U.S. General Accounting Office
Reports and Testimony: January 1993
SPECIAL REPORTS
Weapons Acquisition: A Rare Opportunity for Lasting Change
GAO/NSIAD-93-15, Dec. 1992 (84 pages).
The United States today wields unprecedented military strength,
boasting an impressive arsenal of battleforce ships, combat
planes, tanks, and munitions. The acquisition of many of these
weapons, however, has been fraught with major problems.
Commitments have been made to programs like the B-2 bomber
without first demonstrating that they meet critical performance
requirements. Unit costs for weapon systems like the DDG-51
destroyer and the C-17 transport continue to spiral upward.
Meanwhile, weapons such as the Advanced Cruise Missile and
Apache helicopter have been encountering costly production and
support problems. This report explores what can be done to
reverse past trends and improve the acquisition process.
Today's acquisition problems are the consequences of a
procurement process that has become deeply rooted over the
years. Yet GAO believes that the prospects for lasting change,
given the diminished Soviet threat and declining defense
budgets, have never been more encouraging. This report draws on
15 years of GAO work on acquisition issues, examining the
cultural side of acquisition problems to suggest ways to improve
the process in the future.
Transition Series 1992 Dec. 1992 (28 reports).
The transition series, a set of 28 reports, summarizes GAO's
findings on major problems confronting federal agencies, as well
as economic and management issues facing Congress and the
incoming Administration. (Specific report titles are listed
below and may be ordered either individually or as a set.) One
cluster of transition reports, including those on the budget
deficit and investment, addresses broad policy issues affecting
government as a whole and its relationship to the economy.
Another group of reports addresses issues affecting specific
federal agencies, such as the Defense Department and the
Internal Revenue Service. A third group of reports looks at
cross-cutting management issues--everything from financial
management to information management. GAO highlighted many of
these problems in a similar set of reports issued in 1988. In
some instances, progress has been made; all too often, however,
the problems have continued to fester and grow worse. In
general, the state of management in the federal government is
poor. Too many management ideas--and resulting agency
structures and processes--that worked well in the past now
hinder the government from responding quickly and effectively to
a world in tremendous flux. Most agencies have no strategic
vision of the future, lack sound systems to collect and apply
financial and program information to gauge operational success
and accountability, and too often do without people with the
skills necessary to accomplish their missions. The Comptroller
General summarized the series in testimony before Congress; see:
Major Issues Facing a New Congress and a New Administration, by
Charles A. Bowsher, Comptroller General of the United States,
before the Senate Committee on Governmental Affairs.
GAO/T-OCG-93-1, Jan. 8 (30 pages).
NASA Issues GAO/OCG-93-27TR, Dec. 1992 (25 pages).
General Services Issues GAO/OCG-93-28TR, Dec. 1992 (31 pages).
High-Risk Series Dec. 1992 (17 reports).
Many GAO audit reports have spotlighted the effect of management
failures in the federal government--waste, inefficiency, and
even scandal. Political leaders have been forced to spend too
much time reacting to surprises like the HUD debacle rather than
doing the work the agencies were created to do. GAO began its
high-risk program to identify those high-dollar government
programs most vulnerable to fraud, waste, abuse, and
mismanagement. The resulting high-risk series of reports, which
examine the federal government's efforts to identify and correct
problems in 17 especially vulnerable areas, fall into three main
categories: lending and insuring, contracting, and
accountability. (Specific report titles are listed below and
may be ordered either individually or as a set.) Many of the
root causes of the problems afflicting these government programs
are traceable to the absence of fundamental processes and
systems. GAO urges that future congressional oversight focus on
the agency reports and audited financial statements required by
the Chief Financial Officers Act, agency management's progress
in correcting material weaknesses in program internal control
and accounting systems, and federal agency efforts to develop
and implement performance standards. The Comptroller General
summarized the high-risk series in testimony before Congress;
see:
Government Management--Report on 17 High-Risk Areas, by Charles
A. Bowsher, Comptroller General of the United States, before
the Senate Committee on Governmental Affairs. GAO/T-OCG-93-2,
Jan. 8 (22 pages).
Fiscal Year 1994 Budget Estimates for the General Accounting
Office, by Charles A. Bowsher, Comptroller General of the United
States, before the Subcommittee on Legislative, House Committee
on Appropriations. GAO/T-OCG-93-3, Jan. 26 (26 pages).
GAO is requesting $497,585,000 for fiscal year 1994--about an
11-percent increase over fiscal year 1992 levels. In fiscal
year 1993, GAO's funding was reduced by $7 million, and the
agency lost another $5 million in rent collections when the
Bureau of Labor Statistics moved out of the GAO Building. The
level of funding requested for fiscal year 1994, although not
restoring any of the 162 positions cut last year, will allow GAO
to cover mandatory pay increases; continue asbestos removal and
renovations at its headquarters in Washington, D.C.; and pay for
the installation of modern telecommunications equipment and
microcomputers. GAO has been able to provide Congress with
increasing numbers of products without staffing increases. In
fiscal year 1992, the agency's work contributed to a record high
of more than $36.2 billion in measurable financial benefits or
$82 for every dollar appropriated to GAO. The Comptroller
General's goal is to maintain these high productivity levels,
even with lower staffing resources, through continued
improvements in GAO's training curriculum, acquisition of modern
technology, and renovation of the agency's working environment.
ECONOMIC DEVELOPMENT
Testimony
Disaster Management: Recent Disasters Demonstrate the Need to
Improve the Nation's Response Strategy, by J. Dexter Peach,
Assistant Comptroller General for Resources, Community, and
Economic Development Programs, before the Subcommittee on VA,
HUD, and Independent Agencies, Senate Committee on
Appropriations. GAO/T-RCED-93-4, Jan. 27 (35 pages).
Several recent catastrophes--especially Hurricane Andrew in
South Florida--have fueled growing dissatisfaction with how the
nation responds to major disasters. In the aftermath of
Hurricane Andrew, inadequate damage assessments, inaccurate
estimates of needed services, and miscommunication and confusion
at all levels of government slowed the delivery of services
vital to disaster victims. The nation may well experience
future disasters or emergencies even more devastating than
Hurricane Andrew. GAO testified that the federal government's
strategy for dealing with disasters is deficient. It makes no
provision for comprehensively assessing damage or the needs of
disaster victims, which would greatly speed the delivery of
assistance. The federal government also lacks explicit
authority to adequately prepare for a disaster when there is
advance warning. Finally, state and local governments generally
lack the training and funding needed to respond to disasters on
their own.
EDUCATION
Student Testing: Current Extent and Expenditures, With Cost
Estimates for a National Examination
GAO/PEMD-93-8, Jan. 13 (86 pages).
Recent proposals from the federal government and private groups
have focused unprecedented attention on the idea of a national
examination for elementary and secondary students. Yet little
information exists either on the present extent and cost of
testing or on the likely cost of a national examination system.
GAO reviewed the matter and found that students do not seem to
be overtested today. Systemwide testing--exams given to all
students at any one grade level in a school district--consumed
about seven hours for an average student in 1990-91 and cost
about $15 per student. GAO estimates that such testing cost
about $516 million nationwide in that year and that a national
examination--depending on whether it uses multiple choice or
performance testing--could cost, respectively, about $160
million or about $330 million annually. Should Congress decide
to forge ahead with national examinations, it may want to give
serious thought to involving state and local educators in
producing the tests. If the desired end result is a
well-accepted and widely used national examination, Congress
should also consider how to ensure the technical quality of the
tests.
ENERGY
Nuclear Security: Improving Correction of Security Deficiencies
at DOE's Weapons Facilities
GAO/RCED-93-10, Nov. 16 (22 pages).
Although it is critical that the nation's stock of nuclear
materials be properly secured and safeguarded, routine
Department of Energy (DOE) security inspections in 1989 and 1990
uncovered more than 2,100 security deficiencies at 39 of its
contractor-run weapons facilities. This report reviews attempts
by DOE operating contractors to correct security deficiencies
and examines how DOE supervises such contractor efforts. GAO
evaluated 20 security deficiency cases at four nuclear weapons
facilities and found that contractors are not adequately
conducting four of the eight procedures considered necessary to
ensure proper correction of deficiencies. The contractors
cannot always prove that the have done three critical
analyses--root cause, risk assessment, and cost-benefit--and do
not always adequately verify that corrective actions are
appropriate, effective, and complete. At the same time, DOE
oversight has been hampered by computer system incompatibility.
DOE reviews of contractors' corrective action plans are
sometimes untimely, and DOE cannot always show that it has
validated contractors' corrective actions.
Nuclear Weapons Complex: Weaknesses in DOE's Nonnuclear
Consolidation Plan
GAO/RCED-93-56, Nov. 19 (27 pages).
With the end of the Cold War and anticipated cuts in the
nation's nuclear arsenal, the Department of Energy (DOE) has
been studying ways to consolidate its nuclear weapons complex,
which manufactures the nonnuclear components for weapons.
Consolidation will be a particularly difficult task, entailing
huge costs, affecting thousands of workers across the country,
and having important implications for national security. GAO
evaluated DOE's September 1991 Nonnuclear Consolidation Plan and
found several shortcomings. The plan primarily looks at one
option--consolidation at a single dedicated nonnuclear site.
The costs are uncertain and the technical risks of consolidation
were not thoroughly examined. Although DOE is trying to address
some of these weaknesses by further studying other consolidation
options and by reexamining costs in detail, GAO believes that
some problems are being overlooked. Even with these additional
studies, DOE needs to do more to ensure that all reasonable
options have been explored and that technical risks have been
thoroughly examined.
ENVIRONMENTAL PROTECTION
Groundwater Protection: Validity and Feasibility of EPA's
Differential Protection Strategy
GAO/PEMD-93-6, Dec. 9 (104 pages).
In surveying state officials across the country, GAO discovered
that many states possess at least some of the data needed to
assess the vulnerability of groundwater to pesticide
contamination. Significant gaps in the data exist, however.
Officials in only 15 states reported that data have been mapped
in their state for all eight vulnerability factors necessary for
doing valid assessments. Even when data are available, they
often cover only part of the state and are not detailed enough
to use in preparing valid assessments. In fact, no state has
been completely mapped at a sufficient resolution for every
factor. States need to collect more data if they are to conduct
valid groundwater assessments. GAO found that the performance
of vulnerability assessment models has been inconsistent. At
best, existing models have been shown to predict groundwater
vulnerability adequately only in some cases--that is, for some
pesticides in some soils. Moreover, the model tests generally
have not been done on the subcounty scale necessary to show
whether the EPA differential strategy is either scientifically
sound or economically viable. To be useful for regulatory
purposes, both the models and their testing will have to be
improved.
Air Pollution: Actions to Promote Radon Testing
GAO/RCED-93-20, Dec. 24 (35 pages).
To promote radon testing, the Environmental Protection Agency
(EPA) began a public information campaign and gave states grants
to encourage radon testing by home owners. Although this effort
appears to have significantly heightened public awareness of the
problem, only nine percent of home owners surveyed have actually
tested their residences. As a result, an EPA-convened panel
recommended in May 1992 that the current voluntary approach be
continued but with certain programmatic changes. These changes
include targeting areas where radon levels are considered high
and promoting testing and mitigation at the time of real estate
transactions. To support state radon efforts, Congress
authorized a grant program for yearly grants of $10 million for
three years. Funds for this program were recently extended for
a fourth year through fiscal year 1993. Although information to
measure states' success in promoting testing by home owners was
generally unavailable, GAO did identify some state projects that
have increased radon testing by targeting homes in areas with
potentially high radon levels. In two states that GAO surveyed,
the voluntary use of disclosure statements as part of a real
estate sales contract was common; in one state, radon testing
often took place during real estate transactions in areas with
high radon levels. For the most part, the six housing agencies
and federally chartered secondary mortgage institutions that
finance or insure much of the nation's housing do not require
either testing for radon or the disclosure of radon information
for participation in their programs.
FINANCIAL INSTITUTIONS
Resolution Trust Corporation: Number and Types of Legal Matters
GAO/GGD-93-50FS, Jan. 8 (11 pages).
This fact sheet provides information on the number, types, and
nature of pending matters in litigation involving the Resolution
Trust Corporation (RTC). From October 1991 to November 1992,
RTC was involved in about 77,500 legal matters, ranging from
routine real estate foreclosures to complex professional
liability claims. Of this total, 16 percent had been closed by
November 1992. Since October 1991, new legal matters have been
added at an average rate of about 3,100 per month. More
specifically, as of November 1992, 58 percent of RTC's open
legal matters involved litigation cases while 42 percent were
nonlitigation cases. Since its inception, RTC has collected
about $186.8 million from litigation settlements and paid about
$24.7 million in litigation losses, including both judgments and
settlements. RTC's cash recoveries and payments from litigation
settlements increased in each of the past three years.
Resolution Trust Corporation: Recoveries on Asset Sales Through
September 1992
GAO/GGD-93-51FS, Jan. 8 (12 pages).
GAO, in a report issued a year ago (GAO/GGD-92-36FS), examined
the cost of resolving failed thrifts. That report contained
information on the Resolution Trust Corporation's (RTC) recovery
rates and an analysis of the data from RTC's Real Estate Owned
Management System. This report updates that information.
Although cumulative sales of real estate more than doubled from
October 1991 to September 1992, RTC's sales recoveries--measured
as a percentage of net proceeds to book value--have dropped
steadily. The recovery data on a cumulative basis also show a
decline. Overall, the gap between the sales price for real
estate and their appraised value continued to widen; data from
September 1992 show that the average sales price was about 17
percent less than the appraised value.
Deposit Insurance Funds: Compliance With Obligation and
Repayment Requirements as of March 31, 1992
GAO/AFMD-93-31, Jan. 21 (27 pages).
This is the first of GAO's required reports on the Federal
Deposit Insurance Corporation's (FDIC) compliance with the
maximum obligation limitation set by the Federal Deposit
Insurance Corporation Improvement Act of 1991. This obligation
limitation applies separately to both the Bank Insurance
Fund--insurer of commercial bank deposits--and the Savings
Association Insurance Fund--insurer of thrift deposits--and is
designed to ensure that each fund's assets and other funding
sources are enough to pay its obligations. GAO also assesses
whether the Fund's total collections from the management and
disposition of assets acquired from failed banks would be enough
to repay the Fund's existing working capital borrowings.
Testimony
Banks and Thrifts: Safety and Soundness Reforms Need to Be
Maintained, by Charles A. Bowsher, Comptroller General of the
United States, before the Senate Committee on Banking, Housing
and Urban Affairs. GAO/T-GGD-93-3, Jan. 27 (74 pages).
In this testimony, the Comptroller General discusses the
following key safety and soundness provisions of the landmark
Federal Deposit Insurance Corporation Improvement Act of 1991:
(1) the condition of the banking and thrift industries and the
funds that insure them; (2) two concerns being raised
prominently today--the volume of bank lending and regulatory
burden; and (3) the implications of all of this for
congressional oversight and the legislative agenda for banking.
GAO's overriding message is the importance of following through
on the implementation of the key safety and soundness provisions
of the 1991 legislation. Much remains to be done to realize the
act's potential to help both the industry and the deposit
insurance system regain sound financial footing. The banking
industry reported strong earnings performance in the first nine
months of 1992, and welcome signs exist that the health of much
of the industry is improving. Even so, the future of both the
economy and the banking system remains uncertain. Furthermore,
the deposit insurance funds for both banks and thrifts are
severely undercapitalized.
Bank and Thrift Failures: The Government Could Do More to
Pursue Fraud and Wrongdoing, by Harold A. Valentine, Associate
Director for Administration of Justice Issues, before the
National Commission on Financial Institution Reform, Recovery,
and Enforcement. GAO/T-GGD-93-1, Jan. 28 (24 pages).
Fraud and wrongdoing played a big role in the bank and thrift
crisis. Criminal referrals involving former directors,
officers, and other principal officials have been filed in
connection with nearly half of the failed institutions;
negligence by these individuals was suspected in more than 75
percent of these banks and thrifts. GAO testified that the
Justice Department, Federal Deposit Insurance Corporation
(FDIC), and Resolution Trust Corporation (RTC) could be doing
much more to address criminal fraud and civil wrongdoing.
Justice has not adequately coordinated or managed the
government's efforts to investigate and prosecute criminal
fraud. In short, its reaction to this crisis has been "business
as usual." FDIC and RTC have also failed to do all they could
to pursue professional liability claims against former
directors, officers, and other professionals at failed banks and
thrifts. GAO makes a number of recommendations aimed at
strengthening the federal response to fraud, negligence, and
other wrongdoing in financial institutions. GAO also supports
stronger oversight of the nation's financial institutions--a
move that is critical to identifying unsafe and unsound
practices before they threaten the viability of banks and
thrifts.
FINANCIAL MANAGEMENT
Federal Credit Programs: Agencies Had Serious Problems Meeting
Credit Reform Accounting Requirements
GAO/AFMD-93-17, Jan. 6 (22 pages).
The Federal Credit Reform Act of 1990 was meant to better
control and manage the government's direct and guaranteed loan
programs, which totaled $855 billion as of September 1991. GAO
discovered that the law's potential has yet to be realized and
is unlikely to be fully achieved soon, considering the generally
poor state of agency financial systems and controls. The
problems facing agencies include (1) serious and long-standing
weaknesses in credit program financial systems and controls and
resulting unreliable historical credit information, which
stymied the major domestic lending agencies in meeting the
Office of Management and Budget's implementing requirements
under the act; (2) inadequate staff resources to develop the
systems needed to carry out the act's new requirements; and (3)
inappropriate accounting and inconsistent reporting for
pre-credit reform act loans and loan guarantees, a condition
that will both prevent that information from being used to
appraise the reasonableness of post-credit data and diminish the
value of financial reports in measuring agency performance,
future funding needs, and other credit program analyses. These
problems will not be easily overcome and will require a
concerted effort and innovative approaches, such as the interim
use of statistical sampling techniques, to develop and maintain
reasonably accurate credit data.
Financial Management: Poor Internal Control Has Led to
Increased Maintenance Costs and Deterioration of Equipment
GAO/AFMD-93-8, Jan. 5 (60 pages).
The Army, despite having spent more than $1 billion in fiscal
year 1991 to overhaul weapons and equipment, may be wasting
millions of dollars because of poor internal controls and
inadequate systems that fail to protect weapons and equipment
from deterioration and theft during shipments to Army depots and
during routine maintenance. Because repairables at the four
depots GAO visited were stored, often for years, with inadequate
protection, many items rusted or corroded to the point where
they were fit only for scrap. In fiscal year 1991, personnel at
the four depots did only 30 percent of the required physical
inventories for receivables. Improper stacking and other
inadequate storage practices also made it hard to account for
and control items at two of the depots. GAO discovered many
discrepancies between what was on hand and what was recorded in
the system accounting for repairables, suggesting that the Army
may be making decisions about equipment on the basis of
unreliable data. In addition, the depots' cost accounting
system did not accurately record and report maintenance costs
for specific job orders. Because of ineffective maintenance
shop processes and weak accounting controls, costs were not
always charged to the proper job order or inappropriate
nonmaintenance costs were sometimes included.
GOVERNMENT OPERATIONS
Federal Data Collection: Agencies' Use of Consistent Race and
Ethnic Definitions
GAO/GGD-93-25, Dec. 15 (12 pages).
Race and ethnic background is a sensitive subject, and making
determinations of such identity for statistical purposes is an
imprecise effort at best. Federal guidelines aim at ensuring
consistency in federal data collection. Although the agencies
GAO reviewed appear to follow these policies, they do not verify
that data collectors comply with the definitions during surveys
because of the substantial resources that would be required.
This failure to verify compliance, combined with limited review
by the Office of Management and Budget, could be a source of
error in reporting, as seen in an infant mortality study by the
Centers for Disease Control. In addition, inconsistency can
become a problem when agencies use data that are not collected
according to federal standards because these sources may have
their own rules that may differ from federal guidelines. The
agencies GAO reviewed appear to understand this situation and
took it into account when publishing reports.
General Services Administration: Actions Needed to Stop Buying
Supplies From Poor-Performing Vendors
GAO/GGD-93-34, Jan. 11 (42 pages).
Although the General Services Administration (GSA) awards the
majority of its supply contracts to vendors whose products meet
quality and delivery requirements, the agency continues to do
business with a number of vendors with poor performance
histories. Between fiscal years 1988 and 1992, for example, GSA
awarded contracts worth more than $1 billion to at least 285
vendors whose products repeatedly failed to meet contractor
specification and delivery schedule requirements. This
situation exists for two main reasons. First, GSA lacks
complete and readily usable data on vendors' past contract
performance. Second, GSA has not consistently stressed or
considered product quality, on-time delivery, or vendor
capability and performance in awarding and administering its
supply contracts. GSA has taken actions against poor-performing
vendors over the years and recently began several new
initiatives aimed at more fully protecting its supply operations
from such losses and inefficiencies. It is too soon to tell,
however, what impact these initiatives will have on reducing
GSA's vulnerability.
HEALTH
District of Columbia: Barriers to Medicaid Enrollment
Contribute to Hospital Uncompensated Care
GAO/HRD-93-28, Dec. 29 (53 pages).
Uncompensated care costs are becoming a significant problem for
many hospitals in the District of Columbia due to the rising
number of uninsured patients and the soaring cost of health
care. The cost of uncompensated care at hospitals in the
District increased from $157 million in 1987 to $228 million in
1990. Against this growing burden of uncompensated care,
Medicaid reimbursement has become an important revenue source
for hospitals that serve a high percentage of poor and indigent
patients. Even with Medicaid funds, however, many hospitals are
becoming hard pressed to provide adequate health care to their
communities. This report (1) determines the extent to which
uncompensated care is a problem for hospitals in the District of
Columbia, (2) examines the process for obtaining Medicaid
enrollment and its relationship to Medicaid reimbursement and
uncompensated care, and (3) reviews the process for obtaining
Medicaid enrollment in the District and reviews potential
barriers to enrollment.
Emergency Departments: Unevenly Affected by Growth and Change
in Patient Use
GAO/HRD-93-4, Jan. 4 (72 pages).
Patient caseloads in emergency rooms nationwide soared between
1985 and 1990. Nearly 85 percent of hospitals reported an
upsurge in emergency room use by patients with nonurgent
conditions--more than 40 percent of all emergency room patients
in 1990. The largest rise in emergency room visits were by
Medicaid patients, who traditionally have high rates of
emergency room use for nonurgent conditions. Nonurgent use by
uninsured patients also contributed to the emergency room
caseload growth during the six-year period. Growth in emergency
room use was most pronounced among patients whose medical care
is often not fully reimbursed, such as Medicaid, Medicare, and
uninsured patients. At the same time, however, little growth
occurred in emergency room use by patients with private
insurance. This disproportionate growth may make it harder for
hospitals to absorb or offset losses due to unreimbursed
emergency room care. GAO did observe some appreciable
variations in emergency room conditions by community size. For
example, emergency rooms in urban areas were most likely to have
patients waiting a long time for treatment. Furthermore, these
emergency rooms were the most likely to have a larger share of
uninsured patients and increased visits due to AIDS, drug abuse,
and violence.
Medicaid: Changes in Drug Prices Paid by HMOs and Hospitals
Since Enactment of Rebate Provisions
GAO/HRD-93-43, Jan. 15 (44 pages).
In 1990, in an effort to control Medicaid's increasing outlays
for prescription drugs, Congress significantly changed the way
that Medicaid pays for outpatient drugs. Medicaid had been
paying near retail prices for outpatient drugs, while other
purchasers, such as hospitals and health maintenance
organizations (HMO), were able to negotiate big discounts with
drug manufacturers. The new legislation required drug
manufacturers to give state Medicaid programs rebates for
outpatient drugs on the basis of the lowest prices available to
any purchaser. In a September 1991 report (GAO/HRD-91-139), GAO
discussed changes in prescription drug prices charged the
Department of Veterans Affairs and the Defense Department. This
report focuses on changes in drug prices charged hospitals and
HMOs. GAO found that drug price changes experienced by HMOs and
hospitals varied considerably since the enactment of the
Medicare rebate provisions. Some prices increased
substantially, while others declined. Price increases tended to
be more common and more significant for outpatient drugs than
for inpatient drugs, but few other clear patterns emerged. GAO
could not determine the extent to which the price hikes were due
to the new law.
INFORMATION MANAGEMENT
Mission Critical Systems: Defense Attempting to Address Major
Software Challenges
GAO/IMTEC-93-13, Dec. 24 (27 pages).
Billions of dollars in current and future Defense Department
(DOD) weapons and command, control, communications, and
intelligence systems depend on high-performance, correctly
functioning, real-time computer systems that hold up under
severe stresses. Yet the Pentagon's mission-critical systems
continue to be plagued by a host of long-standing software
development problems, including cost, schedule, and performance
shortfalls. This report provides an overview of earlier GAO
work on mission-critical systems. Many studies both by GAO and
DOD have pointed out a variety of deficiencies, ranging from a
lack of management attention to ill-defined system requirements
to inadequate testing. Why has this situation persisted for so
long? GAO notes that the understanding of software as a product
and of software development as a process is not keeping pace
with the growing complexity of existing and emerging
mission-critical systems. The Pentagon is trying to overcome
this dilemma through two main programs--the software action plan
working group and the Corporate Information Management
initiative. Whether these efforts will solve the military's
formidable software problems is uncertain; there are no easy
answers.
Health Information Systems: National Practitioner Data Bank
Continues to Experience Problems
GAO/IMTEC-93-1, Jan. 29 (41 pages).
The Department of Health and Human Services (HHS) created its
National Practioner Data Bank to help prevent unethical or
incompetent doctors from moving across state lines and
concealing their professional history. HHS' management of the
data bank, however, has allowed weaknesses that undermine
achievement of a timely, secure, and cost-efficient operation.
The data bank usually does not give users responses to their
questions for several weeks, which in turn delays the granting
of privileges to health care practitioners. Further, poor
internal controls have allowed user organizations to receive
sensitive practitioner data to which they were not entitled. In
addition, HHS has inadequately monitored the data bank
contractor. Finally, although HHS intends to revamp the data
bank, its plans have not incorporated a sound system development
approach and are based on funding uncertainties. As a result,
HHS may acquire a system that does not meet users' needs.
Testimony
Telecommunications: Cellular Service Competition, by John H.
Anderson, Jr., Associate Director for Transportation and
Communications Issues, before the Senate Committee on Energy and
Public Utilities, California State Legislature.
GAO/T-RCED-93-3, Jan. 12 (13 pages).
Cellular phone service is one of the fastest growing segments of
the telecommunications industry. Since starting up in the early
1980s, cellular phone service has seen annual revenues climb to
nearly $7 billion; about 10 million subscribers today pay more
than $68 per month for service. Under current Federal
Communications Commission (FCC) rules, no more than two cellular
carriers may operate in each geographic market. This testimony
explores the competitive structure of the industry and
determines whether FCC's policies ensure the availability of
cellular services at competitive rates.
INTERNATIONAL AFFAIRS
Loan Guarantees: Export Credit Guarantee Programs' Costs Are
High
GAO/GGD-93-45, Dec. 22 (28 pages).
The cost of running the Commodity Credit Corporation's (CCC)
General Sales Manager-102/103 programs, which guarantee
repayment of bank-financed loans to foreign buyers, has been
very high. Large costs were incurred when CCC provided higher
levels of guarantees to existing program participants or added
new countries to the programs. How much additional cost will be
incurred in the future will depend on the characteristics of any
new loan guarantees that CCC makes. "Rolling over" existing
guarantees to current program participants entails little
additional cost. Increasing the amounts of outstanding
guarantees to most existing program participants or adding new
high-risk countries to the program, however, will add
substantial additional costs. At the same time, the extent of
any meaningful benefits is unknown. Therefore, it is very
important to pay careful attention to future program costs.
International Trade: Advertising and Promoting U.S. Cigarettes
in Selected Asian Countries
GAO/GGD-93-38, Dec. 31 (83 pages).
The controversy surrounding cigarette advertising and promotion
has intensified in recent years in the United States and abroad.
In many countries, cigarettes can be advertised with few
restrictions--in print and broadcast media as well as through
cigarette companies' sponsorship of cultural and sporting
events. Health proponents, however, view these activities as
contrary to international efforts to reduce cigarette
consumption and the illnesses associated with smoking. This
report (1) elaborates on the continuation of the conflicting
U.S. government policy of pursuing antismoking initiatives
domestically while helping U.S. cigarette companies sell their
products abroad and U.S. government regulation of cigarette
exports compared with exports of other potentially harmful
products or substances; (2) summarizes the restrictions on
cigarette advertising and promotion imposed in Japan, Taiwan,
South Korea, Thailand, Hong Kong, Malaysia, and Indonesia and
describes alleged violations by U.S. cigarette companies as
reported by the foreign governments; and (3) reviews the
advertising and promotional activities of U.S. cigarette
companies in these countries and specifically looks at whether
these companies are targeting children and nonsmokers.
Foreign Assistance: Meeting the Training Needs of Police in New
Democracies
GAO/NSIAD-93-109, Jan. 21 (10 pages).
As a way to bolster judicial reform in the former Soviet Union
and Eastern Europe, Congress recently authorized the executive
branch to begin offering law enforcement training in those
countries. This report discusses (1) whether the needs of the
police forces in the region have been adequately assessed, (2)
whether the assistance to police forces now being provided
directly supports attempts to build democracy, (3) whether the
executive branch has developed a plan to provide police training
in support of consolidating democratic values in this region of
the world, and (4) which U.S. agency has the experience to meet
the training intent of the legislation.
JUSTICE AND LAW ENFORCEMENT
Drug War: Drug Enforcement Administration Staffing and
Reporting in Southeast Asia
GAO/NSIAD-93-82, Dec. 4 (24 pages).
GAO reviewed the Drug Enforcement Administration's (DEA)
staffing and intelligence reporting in Southeast
Asia--specifically Burma, Laos, Thailand, Hong Kong, and
Singapore. This report discusses the (1) factors affecting the
size, location, and operations of DEA offices in these areas;
(2) contributions and qualifications of DEA intelligence
analysts assigned to Southeast Asia; (3) analytical support
provided by the Commander-in- Chief, U.S. Pacific Command, to
DEA intelligence programs in Southeast Asia; and (4) adequacy of
DEA intelligence reporting in Southeast Asia. GAO found that
DEA has not fully staffed its Southeast Asia offices with
effectively performing intelligence analysts, resulting in lower
overall intelligence contributions. Various political and
administrative factors, rather than the extent of the narcotics
problem in each country, have generally influenced the size,
location, and operations of DEA offices in Southeast Asia. For
example, even though Burma is a major producer of illicit opium
and heroin, political upheaval in that country has meant a
limited DEA role there. In addition, DEA operates no office in
Laos, the second largest opium producer in Southeast Asia, due
to a lack of Laotian cooperation. Three of four analysts posted
to Southeast Asia have done a poor job providing intelligence
reports--a situation GAO believes is due mainly to a lack of
regional or area knowledge, skills, and abilities among the
analysts. According to a DEA official, the agency has no
criteria other than time-in-grade requirements for determining
whether applicants for intelligence analyst positions are
qualified to do the work.
Federal Judiciary: How the Judicial Conference Assesses the
Need for More Judges
GAO/GGD-93-31, Jan. 29 (95 pages).
This report includes GAO's assessment of the policies,
procedures, and methodologies that the Judicial Conference of
the United States used in recommending the creation of more
federal judgeships. GAO also describes (1) efforts under way to
improve the case weights used to measure district judges'
workload and (2) preliminary efforts to develop a more accurate
measure of appelate court workload. Given the limitations of
current workload measures and the judgmental nature of much of
the Conference's decisions, GAO was unable to determine whether
the 1990 recommendations accurately refelected the need for more
judges. Within these limitations, however, GAO found the
Conference's method of determining the need for more judges to
be reasonable.
NATIONAL DEFENSE
Defense Inventory: Depot Packing and Shipping Procedures
GAO/NSIAD-93-3, Dec. 7 (10 pages).
The Defense Logistics Agency (DLA) routinely consolidates the
packing of low priority shipments going to the same military
installation at the same time. Yet Pentagon regulations do not
allow consolidating the highest priority orders going to the
same place at the same time, even though this would yield
considerable savings. One DLA depot has estimated that it could
save about $250,000 annually through consolidated packing of
these priority orders. DLA depots generally pack and ship
supply items in an efficient and effective way. DLA is
incurring unnecessary costs, however, because of a new Army
supply system that automatically expedites transportation for
high priority requisitions that fail to show a required delivery
date. This procedure contradicts a Pentagon directive allowing
DLA depots to downgrade the transportation priority of
requisitions when materiel is not needed within 20 days. GAO
also found that recycling efforts varied from one military
installation to another.
Theater Missile Defense Program: Funding and Personnel
Requirements Are Not Fully Defined
GAO/NSIAD-93-84, Dec. 15 (14 pages).
The Strategic Defense Initiative Organization (SDIO) cannot
estimate total cost and personnel requirements for the planned
theater missile defense system because it has not fully defined
the design and performance requirements for the overall
capability. For the functional element upon which it has
concentrated--active defense--SDIO has not yet developed an
overall program plan that defines how theater missile defense
will interact within its own elements, with existing air defense
capabilities, or with other components of the Global Protection
Against Limited Strikes system. Further, SDIO has not yet
developed an overall program plan and acquisition strategy for
acquiring and deploying the systems and has not fully defined
certain performance requirements. SDIO projected that it would
need about $2.4 billion more funding during fiscal years 1992
through 1997 than had been approved for the theater missile
defense program in DOD's fiscal year 1993 plan. SDIO officials
said that the fiscal year 1994 plan would include enough funding
to implement the currently planned program. Although the Army
does not know its total theater missile defense force
requirements, it has estimated that it will need about 1,300
people for the Theater High Altitude Area Defense system and has
stated that no new personnel would be required if the upgraded
Patriot system is selected for lower tier defense. The Pentagon
is required to provide Congress with a master plan covering the
theater missile defense program when the President submits his
1994 fiscal year budget.
Defense Health Care: CHAMPUS Mental Health Demonstration
Project in Virginia
GAO/HRD-93-53, Dec. 30 (16 pages).
The Defense Department (DOD) is now undertaking a managed care
demonstration project for mental health services in the
Tidewater, Virginia, area for beneficiaries of the Civilian
Health and Medical Program of the Uniformed Services (CHAMPUS).
Allegations began surfacing in November 1991 that the project's
contractor was denying needed care for CHAMPUS beneficiaries to
boost its profits under the fixed-price contract
arrangement--$31.2 million in fiscal year 1992. GAO discovered
that the project has saved money, mainly by (1) reducing the use
of inpatient services by about 83 percent and substituting less
expensive partial hospitalization and outpatient treatment and
(2) paying mental health providers lower reimbursement rates.
DOD oversight and contractor controls, however, have failed to
guarantee CHAMPUS beneficiaries access to quality treatment.
Although DOD effectively monitors the administrative aspects of
the contractor's operations, it has fallen short in independent
evaluation and quality-of-care monitoring of the project.
Similarly, although the contractor's system for assessing and
authorizing care has many favorable features that help
beneficiaries receive treatment, it may also be unduly
restricting access to care and limiting identification of
quality treatment problems.
Army Materiel Command: Factors Influencing Retirement Decisions
During 1990 Reduction in Force
GAO/NSIAD-93-28BR, Dec. 31 (73 pages).
Congress is debating proposed legislation that would encourage
more early retirements during the reduction of civilian
employees at the Defense Department. This briefing report
studies the retirements experienced by the Army Materiel Command
as part of its 1990 reduction in force, during which specific
authority was given to allow early retirements. GAO (1)
determines the extent to which early retirements may have helped
avoid involuntary separations in that instance, (2) identifies
the main factors that differentiated employees who took early
retirements in that reduction in force from those who did not,
and (3) obtains insights on retirement-eligible employees'
reactions to hypothetical retirement incentives. GAO also
obtained the views of employees already eligible for standard
retirement at the time of the Army Materiel Command's reduction
in force.
Electronic Warfare: Laser Warning System Production Should Be
Limited
GAO/NSIAD-93-14, Jan. 25 (16 pages).
Installed in combat helicopters, the AVR-2 and AVR-2A laser
warning systems are designed to alert pilots to the type and
location of laser-guided enemy weapons. GAO believes that
production of the AVR-2 and AVR-2A should be slowed until
operational tests are completed successfully. The AVR-2's poor
performance during operational testing forced its redesign.
Even though half of the total quantity required has been
procured, neither the redesigned AVR-2 nor the further
redesigned AVR-2A has been subjected to operational tests to
ensure satisfactory performance. This contradicts Pentagon
acquisition policy, and the Army risks buying defective systems.
Desert Shield/Storm: Air Mobility Command's Achievements and
Lessons for the Future
GAO/NSIAD-93-40, Jan. 25 (43 pages).
The Air Force Air Mobility Command performed well under
demanding circumstances during Operation Desert Shield/Storm,
showing flexibility in its response to unforseen difficulties
associated with the airlift operation. The Air Force's ability
to transport sustainment cargo--the material required to supply
deployed troops--and units to the theater of operations
efficiently was taxed by several factors, some of which were
beyond the Air Force's control. These difficulties, however,
were largely offset by the lengthy buildup period between August
1990 and January 1991. By the start of Desert Storm, the
Defense Department and the Air Force had devised "work arounds"
that, to a large degree, alleviated these problems. Yet even
with the Air Force's flexibility in devising work arounds, the
lack of available aircrews prompted the Air Force to extend
allowable hours for flight times; regulations normally limit
these hours because of the dangers associated with aircrew
fatigue. Further, the long distances and lack of an in-theater
recovery base forced the Air Force to rely extensively on Air
Reserve Component volunteer aircrews before the official call-up
of the Reserves was authorized. Finally, the Air Force's
decision to activate partial, rather than complete Reserve
units, caused confusion about command structure and
administrative procedures.
Force Structure: Issues Involving the Base Force
GAO/NSIAD-93-65, Jan. 28 (32 pages).
The dissolution of the Soviet Union has touched off a national
debate over future defense spending levels. Both congressional
leaders and the incoming administration have proposed cuts in
defense outlays that could result in a smaller military than the
Base Force--the level of preparedness that the Pentagon
describes as necessary to protect U.S. interests in the
post-Cold War era. Although conventional force levels in the
current Base Force were originally formulated before the breakup
of the Soviet Union, the Pentagon believes that they still fully
reflect the current international security situation. The
Defense Department's (DOD) force structure decision makes
several assumptions about national interests, threats,
contingency requirements, military doctrine, and risk. At the
heart of the Base Force concept is the ability to deter and
defend against uncertain threats in regions critical to U.S.
interests, including Europe, Southwest Asia, and the Pacific.
Given the relative absence of immediate military threats to U.S.
interests, it is unclear how the United States should compare
itself militarily to other major nations. GAO cites five key
policy issues that policymakers must consider in determining the
size and composition of U.S. military forces. These issues
provide a framework for debating force structure issues in the
future.
SCIENCE, SPACE, AND TECHNOLOGY
Federal Research: Foreign Contributions to the Superconducting
Super Collider
GAO/RCED-93-75, Dec. 30 (15 pages).
The Department of Energy (DOE) may have a hard time getting the
foreign contributions needed to meet its $1.7 billion goal for
the Superconducting Super Collider. As of the end of fiscal
year 1992, DOE had received about $15 million in foreign
contributions consisting of pledges and contributions of labor
and materials from India, Russia, and China. This amount is
close to the $20 million DOE estimated that it would receive by
the end of fiscal year 1992. The Superconducting Super Collider
funding profile, however, calls for DOE to obtain an additional
$1.1 billion in foreign contributions through fiscal year 1996.
Although most of this money will have to come from Japan,
Japanese officials have said that they are still studying the
merits of the project and have yet to decide whether to
contribute. If the foreign contributions do not materialize,
the tab for U.S. taxpayers will increase regardless of whether
Congress decides to make up for the funding shortfall or let the
project's schedule slip. According to DOE, a one-year slippage
in the project's overall completion schedule would boost costs
by about $400 million--or roughly $1 million a day.
SOCIAL SERVICES
Child Support Assurance: Effect of Applying State Guidelines to
Determine Fathers' Payments
GAO/HRD-93-26, Jan. 21 (45 pages).
Inadequate and unreliable financial support from noncustodial
parents contributes to the high incidence of poverty among
children living in single-parent families. During the last
decade, Congress and the states have tried to tighten child
support enforcement laws. Congressional efforts have focused on
a system--known as child support assurance--to make child
support payments more reliable. Under this system, the
government would pay a guaranteed minimum level of support
should noncustodial parents become unable to support their
children or if they fail to pay. This report provides an
empirical analysis of one major element of a child support
assurance system--child support guidelines. GAO (1) examines
the income of young noncustodial fathers and the burden on them
of paying the entire minimum assured benefit and (2) illustrates
how many of these fathers would be required to pay the minimum
assured benefit under typical child support guidelines.
TAX POLICY AND ADMINISTRATION
Tax Administration: IRS Can Improve Controls Over Electronic
Filing Fraud
GAO/GGD-93-27, Dec. 30 (44 pages).
A major advantage to filing electronically with the Internal
Revenue Service (IRS)--returns are sent via telephone lines and
processed by computer--is that taxpayers can receive their
refunds faster. The soaring popularity of electronic filing,
however, has been accompanied by a rising incidence of
fraudulent electronic returns; IRS identified more than 11,000
fraudulent returns in the first seven months of 1992. IRS began
tightening its controls in 1992 both by beefing up its screening
of individuals and firms who want to file electronically and by
increasing the number of fraud detection personnel. These steps
probably contributed to the rise in the number of fraudulent
returns spotted in 1992. The amount of fraudulent returns that
IRS identified but could not stop before issuance, however,
increased by 35 percent during the first seven months of 1992
compared to the same period a year earlier--from $6.3 million to
$8.5 million. A system of controls to totally prevent
electronic filing fraud or to identify and stop all fraudulent
returns before they are issued may be unrealistic. In GAO's
view, however, additional controls can be implemented to further
reduce IRS' vulnerability.
Tax Administration: Opportunities to Increase the Use of
Electronic Filing
GAO/GGD-93-40, Jan. 22 (77 pages).
The prospect of a prompt refund makes electronic filing very
appealing for most taxpayers. These expedited refunds come at a
price, however. Taxpayers have to pay a third party to prepare
or electronically transmit the returns and must pay yet another
fee if they want to obtain the expedited refund through a
financial institution. The Internal Revenue Service's (IRS)
research suggests that this cost deters most people from filing
electronically unless they need their refunds right away. In
promoting electronic filing, IRS has focused on attracting more
preparers and transmitters. Although this approach has boosted
the number of taxpayers filing electronically, about 90 percent
of all individual income tax returns in 1992 were still filed in
traditional ways. GAO believes that IRS needs to make
electronic filing more appealing and more available to a broader
segment of the population. IRS also needs to address various
operational issues that if effectively resolved could make
electronic filing more appealing and help IRS more fully realize
the benefits available through this technology.
TRANSPORTATION
Airline Competition: Impact of Changing Foreign Investment and
Control Limits on U.S. Airlines
GAO/RCED-93-7, Dec. 9 (75 pages).
Recent bankruptcies by financially strapped U.S. airlines have
heightened congressional concerns about the effects of industry
consolidation on domestic and international competition.
Foreign investment is a potential source of capital for U.S.
airlines, but it is limited by law. This report examines the
implications of relaxing existing restrictions on foreign
investment in and control of U.S. airlines. GAO assesses the
impacts in five key areas--domestic and international
competition, national security, airline employment, and safety.
GAO also examines the Department of Transportation's procedures
for enforcing the current restrictions.
Air Traffic Control: Justifications for Capital Investments
Need Strengthening
GAO/RCED-93-55, Jan. 14 (27 pages).
The Federal Aviation Administration (FAA) launched a major
effort in 1991--now called the Capital Investment Plan--to
modernize air traffic control by acquiring new radar,
communications, and data processing systems designed to bolster
the safety and efficiency of air travel. While acquiring these
new systems, FAA has encountered serious problems in cost growth
and peformance as well as schedule delays. In an earlier report
(GAO/RCED-91-159), GAO found that FAA's failure to prepare
mission need statements for any of its major acquisitions had
contributed to these acquisition problems. FAA reformed its
acquisition process in 1991 by requiring a mission need
statement for all new system acquisitions in the Capital
Investment Plan. This report discusses whether (1) mission need
statements contained evidence to support the need for new
investments and (2) the statements relied on analyses of current
performance of air traffic control systems.
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