Defense Communications: White House Communications Agency Activities and
Funding (Testimony, 05/16/96, GAO/T-NSIAD-96-168).

GAO discussed the White House Communications Agency's (WHCA) activities
and funding, focusing on the events that led to the separate review of
WHCA by the Department of Defense (DOD) Inspector General (IG). GAO
noted that: (1) it attempted to obtain WHCA data from September 1994 to
January 1995, but the White House, WHCA, and DOD failed to provide
sufficient information to verify reported WHCA activities and costs; (2)
after these failed attempts, key officials agreed to an independent
review of WHCA; (3) the Defense Information Systems Agency (DISA) did
not review WHCA budget requests as extensively as budget requests from
other subordinate organizations; (4) DISA contracting officials seldom
participated in the WHCA acquisition planning and requirements
validation process; (5) DOD was not reimbursed for $4.3 million in
communications support that WHCA provided to the Secret Service from
1990 to 1995; (6) WHCA spent funds without contractual authorization,
authorized duplicate payments, incurred interest penalties, and leased
telecommunications equipment without conducting proper cost analyses;
(7) DOD IG identified $7.8 million in services and equipment that were
outside of the WHCA mission; (8) WHCA has tried to transfer funding of
these services to the White House or the General Services Administration
since 1991, but the White House has refused to accept them; and (9) WHCA
has made little progress in correcting past deficiencies, and its
inventory remains unauditable.

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

 REPORTNUM:  T-NSIAD-96-168
     TITLE:  Defense Communications: White House Communications Agency 
             Activities and Funding
      DATE:  05/16/96
   SUBJECT:  Defense communications operations
             Investigations into federal agencies
             Internal controls
             Inspectors General
             Questionable payments
             Interagency relations
             Budgeting
             Irregular procurement practices
             Auditing procedures

             
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Cover
================================================================ COVER


Before the Subcommittee on National Security, International Affairs
and Criminal Justice, Committee on Government Reform and Oversight,
House of Representatives

For Release on Delivery
Expected at
11:00 a.m., EDT
Thursday
May 16, 1996

DEFENSE COMMUNICATIONS - WHITE
HOUSE COMMUNICATIONS AGENCY
ACTIVITIES AND FUNDING

Statement of Henry L.  Hinton, Jr., Assistant Comptroller
General, National Security and International Affairs Division

GAO/T-NSIAD-96-168

GAO/NSIAD-96-168T


(709197)


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

  DISA - Defense Information Systems Agency
  DOD - Department of Defense
  WHCA - White House Communications Agency

============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss (1) our 1994 efforts to
assess activities and funding of the White House Communications
Agency (WHCA) and (2) events that led to the separate review and
reports by the Department of Defense (DOD) Inspector General.  Our
work originated from a request by Mr.  Clinger in March 1994 to
provide information on the Defense Information Systems Agency's
(DISA) oversight of WHCA, as well as WHCA's activities, funding, and
reporting processes.  To address Mr.  Clinger's request, we discussed
DISA and WHCA roles, missions, activities and funding with agency
officials and analyzed legal, policy, and regulatory documents.  We
sought to review and examine budget documents such as funding
authorizations and records of expenditure and examine other relevant
studies and documentation. 

We obtained initial data and made some preliminary assessments, which
we discussed with members of the Committee staff and agency
representatives in August 1994 and January 1995.  We identified the
roles and missions of DISA and WHCA, one of its subordinate
organizations.  However, the executive branch limited DOD contact
with us and the release of DOD data, stating its concern about
revealing sensitive information on presidential protection to us. 
Consequently, we were unable to respond fully to Mr.  Clinger's
request.  My comments today are based on the preliminary observations
we had at the conclusion of our work in January 1995 and on our
reading of the Inspector General's November 1995 and April 1996
reports on WHCA's activities.  We have not independently verified the
findings and conclusions of the Inspector General. 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:1

Our 1994 work raised questions about the level of oversight
pertaining to WHCA's budget justifications and procurement
activities, including a recommendation made by a 1987 task force to
improve oversight of WHCA's procurement and management that WHCA had
not implemented.  Our work to that point convinced us that there was
reason to focus on the apparently minimal oversight of WHCA by DISA. 
However, during a January 1995 meeting with DOD and White House
staff, White House Counsel staff indicated that we would not be
provided the information needed to further pursue these issues.  This
prompted meetings involving the requester, the White House, DOD, and
us, which resulted in the initiation of the DOD Inspector General's
review. 

The DOD Inspector General reported the results of its review on
November 29, 1995, and April 29, 1996.\1 We believe these reports not
only support our concerns, but also raise other important issues. 
The Inspector General report disclosed a material weakness that
management controls at the Office of the Assistant Secretary of
Defense (Command, Control, Communications and Intelligence) were not
sufficient to ensure that administrative, financial, and operational
oversight was provided for WHCA.  The Inspector General recommended
that the Assistant Secretary specify DISA and White House Military
Office oversight responsibilities.  It also identified problems in a
wide range of WHCA activities, including acquisition planning,
budgeting, contracting, payment procedures, and controls over assets. 
Finally, it noted that some WHCA activities were outside of the
agency's stated mission. 


--------------------
\1 Audit Report of the Inspector General, White House Communications
Agency (Report No.  96-033, Nov.  29, 1995) and Audit Report of the
Inspector General, White House Communications Agency - Phase II
(Report No.  96-100, Apr.  29, 1996). 


   BACKGROUND
---------------------------------------------------------- Chapter 0:2

The former Defense Communications Agency was redesignated DISA in
June 1991.  DISA is responsible for planning, developing, and
supporting command, control, communications, and information systems
that serve the national command authorities during peace and war. 
DISA has a headquarters office and 16 field organizations, including
WHCA.  Since 1942, WHCA\2 has provided communications to the
President, his successors, and others who play key roles in
supporting the President in his capacity as Commander in Chief.  WHCA
provides worldwide support with communications facilities at seven
locations.  Five facilities are in the Washington, D.C., area, and
two are located at Luke Air Force Base, Arizona, and Carswell Air
Force Base, Texas. 

Although DISA provides administrative oversight of WHCA's budgetary
and acquisition processes, the White House Military Office, a
civilian office within the White House Office of Management and
Administration, develops WHCA's requirements and directs its
operations.  WHCA's activities are funded through defensewide
appropriations for DISA.  Total funding has been somewhat greater
than $100 million annually for the past 5 years, including both
authorized funds for WHCA and an estimate for military personnel who
are paid by their respective services. 


--------------------
\2 WHCA was preceded by the Department of the Army's White House
Signal Detachment, created in 1942.  In 1962, the Detachment was
redesignated WHCA. 


   OUR ATTEMPTS TO OBTAIN DATA
---------------------------------------------------------- Chapter 0:3

In response to our requests during 1994, DISA, WHCA, and White House
staff and counsel provided us with briefings, summary and policy
documents, and a copy of a previous White House management study. 
However, the documents did not provide enough detail for us to
determine specific activities or costs, nor did the agencies provide
supporting documents to verify reported activities and funding. 
Specifically, we requested, but did not receive (1) detailed budget
information on WHCA activities, such as WHCA funding authorizations
and records of expenditure and (2) detailed records of reimbursements
for activities during 1993 and 1994.  On three occasions in May,
June, and August 1994, DOD representatives advised us that the White
House had prohibited DOD contact with us or release of DOD data.  In
each case, we pursued the matter, and our follow-up discussions with
White House representatives resulted in further meetings with DISA
and WHCA. 

From September 1994 to January 1995, we met periodically with the
White House, DOD, and Committee staff to discuss gaining access to
WHCA data.  However, the White House, WHCA, and DOD did not provide
additional information or initiate other efforts to resolve questions
following a September 26, 1994, meeting between Mr.  Clinger, the
Deputy Secretary of Defense, the White House, and our officials. 
From July 6, 1994, when we requested a tour of WHCA facilities and
access to source records for fiscal years 1993 and 1994 purchases,
until January 1995, when our work ended, the only documents WHCA made
available were blank budget execution review forms and an overview of
the requirements process. 

During this period, we were told that the White House would not
authorize our access to WHCA documents, including those that WHCA and
DISA had given to the White House to review before releasing to our
staff because of executive branch concerns about revealing sensitive
information regarding presidential protection. 

In February 1995, our efforts to pursue these matters came to an end. 
Key officials, including the Committee and Subcommittee Chairmen; the
President's Counsel; the Director, White House Military Office; the
Commander, WHCA; and representatives from DOD, DISA, and our office,
discussed the need for WHCA oversight.  The principals agreed that
past oversight had been lacking.  The Counsel proposed an initial
broad scope review by the DISA Inspector General.  However, the
principals agreed to an in-depth, independent review of WHCA to be
conducted under the close supervision of the DOD Deputy Inspector
General. 


   DOD INSPECTOR GENERAL REPORTS
   ADDRESS GAO'S AREAS OF CONCERN
---------------------------------------------------------- Chapter 0:4

The DOD Inspector General's 1995 and 1996 reports addressed several
areas of concern identified during our preliminary work. 


      MANAGEMENT OVERSIGHT
-------------------------------------------------------- Chapter 0:4.1

WHCA is subject to the laws, regulations, and directives that apply
to all defense activities.  In our August 1994 briefing to Committee
staff and January 1995 briefing to White House and DOD officials, we
expressed our concerns about the level of oversight given to WHCA. 
DISA had established controls intended to oversee WHCA activities,
including acquisition and funding guidelines, a program review board,
and an internal controls program.  However, our preliminary
examination of overview data and DISA officials' statements indicated
that DISA's oversight was minimal.  For example: 

  -- DISA's review of WHCA budget requests consisted of periodic
     meetings between WHCA's commander and DISA's director.  In
     contrast, DISA's finance officers required and reviewed detailed
     justifications from DISA's other field activities.  Also, in
     contrast to other organizations, DISA officials stated that,
     except for across-the-board budget reductions, WHCA's requested
     budget amount had never been reduced.  WHCA's budget was viewed
     differently than other DISA field activities, which received
     more detailed oversight.  According to a DISA financial
     management officer, WHCA's budget was "immune" from the usual
     level of review.  The DOD Inspector General's detailed
     examination confirmed that, when DISA validated the WHCA budget,
     it did not review or analyze WHCA budget requests as extensively
     as budget requests of other DISA subordinate organizations. 

  -- No external review of WHCA's projects appeared to exist.  WHCA's
     program review board, established to approve funds for projects,
     validate requirements, and manage project execution, consisted
     only of WHCA personnel--the commander and his principal staff
     officers--and had no external participants.

     The DOD Inspector General's detailed examination documented that
     DISA contracting officials seldom participated in WHCA
     acquisition planning and requirements validation, resulting in
     acquisition problems.  For example, the Inspector General
     concluded that WHCA expended $4.9 million on two mobile
     communications systems that did not meet WHCA's operational
     needs; planned to purchase some unneeded satellite terminals
     until the contractor submitted an average price of $618,000
     --more than double the $269,000 originally estimated by WHCA;
     and planned to issue a $2.1-million sole-source radio network
     maintenance contract that WHCA later found could be competed. 

  -- There appeared to be no oversight of whether WHCA is reimbursed
     for support provided to other agencies.  WHCA performs
     communications support for other agencies such as the Department
     of State and the Secret Service.  In our initial briefings, DISA
     officials told us they had no information on the reimbursements,
     if any, that WHCA had received.

     The DOD Inspector General's detailed review disclosed that since
     1991, WHCA had provided communications support to the Secret
     Service on a nonreimbursable basis and failed to report to the
     Office of the Secretary of Defense all costs for providing
     communications support to the Secret Service.  WHCA had not
     charged the Secret Service for the support because a 1989 WHCA
     and Secret Service memorandum of agreement did not clearly
     delineate reimbursable and nonreimbursable communications
     support to be provided.  As a result, from 1990 to 1995, the
     Secret Service did not reimburse DOD for annual communications
     support totaling $4.3 million and Congress was not informed of
     communications support totaling $3.2 million that WHCA had
     provided to the Secret Service.  Because DOD absorbed costs of
     support to the Secret Service, the Secret Service's budget was
     augmented by $4.3 million. 

Also, we noted that a 1987 task force report on WHCA criticized
management deficiencies.  The report stated the White House lacked a
master plan to guide the design and procurement of information
systems and lacked an effective management mechanism of oversight and
configuration control.  It concluded that there was a proliferation
of nonstandard, redundant telephone and automated data processing
hardware throughout the White House that did not interoperate, used
scarce floor space inefficiently, and was costly and difficult to
maintain.  The report's recommendations, among other things, called
for a management mechanism, such as a chartered interoffice group, to
oversee the telecommunications requirements process, including
validating requirements, evaluating alternatives, and designating who
should act to meet requirements.  The recommended group would include
representatives from WHCA as well as members from White House offices
and the Secret Service. 

The DOD Inspector General's report does not discuss the 1987
management study, but notes that WHCA established an acquisition
management office in 1994.  However, as noted a moment ago, WHCA's
actions were not reviewed or validated.  In addition, the Inspector
General found that when WHCA arranged presidential trips, it did not
use contracting officers to buy equipment and services, competitively
select vendors, negotiate contracts with selected vendors, validate
rate quotes, or establish a formal memorandum of agreement with a
contracting office.  The DOD Inspector General concluded that WHCA
spent funds without contractual authorization, authorized an
undetermined amount of duplicate payments, incurred an undetermined
amount of interest penalties for late payments for vendors, and had
no assurance that telecommunications equipment and services were
leased cost-effectively. 


      WHCA MISSION
-------------------------------------------------------- Chapter 0:4.2

WHCA's activities are undertaken pursuant to a number of laws and
regulations.  These activities range from providing communications
support, such as nonsecure voice, secure voice, and record
communications, to other support, including automated data processing
and construction of presidential podiums.  We did not determine the
cost of the activities or how they were funded and reported since the
White House would not release the necessary documents to us. 

The DOD Inspector General's detailed examination identified $7.8
million in services (audiovisual, news wire, and stenographic
services) and the procurement of camera equipment that the Inspector
General found were outside of WHCA's mission.  For example, WHCA's
Audiovisual Unit provides flags at presidential events, develops and
prints photographs of the President and First Lady, and mounts and
frames photographs.  WHCA also provides stenographic services for the
White House Office of the Press Secretary.  WHCA has tried
unsuccessfully since 1971 to transfer funding for these services to
the White House or the General Services Administration, but the White
House has prevented the transfer.  A March 1996 memorandum of
agreement between the White House Office of Management and
Administration and the Assistant Secretary of Defense for Command,
Control, and Communications and Intelligence again assigned these
functions and the associated funding to WHCA. 


   ADDITIONAL INSPECTOR GENERAL
   FINDINGS
---------------------------------------------------------- Chapter 0:5

The DOD Inspector General reported on issues beyond those that we
noted in our preliminary work.  For example, the Inspector General
reported that WHCA's inventory of short-haul telecommunications
equipment and services, such as circuits and maintenance, was neither
complete nor accurate because WHCA failed to record some of the
equipment and services, terminate the equipment from the inventory,
or update costs.  The Inspector General's April 1996 report found
that (1) WHCA had made little progress in correcting deficiencies
identified in its earlier November 1995 report and (2) the inventory
remained inauditable.  The Inspector General then discontinued its
audit efforts. 

The DOD Inspector General concluded that, taken together, the many
problems in planning, budgeting, acquisition, and payment constitute
a material weakness needing management attention.  By DOD definition,
material weaknesses include, for example, weaknesses that violate
requirements, or significantly weaken safeguards against fraud,
waste, or mismanagement.  The Inspector General identified a material
weakness at a level sufficient to merit Secretary of Defense
attention.\3


--------------------
\3 Under the Federal Managers' Financial Integrity Act, the Secretary
of Defense is required to review DOD's internal accounting and
administrative controls to provide reasonable assurances that funds,
property, and other assets are safeguarded against waste, loss,
unauthorized use, or misappropriation and that internal management
controls emphasize prevention and correction of specific problems. 


-------------------------------------------------------- Chapter 0:5.1

Mr.  Chairman, we believe the DOD Inspector General's work has
disclosed serious management issues that warrant top management
attention at DOD and the White House.  The Inspector General's staff
informed us that DISA and WHCA have initiated steps to resolve the
various deficiencies.  The proposed actions are first steps toward
resolving these issues.  However, because these long-standing
problems cannot be solved immediately and because there are still
areas of disagreement, we believe continued attention by the Congress
is appropriate. 

This concludes my prepared statement.  I will be happy to answer any
questions you or other Members of the Subcommittee may have. 


*** End of document. ***