Reports and Testimony: November 1996 (Other Written Prod., 11/01/96,
GAO/OPA-97-2).

GAO published its monthly digest of reports and testimonies issued in
November 1996.

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

 REPORTNUM:  OPA-97-2
     TITLE:  Reports and Testimony: November 1996
      DATE:  11/01/96
   SUBJECT:  Financial institutions
             Airline industry
             Airports
             International relations
             Law enforcement
             Correctional facilities
             Air transportation operations
             Nuclear powerplant safety
             Information resources management
IDENTIFIER:  Bibliographies
             
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Cover
================================================================ COVER

Office of Public Affairs

November 1996

REPORTS AND TESTIMONY:  NOVEMBER
1996

GAO/OPA-97-2


Highlights

Airline Deregulation

Barriers to entry persist in the airline industry.  Access to
airports, especially for new airlines, is impeded by limits on
takeoff and landing slots at Chicago, New York, and Washington, D.C. 
airports; by long-standing exclusive-use gate leases held by
established carriers; and by "perimeter rules" that prohibit flights
beyond certain distances at airports in New York and Washington, D.C. 
Page 17. 

Federal and State Prisons

Federal and state prison populations grew by 242 percent between 1980
and 1995, and prison operating costs have grown from $3.1 billion to
$17.7 billion during the same period.  Although this growth results
from several factors, "tough-on-crime" enforcement policies played a
major role, and forecasts show that the growth rates in costs and
prison populations will continue to rise. 
Page 13. 

Nuclear Safety

Despite efforts by the United States and other nations to reduce the
risk of accidents and encourage the shutdown of high-risk
Soviet-designed nuclear reactors, none of the highest-risk reactors
has been closed and one in Armenia has been restarted.  Page 2. 

GAO/OPA-96-2



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

  BLM - x
  DISN - x
  DOD - x
  DOE - x
  EPA - x
  FAA - x
  FBI - x
  FDICIA - x
  HUD - x
  IG - x
  IRM - x
  IRS - x
  MLR - x
  NOAA - x
  SSA - x
  USDA - x
  VA - x

REPORTS AND TESTIMONY:  NOVEMBER
1996
=========================================================== Appendix 0


   BUDGET AND SPENDING
--------------------------------------------------------- Appendix 0:1

Budget Issues:
Budgeting for Federal Capital

GAO/AIMD-97-5, Nov.  12 (119 pages). 

As federal agencies confront shrinking budgets and increasing demands
for better service, the importance of making the most effective
fixed-asset acquisitions grows.  Fixed assets often require large
amounts of resources up front but can yield long-term efficiencies
and savings.  Prudent capital planning can help agencies make the
most of limited resources, while failure to make timely and effective
capital acquisitions can result in higher long-term costs.  This
report reviews how five federal organizations--the Army Corps of
Engineers, the Coast Guard, the Interagency Fleet Management System
and Public Buildings Service of the General Services Administration,
and the U.S.  Geological Survey--plan and budget for fixed assets. 
GAO examines (1) how these organizations believe the current budget
process affects their capital acquisitions and (2) whether funding
mechanisms exist--used or proposed by the organizations--that might
be helpful in planning and budgeting for fixed assets.  GAO also
examines the response to the Office of Management and Budget's
Bulletin 94-08, "Planning and Budgeting for the Acquisition of Fixed
Assets."


   ENERGY
--------------------------------------------------------- Appendix 0:2

Nuclear Safety:
Status of U.S.  Assistance to Improve the Safety of
Soviet-Designed Reactors

GAO/RCED-97-5, Oct.  29 (72 pages). 

The goals of the U.S.  nuclear assistance program are to reduce the
risk of accidents at and to encourage the shutdown of high-risk
Soviet-designed nuclear power plants.  Despite efforts by the United
States and other countries, none of the highest-risk
reactors--including some of the type that exploded at Chornobyl--has
been closed and one in Armenia has recently been restarted.  The
Energy Department (DOE) originally expected that this effort would be
short- to mid-term in duration.  DOE now believes that the program
should continue for at least a decade and will cost about $500
million.  However, the agency has yet to develop a plan spelling out
how this money will be spent or how DOE will achieve its long-term
objectives.  In addition, 11 of the 13 safety projects that GAO
reviewed have experienced delays.  In six cases, U.S.  equipment was
not delivered to plants in a timely manner because customs officials
in Russia and Ukraine would not release the equipment.  Other
impediments, including a requirement that some U.S.-supplied safety
equipment be tested in Russia, have also contributed to delays.  The
Pacific Northwest National Laboratory has placed a program
representative in Russia to help resolve customs problems.  GAO
believes that a laboratory representative in Ukraine could be
helpful. 


   FINANCIAL INSTITUTIONS
--------------------------------------------------------- Appendix 0:3

Financial Derivatives:
Actions Taken or Proposed Since May 1994

GAO/GGD/AIMD-97-8, Nov.  1 (165 pages). 

In the wake of a major GAO report in 1994 (GAO/GGD-94-133) detailing
the risks posed by complex financial transactions known as
derivatives, banking regulators and other have taken steps to improve
oversight; however, GAO finds that many of its concerns about
derivatives remain valid and several of its recommendations have yet
to be implemented.  This report examines the steps that have been
taken since 1994 to (1) strengthen corporate governance and internal
controls for derivatives dealers and major end-users, (2) improve
regulation of major U.S.  derivatives dealers, (3) provide federal
oversight of major derivatives dealers that are unregulated
affiliates of securities firms and insurance companies, (4)
promulgate comprehensive and consistent accounting and disclosure
requirements for derivatives, and (5) harmonize regulatory and
accounting standards internationally. 

Inspectors General:
Mandated Studies to Review Costly Bank and Thrift Failures

GAO/GGD-97-4, Nov.  7 (22 pages). 

The Inspectors General (IG) at the Federal Reserve, the Federal
Deposit Insurance Corporation, and the Treasury issued a total of
four material loss review (MLR) reports on banks that failed or whose
losses were recognized during the second year of the MLR mandate. 
GAO found that the four banks failed for similar reasons:  rapid
growth, excessive loan concentrations in commercial real estate, poor
internal controls, and violations of laws and regulations.  The
reports also cited weaknesses in the bank regulators' oversight of
these institutions.  GAO is not making any general recommendations to
the bank regulators because the relatively small number of reports
issued during the first two years of the mandate--six--does not
provide a basis for reaching overall conclusions about the quality of
supervisory practices.  In GAO's view, the limited basis that these
reports provide for making recommendations about overall bank
supervision raises questions about the cost-effectiveness of the MLR
process as currently structured.  Another reason to question the
cost-effectiveness of the current process is that some MLR
requirements are relatively inflexible and divert IG staff and
resources from broader reviews of the quality of bank supervision. 

Bank Oversight Structure:
U.S.  and Foreign Experience May Offer Lessons for Modernizing U.S. 
Structure

GAO/GGD-97-23, Nov.  20 (132 pages). 

Proposals to consolidate U.S.  bank regulatory agencies have raised
questions about how other countries structure and carry out their
bank regulation and central bank activities.  In five recent reports,
GAO reviewed how banks are regulated and supervised in Canada,
France, Germany, Japan, and the United Kingdom.  Although each
country's oversight structure and approach reflects a unique history,
culture, and banking industry, GAO believes that aspects of these
foreign regulatory systems may be useful for Congress as it considers
how to modernize bank oversight in the United States.  This report
draws on the findings from the five reports already mentioned, as
well as other GAO work on the U.S.  financial regulatory system, to
discuss (1) aspects of the five foreign systems GAO reviewed that may
be useful for Congress to consider in any future modernization
efforts, (2) perceived problems with federal bank oversight in the
United States, and (3) principles for modernizing the federal
oversight structure for U.S.  banks. 

Bank and Thrift Regulation:
Implementation of FDICIA's Prompt Regulatory Action Provisions

GAO/GGD-97-18, Nov.  21 (72 pages). 

The thrift and banking crisis of the 1980s caused losses in the
deposit insurance funds estimated at more than $125 billion.  The
Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA), which was enacted to beef up federal oversight of
depository institutions, created two new sections in the Federal
Deposit Insurance Act--sections 38 and 39--that require regulators to
establish a two-part regulatory framework to strengthen safeguards
for the deposit insurance funds.  The first part focuses on capital
levels of depository institutions, and the second focuses on other
measures of a financial institution's safety and soundness.  This
report discusses the progress and results of the federal regulators'
implementation of FDICIA's provisions.  Specifically, GAO assesses
the (1) regulators' implementation of sections 38 and 39 and (2)
impact of the two sections on federal oversight of the banking
industry. 


   FINANCIAL MANAGEMENT
--------------------------------------------------------- Appendix 0:4


      TESTIMONY
------------------------------------------------------- Appendix 0:4.1

IRS Business Operations:  Issues in Setting Priorities and Managing
for Results, by Gene L.  Dodaro, Assistant Comptroller General for
Accounting and Information Management, before the National Commission
on Restructuring the Internal Revenue Service.  GAO/T-AIMD/GGD-97-22,
Nov.  7
(six pages). 

This testimony focuses on three issues that the National Commission
on Restructuring the Civil Service should consider as part of its
review of the Internal Revenue Service's (IRS) current practices and
the improvements needed to modernize IRS operations.  First, the
Commission should evaluate IRS' management operations in light of
recently enacted legislation--the Chief Financial Officers Act of
1990, the Government Performance and Results Act of 1993, and the
Clinger-Cohen Act of 1996.  The Government Performance and Results
Act, in particular, is intended to produce a realistic set of
business goals and priorities for IRS and a discrete number of
performance measures to allow Congress to track the agency's progress
and to hold it accountable for obtaining results.  Second, the
Commission should consider IRS' development of effective
implementation strategies.  The lack of solid strategies has hampered
the realization of IRS' business vision and the correction of
long-standing problems.  Finally, any effort to modernize IRS
operations requires reliable cost and performance information. 
Without solid data, Congress and the executive branch will not be in
a good position to assess IRS' performance, its resource
requirements, and the need for remedial actions. 


   GOVERNMENT OPERATIONS
--------------------------------------------------------- Appendix 0:5

Federal Personnel:
Issues on the Need for NOAA's Commissioned Corps

GAO/GGD-97-10, Oct.  31 (20 pages). 

The National Oceanic and Atmospheric Administration's (NOAA)
commissioned corps is a uniformed service whose officers are covered
by a military-like compensation system resembling that of the
Commissioned Corps of the Public Health Service.  NOAA corps officers
carry out various navigational and scientific duties, such a charting
and oceanographic research.  This report provides information on (1)
whether a continuing need exists for the NOAA and Public Health
Service corps as uniformed services with military-like pay,
allowances, and benefits and (2) what the costs would be if federal
civilian employees carried out the
corps' functions. 

Regulatory Burden:
Measurement Challenges and Concerns Raised by
Selected Companies

GAO/GGD-97-2, Nov.  18 (128 pages). 

Measuring the effects of federal regulation on the economy is often
imprecise and controversial.  Some analysts claim that federal
regulations cost the economy hundreds of billions of dollars
annually, while others argue that regulations yield even greater
benefits.  Working with a small group of companies, GAO sought to
investigate the cumulative impact of federal regulations on those
businesses.  GAO asked the companies to identify which regulations
applied to them, the costs and other impacts of those regulations,
and the regulations that were most problematic.  GAO also gathered
information from regulatory agencies.  GAO found that comprehensive
data on the cost of regulatory compliance were hard to obtain and
that any attempt to measure the incremental impact of all federal
regulations is extremely difficult. 


   HEALTH
--------------------------------------------------------- Appendix 0:6

Public Health:
A Health Status Indicator for Targeting Federal Aid to States

GAO/HEHS-97-13, Nov.  13 (26 pages). 

Premature mortality is the best single proxy for reflecting
differences in the health status of states' populations as measured
by both the Healthy People 2000 indicators and the ReliaStar index. 
GAO's analysis showed that using premature mortality to distribute
federal funding for core public health functions would systematically
target federal assistance to states on the basis of their
populations' rates of mortality, disease incidence, and risk for
mortality and morbidity.  Several other variables, including the
proportion of states' populations that are poor or minorities, were
also found to be correlated with health status differences as
measured by the Healthy People 2000 indicators and the ReliaStar
index.  However, including these variables along with premature
mortality did not significantly enhance GAO's ability to
differentiate the health status of state populations.  Moreover,
improving the targeting of funds beyond that obtained by using
premature mortality alone would require using several additional
variables, which would add to the complexity of the
allocation formula. 

Private Health Insurance:
Millions Relying on Individual Market Face Cost and Coverage
Trade-Offs

GAO/HEHS-97-8, Nov.  25 (76 pages). 

Most Americans obtain health insurance coverage through their jobs or
through government programs like Medicare and Medicaid.  About 10.5
million Americans, however, purchased private health insurance for
themselves or their families in 1994.  The family farmer, the recent
college graduate, the early retiree, and the employee of a company
that does not offer health insurance coverage are all examples of
persons who are often not covered in a voluntary, employment-based
insurance market.  Integrating the individual market into health
insurance reform proposals has been a thorny issue at both the
federal and state level, in part because of the paucity of
information on the nature of this market and the characteristics of
its participants.  This report discusses the (1) size of the
individual market, recent trends in it, and the demographic
characteristics of its participants; (2) market structure, including
how persons access the market, the prices and other characteristics
of health plans offered, and the number of individual carriers
offering plans; and (3) insurance reforms and other measures states
have taken to improve individuals' access to health insurance. 


   HOUSING
--------------------------------------------------------- Appendix 0:7

Public Housing:
Partnerships Can Results in Cost Savings and Other Benefits

GAO/RCED-97-11, Oct.  17 (24 pages). 

Congress is considering legislation that would give the nation's
3,300 public housing authorities greater flexibility in managing
their properties and in operating public and assisted housing for
more than 4 million households.  This greater discretion is expected
to strengthen the long-term viability of public and assisted housing
and allow the public housing authorities to better meet the needs of
local communities.  Before the pending housing reform legislation was
introduced, public housing authorities had begun establishing
partnerships with public and private sector groups to help stretch
limited financial resources.  Some partnerships have generated
quantifiable cost savings, while others have produced nonmonetary
benefits, such as improved social services, that would not have been
possible without the partnership.  This report describes four types
of arrangements that public housing authorities have established and
provides the views of public housing authority officials on the
advantages of these arrangements. 

Multifamily Housing:
Effects of HUD's Portfolio Reengineering Proposal

GAO/RCED-97-7, Nov.  1 (116 pages). 

About 8,600 privately owned multifamily properties with federally
insured mortgages totaling nearly $18 billion received federal rental
subsidies for all or some of their apartments under the Department of
Housing and Urban Development's (HUD) Section 8 program.  For
subsidized apartments, HUD pays the difference between the rent and
30 percent of the household's income.  The rents at many properties
exceed market levels, resulting in high subsidies.  To reduce costs
and address other problems, HUD has proposed adjusting the rents to
market levels and writing down mortgages as needed to allow the
properties to operate at market rents.  In essence, HUD's proposal
recognizes a reality that has persisted for some time--namely, that
many of the properties in the insured Section 8 portfolio are worth
far less than their mortgages suggest.  This report examines the (1)
problems affecting the properties in HUD's insured Section 8
portfolio and HUD's plans for addressing them, (2) results and
reasonableness of a study done by Ernst & Young assessing the effects
of HUD's proposal on the properties in the portfolio, and (3) key
issues facing Congress as it assesses HUD's proposal. 


   INCOME SECURITY
--------------------------------------------------------- Appendix 0:8

Appealed Disability Claims:
Despite SSA's Efforts, It Will Not Reach Backlog Reduction Goal

GAO/HEHS-97-28, Nov.  21 (17 pages). 

Americans who are denied benefits under the disability insurance and
the supplemental security income programs may appeal to the Social
Security Administration's (SSA) Office of Hearings and Appeals.  In
the last decade, however, the number of disability cases appealed to
the Office has swelled by about 140 percent.  As a result of the
processing delays, claimants often wait more than a year for a final
decision on their appeal.  Although the Office has reduced its
inventory of appealed cases during the past eight months, GAO found
that SSA will not reach its goal of reducing its backlog to 375,000
by December 1996.  SSA attributes its difficulties to start-up
delays, overly optimistic projections of the number of appealed cases
that would be processed, and an additional 37,500 appealed cases
above the number that SSA expected during fiscal year 1995.  Some SSA
officials had expressed concern that the agency's aggressive goals to
reduce the backlog of appealed cases could result in inappropriate
benefit awards for some claimants and increase the allowance rate. 
SSA's statistics, however, show just the opposite.  Since SSA's plan
was initiated, the allowance rate has fallen from 75 percent in
fiscal year 1994 to 69 percent through the third quarter of fiscal
year 1996. 


   INFORMATION MANAGEMENT
--------------------------------------------------------- Appendix 0:9

Telecommunications:
Competition Issues in International Satellite Communications

GAO/RCED-97-1, Oct.  11 (76 pages). 

In recent years, several private companies trying to establish
international communications satellite systems have raised concerns
about competitive disadvantages that inhibit their entry into the
market.  This report (1) describes the institutional framework for
providing international communications satellite services, (2)
discusses elements of the framework that may hinder competition, and
(3) identifies key options for resolving competitive issues. 

Defense IRM:
Strategy Needed for Logistics Information Technology Improvement
Efforts

GAO/AIMD-97-6, Nov.  14 (26 pages). 

As part of GAO's continuing review of the Defense Department's (DOD)
Corporate Information Management initiative, this report summarizes
GAO's findings on DOD's efforts during the past four years to improve
its information systems in the depot maintenance, materiel
management, and transportation business areas.  GAO focuses on
whether selected standard information systems will allow the Pentagon
to meet its business objective of dramatically improving the
efficiency and effectiveness of its logistics operations.  DOD plans
to invest more than $7.7 billion during the next several years on
these standard logistics systems. 

Defense Communications:
Performance Measures Needed to Ensure DISN Program Success

GAO/AIMD-97-9, Nov.  27 (13 pages). 

The Defense Department (DOD) is now acquiring the transmission
services and switching technology needed to construct its future
telecommunications network known as the Defense Information System
Network (DISN).  DOD's strategy for the network involves acquiring
and implementing DISN transmission and switching services across
three regions:  the continental United States, the Pacific, and
Europe.  These long-haul services will, in turn, interconnect DOD's
base-level and deployed communications networks.  This report reviews
the steps DOD has taken in selecting and implementing its acquisition
strategy for DISN in the continental United States, which DOD is
focusing on first.  GAO discusses whether (1) DOD considered other
approaches, such as use of an integrated bid, in its selection of an
acquisition strategy and (2) the selected acquisition strategy will
yield the best value to the government over DISN's life-cycle.  GAO
also examines the performance measures that DOD managers are using or
plan to use to objectively evaluate the outcomes and effectiveness of
their DISN implementation efforts. 



   INTERNATIONAL AFFAIRS
-------------------------------------------------------- Appendix 0:10

Food Security:
Preparations for the 1996 World Food Summit

GAO/NSIAD-97-44, Nov.  7 (52 pages). 

This report analyzes U.S.  preparations for the World Food Summit to
be held in Rome, Italy, in November 1996.  GAO discusses the (1)
origin, purpose, and financing of the summit; (2) process used by
member countries of the U.N.  Food and Agricultural Organization to
prepare and negotiate a policy declaration and plan of action for
approval by world leaders or their representatives; (3) U.S. 
approach to the summit; (4) key issues that have arisen in
negotiations; and (5) role and views of nongovernmental
organizations. 

United Nations:
Status of Alternative Revenue Raising Proposals

GAO/NSIAD-97-31, Nov.  8 (13 pages). 

Despite concerns that the United Nations may seek to impose taxes
within the jurisdictions of its member states, the United Nations
lacks the independent authority to do so.  The U.N.  Charter would
have to be amended (a process that requires the explicit approval of
the United States) to allow such taxation, and the United States has
stated that it would veto such an amendment.  The United Nations
receives most of its financial support from three sources:  regular
budget assessments, special assessments for peacekeeping missions,
and voluntary contributions funded by member governments.  Only a
small part of U.N.  financial support comes from private sources.  No
formal proposals have been made at the United Nations concerning
alternative revenue raising.  Some U.N.  member states have studied
various financing mechanisms, including taxes on member states (such
as levies on international air and maritime transport,
telecommunications, trade, and international currency transactions). 
Although the United States has encouraged discussions of alternative
financing sources, it has opposed any suggestion that the United
Nations be granted authority to impose taxes. 

Foreign Affairs:
Perspectives on Foreign Affairs Programs and Structures

GAO/NSIAD-97-6, Nov.  8 (29 pages). 

This report summarizes the views presented at GAO's 1996 conference
on foreign affairs issues.  The purpose of the conference was to help
focus GAO's work on the full range and complexity of U.S.  foreign
activities in order to better assist Congress in adjusting U.S. 
foreign affairs functions and structures to meet post-Cold War
realities.  Conference participants included current and former
government officials and private sector public policy experts
representing a range of interests.  Topics covered in the conference
included the changed environment for foreign policy, the influence
and the impact of U.S.  programs, the role of multilateral
institutions, the world trade interests of the United States, and the
structure of the U.S.  foreign affairs apparatus. 

Export Controls:
Sensitive Machine Tool Exports to China

GAO/NSIAD-97-4, Nov.  19 (40 pages). 

Following a lengthy review, the Commerce Department in 1994 allowed
the McDonnell Douglas Corporation to export to China machine tools
for producing commercial aircraft.  Some of these machine tools were
later diverted to a Chinese facility that built fighter aircraft and
cruise missiles for the Chinese army.  Commerce's enforcement office,
however, did not formally investigate the export control violations
until six months after they were reported.  The U.S.  Customs Service
and Commerce are now conducting a criminal investigation under the
direction of the
Justice Department. 

Export Controls:
Sale of Telecommunications Equipment to China

GAO/NSIAD-97-5, Nov.  13 (16 pages). 

As part of a joint venture involving U.S.  and Chinese companies,
broadband telecommunications equipment with a host of commercial
applications--from video-conferencing to telemedicine--was shipped to
China.  This equipment is of considerable interest to the Chinese
military, which would like to acquire it to upgrade its command and
control networks.  The creation of a new general license category in
April 1994 allowed the export of this equipment to China without a
validated license being issued by the Commerce Department. 
Determining who is a civil end user under the new general license
category is the responsibility of the exporting companies.  This is
particularly difficult in China, however, because of the Chinese
military's involvement in various commercial ventures.  Information
is not readily available to exporters on how much military
involvement in a commercial firm constitutes a military end user.  As
Commerce gains experience under the new general license category, it
may want to consider providing additional information or guidance to
exporters to help them determine when they should request a
government review of an end user. 


   JUSTICE AND LAW ENFORCEMENT
-------------------------------------------------------- Appendix 0:11

Federal and State Prisons:
Inmate Populations, Costs, and Projection Models

GAO/GGD-97-15, Nov.  25 (38 pages). 

From 1980 to 1995, the total federal and state prison population grew
at an average annual rate of 8.5 percent.  The total prison
population rose from about 330,000 inmates in 1980 to about 1.1
million inmates in 1995--an overall increase of 242 percent.  Federal
and state corrections agencies, as well as forecasting groups like
the National Council on Crime and Delinquency, project that the
prison population will continue to grow in the future.  The size of
the prison population is a function of several factors, including
crime levels, sentencing laws, and law enforcement policies.  Inmate
population growth in recent years can be traced in large part to
major legislation intended to get tough on criminals, particularly
drug offenders.  Examples of this new get-tough policy include
mandatory minimum sentences and repeat offender provisions. 
Reflecting the growth in inmate populations, U.S.  prison (federal
and state) annual operating costs swelled from $3.1 billion in fiscal
year 1980 to about $17.7 billion in fiscal year 1994.  All prison
costs (operating and capital costs) totaled about $163 billion during
the 15-year period.  The Bureau of Prisons projects that its prison
operating costs could total about $3.6 billion in fiscal year
2000--an increase of about 88 percent over the fiscal year 1994
level.  Moreover, the Bureau estimates that it may need as much as $4
billion to build new federal prisons through fiscal year 2006.  This
report also discusses the models and methodologies used by federal
and state corrections agencies and nongovernmental forecasting
organizations to make these projections and examines whether validity
or reliability assessments have been done. 

Law Enforcement:
FBI Cost of Freemen Standoff

GAO/GGD-97-13R, Oct.  22 (10 pages). 

The cost of the 81-day standoff between the FBI and the Montana
Freemen totaled $7.5 million.  About half of that amount went for the
salaries and benefits of FBI agents, which would have been incurred
in any event.  The remaining costs arose directly from the standoff
and included such items as overtime, travel, lease of special
vehicles, food, and costs incurred by Montana officers.  For example,
the FBI spent $472,000 for scheduled overtime for FBI agents; $1.6
million for travel, such as transportation and per diem expenses; and
$915,000 for miscellaneous costs, ranging from $397,000 for the lease
and modification of light-armored vehicles to $341,000 for the rental
of equipment such as searchlights and generators. 


   NATIONAL DEFENSE
-------------------------------------------------------- Appendix 0:12

National Defense Stockpile:
Disposal of Excess Zinc

GAO/NSIAD-97-30, Nov.  7 (52 pages). 

The American Zinc Association contends that the Defense Department's
plan to sell excess zinc from the National Defense Stockpile will
disrupt the usual markets for this strategic material.  GAO found,
however, that the government's determination was sound and that the
military has policies and procedures in place to avoid unduly
disrupting the zinc market.  Specifically, it has publicized its
policy on the timing of sales, amounts to be sold, and relation of
sales prices to market prices; provided plans to the appropriate
congressional committees for approval; sold less zinc than it was
authorized to sell; and strived to sell at prices close to commercial
market prices.  Zinc is commonly used for everything from galvanizing
to producing the penny.  As of March 1996, the military has nearly
300,000 tons of slab zinc valued at $300 million stored at 15
facilities in nine states. 

Military Retirement:
Possible Changes Merit Further Evaluation

GAO/NSIAD-97-17, Nov.  15 (53 pages). 

Payments to military retirees and their survivors totaled $29 billion
in fiscal year 1996.  Various factors, including the end of the Cold
War, defense downsizing, changes in civilian retirement systems, and
increasing federal budgetary constraints, have raised questions about
whether the military retirement system today best meets the needs of
the Pentagon and members of the armed forces.  A number of analysts,
including several who participated in a roundtable discussion
convened by GAO, believe that fundamental changes to the military
retirement system could increase its effectiveness or reduce costs by
yielding a force of different composition and size than exists today. 
The suggestions of the GAO panel, which included Defense Department
experts and compensation analysts, ranged from earlier vesting of
retirement benefits to more sweeping reforms, such as placing
military personnel under a system similar to the Federal Employees
Retirement System. 

Defense Transportation:
Reengineering the DOD Personal Property Program

GAO/NSIAD-97-49, Nov.  27 (49 pages). 

The Military Traffic Management Command is reengineering the Defense
Department's personal property program.  Although Congress supports
DOD's reengineering efforts, it is concerned that the reengineered
program could harm the moving industry, particularly small
businesses.  As a result, Congress directed that DOD report on small
business issues before undertaking a pilot test.  Because this report
did not satisfactorily address congressional concerns about the
impact on small businesses, Congress directed DOD to convene a
military/industry working group to develop a mutually agreeable
program to test pilot.  The working group reached consensus on many
issues, including a set of program goals, but it could not agree on
the approach to take for the pilot test.  Consequently, each side
presented a separate proposal.  This report reviews the two
proposals.  Specifically, GAO analyzes the extent to which each
proposal met the DOD/industry goals for a reengineered personal
property program. 


   NATURAL RESOURCES
-------------------------------------------------------- Appendix 0:13

Timber Management:
Opportunities to Limit Future Liability for Suspended or Canceled
Timber Sale Contracts

GAO/RCED-97-14, Oct.  31 (26 pages). 

Each year, the Forest Service and the Bureau of Land Management (BLM)
award thousands of contracts for the removal of timber from public
lands.  Since the early 1990s, the Forest Service and BLM have
suspended or canceled timber sale contracts for various reasons. 
Suspending or canceling timber contracts to protect threatened or
endangered species is a relatively new but growing practice.  GAO
found that BLM has suspended or canceled significantly fewer timber
sale contracts than has the Forest Service, and BLM has consistently
taken steps to protect itself from the damages that could arise from
suspending or canceling contracts to protect threatened or endangered
species.  In contrast, the Forest Service's actions have not fully
protected the agency.  As of October 1996, for example, the Forest
Service had 73 pending claims with potential damages of about $61
million; BLM had one pending claim totaling almost $2.2 million. 
Since the late 1980s, the Forest Service has been developing new
regulations and a new timber sale contract that would limit the
government's liability on canceled timber sale contracts and
redistribute the risk between agency and purchaser.  The Forest
Service has yet to finalize either the regulations or the contract. 


   TAX POLICY AND ADMINISTRATION
-------------------------------------------------------- Appendix 0:14


      TESTIMONY
------------------------------------------------------ Appendix 0:14.1

Tax Administration:  Employment Taxes and Small Business, by Lynda D. 
Willis, Director of Tax Policy and Administration Issues, before the
National Commission on Restructuring the Internal Revenue Service. 
GAO/T-GGD-97-21, Nov.  8 (26 pages). 

This testimony discusses the complexity of tax laws and the
compliance burden this complexity places on taxpayers.  GAO focuses
on employment taxes--federal income tax withholding, federal Social
Security and Medicare taxes, federal unemployment tax, and state and
local employment taxes.  GAO examines the impact that these
employment tax laws and regulations have on small businesses hiring
their first employees and all employees thereafter.  GAO notes that
employment tax compliance can be particularly burdensome to employers
because of multiple federal, state, and local taxes.  Each tax
generally requires its own unique set of rules and regulations, and
each has its own exceptions to these rules and regulations, making
compliance difficult for employers.  These complexities were not a
product of happenstance but rather reflect the various trade-offs
that have been made to address a host of tax policy issues.  These
trade-offs include considerations as to the type of tax imposed, the
types of compensation to be socially encouraged, and the fiscal
requirements of individual government units.  Respondents to an
earlier GAO survey described characteristics of especially
troublesome tax provisions--ambiguity, frequent changes, expiration
clauses, and layers of federal and state regulation.  Because various
employment tax provisions include some or all of these same
characteristics, they present a microcosm of the most burdensome
aspects of tax regulation reported by those businesses. 


   TRANSPORTATION
-------------------------------------------------------- Appendix 0:15

Airline Deregulation:
Barriers to Entry Continue to Limit Competition in Several Key
Domestic Markets

GAO/RCED-97-4, Oct.  18 (36 pages). 

Barriers to entry persist in the airline industry.  Access to
airports continues to be hampered by (1) federal limits on takeoff
and landing slots at the major airports in Chicago, New York, and
Washington; (2) long-term, exclusive-use gate leases; and (3)
"perimeter rules" prohibiting flights beyond certain distances at
airports in New York and Washington, D.C.  New airlines--primarily
those started after deregulation--have been affected the most because
established carriers hold nearly all of the slots, are usually the
beneficiaries of exclusive-use gate leases, and have their hubs
located close enough to New York and Washington airports that their
operations are not restricted by perimeter rules.  These barriers
particularly impede the entry of newer airlines into key markets in
the East and the upper Midwest because several airports in those
areas have leased most of their gates to a single airline.  Even
where airport access is not a problem, airlines sometimes decline to
enter new markets because the strategies of established airlines make
it extremely difficult for other carriers to attract traffic.  These
marketing strategies include bonus commissions paid to travel agents,
frequent flier plans, airline ownership of the computer reservation
systems used by travel agents, and code-sharing partnerships with
commuter carriers.  As a result, competition suffers, leading to
higher airfares.  The effect of these strategies tends to be the
greatest--and the fares the highest--in markets where the dominant
carrier's position is protected by operating barriers. 

Airport Privatization:
Issues Related to the Sale or Lease of U.S.  Commercial Airports

GAO/RCED-97-3, Nov.  7 (55 pages). 

The possible sale or lease of commercial airports in the United
States to private companies has generated considerable interest in
recent years.  Such cities as New York and Los Angeles have
considered privatizing their airports.  Proponents claim that
privatization would inject much needed capital into the aviation
infrastructure, while opponents argue that local governments favor
privatization as a way to divert airport revenue intended for
developing aviation infrastructure to other municipal purposes,
resulting in higher costs for airlines and passengers.  This report
examines the (1) extent of private sector participation in commercial
airports in the United States and foreign countries; (2) incentives
and barriers to the sale or the lease of airports; and (3) potential
implications for major stakeholders, such as the passengers, the
airlines, and the government, should airports be sold or leased. 

Air Traffic Control:
Remote Radar for Grand Junction

GAO/RCED-97-22, Nov.  19 (12 pages). 

GAO agrees with the Federal Aviation Administration's (FAA)
determination that remoting the Grand Junction radar signal to a
TRACON facility in Denver is the most cost-effective way to handle
radar data from the site.  However, GAO believes that the projected
savings from the remote option are overstated by about $500,000--$5.4
billion rather than $5.9 billion--because FAA overlooked certain
telecommunications costs and did not use more realistic staffing
scenarios.  GAO found no valid concerns about the safety and
efficiency of remoting radar data or contracting out a tower's
operation.  FAA's process for deciding when and where to remote radar
signals was generally sound but relatively ad hoc.  A formal
methodology for making such decisions would have helped the agency to
(1) ensure that all relevant factors were properly considered and (2)
communicate to all affected communities how it arrived at its
decision. 


   VETERANS AFFAIRS
-------------------------------------------------------- Appendix 0:16

Substance Abuse Treatment:
VA Programs Serve Psychologically and Economically Disadvantaged
Veterans

GAO/HEHS-97-6, Nov.  5 (15 pages). 

About 25 percent of all VA patients discharged from inpatient
settings in fiscal year 1995 were diagnosed with alcohol or drug
abuse problems.  VA estimates that it spent $2 billion--or about 12
percent of its total health care budget in fiscal year 1995--to treat
veterans with substance abuse disorders.  The VA health care system
is now evaluating what services to offer and where to provide them. 
VA's new organizational structure, called the Veterans Integrated
Service Network, replaces VA's central office and regional structure
with 22 networks of hospitals and clinics.  VA expects this
consolidation and realignment to boost efficiency by trimming
management layers, eliminating duplicative medical services, and
making better use of available public and private resources.  This
report provides information on the (1) characteristics of veterans
who receive substance abuse treatment, (2) services that VA offers to
veterans with substance abuse problems, (3) methods that VA uses to
monitor the effectiveness of its substance abuse treatment programs,
(4) community services available to veterans who suffer from
substance abuse disorders, and (5) implications of changing VA's
current methods for delivering substance abuse treatment. 

*** End of document. ***