Reports and Testimony: October 1995 (Other Written Prod., 10/01/95,
GAO/OPA-96-1).
GAO published its monthly digest of reports and testimonies issued in
October 1995.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: OPA-96-1
TITLE: Reports and Testimony: October 1995
DATE: 10/01/95
SUBJECT: Health care cost control
Census
Housing programs
Information gathering operations
Labor law
Employment or training programs
Safety regulation
Environmental monitoring
Law enforcement
Tax administration systems
IDENTIFIER: Economic Support Fund
International Fund for Ireland
SBA 8(a) Program
Oklahoma City (OK)
AmeriCorps USA Program
Superfund Program
Markets and Trading Reorganization and Reform Act
Senior Executive Service
IRS Coordinated Examination Program
2000 Decennial Census
Arizona Medicaid Managed Care Program
Medicaid Program
Medicare Program
Bibliographies
HUD Single Family Mortgage Assignment Program
HUD Low Income Housing Preservation Program
FDA Operational and Administrative System for Import Support
NWS Next Generation Weather Radar
Cuba
Community Oriented Policing Services Program
Enhanced Fiber Optic Guided Missile
IRS Taxpayer Compliance Measurement Program
Aid to Families with Dependent Children Program
SES
AFDC
STARS
TCMP
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REPORTS AND TESTIMONY: OCTOBER
1995
GAO/OPA-96-1
Highlights
Arizona Medicaid
Arizona, which, in 1982, became the first state to mandate managed
care for Medicaid beneficiaries, has succeeded in containing health
care costs while delivering a sound, accessible system of health
care. Its success offers insights for the growing number of states
implementing managed care for Medicaid programs. Page 11.
The 2000 Census
Although the Census Bureau plans fundamental design changes for the
decennial census in the year 2000 that could save $1 billion and
yield more accurate results than the 1990 census, implementing them
would require aggressive management and early decisions. Page 11.
Worker Protection
Companies that have violated federal labor laws continue to win
billions of dollars in government contracts. In 1993, 80 firms
violated the National Labor Relations Act and received more than $23
billion in contracts; of these, six firms that violated the law
received $21 billion in contracts. Page 4.
GAO/OPA-96-1
Abbreviations
=============================================================== ABBREV
CFTC - x
DOD - x
DOE - x
EPA - x
FDA - x
FHA - x
GSE - x
HCFA - x
HUD - x
INS - x
IRS - x
JOBS - x
NEXRAD - x
NIH - x
NRC - x
NWS - x
OASIS - x
OSHA - x
PMA - x
SBA - x
SEC - x
SES - x
TCMP - x
VA - x
REPORTS AND TESTIMONY: OCTOBER
1995
=========================================================== Appendix 0
BUDGET AND SPENDING
--------------------------------------------------------- Appendix 0:1
Impoundments:
Deferral of Fiscal Year 1995 Economic Support Fund
Budget Authority
GAO/OGC-96-1, Oct. 11 (three pages).
On September 8, 1995, the President submitted to Congress his sixth
special impoundment message for fiscal year 1995. The message
reported one revised deferral of budget authority affecting the
budget of the Economic Support Fund and International Fund for
Ireland. GAO reviewed the deferral and found it to be in accordance
with the Impoundment Control Act.
BUSINESS, INDUSTRY, AND
CONSUMERS
--------------------------------------------------------- Appendix 0:2
Small Business Administration:
8(a) Is Vulnerable to Program and Contractor Abuse
GAO/OSI-95-15, Sept. 7 (23 pages).
The Small Business Administration's (SBA) 8(a) program is intended to
develop and promote businesses that are owned and controlled by
socially and economically disadvantaged persons. Members of Congress
have raised concerns that weaknesses in program management and
administration may make the 8(a) program vulnerable to exploitation
by individuals or corporations that have used illegal or improper
means to participate in and benefit from the program. To develop
case studies, GAO initially selected four firms for investigation on
the basis of indicators, or "red flags," of potential regulatory
violations and criminal misconduct. Because of time constraints and
the destruction of records resulting from the Oklahoma City bombing,
this report focuses on the following two firms: I-NET, Inc., of
Bethesda, Maryland, and Technical and Management Services Corporation
of Calverton, Maryland.
CIVIL RIGHTS
--------------------------------------------------------- Appendix 0:3
Equal Employment Opportunity:
NIH's Handling of Alleged Sexual Harassment and Sex Discrimination
Matters
GAO/GGD-95-192, Sept. 29 (53 pages).
About 32 percent of 4,100 National Institutes of Health (NIH)
employees surveyed by GAO reported experiencing some form of sexual
harassment during the past year. Of these employees, 96 percent
opted not to file equal employment opportunity complaints or take
other personnel action, generally because they did not consider the
incidents to be serious enough, chose to handle the matter
themselves, or decided to ignore the incidents. Others, however,
said that they had not filed complaints because they believed that
the situations would not be kept confidential, the harassers would go
unpunished, filing complaints would not be worth the time or the
cost, or they feared retaliation. Management at NIH and the
Department of Health and Human Services has not met federal
guidelines mandating a 180-day time frame for processing employee
complaints. More than half of the 199 formal sexual harassment and
sex discrimination complaints filed by NIH employees between October
1990 and March 1994 remained unresolved at the end of April 1995.
All complaints had been open for more than one year. NIH has tried
to deal with employee concerns about sexual harassment and sex
discrimination by increasing awareness about workplace relationships
and improving agencywide communication through training. However,
NIH lacks minimum standards on course content and has not
communicated its expectations on which employees should receive
training and how often. Moreover, NIH has not monitored training to
ensure that its expectations on such training are being met.
EDUCATION
--------------------------------------------------------- Appendix 0:4
Schools and Workplaces:
An Overview of Successful and Unsuccessful Practices
GAO/PEMD-95-28, Aug. 31 (100 pages).
The nation's well-being depends on its ability to create and sustain
well-paying jobs and to improve the performance of U.S. business in
an increasingly complex world economy. For more than a decade,
Americans have been concerned that the nation is not doing all that
is needed to meet these challenges. In particular, they have raised
concerns about the quality of education provided by elementary and
secondary schools--especially those attended by disadvantaged
students--and about the productivity and the performance of workers
and their employers. This report summarizes research findings on
what has and has not been successful in schools and workplaces.
VA Student Financial Aid:
Opportunity to Reduce Overlap in Approving Education and Training
Programs
GAO/HEHS-96-22, Oct. 30 (24 pages).
Since the 1940s, the Department of Veterans Affairs (VA) and its
predecessor agencies have contracted with state approving agencies to
assess whether schools and training programs offer classes of
sufficient quality to merit VA education assistance benefits. GAO
estimates that $10.5 million of the $12 million paid to these
agencies in 1994 was spent on assessments that overlapped those of
the Department of Education. These assessments involved reviews of
academic and vocational schools that were already accredited by
Education-approved agencies. State approving agency efforts costing
another $400,000 in 1994 may have overlapped assessments of
apprenticeship programs done by the Department of Labor. The
continued use of state approving agencies to do assessments that
overlap other assessments does not appear to be a good use of scarce
federal dollars. GAO suggests restricting state approving agency
activity solely to those schools and programs not subject to
"gatekeeping" by the Department of Education.
EMPLOYMENT
--------------------------------------------------------- Appendix 0:5
Worker Protection:
Federal Contractors and Violations of Labor Law
GAO/HEHS-96-8, Oct. 24 (89 pages).
Private sector firms receive billions of dollars each year in federal
government contracts for goods and services. Although these firms
generally profit from their business with the federal government,
some also violate federal laws that protect the rights of employees
to bargain collectively. Legislation is pending before Congress that
would debar firms showing "a clear pattern and practice" of violating
the National Labor Relations Act from being awarded federal
contracts. This report identifies the extent to which violators of
the act include employers that have contracts with the government.
More specifically, GAO identifies characteristics associated with
these federal contractors and their violations of the act and
identifies ways to improve compliance of federal contractors with the
act.
TESTIMONY
------------------------------------------------------- Appendix 0:5.1
National Service Programs: AmeriCorps*USA--Early Program Resource
and Benefit Information, by Linda G. Morra, Director of Education
and Employment Issues, before Subcommittee on Oversight and
Investigations, House Committee on Economic and Educational
Opportunities. GAO/T-HEHS-96-14, Oct. 17 (19 pages).
This testimony discusses the major points raised in GAO's recent
report on AmeriCorps*USA (GAO/HEHS-95-222, Aug. 1995). GAO found
that for program year 1994-95, more than one-third of the financial
resources available for AmeriCorps*USA grantee programs came from
sources outside the Corporation for National and Community Service,
mostly from other federal agencies and from state and local
governments. Total resources available per AmeriCorps*USA
participant averaged $26,654, of which about $17,600 came from the
Corporation, $3,200 from non-Corporation federal sources, and $4,000
from state and local governments. The remaining amount--roughly
$1,800--came from the private sector. Resources available per
participant were lower for programs run by nonfederal organizations
than for programs run by federal agencies. Total resources available
to AmeriCorps*USA grantees' programs equaled about $16 per service
hour. AmeriCorps*USA grantee programs are authorized to help
communities address unmet human, educational, environmental, and
public safety needs. At the grantee sites that it visited, GAO found
that the projects had been designed to strengthen communities,
develop civic responsibility, and expand educational opportunities
for program participants and others.
OSHA: Potential to Reform Regulatory Enforcement Efforts, by
Cornelia M. Blanchette, Associate Director for Education and
Employment Issues, before the Subcommittee on Human Resources and
Intergovernmental Relations, House Committee on Government Reform and
Oversight. GAO/T-HEHS-96-42, Oct. 17 (18 pages).
Although the Occupational Safety and Health Administration (OSHA) has
accomplished, during its fairly short history, more than may often be
acknowledged, its current approaches to regulating safety and health
are in some cases dated and frustrating for both workers and
employers. The agency needs, according to employer and employee
representatives GAO spoke with, greater service orientation. This
means better communication with business and labor, greater employer
and worker accessibility to compliance information, and more
cooperation with both business and labor throughout the regulatory
process. By developing alternative regulatory strategies that
supplement and in some instances substitute for its often
confrontational and labor-intensive enforcement approach, OSHA may be
able to carry out its statutory responsibilities more effectively.
To its credit, OSHA has begun to change its enforcement approach,
although it may be to early to assess any effects.
ENERGY
--------------------------------------------------------- Appendix 0:6
Nuclear Regulation:
Weaknesses in NRC's Inspection Program at a South Texas Nuclear Power
Plant
GAO/RCED-96-10, Oct. 3 (48 pages).
In February 1993, the operator of the South Texas Project Electric
Generating Station--a nuclear power plant--shut down its two reactors
because of continuing malfunctions with the reactors' emergency
equipment. The plant, located near Houston, Texas, was shut down for
more than a year to correct these and other problems. The plant had
a long history of problems in its design, construction, and
operation. This report (1) discusses the circumstances surrounding
the plant shutdown and the seriousness of the incident, (2)
determines whether the Nuclear Regulatory Commission (NRC) was aware
of problems at the plant before the shutdown, and (3) identifies
factors that may have prevented NRC from having complete and timely
information about the
contractor's performance.
Federal Electric Power:
Operating and Financial Status of DOE's Power
Marketing Administrations
GAO/RCED/AIMD-96-9FS, Oct. 13 (64 pages).
This fact sheet provides information on the Energy Department's (DOE)
five power marketing administrations (PMA). The first section of the
report--"Operating Information"--describes facilities used by the
PMAs to sell power and the customers served by the PMAs. The second
section--"Financial Information"--discusses the manner in which the
PMAs finance their operations, the revenues and the expenses
associated with their operations, and the manner in which they pay
their debts. The final section--"Competitive Issues"--describes the
increasingly competitive markets in which the PMAs operate and the
potential effect of these markets on the PMAs.
ENVIRONMENTAL PROTECTION
--------------------------------------------------------- Appendix 0:7
Superfund:
Operations and Maintenance Activities Will Require Billions
of Dollars
GAO/RCED-95-259, Sept. 29 (29 pages).
The Environmental Protection Agency (EPA) has developed remedies to
clean up 275 of the 1,300 most hazardous waste sites in America.
Although construction has been completed at these sites, additional
activities, known as operations and maintenance, may be necessary to
ensure that the remedy continues to function effectively and that the
cleanup protects human health and the environment. The federal
government, states, and responsible parties must perform long-term
operations and maintenance at nearly two-thirds of the 275 sites GAO
reviewed. These activities, which include controlling the erosion of
landfill covers, treating contaminated groundwater, and enforcing
restrictions on the use of land or water on the sites, will continue
for decades and, in some cases, indefinitely. For cleanup remedies
that EPA or the responsible parties have already undertaken or will
undertake from now to fiscal year 2005, GAO estimates that about $32
billion will be needed for operations and maintenance costs
nationwide through fiscal year 2040. The states and responsible
parties will bear most of these costs. EPA is required, at least
every five years, to review conditions at many sites that need
operations and maintenance, and these reviews have often uncovered
problems that the states or the responsible parties have had to
correct. However, the agency has a large backlog of reviews and
consequently may be unaware of deteriorating conditions at some
sites.
FINANCIAL INSTITUTIONS
--------------------------------------------------------- Appendix 0:8
Bank Mutual Funds:
Sales Practices and Regulatory Issues
GAO/GGD-95-210, Sept. 27 (147 pages).
At the end of 1993, more than 100 banking institutions had
established their own families of mutual funds with assets in excess
of $219 billion. In addition, banks and thrifts have become major
sales outlets for other companies' funds. This rapid growth in sales
of mutual funds by banks has raised concerns that customers may not
understand the risks of mutual fund investments compared with the
risks of insured deposits. In February 1994, the four banking
regulators issued guidelines that banks and thrifts are to follow in
selling nondeposit investment products, such as mutual funds.
However, GAO found that many institutions were not following the
guidelines. Only about one-third of the institutions GAO visited
made all the risk disclosures called for by the guidelines, and about
one-third did not clearly distinguish their mutual fund sales area
from the deposit-taking area of the bank, though required by the
guidelines. The current regulatory framework allows banks to choose
how to structure their mutual fund sales and advisory activities and,
depending on that structure, how they are regulated. As a result,
banks are allowed to sell mutual funds directly to their customers
and be subject to oversight by the banking regulators, but not by
securities regulators. This creates the potential for different
regulatory treatment of the same activity and a potential for
conflict and inconsistency among different regulators.
Bank Regulatory Structure:
Canada
GAO/GGD-95-223, Sept. 28 (57 pages).
Proposals to consolidate U.S. bank regulatory agencies have raised
questions about how other countries structure and carry out their
various bank regulation and supervision and central bank activities.
As part of a congressional request that GAO examine such activities
in several countries, this report provides information on Canada,
which relies on a federal supervisor rather than the central bank.
GAO describes (1) the Canadian bank federal regulatory and
supervisory structure and its key participants; (2) the way in which
that structure operates, particularly with respect to bank
authorization or chartering, regulation, and supervision; (3) the way
in which banks are examined; and (4) how participants handle other
financial system responsibilities.
TESTIMONY
------------------------------------------------------- Appendix 0:8.1
CFTC/SEC Enforcement Programs: Status and Potential Impact of a
Merger, by James L. Bothwell, Director of Financial Institutions and
Markets Issues, before the Subcommittee on Capital Markets,
Securities, and GSEs, House Committee on Banking and Financial
Services. GAO/T-GGD-96-36, Oct. 25 (21 pages).
Legislation pending before Congress--H.R. 718, the Markets and
Trading Reorganization and Reform Act--would merge the Commodity
Futures Trading Commission (CFTC) and the Securities and Exchange
Commission (SEC). GAO testified that merging CFTC and SEC could
yield a number of enforcement benefits, such as enhanced intermarket
surveillance, availability of resources, and quality of staff and
training. However, regardless of whether the agencies are merged or
not, a need would still exist for attorneys and investigators with
specialized skills and expertise in futures and securities laws and
markets. Moreover, effective enforcement of securities laws is only
one factor that Congress should consider in evaluating a merger.
GOVERNMENT OPERATIONS
--------------------------------------------------------- Appendix 0:9
Personnel Practices:
Career Appointments of Legislative, White House, and
Political Appointees
GAO/GGD-96-2, Oct. 10 (21 pages).
Governmentwide, from October 1984 through June 1994, 1,090 former
political and legislative and judicial branch employees received
career appointments. Of these, 552 persons received noncompetitive
appointments under the Ramspeck Act and 502 persons converted from
Schedule C and noncareer Senior Executive Service (SES) positions to
competitive appointments. Another 36 persons received White House
service appointments. Of the 1,090 appointments, 42 were to the SES
level. The rest were to jobs equivalent to a grade GS-15 or lower.
Ramspeck Act appointments followed a cyclical trend during the
10-year period, increasing significantly following federal elections.
The cycle was associated with turnover in congressional members and
the resulting involuntary separation of congressional staffers. The
pattern of Schedule C and noncareer SES conversions and White House
service appointments is less clear. Cabinet-level departments
accounted for most appointments.
Smithsonian Institution:
Better Care Needed for National Air and Space Museum Aircraft
GAO/GGD-96-9, Oct. 19 (55 pages).
The popular National Air and Space Museum in Washington, D.C., has
preserved many historic air and space artifacts, but a large number
of planes in the museum's collection need extensive restoration and
better storage. The restoration backlog totals 100 years, and plans
to add additional aircraft to the collection will exacerbate the
problem. Management of the aircraft collection at locations that are
not generally seen by the public, such as the Museum's restoration
and storage facility in Suitland, Maryland, needs improvement. The
Museum commits relatively few resources to aircraft restoration,
compared with the resources committed by other museum activities and
another federally funded air museum. But even if the Museum
increased its restoration efforts, it would not have enough space to
properly display or store the aircraft. If the Museum decides to
reduce its collection so that it can be stored under environmentally
controlled conditions, it may wish to deaccession aircraft or obtain
second-party restorations by making temporary loans to other museums.
Using more second-party restorations would help preserve the Museum's
collection, alleviate its storage problems, and help share its
collection with the public. The planned extension at Dulles Airport
could help ease the Museum's storage problems, but funding is
uncertain and the extension may take several years to complete.
TESTIMONY
------------------------------------------------------- Appendix 0:9.1
Civil Service Reform: Changing Times Demand New Approaches, by
L. Nye Stevens, Director of Federal Management and Workforce Issues,
before the Subcommittee on Civil Service, House Committee on
Government Reform and Oversight. GAO/T-GGD-96-31, Oct. 12 (12
pages).
Despite the Civil Service Reform Act of 1978 and other measures taken
since then, the service system is still viewed by many as burdensome
to managers, unappealing to ambitious recruits, overregulated, and
inflexible. GAO's testimony makes three main points. First, ever
since the creation of the competitive service in 1883, Congress has
periodically updated it in response to changing conditions. The goal
of reform today should be a system that not only fulfills current
needs but is also flexible enough to respond quickly to changing
demands. Second, today's leading private-sector employers--as well
as some government entities--are creating personnel systems that
diverge sharply from the federal government's traditional approach.
The new model is more decentralized, focused on mission
accomplishment, and designed more to establish guiding principles
than to dictate rules and procedures. Third, should Congress adopt
this model and create a more decentralized civil service system under
which federal agencies have more flexibility to manage their own
workers, an effective oversight and accountability mechanism will
still be needed to ensure that agencies adhere to civil service
principles and meet established goals.
White House Travel Office Review, by Nancy Kingsbury, Director of
Planning and Reporting in the General Government Division, before the
House Committee on Government Reform and Oversight. GAO/T-GGD-96-33,
Oct. 24 (seven pages).
The operations of the White House Travel Office attracted the
attention of Congress and the media in May 1993 when White House
officials dismissed the seven employees of the office amid charges of
financial mismanagement and possible criminal investigations. This
testimony discusses the scope of GAO's report on the White House
Travel Office (GAO/GGD-94-132, May 1994), the challenges GAO faced as
it undertook this assignment, the results of GAO's work, and
subsequent events
and observations.
Decennial Census: Fundamental Design Decisions Merit Congressional
Attention, by L. Nye Stevens, Director of Federal Management and
Workforce Issues, before the Subcommittee on National Security,
International Affairs, and Criminal Justice, House Committee on
Government Reform and Oversight. GAO/T-GGD-96-37, Oct. 25 (29
pages).
The Census Bureau recently released its design decisions for the 2000
Decennial Census. GAO is encouraged by several of the Bureau's
decisions, such as the questionnaire redesign; the address list,
developed with support from the Postal Service; and multiple mail
contacts, which GAO urged in past testimonies and reports. GAO is
also encouraged that the Bureau has decided to sample households that
failed to respond to census questionnaires rather than conducting a
100-percent follow-up as it has in the past. The Bureau estimates
that a reengineered census would cost about $3.9 billion, which is
$900 million less than would be spent if the census was carried out
without design changes. However, achieving the $900 million savings
would require aggressive management by the Bureau to ensure that the
fundamental changes were well-executed. Congress now needs to weigh
in on the Bureau's decisions and provide the funding that it believes
is appropriate. GAO is concerned that the opportunity for a
well-planned census will be lost if Congress and the Bureau cannot
agree on the fundamental design and the budget for the 2000 census in
a
timely manner.
HEALTH
-------------------------------------------------------- Appendix 0:10
Arizona Medicaid:
Competition Among Managed Care Plans Lowers Program Costs
GAO/HEHS-96-2, Oct. 4 (35 pages).
Many states are converting their traditional fee-for-service Medicaid
programs to managed care delivery systems. Arizona's Medicaid
program offers valuable insights--especially in fostering competition
and monitoring plan performance. Since 1982, Arizona has operated a
statewide Medicaid program that mandates enrollment in managed care
and pays health plans a capitated fee for each beneficiary served.
Although the program had problems in its early years, such as the
dismissal of the program administrator and the state's takeover of
the administration, it has successfully contained health care costs
while maintaining beneficiaries' access to mainstream medical care.
Arizona's recent cost containment record is noteworthy. According to
one estimate, Arizona's Medicaid program saved the federal government
$37 million and the state $15 million in acute care costs during
fiscal year 1991 alone. Arizona succeeded in containing costs by
developing a competitive Medicaid health care market. Health plans
that submit capitation rates higher than their competitors' bids risk
not winning Medicaid contracts. Other states considering managed
care programs can benefit from Arizona's experience. GAO concludes
that key conditions for holding down Medicaid costs without
compromising beneficiaries' access to appropriate medical care
include freedom from some federal managed care regulations,
development and use of market forces, controls to protect
beneficiaries from inadequate care, and investment in data collection
and
analysis capabilities.
Mammography Services:
Initial Impact of New Federal Law Has Been Positive
GAO/HEHS-96-17, Oct. 27 (23 pages).
The Mammography Quality Standards Act of 1992 imposed uniform
standards for mammography in all states, requiring certification and
annual inspection of mammography facilities. GAO found that the act
has resulted in higher quality equipment, personnel, and practices.
Although mammography quality standards are now in place in all
states, they do not appear to have hampered access to services. To
avoid large-scale closure of facilities, however, the Food and Drug
Administration settled on an approach that allowed some delay in
meeting certification requirements. For this and other reasons, such
as the availability of outcome data, more time will be needed before
the act's full impact can be determined. GAO is required to assess
the effects of the act again in two years and to issue a report in
1997.
TESTIMONY
------------------------------------------------------ Appendix 0:10.1
Medicare: Excessive Payments for Medical Supplies Continue Despite
Improvements, by Jonathan Ratner, Associate Director for Health
Financing Issues, before the Subcommittee on Labor, Health and Human
Services, Education, and Related Agencies, Senate Committee on
Appropriations. GAO/T-HEHS-96-5, Oct. 2 (eight pages).
Despite improvements by the Health Care Financing Administration
(HCFA) in claims monitoring, problems in payments for medical
supplies persist. The inflexibility of Medicare's fee schedule
results in payment rates that are higher than wholesale and many
retail prices. In addition, in the case of many part A claims,
claims-processing contractors do not know what they are paying for,
and in the case of part B claims, have not had a basis for
questioning unreasonably high charges. Neither type of contractor
has been able to test claims for potential duplicate payments. For
these reasons, Medicare has lost hundreds of millions of dollars in
unnecessary payments. By obtaining the legislative authority to
modify payment rates in accordance with market conditions, requiring
providers to itemize claims, and introducing the relevant medical
policies before paying for new benefits, HCFA could reduce its dollar
losses arising from medical supply payments. In addition,
contractors could avoid paying unreasonable charges and making
duplicate payments.
HOUSING
-------------------------------------------------------- Appendix 0:11
Homeownership:
Mixed Results and High Costs Raise Concerns About HUD's Mortgage
Assignment Program
GAO/RCED-96-2, Oct. 18 (49 pages).
During the 19-year period that ended in September 1993, the
Department of Housing and Urban Development (HUD) incurred losses
totaling $12.8 billion as a result of foreclosures on homes that the
Federal Housing Administration (FHA) had insured. As an alternative
to foreclosure on such properties, HUD operates a mortgage assignment
program. For borrowers accepted into the program, FHA pays the
mortgage debt, takes assignment of the mortgage from the lenders, and
develops a new repayment plan for the borrower under which monthly
mortgage payments can be reduced or suspended for up to 36 months.
HUD collects mortgage payments from the borrowers while allowing them
to live in their homes. The number of FHA borrowers participating in
the program has tripled during the past six years, reaching 71,500 at
the end of fiscal years 1994. Their unpaid principal balances total
$3.7 billion. GAO found that program has helped borrowers avoid
immediate foreclosure, but it has not been fully successful in
helping borrowers avoid foreclosure and retain their homes on a
long-term basis. GAO estimates that 52 percent of the nearly 69,000
borrowers who have entered the program since fiscal year 1989 will
eventually lose their homes through foreclosure. Moreover, program
losses have exceeded those that would have been incurred had loans
gone immediately to foreclosure without assignment. Options to
reduce program losses include reducing the three-year relief period
provided to borrowers, setting a time limit on eliminating
delinquencies, and accepting only those borrowers into the program
who can afford to pay at least half of their mortgage payments.
TESTIMONY
------------------------------------------------------ Appendix 0:11.1
Housing and Urban Development: Public and Assisted Housing Reform
(S. 1260), by Judy A. England-Joseph, Director of Housing and
Community Development Issues, before the Subcommittee on Housing
Opportunity and Community Development, Senate Committee on Banking,
Housing, and Urban Affairs. GAO/T-RCED-96-22, Oct. 13 (18 pages);
and
Housing and Urban Development: Public and Assisted Housing Reform
(H.R. 2406), by Judy A. England-Joseph, Director of Housing and
Community Development Issues, before the Subcommittee on Housing and
Community Opportunity, House Committee on Banking and Financial
Services. GAO/T-RCED-96-25, Oct. 13 (20 pages).
Current federal housing programs are often viewed as overly regulated
and leading to warehousing of the poor, and Congress is asking state
and local governments to assume a larger role in defining how these
programs work. Congress is now reconsidering the most basic aspects
of public housing policy--whom it will house, the resources devoted
to it, the amount of existing housing stock that will be retained,
and the rules under which it will operate. These statements provide
GAO's views on legislation pending before Congress--S. 1260 and H.R.
2406--that would overhaul federal housing policy. GAO testified that
the two bills contain provisions that will likely improve the
long-term viability of public housing, such as allowing mixed incomes
in public housing and conversion of some public housing to housing
vouchers or tenant-based assistance when that makes the most sense.
Although GAO supports provisions to significantly beef up the
Department of Housing and Urban Development's (HUD) authority to
intervene in the management of troubled housing authorities, GAO
cautions that questions remain about the reliability of the oversight
system that HUD uses to designate these housing authorities as
"troubled."
Multifamily Housing: Issues and Options to Consider in Revising
HUD's Low-Income Housing Preservation Program, by Judy A.
England-Joseph, Director of Housing and Community Development Issues,
before the Subcommittee on Housing Opportunity and Community
Development, Senate Committee on Banking, Housing, and Urban Affairs.
GAO/T-RCED-96-29, Oct. 17 (15 pages).
The Department of Housing and Urban Development's (HUD) program for
preserving low-income housing seeks to maintain the affordable
low-income housing that was created mainly under two federal housing
programs during the 1960s and 1970s. Under these programs, when
owners received HUD-insured mortgages with 40-year repayment periods,
they entered into agreements with HUD that imposed affordability
restrictions, such as limits on the income level of tenants and on
the rents that could be charged at the properties. After 20 years,
however, owners had the right to pay off their mortgages in full
without prior HUD approval and terminate the affordability
restrictions. The preservation program has proven to be complex and
costly, prompting recommendations from HUD and others to change or
repeal the program. This testimony focuses on (1) how the current
preservation program works, (2) the status of preservation eligible
projects, (3) concerns that have been raised about the program, and
(4) options for revising the program.
INFORMATION MANAGEMENT
-------------------------------------------------------- Appendix 0:12
FDA Import Automation:
Serious Management and Systems Development Problems Persist
GAO/AIMD-95-188, Sept. 28 (22 pages).
The Food and Drug Administration (FDA) oversees imports of food,
drugs, cosmetics, medical devices, and other products to ensure that
the public is protected from goods of questionable quality or that
make misleading claims. In 1987, FDA began developing an automated
system to improve its import entry clearance process, which required
extensive paperwork. Despite an investment of eight years and $13.8
million to automate its process for inspecting imported goods, the
new system contains major deficiencies. This is due mainly to
inadequate top management oversight and a management team that lacked
expertise and skills in system development. FDA has implemented a
portion of the system--the Operational and Administrative System for
Import Support (OASIS)--to enhance its ability to regulate imports
and to relieve importers and FDA personnel of some of the paperwork
burdens associated with import processing. In developing OASIS, FDA
did not follow generally accepted systems development practices for
validating software; conducting user acceptance testing; developing a
security plan to safeguard its computer facilities, equipment, and
data; and conducting a cost-benefit analysis. The resulting
shortcomings mean that OASIS may not perform as needed and that
unsafe products could enter the country.
TESTIMONY
------------------------------------------------------ Appendix 0:12.1
Telecommunications: Competition in the Mobile Communications
Industry, by John H. Anderson, Jr., Director of Transportation and
Telecommunications Issues, before the Subcommittee on Oversight and
Investigations, House Committee on Commerce. GAO/T-RCED-96-20, Oct.
12 (14 pages).
Cellular telephone companies have experienced an explosive growth in
the number of subscribers during the past decade. There were 340,000
cellular subscribers in the United States in 1985 versus more than 25
million by February of 1995. During each of the last five years,
subscriberships grew between 40 and 50 percent annually. GAO
testified that the mobile telecommunications market could potentially
become more competitive in the near future. By taking an approach
that emphasizes competition, Congress and the Federal Communications
Commission are bringing beneficial changes to this industry. New
personal communications service providers should enter the market in
the next two years, and GAO is optimistic that as the market gains
new providers, consumers are likely to see new service offerings and
lower prices.
Weather Forecasting: Radars Far Superior to Predecessors, but
Location and Availability Questions Remain, by Jack L. Brock, Jr.,
Director of Defense Information and Financial Management Systems,
before the Subcommittee on Energy and the Environment, House
Committee on Science. GAO/T-AIMD-96-2, Oct. 17 (11 pages).
The National Weather Service (NWS) is deploying new Doppler radars,
known as Next Generation Weather Radars (NEXRAD), to provide greatly
improved and more timely weather forecasts. Simply stated, NEXRADs
have replaced weather event "nearsightedness" with "20/20 vision" and
have given NWS the ability to save lives and money through precise
warnings of severe weather. However, these radars must be up and
running at least 96 percent of the time to be effective--an
operational rate that many do not meet.
INTERNATIONAL AFFAIRS
-------------------------------------------------------- Appendix 0:13
Cuba:
U.S. Response to the 1994 Cuban Migration Crisis
GAO/NSIAD-95-211, Sept. 18 (15 pages).
This report reviews the U.S. government's efforts to cope with the
mass exodus of people from Cuba during the summer of 1994. GAO (1)
describes how U.S. policy toward those seeking to leave Cuba has
changed since then, (2) identifies the agencies and the costs to the
U.S. government associated with the exodus of Cubans, (3) assesses
the capabilities of the U.S. Interests Section in Havana to process
applicants seeking legal entry into the United States, and (4)
evaluates the adequacy of living conditions at the Cuban safe haven
camps at the U.S. Naval Station, Guantanamo Bay.
Export Finance:
Comparative Analysis of U.S. and European Union Export
Credit Agencies
GAO/GGD-96-1, Oct. 24 (66 pages).
GAO reviewed the types of export-financing assistance that national
governments provide to exporters and banks in the United States,
particularly through the U.S. Export-Import Bank, and in the five
largest exporting countries of the European Union--France, Germany,
Italy, the Netherlands, and the United Kingdom. The distinguishing
characteristic of this type of financing is that it is generally tied
to the export of foods and services from the countries providing the
export financing assistance. Congress is debating the level of
resources that the Eximbank should receive to support U.S.
exporters. Some believe that the Eximbank plays an important role by
correcting market failures and helping U.S. exporters compete on a
level playing field against their foreign counterparts. Critics
argue that the Eximbank distorts capital markets and provides
unwarranted taxpayer subsidies to U.S. exporters. This report (1)
identifies the magnitude of export financing that the United States
and the five European Union countries provide, (2) describes the
types of export-financing delivery systems used in these countries,
(3) highlights key differences in and the trade-offs among U.S. and
European Union members' state programs, and (4) summarizes the status
of international efforts to limit the use of government-supported
export financing.
JUSTICE AND LAW ENFORCEMENT
-------------------------------------------------------- Appendix 0:14
Illegal Immigration:
INS Overstay Estimation Methods Need Improvement
GAO/PEMD-95-20, Sept. 26 (68 pages).
Reliable and valid estimates of the number of "overstays"--persons
who enter the United States legally as visitors but do not leave
under the terms of their admissions--are important to public
policy-making. Higher numbers of overstays might suggest, for
example, the need for stricter policies or laws for issuing temporary
U.S. visas to citizens of those countries whose travelers tend to
overstay their visas in significant numbers. Overstay data are also
needed to monitor travel from countries whose citizens are not
required to obtain a U.S. tourist visa. This report examines the
basis for the Immigration and Naturalization Service (INS) estimates
of overstays and suggests ways in which INS can improve
these estimates.
Community Policing:
Information on the "COPS on the Beat" Grant Programs
GAO/GGD-96-4, Oct. 25 (22 pages).
This report reviews aspects of the Community Oriented Policing
Servicing Program--"COPS on the Beat." Under the community policing
approach to law enforcement, citizens, police departments, and other
agencies work together to identify crime problems and develop
solutions. Community policing began to emerge during the late 1970s,
and the Justice Department has supported community policing efforts
through various grants for about 15 years. GAO describes the grant
application, selection, and monitoring process for the program. GAO
also compares the crime rates in applicant and nonapplicant
jurisdictions, the reasons some of the jurisdictions chose not apply
for program grants, and public safety issues identified by a sample
of the jurisdictions applying for program grants.
NATIONAL DEFENSE
-------------------------------------------------------- Appendix 0:15
Federally Funded R&D Centers:
Use of Contract Fee by The Aerospace Corporation
GAO/NSIAD-95-174, Sept. 28 (16 pages).
Federally funded research and development centers are private sector
organizations funded primarily by federal agencies to meet special
long-term research and development needs that cannot be met as
efficiently in-house or through existing contractors. The Aerospace
Corporation is a private, nonprofit mutual benefit corporation
created in 1960. Its main objective is to provide scientific and
engineering support for the U.S. military space program. This
report reviews how The Aerospace Corporation used a $15.5 million
contract fee provided by the Air Force in fiscal year 1993 to operate
a federally funded research and development center. GAO also reviews
the regulatory requirements governing the determination and use of
this fee.
Enhanced Fiber Optic Guided Missile:
Need to Define Requirements and Establish Criteria to
Assess Performance
GAO/NSIAD-96-7, Oct. 17 (28 pages).
The Army plans to acquire limited quantities of the Enhanced Fiber
Optic Missile and field them for a two-year user evaluation. The
missile is designed to strike armored combat vehicles and other
targets beyond the line of sight at ranges up to 15 kilometers. The
Army expects the limited acquisition to cost about $280 million, but,
on the basis of the results of the demonstration and evaluation, a
much larger acquisition could occur. This report reviews selected
aspects of the Army's plans for acquisition of the missile system.
Peace Operations:
Effect of Training, Equipment, and Other Factors on
Unit Capability
GAO/NSIAD-96-14, Oct. 18 (50 pages).
Since the end of the Cold War, the U.S. military has become
increasingly involved in peace operations, ranging from military
observer duties to humanitarian and disaster relief work. This
report examines (1) how the military services incorporate peace
operations into their training programs, (2) what effect peace
operations have on maintaining combat readiness, and (3) whether the
services have the weapon systems and equipment they need for these
operations.
Interagency Contracting:
Controls Over Economy Act Orders Being Strengthened
GAO/NSIAD-96-10, Oct. 20 (12 pages).
Because of past abuses of off-loading at federal agencies, the
Defense Department (DOD) was required to strengthen its controls over
its interagency orders for goods and services. A February 1994 DOD
memorandum specified that DOD's interagency orders be (1) as
convenient and cheap as other alternatives and (2) approved at a
level no lower than senior executive service, general officers, flag
officer, or activity commander. In November 1994, the Coast Guard
independently developed similar reforms. DOD is still adjusting to
these changes. Abundant guidance is available to Air Force, Army,
and Navy contracting activities, but a sample of fiscal year 1995
Volpe Center purchases made by the military services revealed that
not all files contained the information required by the DOD
memorandum. In addition, DOD has not yet implemented a statutorily
mandated monitoring system for its interagency purchases. DOD
contracting with the Volpe Center has been on the downswing since
fiscal year 1992. Although it is difficult to pinpoint the exact
causes for the downward trend, more recent declines appear to be
because of DOD's implementation of the restrictions on interagency
orders. Likewise, a recent decline in Coast Guard purchases at the
Volpe Center appears to be related to the Coast Guard reforms.
NATURAL RESOURCES
-------------------------------------------------------- Appendix 0:16
Restoring the Everglades:
Public Participation in Federal Efforts
GAO/RCED-96-5, Oct. 24 (65 pages).
In central and southern Florida, where national parks and wildlife
refuges abut farmland, urban areas, and Indian reservations, the
boundaries between public and private lands and between federal,
state, local, and tribal jurisdictions overlay the ecological
boundaries created by the flow of water. During the last half
century, engineering projects have altered the quantity and timing of
the water's flow, agricultural runoff has altered water quality, and
urbanization has fragmented the region's ecosystem. As a result,
South Florida--including the Everglades and Florida Bay--is showing
signs of ecological distress. Federal agencies began an effort in
1993 to coordinate environmental restoration in South Florida. In
addition, the administration has targeted South Florida as a site for
testing a new approach to ensuring a healthy environment and managing
the nation's lands and natural resources. This approach, which
recognizes the interrelationships between natural systems and
healthy, sustainable economies, cuts across the boundaries of
ownership and jurisdiction. Central to this new approach is the need
for federal and nonfederal stakeholders to collaborate and build
consensus on solutions to problems of mutual concern. This report
identifies (1) the processes used by federal agencies to involve
nonfederal stakeholders in environmental restoration efforts in South
Florida and (2) the lessons learned about federal and nonfederal
collaboration and consensus-building in South Florida that may be
applicable elsewhere.
SOCIAL SERVICES
-------------------------------------------------------- Appendix 0:17
Welfare to Work:
Approaches That Help Teenage Mothers Complete High School
GAO/HEHS/PEMD-95-202, Sept. 29 (44 pages).
A variety of local programs seeks to help teenage mothers complete
their secondary education and thereby avoid welfare dependency. GAO
found that close monitoring of teenage mothers' educational
activities coupled with follow-up when their attendance drops
increases the likelihood that they will complete their education.
Leveraging the welfare benefit as a sanction or reward for attendance
has contributed to the completion of high school by teenage mothers.
Providing support services to overcome barriers to continued
attendance, with or without financial incentives, also seems to work,
especially for dropouts. Assistance in meeting child care or
transportation needs may be particularly helpful but did not appear
to be enough, in the absence of attendance monitoring, to motivate
these young mothers to complete their secondary education. Although
current federal Aid to Families With Dependent Children policy
stresses the importance of teenage mothers' participation in the JOBS
program, it does not require states to serve all teenage mothers in
JOBS, nor does it require states to monitor the school attendance of
all teenage mothers on welfare. Congress is now deliberating several
reforms to the welfare system, including whether to provide benefits
to teenage mothers. Although GAO found that several approaches can
succeed in helping teenage mothers complete high school, the final
form of any reform legislation will likely influence each state's use
of these approaches.
TAX POLICY AND ADMINISTRATION
-------------------------------------------------------- Appendix 0:18
Tax Administration:
Information on IRS' Taxpayer Compliance Measurement Program
GAO/GGD-96-21, Oct. 6 (26 pages).
The Internal Revenue Service (IRS) generally responded to the
concerns raised in GAO's 1994 report (GAO/GGD-95-39) that dealt with
meeting milestones for starting Taxpayer Compliance Measurement
Program (TCMP) audits, testing TCMP database components, developing
data collection systems, and analyzing data. Because of
uncertainties about its fiscal year 1996 budget, IRS delayed the
start of its TCMP audits from October 1 to December 1, 1995. This
delay turned out to be fortuitous because IRS had not completed
testing all the tax return database or data collection systems for
the TCMP. If the tests show that major changes must be made to the
database or data collection systems, IRS may not meet its December 1
deadline for starting audits. There is still time for IRS to develop
a research plan to enable the agency to analyze final TCMP results
more quickly. IRS can begin now to formulate research questions and
could also use preliminary TCMP data as they become available to
develop other questions. Further delays must be avoided because the
existing TCMP data are old, and, to GAO's knowledge, no other data
sources exist that would allow IRS to develop formulas for selecting
returns for audit. IRS is trying to develop a system that could be
used for selecting returns, but this system will not be up and
running for years. TCMP data could also be helpful to design and
administer alternative tax systems. The data's value would depend on
how much of the current tax system would be retained under the new
system.
Tax Administration:
IRS Faces Challenges in Reorganizing for Customer Service
GAO/GGD-96-3, Oct. 10 (32 pages).
The Internal Revenue Service (IRS) is undergoing a major effort to
modernize its information systems and restructure its organization.
This effort involves several components, one of which IRS calls its
"customer service vision," which seeks to improve IRS interactions
with taxpayers and fold parts of IRS' field structure into 23
customer service centers. These centers would work primarily by
telephone to provide taxpayer service, distribute forms, collect
unpaid taxes, and adjust taxpayer accounts. They would absorb
current IRS telephone operations and try to convert much of its
written correspondence to the telephone. This report reviews IRS'
progress toward its customer service vision. GAO discusses (1) IRS'
goals for customer service and its plans to achieve them, (2) the gap
between current performance and these goals, (3) its progress to
date, (4) current management concerns, and (5) several important
challenges IRS faces. GAO believes that this report will be useful
as a baseline for assessing IRS' progress in coming years.
Tax Administration:
Audit Trends and Taxes Assessed on Large Corporations
GAO/GGD-96-6, Oct. 13 (58 pages).
This report focuses on the Internal Revenue Service's (IRS) program
to audit the tax returns of about 45,000 large corporations. IRS
audits of returns filed by these 45,000 corporations plus the 1,700
largest corporations in IRS' Coordinated Examination Program have
generated about two-thirds of the additional taxes recommended from
all income audits. GAO used IRS data to (1) analyze audit trends for
fiscal years 1988 through 1994, (2) compute the assessment rate--the
portion of taxes recommended by revenue agents that were eventually
assessed, and (3) develop and compare profiles of audited large
corporations with those not audited.
VETERANS AFFAIRS
-------------------------------------------------------- Appendix 0:19
TESTIMONY
------------------------------------------------------ Appendix 0:19.1
VA Health Care: Efforts to Increase Sharing With DOD and the Private
Sector, by David P. Baine, Director of Health Care Delivery and
Quality Issues, before the Subcommittee on Hospitals and Health Care,
House Committee on Veterans' Affairs. GAO/T-HEHS-96-41, Oct. 18 (17
pages).
Sharing health resources, which involves the buying, selling, or
bartering of health care services, can be helpful to both parties in
the agreement and helps contain health care costs by making better
use of medical resources. For example, it is often cheaper for a
hospital to buy an infrequently used diagnostic test from another
hospital than it is to buy the equipment and provide that service
itself. Similarly, a hospital using an expensive piece of equipment
only four hours a day but staffed to operate the equipment for eight
hours could make money by selling its excess capacity to other
providers. This testimony discusses the status and future direction
of the Veterans Affairs' (VA) sharing of health care resources with
the Defense Department (DOD) and the private sector. Specifically,
GAO focuses on (1) the origin and the evolution of VA's sharing
authority, (2) the growth in sharing agreements, and (3) the
challenges facing VA as it enters into more and more sharing
agreements with the private sector.
SPECIAL PUBLICATIONS
-------------------------------------------------------- Appendix 0:20
GAO Reports:
Health, Education, Employment, Social Security, Welfare, and Veterans
Issues
GAO/HEHS-96-15W, Oct. 1995 (46 pages).
This booklet lists GAO documents on government programs related to
health, education, employment, social security, welfare, and veterans
issues, which are primarily run by the Departments of Health and
Human Services, Labor, Education, and Veterans Affairs. One section
identifies reports and testimony issued during the past month and
summarizes key products. Another section lists all documents
published during the past year, organized chronologically by subject.
Order forms are included.
*** End of document. ***