[House Report 104-874] [From the U.S. Government Publishing Office] Union Calendar No. 477 104th Congress Report HOUSE OF REPRESENTATIVES 2d Session 104-874 _______________________________________________________________________ ACTIVITIES OF THE HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT ONE HUNDRED FOURTH CONGRESS FIRST AND SECOND SESSIONS 1995-1996 (Pursuant to House Rule XI, 1(d))January 2, 1997.--Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Union Calendar No. 477 104th Congress Report HOUSE OF REPRESENTATIVES 2d Session 104-874 _______________________________________________________________________ ACTIVITIES of the HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT ONE HUNDRED FOURTH CONGRESS FIRST AND SECOND SESSIONS 1995-1996 (Pursuant to House Rule XI, 1(d))
January 2, 1997.--Committed to the Committee of the Whole House on the State of the Union and ordered to be printed COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT WILLIAM F. CLINGER, Jr., Pennsylvania, Chairman CARDISS COLLINS, Illinois BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California DAN BURTON, Indiana TOM LANTOS, California J. DENNIS HASTERT, Illinois \1\ ROBERT E. WISE, Jr., West Virginia CONSTANCE A. MORELLA, Maryland MAJOR R. OWENS, New York CHRISTOPHER SHAYS, Connecticut EDOLPHUS TOWNS, New York STEVEN SCHIFF, New Mexico JOHN M. SPRATT, Jr., South Carolina ILEANA ROS-LEHTINEN, Florida LOUISE McINTOSH SLAUGHTER, New York WILLIAM H. ZELIFF, Jr., New PAUL E. KANJORSKI, Pennsylvania Hampshire GARY A. CONDIT, California JOHN M. McHUGH, New York COLLIN C. PETERSON, Minnesota STEPHEN HORN, California KAREN L. THURMAN, Florida JOHN L. MICA, Florida CAROLYN B. MALONEY, New York PETER BLUTE, Massachusetts THOMAS M. BARRETT, Wisconsin THOMAS M. DAVIS, Virginia GENE TAYLOR, Mississippi \5\ DAVID M. McINTOSH, Indiana BARBARA-ROSE COLLINS, Michigan JON D. FOX, Pennsylvania \7\ ELEANOR HOLMES NORTON, District of ColumbiaTATE, Washington JAMES P. MORAN, Virginia DICK CHRYSLER, Michigan GENE GREEN, Texas GIL GUTKNECHT, Minnesota CARRIE P. MEEK, Florida MARK E. SOUDER, Indiana FRANK MASCARA, Pennsylvania \3\ WILLIAM J. MARTINI, New Jersey CHAKA FATTAH, Pennsylvania JOE SCARBOROUGH, Florida BILL K. BREWSTER, Oklahoma \2\ JOHN B. SHADEGG, Arizona TIM HOLDEN, Pennsylvania \4\ MICHAEL PATRICK FLANAGAN, Illinois ELIJAH CUMMINGS, Maryland \6\ CHARLES F. BASS, New Hampshire ------ STEVEN C. LaTOURETTE, Ohio BERNARD SANDERS, Vermont (Independent)ARSHALL ``MARK'' SANFORD, South Carolina ROBERT L. EHRLICH, Jr., Maryland SCOTT L. KLUG, Wisconsin \8\ James L. Clarke, Staff Director Kevin M. Sabo, General Counsel Judith McCoy, Chief Clerk Bud Myers, Minority Staff Director ---------- \1\ Elected to Committee May 25, 1995 (H. Res. 157). \2\ Elected to Committee June 13, 1995 (H. Res. 166). \3\ Resigned from Committee July 11, 1995 (Communication to the Speaker). \4\ Elected to Committee July 18, 1995 (H. Res. 186). \5\ Resigned from Committee February 28, 1996 (Communication to the Speaker). \6\ Elected to Committee April 25, 1996 (H. Res. 414). \7\ Resigned from Committee June 25, 1996 (H. Res. 462). \8\ Elected to Committee July 22, 1996 (H. Res. 485). LETTER OF TRANSMITTAL ---------- House of Representatives, Washington, DC, January 2, 1997. Hon. Robin H. Carle, Clerk of the House of Representatives Washington, DC. Dear Ms. Carle: I am pleased to submit the enclosed report entitled ``Activities of the House Committee on Government Reform and Oversight, 104th Congress, First and Second Sessions.'' This report follows the committee's past practice of publishing its activities report annually as an interim report at the end of each first session of a Congress and as a separate final report at the end of a full Congress. The present report includes matters required by Rule XI, 1(d) to be reported to the House not later than January 2, 1997, on the activities of the committee and in carrying out its duty under Rule X to ``review and study, on a continuing basis, the application, administration, execution, and effectiveness'' of laws whose subject matter is within the jurisdiction of the committee. The present report describes fully the committee's jurisdiction and organization, and details its activities. Of particular note, in an extraordinarily productive Congress are committee efforts in Procurement Reform, the Line-Item Veto, the Federal Government Management: Examining Government Performance as We Near the Next Century investigative report, and the committee investigations of the White House Travel Office and FBI Background files matter. Sincerely yours, William F. Clinger, Jr., Chairman. C O N T E N T S ---------- Page Part One. General statement of organization and activities....... 1 I. Jurisdiction, authority, powers, duties..........................1 II. Historical background............................................9 III. Organization....................................................13 A. Subcommittees......................................... 13 B. Rules of the Committee on Government Reform and Oversight............................................ 14 IV. Activities, 104th Congress......................................21 A. Investigative Reports................................. 21 B. Legislation........................................... 23 C. Reorganization plans.................................. 30 D. Committee Prints...................................... 30 E. Committee Action on Reports of the Comptroller General 31 Part Two. Report of Committee Activities......................... 33 I. Matters of Interest, Full Committee A. General............................................... 33 1. Oversight plans of the committees of the U.S. House of Representatives......................... 33 2. Views and Estimates for Fiscal Year 1997........ 35 3. Investigations.................................. 36 a. The Financial Holdings and Activities of Secretary of Commerce Ronald H. Brown...... 36 b. The White House Travel Office Investigation. 37 c. The Security of FBI Background Investigation Files...................................... 49 d. Questions Concerning Campaign Contributions Made to or Solicited by Lippo Group, John Huang and Others........................... 52 e. Misuse of Political Influence within the Disciplinary Enforcement System at the Department of Defense...................... 53 f. Health Care Task Force...................... 54 g. Labor Department Taxpayer Funded ``Toll- Free'' Hotline............................. 54 h. National Reconnaissance Office.............. 54 i. Abuse of the American Express Government Travel Payment Program..................... 54 j. Taxpayer Funded Trip to Disney World........ 55 4. Legislation..................................... 56 a. H.R. 5, the Unfunded Mandates Reform Act of 1995 (Public Law 104-4).................... 56 b. H.R. 2, Line Item Veto Act of 1995.......... 57 c. H.R. 1038, a bill to Revise and Streamline the Acquisition Laws of the Federal Government................................. 58 d. H.R. 1670, the Federal Acquisition Reform Act of 1995................................ 59 e. H.R. 830, the Paperwork Reduction Act of 1995....................................... 60 f. S. 790, the Federal Reports Elimination and Sunset Act of 1995......................... 63 g. H.R. 3864, General Accounting Office Management Reform Act of 1996.............. 65 h. H.R. 3136, title III, subtitle E, the ``Congressional Review of Agency Rulemaking,'' (Public Law No. 104-121, title II, subtitle E)...................... 66 i. S. 1577, to Amend Title 44, United States Code, to authorize appropriations for the National Historical Publications and Records Commission......................... 68 j. H.R. 2326, Health Care Fraud and Abuse Prevention Act of 1995..................... 68 k. H.R. 3078, Federal Agency Anti-Lobbying Act. 69 l. ``Proceedings Against John M. Quinn, David Watkins, and Matthew Moore (Pursuant to Title 2, United States Code, Sections 192 and 194,'' House Report 104-598, May 29, 1996....................................... 70 B. Budget Process........................................ 72 C. Federal Procurement Policy--An Era of Reform.......... 74 1. Oversight of the Implementation of the Federal Acquisition Streamlining Act of 1994 (FASA) (Public Law 103-355)............................. 75 2. Review of the Federal Government's Acquisition Strategy Regarding the Post Federal Telecommunications System 2000 Program (Post- FTS2000)......................................... 76 3. Review of the Department of Defense's Acquisition of the Defense Information Systems Network (DISN)................................... 77 4. Review of the General Services Administration's (GSA) Management of the Multiple Award Schedule (MAS) Program.................................... 78 5. Oversight of Reform of the Acquisition System of the Federal Aviation Administration (FAA)........ 79 D. Government Performance and Results Act of 1993 (GPRA). 79 II. Investigations a. investigations resulting in formal reports Committee on Government Reform and Oversight, Hon. William F. Clinger, Jr., Chairman......................................... 81 1. ``A Citizen's Guide on Using the Freedom of Information Act and the Privacy Act of 1974 to Request Government Records,'' House Report No. 104-156, June 22, 1995, First Report by the Committee on Government Reform and Oversight.............................................. 81 2. ``Creating a 21st Century Government,'' House Report No. 104-434, December 21, 1995, Second Report by the Committee on Government Reform and Oversight, Together with Additional Views.................................. 81 3. ``Laws Related to Federal Financial Management as Amended Through December 31, 1995,'' House Report No. 104-745, August 2, 1996, Ninth Report by the Committee on Government Reform and Oversight..................... 83 4. ``Sampling and Statistical Adjustment in the Decennial Census: Fundamental Flaws,'' House Report No. 104-821, September 24, 1996, Fourteenth Report by the Committee on Government Reform and Oversight, Together with Additional and Dissenting Views........................ 84 5. ``Investigation of the White House Travel Office Firings and Related Matters,'' House Report No. 104-849, September 26, 1996, Fifteenth Report by the Committee on Government Reform and Oversight, Together with Minority and Additional Views.......................... 86 6. ``Federal Government Management: Examining Government Performance As We Near the Next Century,'' House Report No. 104-861, September 28, 1996, Eighteenth Report by the Committee on Government Reform and Oversight, Together with Additional and Minority Views............ 90 7. ``Investigation into the White House and Department of Justice on Security of FBI Background Investigation Files,'' [Interim Report], House Report No. 104-862, September 28, 1996, Nineteenth Report by the Committee on Government Reform and Oversight, Together with Additional Views....................................... 92 Government Management, Information, and Technology Subcommittee, Hon. Stephen Horn, Chairman.................................... 97 1. ``Making Government Work: Fulfilling the Mandate for Change,'' House Report No. 104-435, December 21, 1995, Third Report by the Committee on Government Reform and Oversight, Together with Additional Views.............. 97 2. ``Year 2000 Computer Software Conversion: Summary of Oversight Findings and Recommendations,'' House Report No. 104-857, September 27, 1996, Sixteenth Report by the Committee on Government Reform and Oversight....... 105 3. ``Crude Oil Undervaluation: The Ineffective Response of the Minerals Management Service,'' House Report No. 104-858, September 27, 1996, Seventeenth Report by the Committee on Government Reform and Oversight........... 109 Human Resources and Intergovernmental Relations Subcommittee, Hon. Christopher Shays, Chairman............................... 113 1. ``The FDA Food Additive Review Process: Backlog and Failure to Observe Statutory Deadline,'' House Report No. 104-436, December 21, 1995, Fourth Report by the Committee on Government Reform and Oversight, Together with Additional Views.................................. 113 2. ``The Federal Takeover of the Chicago Housing Authority--HUD Needs to Determine Long-Term Implications,'' House Report No. 104-437, December 21, 1995, Fifth Report by the Committee on Government Reform and Oversight, Together with Additional Views... 116 3. ``Fraud and Abuse in Medicare and Medicaid: Stronger Enforcement and Better Management Could Save Billions,'' House Report No. 104-641, June 27, 1996, Eighth Report by the Committee on Government Reform and Oversight, Together with Additional Views.............. 118 4. ``Health Care Fraud: All Public and Private Payers Need Federal Criminal Anti-Fraud Protections,'' House Report No. 104-747, August 2, 1996, Eleventh Report by the Committee on Government Reform and Oversight........... 120 5. ``Protecting the Nation's Blood Supply From Infectious Agents: The Need for New Standards to Meet New Threats,'' House Report No. 104-746, August 2, 1996, Tenth Report by the Committee on Government Reform and Oversight, Together with Additional Views.............. 121 National Security, International Affairs, and Criminal Justice Subcommittee, Hon. William H. Zeliff, Jr., Chairman............ 124 1. ``National Drug Policy: A Review of the Status of the Drug War,'' House Report No. 104-486, March 19, 1996, Seventh Report by the Committee on Government Reform and Oversight, Together with Additional Views.......... 124 2. ``A Two-Year Review of the White House Communications Agency Reveals Major Mismanagement, Lack of Accountability, and Significant Mission Creep,'' House Report No. 104-748, August 2, 1996, Twelfth Report by the Committee on Government Reform and Oversight, Together with Dissenting Views......................... 131 3. ``Investigation into the Activities of Federal Law Enforcement Agencies Toward the Branch Davidians,'' House Report No. 104-749, August 2, 1996, Thirteenth Report by the Committee on Government Reform and Oversight, prepared in conjunction with the Committee on the Judiciary, Together with Additional and Dissenting Views....................................... 135 Postal Service Subcommittee, Hon. John M. McHugh, Chairman....... 145 1. ``Voices for Change,'' House Report No. 104-438, December 21, 1995, Sixth Report by the Committee on Government Reform and Oversight........................ 145 b. other investigations Civil Service Subcommittee....................................... 146 1. Restructuring of the Office of Personnel Management..... 146 2. Federal Workforce Restructuring Statistics.............. 147 3. Examining the Federal Retirement System................. 147 4. Contracting Out......................................... 148 5. Examination and review of the Federal Workforce Restructuring Act of 1994.............................. 150 6. Review of the Ramspeck Act.............................. 151 7. Review of the Combined Federal Campaign................. 151 8. Contracting Federal Investigations--Policy and Oversight 152 9. Administration's AIDS Training Program.................. 153 10. Privatization of OPM Training Responsibilities......... 154 11. Review of Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)........................... 155 12. Review of Current Civil Service Reform Initiatives..... 156 13. Continuation of Civil Service Reform Review: Performance and Accountability......................... 156 14. Review of Federal Employee Appeals Procedures.......... 157 15. Shutdowns of Federal Agencies Due to Lapses in Appropriations......................................... 158 16. Employee Benefits in the Context of Total Compensation. 159 17. Medical Savings Accounts (MSA's) in the Federal Employees Health Benefits Plan......................... 160 18. Veterans' Preference................................... 161 19. Soft Landings to Enhance Federal Downsizing?........... 163 20. Workforce Reductions: RIFs v. Buyouts: A Cost-Benefit Comparison............................................. 166 21. Illegal Use of Buyouts................................. 169 22. Civil Service Reform Proposals......................... 171 23. Review of the Federal Employees Health Benefit (FEHB) Program................................................ 173 24. Taxpayer Subsidy of Federal Unions..................... 176 25. Review of Federal Firefighters Pay and Benefits........ 177 26. Drug Testing Policies in the White House............... 180 27. Effects of Privatizing OPM Investigations.............. 183 District of Columbia Subcommittee................................ 184 1. Closing of Pennsylvania Avenue.......................... 184 2. Traffic Disruptions..................................... 186 3. District of Columbia Economic Recovery Act.............. 187 4. Public Law 104-8, District of Columbia Financial Responsibility and Management Assistance Authority Act of 1995................................................ 187 Government Management, Information, and Technology Subcommittee.. 189 1. Capital Budgeting....................................... 189 2. Integrity of Government Documents....................... 191 3. Federal Role in Privatization........................... 193 4. National Performance Review............................. 194 5. Strengthening Departmental Management................... 196 6. Consolidating Federal Programs and Organizations........ 197 7. Corporate Structures for Government Functions........... 199 8. Streamlining Federal Field Structures................... 201 9. Performance Measurement, Benchmarking, and Re-egineering 203 10. Agency Initiatives to Implement the Government Performance and Results Act of 1993.................... 205 11. The General Services Administration's (GSA) Security Measures at Federal Office Buildings................... 207 12. Controls Over Illegal Immigration--Along the Border and Within the Interior.................................... 208 13. Budget and Financial Information--Annual Shareholders Report: How Does the Citizen Know What is Going On?.... 209 14. The Inspector General Act of 1978...................... 211 15. Implementation of the Chief Financial Officers Act of 1990 and the Government Management Reform Act of 1994.. 213 16. Department of Defense's Financial Management Problems.. 215 17. Electronic Reporting Streamlining Act of 1995.......... 217 18. Use of Transportation by Senior Executive Branch Officials in compliance with Federal Travel Guidelines. 218 19. The Government's Response to the Northridge Earthquake. 220 20. OMB 2000 Reforms: Where are they Heading?.............. 221 21. Using the Best Practices of Information Technology in Government............................................. 223 22. Oversight of IRS Financial Management.................. 224 23. Is January 1, 2000 the Date for Computer Disaster?..... 226 24. Oversight of the General Accounting Office............. 228 25. Oversight of the General Services Administration....... 229 26. Federal Information Policy Oversight...................230230 27. Oil Royalties.......................................... 231 28. Field Hearing on the U.S. Border Patrol's Operation Gatekeeper............................................. 232 29. Oversight of the Smithsonian Institution............... 234 Human Resources and Intergovernmental Relations Subcommittee..... 235 1. Efforts to Reorganize and Improve Program Performance and Efficiency at the U.S. Department of Housing and Urban Development (HUD)................................ 235 2. Efforts to Improve Program Performance and Efficiency at the U.S. Department of Health and Human Services (HHS). 235 3. Efforts to Reorganize and Improve Program Performance and Efficiency at the U.S. Department of Labor (DOL)... 236 4. Efforts to Reorganize and Improve Program Performance and Efficiency at the U.S. Department of Education (DOED)................................................. 237 5. Efforts to Reorganize and Improve Program Performance and Efficiency at the U.S. Department of Veteran Affairs (VA)........................................... 238 6. Examination of Programs and Operations of the Corporation for National and Community Service......... 239 7. Revelations of Medicaid Fraud and Scams................. 240 8. Fraud and Abuse in Medicare and Medicaid................ 242 9. Lengthy FDA Delays in Reviewing Food Additive Petitions. 242 10. Bringing Health and Support Services to Women, Minorities and Adolescents--Growing Segments of the AIDS Population........................................ 243 11. Debating the Defining Federalism--the Sharing of Power between the Federal Government and the States.......... 244 12. Joint Hearing on the FDA Regulation of Medical Devices, including Silicone Gel Breast Implants................. 245 13. Federal Takeover of the Chicago Housing Authority...... 246 14. Management of Threats to the Nation's Blood Supply..... 247 15. The Occupational Safety and Health Administration's (OSHA) New Strategy for Changing the Way it Does Business............................................... 248 16. Management of U.S. Department of Housing and Urban Development Funds in Public Housing Tenant Programs.... 249 17. Status of Major Computer System Development............ 250 18. Radioactive Contamination of 27 People, including Researcher Dr. Maryann Ma, in June 1995 at the National Institutes of Health (NIH)............................. 251 19. Unfunded Mandates in Medicaid.......................... 251 20. HUD Management of Tenant Initiative Programs........... 252 21. The Status of Efforts to Identify Persian Gulf War Syndrome............................................... 253 22. Unfunded Mandates Reform Act of 1995: A One Year Review 256 23. Job Training That Works/Common Factors in Effective Job Training Programs...................................... 257 24. Preventing Teen Pregnancy: Coordinating Community Efforts................................................ 257 25. Food Safety: Oversight of the Food and Drug Administration's Center for Veterinary Medicine........ 258 26. Food Safety: Monitoring of Food Borne Illnesses by the Centers for Disease Control, Food and Drug Administration and U.S. Department of Agriculture...... 259 27. The Development of Successful Public Housing Resident Management (Field Hearing)............................. 260 28. Department of Education Oversight: Gatekeeping......... 260 29. Oversight of the Department of Labor's Efforts Against Labor Racketeering..................................... 261 30. Oversight of the Department of Education and the National Institute of Mental Health: Current Approaches to Attention Deficit/Hyperactivity Disorders........... 262 31. Consumers and Health Informatics....................... 262 32. The Management of HUD's Section 8 Multi-Family Housing Portfolio.............................................. 263 33. Off-Label Drug Use and FDA Review of Supplemental Drug Applications........................................... 264 34. Investigation into Possible Misuse of ``New Age'' Training Programs by Federal Departments and Agencies.. 265 National Economic Growth, Natural Resources, and Regulatory Affairs Subcommittee........................................... 266 1. Grantee Lobbying........................................ 266 2. Investigation of Improper EPA Lobbying on Pending Legislation............................................ 267 3. OSHA's Ergonomics Standards............................. 270 4. Improper FDA Rulemaking................................. 271 5. Regulatory Reform....................................... 273 6. Privatization of Sallie Mae and Connie Lee.............. 278 7. Mismanagement of Grants by the Environmental Protection Agency................................................. 279 8. Investigation of the White House Database (WhoDB)....... 280 9. The Effects of a Minimum Wage Increase.................. 281 10. The Impact of Regulations on Employment................ 283 11. Travel Practices of Department of Transportation Administrators......................................... 285 12. Travel Practices of SEC Chairman Arthur Levitt......... 287 13. Travel Practices of NTSB Chairman Jim Hall............. 288 14. Cleaning Up the Superfund Program...................... 288 15. Havertown Superfund Site............................... 292 National Security, International Affairs, and Criminal Justice Subcommittee................................................... 294 1. Office of National Drug Control Policy.................. 294 2. Federal Law Enforcement Actions in Relation to the Branch Davidian Compound in Waco, TX................... 318 3. The Bureau of Census and its planning for the 2000 Census................................................. 327 4. Counterterrorism Activities in the United States........ 329 5. Army Ranger Training Deaths of February 15, 1995........ 331 6. The Ballistic Missile Defense Program................... 332 7. National Drug Control Strategy.......................... 334 8. Department of Defense Bulk Fuel: Appropriations v. Usage 346 9. Oversight of the National Aeronautics and Space Administration......................................... 348 10. INS.................................................... 350 Postal Service Subcommittee...................................... 358 1. General Oversight of the U.S. Postal Service: The Postmaster General and the General Accounting Office... 358 2. General Oversight of the U.S. Postal Service: The Postal Rate Commission........................................ 358 3. General Oversight of the U.S. Postal Service: The Board of Governors........................................... 359 4. General Oversight of the U.S. Postal Service: Major Mailing Customers...................................... 360 5. General Oversight of the U.S. Postal Service: Postal Employee Unions and Organizations...................... 360 6. General Oversight of the U.S. Postal Service: Postal Reliant Businesses and Competitors..................... 361 7. General Oversight Hearing on the Postal Service: Return of the Postmaster General.............................. 361 8. General Oversight of the U.S. Postal Service: Postal Service Inspector General.............................. 362 9. Review of International Mail Market..................... 362 10. General Oversight of the U.S. Postal Service: The Board of Governors, the Postmaster General, the Postal Rate Commission, the Chief Postal Inspector and the General Accounting Office...................................... 363 11. Joint Hearing with the Senate Subcommittee on Post Office and Civil Service, of the Committee on Governmental Affairs on International Postal Reform.... 365 12. Postal Reform: H.R. 210, a bill to provide for the Privatization of the United States Postal Service; H.R. 3717, the Postal Reform Act of 1996; H.R. 3690, the Postal Service Core Business Act of 1996............... 366 13. Field Hearing on Chicago Mail Service and Postal Operations............................................. 368 14. Qui Tam Provisions within the False Claims Act......... 369 15. USPS Contract for 8,879 Cargo Minivans................. 370 16. Review of Postal Service Bulk Business Mail Acceptance Practices; Assessment of the Adequacy of the Postal Service's Systems for Assessing, Collecting, and Otherwise Protecting Revenue and/or Accountable Paper.. 371 17. Review of Selected Major Postal Service Procurements... 372 18. Evaluation of USPS Oversight of National Change of Address Program Licensees.............................. 372 19. Final-Offer Arbitration as an Alternative Means of Resolving Contract Disputes Between Postal Management and Labor Unions....................................... 373 20. Review of the Quality and Quantity of Data Produced by the Postal Service for the Rate Setting Process........ 374 21. Evaluation of the Management Practices, Working Conditions, and Security at Postal facilities in Southern California.................................... 374 22. Miscellaneous Investigative Issues..................... 375 23. Review of the Postal Service Board of Governors........ 376 24. Review of the Status of USPS Initiatives to Improve Employee Working Conditions and Organizational Performance............................................ 377 25. Continued Oversight of Internal Audits of the Existing Inspector General...................................... 378 26. Oversight of the Implementation of the new Office of Inspector General for the Postal Service as provided in Public Law 104-208..................................... 379 27. Continued Oversight of Labor-Management Relations within the Postal Service.............................. 380 28. Continuing Review of the Competitive Role of the U.S. Postal Service......................................... 380 29. Continuing Review of Universal Mail Service and Ratemaking in Canada................................... 381 30. Continuing Review of Mailing Costs for the Federal Government............................................. 382 31. Continuing Review of Growth in Postal Service Employment............................................. 382 32. Continuing Review of the Statutory Mail Box Restriction 383 33. Express Mail Accounts and Insufficient Controls for Revenue Protection..................................... 383 34. Continuing Review of the role of the U.S. Postal Service in the Electronic Information Age.............. 384 35. Review of Postal Inspection Service Investigations of the Public Threat to the U.S. Mails in the Unabomber Case................................................... 384 III. Legislation a. new measures Civil Service Subcommittee....................................... 385 1. H.R. 3586, Veterans' Employment Opportunities Act of 1996................................................... 385 2. H.R. 3481, Omnibus Civil Service Reform Act of 1996..... 385 3. S. 868, Federal Employees Emergency Leave Transfer Act.. 386 District of Columbia Subcommittee................................ 387 1. H.R. 1345, District of Columbia Financial Responsibility and Management Assistance Act of 1995.................. 387 2. H.R. 2108, District of Columbia Convention Center and Sports Arena Authorization Act of 1995................. 388 3. H.R. 2661, District of Columbia Fiscal Protection Act of 1995................................................... 389 4. H.R. 461, Closing of Lorton Correctional Complex........ 390 5. H.R. 1855, To amend Title 11, District of Columbia Code, to restrict the authority of the Superior Court of the District of Columbia over certain pending cases involving child custody and visitation rights.......... 391 6. H.R. 3663, District of Columbia Water and Sewer Authority Act of 1996.................................. 391 7. H.R. 3336, Bill granting the District of Columbia temporary authority to waive reduction for early retirement under the Civil Service Retirement System... 392 8. H.R. 3389, District of Columbia Pension Liability Funding Reform Act of 1996............................. 393 9. H.R. 3664, District of Columbia Government Improvement and Efficiency Act of 1996............................. 393 Government Management, Information, and Technology Subcommittee.. 393 1. H.R. 1271, Family Privacy Protection Act of 1995........ 393 2. H.R. 1756, The Department of Commerce Dismantling Act... 397 3. H.R. 2234, Debt Collection Improvement Act of 1995...... 399 4. H.R. 1162, Lockbox Deficit Reduction Proposals.......... 401 5. H.R. 1698, Mandatory Electronic Funds Transfer Expansion Act of 1995............................................ 402 6. H.R. 1907, The Federal-aid Facility Privatization Act of 1995................................................... 402 7. H.R. 2521, the Statistical Consolidation Act of 1995.... 403 8. H.R. 3184, the Single Audit Act Amendments of 1996...... 405 9. H.R. 3869, the Electronic Reporting Streamlining Act of 1996................................................... 406 10. H.R. 3189, to delay privatization of the Office of Federal Investigations of the Office of Personnel Management............................................. 407 11. H.R. 1281, War Crimes Disclosure Act................... 408 12. H.R. 3802, Electronic Freedom of Information Amendments of 1996................................................ 409 13. H.R. 3452, the Presidential and Executive Office Accountability Act..................................... 410 14. H.R. 3872, the White House Inspector General Act of 1996................................................... 411 15. H.R. 3637, the Travel Reform and Savings Act of 1996... 412 16. S. 1130, Federal Financial Management Improvement Act of 1996................................................ 413 17. Federal Budget Process Reform.......................... 414 18. Health Information Privacy Protection Act.............. 418 Human Resources and Intergovernmental Relations Subcommittee..... 419 1. H.R. 2086, the Local Empowerment and Flexibility Act of 1995................................................... 419 2. H.R. 2326, the Health Care Fraud and Abuse Prevention Act of 1995 and H.R. 1850, the Health Care Fraud and Abuse Act of 1995...................................... 420 National Economic Growth, Natural Resources, and Regulatory Affairs Subcommittee........................................... 421 1. H.R. 450, the Regulatory Transition Act of 1995......... 421 2. H.R. 994, the Regulatory Sunset and Review Act of 1995.. 423 3. Grantee Lobbying Legislation............................ 424 4. Corrections Day......................................... 424 Postal Service Subcommittee...................................... 424 1. H.R. 1026, To designate the United States Post Office building located at 201 East Pikes Peak Avenue in Colorado Springs, Colorado, as the ``Winfield Scott Stratton Post Office''................................. 424 2. H.R. 2077, To designate the United States Post Office building located at 33 College Avenue in Waterville, Maine, as the ``George J. Mitchell Post Office Building''............................................. 425 3. H.R. 1826, To repeal the authorization of transitional appropriations for the United States Postal Service, and for other purposes................................. 425 4. H.R. 210, A bill to provide for the privatization of the United States Postal Service........................... 426 5. H.R. 1963, The Postmark Prompt Payment Act of 1995...... 426 6. H.R. 1398, To designate the United States Post Office located at 1203 Lemay Ferry Road, St. Louis, Missouri as the ``Charles J. Coyle Post Office Building''....... 427 7. H.R. 1606, To designate the United States Post Office building located at 24 Corliss Street, Providence, Rhode Island, as the ``Harry Kizirian Post Office Building''............................................. 428 8. H.R. 1880, To designate the United States Post Office located at 102 South McLean, Lincoln, Illinois as the ``Edward Madigan Post Office Building''................ 428 9. H.R. 2262, To designate the United States Post Office located at 218 North Alston Street in Foley, Alabama as the ``Holk Post Office Building''...................... 429 10. H.R. 2704, A bill to provide that the United States Post Office building located on the 2600 block of East 75th Street in Chicago, Illinois shall be known as the ``Charles A. Hayes Post Office Building''.............. 429 11. H.R. 855, to designate the United States Post Office Building located at 153 East 110th Street, New York, New York, as the ``Oscar Garcia Rivera Post Office Building''............................................. 430 12. H.R. 2700, a bill to designate the United States Post Office Building located at 7980 FM 327, Elmendorf, Texas, as the ``Amos F. Longoria Post Office Building'' 430 13. H.R. 3139, a bill to redesignate the United States Post Office building located at 245 Centereach Mall on Middle Country Road in Centereach, New York, as the ``Rose Y. Caracappa United States Post Office Building''............................................. 431 14. H.R. 3768, a bill to designate a United States Post Office to be located in Groton, Massachusetts, as the ``Augusta `Gusty' Hornblower United States Post Office''............................................... 431 15. H.R. 3834, a bill to redesignate the Dunning Post Office in Chicago, Illinois, as the ``Roger P. McAuliffe Post Office''................................ 432 16. H.R. 3877, a bill to designate the United States Post Office Building in Camden, Arkansas, as the ``Honorable David H. Pryor Post Office Building''.................. 432 17. H.R. 3610, the Omnibus Appropriations Act of 1996...... 433 18. H.R. 3690, the Postal Service Core Business Act of 1996 433 19. H.R. 3717, the Postal Reform Act of 1996............... 434 b. review of laws within committee's jurisdiction Full Committee................................................... 439 Civil Service Subcommittee....................................... 441 District of Columbia Subcommittee................................ 449 Government Management, Information, and Technology Subcommittee.. 450 Human Resources and Intergovernmental Relations Subcommittee..... 458 National Economic Growth, Natural Resources, and Regulatory Affiars Subcommittee........................................... 459 National Security, International Affairs, and Criminal Justice Subcommittee................................................... 461 Postal Service Subcommittee...................................... 462 IV. Other Current Activities a. general accounting office reports Civil Service Subcommittee....................................... 465 District of Columbia Subcommittee................................ 501 Government Management, Information, and Technology Subcommittee.. 503 Human Resources and Intergovernmental Relations Subcommittee..... 541 National Economic Growth, Natural Resources, and Regulatory Affairs Subcommittee........................................... 598 National Security, International Affairs, and Criminal Justice Subcommittee................................................... 634 Postal Service Subcommittee...................................... 752 b. other reports and statements District of Columbia Subcommittee................................ 759 Government Management, Information, and Technology Subcommittee.. 760 c. committee prints Standing committee............................................... 764 Postal Service Subcommittee...................................... 764 V. Prior Activities of Current or Continuing Interest District of Columbia Subcommittee................................ 767 Human Resources and Intergovernmental Relations Subcommittee..... 767 National Economic Growth, Natural Resources, and Regulatory Affairs Subcommittee........................................... 768 National Security, International Affairs, and Criminal Justice Subcommittee................................................... 769 Postal Service Subcommittee...................................... 770 Union Calendar No. 477 104th Congress Report HOUSE OF REPRESENTATIVES 2d Session 104-874 _______________________________________________________________________ ACTIVITIES OF THE HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT _______ January 2, 1997.--Committed to the Committee of the Whole House on the State of the Union and ordered to be printed _______________________________________________________________________ Mr. Clinger, from the Committee on Government Reform and Oversight, submitted the following REPORT FINAL REPORT ON THE ACTIVITIES OF THE HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT, 104TH CONGRESS, 1ST AND 2D SESSIONS, 1995 AND 1996 PART ONE. GENERAL STATEMENT OF ORGANIZATION AND ACTIVITIES I. Jurisdiction, Authority, Powers, and Duties The Rules of the House of Representatives provide for election by the House, at the commencement of each Congress, of 19 named standing committees, one of which is the Committee on Government Reform and Oversight.\1\ Pursuant to House Resolutions 11 and 12 (adopted January 5, 1995), and House Resolution 13 (adopted January 5, 1995), House Resolution 31 (adopted January 9, 1995) the membership of the Committee on Government Reform and Oversight was set at 50, including one independent. Subsequently, the membership was increased to 51, pursuant to House Resolution 157 (adopted May 25, 1995), on June 13, 1995, membership increased to 52, pursuant to House Resolution 166 (adopted June 13, 1995), on July 12, 1995, membership was decreased to 51 pursuant to communication to Speaker, and on July 12, 1995, membership was set at 52, pursuant to House Resolution 186 (adopted July 12, 1995); on February 28, 1996, membership was decreased to 51, pursuant to communication to Speaker; on April 25, 1996, membership was increased to 52, pursuant to House Resolution 414 (adopted April 25, 1996); on June 25, 1996, membership was decreased to 51, pursuant to communication to Speaker; and on July 22, 1996, membership was increased to 52, pursuant to House Resolution 485 (adopted July 22, 1996). --------------------------------------------------------------------------- \1\ Rule X. --------------------------------------------------------------------------- Rule X sets forth the committee's jurisdiction, functions, and responsibilities as follows: RULE X Establishment and Jurisdiction of Standing Committees the committees and their jurisdiction 1. There shall be in the House the following standing committees, each of which shall have the jurisdiction and related functions assigned to it by this clause and clauses 2, 3, and 4; and all bills, resolutions, and other matters relating to subjects within the jurisdiction of any standing committee as listed in this clause shall (in accordance with and subject to clause 5) be referred to such committees, as follows: * * * * * * * (g) Committee on Government Reform and Oversight (1) The Federal Civil Service, including intergovernmental personnel; the status of officers and employees of the United States, including their compensation, classification, and retirement. (2) Measures relating to the municipal affairs of the District of Columbia in general, other than appropriations. (3) Federal paperwork reduction. (4) Budget and accounting measures, other than appropriations. (5) Holidays and celebrations. (6) The overall economy and efficiency of Government operations and activities, including Federal procurement. (7) National archives. (8) Population and demography generally, including the Census. (9) Postal service generally, including the transportation of the mails. (10) Public information and records. (11) Relationship of the Federal Government to the States and municipalities generally. (12) Reorganizations in the executive branch of the Government. In addition to its legislative jurisdiction under the preceding provisions of this paragraph (and its oversight functions under clause 2(b) (1) and (2)), the committee shall have the function of performing the activities and conducting the studies which are provided for in clause 4(c). * * * * * * * general oversight responsibilities 2. (a) In order to assist the House in-- (1) its analysis, appraisal, and evaluation of (A) the application, administration, execution, and effectiveness of the laws enacted by the Congress, or (B) conditions and circumstances which may indicate the necessity or desirability of enacting new or additional legislation, and (2) its formulation, consideration, and enactment of such modifications of or changes in those laws, and of such additional legislation, as may be necessary or appropriate, the various standing committees shall have oversight responsibilities as provided in paragraph (b). (b)(1) Each standing committee (other than the Committee on Appropriations and the Committee on the Budget) shall review and study, on a continuing basis, the application, administration, execution, and effectiveness of those laws, or parts of laws, the subject matter of which is within the jurisdiction of that committee, and the organization and operation of the Federal agencies and entities having responsibilities in or for the administration and execution thereof, in order to determine whether such laws and the programs thereunder are being implemented and carried out in accordance with the intent of the Congress and whether such programs should be continued, curtailed, or eliminated. In addition, each such committee shall review and study any conditions or circumstances which may indicate the necessity or desirability of enacting new or additional legislation within the jurisdiction of that committee (whether or not any bill or resolution has been introduced with respect thereto) and shall on a continuing basis undertake future research and forecasting on matters within the jurisdiction of that committee. Each such committee having more than twenty members shall establish an oversight subcommittee, or require its subcommittees, if any, to conduct oversight in the area of their respective jurisdiction, to assist in carrying out its responsibilities under this subparagraph. The establishment of oversight subcommittees shall in no way limit the responsibility of the subcommittee with legislative jurisdiction from carrying out their oversight responsibilities. (2) The Committee on Government Reform and Oversight shall review and study, on a continuing basis, the operation of Government activities at all levels with a view to determining their economy and efficiency. * * * * * * * (c) Each standing committee of the House shall have the function of reviewing and studying on a continuing basis the impact or probable impact of tax policies affecting subjects within its jurisdiction as described in clauses 1 and 3. * * * * * * * additional functions of committees 4. * * * (c)(1) The Committee on Government Reform and Oversight shall have the general function of-- (A) receiving and examining reports of the Comptroller General of the United States and of submitting such recommendations to the House as it deems necessary or desirable in connection with the subject matter of such reports; (B) evaluating the effects of laws enacted to reorganize the legislative and executive branches of the Government; and (C) studying intergovernmental relationships between the United States and the States, and municipalities, and between the United States and international organizations of which the United States is a member. (2) In addition to its duties under subparagraph (1), the Committee on Government Reform and Oversight may at any time conduct investigations of any matter without regard to the provisions of clause 1, 2, or 3 (or this clause) conferring jurisdiction over such matter upon another standing committee. The committee's findings and recommendations in any such investigation shall be made available to the other standing committee or committees having jurisdiction over the matter involved (and included in the report of any such other committee when required by clause 2(1)(3) of Rule XI). * * * * * * * Rule XI provides authority for investigations and studies, as follows: RULE XI Rules of Procedure for Committees in general 1. * * * (b) Each committee is authorized at any time to consider such investigations and studies as it may consider necessary or appropriate in the exercise of its responsibilities under Rule X, and (subject to the adoption of expense resolutions as required by clause 5) to incur expenses (including travel expenses) in connection therewith. * * * * * * * (d) Each committee shall submit to the House, not later than January 2 of each odd-numbered year, a report on the activities of that committee under this rule and Rule X during the Congress ending at noon on January 3 of such year. * * * * * * * committee rules * * * * * * * Power to sit and act; subpoena power (m)(1) For the purpose of carrying out any of its functions and duties under this rule and Rule X (including any matters referred to it under clause 5 of Rule X), any committee, or any subcommittee thereof, is authorized (subject to subparagraph (2)(A) of this paragraph)-- (A) to sit and act at such times and places within the United States, whether the House is in session, has recessed, or has adjourned, and to hold such hearings, and (B) to require, by subpoena or otherwise, the attendance and testimony of such witnesses and the production of such books, records, correspondence, memorandums, papers, and documents as it deems necessary. The chairman of the committee, or any member designated by such chairman, may administer oaths to any witness. (2)(A) A subpoena may be authorized and issued by a committee or subcommittee under subparagraph (1)(B) in the conduct of any investigation or series of investigations or activities, only when authorized by a majority of the members voting, a majority being present. The power to authorize and issue subpoenas under subparagraph (1)(B) may be delegated to the chairman of the committee pursuant to such rules and under such limitations as the committee may prescribe. Authorized subpoenas shall be signed by the chairman of the committee or by any member designated by the committee. (B) Compliance with any subpoena issued by a committee or subcommittee under subparagraph (1)(B) may be enforced only as authorized or directed by the House. Use of committee funds for travel (n)(1) Funds authorized for a committee under clause 5 are for expenses incurred in the committee's activities; however, local currencies owned by the United States shall be made available to the committee and its employees engaged in carrying out their official duties outside the United States, its territories or possessions. No appropriated funds, including those authorized under clause 5, shall be expended for the purpose of defraying expenses of members of the committee or its employees in any country where local currencies are available for this purpose; and the following conditions shall apply with respect to travel outside the United States or its territories or possessions: (A) No Member or employee of the committee shall receive or expend local currencies for subsistence in any country for any day at a rate in excess of the maximum per diem set forth in applicable Federal law, or if the Member or employee is reimbursed for any expenses for such day, then the lesser of the per diem or the actual, unreimbursed expenses (other than for transportation) incurred by the Member or employee during that day. (B) Each Member or employee of the committee shall make to the chairman of the committee an itemized report showing the dates each country was visited, the amount of per diem furnished, the cost of transportation furnished, any funds expended for any other official purpose and shall summarize in these categories the total foreign currencies and/or appropriated funds expended. All such individual reports shall be filed no later than sixty days following the completion of travel with the chairman of the committee for use in complying with reporting requirements in applicable Federal law and shall be open for public inspection. (2) In carrying out the committee's activities outside of the United States in any country where local currencies are unavailable, a member or employee of the committee may not receive reimbursement for expenses (other than for transportation) in excess of the maximum per diem set forth in applicable Federal law, or if the member or employee is reimbursed for any expenses for such day, then the lesser of the per diem or the actual, unreimbursed expenses (other than for transportation) incurred, by the member or employee during any day. (3) A member or employee of a committee may not receive reimbursement for the cost of any transportation in connection with travel outside the United States unless the member or employee has actually paid for the transportation. (4) The restrictions respecting travel outside of the United States set forth in subparagraphs (2) and (3) shall also apply to travel outside of the United States by Members, officers, and employees of the House authorized under clause 8 of rule I, clause 1(b) of this rule, or any other provision of these Rules of the House of Representatives. (5) No local currencies owned by the United States may be made available under this paragraph for the use outside of the United States for defraying the expenses of a member of any committee after-- (A) the date of the general election of Members in which the Member has not been elected to the succeeding Congress; or (B) in the case of a Member who is not a candidate in such general election, the earlier of the date of such general election or the adjournment sine die of the last regular session of the Congress. The committee also exercises authority under a number of congressional mandates.\2\ --------------------------------------------------------------------------- \2\ For legislation imposing duties specifically on the committee, see, for example, sec. 203(e)(6) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 484(6)(e)), relating to negotiated disposal of Federal surplus property. It requires that, with limited exceptions, explanatory statements be sent ``to the appropriate committees of the Congress'' in advance of negotiated disposal under the act. It covers disposal of all real and personal property whose estimated fair market is over $15,000 in the case of personal property and over $100,000 in the case of real property. The current language stems from a 1988 amendment (Public Law 100-612), which retained the explanatory statement requirement but changed the dollar value thresholds, which theretofore had been $1,000 for both personal property and real property. The House and Senate Government Operations Committees are expressly identified as the appropriate panels in House Report 1763, 85th Congress, which accompanied the measure that contained the 1958 amendment. See also GSA's Federal Property Management Regulations at 41 CFR-47.304-12(d). [N. B. The further examples given in the original footnote text cover sections (section 414 of the 1969 Housing Act and section 304 of the Intergovernmental Cooperation Act) have been repealed. The reference to sections 191-194 of title 2, U.S.C., does not deem pertinent here.] --------------------------------------------------------------------------- 5 U.S.C. sec. 2954 Information to committees of Congress on request An Executive agency, on request of the Committee on Government Operations of the House of Representatives or of any seven members thereof, or on request of the Committee on Government Operations of the Senate, or any five members thereof, shall submit any information requested of it relating to any matter within the jurisdiction of the committee. 18 U.S.C. sec. 1505 Obstruction of proceedings before departments, agencies, and committees Whoever, with intent to avoid, evade, prevent, or obstruct compliance, in whole or in part, with any civil investigation demand duly and properly made under the Antitrust Civil Process Act, willfully withholds, misrepresents, removes from any place, conceals, covers up, destroys, mutilates, alters, or by other means falsifies any documentary material, answers to written interrogatories, or oral testimony, which is the subject of such demand; or attempts to do so or solicits another to do so; or Whoever corruptly, or by threats or force, or by any threatening letter or communication influences, obstructs, or impedes or endeavors to influence, obstruct, or impede the due and proper administration of the law under which any pending proceeding is being had before any department or agency of the United States, or the due and proper exercise of the power of inquiry under which any inquiry or investigation is being had by either House, or any committee of either House or any joint committee of the Congress-- Shall be fined not more than $5,000 or imprisoned not more than five years, or both. 31 U.S.C. sec. 712 Investigating the use of public money The Comptroller General shall-- * * * * * * * (3) analyze expenditures of each executive agency the Comptroller General believes will help Congress decide whether public money has been used and expended economically and efficiently; (4) make an investigation and report ordered by either House of Congress or a committee of Congress having jurisdiction over revenue, appropriations, or expenditures; and (5) give a committee of Congress having jurisdiction over revenue, appropriations, or expenditures the help and information the committee requests. 31 U.S.C. sec. 719 Comptroller General reports * * * * * * * (e) The Comptroller General shall report on analyses carried out under section 712(3) of this title to the Committees on Governmental Affairs and Appropriations of the Senate, the Committee on Government Operations and Appropriations of the House, and the committees with jurisdiction over legislation related to the operation of each executive agency.\3\ --------------------------------------------------------------------------- \3\ For other requirements which relate to General Accounting Office reports to Congress and which affect the committee, see secs. 232 and 236 of the Legislative Reorganization Act of 1970 (Public Law 91-510). II. Historical Background The committee was initially named the ``Committee on Expenditures in the Executive Departments.'' Its antecedents are summarized in Cannon's Precedents of the House of Representatives, vol. VII, sec. 2041, p. 831 (1935), as follows: This committee was created, December 5, 1927, by the consolidation of the eleven Committees on Expenditures in the various Departments of the Government, the earliest of which has been in existence since 1816. As adopted in 1816, the rule did not include the committees for the Departments of Interior, Justice, Agriculture, Commerce, and Labor. The committees for these Departments date, respectively, from 1860, 1874, 1889, 1905 and 1913. The resolution providing for the adoption of the rules of the 70th Congress discontinued the several committees on expenditures and transferred their functions to the newly created Committee on Expenditures in the Executive Departments: On March 17, 1928, the jurisdiction of the committee was further enlarged by the adoption of a resolution, reported from the Committee on Rules, including within its jurisdiction the independent establishments and commissions of the Government.\4\ --------------------------------------------------------------------------- \4\ Examples of the wide-ranging scope of the committee's jurisdiction may be found in Cannon's Precedents, supra VII, secs. 2042-2046, pp. 831-833 (1935). --------------------------------------------------------------------------- From 1928 until January 2, 1947, when the Legislative Reorganization Act of 1946 became effective, the committee's jurisdiction was set forth in Rule XI, 34, of the House Rules then in force (H. Doc. 810, 78th Cong., 2d Sess. (1945)), as follows: powers and duties of committees * * * * * * * 34. The examination of the account and expenditures of the several departments, independent establishments, and commissions of the Government, and the manner of keeping the same; the economy, justness, and correctness of such expenditures; their conformity with appropriation laws; the proper application of public moneys; the security of the Government against unjust and extravagant demands; retrenchment; and enforcement of the payment of moneys due the United States; the economy and accountability of public officers; the abolishment of useless offices, shall all be subjects within the jurisdiction of the Committee on Expenditures in the Executive Departments. The Legislative Reorganization Act of 1946, section 121(b), as adopted in paragraphs (a), (b), and (c) of Rule XI, 8, of later Rules of the House (XI, 9, the 93d Congress), provided: committee on government operations (a) Budget and accounting measures, other than appropriations. (b) Reorganizations in the executive branch of Government. (c) Such committee shall have the duty of-- (1) receiving and examining reports of the Comptroller General of the United States and of submitting such recommendations to the House as it deems necessary or desirable in connection with the subject matter of such reports; (2) studying the operation of Government activities at all levels with a view to determining the economy and efficiency; (3) evaluating the effects of laws enacted to reorganize the legislative and executive branches of the Government; (4) studying intergovernmental relationships between the United States and the States and municipalities, and between the United States and international organizations of which the United States is a member. (d) For the purpose of performing such duties the committee, or any subcommittee thereof when authorized by the committee, is authorized to sit, hold hearings, and act at such times and places within the United States, whether or not the House is in session, is in recess, or has adjourned, to require by subpoena or otherwise the attendance of such witnesses and the production of such papers, documents, and books, and to take such testimony as it deems necessary. Subpoenas may be issued under the signature of the chairman of the committee or of any subcommittee, or by any member designated by any such chairman, and may be served by any person designated by any such chairman or member.\5\ --------------------------------------------------------------------------- \5\ Paragraph (d) was adopted by the House Feb. 10, 1947. --------------------------------------------------------------------------- Rule X, 1(h), of later Rules of the House, effective January 3, 1975 (H. Res. 988, 93d Congress), added the additional jurisdiction of general revenue sharing (formerly within the jurisdiction of the Committee on Ways and Means), and the National Archives (formerly within the jurisdiction of the Committee on Post Office and Civil Service). Rule X, 1(j)(6), of later Rules of the House listed the additional jurisdiction of measures providing for off-budget treatment of Federal agencies or programs, which was added by sec. 225 of Public Law 99-177, the Balanced Budget and Emergency Deficit Control Act of 1985 (December 12, 1985). The 1946 act contained the following proviso: Provided: That unless otherwise provided herein, any matter within the jurisdiction of a standing committee prior to January 2, 1947, shall remain subject to the jurisdiction of that committee or of the consolidated committee succeeding to the jurisdiction of that committee. This proviso was omitted from the Rules of the House adopted January 3, 1954.\6\ --------------------------------------------------------------------------- \6\ H. Res. 5, 83d Cong. (99 Cong. Rec. 15). Cf. rules in H. Doc. 562, 82d Congress, 2d session p. 328 and in H. Doc. 739, 81st Congress, 2d session, p. 326. --------------------------------------------------------------------------- Under the Constitution (Art. I, sec. 5, cl. 2), ``Each House may determine the Rules of its Proceedings.'' Omission of the proviso made no substantive change, since the scope of the committee's jurisdiction prior to January 2, 1947, was embraced within the committee's jurisdiction as stated in existing rules and precedents. The committee's membership, which was fixed at 21 when it was consolidated on December 5, 1927, was increased to 25 when the Legislative Reorganization Act of 1946 became effective on January 2, 1947. In 1951, the committee's membership was increased to 27.\7\ From 1953 until January 1963, the committee's membership remained at 30.\8\ --------------------------------------------------------------------------- \7\ H. Res. 60, 83d Congress, 1st session (97 Cong. Rec. 194). \8\ H. Res. 98, 83d Cong. (99 Cong. Rec. 436); H. Res. 94, 84th Cong. (101 Cong. Rec. 484); H. Res. 89, 85th Cong. (103 Cong. Rec. 412); H. Res. 120, 86th Cong. (105 Cong. Rec. 841); H. Res. 137, 87th Cong. (107 Cong. Rec. 1677). --------------------------------------------------------------------------- Pursuant to H. Res. 108, 88th Congress, adopted January 17, 1963, the committee was enlarged to 31 members. In the 89th Congress the membership of the committee was increased to 34 through passage of H. Res. 114, January 14, 1965. The committee membership in the 90th and 91st Congresses of 35 was first established by H. Res. 128, 90th Congress, approved January 16, 1967. The committee membership in the 92d Congress of 39 was established by H. Res. 192, approved February 4, 1971. It was raised to 41 by H. Res. 158, adopted January 24, 1973. The committee membership of 42 was established by H. Res. 1238, adopted July 17, 1974. It was increased to 43 by H. Res. 76 and 101, adopted January 20 and 28, 1975. Membership was maintained at 43 in the 95th Congress by H. Res. 117 and 118, adopted January 19, 1977. The committee membership was set at 39 in the 96th Congress by H. Res. 62 and 63, adopted January 24, 1979. The committee membership was set at 40 in the 97th Congress by H. Res. 44 and 45, adopted January 28, 1981. The committee size was increased to 41 by the adoption of H. Res. 370 on February 24, 1982. Pursuant to House Res. 26 and 27, adopted January 6, 1983, the committee membership for the 98th Congress was set at 39. In the 99th Congress, the membership of the committee was set at 39, pursuant to House Res. 34 and 35, adopted January 30, 1985. In the 100th Congress, the membership of the committee was set at 39, pursuant to House Res. 45 and 54, adopted January 21 and 22, 1987, respectively. The committee membership in the 101st Congress was established at 39 by H. Res. 29 and H. Res. 45, adopted January 19 and 20, 1989. In the 102d Congress, the membership of the committee was set at 41, pursuant to H. Res. 43, 44, and 45, adopted January 24, 1991. The committee membership was set at 42 in the 103d Congress by adoption of H. Res. 8 and 9 on January 5, 1993; H. Res. 34 on January 21, 1993; H. Res. 67 on February 4, 1993; and H. Res. 92 and 93 on February 18, 1993. The membership was increased to 44 by the adoption of H. Res. 185 on May 26, 1993 and H. Res. 219 on July 21, 1993. Beginning September 28, 1949, the moneys appropriated to the committee were, by House resolution in each session of Congress, available for expenses incurred in conducting studies and investigations authorized under Rule XI, whether made within or without the United States.\9\ In the 103d Congress, these matters are covered in paragraph (b) of clause 1 of Rule XI, as set forth above and by clause 5 of Rule XI. The funds for the committee's studies and oversight function during the first session of the 103d Congress were provided by H. Res. 107 adopted March 30, 1993 (H. Rept. 103-38). --------------------------------------------------------------------------- \9\ See items under (1) in footnote 3, of the final calendar of the committee for the 93d Congress (Dec. 31, 1974). --------------------------------------------------------------------------- The committee's name was changed to ``Committee on Government Operations'' by House resolution adopted July 3, 1952.\10\ The Congressional Record indicates the reasons underlying that change in name were, in part, as follows: \11\ --------------------------------------------------------------------------- \10\ H. Res. 647, 82d Cong. (98 Cong. Rec. 9217). The Senate had made a similar change of name on Mar. 3, 1952, after conference between the chairman of the House and Senate Committees on Expenditures in the Executive Departments to ensure both Houses would adopt the change in name. S. Res. 280, 82d Cong. (98 Cong. Rec. 1701-1702). See also S. Rept. No. 1231, 80th Congress, 2d Session, p. 3 (May 3, 1948). \11\ Letter of Feb. 19, 1952, from the chairman, Senate Committee on Expenditures in the Executive Departments, Senator McCellan to Senator Hayden (98 Cong. Rec. 1702). --------------------------------------------------------------------------- This committee is proposing the indicated change in the present title, in view of the fact that it is misleading and the committees' functions and duties are generally misunderstood by the public. * * * * * * * In suggesting the proposed change the committee based its decision on what it considers to be the major or primary function of the committee under the prescribed duties assigned to it to study ``the operations of Government activities at all levels with a view to determining its economy and efficiency.'' It was the unanimous view of the members of the committee that the proposed new title would be more accurate in defining the purposes for which the committee was created and in clearly establishing the major purpose it serves. On January 4, 1995, the 104th Congress opened with a Republican majority for the first time in 40 years. The shift in power from Democrats to Republicans has resulted in a realignment of the legislative priorities and committee structure of the House of Representatives. Perhaps more than any other committee, the Government Reform and Oversight Committee embodies the changes taking place in the House of Representatives. The committee itself was created by consolidating three committees into one, resulting in budget and staff cuts of nearly 50 percent. The committees that were merged include the Committee on Government Operations, the Committee on the Post Office and Civil Service, and the Committee on the District of Columbia. In order to fulfill the Republican Contract with America, the committee held a record number of hearings and mark-ups, and members cast more votes during this 100 day period than in any of the previous committees' histories. Over the course of the first session, 295 bills and resolutions were referred to the committee and its subcommittees, and 180 hearings and mark- ups were held. Five of these measures have been signed into law. In addition to its greatly expanded legislative jurisdiction, the Government Reform and Oversight Committee serves as the chief investigative committee of the House, with the authority to conduct governmentwide oversight. Because the committee only authorizes money for a small number of Federal agencies and programs, it is able to review government activities with an independent eye. III. Organization A. SUBCOMMITTEES \12\ In the 104th Congress, significant steps were taken to reduce the number of committees, subcommittees, and the number of congressional staff. As a result, the Congress eliminated the District of Columbia Committee and the Post Office and Civil Service Committee. The jurisdiction of these committees were merged into the Government Operations Committee and its name was changed to the Committee on Government Reform and Oversight. --------------------------------------------------------------------------- \12\ The chairman and the ranking minority member of the committee are ex-officio members of all subcommittees on which they do not hold a regular assignment (committee Rule 9). --------------------------------------------------------------------------- In order to perform its functions and to carry out its duties as fully and as effectively as possible, the committee under the leadership of its chairman, Hon. William F. Clinger, Jr., of Pennsylvania, at the beginning of the 104th Congress, established seven standing subcommittees, which cover the entire field of executive expenditures and operations. The names, chairpersons, and members of these subcommittees are as follows: Civil Service Subcommittee, John Mica, Chairman; members: Charles Bass, Ben Gilman, Dan Burton, Connie Morella, James Moran, Bernard Sanders, and Tim Holden. District of Columbia Subcommittee, Tom Davis, Chairman; members: Gil Gutknecht, John M. McHugh, Steve LaTourette, Michael P. Flanagan, Eleanor Holmes Norton, Barbara-Rose Collins, and Edolphus Towns. Government Management, Information, and Technology Subcommittee, Stephen Horn, Chairman; members: Michael P. Flanagan, Peter Blute, Tom Davis, Jon Fox, Randy Tate, Joe Scarborough, Charles Bass, Carolyn Maloney, Major Owens, John Spratt, Paul Kanjorski, Collin Peterson, and Tim Holden. Human Resources and Intergovernmental Relations Subcommittee, Christopher Shays, Chairman; members: Mark Souder, Steven Schiff, Connie Morella, Tom Davis, Dick Chrysler, Bill Martini, Joe Scarborough, Mark Sanford, Edolphus Towns, Tom Lantos, Bernard Sanders, Thomas Barrett, Gene Green, Chaka Fattah, and Henry Waxman. National Economic Growth, Natural Resources, and Regulatory Affairs Subcommittee, David McIntosh, Chairman; members: Jon Fox, J. Dennis Hastert, John M. McHugh, Randy Tate, Gil Gutknecht, Joe Scarborough, John Shadegg, Bob Ehrlich, Collin Peterson, Henry Waxman, John Spratt, Louise M. Slaughter, Paul Kanjorski, Gary Condit, and Carrie Meek. National Security, International Affairs, and Criminal Justice Subcommittee, William H. Zeliff, Jr., Chairman; members: Bob Ehrlich, Steven Schiff, Illeana Ros-Lehtinen, John Mica, Peter Blute, Mark Souder, John Shadegg, Karen Thurman, Robert Wise, Gene Taylor, Tom Lantos, Louise M. Slaughter, Gary Condit, Bill K. Brewster, and Elijah Cummings. Postal Service Subcommittee, John M. McHugh, Chairman; members: Mark Sanford, Ben Gilman, Christopher Shays, David McIntosh, Bob Ehrlich, Barbara-Rose Collins, Major Owens, Gene Green, and Carrie Meek. B. RULES OF THE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT Rule XI, 1(a)(1) of the House of Representatives provides: The Rules of the House are the rules of its committees and subcommittees so far as applicable, except that a motion to recess from day to day, and a motion to dispense with the first reading (in full) of a bill or resolution, if printed copies are available, are nondebatable motions of high privilege in committees and subcommittees. Rule XI, 2(a) of the House of Representatives provides, in part: Each standing committee of the House shall adopt written rules governing its procedures. In accordance with the foregoing, the Committee on Government Reform and Oversight, on January 10, 1995, adopted the rules of the committee. The rules read as follows: Rule 1.--Application of Rules Except where the terms ``full committee'' and ``subcommittee'' are specifically referred to, the following rules shall apply to the Committee on Government Reform and Oversight and its subcommittees as well as to the respective chairmen. [See House Rule XI, 1.] Rule 2.--Meetings The regular meetings of the full committee shall be held on the second Tuesday of each month at 10:00 a.m., unless when Congress has adjourned. The chairman is authorized to dispense with a regular meeting or to change the date thereof, and to call and convene additional meetings, when circumstances warrant. A special meeting of the committee may be requested by members of the committee following the provisions of House Rule XI, 2(c)(2). Subcommittees shall meet at the call of the subcommittee chairmen. Every member of the committee or the appropriate subcommittee, unless prevented by unusual circumstances, shall be provided with a memorandum at least three calendar days before each meeting or hearing explaining (1) the purpose of the meeting or hearing; and (2) the names, titles, background and reasons for appearance of any witnesses. The ranking minority member shall be responsible for providing the same information on witnesses whom the minority may request. [See House Rule XI, 2(b).] Rule 3.--Quorums A majority of the members of the committee shall form a quorum, except that two members shall constitute a quorum for taking testimony and receiving evidence, and one-third of the members shall form a quorum for taking any action other than the reporting of a measure or recommendation. If the chairman is not present at any meeting of the committee or subcommittee, the ranking member of the majority party on the committee or subcommittee who is present shall preside at that meeting. [See House Rule XI, 2(h).] Rule 4.--Committee Reports Bills and resolutions approved by the committee shall be reported by the chairman following House Rule XI, 2(l). Every investigative report shall be approved by a majority vote of the committee at a meeting at which a quorum is present. Supplemental, minority, or additional views may be filed following House Rule XI, 2(l)(5). The time allowed for filing such views shall be three calendar days (excluding Saturdays, Sundays, and legal holidays) unless the committee agrees to a different time, but agreement on a shorter time shall require the concurrence of each member seeking to file such views. A proposed report shall not be considered in subcommittee or full committee unless the proposed report has been available to the members of such subcommittee or full committee for at least three calendar days (excluding Saturdays, Sundays, and legal holidays) before the consideration of such proposed report in subcommittee or full committee. If hearings have been held on the matter reported upon, every reasonable effort shall be made to have such hearings available to the members of the subcommittee or full committee before the consideration of the proposed report in such subcommittee or full committee. Only those reports approved by a majority vote of the committee may be ordered printed, unless otherwise required by the Rules of the House of Representatives. Rule 5.--Proxy Votes In accordance with the Rules of the House of Representatives, members may not vote by proxy on any measure or matter before the committee or any subcommittee. [See House Rule XI, 2(f).] Rule 6.--Roll Calls A roll call of the members may be had upon the request of any member upon approval of a one-fifth vote. [See House Rule XI, 2(e).] Rule 7.--Record of Committee Actions The committee staff shall maintain in the committee offices a complete record of committee actions from the current Congress including a record of the rollcall votes taken at committee business meetings. The original records, or true copies thereof, as appropriate, shall be available for public inspection whenever the committee offices are open for public business. The staff shall assure that such original records are preserved with no unauthorized alteration, additions, or defacement. [See House Rule XI, 2(e).] Rule 8.--Subcommittees; Referrals There shall be seven subcommittees with appropriate party ratios that shall have fixed jurisdictions. Bills, resolutions, and other matters shall be referred by the chairman to subcommittees within two weeks for consideration or investigation in accordance with their fixed jurisdictions. Where the subject matter of the referral involves the jurisdiction of more than one subcommittee or does not fall within any previously assigned jurisdiction, the chairman shall refer the matter as he may deem advisable. Bills, resolutions, and other matters referred to subcommittees may be reassigned by the chairman when, in his judgment, the subcommittee is not able to complete its work or cannot reach agreement therein. In a subcommittee having an even number of members, if there is a tie vote with all members voting on any measure, the measure shall be placed on the agenda for full committee consideration as if it had been ordered reported by the subcommittee without recommendation. This provision shall not preclude further action on the measure by the subcommittee. [See House Rule XI, 1(a)(2).] Rule 9.--Ex Officio Members The chairman and the ranking minority member of the committee shall be ex officio members of all subcommittees. They are authorized to vote on subcommittee matters; but, unless they are regular members of the subcommittee, they shall not be counted in determining a subcommittee quorum other than a quorum for taking testimony. Rule 10.--Staff Except as otherwise provided by House Rule XI, 5 and 6, the chairman of the full committee shall have the authority to hire and discharge employees of the professional and clerical staff of the full committee and of subcommittees. Rule 11.--Staff Direction Except as otherwise provided by House Rule XI, 5 and 6, the staff of the committee shall be subject to the direction of the chairman of the full committee and shall perform such duties as he may assign. Rule 12.--Hearing Dates and Witnesses The chairman of the full committee will announce the date, place, and subject matter of all hearings at least one week before the commencement of any hearings, unless he determines that there is good cause to begin such hearings sooner. So that the chairman of the full committee may coordinate the committee facilities and hearing plans, each subcommittee chairman shall notify him of any hearing plans at least two weeks before the date of commencement of hearings, including the date, place, subject matter, and the names of witnesses, willing and unwilling, who would be called to testify, including, to the extent he is advised thereof, witnesses whom the minority members may request. The minority members shall supply the names of witnesses they intend to call to the chairman of the full committee or subcommittee at the earliest possible date. Witnesses appearing before the committee shall, so far as practicable, submit written statements at least 24 hours before their appearance. [See House Rules XI, 2 (g)(3), (g)(4), (j), and (k).] Rule 13.--Open Meetings Meetings for the transaction of business and hearings of the committee shall be open to the public or closed in accordance with Rule XI of the House of Representatives. [See House Rules XI, 2 (g) and (k).] Rule 14.--Five-Minute Rule A committee member may question a witness only when recognized by the chairman for that purpose. In accordance with House Rule XI, 2(j)(2), each committee member may request up to five minutes to question a witness until each member who so desires has had such opportunity. Until all such requests have been satisfied, the chairman shall, so far as practicable, recognize alternately based on seniority of those majority and minority members present at the time the hearing was called to order and others based on their arrival at the hearing. After that, additional time may be extended at the direction of the chairman. Rule 15.--Investigative Hearings; Procedure Investigative hearings shall be conducted according to the procedures in House Rule XI, 2(k). All questions put to witnesses before the committee shall be relevant to the subject matter before the committee for consideration, and the chairman shall rule on the relevance of any questions put to the witness. Rule 16.--Stenographic Record A stenographic record of all testimony shall be kept of public hearings and shall be made available on such conditions as the chairman may prescribe. Rule 17.--TV, Radio, and Photographs An open meeting or hearing of the committee or a subcommittee may be covered, in whole or in part, by television broadcast, radio broadcast, and still photography, or by any of such methods of coverage, unless closed subject to the provisions of House Rule XI, 3. Rule 18.--Additional Duties of Chairman The chairman of the full committee shall: (a) Make available to other committees the findings and recommendations resulting from the investigations of the committee or its subcommittees as required by House Rule X, 4(c)(2); (b) Direct such review and studies on the impact or probable impact of tax policies affecting subjects within the committee's jurisdiction as required by House Rule X, 2(c); (c) Submit to the Committee on the Budget views and estimates required by House Rule X, 4(g), and to file reports with the House as required by the Congressional Budget Act; (d) Authorize and issue subpoenas as provided in House Rule XI, clause 2(m), in the conduct of any investigation or activity or series of investigations or activities within the jurisdiction of the committee; and (e) Prepare, after consultation with subcommittee chairmen and the minority, a budget for the committee which shall include an adequate budget for the subcommittees to discharge their responsibilities. (f) Make any necessary technical and conforming changes to legislation reported by the committee upon unanimous consent. Rule 19.--Special Affidavits and Depositions If the House provides the committee with authority to take affidavits and depositions, the following rules apply: (a) The Chairman, upon consultation with the ranking minority member or the committee, may authorize the taking of affidavits, and of depositions pursuant to notice or subpoena. Such authorization may occur on a case-by-case basis, or by instructions to take a series of affidavits or depositions. Notices for the taking of depositions shall specify a time and place for examination. Affidavits and depositions shall be taken under oath administered by a member or a person otherwise authorized by law to administer oaths. Consultation with the ranking minority member will include three (3) business days written notice before any deposition is taken, unless otherwise agreed to by the ranking minority member or committee. (b) The committee shall not initiate procedures leading to contempt proceedings in the event a witness fails to appear at a deposition unless the deposition notice was accompanied by a committee subpoena authorized and issued by the chairman. Notwithstanding committee Rule 18(d), the chairman shall not authorize and issue a subpoena for a deposition without the concurrence of the ranking minority member or the committee. (c) Witnesses may be accompanied at a deposition by counsel to advise them of their constitutional rights. Absent special permission or instructions from the chairman, no one may be present in depositions except members, staff designated by the chairman or ranking minority member, an official reporter, the witness and any counsel; observers or counsel for other persons or for the agencies under investigation may not attend. (d) A deposition will be conducted by members or jointly by-- (1) No more than two staff members of the committee, of whom-- (A) One will be designated by the chairman of the committee, and (B) One will be designated by the ranking minority party member of the committee, unless such member elects not to designate a staff member. (2) Any member designated by the chairman. Other staff designated by the chairman or ranking minority member may attend, but are not permitted to pose questions to the witness. (e) Questions in the deposition will be propounded in rounds. A round will include as much time as necessary to ask all pending questions, but not more than one hour. In each round, the member or staff member designated by the chairman will ask questions first, and the member or staff member designated by the ranking minority member will ask questions second. (f) Objections by the witness as to the form of questions shall be noted for the record. If a witness objects to a question and refuses to answer, the members or staff may proceed with the deposition, or may obtain, at that time or at a subsequent time, a ruling on the objection by telephone or otherwise from the chairman or his designee. The committee shall not initiate procedures leading to contempt for refusals to answer questions at a deposition unless the witness refuses to testify after his objection has been overruled and after he has been ordered and directed to answer by the chairman or his designee upon a good faith attempt to consult with the ranking minority member or her designee. (g) The committee staff shall insure that the testimony is either transcribed or electronically recorded, or both. If a witness' testimony is transcribed, he shall be furnished with an opportunity to review a copy. No later than five days thereafter, the staff shall enter the changes, if any, requested by the witness, with a statement of the witness' reasons for the changes, and the witness shall be instructed to sign the transcript. The individual administering the oath, if other than a member, shall certify on the transcript that the witness was duly sworn in his presence, the transcriber shall certify that the transcript is a true record of the testimony, and the transcript shall be filed, together with any electronic recording, with the clerk of the committee in Washington, D.C. Affidavits and depositions shall be deemed to have been taken in Washington, D.C. once filed there with the clerk of the committee for the committee's use. The ranking minority member will be provided a copy of the transcripts of the deposition once the procedures provided above have been completed. (h) Unless otherwise directed by the committee, all depositions and affidavits received in the investigation shall be considered nonpublic until received by the committee. Once received by the committee, use of such materials shall be governed by the committee rules. All such material shall unless otherwise directed by the committee, be available for use by the members of the committee in open session. (i) A witness shall not be required to testify if they have not been provided a copy of the House Resolution and the amended committee Rules. (j) Committee Rule 19 expires on July 8, 1996. IV. Activities, 104th Congress SUMMARY 1. In the 104th Congress, the committee approved and submitted to the House of Representatives 19 investigative reports. In addition, the committee issued 15 committee prints. 2. In the 104th Congress, 436 bills and resolutions were referred to the committee and studied. Of these, the committee reported 42. In addition, 14 Memorials, 4 Petitions, and 8 Presidential messages were referred to the committee. 3. Pursuant to its duty of studying reports of the Comptroller General, the committee received officially and studied 1,536 such reports during the 104th Congress. In addition, 1,237 executive communications, were referred to the committee under clause 2 of rule XXIV of the House of Representatives. 4. The full committee met 43 days during the 104th Congress, while the subcommittees met a total of 270 days in public hearings, markups, and meetings. The significant actions taken by the committee with respect to these and a considerable number of other matters are discussed in detail below. A. INVESTIGATIVE REPORTS During the 104th Congress, the Committee on Government Reform and Oversight approved and submitted to the Congress 19 reports of an investigative nature. For convenience, the published reports are listed here with the names of the originating subcommittees. A more detailed discussion of the material will be found in part two below in the breakdown of the committee's activities by subcommittee: First Report (H. Rept. 104-156): ``A Citizen's Guide on Using the Freedom of Information Act and the Privacy Act of 1974 to Request Government Records.'' Second Report (H. Rept. 104-434): ``Creating a 21st Century Government.'' * --------------------------------------------------------------------------- * Denotes report accompanied by additional, dissenting, minority, separate, or supplemental views. --------------------------------------------------------------------------- Third Report (H. Rept. 104-435): ``Making Government Work; Fulfilling the Mandate for Change.'' * (Subcommittee on Government Management, Information, and Technology) Fourth Report (H. Rept. 104-436): ``The FDA Food Additive Review Process: Backlog and Failure to Observe Statutory Deadlines.'' * (Subcommittee on Human Resources and Intergovernmental Relations) Fifth Report (H. Rept. 104-437): ``The Federal Takeover of the Chicago Housing Authority--HUD Needs to Determine Long-Term Implications.'' * (Subcommittee on Human Resources and Intergovernmental Relations) --------------------------------------------------------------------------- * Denotes report accompanied by additional, dissenting, minority, separate, or supplemental views. --------------------------------------------------------------------------- Sixth Report (H. Rept. 104-438): ``Voices for Change.'' (Subcommittee on the Postal Service) Seventh Report (H. Rept. 104-486): ``National Drug Policy: A Review of the Status of the Drug War.''* (Subcommittee on National Security, International Affairs, and Criminal Justice) Eighth Report (H. Rept. 104-641): ``Fraud and Abuse in Medicare and Medicaid: Stronger Enforcement and Better Management Could Save Billions.''* (Subcommittee on Human Resources and Intergovernmental Relations) Ninth Report (H. Rept. 104-745): ``Laws Related to Federal Financial Management As Amended Through December 31, 1995.'' Tenth Report (H. Rept. 104-746): ``Protecting the Nation's Blood Supply From Infectious Agents: The Need For New Standards to Meet New Threats''* (Subcommittee on Human Resources and Intergovernmental Relations) Eleventh Report (H. Rept. 104-747): ``Health Care Fraud: All Public and Private Payers Need Federal Criminal Anti-Fraud Protection.'' (Subcommittee on Human Resources and Intergovernmental Relations) Twelfth Report (H. Rept. 104-748): ``A Two-Year Review of the White House Communications Agency Reveals Major Mismanagement, Lack of Accountability, and Significant Mission Creep.''* (Subcommittee on National Security, International Affairs, and Criminal Justice) Thirteenth Report (H. Rept. 104-749): ``Investigation into the Activities of Federal Law Enforcement Agencies Toward the Branch Davidians.''* (Subcommittee on National Security, International Affairs, and Criminal Justice prepared in conjunction with the Committee on the Judiciary) Fourteenth Report (H. Rept. 104-821): ``Sampling and Statistical Adjustment in the Decennial Census: Fundamental Flaws.''* Fifteenth Report (H. Rept. 104-849): ``Investigation of the White House Travel Office Firings and Related Matters.''* Sixteenth Report (H. Rept. 104-857): ``Year 2000 Computer Software Conversion: Summary of Oversight Findings and Recommendations.'' (Subcommittee on Government Management, Information, and Technology) Seventeenth Report (H. Rept. 104-858): ``Crude Oil Undervaluation: The Ineffective Response of the Minerals Management Service.'' (Subcommittee on Government Management, Information, and Technology) Eighteenth Report (H. Rept. 104-861): ``Federal Government Management: Examining Government Performance as We Near the Next Century.''* Nineteenth Report (H. Rept. 104-862): ``Investigation into the White House and Department of Justice on Security of FBI Background Investigation Files.''* --------------------------------------------------------------------------- * Denotes report accompanied by additional, dissenting, minority, separate, or supplemental views. --------------------------------------------------------------------------- B. LEGISLATION The legislative jurisdiction of the Committee on Government Reform and Oversight covers a wide range of important governmental operations. In accordance with jurisdiction assumed from the former Committee on Government Operations, the committee receives all budget and accounting measures other than appropriations; all measures relating to the overall economy and efficiency of Government operations and activities, including Federal procurement, intergovernmental relationships, general revenue sharing (the latter subject was formerly within the jurisdiction of the Committee on Ways and Means), and the National Archives (formerly within the jurisdiction of the Committee on Post Office and Civil Service); all reorganization plans and bills providing for the establishment of new departments in the executive branch such as the Department of Energy and the Department of Education; and most other reorganization legislation, examples of which are legislation to reorganize the intelligence community, international trade, and regulatory agencies. Other legislation includes debt collection and proposals relating to delinquent payments and paperwork reduction. It also receives legislation dealing with the General Services Administration, including the Federal Property and Administrative Services Act of 1949 and special bills authorizing the Administrator of General Services to make specific transfers of property, plus legislation dealing with the General Accounting Office, the Office of Management and Budget, the Administrative Expenses Act, the Travel Expenses Act, the Employment Act of 1946, and the Javits-Wagner-O'Day Act relating to the sale of products and services of blind and other handicapped persons. In addition, the committee has jurisdiction over the Freedom of Information provisions of the Administrative Procedure Act, the Privacy Act, the Government in the Sunshine Act, and the Federal Advisory Committee as well as the Inspector General Act. Rule X, 2(b) of the standing Rules of the House, requires the committee to see and review the administration of all laws in the legislative jurisdiction, and Rule XI, 1(d) requires that the committee report to the House thereon by the end of each Congress. The present report outlines the extent and nature of the committee and subcommittee activities constituting the review. On January 4, 1995, as the first session of the 104th Congress convened, the new Republican House majority moved to fulfill its promise of true government reform by implementing its Contract with America. Pursuant to the Contract, 14 bills were introduced as the opening bells rang to promote jobs, enhance wages, take back our Nation's streets, and restore openness, accountability, and fiscal responsibility in our Federal Government. Of the Contract bills, four were referred to the Committee on Government Reform and Oversight for immediate review and action. They included: H.R. 2, the Line- Item Veto Act; H.R. 5, the Unfunded Mandates Reform Act; H.R. 9, the Job Creation and Wage Enhancement Act; and H.R. 450, (830) the Paperwork Reduction Act. The actions taken on each are described below. During the 104th Congress, as noted above, the committee studied 436 bills and resolutions referred to it and reported 42 to the House. The measures reported or ordered reported are discussed more fully in part two below. However, they are listed here for convenience in the order of approval by the committee and with the name of the subcommittee that initially considered them: H.R. 5, To curb the practice of imposing unfunded Federal mandates on States and local governments, to ensure that the Federal Government pays the costs incurred by those governments in complying with certain requirements under Federal statutes and regulations, and to provide information on the cost of Federal mandates on the private sector, and for other purposes. (H. Rept. 104-1, Pt. 2, S. 1; Public Law 104-4.) H.R. 2, To give the President item veto authority over appropriation acts and targeted tax benefits in revenue acts. (H. Rept. 104-11, Pt. 2, S. 4; Public Law 104-50.) H.R. 830, To amend chapter 35 of title 44, United States Code, to further the goals of the Paperwork Reduction Act to have Federal agencies become more responsible and publicly accountable for reducing the burden of Federal paperwork on the public, and for other purposes. (H. Rept. 104-37, S. 244; Public Law 104-13.) H.R. 450, To ensure economy and efficiency of Federal Government operations by establishing a moratorium on regulatory rulemaking actions, and for other purposes. (Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs, H. Rept. 104-39, Pt. 1, S. 219.) H.R. 1271, To provide protection for family privacy. (Subcommittee on Government Management, Information, and Technology, H. Rept. 104-94.) H.R. 1345, To eliminate budget deficits and management inefficiencies in the government of the District of Columbia through the establishment of the District of Columbia Financial Responsibility and Management Assistance Authority, and for other purposes. (Subcommittee on the District of Columbia, H. Rept. 104-96, Public Law 104-8.) H.R. 1826, To repeal the authorization of transitional appropriations for the United States Postal Service, and for other purposes. (Subcommittee on the Postal Service, H. Rept. 104-174.) H.R. 1606, To designate the United States Post Office building located at 24 Corliss Street, Providence, Rhode Island, as the ``Harry Kiziran Post Office Building.'' (Subcommittee on the Postal Service, Public Law 104-100.) H.R. 1026, To designate the United States Post Office building located at 201 East Pikes Peak Avenue in Colorado Springs, Colorado, as the ``Winfield Scott Stratton Post Office.'' (Subcommittee on the Postal Service, passed House and Senate as H.R. 1026; Public Law 104-44.) H.R. 1655, To authorize appropriations for fiscal year 1996 for intelligence and intelligence-related activities of the U.S. Government, the Community Management Account, and the Central Intelligence Agency Retirement and Disability System, and for other purposes. (H. Rept. 104-138, Pt. 2, S. 922; Public Law 104-93.) H.R. 1670, To revise and streamline the acquisition laws of the Federal Government, to reorganize the mechanisms for resolving Federal procurement disputes, and for other purposes. (H. Rept. 104-222, Pt. 1.) H.R. 2108, To permit the Washington Convention Center Authority to expend revenues for the operation and maintenance of the existing Washington Convention Center and for preconstruction activities relating to a new convention center in the District of Columbia, to permit a designated authority of the District of Columbia to borrow funds for the preconstruction activities relating to a sports arena in the District of Columbia and to permit certain revenues to be pledged as security for the borrowing of such funds, and for other purposes. (Subcommittee on the District of Columbia, H. Rept. 104-227; Public Law 104-28.) H.R. 1756, To abolish the Department of Commerce, (Title 1.) (H. Rept. 104-260, Pt. 1, S. 929.) S. 790, To provide for the modification or elimination of Federal reporting requirements. (H. Rept. 104-327; Public Law 104-66.) H.R. 994, To require the periodic review and automatic termination of Federal regulations. (Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs, H. Rept. 104-284, Pt. 1.) H.R. 2661, To amend the District of Columbia Self- Government and Government Reorganization Act to permit the District of Columbia to expend its own funds during any portion of a fiscal year for which Congress has not enacted the budget of the District of Columbia for the fiscal year, and to provide for the appropriation of a monthly pro-rated portion of the annual Federal payment to the District of Columbia for such fiscal year during such portion of the year. (Subcommittee on the District of Columbia, H. Rept. 104-408.) H.R. 1398, To designate the United States Post Office building located at 1203 Lemay Ferry Road, St. Louis, Missouri, as the ``Charles J. Coyle Post Office Building.'' (Subcommittee on the Postal Service, passed House.) H.R. 1880, To designate the United States Post Office building located at 102 South McLean, Lincoln, Illinois, as the ``Edward Madigan Post Office Building.'' (Subcommittee on the Postal Service; Public Law 104-157.) H.R. 2262, To designate the United States Post Office building located at 218 North Alston Street in Foley, Alabama, as the ``Holk Post Office Building.'' (Subcommittee on the Postal Service, passed House.) H.R. 2704, To provide that the United States Post Office building that is to be located on the 2600 block of East 75th Street in Chicago, Illinois, shall be known and designated as the ``Charles A. Hayes Post Office Building.'' (Subcommittee on the Postal Service, passed House.) H.R. 2202, Immigration in the Natural Interest Act of 1995. (Subcommittee on Civil Service, H. Rept. 104-469, Pt. II.) H.R. 2700, To designate the United States Post Office building located at 7980 FM 327, Elmendorf, Texas, as the ``Amos F. Longeria Post Office Building.'' (Subcommittee on the Post Office; Public Law 104-255.) H.R. 3184, To streamline and improve the effectiveness of chapter 75 of title 31, United States Code (commonly referred to as the ``Single Audit Act.'') (Subcommittee on Government Management, Information, and Technology, H. Rept. 104-607; Public Law 104-156.) H.R. 2086, To increase the overall economy and efficiency of Government operations and enable more efficient use of Federal funding, by enabling local governments and private, nonprofit organizations to use amounts available under certain Federal assistance programs in accordance with approved local flexibility plans. (Subcommittee on Human Resources and Intergovernmental Relations, H. Rept. 104-847.) H.R. 885, To designate the United States Post Office building located at 153 East 110th Street, New York, New York, as the ``Oscar Garcia Rivera Post Office Building.'' (Subcommittee on the Postal Service, passed House.) H.R. 3139, To redesignate the United States Post Office building located at 245 Centereach Mall on Middle Country Road in Centereach, New York, as the ``Rose Y. Caracappa United States Post Office Building.'' (Subcommittee on the Postal Service; Public Law 104-187.) H.R. 3663, To amend the District of Columbia Self- Government and Governmental Reorganization Act to permit the Council of the District of Columbia to authorize the issuance of revenue bonds with respect to water and sewer facilities, and for other purposes. (Subcommittee on the District of Columbia, H. Rept. 104-635; Public Law 104-184.) H.R. 3664, To make miscellaneous and technical corrections to improve the operations of the government of the District of Columbia. (Subcommittee on the District of Columbia.) H.R. 3586, To amend title 5, United States Code, to strengthen veterans' preference, to increase employment opportunities for veterans, and other purposes. (Subcommittee on Civil Service, H. Rept. 104-675.) H.R. 3452, To make certain laws applicable to the Executive Office of the President, and for other purposes. (Subcommittee on Government Management, Information, and Technology, H. Rept. 104-820, Pt. 1; Public Law 104-331.) H.R. 1281, To amend title 5, United States Code, and the National Security Act of 1947 to require disclosure under the Freedom of Information Act of information regarding certain individuals who participated in Nazi war crimes during the period in which the United States was involved in World War II. (Subcommittee on Government Management, Information, and Technology, H. Rept. 104-819, Pt. 1; Public Law 104-309.) H.R. 3841, To amend the civil service laws of the United States, and for other purposes. (Subcommittee on Civil Service, H. Rept. 104-831, passed House.) H.R. 3864, To reform the management practices of the General Accounting Office, and for the other purposes. (Public Law 104-316.) H.R. 3802, To amend section 552 of title 5, United States Code, popularly known as the Freedom of Information Act, to provide for public access to information in an electronic format, and for other purposes. (Subcommittee on Government Management, Information, and Technology, H. Rept. 104-795; Public Law 104-231.) H.R. 3869, To amend the Federal Advisory Committee Act to direct the Director of the Office of Management and Budget to conduct a negotiated rulemaking for the purpose of establishing electronic data reporting standards for the electronic interchange of certain data that is required to be reported under existing Federal law. (Subcommittee on Government Management, Information, and Technology.) H.R. 3637, To amend chapter 57 of title 5, United States Code, and title 31, United States Code, to provide employees who transfer in the interest of the Government more effective and efficient delivery of relocation allowances by reducing administrative costs and improving services, and for other purposes. (Subcommittee on Government Management, Information, and Technology.) H.R. 3625 (S. 1577), To authorize appropriations for the National Historical Publications and Records Commission for fiscal years 1998, 1999, 2000, and 2001. (Subcommittee on National Security, International Affairs, and Criminal Justice, S. Rept. 104-283; Public Law 104-274.) H.R. 3768, To designate a United States Post Office to be located in Groton, Massachusetts, as the ``Augusta `Gusty' Hornblower United States Post Office.'' (Subcommittee on the Postal Service.) H.R. 3834, To redesignate the Dunning Post Office in Chicago, Illinois, as the ``Roger P. McAuliffe Post Office.'' (Subcommittee on the Postal Service; Public Law 104-189.) H.R. 3877, To designate the United States Post Office building in Camden, Arkansas, as the ``Honorable David H. Pryor Post Office Building.'' (Subcommittee on the Postal Service; Public Law 104-268.) S. 868, To provide authority for leave transfer for Federal employees who are adversely affected by disasters or emergencies, and for other purposes. (Subcommittee on Civil Service, S. Rept. 104-151; passed House.) OTHER LEGISLATIVE ACTION The following bills were referred to the Committee on Government Reform and Oversight, however, the committee was discharged from further consideration, therefore, the bills were not reported by the committee. Latest action is shown: H.R. 9, to create jobs, enhance wages, strengthen property rights, maintain certain economic liberties, decentralized and reduce the power of the Federal Government with respect to the States, localities, and citizens of the United States, and to increase the accountability of Federal officials. (Reported amended by Committee on Commerce, H. Rept. 104-33, Pt. I; amended from Committee on Science, Pt. II; passed House amended and received in Senate and referred to Governmental Affairs.) H.R. 564, a bill to provide that receipts and disbursements of the Highway Trust Fund, the Airport and Airway Trust Fund, the Inland Waterways Trust Fund, and the Harbor Maintenance Trust Fund shall not be included in the totals of the budget of the U.S. Government as submitted by the President or the congressional budget. (Subcommittee on Government Management, Information, and Technology.) H.R. 842, a bill to provide off-budget treatment for the Highway Trust Fund, the Airport and Airway Trust Fund, the Inland Waterways Trust Fund, and the Harbor Maintenance Trust Fund. (Subcommittee on Government Management, Information, and Technology.) H.R. 1022, a bill to provide regulatory reform and to focus national economic resources on the greatest risks to human health, safety, and the environment through scientifically objective and unbiased risk assessments and through the consideration of costs and benefits in major rules, and for other purposes. (Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs. Considered by House Unfinished Business. Committee Amendment in the Nature of a Substitute Considered as an Original Bill for the Purpose of Amendment. House agreed to Amendments Adopted by the Committee of the Whole. Motion to Recommit with Instructions Failed in House by Yea-Nay Vote: 174-250 (Record Vote No. 182). Passed House (Amended) by Recorded Vote: 286-141 (Record Vote No. 183). Received in the Senate and referred to Senate Committee on Governmental Affairs.) H.R. 1182, a bill to permit certain Federal employees who retired or became entitled to receive compensation for work injury before December 9, 1980, to elect to resume coverage under the Federal employees' group life insurance program. (Subcommittee on Civil Service.) H.R. 1508, a bill to require the transfer of title to the District of Columbia of certain real property in Anacostia Park to facilitate the construction of National Children's Island, a cultural, educational, and family oriented park. (Subcommittee on the District of Columbia. Reported Amended by the Committee on Resources, H. Rept. 104-277, Pt. I; called up by House under Suspension of Rules and passed House. Received in the Senate and referred to Governmental Affairs.) H.R. 1530, to authorize appropriations for fiscal year 1996 for military activities of the Department of Defense, to prescribe military personnel strengths for fiscal year 1996, and for other purposes. (Reported amended by the Committee on National Security, H. Rept. 104-131; passed House amended; passed Senate amended; House agreed to Conference Rept. 104-406; called up by House as Privileged Matter. Public Law No. 104-106.) H.R. 2017, to authorize an increased Federal share of the costs of certain transportation projects in the District of Columbia for fiscal years 1995 and 1996, and for other purposes. (Subcommittee on the District of Columbia. Reported Amended by the Committee on Transportation and Infrastructure, H. Rept. 104-217, Pt. 1; called up by House under Suspension of Rules and passed House and Senate. Public Law 104-21.) H.R. 2077, to designate the U.S. Post Office building located at 33 College Avenue in Waterville, Maine, as the ``George J. Mitchell Post Office Building.'' (Called up by House by Unanimous Consent. Passed House and Senate by Voice Vote. Public Law No. 104-27.) H.R. 2564, to provide for the disclosure of lobbying activities to influence the Federal Government, and for other purposes. (Reported by the Committee on Judiciary, H. Rept. 104-339, Pt. 1; called up by House by Suspension of Rules and passed House by Voice Vote. Public Law 104-65.) H.R. 2276, to establish the Federal Aviation Administration as an independent establishment in the executive branch, and for other purposes. (Reported amended from the Committee on Transportation and Infrastructure, H. Rept. 104-475, Pt. I. Passed House amended March 12, 1996 and received in Senate and referred to Commerce, Science and Transportation March 13, 1996.) H.R. 2636, to transfer jurisdiction over certain parcels of Federal real property located in the District of Columbia, and for other purposes. (Reported amended from the Committee on Transportation and Infrastructure, H. Rept. 104-368, Pt. I. In addition, it was reported amended from the Committee on Resources, H. Rept. 104-368, Pt. II. Passed House amended on July 31, 1996, and received in the Senate and referred to the Committee on Energy and Natural Resources on August 1, 1996, S. Rept. 104-391.) H.R. 3107, to impose sanctions on persons exporting certain goods or technology that would enhance Iran's ability to explore for, extract, refine, or transport by pipeline petroleum resources, and for other purposes. (Reported amended from International Relations Committee, H. Rept. 104-523, Pt. I; reported amended from Ways and Means Committee, H. Rept. 104- 523, Pt. II. Passed House as amended, passed Senate with amendments. Presented to the President July 24, 1996 became Public Law 104-172.) H.R. 3235, to amend the Ethics in Government Act of 1978, to extend the authorization of appropriations for the office of Government Ethics for 3 years, and for other purposes. (Reported from the Committee on the Judiciary, H. Rept. 104-595, Pt. I. Passed House under suspension of rules and passed Senate on July 24, 1996. Presented to the President July 26, 1996, became Public Law 104-179.) H.R. 3237, to provide for improved management and operation of intelligence activities of the Government by providing for a more corporate approach to intelligence, to reorganize the agencies of the Government engaged in the intelligence activities so as to provide an improved Intelligence Community for the 21st century, and for other purposes. (Reported amended from Intelligence Committee, H. Rept. 104-620, Pt. I, and reported amended from National Security Committee, H. Rept. 104-620, Pt. II.) H.R. 3936, to encourage the development of a commercial space industry in the United States, and for other purposes. (Reported amended the Committee on Science, H. Rept. 104-801, Pt. I, passed House under suspension of rules and received in the Senate on September 18, 1996.) C. REORGANIZATION PLANS The most recent authority of the President to transmit reorganization plans to Congress was reestablished by Public Law 98-614. Approved November 8, 1984, this authority expired on December 31, 1984. Legislation extending executive reorganization authority was not enacted during the first session of the 104th Congress. D. COMMITTEE PRINTS Fifteen committee prints, resulting from work by the committee staff, were issued during the 104th Congress, as follows: ``Rules of the Committee on Government Reform and Oversight, House of Representatives, Together with Selected Rules of the House of Representatives (Including Clause 2 of House Rule XI) and Selected Statutes of Interest.'' (Full committee.) (January 1995.) ``Oversight Plans for all House Committees with Accompanying Recommendations by the Committee on Government Reform and Oversight, House of Representatives (Required by Clause 2 of House Rule XI).'' (Full committee.) (March 1995.) ``Mail Service in the United States: Exploring Options for Improvement.'' Report of the U.S. Postal Service and the Postal Rate Commission, to the Committee on Government Reform and Oversight. (Full committee.) (December 1995.) ``Legislative Manual (1st Edition) of the Committee on Government Reform and Oversight.'' (Full committee.) (February 1996.) ``The Federal Acquisition Reform Act of 1996 and the Information Technology Management Reform Act of 1996-- Divisions D and E of the National Defense Authorization Act of Fiscal Year 1996.'' (Full committee.) (February 1996.) ``Rules of the Committee on Government Reform and Oversight, House of Representatives Together with Selected Rules of the House of Representatives (Including Clause 2 of House Rule XI) and Selected Statutes of Interest.'' (Full committee.) (March 1996.) ``Correspondence Between the White House and Congress in the Proceedings Against John M. Quinn, David Watkins, and Matthew Moore As Part of the Committee Investigation into the White House Travel Office Matter.'' (Full committee.) (May 1996.) ``Interim Report of the Activities of the House Committee on Government Reform and Oversight 104th Congress, First Session.'' (Full committee.) (May 1996.) ``Deposition Transcripts from the Committee Investigation into the White House Office Travel Matter, Volume 1.'' (Full committee.) (May 1996.) ``Business Meeting in the Proceedings Against John M. Quinn, David Watkins, and Matthew Moore As Part of the Committee Investigation into the White House Travel Office Matter.'' (Full committee.) (June 1996.) ``Deposition Transcripts from the Committee Investigation into the White House Office Travel Matter, Volume 2.'' (Full committee.) (October 1996.) ``Deposition Transcripts from the Committee Investigation into the White House Office Travel Matter, Volume 3.'' (Full committee.) (October 1996.) ``Deposition Transcripts from the Committee Investigation into the White House Office Travel Matter, Volume 4.'' (Full committee.) (October 1996.) ``Deposition Transcripts from the Committee Investigation into the White House Office Travel Matter, Volume 5.'' (Full committee.) (October 1996.) ``United States Government Policy and Supporting Positions (Plum Book).'' (Full committee.) (November 1996.) E. COMMITTEE ACTION ON REPORTS OF THE COMPTROLLER GENERAL Rule X, 4(c)(1)(A), of the rules of the House, imposes the duty upon this committee to receive and examine reports of the Comptroller General referred to and to make such recommendations to the House as it deems necessary or desirable in connection with the subject matter of the reports. In discharging this responsibility, each report of the Comptroller General received by the committee is studied and analyzed by the staff and referred to the subcommittee of this committee to which has been assigned general jurisdiction over the subject matter involved. The committee has received a total of 35 General Accounting Office Reports to the Congress for processing during the 104th Congress. After preliminary staff study, these reports were referred to subcommittees of this committee as follows: Civil Service Subcommittee........................................ 6 District of Columbia Subcommittee................................. 4 Government Management, Information, and Technology Subcommittee... 3 Human Resources and Intergovernmental Relations Subcommittee...... 7 National Economic Growth, Natural Resources, and Regulatory Affairs Subcommittee.......................................... 5 National Security, International Affairs, and Criminal Justice Subcommittee.................................................. 4 Postal Service Subcommittee....................................... 6 ----------------------------------------------------------------- ________________________________________________ Total....................................................... 35 Furthermore, in implementation of section 236 of the Legislative Reorganization Act of 1970, the committee now regularly receives GAO reports that are not addressed to Congress but contain recommendations to heads of the Federal agencies. These are generally reports to the agency heads their written statements of actions taken with respect to such recommendations, as required by section 236. The committee received a total of 1,065 such GAO reports to Federal agencies or other committees and Members within the legislative branch. Periodic reports are received from the subcommittees on actions taken with respect to individual reports, and monthly reports are made to the chairman as to reports received. During the 104th Congress, the committees used the reports to further specific investigations and reviews. In most cases, additional information concerning the findings and recommendations of the Comptroller General was requested and received from the administrative agency involved, as well as from the General Accounting Office. More specific information on the actions taken appears in part two below. Complete files are maintained by the committee on all Comptroller General's reports received. Detailed records are kept showing the subcommittee to which the report is referred, the date of referral, and the subsequent action taken. The committee will review all of the Comptroller General's reports received during the Congress in the light of additional information obtained and actions taken by the subcommittees, and determinations will be made whether specific recommendations to the House are necessary or desirable under rule X. PART TWO. REPORT OF COMMITTEE ACTIVITIES I. Matters of Interest, Full Committee A. GENERAL 1. Oversight Plans of the Committees of the U.S. House of Representatives. The 104th Congress adopted a new Rule that provides for each standing committee of the House to formally adopt oversight plans at the beginning of each year. Specifically, the Rule states in part: Rule X, clause (2)(d)(1). Not later than February 15 of the first session of a Congress, each standing committee of the House shall, in a meeting that is open to the public and with a quorum present, adopt its oversight plans for that Congress. Such plans shall be submitted simultaneously to the Committee on Government Reform and Oversight and to the Committee on House Oversight. On March 31, 1995, Committee Chairman William F. Clinger, Jr., submitted the oversight plans of each committee together with recommendations to ensure the most effective coordination of such plans. RECOMMENDATIONS OF THE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT Oversight Plans of the Committees of the House Collectively, the committee oversight plans cover a wide array of Federal programs and management issues. The challenges of dealing with the serious, pervasive problems that continue to impede effective management and efficient program delivery is formidable. A major breakthrough in prospects for improving Federal management, as well as congressional oversight of Federal programs, has been provided by two recent laws: the Chief Financial Officers Act and Government Performance and Results Act. Together, these acts provide a framework necessary to help achieve improved government accountability and stewardship and to lower costs by focusing on results. The Congress framed it this way: Set goals, operate programs, and measure results using reliable financial and management information. While these acts are still in the process of being implemented, efforts already completed or underway in response to both acts offer committees a valuable source of information and insight into the management problems and issues. These include issues that impact individual programs, as well as those that cut across agency programs and organizational boundaries. The committees of the House should: (1) conduct oversight to ensure that these statutes are being aggressively implemented, and (2) use the information produced by the implementation of these statutes and the General Accounting Office's (GAO) high risk list to assess the management weaknesses in the agencies within their jurisdiction. Chief Financial Officers Act One of the underlying historical impediments to better management of government programs has been the lack of reliable financial information. With passage of the CFO Act, the Congress has said that this must change and change quickly. The long-needed fiscal accountability that the act is designed to bring about is essential to effective program management and congressional oversight. Agencies, which represent organizations larger than the Nation's largest private corporations, have typically not been able to perform even the most rudimentary bookkeeping functions. Agency financial management systems are badly deteriorated-OMB reports that most do not meet standards and almost all agencies have been unable to pass the test of an independent financial statement audit. A primary element of the Chief Financial Officers Act, as expanded by the Government Management Reform Act of 1994, is the requirement for all 24 major agencies to have audited financial statements. (The act also calls for governmentwide financial statements, audited by GAO, by fiscal year 1997.) Also, agencies must now have:
financial information that is linked with program and budget data for use in both management control and planning; reports on program cost trends and other performance indicators from which managers can make informed decisions on running government operations effectively and efficiently Since passage of the initial legislation in 1990, the CFO Act has already provided: significantly more accurate information on the government's financial status and operations, as well as an understanding of how unreliable the financial information being provided to the Congress and program managers has been; a better understanding of the pervasiveness of management control problems; and substantial savings from recoveries and better use of funds. Annual financial statement audits, which are done by the agency Inspectors General (IGS) or by GAO, continue to provide valuable information on the results of program operations and the current financial condition of agencies. This information can be of great use to committees in their oversight efforts. Audits, for example, have identified: Despite over $400 billion in adjustments needed to correct errors in Defense's financial data over the last 3 years, Defense is still unable to render an accurate accounting of its hundreds of billions of dollars in assets. This unreliable data has traditionally served as the basis for Defense's reports to the Congress. Duplicate, erroneous, and even fraudulent payments to Defense contractors totaling billions of dollars. Unneeded Defense inventories of almost $40 billion. The IRS being unable to effectively collect or accurately account for $1.25 in annual revenues; audits show that only a fraction of over $100 billion in recorded tax receivables was collectible. GAO's ongoing financial audit work includes the IRS, the Bank Insurance Fund, the Resolution Trust Corporation, and the Pension Benefit Guaranty Corporation, all for fiscal year 1994, and the Department of the Navy for fiscal year 1995. IG's are conducting (in some instances with contracted assistance from accounting firms) fiscal year 1994 audits in the Departments of Education, HHS, Army, Air Force, NASA, Veterans Affairs, EPA, Labor, Agriculture, HUD, Interior, and other agencies. Government Performance and Results Act Effective implementation of the Chief Financial Officers Act is also a vital element to the success of the Government Performance and Results Act (GPRA). GPRA seeks to change the focus of Federal management and accountability from a preoccupation with inputs, such as the amount of program appropriations, to measured results and outcomes of Federal programs. Successful implementation of the act will help address the question: What are the American people getting for their investment in the Federal Government? Information on performance in relation to agency goals can also be helpful to the Congress. Experiences of State governments and foreign countries that are leaders in public management show that GPRA's three key elements: strategic planning; performance measurement; and public reporting and accountability could influence the basic culture of the government so that is more results-oriented. Accurate results-oriented information will greatly assist the Congress in its efforts to oversee current programs and in making informed decisions for the future. But making the major changes in the way Federal agencies are managed and held accountable called for under GPRA will require agencies to develop the capacity to manage for results. This will not be accomplished quickly or easily. Therefore, the act's provisions are being phased in with a series of pilot projects over the next several years. Already, 70 pilots have been designated ranging in size from small programs to entire agencies, including the IRS, SSA, and the Defense Logistics Agency. As agencies implement the act, oversight committees should have opportunities to work with agencies in improving performance by providing managers freedom to experiment and find innovative ways to improve program results, while increasing accountability for achieving those results. 2. Views and Estimates for Fiscal Year 1997. On February 27, 1996, pursuant to section 301(d) of the Congressional Budget and Impoundment Control Act of 1974, as amended by the Balanced Budget and Emergency Deficit Control Act of 1985, the committee submitted its views and estimates to the Committee on the Budget on matters that were included in the President's fiscal year 1997 budget within the committee's jurisdiction. 3. Investigations. a. The Financial Holdings and Activities of Secretary of Commerce Ronald H. Brown.--Beginning in February 1994, Representative William F. Clinger, Jr., then-ranking member of the Committee on Government Operations, wrote to Secretary of Commerce, Ronald H. Brown, requesting that Secretary Brown answer questions arising from his Financial Disclosure Statement. The questions focused on appearances of a conflict in Secretary Brown's holdings and/or role in such companies as Harmon International, Inc., First International Communication, Inc., Corridor Communication, Inc., Albimar Communications, Inc., and Kellee Communications Inc., as well as his business relationship with Ms. Nolanda Hill, the owner of First International Communications and Corridor Communications. Secretary Brown's responses, through intermediaries, generated follow-up letters by Representative Clinger on March 23, 1994, July 11, 1994, July 20, 1994, and at least one meeting between committee staff and Commerce Department officials before Mr. Clinger requested that Mr. Stephen D. Potts, Director of the U.S. Office of Government Ethics, investigate the matter pursuant to 5 C.F.R. Section 2638.401 et. seq. on October 5, 1994. On that same day, Representative Clinger asked Department of Commerce Inspector General, Frank DeGeorge, to investigate Secretary Brown's relationship with the aforementioned companies as well as Boston Bank of Commerce and Boston Bank of Commerce Associates to determine whether it raised any conflicts of interest with Secretary Brown's official responsibilities. In a December 21, 1994, letter, Inspector General DeGeorge deferred to OGE Director Potts, stating, ``this office and OGE agreed that if issues or problems arose during their review which needed investigation, OGE, pursuant to their statutory authority, would refer those matters to this office for appropriate investigation. To date, we have not been asked by OGE to look into any matter. At the end of the OGE review, we will review their findings to determine whether there are any indications of conflicts or other violations warranting further investigation.'' In a letter dated December 29, 1994, Office of Government Ethics Director Stephen D. Potts stated, ``We found that the manner in which Commerce's ethics officials reviewed the financial disclosure forms was consistent with the manner in which we require and expect agencies to carry out these responsibilities.'' Despite acknowledging in his letter repeated discrepancies in Secretary Brown's disclosure reports, Director Potts concluded that appearances of conflict had been avoided due to Secretary Brown's divestiture of holdings, resignation from managerial roles or receipt of waivers. These responses, however, failed to address fully the concerns of Representative Clinger who on January 4, 1995, became chairman of the Government Reform and Oversight Committee of the 104th Congress, thus necessitating further investigation into Secretary Brown's activities. Chairman Clinger noted in a January 23, 1995, letter to Secretary Brown that Secretary Brown had failed to disclose income he received during his Commerce tenure from First International Communications Limited Partnership during 1993. Furthermore, First International Communications Limited Partnership's primary source of income was a debt instrument payable by Corridor Broadcasting Corporation, an entity controlled by Nolanda Hill, Secretary Brown's business associate in First International. In addition, Corridor Broadcasting Corporation had defaulted on a $26 million loan held by the Federal Deposit Insurance Corporation, which ultimately cost American taxpayers some $23 million. Secretary Brown's failure to address the potential conflicts of interest involving his business affiliations, coupled with ongoing efforts by the committee's investigative staff, led to Chairman Clinger's February 27, 1995, request that Attorney General Janet Reno appoint an Independent Counsel, under the Independent Counsel Act, 28 U.S.C. Sec. 591 et. seq., to investigate the holdings and activities of Secretary Brown. Chairman Clinger raised allegations concerning Secretary Brown's: (i) submission of incomplete, inaccurate and misleading financial disclosure statements; (ii) supplementation of salary; (iii) potential conflicts of interest; (iv) misinformation to Congress; and (v) refusing to respond to Congress. In addition to questions raised concerning Secretary Brown's affiliation with the business previously mentioned, the February 27, 1995, request noted that Secretary Brown: (i) failed to disclose either as a gift or loan, $108,000 used as a down-payment for a townhouse purchased by Secretary Brown and his son, Michael Brown, in Washington, DC; (ii) failed to report future income of some $190,955, which he knew he would receive in the wake of his divestiture of his interest in First International; (iii) supplemented his Federal salary by receiving some $412,000, in direct payments, loan forgiveness and payments to his creditors by business partners; (iv) undertook official actions which benefited his business partners and associates; and (v) misled the Congress concerning compensation paid by business partners to members of his immediate family. On July 6, 1995, a three-judge Federal appeals court panel announced its selection of former Federal prosecutor Daniel S. Pearson to serve as an independent counsel in the matter of Secretary Ronald H. Brown. No committee hearings were held during the first session of the 104th Congress on the matter of Secretary of Commerce Ronald H. Brown. In the wake of Secretary Brown's death in April 1996, Independent Counsel Pearson suspended his investigation and turned over matters remaining open--including the Nolanda Hill inquiry--to the Justice Department, Criminal Division. b. The White House Travel Office Investigation.--At approximately 10 a.m., on May 19, 1993, all seven members of the White House Travel Office staff were fired and the five Travel Office employees present in the White House that day were ordered to vacate the White House compound within 2 hours. Returning to the Travel Office by 10:30 a.m., the fired Travel Office employees found their desks already occupied by employees of World Wide Travel, the Arkansas travel agency which arranged for press charters during the Clinton Presidential campaign, Catherine Cornelius and others. Two White House Travel Office employees were out of the White House Travel Office on May 19, 1993, one on a White House advance trip to South Korea, the other on vacation. They learned of their firings, respectively, via CNN telecast and a son who saw Tom Brokaw announce the firings on network news that night. The seven White House Travel Office employees had served from 9 to 32 years in the White House Travel Office. The five Travel Office employees who were present in the White House for their firings ultimately were given additional time to complete their White House out-processing. By early afternoon, they heard then-White House Press Secretary Dee Dee Myers announce at a press briefing that they were subject of an FBI criminal investigation. They had been given no such indication at the time of their dismissals. After completing out-processing, the five Travel Office employees present on May 19, 1993, were driven out of the White House compound in a panel van with no passenger seats. They were seated on the floor and wheel wells of the van along with boxes of their gathered personal effects. While the Travel Office employees served at the pleasure of the President, their precipitous firings and replacement by the Clinton campaign's primary travel agency immediately raised a storm of criticism. Administration claims that it had acted in order to save the press and taxpayers money were met with skepticism by a White House press corps which responded with a litany of complaints of over billing and undocumented billings by World Wide itself throughout the 1992 campaign. In addition, the Clinton administration's announcement that an FBI criminal investigation had been launched was highly improper and, in fact, questionable when it was announced. Furthermore, White House contacts with the FBI in the days leading up to and immediately following the Travel Office firings also were considered improperly handled by Attorney General Janet Reno, who publicly admonished the administration for them. Members of the House and the Senate immediately raised concerns about the manner in which the Travel Office firings took place. In the face of press, public and congressional outcry, the White House placed five of the seven Travel Office employees on administrative leave with pay on May 25, 1993, and announced that it would conduct a White House Management Review of the Travel Office and the administration's role in the Travel Office firings. The fired Travel Office director and deputy director retired. On June 1, 1993, William F. Clinger, Jr., the then-ranking minority member of the House Government Operations Committee, requested that then Chairman John Conyers, Jr., hold hearings on the White House Travel Office firings. Then-White House Chief Thomas F. (Mack) McLarty and then- Office of Management and Budget Director Leon Panetta released the White House Travel Office Management Review on July 2, 1993, and announced the reprimands of four White House staffers. Reprimanded were: Associate Counsel to the President, William H. Kennedy III; Assistant to the President for Management and Administration, David Watkins; former Special Assistant to the President for Management and Administration, Catherine A. Cornelius; and Deputy Assistant to the President and Director of Media Affairs, Jeff Eller. At least three of the four first learned of the ``reprimands'' during their televised announcement. None of the reprimands were documented in the personnel files of any of the four. Also on July 2, 1993, the Supplemental Appropriations Act of 1993 (Public Law 103-50) required the U.S. General Accounting Office (GAO) to ``conduct a review of the action taken with respect to the White House Travel Office.'' In addition to the White House Management Review and the GAO Report entitled White House Travel Office Operations (released on May 2, 1994), at least three other reports were prepared concerning various aspects of the White House Travel Office firings. These reports were prepared by: the Office of Professional Responsibility (OPR) of the U.S. Department of Justice (dated March 18, 1994, and released by the committee on October 24, 1995); a Federal Bureau of Investigation Internal Review of FBI Contacts with the White House (dated June 1, 1993), and the Department of Treasury Inspector General Report ``Allegation of Misuse of IRS RE: ULTRAIR'' (dated June 11, 1993). On September 23, 1993, after consultations with majority staff of the Government Operations Committee, Mr. Clinger withdrew his request for committee hearings on the White House Travel Office firings, ``contingent upon the adequacy of the GAO effort'' which had been mandated by Congress through Public Law 103-50. Individually and collectively, the five reports prepared concerning the White House Travel Office left many questions unanswered and, in fact, raised many more. Several Members of Congress, including Mr. Clinger, sought to have these questions answered through further investigation and congressional hearings. In a letter dated October 7, 1994, Mr. Clinger and 16 other House Members again requested congressional hearings on the White House Travel Office in order to ``address serious questions arising from, or unanswered by, the General Accounting Office (GAO) Report to Congress, White House Travel Office Operations (GAO/GGD-94-132).'' Mr. Clinger's request was accompanied by a 71-page minority analysis of issues unaddressed by any of the previous five reports. This analysis reviewed contradictions concerning: memoranda drafted by Catherine Cornelius outlining its new organizational structure and placing her in charge; activities of Harry Thomason and Darnell Martens; mismanagement by David Watkins; White House reasons justifying the Travel Office firings; contacts between Dee Dee Myers and Darnell Martens; public disclosure of the FBI investigation; possible influence on the FBI; the integrity of Travel Office records; the role of the President; the reprimands, and inaccuracies and insufficiencies in the GAO report on the White House Travel Office. Soon after the November 1994 congressional elections, Mr. Clinger, chairman of the Government Reform and Oversight Committee of the 104th Congress, announced that he would hold hearings on the White House Travel Office firings. In December 1994, the Public Integrity Division of the U.S. Department of Justice indicted former White House Travel Office Director Billy R. Dale on one charge of embezzlement and one charge of conversion. The committee investigative staff conducted interviews and gathered documents from various participants in the Travel Office matter on a voluntary basis throughout the spring and summer of 1995. White House document production, however, proved problematic and led to numerous meetings and phone conversations with Clinton administration representatives in the White House Counsel's Office, the Department of Justice, Department of the Treasury as well as the General Accounting Office. In the fall of 1995, Chairman Clinger scheduled the committee's first hearing on the White House Travel Office for October 24, 1995. The hearing focused on the accuracy and completeness of the five White House Travel Office reports and to consider whether further hearings were required to address unanswered issues. The panel at the October 24, 1995, hearing included authors of each of the five reports, respectively. This hearing purposely avoided all areas that might have impacted upon the trial of former Travel Office Director Billy R. Dale which was to commence on October 26, 1995. The committee reviewed which of seven key Travel Office issues each report addressed. These issues were: the completeness of the review of references to ``Highest Levels'' involvement at the White House in the Travel Office firings; whether any assessment of White House Standards of Conduct was performed and whether administration staffers had violated those standards; whether inquiries were made into the role of Hollywood producer Harry Thomason in the firings; the role of Mr. Thomason's and his firm, Thomason, Richland and Martens (TRM) in seeking contracts involving the Interagency Committee on Aviation Policy (ICAP); whether the issue of competitive bidding by the White House Travel Office and by the White House itself in dealing with the Travel Office was reviewed; and whether thorough investigations into FBI and IRS actions and reactions to the White House inquiries had been undertaken. The hearing made clear that, given limitations on their scopes, none of the reports had addressed fully the issues raised by the Travel Office firings. The Treasury Inspector General IRS report redactions made it impossible to determine whether the IRS addressed any of the seven issues. The OPR and FBI reports only partially addressed two issues, ``FBI actions'' and references to ``Highest Levels of the White House'' and never addressed the other five. Despite its far greater understanding of the participants and circumstances leading to the Travel Office firings--or because of it--the White House Travel Office Management Review only briefly and superficially addressed Harry Thomason's role, FBI actions and references to ``Highest Levels'' of the White House while ignoring competitive bidding, IRS action, standards of conduct and ICAP contracts. Similarly, the GAO relied on the White House Management Review in its report on Mr. Thomason's role and only partially addressed FBI actions and ``Highest Levels'' while leaving ICAP, competitive bidding and standards of conduct unaddressed. IRS disclosure laws prevented the GAO from publicly addressing IRS actions. The October 24, 1995 hearing also made clear that the GAO and OPR reports, the most independent of the five, were hobbled by what their respective authors referred to as an unprecedented lack of cooperation by the White House in their investigations. It was determined in the hearing that the White House had denied both GAO and OPR documents which were critical to their investigations, documents which well might have affected their conclusions. Accordingly, both GAO and OPR never received any of the documents subsequently produced by the White House. The criminal trial of former Travel Office Director Billy R. Dale began on October 26, 1995, and concluded on November 17, 1995, with Mr. Dale's acquittal of both charges. After the acquittal was announced, Chairman Clinger requested that the Public Integrity Section of the Department of Justice turn over all documents related to the criminal prosecution for review by the committee. At year-end 1995, the committee planned hearings on: the role of Mr. David Watkins in the Travel Office firings; the experiences of the fired seven Travel Office employees; the role of Mr. Harry Thomason; and the role of the FBI and IRS. In January 1996, the committee subpoenaed all of Mr. Thomason's documents related to the Travel Office and filed a ``6103 Waiver'' with the IRS in which representatives of UltrAir authorized the IRS, Department of Treasury and others to release all relevant documents concerning the IRS audit of UltrAir in the wake of the Travel Office firings. The Department of the Treasury had promised prompt delivery of all documents pending receipt of the expanded 6103 waiver. At 8:30 p.m. on January 3, 1996, the White House delivered a document production to committee offices. Included in that production was a 9-page, undated draft memorandum written by David Watkins, a copy of which was simultaneously released to the media. Mr. Watkins wrote in this memorandum, which he characterized as a ``soul cleansing'' memorandum, that he had made his ``first attempt to be sure the record is straight, something I have not done in previous conversations with investigators--where I have been as vague and protective as possible.'' The Watkins draft memo ascribed a far greater Travel Office role to First Lady Hillary Rodham Clinton than the White House or Mrs. Clinton ever had admitted: On Monday morning you [then-White House Chief of Staff McLarty] came to my office and met with me and Patsy Thomasson. At that meeting you explained that this was on the First Lady's ``radar screen.'' I explained to you that I had decided to terminate the Travel Office employees and you expressed relief that we were finally going to take action (to resolve the situation in conformity with the First Lady's wishes). We both knew there would be hell to pay if, after our failure in the Secret Service situation earlier, we failed to take swift and decisive action in conformity with the First Lady's wishes. Mr. Watkins concluded that his memo: [Made] clear that the Travel Office incident was driven by pressures for action originating outside my Office. If I thought I could have resisted those pressures, undertaken more considered action, and remained in the White House, I certainly would have done so. But after the Secret Service incident, it was made clear that I must more forcefully and immediately follow the direction of the First Family. I was convinced that failure to take immediate action in this case would have been directly contrary to the wishes of the First Lady, something that would not have been tolerated in light of the Secret Service incident earlier in the year. The Watkins draft memorandum was responsive to the September 1995, document request by the committee. Moreover, back in October 1995, the White House Counsel's Office had informed the committee that it had produced most of the substantive documents pursuant to that request. The White House explained weeks afterwards that it first discovered the Watkins draft memorandum on December 29, 1995. The memorandum was reviewed by the White House Counsel's office and copied to several administration officials as well as the personal attorneys for Mack McLarty, Patsy Thomasson, Harry Thomason, and the President and First Lady by January 2, 1996. The White House released the Watkins draft memorandum to the media on the evening of January 3, 1996, at the same time it released the documents to the committee. On January 5, 1996, Chairman Clinger issued subpoenas to both David Watkins and Harry Thomason for all records concerning the White House Travel Office and related matters. On January 11, 1996, Chairman Clinger issued interrogatories concerning the origin and chain-of-custody of the original and all copies of the Watkins draft memorandum to be answered in writing and under oath by: Jane C. Sherburne, Special Counsel to the President. Jon Yarowsky, Associate Counsel to the President. Natalie Williams, Associate Counsel to the President. Miriam R. Nemetz, Associate Counsel to the President. Christopher D. Cerf, Associate Counsel to the President. Nelson Cunningham, General Counsel, Office of Administration. Patsy Thomasson, Deputy Director of White House Personnel. Also on January 11, 1996, the committee issued bipartisan subpoenas for all relevant records to the White House Executive Office of the President and the White House Office of Administration as well as bipartisan personal subpoenas to Mack McLarty, Bruce Lindsey, Todd Stern, Patsy Thomasson, Catherine Cornelius and Margaret Williams. The documents subpoenaed were due on January 22, 1996. In the wake of the White House's release of the Watkins draft memorandum, Clinton officials, attorneys and surrogates launched attacks on the character and managerial skills of former Travel Office Director Billy Dale. First Lady Hillary Rodham Clinton also assailed Mr. Dale's management in various interviews. As a result, Chairman Clinger wrote President Clinton on January 16, 1996, requesting that the White House cease its continued attack on Mr. Dale. On January 17, 1996, the committee held its second hearing on the Travel Office matter. David Watkins was the sole witness at this hearing, at which he requested that no still or video cameras be allowed to record his testimony, invoking a House rule. In the hearing, he testified under oath regarding his draft memorandum and other records he had turned over to the committee pursuant to a personal subpoena. Watkins testified, ``Was there pressure? Did I feel pressure of the desires and wishes of others? Yes, I did.'' Watkins testified he had felt, ``a lot of internal pressure,'' and was asked by whom. ``The pressure that I felt was coming from the First Lady was conveyed primarily through Harry Thomason and Vince Foster.'' Mr. Watkins' May 12, 1993, notes, first received by the committee under personal subpoena, stated that Harry Thomason told him on that day that the First Lady wanted the Travel Office staff fired that day. In a May 14, 1993, telephone call to the First Lady, Watkins testified, he was told, ``We should get our people in and get those people out.'' In the wake of the discovery of the Watkins memorandum where inconsistencies between Mr. Watkins' statements to the GAO and his undated memorandum and contemporaneous notes became clear, Chairman Clinger asked GAO to advise the committee concerning what sanctions exist for intentionally providing false information to GAO. GAO responded in a letter dated January 17, 1996, which addressed the relevant statutes and legal precedents. In a January 23, 1996, response to GAO, Chairman Clinger asked that GAO compare and contrast the notes of its interviews with Mr. Watkins with copies of interviews conducted with Mr. Watkins by various investigative agencies, Mr. Watkins' draft memorandum and contemporaneous notes and other materials. Chairman Clinger asked that GAO identify all of the material inconsistencies between the documents provided and GAO's own interview notes and to determine whether they met the materiality test required by any applicable statute. The seven fired Travel Office employees testified on January 24, 1996, when the committee held its third hearing on the White House Travel Office firings. The seven fired Travel Office employees testified about their work in the White House Travel Office and the management of press charters, the events leading to their firings on May 19, 1993, and their investigation at the hands of the FBI and IRS. Individually, they testified of the costs of their respective legal defenses which, all told, amounted to some $700,000. While all seven acknowledged that they served at the pleasure of the President, they questioned the manner in which the firings were undertaken. Mr. Dale testified: If the President or the First Lady or anyone else wanted us out in order to give the business to their friends and supporters, that was their privilege. But why can't they just admit that is what they wanted to do rather than continue to make up accusations to hide that fact? Mr. Billy Dale testified in the hearing that records disappeared from the Travel Office in the period immediately preceding the firings and disputed allegations of Travel Office mismanagement as a ``convenient excuse'' intended to justify the firings. Five of the Travel Office employees testified about being placed on administrative leave within a week of the firings and subsequently finding employment elsewhere in the Federal Government. Mr. Dale and former White House Travel Office Deputy Director Gary Wright had retired from Federal service in the aftermath of the firings in 1993. In a letter to the committee dated January 23, 1996, Mr. David L. Clark, Director of Audit Oversight and Liaison for the General Accounting Office, evaluated current White House Travel Office management using the 29 criteria identified in its May 1994, report on the Travel Office. The evaluation was based on work performed by GAO in the Travel Office in the fall of 1995. GAO stated: We found that the Travel Office had developed policies and implemented procedures during the period January 1995 through August 1995 to address all but 3 of the 29 criteria. For those three, we found that the Travel Office had not (1) billed customers within its stated 15-day requirement, (2) paid vendors within its stated 45-day requirement, and (3) performed bank reconciliations regularly. GAO also reported: [T]he Travel Office had a policy requiring monthly reconciliations of its checkbook with the cash balance reported by its bank. As of April 1994, we found that staff were performing the reconciliations as required. However, from January 1995 through August 1995, Travel Office staff performed no bank reconciliations because other tasks were given a higher priority. Immediately prior to our review, the Travel Office reconciled all outstanding bank statements and found deposits totaling $200,000 that had not been entered into its checkbook. These funds were all owed to vendors who had previously furnished goods and services for press trips. White House officials informed us that future monthly reconciliations will be performed as required. GAO's discovery of a $200,000 discrepancy in White House Travel Office deposits for calendar year 1995 is a matter of some concern given that the White House alleged in May 1993, that it had fired the entire Travel Office staff and launched an FBI criminal investigation on the basis of a $18,200 discrepancy in Travel Office petty cash funds. On January 30, 1996, General Counsel Robert P. Murphy of the General Accounting Office wrote Chairman Clinger addressing inconsistencies between statements made by David Watkins to GAO and Watkins' undated draft memorandum and notes taken by Watkins which were dated May 31, 1993, and Watkins' GAO interview and other relevant documents. On February 1, 1996, Chairman Clinger and Senate Judiciary Committee Chairman Orrin Hatch (R-UT) introduced a bill to reimburse the legal expenses of the seven fired White House Travel Office employees. The bill would reimburse nearly $500,000 spent by Mr. Billy Dale on his defense as well as the Travel Office expenses still due by his six colleagues. In a 1994 appropriation, Congress previously reimbursed $150,000 in their legal expenses. On February 7, 1996, the committee issued additional bipartisan personal subpoenas to a number of current and former White House employees, volunteers, friends and others involved in the Travel Office matter, including Matt Moore. On February 13, 1996, following consultation with Chairman Clinger, the GAO asked Federal prosecutors to investigate possible false statements made to GAO by David Watkins, having concluded that statements made or attributed to Mr. Watkins were inconsistent with statements he made in his GAO interview. Justice Department officials submitted the referral to the Independent Counsel and asked the court to approve the expansion of the scope of Independent Counsel Kenneth Starr to include this referral. The Government Reform and Oversight Committee submitted a list of 26 interrogatories to First Lady Hillary Rodham Clinton on February 15, 1996. These interrogatories were to be answered in writing and under oath by the First Lady by February 29, 1996. The White House subsequently asked for an extension and the chairman of the Committee on Government Reform and Oversight agreed to a 3-week extension. The White House provided the First Lady's sworn responses to the committee on the second due date, March 21, 1996. Her responses were released to the media at the same time. In the responses, the First Lady insisted she had no decisionmaking role in the Travel Office firings and that her statements to GAO were accurate. As to conversations with Harry Thomason, Vince Foster and David Watkins, the First Lady had very few specific recollections. Chairman Clinger submitted H. Res. 369, which was referred to the Committee on Rules, on February 29, 1996. H. Res. 369 provided special authority to the Committee on Government Reform and Oversight to obtain testimony for purposes of investigation and study of the White House Travel Office matter. The bill was limited, deliberately, to provide deposition authority to the Committee on Government Reform and Oversight only for its investigation of the Travel Office matter. Deposition authority allowed the committee to obtain sworn testimony from witnesses while minimizing the number of hearings needed in order to complete the investigation.\13\ --------------------------------------------------------------------------- \13\ Precedents for such deposition authority have included: 1) President Nixon Impeachment Proceedings (93d Congress, 1974, H. Res. 803); 2) Assassinations Investigation (95th Congress, 1977, H. Res. 222); 3) Koreagate (95th Congress, 1977, H. Res. 252 and H. Res. 752); 4) Abscam (97th Congress, 1981, H. Res. 67); 5) Iran-Contra (100th Congress, 1987, H. Res. 12); 6) Judge Hastings Impeachment Proceedings (100th Congress, 1987, H. Res. 320); 7) Judge Nixon Impeachment Proceedings (100th Congress, 1988, H. Res. 562); and 8) October Surprise (102d Congress, 1991, H. Res. 258. --------------------------------------------------------------------------- The House approved H. Res. 369 on March 7, 1996. Thereupon, the Committee on Government Reform and Oversight notified witnesses it wished to testify under oath before the committee. Depositions commenced in late March 1996. Initially, they were expected to be completed by June 1996.\14\ --------------------------------------------------------------------------- \14\ With the subsequent revelation that the White House improperly had obtained some 900 confidential FBI background files on former officials of the Reagan and Bush administrations, the last of the depositions in fact was conducted in mid-September 1996. --------------------------------------------------------------------------- The White House made a March 15, 1996, production of documents pursuant to the committee's January 11, 1996, subpoena. That production contained yet another unproduced May 3, 1994, handwritten letter from David Watkins to Mrs. Clinton. No explanation for the White House's failure to produce this document for nearly 2 years during the course of numerous other document requests was proffered until two requests for a chain- of-custody were made. Mr. Quinn finally responded on April 8, 1996, stating only that the letter was located in a stack of unsorted, miscellaneous papers and memorabilia in the Office of Personal Correspondence having been forwarded to Carolyn Huber from the First Lady. Ms. Huber forwarded the original letter to the First Lady on March 4, 1996. Mr. Quinn stated that Mrs. Clinton did not look at the letter until March 12, 1996, at which time she immediately sent the only copy of the White House document to her personal lawyer, David Kendall. Mr. Kendall reviewed the original and returned a copy, and later the original, to Special White House Counsel Jane Sherburne. On March 22, 1996, the three-judge Federal appeals panel which appointed Kenneth K. Starr Whitewater Independent Counsel approved an expansion of Independent Counsel Starr's mandate to include the issue of whether David Watkins lied about First Lady Hillary Rodham Clinton's role in the Travel Office firings and related matters. Attorney General Janet Reno referred the Watkins matter to the three-judge panel after the Justice Department had concluded the Watkins could be investigated by an independent counsel. By a vote of 350 to 43 on March 19, 1993, the House of Representatives passed H.R. 2937, a bill to reimburse the legal expenses and related fees incurred by former employees of the White House Travel Office with respect to the termination of their employment in that office on May 19, 1993. In document productions from individuals subpoenaed, the committee was provided with a copy of a February 15, 1996, White House Memorandum from John M. Quinn, Counsel to the President and Jane Sherburne, Special Counsel to the President, to a witness who had been subpoenaed by the Committee on Government Reform and Oversight to provide all records related to the White House Travel Office matter in the witness' possession to the committee. The memorandum from Mr. Quinn and Ms. Sherburne stated, in part: Last week, the Committee [on Government Reform and Oversight] issued personal subpoenas to you and other current and former White House employees. These personal subpoenas call for personal as well as White House records. The Counsel's Office will handle production of your responsive White House records, i.e., records created or obtained during the course of your official duties. Accordingly, you should forward any White House records you believe may be responsive to the Counsel's Office and we will determine whether they should be produced to the Committee. You should provide any responsive personal records directly to the Committee. [Emphasis in original.] The existence of the February 15, 1996, memorandum from Mr. Quinn and Ms. Sherburne greatly concerned the committee because the February 7, 1996, subpoenas served were personal subpoenas. Those subpoenaed to provide all relevant White House Travel Office records in their possession remain personally responsible for making a complete production, whether or not the White House chooses to withhold any or all of their documents from production to the committee. Given the White House's continuing unwillingness to make a complete production of records it has been subpoenaed to provide the committee, its instructions in the February 15, 1996, memo by Mr. Quinn and Ms. Sherburne to witnesses served personal subpoenas suggests that the White House intends to play an intermediary role in the case of current and former White House staffers, volunteers and others in a manner which may lead to their being held personally liable for a failure to produce all relevant records. In the wake of its discovery of the February 15, 1996, memorandum by Mr. Quinn and Ms. Sherburne, the committee wrote letters to each individual who had been issued a personal subpoena informing them that all records responsive to the committee's January and February 1996, subpoenas must be produced by May 8, 1996. Chairman Clinger sent similar letters to White House Counsel Quinn and Attorney General Reno informing them that all records responsive to White House and Justice Department subpoenas were to be produced by May 8, 1996. Chairman Clinger also announced on May 2, 1996, that he had scheduled a committee business meeting for Thursday, May 9, 1996, at 9 a.m. to consider a privileged resolution to compel production of any subpoenaed records relating to the White House Travel Office which were not provided to the committee by May 8, 1996. On May 9, 1996, the Government Reform and Oversight Committee voted to hold White House Counsel Jack Quinn and former White House aides David Watkins and Matthew Moore in contempt of Congress for failing to turn over subpoenaed documents. Also on May 9, 1996, White House Counsel Quinn wrote Chairman Clinger a letter claiming blanket privilege on behalf of President Clinton over 3,000 pages of documents being withheld from the committee. Attached to this letter was a letter from Attorney General Janet Reno endorsing the claim of executive privilege. At that time, however, the Attorney General had not reviewed any of the documents for which she had approved the President's claim of executive privilege. On May 30, 1996, the day on which the contempt resolution against White House Counsel Quinn was scheduled for a vote on the floor of the House, the White House delivered to the committee 1,000 of the 3,000 pages responsive to the committee's subpoenas over which it previously had claimed executive privilege. Accompanying this production was a privilege log of 2,000 documents which the White House continued to withhold. In the wake of this production, the committee postponed the contempt vote on the floor of the House against White House Counsel Quinn in order to review the records produced and the privilege log. In reviewing the 1,000 pages of documents produced on May 30, 1996, the committee discovered Bernard W. Nussbaum's December 20, 1993, request of Billy Dale's confidential FBI background file from the FBI Liaison Office. Even though it was dated 7 months after Mr. Dale's firing, the form indicated that the White House was requesting Mr. Dale's confidential FBI file because it was considering him for ``Access (S).'' Chairman Clinger immediately called on the White House and the FBI to explain why the Dale file had been requested by and provided to the White House even as the Justice Department was undertaking a criminal investigation of Mr. Dale. (See The Security of FBI Background Investigation Files, below.) In the wake of this development, Chairman Clinger called on the White House to release the remaining 2,000 pages of documents over which it had claimed executive privilege, as it once had claimed executive privilege--inappropriately--over the Billy Dale FBI file request memo. After the White House refused this request, claiming that the remaining 2,000 pages were ``unquestionably within the scope of [executive] privilege,'' Ranking Member Cardiss Collins agreed to act as an intermediary in a successful effort to allow the committee to review documents it deemed essential to its investigation while having the White House certify that no other documents remained outstanding. Chairman Clinger and committee staff began a review of the remaining 2,000 pages of documents in the presence of White House personnel on June 27, 1996. The chairman found these documents heavily redacted and also found that the White House privilege log released the previous month provided insufficient detail of their contents. The chairman advised the White House of these concerns in a June 28, 1996, letter to White House Counsel Quinn. After personally spending 6 hours reviewing redacted White House documents, Chairman Clinger wrote a July 31, 1996, letter to the White House requesting that it produce all responsive documents, in unredacted form, in three categories: 1) communications with outside attorneys relating to interviews, depositions or Grand Jury appearances; 2) briefing materials and questions prepared for Congress; and 3) the review of the late Vince Foster's White House office. The White House produced these documents, some 1,400 pages in all, on August 15, 1996. Meanwhile, in response to a press inquiry on August 1, 1996, President Clinton angrily denied having made any pledge to reimburse Billy Dale's legal expenses despite the fact that White House spokesman Mike McCurry had said in January 1996, that the President would sign such a bill if it came to his desk and a second White House spokesman had repeated those remarks the very morning of the President's outburst. In addition, President Clinton improperly referred to Mr. Dale's Justice Department plea bargain negotiations. The details of those negotiations were leaked under highly questionable circumstances by the Clinton Justice Department in the days following Mr. Dale's November 1995, acquittal by a jury in less than 2 hours of the two charges against him. Mr. Robert Bennett, who is defending President Clinton against charges of sexual harassment made by Ms. Paula Jones, first raised--and mischaracterized--these plea negotiations in the days following the Dale acquittal. The provision to reimburse the Travel Office-related legal expenses of Mr. Dale and his six colleagues was passed in the Senate on September 28, 1996, as part of the Omnibus Consolidated Appropriations Act of 1997, and signed into law by President Clinton on September 30, 1996. On September 18, 1996, the Committee on Government Reform and Oversight approved the committee's report of its ``Investigation of the White House Travel Office Firings and Related Matters'' by voice vote and submitted it to the full House to be printed. On October 15, 1996, Chairman Clinger wrote a letter to Independent Counsel Kenneth W. Starr enclosing copies of the committee's Travel Office Report and its interim report on the FBI Background Investigation Files matter. This letter also addressed Chairman Clinger's concerns about the internal discrepancies in testimony, witnesses' lack of recall of material events, and conflicts between the White House's documentary evidence and the sworn accounts of Jane Sherburne, Harry Thomason, Craig Livingstone, Anthony Marceca, William Kennedy, Bernard Nussbaum and Thomas F. ``Mack'' McLarty. c. The Security of FBI Background Investigation Files.--On May 30, 1996, in the course of its Travel Office investigation, the committee discovered a December 20, 1993, White House request of Billy Dale's confidential FBI background file from the FBI Liaison Office. Even though it was dated 7 months after Mr. Dale's firing, the form indicated that the White House was requesting Mr. Dale's confidential FBI file because it was considering him for ``Access (S).'' The Billy Dale FBI background file request memo was found in a White House production of 1,000 pages of documents over which the White House previously had claimed executive privilege. Chairman Clinger immediately called on the White House and the FBI to explain why the Dale file had been requested by and provided to the White House even as the Justice Department was undertaking a criminal investigation of Mr. Dale. By June 5, 1996, the White House had claimed that the Billy Dale FBI background file request was a routine request mistakenly made by an unnamed file clerk. In response, Chairman Clinger requested of the White House and Attorney General Janet Reno a list of all such White House requests for confidential FBI background reports on private citizens and government employees not seeking employment by the Clinton administration or access to the White House. The following day, the White House claimed that the General Accounting Office had requested the Dale Confidential FBI background file. The GAO denied this immediately. By June 7, 1996, the White House had acknowledged that it obtained the FBI files of approximately 338 former White House employees, including many former Reagan and Bush administration employees but alleged that the files never were read. Then Anthony Marceca, a former detailee hand-picked by White House Office of Personnel Security Director Craig Livingstone to work in that office, contradicted the White House when he told Livingstone's attorney that he, Marceca, in fact had read all the files and had passed on any derogatory information to Livingstone. The White House admitted to having an additional 71 improperly sought FBI background files by June 14, 1996, the day that FBI Director Louis J. Freeh released the findings of an FBI review of the matter. Freeh concluded that 408 files had been sought and received by the White House ``without justification.'' Director Freeh further stated, ``The prior system of providing files to the White House relied on good faith and honor. Unfortunately, the FBI and I were victimized. I promise the American people that it will not happen again on my watch.'' Also on June 14, 1996, Livingstone revealed problems in his own background in a sworn deposition before the Committee on Government Reform and Oversight, including problems with his employment history and the use of illegal drugs. On June 15, 1996, the White House delivered a document production to the committee which included letters from former Associate White House Counsel William H. Kennedy III, to then-Defense Secretary Les Aspin and others seeking the assignment of Army investigator Anthony Marceca to a White House detail in the Office of Personnel Security. The committee held four hearings on the FBI files matter in the summer of 1996. The first hearing on June 19 addressed the issue of how confidential FBI background files were handled during previous administrations. Among the witnesses were former White House Counsels and Deputy White House Counsels, the head of the Office of Personnel Security during the Reagan and Bush administrations and her assistant of 12 years. These witnesses testified that access to confidential FBI background files historically had been strictly limited to at most the White House Counsel, his Deputy and the Director of the Office of Personnel Security. By contrast, the assistant to the former Office of Personnel Security Director testified that during 7 months of service in the Clinton administration, White House interns 18-20 years old--and without any security clearance-- had access to the confidential FBI background files. On June 21, Attorney General Janet Reno turned over the investigation of the White House requests for confidential FBI background files to Independent Counsel Kenneth W. Starr. General Reno stated, ``I have concluded it would constitute a conflict of interest for the Department of Justice itself to investigate the matter involving an interaction between the White House and the FBI, a component of the Department of Justice.'' The committee's second hearing on the FBI files matter was held on June 26, with former White House Counsel Bernard Nussbaum, former Associate White House Counsel Bill Kennedy, Office of Personnel Security Director (then on administrative leave) Craig Livingstone and former Army detailee Anthony Marceca and Lisa Wetzl, a former assistant to Livingstone, testifying as to the handling of these files during the Clinton administration. While Livingstone announced his resignation from this position at the June 26 hearing and the White House immediately announced a replacement, the question, ``Who hired Craig Livingstone?'' never was answered definitively by any of the witnesses. Mr. Livingstone testified that it had been his life-long dream to serve in the White House of a Democratic administration yet most improbably could not recall who made him the offer which made that dream come true. Nor was this question answered in the months to follow. It was learned during this hearing that whoever did hire Livingstone was able to overrule or overcome Kennedy's concerns about Livingstone's background. Mr. Livingstone admitted his drug history in committee depositions and during the June 26 hearing. It had also been reported that he was fired from a previous job for lying about his employment history and was fired by a store which had employed him for improperly returning merchandise. Messrs. Livingstone and Marceca and Ms. Wetzl testified that the improper request and receipt of hundreds of confidential FBI background files of former Reagan and Bush administration officials was undertaken due to their reliance on a faulty White House access list provided by the Secret Service. In order to pursue the committee's investigation into the FBI files matter, Chairman Clinger initially had sought to depose FBI agents. Director Freeh recommended, instead, that the committee be allowed to review relevant FBI background files, and the chairman agreed to this. On July 16, committee Chief Investigative Counsel Barbara Olson reviewed the FBI background files of Livingstone and Marceca. In the Livingstone FBI file, notes of a Nussbaum interview indicated Nussbaum's understanding that Livingstone came highly recommended by Mrs. Clinton, who knew Livingstone's mother. Summarizing an interview with then-White House Counsel Nussbaum concerning Livingstone, FBI Agent Sculimbrene wrote, in part, in a memorandum: Bernard Nussbaum, Counsel to the President, advised that he has known [Livingstone] for the period of time that he has been employed in the new administration. [Livingstone] had come highly recommended to him by HILLARY CLINTON, who has known his mother for a longer period of time. While the White House--and Livingstone's mother--subsequently claimed that Mrs. Clinton did not know Livingstone's mother, the factual accuracy of such a relationship was far less important than the fact that, at the time of Livingstone's hiring, Nussbaum understood him to come highly recommended to the position by a First Lady who knew his mother, details he had denied under oath. No less troubling was the committee's subsequent discovery of continuing FBI involvement in this matter despite General Reno's obvious concern about the inherent conflict of interest between the White House and the Department of Justice in the FBI files investigation. The committee learned that despite the Attorney General's concerns, FBI Counsel Howard Shapiro provided the White House with a ``heads-up'' concerning Chief Investigative Counsel Olson's visit to the FBI and review of the Livingstone and Marceca files, including the Nussbaum interview summary which contradicted Nussbaum's testimony to the committee in a deposition and a hearing. Counsel Shapiro called Deputy White House Counsel Kathleen Wallman with this ``heads-up.'' Ms. Wallman in turn contacted White House Special Counsel Jane Sherburne who informed numerous others of the Livingstone file, including Mr. Nussbaum in advance of his grand jury appearance. On July 17, 1996, two FBI agents appeared at the home of Dennis Sculimbrene, the FBI agent whose interview summary referred to the hiring of Livingstone, showed him the summary and asked him for notes of the interview. FBI agents also searched his work area for information related to Livingstone's hiring and his background investigation. This, too, appeared to violate General Reno's sentiments that such actions would, ``constitute a conflict of interest for the Department of Justice itself to investigate the matter involving an interaction between the White House and the FBI, a component of the Department of Justice.'' The question of whether a faulty White House access list could explain what the Clinton administration had called a ``bureaucratic snafu'' was addressed in the committee's third hearing on the FBI files matter on July 17, 1996. Secret Service Special Agents Arnold Cole, John Libonati and Jeffrey Undercoffer testified at this hearing. Their testimony, based on recovered lists, charted the transitions of nearly 500 former White House officials from ``Active'' to ``Inactive'' status from 1982 through 1993. The Secret Service agents also testified the lists it provided the White House would indicate ``Active'' or ``Inactive'' status or ``A'' and ``I'' for those listed unless a custom list had been requested. Special Agent Cole also testified that, soon after the Clinton White House blamed the FBI files ``snafu'' on a faulty Secret Service list, Livingstone came to him and explained that the office knew which lists to use even as it improperly requested hundreds of confidential FBI background files. Chairman Clinger reviewed Livingstone's file for the first time on July 18, 1996, in the company of Chief Investigative Counsel Olson. Chairman Clinger requested information concerning any communication of information in Livingstone's file to the White House. On July 19, 1996, FBI Counsel Howard Shapiro wrote Chairman Clinger a letter informing him that the FBI had advised the White House as to the contents of the Livingstone file: ``because issues raised in Mr. Nussbaum's interview [in Livingstone's FBI file] has been discussed in connection with the committee's oversight investigation, it was determined that the Bureau had a responsibility to advise affected parties. Therefore, after arrangements were made for your staff to review the files, the Department of Justice, and then the White House, were advised of the results of this review.'' On August 1, 1996, the committee held a hearing on Shapiro's ``heads up'' to the White House on the Livingstone matter. Shapiro not only admitted to the ``heads up;'' he also acknowledged hand-carrying retired FBI Agent Gary Aldrich's manuscript on the Clinton White House, ``Unlimited Access'' to White House Counsel Quinn. On October 15, 1996, Chairman Clinger wrote a letter to Independent Counsel Kenneth W. Starr enclosing copies of the committee's Travel Office Report and its interim report on the FBI Background Investigation Files matter. This letter also addressed Chairman Clinger's concerns about the internal discrepancies in testimony, witnesses' lack of recall of material events, and conflicts between the White House's documentary evidence and the sworn accounts of Jane Sherburne, Harry Thomason, Craig Livingstone, Anthony Marceca, William Kennedy, Bernard Nussbaum and Thomas F. ``Mack'' McLarty. d. Questions concerning campaign contributions made to or solicited by Lippo Group, John Huang and others.--In September and October 1996, it was reported that two former Department of Commerce employees had been involved in political activities while working at the Commerce Department. Former Deputy Assistant Secretary for International Economic Policy John Huang and Melinda Yee, former Special Assistant to the late Secretary of Commerce Ron Brown, allegedly were involved in fund raising and/or other political activities on behalf of the Clinton campaign while on the Federal Government payroll. Following his tenure at Commerce, Huang became a senior fund raiser at the Democratic National Committee. Some of the largest campaign contributions he solicited while there allegedly were made in violation of Federal Election Commission laws. Prior to joining the Clinton administration, Mr. Huang was a senior executive of the Lippo Group, an Indonesia-based conglomerate which provided him an $800,000 bonus shortly before he accepted a Commerce Department post where his work raised conflict of interest issues with his former employer. Mr. Huang and James Riady, whose family controls the Lippo Group, had known President Clinton since the 1980's. Throughout that period, Huang and Riady raised substantial sums of money for Clinton's gubernatorial and Presidential campaigns. Subsequently, it was reported that together they participated in scores of meetings in the Clinton White House. Policy matters were discussed at some of these meetings, possibly in violation of Federal Election Commission campaign law. Follow- up articles addressed a number of other campaign finance irregularities arising during the course of the Clinton campaign, including contributions made by individuals barred by law from making them. In October 1996, Chairman Clinger initiated a series of document requests for materials relevant to this inquiry, which is ongoing. The Democratic National Convention has refunded $1.5 million in contributions from illegal or questionable sources. e. Misuse of political influence within the disciplinary enforcement system at the Department of Defense.--On August 2, 1996, the committee received allegations that high-level White House and Department of Defense (DOD) officials had misused their positions and influence to circumvent the DOD disciplinary enforcement system. The allegations charged that White House officials had pressured the Deputy Under Secretary of Defense to employ a former Air Force officer who had recently been dismissed following confirmed charges of official misconduct. The former officer was alleged to have been re- hired to a senior Schedule-C political appointee position within the Office of the Secretary of Defense (OSD). Pursuing the allegations, the committee first confirmed that the former officer had, in fact been re-hired within OSD, then reviewed the charges of TDY fraud, government cell phone fraud, government AMEX Travel Card abuse and sexual harassment which had originally been lodged against the officer. The committee examined the complete Defense Systems Information Agency Inspector General (DISA IG) and Air Force Office of Special Investigations (AFOSI) investigative files on the case. Staff interviewed the DISA IG and AFOSI case investigators, the reviewing Air Force Staff Judge Advocate and Deputy Staff Judge Advocate, and the retired officer's former commanding officers. All records and interviews substantiated the validity of the initial charges. The Staff Judge Advocate confirmed that while the evidence was sufficient to warrant administrative action, the Air Force had agreed to forego disciplinary proceedings in return for the officer's resignation. Committee staff then met with the Deputy Under Secretary of Defense and representatives of the Secretary of Defense to discuss the decision to employ the dismissed officer as a high- level political appointee at an annual salary of well over $100,000. Although both the Deputy Under Secretary and the Secretary's senior staff were made aware of the past misconduct and the officer's forced resignation, the Secretary declined to take action to remove the officer from his subsequent employment. The committee then referred the matter to the appropriate House and Senate authorizing and appropriating committees for additional action. f. Health Care Task Force.--In February 1993, Representative Clinger called into question the secretive manner in which the administration's Health Care Task Force was conducting business. After requesting information from an unresponsive White House on whether the Task Force was meeting in compliance with statutes concerning open meetings, recordkeeping, conflict of interest requirements and costs, Representative Clinger requested a GAO audit. In a required charter, the Clinton administration claimed Task Force costs would be less than $100,000. The GAO audit, however, placed the total cost at $13.8 million. g. Labor Department Taxpayer Funded ``Toll-Free'' Hotline.--Following reports of a telephone hotline set up by the Department of Labor to gather support for increasing the minimum wage from minimum wage earners, Chairman Clinger sent a letter to Secretary Reich requesting information on the costs and purpose of the telephone bank, and to ascertain whether the Department was in compliance with appropriate information collection laws. Shortly thereafter, the hotline was shut down. After several delays, the Department reported that, although total costs were not yet available, the Department had capped the total cost of the politically inspired hotline at $25,000. The minimum wage brings workers an annual salary of $8,840. h. National Reconnaissance Office.--Chairman Clinger and subcommittee Chairman Horn have asked the GAO to review reports due from Defense Department and the Central Intelligence Agency on revelations that the National Reconnaissance Office secretly accumulated $1.7 billion in unspent appropriated funds. After the GAO report has been completed and reviewed, the committee will determine if further action, including possible financial management reforms, is warranted. i. Abuse of the American Express Government Travel Payment Program.--In the fall of 1995, the Committee on Government Reform and Oversight reviewed two audit reports, one from the Commerce Department and the other from the U.S. Information Agency. Each of these reports highlighted problems associated with the American Express Government Travel Payment Program. At the U.S. Information Agency, the audit report cited $2,200,000 in delinquent funds for the Agency's centrally billed credit card account, and $240,000 in delinquent funds for the Agency employees' individually billed credit card accounts. At the Commerce Department, delinquency was found among 293 employees. The committee also learned from these reports that American Express Travel Cards were being used for personal expenditures on a large scale. At the Commerce Department, 567 employees were found to have used the travel cards for personal use. At the U.S. Information Agency, employees were found to have charged $116,000 in retail purchases, much of which was found to be for personal use. As a result of these reports, the committee endeavored to study the breadth of the problems associated with the American Express Government Travel Payment Program throughout the Federal Government. In March 1996, committee staff met with members of the Office of Management and Budget and the General Services Administration and agreed on parameters by which agencies would submit records and/or analysis of the irregularities in their offices. The number and amount of delinquent charges on Government employees' American Express cards is massive. At the Department of Justice, the Inspector General reports that the sum of Centrally Billed Accounts and Individually Billed Accounts brings monthly delinquency to $1.1 million and identified 768 transactions as ``possible misuse.'' Upon investigation, the Department of Justice Inspector General found charges to retail establishments like Victoria's Secret and Gucci. One such personal charge was to the Boston Red Sox. The Environmental Protection Agency chose to examine only its Region 5 office. In that region, misuse ranged from $10.40 to $21,281. Twenty-four Environmental Protection Agency employees improperly charged $2,000 or more on their Government credit cards. Although the State Department Inspector General reported only $82,000 in possible misuse over a 6 month period, of the $6.4 million in retail charges, $3.2 million represents cash transactions from automatic teller machines or traveler checks. The State Department Inspector General reports total delinquency among Government credit card holders at between $847,805 and $1,093,034 each month. On September 25, 1996, Chairman Clinger wrote to Franklin D. Raines, the Director of the Office of Management and Budget, for his assurance that these abuses are being corrected. In addition, the chairman sought to ensure that provisions in a new contract being negotiated by the General Services Administration were designed to prevent the widespread abuse discovered in the course of the committee's investigation. The committee is awaiting a response from Director Raines. j. Taxpayer Funded Trip to Disney World.--After learning of a Disney World training seminar conducted at taxpayer expense for as many as 400 Federal employees, Chairman Clinger wrote on behalf of the committee to the Departments of Interior, Agriculture, and Defense to obtain an accounting of the exact costs of the trip, the number of employees involved, and an explanation of how the training related to the Departments' missions. The trip was taken just 1 week after the Federal Government shut down as a result of disagreements on how to achieve a balanced budget. Chairman Clinger spelled out his concern that hundreds of thousands of dollars may have been spent for what appears to be a lavish, taxpayer-funded vacation. 4. Legislation. a. H.R. 5, the Unfunded Mandates Reform Act of 1995 (Public Law 104-4) a. Report Number and Date.--House Report No. 104-1, Pt. 2; January 13, 1995. b. Summary of Measure.--The Unfunded Mandates Reform Act of 1995 was intended to relieve the burden of unfunded Federal mandates on State, local and tribal governments and the private sector. It was designed to ensure that Congress and the executive branch (1) had information on the costs of unfunded Federal mandates, and (2) were accountable to States and localities, the private sector, and the public for imposing new mandates without paying for them. Title I of the Unfunded Mandates Reform Act (Public Law 104-4) amended Title IV of the Congressional Budget Act to provide that Congress must have Congressional Budget Office (CBO) estimates for the costs of mandates it would impose on State and local governments and the private sector through reported legislation. Intergovernmental mandates projected to cost State, local or tribal governments over $50 million in the aggregate must be funded. Legislation that does not meet these requirements will be subject to a point of order on the House and Senate floor, where a majority of members must vote to waive the point of order before Congress can consider an intergovernmental mandate without paying its costs. Title II of the law requires Federal agencies to analyze the effects of their rules on State and local governments and the private sector, and prepare written statements detailing the costs and benefits of rules expected to cost either State, local and tribal governments or the private sector over $100 million in the aggregate. Agencies must consult with State and local elected officials throughout the process. Agencies also must select the least costly or most cost-effective rule where possible. Title III provides for a look back at existing mandates. It requires the Advisory Commission on Intergovernmental Relations to re-evaluate existing mandates and to make recommendations to Congress and the President within 1 year as to whether some or all should be changed or repealed. Title IV provides for limited judicial review of agency actions under Title II. The differences between H.R. 5 as reported by the committee and Public Law 104-4 are fairly technical in nature and do not dramatically alter the purpose or effect of the legislation. c. Legislative History/Status.--Government Reform and Oversight Committee Chairman William F. Clinger, Jr., joined with Representatives Rob Portman (R-OH), Gary Condit (D-CA) and Tom Davis (R-VA) to introduce H.R. 5, the Unfunded Mandates Reform Act, on January 4, 1995. The bill was referred to the Committee on Government Reform and Oversight, with secondary referrals given to the Committees on Rules, Budget, and Judiciary. d. Hearings and Committee Actions.--On January 10, 1995, the committee voted to report H.R. 5 by a voice vote after a mark up in which 18 amendments were offered and 4 were adopted. Of those amendments adopted, three were offered by Representative Steve Horn (R-CA) and one was offered by Representative Paul Kanjorski (D-PA). The committee did not consider sections 201, 202, or Title III of H.R. 5 based on consultations with the Parliamentarian that those provisions were not in the committee's jurisdiction. S. 1, the companion bill in the Senate (also titled the Unfunded Mandates Reform Act of 1995), moved through the Senate Governmental Affairs Committee on a parallel track. House floor consideration of H.R. 5 began on January 19, 1995, and concluded on February 1, 1995. The Conference Report on S. 1 was passed by the House on March 16, 1995, and was signed into law on March 22, 1995. b. H.R. 2, Line Item Veto Act of 1995 a. Report Number and Date.--House Report No. 104-11, Pt. II, January 30, 1995, together with minority and additional views. b. Summary of Measure.--H.R. 2, the House-passed Line Item Veto Act of 1995, was designed to supplement the President's existing impoundment authority by creating a new enhanced rescission process for individual appropriations and targeted tax benefits contained in Federal tax and spending bills. The bill as sent to the President addresses not only individual appropriations and limited tax benefits, but also provides item-veto authority for increases in new direct spending. Under the Line Item Veto Act, the President may strike any whole dollar amount of discretionary spending in an appropriations act, conference report, or joint explanatory statement to accompany a conference report. In the case of entitlements, the President is permitted to cancel specific provisions of law which provide new direct spending relative to the current budget baseline. Any new direct spending program or legislative expansion of an existing entitlement would therefore be subject to the line item veto. For limited tax benefits, the act permits the Joint Committee on Taxation to determine which provisions, if any, in a revenue or reconciliation bill meet the definition of a limited tax benefit. If the Joint Committee's determinations are included in the revenue or reconciliation bill which is sent to the President, its determinations are binding upon the President's cancellation authority. If no Joint Committee determinations are included in the bill, the President is permitted to make his own determination of what qualifies as a limited tax benefit using the definition contained in the Line Item Veto Act. Tax or spending items item-vetoed by the President are automatically canceled and may only be reinstated if both Houses of Congress vote to disapprove the President's cancellations within a fixed time period. All moneys saved are set aside in a lockbox account for the purposes of deficit reduction. If both Houses disapprove the President's recommendations by a bill or joint resolution, the President retains his constitutional authority to veto the disapproval measure, forcing the Congress to obtain a two-thirds vote in each House to override. The Line Item Veto Act permits the President to choose between using its new item-veto process or the existing impoundment process contained in title X of the Congressional Budget Act. c. Legislative History/Status.--H.R. 2 was introduced on January 4, 1995, and was approved and ordered reported, as amended, by the Committee on Government Reform and Oversight on January 25, 1995. On January 26, 1995, the Committee on Rules asserted its sequential referral by marking-up the bill. The Rules Committee ordered the bill reported with two amendments which more closely defined the format of the President's special disapproval message. An amendment in the nature of a substitute to H.R. 2, incorporating both the Government Reform and Oversight and Rules Committee amendments, passed the House of Representatives on February 6, 1995. On February 14, 1995, the Senate Budget Committee reported two competing versions of S. 4 while the Senate Committee on Governmental Affairs reported its version of the bill on March 7, 1995. The Senate approved the bill, as amended on March 23, 1995, and requested a conference. The bill S. 4 passed the House on March 28, 1996 and was signed into law by the President on April 9, 1996, to become Public Law 104-130. d. Hearings and Committee Actions.--A joint hearing was held on January 12, 1995, by the House Committee on Government Reform and Oversight and the Senate Committee on Governmental Affairs. In the first panel, testimony was received from Senators John McCain and Dan Coats, and from Representatives Gerald Solomon, Jack Quinn, Mark Neumann and Michael Castle. All spoke in favor of the bill. Governor William Weld of Massachusetts then testified to the effectiveness of the line- item veto in controlling State expenditures. Dr. Alice Rivlin, Director of the Office of Management and Budget, spoke on behalf of the Clinton administration and expressed support for the legislation as enhancing the President's authority to cut spending. Dr. Robert Reischauer, Director of the Congressional Budget Office, then cautioned that the bill would provide the President with greater potential power than a constitutionally approved item-veto. Judge Gilbert S. Merritt, Chief Judge of the Sixth Circuit and chairman of the Executive Committee of the Judicial Conference, expressed concern over applying the line-item veto to appropriations acts for the judiciary. The hearing ended with the final panel, which consisted of Joseph Winkelmann of Citizens Against Government Waste, David Keating of the National Taxpayers' Union, and Dr. Norman Ornstein of the American Enterprise Institute, taking different views of the bill. Mr. Winkelmann and Mr. Keating strongly supported H.R. 2, while Dr. Ornstein regarded the bill as more of a transfer of congressional power to the President than a process for true spending restraint. c. H.R. 1038, a bill to revise and streamline the acquisition laws of the Federal Government. a. Report Number and Date.--None. b. Summary of Measure.--On February 24, 1995, Chairman William F. Clinger, Jr., of the Committee on Government Reform and Oversight, Chairman Floyd D. Spence of the Committee on National Security, and Chairman Benjamin A. Gilman of the Committee on International Relations, introduced H.R. 1038 to revise and streamline the acquisition laws of the Federal Government. The bill addressed two issues: repeal of the recoupment of research and development costs, and a rewrite of the Procurement Integrity laws. c. Legislative History/Status.--Included as part of H.R. 1670, the Federal Acquisition Reform Act of 1995 in May 1995, which subsequently was modified and included in the conference report to S. 1124, the Fiscal Year 1996 Department of Defense Authorization Act (Public Law 104-106). d. Hearings and Committee Actions.--The bill was referred to the Subcommittee on Government Management, Information, and Technology, which met pursuant to notification on February 28, 1995, to solicit additional proposals for further simplifying and streamlining the Federal procurement system. At the hearing, testimony was received from various procurement specialists in the contracting community representing government and industry. Generally, the comments of the witnesses were as follows: those representing the government expressed the need for less congressional micro-management and greater flexibility and authority for agency contracting officers; those representing businesses, both large and small, reiterated their long held views about reducing government rules and regulations so they could sell to government agencies like they do to private sector buyers; and those representing other groups complained that existing laws are too complicated and too confusing. The various proposals for reform brought forward by the witnesses ranged from minor technical corrections to a complete overhaul of the system. d. H.R. 1670, The Federal Acquisition Reform Act of 1995 a. Report Number and Date.--Report No. 104-222, Pt. 1, together with additional minority views; August 1, 1995. b. Summary of Measure.--During this time of declining Federal budgets, Chairman Clinger and his colleagues sought to eliminate the mass of requirements littering the current Federal procurement system that has led to too much money being spent for too little product. H.R. 1670 would remove from statute many of these unnecessary government-unique requirements which are often non-value added obstacles to doing business with the Federal Government. This legislation would make changes to the current competition standard; increase the government's purchase of commercial items; streamline current procurement integrity statutes; provide that it is the policy of the Federal Government to acquire goods and services from the private sector; and consolidate current contract disputes and bid protest forums into two streamlined entities, one for Department of Defense acquisitions and the other for the civilian agencies. c. Legislative History/Status.--On June 14, 1995, a version of H.R. 1670 was offered on the floor of the House of Representatives as an amendment to the fiscal year 1996 Department of Defense Authorization Act; adopted and amended by Congresswoman Cardiss Collins' second degree amendment to remove Title I of H.R. 1670, and replace it with language which would retain the current statutory competition standard and include further statutory revisions. An amendment in the nature of a substitute to H.R. 1670 was developed prior to committee mark-up to reflect the views of other Members of Congress (both Republican and Democrat), industry associations, senior industry executives, the administration, government contracting officials, representatives of both large and small business, and from other interested individuals. The Committee on Government Reform and Oversight met on July 27, 1995, to consider H.R. 1670. The bill, as amended, was favorably reported to the House by voice vote and without further amendment by the full committee. H.R. 1670 was passed on the floor of the House of Representatives on September 14, 1995, by an overwhelming vote of 423-0. The bill was sent to the Senate and referred to the Committee on Governmental Affairs. H.R. 1670 was included in a modified form as Division D in the final conference report to accompany S. 1124, the Department of Defense Authorization Act for Fiscal Year 1996. S. 1124 was signed by the President on February 10, 1996, and became Public Law 104-106. Included in the Omnibus Consolidated Appropriations Act for Fiscal Year 1997 (Public Law 104-208) was language to change the short titles of both Division D and Division E (the Information Technology Management Reform Act of 1996) of Public Law 104-106 to the Clinger-Cohen Act of 1996. d. Hearings and Committee Actions.--A joint hearing by the Committee on Government Reform and Oversight and the Committee on National Security was held on May 25, 1995, to solicit views on H.R. 1670 as introduced on May 18, 1995. Procurement experts representing both government and industry provided comment. Statements presented by industry representatives emphasized that H.R. 1670 would shift presumptions of private and public- sector business interaction from a negative one to a positive one, and would permit things to be done cheaper, faster, and better than currently is being done today. These representatives identified H.R. 1670 as clearly making a long- term mark on the acquisition system to prepare it for the 21st century. e. H.R. 830, The Paperwork Reduction Act of 1995 a. Report Number and Date.--Report No. 104-37, February 15, 1995. b. Summary of Measure.--The Paperwork Reduction Act is intended to: 1. Reauthorize appropriations for the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) to carry out the provisions of the Paperwork Reduction Act of 1980 as amended. 2. Strengthen OIRA and agency responsibilities for the reduction of paperwork burdens on the public, particularly through the inclusion of all federally sponsored collections of information in a clearance process involving public notice and comment, public protection, and OIRA review. 3. Establish policies to promote the dissemination of public information on a timely and equitable basis, and in useful forms and formats. 4. Strengthen agency accountability for managing information resources in support of efficient and effective accomplishment of agency missions and programs. 5. Improve OIRA and other central management agency oversight of agency information resources management (IRM) policies and practices. The legislation was premised on the committee's continuing belief in the principles and requirements of the Paperwork Reduction Act of 1980. All of the legislation's amendments to the 1980 act, as amended in 1986, are intended to further its original purposes--to strengthen OMB and agency paperwork reduction efforts, to improve OMB and agency information resources management, including in specific functional areas such as information dissemination, and to encourage and provide for more meaningful public participation in paperwork reduction and broader information resources management decisions. With regard to the reduction of information collection burdens the legislation increases the act's 1986 goal of an annual 5 percent reduction in the public paperwork burdens to 10 percent during the first 2 years of authorization and 5 percent thereafter. OMB is required to include in its annual report to Congress recommendations to revise statutory paperwork burdens if this goal is not reached. The legislation includes third-party disclosure requirements in the definition of collection of information to overturn the Supreme Courts decision, Dole v. United Steelworkers of America (494 U.S. 26 (1990)). This will ensure that collection and disclosure requirements are covered by the OMB paperwork clearance process. The act is also amended to require each agency to develop a paperwork clearance process to review and solicit public comment on proposed information collections before submitting them to OMB for review. Public accountability is also strengthened through requirements for public disclosure of communications with OMB regarding information collections (with protections for whistle blowers complaining of unauthorized collections), and for OMB to review the status of any collection upon public request. In combination with more general requirements, such as encouraging data sharing between the Federal Government and State, local and tribal governments, the legislation strives to further the act's goals of minimizing Government information collection burdens, while maximizing the utility of Government information. The legislation also adds further detail to strengthen other functional areas such as statical policy and information dissemination. The dissemination provisions, for example, delineate clear policies that were not articulated in the act's previous references to dissemination. The provisions require OMB to develop governmentwide policies and guidelines for information dissemination and to promote public access to information maintained by Federal agencies. In turn, the agencies are to: ensure that the public has timely and equitable access to public information; solicit public input on their information dissemination activities; and not establish restrictions on dissemination or redissemination. Emphasis is placed on efficient and effective use of new technology and a reliance on a diversity of public private sources of information to promote dissemination of Government information, particularly in electronic formats. With regard to over-arching information resources management (IRM) policies, the legislation charges agency heads with the responsibility to carry out agency IRM activities to improve agency productivity, efficiency, and effectiveness. It makes program officials responsible and accountable for those information resources supporting their program. The IRM mandate is strengthened by focusing on managing information resources in order to improve program performance, including the delivery of services to the public and the reduction of information collection burdens on the public. To improve accountability for agency IRM responsibilities, as well as responsibilities for paperwork reduction, the agency responsibilities provided in the act are amended to complement and more directly parallel OMB's functional responsibilities. Further, to prompt agencies to reform their management practices, the bill requires each agency head to establish an IRM steering committee, develop an IRM strategic planning process, and develop IRM performance measures linked to program performance. In these various pursuits, the goal is to integrate the management of information resources with program management and assure the use of the resources to achieve agency missions. With the Federal Government spending approximately $25 billion a year on information technology, the stakes are too high not to press for the most efficient and effective management of information resources. The reduction of information collection burdens on the public and maximizing the utility of Government information will not otherwise occur. c. Legislative History/Status.--H.R. 830, the Paperwork Reduction Act of 1995, was introduced on February 6, 1995, by Government Reform and Oversight Committee Chairman William F. Clinger, Jr., for himself, Congressmen Norman Sisky, David McIntosh, chairman of the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs, and other Members of Congress. The President signed the bill on May 22, 1995, as Public Law 104-13. d. Hearings and Committee Actions.--After introduction, H.R. 830 was referred to the Committee on Government Reform and Oversight. On February 6, 1995, Chairman Clinger referred the bill to the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs for consideration. On February 7, 1995, the subcommittee, under the direction of Chairman McIntosh, held a hearing to consider reauthorization of appropriations for the Paperwork Reduction Act, OIRA's implementation of the act, and OIRA's conduct of regulatory review under Presidential Executive order. Testimony included comment and discussion of H.R. 830. Witnesses at the February 8, 1995 hearing were: Sally Katzen, Administrator, Office of Information and Regulatory Affairs; Mr. James McIntyre, former Director of the Office of Management and Budget and currently an attorney; Mr. James Miller, former Director of the Office of Management and Budget and current chairman of the Citizens for a Sound Economy; Mr. Gene Dodaro, Assistant Comptroller General, General Accounting Office accompanied by Mr. Chris Hoenig, also of GAO; Mr. Robert Coakley, executive director, Council on Regulatory and Information Management; Jack Sheehan, legislative director, United Steelworkers of America; and Bob Stolmeier, president, KLC Corp. At the hearing, Clinton administration witness Sally Katzen testified squarely in support of H.R. 830: It is truly gratifying to be here today in what I hope is the last phase of improving and strengthening the Paperwork Reduction Act. For more than 2 years Congress has had legislative proposals to update and expand the Paperwork Reduction Act consistent with and building upon its original purposes. My commendations to the congressional staff who have worked professionally and constructively to develop a consensus, a bipartisan approach, which is contained in H.R. 830 and in the Senate, 244, which the Senate Governmental Affairs Committee reported out on February 1. We are pleased to report that the administration supports those efforts. After taking into consideration the testimony of the witnesses at the February 7 hearing, and after further consultation with the staff of the House Small Business Committee, the Senate Committee on Governmental Affairs, and with staff of the General Accounting Office and Office of Management and Budget, the subcommittee held a mark-up of H.R. 830 on February 8, 1995. The full committee held its mark-up on February 10, 1995, and voted, 40 in favor and 4 against, to report H.R. 830, as amended, favorably to the full House. f. S. 790, The Federal Reports Elimination and Sunset Act of 1995 a. Report Number and Date.--Report No. 104-327, November 8, 1995. b. Summary of Measure.--During consideration of S. 244 the Paperwork Reduction Act of 1995 (PRA), the Senate adopted two amendments which dealt with the elimination or modification of certain congressionally mandated reporting requirements and also placed a sunset on other similar reports. These amendments were offered by Senators John McCain (R-AZ) and Carl Levin (D- MI). Conferees meeting to resolve differences between the House and Senate versions of the PRA agreed to offer the McCain and Levin amendments as separate and freestanding legislation. The PRA was signed into law on May 22, 1995, as Public Law 104-13 without the McCain and Levin amendments. After the President signed the Paperwork Reduction Act of 1995 into law, House and Senate staffers in both the majority and minority began meeting to initiate the work necessary to present this bill to the House Government Reform and Oversight Committee and the Senate Governmental Affairs Committee. The Paperwork Reduction Act sets the standard by which Congress can continue to alleviate the paperwork burden on executive branch agencies. The Federal Report Elimination and Sunset Act of 1995 continues that work. By mandate, executive branch agencies annually produce thousands of reports to Congress. Many are outdated and no longer necessary. This bill eliminates or modifies nearly 200 such reporting requirements and establishes a sunset on all others. S. 790 was needed not merely to alleviate the burden on the executive branch but to also allow the Government to focus its energy on more important issues, thereby better utilizing their time. On December 21, 1982, President Ronald Reagan signed the Congressional Reports Elimination Act of 1982 into law (Public Law 97-375) and 13 years later the Federal Reports Elimination and Sunset Act continues, with the same strong bi-partisan support that the 1982 act received, to relieve the Federal Government of needless and burdensome paperwork. President Reagan said in his statement that this was a, ``useful and constructive step in reducing unnecessary paperwork and in improving executive branch operations.'' Also, given increasing costs of report production, this bill will help control costs in keeping with this committee's efforts to increase the efficiency of the Federal Government. c. Legislative History/Status.--Senators McCain and Levin introduced S. 790, the Federal Reports Elimination and Sunset Act of 1995, on May 11, 1995. It was reported favorably by the Senate Committee on Governmental Affairs and was approved by the Senate by a unanimous voice vote on July 17, 1995. In his floor speech, Senator Levin compared S. 790 to S. 2157, which he and Senator Cohen introduced in 1994. The Senator explained that the list of reports included in S. 790 was first compiled by sending out letters asking all 89 executive and independent agencies to identify those reports required by law which were no longer necessary or useful and could be eliminated or modified. Agencies were asked to produce a clear and substantiated justification for each recommendation made. Following Senate approval, S. 790 was sent to the U.S. House of Representatives on July 18, 1995, and held at the Clerk's desk. On September 12, 1995, S. 790 was referred to the House Committee on Government Reform and Oversight. On September 14, 1995, Congressman Robert Ehrlich (R-MD) introduced the House companion to S. 790, H.R. 2331, with 9 additional co-sponsors. Congressman Ehrlich echoed the concerns of the Paperwork Reduction Act conferees by urging his colleagues to co-sponsor H.R. 2331 and, ``lighten the red tape burden on executive branch agencies so that our government can operate with fewer restrictions and greater efficiency.'' The Congressman also stated that he has, ``the upmost confidence that the President will want to sign this important piece of legislation into law because it allows executive branch agencies to focus more resources on important current issues as opposed to focusing on outdated and unnecessary reporting requirements.'' d. Hearings and Committee Actions.--The Government Reform and Oversight Committee, working in cooperation with the Senate Governmental Affairs Committee, distributed a copy of this report to all the House and Senate full committee chairmen and ranking minority members to elicit their views as to whether the changes being made would impede their committees legislative and oversight functions. Their responses were incorporated into the final amendments to this bill. On September 21, 1995, S. 790 was amended and reported by a unanimous voice vote by the full Committee on Government Reform and Oversight. Committee Chairman William F. Clinger, Jr. (R- PA) praised the Reports Elimination and Sunset Act of 1995 by stating, ``this legislation will continue the very positive work this committee started with the Paperwork Reduction Act in a continuing effort to eliminate Federal paperwork burdens.'' Congresswoman Cardiss Collins (D-IL), the committee's ranking minority member, also expressed her support. During the committee's September 21, 1995 consideration of S. 790, two en-bloc amendments were offered and passed without objection. The first, by Congresswoman Collins, modified the bill as requested by the International Relations Committee, deleting some of the reports that were slated for elimination and making some minor technical changes. It was approved by a voice vote. The second amendment was offered by Congressman Ehrlich and also passed by a voice vote. A portion of the Ehrlich amendment reinstated the Estimated expenditures under the Food Stamp Program report, at the request of the House Agriculture Committee. The information contained in this report was necessary to the committee as it prepared to vote on the Farm bill. Also included in this en-bloc amendment was a request from the U.S. Railroad Retirement Board modifying a report dealing with 5-year retirement fund projections to allow for greater accuracy in projecting funds numbers. S. 790 was approved by the Government Reform and Oversight Committee by a unanimous voice vote. g. H.R. 3864, General Accounting Office Management Reform Act of 1996 a. Report Number and Date.--None. b. Summary of Measure.--Title I eliminates over 100 existing statutory mandates affecting GAO that do not represent the most efficient and effective use of GAO's limited resources. Most of the provisions of title II fall into one of the following two categories: Elimination of ``executive'' type functions. These provisions relieve GAO of statutory functions that do not further GAO's current mission and are more appropriate for performance by the executive branch. Functions that are still relevant to government operations are transferred to executive branch agencies. Some of the functions are simply obsolete; these functions are repealed. Elimination of auditing and reporting mandates. These provisions relieve GAO of statutory auditing and reporting requirements, while preserving GAO's authority to conduct the audit pursuant to a specific Congressional request or at its own initiative. Thus, the provisions give GAO flexibility to apply its resources where they are most needed. Title I includes a number of other provisions that will enhance the efficiency of GAO's operations, and eliminate paperwork requirements for GAO as well as executive branch agencies. Section 211 of the Legislative Branch Appropriations Act, 1996 (Public Law 104-53, 109 Stat. 535) transferred a number of GAO's ``executive'' type functions to the OMB, effective on June 30, 1996, and authorized the Director of OMB to delegate those functions to other Federal agencies. In all but a few cases, the Director has now delegated the functions. Title II of the bill makes conforming amendments to the statutes underlying the functions covered by section 211 of the 1996 Appropriations Act in order to reflect the transfers to OMB and further delegations by OMB of those functions. For the most part, the conforming amendments of title II delete references to the Comptroller General or GAO in these underlying statutes and substitute references to the officials or agencies now vested with responsibility for the functions pursuant to section 211 of the 1996 Appropriations Act. Where the delegation of a function has not been completed, the conforming amendment reflects the transfer to OMB and preserves the OMB Director's authority to delegate further. c. Legislative History/Status.--Government Reform and Oversight Committee member, Representative Steve LaTourette (R- OH), introduced H.R. 3864. The bill was referred to the Committee on Government Reform and Oversight on July 22, 1996, and was approved as amended on July 25, 1996. H.R. 3864 passed the House of Representatives on September 4, 1996, by voice vote. The bill was passed by unanimous consent of the Senate on October 3, 1996. It was signed by the President on October 19, 1996 and became Public Law No. 104-316. d. Hearings and Committee Actions.--On April 30, 1996, the Subcommittee on Government Management, Information, and Technology held hearings on the oversight of the General Accounting Office. Subcommittee Chairman Stephen Horn presided over the testimony of John A. Koskinen, Deputy Director for Management, Office of Management and Budget; R. Scott Fosler, president, National Academy of Public Administration; Thomas V. Fritz, president and chief of Executive Officer, Private Sector Council; Cornelius E. Tierney, professor of accountancy, director, Center for Public Financial Management, School of Business and Public Management, the George Washington University; Charles A. Bowsher, Comptroller General of the United States; and James F. Hinchman, Special Assistant to the Comptroller General. h. H.R. 3136, title III, subtitle E, the ``Congressional Review of Agency Rulemaking,'' (Public Law No. 104- 121, title II, subtitle E) a. Report Number and Date.--Although there was no committee report on the ``Small Business Regulatory Enforcement Fairness Act of 1996'' (title II) or the ``Congressional Review of Agency Rulemaking'' (subtitle E), the Committees of Jurisdiction in the House and Senate filed a joint statement in the Congressional Record in lieu of a statement of managers. See 142 Cong. Rec. E571, 574-79 (daily ed. April 19,1996) (statement of March 28, 1996 by Chairman Hyde for the committees of jurisdiction); 142 Cong. Rec. S3683-87 (daily ed. April 18, 1996) (statement of Senator Nickles for himself and for Senators Reid and Stevens). b. Summary of Measure.--The Congressional Review Act (CRA) adds a new chapter 8 to the Administrative Procedure Act that requires executive branch agencies to submit their new rules to Congress for congressional review. See 5 U.S.C. chapter 8 (Supp. 1996). The CRA allows Congress to review each new rule and consider a joint resolution of disapproval to overrule it under expedited House and Senate procedures. Under the Congressional Review Act, no rule may go into effect until it is delivered to the House, the Senate, and to GAO. Although the CRA applies to almost all rules, ``major rules'' are delayed in their effectiveness for 60 calender days to provide Congress with a chance to reject problematic rules before they have an adverse impact. Moreover, the term ``rule'' is defined very broadly to include all general agency statements that affect the public, including ``interpretive'' rules, agency ``policy statements,'' ``guidelines,'' and ``staff manuals.'' In addition to submitting the rules themselves, agencies will have to submit a report to Congress on each rule stating whether they have complied with the Unfunded Mandates Reform Act, the Regulatory Flexibility Act, and whether they have conducted a valid cost-benefit analysis, taking analysis, and federalism assessment as set forth in the Reagan, Bush, and Clinton Executive orders. If a resolution of disapproval is introduced to overturn a problematic regulation, Congress may reject the rule using expedited procedures that eliminate the Senate filibuster and require only a simple majority in each House for passage. If Congress does reject a rule, the rule may not be reissued in substantially the same form without congressional authorization. The intent of the CRA is to bring increased accountability to the rulemaking process. It is also expected that increased congressional involvement will make the agencies more open and responsive to comments from regulated entities during the rulemaking process and during enforcement proceedings. This will foster a more cooperative, less threatening, regulatory environment. As a result, it is the committee's hope and intention that agencies will issue more flexible and less burdensome rules that achieve the same or superior level of protection of health, safety, and the environment. c. Legislative History/Status.--The Senate passed four different versions of the ``Congressional Review Act'' (CRA) and the House passed two different versions of it before the act was incorporated in H.R. 3136 and became part of Public Law 104-121 (title II, subtitle E). Senator Don Nickles introduced the first version of the CRA, S. 219, as a companion bill to H.R. 450, the Regulatory Transition Act of 1995, which originated in the House Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs. The Senate passed S. 219 by a recorded vote of 100-0 on March 29, 1995. On November 9, 1995, the House and Senate then passed an identical version of the CRA as section 3006 of title III of H.R. 2586, the first debt limit bill. Chairman Bob Walker included section 3006 in his amendment to the debt limit bill at the request of Chairman William F. Clinger, Jr. and Representative David M. McIntosh who were the principal House sponsors of the legislation. The President vetoed H.R. 2586 for reasons unrelated to section 3006. On March 19, 1996, the Senate passed a third version of the CRA as part of S. 942, the Small Business Regulatory Enforcement Fairness Act, by a recorded vote of 100-0. The language of the final bill was the product of informal discussions between the House and Senate sponsors and committees of jurisdiction during March 1996. On March 28, 1996, the House and Senate passed H.R. 3136, the Contract with America Advancement Act of 1996, which included the CRA. (The CRA was originally subtitle E of title III, but was redesignated as subtitle E of title II in Public Law 104-121.) The President signed the act on March 29, 1996. d. Hearings and Committee Actions.--None were held. i. S. 1577, To amend Title 44 United States Code, to authorize appropriations for the National Historical Publications and Records Commission. a. Report Number and Date.--No House report was filed. b. Summary of Measure.--S. 1577 reauthorizes appropriations for the National Historical Publications and Records Commission at $10 million annually for Fiscal Years 1998, 1999, 2000, and 2001. c. Legislative History/Status.--The Committee on Government Reform and Oversight reported out H.R. 3625, the identical companion bill to S. 1577. S. 1577 was reported from the Senate Governmental Affairs Committee on June 19, 1996 (S. Rept. No. 104-283). S. 1577 passed the Senate on July 25, 1996 and was received in the House on July 26, 1996 and held at the desk. Rules were suspended and the measure passed the House on September 27, 1996, and was signed into law by the President on October 9, 1996, to become Public Law 104-274. d. Hearings and Committee Actions.--None were held. j. H.R. 2326, Health Care Fraud and Abuse Prevention Act of 1995 a. Report Number and Date.--None. b. Summary of Measure.--The purpose of H.R. 2326 is to prevent, detect, control and penalize fraud and abuse in the provision of health care. The bill provides for improved coordination and data sharing among Federal, State and local law enforcement agencies and private insurers. It creates a new source of funds comprised of fines, penalties, damages and proceeds from forfeitures collected from those in violation of Federal health care fraud and abuse provisions; such funds to be used by Federal and State law enforcement agencies to supplement regularly appropriated funds. The measure establishes, recognizes and defines health care fraud and abuse as a Federal crime and prescribes penalties for violation thereof. Additionally, the legislation details initiatives to be taken in control of fraud and abuse. c. Legislative History/Status.--H.R. 2326 was introduced on September 13, 1995, and referred to Government Reform and Oversight, Commerce, and Ways and Means. On October 16, 1995, Title II of H.R. 2326 was offered by Mr. Schiff as an amendment to H.R. 2425 ``The Medicare Preservation Act of 1995,'' while Mr. Shays offered Title III as an amendment to that measure. The Rules Committee found the Schiff Amendment in order and it was incorporated into H.R. 2425. The Shays amendment was not. Following mark-up by Commerce, H.R. 2425, which included Title II of H.R. 2326, was incorporated, as amended, into H.R. 2491, ``The Balanced Budget Act of 1995,'' which passed the House on November 20, 1995. The bill was then passed by the Senate and subsequently vetoed by the President. d. Hearings and Committee Actions.--A hearing was held on September 28, 1995, before the Subcommittee on Human Resources and Intergovernmental Relations to consider both H.R. 2326 and H.R. 1850 introduced by Mr. Towns. Testimony was heard from Helen Smits, M.D., Deputy Administrator, Health Care Financing Administration, accompanied by Bill Gould, Special Assistant to the Administrator; Gerald Stern, Special Counsel for Health Care Fraud, Department of Justice; Lovola Burgess, past president, American Association of Retired Persons; William J. Mahon, executive director, National Health Care Anti-Fraud Association; and Thomas A. Schatz, president, Citizens Against Government Waste. Dr. Smits was wholly in favor of the legislation pointing out the benefits in coordination of law enforcement. Mr. Stern also spoke in favor of the bill, but voiced some concerns held by the Department of Justice specifically regarding the proposed authority of the FBI to issue administrative subpoenas. Ms. Burgess, Mr. Mahon, and Mr. Schatz all spoke in support of both bills although the provisions in H.R. 2326 are more far reaching than H.R. 1850. The hearing ended with the panel members being encouraged by the Members to speak to their own Members and urge co- sponsorship of H.R. 2326. k. H.R. 3078, Federal Agency Anti-Lobbying Act a. Report Number and Date.--None. b. Summary of Measure.--The purpose of the bill is to prohibit the expenditure of appropriated funds in an attempt by executive agencies to create public opposition to pending legislation. Such actions clearly violate the provisions of 18 U.S.C. 1913, however the present and previous administrations have interpreted this section narrowly in a fashion that limits all restrictions. As a consequence, this bill expands and clarifies the limitation on using public money for grassroots lobbying designed to affect the legislative process. This important legislation emanates from a series of investigations conducted by several congressional committees. The Government Reform and Oversight, Transportation and Infrastructure, and Commerce Committees have all identified instances where carefully designed public relations campaigns have appealed for public support without directing citizens to contact their Congressional representatives. c. Legislative History/Status.--H.R. 3078, The Federal Agency Anti-Lobbying Act was introduced on March 13, 1996 and referred to the Committee on Government Reform and Oversight. On May 15, 1996, a full committee hearing was conducted on the issue. d. Hearings and Committee Actions.--The Government Reform and Oversight Committee held a hearing on this legislation on May 15, 1996. Testimony was heard from Jonathan Cannon, General Counsel, U.S. Environmental Protection Agency; Joseph B. Dial, commissioner, Commodity Futures Trading Commission; Robert Nordhaus, General Counsel, Department of Energy; J. Davitt McAteer, Acting Solicitor General, Department of Labor; Al Cors, Jr, director of government relations, National Taxpayers Union; Robert P. Murphy, General Counsel, U.S. General Accounting Office; Louis Fisher, Senior Specialist in American National Government, Congressional Research Service; N. Jerold Cohen, chairman, Section on Taxation, American Bar Association; Hon. Senator Ted Stevens of Alaska; and Hon. Congressman W.J. (Billy) Tauzin of Louisiana. l. ``Proceedings Against John M. Quinn, David Watkins, and Matthew Moore (Pursuant to Title 2, United States Code, Sections 192 and 194,'' House Report 104-598, May 29, 1996. a. Summary.--Weeks after the Travel Office firings, President Clinton staved off a congressional inquiry into the controversy by committing to then-House Judiciary Committee Chairman Jack Brooks in a July 13, 1993, letter: ``. . . you can be assured that the Attorney General will have the Administration's full cooperation in investigating those matters which the Department wishes to review.'' In fact, that cooperation was by no means forthcoming from the White House. Not only was this established in the committee's October 24, 1995, hearing (see Part Two I.A.3.b. above), it was the conclusion of the Clinton administration's own Justice Department. In a September 8, 1994, memo to Acting Criminal Division Chief Jack Keeney, Justice's Chief of the Public Integrity Division, Lee Radek, wrote: At this point we are not confident that the White House has produced to us all documents in its possession relating to the Thomason allegations . . . the White House's incomplete production greatly concerns us because the integrity of our review is entirely dependent upon securing all relevant documents. In the course of its investigation, the committee came to share in these concerns. Beginning in the fall of 1995, the Clinton White House repeatedly assured the committee that it had produced all documents relevant to the committee's Travelgate investigation. Despite these assurances, White House documents critical to the investigation continued to surface throughout 1996 until August. White House delays, denials and general obfuscation frustrated the committee's investigative efforts throughout the 104th Congress. One such document was an undated 9-page memo written by David Watkins--likely drafted in the fall of 1993--in which Watkins cited pressures by First Lady Hillary Rodham Clinton as a major factor in his decision to fire the Travel Office employees. Mr. Watkins wrote that this self-styled ``soul cleansing'' memo represented his ``first attempt to be sure the record is straight, something I have not done in previous conversations with investigators--where I have been as vague and protective as possible.'' The White House released this memo to the committee at 8:30 p.m. on January 3, 1996, after it had been released to the press. Though it was responsive to subpoenas and document requests made by several previous investigations, including those of Independent Counsel Fiske, the General Accounting Office and the Justice Department, this document was produced to none of them. The Watkins memo clearly contradicted repeated assertions by the White House and First Lady Hillary Rodham Clinton that the First Lady had had minimal involvement in the Travel Office firings: On Monday morning you [then-White House Chief of Staff McLarty] came to my office and met with me and Patsy Thomasson. At that meeting, you explained that this was on the First Lady's ``radar screen.'' I explained to you that I had decided to terminate the Travel Office employees and you expressed relief that we were finally going to take action (to resolve the situation in conformity with the First Lady's wishes). We both knew there would be hell to pay if, after our failure to take swift and decisive action in conformity with the First Lady's wishes. Mr. Watkins concluded in this memo: [Made] clear that the Travel Office incident was driven by pressures for action originating outside my Office. If I thought I could have resisted those pressures, undertaken more considered action, and remained in the White House, I certainly would have done so. But after the Secret Service incident, it was made clear that I must more forcefully and immediately follow the direction of the First Family. I was convinced that failure to take immediate action in this case would have been directly contrary to the wishes of the First Lady, something that would not have been tolerated in light of the Secret Service incident earlier in the year. The apparent contradictions between Watkins' previous ``vague and protective'' responses made to investigators looking into the Travel Office matter and the ``soul cleansing'' memo led to a criminal referral of the matter to Independent Counsel Starr in early 1996. In the wake of this memo's production, the committee issued several subpoenas to the White House and current and former White House officials and others to compel the production of all relevant documents previously withheld. Months of negotiations followed the failure of three parties in particular to complete their productions in compliance with their subpoenas: White House Counsel John M. Quinn, David Watkins, and Matthew Moore, whom the committee learned had copies of various drafts of the Watkins memo in his possession. b. Hearings.--On May 8, 1996, the full committee voted to hold Messrs. Quinn, Watkins and Moore in contempt for their refusals to produce all documents responsive to the committee's subpoenas. c. Resolution.--The committee, in its May 8, 1996, vote: Resolved, That pursuant to 2 U.S.C. 192 and 194, the Speaker of the House certify the report of the Committee on Government Reform and Oversight, detailing the refusal of John M. Quinn to produce papers to the Committee on Government Reform and Oversight, to the United States Attorney for the District of Columbia, for him to be proceeded against in the manner and form provided by law; and be it further Resolved, That pursuant to 2 U.S.C. 192 and 194, the Speaker of the House certify the report of the Committee on Government Reform and Oversight, detailing the refusal of David Watkins to produce papers to the Committee on Government Reform and Oversight, to the United States Attorney for the District of Columbia, for him to be proceeded against in the manner and form provided by law; and be it further Resolved, That pursuant to 2 U.S.C. 192 and 194, the Speaker of the House certify the report of the Committee on Government Reform and Oversight, detailing the refusal of Matthew Moore to produce papers to the Committee on Government Reform and Oversight, to the United States Attorney for the District of Columbia, for him to be proceeded against in the manner and form provided by law. d. Follow-up.--Mr. Moore eventually produced the documents subpoenaed to the committee. Mr. Watkins, by now the subject of an Independent Counsel investigation, declined to do so. Nor had White House Counsel Quinn produced the documents required as the May 30, 1996 date for a House vote on the contempt resolution approached. On May 30, 1996, the day on which the committee's contempt resolution against White House Counsel Quinn was scheduled for a vote on the floor of the House, the White House delivered 1,000 of the 3,000 pages of documents responsive to the committee's subpoenas over which it previously had claimed executive privilege. The White House also provided a privilege log for documents it continued to withhold. As a result, the committee postponed the contempt vote in order to review the materials produced. A critical document long-withheld from the committee under unjustified claims of executive privilege was turned over in the May 30 production. The committee previously had been unaware of the existence of this document: the White House's December 1993 request of Billy Dale's confidential FBI background file--ostensibly made because Dale was being considered for ``Access (S)''--7 months after Dale was fired from the Travel Office. This request was made even as the Justice Department was conducting a criminal investigation of Dale and its discovery led to revelations that the Clinton administration wrongly had requested and received hundreds of confidential FBI background files of former Reagan and Bush administration officials. (See Part Two I.A.3.c. above.) After further discussion and correspondence, the White House and the committee came to an agreement whereby the White House produced to the committee some 1,400 of the remaining 2,000 pages of documents on August 15, 1996. B. BUDGET PROCESS House Rule X(1)(g) (4) and (6) confers upon the Committee on Government Reform and Oversight jurisdiction over, ``[b]udget and accounting measures, generally,'' and ``[t]he overall economy, efficiency and management of government operations and activities.'' As explained in the Statement of Understanding between the Committee on Government Reform and Oversight and the Committee on the Budget, the Committee on Government Reform and Oversight's jurisdiction includes, ``process changes in federal rescission or impoundment authority; measures relating to Executive agency budgeting, including the submission of agency performance reports or plans, or agency regulatory plans, reports or reviews as part of the budget process; measures relating to Executive agency financial management; and process changes leading to the required adoption of a Federal capital budget or joint capital/ operating budget which accounts for the fixed assets of the United States.'' In addition, the committee enjoys jurisdiction over ``special funds, accounts or spending set asides created to reduce the deficit.'' The Committee on Government Reform and Oversight exercised its budget jurisdiction extensively in the 104th Congress. In addition to leading the campaign to enact the long-awaited line item veto, the committee held hearings on performance-based budgeting, financial and accounting improvements, entitlement spending reductions, regulatory accountability and cost-benefit comparisons, and biennial budgeting proposals. The committee was extensively involved in the development of the congressional budget resolutions for fiscal years 1996 and 1997, H. Con. Res. 67 and H. Con. Res. 178. Working with the House and Senate Budget Committees, the Senate Committee on Governmental Affairs, and the congressional leadership, the committee developed a plan for mandatory spending reforms within its jurisdiction totaling savings of more than $10 billion through fiscal year 2002. The committee's entitlement spending reduction package included: Members and staff congressional pension reforms to provide parity between the congressional and civil service retirement systems; a continuation of existing the 3 month cost of living increase (COLA) delay for Federal retirees; a 0.5% increase in the contribution Federal employees make to their own individual retirement accounts; a 1.51% increase in the employing agency contribution to the retirement accounts of their Civil Service Retirement System (CSRS) employees; and a repeal of the transitional appropriations currently provided to the U.S. Postal Service. The committee package also included a proposal to reform the McKinney Homeless Assistance Act to permit homeless assistance organizations to obtain preferential access to surplus Federal property. Pursuant to the directions of the congressional budget resolution, the Government Reform and Oversight Committee's reconciliation package was included in H.R. 2491, the Balanced Budget Act of 1995. The bill was vetoed by the President on December 6, 1995. It is the committee's firm intent to pursue similar reforms in the 105th Congress. The committee also considered legislation to require the President to submit a Congressional Budget Office (CBO) scored balanced budget for fiscal year 1997. The proposal was included in H.J. Res. 134, which was signed into law on Jan. 6, 1996. Public Law 104-94. Further attempts to require the permanent submission of annual balanced budget plans by the President were considered in conjunction with H.R. 4278, the Omnibus Consolidate Appropriations Act of 1997, but were rejected by the Senate. Finally, the committee considered proposals to provide for a deficit reduction ``lock box'' account, to set aside savings gained through appropriation bill amendments for the purposes of deficit reduction. The legislation, initially included in H.R. 2127, the FY 1996 Labor, Health and Human Services, and Education appropriations bill, was vetoed by the President. The lockbox proposal was then attached by the House to H.R. 3019, to provide further Omnibus Continuing Appropriations for 1996. While the provision was dropped by the Senate, the committee expects to revisit the measure in the 105th Congress. C. FEDERAL PROCUREMENT POLICY--AN ERA OF REFORM Each year the government spends about $200 billion on goods and services, ranging from weapons systems to computer systems to everyday commodities. Studies have shown that the current system has cost too much, involved too much red tape, and ill- served the taxpayer and industry. In December 1994, a report prepared for the Secretary of Defense found that, on average, the government pays an additional 18 percent on what it buys solely because of requirements it imposes on its contractors. That confirmed the average estimate by major contractors surveyed by the General Accounting Office that the additional costs incurred in selling to the government are about 19 percent. While some of the government's unique requirements certainly have been needed, we clearly are paying an enormous premium for them--billions of dollars annually. And that has been only part of the government's inflated cost of doing business--for it has included only what is paid to contractors, not the cost of the government's own administrative system. The government's contracting officials have been confronted with a daunting array of mandates of their own, often amounting to step-by-step prescriptions that increase staff and equipment needs. This rigid, rule-based process has left little room for the exercise of business judgement, initiative, and creativity and often has forced the professional staff to assume the role of box-checking robots. These requirements have been well-intentioned. From the time the Second Continental Congress established a Commissary General in 1775, the procurement system commanded the attention of both public officials and the American public. Unfortunately and all too often, the attention has focused on individual abuses rather than the operations of the system as a whole. In response, Congress and the executive branch have maintained a constant effort to correct wrongs or add particular initiatives. Inevitably, after a while, often-uncoordinated incremental efforts will tilt any system out of balance, until the cost of requirements outweigh benefits. And, over the years, that has become the state of our procurement system--an unbalanced mass of requirements that lead, simply, to too much money for too little product. Mr. Philip K. Howard in an editorial on the government's procurement process in the Wall Street Journal aptly described the state of the current process as follows: The rigid procedures designed to prevent squandering of public money, as it turns out, function almost perfectly to guarantee that the money gets squandered. The committee recognized that it was critical in these times of declining budgets to bring the government's procurement system into balance. The 103d Congress took a significant step toward establishing a more commercial-like Federal contracting system with the passage of the Federal Acquisition Streamlining Act of 1994 (FASA) (Public Law 103-355). FASA established a preference for commercial items and simplified procedures for contracts under $100,000, as well as addressing a wide spectrum of issues regarding the administrative burden--on all sides--associated with the government's specialized requirements. These ranged from socio-economic laws to the government's oversight tools, which over the years have resulted in major differences between the government and commercial marketplaces. But FASA went only part of the way, and as important as that effort was, the committee recognized that more needed to be done, particularly in these times of declining budgets, to bring the government's procurement system into balance. In addition to the fundamental legislative reforms made by the Clinger-Cohen Act of 1996 (see Part Two I.A.4.d.), the following issues were initiated/completed by the committee to foster a procurement system which allows industry sellers and government buyers to offer and acquire, respectively, maximum value for the taxpayer. 1. Oversight of the Implementation of the Federal Acquisition Streamlining Act of 1994 (FASA) (Public Law 103-355). a. Summary.--At the time of its enactment, the Federal Acquisition Streamlining Act of 1994 (FASA) (see House Report 103-884) was considered the most comprehensive procurement reform effort in more than a decade. Yet, the committee recognized that its true impact would not be realized fully until the regulations were written to implement the new law. The committee believed that much of the hard work was left to the executive branch in seeing through the goals and purposes of FASA. The committee expected that the regulation writers would not only execute the letter of the law fully and promptly, but would also carry out the spirit of what Congress intended. This included not just writing and revising regulations pursuant to the new law, but looking at and attacking internal agency regulations and procedures which are contrary to FASA's letter and spirit. b. Hearings.--On February 21, 1995, the committee met to review the Clinton administration's implementation plan for FASA, begin the process of determining if the regulations will carry out the spirit of what was intended by Congress, and allow industry and other interested parties to comment on the regulatory implementation for the record. The committee received testimony from administration witnesses, Steven Kelman, Administrator for Federal Procurement Policy at the Office of Management and Budget; and Mrs. Colleen Preston, the Deputy Under Secretary of Defense for Acquisition Reform, regarding the progress-to-date on the implementation of FASA. Industry representative submitted written testimony for the record. Dr. Kelman noted that the ``message of reform'' was being heard by the administration and that the follow-on rules to FASA were being written on an accelerated schedule. He stated that 4 interim rules had been published, 15 proposed rules were published, and 6 were expected to be released in the near future. Mr. Kelman also discussed the establishment of Process Action Teams, which were created by both he and Mrs. Preston in order to expedite the regulatory writing process and FASA implementation. Mrs. Preston focused on the need for further reform so that agencies such as the Department of Defense and others could be ``world class customers and suppliers.'' She emphasized the need for continuing the effort to remove government-unique laws and regulations from the acquisition of commercial products. She also stated that the government must move from a risk adverse system to one which understands and manages risk. 2. Review of the Federal Government's Acquisition Strategy Regarding the Post Federal Telecommunications System 2000 Program (Post- FTS2000). a. Summary.--Currently the Federal Telecommunications System 2000 (FTS 2000) is the government's long distance telecommunications service. This multi-billion dollar program provides telecommunications services to approximately 1.7 million users across the Federal Government. Through the hard work of the General Services Administration (GSA) and an interagency group of information resources management and telecommunications professionals, the current FTS 2000 program was largely successful in leveraging the emerging competition in long-distance markets to save billions of dollars over GSA's prior Federal Telecommunications Service network. The current FTS 2000 contracts which were awarded in 1988 will expire in December 1998, affording the government great opportunities and challenges as it prepares to transition to a Post-FTS2000 environment. Clearly, the telecommunications industry has changed significantly since the initial contracts were awarded: the array of available commercial services is broader; the number of service providers has increased; and the availability and nature of the underlying technologies themselves continue to change. The government's appetite for communications services has changed as well, with demand for more advanced data and video services outdistancing growth in basic voice communications services. Therefore, it is imperative that the Post-FTS2000 program embrace a sensible acquisition approach based on commercial practices and maximize the use of commercially-available services to meet agency needs while following an appropriate strategy for managing complex government operations. Monitoring the development of the next phase procurement for the Federal Government's telecommunications system ensures that the Federal Government receives technically-effective and cost-efficient telecommunications services in a Post FTS2000 environment. It allows the government and the taxpayer to take maximum advantage of the economies associated with increasing competition in the new telecommunications environment and reap the benefits for the best prices and excellent service quality which helps the executive agencies to do their jobs of serving the citizens more efficiently and effectively. While GSA spent much time with the interagency group and a broad cross-section of industry preparing an acquisition strategy, initial proposals failed to take full advantage of telecommunications reform along with today's rapidly changing landscape of advancing technologies, new services, and emerging service providers. Through months of working with this committee, GSA ultimately developed a proposal which addressed many of the issues raised by this committee and others and which will enable the government to take full advantage of rapid changes in the telecommunications services environment. GSA is proceeding with this Post-FTS2000 acquisition strategy. b. Hearings.--On March 21, 1995, the Subcommittee on Government Management, Information, and Technology held a hearing to solicit comment from the General Accounting Office, the long distance carriers, system integrators and the Regional Bell Operating Companies on the initial Post-FTS2000 acquisition strategy developed by the government. The General Accounting Office raised several areas of concern and testified that these concerns must be addressed before proceeding to the next phase of the program. Other witnesses made reference to the strategy as presented and gave comment according to the particular segment of the industry. 3. Review of the Department of Defense's Acquisition of the Defense Information Systems Network (DISN). The Defense Information Systems Network (DISN) is the Department of Defense's (DOD) worldwide telecommunications infrastructure that provides the end-to-end information transfer network for supporting military operations. DISN must be transparent to its users, facilitate the management of information resources, and be responsive to national security and defense needs under all conditions in the most effective manner. DOD has described its objective as being able to provide military personnel with a secure, seamless, network capable of operating across strategic and tactical communications boundaries. Global interoperability and information warfare-protection are two of DISN's key features to deliver protected voice, video, data, and imagery services. Since DISN will be the information transport vehicle for the next century, its acquisition strategy was designed to introduce new cost-effective technology, including space-based capabilities, on a global basis over the life of the system. This strategy will allow DOD to manage DISN services while maintaining a balance in three areas: exploitation of leading- edge technology opportunities, consolidation of geographically disparate network, and operation within fiscal constraints. Given the importance of consolidating and modernizing defense telecommunications capabilities to meet the emerging national security challenges facing the Nation, the committee along with the Committee on National Security, was active in urging DOD to move forward without delay on the DISN program. The committees recognized that a multitude of providers now compete to offer an increasingly broad array of commercially- available telecommunications services and that competition continues to drive the development and deployment of advances in the underlying technologies used to deliver enhanced performance and new capabilities. Therefore, in letters and through a series of meetings, the committees urged DOD to transition to DISN on schedule in order to ensure the availability of state-of-the-art telecommunications to meet the Nation's defense needs. To date, DOD is proceeding and has awarded the contracts for global support services (valued at $2 billion) and switching services for the continental United States (valued at $400 million). It is expected that in the early part of 1997, DOD will award the contracts for transmission services for the continental United States (valued at $5 billion) and global video services (valued at $125 million). 4. Review of the General Services Administration's (GSA) Management of the Multiple Award Schedule (MAS) Program. The Multiple Award Schedule (MAS) Program is the primary and simplified method to enable Federal agencies purchase relatively small quantities of commercially-available, common use, off-the-shelf items and services while securing the benefits of the Federal Government's aggregate purchasing volume. The General Services Administration (GSA) awards contracts to multiple suppliers of similar items. Federal agencies order products and services through the MAS Program at prenegotiated prices commensurate with the vendors' commercial discounts granted for comparable purchase volumes, given terms and conditions, and pay vendors directly for their purchases. There are 121 schedules which generate an annual market of $5-7 billion. The MAS program includes 4,000-5,000 contractors, two- thirds of which are small businesses. The efficiency and effectiveness of the MAS Program has been debated since its inception. After many studies by GAO, reviews by Congress, and input from industry, GSA made many significant changes to the MAS Program. These changes will allow the MAS Program to meet a broader range of customer requirements at a time when agencies are looking for easy to use, low cost procurement solutions. Among these were: eliminating the contract-wide price reduction clause, changing the price reduction clause to enable contractors to offer reduced prices to Federal agencies on a spot basis; and removing the ``maximum order limitation'' to permit agencies to place large-scale orders through the schedule program. The committee supported and urged changes like these to increase the use of the MAS program as a governmentwide vehicle for the acquisition of commercial products and services. However, GSA also proposed to established some rules which would permit post-award audits of commercial products under the MAS program. The committee, along with the Committee on National Security, concluded that this would be inappropriate and contrary to the intent of the Clinger-Cohen Act. The committees believed that, when Congress repealed the authority of Federal agencies to perform post-award audits of suppliers of commercial items in the Clinger-Cohen Act, Congress clearly did not intend Federal agencies to subsequently determine though agency supplements to the Federal Acquisition Regulation whether and to what extent post award audit access is appropriate on commercial item contracts. The committees' opposition to the proposed rule was communicated to the Office of Management and Budget through letters and meetings. A final rule on this issue is pending at GSA. 5. Oversight of Reform of the Acquisition System of the Federal Aviation Administration (FAA). As a result of the steady growth in air traffic operations and the failures of aging equipment in the air traffic control system, the Federal Aviation Administration's (FAA) timely acquisition of new equipment became increasingly critical for aviation safety and efficiency. However, the procurement system at FAA had many problems which raised questions about the agency's ability to field new equipment within cost, schedule, and performance parameters. Thus, the reform of FAA's procurement system became the focus of much debate. The FAA claimed it was choking from the mandated governmentwide procurement laws and argued that its failures in its procurements of high technology equipment could be solved if only it could break clear of the Federal procurement system. Some Members of Congress disagreed and believed that FAA's failures in the past were due to its own management problems and were not due to Federal procurement laws. Nonetheless, the Department of Transportation Appropriations Act for Fiscal Year 1996 (Public Law 104-50) included language which gave FAA the authority to establish a completely new acquisition management system. The law exempted the FAA from virtually all Federal procurement laws and regulations. Prior to putting in place its new system by the April 1, 1996 effective date, FAA met with the committee and briefed the committee on its activities. Review of the new acquisition management system continues. In addition, H.R. 2276 which established FAA as an independent agency exempted FAA from the same laws and regulations as did Public Law 104-50. While H.R. 2276 was passed by the House on March 12, 1996, it was never considered by the Senate. However, during consideration of H.R. 2276 in the House, the committee expressed its support for fundamental government reforms generally and FAA procurement reform specifically. D. GOVERNMENT PERFORMANCE AND RESULTS ACT OF 1993 (GPRA) On March 6, 1996, the Senate Governmental Affairs Committee joined the committee in holding an informational hearing on the purpose and foundation for the Government Performance and Results Act of 1993 (Public Law 103-62). The purpose of the hearing was to explore the foundations of the act and draw parallels between previous experiments with performance measurement in foreign governments and at the State and municipal level and its application at the Federal level. The hearing consisted of two panels. The first witness was Comptroller General of the General Accounting Office, Charles Bowsher. Mr. Bowsher gave testimony on the Government Performance and Results Act, its purpose and provisions. He also emphasized the importance of continued Congressional involvement to the long-term success of the act. Noting that consultation with Congress is mandated by the statute, the Comptroller General stressed that the act could become a meaningless management exercise unless the information prepared by agencies is a decisionmaking tool for members and committees. Mr. Bowsher took numerous questions from the Members of the House and Senate. The second panel began with testimony from Dr. Donald F. Kettl, senior fellow of the Brookings Institution and professor of Public Policy and Political Science at the University of Madison as Wisconsin. Dr. Kettl advised the committees that due to the current fiscal constraints, government needs to increase productivity in order to meet current service needs. One promising way to meet increased demands with reduced, stable on only slowly increasing resources is through managing for performance. This technique has a very long time-horizon, however, and the Federal Government is at least a decade behind New Zealand, Australia and Great Britain, which have been experimenting with performance measurement and management. Reports from overseas indicate that those governments are still working with great diligence to master this extremely complex task. Finally the committees heard from the Commonwealth of Virginia, the city of Phoenix, AZ and the government of Australia each of which has been measuring government performance as a means to increase government efficiency and citizen satisfaction with government services. The hearing was intended to be the first of three hearings on GPRA. Two additional hearings were to have reviewed the status of GPRA pilot projects and departmental progress in implementing the act. The sequence of events involving the FBI files scandal preempted the committees' planned follow-on hearings. II. Investigations A. INVESTIGATIONS RESULTING IN FORMAL REPORTS GOVERNMENT REFORM AND OVERSIGHT COMMITTEE Hon. William F. Clinger, Jr., Chairman 1. ``A Citizen's Guide on Using the Freedom of Information Act and the Privacy Act of 1974 To Request Government Records,'' House Report No. 104-156, June 22, 1995, First Report by the Committee on Government Reform and Oversight. a. Summary.--The Freedom of Information Act (FOIA), enacted in 1966, presumes those records of the executive branch of the U.S. Government are accessible to the public. The Privacy Act of 1974 is a companion to FOIA and regulates Government agency recordkeeping and disclosure practices. The Freedom of Information Act provides that citizens have access to Federal Government files with certain restrictions. The Privacy Act provides certain safeguards for individuals against an invasion of privacy by Federal agencies and permits them to see most records pertaining to them maintained by the Federal Government. A Citizen's Guide on Using the Freedom of Information Act and Privacy Act of 1974 To Request Government Records, House Report 104-156, dated June 22, 1995, and issued by the House Committee on Government Reform and Oversight, explains how to use the two laws and serves as a guide to obtaining information from Federal agencies. The complete texts of the Freedom of Information Act, as amended (5 U.S.C. 552), and the Privacy Act, as amended (5 U.S.C. 552a), are reprinted in the committee report. b. Benefits.--Federal agencies use the Citizen's Guide in training programs for government employees who are responsible for administering the Freedom of Information Act and the Privacy Act of 1974. The Guide enables those who are unfamiliar with the laws to understand the process and to make requests. In addition, the complete text of each law is included in an appendix. The Government Printing Office and Federal agencies subject to the Freedom of Information Act and the Privacy Act of 1974, distribute this report widely. The availability of these acts to all Americans allows executive branch information to be widely available. c. Hearings.--None. 2. ``Creating a 21st Century Government,'' House Report No. 104-434, December 21, 1994, Second Report by the Committee on Government Reform and Oversight, Together With Additional Views. a. Summary.--The purpose of the Government Reform and Oversight Committee field hearings on ``Creating a 21st Century Government'' was to learn from the American public, State and local government officials and the private sector their suggestions and experiences on creating innovative, streamlined, and cost effective organizations. The committee intends that Congress learns from and adopt some of these successful strategies in an effort to restructure the executive branch and better meet the needs of Americans today and in the 21st century. In its effort to hear from people outside Washington, DC, the committee invited witnesses from State and local government, the private sector, and the American public to testify or participate in an open forum in which members could hear their experiences and ideas with regard to organizational downsizing. Members of the committee traveled to Parma Heights, OH; Upper Montclair, NJ; Federal Way, WA; Long Beach, CA; Albuquerque, NM; and Charlotte, NC. Each one of these cities has recently challenged inefficient government by revitalizing its main functions in order to survive, compete, prosper and provide for the needs of its citizens. Identifying what has worked, what has hindered their reorganization efforts and how best to implement a plan will aid congressional initiatives to revitalize government at the Federal level. State and local government witnesses, business representatives, and the public all advocate looking at each Federal department and agency to determine which of the functions it provides are vital to the service delivery needs of Americans and which can be better carried out by State or local governments or the private sector. The widely shared view was that the Federal Government is not meeting the needs of it customers, the American public, and is less effective, less efficient and more costly than it should be. It must be fixed. b. Benefits.--As a result of the nationwide field hearing series and consultation with experts in the private and public sectors, the committee was successful in identifying strategies and principles used by corporate, State and local government organizations in restructuring their entities, and learning how their most successful and creative ideas might be applied to the Federal Government. We now have a better understanding of what States and local governments expect from the Federal Government, what private business expects from the Federal Government, and most importantly the American public's thoughts and ideas for a more responsive Federal Government designed to meet their needs. Six fundamental points, or practices, were raised at all six field hearings, each to promote the efficiency, effectiveness, high quality and low cost of service delivery. The first three of these common reorganization principles in particular affect the culture of an organization, while the other three are more practical in application. The committee found-- (1) Clear missions and a solid organization mission statement are necessary for establishing priorities and goals and maintaining focus on established objectives. (2) Open and honest communication with employees about each step of the reorganization process is vital to maintaining employee morale, as is affording employees an opportunity to convey their views on downsizing and reorganization. (3) Innovative management techniques are enabling States, localities and businesses to empower employees and to strip layers of bureaucratic management in favor of more streamlined structures. The result has been more efficient, more responsive organizations with high morale and greater productivity. (4) Privatization is clearly one of the most advocated means of taking government out of functions which are not inherently governmental and which can be performed more efficiently and cost-effectively by the private sector. (5) Competitive bidding will improve service while saving money. The government should be forced to compete with private business for effective, efficient service delivery. (6) The Federal Government must replace old and outdated computer systems with advanced technology that allows for open communication both internally and with the public. Using such technology will facilitate ``one-stop shopping'' and other innovations in service delivery. The committee made the following recommendations as a result of its oversight findings: (1) Establish a citizens commission on 21st century government. (2) Identify and remove statutory and regulatory barriers to reorganization and innovation. (3) Increase privatization and competitive bidding. (4) Enlist the aid of the private sector in reorganization and innovation efforts. (5) Restore responsibilities to the States and local governments without imposing unfunded mandates. (6) Establish, communicate and adhere to a clear mission for Federal agencies. (7) Maintain open lines of communication with agency employees. (8) Promote innovation by managers and employees. (9) Use technology to improve service and increase efficiency. The committee intends that Congress learn from and adopt some of these successful strategies and recommendations in an effort to restructure the executive branch to better meet the needs of Americans today and in the 21st century. c. Hearings.--Members of the committee began the ``Creating a 21st Century Government'' field hearing series on July 14, 1995, in Parma Heights, OH, and continued the series in Upper Montclair, NJ, on September 9, 1995. The committee's following three hearings were held over Columbus Day weekend traveling to Federal Way, WA, on October 6, 1995; Long Beach, CA, on October 7, 1995; and Albuquerque, NM; on October 9, 1995. The final hearing in the series was held on October 20, 1995, in Charlotte, NC. 3. ``Laws Related to Federal Financial Management as Amended Through December 31, 1995,'' House Report No. 104-745, August 2, 1996, Ninth Report by the Committee on Government Reform and Oversight. a. Summary.--This report outlines the laws and procedure related to Federal financial management. Included in the report are sections related to money and finance (Title 31, U.S.C.); general provisions (Title 1, U.S.C.); the Congress (Title 2, U.S.C.); government organization and employees (Title 5, U.S.C.); commerce and trade (Title 15, U.S.C.); Postal Service (Title 39, U.S.C.); public buildings, property, and works (Title 40, U.S.C.); public contracts (Title 41, U.S.C.); and public printing and documents (Title 44, U.S.C.). Also included in the report are the Debt Collection and Improvement Act of 1996, the Single Audit Act amendments of 1996 and other major laws on financial management. b. Benefits.--The Committee on Government Reform and Oversight believes that effective financial management is critically important in making worthwhile decisions on the use of public resources in support of the well-being and security of the American taxpayer. This report helps fulfill the committee's oversight responsibility and serves as a valuable reference guide in assisting Congress, Federal entities, and all others interested in good stewardship of Federal resources. c. Hearings.--None were held on this measure. 4. ``Sampling and Statistical Adjustment in the Decennial Census: Fundamental Flaws,'' House Report No. 104-821, September 24, 1996, Fourteenth Report by the Committee on Government Reform and Oversight, Together with Additional and Dissenting Views. a. Summary.--Since 1994, the Subcommittee on National Security, International Affairs, and Criminal Justice and the full committee have been conducting an investigation into the planning and preparation for the 2000 Decennial Census. Based on this study and one subcommittee hearing and two full committee hearings, the committee adopted its fourteenth report to the 104th Congress on September 24, 1996. The Decennial Census is mandated by the Constitution in order to apportion the Congress. Census data are used by every State for congressional and State redistricting. They are also used to enforce the Voting Rights Act. Numerous Federal and State programs, distributing billions of dollars each year, use Decennial Census data, or the intercensal estimates derived therefrom, for their implementation. In 1995, the committee learned that the Census Bureau was seriously considering dramatic changes to its approach in taking the Decennial Census of the population. On February 28, 1996, the U.S. Department of Commerce and the Bureau of the Census publicly announced their formal plans for a ``re- engineered 2000 Census.'' The plans call for the use of statistical methods in two separate instances: (1) to sample and estimate the final 10 percent of the population failing to respond in the actual enumeration (``sampling''), and (2) to use a separate sample of houses to estimate those persons missed in the actual enumeration and the sample for non- response and revise it accordingly (``adjustment''). Statistical techniques have been used by the Census Bureau to assess the accuracy of census counts since 1950, but have never been used to ``complete'' and/or ``correct'' the original number for use in apportioning Congress. After the Secretary of Commerce decided in July 1991 not to make a statistical adjustment to the 1990 Census, over 50 lawsuits erupted, culminating in the 1995 case considered by the Supreme Court, United States v. City of New York. The Court's decision, handed down in March 1996, upheld the Secretary's decision not to adjust the 1990 census. The report finds that the problems that surrounded the issue of statistical adjustment in the 1990 Census also plague the plans for the 2000 Census. This is compounded by the plans to incorporate sampling to complete the actual enumeration. Specific findings include: 1. Sampling/statistical adjustment are inherently problematic given the subjectivity in the various decisions comprising the methodology. 2. The legal provisions that concern the use of sampling for apportionment purposes, both in the Constitution and in Federal law, are variously interpreted. 3. The inherent uncertainties of sampling/statistical adjustment may undermine public confidence in the Decennial Census and reduce public participation. 4. The sampling method for nonresponse follow-up introduces additional error into the process and may compromise the accuracy of small-area data which are important for congressional and State legislative redistricting. 5. The complexity of the two different sampling techniques being planned for the 2000 Census adds a great deal of risk to the operational feasibility of the Bureau's current approach. Based on the committee's findings, the committee made the following recommendations: 1. Congress should work to clarify existing Federal statutes with regard to the use of sampling to make statistical adjustments to the census for apportionment purposes. 2. The Bureau should not use sampling methods to complete or adjust the actual enumeration of the 2000 Census which is constitutionally mandated for purposes of apportionment. 3. The Department of Commerce and the Bureau of the Census should prioritize the constitutional mandate of the Decennial Census--apportionment of the House of Representatives. 4. The Bureau should emphasize and strengthen its cooperative relationships with State and local elected officials, as well as members of local organizations, who are vital in helping increase response rates to the Decennial Census. 5. The Bureau should strengthen its plans for a thorough quality check of the 2000 Census and maintain open access to all processes for internal and external review and analysis. b. Benefits.--The report sets aside political considerations regarding the winners and losers in an adjustment situation and addresses the problems with sampling and adjustment on their technical merits. In laying important groundwork regarding the technical problems with sampling and statistical adjustment in the Decennial Census, the report could provide the necessary basis and justification for taking legislative action in future Congresses. The report also represents an important marker in Federal legislative history regarding the issues of sampling and statistical adjustment. c. Hearings.--On October 25, 1995, Congressman William H. Zeliff, Jr., chairman of the Subcommittee on National Security, International Affairs, and Criminal Justice, held an oversight hearing entitled, ``Oversight of the Census Bureau: Preparation for the 2000 Census'' to examine testimony from Census Bureau officials regarding their plans for conducting the 2000 Decennial Census. Witnesses included Dr. Martha Riche (Director, Bureau of the Census, U.S. Department of Commerce), Francis DeGeorge (Inspector General, U.S. Department of Commerce), and Nye Stevens (Director of Federal Management and Workforce Issues, U.S. General Accounting Office). At the hearing, the Bureau announced a number of new initiatives, including the use of statistical sampling to complete the actual enumeration. On February 29, 1996, the Committee on Government Reform and Oversight held a hearing ``Census 2000: Putting Our Money Where It Counts'' to gather testimony from Members of Congress and outside experts regarding the Bureau's new methodology. Witnesses included Senator Herb Kohl (D-WI), Congressman Thomas Sawyer (D-OH), Congressman Thomas Petri (R-WI), Bruce Chapman (president, Discovery Institute, Seattle, WA), Dr. Barbara Bailar (vice president, Survey Research, National Opinion Research Center), Dr. Steve Murdock (director, Department of Rural Sociology, Texas A&M University), Dr. Kenneth Wachter (professor of statistics and demography, University of California at Berkeley), Dr. Charles Schultze (senior fellow, the Brookings Institution, and Dr. James Trussell (director, Office of Population Research, Princeton University). On June 6, 1996, the Committee on Government Reform and Oversight held another hearing, ``Census 2000: The Challenge of the Count'' to air questions and concerns about statistical methods planned for the Census 2000. The witnesses were Dr. Everett Ehrlich (Undersecretary of Commerce for Economic Affairs, U.S. Department of Commerce), and Dr. Martha Riche (Director, Bureau of the Census, U.S. Department of Commerce). Congressman Thomas Petri delivered a brief statement on his bill, H.R. 3589, to prohibit the use of sampling in the 2000 Census. However, he did not receive questioning by members of the committee. 5. ``Investigation of the White House Travel Office Firings and Related Matters,'' House Report No. 104-849, September 26, 1996, Fifteenth Report by the Committee on Government Reform and Oversight, Together with Minority and Additional Views. a. Summary.--On May 19, 1993, the Clinton administration fired seven long-time employees of the White House Travel Office and ordered them to depart the White House premises in 2 hours. Then-White House press secretary Dee Dee Myers simultaneously--and inappropriately--announced a criminal investigation of the Travel Office by the FBI. The Clinton administration replaced the Travel Office employees with employees of World Wide Travel, the Clinton/Gore '92 campaign travel agency. World Wide Travel departed the White House Travel Office within 2 days as a firestorm of press and public criticism over the firings engulfed the White House. World Wide was replaced by a combination of government workers and American Express personnel. Various aspects of the Travel Office matter were investigated by the White House, the Justice Department Office of Professional Responsibility and Public Integrity Division, the FBI, the General Accounting Office and the Internal Revenue Service. Individually and collectively, the resulting reports raised more questions than they answered. For example, in an October 7, 1994, letter to then-Chairman Conyers of the Government Operations Committee, Ranking Minority Member William F. Clinger, Jr., and 16 other House Members requested hearings into the Travel Office matter. This request was accompanied by a 71-page minority analysis of contradictions arising from or issues unaddressed by any of the previous reports. In response to this report, then-Chairman Conyers wrote then-Ranking Minority Member Clinger, ``You have raised serious questions about GAO's report to Congress'' and asked that GAO provide ``a detailed response'' to those issues. When Independent Counsel Fiske concluded in July 1994 that the Travel Office matter had been a major factor in the late Vince Foster's suicidal depression, it became all the more important to have a full understanding of what transpired at the White House Travel Office. Prior to Mr. Fiske's report, little was known of Foster's role in the Travel Office firings. In fact, the committee later learned that the White House had withheld Foster's Travel Office notebook from previous Travel Office investigations. Soon after becoming chairman of the reconstituted Government Reform and Oversight Committee, Mr. Clinger announced that the committee would investigate the Travel Office matter. b. Benefits.--The committee resolved upon the following findings and recommendations. Findings 1.) Plans to fire the White House Travel Office employees and replace them with campaign personnel were in place from the earliest days of the Clinton administration; 2.) Harry Thomason, who had a financial stake in the travel business, instigated the firings. Mr. Thomason's personal and financial interests in the Travel Office made it clearly inappropriate for him to have any involvement in the matter; 3.) President Clinton approved Harry Thomason's ``Image Project'' at the White House, giving Thomason an ``Official Status'' which facilitated Thomason's efforts to obtain lucrative government contracts; 4.) Harry Thomason abused his official status and White House access at a time when he had a financial stake in the travel business. Mr. Thomason's activities at the White House made him a special government employee to whom conflict of interest laws applied; 5.) The White House Communications Office, in conjunction with the White House Counsel's Office, publicly accused the Travel Office employees of criminal conduct and misused and manipulated the FBI to further their political agenda; 6.) President Clinton inappropriately allowed his cousin Catherine Cornelius to remain in a position where she had a clear conflict of interest. Cornelius pursued an investigation of employees of an office in which she coveted the top job and for which she planned a reorganization; 7.) Mrs. Clinton, acting on Harry Thomason's baseless allegations of wrongdoing against the Travel Office employees, exerted pressure on senior White House staff to fire the Travel Office employees; 8.) Associate White House Counsel Bill Kennedy misused the FBI by repeatedly invoking concerns at the ``Highest Levels'' of the White House in meetings with the FBI; 9.) White House officials covered-up the real reasons for the Travel Office firings. The firings were not based on the Peat Marwick review but rather were decided before Peat Marwick examiners ever set foot inside the White House; 10.) The White House misrepresented the Peat Marwick review. It was neither an audit nor independent and was directed by a White House which did not want an audit to be conducted; 11.) The FBI allowed the White House to control its investigation; 12.) The FBI mishandled the Travel Office investigation from the beginning, allowing the White House to control the investigation. The FBI did not adequately secure Travel Office records in a timely fashion; 13.) The White House engaged in a conspiracy of silence of the true story behind the firings from the very beginning for damage control purposes; 14.) President Clinton established a cover-up situation when he inappropriately placed Mack McLarty, the person who had approved the Travel Office firings, in charge of the White House Management Review. McLarty withheld information during the course of the investigation. It is inappropriate for the White House to investigate itself in conflict-of-interest matters; 15.) The internal White House Management Review was a catalog of ``mistakes and deception'' which omitted incriminating information about the President, Mrs. Clinton and Harry Thomason. The White House chose to cover-up incriminating information for political expediency; 16.) The White House Management Review reprimanded people who were only following orders of the real instigators of the Travel Office firings; 17.) The White House's obstruction of the review of Vince Foster's documents was due in part to concerns about Travelgate documents in Foster's custody; 18.) Mrs. Clinton instructed White House staff on the handling of Foster documents and the Foster note found on July 26, 1993, and senior White House staff covered up this information and withheld it from investigators; 19.) The Justice Department deferred to the White House during its investigations of the White House Travel Office and Harry Thomason. The Justice Department ignored the obstructive behavior exhibited by the Counsel's Office; 20.) White House officials engaged in a pattern of delay, deceit and obstruction over the course of 3 years of investigations into the Travel Office and matters related to Vince Foster's death; 21.) David Watkins' ``soul cleansing'' memo account of the Travel Office is substantially corroborated by numerous records and witness testimony; and 22.) President Clinton has engaged in an unprecedented misuse of the executive power, abuse of executive privilege and obstruction of numerous investigations into the Travel Office. Recommendations The committee recommends that: 1.) The ``special government employee'' provisions of the United States Code should be reformed to prevent its requirements from being ignored; 2.) The Executive Office of the President should establish financial and internal review controls consistent with the requirements of the Chief Financial Officers Act and the Inspector General Act, including the development of annual, audited financial statements of all business activities and the establishment of an internal review system; 3.) The Presidential Records Act and the Federal Records Act should be amended to provide for jurisdiction of Federal courts to ensure that Government records are not unlawfully destroyed, but are managed and preserved as required by law; 4.) The Office of Counsel to the President should return to its traditional mission of providing traditional legal counsel to the President and his immediate staff; 5.) Congress should consider the feasibility of prohibiting the Executive Office of the President from procuring goods and services through its own procurement operations and requiring the Executive Office of the President, where possible, to procure using existing contracts of other agencies, such as the General Service Administration's Federal Supply Schedules; and 6.) Only individuals of the highest quality and ethics should be employed by and volunteer services to the Government. c. Hearings.--The committee held three hearings on the White House Travel Office matter: 1.) October 24, 1995. Testifying before the committee were representatives of the organizations which had prepared various White House Travel Office reports: Mr. John Podesta (White House Management Review); Ms. Nancy Kingsbury (GAO's White House Travel Office Operations); Mr. Michael Shaheen (Department of Justice Office of Professional Responsibility Report); Inspector Ivian C. Smith (FBI Report) and Chief Inspector Gary Bell (IRS Report). The committee learned in the course of this hearing that the scopes of all five investigations were limited and that the White House Management Review, GAO and OPR Reports in particular were denied access to witnesses and even knowledge of critical documents subsequently obtained by the committee. As a result, none of the previous investigations could claim to have fully accounted for the actions leading up to and following the White House Travel Office firings. 2.) January 17, 1996. Testifying before the committee was former White House Director of Management and Administration David Watkins. Mr. Watkins testified about his own undated ``soul cleansing'' memo, first released by the White House to the committee in early January 1996. In this memo, which had not been made available to any of the previous Travel Office investigations, Watkins wrote that he had fired the Travel Office employees in the wake of pressure by First Lady Hillary Rodham Clinton. Mr. Watkins stood by that characterization during his testimony before the committee. This appeared to contradict Watkins' previous statements to GAO and other investigators as well as Mrs. Clinton's own assertions that she played no role in the firings. Subsequently, these contradictions led to a criminal referral of Watkins to Independent Counsel Starr. 3.) January 24, 1996. Testifying before the committee were: former White House Travel Office Director Billy Dale and Deputy Director Gary Wright, as well as Travel Office staffers Barney Brasseux, John Dreylinger, Ralph Maughan, John McSweeney and Bob Van Eimeren. The fired Travel Office employees addressed such issues as their work in the Travel Office and management of it, and the circumstances surrounding their firings and subsequent investigations and audits--or threats of same--by the FBI and IRS. Mr. Dale in particular addressed his 30-month investigation by the Department of Justice, his indictment and trial on two charges, and his acquittal by a jury of his peers in only 2 hours. Mr. Dale also strongly challenged allegations of mismanagement in the White House Travel Office and testified to the disappearance of records which he claimed would have exonerated him. Those records disappeared during the period immediately preceding the firings when Clinton administration staffer Catherine Cornelius was removing documents from the office and taking them home. The FBI did not make any effort to secure the Travel Office records until 3 weeks after the firings and 3 weeks after its criminal investigation of the Travel Office had begun. In the wake of these three hearings and the continued withholding of documents by the White House, it became clear that the Travel Office investigation could not proceed without the ability to depose witnesses under oath. As a result, on March 7, 1996, the House of Representatives approved H. Res. 369, providing special authority to the Committee on Government Reform and Oversight to obtain testimony for purposes of investigation and study of the White House Travel Office matter. The Resolution was limited to provide deposition authority to the Committee on Government Reform and Oversight only for its investigation of the Travel Office matter. Committee investigative staff deposed more than 70 witnesses under this authority in the course of the Travel Office and related FBI background files investigations. 6. ``Federal Government Management: Examining Government Performance As We Near the Next Century,'' House Report No. 104-861, September 28, 1996, Eighteenth Report by the Committee on Government Reform and Oversight, Together with Additional and Minority Views. a. Summary.--In mid-1996 the committee undertook to prepare a report that would update information available on the status of overall government management, both in terms of cross- cutting and governmentwide areas of management and in specific programs. The report dispassionately examined mismanagement, waste, fraud and abuse in Federal departments and programs. What we found was truly alarming. The report focussed on actual management and accomplishments, or lack thereof, rather than on policy. By no means, however, should it be considered comprehensive. Serious management deficiencies of the executive branch of Government are too numerous to inventory in a single report. Only some of the more obvious problems facing the cabinet departments and several independent agencies were reviewed. Some of the problems reviewed were unique to their departments, such as the failure of the Department of Labor to focus sufficient management resources on eliminating organized crime in labor unions, or the rising delinquency rates in agricultural loans managed by the U.S. Department of Agriculture. Other problems, such as mismanagement of contracts, abuses of the personnel system and failure to collect debts owed the Federal Government can be found in almost all departments and agencies. The report was initiated to raise the visibility of weak management practices, the lack of oversight and inconsistency in evaluating the effects of agency actions in the Federal Government. It briefly reviewed the administration's highly publicized National Performance Review (NPR), which was developed to make government ``work better, and cost less.'' The NPR is clearly a laudable initiative, but to date, has produced few concrete results. On the positive side, the 104th Congress enacted legislation that, if implemented effectively, should make specific improvements in problem areas of the Federal sector. For example, comprehensive procurement reform, the Unfunded Mandates Reform Act, and the Line Item Veto are a but a few of the refreshing management improvements enacted during the past 2 years. The report concluded that public perceptions of pervasive waste, fraud and mismanagement in the Federal Government are, unfortunately, accurate. Other alarming developments in the Federal Government which demonstrate the need for greater accountability include the expansion of the General Accounting Office's (GAO's) ``High Risk'' list of Federal program areas. That catalog of government hot spots grew from 14 in 1990 to 20 today--a net increase of six areas. Of the ``Twelve Worst Examples of Government Waste'' outlined for priority attention for this administration by a 1992 House Committee on Government Operations majority report, 11 are the same or worse now. Some, like the failure of the Internal Revenue Service and the Department of Justice to collect outstanding debt and the growth of health care fraud and abuse are much worse now. Taken individually, these items are cause for concern; taken in the aggregate, they are cause for alarm and an indication that leadership, both at the various agencies and at the helm of Government is lacking. With some exceptions, key appointees apparently do not understand or care to learn about effective management of their programs. Bureaucrats cannot operate programs in the absence of strong guidance and oversight at the highest levels of their organizations. Poor financial management, wasteful procurement and inventory practices, sloppy contract management, personnel abuses and manipulation of personnel rules, silly or even harmful regulations are among the consequences of bad management. Acts such as the Chief Financial Officers Act and the Government Performance and Results Act were passed by Congress in frustration over managerial anarchy and program disaggregation. These acts are being implemented, and Congress is overseeing their implementation, in an effort to counter the tendency of management and budget to separate at the Federal level, and of management to receive less and less attention over time. As this report amply demonstrated, the Office of Management and Budget exacerbated that problem by merging its management and budget functions. Budget Officers at OMB have now also been made responsible for management oversight. The report's quick review of fraud, abuse and mismanagement uncovered $350 billion in easy savings that could be achieved if greater resources were devoted to good management practices. Hundreds of billions more will be wasted in the near term on cost over runs, programs delays, delinquent payments, loans, grants and unfulfilled contracts. Additional costs for the Department of Energy's nuclear waste cleanup alone is estimated to cost as much as $350 billion. Although the report is critical of the executive branch of Government, it is not intended as an indictment of dedicated career civil servants, including managers, who are functioning in an increasingly complex and sometimes inflexible environment. The committee recognized that Federal employees are operating under greater, rather than fewer, constraints. It was and is the committee's intent that the report serve as a stimulus to discussion, an inducement to action and result in positive reforms in Federal management, efficiency and productivity. b. Benefits.--The rules of the House of Representatives give jurisdiction over general government management and efficiency to the Committee on Government Reform and Oversight. In accordance with that responsibility, the predecessor to this committee produced an overview of government management in 1992. This report, entitled ``Federal Government Management: Examining Government Performance As We Near the Next Century,'' continued the committee's tradition in reporting on comprehensive government program efficiency and cost- effectiveness. It is essentially a report card on the management practices of the first Clinton administration and also reviews the Vice President's National Performance Review (NPR), which was intended to improve government efficiency and morale. c. Hearings.--None were held. 7. ``Investigation into the White House and Department of Justice on Security of FBI Background Investigation Files,'' [Interim Report], House Report No. 104-862, September 28, 1996, Nineteenth Report by the Committee on Government Reform and Oversight, Together with Additional Views. a. Summary.--On May 30, 1996, in the course of its Travel Office investigation, the committee discovered a December 20, 1993, White House request of Billy Dale's confidential FBI background file from the FBI Liaison Office. Even though it was dated 7 months after Dale's firing, the form indicated that the White House was requesting Dale's confidential FBI file because it was considering him for ``Access (S).'' The Dale FBI background file request was found in a production of 1,000 pages of documents over which the White House previously had claimed executive privilege. Chairman Clinger immediately called on the White House and the FBI to explain why the Dale file had been requested by and provided to the White House at a time when the Justice Department was undertaking a criminal investigation of Mr. Dale. On June 5, 1996, the White House claimed the Dale request was made mistakenly by an unnamed file clerk. On June 6, it claimed that the General Accounting Office had requested the Dale FBI background file. The GAO denied this immediately. By June 7, 1996, the White House acknowledged obtaining some 338 FBI files of former White House employees, but alleged that they never were read. Then Anthony Marceca, a former detailee hand-picked by White House Office of Personnel Security Director Craig Livingstone, contradicted the White House when he told Livingstone's attorney that he in fact read all the files and passed derogatory information on to Livingstone. The White House admitted obtaining an additional 71 improperly sought FBI background files by June 14, 1996, as FBI Director Louis J. Freeh released an FBI report indicating that 408 files were provided to the White House ``without justification'' and were ``egregious violations of privacy.'' Director Freeh added, ``The prior system of providing files to the White House relied on good faith and honor. Unfortunately, the FBI and I were victimized. I promise the American people that it will not happen again on my watch.'' Also on June 14, 1996, Livingstone admitted to problems of his own background in a sworn deposition before the committee. These included problems with his employment history and the use of illegal drugs and gave added impetus to the still-unanswered question, ``Who hired Craig Livingstone?'' On June 15, 1996, the White House delivered a document production to the committee which included letters from former Associate White House Counsel William H. Kennedy, III, to then-Defense Secretary Les Aspin and others seeking the assignment of Army investigator Anthony Marceca to a White House detail in the Office of Personnel Security. b. Benefits.--The committee resolved upon the following findings and recommendations. Findings 1.) FBI background files often include the most sensitive and confidential personal and financial information about the individual being reviewed; 2.) The White House improperly requested hundreds of confidential FBI background files without any justification. This violated the constitutional rights and privacy of many former Republican officials whose files improperly were requisitioned and reviewed by Clinton White House employees; 3.) The White House Office of Personnel Security and the FBI maintained a system which allowed low level staff to access any file without question by the FBI. The Clinton administration has, on a number of occasions, failed to implement safeguards that would have prevented lapses in security at the White House and in fact exploited the FBI's longstanding policy of relying on the honor of White House employees in turning over such files; 4.) FBI General Counsel Howard Shapiro provided confidential FBI law enforcement information about Mrs. Clinton's role in bringing Craig Livingstone into the White House. When Shapiro realized that the information contained in Livingstone's FBI background file could damage former White House Counsel Bernard Nussbaum and Mrs. Clinton, he immediately contacted the Office of White House Counsel and read verbatim the incriminating contents of Livingstone's file; 5.) Once White House Special Counsel Jane Sherburne learned that the information contained in Livingstone's file could damage Nussbaum and Mrs. Clinton, Sherburne contacted Mrs. Clinton regarding the information; 6.) Ms. Sherburne may have violated ethical standards by informing private attorneys for Nussbaum and Livingstone about confidential FBI law enforcement information. On the day before reports of his testimony before a grand jury, lawyers for Nussbaum were informed of evidence uncovered in a search of Livingstone's file that contradicted Nussbaum's testimony before the Committee on Government Reform and Oversight. Mr. Livingstone's attorneys received the same information; 7.) White House Office of Personnel Security staff failed to properly secure confidential FBI law enforcement files. The committee was provided with testimony and evidence that staff and interns without the necessary clearances had access to the highly sensitive material in the FBI background files including that of more than 400 Bush and Reagan administration officials; 8.) The FBI continued to involve itself in the investigation of the FBI files matter even after receiving notice from the Attorney General that a conflict of interest existed between the FBI and the White House concerning this matter. Mr. Shapiro notified the White House about the incriminating contents of Livingstone's background file before the committee was allowed to review it. Mr. Shapiro assisted the White House in preparing correspondence for the FBI regarding the FBI files matter and the committee's investigation of it; 9.) Army detailee Anthony Marceca was given unfettered access to confidential FBI law enforcement files and allowed to remove confidential information from the White House despite his own inability to receive White House clearance. Marceca's removal of information in those files from the White House was inappropriate; 10.) Without any valid basis for doing so, FBI General Counsel Shapiro provided the White House Counsel a pre- publication copy of Gary Aldrich's book which the former agent had provided to the FBI under an employment agreement. There was no apparent reason for providing the manuscript to the White House; and 11.) The White House asserted executive privilege over documents over which it had no basis for claiming privilege. Thousands of pages of these documents contained routine administrative information or communications, as opposed to issues of national security or others for which a claim might be appropriate. Recommendations Having undertaken a preliminary investigation, the committee is not satisfied that the public has been provided the answers to many of the concerns raised by the FBI background files matter. This makes it imprudent to make recommendations at this time. The committee feels those individuals whose files were improperly obtained by the White House deserve a complete explanation of the following questions: 1.) Who hired Craig Livingstone? 2.) What list was used by the White House in requesting the improperly-obtained FBI background files? 3.) Who reviewed the contents of the FBI background files of former Reagan and Bush administration officials? 4.) Were the contents of the FBI background files ever transmitted electronically to any computer data base within or outside the White House complex? 5.) What effect have the new procedures implemented by the Clinton administration had on the White House pass process and FBI background checks? 6.) What standard procedures are in place to ensure that those without proper clearances do not have access to materials protected by the Privacy Act which are stored in the White House? 7.) What policies should be implemented to ensure that FBI officials do not interfere with ongoing investigations outside the FBI's jurisdiction? c. Hearings.--The committee held four hearings on the FBI background files matter: 1.) June 19, 1996. Testifying before the committee were former White House Counsels or Deputy Counsels A.B. Culvahouse and Richard Houser (Reagan administration), C. Boyden Gray (Bush administration), and former Office of Personnel Security Director Jane Dannenhauer and her deputy, Ms. Nancy Gemmell. Both Ms. Dannenhauer and Ms. Gemmell had served in the Reagan and Bush administrations and briefly in the Clinton administration. At this hearing, the care and discretion with which FBI background investigation files were handled in the Carter, Reagan and Bush administrations was established. For example, access to these files was strictly limited to Ms. Dannenhauer and one or two members of the White House Counsel's Office. Those with access to these files themselves had been cleared for such access after undergoing background investigations of their own. By contrast, White House interns were assigned to the White House Office of Personnel Security for the first time during the Clinton administration. These interns, aged 18 to 20 years old and without security clearances or background investigations, nonetheless had access to confidential FBI background files in the Clinton White House. 2.) June 26, 1996. Testifying before the committee were: former Clinton administration Director of Personnel Security D. Craig Livingstone; former Clinton administration detailee Anthony Marceca; former Office of Personnel Security staffer Lisa Wetzl; former White House Counsel Bernard W. Nussbaum, and former Associate White House Counsel William H. Kennedy, III. At this hearing, Mr. Livingstone formally announced his resignation from his position, from which he had been on leave since the FBI files scandal broke. Witnesses also testified that hundreds of FBI background files had been requested due to faulty Secret Service lists. No one, including Mr. Livingstone, could answer the question, ``Who hired Craig Livingstone?'' although Messrs. Nussbaum and Kennedy testified that the First Lady had no role in Livingstone's hiring. Apparent contradictions between Nussbaum's testimony and previous statements he had made to an FBI agent in the course of an interview subsequently led to a criminal referral of these matters to Independent Counsel Starr. 3.) July 17, 1996. Testifying before the committee were Secret Service Agents John Libonati, Jeffrey Undercoffer and Arnold Cole. The Secret Service agents established in their testimony that the Secret Service's own records properly recorded as ``inactive'' passholders all but a handful of the individuals whose FBI files were requested and that it thus would have been difficult for the White House to mistakenly request hundreds of FBI background investigation files of former ``inactive'' Republican officials. Special Agent Cole also testified that, when the FBI files matter first was reported in the press, Livingstone told him he knew that the Secret Service lists were indeed accurate and that his office had used the wrong lists. The agents also testified at this hearing about the incidence of recent drug usage among White House staffers, 21 of whom were forced by recent extensive drug usage to be tested twice a year in a special, individualized random drug testing program. 4.) August 1, 1996. Testifying before the committee were: Howard M. Shapiro, FBI General Counsel; Thomas Kelley, FBI Deputy General Counsel; Vernon Thornton, retired former FBI Unit Chief of Executive Agencies Dissemination and Personnel Unit; and Peggy J. Larson, FBI Supervisory Research Analyst. At this hearing, General Counsel Shapiro testified concerning his ``heads-up'' warning to the White House concerning materials in D. Craig Livingstone's FBI background file. Mr. Shapiro acknowledged it was ``a horrific blunder'' warning the White House of the existence of an FBI report stating the First Lady ``highly recommended'' Livingstone for his White House position. In his opening statement and, later while responding to questions, Shapiro acknowledged that the substance of this ``heads-up'' in turn was widely disseminated throughout the White House and beyond. (Former White House Counsel Bernard Nussbaum, who reportedly told the FBI of the First Lady's recommendation of Livingstone, was informed in advance of an appearance before a grand jury.) Mr. Shapiro also testified about his July 16, 1996, decision to send FBI agents out to the home of the agent whose interview summary report related the First Lady's recommendation. He testified that the interview of the FBI agent was not intended to intimidate, as some majority Members suspected. Mr. Shapiro also testified about his delivery to White House Counsel Jack Quinn of retired FBI agent Gary Aldrich's manuscript of a proposed book which discussed activities at the White House. The other three witnesses testified more generally on the handling of FBI files. GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY SUBCOMMITTEE Hon. Stephen Horn, Chairman 1. ``Making Government Work: Fulfilling the Mandate for Change,'' House Report No. 104-435, December 21, 1995, Third Report by the Committee on Government Reform and Oversight, Together With Additional Views. a. Summary.--On December 14, 1995, the Committee on Government Reform and Oversight approved and adopted a report entitled, ``Making Government Work: Fulfilling the Mandate for Change.'' The committee's report is based on a series of hearings conducted by the Subcommittee on Government Management, Information, and Technology. The subcommittee convened eight oversight hearings on various aspects of government management to solicit advice and recommendations for: (a) changing what the Federal Government does; (b) improving the overall economy, efficiency, and management of its operations and activities; and (c) effectively planning, measuring, and reporting the results to the American public. The inquiry reflected public expectation that provided a mandate to the Congress to consider with care the various Government functions, and to determine whether they should continue to be performed, and, if retained, how they can be made more effective. The experience of American industry also influenced the committee. In the past decade, corporations and other entities have reexamined their roles and redefined their institutional objectives and purposes. Many corporate changes have been facilitated by technology that speeds information to decisionmakers and thereby reduces the need for traditional hierarchies. While such changes have been at times wrenching to the people in these institutions, the result has been to make American industry far more productive and competitive. The Federal Government has yet to implement a similar transformation on any appreciable scale. While the committee recognizes fundamental differences between the purposes and the cultures of business and Federal Government organizations, it remains receptive to the suggestion that ``rethinking'' and ``re-engineering'' methods successfully used in the private sector can be and should be adapted for use in the Federal Government. Because of the administration's management responsibilities for the Federal Government, the point of reference for all material reviewed was the National Performance Review, Phases I and II. Findings Based upon the investigation and oversight hearings conducted by the subcommittee, the committee found the following: 1. The Management of the Federal Government Needs Improvement. (a) The capacity of the President as the Chief Executive Officer of the Federal Government and its principal manager has been diminished over several administrations. The Executive Office of the President has abrogated its responsibility to oversee and improve the Government's management structure. (b) The capacity available to the President in the Office of Management and Budget [OMB] to reform or improve management has steadily declined and now barely exists, despite a competent Director of OMB and a Deputy Director of Management, whose talents in this area are underutilized. Federal management organization, oversight authority, and general influence have been consistently overridden by recurring budget crises and budget cycle demands, despite conscientious intention to give ``Budget'' and ``Management'' equal voice within OMB. (c) The NPR, in its ad-hoc and episodic approach to management issues, reveals the weakened state of management capacity of the Executive Office of the President. (d) The NPR-inspired announcement of a reduction of over a quarter-million Federal jobs may have been warranted; however, without first having a solid empirical rationale for doing so and not knowing where or how, it reflected a lack of strategic vision as to the Federal Government's role, and as such it seriously eroded Federal workers' morale, productivity, and planning for the future. (e) The capacity of the Office of Personnel Management to provide leadership to a revitalized career service has been seriously impaired. (f) Short-term political appointees have layered and ``thickened'' the Federal Government's upper echelons of organization to a point where productivity, management, and continuity of operation have become seriously affected. (g) Some potential candidates for political appointment believe that service on Federal organizations will hinder their careers, imposing a protracted and intrusive nomination process as well as numerous restrictions on financial and employment activities during and following Federal Government assignments. As a result, the pool of available talent qualified for appointment and willing to serve has been diminished. (h) Qualified people considering careers in public administration are discouraged from Federal career employment by layers of political appointees of uneven quality which preclude advancement to positions of senior responsibility. (i) Career Federal public administrators have a long record of faithfully executing clearly established policy and rendering effective political leadership. However, political appointees as a group have tended to display more loyalty to individual political sponsors and special interests than to the President, who is elected by and ultimately accountable to the people. (j) Employee-buyout programs in Federal organizations have not worked as well as intended, resulting in the loss of employees with the most marketable skills, leaving in the workplace many of the poorer performers. (k) Programs for Federal-employee professional education, training, and development are vital to a smaller workforce adopting modern management methods and achieving desired productivity improvements. (l) The Federal Government must follow the best practices of private and public organizations for exploiting information technology in reforming management, reducing size, and raising productivity and market competitiveness. A recent General Accounting Office report provides valuable insights on how the Federal Government can lower costs, improve productivity, and provide better services to its citizens. 2. The Federal Intergovernmental Roles Are Poorly Defined. (a) The Federal role has evolved in a patchwork manner. The Federal Government lacks a clear and comprehensive statement of its proper role. The result is similar redundant programs throughout disparate departments and agencies. (b) Many citizens view the Federal Government as having overreached its proper role, by ``meddling'' in affairs such as elementary and secondary education (better left to States and communities), marketing and distribution of energy resources (better left to market forces) and applied research and development (better left to private investment and competition). (c) Many State governments are willing to risk accepting large Federal block grants, with fewer dollars, in return for greater flexibility and fewer restrictions. There is some concern that any residual reporting burdens and controls from Washington may interfere with States' roles and as such constitute an ``unfunded mandate,'' contrary to a law sponsored by this committee. (d) In the current environment, many agencies and States are trying to develop program partnerships. Federal-State program partnership agreements reached a high point during the Johnson and early Nixon administrations. State and Federal leaders need to be aware that those intergovernmental agreements later deteriorated because roles and responsibilities were not clearly defined and accepted by all interested parties. Another cause was that the Federal Government seized a decisionmaking role disproportionate to the resources it provided. 3. Organization of Federal Functions Is Uneven and Duplicative. (a) No Cabinet-level department has been eliminated outright in our Nation's history, although many have been reorganized, renamed, combined, or split. (b) Today's Federal Government is even more enmeshed in red tape, replicated functions and controls than it was in 1971, when President Nixon tried unsuccessfully to reorganize and streamline Cabinet departments. (c) The proposed ``Department of Commerce Dismantling Act of 1995'' contains a model for dismantling any high-level Federal organization using a traditional organization within the Office of Management and Budget. (d) Approximately a million Federal employees work in some 30,000 field offices outside of Washington, DC. Although some field offices only have five or fewer staff, closing them has consistently proven to be a difficult, almost intractable political problem. The committee notes progress by the U.S. Department of Agriculture in addressing the problem. 4. Public Accountability Is Weak. (a) The National Performance Review [NPR] contributed to identifying the need to improve the Federal Government and lower its operating costs. (b) By not establishing first what activities the Federal Government should be performing, the NPR was flawed from the outset and did not achieve enough progress. (c) NPR neglected to place sufficient emphasis on fiscal accountability by failing to address the Federal Government's responsibility for stewardship of public resources. (d) The ad-hoc, even disjointed, nature of NPR is a telling sign of the disconnect between policy and management, evidence of atrophy of the tools of management, and an admission that the President has no organized capacity to manage the executive branch. (e) The NPR recommended a doubling of the existing 1-to-7 supervisory span of control to a 1-to-14 or 1-to-15 supervisor to subordinate ration. This recommendation was without appropriate foundation and ignored the Government's widely varying missions, and threatens public accountability. (f) With more Federal work being done under contract, with private vendors, effective contract administration is critically important in ensuring efficiency, effectiveness, and accountability. (g) The growth of ``contract government'' is a direct by- product of the emphasis on personnel reduction. As successive administrations have sought to limit or reduce the number of Federal employees, more and more activities have been contracted out. (h) The experiences of other foreign and Federal, State and local governments in carrying out significant management and accountability reforms are valuable to Federal agency managers as they implement the Government Performance and Results Act of 1993 [GPRA]. (i) Government corporations and other Government-sponsored enterprises have assumed roles and responsibilities very different from those for which the Government Corporation Control Act of 1945 was intended. Today, a conceptual framework is needed for setting up these kinds of enterprises and centralized oversight of their management operations. (j) Executive branch accountability is made more difficult by the complex congressional budget process and by additional legislative branch restrictions and controls placed on Government agencies, such as prohibitions on closing outdated Federal field offices. Recommendations Based on the foregoing findings, the committee recommends as follows: 1. Strengthen the President's Role as Chief Executive Officer of the Executive Branch. (a) Management of the Federal Government should be a Presidential priority. Among the President's many roles is the responsibility to serve as Chief Executive Officer or general manager of the Federal Government. Many broad initiatives intended to make the Federal Government work better depend on the commitment by the President and his staff in the Executive Office of the President. By approaching the Federal Government almost exclusively from a budget or policy perspective, Presidents limit their capacity to reform management in the Federal Government. (b) The President, acting jointly with Congress through a Federal management office, should establish intergovernmental partnerships, with clearly defined Federal and State roles and responsibilities, and allow local Federal managers the authority and flexibility needed to assist State and local officials in managing devolved programs, functions, and resources. (c) To make the President's executive office more accountable to the public, Congress should establish an Office of Inspector General in the Executive Office of the President. 2. Establish an Office of Management. (a) To enhance the President's management capability throughout the executive branch, Congress should establish, in the Executive Office of the President, a top-level management and organizational oversight office headed by an administrator who has direct access to the President. Sustained attention to management issues beyond recurring budget crises is vital to ensure effectiveness. The new Federal management office would combine the management functions of the OMB, the residual policy and oversight functions of the Office of Personnel Management, and the policy functions from the General Services Administration into an entity separate from but equal in stature to the remaining Office of the Budget. (b) The executive branch is in serious need of an office with responsibility for departmental reorganizations such as the proposed dismantling of the Department of Commerce. The current legislative initiative in that regard will be a model for managing large-scale reductions in the Federal Government's organizational structure and scope of work. (c) An Office of Management could encourage the implementation of the strategic information management and technology practices increasingly common in high quality private and public organizations. It could stress the need to focus management attention on technology improvements that attain goals; and assert senior management control over technology investment decisions. (d) Executive agencies should exploit, publicize, and replicate successful private sector ventures in making Federal Government organizations work more effectively by drawing upon past successes. 3. Convene a Commission on Federal Reorganization. (a) Congress should establish a blue-ribbon inquiry commission of experts from the business, academic, and nonprofit sectors and Federal, State and local government to recommend to the President and Congress in early 1997: (i) ways to organize more efficiently the functions that the Federal Government performs; and (ii) changes in law that would reduce, transfer or eliminate Federal functions. If resources permit, such a commission should produce a reorganization plan. (b) Such a commission should apply the guideline criteria for agency elevation to Cabinet department status which were developed in 1988 by the National Academy of Public Administration [NAPA]. Such a review ought to result in a new alignment and grouping of the tasks and functions of the Federal role by major purpose. (c) Congress should concurrently provide the President broad authority, including optional fast-track authority, to restructure executive branch departments and agencies, similar to past (and now expired) Reorganization Acts. (d) Congress should be fully involved in the consolidation of the many Federal programs it enacts and funds; the proposed commission should look for additional opportunities to consolidate or combine Federal programs, and make recommendations accordingly. (e) Once changes have been made in the structure of the executive branch, Congress should conform its own committee organization and jurisdictions to parallel the executive branch changes. 4. Reshape the Federal Civil Service. (a) Congress should proceed with legislation that would reduce the allowable number of political appointees to an initial level of 2,000--aimed principally at Schedule C (not subject to Senate confirmation) positions--and set lower targets for future years as additional executive branch organizations are consolidated or abolished. (b) Congress should appropriate the professional education, training, and development funds for executive agencies, not as separate line items, but as an integral part of total personnel costs. That would afford managers the flexibility to choose between training and hiring to upgrade collective organizational skills. (c) Any future Federal employee ``buyout'' legislation should be limited to serving the needs of the downsized Federal Government by focusing agency buyouts on those with less-needed skills, functions, and capabilities. 5. Strengthen Public Accountability. (a) Both the President and Congress should complete the work to implement the Government Performance and Results Act, in order to make the executive branch both performance-driven and accountable. The act's performance measurement provisions ought to be used in all steps of the budget and management process. (b) To make public accountability in the executive branch less cumbersome and counterproductive, Congress should simplify the present complex structure of 13 separate appropriations bills by combining them into a lesser number, possibly comparable to the internal budget review structure in the Office of Management and Budget. Congress should adjust its own internal authorizing and appropriating committee structure correspondingly. (c) Congress should amend the Government Corporation Control Act of 1945 to raise the efficiency and effectiveness of the Federal Government's business-type operations and organizations and to set standards consistent with today's marketplace conditions. (d) In its quest to attain the objective of balancing the Federal budget by fiscal year 2002, Congress must recognize three critical needs: (i) to preserve the Federal Government's accountability to the governed throughout the transformation process; (ii) to foster that objective by making investments in human and technological development during that process; and (iii) to accept the hard lessons learned by industry that workforce strength is to be cut only after--not before or while--the Federal roles have been determined and organizational structures have been reduced or eliminated. b. Benefits.--Implementing the recommendations in this report will result in a Federal Government that is less expensive, more efficient, and more accountable to the taxpayer. Federal customers and partners in all program areas will benefit from sharper definition of the roles and relationships between levels of government, as well as between the government and the private sector, elimination of duplicative Federal organizations and activities, and performance measures that facilitate public discussion and decision about the ongoing value of government activities. A strengthened career civil service, well trained and well tooled in the best management practices of both the public and private sector, and empowered to employ them, is vital to making these benefits a reality. c. Hearings.--The series of eight hearings began on May 2, 1995, with an overview of the NPR process. Testimony was received from Alice M. Rivlin, Director, and John A. Koskinen, Deputy Director for Management, Office of Management and Budget (OMB); Charles A. Bowsher, Comptroller General of the United States, General Accounting Office (GAO); Tony Dale, Budget Manager of the New Zealand Treasury (in his capacity as Harkness Fellow, 1994-5), the Commonwealth Fund of New York; Duncan Wyse, executive director, Oregon Benchmarking Project; Dwight A. Ink, president emeritus, Institute of Public Administration and former Assistant Director for Management, Bureau of the Budget and OMB; R. Scott Fosler, president, National Academy of Public Administration; Donald F. Kettl, nonresident senior fellow, Center for Public Management, The Brookings Institution, and professor at the University of Wisconsin, Madison; and Herbert N. Jasper, senior associate, McManis Associates. The subcommittee focused next, on May 9, on the appropriate role of Federal executive leadership in strengthening the management of Cabinet level departments, hearing testimony from Thomas P. Glynn, Deputy Secretary of Labor; George Munoz, Assistant Secretary for Management and Chief Financial Officer, Department of the Treasury; Assistant Comptroller General Johnny C. Finch, General Government Programs, and Gene L. Dodaro, Accounting and Information Management Division, GAO; Alan L. Dean, former Assistant Secretary of Transportation for Management and coordinator of President Nixon's plan for departmental reorganization; William D. Hansen, former Assistant Secretary of Education for Management and Chief Financial Officer under President Bush; and Roger L. Sperry, director of management studies, National Academy of Public Administration. The third hearing, on May 16, turned to consolidating and restructuring the executive branch, assessing alternative ideas for rearranging or reducing several departments and agencies. Witnesses were Representative Robert S. Walker of Pennsylvania, chairman of the Committee on Science; Representative Sam Brownback of Kansas; Representative Dick Chrysler of Michigan; Representative Todd Tiahrt of Kansas; Robert A. Mosbacher, Secretary of Commerce in the Bush administration; Scott A. Hodge, Grover M. Hermann Fellow in Federal Budgetary Affairs, the Heritage Foundation; Jerry Taylor, director, Natural Resources Studies, Cato Institute; and Herbert N. Jasper, senior associate, McManis Associates. In its fourth session, on May 16 and 23, the subcommittee examined the consolidation of a large number of Federal programs and organizations. The subcommittee heard testimony from Secretary of Energy Hazel R. O'Leary, Donald P. Hodel, former Secretary of Energy under President Reagan; Admiral James D. Watkins, U.S.N. (ret.) former Secretary of Energy under President Bush; John S. Herrington, former Secretary of Energy in the Reagan administration; Shelby T. Brewer, former Under Secretary of Energy during the Reagan administration; Donna R. Fitzpatrick, former Under Secretary of Energy during the Bush administration; Marshall S. Smith, Under Secretary of Education; Donald Wurtz, Chief Financial Officer, Department of Education; Chester E. Finn, Jr., John Olin Fellow, the Hudson Institute and former Assistant Secretary of Education during the Reagan administration; William D. Hansen, executive director of the nonprofit Education Finance Council and Assistant Secretary of Education for Management in the Bush administration; George Munoz, Assistant Secretary for Management and Chief Financial Officer, Department of the Treasury; and Paul Posner, Director, Budget Issues, Accounting and Information Management Division, GAO. Attention turned in June to the Federal Government's field establishment. After reviewing several types of possible corporate structures for Federal aviation, electric power, and transportation on June 6, the subcommittee heard testimony from several regional administrators on June 13 to understand their roles and hear their suggestions, then returned to Chicago on June 19 for a firsthand look at the Federal Government's operations from the field perspective. Witnesses at the June 6 hearing were Donald H. Rumsfeld, former Secretary of Defense under President Ford and chief executive officer of General Instruments Corp.; Roger W. Johnson, Administrator of General Services; Jack Robertson, Deputy Administrator and Paul Majkut, general counsel, Bonneville Power Administration; Daniel V. Flanagan, Jr., president, Flanagan Consulting Group; Harold Seidman, senior fellow, National Academy of Public Administration; Jack Johnson, president, Professional Airways Systems Specialists; and Barry Krasner, president, National Air Traffic Controllers Association. Witnesses at the hearing on June 13 and 19 were Dwight A. Ink, president emeritus, Institute of Public Administration; Alan L. Dean, senior fellow, National Academy of Public Administration; Charles F. Bingham, visiting professor of public administration, the George Washington University; Wardell C. Townsend, Jr., Assistant Secretary of Agriculture for Administration; Shirley Sears Chater, acting Commissioner, Social Security Administration; Mary Barrett Chatel, president, National Council of Social Security Management Associations; D. Lynn Gordon, Miami District Director, U.S. Customs Service, Department of the Treasury and George Rodriguez, Houston Area Coordinator, Department of Housing and Urban Development; William Burke, Great Lakes Regional Administrator, General Services Administration and chair, Chicago Federal Executive Board; Gretchen Schuster, Chicago Regional Director, Passport Agency, Department of State and Federal Executive Board member; Joseph A. Morris, former General Counsel, Office of Personnel Management; Michael P. Huerta, Associate Deputy Secretary of Transportation and Director, Office of Intermodalism, Department of Transportation; Kenneth A. Perret, Garrome Franklin, and Donald Gismondi, Federal Regional Administrators in Chicago for highways (FHA), aviation (FAA), and transit (FTA) respectively; and Colonel Richard Craig, North Central Division Engineer, U.S. Army Corps of Engineers. The seventh hearing, on June 20, in Washington, emphasized improving government results through performance measurement, benchmarking, and re-engineering, as many private corporations have done. Witnesses providing testimony were Donald F. Kettl, Center for Public Management, the Brookings Institution, and professor at the University of Wisconsin, Madison; Harry P. Hatry, Director of State and Local Government Research Programs, the Urban Institute; Herbert N. Jasper, senior associate, McManis Associates, Johnny C. Finch, Assistant Comptroller General, General Government Programs, GAO; Linda Kohl, director of Minnesota State Planning; Sheron K. Morgan, North Carolina Office of State Planning; Joseph G. Kehoe, Managing Partner for Government Services, Coopers and Lybrand, LLP; and Laura Longmire, National Director, Benchmarking, KPMG Peat Marwick LLP. The series of hearings ended on June 27, 1995, focused on agencies' preparation for compliance with the Government Performance and Results Act of 1993 (GPRA). Testifying at the final hearing were OMB Deputy Director for Management John. A. Koskinen; Johnny C. Finch, Assistant Comptroller General for General Government Programs, GAO; Paul C. Light, director, Public Policy Programs, the Pew Charitable Trusts; R. Scott Fosler, president, National Academy of Public Administration; Anthony A. Williams, Chief Financial Officer, Department of Agriculture; Vice Admiral A.E. (Gene) Henn, Vice Commandant, U.S. Coast Guard, Department of Transportation; Joseph Thompson, New York Regional Director, Department of Veterans Affairs; and Colonel F. Edward Ward, Jr., Director, Field Offices, Department of Defense Finance and Accounting Service, formerly with the Air Force Air Combat Command. 2. ``Year 2000 Computer Software Conversion: Summary of Oversight Findings and Recommendations,'' House Report No. 104-857, September 27, 1996, Sixteenth Report by the Committee on Government Reform and Oversight. a. Summary.--After midnight, December 31, 1999, computer systems throughout the world are at risk of failing by confusing the year 2000 with the year 1900 on January 1, 2000, and going backward in time instead of forward with the new century. Congress has learned that if businesses and governments continue to ignore this issue, disruption of routine business operations and the inability of the Federal Government to deliver services to the American public could result. According to an April 12, 1996, Congressional Research Service (CRS) memorandum, ``Many people initially doubted the seriousness of this problem, assuming that a technical fix will be developed. Others suspect that the software services industry may be attempting to overstate the problem to sell their products and services. Most agencies and businesses, however, have come to believe that the problem is real, that it will cost billions of dollars to fix, and that it must be fixed by January 1, 2000 to avoid a flood of erroneous automatic transactions.'' On April 16, 1996, subcommittee Chairman Stephen Horn convened a hearing of the Subcommittee on Government Management, Information, and Technology to determine what steps Federal agencies are taking to prevent a possible computer disaster. Among the questions raised were whether agencies are taking appropriate steps to identify the problem and mobilizing the necessary human and capital resources to it. As noted by Representative Tom Davis, ``think for a moment how dates play a part in each one of our lives and how the failure of a computer system or computer scanner to recognize and understand a date can affect us. Our driver's license may prematurely expire and the Social Security Administration may recognize 25-year-olds as 75-year-olds, without conversion that is needed for the year 2000.'' Examples of what could occur if industry and government ignore this issue ranged from unexpected expiration of drivers' licenses to erroneous dates for final mortgage payments if two- digit date fields remain unable to recognize the year 2000. Given that this information technology project has a fixed date for completion, January 1, 2000, subcommittee Chairman Horn asked hearing witness, Kevin Schick, research director, Gartner Group, to estimate the cost of a solution. Mr. Schick estimated $600 billion worldwide, including $300 billion in the United States and $30 billion for the Federal Government. Subcommittee Chairman Horn then asked Schick what the administration's and, in particular, the Office of Management and Budget's was doing to convey the urgency of the problem. Mr. Schick responded ``there is no sense of urgency . . . if [Federal agencies] are not already well into this project by October of 1997, [the Federal Government] will be doing a disservice to the very constituents that depend on [it] to prevent something like this from happening to them . . .'' On September 10, 1996, a joint hearing with the Committee on Science was held to review the Year 2000 impact on personal computers, States and the Federal Government. Larry Olson, Pennsylvania's Deputy Secretary for Information, presented Pennsylvania's plan and noted that the key to success of any plan is senior level support. Mr. Olson testified that in his first year as Governor, Tom Ridge recognized the implications of the Year 2000 date field problem and acted to ensure Pennsylvania businesses and governments will be prepared before January 1, 2000. Also at the hearing Harris Miller, the president of the Information Technology Association of America, outlined three problem areas for personal computer users in homes and businesses nationwide: 1) the machines' BIOs--basic input/ output systems--chips; 2) their operating systems; and 3) their commercial software. Most equipment manufacturers have modified their products in the past 18 months. Operating system software remains an issue but most operating systems can be fixed by a simple procedure using the computer's mouse. Commercial software may or may not be Year 2000 compliant. Another serious concern is their increasing interconnectedness with other systems. To ensure that computer systems are operational in 2000, most systems will need modification. Miller also testified that personal computer users and mainframe information technology managers need to be aware of this issue and take appropriate corrective steps. In her testimony, OMB's Office of Information and Regulatory Affairs Administrator Sally Katzen outlined the Clinton administration's strategy to resolve the problem: 1) raise the awareness of the most senior managers in Federal agencies to the problem; 2) promote the sharing of management and technical expertise; and 3) remove barriers impeding technicians fixing systems. b. Benefits.--The subcommittee found the following: 1. The Year 2000 Problem Results From the Unanticipated Consequences of Decisions Made Decades Ago. Computer systems use the two-digit-year date field to perform such functions as calculating the age of U.S. citizens, sorting information by date, and comparing multiple dates. Twenty years ago, disk storage was so expensive that a four- digit-year date format was rejected. In addition to the cost factor, many programmers assumed that the programs then using two-digit-year date fields would be obsolete by the year 2000, if not within 10 years. In fact, systems now in place nearly 30 years continuously were enhanced by technological developments while remaining programmed for the 20th century. Given these developments, many experts in the public and private sectors were confident further advances would provide ``silver bullet'' solutions to such issues as this one. Others believed the software services industry was overstating the problem to sell products. While correcting the date field is technically simple, the process of inventorying, correcting, testing and integrating software and hardware among all interactive systems (among industry and government) is very complex. 2. Senior Management Involvement Is Required To Address the Year 2000 Problem. Various witnesses appearing before the subcommittee emphasized the value of senior level support to fix the systems. Many experts, aware of this issue for up to a decade, were unable to take corrective action because the problem was considered irrelevant to agencies' missions. In the Federal Government, an ``Interagency Committee on the Year 2000,'' established to raise awareness of the task facing Federal information technology managers, has required that vendor software in future procurement schedules be Year- 2000 compliant, among other things. 3. The Year 2000 Deadline Cannot Be Extended. According to Mr. Schick, the crisis revolves around time, cost and risk. Businesses, Federal agencies, and State and local governments must understand that this information technology project cannot be allowed to slip: Saturday, January 1, 2000 cannot be postponed. Mr. Schick added that all parties may be required to shift resources from other projects to complete this one. 4. Addressing The Year 2000 Problem Will Be Costly. Estimates as high as $600 billion for systems worldwide, $300 billion in the United States and $30 billion for the Federal Government alone reflect the costs of: inventorying current programs; analyzing the percentage of code affected; implementing a fix, and testing to ensure the changes are correct. All must be completed while current information technology remain in use. Only six agencies furnished any cost estimates for resolving the problem in response to the April 29, 1996 oversight letter: the Departments of Agriculture, Education, Health and Human Services and State, as well as the Office of Personnel Management, and the Small Business Administration. In fact, Agriculture and Health and Human Services only provided partial estimates. 5. There Is a High Risk of System Failure if the Year 2000 Computer Problem Is Not Corrected. If, as suggested by CRS, it is too late to correct every system nationwide before January 1, 2000, businesses need to know how to minimize disruptions in their operations. Federal, State and local governments must prioritize mission critical systems and immediately correct systems with the greatest human impact. Federal, State and local governments, must ensure that Americans are not at risk of losing government services. Additionally, the Department of Defense, Federal Aviation Administration and similar agencies must ensure that their computers do not go haywire on January 1, 2000, causing severe disruptions of a strategic nature. On June 7, 1996, the CRS provided the House and Senate with a memorandum discussing various issues complicating the Year 2000 project and potential consequences resulting from a failure to address this problem at the Federal level, including: Social Security Administration miscalculation of the ages of citizens, causing payments to be sent to ineligible persons and/or denying payments to the eligible; IRS miscalculations of standard deductions on income tax returns for persons over 65, causing incorrect records of revenues and payments due; Malfunctioning Department of Defense weapon systems; Erroneous flight schedules generated by the FAA's air traffic controllers; State and local systems being corrupted by false records, resulting in errors in income and property tax records, payroll, retirement systems, motor vehicle registrations, and more; Erroneous records by securities firms and insurance companies; and False billing by telephone or similar companies resulting in billing errors or lapses in service. 6. Potential Liability Issues Arise If the Year 2000 Computer Date Conversion Is Not Completed. Businesses--in particular banks, securities firms and insurance companies, among others--face potential liability for failing to provide Year 2000 compliant products or services and must ensure that their data bases are not corrupted by bad data from external sources. Governments and businesses also must protect themselves from purchasing noncompliant software and services through use of commercial market warranties. c. Hearings.--The Subcommittee on Government Management, Information, and Technology held a hearing on April 16, 1996, entitled, ``Is January 1, 2000, the Date for Computer Disaster?'' and on September 10, 1996, a joint hearing was held with the Committee on Science, entitled, ``Solving the Year 2000 Computer Problems.'' 3. ``Crude Oil Undervaluation: The Ineffective Response of the Minerals Management Service,'' House Report No. 104-858, September 27, 1996, Seventeenth Report by the Committee on Government Reform and Oversight. a. Summary.--Between 1978 and 1993, oil companies underpaid royalties on crude oil drilled on Federal lands by as much as $2 billion nationwide. The Department of the Interior's Minerals Management Service (MMS) has failed to seriously address this problem. California is our fourth largest oil-producing State with 1994 crude-oil production of 345 million barrels, a large amount of which is produced on Federal lands. In 1975, the State of California and the city of Long Beach sued seven major oil companies operating in California alleging they had conspired to keep posted oil prices low, thereby reducing royalties to the litigants. Similarly, insofar as the posted price was kept below fair market value, the Federal Government lost royalties due it for oil production on Federal lands. In 1986, MMS contacted California officials to assess the appropriateness of posted prices as the royalty value basis. MMS' conclusion that posted prices fairly represented market value reflected the failure of California and Long Beach to prove their antitrust claims in court. The Department of Justice looked into the issue but declined to investigate. In 1991, six companies (ARCO, Shell, Chevron, Mobil, Texaco, and Unocal) settled with California and Long Beach for some $345 million. Exxon, the seventh defendant, went to trial and was exonerated of antitrust charges relating to State oil leases. Exxon also won an appeal in January 1995. A separate appeal covering a different time period is pending. In the wake of the 1991 settlement, MMS attempted to estimate royalty underpayments for oil produced on Federal lands. However, since MMS lacked such crucial information as internal oil company records, California urged it to begin a more formal investigation. In 1994, MMS responded by creating an interagency task force consisting of representatives from MMS and the Departments of Interior, Commerce, Energy and Justice. The State of California assisted the Federal team in obtaining court records which proved instrumental in demonstrating the undervaluation of crude oil to the Federal interagency team. In May 1996, the interagency team released a report concluding that companies often received gross proceeds higher than their posted prices. The bulk of crude oil produced in California was not sold in competitive markets but rather through intra-company transfers; straight exchanges (where a company trades oil at one location with another having oil at a second location, thereby reducing transportation costs) and buy/sell contracts including such costs as transportation in the cost of the oil. It is difficult to determine a proxy for the market value of oil when oil companies hide its true value via complex contracts. The interagency report estimated underpayments of Federal oil royalties on California leases alone to be as high as $856 million from 1978 through 1993. It recommended: That MMS focus collection efforts on some 10 companies producing 90 percent of Federal crude oil in California; That for the period beginning March 1, 1988, Federal royalties be based on the premium paid on competitive arm's length contracts for oil produced from the same field or area; The Assistant Secretary of the Interior issue a royalty payor letter ordering targeted oil companies to submit all relevant arm's length records to minimize audit expenses; That the Federal Government submit a bill for 1989 and 1993 to Texaco, since MMS audited those records, and found royalty underpayments and/or crude oil undervaluations; That MMS's oil royalty valuation regulations be revised to consider alternatives to reliance on posted prices and improve clarity; and That a method be chosen to determine royalties owed. MMS announced it would accept part of the task force's recommendations and attempt to collect approximately $440 million. The $856 million figure was reduced due to global settlements between Interior and the oil companies, payments- in-kind, and other factors. These figures do not include underpayments outside of California. In August 1996, the subcommittee obtained a November 1995, draft report by the Interior Department Inspector General from various press sources. The report criticized Interior for improper procedures during oil company negotiations which reduced the estimated value of items being negotiated by more than $350 million without documentation. A year after it was written, the report has yet to be released. FINDINGS The subcommittee found: 1. The Minerals Management Service Has Delayed Collecting Royalty Undervaluations. In the June 17, 1996, subcommittee hearing, members expressed concern that MMS delayed the release of the interagency report: in a 1994 e-mail to his supervisor, task force leader David Hubbard stated he had ``stalled long enough.'' When it announced it would attempt to collect $440 million, MMS set no timetable for the task. MMS will not simply bill the oil companies based on Alaska North Slope crude prices but will audit every contract. With scarce audit resources, this could take many years. Nor does MMS' audit division appear committed to collect: unpublished Interior notes quote the head of the MMS audit division dismissing the interagency task force report in November 1995 as ``a piece of [expletive deleted].'' Giving control of the audit process to staff who disparage its results appears unwise. MMS also declined to outline interim steps to be taken. The interagency task force audited Shell's California contracts for 1984 and Texaco's for 1989 and 1993 and recommended billing those companies immediately for those periods. At the June 17 hearing, however, Interior's Assistant Secretary for Land and Minerals Management stated that bills would be sent out within 4 to 6 weeks. 2. Global Settlements May Have Harmed U.S. Interests. MMS' global settlements covering multiple of issues and claims allowed two oil companies with large underpayments to avoid payment despite full knowledge of substantial problems with California underpayments. These agreements may have extinguished the Federal Government's claim to amounts owed. The Inspector General draft report concluded the royalty settlements were not conducted in accordance with ``Minerals Management Service Settlement Negotiation Procedures'' and faulted MMS for including ``no documentation for the estimated values of the issues concerning the underpayment of royalties to be negotiated. . . .'' Prior to negotiations, an MMS Royalty Management Program division estimated the value of a particular issue to be negotiated in a global settlement as $439 million. A negotiation team listing valued the same issue at $78.2 million. No documentation explained the $360.4 million discrepancy. 3. The California Undervaluation Problem Exists In Other States. During the June 17, 1996, subcommittee hearing, Robert Berman, an economist in Interior's Office of Policy Analysis, testified that the amount of the undervaluation of oil extracted from Federal lands ranges from 3 to 10 percent outside California or as much as $1.3 billion. 4. Royalty-In-Kind Transactions May Have Jeopardized U.S. Interests. The May 1996 interagency task force report acknowledged it had not ``investigated recoupment of additional revenues on royalty-in-kind crude oil that might have been undervalued'' and recommended Interior, ``should consider the effects of RIK [royalty-in-kind] volumes in its decisionmaking, including potential collections where these volumes were undervalued.'' In theory, Interior sells RIK oil directly to a refiner. In practice, it allows the Federal leaseholder and refiner- purchaser to arrange the terms of sale and transfer. RIK purchasers may in fact pay, through excessive transportation charges, more for this oil than the government receives. 5. Pipelines Which Cross Federal Lands Harm Federal Interest By Depressing Royalty Revenues and Preventing an Efficient Oil Market. The task force recognized the problem of proprietary pipelines: The market restrictions imposed by proprietary pipelines operated by the major oil refiners had two critical effects. First, it greatly restricted open- market trading in California crude oil. Second, it segregated the crude oil markets of the San Joaquin Valley and Ventura Basin from the refining centers in San Francisco and Los Angeles. The reports [of two consultants employed by the task force] concluded that the pipeline situation contributed to postings substantially understating California crude oil values. The Department of Energy also recognized this problem and indicated that the administration's Domestic Natural Gas and Oil Initiative included a pipeline reform plank. Energy requested that Interior require pipelines crossing Federal lands operate as common carriers. Interior has taken no action. RECOMMENDATIONS The subcommittee recommends: 1. The Minerals Management Service Should Establish a Timetable For Collections. The MMS and Interior should develop a timetable to collect unpaid royalties. This would assist Congress in providing oversight and commit the administration to taking action. 2. Audit Staff Must Advance the Management Agenda. If the audit staff is unwilling to support program goals determined by the administration, then MMS should contract out the project. California took this approach and received a $345 million settlement. California now contracts with a certified public accounting firm to manage its oil sales. 3. The Department of Justice Should Review Global Settlements. Interior should ask Justice to prepare an opinion concerning royalties negotiated away by MMS. Interior also should review its compromise procedures, which are more sweeping than almost any other Federal agency. Agencies are limited in their authority to compromise debts under Federal law. Interior, along with Justice and OMB, should examine whether the persistent mismanagement of global settlements by MMS warrants review by Justice. 4. The MMS Should Collect Underpayments in All States Where it is Owed. Interior should develop a strategy to address this and advise the committee of its plan. 5. The Department of the Interior Should Review Competition on Common Carrier Pipelines. Interior should alter its policy to comply with the administration's recommendations regarding the Domestic Natural Gas and Oil Initiative. It also should advise California officials of problems arising from proprietary pipelines, and the harm which unregulated pipelines can bring to consumers, producers and royalty owners. b. Benefits.--The report addresses a problem which is costing the Federal Government up to $2 billion in lost revenue. MMS has delayed the collection of oil royalties due. c. Hearings.--On June 17, 1996, testimony was received from: Hon. Ken Calvert, Member of Congress; Cynthia Quarterman, Director, Minerals Management Service, Department of the Interior; Robert Berman, Economist, Office of Policy Analysis, Department of the Interior; Abraham Haspel, Acting Principal Deputy Assistant Secretary for Policy and International Affairs, Office of Policy and International Affairs, Department of Energy; Robert Speir, Economist, Office of Oil and Natural Gas Policy, Department of Energy; Hon. Robert Armstrong, the Assistant Secretary of the Interior for Land and Minerals Management, Department of the Interior; M. Brian McMahon, attorney for the city of Long Beach, Trustee for the State of California; Robert Shannon, assistant city attorney, city of Long Beach; and James McCabe, deputy city attorney, city of Long Beach. HUMAN RESOURCES AND INTERGOVERNMENTAL RELATIONS SUBCOMMITTEE Hon. Christopher Shays, Chairman 1. ``The FDA Food Additive Review Process: Backlog and Failure To Observe Statutory Deadline,'' House Report No. 104-436, December 21, 1995, Fourth Report by the Committee on Government Reform and Oversight, Together With Additional Views. a. Summary.--Since April 1995, the Human Resources and Intergovernmental Relations Subcommittee has been conducting an oversight investigation into the delays in the Food and Drug Administration's (FDA) review and decisionmaking on food additive petitions. This is the first comprehensive oversight investigation into the FDA's management of the food additives program since the food additive amendments were passed in 1958. Based on this study and two subcommittee oversight hearings, the committee adopted its fourth report to the 104th Congress on December 14, 1995. The Federal Food, Drug, and Cosmetic Act (FFDCA) of 1938 gave the FDA authority over food and food ingredients. The Food Additive Amendments to the FFDCA were passed by Congress in 1958 to require FDA's pre-market approval for the use of an additive prior to its inclusion in food. This authority is now found in section 409 of the FFDCA. (21 U.S.C. 348) An ``additive'' is ``any substance the intended use of which results or may reasonably be expected to result, directly or indirectly, in its becoming a component or otherwise affecting the characteristics of any food.'' This definition covers any substance used in the production, processing, treatment, packaging, transportation or storage of food such as colors, packaging materials, artificial sweeteners and fat substitutes. Food additives are commonly used to impart or maintain desired consistency, improve or maintain nutritive value, maintain palatability and wholesomeness, produce texture, control acidity/alkalinity and enhance flavor or impart color. Food additive petitions must be reviewed and acted upon by the FDA ``not more than 180 days after the date of filing of the petition.'' (21 U.S.C. 348(c)(2)). The regulatory scheme in the United States for food additive review is dysfunctional, and as a result, the American consumer and patient are deprived of technologies that could increase the variety and nutritional benefits of foods, improve diet and advance public health. The statutory deadline is not being met. Statutory changes are needed to establish more realistic and binding timeframes for petition reviews. On June 22 and June 29, 1995, the subcommittee held oversight hearings to address these issues. At these hearings, testimony was received from FDA officials with primary responsibility for food safety and operation of the food additive petition process, academicians, food manufacturers, trade associations, food scientists, and consumer groups. The committee report contained nine major oversight findings: 1. FDA does not meet the 180 day statutory deadline to review and make a decision on food additive petitions. 2. As of June 1995, there were 295 pending food additive petitions, some of which were filed in the 1970's. 3. The lack of fixed deadlines and the increased scientific ability to detect and measure potential hazards have resulted in a review process that is risk- averse. 4. FDA is reluctant to decline incomplete or inadequate petitions, and consequently, allows incomplete and inadequate petitions to remain under review at FDA for more than 180 days. 5. FDA has committed insufficient resources to its food additive review responsibilities. 6. FDA does not set food additive petition review priorities appropriately. 7. FDA's failure to expeditiously review food additive petitions has stifled innovation and the introduction of new ingredients by the food industry. 8. A petition review process with no fixed deadlines can be manipulated for anti-competitive purposes. 9. FDA does not make sufficient use of independent scientific resources for food additive petition review. Based upon this investigation, the report made the following detailed recommendations: 1. Congress should amend the Federal Food, Drug, and Cosmetic Act review period for food additive petitions from 180 days to 360 days for the most scientifically complex reviews, and the deadline should be strictly observed by FDA. 2. The FDA should recognize that the approval of useful and safe new products can be as important to the public health as preventing the marketing of harmful or ineffective products. 3. The FDA should eliminate the backlog of pending food additive petitions within 1 year by reallocating the necessary agency resources. 4. The FDA should utilize outside expertise in its evaluation of food additive petitions but retain authority for petition approval. 5. The relevance of the ``Delaney clause'' should be studied in view of modern scientific standards so that better distinctions can be made between nominal hazards and actual risks. The Delaney clause stipulates that no food additive can be deemed safe if it has been found to induce cancer when ingested by man or animal. The FDA should establish a level of acceptable risk for food additives, below which there is no hazard to humans through consumption under normal or intended use. 6. The FDA should amend the review process to prohibit anonymous submissions of data or comments. b. Benefits.--The investigation into delays in the food additive petition review process allowed FDA officials, food industry representatives, and others involved in the process of approving or requesting the approval of food additive petitions the opportunity to articulate their views of flaws in the regulatory system. When fixed, FDA's food additive petition review process could benefit the American public by providing a vast new array of useful and safe products which could add to or replace less effective products. c. Hearings.--The subcommittee convened two hearings on this subject, both entitled ``Delays in the FDA's Food Additive Petition Process and GRAS Affirmation Process.'' These hearings provided subcommittee members the opportunity to say directly to those involved in FDA's food additive petition process that Congress was not receptive to the agency's failure to meet its statutory deadlines, but would consider amendments to FDA's food additive petition review process to give the agency and petitioners a more reasonable timeframe within which to work. On Thursday, June 22, 1995, the subcommittee received testimony from: Linda Suydam, Acting Deputy Commissioner for Operations of the FDA; Dr. Fred Shank, Director of the Center for Food Safety & Applied Nutrition of the FDA; Dr. Alan Rulis, Acting Director of the Office of Premarket Review of the FDA; Dr. Sanford Miller of the University of Texas Health Sciences Center; Dr. Richard Hall, chairman of the Food Forum of the National Academy of Sciences; Al Clausi of the Institute of Food Technologists; Dr. Stephen Ziller of the Grocery Manufacturers of America; Dr. Rhona Applebaum of the National Food Processors Association; Robert Gelardi of the Calorie Control Council; Dr. Stephen Saunders of Frito-Lay; Dr. C. Wayne Callaway of the George Washington University School of Medicine; and Dr. Michael Davidson of the Chicago Center for Clinical Research, the Rush-Presbyterian-St. Luke's Medical Center. On Thursday, June 29, 1995, the subcommittee's second FDA oversight hearing, testimony was received from: Dr. Kenneth Fisher of the Federation of American Societies for Experimental Biology; Jerome Heckman of the Society of the Plastics Industry; Stuart Pape of the National Soft Drink Association; Donald Farley of Pfizer, Inc.; and Dr. Michael Jacobson of the Center for Science in the Public Interest. 2. ``The Federal Takeover of the Chicago Housing Authority--HUD Needs to Determine Long-Term Implications,'' House Report No. 104- 437, December 21, 1995, Fifth Report by the Committee on Government Reform and Oversight, Together With Additional Views. a. Summary.--On May 30, 1995, the U.S. Department of Housing and Urban Development (HUD) assumed control over the day to day operations of the ``troubled'' Chicago Housing Authority (CHA). A declared breach of contract between CHA and HUD signed by HUD Secretary Henry Cisneros on June 2, 1995, made the takeover legally effective. Executed in the wake of the resignation of CHA's Board of Commissioners on May 26, 1995, the takeover was an unprecedented HUD action. Although HUD has authority to intervene in troubled housing agency operations at any time, HUD has never before assumed responsibility for the day-to-day operations of a housing agency the size of CHA. CHA is the Nation's third largest public housing authority and is surpassed in size only by those of Puerto Rico and New York City. The CHA, created in 1937 by a resolution of the city of Chicago pursuant to the Housing Authorities Act of the State of Illinois, administers over 55,000 public and assisted housing units and serves over 150,000 residents. On June 1, 1995, Congresswoman Cardiss Collins (D-IL), ranking member of the Government Reform and Oversight Committee, submitted a request to Committee Chairman William F. Clinger, Jr. (R-PA) that hearings be conducted in Chicago on the role of the U.S. Department of Housing and Urban Development (HUD) in the operation of the Chicago Housing Authority (CHA). Subsequent to this letter, the subcommittee began an investigation into the Federal takeover at CHA. The subcommittee submitted an initial inquiry and document request to HUD on July 11, 1995, regarding HUD's role in the takeover of the CHA. The July 11 letter requested information concerning CHA's demolition and redevelopment initiatives, HUD's previous efforts to reform CHA administration and the CHA budget reconciliation for fiscal year 95. HUD responded to the inquiry on August 1, 1995. Additionally, Assistant Secretary Joseph Shuldiner and HUD staff met with the subcommittee and Member staff on August 21, 1995, to address other issues raised regarding the takeover. On August 28, 1995, the subcommittee directed another document request and inquiry to HUD's Office of General Counsel. The Office of General Counsel staff met with the subcommittee staff the next day to provide a response and to answer staff questions. The subcommittee staff also conducted numerous interviews with members of the Chicago community including: former CHA Executive Director Vince Lane, Mayor Richard Daley, CHA residents, former CHA staff and local housing and community development experts. Further, on August 25, 1995, majority and minority staff conducted onsite investigations and interviews in the city of Chicago. On September 5, 1995, the subcommittee held an oversight hearing in Chicago to investigate the Federal takeover of the Chicago Housing Authority. The hearing focused on HUD's progress at CHA since the May 30 takeover, the agency's short and long term strategies for reforming CHA and its plans for installing new leadership and management at the CHA. At the hearing, testimony was received from top level HUD officials, including Henry Cisneros, HUD Secretary; the U.S. General Accounting Office (GAO); panels of tenants; public housing management experts; and representatives from the city of Chicago and the private sector. Based on the investigation and the oversight hearing, the committee adopted its fifth report to the 104th Congress on December 14, 1995. The report contained seven major oversight findings: 1. HUD's takeover of CHA was a necessary response to the resignation of the CHA Board of Commissioners. 2. HUD implemented a 120 day-plan to stabilize CHA finances, management, security and physical inventory. 3. Three months following the takeover, HUD lacked a long term strategy for reforming CHA, and extricating itself from CHA management. 4. HUD's presence at CHA will be required beyond January 1, 1996. 5. HUD lacks clear statutory or regulatory standards to trigger intervention at troubled housing agencies. 6. HUD does not have the staff resources necessary to run several troubled housing agencies at once. 7. The Resident Management Corp. at 1230 North Burling, Cabrini Green in Chicago has improved living conditions and economic opportunities for public housing residents. Based upon its investigation, the committee report made the following detailed recommendations: 1. HUD should promptly secure strong, long term leadership at CHA. 2. HUD and new CHA management should develop a long term strategy for the recovery of CHA. 3. HUD should maintain a clear distinction between its actions as a Federal agency and its actions as CHA manager. 4. HUD's takeover of CHA should be evaluated as a pilot program to determine the effectiveness of direct HUD intervention at other troubled housing agencies. 5. Clear statutory or regulatory standards should be established for HUD intervention at troubled housing agencies. 6. HUD should do more to support viable Resident Management Corp.'s, particularly those operating in troubled public housing developments. The report includes additional views by Mrs. Collins and Mr. Towns expresssing general support for the report, and noting that a briefing by HUD on December 5, 1995, provided additional information, not reflected in the report, that some of the subcommittee's recommendations have already been adopoted by HUD. The additional views include references to facts that can be found in the hearing record that provide a more complete picture of the status of the intervention effort, the rationale for the takeover, and the capacity of HUD to intervene in other troubled housing authorities. Mrs. Collins and Mr. Towns noted that HUD had acted on the subcommittee's recommendation regarding hiring of CHA staff and regarding formulation of a long range plan for the CHA. The additional views also pointed out that HUD offered information to support the conclusion that the Department does have the capability to intervene in other troubled housing authorities. Finally, the ranking members expressed the view that budget constraints must be acknowledged in any evaluation of the HUD intervention at CHA. Mr. Shays' additional views concurred with those of Mrs. Collins and Mr. Towns regarding HUD's action on the subcommittee's recommendation. b. Benefits.--The investigation found that HUD's takeover of the day-to-day operations of the Chicago Housing Authority (CHA) was necessary given the magnitude and severity of the problems faced by the housing authority and its residents. Significant investment of Federal funds are at risk as a result of the mismanagement of the CHA. Taxpayers and residents will benefit from this intervention by HUD. Moreover, the subcommittee's continued oversight with respect to this matter may spare the Chicago Housing Authority future years of deferred maintenance, administrative waste and further deterioration. c. Hearings.--On Tuesday, September 5, 1995, the subcommittee convened an oversight hearing entitled ``HUD's Takeover of Chicago Housing Authority,'' to receive testimony from: Hon. Henry Cisneros, Secretary of the Department of Housing and Urban Development (HUD); Joseph Shuldiner, Assistant Secretary for Public and Indian Housing at HUD; Kevin Marchman, Deputy Assistant Secretary for Distressed and Troubled Housing at HUD; Artensia Randolph, president of the Central Advisory Committee; Hattie Calvin, president of the Cabrini Green Leadership Advisory Council; Cora Moore, 1230 North Burling, Cabrini Green, Resident Management Corp.; Jeffrey Lines, a Kansas City receiver and president of TAG Associates; Judy England-Joseph, Director of Housing and Community Development Issues for the U.S. General Accounting Office (GAO); Rosanna Marquez, director of programs for the city of Chicago; George Murray, chief of the CHA Police Department; and William Wallace, managing director of the Housing Technology Corp. 3. ``Fraud and Abuse in Medicare and Medicaid: Stronger Enforcement and Better Management Could Save Billions,'' House Report No. 104- 641, June 27, 1996, Eighth Report by the Committee on Government Reform and Oversight, Together with Additional Views. a. Summary.--Fraud and abuse are serious drains on Medicare and Medicaid programs. The General Accounting Office (GAO) estimates that as much as 10 percent of annual Government outlays in Federal health care programs are lost to fraudulent and wasteful provider claims. If that estimate is correct, it would mean almost $32 billion was lost in FY 95. Given that Medicare and Medicaid together account for $269.16 billion in Federal health care spending in FY 1995, Federal losses to these programs associated with fraudulent and abusive practices approached $27 billion. Finding new ways to curb these losses has been a major bi-partisan concern in recent years. Both the Medicare and Medicaid programs are vulnerable to fraud and abuse. There are strong incentives to over provide services; weak fraud and abuse controls to detect questionable billing practices; few limits on those who can bill; and ineffective enforcement tools. The Medicare program is particularly vulnerable because the Department of Health and Human Service's (HHS) Health Care Finance Administration (HCFA) continues to pay higher than market rates for certain services and supplies. This makes the program an attractive target for increasingly sophisticated, multi-state or national fraud schemes. Medicare is also vulnerable because perpetrators know there is little chance of being caught. Federal enforcement activities have been uncoordinated and ineffectively carried out, and HCFA's anti-fraud-and-abuse controls fail to systematically prevent the unquestioned payment of claims. Screening of claims for medical necessity and other criteria is inconsistently applied. Vendors sanctioned for fraud or abuse are not effectively barred from continued participation in Federal health programs because the exclusion sanction is under utilized. This points to insufficient coordination between those charged with enforcing existing anti-fraud statutes. HCFA, the HHS-OIG, and DOJ have outlined initiatives for curtailing fraudulent and abusive practices in Medicare and Medicaid programs. However, the extent to which these initiatives will result in improvements to the Federal Government's health care anti-fraud capabilities is uncertain. HCFA has under development the Medicare Transaction System (MTS) to centralize claims review and processing functions now handled by 72 contractors. The GAO characterized MTS a system ``at risk'' in terms of cost and scheduling. Meanwhile, near-term opportunities for more effective anti-fraud programs may be missed while HCFA places most of its hopes on the far-off prospect of the MTS. Waste, fraud and abuse in Medicare and Medicaid will never be completely eliminated. However, billions could be saved by stronger enforcement and better management--actions which would not place excessive demands on available budgets. The report contained the following findings: 1. There is insufficient coordination among government agencies combating waste, fraud and abuse in the Medicare and Medicaid programs. 2. HCFA does not require Medicare Part B contractors to use software capable of screening out claims for inappropriate medical services. 3. HCFA is reluctant to exercise its statutory ``inherent reasonableness'' authority to adjust reimbursement rates for durable medical equipment and supplies because the process is costly and cumbersome. This makes Medicare an attractive target for fraud and abuse. As a result, the Government too often pays more than the market price for certain equipment and supplies costing taxpayers billions of dollars. 4. HCFA's Medicare Transaction System (MTS) project is vulnerable to cost overruns and schedule delays due to the agency's lack of a disciplined management process. Based on these findings, the report contained the following recommendations: 1. Congress should require HCFA, HHS IG, DOJ, State Medicaid Fraud Control Units and other appropriate law enforcement entities establish a joint program to coordinate fraud detection and prevention activities, and to apply the exclusion sanction against vendors more effectively. 2. HCFA should require its contractors to use autoadjudication prepayment screens to ensure that Medicare does not continue to pay claims for medically unnecessary services. 3. Congress should revise HCFA's ``inherent reasonableness authority'' to require a price adjustment for a Medicare item or service within 1 year of initiating a review of that item or service through the issuance of an interim final regulation. 4. HCFA should develop a comprehensive management plan to address the cost and scheduling challenges associated with the Medicare Transaction System (MTS). Until that plan is developed, HCFA should focus greater resources on effective, near-term anti-fraud efforts. b. Benefits.--This report's detailed findings and recommendations strengthened the bi-partisan consensus in support of improved anti-fraud efforts in Federal health care programs. Federal program administrators generally concur with, and will be guided by, the recommendations to reduce vulnerability to fraud, waste and abuse while increasing preventive enforcement activities in order to limit the unproductive ``pay and chase'' cycle of current enforcement efforts. c. Hearings.--A hearing entitled ``Waste in Human Service Programs: Other Perspectives'' was held on May 23, 1995. A hearing entitled, ``Keeping Fraudulent Providers Out of Medicare and Medicaid'' was held on June 15, 1995. A hearing entitled, ``Screening Medicare Claims for Medical Necessity'' was held on February 8, 1996. A hearing entitled, ``Excluding Fraudulent Providers from Medicaid'' was held on September 5, 1996. 4. ``Health Care Fraud: All Public and Private Payers Need Federal Criminal Anti-fraud Protections,'' House Report No. 104-747, August 2, 1996, Eleventh Report by the Committee on Government Reform and Oversight. a. Summary.--Health care fraud, by some estimates a $100 billion problem, does not stay within the jurisdictional boundaries that divide Federal, State and local health care finance and law enforcement. Sophisticated patterns of fraud and abuse have been detected operating simultaneously against private insurers as well as Federal and State health programs. These scams victimize patients and payers across multiple States, even nationally. Faced with increasing health care costs, and the growing price of health care fraud, Congress and Federal policymakers are aware of the need for a more coordinated, unified approach to anti-fraud enforcement. One essential element of that approach is the availability of Federal criminal health care offenses to prosecute frauds against any and all payers victimized by the same scheme. Current Federal enforcement tools are inefficient and inadequate against increasingly sophisticated patterns of fraud and abuse. Health care fraud cases, prosecuted mainly under mail and wire fraud statutes, money laundering and false claims laws, are complex, costly and time-consuming. Scarce enforcement resources are wasted when Federal enforcement efforts to protect Medicare and Medicaid only result in ``fraud shifting'' to private payers. In that event, the general public continues to pay the price for health care fraud in the form of higher insurance premiums and higher costs for Government health programs. Support for creation of Federal health care fraud crimes is both longstanding and bi-partisan. The previous and current administration endorsed making health care fraud a Federal crime. Legislation in both the 103d and 104th Congress has enjoyed bi-partisan sponsorship and support. Based upon the product of investigative inquiries and hearing testimony, the committee reported the following findings: 1. Health care fraud schemes steal billions of dollars from public and private payers each year. 2. The Department of Justice (DOJ) needs stronger and more direct statutory authority to deter fraud and abuse against public and private health care plans. 3. Scarce enforcement resources are wasted in pursuit of the same fraudulent scheme against public and private health care plans in multiple jurisdictions. The report contains one recommendation: Congress should enact legislation to make health care frauds against all public and private payers Federal criminal offenses. b. Benefits.--This report put a bi-partisan focus on the need for new Federal criminal health care fraud offenses. It provided Members of Congress and the administration with a useful historical perspective and current policy rationale to guide efforts to strengthen enforcement efforts, particularly when frauds are committed against both public and private health care payers. Federal ``all payer'' offenses were included in the Health Care Portability and Accountability Act, Public Law 104-191. c. Hearings.--A joint hearing entitled H.R. 1850: Health Fraud and Abuse Act of 1995, H.R. 2480: Inspector General for Medicare and Medicaid Act of 1995, and H.R. 3224: The Health Care Fraud and Abuse Prevention Act of 1996 (Joint Hearing) was held on May 2, 1996. 5. ``Protecting the Nation's Blood Supply from Infectious Agents: The Need for New Standards to Meet New Threats,'' House Report No. 104-746, August 2, 1996, Tenth Report by the Committee on Government Reform and Oversight, Together with Additional Views. a. Summary.--In the early 1980's, 10,000 hemophiliacs and 12,000 other patients were infected with the human immunodeficiency virus (HIV) through blood and blood products. Approximately 300,000 people were infected with the Hepatitis C virus (HCV), many of whom have never been told of their exposure to infection. The lessons of these tragedies compel greater vigilance and higher regulatory standards to protect the Nation's blood supply from emerging infectious agents and blood borne pathogens. Threats to blood safety are both natural and man- made, as aggressive new infectious agents emerge and blood safety practices evolve. As a result, substantial improvements are needed in coordination between the Public Health Service (PHS) agencies within the Department of Health and Human Services (HHS), particularly the Food and Drug Administration (FDA), the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH). At the first of two subcommittee hearings on blood safety issues, HHS Secretary Donna Shalala announced that the Department's focus on blood safety issues will be expanded and elevated, with the Assistant Secretary for Health charged to improve the coordination and effectiveness of blood safety policy. Current FDA and CDC regulatory systems are not adequate to meet the aggressive nature of emerging threats to blood safety. Product recalls and notification regarding possible exposure to blood borne pathogens are not well communicated to physicians, pharmacists, patients or the public. Regulation of blood collection, testing and the production of blood-derived therapeutics is not well coordinated or consistently managed to minimize known risks. The public is not well served if patients are permitted to believe there is no risk in blood transfusions or in the use of blood derived therapies. While such risks are extremely small, and the U.S. blood supply is as safe as it has ever been, greater efforts should be made to convey known risks to consumers who may wish to minimize even those risks through the use of alternative procedures or therapies. After a year-long investigation of blood safety issues, the Committee on Government Reform and Oversight issued House Report 104-746 ``Protecting The Nation's Blood Supply From Infectious Agents: The Need For New Standards To Meet New Threats;'' which addressed the need for reform in the regulation of blood products. The report's findings included: 1. The blood supply is safer than it has ever been. 2. The blood supply continues to face new infectious disease challenges. 3. In response to the recommendations of the Institute of Medicine (IOM), HHS has begun to implement higher regulatory standards to protect the Nation's blood supply from emerging infectious diseases and blood borne pathogens. 4. The public is provided insufficient information on the risks of blood and blood products. 5. The FDA has not effectively managed regulatory review of blood issues, particularly its advisory committee on blood safety issues, the Blood Products Advisory Committee (BPAC). 6. Despite a BPAC recommendation to the contrary, the FDA took the first step toward closing the ``window period'' of possible HIV transmission by licensing the p24 antigen test for screening of donated blood. 7. Fifteen years after the AIDS virus emerged as a threat to the blood supply, FDA still has not developed an effective system for communicating blood product recalls to pharmacists, doctors or patients. 8. The size of plasma pools for fractionated products can increase the risk of infectious disease transmission. The report recommended: 1. Congress should establish the Blood Safety Council and the Advisory Committee on Blood Safety and Availability in statute. 2. Congress should consider establishing an indemnification system for individuals who suffer adverse consequences from the use of blood and blood products. 3. HHS should take steps to ensure that the estimated 300,000 living recipients of blood and blood products who were infected with Hepatitis C virus before 1990 are notified of their potential infection so that they might seek diagnosis and treatment. 4. HHS should disseminate more clinically useful information to providers of care and to the public regarding blood safety issues. 5. FDA should immediately develop an effective system of recall notification for blood and plasma products. 6. FDA should immediately cease its practice of providing advance notice of safety and compliance inspections to some plasma fractionators. 7. Plasma fractionators should limit the size of plasma pools, with pool sizes determined as much by public health risk factors as by production economies of scale. During the 1980's, 10,000 hemophiliacs and 12,000 others were infected with the Human Immunodeficiency Virus (HIV), which causes Acquired Immune Deficiency Syndrome (AIDS), through the use of blood and blood-derived therapies. The report found that current scientific and regulatory standards to detect and remove emerging blood borne pathogens lack both consistency and vigor. The report recommended greater cooperation and coordination between Federal public health agencies, more effective communication of the risks of blood products to consumers, and more effective recall of contaminated blood and blood products. b. Benefits.--The subcommittee's investigation and hearing allowed FDA officials, patients, physicians, blood collection industry representatives and plasma product manufacturers the opportunity to articulate their concerns and solutions regarding threats to the safety of the blood supply presented by emerging pathogens, complacency and regulatory mismanagement. The lessons of HIV and Hepatitis-C infections compel greater vigilance and higher regulatory standards to protect the Nation's blood supply from emerging infectious agents and blood borne pathogens. This report provides an outline of existing problems in the blood regulatory system as well as recommendations for resolution of these issues. c. Hearings.--Hearings entitled ``Protecting the Nation's Blood Supply from Infectious Agents: The Need for New Standards to Meet New Threats'' were held October 12 and November 2, 1995. NATIONAL SECURITY, INTERNATIONAL AFFAIRS AND CRIMINAL JUSTICE SUBCOMMITTEE Hon. William H. Zeliff, Jr., Chairman 1. ``National Drug Policy: A Review of the Status of the Drug War,'' House Report No. 104-486, March 19, 1996, Seventh Report by the Committee on Government Reform and Oversight, Together with Additional Views. a. Summary.--Pursuant to the National Narcotics Leadership Act of 1988 (21 U.S.C. 1501 et seq.), the Director of the Office of National Drug Control Policy (ONDCP) developed a strategy and budget for anti-narcotics efforts, including both supply and demand reduction. In order to evaluate the strategy and find ways to both improve and supplement in the public and private sector, the Subcommittee on National Security, International Affairs, and Criminal Justice held five hearings and conducted a fact-finding trip to the Caribbean drug transit zone. The findings and recommendations of these activities are detailed in the March 19, 1996 committee report. The National Narcotics Leadership Acts requires that the strategy: ``(A) include comprehensive, research based, long- range goals for reducing drug abuse in the United States; (B) include short-term measurable objectives which the Director determines may be realistically achieved in the 2 year period beginning on the date of the submission of the strategy; (C) describe the balance between resources devoted to supply reduction and demand reduction; and (D) review state and local drug control activities to ensure the United States pursues well-coordinated and effective drug control at all levels of government.'' The subcommittee held five hearings in order to determine whether the current strategy and its execution continues to meet these statutory obligations. The threats posed by illegal drug use, especially among the Nation's youth, have continued to grow since the subcommittee investigation began in January 1995. All national studies show a rise in drug use among teenagers. Both minority and majority members of the subcommittee have demonstrated a commitment to enhancing the drug control strategy by their active participation in these hearings. b. Benefits.--As a result of its investigation into the use of illegal drugs in America and the Nations fight against drugs, the subcommittee confirmed the following facts: (1) Casual teenage drug use trends have suffered a marked reversal over the past 4 years, and are dramatically up in virtually every age group and for every illicit drug, including heroin, crack, cocaine hydrochloride, LSD, non-LSD hallucinogens, methamphetamine, inhalants, stimulants, and marijuana. (2) Rising casual teenage drug use is closely correlated with rising juvenile violent crime. (3) If rising teenage drug use and the close correlation with violent juvenile crime continue to rise on their current path, the Nation will experience a doubling of violent crime by 2010.\15\ --------------------------------------------------------------------------- \15\ See Juvenile Offenders and Victims: A National Report, OJJDP, Department of Justice, September 1995. --------------------------------------------------------------------------- (4) The nature of casual teenage drug use is changing. Annual or infrequent teenage experimentation with illegal drugs is being replaced by regular, monthly or addictive teenage drug use.\16\ --------------------------------------------------------------------------- \16\ See 1995 surveys conducted by PRIDE, The National Household Survey, and The University of Michigan's Monitoring the Future Survey. --------------------------------------------------------------------------- (5) The nationwide street price for most illicit drugs is lower than at any time in recent years, and the potency of those same drugs, particularly heroin and crack, is substantially higher. (6) Nationwide, drug related emergencies have steadily climbed and have now reached an all time high. (7) The 1994, 1995, and 1996 White House ONDCP strategies consciously shift resources away from priorities set in the late 1980's, namely from prevention and interdiction to treatment of ``hardcore addicts'' and source country programs. (8) During 1993, 1994 and most of 1995, the President put little emphasis on, and manifested little interest in, either the demand side war against illegal drug use or the supply side war against international narcotics traffickers. An objective look at the President's public addresses and his actions including dramatic cuts in ONDCP staffing, interactions with Congress, and discussions with foreign leaders reveals that attention to the rising tide of illegal drug use is a low Presidential priority. (9) The President's actual attention to this problem, measured by other than the paucity of speeches and proposed budget cuts, has been uniformly low. In addition to the absence of direct Presidential involvement in the drug war, the President produced no 1993 Annual Strategy, despite a statutory duty to do so under the 1988 Antidrug Abuse Act; delayed appointment of a White House Drug Czar, or ONDCP Director, until half way through 1993; and produced only a terse ``interim'' 1993 Strategy. (10) The Drug War appears also to have been expressly reduced to a low national security priority early in the administration, and not to have been formally elevated at any time since.\17\ --------------------------------------------------------------------------- \17\ Reportedly, the drug war's national security priority during the first 3 years of the Clinton administration was number 29 out of 29. --------------------------------------------------------------------------- (11) While the position is contested by the administration's ONDCP Director, a wide cross section of drug policy experts inside and outside of the administration concur that the absence of direct Presidential involvement in foreign and domestic counter narcotics efforts is one reason for the recent reversal in youth drug use trends, reduced street prices for most narcotics, and increased potency of most illicit drugs. (12) Prevention programs that teach a right-wrong distinction in drug use, or ``no use,'' such as D.A.R.E., G.R.E.A.T., the Nancy Reagan After School Program, community-based efforts run by groups such as C.A.D.C.A., PRIDE, the National Parents Foundation, and Texans War on Drugs, as well as other local school and workplace programs, have proven both successful and popular where they have been well-managed and accountable--despite the 1995 White House ONDCP Strategy statement that ``[a]ntidrug messages are losing their potency among the Nation's youth.'' (13) Federal drug prevention programs, such as Safe and Drug Free Schools, while supporting successful prevention programs in many parts of the country, have also been subject to misapplication, waste and abuse. (14) The Nation's law enforcement community needs greater flexibility and support from the Federal Government in addressing the rise in juvenile and drug related crime. While certain developments are promising, such as the $25 million increase in Byrne Grant funding in fiscal 1996, a law enforcement block grant to supersede the COPS program, and increased reliance on joint interagency task forces, valuable time has been lost in addressing this need. Renewed attention to strengthening Local, County, State and Federal law enforcement's counter narcotics efforts is required. (15) The Nation's interdiction effort has been dramatically curtailed over the past 3 years, due to lack of White House support for interdiction needs, reduced funding, a tiny staff at the U.S. Interdiction Coordinator's Office, the absence of an ONDCP Deputy for Supply Reduction, reduced support for National Guard container search days, the elimination of certain cost effective assets in the Eastern Caribbean, reassignment or absence of key intelligence gathering assets, reluctance by the Department of State to elevate counter narcotics to a top priority in certain source and transit countries, unnecessary interagency quarreling over asset management and personnel issues, and the apparent inability or unwillingness of the White House Drug Czar to bring essential interdiction community concerns to the attention of the President or to aid the President's Interdiction Coordinator in doing so; and (16) There has been poor management and interagency coordination in source country counter-drug activities. c. Hearings.--In 1995, the subcommittee held five days of hearings in conjunction with its investigation of ONDCP. Those hearings include the following: ``Effectiveness of the National Drug Control Strategy and the Status of the Drug War'' on March 9 and April 6, 1995; ``Illicit Drug Availability: Are Interdiction Efforts Hampered by a Lack of Agency Resources?'' on June 27 and 28, 1995; and ``The Drug Problem in New Hampshire: A Microcosm of America,'' September 25, 1995. On March 9, 1995, the subcommittee investigation resulted in its first hearing entitled, ``Effectiveness of the National Drug Control Strategy and the Status of the Drug War.'' The purpose of this hearing was to examine President Clinton's 1995 National Drug Control Strategy, and to begin an assessment of how effectively the Nation is fighting illegal drug abuse, domestically and internationally. Acknowledged components of the Drug War under review include prevention, treatment, interdiction, law enforcement, and source country programs. At this hearing, testimony was received from four panels. The subcommittee heard first from former First Lady of the United States, Nancy Reagan. The second panel included William J. Bennett, former Director of the Office of National Drug Control Policy (ONDCP); Robert C. Bonner, former Administrator of the Drug Enforcement Administration; and John Walters, former Acting Director of ONDCP. The subcommittee also heard testimony from Dr. Lee Brown, Director of ONDCP. Finally, the subcommittee heard from Admiral Paul A. Yost, Jr., former Coast Guard Commandant; and several nationally recognized drug abuse prevention experts, including Thomas Hedrick, Jr., senior representative of the Partnership for a Drug-Free America; G. Bridget Ryan, executive director of California's BEST Foundation; James Copple, national director of the Community Antidrug Coalitions of America (CADCA); and Charles Robert Heard, III, director of program services for Texans' War on Drugs. With varying degrees of emphasis, all panels acknowledged that current Federal efforts are under strain from reduced emphasis on certain components of the Drug War, budgetary pressure, and in some cases accountability. The panels also acknowledged that, over the past several years, there has been a marked reversal in several important national trends including most notably a rise in casual drug use by juveniles, but also reaching to perceived drug availability (up), perceived risk of use (down), average street price (down), drug related medical emergencies (up), drug related violent juvenile crime (up), total Federal drug prosecutions (down), and parental attention to the drug issue (down).\18\ --------------------------------------------------------------------------- \18\ Press release, the University of Michigan, ``Drug Use Rises Again in 1995 Among American Teens:'' December 15, 1995; press release, PRIDE, ``Teen Drug Use Rises for Fourth Straight Year,'' November 2, 1995; preliminary estimates from the Drug Abuse Warning Network, U.S. Department of Health and Human Services, September 1995; James E. Burke, ``Presentation: An Overview of Illegal Drugs in America,'' Partnership for a Drug-Free America, fall 1995. The subcommittee found that these reversals have continued through the period 1993 to 1995, although certain trend lines, including a shift from falling to rising casual use, typically among juveniles, began in 1992. In addition, a shift of certain interdiction resources, which were earlier a part of the counter narcotics force structure, began in late 1991 with the advent of the Persian Gulf War. --------------------------------------------------------------------------- All panels agreed that renewed national leadership, including both Presidential and congressional leadership, will be necessary to combat these recent trend reversals, especially the rise in juvenile drug abuse and drug related violent juvenile crime. The subcommittee continued its investigation into the Nation's drug control strategy with a second hearing on April 6, 1995, which was a follow-up to the March 9 hearing. Testimony was received only from Dr. Lee P. Brown, Director of ONDCP, who continued testimony he gave the subcommittee on March 9, 1995. Dr. Brown testified on a range of topics, including treatment, prevention, law enforcement, interdiction and source country programs. On June 27 and June 28, 1995, the subcommittee held hearings entitled, ``Illicit Drug Availability: Are Interdiction Efforts Hampered by a Lack of Agency Resources?'' to examine efforts to limit supply and availability by interdicting drugs before they cross our borders. On June 27, the subcommittee received testimony from a number of witnesses, beginning with a technology and K-9 demonstration,\19\ and proceeding through testimony from high school students. The hearing continued with testimony from the Administrator of the Drug Enforcement Administration and three investigators from the General Accounting Office (GAO), who evaluated the effectiveness of the Clinton administration's source country programs. --------------------------------------------------------------------------- \19\ The U.S. Customs Service Canine Training Center provided a demonstration on the utilization of drug sniffing dogs in illicit narcotic interdiction. Also, a representative from the U.S. Coast Guard's Miami Law Enforcement Division demonstrated how an Ionscan and the Compact Integrated Narcotic Detection Instrument (CINDI) operate to detect and locate illicit narcotics. --------------------------------------------------------------------------- The subcommittee first heard from four students affected by drugs in their schools, including Michael Taylor of Browne Junior High School, Natasha Surles of Roper Junior High School, Willie Brown of McFarland Middle School, and Lan Bui of Bell Multicultural School. Subsequently, the subcommittee heard testimony by Thomas A. Constantine, Administrator of the Drug Enforcement Administration, and expert witnesses Joseph Kelley, Allan Fleener and Ron Noyes of the General Accounting Office. Mr. Kelley is Director-In-Charge of the International Affairs Section and Mr. Fleener and Mr. Noyes are investigators who principally assisted in producing a June 1995 GAO report on source country anti-narcotics programs. Finally, the subcommittee heard testimony from Jane E. Becker, Acting Assistant Secretary of State for International Narcotics and Law Enforcement Affairs, U.S. Department of State; and Brian Sheridan, Deputy Assistant Secretary for Drug Enforcement Policy and Support at the Department of Defense. During this hearing, the subcommittee examined the current drug interdiction efforts of the major Federal agencies engaged in the national drug control strategy, namely DEA, the U.S. Coast Guard, U.S. Customs, and the Departments of Defense and State. Collectively, the expert witnesses confirmed that on November 3, 1993, President Clinton signed a Presidential Decision Directive for Counter narcotics (PDD-14), which instructed Federal agencies to shift the emphasis in U.S. international antidrug programs from the transit zones such as Mexico, Central America and the Caribbean to the source countries such as Colombia, Peru, and Bolivia. PDD-14 provided that the Director of the Office of National Drug Control Policy (ONDCP) should appoint a Coordinator for Drug Interdiction ``to ensure that assets dedicated by the Federal drug program agencies for interdiction are sufficient and that their use is properly integrated and optimized.'' [PDD-14, November 3, 1993.] The aim of this hearing was to offer the administration's principals on interdiction, those whose mission was affected by PDD-14, an opportunity to assess their own efforts and explain the impact on their agencies of PDD-14 and its concomitant ``controlled shift'' of resources. Continuing these hearings on June 28, 1995, the subcommittee received testimony on interdiction policy from additional administration witnesses, including Admiral Robert E. Kramek, Commandant of U.S. Coast Guard and U.S. Interdiction Coordinator, and George Weise, Commissioner of the U.S. Customs Service. Admiral Robert E. Kramek, U.S. Interdiction Coordinator and Commandant of the U.S. Coast Guard, serves a dual role in the Nation's interdiction efforts. He testified before the subcommittee in both capacities. He explained that the U.S. Coast Guard serves as the lead agency for maritime interdiction and as co-lead with Customs for air interdiction, adding that drug interdiction takes only 9 percent of the Coast Guard budget and emphasizing the important role intelligence plays in drug interdiction. On this topic, he testified that 70 percent of our operations are based on intelligence. Admiral Kramek took particular note of the importance of national leadership on this issue. Offering implicit criticism of a reduced interdiction effort in the Clinton administration, he testified that, when the smugglers see our foreign policy priorities change and make drug interdiction much lower on the priority list than other things, they're quick to take advantage of that. George Weise, Commissioner, U.S. Customs, testified regarding efforts to interdict drugs at our Nation's borders. Mr. Weise reiterated the importance of knocking out smuggling by private plane into this country, and attributes the increased shift to ground smuggling along the Southwest border to the efforts against air transport. He believes that the 2,000 miles of the Nation's Southwest border has now emerged as the primary entry point for cocaine, although he did not contradict Admiral Kramek's assessment that Puerto Rico has recently taken on new significance as a port of entry into the United States. The subcommittee's investigation also included an examination of the fight against drugs on the streets of America's cities. At the subcommittee's September 25, 1995 hearing on the drug problem in New Hampshire entitled ``The Drug Problem in New Hampshire: A Microcosm of America,'' members received testimony from a number of witnesses fighting on the front lines at the local levels. The purpose of the field hearing was to continue an examination of national drug control policy, focusing on the successful drug fighting efforts of Manchester, NH, which had recently participated in a joint interagency task force called ``Operation Streetsweeper.'' Collectively, the expert testimony confirmed the following facts: Early in 1995, statistics showed that the overall crime rate in Manchester, which is New Hampshire's largest city, had declined. However, these statistics also showed that arrests for drug offenses had increased dramatically, as they had for other drug related crimes. After a number of murders were linked to drug distribution and usage, the community came together to rid their city of this scourge. Manchester Police Chief Peter Favreau received a $100,000 grant to help pay for State Police Officers to patrol city streets with city police, and a short time later Manchester Police were joined by the Sheriff's Department, the State Attorney General's Drug Task Force, the State Police Special Investigations Unit, the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco and Firearms (ATF), and the Immigration and Naturalization Service (INS). This Federal- State-Local interagency task force put jurisdictional issues aside and singularly pursued the aim of getting drug dealers off the streets of Manchester. As various panelists and community representatives testified, the change on the streets of Manchester could be felt immediately. As Chief Favreau testified, ``With as much coverage as we have out there, I honestly feel [the criminals] are going elsewhere. It's almost impossible not to have that happen.'' In an effort to understand how the interagency task force worked and what made it so effective, the principals in this successful antidrug effort testified before the subcommittee. Since illegal drugs and associated violent crime plague virtually every city in America, the accounts these witnesses told offer valuable insights into how best to tackle drugs and violent crime in other cities around this country. Witnesses included: Jeff Howard, attorney general for the State of New Hampshire; Geraldine Sylvester, the director of New Hampshire's Office of Alcohol and Drug Abuse Prevention; Paul Brodeur, commissioner of New Hampshire Department of Corrections; Neal Scott, assistant unit commander of the Narcotics Investigation Unit with the New Hampshire State Police; Billy Yout, Special Agent in Charge of Drug Enforcement Administration; Ray Wieczorek, the mayor of Manchester; Peter Favreau, chief of the Manchester Police Department (MPD); Paul Gagnon, U.S. attorney for New Hampshire; Alice Sutphen, a representative from the citizen's group Take Back Our Neighborhoods; Dana Mitchell, captain, Dover Police; Michael Plourde, executive director of the Nashua Youth Council; John Ahman, regional program director for Marathon House, and; Dick Tracy, sergeant, Crime Prevention Division, Manchester Police Department. d. Fact-finding Trip.--The subcommittee's investigation included one fact finding trip to the Drug War's front line. Subcommittee members, the United States Coast Guard and staff, traveled to the Seventh Coast Guard District in the Caribbean transit zone between June 16 and June 19, 1995. In the transit zone, subcommittee members and staff attended briefings at Seventh District Headquarters in Miami, Coast Guard interdiction initiatives at sea, DEA activities in the Greater Antilles, high level interagency briefings in Puerto Rico by the FBI, DEA, Customs, Border Patrol, and local authorities, and received in depth briefings by Admiral Granuzo and others at Joint Interagency Task Force East (JIATF East) in Key West, dedicated to drug interdiction in the transit zone. This interdiction trip was arranged in coordination with the U.S. Coast Guard, and invitations were extended to minority and majority members. In briefings, a number of interdiction facts became more clear. Agents participating in OBAT (Operation Bahamas, Turks and Caicos), a multi-agency, international operation based in Nassau, Bahamas, made clear that they have lost major assets over the past 2 years. At the Greater Antilles Section Coast Guard Base (GANTSAC) in Puerto Rico, which covers 1.3 million square miles, multi- agency briefers expressed the view that, if 70 percent of the cocaine coming into the United States comes over the Southwest border, the rest comes through Puerto Rico, which has seen as much as $40 million in money laundering in recent years. In attendance at the briefing were representatives of the FBI, DEA, Border Patrol, Coast Guard, INS, Customs, Department of Defense and Puerto Rico. Summarizing the briefing, the assets most needed are: more radars (including a suggested radar in Belize); more Jayhawk helicopters; more 378-foot Coast Guard Cutters; ion scanners and CINDI's; air rights agreements with more Caribbean nations (perhaps Cuba); and more senior level staff. The Coast Guard also indicated that they have recently lost 4 of 10 HU-25 intercepter aircraft by re-deployment or demobilization. At JIATF East, briefers included Rear Admiral Andrew A. Granuzo, who admitted that the central obstacle to waging a more effective drug war, particularly in interdiction, is that ``there is no one in charge.'' This assessment mirrored the testimony of Admiral Yost, Bill Bennett, John Walters, and Robert Bonner. JIATF East was created by Presidential Decision Directive 14 (PDD 14), which ordered a review of the Nation's counter narcotics command and control intelligence centers. Creation of three joint interagency task forces and a domestic air interdiction center was authorized by the White House Drug Czar in April 1994. Accordingly, JIATF East is joined in its interdiction mission by JIATF West in Alameda, CA; JIATF South in Panama; the DAICC at March Air Force Base, CA; and JTF-6 in El Paso, TX. JIATF East is dedicated to supporting all counterdrug activities in the transit zone. The command integrates intelligence with operations, and coordinates the employment of the U.S. Navy and U.S. Coast Guard ships and aircraft, U.S. Air Force aircraft, and aircraft and ships from allied nations, such as Great Britain and the Netherlands. The command's mission boils down to maximizing the disruption of drug transhipment, collecting, integrating and disseminating intelligence, and guiding detection and monitoring forces for tactical action. Just as importantly, JIATF East integrates law enforcement personnel, primarily from Customs, into the international interdiction effort. For that reason, the command includes FBI, DEA and State Department, in addition to the Department of Defense. 2. ``A Two-Year Review of the White House Communications Agency Reveals Major Mismanagement, Lack of Accountability, and Significant Mission Creep,'' House Report No. 104-748, August 2, 1996, Twelfth Report by the Committee on Government Reform and Oversight, Together with Dissenting Views. a. Summary.--In March 1994, alarmed by allegations of waste, fraud and abuse within the White House Communications Agency (WHCA), Chairman William F. Clinger, Jr., and subcommittee Chairman William H. Zeliff, Jr., requested the General Accounting Office to conduct a comprehensive audit of the mission, functions and operations of that agency. WHCA, a military unit within the Department of Defense (DOD), is responsible for providing communications support to the White House. The committee's request was met with strong and consistent opposition from the Clinton administration which argued that any inspection of WHCA would create an extreme national security risk and endanger the personal safety of the President. Nevertheless, after blocking the investigation for nearly a year, and as a result of continued pressure by Chairmen Clinger and Zeliff, the administration agreed to permit the DOD Inspector General (IG) to conduct the requested review. The IG audit resulted in a two-part report which confirmed that WHCA was suffering from severe mission creep, internal mismanagement, and a lack of oversight and accountability. The IG concluded that WHCA had significantly expanded its original mission of providing secure communications to the President, and that the agency was now providing extensive unrelated services to the President, First Lady, Vice-President, and to White House staffers in general. The IG further concluded that these extraneous services, which were provided and paid for by DOD, should have been funded by the White House. Although the IG did not provide a total dollar figure for inappropriate DOD- WHCA spending, they identified specific services amounting to more than $16 million in fiscal years 1994 and 1995 which were improperly paid from DOD's budget. The reports concluded that WHCA's mission creep had been fostered primarily by vague and ambiguous mission statements and the gradual transfer of operational control of WHCA from DOD to the White House. While WHCA and its predecessor agencies were initially devoted solely to military, strategic and national security support for the President, a broader mission statement was adopted by DOD in 1962 and subsequently refined in the 1970's and 1980's to, ``provide telecommunications and other related support to the President of the United States and to other elements related to the President. . . . Elements related to the President are his staff, the First Family, the Vice President, the U.S. Secret Service Protective Forces, and others as directed.'' In other words, the DOD had allowed the agency's mission to be broadened to include almost any task to support almost any member of the President's family or staff. The second factor contributing to WHCA's mission creep was the transfer of operational control of WHCA from the Department of Defense to the White House. Although WHCA exists as a DOD agency under the command of the Defense Information Systems Agency (DISA), DISA does not in fact direct the operations of WHCA. Rather, WHCA receives its day-to-day orders and directions from the White House Military Office (WHMO), which is staffed by political appointees and is part of the Executive Office of the President. The Director of WHMO--a civilian, political appointee who holds the position of Deputy Assistant to the President--directs the activities of WHCA and writes the annual Officer Evaluation Report which determines the future career prospects of the WHCA Commander. This Officer Evaluation Report is reviewed, supplemented and signed by the White House Chief of Staff. Thus, although WHCA is technically a sub-command of DISA, and is theoretically under the supervision of DISA, in practice the power relationship is exactly reversed. Because of WHCA's proximity and direct responsibility to the President, DISA has generally taken a deferential and subservient attitude toward WHCA, and has focused on ministering to the requirements of WHCA rather than exercising effective supervision. In light of that fact, WHCA was willing to expand its mission to accommodate successive Presidents, even though many of the new missions should have been funded and performed by other agencies. This unique role reversal was fundamental to WHCA's profound mission creep, as well as its parent agency's lack of program oversight or operational control. In addition to mission creep and a lack of effective oversight, the subcommittee's investigation found significant failings in the areas of procurement, disbursements, property and inventory management, and obligation controls. The IG audit revealed that WHCA has routinely avoided statutorily required competitive bidding procedures for the purchase of goods and services, relying instead on ``best guesses'' in assessing the reasonableness of prices quoted. The agency has frequently ignored fundamental contract law, using unwritten oral agreements in lieu of clearly negotiated, verifiable contracts. As a consequence, the agency has often been held liable for questionable contracts with suspect terms. WHCA has also habitually bypassed required independent DOD review of major purchases. These contracting failures have resulted in millions of dollars of wasted taxpayers' money. Specific examples of procurement waste cited in the IG reports included the $4.9 million purchase of two air- transportable mobile communications systems that did not meet WHCA's operational needs, and the agency's failed acquisition of replacement satellite terminals. While WHCA had planned and justified the purchase of 12 units at a cost of $269,000 each, the belated discovery that the terminals cost more than twice that amount, or $618,000 each, forced WHCA to reduce its purchase by half, thus failing to achieve the needed upgrade. Additional management difficulties uncovered by the subcommittee included a lack of control over disbursements leading to untold numbers of duplicate vendor payments, the routine late payment of bills and invoices resulting interest and penalty charges, and the agency's inability to determine the validity of over $14.5 million in unliquidated payment obligations. In the area of property management, the IG audit unearthed serious problems with WHCA's inventory controls. The reports disclosed $555,000 worth of computers and $22,000 worth of photographic equipment which was never recorded in the agency's property book. In testimony before the subcommittee, the IG conjectured that the total value of non-recorded property may have been as high as $738,000. In addition, the auditors noted that the lack of accountability often made it difficult for WHCA managers to determine whether non-expendable property which had been ordered and paid for had actually been received. The subcommittee's investigation further disclosed that WHCA failed to follow DOD regulations requiring the regular inventory and re-validation of major equipment needs. As a result, the agency was paying over $117,000 a year to lease telecommunications circuits which were no longer required. Upon completing its audit and in testimony before the subcommittee, the IG stated that ``the Assistant Secretary of Defense (Command, Control, Communications and Intelligence) management control program needs improvement because a material weakness exists in that administrative, financial and operational oversight was not provided to the White House Communication Agency.'' The IG identified the Assistant Secretary of Defense for Command, Control, Communications and Intelligence (the ASD/C3I) as the responsible entity because the ASD/C3I is in charge of DISA, WHCA's commanding unit. b. Benefits.--DOD's management response to the IG audit was provided by Hon. Emmett Paige, Jr., the ASD/C3I, who submitted joint comments on his own behalf and on behalf of the Director of DISA and the Commander of WHCA. In response to the IG's findings of mission creep, the ASD/C3I denied the existence of any problem. However, the ASD/C3I did concur with almost all of the IG's findings and recommendations regarding WHCA's lack of accountability and internal controls. The ASD/C3I acknowledged not only that each individual accountability problem needed to be corrected, but also that the scope and nature of WHCA's accountability problems, taken as a whole, demanded an over- arching, systemic solution. To that end, the ASD/C3I entered into negotiations with White House administrators to resolve questions of WHCA's accountability. As a result of those meetings, a Memorandum of Agreement (MOA) was executed between the ASD/C3I and the White House to establish the terms and conditions governing WHCA's future operations and DISA's oversight responsibilities. To address unresolved concerns over mission creep and further define DISA's oversight responsibilities, the committee issued a report, House Rept. 104-748, which recommended the adoption of legislation to statutorily limit WHCA's mission to providing national security-related telecommunications services required by the President. The subcommittee recommended that all other functions presently performed by WHCA either be transferred to the Executive Office of the President (EOP) or require EOP reimbursement. This recommendation was substantially adopted as an amendment to the 1996 Department of Defense Authorization Act. The subcommittee further recommended that the WHCA Commander be given annual performance evaluations by the Director of DISA. Finally, the subcommittee recommended the adoption of a 5 year period of annual reporting to monitor the agency's progress in resolving the problems identified by the DOD IG and by the subcommittee. This recommendation was also included in the 1996 Defense Authorization Act. c. Hearings.--On May 16, 1996, the subcommittee convened a hearing to receive testimony from Hon. Emmett Paige, Jr., ASD/ C3I; Colonel Joseph J. Simmons, IV, the Commander of WHCA; Mr. Robert J. Lieberman, Assistant Inspector General for Auditing for the DOD IG; and Mr. Henry L. Hinton, Jr., Assistant Comptroller General for the GAO's National Security and International Affairs Division. While testimony was received from Messrs. Hinton and Lieberman, concerns over the submission of two differing sets of testimony on behalf of Colonel Simmons caused subcommittee Chairman Zeliff to adjourn the hearing to reconvene at a later date. When the subcommittee reconvened on Jule 13, 1996, testimony was received from Secretary Paige and Colonel Simmons. 3. ``Investigation Into the Activities of Federal Law Enforcement Agencies Toward the Branch Davidians,'' House Report No. 104- 749, August 2, 1996, Thirteenth Report by the Committee on Government Reform and Oversight, Prepared in Conjunction with the Committee on the Judiciary, Together with Additional and Dissenting Views. a. Summary.--The conduct of three executive branch departments and subsidiary agencies came under intense scrutiny following the raid and standoff at the Branch Davidian residence in West Texas in 1993. Accordingly, the subcommittee conducted a 5-month prehearing investigation into executive branch conduct of these departments and agencies and accepted testimony by 97 witnesses during 10 days of hearings in 1995. In June 1992, the Austin, TX Office of the Bureau of Alcohol, Tobacco and Firearms (ATF) opened a formal investigation into allegations that members of a Waco, TX religious group, the Branch Davidians, and in particular their leader, Vernon Howell (a.k.a. David Koresh), possessed illegal firearms and explosive devices. A Federal judge issued a warrant for the search of the Branch Davidian residence and a warrant for the arrest of David Koresh. On February 28, 1993, a force of 76 ATF agents stormed the Davidian residence to serve the arrest and search warrants. Prior to the commencement of the raid, however, the Davidians had learned of the ATF's plans. As the agents arrived at the Davidians' residence, the Davidians engaged the ATF agents in a gun battle which continued for almost 90 minutes. Four ATF agents were killed in the battle and more than 20 agents wounded. Two Davidians were killed by ATF agents and several others, including Koresh, were wounded. After a cease-fire was arranged, the Federal Bureau of Investigation dispatched members of its Hostage Rescue Team to Waco to take control of the situation at the request of the ATF. At 6 a.m. the next morning, the FBI formally took control of the situation and a 51-day standoff with the Davidians ensued. In addition to continual negotiations with the Davidians, FBI officials took other steps to induce the Davidians to surrender. These tactics included tightening the perimeter around the Davidian residence, cutting off electricity to the residence, and at one point, shining bright lights at the residence and playing loud music and irritating sounds over loudspeakers. During the week of April 12, senior Justice Department officials began considering a plan developed by the FBI to end the standoff. Attorney General Janet Reno, other senior Justice Department officials, and FBI officials held several meetings concerning the plan. The proposed plan centered around the injection of a chemical riot control agent through the walls of the Davidian residence in order to induce the residents to leave the structure. The plan provided for the methodical insertion of the riot control agent into different parts of the building over a 48 hour period. The plan also contained a contingency clause which called for the insertion of the riot control agent into all portions of the residence simultaneously, if the Davidians failed to obey orders or responded violently. At approximately 6 a.m., on April 19, 1992, FBI agents using unarmed military vehicles with mounted booms began to insert the riot control agent into the compound by ramming holes into the sides of the building and then spraying the riot control agent into the holes in the walls. Almost immediately the Davidians began to fire on the vehicles used by the FBI to insert the agent. Shortly thereafter, the commander of the Hostage Rescue Team ordered that the contingency provision of the operations plan be implemented and that the riot control agent be inserted in all portions of the residence at once. At approximately 12:07 p.m., a fire was observed in one portion of the residence. Within 2 minutes, two other fires developed. Soon the three fires engulfed the entire structure, destroying it completely. Nine persons escaped from the structure during the course of the fire, but more than 70 other residents remained inside and all of these persons died. Pursuant to its oversight jurisdiction over the Federal law enforcement community, the committee's National Security, International Affairs, and Criminal Justice Subcommittee, jointly with the Crime Subcommittee of the House Committee on the Judiciary, conducted an investigation into the initial raid, ensuing standoff, and eventual fire at the Branch Davidian Compound near Waco, TX. b. Benefits.--Throughout the investigation and the hearings, the subcommittee had difficulty obtaining information from certain agencies and offices under investigation. Correspondence files attest to a constant battle for documents and evidence relating to the situation at Waco. Nonetheless, the investigation and the hearings brought to light a great deal of new information, educated the public on a matter that remained unsettling, and put to rest many errant theories about the incident. The central purpose of this investigation was to initiate internal reforms that would prevent any such tragedy from occurring again. As a result of this investigation, agencies have begun to change their policies such that they will approach future investigations and operations with less likelihood of tragedy and greater opportunity for success. Specifically, ATF has experienced an entire change of leadership. Moreover, the FBI now has 30 Senior Agents specially trained as ``crisis managers,'' who can be called on at any time to assist in any similar crisis. The FBI's Hostage Rescue Team (HRT) has increased personnel and equipment, as well as the size and training of its negotiating team. Today, there are nine FBI SWAT teams around the country to assist the HRT in any similar emergency. The FBI has also established a working relationship with the crisis resolution centers at Michigan State University and George Mason University, and now keeps a resource list of experts on marginal eclectic or unusual religious groups. In addition, FBI Director Louis Freeh has implemented a new policy regarding the use of force in crisis situations that reinforces the FBI's standing policy in favor of a negotiated solution, and has disposed of the prior FBI policy permitting a barrage of unseemly noisemaking in hostage or barricade situation. Perhaps the most beneficial aspect of the investigation of Waco was refutation of various conspiracy theories and accusations of malfeasance on the part of particular government agencies. The subcommittee made some of the following findings and recommendations: FINDINGS 1. But for the criminal conduct and aberrational behavior of David Koresh and other Branch Davidians, the tragedies that occurred in Waco would not have occurred. The ultimate responsibility for the deaths of the Davidians and the four Federal law enforcement agents lies with Koresh. 2. While not dispositive, the evidence presented to the subcommittees indicates that some of the Davidians intentionally set the fires inside the Davidian residence. 3. The gunshot wounds which were the cause of death of 19 of the Davidians on April 19 were either self-inflicted, inflicted by other Davidians, or the result of the remote possibility of accidental discharge from rounds exploding in the fire. 4. Treasury Secretary Lloyd Bentsen and Deputy Secretary Roger Altman acted highly irresponsibly and were derelict in their duties in failing to even meet with the Director of the ATF in the month or so they were in office prior to the February 28 raid on the Davidians residence, in failing to request any briefing on ATF operations during this time, and in wholly failing to involve themselves with the activities of the ATF. 5. Senior Treasury Department officials routinely failed in their duty to monitor the actions of ATF officials, and as a result were uninvolved in the planning of the February 28 raid. This failure eliminated a layer of scrutiny of the plan during which flaws in it might have been uncovered and corrected. 6. The ATF's investigation of the Branch Davidians was grossly incompetent. It lacked the minimum professionalism expected of a major Federal law enforcement agency. 7. David Koresh could have been arrested outside the Davidian compound. The ATF chose not to arrest Koresh outside the Davidian residence and instead were determined to use a dynamic entry approach. In making this decision ATF agents exercised extremely poor judgment, made erroneous assumptions, and ignored the foreseeable perils of their course of action. 8. ATF agents misrepresented to Defense Department officials that the Branch Davidians were involved in illegal drug manufacturing. As a result of this deception, the ATF was able to obtain some training from forces which would not have otherwise provided it, and likely obtained other training within a shorter period of time than might otherwise have been available. Because of its deception, the ATF was able to obtain the training without having to reimburse the Defense Department, as otherwise would have been required had no drug nexus been alleged. 9. The ATF's raid plan for February 28 was significantly flawed. The plan was poorly conceived, utilized a high risk tactical approach when other tactics could have been successfully used, was drafted and commanded by ATF agents who were less qualified than other available agents, and used agents who were not sufficiently trained for the operation. Additionally, ATF commanders did not take precautions to ensure that the plan would not be discovered. 10. There was no justification for the rehiring of the two senior ATF raid commanders after they were fired. The fact that senior Clinton administration officials approved their rehiring indicates a lack of sound judgment on their part. 11. The decision by Attorney General Janet Reno to approve the FBI's plan to end the standoff on April 19 was premature, wrong, and highly irresponsible. In authorizing the assault to proceed Attorney General Reno was seriously negligent. The Attorney General knew or should have known that the plan to end the stand-off would endanger the lives of the Davidians inside the residence, including the children. The Attorney General knew or should have known that there was little risk to the FBI agents, society as a whole, or to the Davidians from continuing this standoff and that the possibility of a peaceful resolution continued to exist. 12. The CS riot control agent insertion and assault plan was fatally flawed. The Attorney General believed that it was highly likely that the Davidians would open fire, and she knew or should have known that the rapid insertion contingency would be activated, that the Davidians would not react in the manner suggested by the FBI, and that there was a possibility that a violent and perhaps suicidal reaction would occur within the residence. The Attorney General should have rejected the plan and demanded the preparation of an alternative. 13. Following the FBI's April 19 assault on the Branch Davidian compound, Attorney General Reno offered her resignation. In light of her ultimate responsibility for the disastrous assault and its resulting deaths the President should have accepted it. 14. The FBI should have sought and accepted more expert advice on the Branch Davidians and their religious views and been more open-minded to the advice of the FBI's own experts. 15. While it cannot be concluded with certainty, it is unlikely that the CS riot control agent, in the quantities used by the FBI, reached lethal toxic levels. However, the presented evidence does indicate that CS insertion into the enclosed bunker, at a time when women and children were assembled inside that enclosed space, could have been a proximate cause of or directly resulted in some or all of the deaths attributed to asphyxiation in the autopsy reports. 16. There is no evidence that the FBI intentionally or inadvertently set the fires on April 19. 17. The activities of active duty military personnel in training the ATF and in supporting the FBI's activities during the standoff did not violate the Posse Comitatus Act because their actions did not constitute direct participation in the government's law enforcement activities. RECOMMENDATIONS 1. Federal law enforcement agencies should verify the credibility and the timeliness of the information on which it relies in obtaining warrants to arrest or search the property of an American citizen. 2. The ATF should revise its National Response Plan to ensure that its best qualified agents are placed in command and control positions in all operations. 3. Senior officials at ATF headquarters should assert greater command and control over significant operations. The ATF's most senior officials should be directly involved in the planning and oversight of every significant operation. 4. The ATF should be constrained from independently investigating drug-related crimes. 5. Congress should consider applying the Posse Comitatus Act to the National Guard with respect to situations where a Federal law enforcement entity serves as the lead agency. 6. The Department of Defense should streamline the approval process for military support so that Posse Comitatus Act conflicts and drug nexus controversies are avoided in the future. 7. Federal law enforcement agencies should redesign their negotiation policies and training to avoid the influence of physical and emotional fatigue on the course of future negotiations. 8. The government should further study and analyze the effects of CS riot control agent on children, persons with respiratory problems, pregnant women, and the elderly. c. Hearings.--Oversight hearings on Federal Law Enforcement Actions in Relation to the Branch Davidian Compound in Waco, TX, July 19, 20, 21, 24, 25, 26, 27 28, 31, and August 1, 1995. Witnesses testified regarding the involvement of different agencies on ``agency days.'' Since several agencies were investigated, the evidence collected at these hearings is grouped under agency headings. (i) The Bureau of Alcohol, Tobacco and Firearms.--The initial investigation of Vernon Howell was conducted by ATF. ATF's investigation began in late May 1992. A Federal judge issued warrants based on evidence uncovered in that investigation. The attempt to serve that warrant on February 28, 1993 went badly awry, resulting in an armed confrontation which cost the lives of four Federal agents and several Branch Davidians. Based on those facts, the subcommittee initiated an investigation into ATF's actions leading to the raid. The subcommittee submitted document requests to the Department of the Treasury for all documents in its possession pertaining to the initial investigation of Vernon Howell. The subcommittee carefully analyzed the documents relating to the investigation and interviewed numerous individuals involved in the investigation and the raid. ATF agents, supervisors and legislative affairs personnel briefed subcommittee staff on events surrounding the investigation of Vernon Howell and preparations for the initial raid on the Mt. Carmel complex. Surviving Branch Davidians instructed the subcommittee about conditions at Mt. Carmel and events surrounding the initial raid. In addition to the defense attorneys for certain Branch Davidians, representatives of the National Association of Criminal Defense Lawyers gave their interpretation of the sufficiency of the warrant that the ATF attempted to serve on Vernon Howell. July 19 marked the first day of hearings. On that day, the subcommittee heard testimony from Dick Reavis, author of ``Ashes of Waco;'' Stuart Wright, contributor and editor of ``Armageddon in Waco;'' Ray Jahn, assistant U.S. attorney; Gerald Goldstein, president of the National Association of Criminal Defense Lawyers; Robert L. Descamps, president of the National District Attorneys' Association; Henry McMahon, firearms dealer; David Thibodeau, resident at Mt. Carmel; Kiri Jewell, resident at Mt. Carmel; David Jewell, father of Kiri Jewell; Lewis Gene Barber, former lieutenant with the McLennan County Sheriff's Office; Bill Johnson, assistant U.S. attorney; Davy Aguilera, ATF Special Agent; Chuck Sarabyn, former ATF ASAC in Houston; Earl Dunagan, former ATF acting SAC in Austin; Dan Hartnett, former ATF Deputy Director for Enforcement; Ed Owens, ATF Firearms Expert; H. Geoffrey Moulton, Jr., Project Director of Treasury Department Review Team; and Dr. Bruce Perry, Associate Professor of Psychiatry and Behavioral Sciences at Baylor College of Medicine. During the first day of hearings, former ATF Special Agent Davy Aguilera testified publicly for the first time in detail the fact that ATF agents knew the Branch Davidians were expecting the raid on Mt. Carmel. Aguilera testified about his desperate attempts to inform ATF Supervisory Special Agents not to go ahead with the raid, and tearfully recalled the results of not being able to turn back the raid. Chuck Sarabyn, former ATF Assistant Special-Agent-in-Charge in Austin, testified before the subcommittee about his decision to allow the raid to proceed in light of the fact that the Branch Davidians knew the ATF was planning to raid Mt. Carmel. Sarabyn defended his decision to go ahead with the raid and maintained that the ATF was afraid of mass suicide among the Branch Davidians. This second day of testimony concentrated on the investigation of Howell's collection of weapons and the alleged or initially asserted existence of a methamphetamine laboratory on the premises of Mt. Carmel. George Morrisson, of the Los Angeles Police Department, testified that ATF should have employed better investigative techniques and more organized methods for case management. He told the subcommittee that newspaper articles surfacing soon before the raid on Mt. Carmel could have assisted ATF in gathering information. Wade Ishomoto, of Sandia National Laboratories, told the subcommittee that the team assembled in Waco to serve the arrest warrant on Howell was inexperienced and that the raid plan lacked the sophisticated procedures necessary for such an operation. Several witnesses testified to the danger of explosive devices in the presence of chemicals necessary for the production of methamphetamine. On this day the hearing consisted of testimony regarding the actions of ATF and the subcommittee heard testimony from former Secretary of Treasury Lloyd Bentsen. Secretary Bentsen testified about the actions he took in response to ATF actions at Waco. He told the subcommittee that, upon hearing of the failure of the raid, he established an in-house review commission that investigated the incident for 5 months and compiled a report based on a number of interviews. Bentsen listed those agencies involved in the Treasury investigation: Secret Service, Customs, the IRS, and the Financial Crimes Enforcement Network. Bentsen was unable to explain why a warning from Mr. Altman, his aide at the time, was not viewed with seriousness or passed on to the FBI; the Altman warning indicated the possibility of ``tragedy'' if the Davidian Compound was, as occurred on April 19, 1993, confronted with what Davidians might perceive as an assault. Secretary Bentsen also mentioned corrective actions taken by ATF and Treasury in the wake of the incident at Waco. According to Bentsen, ATF leadership was replaced, the intelligence chief was demoted, and the two raid commanders were relieved of their law enforcement duties. In addition, Bentsen told the subcommittee that Treasury has enhanced the formal and informal communication between the Office of Enforcement and the bureaus within the department. The final day of hearings regarding the actions of ATF were held on July 24, 1995. The most compelling testimony this day was delivered by Robert Rodriguez. Rodriguez recounted how he warned Mr. Sarabyn and Mr. Chojnacki on the morning of the raid that the Davidians had been tipped off about the assault. Chojnacki and Sarabyn testified that Koresh often declared to followers that the government was coming. ``We didn't know if he meant in the physical sense or the metaphysical sense,'' Chojnacki said. ``These two men know what I told them,'' Rodriguez countered. ``They knew exactly what I meant . . . They lied to the public, and in doing so destroyed a great agency.'' Sarabyn and Chojnacki denied that they lied to the public. They insisted that Rodriguez did not provide a clear warning that Koresh knew the raid was imminent. Rodriguez's version of the events was supported by Lewis Merletti. (ii) The Federal Bureau of Investigation.--Almost immediately after the raid on Mt. Carmel, the FBI was called in to take over the operation of the standoff. The FBI Hostage Rescue team was in place and FBI negotiators were on the phone with Davidians almost continuously for the succeeding 51 days. Jeffrey Jamar, FBI Special Agent-in-Charge in San Antonio, commanded the FBI team and was charged with deciding which tactics to employ. The subcommittee investigation produced audiotapes and transcripts of these negotiations, as well as contemporaneous memoranda from both inside and outside experts attempting to explain the actions of Vernon Howell and the Branch Davidians. After 51 days of standoff, the siege ended tragically. The Branch Davidian compound burned to the ground and resulted in the death of 22 children and more than 60 adults. Regarding the investigation into the role of the Department of Justice and the Federal Bureau of Investigation, the hearings continued with testimony from Jack Zimmerman and Dick DeGuerin, attorneys for Steve Schneider and Vernon Howell, testified before the subcommittee about their dealings with the Branch Davidians and explained in detail their attempts to assist in negotiating a surrender. DeGuerin testified about difficulties he personally encountered in brokering a potential surrender. DeGuerin told the subcommittee about his trips into Mt. Carmel and the breakthrough he had achieved upon receiving Howell's final promise to surrender. DeGuerin obtained a letter from Howell in which Howell promised to complete his interpretation of the ``Seven Seals,'' contained in the Bible, and then surrender with all the Branch Davidians. Also testifying on that day were several of the local Texas Rangers. The Texas Rangers were charged with investigating the deaths of the four ATF agents killed on the day of the initial raid. Captain Byrnes testified that the Texas Rangers had many disagreements with FBI's Jamar and generally felt excluded. Byrnes testified that, in addition to problems with destruction of the crime scene by FBI tactical personnel, the Rangers were disappointed about a lack of communication between FBI personnel and local officials. The sixth day of hearings, provided in greater detail, the facts surrounding the Department of Justice and FBI involvement in Waco. James Cavanaugh, although an ATF Special Agent, testified before the subcommittee regarding negotiations with the Branch Davidians and the transition from ATF control of the operation to FBI control. Cavanaugh was the first person to engage in serious negotiations with the Branch Davidians. He recounted the planning of the initial raid, the ensuing negotiations for a cease fire, the first surrender offer of the Branch Davidians and the lengthy negotiations for a surrender. Cavanaugh described the tension between negotiators and tactical personnel. He expressed the view that negotiators prefer to wait for a peaceful solution to a crisis and tactical personnel generally prefer to intercede with tactical measures. Peter Smerick was the Criminal Investigative Analyst the FBI used to profile Howell for the FBI negotiators and the FBI's Hostage Rescue Team. Smerick testified that his first four memoranda urged the FBI to ``wait Koresh out'' and advised against increasing the pressure from outside. Smerick told the subcommittee that he changed his final memorandum based on his knowledge that the FBI was not pleased with the tone of his memoranda and that, although he felt no overt pressure to change the approach of his memoranda, he knew that FBI agents on the ground in Waco wanted a view that supported a more clearly tactical approach. Jeffrey Jamar, the FBI Special Agent-in-Charge in San Antonio at the time, was the on-site commander of all forces in Waco. Jamar testified before the subcommittee that he was hopeful of a surrender based on Koresh's promise to come out of Mt. Carmel, when he completed his interpretation of the Seven Seals. In response to questions regarding the possibility of the withdrawal of the FBI from Mt. Carmel, Jamar explained that the danger of gun fire from the building, the risk to children inside, and the sanitary conditions in Mt. Carmel made withdrawal untenable. Jamar also testified regarding the decision to implement the CS gas plan. Jamar said, ``I would have waited a year if we had something to work with, if there was just something there we could attach something to. We did it from February 28 until a decision was made in late March that we thought we were going nowhere.'' Jamar told the subcommittee he was certain that Koresh would end the standoff ``his way.'' Jamar also testified that he knew with ``99 percent'' certainty that the Davidians would open fire on the FBI's Bradley vehicles inserting CS gas, an eventuality that he also knew would mean acceleration of the CS gas, under the FBI's CS gas insertion plan. The subcommittee heard compelling testimony from many decisionmakers and received testimony of Webster Hubbell, former Associate U.S. Attorney General; Mark Richard, Deputy Assistant Attorney General; William Sessions, former Director of the FBI; Floyd Clarke, former Deputy Director of the FBI; Larry Potts, former Assistant Director of the FBI, Criminal Investigations; Harry Salem, Ph.D., Defense Department Toxicologist; Rick Sherrow, fire expert; Paul Gray, Houston Fire Department and leader of the Fire Review Team; James Quintere, arson expert, University of Maryland; and Clive Doyle, former Branch Davidian. Webster Hubbell testified on the decisionmaking process that led to the implementation of the CS gas insertion plan. According to Hubbell, the decision to implement the CS gas insertion plan was based essentially on two facts: (1) a lack of progress in negotiations; and (2) military personnel assuring him that the inhabitants would exit the building upon insertion of CS gas. Hubbell testified that President Clinton wanted to be advised of any change in strategy from one of negotiation to one of tactical maneuvers. Hubbell testified before the subcommittee that he was told that Howell was manipulating the attorneys. Howell's statement that he would come out upon having interpreted the ``Seven Seals,'' according to Hubbell, was a ruse. Hubbell told the members of the subcommittee that Howell was responsible for the deaths of those inside Mt. Carmel. The assistant Director of the FBI at the time of the Waco standoff was Larry Potts. Potts testified before the subcommittee regarding the FBI's strategy for resolving the standoff. Potts stated that the strategy was: ``(1) to verbally negotiate a peaceful surrender of Koresh and his followers; and, (2) to gradually increase the pressure on those inside the compound by tightening the perimeter around the compound and denying the Davidians certain comforts.'' Potts recounted how this strategy was perceived as a failure, and he outlined the roles that the FBI and the Department of Justice played in the development of the CS gas insertion plan. Potts testified that the FBI, in response to questions about its conduct of the standoff at Waco, had improved three aspects of FBI crisis management. ``Jurisdictional issues are being clarified, crisis response operations have been reorganized and expanded, including the availability and use of outside experts; and research efforts have been enhanced,'' he stated. Potts displayed a diagram of the crisis management changes implemented as a result of the standoff at Waco. On the final day of hearings, the subcommittee heard from Attorney General Janet Reno. On August 1, 1995, Attorney General Reno gave her reasons for what she termed her decision to implement the plan to insert CS gas into Mt. Carmel. The Attorney General described the 51-day standoff, the efforts to negotiate a surrender, and the reasons that Howell was not trusted by FBI negotiators. Reno stressed changes the FBI had implemented since Waco. According to her testimony, the FBI now has 30 Senior Agents specially trained as ``crisis managers'' to be called on at any time to assist in a crisis the magnitude of Waco. These managers form an element of the Critical Incident Response Group, a group formed to deal with crisis situations. Reno told the subcommittee that the Hostage Rescue Team will increase its personnel, equipment, and the size and training of the negotiating team. Today, there are nine FBI SWAT teams around the country to assist the Hostage Rescue Team in an emergency. To assist the FBI in dealing with complex, psychological hostage takers in the future, Reno testified that the FBI will establish a working relationship with the crisis resolution centers at Michigan State University and George Mason University, and will keep a resource list of experts on marginal religious groups. Much of Reno's testimony involved her decision to implement the CS Gas Insertion Plan. The Attorney General told the subcommittee she thought she had all the information she needed to make her decision. She indicated however, that someone informed her of ongoing abuse in the compound; at no time could she recall who that individual was. She believed that briefings on CS gas were proper and complete. She did confirm that she had not read all pre-fire briefing material and was not in the command center when the tragedy occurred. In her statement to the subcommittee, Reno assured the members that the FBI was continuing its research into non-lethal technologies as alternatives to deadly force. (iii) The Department of Defense.--The subcommittee investigated the participation of the Department of Defense personnel in the events at Waco. Testimony was heard from Ambassador H. Allen Holmes, Assistant Secretary of Defense for Solic; Maj. Gen. John M. Pickler, U.S. Army, Commander Joint Task Force 6; Brig. Gen. Walter B. Huffman, U.S. Army, Assistant Judge Advocate General for Civil Law; Chris Crain, Special Forces Group; Lt. Col. Philip Lindley, U.S. Army, former Deputy Staff Judge Advocate for U.S. Army, Special Forces Command; Maj. Mark Petree, U.S. Army, formerly of 3/3D Special Forces Group; Staff Sgt. Steve Fitts, U.S. Army, formerly of 3/3D Special Forces Group; Staff Sgt. Robert W. Moreland, U.S. Army, formerly of 3/3D Special Forces Group; and Sgt. Chris Dunn, U.S. Army, formerly of 3/3D Special Forces Group. Ambassador Holmes testified on the role of the military in domestic law enforcement actions and about military participation before Waco. Holmes told the subcommittee that, in his opinion, the process developed to monitor military involvement in domestic law enforcement was a sound process. The Ambassador testified that, in his view, there were no violations of the law regarding military assistance at Waco and that the process regarding requests for military assistance had worked effectively. Staff Sgt. Steve Fitts testified regarding the military preparations for involvement in methamphetamine laboratories. He told the subcommittee that he conducted extensive research on the dangers and precautions required to ``take-down'' methamphetamine laboratories. According to Staff Sergeant Fitts, he wrote the paper at the instruction of Maj. Mark Petree. Staff Sergeant Fitts testified that Major Petree then presented the paper to ATF agents in Houston. According to Staff Sergeant Fitts, it was clear to him from the reaction of the ATF agents that these agents anticipated no actual methamphetamine laboratory at Mt. Carmel. Indeed, based on the lack of interest shown by ATF agents in the procedures necessary to dismantle a methamphetamine laboratory, it was Fitts' belief that ATF agents knew that no methamphetamine laboratory existed at Mt. Carmel. POSTAL SERVICE SUBCOMMITTEE Hon. John M. McHugh, Chairman 1. ``Voices for Change,'' House Report No. 104-438, December 21, 1995, Sixth Report by the Committee on Government Reform and Oversight. a. Summary.--``Voices for Change'' analyzes 10 hearings held by the Subcommittee on the Postal Service during the first session of the 104th Congress. Nearly 40 witnesses testified regarding the problems and challenges facing the current postal system. Witnesses urged members to consider fundamental reform of the quarter-century old Postal Reorganization Act because of the challenges confronting the Postal Service in a changing communications environment. Four key reform issues emerged in the hearings, including mail monopoly, labor-management relations, ratemaking and new postal products. Although witnesses raised a variety of issues and suggested a broad range of proposals for improving mail delivery, no unanimity appeared for any specific approach. However, the report notes that ``maintenance of universal service and a need to either strengthen or modify the postal ratesetting process were the legislative-related issues consistently discussed by a large majority of witnesses.'' b. Benefits.--The report provides Congress a concise record of the testimony received by the subcommittee regarding the operations of the Postal Service and its capacity to perform its constitutional and statutory mandates. The eight general oversight hearings highlighted by the report indicate the need for Congress to review, systematically, the statutory structure under which the Postal Service operates. An efficient and fiscally sound Postal Service benefits the American people by providing a cost-effective and reliable communications system. In addition, the constitutional undergirding of the Postal Service requires additional congressional attention in order to preserve and ensure the future viability of the institution. c. Hearings.--On February 23, 1995, testimony was received from Marvin T. Runyon, U.S. Postmaster General, and Michael E. Motley, General Accounting Office. On March 2, 1995, testimony was received from the Postal Rate Commission: Edward J. Gleiman; W.H. LeBlanc; George W. Haley; Edward Quick, Jr.; and Wayne A. Schley. On March 8, 1995, the subcommittee heard testimony from Postal Service Governors: Sam Winters, LeGree S. Daniels, Einar V. Dyhrkopp, Susan E. Alvardo, Bert H. Mackie, and Norma Pace. On May 23, 1995, the subcommittee received testimony from Art Sackler, Mailers Council; Ian D. Volner, Advertising Mail Marketing Association; Richard Barton, Direct Marketing Association; David Todd, Mail Order Association of America; Timothy May, Parcel Shippers Association; Tonda Rush, National Newspaper Association; Cathleen P. Black, Newspaper Association of America; George Gross, Magazine Publishers of America; Steve Bair, Association of American Publisher; Alan Kline, Alliance of Nonprofit Mailers; and Lee Cassidy, National Federation of Nonprofits. The June 7, 1995, hearing testimony was received from Moe Biller, American Postal Workers Union; Vincent Sombrotto, National Association of Letter Carriers; Scottie Hicks, National Rural Letter Carriers Association; William Quinn, National Postal Mail Handlers Union; W. David Games, National Association of Postmasters; Bill Brennen, National League of Postmasters; and Vincent Palladino, National Association of Postal Supervisors. On June 14, 1995, the subcommittee received testimony from John V. Maraney, Nation Star Route Mail Contractors Association; Randall Holleschau, National Association of Presort Mailers; Don Harle, Mail Advertising Service Association; Robert Muma, Envelope Manufacturers Association of America; Anthony W. Desio, Mail Boxes, Etc.; Kathleen Synnott, Pitney-Bowes; Neal Mahlstedt, Ascom Hasler; George W. Gelfer, Postalia; James Rogers, United Parcel Service; James Campbell, Federal Express; Peter N. Hiebert, DHL Worldwide; and Harry Geller, Air Courier Conference of America. On June 28, 1995, Postmaster General, Marvin Runyon and Deputy Postmaster General, Michael Coughlin testified before the subcommittee. On July 25, 1995, hearing testimony was received from Kenneth J. Hunter, Inspector General. B. OTHER INVESTIGATIONS CIVIL SERVICE SUBCOMMITTEE 1. Restructuring of the Office of Personnel Management. a. Summary.--Vice President Gore's National Performance Review of 1993 (NPR) ``challenged'' the Office of Personnel Management (OPM) to become an agent for change. OPM, which oversees 2.1 million people in the Federal Civil Service System, announced it would meet this challenge by ``leading the initiative to reinvent Federal human resource management by working with all agencies to assess their needs in accepting more responsibility in this area.'' Since the release of the administration's NPR, OPM has focused on decentralizing many of its functions. OPM intends to concentrate on certain core functions and devolve other activities. Accordingly, the agency has already RIFed a large number of training staff and reduced its Federal investigative program in anticipation of privatization. The agency intends to cease all governmentwide training activities before the end of the fiscal year and to divest itself of the investigations function by the beginning of fiscal year 96. OPM also intends to delegate all recruitment and staffing responsibilities to Federal agencies. The functions the agency will retain include retirement and health benefit programs, compensation programs, testing and evaluation on a reimbursable basis, and some policy and oversight responsibilities. With deep reductions in its workforce, as well as the vast changes that will occur from the decentralization initiatives, concerns have been raised over what substantive role OPM will retain in the future. Of particular concern was OPM's continued ability to provide adequate oversight over and protection of the Merit System. b. Benefits.--The subcommittee will continue to monitor OPM's restructuring process, and how this downsizing and decentralization will effect its client agencies. Subcommittee Chairman Mica voiced his commitment to instituting whatever remedies necessary to unburden Federal employees from unnecessary rules and regulation, while ensuring that the process produces meaningful results that do not interfere with OPM's ability to carry out core functions and responsibilities. c. Hearings.--A hearing entitled, ``Restructuring Office of Personnel Management'' was held on February 7, 1995. 2. Federal Workforce Restructuring Statistics. a. Summary.--The Federal Workforce Restructuring Act of 1994 established personnel ceilings for fiscal years 1994 through 1996, while targeting 272,900 full-time-equivalent positions for elimination by the end of 1999. To accomplish this, without relying entirely on reductions-in-force (RIF's), the act established temporary financial retirement incentive programs to encourage voluntary separations from certain Federal agencies. However, the act does not specify where the cuts should occur, and preliminary figures indicate the Department of Defense is bearing the brunt of the reductions. All executive branch agencies were provided with detailed guidance by OMB, including steps to be taken to flatten hierarchies, reduce headquarters staff, and pare down management control structures. However, nearly three-fourths of the fiscal year 94 reductions were among civilian employees in the Department of Defense, and DOD is expected to experience an even larger share of the reductions in 1995--reportedly up to 98 percent. From 1993 through the middle of fiscal year 95 over 90 percent of total reductions can be attributed to defense base closures and downsizing activities at the Department of Defense. The chairman expressed concern over the disproportionate distribution of workforce reductions and raised questions about whether the administration's reinventing government initiatives will result in meaningful government restructuring or prove to be simply a reduction of the Department of Defense civilian workforce. b. Benefits.--This oversight review provided an early examination of restructuring activities in the executive branch and highlighted the disproportionate downsizing of the Department of Defense. The planning and out placement programs of the Department of Defense should serve as useful models for workforce reductions in other government agencies. c. Hearings.--A hearing entitled, ``Federal Workforce Restructuring Statistics'' was held on March 2, 1995. 3. Examining the Federal Retirement System. a. Summary.--The Federal pension system consists of two programs: the Civil Service Retirement System (CSRS) covers Federal employees hired prior to 1984, and the Federal Employees Retirement System (FERS) covers those employees hired after 1984. A total of 2.8 million active employees are covered, with 1.5 million in CSRS and 1.3 million in FERS. Currently, 2.3 million participants receive annuities. CSRS has 2.2 million retirees and survivors, FERS has 37,800. Acccording to OPM's 1993 Annual Report on the Civil Service Retirement and Disability Fund (CSRDF) in 1996, the outlay for monthly payments for retirees of the Federal Government is estimated to be $39.2 billion. The CSRDF is projected to take in approximately $10 billion in cash receipts and payments from employee payroll deductions and from cash contributions from the U.S. Postal Service. Transfers from the General Treasury will make up the difference between receipts and payments-- nearly $30 billion. The annuities are projected to grow, while the cash receipts will stay relatively the same. In 2025, cash coming in will total $3.6 billion, while outlays will total $166.2 billion. And by 2035, cash receipts are estimated to be $5.6 billion, while outlays will top $218.5 billion. This increasing burden on the taxpayer and the overall financial stability of the Federal retirement system is of utmost importance to the chairman of the subcommittee. The subcommittee is involved in an ongoing analysis examining a host of various proposals concerning Federal pension reform. The subcommittee reviewed the retirement benefits available for Members of Congress, congressional staff, and executive branch employees under current law. In the 104th Congress a number of Members pension reform bills have been introduced and were reviewed by the subcommittee. Under current law, Members and staff under CSRS accrue benefits at 2.5 percent of preretirement pay for each year of service. Executive branch employees with 10 or more years of CSRS service accrue benefits at 2.0 percent per year. Members and staff under FERS accrue benefits at 1.7 percent per year of service up to 20 years, and 1.0 percent per year over 20. Executive branch FERS employees benefits accrue at 1.0 percent per year, or 1.1 percent if the individual retires at age 62 or over. Members and staff contribute a greater portion of payroll in exchange for the greater benefit. b. Benefits.--The investigation exposed growing reliance of the Federal retirement system on general tax revenues. To stabilize the Federal retirement system the subcommittee will consider the creation of a new retirement system which would be fully funded outside of the Federal budget and would be subject to the same standards and requirements as private sector pension plans. Such a system would assure Federal retirees full payment of benefits without having to rely on the Treasury to subsidize their annuities. This is a responsible approach to financing the government's commitments to its employees and it allows for the permanent elimination of one entitlement program from the Federal budget. The retirement reform of Members and congressional staff was included in the Balanced Budget Act of 1995. Under this reform Members and staff retirement benefits and payroll contributions will conform to that available to executive branch employees. c. Hearings.--Hearings entitled ``Federal Retirement Systems: Overview,'' ``Federal Retirement: Congressional Pensions'' and ``Funding Civil Service Retirement'' were held on March 7, 1995, March 10, 1995, and June 28, 1995. 4. Contracting Out. a. Summary.--Federal policy, adopted during the Eisenhower administration and endorsed on a bipartisan basis by all subsequent Presidents, affirms that Federal agencies should not be performing commercial activities in competition with private sector businesses. Although Federal agencies contract for more than $200 billion in goods and services each year, the Office of Management and Budget estimated in a 1987 Report to the President's Commission on Privatization that more than 900,000 civilian Federal employees were performing commercial functions. In spite of this substantial commercial activity by Federal agencies, previous hearings alleged that Federal agencies were involved in ``arbitrary and perhaps ill-conceived contracting out.'' OMB Circular A-76 provides administrative guidance to agencies for conducting cost comparisons to evaluate the efficiency of proposed contracts. In spite of the established mechanism, few cost comparisons of commercial functions are completed, in part because Federal agencies consider the process itself costly and a disruption to the workforce, and in part because Congress has included numerous provisions of law that restrict agencies from conducting the studies and/or from contracting after the studies are completed. In a June 16, 1995, release, the National Performance Review reported that 25 such obstacles to privatization remain in law. Subcommittee Chairman Mica has routinely asserted his belief that it could and should be possible to contract out more than 50 percent of the services and activities of the Federal Government as we know it today. If the widespread contracting successes being achieved by State and local governments do not move the Federal Government in the direction of greater contracting for commercial services, inevitably budget constraints will. OMB's Circular A-76 maintains that the government should use competition to reduce the costs of goods and services so that it would pay no more than necessary for the quality services that it needs. The subcommittee's analysis has shown that the absence of competition results in excessive costs, with the salaries and benefits of government employees comprising approximately 60 percent of the cost of government operations. Wendell Cox of the American Legislative Exchange Council testified that between 1980 and 1991, Federal employees' wages increased approximately $4.56 for each dollar that private sector compensation increased. As a result, average Federal employees make 45 percent more than private sector employees and 30 percent more than State Government employees. Over the course of a 40-year career, the expected lifetime earnings of a Federal employee have been estimated to be $600,000 greater than that of a comparable private sector employee. Surveys of government managers have demonstrated savings in 98 percent of the cases where functions have been converted to contract, and that the mere fact of competition has the effect of restraining cost increases. Although government must retain full policy control of all its operations, contracting could be used much more extensively to minimize the costs of providing public services and performing government activities. b. Benefits.--The investigation highlighted the need to update OMB Circular A-76, and OMB reissued the circular in March 1996. c. Hearings.--Hearings entitled ``Contracting Out: Summary and Overview'' and ``Contracting Out: Current Issues'' were held on March 29, 1995, and April 5, 1995. 5. Examination and Review of the Federal Workforce Restructuring Act of 1994. a. Summary.--The Federal Workforce Restructuring Act of 1994 authorized Federal agencies to provide voluntary separation incentives (``buyouts'') to Federal employees as one means of reducing Federal employment by 272,900 by fiscal year 1999. Civilian agencies were authorized to offer buyout incentives not to exceed $25,000 each during a period which expired March 31, 1995, and the Department of Defense was allowed to continue offering buyout opportunities through September 30, 1999. By the end of fiscal year 1995, OPM reported that more than 112,500 former Federal employees had been paid buyouts and left their agencies, with more than 68,000 of them leaving the Department of Defense. An additional 50,000 are anticipated to accept Department of Defense offers during the coming 4 years. Total costs to the government of these incentive payments are expected to exceed $2.4 billion. Former Federal employees who accept the buyouts may not return to Federal employment for a 5-year period or are required to repay the full amount of the incentive. By encouraging voluntary separation, buyouts are intended to reduce reliance on reduction in force (RIF) procedures and enable agencies to retain relatively younger workers while senior employees (those eligible or nearly eligible for retirement) accept payments to leave. Separation rates, however, are severely affected by rumors that a buyout might be offered, as evidenced by the reduction in the number of voluntary retirements from Federal agencies while the buyout program was being authorized in legislation. The General Accounting Office (GAO) has reported that 38 percent of buyout payments reported to date went to people in the overhead/administrative positions that were targeted by the National Performance Review. Nearly 70 percent went to employees at or above the GS-11 level, and 62.9 percent went to men. Minority members received 24 percent of the buyouts. The average age of people accepting buyouts was 60--about 1 year younger than regular retirement. Fifty-two percent of the buyout payments reported so far went to employees who were eligible for retirement. The GAO testified that there appears to have been some use of contract personnel to replace departed employees, but the absence, so far, of cost comparison studies required by Section 5(g) of the Workforce Restructuring Act makes difficult the tracking and analysis of buyout effects. b. Benefits.--Buyout authority may be a beneficial tool in downsizing and restructuring the Federal workforce, provided certain procedures are followed: agencies must engage in long range planning and know how they want the organization to look at the end of the restructuring; buyout window should be short to avoid generating rumors and behavior changes based upon expectation of buyouts; buyouts should not be done in successive waves; and buyouts should be effective early in the fiscal year to maximize savings. Additionally, buyouts should be targeted and never offered across the board to avoid additional funds being used to hire and train people with skills identical to those benefiting from buyouts. Downsizing and reorganization are most successful when the importance of directing restructuring efforts to a revised organizational goal is recognized, and detailed planning strategies are employed to achieve it. As a result, the committee has not recommended extending executive branch buyout authority at this time. c. Hearings.--A hearing entitled ``Buyouts: Boon or Boondoggle'' was held on May 17, 1995. 6. Review of the Ramspeck Act. a. Summary.--The Ramspeck Act is a 1940 law that enables members of congressional staffs who have served at least 3 years to gain noncompetitive appointment to the career civil service if they lose their congressional positions through no fault of their own; often as a result of the defeat of a Member or a Member's choosing not to run again. GAO reported that more than 80 percent of recent Ramspeck appointments have been in offices of congressional affairs, public affairs, or policy and strategic planning. Congressman Porter Goss introduced legislation to repeal the Ramspeck Act, H.R. 913, which was referred to the Civil Service Subcommittee. Representative Goss recommended repeal of the Ramspeck authority, arguing that constituents view this law as merely another special privilege that Members of Congress arrange for their staffs. Ramspeck procedures give former congressional employees privileges that are not available to other citizens, who must compete for positions in the Federal service. He believes that Ramspeck authority is inconsistent with the Congressional Accountability Act, adopted early in this session, which holds Congress subject to the same laws that affect other citizens. b. Benefits.--Conditions have changed since the Ramspeck law was enacted, and it is no longer difficult to attract quality applicants to congressional staff positions. The committee was concerned that continued use of Ramspeck appointments creates situations where policies repudiated by the electorate in recent elections may gain continuity in the career civil service through non-competitive transfers of staff. Congress repealed the Ramspeck Act authority as part of the Lobbying Disclosure Act (H.R. 1564). The repeal, which becomes effective 2 years after the President signed the law, will eliminate this end run around the merit system. c. Hearings.--A hearing entitled ``Ramspeck: Repeal, Reform or Retentions'' was held on May 24, 1995. 7. Review of the Combined Federal Campaign. a. Summary.--The Combined Federal Campaign (CFC) is an annual, taxpayer-subsidized solicitation drive in the Federal workplace that began as an effort to aid genuine charities while minimizing workforce disruption. However, many political and ideological advocacy groups and others, who do not directly provide or support human health and welfare, litigated and lobbied their way into the CFC. On February 23, 1995, subcommittee Chairman Mica wrote to James B. King, the Director of the Office of Personnel Management (OPM), asking for his support and cooperation in restoring the Combined Federal Campaign to its rightful role of aiding genuine human health and welfare charities. While the chairman fully endorses and encourages supporting genuine charities, the presence of advocacy groups raises questions about requiring taxpayers to subsidize organizations with which they disagree. A 1988 Task Force on the CFC established by OPM estimated that the CFC costs taxpayers between $55-60 million a year. (OPM's current leadership estimates the cost of the CFC as $22.1 million.) b. Benefits.--Examination of this issue revealed the extent to which taxpayers are forced to subsidize numerous advocacy groups and other organizations with political agendas that participate in the CFC. c. Hearings.--A hearing entitled ``Combined Federal Campaign: Lawyers & Lobbyists v. People in Need?'' was held on June 7, 1995. 8. Contracting Federal Investigations--Policy and Oversight. a. Summary.--Since the Atomic Energy Act of 1954, background investigations have been an important factor in deciding the suitability, security, and public trust qualifications of Federal employees. President Eisenhower extended background investigation requirements through Executive Order 10450, but such investigation centered primarily around employee susceptibility to threats from foreign governments. Some critics believe that several Supreme Court decisions, the Freedom of Information Act, and the Privacy Act combine to make it difficult to gather the information essential to a meaningful adjudication of these areas. As part of the administration's initiatives to reinvent government, OPM abolished chapters of the Federal Personnel Manual establishing criteria for security, suitability, and public trust determinations required to oversee a diverse range of agency requirements in a unified civil service. The administration considers the transition of investigations to the private sector an important component of its effort to reinvent government. This reflects a reorientation of the agency from providing services to conducting policy direction and oversight. OPM proposed an employee stock ownership program (ESOP) as the privatization vehicle chosen for this transition. A sole source contract to the ESOP is an essential ingredient to successful implementation of this plan. Oversight of the investigation function would remain a Federal responsibility under the purview of OPM, but the bulk of the current workforce is expected to shift to the ESOP. Data bases essential to the system would remain government-owned but reside on contractor- operated equipment. OMB testified that any savings from this program would be realized only when agencies became able to acquire investigative services competitively from private firms, thereby reducing the costs of background investigations. The ESOP would have to compete on an equal basis as a private provider. The committee is concerned that Federal agencies with legitimate concerns about the security and suitability of Federal employees have adequate access to investigative services. Many agencies already obtain background investigations through private contractors; work that amounts to more than $20 million each year. Even agencies with significant national security concerns, such as the Department of Defense, contract for significant portions of their background investigations. These agencies rely upon OPM's Federal Investigations Processing Center at Boyers, PA, for essential data and information to support their suitability determinations. In the 6 months between announcement of the privatization plan and the subcommittee's oversight hearing, OPM witnesses were unable to describe systematic planning for conversion, with most of the planning being contracted through a trustee organization. b. Benefits.--These hearings documented the deficiencies in the administration's planning for the transition from a government function to an ESOP operation. GAO and OPM testified that the gathering of information for background investigations is not an inherent function of the Government, the administration demonstrated less-than-effective planning for the proposed transition. Cost estimates included in OMB's budget submissions suggested that these initiatives would save 4 percent per year. OPM awarded a trustee contract to develop a business plan and negotiate a transition on June 9, 1995, only a week before the hearing. These planning deficiencies strengthened the argument to delay implementation from the December 31, 1995, administration proposal to March 31, 1996, as approved in the OPM appropriation for fiscal year 1996. c. Hearings.--Hearings entitled ``Oversight of Federal Investigations Policy'' and ``Outsourcing of OPM's Investigations Program'' were held on June 14, 1995, and June 15, 1995. 9. Administration's AIDS Training Program. a. Summary.--Title 5 authorizes training in the scientific, professional, technical, mechanical, trade, clerical, fiscal, administrative or other appropriate fields. Section 4101 requires workplace training to be a ``planned, prepared, and coordinated program . . . which will improve individual and organizational performance and assist in achieving the agency's mission and performance goals.'' Department heads are required, at least once every 3 years, to review training and other developmental needs essential to meeting mission and performance requirements. This review is an integral part of agency planning, the purpose of which is to ensure that public funds used to develop an organization's human resources have a direct relevance to (1) improving productivity; (2) fulfilling the organizational mission; and (3) providing quality products and services to the public. On September 30th, 1993, President Clinton delivered a memorandum to the heads of executive departments and agencies directing full implementation of comprehensive HIV/AIDS workplace policies and employee education and prevention programs by World AIDS Day, 1994. The Office of the National AIDS Policy Coordinator was authorized to implement the directive, and in a follow-up memo, then-Director Kristine Gebbie required mandatory employee attendance at HIV/AIDS education and prevention training. The HIV/AIDS mandatory training sessions received much adverse attention, due to reports that inappropriate and questionable materials were presented. The committee received numerous letters and calls from Federal employees objecting to being subjected to graphic talk about uncomfortable subjects in the midst of fellow workers. These recent reports raised questions as to whether the Federal HIV/AIDS education training is designed to meet the statutory requirements designated in Title 5: to improve individual and organizational performance, and assist in achieving the agency's mission and performance goals. b. Benefits.--Witnesses testified that many aspects of the administration's training program were not fit for the Federal workplace, either in content or method of presentation. They argued that Federal employees should not have to suffer training programs that assail their fundamental religious and moral principles on pain of losing their jobs, as was the case with the administration's mandatory AIDS training program. According to OPM's figures, Federal agencies spend more than $1 billion on training. In light of the controversy generated by the administration's AIDS training, it is clear that closer oversight of employee training is necessary in order to assure that training is appropriate for the Federal workplace, both in content and method of presentation. Legislation has been proposed to protect Federal employees from improper training and to ensure that taxpayers' dollars are used only for appropriate workplace training. c. Hearings.--A hearing entitled ``Administration AIDS Training Program'' was held on June 22, 1995. 10. Privatization of OPM Training Responsibilities. a. Summary.--On May 16, 1995, the Office of Personnel Management and the U.S. Department of Agriculture Graduate School signed a memorandum of understanding (MOU) transferring OPM's Workforce Training Services, along with its office space, training obligations, and student lists, to the Graduate School, effective July 1, 1995. OPM separated 220 individuals from the agency, 134 of whom were extended offers of employment by the Graduate School. This transfer of functions moved a service from OPM's revolving fund to a ``non-appropriated fund instrumentality,'' a move that OPM Director James B. King described as a ``seamless transition'' enabling many former employees of the Workforce Training Services to retain employment while continuing arrangements through which Federal agencies could obtain training services without the burden of Federal procurement regulations. This initiative has been described among the ``privatization'' initiatives advanced through the National Performance Review. Yet, by retaining authority to work through interagency agreements, this transition strategy reduced the exposure of the training services to competition--a critical factor in improving quality and reducing prices. Witnesses testified that full privatization--including the possibility of a sale of assets to interested private bidders--might have resulted in greater funds for the Treasury while increasing competitive pressures for quality. Moreover, OPM retains responsibility for oversight of training, even though the transition does not provide explicit description of that role. b. Benefits.--More direct privatization of training activities could have resulted in substantial cost-savings to the government. However, concerns have been raised that OPM is choosing to compete unfairly with the private sector and closing off an area that would thrive if full competition were the result. Instead, the USDA Graduate School became eligible to receive annually more than $72 million of noncompetitive work funded by taxpayers, despite the fact that these training activities are commercial services readily available from private competitors. c. Hearings.--A hearing entitled ``OPM Privatization Initiatives Training'' was held on July 26, 1995. 11. Review of Civilian Health and Medical Program of the Uniformed Services (CHAMPUS). a. Summary.--Beneficiaries of the military health care system are eligible to receive medical care at military facilities. However, depending upon the level of demand and ready access to facilities, this care is not always assured. In 1995, 6.6 million non-active duty people are eligible for care through the military health care system. The deficiencies of the overall military health system, of which the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) is a part, are identified by a July 1995 Congressional Budget Office (CBO) study. In that study, CBO reported that a major complaint among beneficiaries is that their access to health care at military medical facilities is poor, and that CHAMPUS is not a satisfactory alternative because of its high out-of- pocket costs. CHAMPUS costs grew dramatically after the program's inception in 1966. Costs almost tripled from $1.2 billion in fiscal year 1984 to $3.18 billion in fiscal year 1990. Many of these costs were unanticipated and required supplemental appropriations or transfer authority. In 1983, in an attempt to put an end to the increasing costs of its health care system, and uneven access to health care services, the Department of Defense (DOD) began a managed care program, called TRICARE. TRICARE offers beneficiaries an alternative to the current CHAMPUS program. Beneficiaries are assigned a primary care physician to manage their care. In administering TRICARE, DOD has reorganized the military delivery system into 12 regions. TRICARE is scheduled to be implemented nationwide by May 1997. Four regional contracts have been awarded, all to the same civilian health care company, and all bid awards have been protested. However, while TRICARE is still in the early stages, some have suggested that it is unlikely to result in giving eligible military beneficiaries access to stable, high quality health care benefits, nor will it improve the efficiency of the military health care system. The Federal Employees Health Benefit Plan (FEHBP) provides voluntary health insurance coverage for over 9 million Federal Government employees, annuitants, and their dependents, and has long been considered the foremost health care plan in the country. The Federal Government and enrollees jointly pay for the cost, or premiums, of the FEHBP plans, according to a statutory formula. The Government's portion of each enrollee's premium is a fixed dollar amount equal to 60 percent of the average of the high option premiums for what are commonly known as the Big Six plans. The average premium contribution for both nonpostal and USPS employees and all annuitants was 72 percent in 1994, with the employees paying the remaining 28 percent. Federal employees and annuitants enroll voluntarily in FEHBP and may terminate their enrollment at any time. Employees are allowed to enroll in FEHBP or change from one plan to another during designated ``open season'' periods. In 1995, over 9 million individuals were covered: 2.3 million active employees, 1.8 million annuitants, and over 5 million dependents. Approximately 5 percent of enrollees change plans each year. b. Benefits.--The government could benefit from an overall reduction in the cost of medical services provided to military families and access to services could be greatly improved by moving to an FEHB type of program. However, the cost of transition to such an alternative delivery system could be high and disruptive of readiness requirements. Further study of this issue is required. c. Hearings.--A hearing entitled ``FEHB/CHAMPUS: Improving Access to Health Benefits for Military Families'' was held on September 12, 1995. 12. Review of Current Civil Service Reform Initiatives. a. Summary.--The Civil Service Reform Act of 1978 reorganized the Civil Service Commission by creating the Office of Personnel Management to perform policy, oversight, and service functions; adding the Merit Systems Protection Board to adjudicate personnel disputes; and formed an Office of Special Counsel to investigate personnel management issues. In addition, the 1978 law enacted measures intended to make government more performance-oriented and to achieve greater accountability. Vice President Gore's National Performance Review (NPR) of 1993 promised a Civil Service Reform program package that would be developed in conjunction with the President's Management Council. However, initiatives of NPR could rescind many of the Civil Service Reform Act's provisions. The administration's package considered a comprehensive range of changes, from hiring procedures through each phase of recruitment, retention, management, labor-management relations, dispute resolution procedures, termination, and Office of Personnel Management operations. Although this National Performance Review product was initially presented as a comprehensive package for civil service reform. The modifications included in the NPR package were never formally submitted as legislation, and generated limited support among five panels of witnesses. The committee continues to analyze such civil service reform proposals. b. Benefits.--Former OPM officials encouraged the subcommittee to approach civil service reform issues deliberatively, because the long-term effects of apparently sound proposals only surface after extensive experience. The normal constituencies share interests, especially increasing pay and benefits, in ways that do not easily surface in complex reviews of classification systems, performance evaluation systems, appeals procedures, and other details. c. Hearings.--A hearing entitled ``Civil Service Reform I: NPR and the Case for Reform'' was held on October 12, 1995. 13. Continuation of Civil Service Reform Review: Performance and Accountability. a. Summary.--Federal agencies experience difficulties linking the activities of their employees to results intended when laws are enacted and policies implemented. The Civil Service Reform Act of 1978 included provisions to improve Federal personnel management, among them the creation of the Senior Executive Service, the GM-13-15 management grades, and greater incentives to better improved performance of agency managers. Oversight agencies reported that these incentives faced sustained resistance among the managers, who contended that the system limited the number of bonuses available and exacerbated the morale problems associated with performance ratings. Abundant evidence points to the failure of performance management systems in Federal agencies. Most agencies use a five-step scale where managers are asked to rate subordinates as ``outstanding,'' ``exceeds fully successful,'' ``fully successful,'' ``minimally successful,'' and ``unsuccessful.'' The Office of Personnel Management's report of fiscal year 1993 ratings shows that 99.6 percent of Federal employees who received a rating were evaluated at least ``fully successful,'' and more than 73 percent were rated ``exceeds fully successful'' or ``outstanding.'' OPM recently issued regulations enabling agencies to replace these multi-step evaluations with ``pass-fail'' rating systems. Human resource professionals contend that performance management systems which focus on results or ratings concentrate attention on an end process and divert attention from earlier stages in the employee management process. Private sector consulting firms and corporations have testified before the subcommittee asserting a more comprehensive approach to personnel management can reduce the need for unsatisfactory ratings and/or firings to strengthen performance. The Hay Group, for example, encourages its clients to evaluate potential employees not only in terms of ``knowledge, skills, and abilities'' (factors identified on all Federal vacancy announcements), but also ``values, attitudes, and motives,'' factors that are seldom (if ever) incorporated in Federal hiring decisions. The 103d Congress repealed the Performance Management and Recognition System. With improved performance measures required by both the Chief Financial Officers Act of 1990 and the Government Performance and Results Act of 1993, Congress reaffirmed its commitment to pursue improved performance by attempting to shift attention to results rather than procedures. b. Benefits.--The Merit Systems Protection Board surveyed Federal managers and learned that although 78 percent reported managing a ``poor performer,'' only 23 percent of them initiated demotion or removal actions to address the problems. The hearing demonstrated that the challenges facing the Federal managers are identical to those in the private sector. The evaluation and management of poor performers must be linked to recruitment, hiring, promotion, and development activities if it is to be effective. This hearing provided additional material for deliberation related to civil service reform proposals. c. Hearings.--A hearing entitled ``Civil Service Reform II: NPR & the Case for Reform--Continuation'' was held on October 26, 1995. 14. Review of Federal Employee Appeals Procedures. a. Summary.--Federal employees have at their disposal many avenues through which they can appeal a variety of personnel actions. The U.S. Merit Systems Protection Board (MSPB), the independent quasi-judicial agency in the executive branch which has a statutory mandate to adjudicate appeals of personnel actions for the government and its employees, decided approximately 8,500 cases in fiscal year 1994. Other agencies involved in the Federal employment complaints process, include: the Federal Labor Relations Authority (FLRA), the Office of Special Counsel (OSC), and the Equal Employment Opportunity Commission (EEOC). In addition, there are multiple levels of reviews of actions within employing agencies, internal agency grievance procedures, and negotiated grievance procedures in collective bargaining agreements, as well as special agency procedures for resolving discrimination claims. The complicated, lengthy means of appeals available to Federal employees led witnesses to testify that the maze of multi-layer, multi-agency appeals processes deters managers from disciplining poor performers or initiating action in conduct cases. Due to the extraordinary amount of time and unknown expense involved in a lengthy appeal, both GAO and the National Academy of Public Administration have expressed the need for consolidating the appeals process and adjudicatory agencies. A recent Issue Paper published by the MSPB emphasized that ``[t]he wide choice of review paths available to employees serves to exacerbate'' the hesitancy of Federal managers to take appropriate action against poor performers. That Issue Paper concluded that the ``current multi-level, multi-agency process should be reexamined,'' observing that the Federal Government needs ``a system that ensures fairness, not one that deters appropriate actions from being taken.'' b. Benefits.--The committee heard extensive testimony that creating a simpler, more straightforward, less duplicative mechanism for resolving disputes in the Federal workplace could improve performance management in the executive branch. Some components of the current system, most notably the unnecessarily complex ``mixed case'' procedure, are simply inefficient and needlessly burden American taxpayers with unnecessary costs. Testimony before the subcommittee clearly demonstrated that there are several attractive alternatives for simplifying and consolidating the appeals process. Witnesses also recommended greater use of alternative dispute resolution methods, which will be the subject of a future subcommittee hearing. c. Hearings.--A hearing entitled ``Civil Service Reform IV: Streamlining Appeals Procedures'' was held on November 29, 1995. 15. Shutdowns of Federal Agencies Due to Lapses in Appropriations. a. Summary.--President Clinton vetoed a continuing appropriations resolution on November 13, 1996, resulting in the 10th shutdown of government due to a lapse in appropriations since 1981. The first shutdown lasted from November 14 to November 21, 1995. Subsequent vetoes resulted in another shutdown of agencies covered by six appropriations bills that had not been enacted, with the second shutdown extending from December 16, 1995, to January 6, 1996. The Office of Management and Budget documented that the administration had been coordinating planning for a potential shutdown beginning in August. Although all agencies were required to submit shutdown plans to OMB, committee staff found that the plans revealed little consistency in planning and an absence of standards in assessing agency plans. Although the initial reason for the shutdown was a lapse of appropriations and fear of violating the Antideficiency Act, the President proposed to modify shutdown guidelines after only a few days, arguing that the shutdown had fostered conditions that would meet the legal exception for ``emergency'' recall of selected Federal employees. After hearing testimony from nine senior agency officials, several committee members expressed concern that many of the employees whose work could qualify as ``emergency'' in only a few days, probably should not have been furloughed in the first place. The subcommittee also received testimony from 14 members who were proposing a variety of legislation to address disruptions caused by the shutdowns. b. Benefits.--The subcommittee's first hearing on the shutdown enabled members to identify functions that should not have been interrupted during the first shutdown. Those views were communicated to the President, and the designated functions remained open during the second shutdown, even though some of them still lacked appropriations. c. Hearings.--Hearings entitled ``Government Shutdown: What's Essential?'' and ``Government Shutdown II'' were held on December 6, 1995, and December 14, 1995. 16. Employee Benefits in the Context of Total Compensation. a. Summary.--Economic constraint is the primary factor that guides the level and design of compensation and benefit packages throughout the private sector. Some employment-based benefits, such as pensions, life insurance, and health insurance are provided voluntarily by employers. Employers and employees often jointly make payments to fund these voluntary employee benefit programs. Other benefits, including Social Security, Medicare, workers' compensation and unemployment insurance, are mandated by government. These mandatory programs are jointly funded by employers and employees, and provide retirement income and health care coverage for elderly and disabled workers and their dependents. Whether mandatory or voluntary, each of these programs is employment based and financed primarily through employer and employee payroll deductions. The government also promotes the granting of additional benefits through favorable treatment under the tax code. Compensation packages can be tailored to achieve the workforce goals of the employer while simultaneously accommodating the needs and preferences of workers. The integration of benefit policy, with both short and long range personnel planning, is essential in the private sector. Flexible benefits plans are growing in popularity in response to the changing demographics of the American population, and the dual income family. Within such arrangements, employees are permitted choices among benefits and/or benefit levels. Employees thus may exchange benefits that they consider less valuable for others better suited to their needs. The level of benefit provided can vary greatly, and tends to be directly related to the size of the business. According to the Employee Benefits Research Institute's Data Book on Employee Benefits, less than half of all small employers provide a retirement benefit for their workers. b. Benefits.--The Federal Government could benefit from a review of its compensation strategies to keep abreast of changing workforce demographics. As the population ages, as corporations face increasing competition in the global marketplace, and as the needs of their employees change, the private sector is adapting its human resource management strategies. As Congress seeks to better allocate available resources within realistic budget constraints, it makes sense to reevaluate our Federal personnel management strategies. c. Hearings.--A hearing entitled ``Civil Service Reform III: Private Sector Compensation Practices'' was held on October 31, 1995. 17. Medical Savings Accounts (MSA's) in the Federal Employees Health Benefits Plan. a. Summary.--A number of proposals have been introduced during the 104th Congress to allow individuals and families to establish tax-favored Medical Savings Accounts (MSA's) for uninsured medical expenses. An MSA can be viewed as a savings account for uninsured medical expenses. MSA's are primarily designed to encourage workers to be more cost conscious in how they spend their money on routine health care, and are also aimed at controlling employer costs. An MSA allows the employer to put aside a fixed amount of money into an account for each employee to pay for his or her own health expenses. In lieu of giving the employee first-dollar or low-deductible coverage, the employer puts cash into a medical savings account and insures or covers the employees' health care costs in full above the amount in the MSA--often referred to as catastrophic coverage. Whatever funds are not spent on health care can be withdrawn at the end of the year and used for any other purpose, or saved for future use. MSA's make economic sense for the employee because out-of- pocket spending can be substantially less with an MSA than under the traditional health plans, and employees can keep any money left in their account at the end of the year while still retaining major medical coverage. In effect, MSA's permit people to manage the spending of their own funds for non- catastrophic health care. b. Benefits.--In examining the utilization of MSA's in the private sector and at the local government level, witnesses testified that MSA's are an extremely attractive health care option for all ages, and that they have not experienced the ``adverse selection'' attributed to MSA's testimony also indicated that MSA's provided greater flexibility and freedom to choose doctors and services than do current plans. Witnesses also testified that with an MSA, an employee is less likely to neglect necessary or preventive care than with a traditional fee-for-service health care plan. Under conventional insurance, individuals receive no reimbursement until they have met the deductible. That places all the out-of-pocket spending on the first expenditures; expenditures that are most likely to cover preventive care. MSA's would actually provide a pool of money that could be used to pay for preventive care. c. Hearings.--A hearing entitled ``FEHB/MSA: Adding Medical Savings Accounts--Broadening Employee Options'' was held on December 13, 1995. 18. Veterans' Preference. a. Summary.--In general, veterans' preference laws give certain veterans preference in appointment to civilian employment with the Federal Government based upon their military service. The first such law was enacted in 1865. Until 1919, the hiring preference extended only to honorably discharged disabled veterans. In 1919, the preference was extended to nondisabled veterans, widows of veterans, and spouses of injured veterans. The statutory basis for today's veterans preference is the Veterans Preference Act of 1944, as subsequently amended. Under that act, veterans were to be given ``augmented scores'' of 5 or 10 points, (depending upon their status) in examinations for employment, and retention preference in the event of a reduction in force. The act also prohibited adverse actions against veterans without ``cause'' and required certain due process protection, such as notice and an opportunity to be heard, as well as appeals. The purpose of veterans preference has always been, as its name implies, to give veterans a legal leg up in acquiring and retaining civilian employment with the Federal Government. Federal employment statistics, however, draw into question whether this preference is having its intended effect. As recently as 1984, veterans representation in the Federal work force was nearly 38 percent. That number is now down to 28 percent. Veterans have borne a disproportionate brunt of the government's downsizing. The number of veterans in the work force declined at nearly seven times the rate of the overall work force. In part, this reflects the concentration of veterans in the very defense-related agencies that account for the vast majority of the recent downsizing. OPM's figures show that in September 1994, 47 percent of all veterans were employed in one of the three military departments. It may also reflect the greater average age of veterans, who have accounted for over 50 percent of all retirements from Federal civil service in the last 5 years. These figures also suggest that veterans are under represented in many Federal agencies and support the claims that we need to create additional opportunities for veterans. b. Benefits.--The subcommittee's investigation disclosed a number of problems with the current application of veterans' preference and laid the groundwork for the legislative remedies proposed in H.R. 3586. c. Hearings.--A hearing entitled ``Veterans' Preference: A New Endangered Species?'' was held on April 30, 1996. The subcommittee held a hearing to examine whether the employment preferences accorded veterans by law are being faithfully applied by the Federal Government and ways in which opportunities can be improved. The first panel consisted of Hon. Stephen E. Buyer, chairman of the Subcommittee on Education, Training, Employment, and Housing of the Committee on Veterans' Affairs, and Hon. Jon D. Fox. Among other issues, Chairman Buyer addressed the need to strengthen veterans' preference protections during reductions in force and to provide veterans with an effective redress system. In particular, he pointed to the escalating use of single-position competitive levels in RIFs as a threat to veterans' preference. He noted that it allowed managers to ``effectively dictate who will retain employment,'' and pointed to recent RIFs at the U.S. Geological Survey, GAO, and the Army's Audit Agency as examples. Chairman Buyer also stated that, ``There is simply no effective means by which a veteran may air a preference grievance, especially if the veteran is not hired.'' Establishing a redress system that provides a reasonable remedy for veterans is, he testified, a ``primary concern.'' Congressman Fox testified in support of H.R. 2510, his bill to extend veterans' preference to those who served in connection with Operations Desert Shield and Desert Storm. In his testimony, Congressman Fox pointed out that many reservists and National Guard members were ordered to active duty during the Persian Gulf War. Some were deployed to the theater of operations. Others were ordered to serve outside the theater. Those who served in the theater now qualify for veterans' preference. But those who served elsewhere do not, even though their contributions were also essential to the ultimate success of our military operations in the Persian Gulf. On the second panel were James Daub, John Davis, and John Fales. Mr. Daub, a reservist who was called to active duty to support Operations Desert Shield and Desert Storm. He pointed out that his unit was split into two groups, one of which was sent to the Desert and his group was sent to Rhein Mein Air Force Base in Germany. The group in Germany performed aircraft maintenance that could not be performed in the theater. This was a task that was critical to the success of our combat operations and a task they performed proudly and to the utmost of their abilities. Those who served in Southwest Asia are now entitled to veterans preference, whereas those such as Mr. Daub who were uprooted from their families and their Federal jobs enjoy no more job protections than ``the non-veteran who was home with his family watching the war on CNN.'' This is a matter of great concern to these veterans in this era of government downsizing, particularly those employed at the Department of Defense. Mr. Davis, a Vietnam veteran who was awarded the Distinguished Flying Cross, the Bronze Star, and multiple awards of the Air Medal, described his experience during a RIF at the Army Corps of Engineers. He testified that in March 1993, the Corps headquarters announced that it would conduct a 50-person RIF. Mr. Davis was placed in a single-position competitive level. Consequently, Mr. Davis was the only employee covered by the RIF who was actually downgraded. (None were separated as a result of the RIF.) Moreover, Mr. Davis was not permitted assignment rights to positions for which he appeared capable of performing, including one job almost identical to the position he held before the RIF. In contrast, however, Mr. Davis testified that prior to the RIF, management went to great lengths to place other individuals whose jobs were to be abolished into positions at their current grade levels. In some cases, the agency actually created positions for these other employees that did not exist prior to the RIF. Nevertheless, both the Merit Systems Protection Board and the United States Court of Appeals for the Federal Circuit upheld the agency's action. Mr. Fales is a decorated blinded Vietnam veteran who is a full-time Federal employee and president of the Blinded American Veterans Foundation. In his testimony, Mr. Fales emphasized the importance of recognizing the important service of the hundreds of thousands of American troops supporting America's military missions around the world. He pointed out that in the past 5 years the military has released 800,000 men and women from the armed forces, many of whom were not eligible for veterans' preference, which made their transition and pursuit of a Federal job much more difficult. Mr. Fales also testified that there are many in the Federal bureaucracy who actively seek to circumvent veterans' preference, and emphasized the need for improved remedies to deter future violations. The subcommittee also heard testimony from Ronald W. Drach, the national employment director for the Disabled Veterans of America, and Emil Naschinski, assistant director, National Economics Commission, of the American Legion. Both testified that the lack of an effective redress system is the key defect in current veterans' preference law. Mr. Drach stated that ``there has never been a meaningful appeal/ redress system available to an individual or a veterans service organization . . . if either thought veterans' preferences were being violated,'' and he contended that the Office of Personnel Management's ``less than aggressive enforcement of veterans' preference'' persuaded agencies they were free to ignore veterans' preference. Mr. Naschinski emphasized that, ``If Congress is serious about improving veterans' preference, it must provide a clear, independent and user friendly redress mechanism that can be utilized by veterans who believe their veterans' preference rights have been violated.'' Both witnesses also testified to the importance of strengthening protections for veterans during RIFs and warned of the potential erosion of veterans' preference through the proliferation of alternative personnel systems. 19. Soft Landings To Enhance Federal Downsizing? a. Summary.--Under the Federal Workforce Restructuring Act of 1994 and the Clinton administration's efforts to ``reinvent'' government, Federal agencies initiated efforts to reduce the Federal workforce by 272,900 positions by 1999. The Federal Workforce Restructuring Act authorized agencies to pay ``voluntary separation incentive payments,'' (buyouts) as a means of increasing attrition through voluntary separations rather than reductions-in-force. This buyout authority expired for nondefense agencies on March 31, 1995. The subcommittee conducted hearings on the buyout program on May 17, 1995, after which subcommittee Chairman Mica communicated four criteria for any future buyouts to Government Reform and Oversight Committee Chairman William F. Clinger, Jr. These criteria reflected a consensus of the General Accounting Office, the Congressional Budget Office, and two private consulting firms with extensive experience analyzing and managing corporate downsizing. They included a requirement that any future buyouts be implemented consistent with a strategic plan that describes the agency's operation after downsizing, that buyouts be done early in the fiscal year, that they be accomplished swiftly, and that they be a one-time event wherever they are used. Several agencies appear to have used previous buyout authority in ways that are inconsistent with workforce reduction objectives. The Environmental Protection Agency bought out 485 employees while reducing 97 positions. The Department of Education bought out 484 employees while reducing only 146 positions. The Department of Justice reported 835 buyouts while increasing staff by 7,536 employees. Several other agencies approached the subcommittee about renewed buyout authority, but few of them had done the planning necessary to prepare for their effective use. In light of the likelihood of additional workforce reduction, and in the absence of effective planning on the part of agencies, this hearing opened a series that would assess the future of the Federal workforce and review legislation proposed to ease the impact of reductions on Federal employees who would be affected by them. b. Benefits.--This investigation enabled the subcommittee to review proposed legislation to ease the process of workforce reductions for Federal agencies. It identified several measures that were subsequently incorporated into H.R. 3841, the Omnibus Civil Service Reform Act of 1996. c. Hearings.--The subcommittee conducted a hearing on proposed legislation, ``Downsizing/Soft-Landings, and Related Legislation,'' on May 8, 1996. Mr. Burton reaffirmed his commitment to reducing the size of government while recognizing Congress' obligation to ease the transition of current employees to positions in the private sector. He noted the difficulties imposed on such transitions by the lack of portability in current pension systems. Mr. Moran lamented the lack of planning with which both Federal agencies and Federal employees approached recent workforce reductions. Although buyouts were available, employees often took them without adequate preparation for retirement or a different occupation, and agencies often awarded them without adequate planning for future operations. Mr. Wolf emphasized the he and his cosponsors of H.R. 2751 had placed a priority on the avoidance of RIFs as Federal agencies reduce their workforces to implement either policy changes or budget reductions. He claimed that RIFs are disruptive, and asserted that Congress has a responsibility to make sure that reductions are achieved with as little disruption as possible. He sponsored the Federal Employee Separation Incentive and Reemployment Act to assist agencies in reducing workforces through attrition rather than RIFs. He observed that, regardless of congressional action, the legislation would have to be complemented with activities such as job fairs to assist Federal employees facing workforce reductions in finding new positions. He agreed with Mr. Mica that buyouts should be used only to avoid RIFs and save the government money, and observed that Federal agencies should be on notice that the Congress will follow their use of buyout authority closely. Mrs. Morella endorsed Mr. Wolf's bill and testified in support of complementary companion legislation that she introduced. H.R. 2826, the Early Retirement Incentive Act, would phase out the 2 percent per year reduction in annuities that Federal employees face if they retire before the age of 55. Under her bill, this reduction would be adjusted annually so that full pensions would be restored incrementally at age 55. She also recommended H.R. 2825, the Strategic Reemployment Training Act, for the subcommittee's consideration. This measure would foster partnerships with the private sector to facilitate placement of Federal employees who could no longer expect opportunities in other Federal agencies. The bill would allow Federal agencies to retrain their employees in ways that develop skills for private sector employment, a practice that is beyond the authority of Title 5. Mr. Hoyer claimed that Federal employees no longer face the long-term employment security experienced in previous years. He observed that the administration has beefed up priority placement programs, but was uncertain whether these programs would be adequate to serve the employees affected by reductions. He supported Mr. Wolf's initiatives in training and job fairs, and endorsed both of Mrs. Morella's bills. Although he acknowledged the cost of buyouts, he commented that ``a $25,000 payment up front may well be the cheapest incentive that the government can adopt.'' He conceded that he had not analyzed the fiscal note on any of the bills that he endorsed in this testimony. In response to questions, he commented that planning would be important to effective use of buyouts, but noted that abolished agencies such as the Bureau of Mines and the Interstate Commerce Commission were terminated through relatively quick appropriations actions. All Members supported provisions that would enable separated employees to extend their life and health insurance coverage. All Members also recognized that the workforce reduction targets are often arbitrary, and that the 5,500 nondefense workforce reductions proposed in the President's FY-1997 budget should be achievable through normal attrition. Mr. Moran observed that the workforce reductions to date have been done exactly the reverse of the way that they should have been done, by creating an arbitrary dollar reduction number and backing it into personnel conclusions. Mr. Moran also expressed his interest in developing a method of easing the transition to retirement. Mr. Shaw testified that the Senior Executives Association had ardently supported H.R. 2751. He noted that current reductions in the Federal workforce are targeted at middle and upper layers of agencies, and these are difficult cuts to achieve. He noted that public employees often face post- employment restrictions that impede their ability to use their professional skills in the private sector. He argued that the most effective means of placing Federal employees during agency reductions is to place the employees in other agencies. He reported that, rather than accept separated Bureau of Mines employees, other components of the Department of the Interior canceled vacancy announcements. Such actions would vitiate priority placement programs. Ms. Chandler reported that the National Federation of Federal Employees believes that voluntary separation incentives are important to assist Federal agencies in downsizing. Attrition rates are lower than any recent years, and she believes that RIFs would be necessary without the buyouts. Mr. Gable agreed with the criteria for new buyout authority outlined by the chairman at the start of the hearing. He contended that the phased reduction of the buyout amount authorized by Mr. Wolf's bill might accelerate voluntary separations, and ease requirements for subsequent reductions. The Federal Managers Association recommends that buyout authority in nondefense agencies be extended to the 1999 deadline for the Department of Defense. The testimony supported every benefit increase proposed in legislation under consideration by the subcommittee. 20. Workforce Reductions: RIFs v. Buyouts: A Cost-Benefit Comparison. a. Summary.--The subcommittee continued to monitor the administration's implementation of the buyout program authorized by the Federal Workforce Restructuring Act of 1994 and to assess the need for renewal of buyout authority, in light of recommendations from Members who had sponsored H.R. 2751. Although the administration was well on its way to meeting the 272,900 FTE workforce reduction required by the act, most reductions to date had come from downsizing at the Department of Defense rather than from efforts to ``Reinvent Government.'' The administration's FY-1997 budget recommended further Department of Defense downsizing--cutting 54,300 DOD positions--and eliminating a total of only 5,500 positions from nondefense agencies. This reduction in nondefense agencies is well within the scope of normal attrition, so these positions could be eliminated simply by exercising buyouts that were deferred from 1995. The President's budget showed that while downsizing discussions continued, the Departments of Justice, Labor, Health and Human Services, and Treasury planned staff increases during fiscal year 1997. Buyouts had cost the government $2.8 billion, and half of these expenditures went to employees eligible for full retirement benefits. GAO reported that better management of normal attrition could have enabled more cost-effective method of achieving workforce reductions. In addition to extensive use of buyouts, several agencies had used their authority to conduct ``reductions-in-force,'' (RIFs) in ways that caused concern about fair and equitable treatment of employees. As a result of provisions of the Legislative Branch Appropriations Act of 1995, GAO had secured authority to revise their RIF regulations, but the revisions that were promulgated provided no substantial changes from RIF rules governing other Federal agencies. b. Benefits.--This investigation revealed that the administration had allowed some agencies to use buyouts beyond the authority granted under the Federal Workforce Restructuring Act of 1994. It also demonstrated that, where an agency was granted extensive authority to revise RIF rules, those revisions were relatively minor, and did not jeopardize any of the protections that are often deemed burdensome in administering RIFs. The extensive use of single-person competitive levels used by the U.S. Geological Survey in conducting its RIF influenced the subcommittee's decision to include additional protection for veterans in the Veterans Employment Opportunities Act of 1996. c. Hearings.--The subcommittee conducted a hearing, ``Reinventing Downsizing or Downsizing the Reinvention,'' on May 23, 1996. Mrs. Morella recognized that previous buyouts did not necessarily achieve their intended results, and added that we must ``avoid another situation whereby agencies pay the same employees both separation incentives and retention, recruitment, or relocation bonuses.'' Mr. Bowling reported that, as of September 30, 1995, Federal agencies had paid buyouts to more than 112,000 employees, enabling the agencies to exceed the workforce reduction targets required by law. Buyouts accounted for 48 percent of those reductions, with RIFs accounting for an additional 6 percent. The balance was achieved through normal attrition--retirements, resignations, and other terminations. He observed, however, that these reductions have not consistently targeted the management positions identified in the National Performance Review. Instead, these positions have actually increased as a portion of the Federal workforce in some agencies, and the portion of supervisory personnel diminished only slightly, even though the administration had relied on questionable techniques, such as renaming supervisors as ``team leaders'' without actually altering responsibilities, to achieve these numbers. Although he saw no need for governmentwide buyout authority, he admitted that some agencies might have to reduce their workforces disproportionately and, in such cases, targeted authority might be appropriate. Mr. Koskinen contended that management of attrition through hiring freezes or similar measures might not provide agency managers the flexibility that they need to redesign their agencies during further workforce reductions. The administration submitted a proposed Federal Employment Reduction Assistance Act of 1996 that would authorize downsizing agencies to extend buyouts to employees at decreasing payment rates over a 4-year period. He expressed concern that, if distinct buyout legislation is approved for different agencies, differences between programs would result, and that some of these could be considered inequitable. He endorsed other ``soft landing'' measures, such as extending health and life insurance benefits for separated employees, but reported that the administration opposed measures, such as the so-called ``2 percent solution,'' that would exacerbate the financial problems of Federal retirement funds. Mr. King testified that buyouts had played an important role in enabling Federal agencies to reduce positions with minimal use of RIFs. He claimed that RIFs are much more disruptive of the morale and productivity of the workforce than voluntary reductions. He observed that future reduction requirements might result from budget reductions, and that renewed buyout authority could facilitate meeting future requirements. Mr. King denied that OPM had promoted radical changes in RIF policy during recent actions, and claimed that the portion of veterans among new hires had increased during the past 3 years. Mr. Koskinen conceded that the President's budget submission contains actual workforce levels from previous years, but only projections for future years, and added that the projections contained in the FY-1997 submission are at least 30,000 persons higher than actual employment levels will turn out to be. Mr. Bowling admitted that Federal personnel data are unreliable at times, in part because of difficulties in OPM's Central Personnel Data File. Mr. Bowling agreed that normal attrition should be sufficient to manage planned downsizing, but added that unanticipated budget reductions might justify some targeted buyouts at affected agencies. Mr. Mica questioned Mr. Koskinen about a Department of Energy legal opinion that was used to rationalize ``renewed'' buyout offers after the March 31, 1995, deadline enacted in the Federal Workforce Restructuring Act. Mr. Koskinen observed that the OMB General Counsel had reviewed the Department of Energy opinion, but had not issued its own opinion on the topic because OMB concluded that the DoE opinion was appropriate. Mr. Koskinen claimed that this authority was limited, and only agencies that had previously offered deferred buyouts could ``recycle'' those buyouts if they were not used. Mr. Moran emphasized that the Congress had never intended to give employees a second chance at buyouts, and chastised OMB because no effort had been made to contact the Congress before allowing the Department of Energy to ``reoffer unused buyouts.'' Mr. Moran observed that when information about such actions first surfaces in unofficial channels, it establishes expectations among Federal employees, with adverse consequences for normal attrition rates. He requested GAO to provide a legal opinion assessing the Department of Energy's views on the authority to extend buyouts after the March 31, 1995, statutory deadline. Mr. Koskinen argued that conditions had changed since his testimony a year ago that buyouts would not be necessary. The Workforce Restructuring Act reductions are being attained, but some agencies are facing constraints on their spending, and that is a different factor than previous conditions. He noted, for examples, that OPM, GSA, and NASA had absorbed reductions proportionately greater than the Department of Defense's 12 percent downsizing. Mr. Koskinen claimed that neither OMB nor the subcommittee would want to go through a period of guerilla warfare deciding on buyouts on an agency-by-agency basis through the appropriations process. Mr. King conceded that RIFs can be cheaper than buyouts where units are eliminated, but claimed that the buyout offers a ``more humane'' method of reducing the workforce. He claimed that, with ``bump and retreat'' rights, an average RIF affects 2.5 other employees. Mr. Luke reported that GAO experienced a 25 percent budget reduction, with 15 percent in FY-1996 and 10 percent in FY- 1997. To reduce these expenditures while continuing to meet its responsibilities, the agency had to reduce personnel beyond rates that could be achieved through attrition. GAO offered buyouts that were accepted by 393 employees, and closed regional offices, which eliminated another 170 positions. A hiring freeze first imposed in 1992 remains in effect. GAO secured legislative authority to issue RIF regulations that differed from executive branch agencies, but included no major revisions in them. They did allow employees to volunteer for RIF, but retained the tenure, veterans' preference, performance, and length of service factors in conducting RIFs. Veterans' employment at GAO reduced slightly, a change that Mr. Luke attributed to more veterans taking advantage of buyouts. Mr. Leahy recounted the extensive deliberations planning for the RIF at the U.S. Geological Survey's Geologic Division. He attributed the necessity of a RIF to a decade-long trend during which payroll required an increasing portion of agency appropriations. This high portion of the annual budget allocated to salaries was increasingly constraining the agency's ability to conduct quality scientific research. He claimed that the planning was based on programmatic needs, and submitted copies of extensive materials distributed to keep agency personnel informed of this planning. The Survey began briefing employees about RIF planning at its three regional centers in March 1995. He testified that the Survey's old RIF plans did not conform to either current OPM guidelines or the Merit System Protection Board's standards, so revision of RIF procedures was a necessary element of this RIF planning. Along with this RIF, the Geologic Division engaged in a major reorganization to adapt its mission to current statutory authorities and to achieve savings by reducing managerial layers. Mr. Leahy testified that the 250 people managerial staff was cut nearly in half in the new organization. He reported that only 9 veterans were separated of the 292 veterans on the Division's 2,192-member staff. Under questioning, neither Mr. Luke nor Mr. Leahy thought that their agencies needed additional buyout authority at this time. They also did not have any recommendations for statutory changes related to workforce downsizing. Under questioning from Mrs. Morella, Mr. Leahy reported that the RIF had generated 123 appeals to the Merit Systems Protection Board, and that the Office of Special Counsel was reviewing the actions. Mr. Leahy noted that Representatives Davis and Wolf had sponsored a job fair for affected employees in northern Virginia. USGS also placed 110 of its employees in other divisions or within the Department of the Interior. 21. Illegal Use of Buyouts. a. Summary.--As a result of evidence presented at its May 23, 1996 hearing, the Subcommittee on Civil Service requested the General Accounting Office to review a Department of Energy legal opinion that the administration had used to support the extension of buyout authority to several other agencies after the Federal Workforce Restructuring Act of 1994's deadline had expired. Although the Federal Workforce Restructuring Act provided authority to offer employees buyouts to ease the transition from the public sector, the administration had continued to offer buyouts after the March 31, 1995, deadline set by law. Documents submitted by OMB demonstrated that OMB Deputy Director for Management John A. Koskinen had approved the Department of Energy's plan to ``reoffer unused buyouts'' on October 4, 1995, even though the administration made no effort to inform the Congress of the decision until after it was publicized in a May 2, 1996, newspaper column. The Department of Commerce had offered a new--1 day--round of buyouts to some of its employees on the very day that the subcommittee had conducted its previous hearing. b. Benefits.--As a result of this oversight, the Office of Management and Budget directed Federal agencies to discontinue any further offers of buyouts to nondefense employees. These hearings also resulted in the development of legislative language to prevent repetition of the abuses revealed during these hearings. Buyout authority granted under the Omnibus Continuing Appropriations Act of 1996 prohibits employees from receiving buyouts if they have received a relocation bonus within the past 2 years, or if they received a retention bonus within the last year. The new buyout authority omitted any provision that might have allowed for deferred separation of employees who accept voluntary separation incentive payments. c. Hearings.--The subcommittee conducted a hearing, ``Reinventing Downsizing or Downsizing the Reinvention,'' on June 11, 1996. Mr. Mica commented, ``[The GAO opinion] means . . . that at midnight on March 31, 1995, the Federal buyout window closed for nondefense agencies. . . . That GAO opinion means that neither OMB nor anyone else in the executive branch has the authority to create an additional application window.'' The subcommittee chairman concluded, ``I will entertain no further discussion of new laws until the Clinton administration demonstrates its compliance with the old law.'' Mr. Moran observed that the issue is important because it sets a precedent in terms of the Federal workforce's expectations and the question of who writes the laws. He rejected the idea that this was an issue of conflicting legal opinion, because the language in the Workforce Restructuring Act is not even remotely ambiguous. Mr. Wray reported that the General Accounting Office had issued a legal opinion to the subcommittee on June 6, 1996, which concluded that the Department of Energy policy is inconsistent with the Federal Workforce Restructuring Act of 1994. GAO concluded that the clear language of the act and the fundamental logic and context of the statute lead to the conclusion that agencies could lawfully approve buyouts only until March 31, 1995. The Secretary of Energy's decision to extend buyout offers after that date was inconsistent with the statute. Mr. Koskinen admitted that, in spite of the administration's claims about reinvention, ``No one has tracked FTE declines for each of these [eliminated] activities, and there is no efficient way to obtain that information at this time.'' He reiterated that reductions in spending, rather than any reinvention effort, is the driving factor behind any further workforce reductions. In spite of the GAO opinion, he denied that any member of the administration was operating deliberately in contravention of the law. Mrs. Morella concurred with the General Accounting Office's legal opinion that the law restricted buyouts to end on March 31, 1995, and observed that this experience erects barriers to enacting soft-landing measures for other employees. Mr. Wray noted that the only practical corrective for the Congress would be to pass additional legislation. Mr. Mica explored options such as holding disbursing officers accountable for funds expended in violation of the law, but Mr. Wray did not view this remedy as effective. Mr. Moran argued that the consequence of the deficient legal opinion was to continue bad management practices, and Federal employees were subject to recurring rumors about new buyout opportunities. The fluctuations jeopardized the chance to bring stability to the workforce. Mr. Koskinen reported that OMB was in communication with agencies that have offered renewed buyouts, and had requested them to review their actions in light of the GAO opinion. Mr. Mica and Mr. Moran emphasized that the subcommittee had bipartisan agreement with the GAO opinion, a factor that OMB should consider in requesting further review by the agencies. Mr. King observed that OPM's recommendations had consistently supported the GAO opinion. 22. Civil Service Reform Proposals. a. Summary.--This oversight provided an opportunity to review issues related to preparation of the Omnibus Civil Service Reform Act of 1996 (H.R. 3841). This legislation drew from topics covered in hearings conducted by the subcommittee during October and November 1995 and legislation proposing soft landings for Federal employees which were the focus of a May 8, 1996, hearing by the subcommittee. The legislation incorporated provisions that reflected concerns widely shared among Members and addressed pressing needs of a public service oriented toward workforce reductions rather than expansion of agencies' responsibilities and workforces. b. Benefits.--This hearing provided an opportunity for extensive discussion of issues related to H.R. 3841, and assisted in the modification of provisions necessary to secure House passage. c. Hearings.--The subcommittee conducted a hearing on the Omnibus Civil Service Reform Act of 1996 on July 16, 1996. Mr. Mica observed, ``Just as the private sector has adjusted to accommodate people changing career patterns, the Federal workplace must adapt to accommodate new technologies, changing agency missions, and eliminate old functions and assume new roles that are so necessary in our dynamic and fluid Federal workplace.'' Mr. Mica added, ``Throughout the past year, I have been struck by the challenges that Federal agencies face relating to managing poor performers. . . . We have heard from many witnesses that the current Federal service provides very limited incentives to our best employees while erecting enormous hurdles when it comes to improving or removing problem employees.'' The draft legislation included provisions to strengthen performance management, to streamline the Federal appeals processes, to expand benefits available through the Federal Retirement Board's Thrift Savings Plan, to provide soft-landings for Federal employees facing workforce reductions and to provide agencies flexibility in reorganizing, and several miscellaneous provisions to address technical and administrative problems in administering the Federal civil service. Mr. Bowling reaffirmed testimony presented by GAO during November 1995. That testimony described the appeals processes available to Federal employees as ``inefficient, expensive, and time consuming.'' He urged congressional action that would reduce the inefficiencies in the system, shorten the time involved, and save money. He contended that reforms needed to sustain two fundamental principles: fair treatment for Federal employees and efficient management of Federal agencies. He recommended measures to eliminate the mixed cases (where employees can appeal prohibited personnel practices to more than one agency), movement toward a private sector model for addressing employees' discrimination complaints, and increased use of alternative dispute resolution (ADR). He reported that, in FY-1994, agencies spent almost $34 million investigating discrimination complaints, and awarded more than $7 million in complainants' legal fees and discrimination settlements. Bowling noted, ``The redress system's protracted processes and requirements can divert Federal managers from more productive activities and inhibit some of them from taking legitimate actions in response to performance or conduct problems.'' He noted that Federal employees file six times the per capita rate of complaints as private sector employees, and that only 18 percent of Federal filings are related to terminations, where 47 percent of private sector discrimination complaints result from terminations. Bowling reported that the Merit Systems Protection Board and the Equal Employment Opportunity Commission rarely differ in their findings, but employees have little to lose by having both agencies review the issue. Eliminating mixed cases would eliminate both the jurisdictional overlap and the inefficiency that accompanies it. He cautioned, however, that the modification of procedures would require the EEOC to learn new approaches to its work. Mr. Heuerman thanked the subcommittee for incorporating several of the administration's recommendations in the consensus package. He welcomed expanded authority for demonstration projects, but the administration opposed allowing demonstration projects to modify leave and benefit programs. Although he welcomed the bill's inclusion of alternative dispute resolution provisions, he recommended thorough assessment of provisions consolidating appeals processes. The administration recognized the bill's interest in strengthening performance credit in developing RIF retention registers, but argued that this objective could be accomplished through regulation rather than statute. Mr. Mehle observed that the bill would make important improvements to the Thrift Savings Plan provisions of the Federal Employees Retirement System Act (FERSA). FERSA authorized the creation of three investment funds, and allowed Congress to authorize additional investment vehicles. This bill would create two additional funds: one a small capitalization fund and the other an international stock index fund. The Board had previously recommended both to the Congress, and could implement them within 2 years. The Board also supported allowing new Federal employees to begin contributing to their accounts immediately and the elimination of restrictions on withdrawals and borrowing from employees' accounts. Mr. Moyer thanked the subcommittee for the provisions that he saw as beneficial to members, especially expansion of the Thrift Savings Plan, provisions to assist agencies in reorganization, and soft landings for employees affected by workforce reductions. FMA supported provisions to extend liability insurance coverage to Federal employees acting in the line of duty. He advocated limiting demonstration projects to 10 percent of the Federal workforce. Rather than retain EEOC jurisdiction, FMA supports consolidating Federal appeals through the MSPB, with appeal to the Federal Circuit. He opposed linking performance management and RIF retention criteria. Ms. Olsen welcomed the expansion of agencies' transition programs for Federal employees affected by downsizing. She opposed, however, giving employees additional credit in RIF processes for outstanding service. She also appreciated the liability insurance protection afforded to Federal managers under this bill, and supported to strengthened monitoring and reporting requirements directed toward Federal training. Mr. Sanders testified that the bill represents an important step in the right direction, and expressed strong support for swift passage. He commented that the bill addresses many of the critical needs for reform--especially of the appeals procedures--but questioned the benefits that might be derived from additional demonstration projects. Rather than a single solution to civil service problems, he argued that more particularized, tailored answers to limited questions are the most likely vehicle of future progress in managing Federal employees. He recommended consideration of reforms instituted in Australia and New Zealand, and also mentioned the private sector's cafeteria compensation plans as an appropriate model for future comparison. He strongly supported the bill's 90-day alternative dispute resolution provisions. Mr. Divine thanked the subcommittee for including the soft landing provisions that would benefit employees separated during agency workforce reductions. He would limit demonstration projects, however, to agencies with partnership agreements. Federal unions, in general, favored a 10 percent cap on the number of employees who could be involved in a demonstration project. They also opposed increasing the credit given performance during a RIF, contending that employees could be adversely affected by being under different rating systems. Mr. Donnellan expressed strong reservations about demonstration projects developed without the participation of employees' unions, and argued for retention of current appeals processes. Mr. Tobias expressed general support of the bill, but expressed reservations about the breadth of potential demonstration projects. Mr. Roth commented that several provisions in the bill do not have the support of employees represented by Federal employees' unions. He expressed concerns about waiver provisions related to demonstration projects. He asserted that Federal employee unions favor removing employees who do not perform their jobs, and contended that a ``two-tiered'' system (pass/fail) would enable agencies to remove those who fail. He also objected to including the increased rewards for outstanding performance in statute. 23. Review of the Federal Employees Health Benefit (FEHB) Program. a. Summary.--The FEHB program is the largest employer- sponsored health insurance system in the country. In 1996, the $16 billion FEHB program will insure more than 9 million Federal employees, retirees, and their dependents. Partial portability, no preexisting conditions limitation, and an annual open enrollment period are facets of the FEHB program that make it an extremely attractive health care system. The program is administered by only 134 employees, and it serves more than 9 million enrollees. Over the past 2 years, a number of FEHB-related issues have arisen. Some effect the coverage and benefits provided to Federal employees, others affect the costs borne by employees and the government. In January 1, 1996, Blue Cross & Blue Shield (BCBS) changed their prescription drug benefit setting off a round of intensive lobbying by the National Association of Retail Druggists (NARD), the National Association of Chain Store Druggists (NACSD), the American Pharmaceutical Association (APHA), and by individual druggists and large chain stores. BCBS for 1996 stopped waiving the 20 percent co-pay on prescriptions purchased at preferred (network) pharmacies for those retirees who also have Medicare Part B coverage. All other BCBS standard contract holders have always been responsible for paying the 20 percent co-pay and, accordingly, are not affected by the 1996 benefit change. The benefit change is expected to save $200 million in 1996. OPM has stated that without the benefit change all 1996 monthly premiums for BCBS Standard Option enrollees would have increased by $5.42/month for self enrollments and $12.03/month for family enrollments. The pharmacists maintain that the benefit change is unfair, because the co-pay is still waived for prescriptions obtained through the mail order program. They see the benefit design as unfairly steering customers away from the community drug stores. Since the FEHB program is a government health care program, the pharmacists have sought to have Congress overturn this benefit decision by BCBS. Many stores posted signs telling all retirees that there is a new co-pay requirement and asking them to sign petitions to Congress and OPM. The controversy is really about the economic consequences of retail store versus mail order prescription drug sales. The pharmacists apparently hope to achieve a result similar to what happened in Maryland when the State rescinded a prescription drug contract in the wake of organized protests from Maryland druggists. (The Federal Trade Commission and the Maryland Attorney General are now investigating the possibility that the organized campaign constitutes an antitrust violation). Senators Pryor and Cohen, and Representatives Moran and Gilman, requested a GAO review of the prescription drug program. That request was narrowly drawn and could have elicited a skewed response. Subcommittee Chairman Mica requested the GAO conduct a more comprehensive and objective analysis of the prescription drug program in the FEHB and provide some external comparison with private sector programs. The external review will provide a better base of information to make a more informed judgement on the issue. During the 104th Congress, a number of bills have been introduced either mandating that health insurance carriers provide coverage for certain benefits or that they provide direct reimbursement for certain health care providers. H.R. 1057, introduced by Representative Ben Gilman (R-NY), would provide for hearing care services by audiologists to Federal civilian employees. H.R. 2009, introduced by Representative Lynn Woolsey (D-CA), would include medical foods as a specific item for which coverage may be provided under the FEHB program; and H.R. 3292, introduced by Representative Maurice Hinchey (D-NY), would provide for coverage of qualified acupuncturists services under the FEHB program. b. Benefits.--The FEHB program is often cited as a model of efficiency and effectiveness that other public and private groups should seek to replicate. The free-enterprise-based FEHB program has effectively contained costs through private sector companies, with limited governmental intervention. The investigation reinforced the importance of the private sector competition that exists in the FEHB program, and that legislative efforts to mandate benefit levels would undermine the ability of health benefit carriers to contain costs. Any additional benefit mandates serve to increase the overall costs of the FEHB program, both to the government and the individual employee. c. Hearings.--A hearing entitled, ``FEHB Program Review and Oversight'' was held on September 5, 1996. The first panel was dedicated to examining the controversy involving the prescription drug benefit for FEHB Blue Cross and Blue Shield enrollees who also have Medicare. The panel consisted of GAO, Blue Cross and Blue Shield Association, Merck-Medco, and the National Association of Chain Drug Stores and the National Association of Retail Druggists. GAO testified that BCBS made the benefit change to try to control an average annual 21-percent increase in its Federal health plan's drug costs. In early 1996, the volume of prescription the mail order pharmacy received was much greater and occurred more quickly than anticipated. As a result, Medco could not meet its customer-service performance measure for prompt dispensing and delivery of prescriptions to enrollees for several weeks during the benefit change's implementation. NACDS and other critics of the benefit change are concerned about its economic impact on retail pharmacies. The second panel consisted of advocates for mandating that health insurance carriers provide coverage for certain benefits or that they provide direct reimbursement for certain health care providers. The American Academy of Audiology, the International Hearing Society, and the American Academy of Otolaryngology--Head and Neck Surgery, commented on legislation introduced by Representative Ben Gilman (R-NY) to mandate that audiologists be given reimbursement by FEHB carriers. The audiologists support the legislation, while both the Hearing Society and the Otolaryngologists were strenuously opposed. A professor from Florida International University testified on behalf of legislation that would add medical foods as an item for which coverage may be provided. The American Association of Pastoral Counselors testified regarding the possible direct reimbursement of their members by carriers. The issue of mental health parity was discussed by the American Psychiatric Association. The National Acupuncture Foundation testified on legislation proposing to mandate coverage of qualified acupuncture services. An OPM official testified for the Clinton administration that the FEHB program is flexible enough to address coverage for those services and supplies and that mandating them ``is contrary to the program's guiding philosophy of allowing flexibility for plans to respond to changing health care practices and individual enrollee needs.'' Regarding the prescription drug issue, OPM said that high percentages of enrollees in fee-for-service plans are satisfied with the mail- order drug program. 24. Taxpayer Subsidy of Federal Unions. a. Summary.--According to OPM data, as of September 1995, approximately 54 percent of the Federal workforce was unionized, encompassing some 1,0157,017 employees. Although most Federal employees are ostensibly represented by a union, it is widely acknowledged that union membership among Federal employees is quite low. Data from 1994 show that 19.3 percent of Federal employees belong to a union. (Hirsch and McPherson, Union Membership and Earnings Data Book 1994.) The subcommittee has been investigating the extent to which taxpayers are forced to subsidize the activities of Federal employee unions. Federal employee unions receive substantial taxpayer subsidies. These come in the form of ``official time,'' i.e., time on the payroll, for performing union representational work and even lobbying Congress and the executive branch. In addition, unions benefit from taxpayer funds in other ways as well. Agencies often furnish the unions that represent their employees with office space, office equipment, meeting rooms, and the use of such agency facilities as e-mail and other communication tools. In addition, the Clinton administration has decided as a matter of policy to release the home addresses of employees in bargaining units to the unions representing those units. This has been a long-sought goal of Federal employee unions. Although ostensibly sought for the purposes of assisting unions' in discharging their duties as exclusive representatives, possession of these home addresses provides unions with invaluable mailing lists they can use for organizing and political activity. b. Benefits.--The subcommittee's investigation has revealed that substantial sums of taxpayer moneys are consumed to finance the activities of Federal unions. However, further investigation is necessary to adequately quantify the amount of the subsidy Federal unions receive from taxpayers. c. Hearings.--A hearing entitled ``Taxpayer Subsidies of Federal Unions'' was held on September 11, 1996 In connection with its investigation, the subcommittee held a hearing and has requested a GAO study of the use of official time. The first panel at the hearing consisted of Sally Katzen, Administrator of the Office of Information and Regulatory Affairs of OMB, and Hon. Lorraine Green, Deputy Director of OPM. These witnesses focused primarily on the administration's decision to release home addresses to Federal unions. Both witnesses contended the decision to release home addresses was made after President Clinton shut much of the Government down as a result of his disagreement with congressional budget proposals and was justified by the ``confusion'' those shutdowns engendered among Government employees. However, they also conceded that OMB began examining options for complying with union requests for these addresses, at the request of Vice President Gore months before the first shutdown. They also conceded that despite these months of planning, there were no written safeguards to protect employees from further invasions of their privacy as a result of secondary disclosures. The second panel consisted of Timothy Bowling of the General Accounting Office (GAO), Michael P. Dolan, Deputy Commissioner of the Internal Revenue Service (IRS), and Robert Tobias, national president of the National Treasury Employees Union. Based upon GAO's analysis of the use of official time at the Social Security Administration and three other entities (the Postal Service, Department of Veterans Affairs, the IRS), Mr. Bowling testified there is insufficient data to estimate the amount or cost of official time government wide. He testified that these agencies either had no system for accounting for the use of official time or their systems had substantial limitations. Nevertheless, it is clear that these expenditures are substantial. GAO estimated that in calendar year 1995, the Social Security Administration alone spent about $11.4 million on an estimated 413,000 hours of official time. Both Deputy Commissioner Dolan and Mr. Tobias generally testified that the use of official time contributes to efficiency in the workplace and effective union-management relations. In addition, Deputy Commissioner Dolan also testified that the IRS has been required by the Federal Labor Relations Authority to release home addresses to the union since September 1995. 25. Review of Federal Firefighters Pay and Benefits. a. Summary.--The Federal Government employs approximately 10,000 Federal structural firefighters. Structural firefighters fight fires in buildings, on airfields, and 94 percent are employed by the Department of Defense. Structural firefighters are also employed by the Veterans Administration, Coast Guard, Department of Interior, National Institutes of Health, and National Aeronautics and Space Administration. Wildland firefighters fight grass and forest fires and are employed by the Department of Interior and the Department of Agriculture. The subcommittee's investigation examined only the compensation package for Federal structural firefighters. The agency head establishes the work schedule or regular tour of duty for firefighters. The most common work schedule or tours of duty for these firefighters are 40 hours, 56 hours, and 72 hours per week. For the most part the 40 and 56 hour tours of duty are for supervisory positions. Generally, 8 hours of actual work, 8 hours of standby duty, and 8 hours of sleep time comprise each 24 hours of the 72-hour work schedule. Three shifts are worked on a weekly basis for a total of 72 hours. Six shifts are worked on a biweekly basis for a total of 144 hours. Pay for firefighters consists of base General Schedule pay, including locality-based comparability payments, premium pay for standby duty, and the Fair Labor Standards Act (FLSA) overtime. Standby duty premium pay is in lieu of Title 5 overtime pay for regularly scheduled overtime. The regular tour of duty determines the amount of standby duty premium pay a firefighter receives. Firefighters who work a 72-hour tour of duty receive 25 percent standby duty premium pay. Firefighters on these shifts receive 125 percent of base pay not to exceed 125 percent of GS-10, step 1. Firefighters who work a 56-hour tour of duty receive 15 percent premium pay for standby duty. Firefighters on these shifts receive 115 percent of base pay not to exceed 115 percent of GS-10, step 1. Firefighters who work a 40-hour tour of duty do not receive this premium pay. Firefighters on a 72-hour tour of duty receive an additional pay adjustment for 19 hours of ``overtime.'' The ``overtime'' rate is computed according to the formula: (basic pay + 25% premium) Overtime Rate = --------------------------------------------------------- x 0.5 72 hours Firefighters on a 56-hour tour of duty receive a pay adjustment for three hours of ``overtime.'' The ``overtime'' rate is calculated as follows: (basic pay + 25% premium) Overtime Rate = --------------------------------------------------------- x 0.5 56 hours For overtime hours beyond the regular work schedule (72 or 56), the ``overtime'' rate is computed as follows: (basic pay + 25% premium) Overtime Rate = --------------------------------------------------------- x 1.5 (72 or 56 hours) Overtime rates are capped at GS-10, step 1. Nearly 80 percent of firefighters are in grades GS-5 through GS-7 of the General Schedule. A fire chief's grade may range from GS-7 through GS-13 depending on the duties and responsibilities of the position. Firefighters, like law enforcement officers, have special retirement provisions in the Federal retirement system. Firefighters may retire voluntarily at an early age with a special annuity computation if they are at least age 50 at the time of retirement and have 20 years of service. Firefighters are subject to mandatory separation at age 55. Firefighters pay an extra one-half percent of salary into the retirement system and in return they receive a higher accrual rate than other employees of the executive branch. The ``normal cost'' of retirement is the cost of the retirement benefit expressed as a percentage of payroll. The ``normal cost'' is 40 percent for firefighters, compared to the average 25.14 percent for all employees of the Federal Government enrolled in the Civil Service Retirement System (CSRS). The ``normal cost'' for firefighters enrolled in the Federal Employees Retirement System (FERS) is 25.6 percent, as opposed to the average 12.3 percent for all employees in FERS. Under current law, DOD is prohibited from contracting out the Federal firefighter function. Funds appropriated to the Department of Defense may not be obligated or expended for the purpose of entering into a contract for the performance of firefighting or security guard functions at any military installation or facility. Federal structural firefighters and their unions have been critical of the firefighter pay system for more than 20 years. Legislation has been introduced to reform the pay system for firefighters since the 86th Congress in 1959. While three hearings were held on the issue over the years, only in 1978 did any legislation move through the House and Senate. In 1978, President Jimmy Carter vetoed legislation to ``substantially reduce the workweek of Federal firefighters while maintaining their pay at nearly the present rate.'' In his veto measure, President Carter outlined three principal objections to the bill. First, the bill would reduce firefighters' workweek without reducing the premium pay which was designed for a longer standby schedule. Second, the bill would impair the ability of agency heads to manage the work force and regulate the workweek. Third, the bill would require DOD alone to hire 4,600 additional employees, at an annual cost of $46.7 million just to maintain existing fire protection. In the 104th Congress one proposal was introduced in the House of Representatives to amend the pay system for Federal structural firefighters. Representative Steny Hoyer (D-MD) introduced H.R. 858, the Firefighters Pay Fairness Act of 1995. The bill would pay firefighters the full General Schedule hourly rate for all non-overtime duty hours, including standby and sleep time. In addition, the FLSA overtime rate would be 1\1/2\ times the hourly rate of basic pay. Under the bill firefighters annual base pay would be calculated on up to 106 hours of work biweekly and overtime would be paid at the rate of 1.5 times the hourly rate of pay for hours above 106. The bill would cap the overtime at the GS- 10, step 1 hourly rate. The new hourly and overtime rates of pay would be phased in. A draft document from the Department of Defense indicated that the legislation would provide a minimum of 44 percent pay increase for a firefighter working a 72-hour schedule. The Congressional Budget Office prepared a preliminary cost estimate and projected that the bill would cost more than $61 million in the first year, and more than $723 million over 5 years. b. Benefits.--The investigation revealed that the current pay system for Federal firefighters is complex and somewhat confusing. Nevertheless, it attempts to compensate for some of the demands and hardships of the occupation. It is fair to say that complex systems sometimes produce inequities. An examination of pay for Federal and municipal firefighters shows that in certain localities total compensation for Federal firefighters may be higher than their municipal counterparts. Employing agencies have refuted the claim that a recruitment and retention problem for Federal firefighters exists. It may be necessary to simplify the pay structure, while simultaneously addressing concerns over the current 72-hour tour of duty, of Federal firefighters. Enactment of H.R. 858 is opposed by the government's central personnel agency OPM, and the individual agencies employing firefighters. The bill is prohibitively expensive and may have a number of unintended consequences. The investigation found a legitimate need for pay simplification. However, justification for an across-the-board pay increase, similar to that contained in H.R. 858, does not exist. The subcommittee chairman has asked OPM and DOD, in cooperation with the unions representing Federal firefighters, to present a thoughtful, cost effective, comprehensive pay simplification proposal. c. Hearings.--A hearing entitled, ``Firefighter Pay and Benefits'' was held on September 17, 1996. The first panel consisted of two officials of the International Association of Fire Fighters; one from the National office and one from a local in San Francisco. Representatives from the OPM and the DOD made up the second panel. The hearing revealed disagreement between the National office of the IAFF and the OPM and DOD with regard to the pay gap between Federal firefighters and other Federal employees and the recruitment and retention issue. Brook Beesley, representative of IAFF's Local F-15 and F-259, said that the entry level pay gap for Federal firefighters in Northern California measured 67 percent in 1995. The IAFF National office testified that ``the pay rate of other Federal workers currently is 44 percent higher than the pay of a Federal firefighter at the exact same grade and step.'' The IAFF testified that ``. . . municipal fire fighters earn an astounding 86 percent more per hour than their Federal counterparts.'' Regarding recruitment and retention the IAFF testified that ``Turnover rates have been as high as 33 percent in recent years, with agencies finding it nearly impossible to retain entry-level firefighters. Reliable data show that the Federal fire service has a turnover rate twelve times higher than the industry norm.'' At the request of the subcommittee the Congressional Research Service examined the testimony presented at the hearing to resolve several inconsistent statistics cited by witnesses. The IAFF National office did not respond to the CRS request for documentation of its calculations. Data presented by CRS and hearing witnesses refuted the turnover claims and the claims of significant underpayment of Federal firefighters. 26. Drug Testing Policies in the White House. a. Summary.--In 1986, President Ronald Reagan issued Executive Order 12564 directing Federal agencies to institute drug free workplace policies. Congress enacted legislation that slowed the implementation of this Executive order in the course of providing a statutory foundation for these drug free workplace programs in all Federal agencies. All Federal employees are subject to pre-employment screening for use of illegal drugs, and employees in national security, safety- related, or otherwise sensitive positions (commonly called ``testing-designated positions'' or TDPs) are also subject to periodic random drug testing programs administered by their agencies. Nearly 40 percent of the Federal workforce is included in such TDPs. In spite of the White House's reassurances that it treated national security concerns related to the use of illegal drugs seriously, the General Accounting Office had reported extensive delays in the submission of the forms needed to initiate background investigations of new employees at the start of the Clinton administration. Previous Senate hearings, as well as hearings and Government Reform and Oversight Committee depositions related to the firing of White House Travel Office personnel had revealed not only that the White House operated a ``special drug testing'' program for employees whom the Secret Service considered potential threats to the President, the Vice President, and the White House complex, but that the White House's Director of Personnel Security was one of the employees who had admitted previous use of illegal drugs during his own background investigation. The placement of a person with a history of previous drug use in such a sensitive position occasioned concern about the adequacy of the White House's drug free workplace program. b. Benefits.--This investigation provided an opportunity to assess whether the institution of a ``special testing'' program for the Executive Office of the President resulted in any compromise of the personnel or physical security of the White House, and allowed the subcommittee to assess the adequacy of current testing standards and monitoring procedures. It also enabled a comparison between the hiring and testing practices of key agencies--the Department of Defense, the Secret Service, and the Federal Bureau of Investigation--and the looser procedures in place at the White House. c. Hearings.--A hearing entitled, ``Drug Testing Policy: White House Standards,'' was conducted on September 20, 1996. Subcommittee Chairman Mica convened the hearing to reassure the American people that abuses identified in previous hearings did not compromise our country's national security interests, to confirm that the White House has instituted effective corrective measures, and to assess whether legislation might be necessary to correct any of these problems. Mr. Mica noted that the reports of illegal drug use by White House employees included recent use, and more serious hallucinogens than would be included in the experimental use of marijuana during college years. In a letter to Senator Richard Shelby, former White House Director of Administration Patsy Thomasson acknowledged that as many as 21 White House employees had participated in the ``special testing program.'' Mr. Mica denounced the Clinton administration's partisan efforts to divert attention from these concerns, and expressed his hope that the White House would assist efforts to resolve these concerns. Mr. Kanjorski reported that two White House employees had tested positive in random drug tests, and that both were career employees who were terminated as a result of these tests. He asserted that White House personnel during the Clinton administration have remained drug free, and he saw no reason to believe that this would change. Mr. Burton noted that much of the American people's concern on this topic is derived from the example established by the White House. The President's flippant perspective on his ``I didn't inhale'' remarks and the loose handling of FBI background checks for senior employees caused legitimate concern that this administration was setting a poor example that was resulting in a more relaxed approach to matters of serious concern. Mr. Nelson reported that the Security Policy Board was working under the National Security Council and the Department of Defense to implement President Clinton's Executive Order 12968, which had directed the development of common adjudication guidelines for determining eligibility for access to classified information. These new guidelines were not completed, but would be submitted after approval. Ms. Vezeris testified that the Secret Service maintains strict standards for the selection of applicants for employment and for ensuring that employees continue drug free during their careers. The Service can continue employees who come forward voluntarily and work through an employee assistance program to resolve drug use problems, but even in such cases, there is no bar against disciplinary procedures, up to the level of dismissal. She emphasized under questioning that the Service can be very selective because they have thousands of applicants for relatively few positions. Mr. Reeder described the White House's drug free workplace program, and claimed that it had been the subject of regular reports to the Congress. He noted that all White House employees must pass pre-employment drug tests, that they are in TDPs throughout their employment, and that no administration employee has tested positive. Records of these tests are now maintained by career employees of the Office of Administration's Human Resource Division. He claimed that the White House has never overruled the Secret Service on questions of issuing a White House pass to an employee. He acknowledged that 11 individuals began in the ``special testing program'' in the spring of 1994. Under the terms of this program, these employees are subject to random testing at least twice per year, and can be included in other tests as well. Twenty-one employees out of more than 3,000 have been involved in the ``special testing program'' during the administration, at a cost of $1,500. Current enrollment in the program is eight. Mr. Reeder, in response to questions, reported that the modification of security policy under consideration in the administration would restrict access to classified information among employees who hold the blue White House passes. These employees had previously been deemed eligible for access to all classified information. In response to questions from Chairman Clinger, Mr. Reeder acknowledged that employees could be in the White House for up to 180 days without having a background investigation completed. Similarly, contractors and consultants, who serve the White House but remain on private payrolls, are not subject to either the drug testing or the background investigation requirements that affect full-time employees. Mr. Reeder reaffirmed that the White House supports language in the Presidential and Executive Office Accountability Act that would clarify the status of special government employees. Chairman Clinger emphasized that the ``special testing program'' was developed to address drug use that applicants admitted having occurred in the past 1 to 2 years, not experimental use during college. He stressed the importance of resolving these concerns and implementing effective policies in these areas. 27. Effects of Privatizing OPM Investigations. a. Summary.--In April 1996, the Office of Personnel Management signed a sole source contract with U.S. Investigations Services, Inc., (USIS) that authorized the new company to conduct background investigations for Federal employees. USIS was incorporated in Butler County, PA, as an employee-owned corporation whose primary stockholders were to be the personnel who had performed these functions as Federal employees in OPM's Office of Federal Investigations. The concept of privatizing Federal functions by coverting them to employee ownership had been advanced by then-OPM Director Constance Horner in 1987. Current OPM Director James B. King embraced the concept when the President proposed to privatize this function as part of the National Performance Review initiatives recommended in his FY-1995 budget. The subcommittee conducted oversight hearings of this proposal in June 1995, and learned that the administration had not developed an adequate cost analysis of the proposal. The General Accounting Office conducted intensive review of the proposal, and had issued letter reports raising questions about the financial plan of the new corporation, the adequacy of its protections for records subject to the Privacy Act, and whether the privatized employees would have effective access to the Federal, State, and local law enforcement records needed to complete these investigations. b. Benefits.--This oversight was conducted in Butler, PA, which serves as the corporate headquarters for USIS and is the site of the OPM records management center. It provided an opportunity for the community most directly affected by this transition to learn the plans of both OPM and USIS for continued operation and development of new business opportunities. This development would provide substantial benefits to the community, where the firm is one of the largest employers in the northern section of Butler County. c. Hearings.--The subcommittee conducted a field hearing, ``OPM Privatization: Community Impact,'' in Butler, PA, on October 17, 1996. Mr. King described the sequence of events leading to OPM's Office of Federal Investigations receiving RIF notices in early May, and all of the employees received employment offers from USIS the next day. On July 5, the employees were separated from OPM, and 94 percent of them accepted the offers to begin work with USIS on Monday, July 8. Rather than ease this transition, some facilities operated by the Department of Energy had revoked the security clearances of employees who were separated from OPM. OPM Director King and USIS CEO Harper testified that these transition problems were close to resolution. Subcommittee Chairman Mica noted that this transition could have been smoothed through more effective planning, and indicated that the GAO monitoring would continue. Mr. Harper indicated that the company had begun operations with some success, and already had hired 27 employees in addition to those inherited from OPM. In response to a petition from the American Federation of Government Employees, USIS held an election that allowed the employees to decide whether they would be represented for collective bargaining purposes. With 94 percent of the employee-owners voting, USIS employees rejected the union, 65 percent to 35 percent. DISTRICT OF COLUMBIA SUBCOMMITTEE 1. Closing of Pennsylvania Avenue. a. Summary.--The purpose of this subcommittee investigation is to explore issues concerning the closure of Pennsylvania Avenue. Called ``America's Main Street'', it is a major artery connecting the Capitol Building and the White House, as well as a major east-west connector for the city, and is part of the original L'Enfant Plan for the District of Columbia. Any closing of this historic street, whether temporary or permanent, has enormous impact on the orderly flow of city traffic. Existing law gives both the DC government and Congress key roles in local street closings. Subcommittee Chairman Davis convened a hearing on June 30, 1995, to gather information on the legal authority necessary to make permanent changes to city streets in the District, and to assess the consequences of taking such actions including lost revenue, and disrupted traffic patterns. The need for Presidential security was not questioned. The subcommittee heard testimony from officials of the Washington municipal government including the Office of the City Administrator, the Departments of Public Works and Housing and Urban Affairs as well as the DC Council. The Municipal testimony stressed the loss of revenue from parking meters, and the dislocation caused by disrupted traffic patterns, as well as the cost of rerouting the transit system. The problem of jurisdiction between the Municipal and Federal law enforcement branches was discussed at length, and the matter of reimbursement of the city by the Federal Government. The Department of the Treasury was asked to present written testimony to be included in the record. Following the hearing, subcommittee Chairman Davis again wrote Secretary Rubin, seeking additional information and clarification of points made in the original written testimony. Information was also requested from the Federal Bureau of Investigation regarding the parking ban in effect around the perimeter of their building. The subcommittee also reviewed the Vulnerability Assessment of Federal Facilities report dated June 28, 1995, prepared by the U.S. Marshal Service of the Department of Justice in direct response to the April 19, 1995, bombing in Oklahoma City. Subcommittee Chairman Davis convened a second hearing on June 7, 1996, to ascertain what effects the closing of Pennsylvania Avenue was having upon the District, businesses, visitors, and tourists a year after the initial closing. Testimony was taken from municipal officials, civic and business representatives, the U.S. Department of the Treasury, and the United States Secret Service. b. Benefits.--This investigation furnished critical information to the Congress necessary to the formation of public policy regarding both government and commercial establishments in the effected area. The investigation, including the hearings, correspondence and several meetings with Treasury and Transportation officials, heightened the administration's awareness of the impact the closure of Pennsylvania Avenue has imposed on the District of Columbia and increased its willingness to address those impacts. As a result of the subcommittee investigation, the Federal Highway Administration has contracted for a ``Transportation Needs Assessment'' for the District of Columbia. Such a comprehensive review of the District's transportation systems has not been conducted in 30 years and is currently beyond the means of the District to perform for itself. It is expected that the report will provide useful information to the District, the Financial Responsibility and Management Assistance Authority (control board), FHA, the Washington Metropolitan Area Transit Authority (Metro), and the Metropolitan Transportation Planning Organization in their important work in transportation and environmental planning. c. Hearings.--On June 30, 1995, the subcommittee held an informational hearing on the closing of Pennsylvania Avenue. The hearing followed an order signed by Treasury Secretary Robert E. Rubin on May 19, 1995, prohibiting vehicular traffic on portions of Pennsylvania Avenue and certain other streets adjacent to the White House. Secretary Rubin delegated to the Director of the United States Secret Service ``all necessary authority to carry out such street closings.'' Those testifying at the June 30, 1995 hearing were, Michael C. Rogers, D.C. city administrator; deputy mayor for operations Larry King, director of Public Works; Hon. Frank Smith, chairman, Committee on Housing and Urban Affairs, D.C. City Council; Hon. David A. Clarke, chairman of the Council of D.C.; Gregory W. Fazakerley, president, D.S. Building Industry Association; Dr. Henry L. Fernandez, chairman, Advisory Neighborhood Commission 2B; Millard Seay, director of planning, Washington Metro Area Transit Authority; Margaret O. Jeffers, Esq., executive vice president, Apartment and Office Building Association of Metropolitan Washington; and Ken Hoeffer, executive director, Washington, DC Area Trucking Association. On June 7, 1996, the Subcommittee on the District of Columbia held a second hearing to ascertain what impact the closing of Pennsylvania Avenue has had on District residents, commuters, visitors, and the greater Washington Metropolitan area in general and administration actions or plans to deal with those impacts. The following witnesses testified: Senator Rod Gramms; Representative Jim Moran; James Johnson, Assistant Secretary for Enforcement, U.S. Department of the Treasury; Eljay Bowron, Director of the United States Secret Service; John Strauchs, CEO, SYSTECH Group, Inc.; Mayor Marion Barry; Larry King, director, DC Department of Public Works; Michael Rogers, DC city administrator; Rodney Slater, Administrator, Federal Highway Administration; William Lawson, Assistant Regional Administrator, General Services Administration; Dennis Galvin, Associate Director for Professional Services, National Park Service; Timothy Coughlin, president, Riggs National Corp.; Robert S. Krebs, vice president, Regional Affairs, Greater Washington Board of Trade; Tom Wilbur, president, DC Building Industry Association; Lon Anderson, staff director, AAA Potomac; Christopher Reutershan, District of Columbia Chamber of Commerce; Emily Vetter, president, Hotel Association of Washington, DC; William Lecos, president, Restaurant Association of Metropolitan Washington, and Jon P. Grove, executive vice president, American Society of Association Executives. 2. Traffic Disruptions. a. Summary.--The subcommittee held an oversight hearing into recent traffic disruptions in the District of Columbia organized by a local labor organization. The group, ``Justice for Janitors'' is organized and supported by the Service Industry Employees Union (SIEU). A concerted effort has been undertaken to pressure private companies to increase wages and benfits for service personnel through public demonstrations. The group repeatedly deliberately blocked major traffic arteries in the Nation's Capitol and caused massive traffic disruptions affecting both the public and private sectors. The subcommittee sought information into the consequences of the traffic disruption to area business, commuters, and police procedure. An incident on September 20, 1995, generated the hearing, in which morning commuter traffic was brought to a standstill on Interstate 66, Routes 50 and 110, the Theodore Roosevelt Memorial Bridge, and the George Washington Memorial Parkway. An estimated 100,000 motorists were affected. As part of the disruption, a bus was pulled across the Roosevelt Bridge and abandoned. Each of the 34 persons arrested was fined $50. According to news reports, the traffic disruption ``impeded an ambulance on call'' and caused ``neighboring small businesses untold losses of normal revenue.'' Testimony at the hearing revealed the problems such demonstrations cause the law enforcement officers, and traffic management personnel. Additional testimony was heard that outlined the difficulties generated by the traffic disruption including a rise in the number of auto accidents. The impact on area businesses and medical facilities was discussed at length. Following a subsequent disruption on December 4, 1995, which created a huge traffic jam in Northwest Washington in the area of the DC Financial Control Board offices, the subcommittee is reviewing legislative options to prevent and control future non-permitted demonstrations. b. Benefits.--The investigation provided information critical to drafting legislation to discourage reoccurrence of deliberate traffic interruptions in Washington, DC. The refusal of the union instigating these disruptions to testify or attempt to justify such behavior strongly indicates that the objective of these incidents was publicity and maximum public disruption in an attempt to gain an advantage over private employers in labor negotiations. The subcommittee was able to encourage various law enforcement agencies to cooperate and plan for joint action to minimize the extent of any future demonstrations of this type. It should be noted that no more incidents of this nature have occurred since December 1995. c. Hearings.--The subcommittee held an oversight hearing on October 6, 1995, concerning the recent traffic disruptions in the District of Columbia organized by a local labor organization. 3. District of Columbia Economic Recovery Act. a. Summary.--In the past 2 years, individuals have suggested ways to help the District of Columbia improve its financial status and grow its economy. Most of the proposals that were brought contained various forms of tax reductions and incentives. District Delegate Eleanor Holmes Norton introduced H.R. 3244 to amend the DC Federal tax code to achieve some of these objectives. The bill was referred the Committee on Ways and Means. Due to the attention the District of Columbia's financial condition has generated and the widening national debate on the concept of the ``flat tax'' and other proposals, subcommittee Chairman Davis convened a hearing on July 31, 1996 to obtain various points of view on the concepts the bill sought to address. Joining the subcommittee in ex officio capacity for the hearing were, Committee Chairman Clinger, Representatives Morella, Moran, and Wynn. b. Benefits.--This investigation furnished the subcommittee, Congress, and interested citizens with information that will assist them in considering tax and other remedies that have thus far been advanced. Witnesses presented statistical evidence in support of the plan and also indicating that it would have little immediate impact on the District of Columbia government or its performance. The hearing will give Congress and other interested parties significant data on the benefits and incentives of such tax reduction on individuals and whether such benefits by themselves could overcome concerns about safety, poor schools, and poor government services which are causing so many people to leave the city. c. Hearings.--On July 31, 1996, the subcommittee held an informational hearing on H.R. 3244. The following witnesses testified: Jack Kemp, co-director, Empower America; Senator Joseph I. Lieberman; Speaker Newt Gingrich; Wade Henderson, executive director, Leadership Conference on Civil Right; James Prost, Basile Baumann Prost and Associates; Martin A. Sullivan, tax analyst; Edwin Kee, George Washington University; Steven Fuller, George Mason University; Thomas B. Ripy, Congressional Research Service; Kenneth J. Kies, chief of staff, Joint Committe on Taxation; James R. Atwood, Covington and Burling; Diane Duff, Greater Washington Board of Trade; H. Hollister Cantur, Fairfax County Chamber of Commerce; Kwasi Holman, executive vice president, DC Chamber of Commerce; and Timothy C. Coughlin, president, Riggs National Corp. 4. Public Law 104-8, District of Columbia Financial Responsibility and Management Assistance Authority Act of 1995. a. Summary.--The subcommittee held two oversight hearings on the implementation of the legislation that established the District of Columbia Financial Responsibility and Management Assistance Authority (the control board). At the first hearing, subcommittee Chairman Davis stressed the importance of the act and called upon the parties working under it to state their understanding of their respective roles and to give their view on the state of the city's financial condition. At the second hearing, subcommittee Chairman Davis reiterated the importance of the positions of Chief Financial Officer and Inspector General as essential parts of the District's government. He also reviewed their relationship with the control board. The rest of the hearing was devoted to the findings of an independent audit by KPMG Peat-Marwick of deficiencies and lack of controls in the District with regard to vender payments and information gathering and dissemination. In addition to holding public hearings on the implementation of Public Law 104-8, the subcommittee exercised its powers of oversight of the statute and the District of Columbia Financial Responsibility and Management Assistance Authority (control board) it created in several ways. b. Benefits.--To assist the subcommittee to fulfill its oversight responsibilities and to bring essential information before Congress and the public, the subcommittee has initiated monthly meetings and briefings between staff of the control board and various congressional committees and subcommittees. It established ongoing lines of communications with the Chief Financial Officer and Inspector General, posts established by the statute. It consulted with control board members and staff about legislation affecting the District, such as H.R. 3663, the District of Columbia Water and Sewer Authority Act of 1996 and other measures Congress considered. Subcommittee Chairman Davis, Ranking Member Norton, and subcommittee staff met periodically with control board Chairman Brimmer and staff to ascertain the board's needs, assess its progress in meeting them, and to assure that the parameters under which the board operates conform to the letter and spirit of Public Law 104- 108. It will continue in these endeavors throughout the life of the control board, as specified in the statute. The benefits of Public Law 104-8 continue to mount as the control board moves aggressively to improve the performance of the District government, control its spending, and to improve revenue collection. The Chief Financial Officer, created by the legislation, has reformed the operation and personnel of the entire financial cluster in the District and has implemented firm control over financial management throughout the government. The Inspector General, which was substantially enhanced by the legislation, has initiated a number of management audits and performance improvements as well investigations of potential fraud, corruption, and waste. The control board has disbanded the Lottery Board and placed operation of the Lottery under the CFO. It has also removed the Superintendent of the DC school system, replacing him with a temporary Chief Executive Officer and has created a Board of Trustees with most of the powers of the Board of Education to revive and reform the entire operation of the DC public schools. Major financial reform has already taken place in the District government with longer term improvements still being worked on. The District was able to sell bonds on the private market in October 1996 at an acceptable interest rate without credit enhancements or other security instruments. The benefits to Congress of better information on the District of Columbia and its government cannot be overemphasized because of its impact on appropriation decisions. More and better information is critical to Congressional efforts to improve and reform the District government. In addition, placing an autonomous agency between Congress and the District government has greatly benefited the residents of the District and its government by providing much more direct and immediate assistance than would be possible for Congress as a body to provide while maintaining the home rule government of the Nation's capital. c. Hearings.--The subcommittee held hearings on March 19 and 28, 1996. Those who testified were: Dr. Andrew Brimmer, chairman, District of Columbia Financial Responsibility and Management Assistance Authority; Stephen D. Harlan, vice chairman, DCFRMAA; DCFRMAA Members Dr. Joyce A. Ladner, Constance Berry Newman, and Edward A. Singletary, Mayor Marion Barry, DC City Council Chairman David Clark; Anthony Williams, DC Chief Financial Officer, Angela Avant, DC Inspector General; and John Hummel, KPMG Peat-Marwick, LLP. GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY SUBCOMMITTEE 1. Capital Budgeting. a. Summary.--Since the imposition of ever-tightening caps on discretionary spending in the 1990 Omnibus Budget Reconciliation Act, committee members have been concerned that long-term investments in capital have been neglected in favor of current consumption. Borrowing funds to invest in capital projects with long-term benefits is an appropriate activity, as the future generations that enjoy the benefits of the assets will also pay for them. However, the Federal Government lacks experience with capital budgeting concepts and techniques. Therefore, committee members were interested in examining the practices of State and local jurisdictions, as well as that of other nations. The subcommittee examined H.R. 767, the Federal Budget Structure Act, introduced on February 1, 1995, by Chairman William Clinger. Two hearings were held to review various proposals to implement a Federal capital budget and the manner in which such budgets impacted other government operations. The hearings examined the workings of capital budgets operated by Fairfax County, VA, New York, NY, Philadelphia, PA, and the government of New Zealand, as well as the work of scholars and private sector financial experts in the area of investment budgeting. b. Benefits.--Implementing a Federal capital budget will help rebuild the Nation's deteriorating capital stock, and will help improve Federal planning, investment and budgeting processes. c. Hearings.--Subcommittee Chairman Horn convened the first hearing on March 2, 1995, to examine the practices and experience of local jurisdictions in the area of capital budgeting. He opened the hearing by noting the importance of planning capital projects, and that the Federal Government has failed to adequately plan. Chairman Clinger noted his endorsement of Federal capital budgeting and that his bill, the Federal Budget Structure Act of 1995, H.R. 767, had been co- sponsored by a number of committee members. Representative Bob Wise also mentioned that he supports the concept of capital budgeting and has introduced two bills on the issue. Representative Norman Mineta testified that borrowing funds to invest in capital projects with long-term benefits was an appropriate activity, as the future generations that enjoy the benefits of that asset will also pay for it. Representative Ray Thornton noted that Arkansas had successfully operated a capital budget for most of this century. Representative Thornton also referred to his support of a capital budget and his introduction of a bill to provide for a Federal capital budget. Katherine Hanley, chairwoman of the Fairfax County Board of Supervisors, accompanied by William J. Leidinger, county executive, Fairfax County, discussed Fairfax's capital budget. Mr. Leidinger testified that the county is prohibited from allowing capital costs to exceed 10 percent of total general fund disbursements. This is the centerpiece of the county's Ten Principles of Sound Financial Management, which has allowed Fairfax to maintain a AAA bond rating, 1 of only 33 local governments out of 30,000 jurisdictions to claim that honor. Thomas McMahon, director of Finance Division, New York City Council, testified on New York City's capital budget. Mr. McMahon noted that Federal adoption of a capital budget would help rebuild the Nation's deteriorating capital stock and testified that New York City has witnessed a decline in the quality and quantity of the city's capital stock. Ted Sheridan, the president of Sheridan Management Corp., and former CFO of Fairchild, testified on behalf of the Financial Executives Institute. Mr. Sheridan stressed that capital budgeting was essential to efficiently plan the Federal investment program. He proposed a pilot program for capital budgeting based on three assets: a weapons system, an information system, and a power generation station. David Chu, a fellow at the National Academy of Public Administration (NAPA), served on NAPA's expert panel on capital budgeting. Dr. Chu believes that capital budgeting has many strengths, including improving planning, investment and identifying budget expenditures for investments. Dr. Chu also mentioned technical problems with capital budgeting, such as the treatment of capital equipment, and the treatment of tax expenditures, government-sponsored enterprises. On June 29, 1995, His Excellency John Wood, Ambassador of New Zealand, described how government agencies in New Zealand changed their accounting, budgeting, and management systems beginning in 1984. These changes affected (1) the way department heads were chosen; (2) the way in which agencies define, measure and report performance; (3) delegation of input control to departments or agencies; and (4) the way government fiscal performance is measured and reported. Government departments in New Zealand are assessed a charge for capital controlled by the department, determined by multiplying total capital times a market rate of interest. In addition, agencies may sell surplus assets and use the proceeds to upgrade computer systems. These features make explicit to agencies the cost of owning assets. Edward Rendell, mayor of Philadelphia, noted that capital budgets are common to local and State governments, are enforceable by a borrower's bond rating, and force long-range prioritization and planning for capital projects. Mr. Paul Posner, Director of Budget Issues, Accounting and Information Management Division of the U.S. General Accounting Office, testified that if the Federal budget were balanced, the long-term boost to Gross Domestic Product would mean that GDP would be 34 percent larger in the year 2025 than if no action were taken to reduce the deficit. Similarly, Mr. Posner noted that within the budget process, care is needed to be taken to improve selection of investments to improve productivity. Mr. Posner noted the temptation that lawmakers would face to classify non-capital expenditures as capital in order to get more favorable budget treatment for the asset. He also noted that the Federal Government does not own many of the capital assets it funds in the budget. Many are owned by States or local governments and funded by subsidies or grants. In addition, Mr. Posner noted the need to impose long-term control over the obligation of public funds. Finally Mr. Posner noted the importance of recognizing the full cost of a long-term obligation up front in order to impose discipline on agencies. 2. Integrity of Government Documents. a. Summary.--On September 30, 1994, former U.S. Representative Barbara Jordan, as chair of the Commission on Immigration Reform, released the Commission's first report to the Congress on the status of the Nation's immigration policy. The report was required by the Immigration Act of 1990, Public Law 101-649. The Commission cited widespread counterfeiting of documents that entitle people to gain public benefits or to be hired for work as a major factor undermining current immigration policy. It recommended development of a ``simpler, more fraud-resistant system for verifying work authorization.'' In the President's Budget for fiscal year 1996, the administration proposed to reform the Nation's immigration process, in part through development of a nationally available employment verification system. In that connection, the subcommittee met to consider a range of views on the nature, the role, the need, the cost, and the potential social consequences of using fraud-resistant personal identification documents as part of a national employment verification system. b. Benefits.--The shortcomings with regard to the security of government documents identified by the hearing will assist the committee in advising relevant Federal agencies on the need to develop more secure documents to verify work eligibility and immigration status. c. Hearings.--Subcommittee Chairman Horn called the hearing on March 7, 1995, to examine the situation regarding the integrity of government documents with testimony from representatives from the U.S. Commission on Immigration Reform and the Immigration and Naturalization Service (INS). Subcommittee Chairman Horn opened the hearing by describing it as a fact-gathering effort toward fraud-proofing personal identification documents. Congressman Becerra, the first witness, cautioned all concerned to remain sensitive to the considerations of personal privacy, data base accuracy, and total public cost as major factors bearing on U.S. immigration policy, ``big-brotherism,'' and perceptions of discrimination. Mr. Robert C. Hill and Dr. Susan Martin, U.S. Commission on Immigration Reform, summarized the Immigration Reform Commission's published recommendation for electronic validation of the Social Security number as the fairest, fastest, most reliable, and most efficient way to guard against employment authorization fraud. They advocated starting slow and small with one or more alternative ``pilot programs'' prior to constructing a nationwide employment verification registry, and letting the Commission monitor preliminary results. Mr. James A. Puleo, Executive Associate Commissioner for Programs, INS, explained his agency's telephone verification system (TVS) for checking identities of Los Angeles area ``green card'' holders (immigrants) applying for work. TVS methodology is potentially usable in a national employment verification system. INS data bases on non-citizen U.S. residents need to be purified, reconciled, and integrated in order to be usable in a national employment verification system. The agency has taken some steps toward fraud-proofing ``green cards'' (resident alien registration cards), but the current re-issuance program will take a year longer than planned. INS is working with the Social Security Administration (SSA) on a multi-stage plan that would ultimately lead to a national employment verification registry. Dr. Shirley S. Chater, Commissioner, Social Security Administration, emphasized that Social Security cards have never been intended to guarantee individual personal identity. Nonetheless, the current counterfeit-resistant Social Security card has been issued to 61 percent of active card holders. SSA has a toll-free telephone number which employers can use to verify Social Security numbers (SSN's) for payroll purposes, but it is not used much, and it could not handle a large nationwide verification workload at present. The agency's ``enumeration at birth'' program has nearly eliminated fraudulent SSN's for infants and children. SSA's data base, recently much improved, still needs more work in order to support employment verification nationwide. Mr. Richard W. Velde, former head of the Law Enforcement Assistance Administration (LEAA), suggested that in today's established electronic data base networks for exchanging health and vital records, criminal history, and bad motor vehicle driving records, we may already have a framework for the proposed national employment registry. In addition, sophisticated moderate-cost biometric identification technology is available to produce encoded personal documents that definitively establish the bearer as either the person described on the document or as a different person. Several States use such technology in issuing drivers' licenses. A nationwide hookup of State motor-vehicle driver registries, coupled with uniform issuance of biometric State drivers' licenses, could serve as the functional equivalent of the Immigration Reform Commission's employment verification registry. Mr. Frank W. Reilly, Ms. Hazel E. Edwards, and Mr. John Chris Martin, Accounting and Information Management Division, General Accounting Office, commented briefly on INS and SSA data bases, TVS's, and plans for a two-step process to cross- check each other's files for discrepant information. They described a newly implemented statewide system for managing public benefits eligibility in Connecticut. The system uses state-of-the-art technology in providing a one-step application for three Federal benefit programs that links nine separate supporting data bases. Connecticut's experience could help in developing the Federal employment verification registry. Joseph Eaton, professor at the Graduate School of Public and International Affairs, University of Pittsburgh, praised the Immigration Reform Commission's work and summarized the advantages and the ready availability of biometric identification technology. The protection of publicly stored private information can be assured and enhanced by (1) feedback to the individual whenever a privacy-sensitive personal file is accessed; (2) standards for data base matching; (3) bonding and licensing of sensitive data bank owners and employees; and (4) administrative and legal remedies. Mr. Robert Rasor, Special Agent, United States Secret Service, mentioned several different kinds of identification- document fraud that the Secret Service pursues in conjunction with the INS's Forensic Identification Laboratory. He described his agency's role of coordinating and assisting the efforts of State bureaus of health and vital statistics and departments of motor vehicles to strengthen and standardize identification media and documents. Mr. Russell Meltzer, Head of Security, Schlumberger-Malco, Inc., explained in concept how the credit card industry's authorization system could be copied and retrofitted to serve as a national employment registry and verification system. The Federal Government would function analogously to a bank, an employer to a retail merchant, and a job applicant to a consumer. Inquiry terminals at work places would not allow users (inquirers) to alter anything in the data bank. An applicant's document would take the form of a ``smart (computer-chip) card,'' biometrically encoded to match to the individual bearer. Written testimony was provided by Mr. Lamar Smith of Visa USA, which described how today's credit card industry authorization process works. 3. Federal Role in Privatization. a. Summary.--The Budget of the United States Government, the President's budget request submitted on February 6, 1995, contained numerous proposals for privatization of government functions, assets, and agencies, including the helium program, the National Weather Service, U.S. Enrichment Corporation, four of the Power Marketing Administrations, and the Naval Petroleum Reserve. The committee examined the history of privatization in other countries and levels of government to determine lessons to be derived from these sources. b. Benefits.--This hearing demonstrated the necessity for additional private sector capital being deployed to meet public needs. From wastewater treatment to airports, many publicly owned assets are not receiving sufficient levels of investment. There are investors willing to provide this capital, and the experience of other nations proves that such measures can improve economic performance while increasing investment, and reducing the role of the Government in the economy. c. Hearings.--Subcommittee Chairman Horn opened the hearing by noting the historical increase in the number of privatizations all over the world, with the exception of the United States. Representative Klug, who chairs the Speaker's task force on privatization, listed the types of Federal agencies and activities which his task force has identified as possible candidates for privatization. Roy Bernardi, mayor of Syracuse, NY, testified about his city's plans for privatization. Chief among the plans is a proposal to privatize the airport. However, this sale is partially blocked by Federal rules regarding grant repayment of assets constructed with Federal dollars. Andrew Jones, worldwide privatization coordinator at Arthur Andersen Consulting, testified about privatizations in other countries and lessons to be learned from those experiences. Roger Leeds, managing director of Barents PLC, testified about his experience directing privatization efforts abroad. Mr. Leeds noted that the likeliest prospects for privatization in the Federal Government were services (though Leeds did mention the power marketing administrations). Louis Albano, president of Civil Service Technical Guild in New York City, testified about the dangers of contracting out additional government services. Mr. Albano suggested that government workers could do the same job cheaper and better than a private contractor whose motive was profit. Bert Concklin, president of Professional Services Council, testified that the Federal Government should contract out more. Mr. Concklin spoke against the system of cost comparison whereby costs of private contractors are compared against the cost of performing work in-house. He also testified that such cost comparisons were misleading, since Federal costs usually do not include many overhead items. Ralph L. Stanley, a senior vice president with United Infrastructure Corp., testified on the need for private infrastructure finance initiatives. He proposed an infrastructure bank which would take several billion Federal dollars and leverage them with private investment. Ronald Correll, president and CEO of United Water Resources, testified about the need for private financing of water system improvements. Viggo Butler, president of Lockheed Air Terminal, testified about the need for relief from the Federal grant repayment requirement. 4. National Performance Review. a. Summary.--On May 2, 1995, the subcommittee convened a hearing to evaluate the accomplishments of the National Performance Review. The National Performance Review (NPR) was initiated by Vice President Gore in 1993 and consisted of two phases. The purpose of the first phase was to make government work better and cost less; the second phase required agencies to fundamentally reevaluate their missions, goals, and objectives. b. Benefits.--Ongoing review of the National Performance Review process will help Congress and the public assess what the NPR has accomplished to date, and what can be expected from the second phase of the NPR initiative. This effort will help the Federal Government determine how to better serve the Nation. c. Hearings.--Witnesses were asked to give their opinions on the mission and role of the NPR, whether benchmarks for evaluating NPR's progress existed, whether NPR as implemented met their expectations for improving government, and whether NPR could achieve its stated objectives. Dr. Alice Rivlin, Director, Office of Management and Budget, supported NPR's effectiveness in improving executive branch departments and agencies. She noted that Vice President Gore, who spearheaded Phase I, encouraged the agencies to adopt the 1,200 recommendations developed by NPR. In describing Phase II, Ms. Rivlin stated that the focus switched from ``how'' government operates to ``what'' it should do. She urged Congress to help NPR with funding. Charles Bowsher, Comptroller General of the United States, applauded the concept and aims of the NPR, but saw many shortcomings. Two examples he cited were failing to address many critical management problems in the agencies and ignoring nearly three-fourths of other issues GAO had identified. He felt that the goals should be stated more clearly, reliable information should be available, and that the focus should be on outcome-based management. Tony Dale, budget manager of the New Zealand Treasury, describes the public sector reform of New Zealand in the mid- eighties. The corporatization, privatization, and public sector reforms are the very reasons that New Zealand now has constant economic growth, a low inflation, a shrinking percentage in government expenditures, and instead of a 9 percent deficit, the country now has a 7 percent surplus. He strongly supports public sector reform. Duncan Wyse, executive director, Oregon Benchmarking Project, made three points: (1) most of the Federal agenda is delivered by State and local governments, and improvement must be made by taking this into consideration; (2) the system needs to be reformed; and (3) Congress as well as the executive branch needs to be reformed. Dwight Ink, Institute of Public Administration, thought that the implementation of NPR concepts has been very disappointing and he hoped the situation will change in the future. He pointed to the hiring process, the inconsistency among NPR agencies, and the inability of leadership as examples of NPR ineffectiveness. He blames the problems of organization and execution in the NPR on too much restructuring without establishing missions and roles. R. Scott Fosler, National Academy of Public Administration agreed with the scope and purpose of the NPR. He believed the move from the ``how'' of government to ``what'' government does is a positive step; however, NPR has to address key areas if it wants to sustain its energy. Such key areas are accountability, a coherent framework, and capacity within the agencies. Donald Kettl, senior nonresident fellow, the Brookings Institution, stated that NPR had made substantial progress, and achieved substantial savings, but the progress of NPR is not self-sustaining and that there are still many unanswered questions. Herbert Jasper, McManis Associates, lauded many of the accomplishments of the NPR, while expressing some misgivings. He cited as disappointing NPR's lack of analysis, statutory promises that are not backed up with resources, the ``command'' or top-down philosophies of some recommendations, and the ``government bashing'' that permeates NPR reports. 5. Strengthening Departmental Management. a. Summary.--In the past 30 years, there has been a multiplication in the numbers of management functions, and a diffusion of their responsibility among numerous centers. These centers of management authority include Secretary, Chief of Staff, Inspector General, Chief Financial Officer, Chief Operating Officer, and Assistant Secretary for Management. The number of employees in executive levels I through V totaled 249 in 1960 and 1626 in 1992. Similarly, occupants of the Senior Executive Service (SES) also increased dramatically in number during the same period. The larger number of management and control personnel resulted in increased layers of management, who delayed implementation of management program and distorted information passing between levels of management. b. Benefits.--The hearing demonstrated the need for a government focus on management issues. This was part of the subcommittee's ongoing interest in and oversight of the management practices at Federal agencies. c. Hearings.--On May 9, 1995, the subcommittee convened a hearing entitled, ``Strengthening Departmental Management.'' Subcommittee Chairman Horn opened the hearing by noting the framework of general management laws which exists to coordinate management reform efforts. Chairman Horn described his intent to bring together private and public sector experience to help solve the problems of government management. Tom Glynn, the Deputy Secretary of Labor, testified about his experience as a Chief Operating Officer at the Department of Labor. Mr. Glynn described his agency's reinvention efforts, including reducing the steps it takes to hire a new worker from 120 to 41 steps. Chairman Horn and Glynn exchanged comments concerning the diffused nature of management responsibilities within the current organizational structure. The Chief Operating Officer, the Secretary's Chief of Staff, the Inspector General, the Assistant Secretary for Management and the Chief Financial Officer each have large management responsibilities. The proposed chief information officer would diffuse management responsibilities further. George Munoz, Assistant Secretary for Management and Chief Financial Officer, Department of the Treasury, testified concerning his agency's recent reinvention efforts. Mr. Munoz described the principles which have guided Treasury's management improvements: customer service, strategic planning and streamlining. Representative Michael Flanagan and Mr. Munoz gave their views on debt collection. Johnny Finch, Assistant Comptroller, General Government Division, and Gene Dodaro, Assistant Comptroller, Accounting and Information Management Division, GAO, testified on GAO's reviews of agency management improvement efforts. Mr. Finch noted that the Government Performance and Results Act, the Chief Financial Officers Act and the Paperwork Reduction Act have formed the basis of the agency management improvement efforts. Mr. Finch noted that agencies need to define their mission, improve operational effectiveness by using information technology to re-engineer, strengthen financial management, and build the capacity to manage the Federal workforce. Upon questioning, Mr. Dodaro outlined the problem areas in information technology investment and described weaknesses in financial management at the Department of Defense. Mr. Finch detailed differences between the National Performance Review and successful government reform efforts abroad. In panel III, Alan Dean, senior fellow of the National Academy of Public Administration, described recent changes in the Federal workforce, such as the increasing numbers of non- career officials. Mr. Dean also discussed reorganization proposals, including the creation of an Office of Federal Management and restructuring executive departments. William Hansen, former Chief Financial Officer at the Department of Education, outlined the reorganization of the Department in the 1980's, and the restructuring and block-granting of programs that occurred in 1981-1983. Mr. Dean testified that OMB's restructuring has denuded the agency of any expertise in government corporations. Roger Sperry, director of management studies of the National Academy of Public Administration, identified the five key areas to any efforts at government reform: strengthening Federal leadership, automating, integrating and streamlining government, focusing on performance, streamlining Federal field structures and congressional-executive relations. Mr. Sperry also commented on interagency and intergovernmental coordination in a region responding to a critical situation. 6. Consolidating Federal Programs and Organizations. a. Summary.--This is part of the Making Government Work series described in Section II.A.1. b. Benefits.--These are described in Section II.A.1. c. Hearings.--On Tuesday, May 16, 1995, the subcommittee began its third hearing in its ``Making Government Work'' series. The hearing was held in two parts and considered proposals for restructuring the programs and functions of the Departments of Energy and Education. The first part of the hearing will be held on May 16th; the second session was on May 23rd. Subcommittee Chairman Horn noted at the opening of the hearing that a number of proposals recommended terminating the Departments of Education and Energy. He offered a criterion to be used when considering whether, if an agency or department did not already exist, it would make sense to create it. Ranking subcommittee member Mrs. Maloney noted that the country had little experience with abolishing Cabinet departments. She cautioned against not adequately providing for the continuation of many of the activities of the Energy Department that she regarded as important. In her testimony, Secretary O'Leary presented her agency's own plan to reduce its workforce by 27 percent and its budget by $14 billion over the next 5 years. She stated that the Department would still be required to perform its four critical missions. The Secretary identified these missions as national security protection and nuclear danger reduction, weapons site clean up and environmental management, science and technology management, and energy security enhancement. She concluded that the Energy Department, smaller in size, was still the best institutional vehicle to perform these tasks. In response to questions from the subcommittee, the Secretary stressed the advantages of maintaining civilian control over the Nation's nuclear weapons program. She criticized suggested alternatives to the Energy Department, such as the proposed Department of Science, as unwieldy and ill-advised. When asked by subcommittee Chairman Horn about the opportunities for closer policy coordination that a ``Natural Resources Department'' offered, as had been proposed by President Nixon, she responded that regular meetings by administration Cabinet members in related fields provided for policy coordination and the resolution of disputes. The subcommittee reconvened its hearing on ``Consolidating Federal Programs and Organizations'' on May 23, 1995. Donald Hodel, former Secretary of Energy told the subcommittee that in a market economy, the Energy Department had little to do with producing or generating energy. He concluded that the very existence of a Department of Energy was undesirable, as ``it suggests that the U.S. Government is doing or is going to do something about energy beyond what I believe government should do.'' Former Energy Secretary Admiral James Watkins indicated that he appeared before the subcommittee neither as an advocate nor an opponent of the Department's elimination. Rather the Admiral stressed his concerns for the appropriate stewardship of the Nation's nuclear energy program. He called upon Congress to initiate a careful review, drawing upon outside experts, to determine which of the Department's functions should be retained, which ought to be transferred and which could be privatized. Former Energy Secretary John Herrington called for the elimination of the Department. He advocated ending all energy research and development and energy conservation programs. He further supported the privatization of government owned laboratories engaged in research, the five Power Marketing Administrations and the naval petroleum reserves. He proposed placing nuclear weapons functions under the jurisdiction of a newly created Under Secretary of Defense. Former Under Secretary of Energy Shelby T. Brewer observed that the Energy Department had strayed from its original mission of obtaining national energy security. He noted that as the Nation's energy circumstance had changed, the Department shifted its mission to become an environmental management department, a basic science department, and a biological and medical research department. As a result, according to Mr. Brewer, energy development and demonstration now accounts for a little over 10 percent of the total budget. Mr. Brewer also testified that a substantial contributory factor to the Department's lack of a clear mission was the multiplicity of congressional committees, each of which has its own set of interests, different from the others. Former Under Secretary of Energy Donna R. Fitzpatrick joined her former colleagues in calling for the elimination of the Department, suggesting that it had outlived its usefulness. She advocated placing weapons related activities into a sub- cabinet agency independent of the Defense Department. As the hearing shifted its attention to the Department of Education, subcommittee Chairman Horn noted that several proposals would either eliminate the subcommittee and transfer its activities to the States, or else merge its functions into another Cabinet subcommittee, such as Labor. Under Secretary of Education Marshall S. Smith stressed in his testimony the strong public support for the Department and its programs. He commented that: Federal involvement in education supports democracy and our economy. This is not just a State and local interest; this is a national interest. He claimed that administrative costs account for only 2 percent of the budget, with the subcommittee having the smallest ratio of employees to total budget in the Federal Government. Accompanying Secretary Marshall was Donald Wurtz, Chief Financial Officer of the Department. Subcommittee Chairman Horn and Ranking Member Maloney engaged Wurtz in a discussion of the Department's efforts to improve its debt collection efforts for student loans. Chester Finn, of the Hudson Institute, testified that the Federal Government had become a meddlesome force in American education. He advocated eliminating the Department and transferring its grant programs into either strings-free block grants to the States, or transferring all the Department's functions to other Federal agencies. William Hansen echoed the views of Mr. Finn, adding that the number of the Department's categorical programs had grown from 130 in 1981 to over 250. According to Mr. Hansen the number of Federal employees and the extent of local intrusion could be reduced by greater use of program consolidation and block grants. Through program consolidation, he said, the Department could greatly reduce its staff. George Munoz, Assistant Secretary of Treasury and the Department's Chief Financial Officer testified that the Education Department has undertaken a number of management reforms. In particular he noted improvements in the Department's financial management practices. Paul Posner, Director of Budget Issues in the Accounting and Information Management Division of the General Accounting Office, testified on his office's conclusions on duplicative and overlapping Federal programs. Program consolidation, he reported, held out promising opportunities for increasing the efficiency of government operations and improving performance. He noted that savings were possible when programs with similar objectives and clients were brought together and conflicting requirements, duplication and overlap were reduced. 7. Corporate Structures for Government Functions. a. Summary.--As the Federal Government continues along the road of structural change, the demand for more efficient operations will become more evident. This hearing drew lessons from effective private and public sector managers on how to downsize institutions effectively. The hearing also probed recent proposals to create additional Federal entities (such as the Air Traffic Control Corporation, the Forrestal Corporation, and the Bonneville Power Corporation). b. Benefits.--Learning from the best practices in business will assist lawmakers and Federal managers to downsize and streamline institutions effectively, with the least detrimental impact on vital public services. c. Hearings.--On June 6, 1995, subcommittee Chairman Horn called the hearing which focused on the use of corporate forms of organization, examining various forms of government corporations and determining what advantages each possesses. Donald H. Rumsfeld, chief executive officer, General Instrument Corp., testified about the general concept of using corporate structure for government functions. Mr. Rumsfeld testified that in a reorganization, it is essential to question an agency's mission, and restructure based on that review. If an agency restructures prior to this review, the effort is wasted. Mr. Rumsfeld also described several of the successful restructuring of corporations in which he had been involved. Roger W. Johnson, Administrator, General Services Administration, testified on the reorganization underway at the General Services Administration. Mr. Johnson noted that the National Performance Review needs to make more progress, but this was blocked by risk aversion and governing by process rather than results. He also suggested that executives with profit-loss responsibility could be deployed in certain Federal jobs involved in operations. Johnson also criticized the capital planning and budget processes and the lack of incentives to invest in long-term systems to improve operations and the annual budget process. Jack Robertson, Deputy Administrator, Bonneville Power Administration, testified concerning the Bonneville Power Administration's proposal to become a government corporation. Mr. Robertson described the competitive forces driving Bonneville toward a corporate structure, including increases in compliance costs associated with the Endangered Species Act and enhanced competition between local power producers. Daniel V. Flanagan, the Flanagan Consulting Group, Inc., testified about the proposed Forrestal Corporation, which would funnel private sector investments into Federal energy improvement required by the 1990 Energy Act. Harold Seidman, senior fellow, the National Academy of Public Administration, explained the history of the Government Corporation Control Act of 1945, and the need to update it to reflect modern realities. Mr. Seidman outlined a ``Government Enterprise Standards Act'' which would improve oversight over government corporations. Mr. Seidman described the uses of a government corporation and the need to have a central body of expertise to govern the creation of such entities. Barry Krasner, president, National Air Traffic Controllers Association, and Jack Johnson, president, Professional Airways Systems Specialists, testified concerning the proposals to create an Air Traffic Control Corporation. Both endorsed the concept of corporatization, but advocated a government corporation rather than private ownership of such a corporation. 8. Streamlining Federal Field Structures. a. Summary.--These two hearings were part of the Making Government Work Report, see section II.A.1. b. Benefits.--See Section II.A.1. referenced above. c. Hearings.--On Tuesday, June 13, 1995, the subcommittee held its sixth hearing in its ``Making Government Work'' series. The hearing, entitled ``Streamlining Federal Field Structures'' considered whether the Federal Government's existing network of field offices is best suited for the Government's current responsibilities. The hearing further inquired into the impediments that hinder making field office networks more efficient. Subcommittee Chairman Horn noted at the opening of the hearing that close to a million Federal employees carry out the daily work of the Federal Government at some 30,000 filed offices, of which 12,000 have five or fewer employees. He observed that overlapping and conflicting agency responsibilities, programs, jurisdictions, and separate offices have often made an ordinary citizen's contact with the Federal Government a frustrating experience. Ranking subcommittee member Carolyn Maloney commented that over the past 50 years the number of Federal field offices has proliferated with the initiation of each new Federal program. She observed that many were set up when transportation and communications were quite different. She praised the reform efforts of the National Performance Review recommendations for field office service improvement. Mr. Dwight Ink, president emeritus of the Institute of Public Administration and a fellow of the National Academy of Public Administration, noted that field structure reforms ought to be the product of a comprehensive consideration of overall agency missions and activities. This review should consider three interdependent dimensions: structures, systems, and people. The review should also begin with a careful consideration of the agency's impact on the public. Mr. Ink noted that agency personnel ought to be well trained and that field employee grade levels should be increased relative to headquarters staff. Mr. Alan Dean, former chairman of the board of trustees and currently senior fellow of the National Academy of Public Administration, commented that no single model for field structure could be applied to all department and agencies. Each agency, consequently, should design its field offices at every level to reflect its mission and impact upon the public. Mr. Dean also testified that agencies needed to decentralize management to the lowest practicable level in order to achieve greater responsiveness and best use of resources. Professor Charles Bingman, of George Washington University, decried barriers to reform noting that once a program or activity had been enacted or implemented, all the relevant interests tend to resist efforts at change. The Federal Government, as a result, tended to lack the flexibility to accomplish reorganizations of operating structures. Mr. Wardell C. Townsend, Assistant Secretary for Administration for the Department of Agriculture Department, testified both on the President's Management Council Federal Field Office Study and the Agriculture Department's own progress in field office restructuring. He proposed four general guidelines for field office restructuring. First, where face-to-face contact is necessary, government presence should be maintained at the point of service delivery. Second, if face-to-face contact is unnecessary, communication technology should be used to upgrade service. Third, back-room operations should be centralized for efficiency. Fourth, unnecessary layers of control should be eliminated. Social Security Commissioner Shirley Chater testified on her agency's reappraisal of its own field structure. She reported her intention to reduce the number of its regional offices from 10 to 5. She also intends to reduce layers of management and increase the numbers of employees to supervisors from 1 to 7 to 1 to 15 by 1999. Commissioner Chater said that the changes were made possible, in part, by a 5-year, $1.1 billion investment in automation. The Commissioner was followed by Ms. Mary Chatel, the president of the National Council of Social Security Management Associations. She presented her organization's plan for redeploying 30 percent of headquarters and regional office staff resources into the field. The plan would go farther than the Social Security Administration's own plan to reduce management layers. Lynn Gordon, District Director of the Bureau of Customs in Miami, FL, and George Rodriguez, Area Coordinator, Department of Housing and Urban Development presented their National Performance Review stories. Each were involved in local initiatives, highlighted by the National Performance Review, to improve ``customer service'' through enhanced agency administrative flexibility. Both initiatives also seek to improve communications with affected individuals and institutions that are in contact with the agencies. On June 19, 1995, the subcommittee held the second part of its ``Streamlining Federal Field Structures'' hearing in Chicago, IL, at the Chicago Historical Society. Subcommittee Chairman Stephen Horn, in his opening statement, noted that the subcommittee had come to Chicago for firsthand answers to four questions. How should agencies determine their most effective field structure? How can the management of field offices be improved? How can closer interagency cooperation in the field be encouraged? What factors deter agency heads from changing field structures? In his opening statement, Representative Michael Flanagan welcomed the subcommittee to his hometown and his district. He noted that the hearing would focus on transportation and infrastructure issues. Representative Flanagan recalled that the Chicago area had long been a leader in this area, beginning with its role as a railroad crossroads and extending through the development of O'Hare as the world's busiest airport. Mr. William Burke, the Regional Administrator of the General Services Administration (GSA) for the Great Lakes Region, reported both on GSA's and the Federal Government's presence in the area. Mr. Burke also serves as chair of the Chicago Federal Executive Board. This board coordinates certain activities of Federal agencies in the region. Among the initiatives that Mr. Burke described was the ``Cooperative Administrative Support Unit'' (CASU) program. CASUs are an effort to hold down administrative costs by sharing overhead costs among different agencies. He also cited telecommuting programs as another means to hold down administrative costs. Gretchen Schuster, Regional Director of the Department of State's Passport Agency testified on her involvement with the Chicago Federal Executive Board. She described the board's efforts in coordinating the work of 154 member agencies in the Chicago area. Mr. Joseph Morris, an attorney in private practice in Chicago, drew upon his prior experience as General Counsel for the Office of Personnel Management. In addition to recommending moving more of the Federal Government's work outside Washington, Mr. Morris advocated better coordination among field offices through the Federal Executive Boards and more reliance by the Federal Government on Federal managers in the field. A second panel of witnesses, led off by Michael Huerta, Associate Deputy Secretary of Transportation, covered field offices involved in transportation and infrastructure programs. Mr. Huerta explained to the subcommittee his Department's proposal to reorganize. The plan would combine several functions into a new Intermodal Transportation Administration, combining all surface transportation and civilian maritime functions. In response to questions, he noted that the Department had yet to determine how the reorganization would affect regional offices. Mr. Huerta was joined by Mr. Garrote Franklin, Regional Administrator of the Federal Aviation Administration, Mr. Kenneth Perret, acting Regional Administrator, Federal Highway Administration, and Mr. Donald Gismondi, Deputy Regional Administrator of the Federal Transit Administration. The regional officials discussed the cooperation among the various components of the Transportation Department located in Chicago. They noted that changes in Federal transportation grant process resulting from the Intermodal Surface Transportation Act of 1991 had necessitated even more cooperation than had been the practice in the past. Col. Richard Craig, Commander and Division Engineer, North Central Division of the Army Corps of Engineers, described the current distribution of responsibility within the Corps among district, division and headquarters offices. The headquarters is primarily responsible for budget and broad policy issues, the division offices provide contact with State and local officials, program management and quality assurance. In response to questions, Col. Craig discussed the Corps' coordination with local governments on environmental regulatory issues. 9. Performance Measurement, Benchmarking, and Re-engineering. a. Summary.--Performance measurement uses indicators and measures to assess how well a program or organization is doing in terms of its mission, goals, and objectives. It focuses on results and outcomes, not processes or compliance. The indicators used are inputs, outputs, and outcomes. Inputs are dollars or time expended, outputs are the quantity and quality of services delivered, and outcomes are the quality and quantity of the results the outputs achieved. Measures are benchmarks to evaluate the indicators, such as a percentage increase or decrease. Performance measurement is necessary for benchmarking, which is the measuring of performance against some actual or desired standard of achievement, to be successful. Re- engineering involves examining how a program or organization works, followed by improving performance by redesigning work processes. b. Benefits.--Developing strategic plans that include performance goals, and measuring and monitoring performance on an ongoing basis, improves the quality of the activities performed or services rendered, contributes to greater efficiency, and can help to offset reductions in funding. Focusing on results rather than on inputs will lead to improvement in managing government operations. c. Hearings.--On June 20, 1995, the subcommittee convened a hearing on performance measurement, benchmarking, and re- engineering. It received testimony from witnesses representing States and think tanks. Representative Bass opened the hearing by stating that the subcommittee would examine performance measurement, bench- marking, and re-engineering and learn how the private sector, other countries, and State governments are using these techniques to respond to the needs of their customers, boost the quality of their products and services and lower costs. Mr. Donald Kettl, professor of public affairs and political science, University of Wisconsin, and the LaFolette Institute of Public Affairs, and nonresident senior fellow, the Brookings Institute for Public Management, stressed that performance measurement offers the potential to measure success in terms of results produced. It requires a long-term view. Performance measurement is about communication and management, not number crunching. Citizens can find out how tax dollars are delivering and Congress can find out how programs are producing. It is very difficult to measure outcomes, easier to measure outputs. Mr. Harry P. Hatry, director, State and local government research programs, the Urban Institute, had three recommendations for Congress: seek and use information on program quality and outcomes; coordinate among authorizing, appropriations and oversight committees to review agency performance information; and encourage State and local governments to measure performance in terms of quality and service to the public. Mr. Herbert N. Jasper, senior associate, McManis Associates, Inc., cautioned that performance measurement is not a panacea, there are pitfalls such as gaming by selecting safe targets, selecting data because it is readily available, even if irrelevant, and ignoring the fact that it is labor- intensive. He indicated that performance budgeting seeks to make budget decisionmaking more analytical and objective. However, the budget process is highly political and decisions will not always be made objectively. He called re-engineering the systematic application of common sense and described its basic steps. Mr. Johnny C. Finch, Assistant Comptroller General, General Government Division, GAO, reported that GAO studies on reform efforts show four actions to be critical if performance measurement is to be used effectively to improve programs: focus on mission and desired results; involve key stakeholders; develop performance measurement systems that have certain characteristics to provide relevant performance information for program managers, staff, and other decisionmakers; and use performance information in the selection and use of process improvement techniques that will further enhance performance. He emphasized that the number of measures chosen should be limited to significant ones. Ms. Linda Kohl, director of Minnesota Planning, described the comprehensive statewide benchmarking project known as Minnesota Milestones. It involved three stages. The first asked Minnesotans to decide on a long-term vision for the State. The second saw the development of measurable indicators called ``milestones'' which are clear, valid, associated with available data, accurate, and outcome-based. The third phase involved soliciting feedback on the indicators. In her opinion, benchmarking and the Milestones can be a tool to assure accountability for block grants. Ms. Sheron Morgan, Office of State Planning, North Carolina, discussed North Carolina's use of performance measurement, known as Performance/Program Planning and Budgeting (P/PPB). It links policy and budgeting and shifts accountability from efforts to results. She mentioned the need for evaluation, analysis and agency buy-in for successful implementation of P/PPB, and for senior management involvement. Mr. Joseph G. Kehoe, managing partner, government services, Coopers and Lybrand, LLP, described activity-based costing (ABC). He explained how ABC can be used to determine how much a service or activity truly costs and the usefulness of value analysis in ABC. Significant savings can be found with no associated reduction in quality when managers focus on activities and processes and eliminate the ones which do not add value. Ms. Laura G. Longmire, national director of benchmarking, KPMG Peat Marwick, LLP, in discussing benchmarking, performance measurement, and business process re-engineering, made it clear that the key issue in adopting these techniques is enhancing accountability. She said that processes must be measurable to be improved. In her opinion, all processes can be measured both in terms of quality and response time. Successful projects share common themes: long-term scope; management commitment; investment in technologies and tools; and constant communication. The culture has to become one focused on results rather than compliance. 10. Agency Initiatives To Implement the Government Performance and Results Act of 1993. a. Summary.--The Government Performance and Results Act of 1993 required agencies to evaluate their missions, goals, and objectives; develop strategic plans and performance measurement systems, set goals, and then evaluate results in the context of those goals. Strategic plans are due by September 1997, annual performance plans beginning in fiscal year 1997, and annual performance reports, beginning in the year 2000. The performance plans must include performance goals for agency program activities, and performance indicators that will be used to measure performance. OMB designated a series of pilots for fiscal years 1994 through 1996 in performance planning and reporting. A second set of at least five pilots will focus on managerial flexibility and accountability for fiscal years 1995 and 1996. b. Benefits.--Using performance measurement will change the focus of management from process and inputs to results and outcomes, increase efficiency and reduce costs by eliminating nonvalue-added activities. c. Hearings.--Subcommittee Chairman Horn opened the hearing by summarizing the series of hearings on ``Making Government Work''. This final hearing in the series focused on the administration and its success in implementing the GPRA. Mr. John A. Koskinen, Deputy Director for Management, Office of Management and Budget, gave an update on the administration's progress, saying that the pilot project stage is valuable because it provides time for experimentation. There are over 70 pilot projects in the first stage, none as yet in the second. OMB's aim is to integrate GPRA information into the budget and NPR processes. Mr. Johnny C. Finch, Assistant Comptroller General, General Government Division, GAO, suggested that there were five challenges for agencies preparing to implement the GPRA: developing and sustaining top management commitment; building the capacity within the agencies to implement GPRA and use performance information; creating incentives to implement GPRA and change the focus of management and accountability; integrating GPRA into daily operations; and building a more effective congressional oversight approach. He thought the hearing was an important first step in communicating to the agencies the importance to Congress of performance-based management. Dr. Paul C. Light, director, public policy program, the Pew Charitable Trusts, described the three types of accountability system, compliance based, capacity based, and performance based and these are not compatible, so changing from the compliance based system predominant in the administration currently to a performance based system will be difficult. He also discussed ``thickening'' of government, how it affects results, and how it can be reversed. He suggested getting rid of one-to-one spans of control and abolishing regional office layers. Dr. R. Scott Fosler, president, National Academy of Public Administration, thought GPRA could be a critical tool in improving government performance, if properly understood and effectively implemented. GPRA changes the focus from inputs to results. Success of GPRA depends on leadership from the executive branch and support from Congress. He questioned whether the capacity was there in the agencies for GPRA implementation and suggested that GPRA implementation may lag behind schedule. Mr. Anthony A. Williams, then-Chief Financial Officer of the U.S. Department of Agriculture, is responsible for coordinating GPRA implementation and testified on Forest Service efforts which constitute one of eight USDA pilots. He described how it had developed a set of 8-10 outcome-oriented corporate performance measures and the All Resources Reporting System, an integrated financial and reporting system which tracks both output- and outcome-related accomplishments. Performance measurement is achieved through a Management Attainment Report. He mentioned that good cost accounting systems are necessary to capture the cost of achieving outcomes, and that it is important to provide incentives to build management support for GPRA. In his testimony, Vice Admiral Arthur E. (Gene) Henn described the Coast Guard's pilot project which was distilled from a business plan developed in the Vice Admiral's office. It is one of four pilots in the Department of Transportation. He described the process as using a simple formula to get the desired outcomes, set goals, empower, manage risks, and measure activities. He emphasized the need to get ``buy-in'' from everyone involved in the project and encouraged the subcommittee to review the reports sent to Congress by the agencies. Mr. Joseph Thompson, Director, New York Regional Office, U.S. Department of Veterans Affairs, testified on the status of the implementation of GPRA in the New York regional office of the VA, which is also an NPR reinvention lab. Organization was changed from a hierarchical model to a self-managed team structure; the step process was reduced from 30 to 20. He praised the GPRA as a tool for organizational improvement. Colonel F. Edward Ward, director of field offices, Defense Finance Accounting Service, reported on the Air Combat Command (ACC) GPRA pilot. ACC is involved in the performance measurement pilot now and hopes to take part in the performance budgeting pilot in 1988. He described how ACC had developed a cost accounting methodology to track costs per unit of output and capture cost associated with performance measures, the Job Order Cost Accounting System II. He stressed the need to link goals and performance measures, for measures to be quantifiable so that costs can be linked to the performance indicators, and to track areas important to the ACC's mission, not just areas that are easy to measure. 11. The General Services Administration's (GSA) Security Measures at Federal Office Buildings. a. Summary.--On April 19, 1995, a bomb destroyed the Murrah Federal Office Building in Oklahoma City, killing 168 people, including 19 children, and injuring over 600 people. As a result of the bombing, security procedures were tightened and a thorough review conducted of security at Federal office buildings. In 1988, the Congress passed Public Law 100-440, which mandated that officer strength of the Federal Protective Service (FPS) be augmented by not less than 50 officers per year until a strength of 1,000 was reached. Instead, FPS personnel were reduced gradually to less than 400. b. Benefits.--This hearing, part of the subcommittee's ongoing activities relating to oversight of the GSA, revealed that GSA had not complied with Public Law 100-440. By identifying the barriers to improving workplace security, including low pay, inadequate recruitment, and the extension of buyouts to security personnel, the subcommittee pointed out methods for remedying the situation. c. Hearings.--Subcommittee Chairman Horn called the hearing on May 3, 1995, to examine GSA's security measures at Federal office buildings in the aftermath of the terrorist attack on the Oklahoma City Federal Building. Mr. Roger Johnson, then-Administrator, General Services Administration (GSA), testified as to GSA's initial response to the Oklahoma City bombing, and spoke about follow-up security measures to protect the Federal worker. Mr. Kenneth Kimbrough, then-Commissioner, Public Buildings Services, GSA, noted that Federal Protective Service officers were understaffed at the time of Oklahoma City with only 409 positions filled. Mr. Kimbrough added that a 1988 law mandates that the Federal Protective Service shall be not less than 1,000 officers. GSA under the current and previous administrations were not in compliance with this law. Mr. Gary Day, Assistant Commissioner for Federal Protective Services, Public Building Service, GSA, echoed Mr. Kimbrough's remarks and added that low pay and compensation have hindered the Federal Protective Service's ability to hire and retain up to its authorized complement of 1,000 officers. Ms. Faith Wohl, Director, Family Workplace Institute, GSA, testified that GSA has taken numerous preventive measures to deter kidnaping and child abuse in Federal child care facilities, but that it was not in GSA's experience to expect a terrorist attack. Ms. Julia Stasch, Deputy Administrator, GSA, testified as to the competence of contract security officers. Ms. Stasch noted that officers were well trained and worked in concert with local law enforcement forces. Ms. Emily Hewitt, General Counsel, GSA, was questioned about whether she had performed a compliance audit to determine which laws GSA was not complying with. Ms. Hewitt had not performed such an audit. Subcommittee Chairman Horn recommended that administration orientation for new agency heads include such an audit. 12. Controls Over Illegal Immigration--Along the Border and Within the Interior. a. Summary.--In 1993 and 1994, Congress voted to increase funds available to control immigration at the border, and increase the numbers of Border Patrol officers by 6,000. As these officers are deployed, the subcommittee remained interested in determining how they were being used, and how they were being divided amongst border duty and interior duty. b. Benefits.--This hearing shed light on the problems faced by State and local officials as a result of Federal policies on illegal immigration. Moreover, the lack of intergovernmental coordination and Federal agency attention to the concerns of local government brought into relief the frustration of local officials: They have neither the policy levers to stop immigration, nor control of the Federal tools to minimize the impact, but still must bear the cost of criminal justice, health, and education related to illegal immigration. c. Hearings.--On June 12, 1995, the subcommittee held a hearing to explore the resources that should be used to control illegal immigration at the border and within the interior of the United States. Witnesses included California State and county officials and officials from the Immigration and Naturalization Service (INS). Subcommittee Chairman Horn called the hearing to examine what resources should be deployed to control illegal immigration at the border and the interior. Mr. Daniel E. Lungren, attorney general, State of California, testified on the impact of illegal immigration on California's prison population and crime problem. Mr. Lungren noted that the dramatic costs involved with illegal immigration drains California tax dollars. Mr. Bill Jones, secretary of State of California, noted that the Motor-Voter Act increases the opportunity for a large number of people to participate in the political system. However, Mr. Jones voiced concern that a number of illegal immigrants would also participate unless California is allowed to take preventive steps. Mr. Gustavo de la Vina, Director, Western Region, INS, testified that the INS has developed a comprehensive immigration enforcement strategy that consists of border enforcement and management, work site enforcement and verification, detention and removal of criminal and deportable aliens, and customer service and assistance to States. Mr. Richard K. Rogers, Western Region, Los Angeles District, INS, testified on a new L.A. initiative which will enable employers to become fraudulent document experts. Mr. Johnny N. Williams, Chief Patrol Agent, INS Border Patrol Sector Headquarters (San Diego), testified on the cooperation that his agency has received from State and local law enforcement agencies. Mr. Williams noted that the Border Patrol's interdiction rate has steadily increased. Mr. Frank Ricchiazzi, assistant director of research, California Department of Motor Vehicles, testified on California policy and technological initiatives designed to improve their ability to provide secure, authentic and durable driver's licenses and ID cards. Mr. Timothy J. Staffel, chairman of the board of supervisors, county of Santa Barbara, noted that local and county governments bear the brunt of costs associated with illegal aliens in California. For example, Mr. Staffel asserted that one in five births in Santa Barbara County were to illegal alien mothers whose deliveries were funded by Medicaid. Mr. Jim Thomas, sheriff, county of Santa Barbara, voiced concerns about the large number of illegal aliens in California jails, the increase in the illegal criminal element in narcotic and gang investigations, and the lack of effective illegal employment investigations. Mr. Thomas W. Sneddon, Jr., district attorney, county of Santa Barbara, described the responsibilities of the Immigration and Naturalization Service, the U.S. attorney's office and the Social Security Administration and the level of assistance given by those offices to local government. Mr. Sneddon faulted the Social Security Administration for not providing information to local government to assist in crime control by identifying illegal aliens. 13. Budget and Financial Information--Annual Shareholders Report: How Does the Citizen Know What Is Going On? a. Summary.--Under the terms of the Congressional Budget Act, Congress passes a budget resolution outlining aggregate levels of discretionary spending and targets for reconciliation. Lacking from the annual budget process is a review of the total financial liabilities and assets of the Federal Government. The hearing examined ways to improve information to bring liabilities totaling trillions of dollars under the discipline of an annual budget. b. Benefits.--Increased public accessibility would enhance the Federal Government's accountability and demonstrate that it is fulfilling its stewardship duty to the American public. The hearing gave attention to the absence of important financial information in the budget process. It is important to regularly review this additional financial information and begin incorporating it into the annual budget process. c. Hearings.--Subcommittee Chairman Horn called the hearing on July 11, 1995. The hearing focused on information on the financial health of the Federal Government available to private citizens, and options for improving access to that information. At the hearing, testimony was received from witnesses from the General Accounting Office, the Office of Management and Budget, Citizens for Budget Reform, and America Report. Mr. Gene Dodaro, Assistant Comptroller General, Accounting and Information Management Division, General Accounting Office (GAO), noted the importance of having solid budgetary and financial information when making crucial policy decisions. Mr. Dodaro noted shortcomings in financial management, but asserted that progress in improving financial reporting was occurring as a result of the Chief Financial Officers Act and the creation of the Federal Accounting Standards Advisory Board (FASAB). Mr. Don Chapin, Chief Accountant, GAO, updated the subcommittee on the activities of FASAB. According to Mr. Chapin, FASAB is developing standards for reporting financial information which will allow Congress to improve its ability to provide oversight of Federal operations. Mr. Chapin noted the possibility that agencies might not be able to make operational the standards recommended by FASAB. Mr. G. Edward DeSeve, Controller, Office of Federal Financial Management, Office of Management and Budget, focused on three areas: the integration of the budget formulation and execution process with financial standards; the role of performance and program integrity in budgeting and financial management; and streamlining current reporting procedures. Mr. Harrison Fox, president, Citizens for Budget Reform, testified on the importance of including non-budgetary financial information in the annual budget process, to give greater attention to the deteriorating financial position of the Federal Government, as measured by the USA Report published by Citizens for Budget Reform. Mr. Fox advocated adoption of a financial plan to improve accessibility of information, risk assessment, and measuring outcomes and results. Mr. Brecht, publisher, America Report, testified about his project to make clear to citizens the financial health of the government in America Report, which is modeled on corporate annual reports. Mr. Brecht advocated a clearer vision of where the United States is headed, the role the Federal Government should play, and clarifying the core values which will guide these efforts. He also suggests that every agency be required to communicate its goals to citizens in an understandable fashion. 14. The Inspector General Act of 1978. a. Summary.--On Tuesday, August 1, 1995, the subcommittee held an oversight hearing of the Inspector General Act of 1978. Inspectors General (IG's) are charged with protecting the integrity of Federal programs and resources. Through their audits and investigations, Offices of Inspectors General (OIG's) seek to determine whether program offices, contractors, Federal workers, grantees and others are conforming with regulations and laws. Since the IG Act first established Inspectors General in 1978, the number of departments and agencies with IG's has grown to 61. Of these, 29 IG's are Presidentially appointed and subject to Senate confirmation. Another 32 IG's in smaller agencies are appointed by their agency heads. Presidentially appointed IG's have staffs totaling about 10,000 employees, with budgets adding to $900 million. Last year IG's' findings led to more than 14,000 successful criminal and civil prosecutions, $1.9 billion in investigative recoveries, and $24 billion in recommendations that agency funds be better used. Presidentially appointed IG's sit on the President's Council on Integrity and Efficiency (PCIE), chaired by the Deputy Director of the Office of Management and Budget; agency appointed IG's are on the Executive Council on Integrity and Efficiency (ECIE). To assure their independence, the IG Act gives them latitude in running their offices. They report directly to agency heads when identifying serious shortcomings, and directly to Congress in semiannual reports. IG's are effectively the only executive branch officials reporting directly to Congress without the need for clearance. They historically have been vigilant in protecting their autonomy, and this has led to differences with their bosses on issues of resources, staffing, and priorities. Critics have argued that IG autonomy has made them less responsive to management's legitimate need to use its audit and program evaluation function for managing agency operations. Also at issue is that IG's ``compliance'' orientation may lead to adversarial relationships between them and their agency managers. The National Performance Review (NPR) has led to a reappraisal of the IG mission. The NPR advocated that IG's broaden their focus ``from strict compliance auditing to evaluating management control systems.'' The NPR further argued that the IG compliance focus stifled agency innovation. IG's have answered, in part, with a vision statement that commits them to greater cooperation with program managers to strengthen operations. The PCIE is working on procedures for acting on allegations of OIG impropriety. The FBI would investigate criminal complaints, but the process is less clear on how to address non-criminal complaints, which might allege malfeasance or equal employment opportunity violations. The Associate FBI Director for Investigations usually serves as chair of the PCIE's Integrity Committee. The Federal Government's reliance on information technology systems raises several issues for IG's. GAO, for example, concluded that ``seriously inadequate automated financial management systems are currently the greatest barrier to timely and meaningful reporting'' at Federal agencies. Weak automated systems are more vulnerable to fraud, and they reduce management's ability to monitor operations. IG's have a stake in developments affecting Federal financial management. The Chief Financial Officer Act (CFOA) requires agencies to have audited financial statements beginning for fiscal year 1997. OIG's will perform most agency audits. Under the Government Performance and Results Act (GPRA) agencies will develop performance measures for agency management and eventually use the measures for allocating budgets. b. Benefits.--The IG's work reduces fraud, waste, and abuse in the Federal Government and contributes to improvement in efficiency and effectiveness of agency operations. The independent status of the IG's renders their opinions more objective, and therefore of greater value to lawmakers and other reviewers. c. Hearings.--Subcommittee Chairman Horn opened the hearing on August 1, 1995, stating that Inspectors General must be accountable. They should encourage improvement while not stifling innovation. He noted that the IG Community is working on increasing their cooperation with management. June Gibbs Brown, Inspector General of the Department of Health and Human Services and Vice Chair of the President's Council on Integrity and Efficiency, noted that the IG's are in a unique position to help program managers and the Congress find ways to achieve a more effective and efficient government. Hubert Sparks, the vice chair of the executive council on integrity and efficiency and inspector general of the Appalachian Regional Commission emphasized the unique role and relationship between IG's and the rest of their organization. IG's will always be in a position of balancing actions that will fulfill the requirements of the IG Act and contribute positively to improve government operations. In response to a question from Mr. Bass, Ms. Brown disputed the conclusion of Vice President Gore contained in a National Performance Review report, from which Mr. Bass quoted, that ``At virtually every agency he visited, the Vice President heard Federal employees complain that the IG's basic approach inhibits innovation and risk-taking. Heavy-handed enforcement with the IG watchfulness compelling employees to follow every rule, document every decision, and fill out every form has had a negative effect in some agencies.'' Ms. Brown stated that very little of the IG resources are really directed internally to people filling out forms or doing that last ``i''-dotting. Ms. Valerie Lau, the chairman of the PCIE audit committee and the Inspector General of the Department of the Treasury testified on the ``substantial'' new audit responsibilities imposed on the Inspectors General as a result of the Chief Financial Officers Act. She commented on the inherent difficulty of the audits. Mr. Frank DeGeorge, Inspector General of the Commerce Department, reported on his office's experience with information technology evaluations. He testified that system acquisitions at Commerce are often disorganized and ad hoc. Mr. William Esposito, Deputy Assistant Director, Criminal Investigative Division, Federal Bureau of Investigation and chairman of the PCIE's integrity committee, reviewed the process for considering allegations of wrongdoing against Inspectors General. He noted that revisions to the policy were currently under consideration. Mr. Charles Dempsey, former vice-chair of the PCIE and former Inspector General of the Department of Housing and Urban Development thought the IG Act was the best piece of public administration legislation in the last 20 years. Mr. Sherman Funk, former Inspector General of the Departments of State and Commerce, also commented on the balancing act that the Inspectors General perform. He disputed the contention, which he attributed to his fellow witness Paul Light, that IG's are too often focused on peripheral issues rather than concerned with the performance of the activities for which they were responsible. Dr. Paul Light, Pew Charitable Trusts, recalled the observation from his book, Monitoring Government that the Inspectors General were not sufficiently focused on prevention. He was of the opinion that the IG's hide behind the Yellow Book too frequently when it comes time to give meaningful advice to their departments and agencies on how they might prevent mistakes before they happen. Mr. Dwight Ink, president emeritus, Institute of Public Administration, observing that he testified from the perspective of his experience as a program manager, urged a narrower focus for the IG's. He testified that because program managers are held accountable for program outcomes, they ought to have their own resources for ensuring the integrity of the programs for which they are responsible. 15. Implementation of the Chief Financial Officers Act of 1990 and the Government Management Reform Act of 1994. a. Summary.--The Chief Financial Officers (CFO) Act of 1990 required agencies to have audits of revolving funds, trust funds and all funds that resembled commercial enterprises. The 1994 Government Management Reform Act (GMRA) extended the CFO requirements to cover all agency resources, with agency-wide audited financial statements due in March 1997, and Federal Governmentwide audited financial statements due in March 1998. b. Benefits.--Audited financial statements improve the quantity and quality of information provided to users of financial statements, allowing better decisionmaking concerning the allocation of scarce resources. Requiring agencies to prepare and have audited their financial statements requires them to strengthen their internal controls over waste, fraud and abuse, and enhances the reliability of the information contained in the financial statements. In all, the result for the executive branch will be greater efficiency and effectiveness of agency operations. c. Hearings.--Subcommittee Chairman Horn opened the hearing held on July 25, 1995, by stating that audited agency financial statements will minimize weak management controls, fraud and waste. The goal of each agency must be to produce a full statement on time and get an unqualified or ``clean'' opinion on the statement. Mrs. Maloney, in her statement, said that quick action was necessary to ensure compliance with the laws and stressed that there should be no delay in meeting the deadlines for audited financial statements. Mr. Charles A. Bowsher, Comptroller General of the United States, described the progress made by the 24 agencies of the executive branch in implementing the CFO Act and the GMRA and stressed that proper accounting and financial reporting leads to much better barriers against fraud, waste, and abuse. Mr. G. Edward De Seve, Controller, Office of Federal Financial Management (OFFM), Office of Management and Budget (OMB), discussed the role of the Federal Accounting Standards Advisory Board in developing Federal accounting standards. He hopes these will be available in time to be used for the fiscal year (FY) 1996 agency audited financial statements and the fiscal year 1997 Governmentwide audited financial statements. Mr. Gerald R. Riso, fellow of the National Academy of Public Administration and former Associate Director for Management and Chief Financial Officer, OMB, provided a historical perspective of the development of the CFO Act. In his view, the CFO Act has improved Federal financial management in many agencies, although the rate of progress in system improvement has slowed down. Mr. Edward J. Mazur, vice president for administration and finance, Virginia State University, and former Controller, OFFM, OMB, had several recommendations to strengthen the CFO Act, for instance the Controller of OFFM should report directly to the OMB Director, and that agencies should establish audit committees. Mr. Harold I. Steinberg, former Deputy Controller, OFFM, OMB, testified on four aspects of the CFO Act: its genesis and initial funding; agency CFO structures and appointments, financial management staffing; and the preparation of audited financial statements. In his opinion, agencies derive the real benefit from being audited from going through the process of preparing the financial statements, because they learn about and can correct weaknesses in their accounting and financial reporting systems. Mr. Buel T. Adams, vice president and treasurer, CBI Industries, representing the Financial Executives Institute, described the state of fiscal affairs of the Federal Government as ``woefully inadequate'', especially with respect to financial management systems. He said that management accountability must be improved and that taxpayers should hold Congress accountable for ensuring that their tax dollars are being spent efficiently. Mr. Thomas V. Fritz, president and chief executive officer of the Private Sector Council, listed benefits from audits required by the CFO Act: savings; knowledge about internal control and information systems problems; and clearer, more accurate and useful information about an agency's financial condition. Mr. Anthony A. Williams, then-Chief Financial Officer (CFO), U.S. Department of Agriculture, described USDA's accomplishments in financial management, including procurement reform, developing cost management techniques, oversight of the National Finance Center, and the Financial Vision and Strategy project. Mr. Alvin Tucker, Deputy CFO, Department of Defense, described steps the Department of Defense is taking to try to ensure that the goals of the CFO Act can be attained. Mr. Dennis Fischer, CFO, General Services Administration, described GSA's approach to CFO Act compliance. GSA is one of only four agencies that routinely receive unqualified opinions as a result of agency-wide audits. He credited GSA's success on having implemented the fundamental aspects of good financial management: CFO organization and responsibility well defined and strong controllers in place in major program areas such as the Public Buildings Service, Federal Supply Service, and Information Technology Service. Ms. Bonnie Cohen, Assistant Secretary for Administration and CFO, Department of the Interior, stressed the advantages of having responsibility for both budget and finance functions, and predicted that, with increased use of performance measurement, the link between budget and finance will become even stronger. 16. Department of Defense's Financial Management Problems. a. Summary.--The subcommittee has been examining certain indications, as expressed in news articles and in congressional hearings, of the Department's lack of ability to control problem disbursements, specifically negative unliquidated obligations and unmatched disbursements, as well as contractor overpayments which the Department of the Navy took years to recover. Additionally, as part of the ongoing subcommittee review of the Chief Financial Officers Act of 1990 and the Government Management Reform Act of 1994, it appears that the Department of Defense (DOD) will be unable to comply with the requirements of the GMRA for a considerable number of years, until they implement modern accounting and financial systems that currently they lack. Recent articles in the national press and other hearings on Capitol Hill have highlighted serious shortcomings in the Defense Department's financial management systems. The Washington Post reported that, in the past 10 years the Department of Defense had spent $15 billion that it could not account for. Contractors are routinely overpaid millions of dollars and are sometimes stonewalled when they try to give the money back. The systems are antiquated and make it difficult for staff to do their work accurately. The CFO Act of 1990 required the preparation and audit of financial statements for the Departments of the Army, the Air Force and 22 funds. Out of 24 parts of DOD examined in fiscal year (FY) 1994, only 1, a minor fund, received an unqualified opinion. Most were either not audited or received a disclaimer, meaning that the statements were not auditable, and therefore not in compliance with the CFO Act. b. Benefits.--The hearing addressed areas of needed improvement in financial management at the Department of Defense. If the millions of dollars that have been reported as overpayments to contractors had been used for necessary expenses, the Department would have been able to improve its readiness at a lesser cost than at present. c. Hearings.--A hearing was convened on November 14, 1995, to examine the Department of Defense's compliance with the Chief Financial Officers (CFO) Act of 1990 and the Government Management Reform Act of 1994. Subcommittee Chairman Horn opened the hearing by saying that strong financial management was needed and that the hearing would focus on what the Department was doing to strengthen its management control. Mrs. Maloney echoed Mr. Horn's statements and emphasized the need to follow generally accepted accounting principles (GAAP), citing the example of the improvement in the city of New York's fiscal situation after it adopted GAAP. Mr. John Hamre, Comptroller, Department of Defense, responded to the criticisms in the May 14, 1995 Washington Post article, and asked that the letter he had sent to Hon. Bill Young, chairman, Subcommittee on National Security, Committee on Appropriations, dated May 22, 1995, be included in the record. He gave his perspective on how DOD was doing in reform and improvement of financial management, and emphasized DOD's commitment to consolidate its accounting systems, and resolve the longstanding problem of unmatched disbursements. Mr. Richard Keevey, director, Defense Finance Accounting Systems, in answer to a question from subcommittee Chairman Horn as to how he would rate the DOD, on a scale of 1 to 10, with 10 being closest to getting clean audit opinions, he rated the Department as a 3. Mr. Alvin Tucker, Deputy CFO, DOD, discussed DOD problem disbursements, specifically the unmatched disbursements problem and overpayments to contractors. He then described DOD's plans for financial management reform. He stated that the overarching problem preventing an unqualified or qualified opinion on the DOD's financial statements is that the accounting systems which support the financial statements do not have an integrated general ledger or produce account-oriented transaction files, but gave no timetable for implementing a transaction-driven general ledger system. Mr. G. Edward DeSeve, Controller, Office of Federal Management, Office of Management and Budget, testified that OMB has been helping the Department of Defense move toward meeting the requirements of the CFO Act as set out in OMB Circular A- 127, Financial Management Systems (the Circular). OMB has recommended that DOD look outside of its own current financial management structure for system solutions, rather than building on the best of the in-house systems, since 76 percent of them do not meet the Circular's requirement to be consistent with the U.S. Standard General Ledger. Mr. Gene Dodaro, Assistant Comptroller General, General Accounting Office, gave the GAO's perspective on the challenges facing the DOD in meeting the objectives of the CFO Act. He stated that CFO Act audits have brought greater clarity to DOD's financial management problems. Progress is slow. According to a recent DOD IG report, general fund financial statements will remain unadaptable until September 1998 and the DOD IG will not be able to render an audit opinion on any of the services until the year 2000 at the earliest. He suggested the establishment of an independent, outside board of experts to aid in reform efforts. Ms. Helen T. McCoy, Assistant Secretary of the Army, described the improvements the Department of the Army has made in implementing the Chief Financial Officers (CFO) Act. The Army has prepared agency-wide audited financial statements as a pilot under the CFO Act since fiscal year (FY) 1991 but the auditors have been unable to express an opinion on the reliability of the financial statements because the accounting systems that provide the information for the statements do not have an integrated general ledger or produce account-oriented transaction files. The audit opinions, however, did note significant progress. The management control process has been restructured, and there is a new performance assessment process within Department of the Army headquarters. Ms. Deborah P. Christie, Assistant Secretary of the Navy, discussed the plans that the Department of the Navy has for financial management improvement. She emphasized the role of selection, upgrading, and deployment of financial systems. Four key activities in improving Navy financial operations are: organizing the Department, consolidating finance and accounting services in DFAS, standardizing and upgrading accounting systems, and improving the feeder systems and the quality of the data they contain. The final step will be to ensure the input of accurate data through modern feeder systems and a system of internal controls to provide sound financial information for internal decisionmaking and external reporting. Mr. Robert F. Hale, Assistant Secretary of the Air Force, discussed the progress the Department of the Air Force had made under his leadership. He has set up the Financial Improvement Policy Council, which works with senior Air Force and DOD leaders, and with organizations within the DOD such as DFAS and DBOF, the Financial Management Steering Committee, and the Senior Financial Management Oversight Council. He has called on the GAO and the Financial Executive Institute for advice and guidance on how to improve financial management. As a result, the Air Force has asked for assistance from Coopers and Lybrand and Electronic Data Systems in the area of systems certification and performance indicators. The Air Force is concentrating its efforts in the critical areas of inventory management, automated data processing security, internal controls, and streamlining the financial management process. Ms. Eleanor Hill, Inspector General, DOD, provided an assessment of the Department's ability to improve its finance and accounting operations and to comply with the acts. She also discussed the audit approach devised by the DOD IG's office. She stated that the financial statement data for the vast majority of DOD funds remain essentially not in condition for audit, because of a general lack of effective internal management controls. Neither the OIG nor the Service audit organizations were able to give audit opinions on the financial statements for the largest DOD funds covered by the CFO Act requirements for fiscal year 1994, funds totaling $715.5 billion. The most fundamental problem was that accounting systems do not compile and report reliable audit information. 17. Electronic Reporting Streamlining Act of 1995. a. Summary.--The Paperwork Reduction Act of 1995 included a number of reforms designed to reduce the burden of government- imposed paperwork on businesses and households. The Electronic Reporting Streamlining Act of 1995 would reduce the burden of regulatory reporting for business by allowing necessary data to be reported in an electronic format. b. Benefits.--This will improve the efficiency of Federal Government operations by allowing electronic filing of the necessary documents. c. Hearings.--Subcommittee Chairman Horn held a hearing on October 10, 1995, which focused on possibility of streamlining Federal operations, and easing the burden on private firms of reporting regulatory information, by adopting a scheme for electronic reporting. Mr. Thomas Kelly, Director, Regulatory Management and Information, Office of Policy, Planning and Evaluation of the U.S. Environmental Protection Agency (EPA) testified concerning his agency's use of information technology and the various initiatives related to electronic reporting and dissemination of information. Many of these initiatives were associated with the National Performance Review projects. Mr. Stephen Hanna, assistant for information technology, California EPA, explained his agency's pilot project for reporting regulatory information on hazardous waste manifests and other data required to be reported by private companies. Mr. Brad W. Lamont, vice president, Romic Environmental Technologies Corp., testified about his company's role in the California pilot. Mr. Lamont noted the large number of pages of data that Romic was required to submit to Cal-EPA, and that this volume of data was transferred by modem in 45 seconds. Upon questioning, Mr. Lamont noted the receptiveness of the Cal-EPA to new electronic reporting initiatives. Mr. David Roe, senior attorney, Environmental Defense Fund, noted the role that increased information about toxic release can play in improving enforcement and community information. Rose explained the manner in which electronic data in California eases the work of his organization in maintaining oversight of environmental data. Mr. Richard Ferguson, board member and executive director of Environment and Safety Data Exchange, is a leading expert on data exchange and standards issues. Mr. Ferguson explained the rationale for moving toward increased electronic reporting. According to Mr. Ferguson, the primary reason is that some will benefit from a reduced reporting burden, and it is those who must do the work to achieve the standards required for the plan to work. 18. Use of Transportation by Senior Executive Branch Officials in Compliance with Federal Travel Guidelines. a. Summary.--Continuing its oversight investigation and pursuant to Rules X and XI of the Rules of the House, the subcommittee has reviewed more than 40,000 documents relating to travel by senior executive branch officials. A pattern of neglect, if not abuse, was discovered on the part of some Federal agencies. The Office of Management and Budget (OMB), in Circular A- 126, has developed standards for government aircraft use by senior executive branch officials. These requirements have been supplemented by a White House Memorandum (dated February 10, 1993) and by OMB Bulletin 93-11. As President Clinton stated in the Memorandum: ``The taxpayers should pay no more than is absolutely necessary to transport government officials. The public should be asked to fund necessities, not luxuries, for its public servants.'' In addition to covering the use of government aircraft, the President's Memorandum contains limitations on the use of regularly scheduled commercial aircraft. It further requires that travel documentation ``be disclosed to the public upon request, unless classified.'' The General Services Administration (GSA) is charged with compiling a semiannual ``Senior Federal Travel Report,'' based on submissions from Federal agencies. It is incumbent upon the agency to supply full and accurate data in compliance with travel protocols and requirements. However, this has not been the case. OMB Circular A-126 requires the semi-annual publication of specific data in the Senior Federal Travel Report, published by the General Services Administration. Two problems exist in the reporting of senior official travel. First, agencies are frequently late in submitting completed reports to GSA. Second, agencies do not always supply all the needed data (specifically, cost to the government, reimbursable cost), intermediate destinations on round trip flights are frequently not reported, and costs are not pro-rated per individual. Additionally, the published copies of the Senior Federal Travel Reports are difficult to read and interpret. The International Civil Aviation Organization (ICAO) codes as listed in the text of the reports are not parallel to the ICAO codes as listed in the index. Important data elements are omitted from the final reports. There is no audit structure that enables GSA to enforce compliance. The subcommittee held two investigative hearings to examine the travel practices of Cabinet Secretaries and other senior executive branch officials. The first hearing was held on December 29, 1995, to examine the abuse of travel by Energy Secretary Hazel O'Leary, former White House staff official David Watkins, General Joseph Ashy, and the incomplete reporting by agencies such as NASA. The subcommittee received testimony from Representative Barlett regarding his 2 year involvement in examining the use of government aircraft by senior Federal officials. He became interested in the abuse of aircraft after David Watkins, at the time a White House staffer, used a Presidential ``whitetop'' helicopter for transportation to play golf at a Frederick, MD golf course. Mr. David E. Williams, research director, Citizens Against Government Waste, testified about the Citizens Against Government Waste's longstanding examination of the travel of Secretary O'Leary. Williams testified among other things that Secretary O'Leary retains a staff of 14 to handle her invitations and travel arrangements. Mr. Peter B. Zuidema, Director, Aircraft Management Division, Federal Supply Service, General Services Administration, testified that Federal aircraft can be used only for official purposes, and only when commercial airlines are not reasonably available. A cost comparison must also be performed. Mr. Dabis B. Buckley, Special Assistant to the Inspector General, Department of Defense, testified that as a result of investigations by the Office of the IG, the Department of Defense has taken steps to tighten its policy regarding the use of its aircraft. A second hearing was held on May 16, 1996, to investigate practices at three executive branch agencies, the Department of Interior, the Department of Veterans' Affairs, and the Department of Labor. Testimony was received from Gregory Walden, counsel, Mayer, Brown & Platt; Bonnie Cohen, Assistant Secretary for Policy, Management and Budget/Chief Financial Officer, the Department of Interior; Harold Gracey, Chief of Staff, Department of Veterans' Affairs; and Patricia Lattimore, Deputy Assistant Secretary for Administration and Management, Department of Labor. Mr. Walden testified that Government travel is something that is often abused and overlooked. He reiterated subcommittee Chairman Horn's point that the issues involved are not only about Government waste, but rather, Government ethics. Walden placed all travel violations discussed into an ethical context. b. Benefits.--Misuse of government aircraft and poor reporting of trips on government aircraft is a serious problem. Because of the casual reporting standards on the part of most Federal agencies it is difficult to determine which flights are in violation of Federal travel requirements. Subsequently it is difficult to determine how much money can be saved by eliminating abuse of the aircraft by senior Federal officials. With continuing congressional oversight, further hearings will instil some awareness into Federal agency management practices and that cost consciousness must be a factor in traveling on Government aircraft. c. Hearings.--December 29, 1995 a hearing was held entitled, ``The Use of Government Aircraft by Senior Federal Officials.'' May 16, 1996, a hearing was held entitled, ``Senior Executive Branch Officials Compliance with Federal Travel Guidelines.'' 19. The Government's Response to the Northridge Earthquake. a. Summary.--On January 17, 1994, the Los Angeles area was struck by one of the most damaging earthquakes in the Nation's history. The earthquake, referred to as the ``Northridge Earthquake'' resulted in more than 70 deaths, more than 18,000 injuries and caused 25,000 residents to become homeless overnight. The General Accounting Office (GAO) estimated more than 55,000 structures were damaged; 1,600 of these were deemed uninhabitable. The area's freeway system sustained heavy damage which resulted in closures in a number of locations. Of the $25-$30 billion losses sustained, FEMA provided relief in the amount of $3.4 billion, not counting assistance from 27 other Federal agencies and the American Red Cross. On January 19, 1996, the subcommittee held an oversight hearing on the Federal Government's response to the 1994 Northridge earthquake. The focus of the hearing was to receive testimony on preventive and cost-effective lessons that could be learned from the earthquake. Testimony was received from Hon. James Lee Witt, director, Federal Emergency Management Agency; Hon. Richard Riordan, mayor, city of Los Angeles, CA; Richard Andrews, director, Governor's Office of Emergency Services, State of California; Constance Perett, manager, Office of Emergency Services, County of Los Angeles; Maj. Gen. Robert Brandt, Assistant Adjutant General and Commander, California Army National Guard; Donald Jones, vice president for disaster services, American Red Cross; James Haigwood, CEO, American Red Cross, Los Angeles Chapter; Terri Jones, director of special projects, California Community Foundation; John Suggs, director of public policy and government affairs, United Way of Greater Los Angeles; Blenda Wilson, president, California State University, Northridge; Robert Maxson, president, California State University, Long Beach; and J. Richard Williams, dean of engineering, California State University, Long Beach. Mr. Witt outlined some of the steps FEMA took in the aftermath of the earthquake and some of the problems encountered with the recovery effort which included the distribution of benefits to eligible recipients, errors of mistakenly giving relief multiple times to the same people and to ineligible people such as illegal aliens. He acknowledged that FEMA needed to enhance its effort to work with State and local governments to promote mitigation efforts. Mayor Riordan described the efforts taken by the city of Los Angeles to provide relief from the earthquake, and suggested that in the future, the Federal Government could bypass FEMA and the Small Business Administration (SBA) and allocate disaster relief funds directly to local governments. This, he argued, would allow for a ``real-time'' relief process, expediting recovery efforts for victims. He added that the relief mechanism was not designed to enable localities to quickly provide assistance to multifamily apartment dwellings. He noted that SBA loans did not provide relief for multifamily apartments which sustained damage above the SBA limit of $1.5 million. In addition, FEMA should make a distinction between commercial and residential units. He also pointed out that instead of importing temporary relief workers from out-of- state, FEMA should make a concerted effort to hire local residents to provide assistance. In response to questioning, Mayor Riordan proposed that the SBA consider restructuring loans to allow for the decrease in value due to earthquake damage. b. Benefits.--This hearing enabled members of the subcommittee to learn first-hand the impact of one of the most damaging natural disasters to ever confront the United States, and learn how the agencies designed to respond to such crises fared in their response. The hearing also allowed members to learn of the efforts underway or planned which would allow manmade structures to withstand future disasters of this type. One of the actions taken was the establishment of a 24-hour disaster information network called the Recovery Channel which was broadcast on 125 cable television outlets. Another was the use of computer technology allowing for almost instantaneous assessments of relief available to victims of the earthquake. Donald Jones testified that more than 14,000 Red Cross volunteers responded to the earthquake. The Red Cross has an agreement with FEMA to provide emergency support services, including food, shelter, and clothing and spent more than $38 million providing services to victims of the earthquake. c. Hearings.--A field hearing entitled, ``The Government Responses to the Northridge Earthquake,'' was held on January 19, 1996. 20. OMB 2000 Reforms: Where Are They Heading? a. Summary.--In March 1994, the Office of Management and Budget (OMB) commenced a reorganization intended to make OMB more effective in serving the President and also how to achieve the proper balance between its responsibilities for management practices within the executive branch and its responsibilities for budget formulation. This reorganization, dubbed OMB 2000, fundamentally changed the organizational structure of OMB. Former budget areas were recreated as resource management offices (RMOs), and the Office of General Management was abolished. Since the three statutorily required offices--the Office of Federal Procurement Policy (OFPP), the Office of Federal Financial Management (OFFM), and the Office of Information and Regulatory Affairs (OIRA)--were unable to be abolished, OMB reduced the staffs of these offices and reallocated staff to the RMOs. In the case of the OFFM, over half of the authorized staff positions were transferred out. The subcommittee convened a hearing to review how a reform initiative, known as OMB 2000, has impacted upon management practices within the Office of Management and Budget and where OMB is headed as a result of this reform initiative. The subcommittee invited the following witnesses to testify at the February 7, 1996 hearing: Hon. Alice M. Rivlin, Director, and Hon. John A. Koskinen, Deputy Director for Management, Office of Management and Budget; Paul L. Posner, Director, Federal Budget Issues, General Accounting Office; L. Nye Stevens, Director, Federal Management Issues, General Accounting Office; Dwight A. Ink, president emeritus, Institute of Public Administration and former Assistant Director for Management, Bureau of the Budget and the Office of Management and Budget (Nixon administration); and Edwin Harper, former Deputy Director, Office of Management and Budget (Reagan administration). In his opening statement, subcommittee Chairman Horn stated that some experts say that a proper balance between budget and management has never been achieved at OMB. These experts question whether it is feasible to integrate the two functions in one organization, and suggest a solution is to set up a separate office within the Executive Office of the President, devoted entirely to management issues. Ms. Rivlin testified that the premise of OMB was based upon the notion that management is about using resources effectively. She asserted that there is not a way to separate resource management from other management. Prior to OMB 2000, OMB used a disjointed approach to dealing with both governmentwide and agency-specific management issues which was counterproductive. Dr. Ink testified that the potential for improvement in the management function within OMB was low because of: the inherent competition with the budget process; the budget not being focussed on crosscutting issues; lack of expertise in OMB to advise agencies on reorganization; lack of emphasis on long- term investment; and financial management. Consolidation of management and budget functions limits the capacity of OMB to provide leadership for reform, and can hinder actions to prevent abuse. He supported the idea of establishing an Office of Federal Management within the Executive Office of the President, but outside OMB. Dr. Harper defined good management as the efficient use of resources in pursuit of specific policy objectives, and said that it would be impossible to deal with improving management until we can measure government program outputs related to policy objectives. He questioned whether the manpower resources assigned to OMB were adequate and whether the statutorily mandated offices were necessary. He would also approve of a separate Office of Management, whose head should have cabinet rank. b. Benefits.--The new direction chosen for OMB, under the OMB 2000 initiative, was to make all OMB activities part of a comprehensive, integrating budget analysis, management review and policy development. The resource management offices (RMOs) were set up to implement this. These RMOs are responsible for budget formulation, program analysis, implementation of governmentwide policy as formulated by the three statutory offices, and program effectiveness and efficiency. Agencies depend on OMB for guidance on implementing regulations required by new and existing legislation; it shares responsibility with the Office of Personnel Management for making sure that agency personnel are trained to perform new functions, such as those required under the Government Performance and Results Act. It should be a resource for the President in management of the executive branch agencies, drafting Executive orders as required or acting as a guide or goad, whichever is necessary, to ensure that agencies follow the administration's policies. The intent of OMB 2000 was to increase the attention OMB staff give to management issues. In the opinion of the committee, as a result of its oversight activities, this has not happened, and it seems that more drastic action is needed to ensure that OMB has the capability to advise the executive branch concerning the complex problems of management facing it. c. Hearings.--A hearing entitled, ``OMB 2000 Reforms: Where Are They Heading?'' was held on February 7, 1996. 21. Using the Best Practices of Information Technology in Government. a. Summary.--Leading corporations use information systems to remake their organizations and improve performance. Enhanced communications let these organizations operate with a greatly reduced hierarchical structure. Fewer middle managers are now needed between line workers and senior management as organizations become ``flatter'' and less bureaucratic. Corporations are using more direct communications links with customers, suppliers and transporters to shorten delivery schedules and reduce expensive inventories. Use of cutting edge information resources at these organizations is often central to their core business strategies. Despite the potential of information systems in strengthening organizations, the Federal Government has lagged behind in its successful application. Numerous reports have identified weaknesses with specific Federal Government information systems. The General Accounting Office has previously placed many of the Federal Government's largest information technology systems on its ``high risk series'' listing of specific programs most vulnerable to waste, fraud and abuse. These have included the Federal Aviation Administration's air traffic control modernization, the Internal Revenue Service's tax systems modernization and the Department of Defense's corporate information management initiative. Other similar reports, such as the Office of Management and Budget's high risk list, have identified additional troubled information systems developments. The subcommittee convened a hearing to address the problem of examining how leading private institutions are using information technology to improve their organizations and to capitalize on the opportunities available from information systems. Witnesses testifying were: Peter Huber, senior fellow, Manhattan Institute, columnist, and author; Chris Hoenig, Director, Information Management Policy and Issues, General Accounting Office; Dr. Renato A. DiPentima, vice president & chief information officer, SRA Corp.; C. Morgan Kinghorn, Jr., director, Coopers & Lybrand; John Kost, chief information officer, State of Michigan; and David R. Brooks, vice president, Health Care Technology Sector, Science Applications International Corp. b. Benefits.--Despite the expenditure of approximately $25 billion per year and $200 billion over the past decade on information systems, the Federal Government lags behind the private sector in the effectiveness of its use of new technology. The Federal Government needs to draw upon the experience of other organizations that have successfully harnessed information technologies to be more efficient, effective organizations. The recommendations made at the hearing will improve the oversight activities conducted by the subcommittee. c. Hearings.--A hearing on ``Using the Best Practices of Information Technology in Government'' was held on February 26, 1996. 22. Oversight of IRS Financial Management. a. Summary.--Pursuing oversight issues designated in Public Law 103-356, the Government Management Reform Act of 1994 and Public Law 101-576, the Chief Financial Officers Act of 1990, the subcommittee convened two oversight hearings regarding the Internal Revenue Service's financial management. The first hearing examined several aspects of financial management and addressed the IRS' ability to produce financial statements, to have these statements audited, and to obtain verification of accuracy. Testimony was received from: Gene L. Dodaro, Assistant Comptroller General, Accounting and Information Management Division, General Accounting Office; Hon. Margaret Milner Richardson, Commissioner, Internal Revenue Service; Donald C. Alexander, former Commissioner of the Internal Revenue Service from 1973 to 1977; Donald L. Korb, former Assistant to the Commissioner of the Internal Revenue Service from 1984 to 1986; and Shannon O'Toole, former Resolution Trust Corporation Department Head and Section Chief of Real Estate Disposition. Subcommittee Chairman Horn emphasized in his opening statement the importance of Congress receiving accurate information to properly oversee and evaluate the IRS' performance. In addition, he addressed concerns regarding the General Accounting Office's inability to give an opinion on audited IRS' financial statements, and weaknesses of internal controls and lack of audit documentation. When GAO auditors review the IRS statements and underlying records, they were unable to reconcile these records and, thus, were unable to give an opinion on the financial statements from fiscal years 1992 through 1995. The audits have identified five significant problems within the IRS' financial management, which if not corrected, will preclude future auditors from rendering an opinion on the IRS's financial statements. They include the: (1) inability to verify total revenue of $1.4 trillion and the amount of tax returns; (2) unsubstantiation of the amount of collection from Social Security, income and excise tax; (3) reliability of reported estimate for FY 1995 of $113 billion for valid accounts receivable and of $46 billion for collectible receivable; (4) verficiation of the $3 billion for non-payroll expenses that the IRS reports; and (5) amounts the IRS reported as appropriations available for operating expenditures which cannot be reconciled with Department of the Treasury's records. Commissioner Richardson claimed that the IRS has strong systems and controls to ensure that the individual accounts are accurate and that they work. She explained that the IRS has two separate financial processes to track funds: the administrative system that handles our appropriated funds, and the revenue system that tracks tax collections. She stated that the current system the IRS uses, designed in 1994 (2 years after the IRS started doing service-wide audits as a pilot under the CFO Act), is not designed to provide the detailed information that is required by the CFO Act for financial statement presentation. Regarding accounts receivable, she described the improvement in management of the receivables inventory that has been undertaken by the IRS. They are also stepping up efforts to increase collection yields. She provided an update on the status of the private debt collection pilot project, in which the IRS is contracting out debt collection activities to a small number of debt collection agencies. A follow-up oversight hearing was held on September 19, 1996, to further discuss the state of financial management in the Internal Revenue Service. The hearing addressed whether there had been any improvement since the first hearing regarding the IRS' inability to produce reliable financial statements and the internal controls or the accuracy of data input. Witnesses testifying included Gene L. Dodaro, Assistant Comptroller General, Accounting and Information Management Division, GAO; Steven App, Deputy Chief Financial Officer, Department of Treasury; and Anthony Musick, Chief Financial Officer, Internal Revenue Service. Gene Dodaro gave the subcommittee a status report about the progress the IRS is making in addressing its financial management problems. He explained that the IRS has two sets of financial statements to account for: statements on its revenue gathering function under its custodial responsibilities, running at about $1.3 to $1.4 trillion currently; and statements reporting on the administrative operations paid for out of appropriations, running at about $8 billion currently. The IRS has improved in this area, and the auditors were able to verify the validity of about $5 billion of their $8 billion in appropriations. However, two problems remain in the administrative area: Documentation of receipts and acceptance of goods and services is inadequate; and the cash accounts with the Department of the Treasury cannot be properly reconciled. b. Benefits.--IRS financial management impacts congressional decisionmaking on many levels. The reliability of revenue and other information gathered by the IRS is of concern to Congress since the revenues collected by the IRS represent more than 90 percent of all revenues available to the Federal Government. The confidence taxpayers have in the IRS to collect and account for the taxes they pay directly affects the degree to which they comply with the tax code which in turn impacts the taxes collected. The efficiency with which the IRS collects the taxes and other receivables owing to the Federal Government affects the cost of other Federal programs to the taxpayer. Subcommittee Chairman Horn introduced H.R. 2234, which is designed to improve debt collection efforts in the Federal Government, to include provisions related to the IRS use of private debt collection agencies. c. Hearings.--On March 6, 1996, the subcommittee held an oversight hearing entitled, ``Oversight of the Internal Revenue Service Financial Management.'' On September 19, 1996, a follow-up oversight hearing was held entitled, ``Internal Revenue Service Financial Management: Has There Been Any Improvement?'' 23. Is January 1, 2000 the Date for Computer Disaster? a. Summary.--After midnight, December 31, 1999, computer systems throughout the world are at risk of failing. Computers may confuse the year 2000 with the year 1900 on January 1, 2000, and go backward in time instead of forward when the new century begins. The severity of the problem was raised when Congress was told that if businesses and governments continue to ignore this issue, disruption of routine business operations and the inability of the Federal Government to deliver services to the American people could result. According to a Congressional Research Service Memorandum dated April 12, 1996, ``Many people initially doubted the seriousness of this problem, assuming that a technical fix will be developed. Others suspect that the software services industry may be attempting to overstate the problem to sell their products and services. Most agencies and businesses, however, have come to believe that the problem is real, that it will cost billions of dollars to fix, and that it must be fixed by January 1, 2000, to avoid a flood of erroneous transactions.'' On April 16, 1996, the subcommittee convened a hearing to collect the facts on the steps Federal agencies are taking to prevent a possible computer disaster. Subcommittee Chairman Horn raised the question whether agencies are taking the necessary actions to identify where the problem lies and whether they are providing the necessary human and capital resources to correct the problem. In her opening statement, Ranking Minority Member Maloney noted: ``The cost of failure is high--systems that deliver services to individuals will not work, and those services will not be delivered. Checks will not arrive on time. Planes will be grounded, and ports will be closed.'' Testimony was received from: Kevin Schick, research director, the Gartner Group; Louis J. Marcoccia, director of data administration and logistics, New York City Transit Authority; Nicholas J. Magri, senior vice president, Securities Industry Automation Corp.; Michael B. Tiernan, the First Boston Corp. on behalf of the Securities Industry Association, Data Management Division; D. Dean Mesterharm, Deputy Commissioner for Systems, Social Security Administration; Hon. Emmett Paige, Jr., Assistant Secretary for Defense Command, Control, Communications and Intelligence, Department of Defense; and Hon. George Munoz, Assistant Secretary for Management and Chief Financial Officer, Department of the Treasury. The witnesses testified to a number of examples of incidences that could occur if industry and government continue to ignore this issue. In fact everything from unexpected expiration of drivers' licenses to erroneous dates for final mortgage payments could occur if two-digit date fields remain unable to recognize the year 2000. On September 10, 1996, the subcommittee convened a joint hearing with the Subcommittee on Technology of the Committee on Science to review the impact on personal computers, on State and local governments, and on Federal agencies. Testimony was received from: Sally Katzen, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget; Larry Olson, deputy secretary, information technology for the Commonwealth of Pennsylvania; Harris Miller, president, Information Technology Association of America; and Daniel Houlihan, first vice president and president elect, National Association of State Information Resource Executives. In her testimony, Sally Katzen provided an outline of the administration's current strategy for solving the problem: 1) raise the awareness of the most senior managers in Federal agencies to the dimensions of the problem; 2) promote the sharing of both management and technical expertise; and 3) remove barriers that may slow down or impede technicians fixing systems. Larry Olson presented Pennsylvania's plan of action. As noted by Olson, the key to success of the plan is senior level support. Mr. Olson pointed out that during his first year as Governor of Pennsylvania, Tom Ridge quickly recognized the dramatic implications of the Year 2000 date field problem. Subsequently the Governor took quick action to ensure that Pennsylvania businesses and governments will be prepared before January 1, 2000. Harris Miller presented an outline of how the Year 2000 situation presents three problems for personal computer users in homes and businesses across the country: 1) the BIOs chip of individual machines; 2) the operating system that generally comes bundled with new computers; and 3) the commercial software purchased for those machines. Most equipment manufacturers in the past 18 months have modified their products. Operating systems in personal computers in most cases can have their operating systems ``fixed'' through a simple procedure using the computer's mouse. Commercial software products may or may not be Year 2000 compliant. An issue of great concern for personal computer users is the increasing access with other systems. In order to ensure that computer systems are operational in the year 2000, most systems will need modification. Miller also testified further that personal computer users as well as mainframe information technology managers need to be aware of this issue and take appropriate corrective steps. b. Benefits.--According to Mr. Schick, the crisis revolves around time, cost and risk. Businesses, Federal agencies, and State and local governments must understand that this information technology project cannot be allowed to slip: Saturday, January 1, 2000 cannot be postponed. Prevention of widespread disruption of services to citizens, breakdowns in information processing, and compromising of computer security controls must be kept to a minimum. The problem, although not technically complex, is managerially challenging and will be very time consuming for private and public sector organizations. It is the Government's responsibility to ensure that its constituents receive Federal services and that public safety is available to all citizens. (See section II.A.2.) c. Hearings.--Hearings entitled, ``Is January 1, 2000 the Date for Computer Disaster?'' and ``Solving the Year 2000 Computer Problems'' were held on April 16, 1996 and September 10, 1996. 24. Oversight of the General Accounting Office. a. Summary.--The primary mission of the General Accounting Office (GAO) is to investigate all matters relating to the receipt, disbursement, and application of public funds, which includes the audit requirements under the Chief Financial Officers Act of 1990. The scope of the GAO's authority has been extended to include conducting commercial audits of governmentwide operations; establishes principles and standards for accounting in executive agencies and audit evaluations of the adequacy of financial management and control; and to conduct a governmentwide audit of the executive branch's agencies in compliance with the Government Management and Reform Act of 1994. The subcommittee convened an oversight hearing on April 30, 1996, to review the growing concerns regarding the GAO's operations and responsibilities; the efficiency of the GAO's processes; and the prioritization of the functions which the GAO performs. Testimony was received from Hon. Charles A. Bowsher, Comptroller General of the United States, U.S. General Accounting Office; Hon. John A. Koskinen, Deputy Director for Management, Office of Management and Budget; Dr. R. Scott Fosler, president, National Academy of Public Administration; Thomas V. Fritz, president and CEO, the Private Sector Council; and Dr. Cornelius (Neil) E. Tierney, accounting professor, George Washington University. Comptroller General Bowsher stated that since 1983, the GAO had doubled its productivity. Some of GAO's accomplishment have led to budget reductions, cost avoidance, appropriation deferrals, and revenue collections that have provided financial savings and other benefits in the billions of dollars. In fiscal year 1995, this amounted to a return of $35 for every $1 appropriated for the GAO. Dr. Tierney stated that, with respect to the GAO's government auditing standards, two conditions exist that might warrant assistance from Congress: the need to actually audit and have auditors render an opinion on the adequacy of a government's system of internal controls; and giving increased emphasis within and possibly requiring the Inspectors General community to periodically conduct the program performance audits outlined and contemplated by the GAO in its government auditing standards. In addition, Tierney said that the concerns expressed about certain aspects of the GAO operations, its working relationships with individual Members of Congress and committees, and its independence, had been examined over the years. The GAO is continually concerned over the length of time taken to issue reports of its reviews and audits. At times, report preparation and delivery have exceeded a year or more. Also he stated that the GAO workload includes various studies, reports, audits, etc., that are legislatively mandated. Much of what appears to be self-initiated, is, in fact, the result of mandates in laws by earlier Congresses. b. Benefits.--In fiscal 1995, the GAO prepared 1,322 audit and evaluation reports, including 910 reports to Congress and agency officials, 166 congressional briefings, and 246 congressional testimonies delivered by 72 GAO executives and serves a valuable asset to the Congress in its oversight of the executive branch. Mr. Bowsher also described steps the GAO has taken to improve its productivity and better serve Congress. It has streamlined its headquarters and field operations. It has improved its processes for conducting and reporting the results of its work. It plans to capitalize on advances in information resource technology and to enhance its methodological and technical skills. In addition, the GAO's financial audit division has successfully undergone an external peer review by KPMG Peat Marwick. c. Hearings.--On April 30, 1996, the subcommittee held an oversight hearing entitled ``Oversight of the United States General Accounting Office.'' 25. Oversight of the General Services Administration. a. Summary.--The General Services Administration (GSA) was created to provide an economical and efficient system to supply goods and services to the Federal Government. It has not been reauthorized in the nearly 50 years of its existence. The subcommittee held a hearing on May 10, 1996, to examine GSA's authority over the Federal motor vehicle fleet, personal property disposal, and leasing of Federal buildings. The subcommittee heard testimony from: David Barram, Administrator of General Services, GSA; G. Martin Wagner, Associate Administrator, Office of Policy, Planning and Evaluation, GSA; Frank Pugliese, Commissioner, Federal Supply Service, GSA; David Bibb, Deputy Commissioner, Public Buildings Service, GSA; Andrew Jones, senior manager, Arthur Andersen; John Dues, partner and director, Arthur Andersen; Chris Butterworth, president, National Association of State Agencies for Surplus Property; and Bill Wilson, vice president, National Association of State Agencies for Surplus Property. Subcommittee Chairman Horn opened the hearing by noting that GSA had not been reauthorized since 1949, and asserted that this harmed GSA, since its programs do not have regular congressional input aside from the $257 million in appropriated funds. In addition to the lack of clear direction from Congress, GSA is split between policy and oversight and the provision of services. Chairman Clinger raised issues relating to the Federal motor vehicle fleet and if GSA could effectively operate a large fleet. Mr. Pugliese stated that the Federal Supply Service would be responsible for operating the GSA fleet, and the Office of Policy, Planning and Evaluation would handle the policy aspects. Pugliese noted that 90 percent of the dollars spent by the GSA fleet program are spent on private sector contractors--so much of the program is already privatized. Mr. Wagner described the purpose of the surplus property program, which is to put Federal property toward the highest possible use, in a Federal agency or a State or local government agency. Wagner agreed that GSA and other agencies should take a look at the property management function, since $30 billion in surplus personal property is declared excess each year by Federal agencies. Subcommittee Chairman Horn raised the issue of leases and public buildings, describing how GSA was charging his predecessor $80,000 for office space he obtained for $30,000, with an increase in service for constituents. Administrator Barram noted that GSA was required to locate, where possible, in downtown city centers, which inflates the cost. b. Benefits.--Administrator Barram noted that lease renegotiation and ensuring that tax reductions are passed through to the Federal Government will reduce office rate charges over the next few years. David Bibb noted that every 5 years appraisers examine buildings to establish the market rate. Several private real estate firms have approached GSA offering to assist GSA in locating savings through restructuring existing leases, challenging tax assessments, and performing lease audits for free in exchange for some portion of the savings. Some private firms say that $1 billion could be saved annually, whereas Arthur Andersen notes show that GSA could save $565 million annually. c. Hearings.--On May 10, 1996, the subcommittee held a hearing on ``Oversight of the General Services Administration (GSA).'' 26. Federal Information Policy Oversight. a. Summary.--As part of its oversight responsibility, the subcommittee has jurisdiction over the following aspects of the Government's information policy: the Freedom of Information Act (FOIA); the Privacy Act; Government in the Sunshine Act; and Federal Advisory Committee Act. The subcommittee conducted an oversight hearing on June 13, 1996, to receive testimony from witnesses regarding the execution of these information policy laws. In his opening statement subcommittee Chairman Horn expressed his frustration upon learning that the Federal Bureau of Investigation (FBI) has a 4-year backlog for responding to FOIA requests. In noting the significance that the committee attaches to the Freedom of Information Act, he observed that the first report issued by the House Committee on Government Reform and Oversight was an updated version of ``A Citizen's Guide on Using the Freedom of Information and Privacy Act of 1974 to Request Government Records.'' The subcommittee received testimony from Senator Patrick Leahy who noted the role that FOIA requests had in uncovering information about various Government actions. He stated that the law needed to be updated to reflect the advancing use of information technology in Government to maintain records, adding ``access should be the same whether they are on a piece of paper or a computer hard drive.'' The Senator also criticized the failure of agencies to comply with the statutory time limits for responding to requests. Few agencies actually respond to FOIA requests within the 10-day limit required by law. Such routine failure to comply with the statutory time limits is bad for morale in the agencies and breeds contempt by citizens who expect Government officials to abide by, not routinely break, the law. Witnesses were Senator Patrick Leahy; J. Kevin O'Brien, Section Chief of the Freedom of Information/Privacy Acts Section, FBI; Roslyn Mazer, Deputy Assistant Attorney General, Office of Policy Development, Department of Justice; Anthony Passarella, Director, Directorate for Freedom of Information and Security Review, Office of the Assistant Secretary of Defense; Eileen Welsome, journalist; Larry Klayman, chairman and general counsel of Judicial Watch; Jane Kirtley, executive director, of the Reporter's Committee for Freedom of the Press; Byron York, reporter for the American Spectator; Marty Wagner, Associate Administrator, Office of Policy, Planning and Evaluation, GSA; James L. Dean, Director, Committee Management Secretariat Staff, GSA; Paul Kamenar, executive director, Washington Legal Foundation; Randolph May, attorney, Sutherland, Asbill & Brennan. b. Benefits.--Access to government information, government records about individuals, and the protection of personal records from unwarranted disclosure are each important protection in a democratic society. Technological developments have the potential of dramatically enlarging the potential for disclosure of this information. Legislative and oversight initiatives are necessary to assure that these new developments facilitate the release of information intended for disclosure in a timely manner, while also better shielding those personal records which the public expects to be kept private. c. Hearings.--Hearing entitled, ``Federal Information Policy Oversight,'' was held on June 13, 1996. 27. Oil Royalties. a. Summary.--The subcommittee has legislative and oversight jurisdiction with respect to the ``overall economy, efficiency and management of government operations and activities, including Federal procurement.'' In addition, the subcommittee has the oversight responsibility to review and study on a continuing basis, the operation of government activities at all levels with a view to determining their economy and efficiency. Pursuant to this authority, the subcommittee convened an oversight hearing to examine whether companies under agreements to extract oil from Federal lands in California undervalued the oil and as a result, underpaid royalties to the Federal Government. In 1975, the State of California and the city of Long Beach pursued litigation against seven major oil companies operating in California alleging that these companies conspired to keep posted oil prices low. The city and State claimed they had been damaged because their oil revenues depended on posted prices (posted prices are the announced prices at which crude oil purchasers, generally major refiners, will buy oil from producers at the wellhead) and the royalty thereon. If the posted price is below fair market value, the Federal Government loses tax and royalty revenue. In 1986, the Minerals Management Service (MMS) of the Department of the Interior contacted State officials to assess the appropriateness of posted prices as the royalty value basis. MMS concluded that the system of posted prices existing at the time fairly represented market value. Also weighing heavily in the MMS decision was the fact that the State and city had been unsuccessful in their antitrust claims in court. The Justice Department looked into the issue and chose not to pursue an investigation. In the mid-1980's, MMS, the General Accounting Office and the Internal Revenue Service independently analyzed the issue, but the information available to them was inconclusive in proving that Federal oil was undervalued at posted prices. In 1991, six of the companies involved (ARCO, Shell, Chevron, Mobil, Texaco, and Unocal) reached settlements totaling $345 million to end the court actions by the State and city alleging undervaluation. A seventh defendant, Exxon, went to trial and was exonerated. That decision was appealed, and Exxon won the appeal in January 1995. A separate appeal covering a different time period is still pending. Given the length and circumstances of the litigation, it is not certain whether the companies settled as a practical matter to cut off litigation, or whether they were concerned about potential legal liability. In light of the 1991 settlement, MMS performed a scoping exercise to estimate the size of any potential Federal royalty underpayment. In 1994, an interagency team consisting of MMS, the Department of the Interior's Solicitor's Office and the Departments of Energy, Commerce and Justice, investigated the allegations. The Justice Department resigned from the team, citing an inability to prove antitrust violations. The State of California assisted the Federal team in obtaining court records from the earlier litigation. b. Benefits.--The Minerals Management Service has delayed the collection of oil royalties which are owed. This hearing was the first congressional hearing on the issue of undervaluation of crude oil. As such, the hearing benefited the Federal Government by focusing attention on the problem and demonstrating that there was bipartisan congressional interest in pursuing underpayment. (See section II.A.3.) c. Hearings.--On June 17, 1996, the subcommittee held a hearing entitled, ``Can the U.S. Increase Oil Royalties.'' 28. Field Hearing on the U.S. Border Patrol's Operation Gatekeeper. a. Summary.--The U.S. Border Patrol is a part of the Immigration and Naturalization Service, the primary agency in the Department of Justice responsible for enforcing the Nation's immigration laws. The Border Patrol is responsible for securing the international land and water borders between ports-of-entry with the goal of preventing illegal entry into the United States, interdicting drug smugglers, and compelling those persons seeking admission to the country to present themselves legally at ports-of-entry for inspection. On October 1, 1994, the Department of Justice initiated Operation Gatekeeper in an attempt to reduce illegal immigration across the United States-Mexico border in the San Diego region. Administered by the Border Patrol, Operation Gatekeeper has as one of its goals the shifting of illegal crossing routes to areas that are remote and difficult to cross--areas where the Border Patrol presumably has a tactical advantage. The operation has had the effect of moving the flow of illegal alien traffic eastward, away from San Diego, Imperial Beach and Chula Vista to Brown Field and beyond eastern San Diego County. A key objective of Operation Gatekeeper is providing a deterrent to illegal aliens crossing the United States-Mexico border. Accordingly, a measure of the operation's success is the number of individuals apprehended for illegally crossing the border. The fewer people caught, it is argued, the more successful the operation, since its aim is to reduce the number of illegal aliens arrested in the areas targeted by the initiative by deterring their crossings. Figures provided by the Immigration and Naturalization Service show reductions in the number of apprehensions in the southwest border region. Arrests in Imperial Beach have fallen to approximately 60,000 for the first 9 months of the current fiscal year versus 84,000 for the same period during the previous year. Arrests in Chula Vista have dropped from 105,159 to 91,987 during the same period. Arrests in Brown Field dropped from 109,141 to 94,206 during that time. The subcommittee investigated allegations made by agents of the Border Patrol that the reported drop in arrests was due to falsification of the reports by officials within the Border Patrol. At a hearing before the California State Assembly Subcommittee on Border Crime, T.J. Bonner, president of the National Border Patrol Council testified that the Border Patrol has: ``[E]ngaged in a comprehensive campaign of deception regarding the effectiveness of Operation Gatekeeper. In its zeal to make good on its promise to replicate the reduction in arrests that occurred in El Paso, the Border Patrol encouraged and ordered agents to create the appearance that illegal entries had declined dramatically in the westernmost fourteen miles of the border.'' Mr. Bonner made a number of specific allegations about the effectiveness of the operation. In his opening statement, subcommittee Chairman Horn questioned the use of the apprehension rate as a gauge to assess the effectiveness of Operation Gatekeeper. He further noted the concerns of residents in areas where the traffic flow of illegal aliens has increased due to the operation. T.J. Bonner testified that: ``[T]he Border Patrol has engaged in a comprehensive campaign of deception regarding the effectiveness of Operation Gatekeeper . . . Encourag[ing] and order[ing] agents to create the appearance that illegal entries had declined dramatically . . .'' He stated that Border Patrol agents were ordered to remain in stationary positions and not to leave their locations even if illegal aliens crossed on either side of their stations. They were chastised and threatened with disciplinary action when they arrested illegal aliens. Illegal aliens were turned back without arresting them, and in other instances, the apprehensions were not recorded or reported. In addition, he testified that the Border Patrol altered the location for returning illegal aliens to Mexico by sending them hundreds of miles away from the San Diego area. This was done, Bonner noted, to ensure that if the illegal aliens attempted another crossing, the flow would not be felt in the area covered by Operation Gatekeeper. ``The result of all of these actions was an artificial decrease in the number of apprehensions'' stated Bonner. Mr. Bonner was joined by a Border Patrol agent whose identity was shielded by the subcommittee from disclosure. This was done at the agent's request for fear that if his identity was known to his supervisors at the Border Patrol, reprisals would occur against him for speaking publicly about allegations about the operation. His testimony supported the allegations raised in Mr. Bonner's statement. He added that quotas were set to limit the number of apprehensions, and noted that he witnessed the falsification of official reports on the number of illegal aliens stopped. In response to a question from subcommittee Chairman Horn, the agent noted that the order to manipulate data came from Johnny Williams, Chief of the Border Patrol's San Diego sector. b. Benefits.--The testimony received during this hearing enabled members of the subcommittee to hear firsthand the impact of Operation Gatekeeper. The testimony leads to the conclusion that Operation Gatekeeper is not a complete success; it has had limited success in slowing the entry of illegal aliens in a few miles of the border. The subcommittee will continue its oversight of this initiative due to the findings from the hearing. c. Hearings.--On August 9, 1996, the subcommittee held a field hearing on ``U.S. Border Patrol Implementation of Operation Gatekeeper.'' 29. Oversight of the Smithsonian Institution. a. Summary.--The subcommittee convened an oversight hearing with the Committee on House Oversight to review security and procurement procedures of the Smithsonian. The subcommittees heard testimony from I. Michael Heyman, secretary of the Smithsonian Institution; Tom Blair, Inspector General of the Smithsonian Institution, and Bill Gadsby, Director of Governmental Business Operations, General Accounting Office. The Smithsonian entered into a contract with Hughes Aircraft Company to develop and build the Smithsonian Institution Proprietary Security System (SIPPS). It took 12 years to complete from the initial award of the contract. The SIPPS was handled in two phases. In spite of the facts that there were significant problems with phase I of the project, the Smithsonian proceeded with phase II. The SIPPS was a complete failure, in that it was unable to protect the collections of the Smithsonian. The procurement and the performance of SIPPS was reviewed by Inspector General Blair who recommended changes in the procurement system. Secretary Heyman was in agreement with Mr. Blair regarding the procurement practices of the Smithsonian as they relate to the procurement of SIPPS. However, it was noted, many of the problems that existed during the initial SIPPS procurement have since been corrected. In addition, Secretary Heyman testified that during the 150th anniversary year of the Smithsonian, it has embarked on a program to enhance public exposure, accessibility and education. One of the ways in which the Smithsonian increased accessibility was to bring collections and collective experts on-line. b. Benefits.--This oversight hearing was the first in many years. This was an opportunity for the subcommittee to exercise its oversight authority over the Smithsonian. c. Hearings.--The subcommittee held an oversight hearing on September 25, 1996 on the Smithsonian Institution. The hearing was held jointly with the House Oversight Committee. HUMAN RESOURCES AND INTERGOVERNMENTAL RELATIONS SUBCOMMITTEE 1. Efforts To Reorganize and Improve Program Performance and Efficiency at the U.S. Department of Housing and Urban Development (HUD). a. Summary.--The Human Resources and Intergovernmental Relations Subcommittee reviewed budget data, National Performance Review recommendations, Inspector General audits and reports, and General Accounting Office studies and recommendations to identify opportunities for cost savings, improved efficiency and consolidations in the programs and operations of the Department of Housing and Urban Development (HUD). The subcommittee convened two oversight hearings with respect to the agency. On February 13, 1995, the subcommittee invited the HUD Secretary Henry Cisneros to testify about the agency's core mission, management, plans, programs, and potential cost savings. The Secretary was also asked to discuss successes and challenges facing HUD in meeting its core mission. Secretary Cisneros spoke about HUD's Blueprint for Reinvention which focuses on the consolidation of several programs, the Department's efforts to transform the Federal Housing Administration (FHA) ``from a government bureau to a government corporation,'' and the agency's sweeping efforts to transform public housing throughout the country. Subcommittee Chairman Shays congratulated Secretary Cisneros on the agency's efforts to reorganize into a ``leaner and more efficient'' agency. On February 22, 1995, the subcommittee held a second hearing to receive information from HUD's Inspector General (IG); the Director of Housing and Community Development Issues of the U.S. General Accounting Office (GAO); a senior fellow from the Hudson Institute; a former chairman of the Chicago Housing Authority and president of American Community Housing Associates; a private organization; and the founder of the National Low Income Housing Coalition. b. Benefits.--American taxpayers and public housing residents, in particular, benefit from administrative savings, greater flexibility, and more effective concentration of limited HUD resources. The hearings demonstrated that there are opportunities at HUD for cost reduction, improved efficiency and reform and allowed HUD officials, former HUD officials, and other Federal and private officials the opportunity to come together to discuss what HUD is doing right as well as what the agency might be doing wrong. c. Hearings.--Hearings entitled ``Oversight Hearing on the Department of Housing and Urban Development'' were held on February 13 and 22, 1995. 2. Efforts To Improve Program Performance and Efficiency at the U.S. Department of Health and Human Services (HHS). a. Summary.--The subcommittee reviewed budget data, National Performance Review recommendations, Inspector General audits and reports, and General Accounting Office studies and recommendations to identify opportunities for cost savings, improved efficiency and consolidations in the programs and operations of the Department of Health and Human Services (HHS). On March 1, 1995, the subcommittee convened an oversight hearing to receive testimony from HHS Secretary Donna E. Shalala. The Secretary was invited to discuss the agency's core mission, goals, programs, and plans for cost saving; to indicate what HHS does well and describe what HHS programs could possibly be better done by the States and localities; and to address agency efforts to move Medicare and Medicaid into managed care systems. Secretary Shalala testified about HHS efforts to reinvent the agency, and indicated that she continually asks the following questions with respect to the duties and responsibilities of HHS: Are the programs or functions critical to the agency's mission and based on customer input? Can the program or the function be done as well or better at the State or local level? Is there a way to cut cost or improve performance by introducing competition? Can the program be improved by putting customers first, cutting red tape, and empowering employees? On March 22, 1995, the subcommittee convened a second oversight hearing to receive testimony from public and private sector witnesses, as well as testimony from the U.S. General Accounting Office (GAO), HHS's Office of Inspector General (OIG), and representatives from the Heritage Foundation and Project HOPE. GAO and OIG officials focused on the critical area of losses due to waste, fraud and abuse in the Medicare and Medicaid programs. Losses in national health care spending are estimated by the GAO to be as high as 10 percent of total spending. If these estimates are correct, losses due to waste, fraud and abuse in Medicare and Medicaid in fiscal year 95 could be in excess of $24 billion. b. Benefits.--Every American taxpayer benefits from a Federal health care and human services delivery system operated in the least costly manner with the needs of the customer given great weight in the decisionmaking processes. The subcommittee will continue to monitor waste, fraud and abuse in Medicare and Medicaid programs. Recommendations made by the GAO, OIG and others in the course of this hearing to reduce staggering and unacceptable losses will be carefully examined and monitored. c. Hearings.--Hearings entitled ``Oversight Hearing on Department of Health and Human Services'' were held on March 1 and 22, 1995. 3. Efforts To Reorganize and Improve Program Performance and Efficiency at the U.S. Department of Labor (DOL). a. Summary.--The subcommittee reviewed budget data, National Performance Review recommendations, Inspector General audits and reports, and General Accounting Office studies and recommendations to identify opportunities for cost savings, improved efficiency and consolidations in the programs and operations of the Department of Labor (DOL). On March 9, 1995, the subcommittee convened an oversight hearing, DOL Secretary Robert B. Reich was asked to address what DOL does well and to describe particular situations that the agency was finding challenging in the accomplishment of its core mission, goals, programs, and plans for cost saving. Secretary Reich was questioned about Representative Steven Gunderson's (IR-WI) proposal to combine the Departments of Education and Labor. The Secretary disagreed with the proposal, claiming that each agency has its own specialized and distinct function. Secretary Reich presented charts that showed the decline of real wages for middle and lower income workers. The Secretary advocated raising the minimum wage and increasing the level of job training, which he defined as ``any vocational course of instruction, directly related to gaining job skills, outside of a formal degree program.'' The Secretary also testified about efforts to consolidate job training programs and the agency's plans regarding downsizing. On April 4, 1995, the subcommittee convened a second oversight hearing to identify other opportunities for cost reduction, increased efficiency and reform in the $33.8 billion Labor Department budget. Testimony was received from the U.S. General Accounting Office (GAO), DOL's Office of Inspector General (OIG), and a representative from the Urban Institute. The GAO and OIG officials focused on consolidation and termination of overlapping job training programs. The GAO told the subcommittee that the Federal Government runs 163 job training programs administered by 15 agencies. Secretary Reich of DOL has proposed to consolidate 70 education and training programs. Urban Institute officials testified about potential administrative cost savings from Federal program consolidations and about administrative savings that might be expected from various program consolidation models. b. Benefits.--The hearings provided an overview of the policy issues presented by current DOL programs, particularly as the issues relate to opportunities for consolidations and terminations of ineffective and/or duplicative programs. c. Hearings.--Hearings entitled ``Oversight Hearing on Department of Labor'' were held on March 9 and April 4, 1995. 4. Efforts To Reorganize and Improve Program Performance and Efficiency at the U.S. Department of Education (DOED). a. Summary.--The subcommittee reviewed budget data, National Performance Review recommendations, Inspector General audits and reports, and General Accounting Office studies and recommendations to identify opportunities for cost savings, improved efficiency and consolidations in the programs and operations of the Department of Education (DOED). On March 13, 1995, the subcommittee convened a hearing to allow DOED Secretary Richard Riley to discuss the agency's core mission, goals, programs, and plans for cost savings. Subcommittee Chairman Shays opened the hearing by mentioning the States' role in education and indicated his wish to understand the changes taking place in the Department of Education, especially in light of proposals to merge the Departments of Labor and Education. Secretary Richard Riley testified about the new and controversial direct student loan program, training program consolidations, and problems the agency had with block granting. Secretary Riley also indicated that he did not agree that combining the Departments of Labor and Education would help to save money since the DOED was already consolidating programs. Deputy Secretary of Education Madeleine Kunin testified that DOED had made significant managerial and attitudinal changes that she believed would break down agency bureaucracy and bring the DOED's philosophy in line with budget constraints. On April 6, 1995, the subcommittee convened a second oversight hearing to discuss whether significant cost savings could be achieved through a consolidation or elimination of duplicative programs and improved efficiencies in DOED program administration. Testimony was received from: the public and private sectors; DOED's Office of Inspector General (OIG); the U.S. General Accounting Office (GAO); and a former DOED Assistant Secretary for Management and Budget. GAO testified that according to Office of Management and Budget data, fiscal year 95 spending on education is estimated to be $70 billion. DOED spends less than half, $33.4 billion or 47 percent of the total. The Department of Labor spends $5.5 billion, or 7.9 percent of the total. Other Federal agencies also manage numerous education-related programs, including the Department of Health and Human Services with 129 programs, the National Endowment for the Arts and Humanities with 27, and the Department of Agriculture with 26. The OIG testified that, since 1965, the Federal Family Education Loan program has suffered $57 billion in defaults, with $4.7 billion in 1993 alone. b. Benefits.--The hearings provided subcommittee oversight of DOED, its core missions, goals, and efforts to downsize and consolidate training and other programs. The hearings also produced information on the potential and the limitations of program consolidations in education and training. c. Hearings.--Hearings entitled ``Oversight Hearing on Department of Education'' were held on March 13 and April 6, 1995. 5. Efforts To Reorganize and Improve Program Performance and Efficiency at the U.S. Department of Veterans Affairs (VA). a. Summary.--The subcommittee reviewed budget data, National Performance Review recommendations, Inspector General audits and reports, and General Accounting Office studies and recommendations to identify opportunities for cost savings, improved efficiency and consolidations in the programs and operations of the Department of Veterans Affairs (VA). On March 13, 1995, the subcommittee convened a hearing to allow VA Secretary Jesse Brown to discuss the agency's core mission, goals, programs and plans for cost savings. Secretary Brown was asked to testify about successes and challenges at the VA and about agency efforts to reform the VA's vast health care system. The Secretary testified that the agency's biggest success so far had been evidenced in its ability to respond more quickly to the needs of veterans. Secretary Brown also discussed VA's continuing efforts to help veterans from the Persian Gulf War, addressed questions relating to VA hospital utilization rates and the accessibility of health services to veterans. On May 9, 1995, the subcommittee convened a second oversight hearing to identify opportunities for improved efficiency and management reforms in the $38.2 billion VA. Testimony was received from the U.S. General Accounting Office (GAO), the VA's Office of Inspector General (IG), and from representatives of veterans organizations. The subcommittee also probed the views of the witnesses on VA's plans for reorganizing hospital and medical facilities. Subcommittee Chairman Shays requested comments about plans to improve the efficiency and quality of the VA's health care service, and asked the witnesses for their views about how to raise the level of management coordination and accountability in VA programs and operations. b. Benefits.--The VA health system is the largest centrally managed health care delivery system in the Nation. Veterans and every American taxpayer will benefit from cost effective VA programs and services. If the VA health care system is to remain viable, it must fundamentally change its approach to providing care. The need for structural change is acute. By holding these hearings, the subcommittee has benefited the system by demonstrating congressional concern that the VA adapt its health care delivery system to meet the changing demands of the health care marketplace. c. Hearings.--Hearings entitled ``Oversight Hearing on Department of Veterans Affairs'' were held on March 13 and May 9, 1995. 6. Examination of Programs and Operations of the Corporation for National and Community Service. a. Summary.--On April 25, 1995, the subcommittee directed an inquiry to the Corporation for National and Community Service (Corporation) regarding the agency's AmeriCorps program. The inquiry requested information on the per- participant costs of the program, the quality and performance standards applied to AmeriCorps grant applications and programs, the amount of training received by AmeriCorps participants and information on any AmeriCorps programs that did not involve AmeriCorps participants. On May 4, 1995, the Corporation responded to the subcommittee's inquiry. The Corporation reported per participant costs to be $17,600 for full time members. They noted this figure was subject to change if their original fiscal year 95 funding levels were rescinded. The Corporation also provided a breakdown of the per-participant costs indicating the percent of costs devoted to educational awards, stipends, travel, training and benefits. Part-time participants were reported to have a cost of $8,800. Again, this figure would also be subject to change if the fiscal year 95 appropriations if rescissions were passed by Congress for that fiscal year. The Corporation also outlined the selection criteria applied in the agency's evaluation of AmeriCorps program applications. The criteria were set out under the headings of: quality, sustainability, innovation, replicability and special considerations (such as geographic diversity and start dates). The Corporation further outlined the quality standards used at both Federal and State levels in selecting grantees. These standards are printed in the AmeriCorps grant application and are reflected in the Corporation's ``Principles for High Quality National Service Programs'' which include: strong organization, excellent service projects, evaluation, participant experience, community partnerships and diversity. The Corporation also reported that the programs were made subject to several levels of performance reviews conducted by State commissions, national parent organizations, Corporation staff and impartial national evaluators. According to the Corporation, performance reviews include quarterly report forms, financial status reports, site visits, and independent evaluations. The Corporation stated that the performance results are taken into consideration during the grant renewal decisionmaking process. In the response, the Corporation also described the statutorily mandated ``planning grants'' that make up 1.5 percent of their grant budgets. Planning grants, such as one awarded to the Northeastern University's Center for the Study of Sports in Society, must be used for activities such as: site selection, anticipating roadblocks, studying other AmeriCorps programs, creating partnerships with businesses, non-profits, police and school districts. The Corporation disputed allegations that planning grants are used to help organizations write grant applications. The Corporation response indicated that AmeriCorps participants must devote at least 80 percent of their hours to direct service, with no more than 20 percent going to education, training or community building activities during a full-time or reduced term of service. The education or training activities may include preparation for the GED. To address questions raised by the Corporation response, the subcommittee convened an oversight hearing to examine the programs and operations of the Corporation for National and Community Service. Testimony was received from Corporation Chief Executive Officer Eli Segal, along with representatives from AmeriCorps program sponsors, participants and critics of the Corporation. This was the first oversight hearing on the Corporation since its creation in 1993, with the passage of the National and Community Service Trust Act (Public Law 103-82). The act consolidated responsibility for a number of community service programs, including AmeriCorps, Volunteers in Service to America (VISTA), the National Civilian Community Corps, Serve- America, and the Retired Senior Volunteer Program (RSVP). b. Benefits.--The subcommittee hearing provided a balanced discussion of the costs and benefits of the national service programs which became operational under the Corporation umbrella in 1993. c. Hearings.--A hearing entitled ``Oversight Hearing on the Corporation for National and Community Service'' was held on May 18, 1995. 7. Revelations of Medicaid Fraud and Scams. a. Summary.--In 1992, the House Government Operations Committee issued a report concluding that waste, fraud and abuse ``cost the government $300 billion in recent years.'' \20\ The report added, ``Government waste has not only bilked the taxpayer of billions of dollars, but it has created a public cynicism about government at a time when effective government is needed the most.'' After having received testimony from the Secretaries of five cabinet departments, the Human Resources and Intergovernmental Relations Subcommittee convened an oversight hearing in order to seek the perspectives and recommendations of commentators and investigators from outside the government on ways to identify and reduce waste, fraud and abuse in these departments. Testimony was received from: Thomas Schatz, president of Citizens Against Government Waste; Martin Gross, an author and commentator; James Bovard, journalist and author; and Dr. Ronald Walters, chairman of the political science department of Howard University. --------------------------------------------------------------------------- \20\ ``Managing the Federal Government: A Decade of Decline,'' December 1992, Majority Staff Report to the Committee on Government Operations. --------------------------------------------------------------------------- Mr. Schatz testified about the Departments of Education and Veterans Affairs. He discussed collection problems in Student Financial Aid Programs, which he believes should be unsubsidized and administered by the Treasury Department. He testified that he believes that the VA frequently overpays pension and compensation benefits and suggested forms of data collection that he believes would fix problems of overpayment. Mr. Gross testified about the Department of Health and Human Services. He believes that to prevent the insolvency of the Social Security system, the retirement age should be raised to 70 years. Mr. Gross also discussed his views regarding how Medicare and Medicaid could be run more efficiently. Mr. Bovard discussed problems in the Section 8 housing system. He cited several examples of incidences where he belived that the government was paying for expensive housing for the poor, and argued that Section 8 projects are linked to many inner city problems. Mr. Kennedy testified about his experience of going undercover for 2 months on the streets of New York City to expose scam artists--doctors, pharmacists and black marketeers--who he says rip off the Medicaid program in New York State for hundreds of millions of dollars. Mr. Kennedy said that he was able to ``easily rent Medicaid cards'' from unscrupulous people on the street and use the cards to obtain thousands of dollars ``in unneeded tests, exams and services-- all at taxpayer expense.'' Mr. Kennedy further testified that ``after 30 years of existence, Medicaid has failed to require ID photos or any other descriptive information on its cards, allowing thousands of unscrupulous recipients to barter their cards for quick cash or drugs.'' Dr. Walters lauded the efforts of the administration's Reinventing Government initiative, and voiced concern about the counterproductive outcomes of dismantling programs too quickly or ill-advisely. Dr. Walters contended that the reason many of the poverty programs do not work is because their operating costs are under funded. Dr. Walters testified about his fear that with further budget cuts to poverty programs and an increasing number of people entering poverty, that the situation would simply get worse. b. Benefits.--It is the view of subcommittee Chairman Shays that ``Even if it were possible to eliminate all losses to waste, fraud and abuse, the savings would still not balance the budget. However, Congressional action to produce a major reduction in losses would go a long was toward restoring public confidence in government. c. Hearings.--A hearing entitled ``Waste in Human Service Programs: Other Perspectives'' was held on May 23, 1995. 8. Fraud and Abuse in Medicare and Medicaid. a. Summary.--Pursuing oversight issues identified in previous general oversight hearings, the subcommittee requested information from the Health Care Finance Administration (HCFA), the HHS Inspector General and others concerning providers who defraud the programs but continue to bill Medicare and Medicaid. The effectiveness of legal and administrative sanctions against abusive providers, and management controls over provider access to Federal health care programs were examined. In particular, the subcommittee focused on whether more could be done to keep fraudulent providers out of those important government programs. Testimony was received from: the Administrator as well as the Senior Advisor for Program Integrity of the Health Care Financing Administration; the HHS Inspector General; the Special Counsel for Financial Institutional Fraud of the U.S. Department of Justice; the Assistant Director of the Agency for Health Care Administration for the State of Florida; and the executive director of the National Health Care Anti-Fraud Association. Federal health care programs will cost $262 billion this year. According to the GAO, up to 10 percent of health care spending is lost to fraud and abuse. That means Medicare and Medicaid losses are perhaps as much as $26 billion, or $71 million each day! b. Benefits.--Losses of this magnitude pose a real threat to the solvency of Federal health care programs. The subcommittee learned of the limited impact of penalties--such as suspension or debarment--that can now be imposed on providers who are consistently abusive, or are indicted or convicted of defrauding the Government's health care systems. c. Hearings.--A hearing entitled ``Keeping Fraudulent Providers Out of Medicare and Medicaid'' was held on June 15, 1995. 9. Lengthy FDA Delays in Reviewing Food Additive Petitions. a. Summary.--This hearing was the first oversight hearing on the FDA's management of this premarket review program since enactment of the food additive amendments of 1958. As subcommittee Chairman Shays noted, a serious look at how the FDA handles its responsibilities was long overdue. Thus, the subcommittee convened an oversight hearing on this subject to span a 2 day period, June 22 and 29, 1995, where testimony was received from representatives of the FDA; the Grocery Manufacturers of America; National Food Processors Association; the University of Texas Graduate School of Biomedical Sciences; the Institute of Food Technologists; the National Academy of Sciences' Food Forum; the Calorie Control Council, the center for Science in the Public Interest and the Federation of American Societies of Experimental Biology and from others. Under the Food Drug and Cosmetic Act, the FDA has up to 180 days to review and act on food additive petitions. The FDA has a backlog of 295 food additive petitions under review. Among the backlog of pending food additive petitions, 66 percent have been pending since 1990, 27 percent since the 1980's, and 7 percent since the 1970's. More than 100 new petitions are submitted each year to the FDA. Food additives affect the characteristics of food. They are commonly used to impart or maintain consistency, nutrition, texture, flavor, color or wholesomeness. b. Benefits.--The delays in the current food additive petition review process impede food technology research and delay benefits to the consumer. By convening these hearings, the subcommittee sought to identify the causes of and solutions to these lengthy FDA delays. According to subcommittee Chairman Shays, from a public health standpoint, the public wants minimum risk in food additives, but also wants the benefits of the same nutritional and dietary advances available to consumers in other nations. The current FDA review process appears to allow endless studies with no definite deadlines for action. The subcommittee will continue to explore the issue of whether the delays are caused by bad management, inadequate resources or a lack of confidence by the FDA in the agency's scientific personnel who review food additive petitions. Based on these subcommittee oversight hearings, the committee adopted its fourth report to the 104th Congress on December 14, 1995, entitled ``The FDA Food Additive Review Process: Backlog and Failure to Observe Statutory Deadline,'' House Report No. 104-436, December 21, 1995, Fourth Report by the Committee on Government Reform and Oversight, Together with Additional Views. c. Hearings.--Hearings entitled ``Delays in the FDA's Food Additive Petition Process and GRAS Affirmation Process'' were held on June 22 and 29, 1995. 10. Bringing Health and Support Services to Women, Minorities and Adolescents--Growing Segments of the AIDS Population. a. Summary.--On July 17, 1995, the subcommittee convened a field hearing held in Brooklyn, NY, to examine how the U.S. Department of Health and Human Services (HHS) and local health care providers are preparing to bring health and support services to women, minorities and adolescents--growing segments of the AIDS population. Testimony was received from: representatives from Deputy Inspector General for Evaluations and Inspections, HHS; the Associate Director of Health Policy of the U.S. General Accounting Office; the Director of the Office of HIV/AIDS Policy, Assistant Secretary of Health, HHS; the acting commissioner of health, New York City department of health; the director of the AIDS Institute of the New York State Title II grantee; the AIDS program coordinator of the Stamford department of health of the Connecticut Title II grantee; the vice president of institutional advancement of the Brooklyn and Caledonian Hospitals; the executive director of Brooklyn Housing Works; the chairman of the Stewart B. McKinney Foundation; a board member of the LAMBDA Independent Democrats; Senator Velmanette Montgomery, New York State Senator, 18th Senate District in Brooklyn, NY; and the executive director of the Corporation for Supportive Housing. The subcommittee found that, in 1993 and 1994, over one- half of the newly reported AIDS cases were in minority groups. The United States has also seen a 17 percent yearly increase in the number of women infected with AIDS. Fifty-four percent of those women are between the ages of 13-19. HHS provides funding to local service providers through the Ryan White CARE Act, administered by the Health Resources and Services Administration (HRSA). In fiscal year 95, HRSA will provide $633 million in Ryan White CARE Act funds. b. Benefits.--By holding the oversight hearing, the subcommittee acknowledged the importance of slowing the spread of AIDS and provided an opportunity for members to discuss how available Federal funding can be effectively utilized to meet the needs of the changing AIDS population. c. Hearings.--A hearing entitled ``AIDS in the 90's: Service Delivery to Emerging Populations (Field Hearing)'' was held on July 17, 1995. 11. Debating and Defining Federalism--the Sharing of Power Between the Federal Government and the States. a. Summary.--The subcommittee is charged under the Rules of the House with the responsibility of studying the intergovernmental relationships between the United States and the States and municipalities. Pursuant to this authority, the subcommittee convened this oversight hearing in the form of a debate regarding what principles should guide Congress in balancing the relationship between the national government and the States, counties, cities and towns. This debate, essentially, a discussion of the meaning of federalism--the unique system of shared sovereignty that unites the States into one Nation--was actually launched by the ratification of the Constitution, waged fiercely in the Civil War, reshaped by the exigencies of the Depression and a World War. Testimony at the hearing was received from: the director of State-Federal relations of the National Governors Association; a former regional EPA Administrator; an author and director for the center for american political studies at Harvard University; the director of the Center on Budget and Budget Policy Priorities; a senior fellow from the Progressive Policy Institute; a commissioner from the Advisory Commission on Intergovernmental Affairs; the director for the center for constitutional studies from the CATO Institute; and the director for the Governors' forum for the Heritage Foundation. Today, it is hardly debatable that modern federalism is entirely out of balance. Federal powers and programs occupy, and in many cases, pre-empt, virtually every area of public concern. As subcommittee Chairman Shays explained, the legacy of the conflict between States' rights and civil rights continues to haunt efforts to empower State government. Any ``new federalism'' will have to overcome that historical barrier and reassure all Americans that States can do what needs to be done more effectively, more efficiency and more fairly than a top-heavy, one-size-fits-all Federal bureaucracy. b. Benefits.--The great national debate over the proper distribution of the people's sovereign powers has raged since the Founders wrote the Constitution. Today, as Congress moves to implement a smaller Federal Government, it is beneficial to continue that discourse over the responsibility and capacity of each level of government to perform essential public functions. c. Hearings.--A hearing entitled ``Federalism Debate: Why Doesn't Washington Trust the States?'' was held on July 20, 1995. 12. Joint Hearing on the FDA Regulation of Medical Devices, Including Silicone Gel Breast Implants. a. Summary.--Continuing oversight conducted in previous Congresses, the Human Resources and Intergovernmental Relations Subcommittee and the National Economic Growth, Natural Resources, and Regulatory Affairs Subcommittee investigated FDA's approval process and enforcement standards for medical devices, including silicone gel breast implants. The subcommittees reviewed scientific and medical literature on so-called ``silicone diseases,'' requested extensive documents from the FDA on device review and enforcement policies and interviewed physicians, researchers and patients. These inquiries explored how the FDA, doctors and scientists assess the risks of silicone and other materials used in medical devices. The subcommittees inquired how the FDA establishes enforcement standards for medical device regulations, how consistently those standards are enforced, and the appearance of arbitrary or selective enforcement practices. In addition, the subcommittees also explored formal and informal procedures used by the FDA to promulgate enforcement standards. Pursuant to the results of these inquiries, both subcommittees became concerned that the FDA's evaluation standards and enforcement procedures for medical devices may create product shortages and inhibit innovation and technical advances. In order to explore these issues further, the subcommittees convened two oversight hearings. At the first hearing, testimony was received from: Hon. Marilyn Lloyd, a former Member of Congress; Hon. James A. Traficant, Jr. (D-OH), a Member of Congress; Hon. Greg Ganske, M.D. (R-IA), a Member of Congress; the Commissioner of the FDA; the Director for the Center for Devices and Radiological Health from the FDA; the chief medical officer from Vanderbilt University Medical Center; an official from the department of pathology from the University of Tennessee in Memphis; an associate professor of medicine and epidemiology at the Mayo Clinic; an official from the department of gynecology and obstetrics from Emory University; medical device patients; device industry representatives; clinicians; and scientists. At the second hearing, testimony was received from the FDA Deputy Commissioner, device industry representatives, and device manufacturers. The witnesses testified about the development and promulgation of FDA standards used in enforcement of statutes and regulations governing the manufacture and distribution of medical devices. b. Benefits.--The investigation updated the status of FDA review of silicone gel breast implants and the impact of that protracted review on the development and availability of other life-sustaining devices containing silicones. In addition, there is a great need for the American public to know that there is an open and predictable FDA process for promulgating enforcement guidance. As a result of these hearings, the FDA committed to more timely device review and a more open process for the development and issuance of guidance. c. Hearings.--A hearing entitled ``FDA Regulation of Medical Devices (Joint Hearing)'' was held on August 1, 1995. A hearing entitled ``FDA Enforcement Standards for Medical Devices (Joint Hearing)'' was held on September 14, 1995. 13. Federal Takeover of the Chicago Housing Authority. a. Summary.--The subcommittee convened an oversight investigation into the Federal takeover of the Chicago Housing Authority (CHA) after Congresswoman Cardiss Collins, ranking member of the Government Reform and Oversight Committee (D-IL), submitted a request to Committee Chairman William F. Clinger, Jr., (R-PA) on June 1, 1995, that hearings be conducted in Chicago on the role of U.S. Department of Housing and Urban Development (HUD) in the operation of the CHA. On May 30, 1995, HUD assumed control over the day to day operations of the ``troubled'' CHA. A declared breach of contract between CHA and HUD signed by HUD Secretary Henry Cisneros on June 2, 1995, made the takeover legally effective. Executed in the wake of the resignation of CHA's Board of Commissioners on May 26, 1995, the takeover was an unprecedented HUD action. Although HUD has authority to intervene in troubled housing agency operations at any time, HUD has never assumed responsibility for the day to day operations of a housing agency the size of CHA. CHA is the Nation's third largest public housing authority (PHA), surpassed in size only by those of Puerto Rico and New York city. CHA was created in 1937 by a resolution of the city of Chicago pursuant to the Housing Authorities Act of the State of Illinois, and administers over 55,000 public and assisted housing units serving over 150,000 residents. The socio-economic status of the resident population of CHA creates particular challenges for the housing authority. Eleven of the 15 poorest neighborhoods in the Nation are located in CHA communities. CHA is plagued by a poorly conceived and distressed housing stock, an acutely poor resident population and a historically mismanaged administrative bureaucracy. HUD's ability to carry out the CHA takeover effectively has immediate impact on the people of Chicago and broad implications for the 86 other housing agencies presently listed as ``troubled'' by HUD. The subcommittee's hearing focused on HUD's progress at CHA since the May 30 takeover, the department's short and long term strategies for reforming CHA and HUD's plans for installing new leadership and management at the housing authority. At the hearing, testimony was received from Hon. Henry Cisneros, Secretary of HUD and other HUD officials; the U.S. General Accounting Office; panels of tenants; public housing management experts and city and private sector representatives. b. Benefits.--Although HUD has not yet articulated a long term plan to reform CHA and to extricate itself from CHA management, if the takeover sets CHA on a course for recovery, HUD's assumption of control of CHA operations may be validated as an acceptable model of intervention at troubled housing agencies. In addition, based on this and the subcommittee's two other oversight hearings of HUD (on February 13 and 22, 1995), the committee adopted its fifth report to the 104th Congress on December 14, 1995 entitled ``The Federal Takeover of the Chicago Housing Authority--HUD Needs to Determine Long-Term Implications,'' House Report No. 104-437, December 21, 1995, Fifth Report by the Committee on Government Reform and Oversight, Together with Additional Views. (See II.A.2.) c. Hearings.--A hearing entitled ``HUD's Takeover of the Chicago Housing Authority (Field Hearing)'' was held on September 5, 1995. 14. Management of Threats to the Nation's Blood Supply. a. Summary.--After infection with the HIV virus, there is a period of time known as a ``window'' in which infection may be present but antibodies to the virus have not been produced in sufficient quantity for detection. This window can last up to 6 months in some individuals, but is usually about 20 days. However, antigens appear and can be detected sooner than antibodies, reducing the window by 10 days or more. Subcommittee investigation discovered that on June 23, 1995, the FDA's Blood Products Advisory Committee (BPAC) recommended against routine HIV-1 antigen screening of blood donor units. On July 12, subcommittee Chairman Shays wrote to FDA Commissioner David Kessler urging him not to accept the BPAC's decision and to approve the immediate licensing of HIV-1 antigen tests for the screening of the Nation's blood supply. Subcommittee Chairman Shays pointed out that antigen testing would further close the window of potential infection in recipients of blood and blood products, a goal which was consistent with remarks made by Commissioner Kessler at a September 26, 1994 FDA Conference. Kessler said, ``[The FDA has] an obligation to foster the development of new technologies, especially if these technologies hold the promise of a blood supply that is even safer. This is especially true for detecting HIV--the AIDS virus. We need to close the window.'' On August 10, 1995, the FDA announced its recommendation that, despite the BPAC recommendation, blood establishments should test donors with new HIV-1 antigen test kits after the tests become available. Under the new guidance, the FDA recommended that blood establishments begin screening all blood and plasma donors with newer test kits for HIV-1 antigen within 3 months after FDA approves one of the kits. To examine this and other issues raised by the subcommittee's inquiries, the Human Resources and Intergovernmental Relations Subcommittee convened two oversight hearings to discuss efforts by the U.S. Department of Health and Human Services (HHS) and the blood products industry under HHS jurisdiction to protect the Nation's blood supply from emerging infectious agents. At the October 12, 1995 oversight hearing, HHS Secretary Donna Shalala provided the agency's response to a recent study that was critical of past HHS efforts to protect the blood supply from infectious agents. Secretary Shalala testified that HHS accepted recommendations of the report released by the Institute of Medicine (IOM)--HIV and the Blood Supply: An Analysis of Crisis Decisionmaking (July 13, 1995)--which had concluded that the medical and governmental response in the early 1980's to blood-borne HIV infection strongly suggests the need for greater coordination and more aggressive policies by HHS to meet the threat of future infectious agents. In addition, the Secretary named the Assistant Secretary for Health to the newly created post of Blood Safety Director and created a Blood Safety Committee which she indicated would include the FDA Commissioner, the Director of the National Institutes of Health (NIH), and the Director of the Centers for Disease Control and Prevention (CDC). Other hearing witnesses included representatives from the Committee of 10,000, the National Hemophilia Foundation, the Hemophilia Federation, the Oklahoma Blood Institute, and Michigan State University. A second oversight hearing on the subject was convened on November 2, 1995, so the subcommittee could consider the blood industry's response to the IOM report. In addition, the roles of the CDC and NIH in protecting blood safety were discussed. Witnesses included representatives from the CDC, NIH, the American Association of Blood Banks, the Council of Community Blood Centers, the American Red Cross, the American Blood Resources Association, the Bayer Corp., the Baxter Healthcare Corp. and the Armour Pharmaceutical Co. b. Benefits.--With 4 million patients in the country receiving transfusions of whole blood and blood components each year, raising the standards for blood collection and processing to meet new threats is a critical national priority. These hearings brought together all the major governmental and private sector players in the blood safety field and elicited a new commitment to diligence in protecting against infectious agents in the blood supply. c. Hearings.--Hearings entitled ``Protecting the Blood Supply from Infectious Agents: New Standards to Meet New Threats'' were held on October 12 and November 2, 1995. 15. The Occupational Safety and Health Administration's (OSHA) New Strategy for Changing the Way it Does Business. a. Summary.--On October 17, 1995, the Human Resources and Intergovernmental Relations Subcommittee convened an oversight hearing to explore initiatives and programs claimed to have been adopted by the Occupational Safety and Health Administration (OSHA) as part of the agency's change in its strategy for doing business in a technology-based workplace. The agency had indicated in numerous publications and announcements that it was seeking to form new partnerships of employers, workers and OSHA to promote common sense regulations, focus on results, and reduce red tape. In the past the agency had earned a ``red tape reputation.'' The agency was widely perceived as an agency with a ``gotcha'' mentality, a preoccupation with small technical violations and governed by confusing, outmoded rules. OSHA's Assistant Secretary of Labor for Occupational Safety and Health Joseph A. Dear discussed the innovative programs the agency has developed to improve workplace protections for America's working men and women. Assistant Secretary Dear fully discussed what the agency refers to as the newly reinvented and responsive--``New OSHA''--and promised that the agency would continue to become more customer friendly and less driven by adherence to red tape and technical rules. In addition to Assistant Secretary Dear, testimony was also received from: the Associate Director for the U.S. General Accounting Office (GAO); the director of the Voluntary Protection Programs Participants' Association; and representatives from trade unions and the private industry. b. Benefits.--Through this hearing, the subcommittee was able to confirm that OSHA's efforts to re-engineer worker safety standards and enforcement to meet the new realities of the 21st century workplace are welcomed by business and workers. Given that no amount of enforcement resources would ever permit the agency to inspect all of America's workplaces, cooperation as opposed to confrontation will permit OSHA to better focus scarce budget resource and meet its core mission of correcting the most serious hazards in the most dangerous workplaces. c. Hearings.--A hearing entitled ``OSHA: New Mission for a New Workplace'' was held on October 17, 1995. 16. Management of U.S. Department of Housing and Urban Development Funds in Public Housing Tenant Programs. a. Summary.--In September 1995, Representative William Martini (R-NJ), a member of the Human Resources and Intergovernmental Relations Subcommittee, forwarded to the subcommittee materials regarding a convention of public housing tenants sponsored by the National Tenants Organization (NTO). The subcommittee initiated inquiries to the Department of Housing and Urban Development (HUD) and several local public housing authorities regarding the use of HUD funds to attend the NTO convention which was described as a ``vacation'' in the promotional material. The subcommittee also learned that public housing tenants attended this and other training sessions using funds from HUD's Tenant Opportunity Program (TOP). At least two tenant groups obtained advances of anticipated TOP grant awards from their public housing agencies. As a result of these inquiries, the subcommittee also learned that 6 TOP grants had been awarded then rescinded by HUD in Delaware after questions were raised regarding the level of consultant fees and the planned use of the funds. On November 9, 1995, the subcommittee convened an oversight hearing on possible waste and mismanagement of HUD grant funds used in public housing tenant programs. Tenant programs support training and leadership activities in order to empower tenants for resident management purposes. The subcommittee investigated whether HUD has appropriately controlled or monitored TOP program results to ensure that program objectives are met. Testimony at the hearing was received from representatives from HUD, HUD's Inspector General, and from tenant and public housing organizations. b. Benefits.--Abuses of HUD's management of tenant training funds suggest fundamental weaknesses that raise concerns about the goals and effectiveness of certain TOP supported programs. The subcommittee will continue to monitor TOP and other public housing programs, as it does other Government programs within its jurisdiction, so as to ensure that the mission and integrity of HUD's tenant technical assistance grants and resident management programs will remain true to their principles and intended purposes. c. Hearings.--A hearing entitled ``HUD's Management of Tenant Empowerment Funds'' was held on November 9, 1995. 17. Status of Major Computer System Development. a. Summary.--Testimony at earlier oversight hearings on Medicare claims processing, and General Accounting Office (GAO) reports on Health Care Finance Administration (HCFA) acquisition and implementation of a centralized Medicare claims system, presented troubling questions regarding whether HCFA had the capacity to develop, procure and implement such a large computer application. Earlier testimony by HCFA also indicated the agency had foregone other claims management and program integrity efforts in favor of placing all their emphasis on the new Medicare Transaction System (MTS). Based on a GAO analysis, the subcommittees were concerned that the use of available claims screening software by HCFA contractors could yield significant savings to the Medicare program immediately, while the MTS system was being developed. To answer these questions, the Subcommittee on Human Resources and Intergovernmental Relations and the Subcommittee on Government Management, Information, and Technology convened a joint oversight hearing on HCFA's MTS project, a proposed $127 million data system to process Medicare claims and enable HCFA to detect and control fraud and abuse. Witnesses at the hearing discussed the status of the MTS computer programs which HCFA began planning in the early 1990's and which the agency claims will curb the loss of billions of dollars annually from fraud and abuse in Medicare claims. HCFA Administrator Bruce Vladek appeared before the Human Resources Subcommittee on June 15, and testified that the system would be fully implemented by late 1999. The subcommittee chairmen and other members wanted to know whether that schedule would be kept and whether the system, with potential for significant cost overruns, would be delivered on budget. b. Benefits.--The hearing provided necessary oversight of the MTS contract terms and milestones. The subcommittees learned that HCFA's schedule and cost estimates for MTS were neither reliable nor realistic, and that HCFA was using an inconsistent approach to define current and future system requirements. This information will be beneficial to those guiding health care management and anti-fraud policy pending the implementation of the MTS system. c. Hearings.--A joint hearing entitled ``Oversight and Review of Medicare's Transaction and Information Systems'' was held on November 16, 1995. 18. Radioactive Contamination of 27 People, Including Researcher Dr. Maryann Ma, in June 1995 at the National Institutes of Health (NIH). a. Summary.--A study by the Human Resources and Intergovernmental Relations Subcommittee, requested by Congresswoman Constance Morella (R-MD), was conducted over a 5- month period to determine if the National Institutes of Health (NIH) was negligent in conforming to safety regulations in its handling of nuclear materials. On June 28, 1995, a contamination of 27 people occurred at the NIH Main Campus in Bethesda, MD, Building 37, Fifth Floor, Laboratory 5D18. The subcommittee also studied the 3-year safety record of NIH to see if there was a pattern of safety violations present at the facility. These studies were aided through documentation, meetings and conversations with the Nuclear Regulatory Commission (NRC) and with the NIH. b. Benefits.--The subcommittee study, in conjunction with an NRC investigation, established that NIH's current handling of nuclear materials at its Bethesda facilities are not a threat to the safety of NIH employees, the community, or the public at large. c. Hearings.--None. 19. Unfunded Mandates in Medicaid. a. Summary.--The subcommittee examined the cost of unfunded Medicaid mandates and the inflexibility of the joint Federal/ State Medicaid program, which adds burdensome costs to the States and prohibits them from taking full advantage of market efficiencies which exist in the private sector. Medicaid's enacting legislation and the subsequent regulations dictate that every State provide specific services to specific populations. Federal mandates in the Medicaid program expanded rapidly between 1983 and 1993 to include such requirements as catastrophic care provisions, mandated coverage for families leaving the AFDC program, coverage for women and children with incomes at 133 percent of the poverty line, and mandated coverage for children up to age 18 at 100 percent of the poverty line. Medicaid costs have more than tripled since this expansion and program enrollment has grown by more than 50 percent. Viewed by States as the most burdensome mandate, the 1980 Boren Amendment was interpreted (through substantial litigation) to require a cost-based payment standard, where all costs incurred by providers must be reimbursed. Without program modifications, CBO and GAO project Medicaid spending is likely to double in the next 5 to 7 years, having serious fiscal and human consequences in the States. In response to this rapid growth of unfunded Federal mandates, States have attempted Medicaid delivery reforms in order to reduce their budgets. Governors are in agreement on the need for more flexibility in the Medicaid program. Through the waiver process, States (approximately half) have requested greater flexibility to address issues related to financing and delivery of care, arguing that if States are receiving less money to meet the increased eligibility and services coverage requirements then they must have the flexibility to operate programs that can respond to cost efficiencies. In response to the increased cost burden to State budgets, State reform initiatives have resulted in 40 States now enrolling a portion of their Medicaid population in some form of managed care. To address the issue, the Clinton administration's FY 96 budget for Medicaid proposed a per capita cap on Federal Medicaid spending to limit growth, control costs of per beneficiary expenditures (keeping in place the mandated eligibility and services), contribute savings to the Federal budget, and provide States with additional flexibility. The House Republicans proposed that Medicaid be turned into a block grant program, called ``Medigrant.'' Those States testifying agreed they would like authority to design effective, innovative health care programs responsive to the special needs of their respective States, arguing that changes are imperative because the current rate of growth in State Medicaid spending will exceed the rate of total State spending ability, at which point the States will be forced either to increase taxes or to divert money from other important State programs to Medicaid. GAO reviewed for the panel those States that have been involved with innovation and reform in their Medicaid programs, elaborating on the States' experiences transitioning to new delivery systems. b. Benefits.--The hearing served as a forum to broaden the discussion of unfunded mandates and as such, helped Members of Congress and policymakers quantify and assess the cost of the unfunded Medicaid mandates to the States in their delivery of Medicaid services to beneficiaries. The Boren Amendment was cited as the most costly expansion mandate, which State officials feel should be repealed in order to help States reduce the escalating cost of Medicaid services. c. Hearings.--A hearing entitled, ``Unfunded Mandates in Medicaid'' was held on January 18, 1996. 20. HUD Management of Tenant Initiative Programs. a. Summary.--On November 9, 1995 the subcommittee held a hearing to hear testimony about the Department of Housing and Urban Development's (HUD) role in the National Tenants Organization (NTO) August 1995 conference in Puerto Rico. At that hearing the subcommittee received strong indications that more than $330,000 in Federal taxes were inappropriately spent on the conference and that there was little substantive training offered. As a result, the subcommittee asked the Inspector General to investigate HUD's active, visible and taxpayer-funded support for a convention advertised as a vacation. At the February 29, 1996 hearing the Inspector General testified among other things, that HUD officials played a key role in planning and conduction the conference, the NTO cleared an estimated $35,000 to $45,000 from the conference, little substantive resident training was provided, there was substantial lobbying and advocacy against Republican housing proposals, and HUD's participation in the convention violated department policies issued by HUD's Office of General Counsel regarding participation in conferences sponsored by non-Federal entities. The Inspector General also made a number of specific recommendations on steps HUD needed to take to remedy the problems and prevent future ones. Kevin Marchman, the Acting Secretary for Public and Indian Housing at HUD, told the subcommittee the steps HUD was taking to implement the Inspector General's recommendations and to strengthen HUD's internal controls and management. Also testifying at the hearing were Maxine Green, president of the NTO; Miguel Rodriguez, the executive director of the Puerto Rican Housing Authority; Ed Moses, deputy executive director of community relations and involvement for the Chicago Housing Authority; and Patricia Arnaudo, Deputy Director for Program Development at HUD. b. Benefits.--Tenant empowerment programs, such as TOP, are an important path out of isolation and dependence for those who use them. The investigation and hearing identified the weaknesses that led to the misuse of the TOP funds, ensured that steps were being taken to rectify the problems, and strengthened HUD's management and internal controls. c. Hearings.--A hearing entitled, ``HUD Management of Tenant Initiative Programs'' was held on February 29, 1996. 21. The Status of Efforts to Identify Persian Gulf War Syndrome. a. Summary.--The subcommittee investigated issues related to the Gulf War veterans' illnesses and convened four hearings during 1996 as a result of those investigations. These hearings began with a primary concern--how ongoing efforts to diagnose, treat and compensate Gulf War veterans can be more sharply focussed and urgently pursued. The first two hearings, in March 1996, dealt with veterans' symptoms and complaints about the handling of their health problems by the VA, especially about inappropriate medical treatment or denial of treatment, compensation issues, and lack of funded research by the VA into causes of their illnesses. The subcommittee also wanted to ensure that any research programs conducted by the Departments of Defense (DOD), Health & Human Services (HHS), and the Environmental Protection Agency (EPA), were focussed and coordinated. Witnesses in these hearings included sick veterans, veterans service organizations, the VA, and non-government medical research experts. The third hearing in June dealt with coordination of Gulf veterans issues between the DOD and VA, including medical recordkeeping and compensation procedures. Witnesses included DOD and VA health and compensation officials. The fourth hearing in September covered typical symptoms of sick Gulf veterans, studies of effects on humans and animals to low level chemical exposures, and probable exposures of large numbers of troops to chemical warfare agents and other toxins during the war. Witnesses were from the VA, EPA, Central Intelligence Agency (CIA), Gulf War Research Foundation, and non-government experts from the field of neurology and toxicology. The September hearing was critical and a turning point in the subcommittee's investigation. It was established that the typical complaints of Gulf veterans--chronic fatigue, flu-like symptoms, rashes, joint pain, headaches, gastrointestinal problems and other maladies--are similar to known effects on humans who have been exposed to organophosphates, such as pesticides and other chemical agents. Organophosphates are chemically related to sarin and other chemical warfare agents. Until recently, DOD had denied that chemical weapons were deployed or used in the Gulf. They also denied that troops were exposed to chemical agents, in spite of information to the contrary available to the Pentagon from reliable sources such as UN inspectors and Czech detection experts. Based on this DOD position, the VA appears to have given little priority to the possibility of low level chemical exposures in their diagnosis, treatment and compensation of sick Gulf War veterans. In the September hearing, Dr. Frances Murphy, Director of the VA Environmental Health Service, conceded in testimony that the VA research agenda through 1995 placed a low priority on low level chemical warfare agent exposure ``because military and intelligence sources had stated that U.S. troops had not been exposed to chemical agents.'' In June, DOD finally admitted that 400 troops may have been exposed to chemical agents. In August, DOD raised the exposure estimate to 1,100 troops; in September to 5,000; and in October to more than 20,000. And recently the Associated Press quoted a high Pentagon official as conceding that ``big numbers'' of 130,000 troops could have been exposed. These probable exposures came from fallout following the detonation of Iraqi munitions bunkers at Khamisiyah and the air bombardment of Iraqi chemical/biological weapons factories. The health problems of some veterans may have come also from other sources such as: the heavy use of pesticides and insect repellants during the war, leaded diesel fuel used in vehicles and for heating and dust mitigation, radioactivity from depleted uranium shells fired at Iraqi tanks, dense smoke from the oil well fires, parasites that cause a chronic infection called leishmaniasis, and perhaps the side effects of troop inoculations in combination with taking the experimental anti-nerve gas drug, pyridostigmine bromide. It is of major concern that many VA doctors have insisted since the war's end that the veterans' symptoms are physical manifestations of Post-Traumatic Stress Disorder (PTSD). While this may be true in some cases, this may also indicate an over- reliance on theories of psychological causation to the exclusion of obvious physical toxins and stressors. With DOD's admission of troop exposures to low level chemical warfare agents, the next concern of the subcommittee was the extent to which DOD and the VA acknowledge the effects of those exposures. In testimony before the subcommittee, Dr. Stephen Joseph, DOD's Assistant Secretary for Health Affairs, stated that ``. . . chronic symptoms or physical manifestations do not later develop among persons exposed to low levels of chemical nerve agents who did not first exhibit acute symptoms of toxicity.'' This statement was challenged at the September 1996 hearing. A 1974 study of low level exposures (e.g. workers in chemical weapons plants) entitled ``Delayed Toxic Effects of Chemical Warfare Agents,'' by German scientist Dr. Karlheinz Lohs, tends to refute Dr. Joseph's testimony. The study concludes that ``. . . even in the case of exposure to very slight amounts [of low level mustard agents] which do not necessarily bring on acute symptoms, toxic reactions may later set in.'' The question of whether delayed or chronic effects result from exposure to low level chemical agents without first having acute or immediate symptoms is critical to veterans. The answer determines whether or not Gulf veterans will be compensated appropriately for injuries suffered during the war. Many sick veterans did not report acute symptoms during the war but later developed chronic symptoms, thereby being denied higher compensation for war-related injuries. On the other hand, many veterans report that they may have had flu-like symptoms or rashes in-theater which they ignored as part of serving in a harsh, desert environment. These ``low-level'' symptoms could be considered acute, but mild, reactions to low level chemical agents. In December, the subcommittee held two additional hearings to discuss recent revelations about chemical detections and exposures in the Gulf War, and to determine the extent to which VA research and treatment protocols are being modified to take these disclosures into account. A panel of active-duty military officers testified regarding their experiences during Operation Desert Shield. Two of the witnesses operated sophisticated chemical detection equipment during the war. They testified that positive readings for mustard and other chemical warfare agents had been verified and recorded at locations other than Khamisayah. The third veteran testified that he heard chemical alarms and was told an Iraqi chemical mine had been detonated. He believes his subsequent medical problems, including Amyotrophic Lateral Sclerosis, or Lou Gherig's Disease, are the direct result of his exposure to residual chemicals after the ``all clear'' was sounded and his unit proceeded through the contaminated area. A former Central Intelligence Agency analyst testified that standard intelligence sources were not relied upon to reach the conclusion that no chemical warfare agents were present in the Gulf War. Instead, the analyst believes the agency relied solely on representations made by the Department of Defense. At the second hearing, veterans of the Gulf War testified about the difficulty in getting the VA health system to recognize war-related illnesses. The VA's Chief Public Health and Environmental Hazards Officer testified that while the VA ``has always remained open to the possibility'' of chemical exposures, no veteran had even been diagnosed as suffering from the after-effects of such an exposure. She testified that the VA health screening protocol for Gulf War veterans was modified in late 1995 to ask specific questions about toxic exposures. She also said epidemiological research into the effects of low- dose chemical exposures was just beginning. Two VA doctors who treat Gulf War veterans also testified. They believe the various combinations of symptoms and illnesses presented by Gulf War veterans are the result of exposures to one or more environmental hazards present in the Gulf, including chemical warfare agents. b. Benefits.--The series of subcommittee hearings focused attention on the Persian Gulf War veterans' illnesses and helped produce admissions from the DOD that U.S. troops were exposed to chemical warfare agents. The investigation and hearings generated pressure on the VA to change their medical protocol and compensation policies toward sick Gulf veterans. The VA has also updated its research priorities and has begun studies into the long term health effects of low-dose exposures to chemical warfare agencts and other toxins. Also as the result of increased congressional scrutiny, the Department of Defense increased the size of its Gulf War Illnesses Investigation Team from 12 to more than 100 investigators and staff. c. Hearings.--Hearings entitled, ``The Status of Efforts to Identify Persian Gulf War Syndrome'' were held on March 11, March 28, June 25, and September 19, 1996. Hearings entitled, ``Persian Gulf Veterans' Illnesses: Intelligence on Chemical/ Biological Exposures'' were held on December 10 and 11, 1996. 22. Unfunded Mandates Reform Act of 1995: A One Year Review. a. Summary.--On March 22, 1996, exactly 1 year after the bill was signed into law, the subcommittee convened a hearing that focused on implementation and the impact of the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). The act requires the legislative and executive branches to identify and quantify implementation costs of statutory and regulatory mandates on State and local governments. The subcommittee has been monitoring Federal department compliance with the requirements of Title II of the act regarding analysis of mandates in proposed and final regulations. Title II also requires the executive branch to conduct an explicit analysis of proposed and final rules to quantify the costs and benefits of mandates and identify the most cost effective, least burdensome regulatory approach. Departments and agencies are required to consult with State and local governments, and the Office of Management and Budget (OMB) is directed to collect those regulatory statements and forward them ``periodically'' to the Congressional Budget Office (CBO). OMB is required to submit a written report detailing compliance by each agency during the preceding year. The subcommittee also been monitored the design and implementation of the study of existing mandates required under Title III of the act. Title III required the Advisory Commission on Intergovernmental Relations to (a) study issues involving the calculation of costs and benefits of mandates on State and local governments, (b) conduct a study and make recommendations to the President and Congress concerning the impact of existing mandates on intergovernmental (Federal- State/local) relations, and (c) monitor and evaluate the implementation of the act. Testimony was received from representatives from Federal departments and agencies; State and local governments; community organizations, and Members of Congress. b. Benefits.--As a result of the investigation and hearing, the subcommittee found that OMB had concluded in the report required by Title II that only 16 out of more than 3,000 proposed or final rules met the act's threshold for a detailed cost/benefit analysis and review. Moreover, the subcommittee found that OMB compliance with the requirement to share these analyses with Congress had been minimal since enacted of the act. Although reporting is required ``periodically,'' not one of the required statements had been forwarded to CBO prior to a day or two before the subcommittee's hearing convened. Then all 16 arrived at once, just in time to be included in the report. The subcommittee was assured that future compliance would be more periodic and less episodic. Additionally, the subcommittee discovered that agencies had ``begun considering, but had not yet developed'' pilot programs to reduce reporting and compliance requirements on small governments, as required by the act. c. Hearings.--A hearing entitled, ``Unfunded Mandates Reform Act of 1995: A One Year Review'' was held on March 22, 1996. 23. Job Training That Works/Common factors in effective job training programs. a. Summary.--At the subcommittee's request, the General Accounting Office (GAO) prepared a report on the common features shared by effective job training programs. The GAO studied six programs that successfully helped graduates attain self-sufficiency. It was learned that the programs employed four key features to ensure that participants were successful in obtaining and maintaining employment. First, there was a focus on ensuring that participants were committed to training and getting a job. Second, the programs removed barriers that could limit clients' ability to finish training and get and keep a job. The third feature was improving participants' employability skills as part of their training curriculum. This included skills such as dependability, promptness, ability to work effectively in groups, and the ability to resolve conflicts appropriately. The fourth feature was linking occupational skills training with the local labor market so that the project could monitor the local labor market and make adjustments in course offerings to meet employer demand. At the hearing the GAO testified about its work and findings. The subcommittee also heard from the directors and graduates of two of the programs reviewed by the GAO, and two additional successful job training programs. b. Benefits.--As the GAO noted, in fiscal year 1995, the Federal Government appropriated about $20 billion for about 163 employment training programs yet large numbers of individuals remain unprepared for employment. The report and hearing form a basis from which to start in redesigning the structure and delivery of Federal job training so that it more successfully helps disadvantaged adults acquire and maintain permanent employment. c. Hearings.--A hearing entitled, ``Job Training That Works'' was held on April 18, 1996. 24. Preventing Teen Pregnancy: Coordinating Community Efforts. a. Summary.--The subcommittee examined strategies at the community level to prevent and reduce teen pregnancy in America. The subcommittee found that teen pregnancy is a near certain path to poverty, and that poverty is a major underlying cause of teenage childbearing. More than 1 million American teenagers become pregnant each year the rate of births per 1,000 teenagers (age 15-19) in the United States is six times the rate of France and Italy, and twice the rate of Great Britain. About half the pregnant teens in the United States will go on to give birth, and of those, 72 percent will be unmarried. Childbearing teens make up less than one-third of out-of-wedlock births, but for a variety of reasons, they represent a disproportionate economic and social burden to society. Most teenage parents who drop out of school never return. Teenage mothers have half the lifetime earnings of women who postpone childbearing under age 20. Teen mothers are at greater risk of developing complications in pregnancy and of delivering low birth weight babies due to poor prenatal care. Low birth weights in turn are associated with increased infant mortality, illness and disabilities. The subcommittee also found that adult men father more than half the children born to 15 to 17 year old mothers. This shocking finding, combined with information on the extent to which initial sexual activity by teenage girls is involuntary, shattered some of the myths surrounding teen pregnancy. At on oversight hearing on Federal, State and private sector programs to reduce teen pregnancy, testimony was received from: Dr. Henry. W. Foster, Jr., senior advisor on teenage pregnancy to President Clinton, and White House liaison to the National Campaign to Prevent Teenage Pregnancy; the National Campaign to Prevent Teen Pregnancy; U.S. Congress; the U.S. Department of Health and Human Services; the Maryland Lieutenant Governor; Child Trends; Advocates for Youth; the Best Friends Foundation; and the Institute for Responsible Fatherhood and Family Revitalization. b. Benefits.--The subcommittee's investigation and hearing into teen pregnancy prevention programs brought needed public attention to the need for greater public/private collaboration in the design and implementation of effective intervention programs. This was the first examination of Federal, State and private teen pregnancy prevention programs since publication of new studies attributing the majority of under-age pregnancies to have been caused by men over the age of 20. This finding argues for a greater emphasis on enforcement of statutory rape laws, along with traditional program focus on abstinence and education about the results of early parenthood. c. Hearings.--A hearing entitled, ``Preventing Teen Pregnancy: Coordinating Community Efforts'' was held on April 30, 1996. 25. Food Safety: Oversight of the Food and Drug Administration's Center for Veterinary Medicine. a. Summary.--The subcommittee reviewed the performance of the FDA's Center for Veterinary Medicine (CVM), particularly regarding FDA's failure to issue a regulation prohibiting feeding of ruminant protein to other ruminant animals. This was a step recommended by the World Health Organization in preventing the spread of Bovine Spongiform Encephalopathy (BSE) or ``Mad Cow Disease'' in countries currently believed to be free of the disease, such as the United States. The subcommittee convened an oversight hearing into FDA's management of the programs of the Center for Veterinary Medicine on May 10, 1996. The hearing examined the lack of adequate funding and program priority for veterinary medicine issues overseen by FDA's Center for Veterinary Medicine as evidenced by the lengthy review process for new animal drugs. Testimony was provided by: FDA Deputy Commissioner Michael Friedman; Dr. Frederick Murphy, University of California School of Veterinary Medicine; Dr. Lester Crawford, Association of American Veterinary Medical Colleges; Dr. Gary Weber, National Cattlemen's Beef Association; Dr. Don Franco, National Renderers Association; Robert Hahn, Public Voice for Food and Health Policy; Dr. John Welser, Pharmacia and Upjohn; Dr. Sherbyn Ostrich, American Veterinary Medical Association and Dr. Cindy Wolf, American Sheep Industry Association. b. Benefits.--Delays in the review of new and supplemental animal drug applications were identified and corrective measures were examined. At the hearing and during subsequent meetings with the subcommittee, the FDA took further action on the issuance of the regulation banning the feeding of ruminant protein to other ruminant animals. c. Hearings.--A hearing entitled, ``Food Safety: Oversight of the Food and Drug Administration's Center for Veterinary Medicine'' was held on May 10, 1996. 26. Food Safety: Monitoring of Food Borne Illnesses by the Centers for Disease Control, Food and Drug Administration and U.S. Department of Agriculture. a. Summary.--Three of the four pathogens considered most important by the Centers for Disease Control were unrecognized as causes of food borne illnesses just 20 years ago. While the food supply becomes more vulnerable to pathogens, the food safety system on which we rely appears fragmented among three different Federal agencies. Therefore, subcommittee investigated issues affecting food safety and convened an oversight hearing on the monitoring of food borne illnesses by CDC, FDA and USDA. The oversight hearing evaluated the need for closer coordination, better surveillance and implementation of scientifically based hazard control systems. Testimony was taken from: Dr. David Satcher, Director, Centers for Disease Control; Dr. Fred Shank, Food and Drug Administration; Dr. Glen Morris, USDA; Mr. Robert Robinson, GAO; Dr. Ban Mishu Allos, Vanderbilt University School of Medicine; and Dr. John Kobayashi, Washington State Department of Health. b. Benefits.--The growing threat to the public health posed by food borne pathogens, such as Campylobacter jejuni which causes over 40 percent of the Nation's cases of the paralytic illness Guillaine-Barre Syndrome, was brought to the attention of the public. The inadequate monitoring of food borne illnesses by three different Federal agencies as well as State governments was identified and corrective actions suggested. c. Hearings.--A hearing entitled, ``Food Safety: Monitoring of Food Borne Illnesses by the Center for Disease Control, Food and Drug Administration and U.S. Department of Agriculture'' was held on May 23, 1996. 27. The Development of Successful Public Housing Resident Management (Field Hearing). a. Summary.--This hearing was the third oversight hearing on resident management programs in public housing developments. The field hearing examined the elements of success at Cochran Gardens in St. Louis, MO. Cochran Gardens has operated one of the best tenant management programs in the country and the hearing examined the elements that make it, and other programs a success. Effective resident programs can provide superior and more cost effective site management than public housing authority management. At the hearing the subcommittee learned that the elements of successful resident management programs include strong tenant leadership, active housing authority support, and effective Department of Housing and Urban Development oversight. The subcommittee heard from non-resident public housing professionals as well as from residents engaged in resident management. b. Benefits.--The hearing demonstrated that resident management programs can be effective and can build strong communities and improve the lives of their residents. The hearing identified the key elements of successful resident management programs, challenges all programs to use those elements to meet the same standards of success. c. Hearings.--A hearing entitled, ``The Development of Successful Public Housing Resident Management'' (Field Hearing) was held on June 3, 1996. 28. Department of Education Oversight: Gatekeeping. a. Summary.--Gatekeeping is the process for screening higher education institutions for participation in Federal student financial aid (SFA) programs. Institutions must meet standards set by the triad of State licensing authority, accrediting agencies, and the U.S. Department of Education. Effective front-end controls are more efficient than back-end institutional monitoring and enforcement. Gatekeeping is particularly important in controlling non-degree-granting vocational trade schools, which pose the greatest risk to SFA programs in terms of fraud, waste, and abuse. b. Benefits.--The Department of Education discussed plans for a more focused oversight effort, including plans to realign staffing toward a case-management approach to enforcement. State government representatives made recommendations for a strong State role in improving institutional integrity following the elimination of State Postsecondary Review Entities. State governments can be effective due to their proximity to institutions within their borders, and because, unlike accrediting bodies, State governments are independent and accountable to the public. Also discussed were institutional concerns about over reliance on student loan default rates to determine institutional quality. High default rates supersede other regulatory reviews that institutions must pass to participate in Title IV. c. Hearings.--A hearing entitled, ``Department of Education Oversight: Gatekeeping'' was held on June 6, 1996. 29. Oversight of the Department of Labor's Efforts Against Labor Racketeering. a. Summary.--As a result of an oversight review of Department of Labor Enforcement activities, the subcommittee found that racketeering is costly to the interests of union members in particular, and to society as a whole. Corrupt union officials betray the trust bestowed upon them as elected representatives of union workers and undermine the public confidence and trust in the collective bargaining agreement system. In some cases, millions of dollars of workers' dues and benefit moneys have been siphoned off by organized crime through outright embezzlement or more sophisticated devices, such as loans or excessive fees paid to corrupt union and trust fund service providers. Millions of consumers unknowingly pay organized crime what amounts to a surcharge on a wide range of goods and services due to organized crime's exercise of power in the marketplace. The subcommittee also examined the Department's current anti-racketeering strategy in view of the administrative and legislative recommendations made 10 years ago by the President's Commission on Organized Crime (Report to the President and Attorney General: ``The Edge: Organized Crime, Business and Labor Unions,'' 1985). The subcommittee found that despite the recommendations of the Presidential Report more than 10 years ago, despite the work of the Labor Secretary's 1989 Task Force on Enforcement, despite a report in 1990 and subsequent reports by the DOL Inspector General of ``material weakness'' in DOL criminal enforcement efforts, and despite more than 5 years of in-depth oversight by the Inspector General, DOL enforcement activities ``remain inconsistent and uncoordinated with no integrated approach to common criminal enforcement issues.'' Moreover, the Report's call for ``New directions for the Department of Justice and fundamental changes in the structure and operation of the Department of Labor, the two principal agencies charged with responsibilities involving organized crime, labor organizations, and businesses' had not been implemented. The Department continues to resist repeated call to integrate and coordinate criminal and civil enforcement efforts to provide a sharper focus on labor racketeering. As a result, the Department appears to remain an inattentive, at times unwilling, partner in the fight against organized crime in labor unions. The subcommittee convened an oversight hearing to assess the Department of Labor's (DOL) strategies designed to detect, prosecute and eliminate labor union corruption. Testimony was received from representatives from the Office of Labor- Management Standards, the Pension and Welfare Benefits Administration, the Office of the Solicitor and the Division of Labor Racketeering, a part of the Office of Inspector General-- all DOL operations responsible for the effectiveness and efficiency of the agency's efforts against criminal labor racketeering activity. b. Benefits.--The investigation and hearing were the first attempt in many years to resolve the issue of what it would take to overcome the legal, political and bureaucratic barriers that prevent the Department of Labor from playing a more effective role in the detection of labor racketeering and the protection of union members' rights and funds from exploitation by organized crime. Testimony at the hearing exposed bureaucratic resistance within DOL to a more unified, effective assault on labor racketeering. Calls for uniform case information, Department-wide outcome tracking, consistent information sharing and cross-agency training cooperation were pronounced too difficult, too complicated, too time-consuming, too costly, not feasible, unnecessary, impractical or secondary to the unique mission each enforcement entity within the DOL responsible for preventing labor racketeering. The Department of Labor and the Inspector General committed to a review of longstanding recommendations and a resolution of outstanding coordination issues. c. Hearings.--A hearing entitled, ``Oversight of the Department of Labor's Efforts Against Labor Racketeering'' was held on July 13, 1996. 30. Oversight of the Department of Education and the National Institute of Mental Health: Current Approaches to Attention Deficit/ Hyperactivity Disorders. a. Summary.--Attention Deficit/Hyperactivity Disorder (ADHD) has become the Nation's leading psychiatric disorder. The Department of Education estimates that 3 to 5 percent, or up to 2\1/2\ million school-aged children, have ADHD. As measured by growth in the use of methylphenidate, or Ritalin, the most commonly prescribed drug treatment for ADHD, the number of children diagnosed with the disorder has grown two and a half times since 1990. ADHD diagnoses in adults are also increasing dramatically. These trends have profound implications for health research and education policy. The subcommittee review and hearing examined what constitutes a proper diagnosis of the disorder, why there has been an increase in the diagnosis of individuals with the disorder, the appropriate treatment for the disorder, the role of medications such as methyphenidate (Ritalin) in treatment, the implications for Federal educational and health policies of current information and planned research, and the appropriate accommodations by schools to the diagnosis and treatment. b. Benefits.--The hearing helped address the uncertainty and controversy surrounding the proper definition, accurate diagnosis and appropriate treatment of ADHD. It also identified the significance of the problem and its implications on Federal education policy and research priorities. c. Hearings.--A hearing entitled, ``Oversight of the Department of Education and the National Institute of Mental Health: Current Approaches to Attention Deficit/Hyperactivity Disorders'' was held on July 15, 1996. 31. Consumers and Health Informatics. a. Summary.--With today's health care consumers demanding more and more information at ever increasing speed in receiving that information, the subcommittee explored the accessibility of health care information to consumers through the use of computers and other telecommunication tools. A report prepared by GAO at the request of subcommittee Chairman Christopher Shays, titled ``Consumer Health Informatics: Emerging Issues,'' was released at the hearing. The GAO report stated that health informatic systems are capable of providing many different types of health related information to consumers, giving them additional information resources to assist them in making more informed choices and decisions as it relates to their health care. The information benefits health care consumers in areas such as the pros and cons of elective surgery, self-care techniques when appropriate, preventative habits and life style choices, training and practice patterns of physicians, medically approved alternative types of treatments, et cetera. In addition, medical practitioners have the benefit of easily accessible patient records and updates on the latest medical practice techniques. HHS highlighted the growth in consumer interest in the data sources available through their information programs, noting that consumers are seeking more detailed health informatics, but are limited in gaining access. HHS reported their primary informatics efforts are coordinated in four main areas: (1) the direct provision of information through these technologies; (2) coordination to improve access to consumer health informatics; (3) partnerships with other pubic and private organizations to extend the reach and impact of consumer health informatics; and (4) research and development and evaluation. Witnesses from private sector organizations and medical facilities presented testimony about their specific health information projects which are providing health information products, infrastructure, data bases and information banks to help disseminate health care information more widely to health care consumers in a variety of settings. b. Benefits.--The hearing highlighted increased demand for health care related information, the potential cost savings in overall health care dollars spent and the benefit to consumers, at the same time calling attention to the problems associated with accessability, quality, privacy and availability of such information. c. Hearings.--A hearing entitled, ``Consumers and Health Informatics'' was held on July 26, 1996. 32. The Management of HUD's Section-8 Multi-Family Housing Portfolio. a. Summary.--The subcommittee examined this issue to begin to address a potential multi-billion dollar housing problem. The cost of rent subsidies on more than 700,000 units of low- income, multi-family housing will soon be unsustainable. As a result, the Federal Housing Administration (FHA) will be forced to pay up to $18 billion on defaulted mortgages. Without definitive administrative and legislative action, this will mean that the place that 1 million Americans call home will be left to decay, or be torn down. At the hearing the subcommittee heard from the Department of Housing and Urban Development (HUD) about its plans to address this problem. The subcommittee also learned from the General Accounting Office (GAO) that there are three main factors that have caused this problem. These factors are high subsidy costs, high exposure to mortgage insurance loss, and the poor physical condition of many properties. These factors can be attributed to program design flaws that inflate subsidies above market rents and place all the risk of financial loss on HUD. The GAO also told the subcommittee that weakness in HUD's oversight and management of its multi-family portfolio has permitted the physical and financial problems facing these units to fester and grow. In addition to hearing from the GAO, the subcommittee learned what past efforts HUD took to address this problem and why they failed, and HUD's current plans and why HUD expects them to succeed. b. Benefits.--The hearing began to identify the causes and depth of a potentially multi-billion dollar problem. The hearing also examined the management and information challenges facing HUD so that any proposed solutions are made with a complete understanding of the capacity to structure and manage such an undertaking. c. Hearings.--A hearing entitled, ``The Management of HUD's Section-8 Multi-Family Housing Portfolio'' was held on July 30, 1996. 33. Off-Label Drug Use and FDA Review of Supplemental Drug Applications. a. Summary.--The subcommittee evaluated the extent of off- label drug use in cancer, rare disease and pediatric indications and the rate at which supplemental indications are added by the FDA to the labeling of already marketed drugs. GAO testified that approximately 90 percent of cancer drug use, 80 percent of pediatric use and 80-90 percent of drugs used to treat rare diseases are used off-label. For 50 million children, 40 million cancer patients and 20 million Americans suffering from rare, or orphan, diseases, most of their treatments are off-label. While perfectly legal, the widespread off-label use of medicines raises significant public policy and public health issues. Physicians need label information to treat patients effectively. Patients need the same information to make decisions about their own care. Both public and private health care payers need safety and efficacy data upon which to base reimbursement policies GAO and representatives of Tufts University Center for Drug Development testified that FDA's review of supplemental indications in the past was not timely. Testimony was heard from: Sarah Jagger, GAO; Dr. Joseph DiMasi, Tufts University Center for Drug Development; FDA Deputy Commissioner Michael Friedman; Dr. Carolyn Runowicz, American Society of Clinical Oncology; Dr. Ralph Kauffman, American Academy of Pediatrics; Abbey Meyers, National Organization for Rare Diseases and Dr. William Kennedy, Zeneca Pharmaceuticals (representing the Pharmaceutical and Research Manufacturers of America). b. Benefits.--This hearing examined the impact of the absence of up-to-date labeling for drugs used by nearly half of America's patients and the adverse impact this lack of information has on medical care. At the hearing, FDA, patient groups, physicians and the pharmaceutical industry pledged to address the problem of inadequate drug labeling and problems with FDA's review of supplemental indications for already marketed drugs. c. Hearings.--A hearing entitled, ``Off Label Drug Use and FDA Review of Supplemental Drug Applications'' was held on September 12, 1996. 34. Investigation into Possible Misuse of ``New Age'' Training Programs by Federal Departments and Agencies. a. Summary.--On February 21, 1996, the subcommittee directed an inquiry to the Equal Employment Opportunity Commission (EEOC) regarding the number and type of objections or complaints regarding training programs, including diversity, management, motivation, ``new age,'' and other work training programs. On March 15, 1996, the EEOC reported a total of 22 charges made against private sector employers and no charges made against public sector employers. Of the 22 charges located, 8 had Letters of Determination issued citing a violation of Title VII of the Civil Rights Act of 1964, as amended, on the basis of religious discrimination. In addition, in seven of the cases it is clear that the respondent conducted its own training. The EEOC analysis indicated that 17 of the 22 charges involved allegations that employees were inappropriately required to participate in Church of Scientology training sessions or religious practices and/or were told to utilize Church of Scientology philosophies in conducting their work. The other charges involved a diffuse set of ``new age'' practices that employees found objectionable. On May 29, 1996, the subcommittee directed inquiries to the Federal departments and agencies within its oversight jurisdiction regarding the impact of ``new age'' training programs, including the use of consultants for that purpose. The inquiries sought: a list of all requests for proposals for employee training issued; a list of all contracts for employee training entered into; copies of not less than five of the contracts; a tally of the number of objections or complaints from any source involving training programs; an analysis of the tally indicating the basis of each complaint; and an analysis of the objections or complaints tallied indicating common themes or trends. The departments and agencies all responded between June 5, 1996 and August 2, 1996. Many of the agencies did not utilize or rarely utilized training programs. All responses, however, proved comprehensive. The responses were characterized by very few or no objections or complaints concerning the violation of individual civil rights. b. Benefits.--As questionable, and often dubious, practices falling under the category of ``new age'' training have gotten more attention, it has become important to protect against such explicit and implicit indoctrination and insure continued use of proven and effective training practices. The department and agency responses provided the subcommittee with a comprehensive listing of training programs. Based on these responses, it was concluded that Federal dollars were used responsibly in the choosing of appropriate and sound diversity, management, motivation, and other such employee training programs. c. Hearings.--None. NATIONAL ECONOMIC GROWTH, NATURAL RESOURCES, AND REGULATORY AFFAIRS SUBCOMMITTEE 1. Grantee Lobbying. a. Summary.--For decades, the Federal Government has awarded billions of dollars in grants to organizations that engage in lobbying and other forms of political advocacy. Much of this money is given to non-profit organizations. According to IRS figures, in 1992 alone, approximately 44,274 non-profit groups received $42.6 billion in grants from the Federal Government. Non-government sources put the figures even higher.\21\ The Independent Sector, a coalition of some of the largest non-profits in the country, reports that non-profits received nearly $160 billion from all government sources in 1992; and OMB Watch's Gary Bass claims the Federal Government granted approximately $226 billion in fiscal year 1994 to non- profits, for-profits, and to State, local and tribal governments. --------------------------------------------------------------------------- \21\ Letter from the U.S. General Accounting Office, Associate Director, Tax Policy and Administration Issues, Natwar M. Gandhi, to Ernest Istook, 11/08/95, found in subcommittee files. --------------------------------------------------------------------------- In many instances, government funding far exceeds donations received directly from private citizens. For example, in 1994 Catholic Charities, one of the largest non-profit organization in the country, obtained $1.2 billion or 65 percent of its total annual revenue from government sources. While much of the money given away by the government is undoubtedly put to good use, too much of it is spent to subsidize political advocacy--whether it be lobbying on pending legislation, buying paid advertisements for political races, or simple grass-roots organizing. Federal grantees naturally develop a symbiotic relationship with their governmental funding sources. Even where Federal funds are not directly used for political advocacy, indirect support is inevitable--after all, money is fungible. Several votes have clearly demonstrated that Congress firmly believes the practice of giving grants to politically active organizations, termed ``Welfare for Lobbyists,'' must stop. The subcommittee explored the issue of Welfare for Lobbyists in great detail throughout the first session of the 104th Congress. A total of four hearings were held by the subcommittee to investigate allegations that certain groups receiving Federal grants were engaging in political advocacy; to consider how Welfare for Lobbyists adversely affects both government and charity; and to explore possible solutions to the problem. The subcommittee also worked in coordination with the General Accounting Office to investigate the National Council of Senior Citizens (NCSC). NCSC is a non-profit organization that receives over 95 percent of its funding from the Federal Government (ostensibly to provide housing and jobs to senior citizens). Yet it is highly active in partisan politics. Half of NCSC's annual report for 1994 was devoted to a description of its political activities. As part of this investigation, electronic copies of NCSC's financial records for fiscal year 1994 were requested. Those records are now being analyzed to determine whether current restrictions on the use of Federal funds were violated, and, if no violations took place, to identify the loopholes that permit an organization so heavily funded by the government to engage in significant political activity. In addition to investigatory hearings, the subcommittee and other Members also proposed legislation to address some of the problems associated with Welfare for Lobbyists. Ultimately, language was added to section 18 of the Lobbying Disclosure Act of 1995 to prohibit certain non-profit organizations (qualified as tax-exempt under IRC section 501(c)(4)) from receiving Federal funds in any form, if they engage in lobbying activities. That bill was signed into law by President Clinton on December 19, 1995, as Public Law No. 104-65. Those restrictions have no effect on grantees other than 501(c)(4)'s, nor do they prevent a 501(c)(4) grantee from creating shell corporations to separate, on paper, the grant receipts from the political activity. b. Benefits.--There is a need to protect the taxpayers by ensuring that Federal funds are not used to subsidize legislative or political advocacy. To that end, the subcommittee's hearings have exposed abuses of Federal grants. Many Members believe that further reforms are needed to increase accountability to the taxpayers and to prevent the abuse of tax dollars. With at least $42 billion in government grants each year, there is substantial room for waste, fraud, and abuse by unscrupulous grantees. The subcommittee's efforts will continue with an eye toward exposing existing abuses and demonstrating the case for reform to protect the American taxpayers. c. Hearings.--As part of its investigatory work, the subcommittee held four hearings on the question of Welfare for Lobbyists. Hearings were held to investigate allegations that certain groups receiving Federal grants were engaging in political advocacy; to consider how Welfare for Lobbyists adversely affects both government and charity; and to explore possible solutions to the problem. On June 29, 1995, the subcommittee heard from representatives from non-profits that refuse to engage in political activity or take Federal grants; General Accounting Office researchers and private scholars who have studied Welfare for Lobbyists; and Congressmen and Senators who are concerned about the problem as well. In addition, the subcommittee questioned representatives of the Nature Conservancy and the National Fish and Wildlife Foundation about allegations of improper political activity in connection with Federal grants they receive. Subsequent hearings were held on July 28, August 2, and September 28, 1995. 2. Investigation of Improper EPA Lobbying on Pending Legislation. a. Summary.--The Anti-Lobbying Act is a criminal statute that prohibits executive branch agencies from using any appropriated money directly or indirectly to influence a Member of Congress on pending legislation, except through proper official channels. (18 U.S.C. sec. 1913.) The dual purpose of the act is to prevent agency officials from squandering public money in attempts to increase their budgets or protect their jobs, and to prevent executive branch agencies from using tax dollars to disseminate propaganda about pending legislation. Pursuant to this statute, and other Federal anti-publicity and propaganda statutes, the executive branch is free to propose such legislative measures as the President deems appropriate and communicate its comments directly to Members of Congress on any pending legislation. Executive branch officers and employees are prohibited, however, from engaging in any grass- roots lobbying, even indirect grass-roots lobbying, that is intended to influence the legislative debate. In late February 1995, the committee learned the following facts regarding improper EPA lobbying: (1) EPA officials had used taxpayer funds to create non-public advocacy material strongly condemning pending regulatory reform legislation; (2) the EPA used taxpayer funds to fax these documents to more than 150 grass-roots lobbying organizations and industry groups that are active in lobbying Members of Congress on these legislative proposals; (3) an objective reader would interpret these documents as a call to action, or in the words of one newspaper, ``a call to arms;'' (4) most of the documents, including the strongest advocacy pieces, were not solicited; (5) the mass-faxing of these documents was carefully timed to coincide with important votes in the House of Representatives; and (6) such action was consistent with a pattern of other EPA contacts with grass-roots lobbying organizations to defeat the reform legislation. These undisputed facts constituted strong evidence that some EPA officials had violated the criminal anti-lobbying laws. Indeed, the concerted EPA actions appeared to precisely fit the accepted definition of prohibited grass- roots lobbying. On March 2, 1995, a written request for information was submitted to EPA Administrator Carol Browner. The Administrator initially responded that the EPA would cooperate with the oversight investigation and provide answers to the questions. However, EPA did not provide complete answers to any of the questions that were posed after an extension of time was granted. For example, EPA refused to say who approved the content of the lobbying material and who was involved in the decision to send it out. The EPA also refused to disclose whether EPA officials had meetings or conversations with outside lobbying groups to discuss lobbying Members of Congress. Instead, EPA's response to the legitimate oversight request was largely an argument why EPA need not provide Congress information regarding potential wrongdoing and waste of taxpayer resources. On March 21, 1995, subcommittee Chairman McIntosh and ranking subcommittee Member Peterson sent Administrator Browner a letter insisting on complete responses to all of its questions pursuant to its authority under Rules X and XI of the U.S. House of Representatives. The March 21 letter explained that the subcommittee knew of documents that EPA was refusing to produce, which raised concerns about possible violations of several Federal statutes besides the Anti-Lobbying Act, including other appropriation laws, the Hatch Act prohibitions against political activity by executive branch officials, the conspiracy statute, and the statute prohibiting misprision of felony. As the March 21 letter relayed: EPA simply cannot pick and choose which of the subcommittee's requests for information it will honor and which it will reject. We insist on complete responses to all of our requests. . . . It is impossible for the subcommittee to discharge its oversight duty without uncovering all of the facts. Your position that the Congress is not entitled to the information because no one at EPA violated the Anti- Lobbying Act is troubling for two reasons. First, your assertion that the act prohibits almost nothing is unsupportable. The very opinions cited in the EPA letter from the Department of Justice refute EPA's interpretation of what the law allows and what it prohibits. Second, even if we accepted EPA's . . . construction of the law and blindly accepted EPA's conclusion (based on EPA interviews not provided to us) that no laws were violated, the information we seek still would be highly relevant to our core legislative duty. If current law is as empty as you assert, then our oversight investigation is necessary to determine whether to propose new legislation, similar to that which exists for many agencies, which prohibits an even broader category of publicity and propaganda activities. The March 21 letter also contained a four-page appendix that refuted the agency's legal interpretation of the Anti-Lobbying Act. In the following months, EPA missed every agreed-upon deadline to provide the requested information. Although EPA eventually produced a significant number of documents, the agency continued to stonewall on producing answers to the most important questions and the most relevant documents and e-mail messages. At the same time, the Department of Justice's Office of Legal Counsel (OLC) issued new ``guidelines'' to executive branch agencies on interpreting the Anti-Lobbying Act. The OLC guidelines were substantially different from prior General Accounting Office (GAO) and OLC guidelines and directly contradicted the text of the Anti-Lobbying Act without justification. Despite the Department of Justice's refusal to investigate the facts, committee Chairman William F. Clinger, Jr., and subcommittee Chairman McIntosh reviewed the available evidence of improper lobbying by EPA and a host of other executive branch agencies. That evidence was more than sufficient to find a widespread pattern of lobbying by executive agencies within the Clinton administration, including the Departments of Commerce, Interior, Housing and Urban Development, Labor, the EPA, the Small Business Administration, and AmeriCorps. Chairman Clinger introduced an amendment to H.R. 2564, the ``Lobbying Disclosure Act of 1995,'' which would clarify existing prohibitions and create a civil enforcement mechanism to prevent further improper lobbying activity. Although the amendment was narrowly defeated, there was widespread recognition that legislation of this type was needed to correct executive branch abuses. In early 1996, Chairman Clinger introduced H.R. 3078, ``The Federal Agency Anti-Lobbying Act,'' to create a civil law prohibiting agency grass-roots lobbying in support of or in opposition to pending legislation. Although H.R. 3078 did not move from committee, Chairman Clinger was able to have a similar prohibition enacted as section 631 of the Treasury Postal portion of the Omnibus Consolidated Appropriations Act of 1997. b. Benefits.--This investigation demonstrates the need for additional civil legislation, and greater enforcement of existing criminal laws regarding improper executive branch lobbying. The investigation also laid the groundwork for the consideration of civil legislation which was passed as part of the Omnibus Consolidated Appropriations Act that creates a civil enforcement mechanism to prevent further waste and abuse of taxpayer resources. c. Hearings.--The full committee conducted a hearing on H.R. 3078, on May 15, 1996, (see Part Two I.A.4.k.) 3. OSHA's Ergonomics Standards. a. Summary.--During the 104th Congress, the subcommittee conducted oversight into the Occupational Safety and Health Administration's (OSHA) rulemaking process for an ergonomics standard. The term ``ergonomics'' originated in industrial engineering to explain the idea that workplaces should be designed around the people who use them. The recent attention focused on ergonomics comes from its association with repetitive strain injuries (RSI's), also known as cumulative trauma disorders (CTD's). In spite of the lack of scientific evidence to support either of these theories, OSHA has proceeded aggressively with an ergonomics regulation.\22\ --------------------------------------------------------------------------- \22\ Eugene Scalia, ``Ergonomics: OSHA's Strange Campaign to Run American Business,'' White Paper, National Legal Center for the Public Interest, Vol. 6, No. 3, August 1994, pp. 8-20. --------------------------------------------------------------------------- The regulatory moratorium bill (H.R. 450) would have prevented further work by OSHA on an ergonomics standard. When an OSHA official publicly indicated her intent to defy the moratorium, Congress passed a ``Stop Work Order'' on this rulemaking as part of H.R. 1158 and H.R. 1944, the 1995 Rescissions Bill. Press accounts in June 1995 reported that OSHA had abandoned the ergonomics rulemaking. As Congress continued to review comprehensive regulatory reform proposals, the subcommittee held a hearing on July 12, 1995, with OSHA Assistant Secretary Joseph Dear as a witness, to finally establish the status of OSHA's regulatory activities on the ergonomics issue. The committee also examined whether a single, one-size- fits-all rulemaking could ensure workplace safety and health, especially when serious questions still existed about the scientific basis of the regulation. The investigation brought into light the fact that the sweeping regulation would require that 96 million jobs across the Nation be formally reviewed for ergonomic ``risk factors.'' These risk factors are inherent in every job they include: repetitive motion; frequent or heavy lifting; contact stress; unsupported or awkward postures for long periods; and vibrating tools and equipment.\23\ Under this standard, workers would be prohibited from repeatedly pinching small binder clips or twisting their necks to cradle a telephone receiver. The investigation revealed that many jobs which include these risk factors would be abolished altogether in favor of automation.\24\ As a result of this investigation, the committee was able to establish that OSHA is continuing to work on the promulgation of an ergonomics rulemaking. Prior to the July 12, 1995 hearing, conflicting press reports were written on the subject. In addition to establishing the status of the ergonomics rulemaking, the hearing helped make a strong case that the rulemaking was overreaching and the House showed its agreement by passing a rider to deny funding DOL for promulgation of the ergonomics regulation. --------------------------------------------------------------------------- \23\ OSHA's Regulatory Process and Activities Regarding Ergonomics before the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs. Testimony of Joseph A. Dear, Assistant Secretary of Labor for Occupational Safety and Health. (Original transcript pp. 26-28, in subcommittee files.) \24\ Ibid., pp. 36-40. --------------------------------------------------------------------------- b. Benefits.--During the investigation, the committee learned from Assistant Secretary Dear that the agency is continuing to work on its proposed ergonomics regulation. Assistant Secretary Dear also confirmed that the agency is already enforcing the scientifically dubious ergonomics principles under the general duty clause, without a regulation. The airing of this information refuted press reports that the agency had stopped work on the massive regulation and renewed congressional scrutiny of the rulemaking process. A study released in January 1995, conducted by experts in occupational medicine, concludes that OSHA did not ground its proposed ergonomic regulation in sound medicial science. Rather OSHA selected research that supported its position and ignored or minimized findings that did not. In the Labor-HHS Appropriations bill to fund OSHA in 1996, Congress approved a prohibition on funds for further work on the ergonomics standard. c. Hearings.--The subcommittee held a hearing on July 12, 1995, on ``OSHA's Regulatory Activities and Processes Regarding Ergonomics.'' Testimony was received from: Joseph A. Dear, Assistant Secretary of Labor for Occupational Safety and Health, U.S. Department of Labor; Joseph M. Woodward, Esquire, Associate Solicitor, Occupational Safety and Health Division, Office of the Solicitor, U.S. Department of Labor; David Sarvadi, attorney, Keller and Heckman; Howard M. Sandler, M.D., president, Sandler Occupational Medicine Associates, Inc.; C. Boyden Gray, Esquire, chairman, Citizens for A Sound Economy; Rick Treaster, president, Local 2400, Amalgamated Clothing and Textile Workers Union; Deborah Berkowitz, director, office of occupational health, United Food and Commercial Workers International Union. 4. Improper FDA Rulemaking. a. Summary.--The committee conducted an investigational hearing on the improper use of informal rulemaking by the Food and Drug Administration in cooperation with the Subcommittee on Human Resources and Intergovernmental Relations. This investigation resulted from a compelling Citizens' Petition filed with the FDA pursuant to section 553 of the Administrative Procedures Act by the Indiana Medical Device Manufacturers Council and the law firm of Baker & Daniels on May 2, 1995. That Citizens' Petition asked the FDA to add back certain language that the agency had deleted from its regulations in 1991 requiring notice and comment procedures for most rules. The 1991 language deletion permitted the FDA to issue guidance documents without subjecting them to notice and comment rulemaking. The Petition also asked the FDA to implement a consensus-based approach to the initiation, development and issuance of guidance documents that do not impose new rules, and to adopt greater internal controls over its communications with the public. In support, the Petition identified dozens of examples where informal guidance documents had been used by the FDA to justify enforcement actions or approval decisions that could not be otherwise justified by a formal rule or statute. Subcommittee Chairmen McIntosh and Shays submitted written questions to the FDA, which resulted in the production of hundreds of pages of documents and a number of instructive answers. For example, the FDA revealed that its decision in 1991 to exempt guidance documents from notice and comment rulemaking procedures was made despite criticism from an independent government agency charged with improving government regulations. In a September 24, 1990 letter, Marshall Breger, chairman of the Administrative Conference of the United States, advised the Acting Commissioner of the FDA, James Benson, ``FDA should reconsider its seeming ``all-or-nothing'' approach with regard to using notice-and-comment procedure in the promulgation of interpretive rules.'' In addition to focusing on the Citizens' Petition, the hearing also provided an opportunity for Members to consider a briefing paper published by David Murray of the Hudson Institute, entitled ``The Human Cost of Regulation: The Case of Medical Devices and the FDA.'' In that paper, the Hudson Institute concluded thousands of Americans had died as a result of FDA delay in approving just four medical devices. As one example from the paper indicates, nearly 1,100 Americans died as a result of a 24-month delay in the FDA's approval of endocardial leads. On October 30, 1995, the FDA provided a preliminary written response to the Citizen's Petition. Significantly, the FDA granted the petitioners' request that the FDA improve its guidance document procedures. In a letter signed by the Deputy Commissioner for Policy, the FDA concluded: ``FDA believes that there is merit to your concern about the initiation, development, and issuance of guidance documents. FDA agrees that public participation benefits the guidance document development process. Moreover, FDA believes that the Agency can do a better of [sic] job of communicating to its employees and to the public the non-binding nature of guidance documents.'' However, the FDA denied the petitioners' request for the FDA to add back certain language that the agency had deleted from its regulations in 1991 requiring notice and comment procedures for most rules. The FDA ruled ``notice-and-comment rulemaking would significantly delay the issuance of guidance documents, or more likely, make it impracticable to issue them at all. The Agency believes that the proper balance between the need for public input and the need for timely guidance can be struck if FDA modifies its guidance document procedures. This approach addresses your concerns regarding adequate public participation but does not make it impossible for FDA to continue making guidance available.'' In that same letter, the FDA also announced plans to publish by January 31, 1996, a Federal Register notice setting forth its proposed ideas for revising guidance document procedures and its intention to solicit comment on the issues raised in the Citizens' Petition. b. Benefits.--The investigation helped focus both the public's and the FDA's attention on an issue that is of significant importance to the regulated community. The extent to which guidance documents and other informal statements issued by a regulatory body are used by that body is a core problem for any regulatory system. The Administrative Conference of the United States has recognized this concern, and has attempted to address solutions on a governmentwide basis. This investigation helps to highlight this concern with respect to the FDA. However, the FDA is not the only agency that could benefit from considering its treatment of informal rulemaking. The EPA, OSHA, and every other regulatory body needs to voluntarily examine their current rulemaking procedures. Failure to act voluntarily will inevitably lead more private citizens to use the Citizens' Petition process as a means of forcing the agencies to act responsibly. The subcommittee encouraged the filing of such petitions, and invites private citizens to bring them to its attention. c. Hearings.--A hearing on this matter was held on September 14, 1995. Witnesses included: William Schultz, Deputy Commissioner for Policy, FDA; Brad Thompson of the law firm of Baker & Daniels; Larry Pilot, counsel to the Medical Device Manufacturers Association; Ed Kimmelman, regulatory affairs director for Boehringer Mannheim Corp.; Thomas Lenard, Ph.D., director of regulatory studies at the Progress & Freedom Foundation; David Murray of the Hudson Institute's Competitiveness Center; and Jeff Brinker, M.D., director of interventional cardiology, Johns Hopkins Hospital. 5. Regulatory Reform. a. Summary.--The committee conducted an examination of the impact of Federal regulations on average Americans across the Nation. The subcommittee visited 17 cities and held hearings on the need for regulatory reform. Testimony from the hearings clearly showed that Government regulations place undue burdens on small business and the American people--burdens that are not outweighed by regulatory benefits. In Washington, DC, Federal agency officials and some Members of Congress make the case that more and more regulations are needed. However, outside Washington, DC, citizens plead for relief from the needless burden of regulations that already exist. In some cases the burden of regulations just makes it more difficult for these individuals to do their jobs. In other cases, regulations threaten to drive them out of business completely. The subcommittee found that America's hard-working farmers, who grow the food on which we all subsist, are heavily and unnecessarily burdened by regulations. One farmer in Oklahoma, Robert Ross, testified that Federal agencies issue so many convoluted regulations that it is nearly impossible for farmers not to break the law. Farmers are left with no other option but to follow the rules to the best of their ability, knowing that at any time, an agency inspector could fine them for a minor violation or, worse, take their land away. Another Oklahoma farmer, Ruby Henderson, testified that she can no longer farm her own land because it has been classified as a wetland-- although it remains dry most of the year. The subcommittee also found that regulations can be counterproductive, hurting the very people our society and our government should be trying to help. In Modesto, CA, a Laotian immigrant farmer leased 20 acres of land between two major roads which are good for only one thing--farming strawberries. Two agencies, the Fish and Wildlife Service and the Army Corps of Engineers, quickly stepped in to stop him from farming his own land. After much headache and paperwork, which involved the agencies first losing and then rejecting his forms because the drawings were not quite to scale, this farmer is still in limbo. He came to America because he thought it was the land of opportunity, and he wanted to escape governmental abuse. Unfortunately, he has not been able to do that here. His American dream has become a personal nightmare. Testimony from the field hearings also showed that regulations can have a counterproductive impact on large pockets of the American populace. For example, the small city of Manson, IA was forced to reduce the level of fluoride in the public drinking water--it was 4 to 5 milligrams per liter while Federal regulations required only 4 milligrams per liter. Even though the discrepancy between the actual level and the mandated level was very small, and fluoride is a good thing, the city was forced to install a reverse osmosis treatment plant to remove 1 milligram or less of fluoride per liter of water at a cost of more than $700,000. Water rates were increased by 45 percent to cover the operational costs of the plant. Property taxes were raised and now approximately 24 percent of these taxes are allocated to paying off the bonds the city had to sell to build the plant. Some 50,000 gallons of water are rejected by the plant daily. In some cases, regulations aren't as much at fault as the methods Federal agencies use to enforce them. According to Dr. Jonathon Wright, on May 6, 1992, a group of flak-jacketed police and FDA agents kicked in the front door of the Tahoma Clinic, and with guns pointed at the staff demanded, among other things, their B vitamins. The raid came without any prior contact or inquiry from the FDA. In September 1995, the FDA's ``criminal investigation'' was dropped without as little warning as it was started--and without any explanation, apology or reimbursement of costs. b. Benefits.--The field hearings have given private citizens across the Nation the opportunity to participate in the regulatory reform debate in Congress. By reaching outside Washington, DC, and listening to those people who must comply with Federal regulations on a daily basis, the subcommittee learned about many of the problems that the Federal regulatory system poses: use of excessive force by agencies, costly regulations that threaten to drive farmers and small business owners into bankruptcy, and counterproductive regulations that burden the American consumer without providing the benefits of protection for health and safety. The testimony of witnesses at the field hearings has helped build the record for regulatory reform, supporting the need for legislation to enact true, common-sense reform. Such significant legislation was enacted in the Small Business Regulatory Enforcement Fairness Act of 1996, which gives Congress veto power over agency regulations. c. Hearings.--The subcommittee held the following field hearings: ``The Regulatory Transition Act of 1995 (H.R. 450) and Clean Air Act Regulations'' in Fairfax, VA, on February 2, 1995. Testimony was received from: Robert W. McGillicuddy, AutoCare, Inc.; Dennis Dwyer, Potomac Mills Exxon; Ron Harrell, Capital Services, Inc.; Becky Norton Dunlop, secretary of natural resources, Commonwealth of Virginia; Robert E. Martinez, secretary of transportation, Commonwealth of Virginia; Robert B. Dix, Jr., Fairfax County board of supervisors; Lorraine Lavet, Fairfax County chamber of commerce; Stan Laskowski, Deputy Regional Administrator, Region 3, Environmental Protection Agency; Ellen Bosman, vice chairman, Arlington County board; Sheryll Crosby, Shortness of Breath Club, American Lung Association. ``The Need for Regulatory Reform'' in Muncie and Indianapolis, IN, on April 17, 1995. In Muncie, testimony was received from: Betty Devoe, executive director, Westminster Village; Joseph Russell, farmer; Wayne Townsend, farmer; Tom Miller, vice president, commercial lending, American National Bank; Lowell Williams, senior vice president, First Merchants Bank; Eugene Roach, M.D., medical director, Anderson Center of St. John's; James Currier, M.D., radiation oncologist; Robert Brodhead, president, Ball Hospital; George Brannum, M.D., Pathologists Associated; G.W. Bartlett, president, G.W. Bartlett Co.; Richard Brown, sales manager, Beckett Bronze; Robert Kersey, president, Rochester Metal Products; Robert Anderson, plant manager, Delphi Interior and Lighting Systems; Richard Sullivan, vice president and division manager, New Venture Gear; Mike Lunsford, realtor; Terri Quinter, supervisor, Rose View Transit; Katherine Kleber, Abate of Indiana PAC; Dan Conaway, Abate of Indiana PAC. In Indianapolis, testimony was received from: Alan Kemper, farmer; Warren Baird, farmer; Bart Dye, farmer; Jean Ann Harcourt, president, Harcourt Outlines; Malcolm Applegate, president and general manager, Indianapolis Newspapers; Jeff Bowe, president, Benham Press; John Keach, Jr., president, Home Federal Savings Bank; Jerry Baumgartner, president, Tri County Bank and Trust; Jeff Robinson, Indiana American Water Co.; Myles Brand, president, Indiana University. ``Regulatory Problems Maine Citizens Face Under the Clean Air, Clean Water, and Safe Drinking Water Acts'' in Portland, ME, on May 26, 1995. Testimony was received from: Richard Verville, Citizens for Sensible Emissions; Monte Sloan, United Bikers of Maine; David Dixon, Earth Tech; Jinger Duryea, C.N. Brown Co.; Edward F. Miller, American Lung Association of Maine; Everett B. Carson, Natural Resources Council of Maine; Senator Jeffrey H. Butland, president of the senate, Maine State Senate; David Sweet, superintendent, Kennebunk, Kennebunkport and Wells Water District; Delores Lymburner, Maine Peoples Alliance; Judy W. Hayes, president, Consumers Maine Water Co.; Dale Glidden, superintendent, Augusta Sanitary District. ``Regulatory Reform and the FDA Drug Approval Process'' in Norristown, PA, on June 9, 1995. Testimony was received from: Beverly Zakarian, president, Cancer Patients Action Alliance; David and Faith Samowitz; Mariah Gladis; Kiyoshi Kuromiya; Dr. David Bios, vice president, worldwide regulatory affairs, Merck & Co.; Dr. James Molt, vice president, worldwide regulatory affairs, Rhone- Poulence Rorer; Dr. Robert Powell, vice president, regulatory affairs, SmithKline Beecham Co.; Bruce Carroll, manager, government relations division, Centocor, Inc.; Dr. Robert Larkin, director, registration & regulatory affairs, agricultural chemicals business, Rohm & Haas Co.; Mike Lumpkin, Deputy Director, Center for Drug Evaluation and Research, FDA. ``The Need for Regulatory Reform'' in Tampa, FL, on July 17, 1995. Testimony was received from: Juan Adriatico, farmer; Roy Davis, nurseryman and president, Hillsborough County Farm Bureau and president, Tampa Bay Chapter of the Florida Nurserymen and Growers Association; Tommy Brock, farmer and president, Hillsborough County Strawberry Growers Association; David Boozer, executive director, Florida Tropical Fish Farms Association; Charles E. Weeder, chairman and CEO, Homes of Merit, Inc.; Bruce Congleton, president and CEO, Florida Food Industry Association. ``Federal Regulatory Reform'' in St. Cloud, MN, on August 7, 1995. Testimony was received from: Harold Anderson, president, Anderson Trucking Service; Mike Helfeson, CEO, Gold'n Plump Poultry; Bruce Gohman, president, W. Gohman Construction Co.; Morrie Lanning, mayor, Moorhead, MN; Don Adams, director, Stearns County Environmental Services; David Volker, loss control manager, Berkley Administrators; Peter Larsen, M.D., F.A.C.S., St. Cloud Eye Clinic; John Solheim, CEO, St. Mary's regional health center, Detroit Lakes; Ed Zapp, president, chairman and CEO, Zappco Inc. ``Federal Regulatory Reform Pertaining to Federal Contracts'' in St. Paul, MN, on August 8, 1995. Testimony was received from: Ron Turner, president, Minnesota Federal Contractors Council, Joe Weis, chairman, Weis Builders; Todd Goderstad, legal counsel, Ames Construction Co.; Ted Arneson, president, Professional Instruments; Donnovan Eaker, owner, Steve's Meat Market; Charles McDuff, director of government and technical affairs, Ecolab Inc.; Lyle Clemenson, president, CEI, Inc.; William D. Smith, Jr., executive vice president, Brown & Bigelow. ``FDA Medical Product Approvals'' in Rochester, MN, on August 8, 1995. Testimony was received from: Dr. Robert Schwartz, cardiologist, the Mayo Clinic; Dr. Richard Geier, president, Olmsted Medical Group; Dr. Mike Murray, president-elect, Minnesota Medical Association; Paul Citron, vice president of science and technology, Medtronic; Mike Gozola, president, Rochester Prosthetic Laboratories. ``The Federal Regulatory Climate in Maryland,'' in Towson, MD, on January 26, 1996. Testimony was received from: Paul Abenante, president, American Bakers Association; William Paterakis, H&S Bakery; John Morrison, vice president of Human Resources, Schmidt Baking Co.; Alvin Manger, president, Manger Packing Co.; Edward Lauer, owner, Lauer's Super Thrift; Joseph DeFrancis, president, chairman and CEO, Pimlico Race Course; Timothy Capps, Maryland Horse Breeders Association; William A. Good, executive vice president, National Roofing Contractors Association; Mark Gaulin, president, Magco, Inc., and president, Associated Roofing Contractors of Maryland; Calvin Coblentz, president, Wimpey Minerals U.S.A., Inc., and president, Maryland Associated General Contractors; William T. Popmaronis, president, EPIC MD Professional Pharmacies and owner, Edwards and Anthony Pharmacy; Hugh Brown, president, Safeguard Maintenance Corp.; Michael Stappler, president, Overlea Caterers, Inc.; Thomas Meighan, safety manager, Stromberg Metal Works, Inc.; Rabbi Moshe Heinemann, Star-K Kosher Certification; Joseph DiCara, GOW International, Inc. ``The Need for Regulatory Reform,'' in Sioux City, IA, on February 8, 1996. Testimony was received from: Harold Higman, Higman Sand & Gravel; David Calhoun, Wells Blue Bunny Dairy; Corky Bailey, JEBRO; Ellen Prescott, Security National Bank; George Valentine, Terra Industries, Inc.; Craig Davis, Davey & Jim's Seed Store, Inc.; Ron Marr, Petroleum Marketers of Iowa; Bob Hamilton, chief, Sioux City Fire Department; Linda Madison, Sioux City Community School District; Stephen Brevig, Northwest Iowa Power Cooperative; Don Meisner, Siouxland Interstate Metro Planning Council. ``The Need for Regulatory Reform,'' on February 9, 1996 in Des Moines, IA. Testimony was received from: Wes Houston, human resources manager, Johnson Machine Works, Inc.; Loren Duchman, consultant, James B. Meehan, PE, PC; Don Beal, president, Beal Development Corp.; David Whiton, owner, Whiton Feed and Milling Co.; Bill Willis, Soil Conservation Consultant; Richard Seigel, farmer; Royal ``Curly'' Holtz, II, farmer; Howard Alff, farmer; Harvey Johnson, farmer; Dean Torreson, city administrator, city of Atlantic; Robert Layton, city manager, city of Urbandale; Fletcher Reel, mayor, city of Missouri Valley; Tom Hanafan, mayor, city of Council Bluffs; Joe A. Gray, mayor, city of Manson; L.D. McMullen, CEO and general manager, Des Moines Water Works. ``The Impact of Regulations on California's Central Valley,'' in Modesto, CA, on April 1, 1996. Testimony was received from: Shel Thompson, president, Charter Mortgage; Robert Rucker, president, Rucker Construction; Ron West, Ron West Consulting; John Roberts, CEO, California Rice Industry Association; Norma Cordova, director, Sand Creek Flood Control District; Dan Nelson, executive director, San Luis Delta Mendota Water Authority; Allen Short, general manager, Modesto Irrigation District; Roger Wood, corporate vice president, J.R. Wood Co.; Manuel Cunha, president, NISEI Farmer's League; Carolyn Richardson, director, Department of Environmental Advocacy; Pat Paul, chair, Stanislaus County Board of Supervisors. ``Creating an Employer-Friendly Regulatory System,'' in Auburn, WA, on April 2, 1996. Testimony was received from: Dr. Jonathon Wright, Tahoma Clinic; Timothy S. Cooke, CEO, the Electrode Store; Ray Schow, State senator and owner, All-Night Printery and ANP Publishers; Ann Anderson, State senator; Suzette Cook, State representative; Pat Cattin, owner, Cattin's Restaurant; Don Guthrie, vice president, Wayne's Roofing; David Cornforth, co-owner, Cornforth-Campbell Pontiac, Buick, GMC; Keith Shay, former employee, Cornforth- Campbell Pontiac, Buick, GMC. ``Taxing Times: The Case for IRS Reform,'' in Phoenix, AZ, on April 3, 1996. Testimony was received from: Sybille Koberstein; Alma Davis; Marlan Walker, Walker Ellsworth, P.L.C.; Yale Goldberg, Fraiser, Ryan, Goldberg & Hunter, L.L.P.; Mike Pietzsch, Polese, Pietzsch, Williams and Nolan; William Raby, the Raby Law Office; Natwar Ghandi, Associate Director of Tax Policy, General Accounting Office; Leigh Cheatham, deputy director, Arizona Department of Revenue; Judith C. Dunn, Associate General Counsel (domestic), Internal Revenue Service. ``The Impact of Regulations on the Oil Industry,'' in Norman, OK, on May 20, 1996. Testimony was received from: Frank McPherson, chairman of the Board, Kerr McGee; Richard Bilas, John A. & Donnie Brock Chair in Energy Economics & policy director, University of Oklahoma Energy Center; Christine Hansen, Interstate Oil and Gas Compact Commission; Terry Ross, executive vice president, Love's Country Stores; Susie King, senior staff engineer, Conoco; Barbara Price, vice president, Health, Environment and Safety, Phillips Petroleum; Mike Cantrell, president, Oklahoma Independent Petroleum Association; Troy Vickers, deputy director of Regulatory Services, Amoco Corp.; Commissioner Ed Apple, Oklahoma Corporation Commission. ``The Hidden Cost of Government Regulations,'' in Claremore, OK, on May 20, 1996. Testimony was received from: Wayne Francis, mayor of Henryetta; Sam Wade, deputy CEO, National Rural Water Association; Gene Whatley, executive director, Oklahoma Rural Water Association; Ron Meadows, superintendent, Prue Public Schools; Sue Ann Clayton, Cystic Fibrosis Patient; Joe Cox, president, Hydrohoist International; Ted McGuire, president & CEO, RCB Bank; Ruby Henderson, farmer; Robert Ross, farmer; Charles Sloan, farmer, Sequoyah County Farm Bureau; Don Turner, Turner Bros. Meats; Larry McFerron, McFerron's Quality Meats; James Zangger, Greenleaf Nursery. 6. Privatization of Sallie Mae and Connie Lee. a. Summary.--The Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs and the Subcommittee on Postsecondary Education, Training and Life-Long Learning of the House Committee on Economic and Educational Opportunities held a joint hearing on the possible privatization of Sallie Mae and Connie Lee, both of which were chartered under the Higher Education Act. Sallie Mae was established in 1972 as a shareholder-owned, for-profit corporation to help ensure adequate private sector funding for federally guaranteed education loans. Sallie Mae supports financing for higher education loans primarily by making a secondary market in such loans and providing related financial and operational support to lending and educational institutions. Connie Lee was established in 1986 as a Triple-A rated, for-profit municipal bond insurance company which guarantees the repayment of bonds issued by colleges, universities, and teaching hospitals for the construction and renovation of facilities. Connie Lee helps educational institutions with lower investment grades obtain low cost, long-term capital. Members were interested in hearing testimony on whether it was in the public interest, and the interest of the stockholders of Sallie Mae and Connie Lee, that they be privatized because of changes in the secondary markets that these government-sponsored enterprises (GSE's) serve, and other changes in government policy. b. Benefits.--The information gained by the hearing provided valuable information on the following three questions: (1) whether the markets served by Sallie Mae and Connie Lee were mature enough to allow these GSE's to be privatized and pursue other socially productive business opportunities; (2) if the markets were mature enough, whether it was fundamentally unfair to prevent the stockholders of these companies from deciding for themselves the future of their companies; and (3) if privatization of Sallie Mae and Connie Lee was in the public and private interest, what general form the legislation should take to accomplish this objective. c. Hearings.--On May 3, 1995, the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs and the Subcommittee on Postsecondary Education, Training and Life- Long Learning of the House Committee on Economic and Educational Opportunities held the joint hearing. The first panel of witnesses included Larry Hough, the president of Sallie Mae; Oliver Stockwell, the president of Connie Lee; along with representatives from the U.S. Department of Education and the U.S. Department of the Treasury. These witnesses testified about advantages of privatizing these GSE's and the possible terms of such privatization arrangement. The second panel of witnesses included experts on the financial markets served by Sallie Mae and Connie Lee. These witnesses discussed the typical life cycle of a GSE and explained that the secondary markets served by Sallie Mae and Connie Lee were sufficiently mature to make privatization appropriate. 7. Mismanagement of Grants by the Environmental Protection Agency. a. Summary.--The subcommittee initiated an investigation of the Environmental Protection Agency's grantmaking process. The subcommittee's investigation, spurred by a September 28, 1995 report entitled ``Final Report of Audit on EPA's Controls Over Assistance Agreements'' by the EPA's Inspector General, found financial mismanagement that potentially places billions of tax dollars at risk. Grants generally compose more than half of the EPA's annual budget of approximately $6 billion. The agency's Inspector General found violations of EPA policies and procedures, destruction of critical grant documents, and blatant disregard for sound management practices. The Inspector General's report stated that ``audits have shown that the recipients of assistance agreements have at times misspent and wasted millions of dollars.'' The report attributes some of the abuse to the fact that EPA ``personnel did not comply with EPA policies and procedures when administering assistance agreements.'' The Inspector General's audit revealed that an examination of agency grant records showed a ``disregard of basic management techniques.'' For example, in many documents, the grant agreement itself--the contract between the grantee and the government--could not be found. In some cases, EPA employees improperly destroyed grant documents, despite ``numerous directives prohibiting the destruction of records.'' The EPA has acknowledged the problems. In response to the Inspector General's report, the official EPA response stated flatly: ``The findings are consistent with the findings in previous reports. Basically, no new issues are identified.'' \25\ A later agency response indicated that ``many of the conditions which affect [EPA's] ability to administer and close out assistance agreements are a result of Agency priorities and lack of resources.''\26\ --------------------------------------------------------------------------- \25\ A memorandum from Sallyanne Harper, Acting Assistant Administrator for Administration and Resource Management at EPA to Elissa Karpf, Deputy Assistant IG for Acquisition and Assistance Audits dated September 19, 1995. \26\ A memorandum from Al Pesachowitz, Acting Assistant Administrator for Administration and Resource Management at EPA to Elissa Karpf, Deputy Assistant IG for Acquisition and Assistance Audits dated March 25, 1996. --------------------------------------------------------------------------- The EPA has clearly indicated what its priorities are. Today, there are only 11 people in EPA headquarters in Washington watching out for the billions of dollars in taxpayer's money sent out each year in grants. To put that in perspective, more than 13 people work in EPA's public relations shop. On July 30, 1996, the subcommittee held a hearing to hear from Inspector General John Martin regarding the variety and volume of abuses of the grantmaking process uncovered. EPA Administrator Carol Browner was invited but refused to appear before the subcommittee to respond to the concerns raised by the Inspector General about half of the Agency's annual budget. Instead, the subcommittee heard from Deputy Administrator Fred Hansen. The subcommittee heard from Inspector General Martin that the Agency had not filed a formal response outlining proposed corrective action related to the September 28, 1996 report until just days before the subcommittee's hearing. Under the EPA's own guidelines, this report should have been provided months before the hearing. Further, the subcommittee heard from Deputy Administrator Hansen that it would take the EPA years in order to relieve the backlog of unmonitored grants and to establish the policy, procedures, and training necessary to adequately protect taxpayer funds from abuse. Mr. Hansen also testified that the EPA could not assure the Congress that taxpayer funds are not being used for lobbying or political purposes due to the EPA's lax management practices. Inspector General Martin agreed to work with the subcommittee's staff to initiate a review of potential abuse of taxpayer- funded grants to subsidize lobbying and political activity. b. Benefits.--The EPA Inspector General found that more than $33 million in additional funds could have been spent cleaning up the environment if EPA had properly closed out completed grants. By failing to do so, grantees escaped a final audit and the American public was cheated out of a cleaner, safer environment. The subcommittee and the Inspector General of the EPA both intend to carefully monitor the Agency's ongoing corrective actions in order to ensure that the taxpayer's money is adequately protected while maintaining a cleaner, safer environment. c. Hearings.--``Mismanagement of Grants by the Environmental Protection Agency,'' July 30, 1996. 8. Investigation of the White House Database (WhoDB). a. Summary.--In response to press reports related to the committee's investigation of the improper acquisition of FBI files by the White House, the subcommittee undertook a review of the White House Database. The subcommittee has requested documents and information from the White House, various Federal agencies, and outside contractors with regard to their involvement with the WhoDB. The White House has not cooperated with the subcommittee's requests in a timely fashion. The subcommittee's initial review of the WhoDB shows that it is a computerized system of records that has information on more than 350,000 individuals and 80,000 organizations. The computer data base maintains sensitive personal and political information on these individuals and organizations. The subcommittee held an initial hearing on the WhoDB on September 10, 1996 and heard from witnesses from the General Accounting Office and legal experts on privacy and appropriations law. The General Accounting Office (GAO) testified that the White House cannot ``ensure that users are properly accessing and using'' the White House Database and that there is ``an opportunity for misuse'' of the system. In testimony by GAO's Director of Information Resources Management, Jack Brock, the independent auditing agency stated that the WhoDB system lacks basic security features, such as an access log and audit trail, that would track whether the ``sensitive information'' was being misused. He testified that the White House should assure ``accountability'' in the WhoDB by operating under the ``principles of [OMB Circular] A-130.'' OMB Circular A-130, the official guidance document for computerized data bases, states that the government shall ``limit the collection of information which identifies individuals to that which is legally authorized and necessary for the proper performance of agency functions.'' It does not appear that the White House's policy of keeping information on the fact that individuals attended DNC functions or received DNC or Re-election Committee Holiday Cards in 1995, as the WhoDB does, complies with this standard. b. Benefits.--The subcommittee's investigation of the WhoDB is ongoing, as is the General Accounting Office's review of the system. The investigation seeks to ensure that taxpayer funds are protected from abuse and that the White House has properly and legally spent appropriated funds. The investigation also will determine whether new safeguards or other restrictions need to be placed on the White House Database specifically or on government information systems generally. Internal White House estimates show that more than $1.7 million of taxpayer money has been spent to design, develop and maintain the WhoDB. c. Hearings.--``Propriety of the White House Database,'' September 10, 1996. 9. The Effects of a Minimum Wage Increase. a. Summary.--The subcommittee examined the consequences of an increase in the minimum wage. The subcommittee held a hearing at which it heard from economic experts on the wage issue as well as employers and minimum wage employees. The testimony presented to the subcommittee clearly showed that an increase in the minimum wage would have a significant negative effect on employment. David Neumark, professor of economics at Michigan State University, testified that a hike in the minimum wage would have detrimental effects. Neumark has researched the minimum wage issue with William Wascher of the Federal Reserve Board for the past 6 years. In their first paper on the general employment effects of a minimum wage increase, Neumark and Wascher used data from the 50 States and Washington, DC between 1973 and 1989 to estimate the effects of a change in the minimum wage on the employment of workers, aged 16 to 24. They concluded from the data that a 10 percent increase in the minimum wage results in a reduction of the employment rate of young workers by 1 or 2 percent. Applied to the proposed minimum wage increase of about 20 percent, their results predict a decline in employment of 2 to 4 percent among young workers. Neumark testified that, taking into account a rise in nominal wages, he now estimates the proposed minimum wage hike will result in a decline of 100,000 to 200,000 jobs among young workers. Given the fact that employment declines when the minimum wage goes up, Neumark examined the question of whether minimum wage increases are the best way to reduce poverty. He concluded that minimum wage increases are an ineffective means of reducing poverty because such increases do not target individuals in poor families and they result in some low-wage workers losing their jobs. Neumark and Wascher's research went beyond employment effects to examine the effects of minimum wage increases on school enrollment. Their findings were compatible with economic theory which suggests that minimum wage increases lead employers to decrease the number of lowest-skilled workers, who cost more to employ when the minimum wage goes up, and choose more skilled workers. This leads to two results for teenagers: those teenagers who have already left school and are employed full time lose their jobs at a high rate; and those teenagers who were enrolled in school and are more skilled have more attractive job opportunities and leave school for full-time work. Thus, increases in the minimum wage lead to increases in the high school drop out rate. Neumark and Wascher's most recent research has disproved the study done by David Card and Alan Krueger, which is most frequently cited in support of raising the minimum wage. The Card and Krueger study looked at fast-food restaurants in New Jersey before and after the minimum wage was increased from $4.25 to $5.05. They concluded from their data that relative employment rose in New Jersey as a result of the minimum wage increase. Neumark and Wascher, however, point out that Card and Krueger's data were obtained from a telephone survey and were very imprecise measures of changes in employment. Neumark and Wascher studied payroll data from the same restaurants and came to the exact opposite conclusion--that New Jersey's minimum wage increase led to a decline in employment in fast-food restaurants in the State. Several renowned economists also testified about the negative consequences of an increase in the minimum wage, particularly on employment. Finis Welch, Abell Professor of Liberal Arts and Distinguished Professor of Economics, Texas A&M University testified that his studies have shown that increases in the minimum wage will cause significant unemployment, particularly among teenagers. Kevin Murphy, George Pratt Shultz Professor of Business Economics and Industrial Relations, University of Chicago, testified that his studies have shown that increases in the minimum wage will cause significant unemployment among the least skilled workers. His studies have also shown that the minimum wage is one of the least effective means of helping poor wage earners. He explained how the cost of goods and services will increase for the poor under a hike in the minimum wage. William A. Niskanen, Ph.D. economist, former Economic Adviser to President Reagan, and chairman, Cato Institute, has studied what type of worker earns the minimum wage. He testified that current minimum-wage workers are not family breadwinners. He testified that other anti-poverty approaches, such as EITC and other tax cuts, are much more targeted to help family breadwinners. In contrast to the other witnesses, Edward Montgomery, Professor of Economics at the University of Maryland, testified that the evidence suggests that the employment losses associated with an increase in the minimum wage would be small. He also stated that since the evidence points to small employment losses, it would be short-sighted to ignore the financial gains a minimum wage increase would offer to minimum wage workers. All of the other expert and citizen witnesses disputed Montgomery's conclusions. b. Benefits.--The subcommittee learned that the unintended consequences of raising the minimum wage would be felt most by those least able to absorb them--seniors, the disabled and new employees in the work force--because it would create higher unemployment and higher prices for goods and services. Subcommittee Chairman David McIntosh introduced legislation proposing a minimum wage tax cut as an alternative to raising the minimum wage. McIntosh's legislation would cut Federal taxes for workers earning between $4.25 and $5.15 an hour, and it would raise workers' take home pay to $4.57 an hour, compared to the current $3.92 when Federal withholdings are deducted. c. Hearings.--The subcommittee held a hearing on May 14, 1996, on ``The Effects of a Minimum Wage Increase.'' Testimony was received from: David Neumark, Ph.D., professor of economics, Michigan State University; Melody Rane, Burger King Franchisee; Don Baisch, manager, Burger King Franchise; Jim Militello, Jr., Attorney, Militello, Zanck & Coen, owner, Source Team, and Partner, Super Wash; Bernie Hellgeth, Source Team; Taalib-Din Abdul Uqdah, co-owner, Cornrows & Co., and president, Hairbraiders & Natural Haircare Association; Gail Robbins, Pizza Inn Franchisee; Finis Welch, Ph.D., professor of economics, Texas A&M University; Kevin Murphy, Ph.D., professor of economics, University of Chicago; William A. Niskanen, Ph.D. economist, chairman, Cato Institute; Edward Montgomery, professor of economics, University of Maryland. 10. The Impact of Regulations on Employment. a. Summary.--The subcommittee examined the impact of Federal regulations on employment. Witnesses at many of the subcommittee's field hearings testified that if they didn't have to absorb the huge cost of complying with government red tape, they would hire more workers, pay higher wages, or otherwise expand their businesses. Testimony presented before the subcommittee clearly showed that Federal regulations and big government in general depress job and economic growth. The subcommittee held a hearing on this issue at which expert economists and policy analysts, who have studied how the cost of big government depresses job, wage, and overall national economic growth presented testimony. One witness, Professor Lowell Gallaway from Ohio University, conducted a recent study for the Joint Economic Committee which showed that limiting big government spending is critical to raising the average American worker's wages. In fact, it showed that if Federal spending levels were held constant at their 1965 level and Federal taxes were adjusted accordingly, the typical worker would have taken home enough additional pay between 1973 and 1994 to buy a home. His study used historical data on Federal regulatory costs from the Center for the Study of American Business to determine the relationship between productivity growth and regulation. One of the study's results showed that rising regulatory activity is to blame for almost half of the slowdown in long-run productivity growth from the last year of the Kennedy administration (1963) to the first year of the Clinton administration (1993). Therefore, if regulatory activity had remained at its 1963 level, annual productivity growth today would be nearly 1 percent higher. The cumulative effect of this 30-year drag on productivity caused by regulation has been to lower the Nation's output by 1993 by $1.3 trillion a year. Gallaway pointed to work by other economists supporting the idea that growth in regulatory activity lowers productivity growth. For example, Clark University Economist Wayne Gray has studied EPA and OSHA regulations in 450 manufacturing industries and found that increased regulatory activity explained more than 30 percent of the growth slowdown from the 1960's to the 1973-78 period. In a National Bureau of Economic Research study, Gray and Ronald J. Shadbegian concluded that each dollar of regulatory compliance costs lowered total factor productivity by $3 to $4 dollars. Another witness, Professor Thomas D. Hopkins of the Rochester Institute of Technology, has studied the effects of regulations on the economy since he served in the Executive Office of the President from 1975-1984, conducting regulatory analysis. Hopkins has concluded that not only does Government regulation impose burdens on those who are regulated, but regulatory compliance costs are not distributed evenly and burden small businesses disproportionately. His work has shown that approximately $670 billion is spent each year to comply with all Federal regulations. If all regulatory compliance costs were shared evenly, every American household in 1995 would have paid $7,000. Although it is the household that ultimately pays the price of regulation, initially business pays the compliance costs. Ninety percent of all U.S. firms are small businesses with fewer than 20 employees. In 1992, the average small firm with under 20 employees spent some $5,500 per employee to comply with Federal regulations. The larger the firm, the smaller the compliance cost per employee, with firms of 500 or more spending about $3,000 per employee. Hopkins points out that compliance costs alone do not capture the decline in productivity that results from Government regulation. Regulation forces businesses to change their methods, giving up their most profitable and productive ways of doing business. Regulation also limits innovation and growth. Regulation makes it more expensive for businesses to hire workers--particularly small businesses which account for more than half the total employment in the United States. Mark Wilson, labor policy analyst at the Heritage Foundation, testified that the average cost of hiring an employee in private industry is $17.10 per hour, 43 percent of which is due to Government regulations, taxes and mandated benefits. For a minimum wage worker the cost is $4.76 per hour, 22 percent of which is due to Government regulations, taxes and mandated benefits. Several small business owners also presented testimony to the subcommittee. Gary Bartlett, President, G.W. Bartlett & Co. in Muncie, IN, testified that if it weren't for the huge regulatory burden, he would be able to build a new facility and create 100 new jobs in 18 months. Judi Moody, a small business owner in Washington State testified that she wants to open a small retail business. When she started investigating the matter seriously, she discovered that she would have to comply with myriad regulations and codes, hire a lawyer, and get industrial insurance before she could even open the doors. Due to this regulatory burden, she has decided not to open the business. Her spirit of entrepreneurship has been squashed and the jobs she would have created are lost. b. Benefits.--The subcommittee learned that reducing the cost of regulation, and big government in general, will promote greater productivity and economic growth, creating new jobs and enabling workers to take home more pay. Getting rid of unnecessary and counterproductive regulations will lift some of the disproportionate burden off small businesses, which comprise 90 percent U.S. firms. As a result, small businesses will have more money to expand, hire more workers and pay their workers higher wages. c. Hearings.--The subcommittee held a hearing on May 16, 1996, on ``The Impact of Regulations on Employment.'' Testimony was received from: Gary Bartlett, president, G.W. Bartlett Co.; Judi Moody, owner, CEG Northwest; Dick Walton, owner, Maroney's Cleaners & Laundry; Lowell Gallaway, distinguished professor of economics, Ohio University; Thomas D. Hopkins, Arthur J. Gosnell professor of economics, Rochester Institute of Technology; Mark Wilson, Rebecca Lukens Fellow in Labor Policy, the Heritage Foundation. 11. Travel Practices of Department of Transportation Administrators. a. Summary.--The subcommittee investigated the travel practices of the Department of Transportation's administrators to determine the cost and nature of senior executive travel in the department. An initial letter was sent from subcommittee Chairman McIntosh on April 26, 1996, to Administrator Rodney Slater, Federal Highway Administration (FHWA); Administrator Jolene Molitoris, Federal Railroad Administration (FRA); Administrator David R. Hinson, Federal Aviation Administration (FAA); and Admiral Robert E. Kramek, U.S. Coast Guard (USCG). Subcommittee Chairman McIntosh sent an initial letter on May 23, 1996 to Administrator Albert J. Herberger, Maritime Administration; Administrator Ricardo Martinez, National Highway Traffic Safety Administration (NHTSA); Administrator Gail McDonald, Saint Lawrence Seaway Development Corp. (SLSDC); and Administrator Gordon Linton, Federal Transit Administration (FTA). This letter requested information from each DOT Administration about their travel budget for fiscal years 1991 through 1996 and about compliance with Federal travel practices. The letter also requested each administrator to disclose each time he or she traveled at government expense since becoming administrator, the purpose of the trips, and the cost to the Federal Government for the trips. Based on each administrator's response to the subcommittee's initial request for information, subcommittee Chairman McIntosh sent follow-up letters to Administrators Slater, Molitoris, Hinson, and Admiral Kramek. b. Benefits.--The subcommittee learned that certain DOT administrators traveled on frequent trips at great expense to the taxpayer. FHWA Administrator Rodney Slater took 134 trips totaling 328 travel days, between June 14, 1993 and January 17, 1996. His travel included 9 trips to 11 foreign cities: Moscow, St. Petersburg, Berlin, Acapulco, Johannesburg, Calgary, Budapest, Paris, San Juan, Montreal, and Tokyo. His total travel (including accompanying staff) cost the taxpayer $168,719. Among his domestic trips, Slater traveled at least 14 times to his home State of Arkansas at taxpayer expense. At least one of these trips included political activity. On October 29, 1994, Slater billed taxpayers for a trip to Austin, TX, while he also participated in political events for then- Governor Richards' re-election campaign. From June 16 to 26, 1996, Slater took a $20,000 cross-country trip to celebrate the Federal highway system. This costly trip included stops at several national landmarks and popular vacation spots, such as the Lone Tree Gold Mine in Nevada and the Olympic Sports Park in Utah. FRA Administrator Jolene Molitoris traveled almost as frequently as her colleague at the FHWA, taking 86 trips between August 10, 1993 and April 10, 1996. Her total travel (including accompanying staff) cost the taxpayer $116,567.79. On 32 of these trips she had free, unscheduled days, some of which she took as personal time. These trips included 12 visits to Columbus, OH, her home town where she keeps a residence. On most occasions her trips to Columbus did not coincide with any official business in the city. She attached stops in Columbus to other trips to Ohio. In one case, Molitoris attached a stop in Columbus to a trip to San Francisco, spending five personal days in Columbus when she had no official business in the city or even in the State. Molitoris also took six international trips to 21 foreign cities: Caracas, Vienna, Frankfurt, Calais, Paris, Geneva, Lille, London, Berlin, Warsaw, Yokota, Bangkok, Hanoi, Hong Kong, Jakarta, Kuala Lumpur, Osaka, Tokyo, Manila, Vancouver, and Victoria. Coast Guard Commandant Robert Kramek, incurred especially high travel costs relative to the number of trips he took due to his frequent use of Government (USCG) aircraft. Between June 1994 and June 1996, Admiral Kramek took 62 trips. Five of these trips were international, during which he visited England, France, Cuba, Norway, Russia, Iceland, Japan, Panama, Argentina, Bolivia, Peru, and Venezuela. His travel costs (including accompanying staff and his wife) were $304,471.30. Admiral Kramek's wife accompanied him on about half (30) of his official trips. The USCG covered her transportation costs. The USCG justifies Mrs. Kramek's travel because she ``plays a critical representational role'' as a service chief's wife. In response to the subcommittee's inquiry, the USCG noted that Admiral Kramek ``will reduce his overall travel by 15%'' in 1996 and that ``Admiral Kramek has also mandated that all other Coast Guard flag officers and SES's reduce their overall travel by 15%.'' Admiral Kramek's seemingly sudden decision to reduce travel in 1996 is curious because as of the second quarter of the year, he had already spent more than half of his total travel expenses for previous years. To achieve a 15 percent reduction in travel, he would have to sharply curtail his travel for the remainder of the year. FAA Administrator David Hinson took 90 trips between August 1993 and April 1996. His travels included eight international trips to 15 foreign locales: Paris, Toulouse, Zurich, Amsterdam, Brussels, Bejing, Tokyo, Geneva, Tel Aviv, Frankfurt, London, Madrid, Santiago, Montreal, and Saudi Arabia. His trips (including airfare for accompanying staff, but not their per diem and lodging expenses) cost $320,963.53. Like Admiral Kramek, Administrator Hinson incurred very high travel costs because of his frequent use of Government (FAA) aircraft. For many of the trips, the FAA did not report an estimated cost for the FAA aircraft, so the subcommittee's figure for Hinson's costs is an underestimate. [NOTE: All the above data on each DOT administrator was provided to the subcommittee by the respective DOT Administrations at the subcommittee's request.] c. Hearings.--None. 12. Travel Practices of SEC Chairman Arthur Levitt. a. Summary.--The subcommittee investigated the travel practices of the Securities and Exchange Commission's (SEC) Chairman Arthur Levitt. An initial letter was sent from subcommittee Chairman McIntosh to Chairman Levitt on March 8, 1996, requesting information about the SEC's travel budget for fiscal years 1991 through 1996 and about compliance with Federal travel practices. The letter also requested that Levitt disclose each time he traveled at government expense since becoming chairman, the purpose of his trips, and the cost to the Federal Government for the trips. In subsequent letters sent on April 23, April 29, May 6, June 4, November 13, and December 6, 1996 as well as in meetings with Levitt's staff, the subcommittee requested further information, including copies of his schedule for all travel days, a complete list of all days he took as personal leave, copies of vouchers for all his trips, and a list of all the occasions on which Mrs. Levitt accompanied him on official travel. The period of Levitt's travel reviewed by the subcommittee is August 1993 through November 1996 (approximately 3 years). During that time, Levitt took numerous trips paid for or subsidized by the U.S. taxpayer. The approximate total cost of his international and domestic travel through October 1996 (not including accompanying staff) was $104,758. b. Benefits.--The subcommittee plans to continue its inquiry into the travel practices of Chairman Levitt. Particularly, the subcommittee will examine what internal controls are in place at the SEC to prevent abuse of taxpayer dollars and whether these controls are being properly implemented by the comptroller and others. [NOTE: All the above data on SEC Chairman Arthur Levitt's travel was provided to the subcommittee by the SEC at the subcommittee's request.] c. Hearings.--None. 13. Travel Practices of NTSB Chairman Jim Hall. a. Summary.--The subcommittee investigated the travel practices of the National Transportation Safety Board (NTSB) Chairman Jim Hall. An initial letter was sent from subcommittee Chairman McIntosh to Chairman Hall on March 8, 1996, requesting information about the NTSB's travel budget for fiscal years 1991 through 1996 and about compliance with Federal travel practices. The letter also requested that Hall disclose each time he traveled at Government expense since becoming chairman, the purpose of his trips, and the cost to the Federal Government for the trips. In subsequent letters on April 17 and June 4 as well as in discussions with Hall's staff, the subcommittee requested further information, including copies of his schedule for all travel days, copies of vouchers for all his trips, copies of NTSB trip reports filed for each of his official trips, and information regarding the designation of Chattanooga as an alternate home base. b. Benefits.--The subcommittee learned that Chairman Hall has traveled extensively since taking the position as acting chairman in June 1994. (He was confirmed as chairman in October 1994.) He took 51 official trips between July 1994 and February 1996. His trips were largely domestic, but also included visits to foreign locales, including London, Paris, Moscow, Australia, Puerto Rico and Canada. The total cost to the taxpayer for his travels (including accompanying staff) was $141,251.14. In Hall's May 10 letter to the subcommittee, he wrote that, ``During the process of compiling the requested documents, a few instances were discovered in which the complex and confusing rules governing alternate home base appear to have been unintentionally misinterpreted. For example, my understanding that establishing Chattanooga as my alternate home base allowed me to be reimbursed as if I were traveling out of Washington was incorrect.'' Therefore, as a result of the subcommittee's investigation into the matter, Hall was forced to reimburse the Government $1,887, a direct savings to the American taxpayer. [NOTE: All the above data on NTSB Chairman Hall's travel was provided to the subcommittee by the NTSB at the subcommittee's request.] c. Hearings.--None. 14. Cleaning Up the Superfund Program. a. Summary.--On May 8, 1996, the subcommittee held a hearing on the Federal Superfund program in order to continue the oversight performed by its predecessor subcommittee and to assist ongoing efforts to reauthorize this program. The subcommittee's review focused on: the current state of the Superfund program; how well the program is being managed under the reforms initiated by the Environmental Protection Agency (EPA); and on the limits to improving the cleanup process without new legislation. The Superfund program was created in 1980 when Congress enacted the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) to identify and cleanup the Nation's worst hazardous waste sites. Activity under the program includes emergency cleanups (removal actions) and the designation of sites on a National Priorities List (NPL) for longer-term remedial actions. Since 1980, approximately $16 billion has been obligated by the EPA. For this investment, EPA's program has cleaned up only 128 sites as of November, 1996, about 9 percent of the 1,387 sites on the NPL.\27\ Moreover, at least 40 percent of the deleted sites required no remedial action at all. --------------------------------------------------------------------------- \27\ 40 CFR Part 300, App. B, Table 1. Also, see the Federal Register generally for NPL deletions. --------------------------------------------------------------------------- On April 23, 1996, in testimony before the Senate Committee on Environment and Public Works, EPA Administrator Carol Browner claimed great strides in reforming Superfund. She stated that ``the current program is fundamentally different from the program as it existed just three years ago.'' Over the past 3 years, the Agency has implemented three rounds of Superfund reforms. Among other initiatives, the EPA has established a remedy review board to consider costly remedies, and drafted guidance to better control costs in remedy selection, to increase the number of protected small contributors, and to conduct national risk-based priority- setting for funding cleanups. Administrator Browner maintained that these initiatives have produced ``measurable benefits'' to Superfund stakeholders and to public health and the environment by providing significant resource savings, accelerating cleanups, reducing transaction costs, and relieving small businesses of liability. About 11 million Americans live within one mile of the Nation's Superfund sites.\28\ Nonetheless, the current pace of cleanups has not accelerated at all. It still takes at least 12 years on average to clean up a Superfund site.\29\ The fact that, within the last 3 years, sites are finally reaching the construction completion stage is simply a function of the Superfund pipeline and has nothing to do with the pace of cleanup. Indeed, testimony from a wide array of witnesses who appeared at the subcommittee's hearing indicated that EPA's initiatives have done little as yet to reduce the inordinate cleanup delays caused by interminable legal disputes over liability issues and the remedy selection process. Moreover, these disputes continue to generate enormous transaction costs. Over 30 percent of the $28 billion that has been spent on Superfund to date has gone to lawyers, consultants, and other non-cleanup expenses, instead of to cleaning up the most serious hazardous waste sites threatening the health and environment of the American public.\30\ --------------------------------------------------------------------------- \28\ Agency for Toxic Substances and Disease Registry's ``Report to Congress: 1993, 1994, 1995'' at 5 (Oct. 1996). \29\ EPA, Office of Inspector General, ``Review of Barriers to Superfund Cleanups,'' at 2 (Nov. 29, 1995). \30\ See testimony of Jan Paul Acton, Assistant Director, Congressional Budget Office, Superfund Reauthorization Hearings, Committee on Transportation and Infrastructure, June 22, 1995, at 678. --------------------------------------------------------------------------- In his testimony at the hearing, EPA's own Inspector General identified negotiations over who pays for cleanup costs as a major barrier to cleaning up Superfund sites. Based on an audit of several highly toxic waste sites, the Inspector General concluded that liability negotiations clearly consume a lot of time and significantly delay completion of site cleanups. Moreover, several witnesses observed that such extended negotiations are inescapable due to the inherent unfairness of the current liability scheme. In theory, Superfund is supposed to enforce a ``polluter pays'' policy. That is, if culpable parties can be linked to a polluted site, these ``potentially responsible parties'' (PRPs) must pay for cleanup efforts. However, these witnesses testified that, in practice, Superfund's rule of ``retroactive, joint and several, and strict liability'' has been used to force numerous parties to pay for cleanup, even when they were not at fault. The Superfund statute established a sweeping liability system that declares that any person who contributed to contamination at a Superfund site at any time can be held liable for all costs of cleaning up that property, regardless of the degree of involvement of that person with the site, or even if the person fully complied with the laws at the time of disposal. As a result, EPA's Inspector General found that cleanups have been significantly delayed while PRPs and EPA negotiate the extent of the total liability and the allocation of liability among the PRP's. Several witnesses also pointed out the disproportionate impact that this unjust liability scheme has had on small businesses. Indeed, Mr. Leon Dixon testified that his family bronze foundry business, Beckett Bronze, is now facing a third party liability suit seeking a contribution of about $26,000 for cleanup costs. The only evidence of Beckett Bronze's contribution to the contamination is a dump receipt for $16.l5, dated January 3, 1972. Furthermore, as Mr. James Nerger testified, persons are frequently named as PRP's even when they had no control over where their wastes were sent for disposal, and even though they were not required at the time to keep detailed records. His small family-owned solvent recycling business, Marisol, Inc., is potentially liable for $3-$10 million. This is a business with $12 million in total annual sales that recently received its fifth consecutive E.I. Digest's Regulatory Compliance Award. Remedy selection, when based on unrealistic land-use assumptions, also can be viewed as a barrier to cleanups. By making cleanups unnecessarily expensive, such remedies reduce the cost-effectiveness of the Superfund program. As Representative Lincoln stated in written testimony, ``Sites that are located in industrial areas should not meet soil eating standards that are required for land used for day care centers.'' Stated differently by the representatives of the General Accounting Office (GAO), using realistic land-use assumptions will help to maximize Superfund resources for the protection of public health and the environment. GAO reviewed the sites contained in an EPA data base on health risks from Superfund sites to evaluate the significance of land-use assumptions. About half of the sites (119) in the data base did not pose health risks serious enough to justify their cleanup under current land-use assumptions. However, EPA nonetheless judged cleanup necessary because the agency assumed the sites' uses would change in a way that would increase human exposure to contaminants in the future. (The sites studied represent most of the sites where EPA made cleanup decisions between 1991 and mid-1993.) Both GAO and Mr. Jeffrey Rosmarin, whose company is the current owner of the Liberty Industrial Finishing Superfund Site, testified that EPA has often assumed a site will be used for residential purposes and used residential exposure scenarios when calculating risks, even when the planned future use of a site was commercial or industrial redevelopment. Mr. Rosmarin testified that, although the Liberty Site has been zoned light industrial and used for that purpose for over 80 years, EPA Region II did not even include light industrial use as a possible future use at this site in the Remedial Investigation report, issued in January 1994. According to one EPA estimate, the commercial level cleanup would be in the $6 million range, while the residential level cleanup would be approximately $60 million. Moreover, Mr. Rosmarin noted that an EPA toxicologist has stated that the commercial industrial level cleanup would have the same health benefits for the surrounding community as the residential cleanup. In addition, GAO testified that EPA can reduce the risks at sites more quickly and economically by using its removal authority, where appropriate, instead of its more expensive and time-consuming traditional remedial techniques. If the accelerated cleanup techniques were used more consistently, GAO estimated that the Federal Government's and private sector's Superfund costs could be reduced by as much as $1.7 billion over the life of the program. However, GAO also noted that restrictions in CERCLA on the cost and time allowed for removal actions and inflexible funding arrangements have limited EPA's use of non-time-critical removals (where removal action in response to threats to human health or the environment can be delayed for at least 6 months in order to adequately plan for cleanup.) Finally, Representative Lincoln pointed out that ``one size does not fit all'' when it comes to cleanup remedies. Today, a large amount of cleanup spending is devoted to meeting cleanup criteria under other statutes and regulations that were not developed for remediation waste and/or complying with Superfund's current statutory preference for treatment--whether or not such standards are, in fact, necessary to protect human health and the environment at a specific site. The Congresswoman believes that, given the truly local impacts of the Superfund program, States should be given the flexibility to design site-specific, risk-based remedies that are tailored to their particular environmental make-ups. Witnesses also testified regarding significant management inefficiencies in the implementation of the Superfund program. GAO observed that the estimated cost of cleaning up the Nation's hazardous waste problem has grown to $75 billion for nonfederal Superfund sites. GAO maintains that, in this time of fiscal constraint, EPA could achieve more cost-effective cleanups by basing its priorities for funding cleanups on the principle of risk reduction. However, GAO has found that, to date, although one of the EPA's key policy objectives is to address the ``worst sites first,'' relative risk plays little role in the agency's determinations of priorities. EPA headquarters leaves the task of setting priorities to the regions, yet the regions do not rank sites by risk. As a result, the risks most dangerous to human health are not necessarily those that are addressed first. Commissioner Charles Williams of the Minnesota Pollution Control Agency stated that while the national average cost for cleaning up Federal Superfund sites is $31 million, the average cost to the State of Minnesota for cleaning up its sites is $3 million. Finally, Mrs. Helena Tielmann testified that the ``cleanup'' of her property by EPA contractors represents a prime example of gross mismanagement; a case where the property was left in far worse environmental condition than before remediation. Mrs. Tielmann lives with her husband and three children on a Superfund hazardous waste site, a 30-acre farm that had been the dumping ground for asbestos 25 years ago. After excavating the asbestos throughout their property and solidifying the flaky substance into a concrete monolith in their backyard, EPA's contractor backfilled the excavated soil with more than 100,000 tons of untested industrial fill from a contaminated industrial site. When later tested, the industrial fill, which, in fact, contained asbestos, exceeded New Jersey's residential use criteria. There is now more asbestos on the surface of the Tielmann's yard than there was before EPA implemented its remedy. Mrs. Tielmann maintains that this nightmare would never have occurred if there had been proper management, supervision, and controls; if EPA had used competent contractors; and if the Agency had been responsive to the property owner and the local community. b. Benefits.--This hearing has served to document further Superfund's fundamental flaws. Once again, testimony reflects a rigid statutory process that does not provide the flexibility to address effectively the wide variety of circumstances encountered at sites. It also is clear from the testimony that this program continues to wreak havoc on the lives of hard- working and law-abiding citizens. Overall, the program continues to fall far short of protecting human health and the environment. Moreover, the record developed in the subcommittee's hearing stands in sharp contrast to Administrator Browner's recent assertion that the current program is fundamentally different from the one in years past. This subcommittee has heard testimony that shows that EPA's initiatives to improve the pace, cost, and fairness of the Superfund program within the constraints of the law are not really being implemented. Clearly, these reforms have not received sustained management attention and follow-through. Most importantly, the testimony given in this hearing reflects a dire need for legislative reform of this wasteful and expensive program. As J. Lawrence Wilson, chairman and chief executive of Rohm & Haas Co, stated before the Senate Environment and Public Works Committee on April 23, 1996: ``Every month that continues to go by without reauthorization means more delays in cleanups, more litigation resulting from an inequitable liability scheme, more controversy between the public and EPA, and more wasteful spending by both the government and the private sector.'' c. Hearings.--The subcommittee held a hearing entitled, ``Cleaning up the Superfund Program,'' on May 8, 1996. 15. Havertown Superfund Site. a. Summary.--The subcommittee is examining the process that the Environmental Protection Agency has followed in developing a cleanup plan for the Havertown PCP Superfund site (NPL No. 542; CERCLIS No. PAD 002338010). This investigation was prompted by complaints from township citizens. Residents of the local community expressed difficulty in obtaining information about EPA's technical and economic analyses and raised concerns about whether the Agency has properly evaluated all viable remediation options. In addition, the subcommittee undertook this inquiry because this case involves issues that are the focus of EPA's Superfund administrative reforms. The Havertown PCP site is a National Priorities List Superfund site in Havertown, PA. The site, which has been on the NPL since 1983, is surrounded by a mixture of commercial establishments, industries, parks, schools and residential homes. The site covers 12 to 15 acres, including a wood treatment facility. From 1947 to 1963, National Wood Preservers disposed of wood treatment waste materials into a 25 to 35 foot deep well that entered the groundwater under the plant. These wastes generally consisted of spent wood-treatment solutions containing pentachlorophenol (PCP) and diesel-type oil. The Agency also has found arsenic and dioxins on the site. The liquid wastes leached into a nearby small stream that flows through a residential area and eventually into the Delaware River. EPA has taken various steps, such as conducting an emergency removal action, fencing the site, and installing an oil/water separator, in order to stem the further spread of site contamination and, thus, to reduce the potential of exposure to contamination. Recently, to respond to soil and ground water contamination, EPA began the preparatory work for placing a protective cap over areas of the site. The cap is part of EPA's response action at the site and will be used to prevent contact with contaminated soil and prevent rain water from trickling down through the soil and moving additional contamination into the groundwater. On July 26, 1996, the subcommittee sent a letter of inquiry to EPA requesting information about its remedy decisions. The letter called upon EPA to provide the studies and analyses on which the Agency has relied for remedy selection at the Havertown site. On August 15, 1996, the subcommittee received from EPA Region III information and documentation in response to the inquiry. In reviewing these documents, the subcommittee has focused particularly on the following matters: 1. Re-evaluation of the Remedy Decision. Whether material changes in site conditions and/or technological developments have occurred since the Havertown site was listed on the NPL that justify an alternative or modified remedy. Has EPA performed a coordinated current review of the site to determine the potential effectiveness of the selected remedy, including collecting and analyzing updated site information, re- appraising the remedy's expected performance and costs, and evaluating currently available alternatives. 2. Community Participation. Whether the community has had the opportunity to play a meaningful role in the selection of the cleanup remedy. Has EPA provided the local community with the material information needed for informed participation. 3. Consideration of Future Land Use. To what extent has EPA conferred with local officials and other interested parties in developing a land use plan to guide decisionmaking on remedy selection. 4. Economic Redevelopment of Contaminated Property. To what extent will the selected remedy inhibit productive use of the property. To what extent will this remedy keep the source areas under control so that the contamination will not continue to migrate. 5. National Risk-Based Priority Setting. Whether the Havertown site is truly 1 of the 10 worst sites in this country, based on the criteria that EPA used to set national risk-based priorities for funding cleanups. Finally, the subcommittee's review of EPA's responses has raised additional questions that the subcommittee plans to probe further. b. Benefits.--In this Superfund case, the issues that are in dispute between the local community and EPA are the focus of the Agency's administrative reforms. The subcommittee is reviewing the Agency's implementation of such reforms at this site. Also, the Agency has listed this site as 1 of the 10 worst sites in the country on its national risk-based priorities list for funding. After reviewing the Havertown Superfund documentation, this designation appears inappropriate based on the criteria that the Agency applied in developing the list. c. Hearings.--None were held. NATIONAL SECURITY, INTERNATIONAL AFFAIRS, AND CRIMINAL JUSTICE SUBCOMMITTEE 1. Office of National Drug Control Policy. a. Summary.--The National Narcotics Leadership Act of 1988 (21 U.S.C. 1501 et seq.) established the Office of National Drug Control Policy (ONDCP). The act also provided for appointment of a Director of ONDCP, and required that the Director develop an overall strategy and budget for Federal anti-narcotics efforts, including both supply and reduction. Specifically, the statute provides that ONDCP: ``(A) include comprehensive, research based, long-range goals for reducing drug abuse in the United States; (B) include short-term measurable objectives which the Director determines may be realistically achieved in the 2 year period beginning on the date of the submission of the strategy; (C) describe the balance between resources devoted to supply reduction and demand reduction; and (D) review State and local drug control activities to ensure that the United States pursues well- coordinated and effective drug control at all levels of government.'' Pursuant to the Government Reform and Oversight Committee's jurisdiction over ONDCP, the Subcommittee on National Security, International Affairs, and Criminal Justice convened five indepth oversight hearings during 1995 to assess the status and effectiveness of the Nation's Federal drug control strategy and the strategy's implementation. The subcommittee zeroed in on the interdiction program, source country, law enforcement, prevention and treatment components as prescribed by the Federal strategy. Before, during and after these hearings, expert advice and recommendations were sought from top administration officials and preeminent outside experts. The subcommittee's twin aims were to (a) identify strategic and implementation problems, and (b) identify sound recommendations for achieving measurable improvement in combating illegal drug importation and use. As a backdrop for this investigation, the committee recognized that the impact of illegal drugs on our society has been a growing concern since the early 1970's. For example, in June 1971, President Nixon told Congress that a national response to drug addiction was needed since ``the problem has assumed the dimensions of a national emergency.'' \31\ --------------------------------------------------------------------------- \31\ Musto, David F. The American Disease: Origins of Narcotic Control, at 256 (1987). --------------------------------------------------------------------------- Moreover, by 1980, illegal drug use was so widespread that antidrug parent groups such as Pride and National Family Partnership began to take root in America's heartland; in fact, by 1979 more than half of all minors surveyed acknowledged illegal drug use.\32\ --------------------------------------------------------------------------- \32\ In 1979, 54 percent of youth respondents to the Monitoring the Future Survey indicated drug use. See the 1995 Pride Report, Executive Summary, at 1. --------------------------------------------------------------------------- During the early 1980's, the Nation awakened to the enormity of the incursion being made by illegal drugs. Former First Lady Nancy Reagan became a leader in the anti-drug, or drug abuse prevention, movement. Mrs. Reagan effectively led the campaign to educate our Nation's youth and stem rising youth drug abuse. Her most famous statement, ``Just Say No,'' the answer to a child's question about how to respond if pressed to take drugs, became a guiding phrase in the prevention movement. Unrivaled in her energy and commitment, Nancy Reagan became the movement's chief spokesperson for much of the decade. Finally, as indicated earlier, during the mid-1980's, President Reagan showed unprecedented leadership in what soon became known as a war against illegal drug use and those who trafficked in illegal drugs.\33\ --------------------------------------------------------------------------- \33\ See ``Testimony of Admiral Paul Yost,'' supra. --------------------------------------------------------------------------- In 1988, Congress passed the Anti-Drug Abuse Act of 1988 (Public Law 100-690, Title I, Subtitle A), which established the Office of National Drug Control Policy (ONDCP) and created the new position of ``White House Drug Czar'' or ONDCP Director. In recognition of the threat posed to our society by the menace of illegal drug use, the act required the White House ONDCP Director to present an annual strategy with measurable goals and a Federal drug control budget to the President and Congress.\34\ --------------------------------------------------------------------------- \34\ Public Law 100-690, Title I, Subtitle A. --------------------------------------------------------------------------- The 1988 act has been tinkered with in the years since. In 1994, pursuant to the Violent Crime Control and Law Enforcement Act of 1994 (Public Law 103-322, Title X), the ``Drug Czar'' was authorized to make recommendations to agencies during budget formulation. The aim of this 1994 change was to improve resource targeting and policy consistency at Federal agencies involved in implementing the National Drug Control Strategy, as well as to heighten overall counternarcotics coordination throughout the Federal Government. In addition, the ``Drug Czar'' was authorized under the 1994 act to exercise discretion over 2 percent of the overall drug budget. While some have suggested that this provision achieved little, the ``Drug Czar'' could theoretically transfer up to 2 percent of the budget among National Drug Control Program accounts, upon approval by the appropriations committees.\35\ --------------------------------------------------------------------------- \35\ In fact, this 2 percent measure has proved more theoretical than actual, as particular agency heads have resisted the transfers and prevailed in those efforts. For example, FBI Director Louis Freeh reportedly blocked resource allocations by ONDCP in 1994. --------------------------------------------------------------------------- Beyond these hallmark 1995 hearings, during recent prior sessions of Congress, legislative and oversight hearings have been held on various aspects of national drug policy. However, these hearings have focused on particular aspects of the ONDCP Strategy and have been conducted against the backdrop of falling drug use or general support by the minority-controlled Congress for the overall White House Strategy. This subcommittee's 1995 oversight hearings, proposed and supported by both minority and majority subcommittee members, were the result of recent developments, including the steep rise in juvenile and overall drug use (including both rising casual drug use, and increasing regularity of use); the growing awareness that increased juvenile drug use is linked to rising juvenile crime; \36\ the absence of a long-promised White House Heroin Strategy; \37\ an objective reduction in interdiction efforts; \38\ an apparent lack of progress in source countries toward goals set forth for so-called source country programs; \39\ reports of lagging accountability in certain drug prevention programs; \40\ deemphasis by the media on drug abuse; \41\ overall rise in drug related juvenile violence; \42\ and general concerns about interagency coordination of the Federal counternarcotics effort.\43\ --------------------------------------------------------------------------- \36\ 1995 OJJDP Report, pp. 58-65. \37\ The President promised a Heroin Strategy within 120 days of taking office. Without any White House announcement, he signed a Heroin Strategy in late November 1995. The signed Strategy offers little detail, and was promulgated without Implementing Guidelines, which has so far made it a nullity. \38\ See ``Interdiction Policy Oversight'' section, below. \39\ See ``Source Country Program Oversight'' section, below. \40\ In particular, reports of waste and misapplication of funds have been associated with certain States' administration of Safe and Drug Free Schools moneys, and these allegations are under continuing investigation by the Department of Education Inspector General's Office and the General Accounting Office. \41\ See ``prevention Policy Oversight'' section, below. \42\ See ``Background'' section, below. \43\ See, e.g., Yost Testimony, below. --------------------------------------------------------------------------- The intent to examine National Drug Control Strategy was set forth in the February 6, 1995 subcommittee Strategic Plan in accord with both the majority and minority view that the area required oversight.\44\ --------------------------------------------------------------------------- \44\ The topic was discussed at a meeting of the full subcommittee in early February, views were solicited by the subcommittee chairman, and both minority and majority members indicated a desire to conduct oversight in this area. --------------------------------------------------------------------------- In the course of investigating the status of the National Drug Control Strategy, the Strategy's implementation and the need for improvement, the subcommittee engaged in extensive correspondence with the administration, including direct correspondence with the President; the Vice President; Anthony Lake, the President's National Security Advisor; Dr. Lee P. Brown, Director of ONDCP; Admiral Robert E. Kramek, U.S. Interdiction Coordinator and Coast Guard Commandant; Thomas A. Constantine, Administrator of the Drug Enforcement Administration; George Weise, Commissioner of the U.S. Customs Service; Brian Sheridan, Department of Defense Deputy Assistant for Drug Enforcement Policy; Ambassador Jane E. Becker, Department of State Deputy Assistant Secretary for International Narcotics and Law Enforcement; and others at the Departments of Justice, Defense, State, ONDCP and elsewhere in the administration. The committee investigation included one fact finding trip. Subcommittee members, and members of the United States Coast Guard traveled to the Seventh Coast Guard District in the Caribbean transit zone. There, they attended briefings at Seventh District Headquarters in Miami, Coast Guard interdiction initiatives at sea, Drug Enforcement Administration (DEA) activities in the Greater Antilles, high level interagency briefings in Puerto Rico by the FBI, DEA, Customs, Border Patrol, and local authorities, and received indepth briefings by Admiral Granuzo and others at Joint Task Force Six in Key West, dedicated to Eastern Caribbean Drug Interdiction. This trip was arranged in coordination with the U.S. Coast Guard, and invitations were extended to majority and minority members. The trip occurred on June 16 through 19, 1995. Additionally, in coordination with ONDCP, subcommittee Chairman Zeliff traveled with the White House Director of ONDCP to see prevention and treatment programs first-hand in Massachusetts. Throughout 1995, the subcommittee met extensively with the agencies involved in the counternarcotics effort, and endeavored to collect directly and indirectly both statistical and anecdotal evidence on the effectiveness and accountability of the current National Drug Control Strategy and programs. These efforts spanned the key areas of interdiction, law enforcement, prevention, treatment, and source country initiatives. The subcommittee sought further insight from GAO investigators, agents in the field, and departmental inspectors general. b. Benefits.--As a result of its investigation into the use of illegal drugs in America and the Nations fight against drugs, the committee uncovered the following basic facts: (1) Casual teenage drug use trends have suffered a marked reversal over the past 3 years, and are dramatically up in virtually every age group and for every illicit drug, including heroin, crack, cocaine hydrochloride, LSD, non-LSD hallucinogens, methamphetamine, inhalants, stimulants, and marijuana. (2) Rising casual teenage drug use is closely correlated with rising juvenile violent crime. (3) If rising teenage drug use and the close correlation with violent juvenile crime continue to rise on their current path, the Nation will experience a doubling of violent crime by 2010.\45\ --------------------------------------------------------------------------- \45\ See Juvenile Offenders and Victims: A National Report, OJJDP, Department of Justice, September 1995. --------------------------------------------------------------------------- (4) The nature of casual teenage drug use is changing. Annual or infrequent teenage experimentation with illegal drugs is being replaced by regular, monthly or addictive teenage drug use.\46\ --------------------------------------------------------------------------- \46\ See 1995 surveys conducted by PRIDE, The National Household Survey, and The University of Michigan's Monitoring the Future Survey. --------------------------------------------------------------------------- (5) The nationwide street price for most illicit drugs is lower than at any time in recent years, and the potency of those same drugs, particularly heroin and crack, is higher.\47\ --------------------------------------------------------------------------- \47\ See ``Interdiction Policy Oversight'' section, below. --------------------------------------------------------------------------- (6) Nationwide, drug related emergencies are at an all time high.\48\ --------------------------------------------------------------------------- \48\ See ``Background'' section, below. --------------------------------------------------------------------------- (7) The 1994 and 1995 White House ONDCP strategies consciously shift resources away from priorities set in the late 1980's, namely from prevention and interdiction to treatment of ``hardcore addicts'' and source country programs. (8) During 1993, 1994, and most of 1995, the President put little emphasis on, and manifested little interest in, either the demand side war against illegal drug use or the supply side war against international narcotics traffickers. An objective look at the President's public addresses and his actions regarding gutting the ONDCP when he became President, interactions with Congress, and discussions with foreign leaders reveals that attention to the rising tide of illegal drug use is a low Presidential priority.\49\ --------------------------------------------------------------------------- \49\ See ``Background,'' ``Interdiction Policy Oversight'' and ``Prevention Policy Oversight'' sections, below. --------------------------------------------------------------------------- (9) The President's actual attention to this problem, measured by other than the paucity of speeches and proposed budget cuts, has been uniformly low. In addition to the absence of direct Presidential involvement in the drug war, the President produced no 1993 Annual Strategy, despite a statutory duty to do so under the 1988 Antidrug Abuse Act; delayed appointment of a White House Drug Czar, or ONDCP Director, until half way through 1993; and produced only a terse ``interim'' 1993 Strategy. (10) The Drug War appears also to have been expressly reduced to a low national security priority early in the administration, and not to have been formally elevated at any time since.\50\ --------------------------------------------------------------------------- \50\ See ``Interdiction Policy Oversight'' section, below. Reportedly, the drug war's national security priority during the first 3 years of the Clinton administration was number 29 out of 29. --------------------------------------------------------------------------- (11) While the position is contested by the administration's ONDCP Director, a wide cross section of drug policy experts inside and outside of the administration concur that the absence of direct Presidential involvement in foreign and domestic counternarcotics efforts is one reason for the recent reversal in youth drug use trends, reduced street prices for most narcotics, and increased potency of most illicit drugs. (12) Prevention programs that teach a right-wrong distinction in drug use, or ``no use,'' such as D.A.R.E., G.R.E.A.T., the Nancy Reagan After School Program, community-based efforts run by groups such as C.A.D.C.A., PRIDE, the National Parents Foundation, and Texans War on Drugs, as well as other local school and workplace programs, have proven both successful and popular where they have been well-managed and accountable--despite the 1995 White House ONDCP Strategy statement that ``[a]ntidrug messages are losing their potency among the Nation's youth;''.\51\ --------------------------------------------------------------------------- \51\ See ``Prevention Oversight'' section, below. --------------------------------------------------------------------------- (13) Federal drug prevention programs, such as Safe and Drug Free Schools, while supporting successful prevention programs in many parts of the country, have also been subject to misapplication, waste and abuse. \52\ --------------------------------------------------------------------------- \52\ See ``Prevention Oversight'' section, below. --------------------------------------------------------------------------- (14) The Nation's law enforcement community needs greater flexibility and support from the Federal Government in addressing the rise in juvenile and drug related crime. While certain developments are promising, such as the $25 million increase in Byrne Grant funding in fiscal 1996, a law enforcement block grant to supersede the COPS program, and increased reliance on joint interagency task forces, valuable time has been lost in addressing this need. Renewed attention to strengthening Local, County, State and Federal law enforcement's counternarcotics efforts is required. (15) The Nation's interdiction effort has been dramatically curtailed over the past 3 years, due to lack of White House support for interdiction needs, reduced funding, a tiny staff at the United States Interdiction Coordinator's Office, the absence of an ONDCP Deputy for Supply Reduction, reduced support for National Guard container search days, the elimination of certain cost effective assets in the Eastern Caribbean, reassignment or absence of key intelligence gathering assets, reluctance by the Department of State to elevate counternarcotics to a top priority in certain source and transit countries, unnecessary interagency quarreling over asset management and personnel issues, and the apparent inability or unwillingness of the White House Drug Czar to bring essential interdiction community concerns to the attention of the President or to aid the President's Interdiction Coordinator in doing so; and (16) Poor management and interagency coordination in source countries. c. Hearings.--The subcommittee held five hearings in conjunction with its investigation of ONDCP. Those hearings include the following: (1) ``Effectiveness of the National Drug Control Strategy and the Status of the Drug War,'' March 9 and April 6, 1995. (2) ``Illicit Drug Availability: Are Interdiction Efforts Hampered by a Lack of Agency Resources?,'' June 27 and 28, 1995. (3) ``The Drug Problem in New Hampshire: A Microcosm of America,'' September 25, 1995. On March 9, 1995, the subcommittee investigation resulted in its first hearing. The purpose of this hearing was to examine President Clinton's 1995 National Drug Control Strategy, and to begin an assessment of how effectively the Nation is fighting illegal drug abuse, domestically and internationally. Acknowledged components of the Drug War under review include prevention, treatment, interdiction, law enforcement, and source country programs. At this hearing, testimony was received from four panels. The subcommittee heard first from former First Lady of the United States, Nancy Reagan. Testimony was received from William J. Bennett, former Director of the Office of National Drug Control Policy (ONDCP); Robert C. Bonner, former Administrator of the Drug Enforcement Administration; and John Walters, former Acting Director of ONDCP. The subcommittee also heard testimony from Dr. Lee Brown, Director of ONDCP. Finally, the subcommittee heard from Admiral Paul A. Yost, Jr., former Coast Guard Commandant; and several nationally recognized drug abuse prevention experts, including Thomas Hedrick, Jr., senior representative of the Partnership for a Drug-Free America; G. Bridget Ryan, executive director of California's BEST Foundation; James Copple, national director of the Community Antidrug Coalitions of America (CADCA); and Charles Robert Heard III, director of program services for Texans' War on Drugs. With varying degrees of emphasis, all panels acknowledged that current Federal efforts are under strain from reduced emphasis on certain components of the Drug War, budgetary pressure, and in some cases accountability. The panels also acknowledged that, over the past several years, there has been a marked reversal in several important national trends including most notably a rise in casual drug use by juveniles, but also reaching to perceived drug availability (up), perceived risk of use (down), average street price (down), drug related medical emergencies (up), drug related violent juvenile crime (up), total Federal drug prosecutions (down), and parental attention to the drug issue (down).\53\ --------------------------------------------------------------------------- \53\ Press Release, the University of Michigan, ``Drug Use Rises Again in 1995 Among American Teens,'' December 15, 1995; Press Release, PRIDE, ``Teen Drug Use Rises for Fourth Straight Year,'' November 2, 1995; Preliminary Estimates from the Drug Abuse Warning Network, U.S. Department of Health and Human Services, September 1995; James E. Burke, ``Presentation: An Overview of Illegal Drugs in America,'' Partnership for a Drug-Free America, Fall 1995. --------------------------------------------------------------------------- The subcommittee found that these reversals have continued through the period 1993 to 1995, although certain trend lines, including a shift from falling to rising casual use, typically among juveniles, began in 1992. In addition, a shift of certain interdiction resources, which were earlier a part of the counter narcotics force structure, began in late 1991 with the advent of the Persian Gulf War. All panels agreed, albeit with differing emphases, that renewed national leadership, including both Presidential and congressional leadership, will be necessary to combat these recent trend reversals, especially the rise in juvenile drug abuse and drug related violent juvenile crime. Subcommittee Chairman Zeliff initiated the hearing by noting that Mrs. Reagan ``woke the Nation up to this [juvenile drug abuse] problem and its pervasiveness in the early 1980's.'' Subcommittee Chairman Zeliff observed that the former First Lady's ``Just Say No'' campaign effectively launched a ``national crusade'' for drug abuse prevention. Subcommittee Chairman Zeliff also noted that, in April 1985, Mrs. Reagan held the first International Drug Conference for the world's First Ladies. In 1988, she held the second such conference and became the first American First Lady to speak before the United Nations; and after leaving the White House, she founded the Nancy Reagan Foundation, which has since ``awarded grants in excess of $5 million to drug prevention and education programs . . .'' Appearing before the subcommittee, First Lady Nancy Reagan testified that America has forgotten the dangers of drug use, that America's children are at increased risk in 1995, that there is an absence of national leadership on the drug issue, and that a national strategy focused on treatment of so-called hardcore addicts misses the largest at-risk population, namely children participating in casual use. Specifically, Mrs. Reagan explained that she had ``decided to speak [before Congress on the drug issue] only after a lot of soul searching . . . because my husband and everything he stands for calls for me to be here.'' She then explained that the Nation ``is forgetting how endangered our children are by drugs,'' that societal ``tolerance for drugs'' is up, and that ``the psychological momentum we had against drug use [in the late 1980's and early 1990's] has been lost.'' In short, she asked, ``How could we have forgotten so quickly?'' Directing herself to national policy, Mrs. Reagan quoted from President Clinton's 1995 National Drug Control Strategy, which states that ``[a]nti-drug messages have lost their potency.'' Mrs. Reagan disagreed, testifying: ``That's not my experience. If there's a clear and forceful `no use' message coming from strong, outspoken leadership, it is potent . . . Half-hearted commitment doesn't work. This drift, this complacency, is what led me to accept your invitation to be in Washington today . . . [W]e have lost a sense of priority on this problem, we have lost all sense of national urgency and leadership.'' John P. Walters, president of the New Citizenship Project and former Acting Director of ONDCP, testified that President Clinton has promoted policies that reversed or accelerated the reversal of nearly a decade of falling drug use. Mr. Walters tagged President Clinton as the source of major reversals in: the cultural aversion to drug use, falling drug availability, falling drug purities and rising drug prices. He sees these trends as significant and dangerous. Mr. Walters pointed to the President's 80 percent reduction of ONDCP staff,\54\ the Attorney General's stated goal of reducing mandatory minimum sentences for drug trafficking,\55\ and a Presidential directive reducing Department of Defense support to drug interdiction efforts as damaging to the drug control program. Further, Walters testified, the reduction in resources to transit and source countries by 33 percent (from $523.4 million in fiscal year 1993 to $351.4 million in fiscal year 1994),\56\ a reduction in Federal domestic marijuana eradication efforts, a call by the President's Surgeon General for study of drug legalization,\57\ and ``no moral leadership or encouragement'' from President Clinton himself as significant factors in the Nation's rising drug problems. --------------------------------------------------------------------------- \54\ On February 9, 1993, the White House announced that ONDCP would have its personnel cut from 146 to 25. \55\ See also Isikoff, the Washington Post (November 26, 1993), pps. A1, A10-A11. \56\ See also, ONDCP, National Drug Control Strategy: Budget Summary (February 1994), pp. 184. \57\ See also, Reuter, ``Elders Reiterates Her Support for Study of Drug Legalization,'' the Washington Post (January 15, 1994), pp. A8. --------------------------------------------------------------------------- In short, Mr. Walters testified, ``the drug problem is simply not a part of the foreign policy agenda of the United States under President Clinton--there is no carrot and no stick facing countries from which the poison destroying American lives every day comes.'' Finally, he noted that this de- emphasis on international efforts ``fuels calls in other countries for abandoning antidrug cooperation.'' [See also the New York Times (February 20, 1994), pp. A6; the New York Times (February 27, 1994), Section 4, pp. 15.] In Mr. Walter's view, ``if these trends continue, by 1996, the Clinton administration will have presided over the greatest increase in drug use in modern American history.'' William J. Bennett, current Co-Director of Empower America and former Director of ONDCP, testified that there has been a ``sharp rise in drug use,'' citing many of the same studies cited by subcommittee Chairman Zeliff, Mrs. Reagan, Mr. Walters and others. According to Mr. Bennett, this rise should have ``mobilized the Federal Government to forcefully state the case against drug use, enforce the law and provide safety and security to its citizens.'' Instead, ``the Clinton administration has abdicated its responsibility'' and ``has been AWOL in the War on Drugs,'' said the former White House Drug Czar. Widely regarded as the most effective White House Drug Czar to date, Mr. Bennett denounced the 80 percent cut by President Clinton in the ONDCP staff, and the willingness of Clinton's Attorney General to endorse reductions in mandatory minimum sentences for drug traffickers. Mr. Bennett introduced new facts into the national dialog when he observed that, ``last year, the Clinton administration directed the U.S. Military to stop providing radar tracking of cocaine-trafficker aircraft to Colombia and Peru,'' a policy ``Congress again had to reverse,'' and noted that ``last month, for the first time in history, the nation's drug control strategy was introduced without the participation of the President.'' He also believes that, if present trends continue, by 1996 the Clinton administration will have presided over the greatest increase in drug use ``in modern American history.'' Expanding his analysis beyond the failure of public policy, Mr. Bennett testified that ``the Clinton administration suffers from moral torpor on the issue'' and that, as a general matter, ``policy follows attitude.'' In support of this statement, Mr. Bennett quoted several statements by the President on his own prior use of drugs, in particular, President Clinton's 1991 statement that he had never ``broken any drug law,'' followed by the 1992 statement that he had used marijuana in England but ``didn't inhale it,'' followed in turn, when asked if he would inhale if he had it to do over, by: ``Sure, if I could, I tried before.'' Mr. Bennett noted, on closing, that ``success in the drug war depends above all on the efforts of parents and schools and churches and police chiefs and judges and community leaders.'' Giving examples from more than 100 cities visited when President Bush's Drug Czar, Mr. Bennett urged renewed leadership. Robert C. Bonner, former Administrator of the Drug Enforcement Administration (DEA) under both Presidents Bush and Clinton, a former Federal judge, and currently a partner at Gibson, Dunn and Crutcher, testified forcefully for renewed leadership in the Drug War: ``The bottom line is unmistakable-- during the past two years, drug use among the youth of America has soared in nearly every category of illegal drug . . . When juxtaposed against the immediately preceding period and nearly a decade of declining drug use, there can be only one conclusion--the Clinton administration's National Drug Strategy has failed miserably, and indeed it is a tragedy.'' Crediting Mrs. Reagan's ``Just Say No'' campaign and the Antidrug Abuse Act of 1988, Mr. Bonner noted that the onslaught of direct and indirect damage from illegal drugs was turned back in the mid-1980's and early 1990's. In Mr. Bonner's view, national will and a combination of ``strong law enforcement,'' a strong ``educational and moral message,'' and effective treatment programs for hardcore users made the difference. However, he warns that drug treatment programs should not be ``oversold.'' Bluntly, Mr. Bonner concluded, ``there has been a near total absence of presidential leadership by President Clinton in the fight to turn back illegal drug use . . .'' and his Surgeon General's remarks on legalization ``arguably encourages it'' by further reducing perceived risk; Mr. Bonner called Surgeon General Jocelyn Elders' statement on legalization ``dead wrong and flagrantly irresponsible for a national public health official.'' Dr. Lee P. Brown, Director of ONDCP, testified defending the 1995 National Drug Control Strategy. Dr. Brown testified that President Clinton's fiscal 1996 budget sought $14.6 billion in funding across the Federal Government for drug related Federal programs. For context, the President's 1995 National Drug Control Strategy lists the total ``Drug Budget'' as $14,550.4 (millions). This figure is somewhat misleading, however, since it contains funding for a variety of programs mixed purposes, such as the Federal Court System, Food and Drug Administration, Social Security Administration, Department of Agriculture's Agricultural Research Service and U.S. Forest Service, Department of Interior's Bureau of Indian Affairs, Bureau of Land Management, Fish and Wildlife Service, and National Park Service, Department of Justice's Community Policy, Immigration and Naturalization Service, U.S. Marshal's Service and Tax Division, an unidentified grant to the Department of Labor, ONDCP's ``gift fund'' (zeroed out in fiscal 1996), the Small Business Administration, the Agency for International Development (AID), the Department of Treasury's Internal Revenue Service, and United States Secret Service, the U.S. Information Agency (USIA), and a range of other disparate Federal initiatives.\58\ --------------------------------------------------------------------------- \58\ See National Drug Control Strategy, February 1995, the White House, pp. 120-121. --------------------------------------------------------------------------- A dual concern raised by some members of the subcommittee was how these funds are actually spent and who coordinates the spending. The latter concern boiled down to accountability, avoiding duplication, and assuring interagency coordination. Seeking to justify the administration's acknowledged shift to treatment of hardcore drug users and the President's request for ``$2.8 billion for treatment'' in fiscal 1996, Dr. Brown noted that ``chronic hardcore drug users comprise 20 percent of the drug user population but consume two-thirds of the drugs . . .'' From this, he argued that ``past strategy [sic] ignore this inextricable part of the drug problem.'' In fact, while the 1995 National Drug Control Strategy does increase the proportion of overall spending devoted to treatment, past strategies have included--and have steadily increased--funding for treatment. In fact, Federal treatment funding has increased every year from 1982 to 1995.\59\ --------------------------------------------------------------------------- \59\ Fiscal year 1992, Federal treatment spending stood at $505.6 million. Fiscal year 1995, Federal treatment spending stood at $2.65 billion. National Drug Control Strategy: Budget Summary, Office of National Drug Control Policy, February 1995, pp. 238. --------------------------------------------------------------------------- Dr. Brown acknowledged that ``drug use among adolescents is rising,'' but attributed the trend to the final year of the Bush administration. Dr. Brown offered the view that Safe and Drug Free Schools moneys are ``the cornerstone of this nation's efforts to educate our children about drug use'' and are currently disbursed to ``94 percent of the school districts in this country.'' Dr. Brown confirmed a shift in trafficking patterns toward greater use of container cargo and noted that ``over 70 percent of the cocaine entering our country crosses the border with Mexico,'' but was unable to explain reduced emphasis in the current strategy on National Guard Container Search Workdays along the United States-Mexican border. Specifically, Dr. Brown had no answer for the question why National Guard Container Search Workdays fell from 227,827 in 1994 to a 1996 projection of 209,000, as described in ONDCP's own 1995 Strategy at page 41. Generally, Dr. Brown condemned ``Congress'' for having ``failed to fulfill [the President's] budget request.'' However, Dr. Brown made no attempt to provide specific answers to Members' questions concerning (1) the President's own proposed deep cuts in interdiction and international program funding; (2) accountability; (3) shifting interdiction resources to source countries, (4) a reduction of Customs agents at the Southwest border; or (5) the shift in resources from prevention of casual use (80 percent of total users) by juveniles to treatment for older, chronic, hardcore users (20 percent of total). Subcommittee Chairman Zeliff introduced an unclassified piece of correspondence dated December 1994 between the Interdiction Coordinator, Admiral Kramek, and the Director of ONDCP, Dr. Brown, which stated that a consensus of agency heads believed ``we need to restore assets to the interdiction force structure . . .'' and ``we must return to the 1992-1993 levels of effort.'' The Kramek letter also indicated that the source country programs were not yet ``producing necessary results.'' Addressing drugs as a national security threat, the Kramek letter specifically asked for a meeting with the President. The letter read, ``I believe it appropriate that we meet with the President and National Security Advisor as soon as possible to brief them on the results of our conference and discuss the current state of implementation and national strategy . . . Of key importance to this meeting is the determination of priority of counting narcotics trafficking as a threat to national security of the United States as evaluated against other threats to our security that compete for resources.'' Subcommittee Chairman Zeliff asked Dr. Brown if he had followed the Interdiction Coordinator's and agency heads' consensus that drug interdiction resources be returned to the ``1992-1993 levels.'' Dr. Brown indicated that he held a view different from that of the Interdiction Coordinator and had, apparently, not followed that recommendation. Similarly, subcommittee Chairman Zeliff asked Dr. Brown if he had taken the Interdiction Coordinator's request to the President or National Security Advisor. Dr. Brown indicated that he had not, and apparently also had not set up the requested meetings between Kramek and the President, or between Kramek and the National Security Advisor to ``determin[e] [the] priority of counting narcotics trafficking as a threat to national security . . .'' Admiral Paul Yost, former 18th Commandant of the U.S. Coast Guard and presently president of the non-partisan James Madison Fellowship Foundation, testified on the topics of interdiction and interagency coordination. He testified that the Nation witnessed a ``major build-up in drug interdiction in the at-sea war on drugs from 1984 through 1990,'' with the result that this interdiction effort ``successfully interrupted the flow of bulk marijuana by sea and cocaine by air over the water routes [of the Caribbean].'' In Admiral Yost's view, ``strong interdiction and law enforcement were providing a climate [from 1984 through 1990] that made it clear to the [drug] trafficker that `this is wrong, and your chances of being intercepted are very high.' '' Since that time, he testified, there has been a ``tragic dismantling'' of the at-sea interdiction effort, so that today ``there are several orders of magnitude less effort spent on drug interdiction.'' Calling the resultant increase in drug availability and drug use predictable, Yost testified that the Nation ``will never stop drug use without a solid interdiction foundation for . . . education and treatment programs.'' Accordingly, Admiral Yost favored a return to ``emphasiz[ing] the interdiction prong of the drug strategy'' and increased budget authority for the Coast Guard. Finally, Admiral Yost discussed the need for better interagency coordination. He supports greater ``authority'' for the White House Drug Czar and President's Interdiction Coordinator. Without the ability, specifically, to ``direct cabinet-level officers regarding budget allocation, personnel allocation, or forced deployments'' on this issue, both positions are ``largely ceremonial,'' he said. Thomas Hedrick, Jr., vice chairman of the Partnership for a Drug-Free America, testified that prevention and interdiction advocates must begin to work together, and that ``preventing drug use by young people'' is essential ``if we are to have prayer of building safe and healthy families and communities.'' As a prevention expert with 10 years of experience, Mr. Hedrick testified that, ``quite frankly, I am frightened because after nearly a decade of progress, drug use is rapidly increasing. The issue has `overarching importance.' `Crisis' is not an overly dramatic or inappropriate description, particularly when you consider that drug use among our youngest kids, 13 and 14, has more than doubled in the last three years,'' observed Mr. Hedrick. Mr. Hedrick favors increased parental involvement in setting a ``clear expectation of no use,'' better in-school education, and reduced exposure of children to ``pro-drug information,'' especially exposure to the ``recent re- glamorization of drug use in some of the media.'' Significantly, Mr. Hedrick reported that the Partnership has received--since inception--``over $2 billion in time and space'' from the media. In 1990 and 1991, this produced roughly one antidrug message per household per day. However, Mr. Hedrick testified that ``support for these messages has declined 20 percent in the past three years,'' apparently ``because the media is not as convinced that the drug issue is as important as it was.'' Media coverage is also down, from 600 antidrug stories on the three major networks in 1989 to 65 last year, which Mr. Hedrick said is tantamount to ``zero'' from a communications point of view. Mr. Hedrick expressed the view that ``Federal support and Federal leadership in making drugs a critical national priority is essential, if we are to help convince the media that this is an important issue.'' National leaders must also tell those community leaders involved in this fight that what they are doing is important. Mr. Hedrick's 14-year-old son, Todd, testified briefly that his generation is surrounded by drugs. He said that ``parents need a serious wake-up call'' and that all kids now know where to get drugs in their schools. ``This entire country needs a huge turn-around in how it deals with drugs,'' since ``the fact that drugs aren't a prominent issue anymore tells kids that adults don't care about it.'' The younger Hedrick said, ``that's suicide to my generation . . .'' He proposed starting prevention earlier, in elementary school, having parents talk more with their kids, increasing media attention to the problem, and stopping the legalization movement. Bridget Ryan, former program director for the Charles Stuart Mott Foundation and presently executive director of the BEST Foundation for a Drug-Free Tomorrow, testified that a recent RAND study advocated drug prevention as ``the first priority'' in curbing drug abuse. Ms. Ryan distinguished between ``validated'' and ``unvalidated'' drug prevention programs, and urged that the former be adequately funded. The best ``validated'' prevention programs build, Ms. Ryan testified, on three propositions: first, ``target[ing] substances used first and most widely by young people;'' second, ``helping students develop the motivation to resist using drugs;'' and third, teaching effectively. Ms. Ryan described a recent RAND study on the effectiveness of prevention as one ``conducted with methodological exactitude'' and ``one of the most rigorous ever undertaken.'' Ms. Ryan testified that the RAND prevention study disproves three common criticisms of prevention--``first, that it works only for middle class, largely white, suburban situations; second, that the programs work only for kids who need them least; and finally, that prevention programs prevent only trivial levels of use.'' RAND found that a properly designed prevention program, such as Project Alert, ``works well in urban, suburban, and rural areas, in middle- and low-income communities, and in schools with high and low minority populations.'' Project Alert is one of the prevention programs made available to ``schools across America'' by the BEST Foundation. James Copple, national director of the Community Anti-Drug Coalitions of America (CADCA), testified that CADCA is a non- partisan group with approximately 2,500 community coalition members in every State and two U.S. territories. He noted that CADCA was founded in 1992 by the President's Drug Advisory Council, a creation of President Bush, and is privately funded. Expressing support for the Safe and Drug Free Schools Program, Mr. Copple retold a moving story of a young child that ``made her stand'' against drugs, while forced to live in a crack house. During a law enforcement raid of the house, this child was found in her room, surrounded by antidrug posters and ``a workbook on drug refusal skills;'' the posters and workbook were funded by Safe and Drug Free Schools moneys. In closing, Mr. Copple cited Peter Drucker's recommendation that budget cutting be conducted without imperiling the Federal Government's ability to conduct some ``national crusades.'' Mr. Copple noted that Drucker identified the war on drugs as one such crusade, and Mr. Copple urged the Congress to ``embrace a national strategy that is comprehensive, balanced and directs the majority of the resources to local communities to address local problems.'' Charles Robert ``Bobby'' Heard III, director of program services at the Texans' War on Drugs, testified that ``parents, community leaders, and elected officials don't realize how easy it is for kids to get involved in drugs.'' He credited the precipitous drop in drug use ``between 1979 and 1992'' to substance abuse prevention, and noted that ``no other social issue can claim that kind of success.'' Mr. Heard sees the primary solution to drug abuse in demand reduction. He testified that ``prisons alone will not break the cycle,'' and ``we can't treat our way out of this problem.'' He also noted that prevention is not a one-time mission, but an ongoing duty that must continue ``from generation to generation.'' The subcommittee continued it's investigation into the Natio