[Congressional Record Volume 140, Number 70 (Wednesday, June 8, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: June 8, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
              FEDERAL ACQUISITION STREAMLINING ACT OF 1994

  The PRESIDING OFFICER. Under the previous order, the hour of 10 a.m. 
having arrived, the Senate will now resume consideration of S. 1587, 
which the clerk will report.
  The legislative clerk read as follows:

       A bill (S. 1587) to revise and streamline the acquisition 
     laws of the Federal Government, and for other purposes.

  The Senate resumed consideration of the bill.
  Mr. HATFIELD addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Oregon, 
[Mr. Hatfield].


                           Amendment No. 1753

(Purpose: To provide for waivers of the requirements of the Davis-Bacon 
   Act with respect to certain Federal programs as such requirements 
                         relate to volunteers)

  Mr. HATFIELD. Mr. President, I ask unanimous consent that the Senator 
from Oregon, [Mr. Packwood], be included as a cosponsor of the 
amendment which I send to the desk and ask for its immediate 
consideration.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will report the amendment.
  The legislative clerk read as follows:

       The Senator from Oregon [Mr. Hatfield], for himself and Mr. 
     Packwood, proposes an amendment numbered 1753.

  Mr. HATFIELD. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the end of the bill, add the following new title:

   TITLE X--WAIVER OF THE APPLICATION OF THE PREVAILING WAGE-SETTING 
                       REQUIREMENTS TO VOLUNTEERS

     SEC. 1001. SHORT TITLE.

       This title may be cited as the ``Community Improvement 
     Volunteer Act of 1994.''

     SEC. 1002. PURPOSE.

       It is the purpose of this title to promote and provide more 
     opportunities for people who wish to volunteer their services 
     in the construction, repair or alteration (including painting 
     and decorating) of public buildings and public works funded, 
     in whole or in part, with Federal financial assistance 
     authorized under certain Federal programs that might not 
     otherwise be possible without the use of volunteers, by 
     waiving the application of the otherwise applicable 
     prevailing wage-setting provisions of the Act of March 3, 
     1931 (commonly known as the ``Davis-Bacon Act'') (40 U.S.C. 
     276a et seq.) to such volunteers.

     SEC. 1003. WAIVER.

       (a) In General.--The requirement that certain laborers and 
     mechanics be paid in accordance with the wage-setting 
     provisions of the Act of March 3, 1931 (commonly known as the 
     ``Davis-Bacon Act'' (40 U.S.C. 276a et seq.) as set forth in 
     any of the Acts or provisions described in subsection (d), 
     and the provisions relating to wages, in any federally 
     assisted or insured contract or subcontract for construction, 
     shall not apply to any individual--
       (1) who volunteers--
       (A) to perform a service for a public or private entity for 
     civic, charitable, or humanitarian reasons, without promise, 
     expectation, or receipt of compensation for services rendered 
     other than expenses, reasonable benefits, or a nominal fee 
     (as defined in subsection (b)), but solely for the personal 
     purpose or pleasure of the individual; and
       (B) to provide such services freely and without pressure or 
     coercion, direct or implied, from an employer;
       (2) whose contribution of service is not for the benefit of 
     any contractor otherwise performing or seeking to perform 
     work on the same project; and
       (3) who is not otherwise employed at any time under the 
     federally assisted or insured contract or subcontract 
     involved for construction with respect to the project for 
     which the individual is volunteering.
       (b) Expenses.--Payments of expenses, reasonable benefits, 
     or a nominal fee may be provided to volunteers described in 
     subsection (a) if the Secretary of Labor determines, after an 
     examination of the total amount of payments made (relating to 
     expenses, benefits, or fees) in the context of the economic 
     realities of the specific federally assisted or insured 
     project, that such payments are appropriate. Subject to such 
     a determination--
       (1) a payment for an expense may be received by a volunteer 
     for items such as uniform allowances, protective gear and 
     clothing, reimbursement for approximate out-of-pocket 
     expenses, or for the cost or expense of meals and 
     transportation;
       (2) a reasonable benefit may include the inclusion of a 
     volunteer in a group insurance plan (such as a liability, 
     health, life, disability, or worker's compensation plan) or 
     pension plan, or the awarding of a length of service award; 
     and
       (3) a nominal fee may not be used as a substitute for 
     compensation and may not be tied to productivity.

     The decision as to what constitutes a nominal fee for 
     purposes of paragraph (3) shall be made on a case-by-case 
     basis and in the context of the economic realities of the 
     situation involved.
       (c) Economic Reality.--For purposes of subsection (b), in 
     determining whether an expense, benefit, or fee described in 
     such subsection may be paid to volunteers in the context of 
     the economic realities of the particular situation, the 
     Secretary of Labor shall not approve any such expense, 
     benefit, or fee that has the effect of undermining labor 
     standards by creating downward pressure on prevailing wages 
     in the local construction industry.
       (d) Contracts Exempted.--For purposes of subsection (a), 
     the Acts or provisions described in this subsection are the 
     following:
       (1) The Library Services and Construction Act (20 U.S.C. 
     351 et seq.).
       (2) The Indian Self-Determination and Education Assistance 
     Act (25 U.S.C. 450 et seq.).
       (3) Section 329 of the Public Health Service Act (42 U.S.C. 
     254b).
       (4) Section 330 of the Public Health Service Act (42 U.S.C. 
     254c).

     SEC. 1004. REPORT.

       Not later than December 31, 1997, the Secretary of Labor 
     shall prepare and submit to the appropriate committees of 
     Congress a report that--
       (1) identifies and assesses, to the maximum extent 
     practicable--
       (A) the projects for which volunteers were permitted to 
     work under this title; and
       (B) the number of volunteers permitted to work because of 
     the compliance of entities with the provisions of this title; 
     and
       (2) contains recommendations with respect to Acts related 
     to the Davis-Bacon Act that could be addressed to permit 
     volunteer work.

  Mr. HATFIELD. Mr. President, in the few years before the 
Revolutionary War, volunteers were organized into military companies 
and trained to bear arms. These volunteers were called minutemen 
because they were ready to fight at a minute's notice. Although 
minutemen regiments were eventually dissolved when regular armies were 
formed, the defense of the United States still depends on an All-
Volunteer Army.
  I mention the minutemen of the Revolutionary War because the idea of 
voluntarism has been ingrained in our psyche before our country's 
inception. The ethic of civic responsibility, the spirit of community, 
and the belief in voluntarism have all been fundamental principles that 
have helped guide our country's evolution. Today, one only needs to 
visit the local soup kitchen, homeless shelter, hospital, or literacy 
center to find people who give of themselves daily, so that others may 
enjoy better and more fulfilling lives.
  Americans persist in their desire to affirm their sense of humanity 
and shared values, and I believe that most would agree that voluntarism 
plays a vital role in helping us meet these mores. That is why I am 
offering an amendment that I recently introduced as a freestanding 
bill, the Community Improvement Volunteer Act, to the Federal 
Acquisition Streamlining Act of 1994.
  As my colleagues know, the Davis-Bacon Act requires that those who 
work on federally assisted construction projects must receive the local 
prevailing wage. I support the Davis-Bacon Act and its protection of 
the working men and women of our country, however, over the years, I 
have been worried that its application in certain instances has been 
overly zealous.
  As a result, in 1992, I asked the Comptroller General of the United 
States to review the effect of the Davis-Bacon Act and its implementing 
regulations on the use of volunteers on federally financed or assisted 
construction projects. The study identified approximately 43 Davis-
Bacon-related acts, of which 5 currently permit either the Secretary of 
Labor or the Secretary of Housing and Urban Development to waive the 
prevailing wage requirements for volunteers. However, the study also 
identified a number of other related acts for which there was no 
specific authority for the use of volunteers.
  Mr. President, having reviewed both the Comptroller General's report 
and the types of construction permitted under the identified related 
acts, I believe there are additional construction programs that should 
have specific authority for the use of volunteers as a consequence of 
the confusion created in Philomath.
  The programs I have chosen to include in this amendment lend 
themselves to wide participation by local citizens, and have a very 
precise and significant social or humanitarian effect on a community.
  The amendment makes it clear that projects that would not be 
otherwise possible without the use of volunteers, can utilize 
volunteers for the construction of that project. Specifically, the 
purpose is to promote and provide more opportunities for people who 
wish to volunteer their services for humanitarian, civic, or community 
purposes.
  For the last several months, I have devoted a great deal of time to 
provide what I believe are the necessary protections in this amendment. 
Few would dispute my support for the Davis-Bacon Act, and I have no 
interest in undermining its basic intent. However, I do believe that 
some of the Davis-Bacon-related acts need to recognize or have some 
flexibility in order to permit nonprofit or similar entities to 
overcome some of the fiscal constraints that many of our urban and 
rural areas face.

  The amendment defines a volunteer in very narrow terms. A volunteer 
would be one who performs a service for a public or private entity for 
civic, charitable, or humanitarian reason, without the promise or 
expectation of compensation. Furthermore, a volunteer must not be 
pressured or coerced by any employer, and the volunteer's service 
cannot be done for the benefit of any contractor.
  Although the amendment would permit reasonable expenses like 
protective gear, out-of-pocket expenses, and meals, it would prohibit 
these expenses from being tied to productivity. Furthermore, the 
amendment would only allow volunteers to work on certain types of 
projects--those that would not otherwise be possible without the use of 
volunteers.
  Although the days of British colonialism and the need for minutemen 
are long over, there still are incalculable numbers of pressing issues 
that face our country. Daily, we hear of the nearly 37 million people 
who are uninsured or have little or no access to health care. By simply 
walking the street of any town or city in America, one can see people 
who have lost their way and have become homeless. We may be the freest, 
we may be the luckiest, and we may be the most prosperous country on 
the face of the Earth, but throughout the United States, there are 
continuing and pressing unmet public needs.
  Few would dispute the fact that if we, as a government, can make it 
easier for the public or local communities to address some of these 
unmet needs, the American people will be able to better serve members 
of their own community. By making it easier for an organization or 
local community to build a community or migrant health center, a 
library, a school, or housing for those who may not be as fortunate as 
we, we can continue to validate our shared values. Through this 
amendment, we can help to resuscitate in communities the breath of 
fresh air that comes with hard work and community spirit forged 
together to realize an otherwise impossible dream.
  Mr. President, let me summarize two examples that occurred in my 
State--and I am sure other Senators have had similar experiences--which 
give rise to this amendment.
  In 1990, the Portland Kiwanis Club decided they would renovate an 
antipoverty center as a project for the club. They got volunteers, and 
they contributed 190 hours for the rehabilitation of this center.
  Mr. President, because the antipoverty center had Federal moneys 
granted to it, the Department of Labor stated that the Kiwanis Club had 
to be reimbursed $3,000 for their labor because of the prevailing-wage 
requirements of the Davis-Bacon Act.
  We took this matter up with the Department of Labor because the 
Kiwanis Club did not want $3,000, and they had made this as strictly a 
contribution to the community. We were able to resolve this problem 
after I came to the floor and offered an amendment to the Cranston-
Gonzalez National Affordable Housing Act to permit volunteer workers on 
these humanitarian projects under the Community Development Block Grant 
Program and the public housing and section 8 assistance programs. That 
amendment was adopted by the Congress.
  More recently, we had a situation in a very small community, the 
timber-dependent town of Philomath. With the forestry crisis in our 
State, this community has been devastated. They decided to undertake a 
project to build a community library. When they found that they had 
difficulty in raising the money for its construction, the community 
turned to volunteer work to build it. But because the Library 
Construction Act of the Federal Government and the Federal moneys from 
that being utilized in this project, the Department of Labor said no, 
they could not build it with volunteer labor. We discussed it with the 
Department of Labor. Finally, because the city was the supervisor and 
not a private contractor, the Department made an interpretation that 
said, OK, you can go ahead and use volunteer labor.
  Mr. President, I am a supporter of the Davis-Bacon Act. I have voted 
to sustain it every time it has been challenged on the floor. This 
amendment does not amend the Davis-Bacon Act. Rather, it amends a 
number of construction acts that include funding for local projects of 
a humanitarian, civic, and educational nature.
  I have no intent of trying to take the Davis-Bacon Act apart or to 
weaken it in any respect. However, I do think that we have an 
obligation to provide flexibility. And in this flexibility, I am 
talking about the use of volunteer labor. We are not talking about 
building bridges. We are not talking about building nuclear plants. 
According to the GAO, there are 43 accounts in the Federal budget that 
provide for local construction which include the prevailing-wage 
provision of Davis-Bacon.
  What I am suggesting is that flexibility be given to these 
construction programs in which volunteer labor could be permitted. Let 
me enumerate the ones that I propose to include, not 43 of them, but 
only those relating to humanitarian, civic, and educational needs.
  I suggest that the Library Services and Construction Act be amended 
to provide for this waiver of the prevailing wages when using volunteer 
labor. I would also suggest this for the Indian Self-Determination and 
Education Assistance Act, particularly for Indian reservations, and for 
two sections of the Public Health Service Act which authorize 
construction and renovation of community and migrant health centers.
  That is all that I am suggesting here in this amendment. These are 
very worthy, humanitarian programs in which volunteer labor could be 
offered.
  So it seems to me that this really tries to encourage voluntarism, 
people giving themselves, their talents, and their skills to build 
stronger communities, for reaching out to the poor and those in need. I 
do not believe that our Federal laws should be so rigid and so 
inflexible that we cannot provide for a volunteer effort.
  I come from a part of the country where they still have old-fashioned 
barn raisings. The community gets together and helps to raise a barn or 
to build a house and what have you--civic centers, an antipoverty 
center, or library.
  I really do not understand why there should be any opposition. We 
talked to labor on this, and to our own Oregon labor organizations. 
They, of course, are very nervous about anything that relates to the 
Davis-Bacon Act. They are not leading any major opposition to this 
provision. They recognize the Philomath community library project and 
the project of the Kiwanis Club of Portland as worthy projects.
  I ask unanimous consent at this time that a section-by-section 
description of this amendment to this bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 Section-by-Section Summary of the Community Improvement Volunteer Act 
                                of 1994


                            section 1: title

                           section 2: purpose

       The purpose of this Act is to promote and provide more 
     opportunities for people who wish to volunteer their services 
     in the construction, repair or alteration, including painting 
     and decorating, of certain public buildings and public works 
     funded, in whole or in part, with Federal financial 
     assistance that would not otherwise be possible without the 
     use of volunteers, by waiving the application of the 
     otherwise applicable prevailing wage-setting provisions of 
     the Davis-Bacon Act of 1931.


                           section 3: waiver

       Waiver of the prevailing wage requirements:
       The requirement that certain laborers and mechanics be paid 
     the local prevailing wages in accordance with the Davis-Bacon 
     Act and applicable to the Davis-Bacon-related Acts under this 
     bill (Library Services and Construction Act, the Indian Self-
     Determination and Education Act, Migrant Health Centers and 
     Community Health Centers) shall not apply to an individual 
     who volunteers:
       Definition of a volunteer:
       (a) To perform a service for a public or private entity for 
     civic, charitable, or humanitarian reasons, without promise, 
     expectation or receipt of compensation for services rendered 
     other than expenses, reasonable benefits, or a nominal fee 
     (as described in the bill) but solely for the personal 
     purpose or pleasure of the individual;
       (b) To provide such services freely and without pressure or 
     coercion, direct or implied from an employer;
       (c) Whose contribution of service is not for the benefit of 
     any contractor performing or seeking to perform work on the 
     project;
       (d) Who is not employed at any time under the federally 
     assisted or insured contract or subcontract involved for 
     construction with respect to the project for which the 
     individual is volunteering.
       Definition of expenses:
       Payments of expenses, reasonable benefits, or a nominal fee 
     may be provided to volunteers if the Secretary of Labor 
     determines that in the context of the economic realities of 
     the project (which would have the effect of undermining the 
     labor standards by creating downward pressure on prevailing 
     wages in the local construction industry) that such payments 
     are appropriate. Reasonable expenses and benefits will be 
     made on a case-by-case basis and may include:
       (a) Uniform allowances, protective gear and clothing, 
     reimbursement for approximate out-of-pocket expenses, or for 
     the cost or expense of meals and transportation;
       (b) Inclusion in a group insurance plan (such as liability, 
     health, life, disability, or worker's compensation plans) or 
     pension plan or the awarding of a length of service award; or
       (c) A nominal fee cannot be used as a substitute for 
     compensation and must not be tied to productivity.
       Definition of economic reality:
       The Secretary of Labor shall not approve any payment of the 
     expenses or benefits which would have the effect of 
     undermining labor standards by creating downward pressure on 
     prevailing wages in the local construction industry.
       Contracts that are exempted for volunteers:
       (1) The Library Services and Construction Act;
       (2) The Indian Self-Determination and Education Assistance 
     Act;
       (3) Section 329 of the Public Health Service Act--Migrant 
     Health Centers;
       (4) Section 330 of the Public Health Service Act--Community 
     Health Centers.


                           Section 4. Report

       Requires the Secretary of Labor to submit a report to 
     Congress by December 31, 1997 that identifies and assesses:
       (a) The projects for which volunteers were permitted to 
     work under this bill;
       (b) The number of volunteers permitted to work due to this 
     bill;
       (c) Contains recommendations to other Davis-Bacon-related 
     Acts that could be addressed to permit volunteer work.

  Mr. HATFIELD. Mr. President, I am happy to answer any questions at 
this time.
  Mr. GLENN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Ohio.
  Mr. GLENN. Mr. President, I was originally concerned about the 
proposal that Senator Hatfield was going to make because I was 
concerned that it did get into some changes in Davis-Bacon. But, I am 
reassured that it is not an attempt to amend this Act. In fact, it is 
an attempt to really encourage voluntarism in this country, which we 
are very proud of. We are more a nation of volunteers than any nation 
in the world. In fact, that has been sort of the fabric of our whole 
society, that we help out in trying to do things on a volunteer basis.
  Also, the proposal by my distinguished colleague is very narrowly 
drawn. So it applies only to those narrow, core areas that he referred 
to.
  With those assurances which he made in his opening statement on this 
amendment, I would be glad to accept it on this side. I hope that 
Senator Roth will do the same on the other side.
  Mr. ROTH. Mr. President, I congratulate the distinguished Senator 
from Oregon for his proposal. It is a worthy one. It does promote 
voluntarism. I am glad to support it.
  The PRESIDING OFFICER. Is there further debate on the amendment? If 
not, the question is on agreeing to the amendment of the Senator from 
Oregon.
  The amendment (No. 1753) was agreed to.
  Mr. ROTH. Mr. President, I move to reconsider the vote by which the 
amendment was agreed to.
  Mr. GLENN. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. GLENN. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. GLENN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GLENN. Mr. President, I ask unanimous consent that on the 
upcoming amendment by Mr. Grassley, there be a time limit of 1 hour, 
equally divided, with no second-degree amendments to be in order, with 
the time controlled in the usual form.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.


                           Amendment No. 1754

    (Purpose: To amend the inspector general Act of 1978 to require 
              Inspectors General to employ legal counsel)

  Mr. GRASSLEY. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Iowa [Mr. Grassley] proposes an amendment 
     numbered 1754.

  Mr. GRASSLEY. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       Strike out the heading of title IX and insert in lieu 
     thereof the following:

                    TITLE IX--MISCELLANEOUS MATTERS

     SEC. 9001. LEGAL COUNSEL FOR INSPECTORS GENERAL.

       (a) Authority To Employ Counsel.--Section 3 of the 
     Inspector General Act of 1978 (5 U.S.C. App) is amended--
       (1) in subsection (d)--
       (A) by striking out ``, and'' at the end of paragraph (1) 
     and inserting in lieu thereof a semicolon;
       (B) by striking out the period at the end of paragraph (2) 
     and inserting in lieu thereof ``; and ''; and
       (C) by adding at the end the following new paragraph:
       ``(3) appoint a legal counsel who shall have the 
     responsibility for providing the Inspector General with legal 
     advice, including formal legal opinions.''; and
       (2) by adding at the end the following new subsection:
       ``(e) Each person appointed as a legal counsel to the 
     Inspector General of an establishment shall report to and be 
     under the general supervision of the Inspector General and 
     may not be required to report to or be subject to supervision 
     by, any other official or employee of the establishment. Only 
     the Inspector General may evaluate the performance of a legal 
     counsel for official purposes.''.
       (b) Absorption of Cost for Fiscal Year 1994.--In the case 
     of a department or agency referred to in paragraph (2), funds 
     available for fiscal year 1994 for the General Counsel of 
     such department or agency that would be expended for such 
     fiscal year for payment of the costs of the legal staff 
     (including support staff) made available by the General 
     Counsel of such department or agency to the Inspector General 
     of that department or agency on a permanent basis shall be 
     used for paying the costs for fiscal year 1994 for legal 
     counsel (including support staff for legal counsel) employed 
     by the Inspector General of such department or agency.
       (2) Paragraph (1) applies to the following departments and 
     agencies:
       (A) The Department of Defense.
       (B) The Department of Health and Human Services.
       (C) The Department of Transportation.
       (D) The Environmental Protection Agency.
       (E) The Federal Emergency Management Agency.

              TITLE X--EFFECTIVE DATES AND IMPLEMENTATION

       In the table of contents in section 2, strike out the item 
     relating to the heading of title IX and insert in lieu 
     thereof the following:;

                    TITLE IX--MISCELLANEOUS MATTERS

Sec. 9001. Authority of Inspectors General to employ legal counsel.

              TITLE X--EFFECTIVE DATES AND IMPLEMENTATION

  Mr. GRASSLEY. Mr. President, the first point I will make is this, 
because I think it is something everybody ought to be concerned about 
when you hear about an amendment that talks about hiring, and I want to 
make this point very clear: This amendment is going to change boxes on 
the table of organization in five departments--not the entire 
Government, just in five departments--and it will not cost the 
taxpayers $1, or it will not lead to the hiring of one more person. 
That is clearly my intent.
  As I have studied the situation, that is clearly possible because 
what is being done in these agencies, is now being done, but in a way 
that I think contravenes the goals of the Inspector General Act of 
1978. I want to make sure that we meet the intent of that in the five 
departments where it is not being met.
  It is being met in 21 out of 28 departments, and it is in the process 
of being met in two more departments. So basically we have a situation 
here where in five departments the inspector general does not have 
independent legal counsel. My amendment would give him independent 
legal counsel, but without spending 1 penny more of taxpayers' dollars, 
without hiring anybody else, and it would do it by having people that 
are doing this work now who are under the jurisdiction of the general 
counsel office. They would be like they are in the other 21 
departments. They would be working for the IG, so that they are truly 
independent. And that is the purpose of the IG, as you know.
  The IG is set up so that we have a situation where there is somebody 
that is not under the direction of the Secretary or the head of an 
agency, but it is over here in an independent way. So that if the 
taxpayers' money is not being spent wisely and policy is not being 
followed according to congressional intent, we have a person in that 
department who can blow the whistle and say that this is not quite 
right. Hopefully, just bringing this out into the sunshine as a fact 
will cause the administrators in charge to change policy, or at the 
very least, it is going to cause Congress to bring some changes.
  The Inspector General Act of 1978 authorizes each inspector general 
to hire all necessary personnel, including legal counsel. So you may 
ask: Why is my amendment needed? I want to explain what I just 
summarized in greater detail.
  There is some speculation behind my amendment. I want to be up front 
about that. That speculation is this--and I do not know exactly why 5 
agencies out of the 28 do not have independent counsel in their IG's 
office. But I think that the answer goes somewhat like this:
  The IG's who do have independent legal counsel, first of all, had to 
fight very hard within their agency to get it. We know that as a fact. 
Those without it do not have it because their agencies do not want them 
to have it. They want the IG to be somewhat dependent upon the agency 
as a whole, and they do that through legal counsel. They see, then, 
that the independent counsel is less of a threat.
  So this is where we are today, as I said. We have 28 major IG 
establishments in existence, and 21 have already hired independent 
legal counsel.
  Two more--the IG's at HUD and the U.S. Information Agency--are in the 
process of establishing independent legal counsel. So the movement is 
definitely in the right direction, but there is unfinished business. 
There are five important holdouts.
  Five IG's still rely on legal counsel provided by the general counsel 
at their parent agencies. The five IG's that do not have independent 
counsel are in the Department of Defense, No. 1. I will use the 
Department of Defense as an example where this is not going to cost the 
taxpayers $1, and it is not going to hire one more person.
  There are six lawyers from the general counsel's office assigned over 
here to the IG. But they work for the general counsel. So the IG does 
not have independent legal counsel, as they do in the other 21 agencies 
of Government.
  So if my amendment is adopted, in the Department of Defense--and I 
will not go into details for the other four agencies, including the 
EPA, FEMA, HHS, and the Department of Transportation, but those six 
people that are presently on the payroll will be on the payroll of the 
inspector general instead of on the payroll of the general counsel, 
because that is the way it is in 21 of the 28 agencies, and that is the 
way it is going to be in the U.S. Information Agency and the HUD 
agency. So there are only five left.
  In these five cases, now the IG's have an arrangement. They have 
forged unholy alliances with their counterpart general counsels. With 
these alliances, the IG's get access and support. But they surrender 
control to the agency lawyers. For the taxpayers, that is not a very 
good deal because the IG was set up to guarantee that there was frugal 
use of the taxpayers' money and that that law was executed as Congress 
intended, and the independence of the IG is important to make real that 
guarantee.
  Nor does it seem to me to square with the IG's oversight and 
investigative responsibilities under the IG Act. In fact, the alliances 
seem to invalidate the IG Act because independent legal counsel is 
important to get to our goal.
  The alliances are embodied in memorandums of understanding. That is 
within these five agencies.
  The memorandum of understanding documents dictate what the IG's can 
and cannot do in the legal arena in just these five Departments, not in 
the 21 Departments that have independent legal counsel.
  So this is how it works at DOD, but the setup at the other four 
agencies is essentially the same.
  The Department of Defense memorandum of understanding document was 
signed by Mr. Joseph Sherick, the first Department of Defense IG, and 
Mr. Chapman B. Cox, DOD general counsel. It is dated August 16, 1985.
  Mr. President, the memorandum of understanding of the DOD makes the 
general counsel the final arbiter or judge in any legal dispute between 
the IG and the agency lawyers.
  Mr. President, I want to read from this memorandum of understanding 
what it says about how disagreements are going to be handled, if there 
are disagreements, between the general counsel or the Department and 
the IG. From the memorandum of understanding:

       If there is a disagreement, the matter shall be referred to 
     the general counsel for resolution.

  That is outside the inspector general's office.

       The general counsel shall then review the different 
     positions and, in his sole discretion, issue a legal opinion.

  That is the end of the quote.
  If the IG disagrees with the opinion, then the IG may turn to his or 
her chief counsel for advice.
  That is fine and dandy. But, in practice, the IG's chief counsel is 
controlled by the Department of Defense general counsel. And, as I 
said, that is true not exactly the same way, but pretty much the same 
way, in those other four Departments that do not have the arrangement 
the other 21 Departments have.
  The Defense general counsel selects the IG's lawyer. The Defense 
general counsel evaluates the inspector general's lawyer, and the DOD 
general counsel pays the IG's lawyer.
  That arrangement does not give the inspector general enough room to 
maneuver on legal issues.
  I would like to take a hypothetical example: An official at DOD is 
accused of illegal activities or misconduct. The IG conducts an 
independent investigation--that is his job--and finds that the official 
involved violated the law. However, the attorneys at the agency might 
disagree with the IG's finding, as they almost always do, when a 
violation of law is involved.
  Once that happens, the inspector general at DOD is dead in the water.
  With this kind of setup, it is easy to understand why no one in 
Government is ever held accountable for anything. I have given more 
speeches on this floor this year on financial mismanagement in the 
Defense Department, I bet, than any other Senator has. And it is there. 
Even people who are going to be debating against my amendment today 
will have to admit that.
  The inspectors general were set up in 1978 to see that these things 
do not happen. Independent legal counsel, complete independence, is 
important to get this done.
  We cannot expect an IG to successfully investigate a Department if 
that Department has authority to control the outcome of the 
investigation. That just will not work.
  The alleged misconduct on the C-17 program and the advanced cruise 
missile contracts are real-life examples of how the memorandums of 
understanding do not work.
  The evidence uncovered by the IG suggested that Federal criminal laws 
and the Uniform Code of Military Justice may have been violated by 
senior military officials. The Anti-Deficiency Act was violated. That 
could be a class E felony.
  But the legal beagles put up a stonewall that stopped the inspector 
general cold in two instances. What followed were two Air Force 
reinvestigations and debunking operations.
  The IG recommended that disciplinary action be taken against senior 
officials. All that followed was a slap on the wrist. Then came 
recommendations for promotions for those involved. Only one person was 
forced to retire.
  I know my friend from Ohio, Senator Glenn, who chairs the 
Governmental Affairs Committee, has acted in the past to resolve 
conflicts between the IG's and general counsels at the Departments of 
Education and Labor.
  In these two Departments, the general counsels in both Agencies were 
actively blocking IG efforts to hire independent legal counsel.
  When Senator Glenn found out about it, he was pretty ticked off, as I 
remember, and fired off letters to those Departments.
  I would like to quote from one of his letters to the Secretary of 
Education, dated January 26, 1990, Secretary of Education Lauro O. 
Cavazos.
  Senator Glenn's letter was written in response to a complaint he had 
received from the IG at the Department of Education, Mr. James B. 
Thomas, Jr.

  This is an appeal for independent legal counsel at IG establishments, 
if I ever heard one, and I want to quote. I am quoting Senator Glenn:

       Mr. Thomas' letter demonstrates that the current 
     arrangement at the Department of Education compromises the 
     independence of his office, deprives the Department of 
     potentially valuable input from the OIG, and places the 
     attorneys in a conflict of interest situation, since they are 
     being asked to serve both the IG and the General Counsel, who 
     at times have competing interests and objectives.
  The thoughts of the distinguished chairman of the Governmental 
Affairs Committee, as expressed in that letter on this issue, are my 
own, and in his own words he sums up my rationale for my amendment.
  The memorandums of understanding undermine and may even compromise 
the IG's ability to render truly independent judgments on controversial 
procurement and investigative issues.
  The most sensitive issues usually boil down to a legal question.
  The memorandums of understanding put the general counsels in the 
driver's seat. The memorandums allow them to shape and control the 
legal issues that drive investigations. This puts them in a position to 
limit damage to their Departments. That is pretty much business as 
usual, and covers up, muddies the waters.
  The memorandums of understanding, it seems to me, for these five 
Departments, is clearly inconsistent with the intent of the Inspector 
General Act of 1978.
  I think this is a problem, and there is a consensus on the need to 
fix it.
  The House of Representatives Committee on Government Operations has 
spoken on the ``need for independent legal counsel for the IG's.''
  The President's Council on Integrity and Efficiency has spoken on 
this issue as well.
  Senator Glenn's work with the IG's at Labor and Education clearly 
indicates that he favors independent legal counsel for the IG's.
  The only disagreement, I think, is how do we get from here to there?
  Senator Glenn, I believe, favors resolving the IG/general counsel 
conflicts on a case-by-case basis as the need arises.
  Senator Glenn's work and approach has accomplished a great deal, to a 
point, but I think the process has been stalled.
  We still have five major IG's without independent legal counsel, and 
it looks as if these five Department heads are dead set against it, 
particularly the general counsel there.
  I think we need a set procedure in place that guarantees independent 
legal counsel for all IG's, following the intent of the 1978 
legislation.
  My amendment offers an effective remedy. First, it would require that 
each major IG establishment appoint independent legal counsel. Again, 
no new people hired; no new money appropriated. Just take the people 
that are assigned to the general counsel office and put them there 
where they need to be.
  Second, reform could be accomplished, as I said, at no additional 
cost. Existing personnel would remain in place. Their pay would simply 
be shifted from the general counsels' budget to the IGs' budgets.
  One way to further the cause of procurement reform is to have an 
effective watchdog. IG's are the most effective watchdog. An effective 
watchdog needs the right tools for the job. Independent legal counsel 
is essentially for getting the job done.
  So I ask you to support my amendment.
  Once again, particularly for the benefit of anybody who might be here 
from the Armed Services Committee, I know that this is an attempt by an 
outsider, a Senator from Iowa, to inject himself into what is good and 
bad for the Department of Defense.
  All I can say is that I will bet you that every one of the Senators 
speaking against my amendment today voted for the inspector generals to 
be set up in 1978. And I will bet you that they argued then that they 
should be independent.
  I want any of these Senators to know that we have 21 out of 28 
departments that have independent legal counsel in the IG's office. Two 
more are going to have it--HUD and the U.S. Information Agency.
  We have five that do not have it and one of those is the Department 
of Defense. Now, somebody is probably going to say this is going to 
cost a lot of money. It is not going to cost any money at all. There 
are six lawyers assigned from the general counsel's office to the 
inspector general's office. If that inspector general is going to be 
independent, he should have independent legal counsel.
  And I would suggest if you do not want the inspector general of the 
Department of Defense to be totally independent, to make sure that the 
taxpayers' money is spent wisely so things likes the C-17 debacle does 
not happen again, then maybe we ought to do away with the inspector 
general at the Department of Defense. But I do not think you want to do 
that. I think we have to make sure that our money is spent wisely, and 
I think this will be the way to do it.
  Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator has 12 minutes and 15 seconds 
remaining.
  Mr. GRASSLEY. I reserve the remainder of my time.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. GLENN addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Ohio 
[Mr. Glenn].
  Mr. GLENN. I yield myself such time as I may require.
  Mr. President, when Senator Grassley first talked to me about his 
amendment, I indicated to him that I was certainly concerned about some 
of the same things that he is dealing with in this amendment, and that 
I might well support it.
  However, I went back to it and looked at it in more depth, and we had 
communications with some of the people directly involved, such as the 
inspectors general at the Department of Defense and HHS. I have not 
talked to those who have smaller staffs--EPA, FEMA, and Transportation.
  We have some 61 IG's all across Government now. Those at DOD, EPA, 
FEMA, HHS, and Transportation are the only five that do not have their 
own independent staffs. DOD and HHS are big operations so they have a 
different requirement from most of the other 59 agencies that are very 
specialized and very specific in what their IG's do.
  DOD and HHS have large staffs. They deal with very broad and diverse 
matters and their staffs have to be more flexible than those of some of 
the other Departments.
  I disagree with Senator Grassley when he says that he is an outsider 
on this issue because the committees that are involved with this, 
particularly with DOD, are not committees on which he sits.
  I would say to Senator Grassley that no Senator here is an outsider. 
No Senator is an outsider when it comes to matters of efficiency and 
running our Government properly. I may have a big interest in some of 
the matters in committees on which the distinguished Senator from Iowa 
sits. And he obviously has taken one of the leading roles this year, as 
he says, in trying to root out some of the fat, fraud, waste, and 
abuse. He and I have discussed this on several occasion. We are moving 
in this area.
  Secretary Perry and Deputy Secretary Deutch are very much involved 
with trying to resolve some of the financial management difficulties we 
have had at DOD. They have assigned people to specific jobs and they 
are really trying to straighten things out. I have held I do not know 
how many hearings on matters that the Senator from Iowa is concerned 
about, on specific matters where we have brought out some of the waste 
and abuse and procurement difficulties that we have had in the past. We 
are trying our very best to get those ironed out.
  But there are two basic reasons why I rise to oppose this amendment 
today. In major agencies like this, we need two things: One, the number 
of people to investigate a series of particular items at any one time. 
In other words, the requirement in a big agency for IG personnel goes 
up and down. It is not static. In a major agency, the flexibility that 
is provided, as the inspector general of DOD points out in a letter 
that he sent to us, is essential. The other important thing is that the 
inspector general requires varying expertise in different fields from 
one time to another. And they can call on the parent agency to give 
them that kind of expertise.
  Now, they may be involved in one type of investigation at one time, 
an audit investigation at another time, and they can call on different 
numbers of people out of the general counsel's office.
  The Department of Defense has handled this by working out a 
memorandum of understanding, and it has worked very well. Of the IG's 
we have had over there since 1982, when the law was first put in, none 
has complained that their independence has been interfered with in any 
way. They have had this flexibility and they have had the ability then 
to call on broad expertise as different matters have come up. This has 
not been a problem.
  The Senator from Iowa also mentioned IG independence. I know from 
personally talking to the IG's. I meet with the whole group of them on 
occasion. They are fiercely independent. I do not know that anyone has 
ever brought charges that any of the IG's have been, in effect, co-
opted by the agency in which they serve. There has not been any 
evidence of that.
  Now, as to the dollars involved, this is not just a matter of saying 
``OK''. It seems to me that if they have to go to a different number of 
people by hiring their own counsel, then there is an increase in the 
dollars involved in this.
  There is one other issue that I think is very important. Right now, 
the IG's have complete authority to hire outside help and increase 
their permanent staff if they wish to do so. This is written into the 
law. If they feel their independence is being compromised in any way, 
shape or form, they have the authority to hire their own independent 
counsel and their own independent staffs.
  Now, if they did that with a large number of people and over a long 
period of time, obviously they would probably not be able to take that 
extra cost out of their own budget. But they have that authority right 
now.
  And so it just seems to me that this is a situation that is working 
well and that has been working independently and is flexible enough to 
take care of the investigative peaks and valleys that occur. The system 
as it exists allows the IG's to call on broad agency expertise as they 
need it. I just do not see that we need to change that situation right 
now.
  I appreciate what the Senator from Iowa is specifically trying to do, 
but I think the system has worked out very well. If we find the IG's do 
not have enough authority or enough people to do what they are doing, 
then perhaps we need to make some changes. But that is not the 
situation in which we find ourselves today.
  The Office of Management and Budget [OMB] has written us a letter--
Mr. Kelman, Administrator of the Office of Federal Procurement Policy 
within OMB, has written a letter strongly opposing this amendment and 
the reasons given are along the lines I have outlined here. I will not 
read the letter, but I ask unanimous consent it be printed in the 
Record at the end of my statement.
  The PRESIDING OFFICER (Mrs. Murray). Without objection, it is so 
ordered.
  (See exhibit 1.)
  Mr. GLENN. Madam President, I have another letter from the inspector 
general of the Department of Defense, in which he, too, says it is 
working well. He basically says the same thing that Mr. Kelman says, 
from the Office of Federal Procurement Policy.
  I have another letter opposing the amendment from the Department of 
Health and Human Services, in which one of the items that is mentioned 
is, ``Hiring in-house counsel would only add to the bureaucratic 
clearance process when specialized legal consultation is desired.''
  In an earlier part he says, ``We strongly believe that such a blanket 
mandate is unnecessary and ill-advised.''
  I ask unanimous consent those letters be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 2.)
  Mr. GLENN. For those reasons I rise to oppose the amendment. I fully 
appreciate what the Senator from Iowa is intending to do with this. His 
intentions are the same as mine, to get a more effectively and 
efficiently operating inspectors general group. We backed that group 
from its inception when it was placed in operation in 1982 with a 
limited number as an experiment. They worked so well over a 10-year 
period that I proposed expanding the IG's, and that legislation went 
through. We expanded the IG's to where they now encompass 61 different 
agencies and departments of Government and they are working very well.
  They look with great pride on the independence that they have. They 
are, I believe, operating without fear or favor. They have these 
memoranda of understanding that address issues between the IG and their 
parent agency. They work out the numbers of people they are going to 
need, and at the same time they have full authority to go outside and 
hire additional help if they need it. So I regret, knowing the 
intentions of the Senator from Iowa, I have to oppose this amendment 
but I do so and reserve the remainder of my time.

                               Exhibit 1

         Executive Office of the President, Office of Management 
           and Budget,
                                     Washington, DC, June 3, 1994.
     Hon. John Glenn,
     Chairman, Committee on Governmental Affairs, U.S. Senate, 
         Washington, DC.
       Dear Mr. Chairman: I understand that Senator Grassley has 
     introduced an amendment to S. 1587 requiring Inspectors 
     General to employ legal advisors within their own 
     organizations rather than receiving legal advice from their 
     respective Offices of General Counsel. The Administration 
     opposes such an amendment.
       The quality and independence of the legal advice provided 
     from the Office of General Counsel have been excellent in 
     assisting those Inspectors General in fulfilling their 
     statutory responsibilities. One of the advantages of the 
     existing relationship between the Inspectors General and 
     their respective Offices of General Counsel is that it 
     ensures that the full legal expertise of the Agency's lawyers 
     are available to the IGs. The expertise of the Offices of 
     General Counsel has proven invaluable in addressing broad and 
     diverse legal issues that arise in the course of conducting 
     Inspector General audits, investigations, and inspections 
     into agency programs and operations. The alliance between the 
     two organizations also helps convince management to consider 
     strongly the findings and recommendations of the Inspectors 
     General.
       As Inspectors General currently have the authority to hire 
     counsel within their organizations should they so desire, the 
     Administration believes that such an amendment would diminish 
     their authority and independence rather than augment it.
       Therefore, we recommend against any attempt to 
     legislatively mandate the manner in which an Inspector 
     General must obtain legal services.
           Very truly yours,
                                                    Steven Kelman,
                                                    Administrator.
                                  ____


                               Exhibit 2

                                                Inspector General,


                                        Department of Defense,

                                      Arlington, VA, May 23, 1994.
     Hon. Sam Nunn,
     Chairman, Committee on Armed Services, U.S. Senate, 
         Washington, DC.
       Dear Mr. Chairman: This is in response to a request from 
     the Committee asking for my views on a possible amendment 
     that would require Inspectors General to employ legal 
     advisors within their own organizations rather than receiving 
     legal advice from the Office of General Counsel. I am 
     strongly opposed to any such amendment.
       The Office of the Inspector General in the Department of 
     Defense has received its legal services from the Office of 
     General Counsel since its statutory creation in 1982. I 
     believe this is a sound and desirable arrangement which best 
     serves the needs of this office and note that none of the 
     three Inspectors General who have been appointed in the 
     Department of Defense has ever expressed any desire to modify 
     it. The quality and independence of the legal advice provided 
     to this office over the years has been excellent and 
     invaluable in assisting us in fulfilling our statutory 
     responsibilities. I recommend against any attempt to 
     legislatively mandate the manner in which an Inspector 
     General must obtain legal services.
       Without question, the Office of the Inspector General needs 
     objective and independent legal advice. To that end, the 
     relationship between the Office of the Inspector General and 
     the Office of General Counsel has been memorialized in a 
     Memorandum of Understanding that explicitly recognizes this 
     need and sets forth procedural protections to ensure that it 
     is met. The Memorandum of Understanding is enclosed.
       One of the advantages of the existing relationship between 
     the Office of the Inspector General and the Office of General 
     Counsel is that it ensures the full legal expertise of the 
     Department's lawyers is available to us. Such expertise is 
     invaluable in addressing the immensely broad and diverse 
     legal issues that arise in the course of conducting audits, 
     investigations, and inspections into the programs and 
     operations of the Department of Defense. However, as the 
     enclosed Memorandum sets forth, there are procedures to 
     ensure that the ability to seek legal assistance in no way 
     compromises the independent advice provided by our lawyers.
       Finally, we have found that working with the Office of 
     General Counsel often results in an alliance between our 
     organizations that helps convince management to concur in our 
     findings and recommendations. The relationship has been a 
     productive one, and we see no reason to change it. Because 
     Inspectors General currently have the authority to hire 
     counsel within their own organizations should they so desire, 
     we believe that an amendment that requires Inspectors General 
     to do so diminishes their authority and independence rather 
     than augmenting it. I believe the manner in which legal 
     services are obtained by an Inspector General should be left 
     to the discretion of the Inspector General, who is in the 
     best position to evaluate the needs of his or her office.
       Thank you for giving me the opportunity to comment on this 
     matter. If you need additional information, please call me or 
     Mr. John Crane, Office of Congressional Liaison, at (703) 
     614-0491.
           Sincerely,
                                           Derek J. Vander Schaaf,
                                         Deputy Inspector General.
                                  ____

         Department of Health and Human Services, Office of 
           Inspector General,
                                   Washington, DC, April 21, 1994.
     Hon. John Glenn,
     Chairman, Committee on Governmental Affairs, U.S. Senate, 
         Washington, DC.
       Dear Mr. Chairman: As you know, there is pending before 
     your Committee the bill, S. 1587, the ``Federal Acquisition 
     Streamlining Act of 1993''. I have learned that an amendment 
     will likely be offered to this bill that would require all 
     Inspectors General to obtain legal services exclusively from 
     an ``in-house'' staff, employed and paid by the Office of 
     Inspector General (OIG). We strongly believe that such a 
     blanket mandate is unnecessary and ill-advised.
       Like you, we are adamant that every Inspector General must 
     enjoy the services of truly independent and objective legal 
     advisors. Since the OIG regularly questions positions taken 
     by agency managers, it is critical that the legal advice 
     provided to the OIG not be tainted by allegiances between the 
     attorneys and those managers. However, I am convinced that 
     the Inspector General of the Department of Health and Human 
     Services (HHS) does secure expert and independent legal 
     advice from the agency Office of General Counsel. Hiring in-
     house counsel would only add to the bureaucratic clearance 
     process when specialized legal consultation is desired.
       At HHS, we have had a longstanding and very successful 
     relationship with the agency's Office of the General Counsel 
     (OGC). Currently, our OGC maintains a staff of 27 persons 
     devoted exclusively to providing legal services to the OIG. 
     The independence of this staff is ensured by a Memorandum of 
     Understanding between the Inspector General and the General 
     Counsel; a memorandum that provides for the Inspector 
     General's concurrence in the selection, retention, and 
     evaluation of senior officials of the office (see Enclosure). 
     Moreover, this agreement instructs the attorneys assigned to 
     the OIG to provide independent advice to the OIG, even when 
     the advice is contrary to the legal position of the 
     Department.
       In a Department like ours, with its vast array of diverse 
     and complex programs, it is important that attorneys working 
     for the OIG have had the opportunity for training and 
     experience gained through the Office of the General Counsel, 
     as well as the expanded ``career path'' opportunities that 
     this affiliation provides.
       I must emphasize that if circumstances were to change, and 
     we found that the independence of the OGC's legal advice had 
     been compromised, we already have ample authority to 
     establish our own in-house counsel; we need no statutory 
     amendment to ensure this outcome. However, we see no benefit 
     in severing our long and fruitful partnership with the Office 
     of the General Counsel. Worse, the proposal would have the 
     effect of requiring the OIG to absorb a staff of nearly 30 
     persons. I am deeply concerned about our ability to assume 
     this obligation given our current and prospective budgets.
       For these reasons, we are hopeful that the Inspector 
     General Act will be left intact, and will continue to permit 
     each Inspector General to exercise discretion in determining 
     how best to secure independent legal advice.
       Thank you for the invitation to provide these comments. If 
     you have any questions, please do not hesitate to contact me.
           Sincerely yours,
                                                 June Gibbs Brown,
                                                Inspector General.
                                  ____


   Memorandum of Understanding Between the Inspector General and the 
  General Counsel of the U.S. Department of Health and Human Services

       The Inspector General Act of 1978, Pub. L. 95-452, as 
     amended by Pub. L. 100-504 established the Office of 
     Inspector General (OIG) as an independent office within the 
     Department of Health and Human Services (the Department). The 
     OIG is responsible for providing objective oversight to 
     identify and make recommendations for preventing waste, fraud 
     and abuse in Department programs and operations, and to make 
     reports to the Secretary and the Congress on such activities. 
     The head of the OIG is the Inspector General.
       The Office of the General Counsel (OGC) is responsible for 
     providing the Department with the full range of legal advice 
     and counsel with respect to all the programs and activities 
     of the Department. The head of the OGC is the General Counsel 
     who is the principal legal officer for the Department and 
     reports to the Secretary.
       In order for the OIG to perform its full range of 
     responsibilities under the Inspector General Act, as amended, 
     as well as other duties delegated to it by the Secretary, the 
     OIG needs high quality, independent, and objective legal 
     advice. The OIG recognizes the expertise of the OGC in 
     providing legal services to the Department and considers it 
     advantageous to the OIG to receive legal advice from the OGC. 
     The purpose of this memorandum is to set forth the 
     relationship between the OIG and the OGC.


                       i. independence of the oig

       In accordance with the OIG's mandate to provide objective 
     oversight of Department programs and operations, the OIG 
     performs its activities independent of OGC review or 
     approval.
       These activities include but are not limited to:
       A. initiating or pursuing any audit, investigation or 
     inquiry;
       B. transmitting to the United States Department of Justice 
     or to any other law enforcement or investigative agency any 
     complaints, information, investigative reports or audit 
     reports in its possession;
       C. conducting investigations and audits, and the 
     determination of their direction and scope; and
       D. preparing reports and recommendations and submitting 
     them to the Secretary and the Congress.


      ii. availability of legal services to the inspector general

       The Office of the General Counsel will provide the OIG 
     legal advice and counsel,\1\ within the constraints of 
     available resources, including advice and counsel on such 
     matters as:
---------------------------------------------------------------------------
     Footnotes at end of memorandum.
---------------------------------------------------------------------------
       A. the proper interpretation of statutes, regulations and 
     policy directives governing the administration of the 
     Department's programs;
       B. investigative procedures and techniques, such as 
     subpoenaing documents;
       C. the interpretation of statutes applicable to the OIG; 
     and
       D. the legal implications and conclusions to be drawn from 
     audit and investigative material produced by the OIG.
       To ensure that adequate expert legal services are available 
     to the OIG, and that these services are provided in a manner 
     consistent with the statutory independence of that office, 
     the General Counsel shall retain a separate Inspector General 
     Division within the Office of the General Counsel in 
     Headquarters which will be responsible to provide legal 
     services to the OIG. In addition, legal services will also be 
     made available from the ten Regional Chief Counsels' offices 
     for legal services required for the OIG field operations. 
     There shall be a senior attorney in each region under the 
     direction of the Chief Counsel responsible for liaison with 
     the OIG in order to facilitate training and information 
     exchange.
       The Inspector General Division will be headed by an 
     Associate General Counsel who is a member of the Senior 
     Executive Service. The OIG will participate in establishing 
     the highly qualified list for that position, and interviewing 
     and candidates. The General Counsel will select the Associate 
     General Counsel with the concurrence of the Inspector 
     General.
       The Associate General Counsel for the Inspector General 
     Division shall be under the general supervision of the 
     General Counsel. However, the Associate General Counsel may 
     not be transferred, reassigned, provided additional duties, 
     or terminated without the concurrence of the Inspector 
     General. The position description and performance plan and 
     goals for the Associate General Counsel shall be executed by 
     the General Counsel with the concurrence of the Inspector 
     General. The General Counsel will seek the views of the 
     Inspector General in the evaluation of the Associate General 
     Counsel's performance and will consult the Inspector General 
     annually with respect to whether to award a bonus to the 
     Associate General Counsel. The Associate General Counsel will 
     be assisted by a deputy who is also a member of the Senior 
     Executive Service and whose selection is governed by the same 
     process as the Associate General Counsel. All the provisions 
     of this paragraph will apply to any Senior Executive Service 
     position added to the Inspector General Division. 
     Additionally, the General Counsel recognizes that the 
     Inspector General has statutory authority to retain Schedule 
     A attorneys without the approval of the General Counsel.
       The Inspector General Division shall have access to any 
     opinion(s) of the Office of the General Counsel, upon 
     request. Where a component of the Office of the General 
     Counsel, other than the Inspector General Division, proposes 
     to issue an opinion that relates to the authorities of the 
     OIG, a draft of the opinion should be shared with the IG 
     Division before issuance for its concurrence. Similarly, 
     where the IG Division proposes to issue an opinion on the 
     subject matter for which another OGC division has primary 
     responsibility, a draft of that opinion should be shared with 
     that division before issuance for its concurrence. The other 
     division shall review and provide whatever comments are 
     appropriate as promptly as possible. If there is disagreement 
     with OGC the matter shall be referred to the General Counsel 
     for resolution. The General Counsel shall then review the 
     legal opinions, and after consultation with the Inspector 
     General, shall issue the legal opinion for the Department. If 
     a Division of the Office of the General Counsel does not 
     respond to a request for an opinion within 30 days, the 
     request shall be forwarded immediately to the Deputy General 
     Counsel (Legal Counsel) for expeditious resolution of the 
     issue(s) involved.
       If the Inspector General disagrees with the legal opinion 
     of the Department, and requests legal assistance from the 
     Associate General Counsel, the Associate General Counsel and 
     the attorneys within the IG Division may provide whatever 
     legal assistance is required by the Inspector General to 
     carry out the responsibilities of the Inspector General Act. 
     Legal opinions rendered to the Inspector General by the 
     Associate General Counsel that conflict with the legal 
     position of the Department shall state that they are solely 
     the position of the IG Division.
       Although the Inspector General may seek and obtain the 
     advice of the General Counsel, under the Inspector General 
     Act the Inspector General is not bound by such advice, and is 
     free to disregard it.


 iii. availability of the office of inspector general to the office of 
                          the general counsel

       The Office of Inspector General shall, within the 
     constraints of available resources, assist the OGC in the 
     defense of an OIG or Department decision before an 
     administrative or judicial tribunal where the decision relies 
     upon an OIG audit or investigation. This will include, making 
     OIG staff and contractors available as witnesses, furnishing 
     relevant documents, executing affidavits, reviewing material 
     submitted by the parties to the proceedings; and with respect 
     to defense of OIG activities, paying the reasonable out-of-
     pocket costs of such defense (excluding any costs for 
     personnel of the Office of the General Counsel).


             iv. support of the inspector general division

       Except as provided for in Section III above, the support of 
     the OGC, Inspector General Division is the responsibility of 
     the Office of the General Counsel, i.e. all necessary support 
     shall derive from the OGC budget. The two parties recognize 
     this can not be fully accomplished until the FY '92 budget.


                       v. exchange of information

       The Inspector General in his discretion, and pursuant to 
     guidance and direction of the Department of Justice and rules 
     of the U.S. District Court, may keep the General Counsel 
     informed of investigations and inquiries initiated or 
     completed an any transmittals outside the Agency by the OIG 
     on the results of its activities.
       The General Counsel shall keep the Inspector General 
     informed of any communications between OGC and the Department 
     of Justice, or any other enforcement or investigative agency, 
     concerning any matter that has been or is the subject of 
     investigation or inquiry by OIG or which has bearing or 
     effect on OIG.
       Where the Inspector General determines that the subject 
     matter of any inquiry, investigation or task is of such a 
     nature that communication of its substance to the General 
     Counsel would impair or undermine the OIG's function, the 
     Inspector General may limit his communications to the IG 
     Division. Thereafter, the IG Division shall not communicate 
     any information received from the OIG, or the substance of 
     any advice or counsel provided by the IG Division to the OIG, 
     concerning such inquiry, investigation or task, without 
     specific authorization from the Inspector General.
       This Memorandum of Understanding is entered into 
     voluntarily by both the Inspector General and General 
     Counsel. It may be modified at any time by agreement of the 
     parties and may be terminated upon thirty (30) days prior 
     written notice by either party.
       This Memorandum of Understanding shall become effective 
     upon the date of signing by both parties and shall continue 
     until such memorandum is modified or terminated.
       Signed this 20th day of April, 1990.
     Richard P. Kusserow,
       Inspector General.
     Michael J. Astrue,
       General Counsel.
                                  ____



                               footnotes

     \1\It is recognized that legal advice and counsel with 
     respect to violations of Federal criminal law are provided 
     primarily by the Department of Justice, Criminal Division, 
     and the various United States Attorneys, and that legal 
     advice and counsel with respect to Federal civil actions may 
     be provided by the Department of Justice, Civil Division, and 
     the various United States Attorneys.
     \2\In accordance with OGC policy, the Associate General 
     Counsel may opt to use the alternative title of ``Chief 
     Counsel to the Inspector General.''

                Addendum to Memorandum of Understanding

       This memorandum is to clarify the Memorandum of 
     Understanding entered into between our offices on April 20, 
     1990 (MOU), to the extent that the MOU may affect the role of 
     the Associate General Counsel for the Inspector General 
     Division (AGC) under the Program Fraud Civil Remedies Act, 31 
     U.S.C. Sec. Sec. 3801-3812 (PFCRA).
       PFCRA establishes an administrative remedy for false or 
     fraudulent claims or statements made or caused to be made to 
     this Department. PFCRA vests the Inspector General with the 
     duties of the ``Investigating Official,'' to refer PFCRA 
     cases to the Department's ``Reviewing Official,'' for review 
     prior to reference of those cases to the Department of 
     Justice. By regulation, the General Counsel exercises 
     authority in the Reviewing Official. The regulation states:
       Reviewing Official means the General Counsel of the 
     Department or his or her designee who is--
       (a) Not subject to supervision by, or required to report 
     to, the investigating official;
       (b) Not employed in the organizational unit of the 
     authority in which the investigating official is employed; . 
     . .

     45 C.F.R. Sec. 79.2. This responsibility was delegated to the 
     AGC on April 15, 1988.
       Our MOU provides, inter alia, that the AGC, ``shall be 
     under the general supervision of the General Counsel.'' 
     However, the Inspector General has concurrence authority with 
     respect to the position description and performance plan and 
     goals for the AGC, as well as the AGC's selection, 
     termination, etc. Further, the General Counsel must ``seek 
     the views'' of the Inspector General with respect to the 
     evaluation of the AGC, and will ``consult'' with the 
     Inspector General regarding bonuses for the AGC.
       In order to ensure that the terms of the MOU do not disable 
     the AGC from serving as the PFCRA Reviewing Official, we 
     agree as follows. The AGC is supervised solely by, and 
     reports solely to the General Counsel. Further, with respect 
     to the AGC's role as the PFCRA Reviewing Official, the 
     duties, performance, and tenure of the AGC shall not be 
     subject in any manner whatsoever to concurrence, non-
     concurrence, consultation or other expression of views by the 
     Inspector General.
       Signed this 18th day of July, 1990.
     Richard P. Kusserow,
       Inspector General.
     Michael J. Astrue,
       General Counsel.

  The PRESIDING OFFICER. Who yields time?
  Mr. THURMOND addressed the Chair.
  The PRESIDING OFFICER. Who yields time to the Senator from South 
Carolina?
  Mr. GLENN. I yield 4 minutes to the Senator from South Carolina.
  Mr. THURMOND. Madam President, my good friend, Senator Grassley, has 
proposed an amendment that would give the agency inspectors general 
complete control over the attorneys who provide that office with legal 
advice. Senator Grassley has been a long time supporter and friend of 
the inspectors general and I believe he intends this to be something to 
assist them--something that would improve their independence and 
operation. I join Senator Grassley in his high regard for the 
inspectors general, but I believe his amendment will neither promote 
independence nor assist operations.
  I believe quite strongly in the old saying, ``If it isn't broken, 
don't fix it.'' The deputy inspector general of the Department of 
Defense, Mr. Derek J. Vander Schaaf, provided the Senate Armed Services 
Committee with an opinion of Senator Grassley's amendment on May 23, 
1994. In his letter, Mr. Vander Schaaf voiced strong opposition to 
changing the current arrangement. He believes the system in place 
works; that it provides him far more flexibility than would Senator 
Grassley's amendment and the proposed amendment would do nothing to 
improve the operations of the IG.
  Let's review the facts:
  First, the deputy inspector general in the Defense Department, who is 
also the acting inspector general, does not want a change to the 
system.
  Second, the IG currently has control of general counsel legal assets 
under an agreement that has been in effect for nearly as long as there 
has been an inspector general at the Department of Defense.
  Third, the IG office under existing agreements, can use the very fine 
legal advice provided by the general counsel's office and can also hire 
independent counsel if he or she so desires.
  Fourth, no person appointed to the position of inspector general has 
ever expressed the slightest desire to modify the existing system.
  Fifth, the current arrangement tends to build a stronger Department 
of Defense.
  The Senate has enough to do fixing things that are broken; there is 
no good reason to fix something that is working extremely well. For 
these reasons, I oppose the Grassley amendment.
  The PRESIDING OFFICER. Who yields time?
  Several Senators addressed the Chair.
  Mr. GLENN. Madam President, I yield the chairman of the Senate Armed 
Services Committee 5 minutes.
  Mr. NUNN. I thank my friend from Ohio.
  Madam President, the Senator from Iowa has been a champion of an 
independent IG, and I understand full well his concern in this area. 
But I really hope he will look carefully at the arguments against this 
amendment.
  I do not think anyone questions the IG in the Department of Defense, 
the Deputy IG, Derek Vander Schaaf, in terms of his independence. He 
makes it very clear in the letter Senator Glenn has already put in the 
Record that he believes this would reduce his overall authority and 
flexibility if it is passed. Right now the essence of the reasons I 
oppose this amendment is he already has the authority to go outside and 
get independent counsel if he chooses to. This amendment compels him 
to.
  So, rather than increase the authority of the IG, it restricts his 
authority and it requires him to not use DOD general counsel even if 
they are the best qualified, even if they are the best prepared, even 
if he has total confidence in them. So this is not an enhancement of 
the IG authority, it is a diminishing of the IG authority, and it is 
compelling him to accept certain legal counsel as outsiders rather than 
to have his own choice.
  If one believes the IG is not independent to begin with, and that he 
is already cowed by their authority and he will not use this authority 
and he is going to use general counsel even if it does not make sense 
or if they threaten his independence, then that Senator should vote for 
the Grassley amendment. But if one believes basically the IG wants to 
be independent, has every ability to be independent--the IG can get his 
own counsel any time he needs to get his own counsel--and if you listen 
to the IG's we have heard from and listen to what they are saying 
carefully, I think one would vote against this amendment.
  I just would use the remainder of my time to read the final, bottom 
line of the letter from Derek Vander Schaaf, who is the deputy 
inspector general of the Department of Defense. He says, quoting his 
final paragraph that Senator Glenn has put in the Record:

       Finally, we have found that working with the Office of 
     General Counsel often results in an alliance between our 
     organizations that helps convince management to concur in our 
     findings and recommendations. The relationship has been a 
     productive one, and we see no reason to change it. Because 
     Inspectors General currently have the authority to hire 
     counsel within their own organizations should they so desire, 
     we believe that an amendment that requires Inspectors General 
     to do so diminishes their authority and independence rather 
     than augmenting it. I believe the manner in which legal 
     services are obtained by an Inspector General should be left 
     to the discretion of the Inspector General, who is in the 
     best position to evaluate the needs of his or her office.

  Madam President, I think that says it all. I think Senator Thurmond 
summed it up well when he said, ``If it isn't broken, don't fix it.''
  We have enough problems around here to fix that really are broken. 
When we have one that works and is working well according to the people 
who have to administer it, then I think we ought to let it alone.
  So I believe the situation now is one that works and I believe we 
ought to let it alone and therefore I urge we not vote for the Grassley 
amendment.
  I yield the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRASSLEY. I yield 3 minutes to the Senator from Delaware.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Madam President, I rise in support of the Grassley 
amendment. As one who was involved in the legislation creating the IG 
back in 1978 and was particularly involved in the creation of an 
independent IG for the Department of Defense, at which time I was 
chairman of the committee, I am a strong believer that the independence 
of the IG is of critical importance.
  I notice that out of the 28 Offices of Independent Inspector General, 
21 of them hire their own counsel. I think that underscores the 
importance of the independent IG having independent counsel.
  The thing that particularly concerns me and the question of 
independence is the memorandum of understanding between the inspector 
general and the general counsel of the U.S. Department of Defense. In 
that memorandum, it is made clear that whenever the IG requests legal 
advice from the Office of General Counsel, the ultimate determination 
of a legal opinion is solely the matter of the general counsel. It says 
specifically in the memorandum:

       If a legal opinion in response to a request by the 
     inspector general is being prepared by other than the 
     assistant general counsel, it shall be submitted to the 
     assistant general counsel who may express his views thereon. 
     If there is disagreement, the matter shall be referred to the 
     general counsel for resolution. The general counsel shall 
     then review the different positions and, in his sole 
     discretion, issue a legal opinion.

  The language that particularly bothers me is language that says the 
general counsel shall then review the different positions and, in his 
sole discretion, issue a legal opinion. Yes, the independent inspector 
general can still request legal assistance from the assistant general 
counsel or, if he chooses, go outside for legal advice, but the fact is 
that under this agreement, the general counsel is placed in the 
critical position of being the arbiter of legal advice.
  I think the success of the inspector general depends upon its 
independence, upon its perception of being independent, and I believe 
that the amendment proposed by the distinguished Senator from Iowa 
ensures the independence of that advice.
  For that reason, I am pleased to support the amendment of Senator 
Grassley.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRASSLEY. Madam President, I assume I have 7 minutes left. Is 
that right?
  The PRESIDING OFFICER. The Senator from Iowa controls 7 minutes 55 
seconds.
  Mr. GRASSLEY. Madam President, first of all, I thank the Senator from 
Delaware for his support. I thank Senator Glenn for his kindnesses 
during many weeks of our talking about this issue. I wish I had his 
support in the final analysis, but I understand where he is coming 
from. And even though he cannot support me on this, I want to say this 
to everybody not only in Iowa but the entire country, that he has been 
very cooperative and very much a leader in trying to not only help me 
but, on his own initiative, to take care of some of these problems.
  I would like to take a little while to explain how I was drawn into 
this issue because I think it will help illustrate for my colleagues 
some of the problems I have with the existing situation.
  Last year, I was involved and I also had my staff very deeply 
involved with talking to the Department of Defense officials about the 
qui tam issues. In preparation for some of the meetings, the IG's 
office was asked to assemble some data on the voluntary disclosure 
program that is involved in the qui tam legislation that I helped pass 
in 1986.
  We are all aware that the Department of Defense IG supports the qui 
tam legislation. It has brought $1 billion--almost $1 billion, I should 
say--into the Federal Treasury since 1986. But during that meeting, the 
IG's attorneys showed a hostility toward qui tam. Of course, that 
sounded more like DOD talking rather than the inspector general, 
because I know the inspector general believes it works.
  The name of one of the IG attorneys who made the remarks about qui 
tam was Mr. Kevin Flanagan, Esq. He said that that was his boss' 
position. So one of my staff members, while obviously scratching his 
head over this situation, asked who his boss was, and Mr. Flanagan 
responded that it was the Department of Defense general counsel, not 
the inspector general, but the general counsel, outside of the Office 
of Inspector General.
  Simply that explained it. Mr. Flanagan's business card read: 
``Department of Defense, Office of the Inspector General.'' Nowhere on 
his card was there a reference to the general counsel's office, but his 
arguments were those of the Defense Department's general counsel.
  All I can say is you just have to figure it out; when you are 
responsible to somebody else and you take a very unusual course of 
action that does not follow the company line, you know where your 
loyalty is going to be. It is going to be not with that independent 
inspector general, it is going to be out there with the political 
control of the Department, because, Madam President, the memorandum of 
understanding makes the general counsel the final arbiter or judge in 
any dispute between the agency's lawyers and the inspector general.
  I spoke about the six attorneys that are on the IG legal staff. These 
people are physically located within the IG's office building. But we 
discovered that these six lawyers do not really belong to the IG. They 
are really Office of the Secretary of Defense employees. OSD, of 
course, is the boss, the boss office. The six attorneys occupy Office 
of Secretary of Defense general counsel manpower spaces. They belong to 
the Department of Defense general counsel. They are paid for by the 
Department of Defense general counsel. They are on the Office of 
Secretary of Defense payroll. The general counsel evaluates the 
performance of the six and decides who gets promoted. In reality, these 
six IG attorneys are simply just assigned by the general counsel to 
support the Department of Defense IG.
  Madam President, I think Mr. Flanagan said it all when he said that 
the general counsel was his boss. My concern is this: How can the IG be 
truly independent if he or she must depend on the Department of Defense 
general counsel for legal advice? It seems to me that this is 
counterintuitive. It is actually very oxymoronic.
  No one in this body will disagree that it is essential for the IG to 
be independent. So then why would we make an exception, an exception 
that clearly detracts from that independence? Most of the difficult 
investigative and contract-related issues that the IG's have to wrestle 
with boil down to legal questions. The present arrangement puts the 
general counsel at DOD, rather than the inspector general, in a 
position to shape very important legal issues and, in the end, that 
means the ability to finally and definitively control the outcome of an 
investigation by the inspector general.
  In my view, this is an unhealthy arrangement. It is not conducive to 
independence. It is not consistent with the IGA. It does not give the 
IG's enough room to maneuver on legal matters, and any letters that we 
have from any IG to the contrary notwithstanding, because what would 
you expect them to say when they rely upon these people for help? And 
it is not going to be any other way unless we make the changes. This is 
a problem that needs to be addressed. My amendment will address it 
without costing the taxpayers a single nickel.

  I wish to repeat, my amendment would not cost the taxpayers a penny. 
It would simply change the chain of command for the IG's lawyers from 
the general counsel of the agency to the inspector general. It would 
preserve total independence at the IG.
  I reserve the remainder of my time and yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. GLENN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Ohio.
  Mr. GLENN. How much time do I have remaining?
  The PRESIDING OFFICER. The Senator from Ohio controls 12 minutes.
  Mr. GLENN. Madam President, I will reserve the remainder of my time.
  Does the Senator wish any more time?
  Mr. GRASSLEY. Madam President, how much time do I have?
  The PRESIDING OFFICER. The Senator from Iowa controls 1 minute 19 
seconds.
  Mr. GRASSLEY. Was the Senator going to yield back his time?
  Mr. GLENN. I just had about 4 or 5 minutes.
  Mr. GRASSLEY. I reserve the remainder of my time.
  Mr. GLENN. If the Senator wishes more time, I will yield him some of 
my time.
  Mr. GRASSLEY. I thank the Senator.
  Mr. GLENN. There may be other people who wish to come to the floor 
and speak on this, so I will not yield back my time quite yet.
  Basically, it comes down to this: The IG's have flexibility now 
within their agency or department to accommodate more or fewer people 
to perform the work load they find themselves facing.
  The other issue is, with their current setup, they have the ability 
to call upon a broad range of people, depending on what expertise is 
needed, without having to keep inflated, big staffs in place all the 
time.
  The IG's have not complained about this situation themselves, nor 
have we seen any indication that the IG's have been preempted by their 
particular departments. There is no question of that. The IG's normally 
exhibit a very fierce independence. They are independent inspectors 
general, and they take great pride in that independence.
  The final point to be made on this is that right now the IG's have 
the full ability to hire outside counsel if they wish to do so.
  And so it seems to me that while this is an attractive proposal put 
forward by the distinguished Senator from Iowa, I think it would be a 
wrong move. There is no evidence that any of the IG's have had their 
independence compromised by the current arrangements. We have 61 IG's 
across Government. Five of these agencies or departments have chosen to 
work out a memorandum of understanding with the agencies they serve, 
and they feel it has been working well. Three of these are Cabinet-
level agencies: the Department of Defense, HHS, and Transportation. EPA 
and FEMA, as separate agencies, also have IG's that have operated 
through the counsel of their particular agency.
  So for all the reasons given here today I rise to oppose and at the 
appropriate time will move to table the proposal by the distinguished 
Senator from Iowa.
  I would only say in closing that I do hate to oppose this because I 
know how Senator Grassley has worked on this issue. There is no one 
outside the committees directly involved who has worked any harder on 
matters involving defense financial matters. They are arcane, complex, 
and hard to understand, and he has taken the time to really go into 
them, going back to the days when we worked to get the infamous M 
accounts eradicated once and for all. They sort of acted as a big slush 
fund in the Defense Department. So we got that changed.
  Then we had a number of hearings that pointed out areas where money 
was being paid out where no bills had been sent in, and they went to 
work and got that corrected. That is about as sloppy a business 
practice as anyone could imagine. The Senator from Iowa was involved 
with that also, as well as many others.
  I congratulate him again on his work in this area. I hate to have to 
oppose this amendment, but for the reasons I gave, I do so.
  If there is anyone else listening who wants to speak on this, we do 
have a little time remaining.
  How much time do I have remaining on this?
  The PRESIDING OFFICER. The Senator from Ohio has 7 minutes 27 seconds 
remaining.
  Mr. GLENN. Does the Senator from Iowa need any additional time? I 
will yield additional time on this side if he needs additional time.
  Mr. GRASSLEY. Put in a quorum call.
  Mr. GLENN. I suggest the absence of a quorum, with the time to be 
taken equally off both sides.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. GRASSLEY. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. Madam President, I ask for the yeas and nays on my 
amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  Mr. GRASSLEY. Madam President, I yield myself such time as I have 
remaining. I would use that time, Madam President, kind of in a way of 
summary but speak specifically to a question my distinguished 
colleague, Senator Thurmond, raised as he tried to explain that there 
is no problem here and if it is not broke, why try to fix it.
  My feeling that it is broke and the need for independent counsel 
comes from years of work with audit and investigative reports from 
inspectors general, not only at the Department of Defense but a lot of 
different inspectors general. I do not think we pay enough attention to 
these audit reports and investigative reports that show where 
taxpayers' money is wasted and public policy set by Congress is not 
being followed.
  It seems to me that we have a responsibility, if we are going to make 
the IG reports effective, to read them, study them, and bring about the 
change that he or she suggests. The bottom line is that we are going to 
encourage the inspectors general to do their job in a better way, and I 
cannot help but read these reports and see a lot wrong because I do not 
see changes.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. GRASSLEY. Could I have 1 more minute, please.
  Mr. GLENN. I yield the Senator 3 minutes of my time.
  Mr. GRASSLEY. I thank the Senator.
  After reading these reports and asking myself have changes been made 
as a result of these reports, changes have not been made. I do not know 
whether it is a fault of the Congress, a fault of the head of the 
Department, or both. It probably is both.
  It cannot help but discourage inspectors general as they do their 
work. But it does not justify the expenditure of money at the 
inspectors general's offices if we do not follow through.
  So I see so much waste. I see, more importantly, no accountability 
when something is blatantly wrong, blatantly exposed, sometimes even 
violation of law, things that would fall into the category of felonies, 
not the proper follow through, all directly related to issues that are 
brought up by inspectors general in their reports. I guess I spent most 
of my time on the Department of Defense. But that tells me that things 
are not right, that they need to be changed.
  In a sense, I would challenge my friend from South Carolina that 
things are broke. I do not say entirely broke because the very good 
inspector general of the Department of Defense does very good work. I 
know he has been quoted as saying he does not need the help of my 
particular amendment.
  But I think that we have a pattern in inspector general offices of 21 
out of 28 major agencies, and two more moving in that direction, for 
this. It seems to me that proves it works better that way and that we 
should move in that direction.
  Again, this is not a total solution towards the major problem that I 
just spelled out of audit reports and their recommendations not being 
followed. But I think this would help in some small way for those 
inspectors general who say they are happy with the existing situation. 
These cozy little arrangements that are made in these few departments 
probably work for them. But when an inspector general really needs to 
go for the jugular to point out something that is really wrong, I guess 
as a taxpayer, as a Member of the Senate with constitutional oversight 
responsibilities, I want to know that the inspector general has the 
authority and the independence to carry it out.
  I yield the floor.
  Mr. GLENN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Ohio has 1 minute 50 seconds 
remaining.
  Mr. GLENN. I yield the remainder of my time.
  I ask unanimous consent that the amendment by the distinguished 
Senator from Iowa be set aside pending further amendments.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GLENN. I believe the agreement on when votes will occur this 
afternoon is still being worked out.
  Madam President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. CONRAD. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GLENN. Madam President, I ask unanimous consent that on the 
upcoming amendment by Senator Conrad there be a 30-minute time limit 
with no second-degree amendments, the time limit to be evenly divided 
and in the usual form as to allocation of time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CONRAD addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota is recognized.


                           Amendment No. 1755

(Purpose: To clarify that, under covered contracts, entertainment costs 
               are not allowable under any circumstances)

  Mr. CONRAD. Madam President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from North Dakota [Mr. Conrad], for himself, 
     Mr. Grassley, Mr. Roth, and Mr. Sasser, proposes an amendment 
     numbered 1755.

  Mr. CONRAD. Madam President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 438, after line 25, insert the following:

     SEC. 2192. UNALLOWABILITY OF ENTERTAINMENT COSTS UNDER 
                   COVERED CONTRACTS.

       Not later than 90 days after the date of the enactment of 
     this Act, the Federal Acquisition Regulatory Council shall 
     amend the cost principle in the Federal Acquisition 
     Regulation that is set out in section 31.205-14 of title 48, 
     Code of Federal Regulations, relating to unallowability of 
     entertainment costs--
       (1) by inserting in the cost principle a statement that 
     costs made specifically unallowable under that cost principle 
     are not allowable under any other cost principle; and
       (2) by striking out ``(but see 31.205-1 and 31.205-13)''.

  Mr. CONRAD. Madam President, in 1991, in reviewing the inspector 
general's reports of the Pentagon, Senator Sasser and I discovered a 
pattern of abuses by defense contractors that raised serious questions 
about how taxpayer dollars were being used by some of those defense 
contractors. We discovered abusive practices that were wasting, we 
thought, millions and potentially even billions of dollars.
  As a result of those IG reports, Senator Sasser and I requested that 
the General Accounting Office perform a series of studies and issue a 
report to tell us its findings.
  Madam President, the GAO initially examined six small defense 
contractors. In November 1992, GAO issued a report that was very 
troubling. Let me just discuss a few of the GAO findings.
  In its report, the GAO said that the Defense Contract Audit Agency 
had discovered almost $1 million in questionable and unallowable costs. 
But in addition to that, the GAO questioned $2 million more in overhead 
costs that were expressly unallowable or questionable. Among the items 
found by GAO that are expressly unallowable under the law which were 
included in contractor overhead submissions were personal use of 
company cars, personal use of a 46-foot company boat, money for 
advertising and trade shows, and scholarships for children of 
employees. It did not end there. Hundreds of thousands of dollars and 
millions, perhaps even billions, of dollars were being squandered of 
taxpayers' money on costs that were never intended to be covered by 
taxpayers.
  Madam President, we found some interesting items, such as $6,000 for 
Boston Red Sox tickets billed to the taxpayers of this country by 
contractors.
  Nobody likes baseball more than I do. I watch baseball whenever I 
have the opportunity. But I do not bill it to the taxpayers, and I do 
not anticipate that the taxpayers want to be paying for baseball 
tickets for defense contractors. Nor do I think they want to be paying 
for tickets to Boston Celtics games, or Christmas parties, or the 
rental of schooners--where a one-time rental is $10,000--billed to the 
taxpayers of this country.

  Madam President, again, it did not end there. We found business 
travel that had nothing to do with business. There was so-called 
business travel that did nothing to advance the defense interests of 
the United States but which resulted in cost submissions of hundreds of 
thousands of dollars, millions of dollars, for what were really 
vacations.
  Madam President, we found one defense contractor that billed $230,000 
for a trip to Hawaii. When asked why he needed a business trip to 
Hawaii to decide how to handle a U.S. Government contract, this 
contractor said: ``Well, it improved employee morale to be in Hawaii to 
discuss the contract.'' Well, I bet it did, Madam President. He should 
have paid the tab, not the taxpayers of this country.
  Another trip was taken to Jamaica, a trip by officers of a company, 
and they billed the taxpayers of this country $102,000. That must have 
been a nice trip. I do not hold it against anybody that wants to go to 
Jamaica and pay their own way. I have been to Jamaica, and I paid my 
own way. I do not think the taxpayers ought to be asked to pay for a 
trip to Jamaica for defense contractors. There is no need, in terms of 
developing a defense policy for this country, in trying to fulfill a 
Government contract, to go down to Jamaica at taxpayers' expense.
  Madam President, it did not stop there. There were trips to Bermuda, 
Mexico, and the Cayman Islands, all billed to taxpayers when it had 
nothing to do with the Government contracts in question.
  We also found unallowable costs charged to defense contracts. These 
are things that are not permitted, things that are expressly prohibited 
under the law, but which were occurring: Advertising and trade shows 
were billed to the taxpayers; personal use of autos, and some very nice 
autos, by the way, Madam President. I tell you, some of these guys go 
for nothing but the best. When they are going on the taxpayers' tab, 
they figure out how to go first class. Then there were personal use of 
yachts, and scholarships that were extended to employees of companies 
that were billing it to the taxpayers of this country. These are all 
things that simply cannot be permitted to continue.
  On March 3 of this year, the Senate Budget Committee, under the 
leadership of Senator Sasser, held a hearing on this issue. At the 
hearing, GAO testified about a culture that pervades these contractors. 
They believe anything goes, and they will never get caught, and if they 
are caught, they believe there will be no penalty. The amendment that I 
offer today, along with my colleague, Senator Grassley of Iowa, Senator 
Roth of Delaware, and Senator Sasser of Tennessee, is designed to put a 
halt to these practices.
  Madam President, I believe this hearing and this amendment will send 
a signal that these kinds of abusive practices should not and will not 
be tolerated. This amendment requires that the loophole that has 
allowed companies to engage in these kinds of activities and justify it 
as employee morale and welfare will no longer be allowed. It closes a 
loophole that has existed for 8 years.
  As far back as 1986, the GAO had recommended clarifying the 
entertainment and employee morale and welfare cost principles in the 
Federal acquisition regulation. In report after report, the GAO has 
told us they have found abuses in overhead cost submissions and that we 
are probably only catching the tip of the iceberg. Madam President, 
that is what the GAO said before the Senate Budget Committee and in 
report after report to Congress, and we heed GAO's call here today to 
put a stop to these abusive practices.
  It is time to mandate that this change be made. I am very pleased 
that the Senate is going to respond favorably. I am going to ask my 
colleague, Senator Grassley, who has been a lion in the U.S. Senate for 
many years on these questions of wasting of taxpayers money. Senator 
Grassley has taken a back seat to no one in his desire to close 
loopholes and close down the abusive practices that have cost the 
taxpayers literally millions of dollars, and I might say these are 
based on examinations of only six small contractors. If it is 
extrapolated to the larger defense contractors and other Government 
contractors, GAO informed us that they believe we are talking about 
billions of dollars of abuse--billions of dollars of abuse--that we are 
going to stop, starting today.
  I thank the Chair, and I yield the floor.
  Mr. GRASSLEY. Madam President, will the Senator from North Dakota 
yield me 6 minutes?
  Mr. CONRAD. Yes. I yield 6 minutes to the Senator from Iowa.
  Mr. GRASSLEY. Madam President, first of all, I want to surely thank 
the Senator from North Dakota for his outstanding leadership in this 
area and, most importantly, for a very dogged effort that he made in 
the Budget Committee when Senator Sasser brought this whole issue up 
before the Budget Committee. A determination was made at that time that 
things like this have supposedly been wrong, illegal, and could not be 
done. But time after time, Congress tried to accomplish some change in 
policy so it would not be done, and then you find out there is some way 
that these contractors get around it. So, once and finally, Senator 
Conrad has made up his mind that we ought to put an end to this sort of 
game playing.
  I think his amendment does that, and I compliment him for that, as 
well as Senator Sasser for the hearing, as well as Senator Roth for 
being in the trenches on procurement reform for many years. I think 
that the work of Senator Conrad and Senator Roth will be very effective 
in saving the taxpayers money.
  As my colleagues know, as one example of what we are all talking 
about, there was the one company, General Dynamics, that charged the 
taxpayers for boarding Thurston the dog. He was the dog of some big 
shot at General Dynamics. The company thought the taxpayers should foot 
the bill for putting Thurston in the dog kennel while the family went 
on vacation.
  This is one example in the mid-eighties. We listened and watched as 
all the defense contractors promised they would be good. They were 
enacting reforms and saying that would never happen again. Well, the 
recent hearing that I referred to before the Budget Committee showed us 
that these types of outrageous actions are continuing, and nothing has 
changed. GAO recently found that taxpayers are paying for baseball 
tickets, scholarships for children of executives, 46-foot yachts, even 
$5,800 for running shoes. Imelda Marcos must work for that company. 
These are incredible charges being made to the taxpayers' pockets.
  They are made possible simply through a loophole that allows 
contractors to pay for these items by claiming that somehow they are 
for employee morale and welfare.
  So, the Conrad-Grassley-Roth amendment would eliminate that loophole 
and start putting an end to this nonsense once and for all.
  The amendment would basically not allow contractors to slip in a 
request for these expenses in one account when it would be illegal 
elsewhere. For example, a contractor buys tickets for the Red Sox. That 
is illegal under the Federal acquisitions regulation. But it is not 
illegal under the Federal acquisitions regulation if seeing the Red Sox 
is billed under another category called employee welfare and morale 
account. Our amendment would not allow this kind of accounting gimmick 
that would stick the taxpayers with the bill.
  This is a reform that is wholly embraced by the General Accounting 
Office. I would like to cite testimony from GAO at our Budget Committee 
hearing, and I quote:

       We have been trying to close that loophole on the employee 
     morale since 1986. We made recommendations in 1986, again in 
     1992 in response to the work we did for this committee.

  That statement just quoted was from Mr. David Cooper, Director of 
Acquisition Policy at GAO.
  In addition, Citizens Against Government Waste and the National 
Taxpayers Union fully support this amendment.
  Eight years of waste is enough. It is time to get this loophole 
closed once and for all, and the Conrad amendment does it.
  Finally, let me make clear that these attempts to defraud the 
taxpayers are not unique to defense contractors. They are found in all 
types of Government contracts. I hope to work with Senator Sasser and 
Senator Conrad in the near future on highlighting unallowable costs in 
Medicaid, university research, and other programs.
  The issue is really quite simple. The Conrad-Grassley-Roth amendment 
takes a step toward ending this waste of taxpayers' funds. This is a 
common-sense amendment because it would implement for the first time a 
long-time General Accounting Office recommendation.
  It would put a stop to taxpayers having to pay for boat trips and 
baseball tickets for top executives. It has been 10 years since 
Thurston the dog had his taxpayer-paid stay in the kennel. Let us 
finally do the right thing and stop picking up the tab for modern-day 
Thurstons.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Ohio.
  Mr. GLENN. Madam President, I yield myself such time as I may 
require.
  Madam President, I wish this amendment were not necessary. I think it 
is too bad when our companies instead of operating in what they know to 
be the spirit of the law, go around and try and hide expenses as has 
been done in the examples given here this morning by both Senator 
Conrad and Senator Grassley.
  But there are a lot of people in the country that operate on what 
they can skin the Government out of, not on what they know to be the 
spirit of the law, whether it is written out in exact and excruciating 
detail or not.
  So here we are with the law fairly evident to everybody under the Sun 
that morale and welfare costs which were not changed in the mid-1980's 
for such things as company newspapers, and food, recreation services, 
and other company activities. Those were continued as allowable for 
reimbursement under Federal contracts because they were deemed to be 
normal and appropriate costs of doing business and of concern for all 
their employees. But then what do we find?
  We find all the examples here today: Unallowable entertainment, show 
tickets, golf tickets, trips to Hawaii, and so forth. Now here we are 
back on the floor where you would think people would have enough sense 
and pride in their country and company not to do these things that they 
know are not in the spirit of the law. Then they wonder why Government 
gets bogged down in regulations. They will be the first to complain 
when we inundate them with fine print regulations which must be fine 
enough that they cannot possibly misunderstand it.
  What has happened here is that these unallowable costs apparently 
were not written out in the rules and regulations in sufficient fine 
print detail pursuant to the laws passed in the mid-1980's. So now they 
hide these other experiences under another title making them allowable 
elsewhere even though such things as entertainment and the cost of 
tickets and expensive trips, and so on, was never intended to be 
allowable and they know that. What is so disgusting about this is that 
we have to be back on the floor debating this. Of course, they will be 
back in telling us how inundated they are with paperwork and rules and 
regulations.
  So I support this amendment. The General Accounting Office supports 
it. In fact, they provided a letter stating where they have recommended 
in the past these regulations be clarified so there will be no 
misunderstandings. At the appropriate time I will yield back the 
remainder of my time and accept the amendment on our side.
  I understand Senator Roth is prepared to accept the amendment. I 
believe he is a cosponsor of the legislation. At the appropriate time 
we will accept it.
  I yield the floor and reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from North Dakota has 1 minute 
remaining.
  Mr. CONRAD. Madam President, I ask the manager of the bill if I might 
have 2 additional minutes.
  Mr. GLENN. I yield 5 minutes.
  The PRESIDING OFFICER. The Senator from North Dakota is yielded 5 
minutes.
  Mr. CONRAD. That will be great.
  Madam President, I want to enter into the Record a letter from 
Citizens Against Government Waste, and I just quote from the first 
paragraph of their letter.

       The 600,000 members of the Council for Citizens Against 
     Government Waste strongly support the amendment to S. 1587, 
     the ``Government Procurement Reform Act,'' to be offered by 
     you and Senators Grassley and Roth.

  They go on to describe the problem and how they believe this 
amendment will help solve it.
  I also want to enter into the Record a letter from the GAO, and I 
just want to read one sentence from that letter.

       The proposed revisions to the entertainment cost principle 
     that would be required under this amendment would effectively 
     implement our recommendation in this area.

  Madam President, I think the record is very clear on the problem and 
that this amendment directly addresses it.
  Madam President, I also thank Senator Glenn, who is managing this 
bill, for his leadership because the fact is the work that he has done 
as chairman of the Governmental Affairs Committee in getting us a 
network of inspector generals who had the authority to do the kinds of 
investigations has led us to the information that told us there was a 
problem. Senator Glenn's leadership in this area has been very 
important, and I just want to publicly thank him for what he has done. 
We would not be here today with the solution to the problem without the 
excellent work that he has done as chairman of the Governmental Affairs 
Committee.
  Madam President, I ask unanimous consent to print in the Record the 
two letters to which I have referred.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:
                                                       Council for


                            Citizens Against Government Waste,

                                     Washington, DC, June 7, 1994.
     Hon. Kent Conrad,
     U.S. Senate, Washington, DC
       Dear Senator Conrad: The 600,000 members of the Council for 
     Citizens Against Government Waste (CCAGW) strongly support 
     the amendment to S. 1587, the ``Government Procurement Reform 
     Act,'' to be offered by you and Senators Grassley and Roth.
       Your amendment would prevent government contractors from 
     billing entertainment costs to U.S. taxpayers, who are tired 
     of this abuse of their tax dollars. For too long, government 
     contractors have billed millions for baseball tickets, 
     yachts, Christmas parties, and other outrageous expenditures 
     such as trips to exotic destinations like the Cayman Islands 
     and Jamaica. Most recently, in testimony delivered to the 
     Senate Appropriations Subcommittee on Labor, Health and Human 
     Services, and Education, one contractor was exposed for 
     billing his child's college tuition as a contract expense.
       This amendment ends the gimmickry. No longer would 
     contractors be allowed to use the term ``good for employee 
     morale and welfare'' to pad their luxury-laden expense 
     accounts. For this reason, CCAGW strongly supports this 
     bipartisan amendment and commends you, Senator Grassley and 
     Senator Roth for your leadership.
           Sincerely,
                                                       Tom Schatz.
                                  ____



                                    General Accounting Office,

                                     Washington, DC, June 7, 1994.
     Hon. Kent Conrad,
     U.S. Senate, Washington, DC.
       Dear Senator Conrad: This responds to your request for our 
     comments on a proposed amendment to S. 1587, the Federal 
     Acquisition Streamlining Act of 1994. The amendment would 
     require revision of the cost principle at Federal Acquisition 
     Regulation (FAR) section 31.205-14, relating to the 
     unallowability of entertainment costs, by adding a statement 
     that such costs, if specifically unallowable under the 
     principle, would not be allowable under any other cost 
     principle, and by eliminating the parenthetical reference to 
     the cost principles at FAR 31.205-1 and 31.205-13.
       A number of GAO reports in recent years have addressed the 
     extent to which unallowable costs are included in overhead 
     submissions. For example, in CONTRACT PRICING: Unallowable 
     Costs Charged to Defense Contracts, GAO/NSIAD-93-79, Nov. 
     1992, we questioned claims for reimbursement of the costs of 
     social activities and tickets to sporting events because the 
     cost principle on entertainment, FAR 31.205-14 expressly 
     provides that the cost of social activities, and any directly 
     associated costs such as tickets to shows or sports events, 
     are unallowable. The contractors sought reimbursement for 
     these costs on the theory that they contributed to employee 
     morale, the costs of which are allowable under the employee 
     morale and welfare cost principle, FAR 31.205-13. We 
     recommended that the FAR be clarified to ensure that costs 
     made specifically unallowable under the entertainment cost 
     principle could not be recovered under other cost principles. 
     We have been urging such a clarification since 1986.
       The proposed revisions to the entertainment cost principle 
     that would be required under this amendment would effectively 
     implement our recommendations in this area. We will be 
     pleased to provide further support to you on this or on any 
     other issue as you continue your consideration of S. 1587.
           Sincerely yours,
                                                 Robert P. Murphy,
                                           Acting General Counsel.

  Mr. CONRAD. I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator from Ohio has 10 minutes 
remaining.
  Mr. GLENN. I yield 3 minutes to Senator Roth.
  The PRESIDING OFFICER. The Senator from Delaware is recognized.
  Mr. ROTH. Madam President, I congratulate my distinguished colleague 
from North Dakota as well as Senator Grassley for this amendment.
  The proposed amendment would close the loophole in procurement 
regulations which allows entertainment costs to be charged to the 
taxpayer. The amendment should curb the unfortunately common practice 
by Government contractors of billing the Government for lavish parties, 
tickets to sporting events, and other expensive entertainment.
  The American taxpayer should not be underwriting these kinds of 
corporate entertainment expenses. Current statute explicitly states 
that entertainment costs such as tickets to shows or sports events are 
not allowed to be charged to the Government as indirect costs. 
Unfortunately, the procurement regulations permit contractors to 
include entertainment costs as employee morale and welfare costs. 
Hence, the regulations allow entertainment costs that are prohibited by 
statute to be slipped in and billed to the Government.
  This amendment would simply ensure that the regulations do not permit 
defense contractors to evade the existing statutory prohibition on 
billing the taxpayer for corporate entertainment expenses. Hopefully, 
the amendment will result in enforcement of the well-considered 
statutory provision which makes such entertainment costs unallowable.
  Again, I congratulate Senators Grassley and Conrad for their work in 
this area. As a sponsor of this amendment, I urge my colleagues to 
support its adoption.
  Mr. SASSER. Madam President, I rise in support of the amendment 
offered by my distinguished colleagues, Senators Conrad, Grassley, and 
Roth. It signals last call for the party that some DOD contractors have 
been holding at the American taxpayers' expense.
  I believe that we have in S. 1587 an anvil upon which we can forge 
meaningful change in Federal acquisition laws.
  I want to compliment the two managers of the bill--Chairman Nunn and 
Chairman Glenn--for their efforts to streamline the process and break 
through the red tape.
  The amendment before the Senate today is a valuable addition to this 
legislation. It is also an important outgrowth of a hearing which the 
Budget Committee held earlier this year on the potential for overhead 
waste and abuse in DOD contracting.
  That hearing confirmed my worst suspicions. A GAO audit of just six 
small companies which have DOD contracts in the $40 million-and-under 
range revealed a pattern of abuse.
  A subsequent investigation of a larger contractor found that the 
anything-goes attitude was not limited to smaller contractors without 
on-site auditors.
  The GAO uncovered improper or questionable costs totalling $2 million 
in all six companies' cost reimbursement submissions. This is double 
what the Defense Department's own audit turned up.
  In the normal business world, legitimate overhead costs are to be 
expected. And I am not saying that all DOD contractors are trying to 
stick it to the American taxpayer.
  But let me ask my colleagues if any of you would go up to a working 
family in America and defend trips to the Cayman Islands, Hawaii and 
Jamaica, personal use of a 46-foot fishing boat, season tickets to the 
Boston Red Sox, or gourmet meals at a company party. All at taxpayers' 
expense.

  Of course you would not. It is ludicrous.
  Yet, that is exactly what we are being asked to do.
  The contractors claim the law is ambiguous on many of these eat, 
drink, and be merry charges.
  Well, I am tired of these rationalizations. The contractors are 
erecting a scaffold of excuses upon which the American taxpayer is 
being hung out to dry.
  Now, the GAO further uncovered that many of these flings went on 
right under DOD's nose. The Department signed off on the companies' 
cost reports.
  Many of these contractors apparently realized that they could get 
away with a wink and a nod and took full advantage of the anything-goes 
atmosphere.
  DOD is not without its own watchdogs. The Defense Department Contract 
Audit Agency regularly reviews contractors' overhead claims. But the 
watchdog apparently lacks teeth. The DCAA serves only in an advisory 
capacity; it can root out the overhead violations, but the Agency has 
few enforcement powers.
  The situation is made all the worse by the absence of internal 
controls at many contractors, a lack of resources at DOD audits, and a 
set of regulations that through their imprecision, literally invite 
abuse.
  To complete the record, it is only fair to note that since GAO's 
initial report, DCAA has responded by launching a series of 
initiatives. I congratulate them on those efforts and their cooperation 
in helping to craft this amendment.
  Now, I do not for a minute believe that this amendment will put a 
stop to all of the shenanigans that took place. I am not going to 
oversell its virtues, of which there are many.
  Unfortunately, counsel believes that it would be close to impossible 
to construct an amendment that properly restricts business travel. So 
there is little that we can do to put the Love Boat in dry dock.
  However, I am pleased to see that we can at least bring a moderating 
influence to the expenditures for employee morale and welfare.
  This amendment will clarify existing regulations regarding employee 
morale and welfare expenses. It will insure that all government 
contractors--large and small--defense and non-defense--understand that 
entertainment costs are not allowable under any circumstances.
  And for those critics who say that this amendment will take away the 
gold watch from the employee who has put in 50 years of hard work, let 
me set the record straight. This amendment does nothing to prevent a 
company from recognizing good work or improving morale.
  Mr. President, this amendment represents a modest beginning to 
correct a systemic problem that infects the entire Federal procurement 
process. It does not take us the distance but it is a first step that 
all Senators should be able to support.
  The PRESIDING OFFICER. Who yields time?
  Mr. GLENN. Madam President, I yield back the remainder of my time and 
accept the amendment.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
1755 offered by the Senator from North Dakota [Mr. Conrad].
  The amendment (No. 1755) was agreed to.
  Mr. ROTH. Mr. President, I move to reconsider the vote.
  Mr. GLENN. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.

                          ____________________