U.S. General Accounting Office
Reports and Testimony:  February 1993


AGRICULTURE AND FOOD

Farmers Home Administration:  Final Resolution of Farm Loan or
Servicing Appeals

GAO/RCED-93-28, Feb. 10 (61 pages).

In deciding on about 7,700 appeals of Farmers Home
Administration (FmHA) loan or loan-servicing decisions, hearing
officers ruled that lending officials had not made correct
decisions in about 40 percent of the cases.  As a result, FmHA
must reconsider such applications and again decide whether to
offer the appellants loans or loan servicing.  GAO estimates
that nearly half of the 2,900 appellants whose cases were
remanded received at least part of their requested loans or loan
servicing.  FmHA reconsidered and denied loans or loan servicing
for 19 percent of the appellants.  Another 14 percent did not
receive loans or loan servicing because they had rejected FmHA's
offers.  Actions for the remaining 18 percent of the appellants
were still pending at the time of GAO's review.  Although FmHA
regulations generally specify time frames for completing actions
on initial loan and loan-servicing applications, the agency has
not set deadlines for completing actions on remanded decisions.
GAO estimates that only 34 percent of the appellants who
received loans and loan servicing had their appeals processed in
a timely way.  Appellants' not providing information in a timely
manner was the main reason cited by FmHA officials for the
delays.

Testimony

Food Safety: Inspection of Domestic and Imported Meat Should Be
Risk-Based, by John W. Harman, Director of Food and Agriculture
Issues, before the Subcommittee on Commerce, Consumer
Protection, and Competitiveness, House Committee on Energy and
Commerce.  GAO/T-RCED-93-10, Feb. 18 (12 pages).

During the past 15 years, the U.S. system for inspecting
domestic and imported beef has changed little.  Inspectors still
rely on sight, smell, and feel when inspecting meat--a method
that may not protect the public from harmful bacteria.
Contaminated beef recently caused extensive illness and two
deaths in several western states, once again raising concerns
about inadequate U.S.  inspection.  In the wake of a GAO report
on Canadian meat, the U.S.  Department of Agriculture (USDA) and
the Canadian government have improved their inspection
procedures and better documented that the Canadian inspection
system is equivalent to that of the U.S.   That system, however,
suffers from the same shortcomings as does the U.S.  system--the
need for fundamental improvement to protect against the greatest
food safety risks.  USDA needs to weigh the benefits and the
risks of inspection by sight, smell, and feel.  This method of
inspection is extremely labor-intensive and drains resources
that could be put to better use.  In addition, no matter how
many USDA inspectors are assigned to the slaughter line,
pathogenic bacteria often avoid detection by sight, feel,or
smell.

U.S. Department of Agriculture:  Better Management Could
Increase Effectiveness of FAS Export Operations, by Allan I.
Mendelowitz, Director of Financial Institutions and
International Trade Issues, before the Subcommittee on
Agriculture, Rural Development, Food and Drug Administration,
and Related Agencies, House Committee on Appropriations.
GAO/T-GGD-93-5, Feb. 23 (36 pages).

Subsidized agricultural export competition has intensified, and
agricultural trade has become a point of friction between the
United States and its major trade partners.  At the same time,
the number and the costs of U.S. agricultural export programs
have risen.  Budgetary constraints and the substantial money
spent on agriculture export programs make good program
management critical.  The U.S. Department of Agriculture's
Foreign Agricultural Service (FAS) manages about $10 billion a
year in agricultural export assistance programs intended to
boost U.S. agricultural exports and to develop and maintain
foreign agricultural markets for U.S.  products.  This testimony
outlines a number of crosscutting program and management
weaknesses that diminish the efficiency and the effectiveness of
FAS' export operations.

BUDGET AND SPENDING

Impoundments:  Historical Information and Statistics on Proposed
and Enacted Rescissions of Budget Authority, 1974 to the Present

GAO/OGC-93-3, Feb. 1 (four pages).

To keep Congress apprised of the amount and the frequency of
rescissions proposed and enacted, GAO updated its April 1992
compilation of historical information and statistics on
rescissions proposed by the President and rescissions enacted by
Congress.  Included is an updated table showing, from 1974 to
the present, the (1) aggregate number and amount of rescissions
proposed by the President; (2) aggregate number and amount of
proposals enacted by Congress; (3) aggregate number and amount
of rescissions initiated by Congress; and (4) total number of
rescissions enacted and the total amount of budget authority
rescinded, with grand totals for each category.  GAO also
provides an updated table, showing by administration, from 1974
to the present, the aggregate number and amount of rescissions
proposed by the President and enacted.

Impoundments:  Unreported Withholding of Funds in the Forest
Service Timber Salvage Sales Account and Proposed Deferrals of
Security Assistance and Emergency Refugee Funds

GAO/OGC-93-4, Feb. 5 (four pages).

On December 30, 1992, the President submitted his second special
impoundment message for fiscal year 1993.  The message reports
two deferrals of budget authority and revises the amounts of
three deferrals previously reported.  GAO reviewed these
deferrals and found them to be in accordance with the
Impoundment Control Act.  GAO also reports an impoundment of
Department of Agriculture budget authority that should have been
reported by the President to Congress but was not.  The
impoundment involved the Forest Service Timber Salvage Sales
account, while the proposed deferrals affected security
assistance and emergency refugee funds.

Budget Issues:  A Comparison of Fiscal Year 1992 Budget
Estimates and Actual Results

GAO/AFMD-93-51, Feb. 12 (26 pages).

The critical issue for fiscal year 1992 budget projections was
not whether any particular forecaster had more-accurate models
or more-relevant data, but rather the capacity of any economic
model to predict key turning points in economic performance; on
this question, all forecasters to a large degree failed in 1992.
The total budget for fiscal year 1990 was $290.2 billion--the
highest in the nation's history, surpassing the previous record
of $268.7 billion set in fiscal year 1991.  This result appears
to track rather well with the original deficit estimate of
$280.9 billion.  This rough comparability, however, masks (1)
significant underlying variations between original receipt and
outlay projections and actual results and (2) the impact of
substantially lower deposit insurance spending than originally
estimated.  Actual 1992 receipts were more than $73 billion less
than original estimates.  Receipts from almost all sources fell
below original estimates, led by individual income taxes ($53
billion) and social insurance taxes ($15.7 billion), due largely
to the economy's not performing as well as assumed in the
original estimates.  Total outlays also were less than original
estimates by about $64 billion.  In 1992, the inherent
difficulty of any economic model to accurately predict key
turning points in the economy was clearly demonstrated, with
significant implications for the accuracy of receipt and outlay
estimates.

Performance Budgeting:  State Experiences and Implications for
the Federal Government

GAO/AFMD-93-41, Feb. 17 (16 pages).

Advocates of performance budgeting--budgeting that links
performance levels with specific budget amounts--have argued
that systematically presenting information on agency and program
performance will improve budget decision-making by focusing
choices on program results.  The Senate's recent passage of
legislation calling for a series of pilot projects dealing with
performance measurement and performance budgeting indicates
renewed interest in this subject at the federal level.  This
report looks at the uses and the limitations of performance
measurement and budgeting as experienced by certain states.  GAO
describes the experiences of these states, considered leaders in
performance budgeting, and discusses the potential implications
of these experiences for the federal government.

EDUCATION

Compensatory Education:  Additional Funds Help More Private
School Students Receive Chapter 1 Services

GAO/HRD-93-65, Feb. 26 (48 pages).

For more than two decades, public school teachers in the Chapter
1 program--a federal program of compensatory education for the
disadvantaged--provided remedial services to students in
religious schools.  The Supreme Court ruled in 1985, however,
that this practice violated the doctrine of separation of church
and state, and school districts were forced to find new ways to
provide Chapter 1 services to private school students.  These
alternatives were often more expensive and initially resulted in
fewer private school students receiving Chapter 1 services.
This report provides an update on Chapter 1 services provided to
private sectarian school students since Congress authorized
additional funds to help local school districts comply with the
Supreme Court decision.  GAO identifies (1) what changes have
occurred in participation rates, (2) how services are provided
to private school students and what changes have occurred in
services, and (3) what the current status of state expenditures
is and how much additional Chapter 1 funding has been allocated
for complying with the Supreme Court decision.

Testimony

Student Achievement Standards and Testing, by Eleanor Chelimsky,
Assistant Comptroller General for Program Evaluation and
Methodology, before the Subcommittee on Elementary, Secondary,
and Vocational Education, House Committee on Education and
Labor.  GAO/T-PEMD-93-1, Feb. 18 (11 pages).

In this testimony on student achievement standards and testing,
GAO discusses (1) the extent and the cost of testing in this
country and (2) the experience with standards and tests in
Canada.  GAO believes that Congress should consider specific
ways to encourage the participation of teachers, as well as
state and local education administrators, in developing
standards and in all aspects of increased testing.  Congress
should also carefully consider how to ensure the technical
quality of any tests in a national examination system.

EMPLOYMENT

Dislocated Workers:  Worker Adjustment and Retraining
Notification Act Not Meeting Its Goals

GAO/HRD-93-18, Feb. 22 (62 pages).

About 7,000 plant closures and mass layoffs occurred in 1990 and
1991, leaving more than one million Americans out of work.
Although a 1988 law requires certain employers to give their
workers and state and local agencies 60 days' notice of
impending plant closings or layoffs, about half of all employers
in a GAO survey did not give any notice at all and many of those
who had provided notice gave less than the required time.  The
notification provisions of the Worker Adjustment and Retraining
Notification Act (WARN) were intended to give workers time to
adjust and allow states to begin helping workers find new jobs
as quickly as possible.  As the law is written, however, many
major layoffs are not covered and, given the high percentage of
closures for which there was no notice or notices were late, the
use of the courts as an enforcement mechanism does not appear to
be working.  GAO suggests that as Congress considers ways to
improve the implementation of WARN, the Department of Labor be
given responsibility for enforcing the law.  GAO summarized this
report in testimony before Congress; see:

Dislocated Workers:  Implementation of the Worker Adjustment and
Retraining Notification Act, by Linda G. Morra, Director of
Education and Employment Issues, before the Subcommittee on
Labor, Senate Committee on Labor and Human Resources.
GAO/T-HRD-93-6, Feb. 23 (nine pages).

ENERGY

Nuclear Security:  Safeguards and Security Planning at DOE
Facilities Incomplete

GAO/RCED-93-14, Oct. 30 (19 pages).

High-risk vulnerabilities may be going undetected at Department
of Energy (DOE) field facilities because of ineffective
safeguards and security planning.  Protection plans, many of
which have been in the works for years, remain incomplete for a
large number of DOE's sensitive facilities and most of its
sites.  Although DOE has cited various reasons--such as lack of
staff or changes in mission--to explain the situation, GAO
believes that the underlying problem is DOE's lack of commitment
to the planning process.  According to DOE officials, the
agency's proposal to improve the process by requiring a new
overall plan may actually further complicate the process.  They
believe that the modified planning process could further delay
the safeguards and security plans because many plans now being
prepared will have to be rewritten and because work required to
develop vulnerability assessments will be increased.   GAO
agrees that implementation of the revised process could increase
the amount of vulnerability assessment work, further delaying
the completion of plans.  In GAO's view, it is important for DOE
to complete the remaining sensitive facility plans.

Energy Management:  Types of Allowable and Unallowable Costs
Incurred Under Two DOE Contracts

GAO/RCED-93-76FS, Jan. 29 (18 pages).


This fact sheet provides information on costs that the
Department of Energy's (DOE) management and operating
contractor, Martin Marietta Energy Systems, incurred while
running DOE's facilities at Oak Ridge, Tennessee; Paducah,
Kentucky; and Portsmouth, Ohio.  Martin Marietta has two
contracts with DOE, one involving Oak Ridge and the other
involving the Kentucky and Ohio facilities.  GAO identified some
limited instances in which costs incurred were determined to be
unallowable, including Martin Marietta employee memberships in
trade, business, and professional organizations.  Compared with
the more than $1.8 billion spent on the two contracts in fiscal
year 1991, however, the amounts of the unallowable costs were
relatively small, and either DOE or Martin Marietta plans to
take appropriate corrective action.  GAO also found that the
most recent allowability-of-costs report, an examination of
fiscal year 1991 costs prepared by Martin Marietta's internal
audit staff, included a broad discussion of unallowable cost
issues and identified some unallowable costs.  The two previous
reports did not identify any unallowable costs.  Further, Martin
Marietta gave GAO data showing that it had incurred more than
$2.2 million in costs to run DOE facilities in 1992 that had not
been charged to the government because Martin Marietta
considered them unallowable.  These costs included relocation
expenses, community relations expenses, incentive compensation
for executives, country club dues, and entertainment costs.
Also, in fiscal year 1991, Martin Marietta charged more than
$320,000 in allowable recreational costs, including $7,300 for
golf balls and $20,000 for a Christmas party.

Testimony

Energy Management:  High Risk Area Requires Fundamental Change,
by Victor S. Rezendes, Director of Energy and Science Issues,
before the Subcommittee on Oversight and Investigations, House
Committee on Energy and Commerce.  GAO/T-RCED-93-7, Feb. 17 (18
pages).

The Department of Energy's (DOE) contract management philosophy
has put billions of dollars in yearly contractors' services at
risk.  These problems date back to the Manhattan Project of the
1940s, when the government, desirous of enlisting the private
sector in developing the atomic bomb, gave contractors wide
latitude in running the government's weapons research and
production facilities.  Today, DOE is trying to overcome this
legacy of inadequate oversight by giving contractors more
incentive to act responsibly while simultaneously increasing
oversight of contractors' activities.  GAO applauds these
efforts but recognizes that they will take years to implement.
With the new administration, DOE has a chance to build on the
momentum from recent changes in contract management.  The new
administration needs to continue demanding greater contractor
accountability.  Improved information and financial management
systems, along with better-trained technical staff, will also be
needed to ensure accountability.  Finally, changes of this
magnitude will take long-term commitment and sustained
leadership to implement.

ENVIRONMENTAL PROTECTION

Testimony

Pesticides:  U.S. and Mexican Fruit and Vegetable Pesticide
Programs Differ, by Peter F. Guerrero, Associate Director for
Environmental Protection Issues, before the Subcommittee on
Commerce, Consumer Protection, and Competitiveness, House
Committee on Energy and Commerce.  GAO/T-RCED-93-9, Feb. 18 (13
pages).

GAO testified that several differences exist in
tolerances--maximum limits of pesticides allowed in or on
foods--between the United States and Mexico.  These differences
fall into three main categories:  (1) pesticides that have
tolerances in both countries but have tolerance in Mexico for
some commodities and no comparable tolerances in the Unites
States; (2) pesticides that have tolerances in Mexico but none
in the United States; and (3) pesticides that have tolerances in
both countries for the same commodities, but at different
levels.  If Congress approves the North American Free Trade
Agreement, the level of imported Mexican produce may soar.  This
anticipated rise has heightened concern among environmental
groups that pesticide levels for Mexican produce may exceed U.S.
limits if growers attempt to maximize production with the new
opportunities for agricultural exports.  Whether or not Congress
approves the agreement, pesticide standards for produce will
most likely play a larger role in trade discussions as imports
from Mexico and other nations continue to increase.  In
addition, the Food and Drug Administration will need to continue
monitoring fruits, vegetables, and other food imported into the
United States from Mexico regardless of whether the agreement is
enacted.  GAO outlines several steps that need to be taken by
both governments to ensure that Mexican produce does not violate
U.S. pesticide tolerance levels.

Creation of a Department of the Environment, by Richard L.
Hembra, Director of Environmental Protection Issues, before the
Senate Committee on Governmental Affairs.  GAO/T-RCED-93-6, Feb.
18 (eight pages).

GAO testified on proposed legislation that would create a
Department of the Environment.  GAO supports such a move.
Conferring Cabinet status on the Environmental Protection Agency
(EPA) would not only enhance the status of environmental
protection issues on the nation's agenda but would also help the
nation to respond more effectively to the complex environmental
challenges it faces.  Other reasons for GAO's support include
the growing importance of EPA and of environmental issues; the
interrelationship of environmental protection issues and other
issues represented by Cabinet departments; and the ability of
the proposed elevation to Cabinet status to improve EPA's
oversight and accountability.

FINANCIAL INSTITUTIONS

Bank and Thrift Regulation:  Improvements Needed in Examination
Quality and Regulatory Structure

GAO/AFMD-93-15, Feb. 16 (74 pages).

This report summarizes the results of GAO's review of bank and
thrift examinations done by the Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve Board, the Office of the
Comptroller of the Currency, and the Office of Thrift
Supervision.  (Each organization is discussed in a separate
report listed below.)  GAO focused on how well regulators assess
the quality of bank and thrift loan portfolios and related loan
loss reserves and the effectiveness of the institutions'
internal control systems.   In reviewing examinations for 58
randomly selected banks and thrifts, GAO discovered surprising
weaknesses.  Specifically, examinations were too limited to
fully reveal the extent of deficiencies jeopardizing safety and
soundness.  These limitations impeded early warning of the
seriousness of bank and thrift weaknesses and reduced the chance
to take timely corrective action and minimize losses to the
insurance funds.  Similar weaknesses affected the quality of
bank holding company inspections.  Extensive flexibility granted
examiners and a lack of minimum requirements were common
problems affecting the quality of examinations and inspections.
As measured by the unprecedented failures of banks and thrifts
since 1980, the regulatory system has become far less effective
in preventing and minimizing the number and the cost of
failures.  Successful implementation of the FDIC Improvement Act
of 1991 and strengthened examinations and accounting rules are
vital to regulatory effectiveness and protection of the
insurance funds.  GAO also identified many inconsistencies among
the regulators that may hinder their efficiency and
effectiveness.  GAO concludes that the regulatory structure that
arose from the Great Depression has not kept pace with the
banking world, one that has become increasingly competitive and
complex in the 1990s.  The Comptroller General summarized this
series of reports in testimony before Congress; see:

Bank and Thrift Regulation:  Improvements Needed in Examination
Quality and Regulatory Structure, by Charles A. Bowsher,
Comptroller General of the United States, before the House
Committee on Banking, Finance, and Urban Affairs.
GAO/T-AFMD-93-2, Feb. 16 (47 pages).

Thrift Examination Quality:  OTS Examinations Do Not Fully
Assess Thrift Safety and Soundness

GAO/AFMD-93-11, Feb. 16 (52 pages).

Bank Examination Quality:  FDIC Examinations Do Not Fully Assess
Bank Safety and Soundness

GAO/AFMD-93-12, Feb. 16 (65 pages).

Bank Examination Quality:  FRB Examinations and Inspections Do
Not Fully Assess Bank Safety and Soundness

GAO/AFMD-93-13, Feb. 16 (63 pages).

Bank Examination Quality:  OCC Examinations Do Not Fully Assess
Bank Safety and Soundness

GAO/AFMD-93-14, Feb. 16 (50 pages).

Penny Stocks:  Regulatory Actions to Reduce Potential for Fraud
and Abuse

GAO/GGD-93-59, Feb. 3 (74 pages).

During the 1980s, the widespread peddling of low-priced
securities known as penny stocks was fraught with fraud and
abuse; investor losses due to unscrupulous sales of these stocks
may have topped more than $2 billion annually.  In response,
Congress granted the Securities and Exchange Commission (SEC)
additional authority to go after individuals involved in
questionable sales of penny stocks.  Broker-dealers that sell
penny stocks and companies that issue penny stocks must now
disclose information about the stocks and the companies before
finalizing penny stock sales.  Although SEC statistics show that
the number of broker-dealers trading penny stocks and complaints
involving penny stocks have decreased in recent years, continued
complaints by investors and newly  uncovered selling tactics
suggest that the potential for fraud and abuse in penny stock
sales remains high.   This report presents information on the
overall status of penny stock activity and the National
Association of Securities Dealers' efforts to (1) increase its
regulation of the market during recent years, (2) implement new
information collection and dissemination systems, (3) coordinate
enforcement with other federal and state authorities, and (4)
examine penny stock broker-dealers' sales practices.

Securities Regulation:  SEC's Oversight of Privately Placed
Transactions Among Large Investors

GAO/GGD-93-37, Feb. 19 (17 pages).

This report reviews how the Securities and Exchange Commission
(SEC) collected and analyzed data for its first two reports to
Congress on the implementation of Rule 144A.  SEC adopted Rule
144A in April 1990 to (1) increase the liquidity and the
efficiency of the secondary market among large institutional
U.S. investors for privately placed foreign and domestic
securities that are not registered with SEC and (2) attract
foreign securities to the U.S.  capital markets.  The rule
allows large institutional U.S.  investors to trade unregistered
securities among themselves and eases disclosure requirements
for foreign issues of privately placed Rule 144A securities.
Obtaining accurate and complete information on the Rule 144A
market is difficult, however.  The nonpublic characteristics
that make the private placement market appealing to large,
sophisticated investors also make it hard for SEC to monitor
market activity.  Consequently, SEC uses various data sources to
monitor developments in the Rule 144A marketplace and to prepare
the reports.  SEC's first effort to report on Rule 144A relied
on limited supporting data and analysis.  Modifications and
expansions in SEC's data collection and procedures during the
second reporting efforts enabled SEC to collect and analyze
more-comprehensive and more-detailed data on the Rule 144A
market.  Although the private nature of the market might not
allow SEC to identify all Rule 144A transactions, SEC officials
have agreed to use two additional data bases when preparing
future reports.  This should provide more-complete data on Rule
144A transactions and enable SEC to better monitor and assess
the impact of the Rule 144A market.

FINANCIAL MANAGEMENT

Testimony

Government Management:  Status of Progress in Correcting
Selected High-Risk Areas, by Donald R. Wurtz, Director of
Financial Integrity Issues, before the Subcommittee on
Oversight, House Committee on Ways and Means.  GAO/T-AFMD-93-1,
Feb. 3 (26 pages).

GAO testified on seven of 17 high-risk areas within the
government that are particularly vulnerable to fraud, waste,
abuse, and mismanagement.  The seven areas involve the Pension
Benefit Guaranty Corporation, the Internal Revenue Service,
Medicare, the Customs Service, asset forfeiture, the Resolution
Trust Corporation, and Superfund.  This testimony focuses on
program weaknesses; agency corrective actions; and
recommendations for future actions by Congress, the
administration, and agency officials.

GOVERNMENT OPERATIONS

Status of Open Recommendations:  Part A--Improving National
Security and International Affairs Programs

GAO/OP-93-1A, Jan. 15.

Status of Open Recommendations:  Part B--Improving Resources,
Community, and Economic Development Programs

GAO/OP-93-1B, Jan. 15.

Status of Open Recommendations:  Part C--Improving Human
Resource Programs

GAO/OP-93-1C, Jan. 15.

Status of Open Recommendations:  Part D--Improving Justice,
General Government, Financial and Information Management, and
Evaluation Programs

GAO/OP-93-1D, Jan. 15.

This annual report summarizes the findings and open
recommendations resulting from GAO audits and other review work
in federal agencies for which satisfactory legislative or
administrative actions have not yet been completed.  To
encourage prompt, responsive actions on its recommendations, GAO
follows up on them.  This report contains information on 2,522
GAO recommendations that were open as of September 30, 1992.
The report is available in a four-volume set totaling more than
1,000 pages or on computer disk.  Either format can be obtained
by using the order form in the back of this publication.

Personnel Practices:  Career Appointments Granted Political
Appointees From Jan. Through Nov. 1992

GAO/GGD-93-49FS, Jan. 22 (six pages).

GAO reviewed the conversion of political appointees to career
positions from January 1 through November 30, 1992.  In total,
the Office of Personnel Management (OPM) reported that it had
processed and approved the conversion of 13 noncareer Senior
Executive Service (SES)  and Schedule C appointees during that
period.  Of the 13 conversions, nine were to career General
Schedule/General Management appointments and four were to career
SES appointments.  All nine conversions to career General
Schedule/General Management appointments consisted of Schedule C
appointments.  The four conversions to career SES appointments
were all noncareer SES appointees.  In all but one instance, the
Schedule C and noncareer SES appointees converted to career
appointments in the same agencies.  OPM also reported that
during that period, six conversions received were not processed.
OPM officials said that these cases either had been withdrawn by
the requesting agencies after discussions with OPM or had not
been processed to completion because they did not meet the merit
and fitness requirements of civil service rules.  GAO did not
look into the reasons why these cases had not been processed.
Two of the six involved noncareer SES appointees, and four
involved Schedule C appointees.  OPM also reported that as of
November 1992, another five cases were in process--all Schedule
C appointees.

Legal Services Corporation:  National Support Center Grantees'
Activities

GAO/HRD-93-9, Feb. 5 (33 pages).

In response to congressional interest in congressional funds
spent on programs involved, directly or indirectly, in
political, cultural, institutional, ideological, and/or economic
advocacy, this report provides information on the Legal Services
Corporation (LSC).  GAO presents data on the activities of the
16 grantees, referred to as national support centers, that
received funds from LSC in 1990.  GAO discusses (1) the amount
and the sources of the centers' funding, (2) their principal
activities, (3) the estimate of funds spent on lobbying
activities, and (4) the makeup of their boards of directors.
GAO also discusses recent findings of monitoring reviews done by
LSC on each center's funded activities.

State Department:  Management Weaknesses at the U.S. Embassy in
Mexico City, Mexico

GAO/NSIAD-93-88, Feb. 8 (24 pages).

The U.S. embassy in Mexico City lacks sufficient management
controls to ensure full compliance with regulations and reduce
its vulnerability to waste, fraud, and abuse.  In less than two
years, the embassy lost property, including office equipment and
household furnishings, valued at $120,000.  Essentially, the
problem was "swept under the rug" because the embassy's records
were so poor that it could not identify how the items had been
lost and if employees should be held responsible.  The embassy
did not report its missing property to the State Department,
though this was required.  In addition, weaknesses in controls
over cashiering have affected mission operations since the
mid-1980s.  Moreover, the embassy has not established a formal
competition advocacy program to ensure that contracts are fully
competed.  Other problems at the embassy include a lack of
compliance with the State Department's new residential housing
standards, weaknesses in the personnel system, and a lack of
effective budget controls.  Although the embassy plans to
correct many of these problems, GAO believes that a formal
program of management improvement is needed to (1) focus senior
management attention on problems and issues and (2) provide a
basis for continuity as foreign service officers rotate to their
next assignments and are replaced by new officers having
management responsibilities in critical control areas.

Kennedy Center:  Information on the Capital Improvement Program

GAO/GGD-93-46, Feb. 9 (10 pages).

This report discusses a $27.4 million appropriation for repairs
and alterations at the Kennedy Center--mechanical, structural,
and handicapped-access projects, as well as garage
repairs--included in the fiscal years 1991 and 1992
appropriation acts.  During the next few years, the
Center--despite limited staff--plans to undertake several large
capital projects.  It lacks an in-house federal contracting
officer, architects, engineers, or other professionals to handle
capital projects.  As a result, the Kennedy Center has
contracted for these services when necessary.  During fiscal
year 1992, Congress considered, but did not pass, legislation
providing the Center with permanent authority for managing these
projects.  GAO doubts whether the Center, at present, has enough
capability to effectively manage a capital improvement effort of
the scope now being considered.  Given enough time and funding,
however, the Center should be able to acquire that capability.

Postal Service:  Service Impact of South Dakota Mail Facility
Not Fully Recognized

GAO/GGD-93-62, Feb. 25 (13 pages).

This report examines planned changes in mail service to
communities that will be served by a new Dakota Central Area
Mail Processing Center in Huron, South Dakota.  Area mail
processing is meant to cut labor costs by consolidating mail
processing--canceling and sorting--functions of many post
offices at one facility.  The plan for the Dakota Central mail
processing facility called for a minor decline in mail service
along with some improvements, with a net overall improvement in
mail service to the affected communities.  GAO found, however,
that the consolidation will affect service more adversely than
was suggested in the Postal Service's consolidation plan and
could result in a net decline in service.  The Postal Service
did not seek the comments of the local communities or discuss
the service aspects of the consolidation with them before
initially approving the new facility.  Among other things, some
postal customers are concerned that reduced service will harm
their businesses.  GAO believes that the Postal Service needs to
review the costs and the benefits of options that could offer
the same or better service to the affected communities after the
consolidation.  Options might include revising or adding routes
to the affected communities, adjusting collection schedules,
keeping some processing capability in the communities, and
establishing separate mail drops for local delivery.

HEALTH

Prescription Drug Prices:  Analysis of Canada's Patented
Medicine Prices Review Board

GAO/HRD-93-51, Feb. 17 (26 pages).

As the public debate about health care costs intensifies,
congressional attention has focused on ways to curb the upward
spiral of prescription drug prices.  The last Congress saw 11
bills introduced that would have constrained drug prices, yet
none of these was enacted.  Some of these bills would have
created a federal board, modeled after Canada's Patented
Medicine Prices Review Board, to monitor prescription drug
pricing.  A September 1992 GAO report (GAO/HRD-92-110) found
that manufacturers charge less for many drugs in Canada than in
the United States and that the Canadian approach to regulating
drug prices contributes to this price differential.  This report
(1) describes the purpose and the structure of Canada's Patented
Medicine Prices Review Board as well as its guidelines and
procedures, especially those used to determine if a drug price
is excessive, and (2) summarizes the evidence about the effects
of the Board's actions in Canada on the prices of new drugs, on
price increases for existing drugs, and on pharmaceutical
research and development.

Testimony

Health Insurance:  Legal and Resource Constraints Complicate
Efforts to Curb Fraud and Abuse, by Janet L. Shikles, Director
of Health Financing and Policy Issues, before the Subcommittee
on Crime and Criminal Justice, House Committee on the Judiciary.
GAO/T-HRD-93-3, Feb. 4 (10 pages).

GAO testified on health care fraud and abuse and the need for
better remedies and more resources to combat the problem.
Health insurance experts estimate that fraud and abuse
contribute to about 10 percent of the more than $800 billion now
spent on health care.  GAO's past work has shown that (1) all
health care payers are vulnerable to fraud and abuse, (2)
significant obstacles hinder the prevention of dishonest billing
practices and the pursuit of health care profiteers, and (3) the
resources devoted to detection and prosecution are inadequate.
This testimony discusses these issues in detail.

Medicare:  Funding and Management Problems Result in Unnecessary
Expenditures, by Janet L. Shikles, Director of Health Financing
and Policy Issues, before the House Committee on the Budget.
GAO/T-HRD-93-4, Feb. 17 (17 pages).

Medicare's soaring expenditures underscore the need for the
government to fund and manage the program judiciously.  Among
the many problems plaguing Medicare management, two stand out.
First, the Health Care Financing Administration (HCFA), the
agency that oversees Medicare, does not have an effective,
national strategy to protect the program from making erroneous
or wasteful payments.  Second, budget constraints have led to
the underfunding of the types of payment controls that prevent
or detect losses due to waste, fraud, and abuse.  For example,
Medicare failed to adequately investigate complaints of fraud
and abuse telephoned in by Medicare beneficiaries, little was
done initially to claim more than $250 million in overpayments
owed by hospitals, Medicare paid an estimated $2 billion in
claims that may have been the responsibility of other health
insurers, and loose controls over who can bill Medicare have
allowed profiteers to exploit the program through fraud and
abuse.  GAO believes that Congress should continue to pursue
modifying budget procedures so that funding for safeguards could
be increased without having to cut spending elsewhere.  In
addition, GAO believes that HCFA needs to develop a national
strategy to manage the Medicare safeguard program.  This would
entail assessing the appropriateness and effectiveness of
individual contractors' controls and developing ways to ensure
that controls that have proven effective are implemented
nationwide.

Prescription Drugs:  Companies Typically Charge More in the
United States Than in Canada, by Janet L. Shikles, Director of
Health Financing and Policy Issues, before the Subcommittee on
Health and the Environment, House Committee on Energy and
Commerce.  GAO/T-HRD-93-5, Feb. 22 (six pages).

Drug manufacturers typically charge wholesalers more in the
United States than in Canada.  In studying prices for 121 widely
dispensed drugs sold in both countries, GAO found that these
drugs would cost 32 percent more in the United States than in
Canada if a common prescription of each drug were purchased at
its factory price.  Differences between U.S. and Canadian drug
prices can be explained largely by two factors that are unique
to Canada:  (1) federal regulations designed to restrain prices
on patented drugs and (2) provincial drug benefit plans that pay
for drugs for a large segment of the population.  Differences in
costs, whether of research, production, or distribution, are not
a major factor in explaining differences in drug manufacturers'
prices.

INCOME SECURITY

Testimony

Assessing PBGC's Short-Run and Long-Run Conditions, by Joseph F.
Delfico, Director of Income Security Issues, before the
Subcommittee on Labor-Management Relations, House Committee on
Education and Labor.  GAO/T-HRD-93-1, Feb. 2 (seven pages).

The risks to the Pension Benefit Guaranty Corporation (PBGC), as
well as pension plan participants, from underfunded plans have
become more apparent with the termination of several large
pension plans sponsored by companies in declining industries.
PBGC's administrative and accounting problems have added to
concerns about the pension insurance agency.  This testimony
highlights the following three areas:  (1) operational and
administrative problems at PBGC, (2) the financial status of
PBGC's single-employer insurance funds and the threat to it from
currently underfunded private sector plans, and (3) the risks
still faced by plan participants.  Pension plan sponsors who
fail to fully fund their plans put an undue burden on
others--sponsors of well-funded plans who may have to pay higher
PBGC premiums to cover the insured shortfall; participants in
underfunded plans who may end up losing some of their benefits;
and, under a worst-case scenario, the federal government, which
could be forced to pay guaranteed benefits should PBGC be
overwhelmed by a rash of large terminations during an economic
downturn.  Reducing plan underfunding would lower PBGC's future
losses by targeting the greatest threat to the pension insurance
agency.  Congress should also consider making the variable rate
premium more risk-related to cut future losses PBGC will most
likely incur.


Pension Plans:  Underfunded Plans Threaten PBGC, by Joseph F.
Delfico, Director of Income Security Issues, before the
Subcommittee on Oversight, House Committee on Ways and Means.
GAO/T-HRD-93-2, Feb. 4 (14 pages).

Several years ago, GAO placed the Pension Benefit Guaranty
Corporation (PBGC) on its "high-risk" list of federal programs
because of long-standing internal control weaknesses and
potentially huge losses to taxpayers.  This testimony discusses
GAO's December 1992 high-risk series report on PBGC
(GAO/HR-93-5).  In GAO's view, successfully addressing the
problems confronting PBGC involves management reforms,
modification of the pension funding rules, and possible changes
in the insurance premium structure.  As long as pension plan
underfunding persists, the pension insurance program and plan
participants' benefits are at risk.  GAO believes that this is
the time--while PBGC still has a positive cash flow--to develop
solutions to better fund pension promises.  GAO supports more
effective funding standards for defined benefit pension plans.
Reducing underfunding would limit PBGC's future exposure and
appropriately target the greatest threat confronting
it--underfunded pension plans.  In addition, Congress should
consider whether the overall premium ceiling and existing
variable premium rate best reflect the risk to PBGC.  Raising
premiums, by making the variable rate premium more risk-related,
would cut PBGC's deficit.

INFORMATION MANAGEMENT

Weather Forecasting:  Important Issues on Automated Weather
Processing System Need Resolution

GAO/IMTEC-93-12BR, Jan. 6 (25 pages).

To improve its weather forecasting, the National Weather Service
(NWS), part of the National Oceanic and Atmospheric
Administration (NOAA), is spending an estimated $4.6 billion to
modernize its observational, information processing, and
communications systems.  The centerpiece of this effort is the
Advanced Weather Interactive Processing System (AWIPS)--an
information network that will analyze and display data received
from radars and satellites, NWS field offices, and other
sources.  The tab for AWIPS is pegged at about $467 million.
This briefing report (1) determines how effectively NOAA has
analyzed and defined its system requirements, (2) identifies key
risks associated with the AWIPS acquisition, and (3) determines
whether any identified risks were severe enough to warrant
delaying the scheduled award of the AWIPS contract in late 1992.

Software Reuse:  Major Issues Need to Be Resolved Before
Benefits Can Be Achieved

GAO/IMTEC-93-16, Jan. 28 (21 pages).

The Pentagon estimates that expenses for developing and
maintaining software for automated information systems now top
$24 billion a year.  To contain costs and improve the
development of high-quality software, the Defense Department
(DOD) has turned to software reuse--the practice of developing
new applications from existing software.  This report provides
background information on software reuse, including an overview
of issues that can inhibit effective software reuse and
information on DOD's strategy to implement a departmentwide
software reuse program.

Asset Management System:  Liquidation of Failed Bank Assets Not
Adequately Supported by FDIC System

GAO/IMTEC-93-8, Feb. 3 (34 pages).

The Federal Deposit Insurance Corporation's (FDIC) requirements
to liquidate failed bank assets are not always being followed.
As a result, FDIC is not maximizing cash recovery on all failed
bank assets.  Foreclosure requirements were not followed for 35
of 135 assets GAO reviewed; income of about $1.4 million being
generated by collateral on 13 delinquent loans went uncollected;
and collateral valued at nearly $80,000 for one loan was
inadequately protected, resulting in its being sold by a local
jurisdiction to recover unpaid taxes.  Information on asset
values and status is supposed to be contained in FDIC's computer
system and in manual asset case files.  GAO discovered, however,
that this information is incomplete and hard to retrieve.  These
weaknesses exist because effective information systems have not
been developed to satisfy the Division of Liquidation's needs.
FDIC has contracted with a consultant to strengthen its
strategic business and information resource management processes.

Telecommunications:  FCC's Oversight Efforts to Control
Cross-Subsidization

GAO/RCED-93-34, Feb. 3 (32 pages).

Regulated telecommunications services include basic interstate
telephone service, while unregulated services encompass such
technologies as voice mail and electronic mail that transmit
information over telephone lines.  If carriers' costs for these
two types of services are not properly allocated, customers of
regulated telephone services may end up paying for some of the
costs of the unregulated services--a practice known as
cross-subsidization.  GAO reported in 1987 (GAO/RCED-88-34) that
the Federal Communications Commission (FCC) had not assigned
enough staff to monitor carriers' cost allocations to protect
ratepayers from cross-subsidization.  This report reviews FCC's
implementation of (1) GAO's recommendation to boost on-site
audits of carriers' cost allocations and (2) certain accounting
safeguards established after 1987 to protect ratepayers from
cross-subsidization, including audits of carriers' cost
allocations done from the carriers by certified public
accounting firms, FCC's reviews of these audits, and a
computerized system for maintaining carriers' cost and revenue
data.

Testimony

Tax Systems Modernization:  Comments on IRS' Portion of
President's Request for Fiscal Year 1993 Supplemental Funds, by
Howard G.  Rhile, Director of General Government Information
Systems Issues, before the Subcommittee on Treasury, Postal
Service, and General Government, House Committee on
Appropriations.  GAO/T-IMTEC-93-1, Feb. 24 (three pages).

The Internal Revenue Service (IRS) is requesting nearly $150
million to buy computer and telecommunications equipment for 12
projects.  The proposed acquisitions, in GAO's view, do not
appear to be spur-of-the-moment purchases but mostly represent
accelerated acquisitions of planned computer hardware and
software buys.  Three of the acquisitions, totaling about $41
million, will directly support IRS' Tax Systems Modernization
program, which includes telecommunications modernization, an
automated system to inventory and control taxpayer
correspondence, and a system to support criminal investigations.
The remaining $107.4 million is primarily to support IRS'
current operations.  This testimony provides GAO's observations
on the proposal.


INTERNATIONAL AFFAIRS

Aid to Kenya:  Accountability for Economic and Military
Assistance CanBe Improved

GAO/NSIAD-93-57, Jan. 25 (81 pages).

The United States has provided more than $300 million in
economic and military aid to Kenya since 1987--a period of
mounting allegations of Kenyan government misuse of foreign aid.
Inadequate controls and other problems make some U.S. assistance
vulnerable to ineffective use or to diversion by the Kenyan
government.  GAO did not identify specific instances of
diversion of U.S. funds or equipment; however, the United States
cannot be certain that all assistance is being used for its
intended purposes.  For example, the Agency for International
Development's accountability for local currency funds is
inadequate, housing guaranty repayments by the Kenyan government
are delinquent, food aid distribution is sometimes delayed,
military aid monitoring could be strengthened, and questions
exist about the potential use of U.S.-supplied helicopters.

JUSTICE AND LAW ENFORCEMENT

Bank and Thrift Criminal Fraud:  The Federal Commitment Could Be
Broadened

GAO/GGD-93-48, Jan. 8 (128 pages).

Although criminal fraud, often involving real estate, has been a
factor in the failure of many financial institutions, the
Justice Department has not done all that it could with the
authority it has to strengthen the government's financial
institution fraud program.  Fraud committed by officers,
directors, and customers at banks and thrifts across the country
has resulted in scores of failed financial institutions and
heavy dollar losses.  In "land flips," for example, related
parties transferred land between themselves to inflate its
value.  They then used the fraudulently overvalued land as
collateral to obtain loans, which typically greatly exceeded the
land's actual value.  The Attorney General has pledged to beef
up the federal government's attack on bank and thrift fraud, and
Congress has passed two major bills supporting the government's
effort.  The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 and the Crime Control Act of 1990
provided the Justice Department with additional powers and
resources to investigate and prosecute financial institution
fraud.  This report provides an overview of the government's
efforts, with a particular focus on the implementation of
certain provisions of the Crime Control Act, Justice's local
enforcement efforts against criminal bank and thrift fraud, and
the progress achieved to date.

Federal Prisons:  Inmate and Staff Views on Education and Work
Training Programs

GAO/GGD-93-33, Jan. 19 (50 pages).

Concerns have been raised about the failure of many federal
prisoners to complete basic prison education programs and about
how useful prison vocational training programs have been in
providing inmates with marketable skills.  Only about 36 percent
of the Federal Bureau of Prisons (BOP) staff GAO surveyed
considered BOP's principal data base on inmate prison education
activities--the Education Data System--to be very accurate.  The
system is supposed to track an inmate's education history,
program enrollments, withdrawals, and completions.  BOP's own
internal reviews have frequently noted, however, that key data
were inaccurate or missing, and GAO's tests of the education
records at three federal prisons had similar findings.  Inmates
GAO surveyed said that they are inclined to participate in
programs when they see clear opportunities to enhance their
abilities and for postprison success.  The staff, on the other
hand, tended to consider inmates to be motivated by cash awards
and other tangible benefits for participation.  Both staff and
inmates strongly favored an incentive of reduced prison time for
participation.  Staff and inmates also strongly favored some
ideas that are generally within BOP's discretion, such as
security classification reductions, preferred housing
assignments, and being paid the starting wage for inmate work to
attend class.  BOP should explore the feasibility of some of
these ideas, perhaps on a test basis.  BOP also needs to ensure
that prison officials enforce the requirement that inmates
lacking a high school diploma acquire a General Equivalency
Diploma before receiving pay raises.  More than half the inmates
and three fourths of the staff responding to GAO's survey
thought that vocational training would generally be useful in
providing inmates with marketable skills.

Bankruptcy Trustees:  Oversight Improved, but Extent of Trustee
Fraud Is Unknown

GAO/GGD-93-54, Jan. 27 (25 pages).

Over the past several years, bankruptcy filings have risen more
sharply than at any other time in history.  Filings since 1986
have increased 109 percent--from about 500,000 to an estimated
1,000,000 in 1992; more than 1.2 million bankruptcy filings are
predicted for 1993.  The oversight and monitoring of bankruptcy
trustees is one of several areas in the Justice Department that
GAO has deemed to be at "high risk."  The trustee system is
vulnerable to fraud because of the large number of trustees
administering ten of billions of dollars in estate funds and
because of the limited resources available to conduct and
thoroughly follow up on trustee audits and reports.  The Justice
Department has sought to improve its oversight of private
bankruptcy trustees through more rigorous review of trustee
candidates, enhanced trustee reporting requirements, more
extensive trustee audit coverage by the Inspector General, and
the replacement of 14 of the 21 U.S.  Trustees who run the
program.  Yet several challenges remain to be addressed,
including the number of old cases, problems identified by
Inspector General audits, and funding limitations.  Concerns
about possible conflicts of interest between those parts of the
Justice Department representing the federal government as a
creditor in bankruptcy cases and the Executive Office for U.S.
Trustees have not been borne out.  Only two cases have been
identified in which conflict of interest might have been an
issue.  The authority of the bankruptcy courts in approving key
case administration decisions provides a check and balance to
Justice's dual role.

Drug Control:  Status Report on Counterdrug Technology
Development

GAO/NSIAD-93-104, Jan. 28 (17 pages).

This report provides information on counterdrug technology and
its development.  GAO reviewed the current efforts of the
Defense Department and the Office of National Drug Control
Policy to develop and demonstrate counterdrug technology
applications with an emphasis on the Pentagon's efforts to
develop cargo container inspection technology.

Drug Control:  Treatment Alternatives Program for Drug Offenders
Needs Stronger Emphasis

GAO/GGD-93-61, Feb. 11 (19 pages).

This report examines the Treatment Alternatives to Street Crime
program, an offender case management program designed to link
drug abusers within the criminal justice system to
community-based drug abuse treatment as an alternative to
criminal penalties.  Elements of the case management include (1)
identifying drug abusers within the criminal justice system; (2)
assessing their need for treatment; (3) matching them to the
most appropriate treatment program; and (4) monitoring their
performance during treatment, which includes drug testing.  GAO
looks at whether the Treatments Alternatives to Street Crime
program has elements that can be attributed to successful drug
abuse control, evaluates program results, and identifies any
barriers that may limit program potential.

Testimony

Drug Control:  Increased Interdiction and Its Contribution to
the War on Drugs, by Louis J. Rodrigues, Director of Systems
Development and Production Issues, before the Subcommittee on
Treasury, Postal Service and General Government, Senate
Committee on Appropriations.  GAO/T-NSIAD-93-4, Feb. 25 (eight
pages).

The portion of the federal drug budget devoted to reducing the
flow of drugs into the United States has almost doubled during
the past five years, and funding for the Pentagon's detection
and monitoring missions has soared more than 400 percent since
1989.  Yet cocaine remains affordable, its purity remains high,
and it continues to be readily available on American streets.
The failure to reduce the amount of cocaine entering the country
is the combined result of (1) the enormous profits that make
interdiction losses relatively inconsequential to drug
traffickers and (2) the inability of the Unites States to
counter successful smuggling methods.  Some level of
interdiction effort must be maintained, not only as a symbolic
gesture of national resolve but also as a key part of the
national strategy for combatting the cocaine cartels.  The level
of that effort, however, should be commensurate with the
relative contribution that interdiction is making--and can be
expected to make--to the national war on drugs.  GAO testified
that additional investments in air and maritime surveillance
will not substantially improve drug interdiction.

NATIONAL DEFENSE

Navy Carrier Battle Groups:  The Structure and Affordability of
the Future Force

GAO/NSIAD-93-74, Feb. 25 (148 pages).

Mounting budget pressures, reduced global threats, competing
priorities, and affordability issues dominate the congressional
debate on national security.  At the same time, the Navy is
embarking on several costly carrier programs--procuring another
carrier, refueling the reactors on existing nuclear carriers,
and replacing and upgrading aircraft.  These programs will have
long-term impacts on the size and cost, and potentially the
capability, of a 12-carrier force.  For example, replacing the
current tactical combat aircraft with the planned F/A-18E/F and
AX aircraft could cost more than $120 billion.  Alternatives
exist that could save tens of billions of dollars.  In addition,
less costly options exist that could satisfy many of the carrier
battle groups' traditional roles without endangering U.S.
national security.  For example, a smaller, less expensive
carrier force could be achieved by relying more on increasingly
capable surface combatants and amphibious assault ships and/or
by employing a more flexible carrier deployment strategy.  GAO
believes that the Pentagon and Congress must agree on the size
and affordability of the carrier force required to meet national
defense goals, including the consideration of other options,
before committing to build another nuclear carrier.

Chemical Weapons Destruction:  Issues Affecting Program Cost,
Schedule, and Performance

GAO/NSIAD-93-50, Jan. 21 (34 pages).

Congress told the Pentagon in 1985 to destroy the bulk of the
U.S.  stockpile of lethal chemical weapons.  The Defense
Department plans to spend nearly $8 billion to build and run
specially designed, high-temperature incinerators on Johnston
Island in the Pacific Ocean and at eight locations around the
continental United States.  GAO's review of test results from
the Johnston Island facility shows lower than anticipated
destruction rates stemming from unreliable equipment.  This
could mean that the destruction program will take longer than
planned and exceed cost estimates.  The overall average hourly
rate of rocket destruction improved substantially from the first
to the second test phase, but extensive maintenance downtime
continued to slow operations.  Public concerns about the safety
of chemical weapons incineration have caused several states to
consider legislation that could halt construction of the
facilities.  The Army began a study in October 1991 to identify
and evaluate the possible use of alternative technologies to
destroy chemical weapons and agents.  The Army has also
continued to encounter difficulties in obtaining the required
environmental permits. Congress recently extended the mandatory
completion date of the disposal program by more than five years
and postponed funding decisions for future incineration
facilities until the results of the alternative technology study
are known.

Operation Desert Storm:  Army Not Adequately Prepared to Deal
With Depleted Uranium Contamination

GAO/NSIAD-93-90, Jan. 29 (42 pages).

During the Persian Gulf War, a number of U.S. combat vehicles
were contaminated by depleted uranium after being struck by
munitions or when ammunition stored on board was ignited by
accidental fires.  Although the Army does not know the full
extent to which personnel were exposed to depleted uranium--a
radioactive, chemically toxic metal--GAO discovered that at
least several dozen U.S. soldiers, some unknowingly, either
breathed it in, ingested it, or were hit by contaminated
shrapnel.  Army and Nuclear Regulatory Commission (NRC)
officials believe, however, that the exposure levels did not
exceed allowable limits set by NRC.  Although the Army's policy
is to minimize individuals' exposure to radiation, it has not
effectively educated its personnel about the hazards of depleted
uranium contamination or about proper safety measures.  What
little information is available is not widely disseminated.  The
military has begun to test crew members who were injured in
Abrams tanks and Bradley Fighting vehicles contaminated by
munitions hits, along with an Army National Guard unit that
claimed exposure while working with contaminated vehicles in the
Persian Gulf, but the Army has no plans to medically evaluate
other personnel who might have been exposed.  The Army still
lacks a formal plan to ensure that contaminated vehicles are
decontaminated, disposed of, and repaired in an efficient way.
These issues may also be relevant to the other services.

Strategic Bombers:  Adding Conventional Capabilities Will Be
Complex, Time-Consuming, and Costly

GAO/NSIAD-93-45, Feb. 5 (68 pages).

The Air Force's "Bomber Roadmap" estimates that it will cost
about $3 billion to modify and equip the B-1B and B-52 bombers
with conventional capabilities, but this figure is understated
by billions of dollars.  At the end of the Cold War, the Air
Force redefined the role of its bomber force from one focused on
nuclear war to one equipped to do a variety of conventional
missions--a scenario spelled out in the June 1992 "Bomber
Roadmap."  This report discusses operational and fiscal
challenges that Congress and the Pentagon will need to address
when deciding the level of funding needed to make the changeover
to a conventional role.  GAO identifies some operational
problems that must be resolved if the B-1B aircraft is to become
the backbone of the conventional bomber force, and GAO questions
the Air Force's plans to equip each type of bomber with some mix
of precision-guided munitions.

B-2 Bomber:  Acquisition Cost Estimates

GAO/NSIAD-93-48BR, Feb. 10 (15 pages).

Estimating the cost of acquiring the B-2 bomber has been a
challenge for the Air Force.  Schedule delays in development,
changes in procurement estimates, and funding restrictions have
contributed to difficulties in estimating cost.  This report
evaluates the difference between the B-2 acquisition cost
estimates for the 75 aircraft program, the 20 aircraft program,
and a 15 aircraft program.  GAO also identifies how appropriated
funds have been applied by the program and how the Air Force
plans to apply future funds.

Mine Warfare:  Consolidation at Ingleside Has Not Been Justified

GAO/NSIAD-93-147, Feb. 16 (10 pages).

The Secretary of the Navy's January 1993 analysis of the plan to
consolidate mine warfare forces at Ingleside, Texas, does not
justify that move.  The Center for Naval Analysis estimates that
moving to Ingleside is one of the costliest alternatives.  The
Secretary's report neither adequately challenges that view nor
addresses the fundamental need for mine warfare forces to train
with the fleets they are to protect--a difficult task if
Ingleside is chosen.  A draft National Academy of Science study
directed by the House Armed Services Committee argues that mine
warfare forces need to be located with the fleets on both
coasts.  The draft says that this is one of the many
disadvantages of locating these forces at Ingleside.  The Navy's
failure to support its decision with compelling evidence that
can override the cost factor and the fleet training issue
suggests that Ingleside is not the best alternative.

Reserve Forces:  Aspects of the Army's Equipping Strategy Hamper
Reserve Readiness

GAO/NSIAD-93-11, Feb. 18 (75 pages).

Although Army Reserve and National Guard units are much better
equipped than they were a decade ago, substantial equipment
shortages persist.  Shortages of major equipment items totaling
$13.7 billion remain, including some items considered essential
to the reserves' wartime missions.  Some shortages are
especially widespread.  Major shortages surfaced in preparing
reserve support units to deploy to the Gulf War and, in some
cases, harmed the ability of these units to carry out their
missions.  This report discusses in detail the (1) progress made
in equipping the reserves, (2) aspects of the Army's equipping
strategy that account for continuing shortages, (3) impact that
additional separate funding for reserve equipment has had on the
reserves' equipment posture, and (4) extent that equipment freed
from force reductions might alleviate existing shortages.

NATURAL RESOURCES

Testimony

Natural Resources Management:  Issues to Be Considered by the
Congress and Administration, by J. Dexter Peach, Assistant
Comptroller General for Resources, Community, and Economic
Development Programs, before the Subcommittee on Oversight and
Investigations, House Committee on Natural Resources.
GAO/T-RCED-93-5, Feb. 2 (seven pages).

This testimony discusses GAO's December 1992 transition series
report entitled Natural Resources Management Issues
(GAO/OCG-93-17TR).  During this era of budgetary constraints,
Congress and the new administration face hard choices in how to
protect the nation's natural resources.  Current funding is
inadequate to handle the declining condition of the nation's
natural resources and related infrastructure on federal lands.
A number of proposals to obtain a better return for the sale or
use of natural resources have not succeeded, GAO believes,
because (1) the full extent of the staffing and funding
shortfalls facing federal natural resources management agencies
has not been clearly articulated and (2) the proposals and the
dialogue surrounding them have not focused on the need to
encourage uses that are compatible with sustaining the nation's
natural resources for future generations.

SCIENCE, SPACE, AND TECHNOLOGY

Federal Research:  Super Collider Is Over Budget and Behind
Schedule

GAO/RCED-93-87, Feb. 12 (46 pages).

The Superconducting Super Collider--a potential source of basic
knowledge about matter and energy--will, when completed, be the
world's largest particle accelerator.  The prime contractor for
the multibillion dollar project, which is being built about 30
miles south of Dallas, Texas, still has not come up with a fully
functioning cost and schedule control system.  Such a
system--with trend analysis showing the estimated cost and
schedule for completing the project--is not expected to be up
and running until July 1993 or later.  Analysis of the major
subcontractors' work in progress showed that the project is over
budget and behind schedule.  For example, trend analyses show
that costs at completion for architect and engineering services
and conventional construction will be $630 million over the
baseline cost estimate of $1.25 billion.  Further, it is unclear
how much these increases will ultimately change the project's
total cost and schedule.  To counter cost increases, the
Department of Energy (DOE) plans to follow a build-to-cost
strategy.  This effort is intended to hold constructions costs
to baseline cost estimates by eliminating, reducing, or
deferring some components.  Such actions would reduce the Super
Collider's experimental capabilities, could harm the
experimental research, and could increase overall costs to the
government.  DOE recently advised Congress that it may only be
able to obtain about $400 million of the $1.7 billion that it is
seeking from foreign contributors--leaving a shortfall of $1.3
billion.  As a result, Congress faces the prospect of having to
substantially boost federal funding to complete the project.

NASA Program Costs:  Space Missions Require Substantially More
Funding Than Initially Estimated

GAO/NSIAD-93-97, Dec. 31 (21 pages).

In response to concerns that Congress has been asked to
authorize the start-up of new NASA programs estimated to cost
hundreds of millions of dollars without having reasonably
accurate estimates of their total funding requirements, GAO
reviewed NASA's historical experience at estimating space
program costs.  Almost all of the 29 programs GAO reviewed
required substantially more funding than the initial estimates
given to Congress.  Changes in estimates ranged from a
44-percent decrease to a 426-percent increase over the initial
estimates; the median change was a 77-percent increase.  General
reasons NASA gave for differences between the initial and
current estimate included insufficient definition studies,
program and funding instability, overoptimism by program
officials, and unrealistic contractor estimates.  Specific
reasons for changes in estimates included program redesigns,
technical complexities, budget constraints, incomplete
estimates, shuttle launch delays, and inflation.  As a result of
these factors, the content and schedule of many programs changed
substantially between the initial and current cost estimates.

Goddard Space Flight Center:  Decision to Contract for Plant
Operations and Maintenance

GAO/NSIAD-93-92, Jan. 12 (nine pages).

This report reviews the impacts of Goddard Space Flight Center's
decision to contract out the operations and maintenance of its
plant facilities.  GAO compared the cost of the current mixed
work force of civil service and contractor employees who do this
work with the cost of (1) an all civil service work force and
(2) an all contractor work force.  GAO also looked at the
benefits realized and the problems encountered by Goddard as a
result of the contracting decision and the transitioning of some
of the functions from a civil service staff to a contractor
staff.  Finally, GAO obtained information from Langley Research
Center, which has a similar mix of contractor and civil service
staff doing operations and maintenance work, to see if any
lessons could be learned that might apply to Goddard.

Testimony

Science and Technology:  Federal Efforts to Collect and Analyze
Information on Foreign Science and Technology, by Jim Wells,
Associate Director for Energy and Science Issues, before the
Subcommittee on Technology, Environment, and Aviation, House
Committee on Science, Space, and Technology.  GAO/T-RCED-93-8,
Feb.  23 (12 pages).

A whole host of federal offices and laboratories collect
information on foreign science and technology.  Scattered
throughout the government, these organizations are concerned
primarily with defense, intelligence, commerce, and science.
Generally, the groups obtain their information from open
(public) sources.  In some cases--particularly in the
intelligence community--they analyze it and restrict access to
their analyses.  No central federal agency is responsible for
coordinating either the collection or the monitoring of
information on foreign science and technology.  Agencies with
common interests, however, are trying to coordinate the
collection and monitoring of relevant information.  It is
unclear at this point how valuable this data might be to U.S.
businesses and whether firms would have much interest in
obtaining the information from the government.

SOCIAL SERVICES

Foster Care:  State Agencies Other Than Child Welfare Can Access
IV-E Funds

GAO/HRD-93-6, Feb. 9 (29 pages).

Foster care caseloads nationwide swelled from about 276,000 in
1985 to 390,000 in 1990 and are expected to reach about 540,000
by 1995.  Faced with less money and rising caseloads, states are
now under pressure to transfer a greater share of foster care
program costs to the federal government.  This report examines
(1) the federal statutes that allow federal reimbursement for
foster care placements by state juvenile justice and mental
health agencies, as opposed to more usual placements by child
welfare agencies, and whether the procedural safeguards required
by the Adoption Assistance and Child Welfare Act of 1980 apply;
(2) which states are claiming reimbursements for juvenile
justice and mental health agency placements and the amounts
claimed during 1991; and (3) barriers that states encounter in
trying to claim reimbursement for these placements.

TAX POLICY AND ADMINISTRATION

Tax Administration:  Overstated Real Estate Tax Deductions Need
to Be Reduced

GAO/GGD-93-43, Jan. 19 (40 pages).

The Internal Revenue Service (IRS) needs to reduce overstated
real estate tax deductions that lead to millions of dollars in
tax losses for federal, state, and local governments.  From 1982
to 1990, individuals' federal deductions of real estate taxes
increased 81 percent--from $27 billion to $49 billion.  IRS
audits show that individuals in 1988 overstated their real
estate tax deductions by an estimated $1.5 billion nationwide.
GAO believes that this level of noncompliance has resulted in
nearly $300 million in federal income tax loss for 1988 and has
increased to about $400 million for 1992.  However, GAO's review
of IRS audits of taxpayers who claimed the deduction for 1988 in
three locations--Montgomery County, Maryland; New Jersey; and
Minnesota--uncovered a much higher level of noncompliance.  IRS
detected only about $37 million (29 percent) of $127 million in
overstated deductions that arose from user fee and rebate
errors.  Examiners would have caught more noncompliance had they
followed IRS audit guidelines on checking source documents to
verify taxpayers' support for deductions.

Testimony

Tax Administration:  Status of Tax Systems Modernization, Tax
Delinquencies, and the Tax Gap, by Jennie S. Stathis, Director
of Tax Policy and Administration Issues, before the Subcommittee
on Treasury, Postal Service, and General Government, House
Committee on Appropriations.  GAO/T-GGD-93-4, Feb. 3 (29 pages).

This testimony, which draws on GAO's December 1992 transition
series report on the Internal Revenue Service (IRS)
(GAO/OCG-93-24TR), discusses three of the most critical issues
facing the agency:  (1) managing the $23 billion Tax Systems
Modernization program, (2) collecting $30 billion in delinquent
taxes, and (3) reducing a $114 billion tax gap.  These issues
are related.  IRS would be better able to collect delinquent
taxes and reduce the tax gap if its employees had on-line access
to information when they need it--a basic goal of Tax Systems
Modernization.  GAO cannot overemphasize the importance of
modernizing IRS's outdated systems.  Dramatic improvements in
IRS' ability to collect delinquent taxes and reduce the tax gap
will only come about, in GAO's view, through fundamental changes
in the way IRS does business.  GAO spells out several potential
obstacles to successful implementation of Tax Systems
Modernization.

TRANSPORTATION

Aviation Safety:  Slow Progress in Making Aircraft Cabin
Interiors Fireproof

GAO/RCED-93-37, Jan. 6 (33 pages).

The Federal Aviation Administration (FAA) issued regulations in
the 1980s to strengthen the flammability standards for materials
used in aircraft cabin interiors.  In establishing the stricter
standards, FAA anticipated that nearly 85 percent of the U.S.
aircraft fleet would comply by the year 2000 and indicated that
it would consider proposing a mandatory retrofit requirement if
all airlines did not meet the standards as anticipated.  At the
start of 1992, about 11 percent of the more than 4,200 aircraft
in the fleet had complied with the standards.  Although the
number of newly built aircraft meeting the standards will
increase each year, no airline has replaced or plans to
completely replace the interior components of aircraft that were
in-service before the stricter standards went into effect.  As a
result, 45 percent of the aircraft fleet at the end of the
decade may not meet the new flammability standards; the entire
fleet is not expected to comply with the stricter flammability
standards until 2018.  The total cost to the airlines to modify
aircraft not meeting the standards would be several billion
dollars and would average more than $1 million per aircraft.
FAA estimates that nine to 16 lives could be saved each year if
all aircraft met the stricter standards.  If the Department of
Transportation's current value of $1.5 million for a human life
were used to extrapolate a value for the potential fatalities
avoided, then up to $110 million could potentially be saved by
modifying aircraft to meet the standards.  In the event,
however, of one or two major crashes in which hundreds of people
are killed, the potential savings could be much higher depending
how high a value was used for a human life.

New Chicago-Area Airport:  Site Comparison Selection Process and
Federal Funding

GAO/RCED-93-105, Feb. 22 (35 pages).

The need for a major new airport in the Chicago region has been
much studied and debated in recent years.  A site selection
process narrowed possible candidates to five locations in
Illinois and Indiana, which an independent consultant then
evaluated on the basis of nine factors.  In a controversial
decision, a policy committee consisting of representatives from
each state reviewed the consultant's analysis and settled on the
Lake Calumet site in the city of Chicago.  An analysis of the
factors in the consultant's study, however, does not indicate a
clear-cut choice for the location of a new Chicago-area airport.
For two of the nine factors--airspace and air traffic
control--particular sites had advantages over the others.  The
consultant estimated that the rural sites would have the fewest
airspace and air traffic control delays and would incur
significantly lower costs than the urban sites.  For another
factor--collateral development costs for utilities and highways
and rail lines to access a new airport--the consultant did not
provide cost data for comparing the sites.  The remaining six
factors identified advantages and disadvantages for each site
but did not strongly favor any particular one.  The policy
committee's site selection was based on its interpretation of
the consultant's study and other considerations.  The committee
votes indicate that Illinois members favored the Illinois sites,
while Indiana members supported the Indiana site.  Seven of the
11 committee members were from Illinois, and a majority-rule
process was used to choose a site.  Federal funds to help defray
the costs of a new Chicago-area airport would have totaled about
$3.1 billion for the Lake Calumet site.  By comparison, the new
Denver airport--the only major airport to be built since
1974--will receive $498 million in federal funds.  FAA is
concerned that funding a new airport at such levels would
seriously affect the government's ability to fund other airport
projects across the country.

Testimony

Airline Competition:  Strategies for Addressing Financial and
Competitive Problems in the Airline Industry, by Kenneth M.
Mead, Director of Transportation Issues, before the Subcommittee
on Aviation, House Committee on Public Works and Transportation.
GAO/T-RCED-93-11, Feb. 18 (26 pages).

Although deregulation of the domestic airline industry has
benefitted U.S. consumers through lower fares and more frequent
service on many routes, some firms face serious financial
problems, and the long-term competitive health of the industry
could be at risk.  This testimony discusses the interrelated
competitive and financial problems of the industry, with a view
toward protecting the interests of consumers and ensuring that
U.S. airlines are positioned to successfully compete in domestic
and international aviation markets.  In GAO's view, an effective
strategy for reviving the ailing U.S. airline industry should
include four key elements: improving airlines' access to capital
markets by easing restrictions on foreign investments and
control; improving access to the growing international market;
reducing barriers to competition; and examining airline pricing
practices, especially those of bankrupt carriers.





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