International Broadcasting: Downsizing and Relocating Radio Free
Europe/Radio Liberty (Letter Report, 04/05/95, GAO/NSIAD-95-53).

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-95-53
     TITLE:  International Broadcasting: Downsizing and Relocating Radio 
             Free Europe/Radio Liberty
      DATE:  04/05/95
   SUBJECT:  Agency missions
             Federal agency reorganization
             Radio broadcasting
             Future budget projections
             Federal facility relocation
             Political activities
             Administrative costs
IDENTIFIER:  Munich (Germany)
             Prague (Czech Federal Republic)
             
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Cover
================================================================ COVER


Report to Congressional Requesters

April 1995

INTERNATIONAL BROADCASTING -
DOWNSIZING AND RELOCATING RADIO
FREE EUROPE/RADIO LIBERTY

GAO/NSIAD-95-53

International Broadcasting

(711094)


Abbreviations
=============================================================== ABBREV

  BBG - Broadcasting Board of Governors
  BIB - Board for International Broadcasting
  OMB - Office of Management and Budget
  RFE/RL - Radio Free Europe/Radio Liberty's
  RFE - Radio Free Europe
  USIA - United States Information Agency

Letter
=============================================================== LETTER


B-258686

April 5, 1995

The Honorable Harold Rogers
Chairman
The Honorable Alan Mollohan
Ranking Minority Member
Subcommittee on Commerce, Justice,
 State, and Judiciary
Committee on Appropriations
House of Representatives

In response to your request, we reviewed issues related to Radio Free
Europe/Radio Liberty's (RFE/RL) downsizing and its planned relocation
from Munich, Germany, to Prague in the Czech Republic.  In
particular, we focused on (1) RFE/RL's ability to meet
congressionally mandated funding ceilings and successfully operate in
Prague, (2) the most pressing management problems RFE/RL faces in
Prague, and (3) RFE/RL's view of its role and mission in the 21st
century. 


   BACKGROUND
------------------------------------------------------------ Letter :1

In the 1950s, the U.S.  government established RFE/RL as a private
nonprofit company to provide surrogate radio programming to and about
Eastern Europe and the former Soviet Union.  Surrogate broadcasting
takes the place of free, uncensored local media and provides news
about political, social, and economic developments within the
countries.  This differs from the role of the other major U.S. 
international broadcaster--the Voice of America--which has a broader
purpose to deliver news overseas about the United States, U.S. 
policy, and the world.  RFE/RL receives its grants and policy
direction from the Board for International Broadcasting (BIB), a
federal entity created to fund and oversee the operations of RFE/RL. 
During the past several years, RFE/RL has received annual grants of
more than $200 million. 

With the demise of the Cold War, the executive branch began
questioning the role and management of international broadcasting. 
President Clinton called for the consolidation of all U.S. 
international broadcasting to better address changing broadcasting
requirements, and to meet his deficit reduction goals.  Executive
branch officials believed that a new management structure would
reduce costs by promoting more rational programming decisions and
sharing engineering and other administrative resources.  The Office
of Management and Budget (OMB) determined that a consolidation could
save $400 million during a 5-year period. 

On April 30, 1994, the President signed into law the United States
International Broadcasting Act (Title III, P.L.  103-236), which
consolidated all nonmilitary, U.S.-funded international broadcasting
activities under the International Broadcasting Bureau within the
United States Information Agency (USIA).  The legislation also
authorized the establishment of a Broadcasting Board of Governors
(BBG) to oversee the Broadcasting Bureau; establish and maintain
broadcasting standards; and assess the quality, effectiveness, and
professional integrity of all activities.  BIB, which currently
oversees RFE/RL, is to be dissolved by October 1995.  Additionally,
the act expressed the sense of Congress that the private sector
should assume all funding for the radios not later than the end of
fiscal year 1999. 

The authorizing legislation placed certain funding limits on RFE/RL
and restricted what it could do.  It specified that grants to RFE/RL
could not exceed $75 million for any fiscal year after 1995 and
limited salaries to those paid to comparable personnel in the federal
government overseas.  Additionally, the legislation specified that no
fiscal years 1994 and 1995 funds could be used to relocate the radios
from Germany unless (1) Congress specifically approved a relocation
in an appropriation or pursuant to a reprogramming request and (2)
BBG authorized a relocation and submitted to Congress and the
Comptroller General a detailed plan for such relocation, or prior to
the establishment of BBG, the President certified that a significant
national interest required a relocation. 

On July 12, 1994, the President certified that significant national
interest required relocating the operations of RFE/RL from Munich,
Germany, to Prague in the Czech Republic before confirming a new BBG. 
Following a review of the relocation plan, on August 20, 1994,
Congress approved the reprogramming request for the relocation. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Current and planned sources of revenue are insufficient to cover
RFE/RL downsizing and relocation costs and meet mission requirements
through 1999.  BIB estimates that the overall funding shortfall could
reach as high as $28 million.  This shortfall is occurring in part
because the cost of downsizing and relocating the organization will
greatly exceed the amount OMB has budgeted for these purposes. 
Original estimates to consolidate international broadcasting
activities did not, for example, identify the need for RFE/RL to pay
millions of dollars in corporate liabilities for pensions and post
retirement medical benefits and understated the costs to terminate
the employment of staff in Germany.  Furthermore, total revenue will
be less than envisioned:  RFE/RL has not received the level of
appropriations it anticipated, and rather than realizing gains from
exchange rate fluctuations, it may now experience significant losses. 

The move and operations in Prague may not occur as easily as RFE/RL
has anticipated.  Some RFE/RL managers are concerned about their
ability to recruit the most qualified staff from within and outside
the company.  Additionally, the move is already behind schedule, and
any deviation from the plans to refurbish the new headquarters in
Prague could increase costs. 

In looking to the future, RFE/RL officials see an enduring, although
changing mission.  They believe their broadcasts will continue to be
needed to provide accurate, objective news in support of democratic
institutions and to present journalistic standards that in-country
media could emulate.  RFE/RL is also crafting a role for itself to
directly assist in the democratic development of the former Eastern
bloc countries.  Additionally, to prepare for the eventual
termination of U.S.  financial support at the end of 1999, RFE/RL is
contemplating new services and activities, such as English language
print news reports, which are potentially marketable and competitive
with other private sector media organizations.  It is too early to
tell if these activities would fall within the mission guidelines
that Congress authorized for RFE/RL.  However, Congress clearly
intended that the new BBG approve any changes or additions to
RFE/RL's mission through fiscal year 1999 and that U.S.  assistance
to emerging democracies be coordinated among all U.S.  agencies
performing similar activities. 


   DOWNSIZING PLAN CALLS FOR
   SIGNIFICANT REDUCTIONS IN
   RFE/RL
------------------------------------------------------------ Letter :3

Since the consolidation was first proposed in 1993, savings were
expected to occur by merging some RFE/RL and Voice of America
resources, eliminating duplicative language broadcasts, reducing
staff, and decreasing RFE/RL's salary and compensation package. 

In essence, the legislation required RFE/RL to completely reinvent
itself.  Some administrative functions would be transferred to the
Voice of America, and all engineering and transmission activities
would be merged with the Voice of America's engineering program.  The
legislation required that the private sector assume responsibility
for funding the Research Institute as soon as possible\1 and that
RFE/RL reduce its salaries and benefits to match those of comparable
federal employees overseas.  We had found, for example, that salary
and selected benefits, such as housing allowances, for RFE/RL staff
exceeded those of comparable Voice of America federal employees in
Germany by $13,000 a year at the lower grades and $44,000 a year at
the upper-management level. 

As a result of the downsizing, RFE/RL's annual fiscal year budget
will be cut from its fiscal year 1994 level of $143 million to $75
million for fiscal years 1996 through 1999.  Its staff ceiling will
be reduced from more than 1,000 to 419.  The budget and staffing
figures cited for fiscal year 1994 exclude the amount for the
Research Institute and engineering. 


--------------------
\1 RFE/RL's Research Institute has been comprised of four elements: 
analytic research, archives, publication, and a media and opinion
research section.  Its archives was recognized as a source of
information about the East during the Cold War.  In the summer of
1994, RFE/RL and the Open Society Institute signed agreements
creating the Open Media Research Institute in Prague to replace the
Research Institute.  RFE/RL will fund first year start-up costs but
thereafter pay only for specific services it requires. 


   RADIOS MAY NOT HAVE SUFFICIENT
   FUNDS TO LIQUIDATE LIABILITIES
   AND OPERATE IN PRAGUE
------------------------------------------------------------ Letter :4

RFE/RL believed it could operate within the $75 million annual cap
Congress set for fiscal years 1996 to 1999 as long as it had
sufficient funding in fiscal year 1995 to cover its downsizing and
relocation costs.  Fiscal year 1995 is a pivotal transition year
because RFE/RL will terminate staff, shut down operations in Munich,
and move to Prague.  In 1993, OMB estimated that $105 million would
be needed in fiscal year 1995 to cover all downsizing costs, and that
approximately $152 million would cover operations in 1995, for a
total funding requirement of about $257 million. 


      LIABILITIES HIGHER THAN
      ANTICIPATED
---------------------------------------------------------- Letter :4.1

In September 1993, we reported that OMB had locked into an estimate
of $105 million for downsizing costs despite many unknowns.  We noted
that there was no plan detailing which activities, sites, or staff
would be terminated.  Furthermore, we pointed out that at the time it
was not possible to accurately calculate how much RFE/RL would have
to pay its terminated employees.\2

Of particular importance, German labor law requires companies to
compensate terminated staff for their job loss.  In addition to
severance pay based on length of service, employees are entitled to
receive a "social compensation package" payment.  The amount of this
payment is not based on a specific formula but rather is determined
through management and union negotiations and varies by individual
according to factors such as marital status and number of dependents. 
Only recently have all of these costs been determined. 

In 1993, neither OMB nor BIB had foreseen that the radios would be
moving and incurring $19 million in relocation costs or that the
sense of Congress to secure private sector funding by the end of
fiscal year 1999 would have a financial impact on RFE/RL.  Now RFE/RL
estimates that to clear all debts by that time, it will need to fund
$34 million in post retirement medical benefits and more than $30
million in the pension account. 

In August 1994, BIB calculated that downsizing and relocation would
cost more than $200 million.  To compensate for the difference
between what had been budgeted for these costs and actual costs, BIB
determined RFE/RL would have to use some of the funds originally
budgeted for its operations for the next 5 years.  Rather than having
$75 million available each year for operations, RFE/RL would have
only slightly more than $60 million each year.  Table 1 shows the
RFE/RL budget that BIB developed for fiscal years 1995 through 1999. 



                                     Table 1
                     
                      Actual Fiscal Year 1994 and Projected
                     Operating Budget in Prague as of August
                                     4, 1994

                              (Dollars in millions)



                                    1994    1995    1996    1997    1998    1999
--------------------------------  ------  ------  ------  ------  ------  ------
Operating base                    $175.8  $134.3   $61.5   $61.6   $62.4   $62.6
Severance                           24.6    36.9       0       0       0       0
Pension                                0    10.2     6.3     6.3     5.5     5.3
Post retirement medical                0     6.0     7.2     7.1     7.1     7.1
 insurance
Litigation, etc.                     2.5    10.2       0       0       0       0
Engineering\a                          0    12.7       0       0       0       0
Social plan                          5.0    25.2       0       0       0       0
Relocation                           0.2    19.3       0       0       0       0
Subtotal                          $208.1  $254.8   $75.0   $75.0   $75.0   $75.0
Bureau for International             1.9     1.9       0       0       0       0
 Broadcasting
================================================================================
Total                             $210.0  $256.7   $75.0   $75.0   $75.0   $75.0
--------------------------------------------------------------------------------
\a This is RFE/RL's contribution to the costs of consolidating RFE/RL
and Voice of America engineering and technical services. 


--------------------
\2 International Broadcasting (GAO/NSIAD-93-302R, Sept.  17, 1993). 


      REDUCED FISCAL YEAR 1995
      APPROPRIATIONS AND CURRENCY
      LOSSES
---------------------------------------------------------- Letter :4.2

In December 1994, RFE/RL determined that it would not be able to pay
off its debts or have about $60 million available for operations as
the budget above indicates because it would not be receiving the
revenue it anticipated.  First, Congress cut the fiscal year 1995
request of $256.7 million to $229.7 million.  Furthermore, in
December 1994, BIB projected that in fiscal year 1995 RFE/RL will not
realize more than $12 million in exchange rate currency gains it had
anticipated.  BIB had assumed there would be currency gains believing
that the dollar would buy more German marks than originally
estimated.  BIB now believes that RFE/RL could be faced with currency
exchange rate losses of up to $10 million in fiscal year 1995 because
the value of the dollar against the German mark has been declining. 
At this time, however, it appears that RFE/RL will have available $5
million in unused construction funds and $3.6 million in fiscal year
1994 currency exchange rate gains. 

Congress has tried to ease RFE/RL's financial burden.  Technical
amendments to the legislation that consolidated international
broadcasting authorized the use of proceeds from the sale of the
RFE/RL headquarters in Munich for the one-time costs of consolidating
broadcast operations and relocating RFE/RL to Prague.  Proceeds from
the sale of the site are expected to be approximately $13.5 million
after structural repairs are made to the property.  Overall, BIB does
not believe that this infusion of funds will be sufficient to cover
the current funding shortfall, which it estimates could reach as high
as $28 million. 


      BIB BELIEVES FURTHER
      DEFERRALS MAY NOT BE
      POSSIBLE
---------------------------------------------------------- Letter :4.3

To respond to the rising levels of liabilities and reduced income in
fiscal year 1995, BIB and RFE/RL are contemplating deferring the
payment of some liabilities.  For example, they are studying the
feasibility of delaying some severance payments beyond fiscal year
1995.  However, they are concerned that they may be unable to do this
for two reasons.  First, they are unsure if German labor law will
permit them to postpone payments to terminated staff.  Second, even
if this were legally permissible, BIB believes that such a move would
drastically hurt RFE/RL's ability to meet mission requirements
because RFE/RL would have to pay these costs out of its fiscal years
1996 through 1999 operating budgets.  BIB officials believe that
RFE/RL could not withstand additional cuts in its operating budget. 
They believe that the approximately $62 million annual budget
developed in August 1994 is RFE/RL's bottom-line requirement and
already well below the annual $75 million RFE/RL had expected for
operations. 


   MOVING AND OPERATING IN PRAGUE
   MAY PROVE MORE DIFFICULT THAN
   ANTICIPATED
------------------------------------------------------------ Letter :5

President Clinton determined that relocating the stations to Prague
would offer significant advantages of economy and efficiency and
bring an added political benefit.  Politically, Prague offers a
location of great symbolic value as the city becomes a crossroads of
communication and culture for the West and what was formerly
considered the Eastern bloc countries. 

RFE/RL's plans to relocate and operate in Prague assume a new,
innovative, and cost-conscious management approach.  Our review
indicates that RFE/RL has cost estimates to support its construction
plans, but deviation from them could cause costs to rise. 

For example, RFE/RL plans to utilize existing space in a building
that housed the former Communist Parliament in Prague essentially as
is and spend as little money as possible to convert it for RFE/RL
uses.  Although RFE/RL officials had originally budgeted $245,000 to
remodel office space, buy new furniture, and replace carpeting, they
subsequently decided not to do so.  The planned construction of
studios will neither meet the aesthetics nor broadcasting standards
that the Voice of America uses, but will meet U.S.  commercial
broadcasting standards and cost several hundred thousand dollars
less.  RFE/RL will not replace the aluminum electrical wiring. 
Rather, it will only install copper wiring to support increased
electrical demand for studios and computer networks. 

To reduce personnel costs, RFE/RL plans to redesign how it conducts
its business.  For example, it plans to introduce digital production
equipment to reduce the number of people required to do a job.  In
addition, rather than maintaining full-time staff for maintenance and
other housekeeping activities, RFE/RL plans to contract out for these
services.  RFE/RL said they will also institute higher productivity
standards for their staff because they will not initially be under
union- imposed management constraints as they had been in Munich. 
Finally, to conform with U.S.  legislation, RFE/RL has designed a new
pay and benefits package that will more closely parallel those of
federal employees in similar positions.  We did not determine what
impact these plans would have on savings:  however the move is behind
schedule and RFE/RL may find it difficult to recruit experienced
staff for Prague. 


      MOVE IS BEHIND SCHEDULE
---------------------------------------------------------- Letter :5.1

RFE/RL developed ambitious time frames to shut down operations in
Munich, ready the new headquarters building and move staff to Prague. 
Original plans called for relocating some staff by early December
1994.  However, as of February 1995, RFE/RL did not know the
employees who would be moving to Prague since the German courts were
still reviewing whether RFE/RL has followed German labor law
requirements in terminating employees and offering positions in
Prague.  Until RFE/RL knows who will move, it cannot finalize its
staffing pattern or develop a plan to find new staff. 

The refurbishment of the building in Prague is also behind schedule. 
Most nonelectrical construction was to have been completed by
December 31, 1994.  However, the lease on the building was not signed
until December 20, 1994.  As of February 1995, RFE/RL was still
evaluating bids for projects such as studio construction and
electrical wiring. 

The RFE/RL president has recognized that RFE/RL does not have
managers experienced in logistically relocating an organization. 
However, we were informed that RFE/RL has recently developed a moving
and management plan and an assessment of technology or equipment
needs. 


      ABILITY TO RECRUIT AND TRAIN
      NECESSARY STAFF MAY BE
      DIFFICULT
---------------------------------------------------------- Letter :5.2

There are indications that RFE/RL may face problems in obtaining the
experienced, talented RFE/RL staff it wants to move to Prague. 
RFE/RL plans to recruit primarily from within the RFE/RL ranks from
its third country, or U.S.  employees.  The American staff members
are concentrated in the top positions and would fill the management
ranks.  Non-Americans are predominately broadcasters.  RFE/RL does
not assume that any Germans will be willing to make the move. 

According to the RFE/RL president, almost all of the language service
directors as well as many of their most valued employees have
indicated they would accept a position in Prague.  However, some BIB
and RFE/RL officials are skeptical that RFE/RL can recruit the people
it wants because (1)a number of the top U.S.  managers appear
unwilling to relocate and (2)RFE/RL will not have the freedom to
select only the best candidates from among its non-U.S.  staff.  We
were informed that RFE/RL attorneys concluded that the company must
follow German labor law procedures in making employment offers.  This
requires RFE/RL to consider conditions such as an employee's
seniority, marital status, number of dependents, and disabilities
rather than just performance. 

Furthermore, one official predicted that among the lower grades, the
best staff are also the least likely to accept an offer because they
would have good employment prospects in Germany.  According to some
RFE/RL and BIB officials, a number of factors would inhibit top staff
from accepting an offer.  For example: 

  The compensation and benefits will be considerably less in Prague
     than they were in Munich, and, therefore, potentially less
     attractive to current employees. 

  Non-Germans who leave the country relinquish their German residency
     status, their ability to return to live in the country, and all
     claim to government of Germany benefits such as unemployment
     compensation which accrue to residents. 

  The future of RFE/RL in Prague is uncertain beyond fiscal year
     1999. 

RFE/RL's president believes, however, that if RFE/RL staff is
unwilling to move to Prague he can fill open positions with
well-qualified broadcasters from outside the organization.  He cited
the positive experience of the new Open Media Research Institute, the
former RFE/RL Research Institute.  The Institute advertised in two
U.S.  newspapers and one higher education magazine for 50 job
vacancies in the editing and analysis area.  According to the RFE/RL
president, these ads attracted more than 500 applicants. 

Finally, training could also be a problem.  Though RFE/RL will be
dependent on the abilities of staff to utilize new technologically
advanced equipment to cut costs, money for formal training is not
included in the budget.  Staff will have to learn on the job. 
Additionally, RFE/RL indicated that it may utilize contract services
rather than hire personnel to fill some support positions, but no
firm decisions on this had yet been made. 


   RFE/RL SEEKS NEW ROLE IN THE
   21ST CENTURY
------------------------------------------------------------ Letter :6

The recent congressional and executive branch deliberations on the
future of RFE/RL indicates the breadth of opinions on the value and
merit of U.S.-funded surrogate broadcasting in the post-Cold War era. 
There were questions about whether surrogate broadcasting was still
needed, as well as whether surrogate broadcasters should be
completely independent from the U.S.  government.  In the legislation
which consolidated all broadcasting, it was the sense of Congress to
support surrogate broadcasting to the region but only through the end
of fiscal year 1999. 

In presentations to Congress, BIB recognized that changing conditions
in the region required a rethinking of the purposes of the
broadcasts.  BIB determined that the radios' missions had evolved
from a purely surrogate task of providing objective news and analysis
on internal events where no such media were available, to
compensating for the limitations of domestic media and setting a
standard by which an emerging free press could judge itself. 
Although the primary mission remains that of a broadcaster, as
discussed below, RFE/RL managers appear to see their role in a
broader context. 


      POTENTIAL DEVELOPMENT ROLE
---------------------------------------------------------- Letter :6.1

Current managers see RFE/RL's goals in a developmental context. 
RFE/RL officials said that RFE/RL has three primary missions: 

(1) To act as a traditional broadcaster by providing information and
news on important issues such as democracy and political
organization, the environment, and economic growth (their top
priority). 

(2) To provide assistance to indigenous radio stations. 

(3) To train indigenous radio personnel and broadcasters. 

The RFE/RL Director of Broadcasting described the mission as beyond
that of supplying the news.  He said that RFE, for example, attempts
to negotiate agreements with host governments and media that not only
meet RFE/RL needs but also address the goal of developing independent
media and more democratic institutions. 

The RFE/RL president informed us that RFE/RL has loaned equipment to
local stations and sent its technicians to help these stations
modernize their operations.  RFE has included a developmental
component in some of its programs.  For example, RFE planned,
coordinated, and conducted live debates prior to the first Latvian
election after the collapse of the Soviet Union.  RFE/RL discussed
plans with each of the 23 candidates, the Foreign Ministry, and the
Elections Commission and involved local media with the intent that
similar debates could be held in the future.  Additionally, RFE/RL
has conducted exchanges with local media personnel. 


      PREPARING FOR THE
      TERMINATION OF U.S. 
      GOVERNMENT SUPPORT
---------------------------------------------------------- Letter :6.2

The president of RFE/RL believes that he must start positioning
RFE/RL for the eventual termination of U.S.  government support.  He
concluded that unless it builds a foundation of competitive goods and
services now, RFE/RL will not be in a position to market its products
to the private sector in the year 2000.  He doubts that all of the
broadcast services RFE/RL currently supplies will attract the level
of private financial support that Congress envisions.  For example,
he believes it is unrealistic to expect private support for
broadcasts in small former Soviet Union countries that are not
internationally important and where their private sectors are not
strong.  It is within this context that he is considering how to best
utilize the strengths of his staff, the reputation of RFE/RL, and the
new site in Prague. 

The RFE/RL president told us he would like to completely recast the
central news function so that reporters would write stories in both
English and the language of the country from which they are
reporting.  The president believes that adding an English capability
would both internally aid operations and help develop a product that
private sources would be willing to buy.  He believes that RFE/RL is
the definitive source of information about events in the region to
which private news and other organizations would be willing to
subscribe. 

Although no firm plans have been developed, the RFE/RL president
envisions a new training program that will bring multilingual
journalists to Prague for intensive instruction in Western-style news
gathering and writing.  They would then return to their home
countries under contract to RFE/RL and form a network of reliable
reporters who can report in both English and the host country
language. 

The RFE/RL president is looking for ways to utilize the new
headquarters in Prague.  The building has well- appointed meeting
facilities and could host international conferences, seminars, and
outreach programs.  He believes the site can be used by both private
and U.S.  government entities and recently invited U.S.  public
affairs officers from USIA overseas missions to discuss the potential
uses of the building.  With such cosponsors, he believes the building
could become an "internationally recognized symbol of democratic
dialogue."


      LEGISLATION LIMITS RFE/RL
      MISSION AND REQUIRES
      COORDINATION OF DEMOCRACY
      BUILDING ACTIVITIES
---------------------------------------------------------- Letter :6.3

Notwithstanding the potential merits of any planned RFE/RL activity,
Congress clearly intended to control RFE/RL activity and prevent
unilateral decisions on changes in roles and missions through fiscal
year 1999.  The legislation consolidating all international
broadcasting stipulated the following: 

  No activities should in any manner duplicate the activities of
     private sector broadcasters. 

  Funds are to be used only for the purpose of carrying out similar
     functions that RFE/RL carried out on the day before enactment of
     the act. 

  Funds are to be used for activities that the new BBG determines are
     consistent with these functions. 

Additionally, the legislation also designated BBG as the ultimate
authority on all mission-related decisions.  The initiatives RFE/RL
is now contemplating appear to be those that BBG need to review and
coordinate.  As such, we question whether RFE/RL should make any
changes or additions to its mission at this time without BIB's review
or, when it is constituted, BBG.\3

Furthermore, over the past year, Congress has indicated its concern
over the proliferation and overlap of U.S.  agencies and U.S.-funded
organizations involved in democracy development activities.  In an
earlier report, we noted that a variety of U.S.  agencies were
involved in delivering democratic development assistance worldwide.\4
This included activities such as media development and training and
information exchanges of the type RFE/RL is now contemplating. 
Specifically, the Office of International Media Training in USIA
trains foreign reporters, broadcasters, editors, managers, and
technicians.  In operation since 1983, its training mission is to
provide practical training for foreign media personnel and support
the development of independent media on a global scale.  By its own
account, the Office has trained more than 5,000 media personnel from
over 130 countries and, since the end of the Cold War, has shifted
its focus to East and Central Europe, the Baltics, Russia, and the
Newly Independent States. 

In light of the expansion of democratic development activities,
Congress determined that it is in the government's interest to have a
coordinated approach.  The 1994-95 Foreign Relations Authorization
Act\5

requires the President to report to Congress on the extent, goals,
objectives, and impact of U.S.-sponsored democracy programs. 

Some of the activities RFE/RL is now undertaking, or contemplating
initiating, appear to fall under this mandate. 


--------------------
\3 As of February 1995, President Clinton had not yet named the
members of the BBG. 

\4 Promoting Democracy:  Foreign Affairs and Defense Agencies Funds
and Activities--1991 to 1993 (GAO/NSIAD-94-83, Jan.  4, 1994). 

\5 P.L.  103-236, Sec.  534 (1994). 


   RECOMMENDATION
------------------------------------------------------------ Letter :7

Until the BBG is established, BIB is still responsible for supplying
RFE/RL policy direction.  As such, we recommend that the Chairman of
the BIB review and evaluate any RFE/RL plans to change or add to its
mission to ensure that such plans are consistent with the
legislation, do not duplicate or overlap existing programs, and are
fully coordinated with other U.S.-funded organizations performing
similar activities. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :8

In commenting on a draft of this report, BIB agreed with our
recommendation and the areas of concern we identified.  BIB
emphasized that the move to Prague is very much a work in progress
and that BIB has, and will continue to, provide the oversight
necessary to address these issues.  (See app.  I.) BIB also supplied
us oral comments that we incorporated as appropriate. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :9

To assess RFE/RL's ability to operate within congressional funding
limits, we reviewed documents, including studies prepared by BIB and
Arthur Andersen and Company, on the costs and issues associated with
downsizing and relocating RFE/RL.  Also, we interviewed agency
officials concerning the move to Prague.  We did not independently
develop new termination cost estimates but used those estimates we,
OMB, and BIB had developed in 1993 as a base from which we assessed
the reasonableness of current estimates.  We compared these and
operational budgets developed by BIB, against known appropriations
levels and other expected sources of revenue.  To determine the most
pressing management issues facing RFE/RL and plans for the future, we
interviewed officials from BIB, USIA, and RFE/RL; reviewed internal
planning documents; and reviewed legislative authority for
activities.  We interviewed officials and obtained documents in
Washington, D.C., Munich, and Prague.  While in Prague, we examined
back-up data for cost estimates and visited RFE/RL's new
headquarters. 

We conducted this review from July 1994 to February 1995 in
accordance with generally accepted government auditing standards. 


---------------------------------------------------------- Letter :9.1

We are sending copies of this report to the Chairman, Board for
International Broadcasting; the Director, United States Information
Agency; the Director, Office of Management and Budget; and
appropriate congressional committees.  We will also make copies
available to others upon request. 


Please call me at (202) 512-4128 if you or your staff have any
questions concerning this report.  The major contributors to this
report were Charles Schuler, Joan Slowitsky, John Butcher, and Cherie
Starck. 

Joseph E.  Kelley
Director-in-Charge
International Affairs Issues




(See figure in printed edition.)Appendix I
COMMENTS FROM THE BOARD FOR
INTERNATIONAL BROADCASTING
============================================================== Letter 



(See figure in printed edition.)



(See figure in printed edition.)

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