistics--if those, for example, were 
textual records, for a moment. I mean let us just pretend for a 
moment that green is all that we have ever taken in terms of 
paper. And now we are going to have this--I mean we would be 
talking about space issues beyond anyone's capacity. They are 
electronic.
    The problem we have today is we have waited too long to get 
intensely involved, so, we are playing catchup. With a 
reasonable amount of help this can be handled but not with 
existing resources.
    But as you can tell in our budget request, we are not 
asking for that kind of growth in our budget. We are asking for 
modest increases because we believe we can make technology work 
for us so that we can do the job.
    But it is going to take partnering, as we are doing with 
the Department of Defense. That is a very significant project. 
It is going to take a lot of partnering with the private sector 
to make sure that they are plugged into standards, because in a 
real simple and clear way we have got to get to the point where 
we are basically using the same system across the entire 
Federal Government.
    We work with some 340 different entities in the Federal 
Government that set up different systems. We cannot have them 
going in 340 different directions. If we get them going in one 
direction, a direction that makes sense for them in terms of 
their recordkeeping, that makes sense for us in terms of 
preservation and accessibility, we can make it possible for us 
to not be talking about this in a dramatic way 5 or 10 years 
from now.
    It is reasonable to deal with. If we can have the help, we 
can make technology work for us.
    Mr. Hoyer. Thank you, Mr. Chairman.
    Well, we are obviously going to have to deal with it. We 
have to think new ways about this and obviously 
contemporaneously with the creation of the information we are 
going to have to categorize it and archive it at the same time. 
That is the only way it can be done.
    Thank you, Mr. Chairman.
    Mr. Kolbe. Ms. Northup, do you have any questions?
    Ms. Northup. I may have other questions for the record.
    Mr. Kolbe. I think that completes the testimony. Again, we 
want to thank you very much, Governor Carlin, for being here 
today and for your testimony and we look forward to working 
with you as we get into the budget.
    Mr. Carlin. And we will be very happy to work with you.
    Mr. Kolbe. Thank you.
    [Questions for the record and budget justification material 
follow:]

[Pages 524 - 616--The official Committee record contains additional material here.]


                                            Friday, March 13, 1998.

                     OFFICE OF PERSONNEL MANAGEMENT

                                WITNESS

JANICE R. LACHANCE, DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT

                              Introduction

    Mr. Kolbe. The Subcommittee will come to order. We are at 
our last hearing of the week here. We are very pleased to 
welcome this afternoon Janice Lachance, the Director of the 
Office of Personnel Management, and her staff that is here to 
testify this afternoon on the 1999 budget request for the 
office.
    Ms. Lachance, this is your first opportunity to appear 
before the subcommittee, and we look forward to hearing the 
statement that you have to give. Just a couple of remarks 
before we do that. And we will be joined shortly by Mr. Hoyer, 
I believe.

                            Opening Remarks

    OPM is, of course, the Government's chief personnel office, 
with responsibility for managing the oversight of the merit 
system, managing the trust funds that provide for the 
retirement and health plans of Federal employee annuitants, 
provides advisory assistance to Federal agencies on personnel 
matters, among other issues.
    We are very aware that OPM has gone through a lot of 
changes in the last 5 years, both in terms of the restructuring 
that it has undergone, and in outsourcing a number of your 
activities, and that there has been a cut in your staff by 
nearly 50 percent as a result of that.
    As a part of your responsibility for overseeing the trust 
funds for health and retirement benefits, you also have to keep 
foremost in mind the best interests of the Federal work force, 
both in terms of the quality of the health care benefits they 
receive and the compensation and the role that all of these 
play in serving to attract and retain the very best possible 
people in government service.
    Included in your appropriations is funding for the Office 
of the Inspector General, which, in addition to its standard 
responsibilities, has been taking additional measures to 
counter criminal diversion of retirement and health payments. 
And I hope we will get into that and hear a little bit about 
that from you.
    So I look forward to your testimony. When Mr. Hoyer does 
get here, I would certainly turn to him for some remarks. But, 
in the meantime, let's go ahead with your statement. Let me 
remind you that the full statement can be placed in the record, 
and if you would like to summarize, that is fine.

                           Summary Statement

    Ms. Lachance. I would appreciate that, Mr. Chairman. And 
actually, I can just then speak to a couple of highlights.
    OPM has had a long and productive history with this 
subcommittee, and I intend on my part to do everything that I 
can to continue that and build on our past successes. As you 
mentioned, we have changed dramatically over the last 5 years. 
I think we can characterize those years as challenges that have 
been successfully met, and our future course continues on that 
path.
    Since the inception of the administration's Reinvention of 
Government effort in fiscal year 1993, OPM's FTE level has 
dropped 52 percent, from 6,208 to 3,005; and our salaries and 
expenses budget is smaller by more than one-third in constant 
dollars. Simultaneous with our downsizing, we have redesigned 
the agency and achieved three major objectives.
    First, we privatized functions such as training, delivery, 
and investigations. We created the first employee stock 
ownership plan in Federal Government history, and that ESOP has 
been a resounding success.
    Second, we reorganized OPM to sharpen the focus on our core 
mission, protecting the merit system principles and veterans 
preference in Federal employment.
    Third, we have positioned the agency to meet its long-term 
goals and objectives. We now are submitting a budget that is 
fully integrated with our performance plan, which was developed 
to meet the requirements of the Government Performance And 
Results Act. The plan also reflects that we are on target to 
meet all requirements for the year 2000 computer conversion. 
All OPM systems will be renovated by September and implemented 
by December of this calendar year. And all mission-critical 
systems will be independently verified as year 2000 compliant.
    The total OPM budget request for $13.5 billion includes 
appropriations that are 1 percent discretionary and 99 percent 
mandatory. OPM's request for basic operating expenses from 
general funds totals $85.4 million, the same level as in fiscal 
year 1998. We will provide Federal agencies with human 
resources leadership oversight and technical assistance which 
are both innovative and of the highest quality. We will contain 
our increased cost within the same funding level as last year. 
We will continue to make increased use of the best available 
technology, from our employee express system that allows 
Federal workers to monitor and manage their benefits and 
personnel data to an interactive CD-ROM that equips managers to 
resolve performance problems. In our oversight role, OPM will 
continue to evaluate human resources management across 
government. We plan to complete evaluations in all major 
Federal agencies by the year 2000.
    As you mentioned, our trusteeship of the earned benefits 
programs for the Federal workers, annuitants and their families 
is OPM's most significant responsibility from a fiscal 
perspective. It also matters deeply to these people in their 
individual lives. For the administration of these retirement 
and insurance programs, we are requesting $91.2 million in 
transfers from the trust funds. Since this is the same level 
provided in fiscal year 1998, we will be absorbing the impact 
of cost increases.
    I would also like to note that a variety of services 
provided by OPM are financed by payments from other 
agenciesthrough the revolving fund. The fiscal year 1999 budget 
includes an estimated $179 million in obligations for ongoing revolving 
fund programs. As recently as the end of fiscal year 1994, the fund had 
experienced a cumulative deficit of $48.8 million. But I am glad to 
report that OPM has reversed a 10-year trend of such deficits.
    As always, the OPM budget request includes mandatory 
appropriations to pay the Government's contributions to the 
Federal Employees Life Insurance and Health Benefits Program on 
behalf of annuitants as well as for the Civil Service 
Retirement and Disability Fund. Serving our Federal employees 
allows us to better serve our ultimate customers, the American 
people.
    All of us at OPM are deeply committed to creating the work 
force necessary to meet the challenges of the next century. 
Again, I want to thank you for the opportunity to appear before 
you.

                       statements for the record

    [The information follows:]

[Pages 620 - 642--The official Committee record contains additional material here.]


    Mr. Kolbe. Thank you very much.
    As I indicated when I called on you for your statement, we 
call Mr. Hoyer for some opening remarks.

                            opening remarks

    Mr. Hoyer. Thank you, Mr. Chairman. I apologize for being a 
little late.
    I want to welcome Ms. Lachance to the hearing. This is her 
first appearance as Director of the Office of Personnel 
Management. I was honored to be included at her swearing in 
ceremony at the White House and enjoyed that very much and had 
an opportunity to meet her parents. She probably thinks it 
hasn't been very cool here in the last 3 days, being from 
Maine, as she is.
    Ms. Lachance, as you know Mr. Chairman, has an outstanding 
career both in the private and public sectors, as well as on 
behalf of Federal employees as an officer of the AFGE. I want 
to welcome her here and say that I look forward to working with 
her and look forward to coming to solutions on some of the 
issues that we will raise and questions that we have had the 
opportunity to discuss regarding the pay and benefits of 
Federal employees. But the Federal employees, I think, are 
going to be well-served by Ms. Lachance's leadership.
    Ms. Lachance. Thank you very much.
    Mr. Hoyer. Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you, Mr. Hoyer.

                         retirement open season

    Let me direct a couple of questions, and we talked about 
this a little bit when you were in my office informally about 
the open season, or the CSRS-FERS transfer shift for people to 
move from one retirement system to the other. The last time, I 
guess, this was possible was the year 1987.
    As we know, of course, the President used his line-item 
veto against this provision and then withdrew it subject to the 
court decision or court action in this area, but he has gone 
ahead and requested that we repeal this provision in the law. 
There have been different estimates of the cost to the 
Government by CBO and OMB based largely on the participation 
rates that we would see.
    You are personnel director; you would have a better handle 
than anybody in terms of how many people are likely to get 
involved in this to do this to pick up the option of making the 
transfer. So what do you expect the costs would be?
    Ms. Lachance. We went back and looked at the last time 
there was an opportunity to switch, and we have come up with a 
ball park figure of perhaps 5 percent of the people who might 
make the switch. It could end up being far more than that. 
There has been a lot of excitement and enthusiasm about the 
thrift savings plan. So the number could be higher. But if it 
is 5 percent, that would mean additional retirement cost to the 
agencies of $1.4 billion between now and fiscal year 2002. So 
there is a real concern in the administration about the amount 
of money that would take out of programs, out of possible pay 
raises, out of a number of other issues that need to be funded. 
So there is a very strong concern.
    Mr. Kolbe. And why, if it is only 3 percent or 2 percent, 
is there a net savings, a net benefit, for the Government? I do 
not understand.
    Ms. Lachance. I am not sure exactly where you mean. Could 
I, perhaps, call on Ed Flynn, who might be able to answer?
    Mr. Kolbe. Certainly. If you would come up to the table and 
identify yourself for the reporter and use your name and 
position and use the microphone.
    Mr. Flynn. My name is Ed Flynn. I am the Associate Director 
for Retirement and Insurance at the Office of Personnel 
Management. I am not sure exactly the point about net savings.
    Mr. Kolbe. Well, I think it was CBO said that, based on 
somewhere between a 1 and 4 percent participation rate, they 
estimate there would be a net savings. Because I think there is 
a savings in the annuity cost; is that right?
    Mr. Flynn. There is a savings in terms of the outlays that 
go out from the Retirement and Disability Fund. But if you look 
at net cost to the government, what you do see, assuming a 5-
percent switch rate, about 60,000 people, would be a net long-
term cost to the Government of about a billion dollars.
    Mr. Kolbe. And if you have a 2-percent, you would have a 
net long-term cost of roughly two-fifths of that; would that 
not be correct?
    Mr. Flynn. That is correct, Mr. Chairman.
    Mr. Kolbe. So CBO is off the mark when they say there would 
be a net savings to the Government?
    Mr. Flynn. I am not aware of CBO offering a net savings.
    Mr. Kolbe. As staff just indicated, maybe they were 
referring to the short-term savings. Is there a short-term 
savings that is involved in this?
    Mr. Flynn. If you look at simply the long-term outlays from 
the Retirement and Disability Fund, that would be the case. CBO 
did testify on this before Mr. Mica's subcommittee and 
indicated that if they used the same estimates that the 
administration used, the cost would be essentially the same.
    Mr. Kolbe. Well, let's assume, then, we are talking about 
the same, there is going to be some net cost. I think that it 
is highly unlikely that this Congress will take that option 
away and repeal that. So given that, would you describe what 
preparations you were making for this shift.
    Ms. Lachance. In any event, whatever action Congress takes, 
Mr. Chairman, OPM will be ready to provide individual employees 
with the kind of information they need to make this very 
important decision.
    Mr. Kolbe. When in the law are they supposed to be eligible 
to enter into open season?
    Ms. Lachance. Open season would begin July 1st and go 
through December 31.
    Mr. Kolbe. Six months.
    Ms. Lachance. Yes I think what is important to remember as 
a backdrop to all of this is the fact that agencies run open 
seasons all the time. They do a big one every year for the 
Federal Employees Health Benefits Program.
    Mr. Kolbe. So it is not a big thing to do this.
    Ms. Lachance. It is unusual because of the subject matter, 
but not the process. So we are working very closely with 
benefit counselors at every agency and personnel officers there 
to give them the kind of information they need. We are going to 
update our calculation formula so that individuals can make 
their own calculations on how it is going to affect them 
personally. We are going to put that up on the Web site on the 
OPM home page so that everyone will have access to it, and we 
are going to produce a CD-ROM as well as the very traditional 
printed material.
    So, whatever happens, we will be ready and we believe that 
every Federal employee that has this option will be able to 
make a rational decision based on good and up-to-date 
information.
    Mr. Kolbe. We are talking about most of it being in this 
current fiscal year. Do you have sufficient administrative 
expenses in there to do this?
    Ms. Lachance. We are going to absorb this, and we have been 
able to work that through.
    Mr. Kolbe. When we first created FERS, how many made the 
switch then and in between then and 1987? What was the rough 
number?
    Ms. Lachance. I believe 4 percent of those who were 
eligible.
    Mr. Kolbe. Just 4 percent after we have shifted over to 
FERS. A lot more wished they had, then, at this point.
    Ms. Lachance. That is what we are thinking would happen at 
this point.
    Mr. Kolbe. Of course, the pool is substantially smaller.
    Ms. Lachance. That was the best information we had.
    Mr. Hoyer. Mr. Chairman, the estimate I have, these figures 
here by OMB of how many people would switch in 1987 is 4 
percent.
    Mr. Kolbe. In 1987.
    Mr. Hoyer. In 1987, 86,000 employees actually switched.
    Mr. Kolbe. And now even if it is another 4 or 5 percent, 
the pool is much smaller because you have a lot of those people 
retired by this time, so you are talking about fewer.
    What is the total number of Federal employees, active 
current Federal employees that are still in the CSRS.
    Ms. Lachance. It is about half. It is about half, and it 
has switched over to being predominantly FERS. Mr. Chairman, we 
can get back to you with specifics for the record. Actually 
here are the exact numbers right here. As of September 30, 
1997, there were 1.194 million CSRS employees and 1.487 FERS 
employees.
    Mr. Kolbe. Mr. Hoyer.
    Mr. Hoyer. I had those figures.
    Mr. Kolbe. I am yielding.
    Mr. Hoyer. Okay. I would observe that as you indicated, as 
well, the probability of that ability to shift being changed is 
very, very small I would think.

                     reduction in personnel at opm

    First, let me ask you about the reduction in personnel at 
OPM. There was a pretty caustic letter that you may have seen 
in Mike Causey's column a week ago, Monday, I guess it was, 
where he does his, you know, you get the responses of the week, 
a pretty angry one about the reduction in employees and pretty 
critical of Mr. King. As you know, I thought Mr. King did a 
good job and I was a supporter of his. And I think what he did 
with the ESOPS was very innovative and very helpful to a lot of 
employees.
    Ms. Lachance. And very successful.
    Mr. Hoyer. And has been very successful and maybe set an 
example for others to follow. But, nevertheless, we reduced a 
lot of employees.
    Do you have an analysis that you could give for the record, 
because the answer would probably be too long, as to the 
commensurate reduction in duties performed by OPM that is 
analogous to or relates to the very, very significant reduction 
in employees? Obviously, the intent of my question is to assure 
that we did not reduce large numbers of employees and retain 
significant numbers of duties above and beyond what could be 
expected of the worker to perform so that unless there was a 
radical change in productivity, we are just going to have 
frustrated people on the job.
    Ms. Lachance. Sure, I understand and I will be glad to get 
that for you. But I think what is important to remember, 
Congressman, is that as we downsized, we also redefined our 
mission and so we really have changed OPM and really focused on 
its core missions and have been able to make, I think, some 
very, very good businesslike decisions on what could be done 
better outside of government. We went through a very rigorous 
process. And I think the organization that is there now is 
ready to meet the needs of the future. But I will be happy to 
give you that analysis.
    [The information follows:]

                    OPM Duties Following Downsizing

    The Office of Personnel Management (OPM) has been a leader 
in downsizing, both by example (reducing its Fiscal Year 1999 
Full-Time Equivalent employment level 52 percent below that of 
Fiscal Year 1993) and by providing guidance and assistance to 
other agencies in their downsizing efforts. There has not been, 
however, a commensurate reduction in OPM's duties. Part of our 
downsizing was achieved through the privatization of two OPM 
programs, training and investigations. The only significant 
reduction in duties was in the training program when much of 
the conduct of our classroom training was taken over by the 
Department of Agriculture's Graduate School. OPM does retain 
its policy and oversight role for training and employee 
development in the Federal Government and conducts training for 
Federal managers and executives at the Federal Executive 
Institute and two Management Development Centers. In the area 
of investigations, OPM privatized the conduct of the 
investigative field work through the formation of an employee 
stock ownership plan (ESOP) company. OPM does, however, retain 
full responsibility for the personnel investigations program 
including policy setting and oversight of ESOP work as well as 
delivery of the investigative products to the customer.

                payment for annuitants' health benefits

    Mr. Hoyer. Good. A question I have asked since Don Devine 
told me the second year I served on this committee, well, we 
had to reduce health benefits because you did not give us 
enough money. My question to Mr. Devine was, ``Mr. Devine, you 
asked for the money we gave you.'' His answer, ``Yes, but it 
wasn't enough.''
    Is the $4.632 billion for the trust fund health benefit 
payment sufficient to maintain health benefits at present 
levels?
    Ms. Lachance. Yes, it is.
    Mr. Hoyer. You are confident that any renegotiations this 
summer will not adversely impact that level?
    Ms. Lachance. Not that we can anticipate. We believe we 
carefully thought it through and have anticipated anything that 
may come up.
    Mr. Hoyer. I asked you that question so if something 
happens in October, I can say----
    Ms. Lachance. ``I told you so''?
    Mr. Hoyer. It is not so much ``I told you so.'' I want to 
be careful that we do not, through budget mistakes, if you 
will, lack of understanding what the benefit cost might be, 
reduced benefits without intending to do so.
    Mr. Kolbe. Would the gentleman yield to me on that point?
    Mr. Hoyer. I will be happy to yield.

     causes of increase in payment for annuitants' health benefits

    Mr. Kolbe. You have got, I think, a 12-percent increase; is 
that right, $485 million increase?
    Ms. Lachance. I believe so, that is correct. Yes, that is 
correct.
    Mr. Kolbe. Can you tell me, is that mostly due to the cost 
per annuitant, or is that mostly due to increased 
participation? Because 12 percent is a whopping increase way 
beyond right now where we are in Medicare or the private health 
sector and I am wondering what is causing this 12 percent 
increase.
    Ms. Lachance. To make sure I do not misspeak, why don't I 
get Ed back up here again.
    Mr. Flynn. Mr. Chairman, the increase is a reflection of 
two primary factors: First, the increased number of annuitants 
for whom OPM serves as the payroll office; and secondly, the 
increase trend of medical costs generally. It is two factors 
and that causes the increase.
    Mr. Kolbe. Can you break that down at all? I am just 
curious. Or let me just ask you, I guess really what I am 
trying to find out is what is the increase per annuitant that 
you are projecting for next year?
    Mr. Flynn. The increase per annuitant would be in the 
range, this is an estimate at this point of medical inflation 
continuing at its current levels, which is at about 7 percent a 
year.
    Mr. Kolbe. Thank you.
    Mr. Hoyer.
    Mr. Hoyer. Mr. Chairman, as you know, what happens is that 
OPM will renegotiate with the insurers, with those folks who 
participate in the FEHBP before the open season this coming 
fall, and that is an annual renegotiation and benefit levels 
and premium levels will be discussed in that process. And then, 
of course, they will package that program and send it on to 
Federal employees and they will make their determination at 
what levels they want.
    But, generally speaking, what they try to do is not through 
budget shortfalls drive reduction in either benefits or 
increases in premiums. That is what I was getting at. So, 
obviously, to some degree this is an estimate because it is 
pending negotiations.

                              federal pay

    On pay, I asked Mr. Raines yesterday, as I discussed with 
you earlier, about the status of our economy. He was, of 
course, as we all are, very pleased with status of our economy. 
I asked him further, Ms. Lachance, whether or not it was known 
at the time that the Federal employee pay raise was recommended 
by the President that we would, in fact, have a budget surplus 
in fiscal year 1998, not the budget year that we are now 
budgeting for, but the one we are in. He said that we did not 
know that.
    Based upon that, have you asked for any opinion from your 
counsel or do you have an opinion from your counsel as to 
whether or not FEPCA would require in fiscal year 1998 or at 
least a proposal for fiscal year 1999, a pay raise, which I 
understand under FEPCA would be 12.9 percent?
    Ms. Lachance. We are looking into that, Congressman. But I 
think what is more important or maybe as important are the 
efforts that are going on within the administration to discuss 
this problem and try to come up with an equitable solution that 
can balance some of the President's policy and program 
priorities along with his very deep respect for Federal 
employees and the work they do. So we are, in fact, pursuing 
discussions on that front as well as looking into any legal 
issues that may come up.
    Mr. Hoyer. I appreciate that answer. But let me say, Mr. 
Raines said yesterday in conclusion something with which I 
agree wholeheartedly. He said that Federal employee pay ought 
not to be the last thing that gets attended to when you find 
out what's left over after everybody's wish list is 
accommodated, and we then ask the Federal employees to carry 
out those wish lists.
    In that context, I understand what you are saying about 
balancing, but if Congress did not say in the statute, that it 
passed overwhelmingly and that President Bush signed, or that 
if there is enough money left over we will have comparability. 
If there is enough money left over, we will treat our employees 
as well as the private sector treats theirs. It did not say 
that. It said we are going to treat our employees comparably 
with the private sector.
    As I said publicly and in private with you, I understand 
that there may be legitimate issues with respect to whether or 
not the present system accurately reflects the difference 
between private and public sector pay. As you know, because of 
the locality pay, we have tried to be more precise so that you 
do not have San Francisco prices driving Des Moines salaries. 
We all thought that made sense, which is why we have locality 
pay. Des Moines did not say to themselves, daggone, those 
people are overpaid. Who do they think they are? That was a 
legitimate frustration.
    Now that we have done that, however, and we have said we 
are going to pay Federal employees comparably, we clearly are 
not doing that under the present system. Now, I read in, I 
guess a letter from the Vice President or something about the 
fact that he was initiating a program or looking at a Phase II; 
is that what he called it, or two-tier study.
    Now, what concerns me is I have been hearing since Don 
Devine in 1981, when I was on the Post Office and Civil Service 
Committee, that we are going to have a new study. That was 18 
years ago. There is no study which any administration has said 
is the right study. George Bush did not argue about this as 
much as, frankly, Mr. Reagan did, and Mr. Clinton has done, the 
two Presidents on either side ofthe President who signed FEPCA. 
But we need to come to grips, and I would hope you would be an advocate 
within the administration for treating Federal employees as we promised 
them.
    If we do not mean what we say, we ought to change the law, 
we ought not to promise. We ought to say, as a practical 
matter, we cannot afford our promise. But we ought not to just 
pretend that the economy is still in an emergency status and, 
therefore, we cannot pay you anything more than 3.1, 
notwithstanding the fact the law says we ought to get 12.9.
    I am raising my voice for emphasis, not because I am angry 
with you. But I cannot, for the life of me, understand how we 
can with a straight face look our employees in the eye whether 
they work here or whether they work in the executive department 
and say to them, yes, we passed a law and, yes, you are 
entitled under the law to a 12.0 percent adjustment. That is 
what the Pay Advisory Committee made up of executive 
representatives, not legislative representatives, and high 
level representatives, you included, tell us is the pay due to 
Federal employees. And we either need to change the law and say 
we cannot afford it; we made a mistake--we did that in 1977 
with Social Security. We said in 1972 we made a mistake. But 
the Federal employees are not forgetting.
    They are angry about it because now when this 
administration says the economy is in great shape, and I am 
proud as I can be of our role in that, as you know, but we 
cannot now say, but we still cannot follow the law.
    So that is not a question, that is sort of, I know, a 
speech. And you have heard it and you knew I felt that way. But 
I want to emphasize that I am serious about this, and I want to 
pursue it, and I want a high level of angst in the 
administration to figure out how we at least move towards 
equitably compensating our people in good times.
    They are, after all, the average working men and women that 
our administration and our party, this was the Republican 
President who signed this bill and who made this commitment. 
God bless him. I was proud of him. But now our party, when it 
says we are for working men and women, these are working men 
and women and we ought to pay them properly.
    Thank you, Mr. Chairman.
    Mr. Kolbe. Mr. Price.
    Mr. Price. Thank you Mr. Chairman.

               agencies exempted from civil service laws

    Ms. Lachance, I want to add my welcome to you and your 
colleagues here today. I have only one question, but it does go 
to a rather important policy question I believe, so I 
appreciate your response. It has to do with the trend that we 
have seen of exempting various Federal agencies from title 5, 
the civil service provisions of the U.S. Code. Most recently, I 
believe this was done with respect to the Federal Aviation 
Administration. And I am not sure how long the list is. Perhaps 
you could furnish a list of what these exemptions add up to.
    My question has to do with whether this trend concerns you 
at all. I am sure there is a justification made each time this 
is done. Are there aspects of this, though, that we should be 
concerned about, the cumulative impact, and is there any way 
for us to be assured that merit system principles are being 
adhered to within these agencies once this exemption occurs?
    Ms. Lachance. Congressman Price, I would be happy to 
furnish you with a thorough list of agencies who are no longer 
under title 5. There are more and more of them every day and it 
is a great concern to us. We do not currently have the 
authority to conduct oversight or authority to review agencies' 
practices who are outside of title 5. That is something that we 
would really like to see corrected.
    I think the American taxpayer expects the entire government 
to operate on merit principles. I believe they have counted on 
an impartial civil service over the years and should be able to 
continue to count on that. And while I think agencies have the 
very best intentions when they seek to get out of title 5, I do 
believe that there is a way to accommodate the flexibility that 
they need, as well as make sure that they are strictly adhering 
to the merit principles that have been so prominent in our 
Nation's history. We would love to be able to do that work. We 
do it for title 5 agencies. We are good. It is collaborative. 
It is productive. It finds small problems here and there or 
sometimes big problems when there are systemic issues, and we 
get in there and solve them and I think to the betterment of 
the Federal service.
    [The information follows:]
               Agency Exemptions From Civil Service Laws
    The tendency for agencies to seek exemption from title 5, United 
States Code, has gained momentum over the past few years. As a result, 
nearly half of Federal employees now work in agencies fully or 
partially outside title 5. But cataloging precisely which agencies are 
exempt from title 5 and from which particular provisions is not easy. 
For example, the General Accounting Office recently launched a study 
aimed at doing just that, but ultimately had to stop short of this 
goal. It was simply too complicated to follow all the legal threads for 
each agency without a huge expenditure of staff resources.
    Recognizing this difficulty, the Office of Personnel Management 
(OPM) has nevertheless endeavored to identify and obtain information 
about the most significant non-title 5 agencies. We are currently in 
the midst of a study of 19 such agencies, which will help us understand 
the degree to which merit considerations pervade Human Resources 
management (HRM) at these agencies and also what kind of interesting 
HRM practices are found outside title 5. The attached list of the 19 is 
by no means comprehensive, but includes major agencies outside title 5 
and surely demonstrates the breadth and diversity of the non-title 5 
universe.
    We can also offer, by way of illustration, three recent cases of 
agencies receiving the authority to leave all or part of title 5. Two 
of these Acts actually occurred after the list for the non-title 5 
study was drawn and are, therefore, not included in the 19.
                    federal aviation authority (faa)
    The 1996 Department of Transportation Appropriations Act permitted 
FAA to develop and implement a new personnel management system that 
``addresses the unique demands on the agency's workforce.'' This 
legislation exempted the new personnel system from ``substantially all 
of title 5, though FAA has the discretion to adopt the substance of any 
portion of title 5 they deem appropriate.'' The Merit System Principles 
were not retained statutorily and, now by being outside title 5, are no 
longer subject to OPM oversight.
                 federal bureau of investigation (fbi)
    Contained in the 1998 Appropriations Act for the Departments of 
Commerce, Justice, and State, and the Judiciary was language 
authorizing the Director of the FBI, with the approval of the Attorney 
General, to establish a personnel management system providing for the 
compensation and performance management of not more than 3,000 non-
Special Agent employees to fill critical scientific, technical, 
engineering, intelligence analyst, language translator, and medical 
positions in the FBI. An evaluation of this system was required to be 
submitted to Congress in 3 years, including recommendation for 
extension of authority.
                                treasury
    In the same 1998 Appropriations Act as cited above, the Secretary 
of the Treasury was vested with the demonstration project authority 
contained in section 4703 of title 5, to establish demonstration 
projects for 3 years for up to 950 employees to fill the identical 
positions mentioned above.
    Without specific knowledge of all the justifications behind these 
and other legislative proposals, we assume they intend to tailor HRM 
practices to the specific agency needs. What is disturbing in some 
cases is the lack of a statutory requirement for adherence to the Merit 
System Principles and lack of explicit oversight from OPM. Moreover, 
systems developed independently of OPM do not always allow for the 
experience and expertise of OPM as a central human resources management 
agency to be effectively shared and brought to bear through the blend 
of tailored systems and the best interests of the Government at large.
    OPM shares the desire for a title 5 that contains greater 
opportunity for flexibility and tailored systems that meet mission 
accomplishment; however, that must be balanced with core values and 
principles of a merit-based system. OPM does not currently have broad 
authority to review agencies outside of title 5, or legislatively 
exempted from oversight and, therefore, cannot play the strongest role 
to assure effective and accountable application of the Merit System 
Principles throughout the Executive Branch.
---------------------------------------------------------------------------
    \1\ These are the 19 agencies included by OPM in its current study 
of the non-title 5 universe. This is not intended as a comprehensive 
list of non-title 5 agencies, but rather represents important agencies 
in this category.
---------------------------------------------------------------------------
    Significant Agencies Fully or Partially Exempt From Title 5 \1\
Central Intelligence Agency
Department of State--Foreign Service
Farm Service Agency
Federal Aviation Administration
Federal Deposit Insurance Corporation
Federal Reserve Board
Foreign Agricultural Service
Library of Congress
Metropolitan Washington Airports Authority
National Security Agency
Nuclear Regulatory Commission
Office of Federal Housing Enterprise Oversight
Office of Thrift Supervision
Peace Corps
Sallie Mae
Smithsonian Institution (Trust Fund Employees)
Tennessee Valley Authority
U.S. Postal Service
Veteran's Health Administration (title 38, United States Code)

      
    Mr. Price. Well, what are some of those reasons that you 
refer to? Are there aspects of agency operations that that 
represents an implied critique of? I mean what are some of the 
reasons that are given when these exemptions are made?
    Ms. Lachance. I believe agencies and their congressional 
committees have a very difficult time navigating their way 
through some of the flexibilities that are available under 
title 5. We think that most agencies who claim to have trouble 
operating or meeting their missions because of the constraints 
of title 5 really could do it if they understood all the 
flexibilities that were currently available.
    I understand the knee-jerk impulse to try to get out of the 
rules and regulations. However, I still very firmly believe 
that the government needs the government-wide merit principles 
and those need to be enforced equitably across government so 
that everybody is operating in a fair, open and competitive 
system.
    Mr. Price. And the way this works now is that once this 
exemption is created, you then have no oversight powers or 
responsibilities with respect to that agency; is that true?
    Ms. Lachance. That is correct.
    Mr. Price. Thank you. Thank you, Mr. Chairman.

                       year 2000 computer problem

    Mr. Kolbe. I think we can wrap up with just one more round 
of questions for all of us here. I will have a couple that I 
want to put in the record, but the question I want to ask you 
is one that I know my colleagues and probably staff have become 
very tired--and I think I am tired--of asking repeatedly, but 
it has to do with the year 2000 century change.
    We fund the responsibility for OMB, which has the overall 
responsibility in the government for this and increasingly I am 
becoming concerned about agencies', as well as, I think, 
frankly, the private sector's, ability to be adequately 
prepared for this Y2K responsibility. You have got a lot of 
things that are critical here; keeping all the personnel 
records, the trust fund activity. You have a lot of 
preparations for this. Tell me, what priority does this have in 
your list of management responsibilities?
    Ms. Lachance. It has my personal attention. I think it has 
to be one of the top three things that I pay most attention to 
within the agency. You are absolutely right. We have a lot of 
responsibility to the people that we serve. And we do not 
intend to shirk this duty at all. We are, in fact, doing quite 
well on it. We are going to meet and hopefully exceed the 
government-wide deadline date of March 1999. We anticipate 
being through with all of our fixes by December of this year, 
so that we will have a year to make sure everything is running 
right.
    As you know, Congressman Horn just upgraded us from a D to 
a B on his report card; and we are very, very proud of that. 
But that does not mean that we are slacking off. The sooner we 
can get this done, the better I think we are going to sleep at 
night.
    Mr. Kolbe. Do you have anybody in your shop that has 
operational responsibility for that?
    Ms. Lachance. Chief Information Officer Janet Barnes.
    Mr. Kolbe. Do you meet with that team on a regular basis?
    Ms. Lachance. Yes.
    Mr. Kolbe. Do you receive regular status reports?
    Ms. Lachance. Yes, I do.
    Mr. Kolbe. Do you have any way of independently verifying 
or saying we have been told everything is coming along 
swimmingly; that somebody looks at it independently?
    Ms. Lachance. Yes, sir. We plan on having independent 
verification of all our mission-critical systems.
    Mr. Kolbe. You are satisfied with the progress you are 
making today?
    Ms. Lachance. Yes, sir. And I never stop talking about it.
    Mr. Kolbe. You think you will be ready by March 1999. What 
would be one of the most critical areas that you have to 
address? I guess in the same breath I could ask, what would be 
the mission-critical failures if we were not ready at OPM for 
this?
    Ms. Lachance. Well, to me, personally, given Congressman 
Hoyer referred to my parents, given the fact that my parents 
get Government annuity checks every month, I think I would have 
a tough time living down the fact that somebody did not get 
their check on time.
    Mr. Kolbe. So the actual processing of annuitant checks 
would be one of the critical things.
    Mr. Hoyer. God bless those lobbyists.
    Ms. Lachance. They do not get paid very much.
    Mr. Kolbe. How about all the health benefits?
    Ms. Lachance. That is in the same category as far as I am 
concerned. I think anything that touches people's lives is 
critical and so certainly our retirement and our health 
benefits, to me, would be at the very top.
    Mr. Kolbe. Are you making these changes mostly through 
upgrades and adjustments to your current hardware and software 
or are you bringing in whole new systems?
    Ms. Lachance. It is a combination of things. There is a 
variety of systems.
    Mr. Kolbe. Do you have adequate funding for the new systems 
you need?
    Ms. Lachance. Yes, sir. We have planned for this and we are 
good to go.
    Mr. Kolbe. Okay. Next March we will talk again, and I hope 
we do not have to hold up these words to you and be shocked 
that we are not at this point. That is all the questions I 
have. As I say, I may have one or two more to submit for the 
record.
    Mr. Hoyer.

                        family-friendly policies

    Mr. Hoyer. Thank you. Mr. Wolf is not here. Congressman 
Wolf is the ranking member, as you know, on the Transportation 
Committee. So he has trouble getting here, but he has been the 
real leader on the family-friendly policies of the Federal 
Government as an employer, and he and I have worked on a number 
of issues, as you know, dealing with family-friendly child care 
centers at Federal facilities.
    The IRS building, as you know, has an excellent one. I just 
went through the Department of Agriculture's building in 
Greenbelt that has a terrific child care facility. But there 
are a number of other--leave policies, flex-time, all those 
sorts of things.
    Congressman Wolf has asked, as you know, and I havejoined 
with him on a study to be done maybe short-term and long-term. I think 
he said in the next 60 days. But in any event, can you tell me whether 
or not you think we can accomplish something so Congressman Wolf will 
have, and I will have some information on how well we are doing, how 
much compliance we are getting by constituent agencies in dealing with 
these?
    Ms. Lachance. I think we can help you on a number of 
fronts, and, in fact, we have sent a letter up, I want to say 
either last night or today, to you and Congressman Wolf to see 
how would you want to proceed with this. There is a lot of 
information already on the shelves that we can pull together 
and give you some immediate information, if that is what you 
are looking for.
    Another thing we are proposing to do is, as we conduct 
oversight reviews on Federal agencies, include a factor on how 
well they are implementing the government's family-friendly 
policies, and we can start that literally tomorrow--well, 
Monday as we all come back to work. And then we have also 
proposed to you some longer term possibilities or options that 
you may choose to do. So we are committed to working with you 
on this and we will get it done in whatever way you think will 
best serve your needs.
    Mr. Hoyer. March 13. That would be the day. We have the 
letter. I have not read it yet. It is directed to Frank Wolf, 
as it should have been. I guess I have one myself. He has 
really been terrific on these issues. He cares a lot about them 
very sincerely.
    As you know, he is very concerned about families and about 
their security. He has done a terrific job on this and I am 
glad to join with him on this. But I will talk to him about 
this letter and by, hopefully, Tuesday we can get back to you 
and see what his thoughts are.
    Ms. Lachance. Let us know how would you like us to proceed.
    Mr. Hoyer. Thank you.

                         telecommuting centers

    Second question, Mr. Chairman, if I can, telecommuting 
centers. As you know, again, Congressman Wolf and I have both 
been ranking members on this committee; he, the ranking 
Republican; me, the ranking Democrat under Chairman Roybal, put 
$12 million in the pot for telecommuting centers. And we used, 
surprisingly enough, Maryland and Virginia as sites for this 
test. It was just random selection. But in any event, those 
sites have been very successful, some more successful than 
others in terms of utilization.
    The Waldorf site, as you know, is the most successful in 
the United States in terms of rated capacity. They are at about 
140 percent of rated capacity in Waldorf, which simply means 
that you expect to have certain vacancies in the work stations 
you have available and we hardly have any.
    Prince Frederick is different and around the country they 
are different, but the bottom line is and this is my question, 
some agencies obviously are more enthusiastic about 
participating in telecommuting than others. We have a 
hellacious computer problem in the Washington Metropolitan area 
and a lot of metropolitan areas throughout the country. 
Telecommuting is obviously very popular in the private sector, 
particularly the airline industry, the insurance industry and 
other industries that deal with telephone business, and it 
doesn't matter whether you are in Timbuktu or in the middle of 
Washington D.C., or New York or San Francisco, nobody cares 
where you are. They just want you to have a computer that will 
get the information and do the order and do the reservation and 
tell them the status of their insurance or whatever. The bottom 
line is where you sit is not the issue. And productivity, the 
private sector has found, can be monitored without the 
supervisor visually looking at you and having you proximate to 
them.
    I am of the view that we are not encouraging telecommuting 
enough in some agencies because of their managerial concern 
about supervision and productivity. Can you give me your 
thoughts on that and what efforts we are taking in concert with 
GSA, of course, that oversees the program to implement more 
fully telecommuting.
    Ms. Lachance. We are very committed to knocking down some 
of those barriers that you refer to. We are constantly 
promoting the effectiveness and productivity gains that can be 
made through telecommuting. We put out publications, hold 
fairs, conferences, different ways to break down some of those 
attitudinal issues that get in the way.
    We think we are making some progress, but as you say, it is 
different in every agency and every agency culture, so we are 
going to continue to pursue it. Family-friendly policies are a 
priority for this administration. My marching orders are clear 
from you and this subcommittee, so you can count on us to 
pursue this.
    Mr. Hoyer. Let me suggest, and I am going to take this 
suggestion myself, I have not told the Vice President about 
this, but when you think about the concept of Reinventing 
Government and reinventing the workplace and all being wired, 
this really falls in with his highway. The highway you want to 
be on now is the communications highway, not the concrete 
highway, if I can make that poor analogy. But I would think 
this would be something the Vice President's office might want 
to focus on as well, and I will talk to him about that. But you 
might want to----
    Ms. Lachance. We have had those discussions with him and he 
is very committed to it as is the National Performance Review 
staff. I think that there are some wonderful ways of looking at 
these problems that are emerging.
    I have heard Dave Barram, who is the Administrator at GSA, 
talk about the fact that at some time or another every employee 
is telecommuting when taking a business trip and calling in for 
messages, faxing things back and forth, or carrying a lap top. 
So I think we are making progress in the way people are looking 
at this issue and how they are looking at it.
    Mr. Hoyer. Last suggestion I would make, again, not a 
question, but one of the ways to convince managers to do 
something is to show them that other managers have been 
successful in doing it. If perhaps in coordination with GSA--I 
do not know whether staff knows if there has been a study. I do 
not know whether there has been a study of productivity gains 
that have occurred as a result of employees really being less 
stressed because the child is 5 minutes away as opposed to 35 
minutes away; that they are on the road for 10 minutes rather 
than an hour, and they have a lot less stress as a result of 
that. I really think this could be a very positive productive 
relationship for all concerned. I am into win-win. That is the 
way you really ought to do things, and I think this is a win-
win. But I think if we could show that to the managers in the 
Federal Government and they believe it, they will be much more 
likely to say to employees, surewe can reach that effort.
    We have a telecommuting site in Prince Frederick that is 
just getting started. Waldorf has been up and going, I guess, 
for 4 years now, maybe even 5 years--4 years, I guess. But such 
a study, I think, would be helpful to sell it to your other 
managers.
    Mr. Chairman, I do not have any other questions. If I have 
some questions that my staff thinks ought to be in the record, 
they will put them in the record. I know we will get good 
responses. I thank the chairman and thank Ms. Lachance for her 
leadership.
    Mr. Kolbe. Thank you very much, Mr. Hoyer. And thank you 
very much, Ms. Lachance, for you and your staff for being here 
today and for answering questions. We appreciate it very much 
and look forward to working with you.
    This subcommittee stands adjourned.
    [Questions for the record follow:]

[Pages 657 - 1114--The official Committee record contains additional material here.]















                           W I T N E S S E S

                              ----------                              
                                                                   Page
Barram, D.J......................................................   103
Bolden, Betty....................................................   897
Carlin, J.W......................................................   443
Elliott, L.A.....................................................     1
Erdreich, B.L....................................................   941
Fischer, D.J.....................................................   103
Lachance, J.R....................................................   617
Peck, R.A........................................................   103
Segal, P.N.......................................................   885
Swerdzewski, Joseph..............................................   892
Thomas, Scott....................................................     1









                               I N D E X

                              ----------                              
Federal Election Commission
                                                                   Page
    Commissioner Vacancies.......................................    25
    Compliance Program........................................... 3, 16
    Disclaimer Rule..............................................    22
    Electronic Filing............................................     4
    Fiscal Year 1999 Budget Request..............................     2
    Hoyer, Opening Remarks of Congressman........................    16
    Issue Advocacy...............................................    24
    Justice, Department of, Resources............................    26
    Justification, FY99 Congressional............................    56
    Kolbe, Questions Submitted by Chairman.......................    29
    Kolbe, Opening Statement of Chairman.........................     1
    Money Laundering.............................................    23
    Northrup, Questions Submitted by Representative..............    47
    Outreach Programs............................................    23
    Performance Plan, FY99.......................................    94
    Presidential Election Campaign Fund..........................    27
    Processing Reports...........................................     3
    Push Polls, Legislative Recommendation on....................    21
    Strategic Plan, FY 1998-2003.................................    82
    Thomas, Prepared Statement of Vice Chairman..................     5
    Thomas, Summary Statement of Vice Chairman...................     2
    Workload Increases...........................................    19
General Services Administration
    Agencies Not Paying Full Rent................................   132
    Barram, Prepared Statement of Mr.............................   107
    Barram, Summary Statement of Mr..............................   104
    Child Care...................................................   127
    Child Care Center In Central Islip Court Complex.............   128
    Child Care Centers In Courthouses............................   127
    Fiscal Year 1999 Budget Congressional Justifications.........   252
    Courthouse Construction......................................   142
    Contracts....................................................   251
    FCC Relocation...............................................   134
    Federal Agencies Request To Move Between Districts...........   130
    Federal Buildings Fund.....................................132, 144
    Federal Communications Commission Move To Portals II Building   156
    FTS 2001...................................................128, 139
    General Supply Fund..........................................   155
    Goodwill Games...............................................   125
    Government Performance And Results Act.......................   176
    Governor's Island............................................   124
    Hoyer, Questions Submitted by Congressman....................   180
    ICC/Connecting Wing/Customs Complex Rental Income............   135
    ICC/Connecting Wing Project..................................   135
    ICC/Connecting Wing/Custom Complex--Impact of Failure To 
      Complete...................................................   136
    Introduction.................................................   103
    Istook, Questions Submitted by Congressman...................   160
    Meek, Questions Submitted by Congresswoman...................   251
    Northup, Questions Submitted by Congresswoman................   176
    Overnight Package Delivery...................................   176
    Patent And Trademark Office (PTO)............................   160
    Policy And Operations........................................   149
    Printing And Duplicating Facilities..........................   180
    Procurement Review...........................................   168
    Procurement..................................................   165
    PTO Procurement Review.......................................   168
    PTO Alternatives Analysis....................................   166
    PTO Build-Out Costs..........................................   162
    PTO Moving Costs.............................................   165
    PTO Procurement..............................................   165
    PTO Rental Rates.............................................   160
    Rental of Space Account......................................   120
    Reprogramming for Rental of Space and Installment 
      Acquisitions...............................................   137
    Strategic Plan...............................................   410
    Support For Goodwill Games...................................   126
    Welfare To Work Initiative...................................   130
National Archives and Records Administration
    Archives II Space............................................   465
    Charters of Freedom Encasements..............................   464
    Electronic Access Project....................................   517
    Electronic Records...........................................   521
    General Records Schedule 20..................................   463
    Internal Revenue Service Records Policy......................   467
    Introduction.................................................   443
    National Historical Publications and Records Commission......   519
    National Archives Building Concept Design....................   464
    Records Classification/Declassification......................   465
    Summary Statement of Mr. Carlin..............................   444
    Theft of Documents...........................................   518
Office of Personnel Management (OPM)
    Agencies Excepted from Civil Service Laws....................   649
    Calverton National Cemetery Wage Grade Classification Review.   662
    Congressional Budget Justification, OPM......................   671
    Family-Friendly Policies.....................................   653
    Federal Equal Opportunity Recruitment Program................   661
    Federal Pay..................................................   647
    Financial Management.........................................   666
    Forbes, Questions Submitted for the Record by Representative.   662
    Government Performance and Results Act.......................   664
    Hoyer, Opening Remarks of Representative.....................   643
    Increased Use of Outpatient Care for Major Medical Procedures   658
    Istook, Questions Submitted for the Record by Representative.   661
    Kolbe, Opening Remarks of Chairman...........................   617
    Kolbe, Questions Submitted for the Record by Chairman........   657
    Labor-Management Partnerships................................   667
    Lachance, Introduction of OPM Director.......................   617
    Lachance, Statement for the Record of OPM Director...........   620
    Lachance, Summary Statement of OPM Director..................   618
    Management Training Programs.................................   658
    McFarland, Statement for the Record of OPM Inspector General.   637
    Meek, Questions Submitted for the Record by Representative...   664
    Northup, Questions Submitted for the Record by Representative   664
    Official Time................................................   661
    OPM Duties Following Downsizing..............................   646
    Payment for Annuitants' Health Benefits......................   646
    Payment for Annuitants' Health Benefits, Causes of Increase 
      in.......................................................647, 657
    Reduction in Personnel at OPM................................   645
    Retirement Open Season.......................................   643
    Telecommuting Centers........................................   654
    Year 2000 Computer Problem...................................   652
Committee for the Purchase from People Who Are Blind or Severely 
  Disabled
    Budget Justifications........................................   855
Federal Labor Relations Authority
    Federal Labor Relations Authority Budget Justifications......   902
    Prepared Statement of the Chair, Federal Service Impasses 
      Panel......................................................   885
    Prepared Statement of the General Counsel....................   892
U.S. Merit Systems Protection Board
    Merit Systems Protection Board Budget Justifications.........   947
    Prepared Statement of the Chairman, Merit Systems Protection 
      Board......................................................   941
Office of Government Ethics
    Office of Goverment Ethics Budget Justifications.............   965
Office of Personnel Management, Office of Inspector General
    Office of Personnel Management Budget Justifications.........  1027
U.S. Office of the Special Counsel
    Budget Justifications........................................  1079
U.S. Tax Court
    Prepared Statement by Chief Judge Mary Ann Cohen.............  1095
    U.S. Tax Court Budget Justifications.........................  1097