[House Report 104-874]
[From the U.S. Government Publishing Office]



                                                 Union Calendar No. 477
104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-874
_______________________________________________________________________

 
  ACTIVITIES OF THE HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

                      ONE HUNDRED FOURTH CONGRESS

                       FIRST AND SECOND SESSIONS

                               1995-1996

                   (Pursuant to House Rule XI, 1(d))

                                     


                                     

January 2, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed


                                                 Union Calendar No. 477
104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-874
_______________________________________________________________________

                               ACTIVITIES

                                 of the

                     HOUSE COMMITTEE ON GOVERNMENT

                          REFORM AND OVERSIGHT

                      ONE HUNDRED FOURTH CONGRESS

                       FIRST AND SECOND SESSIONS

                               1995-1996

                   (Pursuant to House Rule XI, 1(d))

                                     


                                     

January 2, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed


              COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

     WILLIAM F. CLINGER, Jr., 
      Pennsylvania, Chairman
CARDISS COLLINS, Illinois            BENJAMIN A. GILMAN, New York
HENRY A. WAXMAN, California          DAN BURTON, Indiana
TOM LANTOS, California               J. DENNIS HASTERT, Illinois \1\
ROBERT E. WISE, Jr., West Virginia   CONSTANCE A. MORELLA, Maryland
MAJOR R. OWENS, New York             CHRISTOPHER SHAYS, Connecticut
EDOLPHUS TOWNS, New York             STEVEN SCHIFF, New Mexico
JOHN M. SPRATT, Jr., South Carolina  ILEANA ROS-LEHTINEN, Florida
LOUISE McINTOSH SLAUGHTER, New York  WILLIAM H. ZELIFF, Jr., New 
PAUL E. KANJORSKI, Pennsylvania      Hampshire
GARY A. CONDIT, California           JOHN M. McHUGH, New York
COLLIN C. PETERSON, Minnesota        STEPHEN HORN, California
KAREN L. THURMAN, Florida            JOHN L. MICA, Florida
CAROLYN B. MALONEY, New York         PETER BLUTE, Massachusetts
THOMAS M. BARRETT, Wisconsin         THOMAS M. DAVIS, Virginia
GENE TAYLOR, Mississippi \5\         DAVID M. McINTOSH, Indiana
BARBARA-ROSE COLLINS, Michigan       JON D. FOX, Pennsylvania \7\
ELEANOR HOLMES NORTON, District of ColumbiaTATE, Washington
JAMES P. MORAN, Virginia             DICK CHRYSLER, Michigan
GENE GREEN, Texas                    GIL GUTKNECHT, Minnesota
CARRIE P. MEEK, Florida              MARK E. SOUDER, Indiana
FRANK MASCARA, Pennsylvania \3\      WILLIAM J. MARTINI, New Jersey
CHAKA FATTAH, Pennsylvania           JOE SCARBOROUGH, Florida
BILL K. BREWSTER, Oklahoma \2\       JOHN B. SHADEGG, Arizona
TIM HOLDEN, Pennsylvania \4\         MICHAEL PATRICK FLANAGAN, Illinois
ELIJAH CUMMINGS, Maryland \6\        CHARLES F. BASS, New Hampshire
            ------                   STEVEN C. LaTOURETTE, Ohio
BERNARD SANDERS, Vermont (Independent)ARSHALL ``MARK'' SANFORD, South 
                                     Carolina
                                     ROBERT L. EHRLICH, Jr., Maryland
                                     SCOTT L. KLUG, Wisconsin \8\
  James L. Clarke, Staff Director
  Kevin M. Sabo, General Counsel
     Judith McCoy, Chief Clerk
Bud Myers, Minority Staff Director

----------
\1\ Elected to Committee May 25, 1995 (H. Res. 157).
\2\ Elected to Committee June 13, 1995 (H. Res. 166).
\3\ Resigned from Committee July 11, 1995 (Communication to the 
Speaker).
\4\ Elected to Committee July 18, 1995 (H. Res. 186).
\5\ Resigned from Committee February 28, 1996 (Communication to the 
Speaker).
\6\ Elected to Committee April 25, 1996 (H. Res. 414).
\7\ Resigned from Committee June 25, 1996 (H. Res. 462).
\8\ Elected to Committee July 22, 1996 (H. Res. 485).



                         LETTER OF TRANSMITTAL

                              ----------                              

                                  House of Representatives,
                                   Washington, DC, January 2, 1997.
Hon. Robin H. Carle,
Clerk of the House of Representatives
Washington, DC.
    Dear Ms. Carle: I am pleased to submit the enclosed report 
entitled ``Activities of the House Committee on Government 
Reform and Oversight, 104th Congress, First and Second 
Sessions.''
    This report follows the committee's past practice of 
publishing its activities report annually as an interim report 
at the end of each first session of a Congress and as a 
separate final report at the end of a full Congress.
    The present report includes matters required by Rule XI, 
1(d) to be reported to the House not later than January 2, 
1997, on the activities of the committee and in carrying out 
its duty under Rule X to ``review and study, on a continuing 
basis, the application, administration, execution, and 
effectiveness'' of laws whose subject matter is within the 
jurisdiction of the committee.
    The present report describes fully the committee's 
jurisdiction and organization, and details its activities. Of 
particular note, in an extraordinarily productive Congress are 
committee efforts in Procurement Reform, the Line-Item Veto, 
the Federal Government Management: Examining Government 
Performance as We Near the Next Century investigative report, 
and the committee investigations of the White House Travel 
Office and FBI Background files matter.
            Sincerely yours,
                                 William F. Clinger, Jr., Chairman.




                            C O N T E N T S

                              ----------                              
                                                                   Page
Part One. General statement of organization and activities.......     1
  I. Jurisdiction, authority, powers, duties..........................1
 II. Historical background............................................9
III. Organization....................................................13
        A. Subcommittees.........................................    13
        B. Rules of the Committee on Government Reform and 
            Oversight............................................    14
 IV. Activities, 104th Congress......................................21
        A. Investigative Reports.................................    21
        B. Legislation...........................................    23
        C. Reorganization plans..................................    30
        D. Committee Prints......................................    30
        E. Committee Action on Reports of the Comptroller General    31
Part Two. Report of Committee Activities.........................    33

                 I. Matters of Interest, Full Committee

        A. General...............................................    33
              1. Oversight plans of the committees of the U.S. 
                House of Representatives.........................    33
              2. Views and Estimates for Fiscal Year 1997........    35
              3. Investigations..................................    36
                  a. The Financial Holdings and Activities of 
                      Secretary of Commerce Ronald H. Brown......    36
                  b. The White House Travel Office Investigation.    37
                  c. The Security of FBI Background Investigation 
                      Files......................................    49
                  d. Questions Concerning Campaign Contributions 
                      Made to or Solicited by Lippo Group, John 
                      Huang and Others...........................    52
                  e. Misuse of Political Influence within the 
                      Disciplinary Enforcement System at the 
                      Department of Defense......................    53
                  f. Health Care Task Force......................    54
                  g. Labor Department Taxpayer Funded ``Toll-
                      Free'' Hotline.............................    54
                  h. National Reconnaissance Office..............    54
                  i. Abuse of the American Express Government 
                      Travel Payment Program.....................    54
                  j. Taxpayer Funded Trip to Disney World........    55
              4. Legislation.....................................    56
                  a. H.R. 5, the Unfunded Mandates Reform Act of 
                      1995 (Public Law 104-4)....................    56
                  b. H.R. 2, Line Item Veto Act of 1995..........    57
                  c. H.R. 1038, a bill to Revise and Streamline 
                      the Acquisition Laws of the Federal 
                      Government.................................    58
                  d. H.R. 1670, the Federal Acquisition Reform 
                      Act of 1995................................    59
                  e. H.R. 830, the Paperwork Reduction Act of 
                      1995.......................................    60
                  f. S. 790, the Federal Reports Elimination and 
                      Sunset Act of 1995.........................    63
                  g. H.R. 3864, General Accounting Office 
                      Management Reform Act of 1996..............    65
                  h. H.R. 3136, title III, subtitle E, the 
                      ``Congressional Review of Agency 
                      Rulemaking,'' (Public Law No. 104-121, 
                      title II, subtitle E)......................    66
                  i. S. 1577, to Amend Title 44, United States 
                      Code, to authorize appropriations for the 
                      National Historical Publications and 
                      Records Commission.........................    68
                  j. H.R. 2326, Health Care Fraud and Abuse 
                      Prevention Act of 1995.....................    68
                  k. H.R. 3078, Federal Agency Anti-Lobbying Act.    69
                  l. ``Proceedings Against John M. Quinn, David 
                      Watkins, and Matthew Moore (Pursuant to 
                      Title 2, United States Code, Sections 192 
                      and 194,'' House Report 104-598, May 29, 
                      1996.......................................    70
        B. Budget Process........................................    72
        C. Federal Procurement Policy--An Era of Reform..........    74
              1. Oversight of the Implementation of the Federal 
                Acquisition Streamlining Act of 1994 (FASA) 
                (Public Law 103-355).............................    75
              2. Review of the Federal Government's Acquisition 
                Strategy Regarding the Post Federal 
                Telecommunications System 2000 Program (Post-
                FTS2000).........................................    76
              3. Review of the Department of Defense's 
                Acquisition of the Defense Information Systems 
                Network (DISN)...................................    77
              4. Review of the General Services Administration's 
                (GSA) Management of the Multiple Award Schedule 
                (MAS) Program....................................    78
              5. Oversight of Reform of the Acquisition System of 
                the Federal Aviation Administration (FAA)........    79
        D. Government Performance and Results Act of 1993 (GPRA).    79

                           II. Investigations
             a. investigations resulting in formal reports

Committee on Government Reform and Oversight, Hon. William F. 
  Clinger, Jr., Chairman.........................................    81
      1. ``A Citizen's Guide on Using the Freedom of Information 
          Act and the Privacy Act of 1974 to Request Government 
          Records,'' House Report No. 104-156, June 22, 1995, 
          First Report by the Committee on Government Reform and 
          Oversight..............................................    81
      2. ``Creating a 21st Century Government,'' House Report No. 
          104-434, December 21, 1995, Second Report by the 
          Committee on Government Reform and Oversight, Together 
          with Additional Views..................................    81
      3. ``Laws Related to Federal Financial Management as 
          Amended Through December 31, 1995,'' House Report No. 
          104-745, August 2, 1996, Ninth Report by the Committee 
          on Government Reform and Oversight.....................    83
      4. ``Sampling and Statistical Adjustment in the Decennial 
          Census: Fundamental Flaws,'' House Report No. 104-821, 
          September 24, 1996, Fourteenth Report by the Committee 
          on Government Reform and Oversight, Together with 
          Additional and Dissenting Views........................    84
      5. ``Investigation of the White House Travel Office Firings 
          and Related Matters,'' House Report No. 104-849, 
          September 26, 1996, Fifteenth Report by the Committee 
          on Government Reform and Oversight, Together with 
          Minority and Additional Views..........................    86
      6. ``Federal Government Management: Examining Government 
          Performance As We Near the Next Century,'' House Report 
          No. 104-861, September 28, 1996, Eighteenth Report by 
          the Committee on Government Reform and Oversight, 
          Together with Additional and Minority Views............    90
      7. ``Investigation into the White House and Department of 
          Justice on Security of FBI Background Investigation 
          Files,'' [Interim Report], House Report No. 104-862, 
          September 28, 1996, Nineteenth Report by the Committee 
          on Government Reform and Oversight, Together with 
          Additional Views.......................................    92
Government Management, Information, and Technology Subcommittee, 
  Hon. Stephen Horn, Chairman....................................    97
      1. ``Making Government Work: Fulfilling the Mandate for 
          Change,'' House Report No. 104-435, December 21, 1995, 
          Third Report by the Committee on Government Reform and 
          Oversight, Together with Additional Views..............    97
      2. ``Year 2000 Computer Software Conversion: Summary of 
          Oversight Findings and Recommendations,'' House Report 
          No. 104-857, September 27, 1996, Sixteenth Report by 
          the Committee on Government Reform and Oversight.......   105
      3. ``Crude Oil Undervaluation: The Ineffective Response of 
          the Minerals Management Service,'' House Report No. 
          104-858, September 27, 1996, Seventeenth Report by the 
          Committee on Government Reform and Oversight...........   109
Human Resources and Intergovernmental Relations Subcommittee, 
  Hon. Christopher Shays, Chairman...............................   113
      1. ``The FDA Food Additive Review Process: Backlog and 
          Failure to Observe Statutory Deadline,'' House Report 
          No. 104-436, December 21, 1995, Fourth Report by the 
          Committee on Government Reform and Oversight, Together 
          with Additional Views..................................   113
      2. ``The Federal Takeover of the Chicago Housing 
          Authority--HUD Needs to Determine Long-Term 
          Implications,'' House Report No. 104-437, December 21, 
          1995, Fifth Report by the Committee on Government 
          Reform and Oversight, Together with Additional Views...   116
      3. ``Fraud and Abuse in Medicare and Medicaid: Stronger 
          Enforcement and Better Management Could Save 
          Billions,'' House Report No. 104-641, June 27, 1996, 
          Eighth Report by the Committee on Government Reform and 
          Oversight, Together with Additional Views..............   118
      4. ``Health Care Fraud: All Public and Private Payers Need 
          Federal Criminal Anti-Fraud Protections,'' House Report 
          No. 104-747, August 2, 1996, Eleventh Report by the 
          Committee on Government Reform and Oversight...........   120
      5. ``Protecting the Nation's Blood Supply From Infectious 
          Agents: The Need for New Standards to Meet New 
          Threats,'' House Report No. 104-746, August 2, 1996, 
          Tenth Report by the Committee on Government Reform and 
          Oversight, Together with Additional Views..............   121
National Security, International Affairs, and Criminal Justice 
  Subcommittee, Hon. William H. Zeliff, Jr., Chairman............   124
      1. ``National Drug Policy: A Review of the Status of the 
          Drug War,'' House Report No. 104-486, March 19, 1996, 
          Seventh Report by the Committee on Government Reform 
          and Oversight, Together with Additional Views..........   124
      2. ``A Two-Year Review of the White House Communications 
          Agency Reveals Major Mismanagement, Lack of 
          Accountability, and Significant Mission Creep,'' House 
          Report No. 104-748, August 2, 1996, Twelfth Report by 
          the Committee on Government Reform and Oversight, 
          Together with Dissenting Views.........................   131
      3. ``Investigation into the Activities of Federal Law 
          Enforcement Agencies Toward the Branch Davidians,'' 
          House Report No. 104-749, August 2, 1996, Thirteenth 
          Report by the Committee on Government Reform and 
          Oversight, prepared in conjunction with the Committee 
          on the Judiciary, Together with Additional and 
          Dissenting Views.......................................   135
Postal Service Subcommittee, Hon. John M. McHugh, Chairman.......   145
      1. ``Voices for Change,'' House Report No. 104-438, 
          December 21, 1995, Sixth Report by the Committee on 
          Government Reform and Oversight........................   145

                        b. other investigations

Civil Service Subcommittee.......................................   146
      1. Restructuring of the Office of Personnel Management.....   146
      2. Federal Workforce Restructuring Statistics..............   147
      3. Examining the Federal Retirement System.................   147
      4. Contracting Out.........................................   148
      5. Examination and review of the Federal Workforce 
          Restructuring Act of 1994..............................   150
      6. Review of the Ramspeck Act..............................   151
      7. Review of the Combined Federal Campaign.................   151
      8. Contracting Federal Investigations--Policy and Oversight   152
      9. Administration's AIDS Training Program..................   153
      10. Privatization of OPM Training Responsibilities.........   154
      11. Review of Civilian Health and Medical Program of the 
          Uniformed Services (CHAMPUS)...........................   155
      12. Review of Current Civil Service Reform Initiatives.....   156
      13. Continuation of Civil Service Reform Review: 
          Performance and Accountability.........................   156
      14. Review of Federal Employee Appeals Procedures..........   157
      15. Shutdowns of Federal Agencies Due to Lapses in 
          Appropriations.........................................   158
      16. Employee Benefits in the Context of Total Compensation.   159
      17. Medical Savings Accounts (MSA's) in the Federal 
          Employees Health Benefits Plan.........................   160
      18. Veterans' Preference...................................   161
      19. Soft Landings to Enhance Federal Downsizing?...........   163
      20. Workforce Reductions: RIFs v. Buyouts: A Cost-Benefit 
          Comparison.............................................   166
      21. Illegal Use of Buyouts.................................   169
      22. Civil Service Reform Proposals.........................   171
      23. Review of the Federal Employees Health Benefit (FEHB) 
          Program................................................   173
      24. Taxpayer Subsidy of Federal Unions.....................   176
      25. Review of Federal Firefighters Pay and Benefits........   177
      26. Drug Testing Policies in the White House...............   180
      27. Effects of Privatizing OPM Investigations..............   183
District of Columbia Subcommittee................................   184
      1. Closing of Pennsylvania Avenue..........................   184
      2. Traffic Disruptions.....................................   186
      3. District of Columbia Economic Recovery Act..............   187
      4. Public Law 104-8, District of Columbia Financial 
          Responsibility and Management Assistance Authority Act 
          of 1995................................................   187
Government Management, Information, and Technology Subcommittee..   189
      1. Capital Budgeting.......................................   189
      2. Integrity of Government Documents.......................   191
      3. Federal Role in Privatization...........................   193
      4. National Performance Review.............................   194
      5. Strengthening Departmental Management...................   196
      6. Consolidating Federal Programs and Organizations........   197
      7. Corporate Structures for Government Functions...........   199
      8. Streamlining Federal Field Structures...................   201
      9. Performance Measurement, Benchmarking, and Re-egineering   203
      10. Agency Initiatives to Implement the Government 
          Performance and Results Act of 1993....................   205
      11. The General Services Administration's (GSA) Security 
          Measures at Federal Office Buildings...................   207
      12. Controls Over Illegal Immigration--Along the Border and 
          Within the Interior....................................   208
      13. Budget and Financial Information--Annual Shareholders 
          Report: How Does the Citizen Know What is Going On?....   209
      14. The Inspector General Act of 1978......................   211
      15. Implementation of the Chief Financial Officers Act of 
          1990 and the Government Management Reform Act of 1994..   213
      16. Department of Defense's Financial Management Problems..   215
      17. Electronic Reporting Streamlining Act of 1995..........   217
      18. Use of Transportation by Senior Executive Branch 
          Officials in compliance with Federal Travel Guidelines.   218
      19. The Government's Response to the Northridge Earthquake.   220
      20. OMB 2000 Reforms: Where are they Heading?..............   221
      21. Using the Best Practices of Information Technology in 
          Government.............................................   223
      22. Oversight of IRS Financial Management..................   224
      23. Is January 1, 2000 the Date for Computer Disaster?.....   226
      24. Oversight of the General Accounting Office.............   228
      25. Oversight of the General Services Administration.......   229
      26. Federal Information Policy Oversight...................230230
      27. Oil Royalties..........................................   231
      28. Field Hearing on the U.S. Border Patrol's Operation 
          Gatekeeper.............................................   232
      29. Oversight of the Smithsonian Institution...............   234
Human Resources and Intergovernmental Relations Subcommittee.....   235
      1. Efforts to Reorganize and Improve Program Performance 
          and Efficiency at the U.S. Department of Housing and 
          Urban Development (HUD)................................   235
      2. Efforts to Improve Program Performance and Efficiency at 
          the U.S. Department of Health and Human Services (HHS).   235
      3. Efforts to Reorganize and Improve Program Performance 
          and Efficiency at the U.S. Department of Labor (DOL)...   236
      4. Efforts to Reorganize and Improve Program Performance 
          and Efficiency at the U.S. Department of Education 
          (DOED).................................................   237
      5. Efforts to Reorganize and Improve Program Performance 
          and Efficiency at the U.S. Department of Veteran 
          Affairs (VA)...........................................   238
      6. Examination of Programs and Operations of the 
          Corporation for National and Community Service.........   239
      7. Revelations of Medicaid Fraud and Scams.................   240
      8. Fraud and Abuse in Medicare and Medicaid................   242
      9. Lengthy FDA Delays in Reviewing Food Additive Petitions.   242
      10. Bringing Health and Support Services to Women, 
          Minorities and Adolescents--Growing Segments of the 
          AIDS Population........................................   243
      11. Debating the Defining Federalism--the Sharing of Power 
          between the Federal Government and the States..........   244
      12. Joint Hearing on the FDA Regulation of Medical Devices, 
          including Silicone Gel Breast Implants.................   245
      13. Federal Takeover of the Chicago Housing Authority......   246
      14. Management of Threats to the Nation's Blood Supply.....   247
      15. The Occupational Safety and Health Administration's 
          (OSHA) New Strategy for Changing the Way it Does 
          Business...............................................   248
      16. Management of U.S. Department of Housing and Urban 
          Development Funds in Public Housing Tenant Programs....   249
      17. Status of Major Computer System Development............   250
      18. Radioactive Contamination of 27 People, including 
          Researcher Dr. Maryann Ma, in June 1995 at the National 
          Institutes of Health (NIH).............................   251
      19. Unfunded Mandates in Medicaid..........................   251
      20. HUD Management of Tenant Initiative Programs...........   252
      21. The Status of Efforts to Identify Persian Gulf War 
          Syndrome...............................................   253
      22. Unfunded Mandates Reform Act of 1995: A One Year Review   256
      23. Job Training That Works/Common Factors in Effective Job 
          Training Programs......................................   257
      24. Preventing Teen Pregnancy: Coordinating Community 
          Efforts................................................   257
      25. Food Safety: Oversight of the Food and Drug 
          Administration's Center for Veterinary Medicine........   258
      26. Food Safety: Monitoring of Food Borne Illnesses by the 
          Centers for Disease Control, Food and Drug 
          Administration and U.S. Department of Agriculture......   259
      27. The Development of Successful Public Housing Resident 
          Management (Field Hearing).............................   260
      28. Department of Education Oversight: Gatekeeping.........   260
      29. Oversight of the Department of Labor's Efforts Against 
          Labor Racketeering.....................................   261
      30. Oversight of the Department of Education and the 
          National Institute of Mental Health: Current Approaches 
          to Attention Deficit/Hyperactivity Disorders...........   262
      31. Consumers and Health Informatics.......................   262
      32. The Management of HUD's Section 8 Multi-Family Housing 
          Portfolio..............................................   263
      33. Off-Label Drug Use and FDA Review of Supplemental Drug 
          Applications...........................................   264
      34. Investigation into Possible Misuse of ``New Age'' 
          Training Programs by Federal Departments and Agencies..   265
National Economic Growth, Natural Resources, and Regulatory 
  Affairs Subcommittee...........................................   266
      1. Grantee Lobbying........................................   266
      2. Investigation of Improper EPA Lobbying on Pending 
          Legislation............................................   267
      3. OSHA's Ergonomics Standards.............................   270
      4. Improper FDA Rulemaking.................................   271
      5. Regulatory Reform.......................................   273
      6. Privatization of Sallie Mae and Connie Lee..............   278
      7. Mismanagement of Grants by the Environmental Protection 
          Agency.................................................   279
      8. Investigation of the White House Database (WhoDB).......   280
      9. The Effects of a Minimum Wage Increase..................   281
      10. The Impact of Regulations on Employment................   283
      11. Travel Practices of Department of Transportation 
          Administrators.........................................   285
      12. Travel Practices of SEC Chairman Arthur Levitt.........   287
      13. Travel Practices of NTSB Chairman Jim Hall.............   288
      14. Cleaning Up the Superfund Program......................   288
      15. Havertown Superfund Site...............................   292
National Security, International Affairs, and Criminal Justice 
  Subcommittee...................................................   294
      1. Office of National Drug Control Policy..................   294
      2. Federal Law Enforcement Actions in Relation to the 
          Branch Davidian Compound in Waco, TX...................   318
      3. The Bureau of Census and its planning for the 2000 
          Census.................................................   327
      4. Counterterrorism Activities in the United States........   329
      5. Army Ranger Training Deaths of February 15, 1995........   331
      6. The Ballistic Missile Defense Program...................   332
      7. National Drug Control Strategy..........................   334
      8. Department of Defense Bulk Fuel: Appropriations v. Usage   346
      9. Oversight of the National Aeronautics and Space 
          Administration.........................................   348
      10. INS....................................................   350
Postal Service Subcommittee......................................   358
      1. General Oversight of the U.S. Postal Service: The 
          Postmaster General and the General Accounting Office...   358
      2. General Oversight of the U.S. Postal Service: The Postal 
          Rate Commission........................................   358
      3. General Oversight of the U.S. Postal Service: The Board 
          of Governors...........................................   359
      4. General Oversight of the U.S. Postal Service: Major 
          Mailing Customers......................................   360
      5. General Oversight of the U.S. Postal Service: Postal 
          Employee Unions and Organizations......................   360
      6. General Oversight of the U.S. Postal Service: Postal 
          Reliant Businesses and Competitors.....................   361
      7. General Oversight Hearing on the Postal Service: Return 
          of the Postmaster General..............................   361
      8. General Oversight of the U.S. Postal Service: Postal 
          Service Inspector General..............................   362
      9. Review of International Mail Market.....................   362
      10. General Oversight of the U.S. Postal Service: The Board 
          of Governors, the Postmaster General, the Postal Rate 
          Commission, the Chief Postal Inspector and the General 
          Accounting Office......................................   363
      11. Joint Hearing with the Senate Subcommittee on Post 
          Office and Civil Service, of the Committee on 
          Governmental Affairs on International Postal Reform....   365
      12. Postal Reform: H.R. 210, a bill to provide for the 
          Privatization of the United States Postal Service; H.R. 
          3717, the Postal Reform Act of 1996; H.R. 3690, the 
          Postal Service Core Business Act of 1996...............   366
      13. Field Hearing on Chicago Mail Service and Postal 
          Operations.............................................   368
      14. Qui Tam Provisions within the False Claims Act.........   369
      15. USPS Contract for 8,879 Cargo Minivans.................   370
      16. Review of Postal Service Bulk Business Mail Acceptance 
          Practices; Assessment of the Adequacy of the Postal 
          Service's Systems for Assessing, Collecting, and 
          Otherwise Protecting Revenue and/or Accountable Paper..   371
      17. Review of Selected Major Postal Service Procurements...   372
      18. Evaluation of USPS Oversight of National Change of 
          Address Program Licensees..............................   372
      19. Final-Offer Arbitration as an Alternative Means of 
          Resolving Contract Disputes Between Postal Management 
          and Labor Unions.......................................   373
      20. Review of the Quality and Quantity of Data Produced by 
          the Postal Service for the Rate Setting Process........   374
      21. Evaluation of the Management Practices, Working 
          Conditions, and Security at Postal facilities in 
          Southern California....................................   374
      22. Miscellaneous Investigative Issues.....................   375
      23. Review of the Postal Service Board of Governors........   376
      24. Review of the Status of USPS Initiatives to Improve 
          Employee Working Conditions and Organizational 
          Performance............................................   377
      25. Continued Oversight of Internal Audits of the Existing 
          Inspector General......................................   378
      26. Oversight of the Implementation of the new Office of 
          Inspector General for the Postal Service as provided in 
          Public Law 104-208.....................................   379
      27. Continued Oversight of Labor-Management Relations 
          within the Postal Service..............................   380
      28. Continuing Review of the Competitive Role of the U.S. 
          Postal Service.........................................   380
      29. Continuing Review of Universal Mail Service and 
          Ratemaking in Canada...................................   381
      30. Continuing Review of Mailing Costs for the Federal 
          Government.............................................   382
      31. Continuing Review of Growth in Postal Service 
          Employment.............................................   382
      32. Continuing Review of the Statutory Mail Box Restriction   383
      33. Express Mail Accounts and Insufficient Controls for 
          Revenue Protection.....................................   383
      34. Continuing Review of the role of the U.S. Postal 
          Service in the Electronic Information Age..............   384
      35. Review of Postal Inspection Service Investigations of 
          the Public Threat to the U.S. Mails in the Unabomber 
          Case...................................................   384

                            III. Legislation
                            a. new measures

Civil Service Subcommittee.......................................   385
      1. H.R. 3586, Veterans' Employment Opportunities Act of 
          1996...................................................   385
      2. H.R. 3481, Omnibus Civil Service Reform Act of 1996.....   385
      3. S. 868, Federal Employees Emergency Leave Transfer Act..   386
District of Columbia Subcommittee................................   387
      1. H.R. 1345, District of Columbia Financial Responsibility 
          and Management Assistance Act of 1995..................   387
      2. H.R. 2108, District of Columbia Convention Center and 
          Sports Arena Authorization Act of 1995.................   388
      3. H.R. 2661, District of Columbia Fiscal Protection Act of 
          1995...................................................   389
      4. H.R. 461, Closing of Lorton Correctional Complex........   390
      5. H.R. 1855, To amend Title 11, District of Columbia Code, 
          to restrict the authority of the Superior Court of the 
          District of Columbia over certain pending cases 
          involving child custody and visitation rights..........   391
      6. H.R. 3663, District of Columbia Water and Sewer 
          Authority Act of 1996..................................   391
      7. H.R. 3336, Bill granting the District of Columbia 
          temporary authority to waive reduction for early 
          retirement under the Civil Service Retirement System...   392
      8. H.R. 3389, District of Columbia Pension Liability 
          Funding Reform Act of 1996.............................   393
      9. H.R. 3664, District of Columbia Government Improvement 
          and Efficiency Act of 1996.............................   393
Government Management, Information, and Technology Subcommittee..   393
      1. H.R. 1271, Family Privacy Protection Act of 1995........   393
      2. H.R. 1756, The Department of Commerce Dismantling Act...   397
      3. H.R. 2234, Debt Collection Improvement Act of 1995......   399
      4. H.R. 1162, Lockbox Deficit Reduction Proposals..........   401
      5. H.R. 1698, Mandatory Electronic Funds Transfer Expansion 
          Act of 1995............................................   402
      6. H.R. 1907, The Federal-aid Facility Privatization Act of 
          1995...................................................   402
      7. H.R. 2521, the Statistical Consolidation Act of 1995....   403
      8. H.R. 3184, the Single Audit Act Amendments of 1996......   405
      9. H.R. 3869, the Electronic Reporting Streamlining Act of 
          1996...................................................   406
      10. H.R. 3189, to delay privatization of the Office of 
          Federal Investigations of the Office of Personnel 
          Management.............................................   407
      11. H.R. 1281, War Crimes Disclosure Act...................   408
      12. H.R. 3802, Electronic Freedom of Information Amendments 
          of 1996................................................   409
      13. H.R. 3452, the Presidential and Executive Office 
          Accountability Act.....................................   410
      14. H.R. 3872, the White House Inspector General Act of 
          1996...................................................   411
      15. H.R. 3637, the Travel Reform and Savings Act of 1996...   412
      16. S. 1130, Federal Financial Management Improvement Act 
          of 1996................................................   413
      17. Federal Budget Process Reform..........................   414
      18. Health Information Privacy Protection Act..............   418
Human Resources and Intergovernmental Relations Subcommittee.....   419
      1. H.R. 2086, the Local Empowerment and Flexibility Act of 
          1995...................................................   419
      2. H.R. 2326, the Health Care Fraud and Abuse Prevention 
          Act of 1995 and H.R. 1850, the Health Care Fraud and 
          Abuse Act of 1995......................................   420
National Economic Growth, Natural Resources, and Regulatory 
  Affairs Subcommittee...........................................   421
      1. H.R. 450, the Regulatory Transition Act of 1995.........   421
      2. H.R. 994, the Regulatory Sunset and Review Act of 1995..   423
      3. Grantee Lobbying Legislation............................   424
      4. Corrections Day.........................................   424
Postal Service Subcommittee......................................   424
      1. H.R. 1026, To designate the United States Post Office 
          building located at 201 East Pikes Peak Avenue in 
          Colorado Springs, Colorado, as the ``Winfield Scott 
          Stratton Post Office''.................................   424
      2. H.R. 2077, To designate the United States Post Office 
          building located at 33 College Avenue in Waterville, 
          Maine, as the ``George J. Mitchell Post Office 
          Building''.............................................   425
      3. H.R. 1826, To repeal the authorization of transitional 
          appropriations for the United States Postal Service, 
          and for other purposes.................................   425
      4. H.R. 210, A bill to provide for the privatization of the 
          United States Postal Service...........................   426
      5. H.R. 1963, The Postmark Prompt Payment Act of 1995......   426
      6. H.R. 1398, To designate the United States Post Office 
          located at 1203 Lemay Ferry Road, St. Louis, Missouri 
          as the ``Charles J. Coyle Post Office Building''.......   427
      7. H.R. 1606, To designate the United States Post Office 
          building located at 24 Corliss Street, Providence, 
          Rhode Island, as the ``Harry Kizirian Post Office 
          Building''.............................................   428
      8. H.R. 1880, To designate the United States Post Office 
          located at 102 South McLean, Lincoln, Illinois as the 
          ``Edward Madigan Post Office Building''................   428
      9. H.R. 2262, To designate the United States Post Office 
          located at 218 North Alston Street in Foley, Alabama as 
          the ``Holk Post Office Building''......................   429
      10. H.R. 2704, A bill to provide that the United States 
          Post Office building located on the 2600 block of East 
          75th Street in Chicago, Illinois shall be known as the 
          ``Charles A. Hayes Post Office Building''..............   429
      11. H.R. 855, to designate the United States Post Office 
          Building located at 153 East 110th Street, New York, 
          New York, as the ``Oscar Garcia Rivera Post Office 
          Building''.............................................   430
      12. H.R. 2700, a bill to designate the United States Post 
          Office Building located at 7980 FM 327, Elmendorf, 
          Texas, as the ``Amos F. Longoria Post Office Building''   430
      13. H.R. 3139, a bill to redesignate the United States Post 
          Office building located at 245 Centereach Mall on 
          Middle Country Road in Centereach, New York, as the 
          ``Rose Y. Caracappa United States Post Office 
          Building''.............................................   431
      14. H.R. 3768, a bill to designate a United States Post 
          Office to be located in Groton, Massachusetts, as the 
          ``Augusta `Gusty' Hornblower United States Post 
          Office''...............................................   431
      15. H.R. 3834, a bill to redesignate the Dunning Post 
          Office in Chicago, Illinois, as the ``Roger P. 
          McAuliffe Post Office''................................   432
      16. H.R. 3877, a bill to designate the United States Post 
          Office Building in Camden, Arkansas, as the ``Honorable 
          David H. Pryor Post Office Building''..................   432
      17. H.R. 3610, the Omnibus Appropriations Act of 1996......   433
      18. H.R. 3690, the Postal Service Core Business Act of 1996   433
      19. H.R. 3717, the Postal Reform Act of 1996...............   434

           b. review of laws within committee's jurisdiction

Full Committee...................................................   439
Civil Service Subcommittee.......................................   441
District of Columbia Subcommittee................................   449
Government Management, Information, and Technology Subcommittee..   450
Human Resources and Intergovernmental Relations Subcommittee.....   458
National Economic Growth, Natural Resources, and Regulatory 
  Affiars Subcommittee...........................................   459
National Security, International Affairs, and Criminal Justice 
  Subcommittee...................................................   461
Postal Service Subcommittee......................................   462

                      IV. Other Current Activities
                  a. general accounting office reports

Civil Service Subcommittee.......................................   465
District of Columbia Subcommittee................................   501
Government Management, Information, and Technology Subcommittee..   503
Human Resources and Intergovernmental Relations Subcommittee.....   541
National Economic Growth, Natural Resources, and Regulatory 
  Affairs Subcommittee...........................................   598
National Security, International Affairs, and Criminal Justice 
  Subcommittee...................................................   634
Postal Service Subcommittee......................................   752

                    b. other reports and statements

District of Columbia Subcommittee................................   759
Government Management, Information, and Technology Subcommittee..   760

                          c. committee prints

Standing committee...............................................   764
Postal Service Subcommittee......................................   764

         V. Prior Activities of Current or Continuing Interest

District of Columbia Subcommittee................................   767
Human Resources and Intergovernmental Relations Subcommittee.....   767
National Economic Growth, Natural Resources, and Regulatory 
  Affairs Subcommittee...........................................   768
National Security, International Affairs, and Criminal Justice 
  Subcommittee...................................................   769
Postal Service Subcommittee......................................   770


                                                 Union Calendar No. 477
104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-874
_______________________________________________________________________

  ACTIVITIES OF THE HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

                                _______
                                

January 2, 1997.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


  Mr. Clinger, from the Committee on Government Reform and Oversight, 
                        submitted the following

                                 REPORT

  FINAL REPORT ON THE ACTIVITIES OF THE HOUSE COMMITTEE ON GOVERNMENT 
  REFORM AND OVERSIGHT, 104TH CONGRESS, 1ST AND 2D SESSIONS, 1995 AND 
                                  1996

       PART ONE. GENERAL STATEMENT OF ORGANIZATION AND ACTIVITIES

             I. Jurisdiction, Authority, Powers, and Duties

    The Rules of the House of Representatives provide for 
election by the House, at the commencement of each Congress, of 
19 named standing committees, one of which is the Committee on 
Government Reform and Oversight.\1\ Pursuant to House 
Resolutions 11 and 12 (adopted January 5, 1995), and House 
Resolution 13 (adopted January 5, 1995), House Resolution 31 
(adopted January 9, 1995) the membership of the Committee on 
Government Reform and Oversight was set at 50, including one 
independent. Subsequently, the membership was increased to 51, 
pursuant to House Resolution 157 (adopted May 25, 1995), on 
June 13, 1995, membership increased to 52, pursuant to House 
Resolution 166 (adopted June 13, 1995), on July 12, 1995, 
membership was decreased to 51 pursuant to communication to 
Speaker, and on July 12, 1995, membership was set at 52, 
pursuant to House Resolution 186 (adopted July 12, 1995); on 
February 28, 1996, membership was decreased to 51, pursuant to 
communication to Speaker; on April 25, 1996, membership was 
increased to 52, pursuant to House Resolution 414 (adopted 
April 25, 1996); on June 25, 1996, membership was decreased to 
51, pursuant to communication to Speaker; and on July 22, 1996, 
membership was increased to 52, pursuant to House Resolution 
485 (adopted July 22, 1996).
---------------------------------------------------------------------------
    \1\ Rule X.
---------------------------------------------------------------------------
    Rule X sets forth the committee's jurisdiction, functions, 
and responsibilities as follows:

                                 RULE X

         Establishment and Jurisdiction of Standing Committees

                 the committees and their jurisdiction

    1. There shall be in the House the following standing 
committees, each of which shall have the jurisdiction and 
related functions assigned to it by this clause and clauses 2, 
3, and 4; and all bills, resolutions, and other matters 
relating to subjects within the jurisdiction of any standing 
committee as listed in this clause shall (in accordance with 
and subject to clause 5) be referred to such committees, as 
follows:
          * * * * * * *

            (g) Committee on Government Reform and Oversight

    (1) The Federal Civil Service, including intergovernmental 
personnel; the status of officers and employees of the United 
States, including their compensation, classification, and 
retirement.
    (2) Measures relating to the municipal affairs of the 
District of Columbia in general, other than appropriations.
    (3) Federal paperwork reduction.
    (4) Budget and accounting measures, other than 
appropriations.
    (5) Holidays and celebrations.
    (6) The overall economy and efficiency of Government 
operations and activities, including Federal procurement.
    (7) National archives.
    (8) Population and demography generally, including the 
Census.
    (9) Postal service generally, including the transportation 
of the mails.
    (10) Public information and records.
    (11) Relationship of the Federal Government to the States 
and municipalities generally.
    (12) Reorganizations in the executive branch of the 
Government.
    In addition to its legislative jurisdiction under the 
preceding provisions of this paragraph (and its oversight 
functions under clause 2(b) (1) and (2)), the committee shall 
have the function of performing the activities and conducting 
the studies which are provided for in clause 4(c).
          * * * * * * *

                   general oversight responsibilities

    2. (a) In order to assist the House in--
          (1) its analysis, appraisal, and evaluation of (A) 
        the application, administration, execution, and 
        effectiveness of the laws enacted by the Congress, or 
        (B) conditions and circumstances which may indicate the 
        necessity or desirability of enacting new or additional 
        legislation, and
          (2) its formulation, consideration, and enactment of 
        such modifications of or changes in those laws, and of 
        such additional legislation, as may be necessary or 
        appropriate,
the various standing committees shall have oversight 
responsibilities as provided in paragraph (b).
    (b)(1) Each standing committee (other than the Committee on 
Appropriations and the Committee on the Budget) shall review 
and study, on a continuing basis, the application, 
administration, execution, and effectiveness of those laws, or 
parts of laws, the subject matter of which is within the 
jurisdiction of that committee, and the organization and 
operation of the Federal agencies and entities having 
responsibilities in or for the administration and execution 
thereof, in order to determine whether such laws and the 
programs thereunder are being implemented and carried out in 
accordance with the intent of the Congress and whether such 
programs should be continued, curtailed, or eliminated. In 
addition, each such committee shall review and study any 
conditions or circumstances which may indicate the necessity or 
desirability of enacting new or additional legislation within 
the jurisdiction of that committee (whether or not any bill or 
resolution has been introduced with respect thereto) and shall 
on a continuing basis undertake future research and forecasting 
on matters within the jurisdiction of that committee. Each such 
committee having more than twenty members shall establish an 
oversight subcommittee, or require its subcommittees, if any, 
to conduct oversight in the area of their respective 
jurisdiction, to assist in carrying out its responsibilities 
under this subparagraph. The establishment of oversight 
subcommittees shall in no way limit the responsibility of the 
subcommittee with legislative jurisdiction from carrying out 
their oversight responsibilities.
    (2) The Committee on Government Reform and Oversight shall 
review and study, on a continuing basis, the operation of 
Government activities at all levels with a view to determining 
their economy and efficiency.
          * * * * * * *
    (c) Each standing committee of the House shall have the 
function of reviewing and studying on a continuing basis the 
impact or probable impact of tax policies affecting subjects 
within its jurisdiction as described in clauses 1 and 3.
          * * * * * * *

                   additional functions of committees

    4. * * *
    (c)(1) The Committee on Government Reform and Oversight 
shall have the general function of--
          (A) receiving and examining reports of the 
        Comptroller General of the United States and of 
        submitting such recommendations to the House as it 
        deems necessary or desirable in connection with the 
        subject matter of such reports;
          (B) evaluating the effects of laws enacted to 
        reorganize the legislative and executive branches of 
        the Government; and
          (C) studying intergovernmental relationships between 
        the United States and the States, and municipalities, 
        and between the United States and international 
        organizations of which the United States is a member.
    (2) In addition to its duties under subparagraph (1), the 
Committee on Government Reform and Oversight may at any time 
conduct investigations of any matter without regard to the 
provisions of clause 1, 2, or 3 (or this clause) conferring 
jurisdiction over such matter upon another standing committee. 
The committee's findings and recommendations in any such 
investigation shall be made available to the other standing 
committee or committees having jurisdiction over the matter 
involved (and included in the report of any such other 
committee when required by clause 2(1)(3) of Rule XI).
          * * * * * * *
    Rule XI provides authority for investigations and studies, 
as follows:

                                RULE XI

                   Rules of Procedure for Committees

                               in general

    1. * * *
    (b) Each committee is authorized at any time to consider 
such investigations and studies as it may consider necessary or 
appropriate in the exercise of its responsibilities under Rule 
X, and (subject to the adoption of expense resolutions as 
required by clause 5) to incur expenses (including travel 
expenses) in connection therewith.
          * * * * * * *
    (d) Each committee shall submit to the House, not later 
than January 2 of each odd-numbered year, a report on the 
activities of that committee under this rule and Rule X during 
the Congress ending at noon on January 3 of such year.
          * * * * * * *

                            committee rules

          * * * * * * *

Power to sit and act; subpoena power

    (m)(1) For the purpose of carrying out any of its functions 
and duties under this rule and Rule X (including any matters 
referred to it under clause 5 of Rule X), any committee, or any 
subcommittee thereof, is authorized (subject to subparagraph 
(2)(A) of this paragraph)--
          (A) to sit and act at such times and places within 
        the United States, whether the House is in session, has 
        recessed, or has adjourned, and to hold such hearings, 
        and
          (B) to require, by subpoena or otherwise, the 
        attendance and testimony of such witnesses and the 
        production of such books, records, correspondence, 
        memorandums, papers, and documents as it deems 
        necessary.
The chairman of the committee, or any member designated by such 
chairman, may administer oaths to any witness.
    (2)(A) A subpoena may be authorized and issued by a 
committee or subcommittee under subparagraph (1)(B) in the 
conduct of any investigation or series of investigations or 
activities, only when authorized by a majority of the members 
voting, a majority being present. The power to authorize and 
issue subpoenas under subparagraph (1)(B) may be delegated to 
the chairman of the committee pursuant to such rules and under 
such limitations as the committee may prescribe. Authorized 
subpoenas shall be signed by the chairman of the committee or 
by any member designated by the committee.
    (B) Compliance with any subpoena issued by a committee or 
subcommittee under subparagraph (1)(B) may be enforced only as 
authorized or directed by the House.

Use of committee funds for travel

    (n)(1) Funds authorized for a committee under clause 5 are 
for expenses incurred in the committee's activities; however, 
local currencies owned by the United States shall be made 
available to the committee and its employees engaged in 
carrying out their official duties outside the United States, 
its territories or possessions. No appropriated funds, 
including those authorized under clause 5, shall be expended 
for the purpose of defraying expenses of members of the 
committee or its employees in any country where local 
currencies are available for this purpose; and the following 
conditions shall apply with respect to travel outside the 
United States or its territories or possessions:
          (A) No Member or employee of the committee shall 
        receive or expend local currencies for subsistence in 
        any country for any day at a rate in excess of the 
        maximum per diem set forth in applicable Federal law, 
        or if the Member or employee is reimbursed for any 
        expenses for such day, then the lesser of the per diem 
        or the actual, unreimbursed expenses (other than for 
        transportation) incurred by the Member or employee 
        during that day.
          (B) Each Member or employee of the committee shall 
        make to the chairman of the committee an itemized 
        report showing the dates each country was visited, the 
        amount of per diem furnished, the cost of 
        transportation furnished, any funds expended for any 
        other official purpose and shall summarize in these 
        categories the total foreign currencies and/or 
        appropriated funds expended. All such individual 
        reports shall be filed no later than sixty days 
        following the completion of travel with the chairman of 
        the committee for use in complying with reporting 
        requirements in applicable Federal law and shall be 
        open for public inspection.
    (2) In carrying out the committee's activities outside of 
the United States in any country where local currencies are 
unavailable, a member or employee of the committee may not 
receive reimbursement for expenses (other than for 
transportation) in excess of the maximum per diem set forth in 
applicable Federal law, or if the member or employee is 
reimbursed for any expenses for such day, then the lesser of 
the per diem or the actual, unreimbursed expenses (other than 
for transportation) incurred, by the member or employee during 
any day.
    (3) A member or employee of a committee may not receive 
reimbursement for the cost of any transportation in connection 
with travel outside the United States unless the member or 
employee has actually paid for the transportation.
    (4) The restrictions respecting travel outside of the 
United States set forth in subparagraphs (2) and (3) shall also 
apply to travel outside of the United States by Members, 
officers, and employees of the House authorized under clause 8 
of rule I, clause 1(b) of this rule, or any other provision of 
these Rules of the House of Representatives.
    (5) No local currencies owned by the United States may be 
made available under this paragraph for the use outside of the 
United States for defraying the expenses of a member of any 
committee after--
          (A) the date of the general election of Members in 
        which the Member has not been elected to the succeeding 
        Congress; or
          (B) in the case of a Member who is not a candidate in 
        such general election, the earlier of the date of such 
        general election or the adjournment sine die of the 
        last regular session of the Congress.
The committee also exercises authority under a number of 
congressional mandates.\2\
---------------------------------------------------------------------------
    \2\ For legislation imposing duties specifically on the committee, 
see, for example, sec. 203(e)(6) of the Federal Property and 
Administrative Services Act of 1949 (40 U.S.C. 484(6)(e)), relating to 
negotiated disposal of Federal surplus property. It requires that, with 
limited exceptions, explanatory statements be sent ``to the appropriate 
committees of the Congress'' in advance of negotiated disposal under 
the act. It covers disposal of all real and personal property whose 
estimated fair market is over $15,000 in the case of personal property 
and over $100,000 in the case of real property. The current language 
stems from a 1988 amendment (Public Law 100-612), which retained the 
explanatory statement requirement but changed the dollar value 
thresholds, which theretofore had been $1,000 for both personal 
property and real property. The House and Senate Government Operations 
Committees are expressly identified as the appropriate panels in House 
Report 1763, 85th Congress, which accompanied the measure that 
contained the 1958 amendment. See also GSA's Federal Property 
Management Regulations at 41 CFR-47.304-12(d).
    [N. B. The further examples given in the original footnote text 
cover sections (section 414 of the 1969 Housing Act and section 304 of 
the Intergovernmental Cooperation Act) have been repealed. The 
reference to sections 191-194 of title 2, U.S.C., does not deem 
pertinent here.]
---------------------------------------------------------------------------

                           5 U.S.C. sec. 2954

            Information to committees of Congress on request

    An Executive agency, on request of the Committee on 
Government Operations of the House of Representatives or of any 
seven members thereof, or on request of the Committee on 
Government Operations of the Senate, or any five members 
thereof, shall submit any information requested of it relating 
to any matter within the jurisdiction of the committee.

                          18 U.S.C. sec. 1505

Obstruction of proceedings before departments, agencies, and committees

    Whoever, with intent to avoid, evade, prevent, or obstruct 
compliance, in whole or in part, with any civil investigation 
demand duly and properly made under the Antitrust Civil Process 
Act, willfully withholds, misrepresents, removes from any 
place, conceals, covers up, destroys, mutilates, alters, or by 
other means falsifies any documentary material, answers to 
written interrogatories, or oral testimony, which is the 
subject of such demand; or attempts to do so or solicits 
another to do so; or
    Whoever corruptly, or by threats or force, or by any 
threatening letter or communication influences, obstructs, or 
impedes or endeavors to influence, obstruct, or impede the due 
and proper administration of the law under which any pending 
proceeding is being had before any department or agency of the 
United States, or the due and proper exercise of the power of 
inquiry under which any inquiry or investigation is being had 
by either House, or any committee of either House or any joint 
committee of the Congress--
    Shall be fined not more than $5,000 or imprisoned not more 
than five years, or both.

                           31 U.S.C. sec. 712

                 Investigating the use of public money

    The Comptroller General shall--
          * * * * * * *
    (3) analyze expenditures of each executive agency the 
Comptroller General believes will help Congress decide whether 
public money has been used and expended economically and 
efficiently;
    (4) make an investigation and report ordered by either 
House of Congress or a committee of Congress having 
jurisdiction over revenue, appropriations, or expenditures; and
    (5) give a committee of Congress having jurisdiction over 
revenue, appropriations, or expenditures the help and 
information the committee requests.

                           31 U.S.C. sec. 719

                      Comptroller General reports

          * * * * * * *
    (e) The Comptroller General shall report on analyses 
carried out under section 712(3) of this title to the 
Committees on Governmental Affairs and Appropriations of the 
Senate, the Committee on Government Operations and 
Appropriations of the House, and the committees with 
jurisdiction over legislation related to the operation of each 
executive agency.\3\
---------------------------------------------------------------------------
    \3\ For other requirements which relate to General Accounting 
Office reports to Congress and which affect the committee, see secs. 
232 and 236 of the Legislative Reorganization Act of 1970 (Public Law 
91-510).
                       II. Historical Background

    The committee was initially named the ``Committee on 
Expenditures in the Executive Departments.'' Its antecedents 
are summarized in Cannon's Precedents of the House of 
Representatives, vol. VII, sec. 2041, p. 831 (1935), as 
follows:
          This committee was created, December 5, 1927, by the 
        consolidation of the eleven Committees on Expenditures 
        in the various Departments of the Government, the 
        earliest of which has been in existence since 1816. As 
        adopted in 1816, the rule did not include the 
        committees for the Departments of Interior, Justice, 
        Agriculture, Commerce, and Labor. The committees for 
        these Departments date, respectively, from 1860, 1874, 
        1889, 1905 and 1913.
    The resolution providing for the adoption of the rules of 
the 70th Congress discontinued the several committees on 
expenditures and transferred their functions to the newly 
created Committee on Expenditures in the Executive Departments:
          On March 17, 1928, the jurisdiction of the committee 
        was further enlarged by the adoption of a resolution, 
        reported from the Committee on Rules, including within 
        its jurisdiction the independent establishments and 
        commissions of the Government.\4\
---------------------------------------------------------------------------
    \4\ Examples of the wide-ranging scope of the committee's 
jurisdiction may be found in Cannon's Precedents, supra VII, secs. 
2042-2046, pp. 831-833 (1935).
---------------------------------------------------------------------------
    From 1928 until January 2, 1947, when the Legislative 
Reorganization Act of 1946 became effective, the committee's 
jurisdiction was set forth in Rule XI, 34, of the House Rules 
then in force (H. Doc. 810, 78th Cong., 2d Sess. (1945)), as 
follows:

                    powers and duties of committees

          * * * * * * *
    34. The examination of the account and expenditures of the 
several departments, independent establishments, and 
commissions of the Government, and the manner of keeping the 
same; the economy, justness, and correctness of such 
expenditures; their conformity with appropriation laws; the 
proper application of public moneys; the security of the 
Government against unjust and extravagant demands; 
retrenchment; and enforcement of the payment of moneys due the 
United States; the economy and accountability of public 
officers; the abolishment of useless offices, shall all be 
subjects within the jurisdiction of the Committee on 
Expenditures in the Executive Departments.
    The Legislative Reorganization Act of 1946, section 121(b), 
as adopted in paragraphs (a), (b), and (c) of Rule XI, 8, of 
later Rules of the House (XI, 9, the 93d Congress), provided:

                   committee on government operations

    (a) Budget and accounting measures, other than 
appropriations.
    (b) Reorganizations in the executive branch of Government.
    (c) Such committee shall have the duty of--
          (1) receiving and examining reports of the 
        Comptroller General of the United States and of 
        submitting such recommendations to the House as it 
        deems necessary or desirable in connection with the 
        subject matter of such reports;
          (2) studying the operation of Government activities 
        at all levels with a view to determining the economy 
        and efficiency;
          (3) evaluating the effects of laws enacted to 
        reorganize the legislative and executive branches of 
        the Government;
          (4) studying intergovernmental relationships between 
        the United States and the States and municipalities, 
        and between the United States and international 
        organizations of which the United States is a member.
    (d) For the purpose of performing such duties the 
committee, or any subcommittee thereof when authorized by the 
committee, is authorized to sit, hold hearings, and act at such 
times and places within the United States, whether or not the 
House is in session, is in recess, or has adjourned, to require 
by subpoena or otherwise the attendance of such witnesses and 
the production of such papers, documents, and books, and to 
take such testimony as it deems necessary. Subpoenas may be 
issued under the signature of the chairman of the committee or 
of any subcommittee, or by any member designated by any such 
chairman, and may be served by any person designated by any 
such chairman or member.\5\
---------------------------------------------------------------------------
    \5\ Paragraph (d) was adopted by the House Feb. 10, 1947.
---------------------------------------------------------------------------
    Rule X, 1(h), of later Rules of the House, effective 
January 3, 1975 (H. Res. 988, 93d Congress), added the 
additional jurisdiction of general revenue sharing (formerly 
within the jurisdiction of the Committee on Ways and Means), 
and the National Archives (formerly within the jurisdiction of 
the Committee on Post Office and Civil Service).
    Rule X, 1(j)(6), of later Rules of the House listed the 
additional jurisdiction of measures providing for off-budget 
treatment of Federal agencies or programs, which was added by 
sec. 225 of Public Law 99-177, the Balanced Budget and 
Emergency Deficit Control Act of 1985 (December 12, 1985).
    The 1946 act contained the following proviso:
          Provided: That unless otherwise provided herein, any 
        matter within the jurisdiction of a standing committee 
        prior to January 2, 1947, shall remain subject to the 
        jurisdiction of that committee or of the consolidated 
        committee succeeding to the jurisdiction of that 
        committee.
This proviso was omitted from the Rules of the House adopted 
January 3, 1954.\6\
---------------------------------------------------------------------------
    \6\ H. Res. 5, 83d Cong. (99 Cong. Rec. 15). Cf. rules in H. Doc. 
562, 82d Congress, 2d session p. 328 and in H. Doc. 739, 81st Congress, 
2d session, p. 326.
---------------------------------------------------------------------------
    Under the Constitution (Art. I, sec. 5, cl. 2), ``Each 
House may determine the Rules of its Proceedings.'' Omission of 
the proviso made no substantive change, since the scope of the 
committee's jurisdiction prior to January 2, 1947, was embraced 
within the committee's jurisdiction as stated in existing rules 
and precedents.
    The committee's membership, which was fixed at 21 when it 
was consolidated on December 5, 1927, was increased to 25 when 
the Legislative Reorganization Act of 1946 became effective on 
January 2, 1947. In 1951, the committee's membership was 
increased to 27.\7\ From 1953 until January 1963, the 
committee's membership remained at 30.\8\
---------------------------------------------------------------------------
    \7\ H. Res. 60, 83d Congress, 1st session (97 Cong. Rec. 194).
    \8\ H. Res. 98, 83d Cong. (99 Cong. Rec. 436); H. Res. 94, 84th 
Cong. (101 Cong. Rec. 484); H. Res. 89, 85th Cong. (103 Cong. Rec. 
412); H. Res. 120, 86th Cong. (105 Cong. Rec. 841); H. Res. 137, 87th 
Cong. (107 Cong. Rec. 1677).
---------------------------------------------------------------------------
    Pursuant to H. Res. 108, 88th Congress, adopted January 17, 
1963, the committee was enlarged to 31 members. In the 89th 
Congress the membership of the committee was increased to 34 
through passage of H. Res. 114, January 14, 1965. The committee 
membership in the 90th and 91st Congresses of 35 was first 
established by H. Res. 128, 90th Congress, approved January 16, 
1967. The committee membership in the 92d Congress of 39 was 
established by H. Res. 192, approved February 4, 1971. It was 
raised to 41 by H. Res. 158, adopted January 24, 1973. The 
committee membership of 42 was established by H. Res. 1238, 
adopted July 17, 1974. It was increased to 43 by H. Res. 76 and 
101, adopted January 20 and 28, 1975. Membership was maintained 
at 43 in the 95th Congress by H. Res. 117 and 118, adopted 
January 19, 1977. The committee membership was set at 39 in the 
96th Congress by H. Res. 62 and 63, adopted January 24, 1979. 
The committee membership was set at 40 in the 97th Congress by 
H. Res. 44 and 45, adopted January 28, 1981. The committee size 
was increased to 41 by the adoption of H. Res. 370 on February 
24, 1982. Pursuant to House Res. 26 and 27, adopted January 6, 
1983, the committee membership for the 98th Congress was set at 
39.
    In the 99th Congress, the membership of the committee was 
set at 39, pursuant to House Res. 34 and 35, adopted January 
30, 1985.
    In the 100th Congress, the membership of the committee was 
set at 39, pursuant to House Res. 45 and 54, adopted January 21 
and 22, 1987, respectively.
    The committee membership in the 101st Congress was 
established at 39 by H. Res. 29 and H. Res. 45, adopted January 
19 and 20, 1989. In the 102d Congress, the membership of the 
committee was set at 41, pursuant to H. Res. 43, 44, and 45, 
adopted January 24, 1991. The committee membership was set at 
42 in the 103d Congress by adoption of H. Res. 8 and 9 on 
January 5, 1993; H. Res. 34 on January 21, 1993; H. Res. 67 on 
February 4, 1993; and H. Res. 92 and 93 on February 18, 1993. 
The membership was increased to 44 by the adoption of H. Res. 
185 on May 26, 1993 and H. Res. 219 on July 21, 1993. Beginning 
September 28, 1949, the moneys appropriated to the committee 
were, by House resolution in each session of Congress, 
available for expenses incurred in conducting studies and 
investigations authorized under Rule XI, whether made within or 
without the United States.\9\ In the 103d Congress, these 
matters are covered in paragraph (b) of clause 1 of Rule XI, as 
set forth above and by clause 5 of Rule XI. The funds for the 
committee's studies and oversight function during the first 
session of the 103d Congress were provided by H. Res. 107 
adopted March 30, 1993 (H. Rept. 103-38).
---------------------------------------------------------------------------
    \9\ See items under (1) in footnote 3, of the final calendar of the 
committee for the 93d Congress (Dec. 31, 1974).
---------------------------------------------------------------------------
    The committee's name was changed to ``Committee on 
Government Operations'' by House resolution adopted July 3, 
1952.\10\ The Congressional Record indicates the reasons 
underlying that change in name were, in part, as follows: \11\
---------------------------------------------------------------------------
    \10\ H. Res. 647, 82d Cong. (98 Cong. Rec. 9217). The Senate had 
made a similar change of name on Mar. 3, 1952, after conference between 
the chairman of the House and Senate Committees on Expenditures in the 
Executive Departments to ensure both Houses would adopt the change in 
name. S. Res. 280, 82d Cong. (98 Cong. Rec. 1701-1702). See also S. 
Rept. No. 1231, 80th Congress, 2d Session, p. 3 (May 3, 1948).
    \11\ Letter of Feb. 19, 1952, from the chairman, Senate Committee 
on Expenditures in the Executive Departments, Senator McCellan to 
Senator Hayden (98 Cong. Rec. 1702).
---------------------------------------------------------------------------
          This committee is proposing the indicated change in 
        the present title, in view of the fact that it is 
        misleading and the committees' functions and duties are 
        generally misunderstood by the public.
          * * * * * * *
    In suggesting the proposed change the committee based its 
decision on what it considers to be the major or primary 
function of the committee under the prescribed duties assigned 
to it to study ``the operations of Government activities at all 
levels with a view to determining its economy and efficiency.'' 
It was the unanimous view of the members of the committee that 
the proposed new title would be more accurate in defining the 
purposes for which the committee was created and in clearly 
establishing the major purpose it serves.
    On January 4, 1995, the 104th Congress opened with a 
Republican majority for the first time in 40 years. The shift 
in power from Democrats to Republicans has resulted in a 
realignment of the legislative priorities and committee 
structure of the House of Representatives. Perhaps more than 
any other committee, the Government Reform and Oversight 
Committee embodies the changes taking place in the House of 
Representatives. The committee itself was created by 
consolidating three committees into one, resulting in budget 
and staff cuts of nearly 50 percent. The committees that were 
merged include the Committee on Government Operations, the 
Committee on the Post Office and Civil Service, and the 
Committee on the District of Columbia.
    In order to fulfill the Republican Contract with America, 
the committee held a record number of hearings and mark-ups, 
and members cast more votes during this 100 day period than in 
any of the previous committees' histories. Over the course of 
the first session, 295 bills and resolutions were referred to 
the committee and its subcommittees, and 180 hearings and mark-
ups were held. Five of these measures have been signed into 
law.
    In addition to its greatly expanded legislative 
jurisdiction, the Government Reform and Oversight Committee 
serves as the chief investigative committee of the House, with 
the authority to conduct governmentwide oversight. Because the 
committee only authorizes money for a small number of Federal 
agencies and programs, it is able to review government 
activities with an independent eye.
                           III. Organization

                         A. SUBCOMMITTEES \12\

    In the 104th Congress, significant steps were taken to 
reduce the number of committees, subcommittees, and the number 
of congressional staff. As a result, the Congress eliminated 
the District of Columbia Committee and the Post Office and 
Civil Service Committee. The jurisdiction of these committees 
were merged into the Government Operations Committee and its 
name was changed to the Committee on Government Reform and 
Oversight.
---------------------------------------------------------------------------
    \12\ The chairman and the ranking minority member of the committee 
are ex-officio members of all subcommittees on which they do not hold a 
regular assignment (committee Rule 9).
---------------------------------------------------------------------------
    In order to perform its functions and to carry out its 
duties as fully and as effectively as possible, the committee 
under the leadership of its chairman, Hon. William F. Clinger, 
Jr., of Pennsylvania, at the beginning of the 104th Congress, 
established seven standing subcommittees, which cover the 
entire field of executive expenditures and operations. The 
names, chairpersons, and members of these subcommittees are as 
follows:
          Civil Service Subcommittee, John Mica, Chairman; 
        members: Charles Bass, Ben Gilman, Dan Burton, Connie 
        Morella, James Moran, Bernard Sanders, and Tim Holden.
          District of Columbia Subcommittee, Tom Davis, 
        Chairman; members: Gil Gutknecht, John M. McHugh, Steve 
        LaTourette, Michael P. Flanagan, Eleanor Holmes Norton, 
        Barbara-Rose Collins, and Edolphus Towns.
          Government Management, Information, and Technology 
        Subcommittee, Stephen Horn, Chairman; members: Michael 
        P. Flanagan, Peter Blute, Tom Davis, Jon Fox, Randy 
        Tate, Joe Scarborough, Charles Bass, Carolyn Maloney, 
        Major Owens, John Spratt, Paul Kanjorski, Collin 
        Peterson, and Tim Holden.
          Human Resources and Intergovernmental Relations 
        Subcommittee, Christopher Shays, Chairman; members: 
        Mark Souder, Steven Schiff, Connie Morella, Tom Davis, 
        Dick Chrysler, Bill Martini, Joe Scarborough, Mark 
        Sanford, Edolphus Towns, Tom Lantos, Bernard Sanders, 
        Thomas Barrett, Gene Green, Chaka Fattah, and Henry 
        Waxman.
          National Economic Growth, Natural Resources, and 
        Regulatory Affairs Subcommittee, David McIntosh, 
        Chairman; members: Jon Fox, J. Dennis Hastert, John M. 
        McHugh, Randy Tate, Gil Gutknecht, Joe Scarborough, 
        John Shadegg, Bob Ehrlich, Collin Peterson, Henry 
        Waxman, John Spratt, Louise M. Slaughter, Paul 
        Kanjorski, Gary Condit, and Carrie Meek.
          National Security, International Affairs, and 
        Criminal Justice Subcommittee, William H. Zeliff, Jr., 
        Chairman; members: Bob Ehrlich, Steven Schiff, Illeana 
        Ros-Lehtinen, John Mica, Peter Blute, Mark Souder, John 
        Shadegg, Karen Thurman, Robert Wise, Gene Taylor, Tom 
        Lantos, Louise M. Slaughter, Gary Condit, Bill K. 
        Brewster, and Elijah Cummings.
          Postal Service Subcommittee, John M. McHugh, 
        Chairman; members: Mark Sanford, Ben Gilman, 
        Christopher Shays, David McIntosh, Bob Ehrlich, 
        Barbara-Rose Collins, Major Owens, Gene Green, and 
        Carrie Meek.

      B. RULES OF THE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

    Rule XI, 1(a)(1) of the House of Representatives provides:
          The Rules of the House are the rules of its 
        committees and subcommittees so far as applicable, 
        except that a motion to recess from day to day, and a 
        motion to dispense with the first reading (in full) of 
        a bill or resolution, if printed copies are available, 
        are nondebatable motions of high privilege in 
        committees and subcommittees.
    Rule XI, 2(a) of the House of Representatives provides, in 
part:
          Each standing committee of the House shall adopt 
        written rules governing its procedures.
    In accordance with the foregoing, the Committee on 
Government Reform and Oversight, on January 10, 1995, adopted 
the rules of the committee. The rules read as follows:

                     Rule 1.--Application of Rules

    Except where the terms ``full committee'' and 
``subcommittee'' are specifically referred to, the following 
rules shall apply to the Committee on Government Reform and 
Oversight and its subcommittees as well as to the respective 
chairmen.
        [See House Rule XI, 1.]

                           Rule 2.--Meetings

    The regular meetings of the full committee shall be held on 
the second Tuesday of each month at 10:00 a.m., unless when 
Congress has adjourned. The chairman is authorized to dispense 
with a regular meeting or to change the date thereof, and to 
call and convene additional meetings, when circumstances 
warrant. A special meeting of the committee may be requested by 
members of the committee following the provisions of House Rule 
XI, 2(c)(2). Subcommittees shall meet at the call of the 
subcommittee chairmen. Every member of the committee or the 
appropriate subcommittee, unless prevented by unusual 
circumstances, shall be provided with a memorandum at least 
three calendar days before each meeting or hearing explaining 
(1) the purpose of the meeting or hearing; and (2) the names, 
titles, background and reasons for appearance of any witnesses. 
The ranking minority member shall be responsible for providing 
the same information on witnesses whom the minority may 
request.
        [See House Rule XI, 2(b).]

                            Rule 3.--Quorums

    A majority of the members of the committee shall form a 
quorum, except that two members shall constitute a quorum for 
taking testimony and receiving evidence, and one-third of the 
members shall form a quorum for taking any action other than 
the reporting of a measure or recommendation. If the chairman 
is not present at any meeting of the committee or subcommittee, 
the ranking member of the majority party on the committee or 
subcommittee who is present shall preside at that meeting.
        [See House Rule XI, 2(h).]

                       Rule 4.--Committee Reports

    Bills and resolutions approved by the committee shall be 
reported by the chairman following House Rule XI, 2(l).
    Every investigative report shall be approved by a majority 
vote of the committee at a meeting at which a quorum is 
present. Supplemental, minority, or additional views may be 
filed following House Rule XI, 2(l)(5). The time allowed for 
filing such views shall be three calendar days (excluding 
Saturdays, Sundays, and legal holidays) unless the committee 
agrees to a different time, but agreement on a shorter time 
shall require the concurrence of each member seeking to file 
such views. A proposed report shall not be considered in 
subcommittee or full committee unless the proposed report has 
been available to the members of such subcommittee or full 
committee for at least three calendar days (excluding 
Saturdays, Sundays, and legal holidays) before the 
consideration of such proposed report in subcommittee or full 
committee. If hearings have been held on the matter reported 
upon, every reasonable effort shall be made to have such 
hearings available to the members of the subcommittee or full 
committee before the consideration of the proposed report in 
such subcommittee or full committee.
    Only those reports approved by a majority vote of the 
committee may be ordered printed, unless otherwise required by 
the Rules of the House of Representatives.

                          Rule 5.--Proxy Votes

    In accordance with the Rules of the House of 
Representatives, members may not vote by proxy on any measure 
or matter before the committee or any subcommittee.
        [See House Rule XI, 2(f).]

                          Rule 6.--Roll Calls

    A roll call of the members may be had upon the request of 
any member upon approval of a one-fifth vote.
        [See House Rule XI, 2(e).]

                  Rule 7.--Record of Committee Actions

    The committee staff shall maintain in the committee offices 
a complete record of committee actions from the current 
Congress including a record of the rollcall votes taken at 
committee business meetings. The original records, or true 
copies thereof, as appropriate, shall be available for public 
inspection whenever the committee offices are open for public 
business. The staff shall assure that such original records are 
preserved with no unauthorized alteration, additions, or 
defacement.
        [See House Rule XI, 2(e).]

                   Rule 8.--Subcommittees; Referrals

    There shall be seven subcommittees with appropriate party 
ratios that shall have fixed jurisdictions. Bills, resolutions, 
and other matters shall be referred by the chairman to 
subcommittees within two weeks for consideration or 
investigation in accordance with their fixed jurisdictions. 
Where the subject matter of the referral involves the 
jurisdiction of more than one subcommittee or does not fall 
within any previously assigned jurisdiction, the chairman shall 
refer the matter as he may deem advisable. Bills, resolutions, 
and other matters referred to subcommittees may be reassigned 
by the chairman when, in his judgment, the subcommittee is not 
able to complete its work or cannot reach agreement therein. In 
a subcommittee having an even number of members, if there is a 
tie vote with all members voting on any measure, the measure 
shall be placed on the agenda for full committee consideration 
as if it had been ordered reported by the subcommittee without 
recommendation. This provision shall not preclude further 
action on the measure by the subcommittee.
        [See House Rule XI, 1(a)(2).]

                      Rule 9.--Ex Officio Members

    The chairman and the ranking minority member of the 
committee shall be ex officio members of all subcommittees. 
They are authorized to vote on subcommittee matters; but, 
unless they are regular members of the subcommittee, they shall 
not be counted in determining a subcommittee quorum other than 
a quorum for taking testimony.

                            Rule 10.--Staff

    Except as otherwise provided by House Rule XI, 5 and 6, the 
chairman of the full committee shall have the authority to hire 
and discharge employees of the professional and clerical staff 
of the full committee and of subcommittees.

                       Rule 11.--Staff Direction

    Except as otherwise provided by House Rule XI, 5 and 6, the 
staff of the committee shall be subject to the direction of the 
chairman of the full committee and shall perform such duties as 
he may assign.

                 Rule 12.--Hearing Dates and Witnesses

    The chairman of the full committee will announce the date, 
place, and subject matter of all hearings at least one week 
before the commencement of any hearings, unless he determines 
that there is good cause to begin such hearings sooner. So that 
the chairman of the full committee may coordinate the committee 
facilities and hearing plans, each subcommittee chairman shall 
notify him of any hearing plans at least two weeks before the 
date of commencement of hearings, including the date, place, 
subject matter, and the names of witnesses, willing and 
unwilling, who would be called to testify, including, to the 
extent he is advised thereof, witnesses whom the minority 
members may request. The minority members shall supply the 
names of witnesses they intend to call to the chairman of the 
full committee or subcommittee at the earliest possible date. 
Witnesses appearing before the committee shall, so far as 
practicable, submit written statements at least 24 hours before 
their appearance.
        [See House Rules XI, 2 (g)(3), (g)(4), (j), and (k).]

                        Rule 13.--Open Meetings

    Meetings for the transaction of business and hearings of 
the committee shall be open to the public or closed in 
accordance with Rule XI of the House of Representatives.
        [See House Rules XI, 2 (g) and (k).]

                       Rule 14.--Five-Minute Rule

    A committee member may question a witness only when 
recognized by the chairman for that purpose. In accordance with 
House Rule XI, 2(j)(2), each committee member may request up to 
five minutes to question a witness until each member who so 
desires has had such opportunity. Until all such requests have 
been satisfied, the chairman shall, so far as practicable, 
recognize alternately based on seniority of those majority and 
minority members present at the time the hearing was called to 
order and others based on their arrival at the hearing. After 
that, additional time may be extended at the direction of the 
chairman.

              Rule 15.--Investigative Hearings; Procedure

    Investigative hearings shall be conducted according to the 
procedures in House Rule XI, 2(k). All questions put to 
witnesses before the committee shall be relevant to the subject 
matter before the committee for consideration, and the chairman 
shall rule on the relevance of any questions put to the 
witness.

                     Rule 16.--Stenographic Record

    A stenographic record of all testimony shall be kept of 
public hearings and shall be made available on such conditions 
as the chairman may prescribe.

                  Rule 17.--TV, Radio, and Photographs

    An open meeting or hearing of the committee or a 
subcommittee may be covered, in whole or in part, by television 
broadcast, radio broadcast, and still photography, or by any of 
such methods of coverage, unless closed subject to the 
provisions of House Rule XI, 3.

                Rule 18.--Additional Duties of Chairman

    The chairman of the full committee shall:
          (a) Make available to other committees the findings 
        and recommendations resulting from the investigations 
        of the committee or its subcommittees as required by 
        House Rule X, 4(c)(2);
          (b) Direct such review and studies on the impact or 
        probable impact of tax policies affecting subjects 
        within the committee's jurisdiction as required by 
        House Rule X, 2(c);
          (c) Submit to the Committee on the Budget views and 
        estimates required by House Rule X, 4(g), and to file 
        reports with the House as required by the Congressional 
        Budget Act;
          (d) Authorize and issue subpoenas as provided in 
        House Rule XI, clause 2(m), in the conduct of any 
        investigation or activity or series of investigations 
        or activities within the jurisdiction of the committee; 
        and
          (e) Prepare, after consultation with subcommittee 
        chairmen and the minority, a budget for the committee 
        which shall include an adequate budget for the 
        subcommittees to discharge their responsibilities.
          (f) Make any necessary technical and conforming 
        changes to legislation reported by the committee upon 
        unanimous consent.

              Rule 19.--Special Affidavits and Depositions

    If the House provides the committee with authority to take 
affidavits and depositions, the following rules apply:
          (a) The Chairman, upon consultation with the ranking 
        minority member or the committee, may authorize the 
        taking of affidavits, and of depositions pursuant to 
        notice or subpoena. Such authorization may occur on a 
        case-by-case basis, or by instructions to take a series 
        of affidavits or depositions. Notices for the taking of 
        depositions shall specify a time and place for 
        examination. Affidavits and depositions shall be taken 
        under oath administered by a member or a person 
        otherwise authorized by law to administer oaths. 
        Consultation with the ranking minority member will 
        include three (3) business days written notice before 
        any deposition is taken, unless otherwise agreed to by 
        the ranking minority member or committee.
          (b) The committee shall not initiate procedures 
        leading to contempt proceedings in the event a witness 
        fails to appear at a deposition unless the deposition 
        notice was accompanied by a committee subpoena 
        authorized and issued by the chairman. Notwithstanding 
        committee Rule 18(d), the chairman shall not authorize 
        and issue a subpoena for a deposition without the 
        concurrence of the ranking minority member or the 
        committee.
          (c) Witnesses may be accompanied at a deposition by 
        counsel to advise them of their constitutional rights. 
        Absent special permission or instructions from the 
        chairman, no one may be present in depositions except 
        members, staff designated by the chairman or ranking 
        minority member, an official reporter, the witness and 
        any counsel; observers or counsel for other persons or 
        for the agencies under investigation may not attend.
          (d) A deposition will be conducted by members or 
        jointly by--
                  (1) No more than two staff members of the 
                committee, of whom--
                          (A) One will be designated by the 
                        chairman of the committee, and
                          (B) One will be designated by the 
                        ranking minority party member of the 
                        committee, unless such member elects 
                        not to designate a staff member.
                  (2) Any member designated by the chairman. 
                Other staff designated by the chairman or 
                ranking minority member may attend, but are not 
                permitted to pose questions to the witness.
          (e) Questions in the deposition will be propounded in 
        rounds. A round will include as much time as necessary 
        to ask all pending questions, but not more than one 
        hour. In each round, the member or staff member 
        designated by the chairman will ask questions first, 
        and the member or staff member designated by the 
        ranking minority member will ask questions second.
          (f) Objections by the witness as to the form of 
        questions shall be noted for the record. If a witness 
        objects to a question and refuses to answer, the 
        members or staff may proceed with the deposition, or 
        may obtain, at that time or at a subsequent time, a 
        ruling on the objection by telephone or otherwise from 
        the chairman or his designee. The committee shall not 
        initiate procedures leading to contempt for refusals to 
        answer questions at a deposition unless the witness 
        refuses to testify after his objection has been 
        overruled and after he has been ordered and directed to 
        answer by the chairman or his designee upon a good 
        faith attempt to consult with the ranking minority 
        member or her designee.
          (g) The committee staff shall insure that the 
        testimony is either transcribed or electronically 
        recorded, or both. If a witness' testimony is 
        transcribed, he shall be furnished with an opportunity 
        to review a copy. No later than five days thereafter, 
        the staff shall enter the changes, if any, requested by 
        the witness, with a statement of the witness' reasons 
        for the changes, and the witness shall be instructed to 
        sign the transcript. The individual administering the 
        oath, if other than a member, shall certify on the 
        transcript that the witness was duly sworn in his 
        presence, the transcriber shall certify that the 
        transcript is a true record of the testimony, and the 
        transcript shall be filed, together with any electronic 
        recording, with the clerk of the committee in 
        Washington, D.C. Affidavits and depositions shall be 
        deemed to have been taken in Washington, D.C. once 
        filed there with the clerk of the committee for the 
        committee's use. The ranking minority member will be 
        provided a copy of the transcripts of the deposition 
        once the procedures provided above have been completed.
          (h) Unless otherwise directed by the committee, all 
        depositions and affidavits received in the 
        investigation shall be considered nonpublic until 
        received by the committee. Once received by the 
        committee, use of such materials shall be governed by 
        the committee rules. All such material shall unless 
        otherwise directed by the committee, be available for 
        use by the members of the committee in open session.
          (i) A witness shall not be required to testify if 
        they have not been provided a copy of the House 
        Resolution and the amended committee Rules.
          (j) Committee Rule 19 expires on July 8, 1996.
                     IV. Activities, 104th Congress

                                SUMMARY

    1. In the 104th Congress, the committee approved and 
submitted to the House of Representatives 19 investigative 
reports. In addition, the committee issued 15 committee prints.
    2. In the 104th Congress, 436 bills and resolutions were 
referred to the committee and studied. Of these, the committee 
reported 42. In addition, 14 Memorials, 4 Petitions, and 8 
Presidential messages were referred to the committee.
    3. Pursuant to its duty of studying reports of the 
Comptroller General, the committee received officially and 
studied 1,536 such reports during the 104th Congress. In 
addition, 1,237 executive communications, were referred to the 
committee under clause 2 of rule XXIV of the House of 
Representatives.
    4. The full committee met 43 days during the 104th 
Congress, while the subcommittees met a total of 270 days in 
public hearings, markups, and meetings.
    The significant actions taken by the committee with respect 
to these and a considerable number of other matters are 
discussed in detail below.

                        A. INVESTIGATIVE REPORTS

    During the 104th Congress, the Committee on Government 
Reform and Oversight approved and submitted to the Congress 19 
reports of an investigative nature.
    For convenience, the published reports are listed here with 
the names of the originating subcommittees. A more detailed 
discussion of the material will be found in part two below in 
the breakdown of the committee's activities by subcommittee:
          First Report (H. Rept. 104-156): ``A Citizen's Guide 
        on Using the Freedom of Information Act and the Privacy 
        Act of 1974 to Request Government Records.''
          Second Report (H. Rept. 104-434): ``Creating a 21st 
        Century Government.'' *
---------------------------------------------------------------------------
    * Denotes report accompanied by additional, dissenting, minority, 
separate, or supplemental views.
---------------------------------------------------------------------------
          Third Report (H. Rept. 104-435): ``Making Government 
        Work; Fulfilling the Mandate for Change.'' * 
        (Subcommittee on Government Management, Information, 
        and Technology)
          Fourth Report (H. Rept. 104-436): ``The FDA Food 
        Additive Review Process: Backlog and Failure to Observe 
        Statutory Deadlines.'' * (Subcommittee on Human 
        Resources and Intergovernmental Relations)
          Fifth Report (H. Rept. 104-437): ``The Federal 
        Takeover of the Chicago Housing Authority--HUD Needs to 
        Determine Long-Term Implications.'' * (Subcommittee on 
        Human Resources and Intergovernmental Relations)
---------------------------------------------------------------------------
    * Denotes report accompanied by additional, dissenting, minority, 
separate, or supplemental views.
---------------------------------------------------------------------------
          Sixth Report (H. Rept. 104-438): ``Voices for 
        Change.'' (Subcommittee on the Postal Service)
          Seventh Report (H. Rept. 104-486): ``National Drug 
        Policy: A Review of the Status of the Drug War.''* 
        (Subcommittee on National Security, International 
        Affairs, and Criminal Justice)
          Eighth Report (H. Rept. 104-641): ``Fraud and Abuse 
        in Medicare and Medicaid: Stronger Enforcement and 
        Better Management Could Save Billions.''* (Subcommittee 
        on Human Resources and Intergovernmental Relations)
          Ninth Report (H. Rept. 104-745): ``Laws Related to 
        Federal Financial Management As Amended Through 
        December 31, 1995.''
          Tenth Report (H. Rept. 104-746): ``Protecting the 
        Nation's Blood Supply From Infectious Agents: The Need 
        For New Standards to Meet New Threats''* (Subcommittee 
        on Human Resources and Intergovernmental Relations)
          Eleventh Report (H. Rept. 104-747): ``Health Care 
        Fraud: All Public and Private Payers Need Federal 
        Criminal Anti-Fraud Protection.'' (Subcommittee on 
        Human Resources and Intergovernmental Relations)
          Twelfth Report (H. Rept. 104-748): ``A Two-Year 
        Review of the White House Communications Agency Reveals 
        Major Mismanagement, Lack of Accountability, and 
        Significant Mission Creep.''* (Subcommittee on National 
        Security, International Affairs, and Criminal Justice)
          Thirteenth Report (H. Rept. 104-749): ``Investigation 
        into the Activities of Federal Law Enforcement Agencies 
        Toward the Branch Davidians.''* (Subcommittee on 
        National Security, International Affairs, and Criminal 
        Justice prepared in conjunction with the Committee on 
        the Judiciary)
          Fourteenth Report (H. Rept. 104-821): ``Sampling and 
        Statistical Adjustment in the Decennial Census: 
        Fundamental Flaws.''*
          Fifteenth Report (H. Rept. 104-849): ``Investigation 
        of the White House Travel Office Firings and Related 
        Matters.''*
          Sixteenth Report (H. Rept. 104-857): ``Year 2000 
        Computer Software Conversion: Summary of Oversight 
        Findings and Recommendations.'' (Subcommittee on 
        Government Management, Information, and Technology)
          Seventeenth Report (H. Rept. 104-858): ``Crude Oil 
        Undervaluation: The Ineffective Response of the 
        Minerals Management Service.'' (Subcommittee on 
        Government Management, Information, and Technology)
          Eighteenth Report (H. Rept. 104-861): ``Federal 
        Government Management: Examining Government Performance 
        as We Near the Next Century.''*
          Nineteenth Report (H. Rept. 104-862): ``Investigation 
        into the White House and Department of Justice on 
        Security of FBI Background Investigation Files.''*
---------------------------------------------------------------------------
    * Denotes report accompanied by additional, dissenting, minority, 
separate, or supplemental views.
---------------------------------------------------------------------------

                             B. LEGISLATION

    The legislative jurisdiction of the Committee on Government 
Reform and Oversight covers a wide range of important 
governmental operations. In accordance with jurisdiction 
assumed from the former Committee on Government Operations, the 
committee receives all budget and accounting measures other 
than appropriations; all measures relating to the overall 
economy and efficiency of Government operations and activities, 
including Federal procurement, intergovernmental relationships, 
general revenue sharing (the latter subject was formerly within 
the jurisdiction of the Committee on Ways and Means), and the 
National Archives (formerly within the jurisdiction of the 
Committee on Post Office and Civil Service); all reorganization 
plans and bills providing for the establishment of new 
departments in the executive branch such as the Department of 
Energy and the Department of Education; and most other 
reorganization legislation, examples of which are legislation 
to reorganize the intelligence community, international trade, 
and regulatory agencies. Other legislation includes debt 
collection and proposals relating to delinquent payments and 
paperwork reduction. It also receives legislation dealing with 
the General Services Administration, including the Federal 
Property and Administrative Services Act of 1949 and special 
bills authorizing the Administrator of General Services to make 
specific transfers of property, plus legislation dealing with 
the General Accounting Office, the Office of Management and 
Budget, the Administrative Expenses Act, the Travel Expenses 
Act, the Employment Act of 1946, and the Javits-Wagner-O'Day 
Act relating to the sale of products and services of blind and 
other handicapped persons. In addition, the committee has 
jurisdiction over the Freedom of Information provisions of the 
Administrative Procedure Act, the Privacy Act, the Government 
in the Sunshine Act, and the Federal Advisory Committee as well 
as the Inspector General Act.
    Rule X, 2(b) of the standing Rules of the House, requires 
the committee to see and review the administration of all laws 
in the legislative jurisdiction, and Rule XI, 1(d) requires 
that the committee report to the House thereon by the end of 
each Congress. The present report outlines the extent and 
nature of the committee and subcommittee activities 
constituting the review.
    On January 4, 1995, as the first session of the 104th 
Congress convened, the new Republican House majority moved to 
fulfill its promise of true government reform by implementing 
its Contract with America. Pursuant to the Contract, 14 bills 
were introduced as the opening bells rang to promote jobs, 
enhance wages, take back our Nation's streets, and restore 
openness, accountability, and fiscal responsibility in our 
Federal Government. Of the Contract bills, four were referred 
to the Committee on Government Reform and Oversight for 
immediate review and action. They included: H.R. 2, the Line-
Item Veto Act; H.R. 5, the Unfunded Mandates Reform Act; H.R. 
9, the Job Creation and Wage Enhancement Act; and H.R. 450, 
(830) the Paperwork Reduction Act. The actions taken on each 
are described below.
    During the 104th Congress, as noted above, the committee 
studied 436 bills and resolutions referred to it and reported 
42 to the House. The measures reported or ordered reported are 
discussed more fully in part two below. However, they are 
listed here for convenience in the order of approval by the 
committee and with the name of the subcommittee that initially 
considered them:
          H.R. 5, To curb the practice of imposing unfunded 
        Federal mandates on States and local governments, to 
        ensure that the Federal Government pays the costs 
        incurred by those governments in complying with certain 
        requirements under Federal statutes and regulations, 
        and to provide information on the cost of Federal 
        mandates on the private sector, and for other purposes. 
        (H. Rept. 104-1, Pt. 2, S. 1; Public Law 104-4.)
          H.R. 2, To give the President item veto authority 
        over appropriation acts and targeted tax benefits in 
        revenue acts. (H. Rept. 104-11, Pt. 2, S. 4; Public Law 
        104-50.)
          H.R. 830, To amend chapter 35 of title 44, United 
        States Code, to further the goals of the Paperwork 
        Reduction Act to have Federal agencies become more 
        responsible and publicly accountable for reducing the 
        burden of Federal paperwork on the public, and for 
        other purposes. (H. Rept. 104-37, S. 244; Public Law 
        104-13.)
          H.R. 450, To ensure economy and efficiency of Federal 
        Government operations by establishing a moratorium on 
        regulatory rulemaking actions, and for other purposes. 
        (Subcommittee on National Economic Growth, Natural 
        Resources, and Regulatory Affairs, H. Rept. 104-39, Pt. 
        1, S. 219.)
          H.R. 1271, To provide protection for family privacy. 
        (Subcommittee on Government Management, Information, 
        and Technology, H. Rept. 104-94.)
          H.R. 1345, To eliminate budget deficits and 
        management inefficiencies in the government of the 
        District of Columbia through the establishment of the 
        District of Columbia Financial Responsibility and 
        Management Assistance Authority, and for other 
        purposes. (Subcommittee on the District of Columbia, H. 
        Rept. 104-96, Public Law 104-8.)
          H.R. 1826, To repeal the authorization of 
        transitional appropriations for the United States 
        Postal Service, and for other purposes. (Subcommittee 
        on the Postal Service, H. Rept. 104-174.)
          H.R. 1606, To designate the United States Post Office 
        building located at 24 Corliss Street, Providence, 
        Rhode Island, as the ``Harry Kiziran Post Office 
        Building.'' (Subcommittee on the Postal Service, Public 
        Law 104-100.)
          H.R. 1026, To designate the United States Post Office 
        building located at 201 East Pikes Peak Avenue in 
        Colorado Springs, Colorado, as the ``Winfield Scott 
        Stratton Post Office.'' (Subcommittee on the Postal 
        Service, passed House and Senate as H.R. 1026; Public 
        Law 104-44.)
          H.R. 1655, To authorize appropriations for fiscal 
        year 1996 for intelligence and intelligence-related 
        activities of the U.S. Government, the Community 
        Management Account, and the Central Intelligence Agency 
        Retirement and Disability System, and for other 
        purposes. (H. Rept. 104-138, Pt. 2, S. 922; Public Law 
        104-93.)
          H.R. 1670, To revise and streamline the acquisition 
        laws of the Federal Government, to reorganize the 
        mechanisms for resolving Federal procurement disputes, 
        and for other purposes. (H. Rept. 104-222, Pt. 1.)
          H.R. 2108, To permit the Washington Convention Center 
        Authority to expend revenues for the operation and 
        maintenance of the existing Washington Convention 
        Center and for preconstruction activities relating to a 
        new convention center in the District of Columbia, to 
        permit a designated authority of the District of 
        Columbia to borrow funds for the preconstruction 
        activities relating to a sports arena in the District 
        of Columbia and to permit certain revenues to be 
        pledged as security for the borrowing of such funds, 
        and for other purposes. (Subcommittee on the District 
        of Columbia, H. Rept. 104-227; Public Law 104-28.)
          H.R. 1756, To abolish the Department of Commerce, 
        (Title 1.) (H. Rept. 104-260, Pt. 1, S. 929.)
          S. 790, To provide for the modification or 
        elimination of Federal reporting requirements. (H. 
        Rept. 104-327; Public Law 104-66.)
          H.R. 994, To require the periodic review and 
        automatic termination of Federal regulations. 
        (Subcommittee on National Economic Growth, Natural 
        Resources, and Regulatory Affairs, H. Rept. 104-284, 
        Pt. 1.)
          H.R. 2661, To amend the District of Columbia Self-
        Government and Government Reorganization Act to permit 
        the District of Columbia to expend its own funds during 
        any portion of a fiscal year for which Congress has not 
        enacted the budget of the District of Columbia for the 
        fiscal year, and to provide for the appropriation of a 
        monthly pro-rated portion of the annual Federal payment 
        to the District of Columbia for such fiscal year during 
        such portion of the year. (Subcommittee on the District 
        of Columbia, H. Rept. 104-408.)
          H.R. 1398, To designate the United States Post Office 
        building located at 1203 Lemay Ferry Road, St. Louis, 
        Missouri, as the ``Charles J. Coyle Post Office 
        Building.'' (Subcommittee on the Postal Service, passed 
        House.)
          H.R. 1880, To designate the United States Post Office 
        building located at 102 South McLean, Lincoln, 
        Illinois, as the ``Edward Madigan Post Office 
        Building.'' (Subcommittee on the Postal Service; Public 
        Law 104-157.)
          H.R. 2262, To designate the United States Post Office 
        building located at 218 North Alston Street in Foley, 
        Alabama, as the ``Holk Post Office Building.'' 
        (Subcommittee on the Postal Service, passed House.)
          H.R. 2704, To provide that the United States Post 
        Office building that is to be located on the 2600 block 
        of East 75th Street in Chicago, Illinois, shall be 
        known and designated as the ``Charles A. Hayes Post 
        Office Building.'' (Subcommittee on the Postal Service, 
        passed House.)
          H.R. 2202, Immigration in the Natural Interest Act of 
        1995. (Subcommittee on Civil Service, H. Rept. 104-469, 
        Pt. II.)
          H.R. 2700, To designate the United States Post Office 
        building located at 7980 FM 327, Elmendorf, Texas, as 
        the ``Amos F. Longeria Post Office Building.'' 
        (Subcommittee on the Post Office; Public Law 104-255.)
          H.R. 3184, To streamline and improve the 
        effectiveness of chapter 75 of title 31, United States 
        Code (commonly referred to as the ``Single Audit 
        Act.'') (Subcommittee on Government Management, 
        Information, and Technology, H. Rept. 104-607; Public 
        Law 104-156.)
          H.R. 2086, To increase the overall economy and 
        efficiency of Government operations and enable more 
        efficient use of Federal funding, by enabling local 
        governments and private, nonprofit organizations to use 
        amounts available under certain Federal assistance 
        programs in accordance with approved local flexibility 
        plans. (Subcommittee on Human Resources and 
        Intergovernmental Relations, H. Rept. 104-847.)
          H.R. 885, To designate the United States Post Office 
        building located at 153 East 110th Street, New York, 
        New York, as the ``Oscar Garcia Rivera Post Office 
        Building.'' (Subcommittee on the Postal Service, passed 
        House.)
          H.R. 3139, To redesignate the United States Post 
        Office building located at 245 Centereach Mall on 
        Middle Country Road in Centereach, New York, as the 
        ``Rose Y. Caracappa United States Post Office 
        Building.'' (Subcommittee on the Postal Service; Public 
        Law 104-187.)
          H.R. 3663, To amend the District of Columbia Self-
        Government and Governmental Reorganization Act to 
        permit the Council of the District of Columbia to 
        authorize the issuance of revenue bonds with respect to 
        water and sewer facilities, and for other purposes. 
        (Subcommittee on the District of Columbia, H. Rept. 
        104-635; Public Law 104-184.)
          H.R. 3664, To make miscellaneous and technical 
        corrections to improve the operations of the government 
        of the District of Columbia. (Subcommittee on the 
        District of Columbia.)
          H.R. 3586, To amend title 5, United States Code, to 
        strengthen veterans' preference, to increase employment 
        opportunities for veterans, and other purposes. 
        (Subcommittee on Civil Service, H. Rept. 104-675.)
          H.R. 3452, To make certain laws applicable to the 
        Executive Office of the President, and for other 
        purposes. (Subcommittee on Government Management, 
        Information, and Technology, H. Rept. 104-820, Pt. 1; 
        Public Law 104-331.)
          H.R. 1281, To amend title 5, United States Code, and 
        the National Security Act of 1947 to require disclosure 
        under the Freedom of Information Act of information 
        regarding certain individuals who participated in Nazi 
        war crimes during the period in which the United States 
        was involved in World War II. (Subcommittee on 
        Government Management, Information, and Technology, H. 
        Rept. 104-819, Pt. 1; Public Law 104-309.)
          H.R. 3841, To amend the civil service laws of the 
        United States, and for other purposes. (Subcommittee on 
        Civil Service, H. Rept. 104-831, passed House.)
          H.R. 3864, To reform the management practices of the 
        General Accounting Office, and for the other purposes. 
        (Public Law 104-316.)
          H.R. 3802, To amend section 552 of title 5, United 
        States Code, popularly known as the Freedom of 
        Information Act, to provide for public access to 
        information in an electronic format, and for other 
        purposes. (Subcommittee on Government Management, 
        Information, and Technology, H. Rept. 104-795; Public 
        Law 104-231.)
          H.R. 3869, To amend the Federal Advisory Committee 
        Act to direct the Director of the Office of Management 
        and Budget to conduct a negotiated rulemaking for the 
        purpose of establishing electronic data reporting 
        standards for the electronic interchange of certain 
        data that is required to be reported under existing 
        Federal law. (Subcommittee on Government Management, 
        Information, and Technology.)
          H.R. 3637, To amend chapter 57 of title 5, United 
        States Code, and title 31, United States Code, to 
        provide employees who transfer in the interest of the 
        Government more effective and efficient delivery of 
        relocation allowances by reducing administrative costs 
        and improving services, and for other purposes. 
        (Subcommittee on Government Management, Information, 
        and Technology.)
          H.R. 3625 (S. 1577), To authorize appropriations for 
        the National Historical Publications and Records 
        Commission for fiscal years 1998, 1999, 2000, and 2001. 
        (Subcommittee on National Security, International 
        Affairs, and Criminal Justice, S. Rept. 104-283; Public 
        Law 104-274.)
          H.R. 3768, To designate a United States Post Office 
        to be located in Groton, Massachusetts, as the 
        ``Augusta `Gusty' Hornblower United States Post 
        Office.'' (Subcommittee on the Postal Service.)
          H.R. 3834, To redesignate the Dunning Post Office in 
        Chicago, Illinois, as the ``Roger P. McAuliffe Post 
        Office.'' (Subcommittee on the Postal Service; Public 
        Law 104-189.)
          H.R. 3877, To designate the United States Post Office 
        building in Camden, Arkansas, as the ``Honorable David 
        H. Pryor Post Office Building.'' (Subcommittee on the 
        Postal Service; Public Law 104-268.)
          S. 868, To provide authority for leave transfer for 
        Federal employees who are adversely affected by 
        disasters or emergencies, and for other purposes. 
        (Subcommittee on Civil Service, S. Rept. 104-151; 
        passed House.)

                        OTHER LEGISLATIVE ACTION

    The following bills were referred to the Committee on 
Government Reform and Oversight, however, the committee was 
discharged from further consideration, therefore, the bills 
were not reported by the committee. Latest action is shown:
          H.R. 9, to create jobs, enhance wages, strengthen 
        property rights, maintain certain economic liberties, 
        decentralized and reduce the power of the Federal 
        Government with respect to the States, localities, and 
        citizens of the United States, and to increase the 
        accountability of Federal officials. (Reported amended 
        by Committee on Commerce, H. Rept. 104-33, Pt. I; 
        amended from Committee on Science, Pt. II; passed House 
        amended and received in Senate and referred to 
        Governmental Affairs.)
          H.R. 564, a bill to provide that receipts and 
        disbursements of the Highway Trust Fund, the Airport 
        and Airway Trust Fund, the Inland Waterways Trust Fund, 
        and the Harbor Maintenance Trust Fund shall not be 
        included in the totals of the budget of the U.S. 
        Government as submitted by the President or the 
        congressional budget. (Subcommittee on Government 
        Management, Information, and Technology.)
          H.R. 842, a bill to provide off-budget treatment for 
        the Highway Trust Fund, the Airport and Airway Trust 
        Fund, the Inland Waterways Trust Fund, and the Harbor 
        Maintenance Trust Fund. (Subcommittee on Government 
        Management, Information, and Technology.)
          H.R. 1022, a bill to provide regulatory reform and to 
        focus national economic resources on the greatest risks 
        to human health, safety, and the environment through 
        scientifically objective and unbiased risk assessments 
        and through the consideration of costs and benefits in 
        major rules, and for other purposes. (Subcommittee on 
        National Economic Growth, Natural Resources, and 
        Regulatory Affairs. Considered by House Unfinished 
        Business. Committee Amendment in the Nature of a 
        Substitute Considered as an Original Bill for the 
        Purpose of Amendment. House agreed to Amendments 
        Adopted by the Committee of the Whole. Motion to 
        Recommit with Instructions Failed in House by Yea-Nay 
        Vote: 174-250 (Record Vote No. 182). Passed House 
        (Amended) by Recorded Vote: 286-141 (Record Vote No. 
        183). Received in the Senate and referred to Senate 
        Committee on Governmental Affairs.)
          H.R. 1182, a bill to permit certain Federal employees 
        who retired or became entitled to receive compensation 
        for work injury before December 9, 1980, to elect to 
        resume coverage under the Federal employees' group life 
        insurance program. (Subcommittee on Civil Service.)
          H.R. 1508, a bill to require the transfer of title to 
        the District of Columbia of certain real property in 
        Anacostia Park to facilitate the construction of 
        National Children's Island, a cultural, educational, 
        and family oriented park. (Subcommittee on the District 
        of Columbia. Reported Amended by the Committee on 
        Resources, H. Rept. 104-277, Pt. I; called up by House 
        under Suspension of Rules and passed House. Received in 
        the Senate and referred to Governmental Affairs.)
          H.R. 1530, to authorize appropriations for fiscal 
        year 1996 for military activities of the Department of 
        Defense, to prescribe military personnel strengths for 
        fiscal year 1996, and for other purposes. (Reported 
        amended by the Committee on National Security, H. Rept. 
        104-131; passed House amended; passed Senate amended; 
        House agreed to Conference Rept. 104-406; called up by 
        House as Privileged Matter. Public Law No. 104-106.)
          H.R. 2017, to authorize an increased Federal share of 
        the costs of certain transportation projects in the 
        District of Columbia for fiscal years 1995 and 1996, 
        and for other purposes. (Subcommittee on the District 
        of Columbia. Reported Amended by the Committee on 
        Transportation and Infrastructure, H. Rept. 104-217, 
        Pt. 1; called up by House under Suspension of Rules and 
        passed House and Senate. Public Law 104-21.)
          H.R. 2077, to designate the U.S. Post Office building 
        located at 33 College Avenue in Waterville, Maine, as 
        the ``George J. Mitchell Post Office Building.'' 
        (Called up by House by Unanimous Consent. Passed House 
        and Senate by Voice Vote. Public Law No. 104-27.)
          H.R. 2564, to provide for the disclosure of lobbying 
        activities to influence the Federal Government, and for 
        other purposes. (Reported by the Committee on 
        Judiciary, H. Rept. 104-339, Pt. 1; called up by House 
        by Suspension of Rules and passed House by Voice Vote. 
        Public Law 104-65.)
          H.R. 2276, to establish the Federal Aviation 
        Administration as an independent establishment in the 
        executive branch, and for other purposes. (Reported 
        amended from the Committee on Transportation and 
        Infrastructure, H. Rept. 104-475, Pt. I. Passed House 
        amended March 12, 1996 and received in Senate and 
        referred to Commerce, Science and Transportation March 
        13, 1996.)
          H.R. 2636, to transfer jurisdiction over certain 
        parcels of Federal real property located in the 
        District of Columbia, and for other purposes. (Reported 
        amended from the Committee on Transportation and 
        Infrastructure, H. Rept. 104-368, Pt. I. In addition, 
        it was reported amended from the Committee on 
        Resources, H. Rept. 104-368, Pt. II. Passed House 
        amended on July 31, 1996, and received in the Senate 
        and referred to the Committee on Energy and Natural 
        Resources on August 1, 1996, S. Rept. 104-391.)
          H.R. 3107, to impose sanctions on persons exporting 
        certain goods or technology that would enhance Iran's 
        ability to explore for, extract, refine, or transport 
        by pipeline petroleum resources, and for other 
        purposes. (Reported amended from International 
        Relations Committee, H. Rept. 104-523, Pt. I; reported 
        amended from Ways and Means Committee, H. Rept. 104-
        523, Pt. II. Passed House as amended, passed Senate 
        with amendments. Presented to the President July 24, 
        1996 became Public Law 104-172.)
          H.R. 3235, to amend the Ethics in Government Act of 
        1978, to extend the authorization of appropriations for 
        the office of Government Ethics for 3 years, and for 
        other purposes. (Reported from the Committee on the 
        Judiciary, H. Rept. 104-595, Pt. I. Passed House under 
        suspension of rules and passed Senate on July 24, 1996. 
        Presented to the President July 26, 1996, became Public 
        Law 104-179.)
          H.R. 3237, to provide for improved management and 
        operation of intelligence activities of the Government 
        by providing for a more corporate approach to 
        intelligence, to reorganize the agencies of the 
        Government engaged in the intelligence activities so as 
        to provide an improved Intelligence Community for the 
        21st century, and for other purposes. (Reported amended 
        from Intelligence Committee, H. Rept. 104-620, Pt. I, 
        and reported amended from National Security Committee, 
        H. Rept. 104-620, Pt. II.)
          H.R. 3936, to encourage the development of a 
        commercial space industry in the United States, and for 
        other purposes. (Reported amended the Committee on 
        Science, H. Rept. 104-801, Pt. I, passed House under 
        suspension of rules and received in the Senate on 
        September 18, 1996.)

                        C. REORGANIZATION PLANS

    The most recent authority of the President to transmit 
reorganization plans to Congress was reestablished by Public 
Law 98-614. Approved November 8, 1984, this authority expired 
on December 31, 1984. Legislation extending executive 
reorganization authority was not enacted during the first 
session of the 104th Congress.

                          D. COMMITTEE PRINTS

    Fifteen committee prints, resulting from work by the 
committee staff, were issued during the 104th Congress, as 
follows:
          ``Rules of the Committee on Government Reform and 
        Oversight, House of Representatives, Together with 
        Selected Rules of the House of Representatives 
        (Including Clause 2 of House Rule XI) and Selected 
        Statutes of Interest.'' (Full committee.) (January 
        1995.)
          ``Oversight Plans for all House Committees with 
        Accompanying Recommendations by the Committee on 
        Government Reform and Oversight, House of 
        Representatives (Required by Clause 2 of House Rule 
        XI).'' (Full committee.) (March 1995.)
          ``Mail Service in the United States: Exploring 
        Options for Improvement.'' Report of the U.S. Postal 
        Service and the Postal Rate Commission, to the 
        Committee on Government Reform and Oversight. (Full 
        committee.) (December 1995.)
          ``Legislative Manual (1st Edition) of the Committee 
        on Government Reform and Oversight.'' (Full committee.) 
        (February 1996.)
          ``The Federal Acquisition Reform Act of 1996 and the 
        Information Technology Management Reform Act of 1996--
        Divisions D and E of the National Defense Authorization 
        Act of Fiscal Year 1996.'' (Full committee.) (February 
        1996.)
          ``Rules of the Committee on Government Reform and 
        Oversight, House of Representatives Together with 
        Selected Rules of the House of Representatives 
        (Including Clause 2 of House Rule XI) and Selected 
        Statutes of Interest.'' (Full committee.) (March 1996.)
          ``Correspondence Between the White House and Congress 
        in the Proceedings Against John M. Quinn, David 
        Watkins, and Matthew Moore As Part of the Committee 
        Investigation into the White House Travel Office 
        Matter.'' (Full committee.) (May 1996.)
          ``Interim Report of the Activities of the House 
        Committee on Government Reform and Oversight 104th 
        Congress, First Session.'' (Full committee.) (May 
        1996.)
          ``Deposition Transcripts from the Committee 
        Investigation into the White House Office Travel 
        Matter, Volume 1.'' (Full committee.) (May 1996.)
          ``Business Meeting in the Proceedings Against John M. 
        Quinn, David Watkins, and Matthew Moore As Part of the 
        Committee Investigation into the White House Travel 
        Office Matter.'' (Full committee.) (June 1996.)
          ``Deposition Transcripts from the Committee 
        Investigation into the White House Office Travel 
        Matter, Volume 2.'' (Full committee.) (October 1996.)
          ``Deposition Transcripts from the Committee 
        Investigation into the White House Office Travel 
        Matter, Volume 3.'' (Full committee.) (October 1996.)
          ``Deposition Transcripts from the Committee 
        Investigation into the White House Office Travel 
        Matter, Volume 4.'' (Full committee.) (October 1996.)
          ``Deposition Transcripts from the Committee 
        Investigation into the White House Office Travel 
        Matter, Volume 5.'' (Full committee.) (October 1996.)
          ``United States Government Policy and Supporting 
        Positions (Plum Book).'' (Full committee.) (November 
        1996.)

       E. COMMITTEE ACTION ON REPORTS OF THE COMPTROLLER GENERAL

    Rule X, 4(c)(1)(A), of the rules of the House, imposes the 
duty upon this committee to receive and examine reports of the 
Comptroller General referred to and to make such 
recommendations to the House as it deems necessary or desirable 
in connection with the subject matter of the reports.
    In discharging this responsibility, each report of the 
Comptroller General received by the committee is studied and 
analyzed by the staff and referred to the subcommittee of this 
committee to which has been assigned general jurisdiction over 
the subject matter involved.
    The committee has received a total of 35 General Accounting 
Office Reports to the Congress for processing during the 104th 
Congress. After preliminary staff study, these reports were 
referred to subcommittees of this committee as follows:

Civil Service Subcommittee........................................     6
District of Columbia Subcommittee.................................     4
Government Management, Information, and Technology Subcommittee...     3
Human Resources and Intergovernmental Relations Subcommittee......     7
National Economic Growth, Natural Resources, and Regulatory 
    Affairs Subcommittee..........................................     5
National Security, International Affairs, and Criminal Justice 
    Subcommittee..................................................     4
Postal Service Subcommittee.......................................     6
                        -----------------------------------------------------------------
                        ________________________________________________
      Total.......................................................    35

    Furthermore, in implementation of section 236 of the 
Legislative Reorganization Act of 1970, the committee now 
regularly receives GAO reports that are not addressed to 
Congress but contain recommendations to heads of the Federal 
agencies. These are generally reports to the agency heads their 
written statements of actions taken with respect to such 
recommendations, as required by section 236. The committee 
received a total of 1,065 such GAO reports to Federal agencies 
or other committees and Members within the legislative branch.
    Periodic reports are received from the subcommittees on 
actions taken with respect to individual reports, and monthly 
reports are made to the chairman as to reports received. During 
the 104th Congress, the committees used the reports to further 
specific investigations and reviews. In most cases, additional 
information concerning the findings and recommendations of the 
Comptroller General was requested and received from the 
administrative agency involved, as well as from the General 
Accounting Office. More specific information on the actions 
taken appears in part two below.
    Complete files are maintained by the committee on all 
Comptroller General's reports received. Detailed records are 
kept showing the subcommittee to which the report is referred, 
the date of referral, and the subsequent action taken.
    The committee will review all of the Comptroller General's 
reports received during the Congress in the light of additional 
information obtained and actions taken by the subcommittees, 
and determinations will be made whether specific 
recommendations to the House are necessary or desirable under 
rule X.
                PART TWO. REPORT OF COMMITTEE ACTIVITIES

                 I. Matters of Interest, Full Committee

                               A. GENERAL

1. Oversight Plans of the Committees of the U.S. House of 
        Representatives.
    The 104th Congress adopted a new Rule that provides for 
each standing committee of the House to formally adopt 
oversight plans at the beginning of each year. Specifically, 
the Rule states in part:

          Rule X, clause (2)(d)(1). Not later than February 15 
        of the first session of a Congress, each standing 
        committee of the House shall, in a meeting that is open 
        to the public and with a quorum present, adopt its 
        oversight plans for that Congress. Such plans shall be 
        submitted simultaneously to the Committee on Government 
        Reform and Oversight and to the Committee on House 
        Oversight.

    On March 31, 1995, Committee Chairman William F. Clinger, 
Jr., submitted the oversight plans of each committee together 
with recommendations to ensure the most effective coordination 
of such plans.

  RECOMMENDATIONS OF THE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

             Oversight Plans of the Committees of the House

    Collectively, the committee oversight plans cover a wide 
array of Federal programs and management issues. The challenges 
of dealing with the serious, pervasive problems that continue 
to impede effective management and efficient program delivery 
is formidable.
    A major breakthrough in prospects for improving Federal 
management, as well as congressional oversight of Federal 
programs, has been provided by two recent laws: the Chief 
Financial Officers Act and Government Performance and Results 
Act. Together, these acts provide a framework necessary to help 
achieve improved government accountability and stewardship and 
to lower costs by focusing on results. The Congress framed it 
this way: Set goals, operate programs, and measure results 
using reliable financial and management information.
    While these acts are still in the process of being 
implemented, efforts already completed or underway in response 
to both acts offer committees a valuable source of information 
and insight into the management problems and issues. These 
include issues that impact individual programs, as well as 
those that cut across agency programs and organizational 
boundaries.
    The committees of the House should: (1) conduct oversight 
to ensure that these statutes are being aggressively 
implemented, and (2) use the information produced by the 
implementation of these statutes and the General Accounting 
Office's (GAO) high risk list to assess the management 
weaknesses in the agencies within their jurisdiction.

                      Chief Financial Officers Act

    One of the underlying historical impediments to better 
management of government programs has been the lack of reliable 
financial information. With passage of the CFO Act, the 
Congress has said that this must change and change quickly. The 
long-needed fiscal accountability that the act is designed to 
bring about is essential to effective program management and 
congressional oversight.
    Agencies, which represent organizations larger than the 
Nation's largest private corporations, have typically not been 
able to perform even the most rudimentary bookkeeping 
functions. Agency financial management systems are badly 
deteriorated-OMB reports that most do not meet standards and 
almost all agencies have been unable to pass the test of an 
independent financial statement audit.
    A primary element of the Chief Financial Officers Act, as 
expanded by the Government Management Reform Act of 1994, is 
the requirement for all 24 major agencies to have audited 
financial statements. (The act also calls for governmentwide 
financial statements, audited by GAO, by fiscal year 1997.) 
Also, agencies must now have:
     financial information that is linked with program 
and budget data for use in both management control and 
planning;
     reports on program cost trends and other 
performance indicators from which managers can make informed 
decisions on running government operations effectively and 
efficiently
    Since passage of the initial legislation in 1990, the CFO 
Act has already provided:
     significantly more accurate information on the 
government's financial status and operations, as well as an 
understanding of how unreliable the financial information being 
provided to the Congress and program managers has been;
     a better understanding of the pervasiveness of 
management control problems; and
     substantial savings from recoveries and better use 
of funds.
    Annual financial statement audits, which are done by the 
agency Inspectors General (IGS) or by GAO, continue to provide 
valuable information on the results of program operations and 
the current financial condition of agencies. This information 
can be of great use to committees in their oversight efforts. 
Audits, for example, have identified:
     Despite over $400 billion in adjustments needed to 
correct errors in Defense's financial data over the last 3 
years, Defense is still unable to render an accurate accounting 
of its hundreds of billions of dollars in assets. This 
unreliable data has traditionally served as the basis for 
Defense's reports to the Congress.
     Duplicate, erroneous, and even fraudulent payments 
to Defense contractors totaling billions of dollars.
     Unneeded Defense inventories of almost $40 
billion.
     The IRS being unable to effectively collect or 
accurately account for $1.25 in annual revenues; audits show 
that only a fraction of over $100 billion in recorded tax 
receivables was collectible.
    GAO's ongoing financial audit work includes the IRS, the 
Bank Insurance Fund, the Resolution Trust Corporation, and the 
Pension Benefit Guaranty Corporation, all for fiscal year 1994, 
and the Department of the Navy for fiscal year 1995. IG's are 
conducting (in some instances with contracted assistance from 
accounting firms) fiscal year 1994 audits in the Departments of 
Education, HHS, Army, Air Force, NASA, Veterans Affairs, EPA, 
Labor, Agriculture, HUD, Interior, and other agencies.

                 Government Performance and Results Act

    Effective implementation of the Chief Financial Officers 
Act is also a vital element to the success of the Government 
Performance and Results Act (GPRA). GPRA seeks to change the 
focus of Federal management and accountability from a 
preoccupation with inputs, such as the amount of program 
appropriations, to measured results and outcomes of Federal 
programs. Successful implementation of the act will help 
address the question: What are the American people getting for 
their investment in the Federal Government? Information on 
performance in relation to agency goals can also be helpful to 
the Congress.
    Experiences of State governments and foreign countries that 
are leaders in public management show that GPRA's three key 
elements: strategic planning; performance measurement; and 
public reporting and accountability could influence the basic 
culture of the government so that is more results-oriented. 
Accurate results-oriented information will greatly assist the 
Congress in its efforts to oversee current programs and in 
making informed decisions for the future.
    But making the major changes in the way Federal agencies 
are managed and held accountable called for under GPRA will 
require agencies to develop the capacity to manage for results. 
This will not be accomplished quickly or easily. Therefore, the 
act's provisions are being phased in with a series of pilot 
projects over the next several years.
    Already, 70 pilots have been designated ranging in size 
from small programs to entire agencies, including the IRS, SSA, 
and the Defense Logistics Agency. As agencies implement the 
act, oversight committees should have opportunities to work 
with agencies in improving performance by providing managers 
freedom to experiment and find innovative ways to improve 
program results, while increasing accountability for achieving 
those results.
2. Views and Estimates for Fiscal Year 1997.
    On February 27, 1996, pursuant to section 301(d) of the 
Congressional Budget and Impoundment Control Act of 1974, as 
amended by the Balanced Budget and Emergency Deficit Control 
Act of 1985, the committee submitted its views and estimates to 
the Committee on the Budget on matters that were included in 
the President's fiscal year 1997 budget within the committee's 
jurisdiction.
3. Investigations.
    a. The Financial Holdings and Activities of Secretary of 
Commerce Ronald H. Brown.--Beginning in February 1994, 
Representative William F. Clinger, Jr., then-ranking member of 
the Committee on Government Operations, wrote to Secretary of 
Commerce, Ronald H. Brown, requesting that Secretary Brown 
answer questions arising from his Financial Disclosure 
Statement. The questions focused on appearances of a conflict 
in Secretary Brown's holdings and/or role in such companies as 
Harmon International, Inc., First International Communication, 
Inc., Corridor Communication, Inc., Albimar Communications, 
Inc., and Kellee Communications Inc., as well as his business 
relationship with Ms. Nolanda Hill, the owner of First 
International Communications and Corridor Communications.
    Secretary Brown's responses, through intermediaries, 
generated follow-up letters by Representative Clinger on March 
23, 1994, July 11, 1994, July 20, 1994, and at least one 
meeting between committee staff and Commerce Department 
officials before Mr. Clinger requested that Mr. Stephen D. 
Potts, Director of the U.S. Office of Government Ethics, 
investigate the matter pursuant to 5 C.F.R. Section 2638.401 
et. seq. on October 5, 1994. On that same day, Representative 
Clinger asked Department of Commerce Inspector General, Frank 
DeGeorge, to investigate Secretary Brown's relationship with 
the aforementioned companies as well as Boston Bank of Commerce 
and Boston Bank of Commerce Associates to determine whether it 
raised any conflicts of interest with Secretary Brown's 
official responsibilities.
    In a December 21, 1994, letter, Inspector General DeGeorge 
deferred to OGE Director Potts, stating, ``this office and OGE 
agreed that if issues or problems arose during their review 
which needed investigation, OGE, pursuant to their statutory 
authority, would refer those matters to this office for 
appropriate investigation. To date, we have not been asked by 
OGE to look into any matter. At the end of the OGE review, we 
will review their findings to determine whether there are any 
indications of conflicts or other violations warranting further 
investigation.''
    In a letter dated December 29, 1994, Office of Government 
Ethics Director Stephen D. Potts stated, ``We found that the 
manner in which Commerce's ethics officials reviewed the 
financial disclosure forms was consistent with the manner in 
which we require and expect agencies to carry out these 
responsibilities.'' Despite acknowledging in his letter 
repeated discrepancies in Secretary Brown's disclosure reports, 
Director Potts concluded that appearances of conflict had been 
avoided due to Secretary Brown's divestiture of holdings, 
resignation from managerial roles or receipt of waivers.
    These responses, however, failed to address fully the 
concerns of Representative Clinger who on January 4, 1995, 
became chairman of the Government Reform and Oversight 
Committee of the 104th Congress, thus necessitating further 
investigation into Secretary Brown's activities.
    Chairman Clinger noted in a January 23, 1995, letter to 
Secretary Brown that Secretary Brown had failed to disclose 
income he received during his Commerce tenure from First 
International Communications Limited Partnership during 1993. 
Furthermore, First International Communications Limited 
Partnership's primary source of income was a debt instrument 
payable by Corridor Broadcasting Corporation, an entity 
controlled by Nolanda Hill, Secretary Brown's business 
associate in First International. In addition, Corridor 
Broadcasting Corporation had defaulted on a $26 million loan 
held by the Federal Deposit Insurance Corporation, which 
ultimately cost American taxpayers some $23 million.
    Secretary Brown's failure to address the potential 
conflicts of interest involving his business affiliations, 
coupled with ongoing efforts by the committee's investigative 
staff, led to Chairman Clinger's February 27, 1995, request 
that Attorney General Janet Reno appoint an Independent 
Counsel, under the Independent Counsel Act, 28 U.S.C. Sec. 591 
et. seq., to investigate the holdings and activities of 
Secretary Brown. Chairman Clinger raised allegations concerning 
Secretary Brown's: (i) submission of incomplete, inaccurate and 
misleading financial disclosure statements; (ii) 
supplementation of salary; (iii) potential conflicts of 
interest; (iv) misinformation to Congress; and (v) refusing to 
respond to Congress.
    In addition to questions raised concerning Secretary 
Brown's affiliation with the business previously mentioned, the 
February 27, 1995, request noted that Secretary Brown: (i) 
failed to disclose either as a gift or loan, $108,000 used as a 
down-payment for a townhouse purchased by Secretary Brown and 
his son, Michael Brown, in Washington, DC; (ii) failed to 
report future income of some $190,955, which he knew he would 
receive in the wake of his divestiture of his interest in First 
International; (iii) supplemented his Federal salary by 
receiving some $412,000, in direct payments, loan forgiveness 
and payments to his creditors by business partners; (iv) 
undertook official actions which benefited his business 
partners and associates; and (v) misled the Congress concerning 
compensation paid by business partners to members of his 
immediate family.
    On July 6, 1995, a three-judge Federal appeals court panel 
announced its selection of former Federal prosecutor Daniel S. 
Pearson to serve as an independent counsel in the matter of 
Secretary Ronald H. Brown.
    No committee hearings were held during the first session of 
the 104th Congress on the matter of Secretary of Commerce 
Ronald H. Brown. In the wake of Secretary Brown's death in 
April 1996, Independent Counsel Pearson suspended his 
investigation and turned over matters remaining open--including 
the Nolanda Hill inquiry--to the Justice Department, Criminal 
Division.
    b. The White House Travel Office Investigation.--At 
approximately 10 a.m., on May 19, 1993, all seven members of 
the White House Travel Office staff were fired and the five 
Travel Office employees present in the White House that day 
were ordered to vacate the White House compound within 2 hours. 
Returning to the Travel Office by 10:30 a.m., the fired Travel 
Office employees found their desks already occupied by 
employees of World Wide Travel, the Arkansas travel agency 
which arranged for press charters during the Clinton 
Presidential campaign, Catherine Cornelius and others.
    Two White House Travel Office employees were out of the 
White House Travel Office on May 19, 1993, one on a White House 
advance trip to South Korea, the other on vacation. They 
learned of their firings, respectively, via CNN telecast and a 
son who saw Tom Brokaw announce the firings on network news 
that night. The seven White House Travel Office employees had 
served from 9 to 32 years in the White House Travel Office.
    The five Travel Office employees who were present in the 
White House for their firings ultimately were given additional 
time to complete their White House out-processing. By early 
afternoon, they heard then-White House Press Secretary Dee Dee 
Myers announce at a press briefing that they were subject of an 
FBI criminal investigation. They had been given no such 
indication at the time of their dismissals. After completing 
out-processing, the five Travel Office employees present on May 
19, 1993, were driven out of the White House compound in a 
panel van with no passenger seats. They were seated on the 
floor and wheel wells of the van along with boxes of their 
gathered personal effects.
    While the Travel Office employees served at the pleasure of 
the President, their precipitous firings and replacement by the 
Clinton campaign's primary travel agency immediately raised a 
storm of criticism. Administration claims that it had acted in 
order to save the press and taxpayers money were met with 
skepticism by a White House press corps which responded with a 
litany of complaints of over billing and undocumented billings 
by World Wide itself throughout the 1992 campaign. In addition, 
the Clinton administration's announcement that an FBI criminal 
investigation had been launched was highly improper and, in 
fact, questionable when it was announced. Furthermore, White 
House contacts with the FBI in the days leading up to and 
immediately following the Travel Office firings also were 
considered improperly handled by Attorney General Janet Reno, 
who publicly admonished the administration for them.
    Members of the House and the Senate immediately raised 
concerns about the manner in which the Travel Office firings 
took place. In the face of press, public and congressional 
outcry, the White House placed five of the seven Travel Office 
employees on administrative leave with pay on May 25, 1993, and 
announced that it would conduct a White House Management Review 
of the Travel Office and the administration's role in the 
Travel Office firings. The fired Travel Office director and 
deputy director retired.
    On June 1, 1993, William F. Clinger, Jr., the then-ranking 
minority member of the House Government Operations Committee, 
requested that then Chairman John Conyers, Jr., hold hearings 
on the White House Travel Office firings.
    Then-White House Chief Thomas F. (Mack) McLarty and then-
Office of Management and Budget Director Leon Panetta released 
the White House Travel Office Management Review on July 2, 
1993, and announced the reprimands of four White House 
staffers. Reprimanded were: Associate Counsel to the President, 
William H. Kennedy III; Assistant to the President for 
Management and Administration, David Watkins; former Special 
Assistant to the President for Management and Administration, 
Catherine A. Cornelius; and Deputy Assistant to the President 
and Director of Media Affairs, Jeff Eller. At least three of 
the four first learned of the ``reprimands'' during their 
televised announcement. None of the reprimands were documented 
in the personnel files of any of the four.
    Also on July 2, 1993, the Supplemental Appropriations Act 
of 1993 (Public Law 103-50) required the U.S. General 
Accounting Office (GAO) to ``conduct a review of the action 
taken with respect to the White House Travel Office.''
    In addition to the White House Management Review and the 
GAO Report entitled White House Travel Office Operations 
(released on May 2, 1994), at least three other reports were 
prepared concerning various aspects of the White House Travel 
Office firings. These reports were prepared by: the Office of 
Professional Responsibility (OPR) of the U.S. Department of 
Justice (dated March 18, 1994, and released by the committee on 
October 24, 1995); a Federal Bureau of Investigation Internal 
Review of FBI Contacts with the White House (dated June 1, 
1993), and the Department of Treasury Inspector General Report 
``Allegation of Misuse of IRS RE: ULTRAIR'' (dated June 11, 
1993).
    On September 23, 1993, after consultations with majority 
staff of the Government Operations Committee, Mr. Clinger 
withdrew his request for committee hearings on the White House 
Travel Office firings, ``contingent upon the adequacy of the 
GAO effort'' which had been mandated by Congress through Public 
Law 103-50.
    Individually and collectively, the five reports prepared 
concerning the White House Travel Office left many questions 
unanswered and, in fact, raised many more. Several Members of 
Congress, including Mr. Clinger, sought to have these questions 
answered through further investigation and congressional 
hearings. In a letter dated October 7, 1994, Mr. Clinger and 16 
other House Members again requested congressional hearings on 
the White House Travel Office in order to ``address serious 
questions arising from, or unanswered by, the General 
Accounting Office (GAO) Report to Congress, White House Travel 
Office Operations (GAO/GGD-94-132).''
    Mr. Clinger's request was accompanied by a 71-page minority 
analysis of issues unaddressed by any of the previous five 
reports. This analysis reviewed contradictions concerning: 
memoranda drafted by Catherine Cornelius outlining its new 
organizational structure and placing her in charge; activities 
of Harry Thomason and Darnell Martens; mismanagement by David 
Watkins; White House reasons justifying the Travel Office 
firings; contacts between Dee Dee Myers and Darnell Martens; 
public disclosure of the FBI investigation; possible influence 
on the FBI; the integrity of Travel Office records; the role of 
the President; the reprimands, and inaccuracies and 
insufficiencies in the GAO report on the White House Travel 
Office.
    Soon after the November 1994 congressional elections, Mr. 
Clinger, chairman of the Government Reform and Oversight 
Committee of the 104th Congress, announced that he would hold 
hearings on the White House Travel Office firings. In December 
1994, the Public Integrity Division of the U.S. Department of 
Justice indicted former White House Travel Office Director 
Billy R. Dale on one charge of embezzlement and one charge of 
conversion.
    The committee investigative staff conducted interviews and 
gathered documents from various participants in the Travel 
Office matter on a voluntary basis throughout the spring and 
summer of 1995. White House document production, however, 
proved problematic and led to numerous meetings and phone 
conversations with Clinton administration representatives in 
the White House Counsel's Office, the Department of Justice, 
Department of the Treasury as well as the General Accounting 
Office.
    In the fall of 1995, Chairman Clinger scheduled the 
committee's first hearing on the White House Travel Office for 
October 24, 1995. The hearing focused on the accuracy and 
completeness of the five White House Travel Office reports and 
to consider whether further hearings were required to address 
unanswered issues. The panel at the October 24, 1995, hearing 
included authors of each of the five reports, respectively. 
This hearing purposely avoided all areas that might have 
impacted upon the trial of former Travel Office Director Billy 
R. Dale which was to commence on October 26, 1995.
    The committee reviewed which of seven key Travel Office 
issues each report addressed. These issues were: the 
completeness of the review of references to ``Highest Levels'' 
involvement at the White House in the Travel Office firings; 
whether any assessment of White House Standards of Conduct was 
performed and whether administration staffers had violated 
those standards; whether inquiries were made into the role of 
Hollywood producer Harry Thomason in the firings; the role of 
Mr. Thomason's and his firm, Thomason, Richland and Martens 
(TRM) in seeking contracts involving the Interagency Committee 
on Aviation Policy (ICAP); whether the issue of competitive 
bidding by the White House Travel Office and by the White House 
itself in dealing with the Travel Office was reviewed; and 
whether thorough investigations into FBI and IRS actions and 
reactions to the White House inquiries had been undertaken.
    The hearing made clear that, given limitations on their 
scopes, none of the reports had addressed fully the issues 
raised by the Travel Office firings. The Treasury Inspector 
General IRS report redactions made it impossible to determine 
whether the IRS addressed any of the seven issues. The OPR and 
FBI reports only partially addressed two issues, ``FBI 
actions'' and references to ``Highest Levels of the White 
House'' and never addressed the other five. Despite its far 
greater understanding of the participants and circumstances 
leading to the Travel Office firings--or because of it--the 
White House Travel Office Management Review only briefly and 
superficially addressed Harry Thomason's role, FBI actions and 
references to ``Highest Levels'' of the White House while 
ignoring competitive bidding, IRS action, standards of conduct 
and ICAP contracts. Similarly, the GAO relied on the White 
House Management Review in its report on Mr. Thomason's role 
and only partially addressed FBI actions and ``Highest Levels'' 
while leaving ICAP, competitive bidding and standards of 
conduct unaddressed. IRS disclosure laws prevented the GAO from 
publicly addressing IRS actions.
    The October 24, 1995 hearing also made clear that the GAO 
and OPR reports, the most independent of the five, were hobbled 
by what their respective authors referred to as an 
unprecedented lack of cooperation by the White House in their 
investigations. It was determined in the hearing that the White 
House had denied both GAO and OPR documents which were critical 
to their investigations, documents which well might have 
affected their conclusions. Accordingly, both GAO and OPR never 
received any of the documents subsequently produced by the 
White House.
    The criminal trial of former Travel Office Director Billy 
R. Dale began on October 26, 1995, and concluded on November 
17, 1995, with Mr. Dale's acquittal of both charges. After the 
acquittal was announced, Chairman Clinger requested that the 
Public Integrity Section of the Department of Justice turn over 
all documents related to the criminal prosecution for review by 
the committee.
    At year-end 1995, the committee planned hearings on: the 
role of Mr. David Watkins in the Travel Office firings; the 
experiences of the fired seven Travel Office employees; the 
role of Mr. Harry Thomason; and the role of the FBI and IRS. In 
January 1996, the committee subpoenaed all of Mr. Thomason's 
documents related to the Travel Office and filed a ``6103 
Waiver'' with the IRS in which representatives of UltrAir 
authorized the IRS, Department of Treasury and others to 
release all relevant documents concerning the IRS audit of 
UltrAir in the wake of the Travel Office firings. The 
Department of the Treasury had promised prompt delivery of all 
documents pending receipt of the expanded 6103 waiver.
    At 8:30 p.m. on January 3, 1996, the White House delivered 
a document production to committee offices. Included in that 
production was a 9-page, undated draft memorandum written by 
David Watkins, a copy of which was simultaneously released to 
the media. Mr. Watkins wrote in this memorandum, which he 
characterized as a ``soul cleansing'' memorandum, that he had 
made his ``first attempt to be sure the record is straight, 
something I have not done in previous conversations with 
investigators--where I have been as vague and protective as 
possible.'' The Watkins draft memo ascribed a far greater 
Travel Office role to First Lady Hillary Rodham Clinton than 
the White House or Mrs. Clinton ever had admitted:

          On Monday morning you [then-White House Chief of 
        Staff McLarty] came to my office and met with me and 
        Patsy Thomasson. At that meeting you explained that 
        this was on the First Lady's ``radar screen.'' I 
        explained to you that I had decided to terminate the 
        Travel Office employees and you expressed relief that 
        we were finally going to take action (to resolve the 
        situation in conformity with the First Lady's wishes). 
        We both knew there would be hell to pay if, after our 
        failure in the Secret Service situation earlier, we 
        failed to take swift and decisive action in conformity 
        with the First Lady's wishes.

Mr. Watkins concluded that his memo:

          [Made] clear that the Travel Office incident was 
        driven by pressures for action originating outside my 
        Office. If I thought I could have resisted those 
        pressures, undertaken more considered action, and 
        remained in the White House, I certainly would have 
        done so. But after the Secret Service incident, it was 
        made clear that I must more forcefully and immediately 
        follow the direction of the First Family. I was 
        convinced that failure to take immediate action in this 
        case would have been directly contrary to the wishes of 
        the First Lady, something that would not have been 
        tolerated in light of the Secret Service incident 
        earlier in the year.

    The Watkins draft memorandum was responsive to the 
September 1995, document request by the committee. Moreover, 
back in October 1995, the White House Counsel's Office had 
informed the committee that it had produced most of the 
substantive documents pursuant to that request.
    The White House explained weeks afterwards that it first 
discovered the Watkins draft memorandum on December 29, 1995. 
The memorandum was reviewed by the White House Counsel's office 
and copied to several administration officials as well as the 
personal attorneys for Mack McLarty, Patsy Thomasson, Harry 
Thomason, and the President and First Lady by January 2, 1996. 
The White House released the Watkins draft memorandum to the 
media on the evening of January 3, 1996, at the same time it 
released the documents to the committee.
    On January 5, 1996, Chairman Clinger issued subpoenas to 
both David Watkins and Harry Thomason for all records 
concerning the White House Travel Office and related matters. 
On January 11, 1996, Chairman Clinger issued interrogatories 
concerning the origin and chain-of-custody of the original and 
all copies of the Watkins draft memorandum to be answered in 
writing and under oath by:
          Jane C. Sherburne, Special Counsel to the President.
          Jon Yarowsky, Associate Counsel to the President.
          Natalie Williams, Associate Counsel to the President.
          Miriam R. Nemetz, Associate Counsel to the President.
          Christopher D. Cerf, Associate Counsel to the 
        President.
          Nelson Cunningham, General Counsel, Office of 
        Administration.
          Patsy Thomasson, Deputy Director of White House 
        Personnel.
    Also on January 11, 1996, the committee issued bipartisan 
subpoenas for all relevant records to the White House Executive 
Office of the President and the White House Office of 
Administration as well as bipartisan personal subpoenas to Mack 
McLarty, Bruce Lindsey, Todd Stern, Patsy Thomasson, Catherine 
Cornelius and Margaret Williams. The documents subpoenaed were 
due on January 22, 1996.
    In the wake of the White House's release of the Watkins 
draft memorandum, Clinton officials, attorneys and surrogates 
launched attacks on the character and managerial skills of 
former Travel Office Director Billy Dale. First Lady Hillary 
Rodham Clinton also assailed Mr. Dale's management in various 
interviews. As a result, Chairman Clinger wrote President 
Clinton on January 16, 1996, requesting that the White House 
cease its continued attack on Mr. Dale.
    On January 17, 1996, the committee held its second hearing 
on the Travel Office matter. David Watkins was the sole witness 
at this hearing, at which he requested that no still or video 
cameras be allowed to record his testimony, invoking a House 
rule. In the hearing, he testified under oath regarding his 
draft memorandum and other records he had turned over to the 
committee pursuant to a personal subpoena. Watkins testified, 
``Was there pressure? Did I feel pressure of the desires and 
wishes of others? Yes, I did.'' Watkins testified he had felt, 
``a lot of internal pressure,'' and was asked by whom. ``The 
pressure that I felt was coming from the First Lady was 
conveyed primarily through Harry Thomason and Vince Foster.'' 
Mr. Watkins' May 12, 1993, notes, first received by the 
committee under personal subpoena, stated that Harry Thomason 
told him on that day that the First Lady wanted the Travel 
Office staff fired that day. In a May 14, 1993, telephone call 
to the First Lady, Watkins testified, he was told, ``We should 
get our people in and get those people out.''
    In the wake of the discovery of the Watkins memorandum 
where inconsistencies between Mr. Watkins' statements to the 
GAO and his undated memorandum and contemporaneous notes became 
clear, Chairman Clinger asked GAO to advise the committee 
concerning what sanctions exist for intentionally providing 
false information to GAO. GAO responded in a letter dated 
January 17, 1996, which addressed the relevant statutes and 
legal precedents. In a January 23, 1996, response to GAO, 
Chairman Clinger asked that GAO compare and contrast the notes 
of its interviews with Mr. Watkins with copies of interviews 
conducted with Mr. Watkins by various investigative agencies, 
Mr. Watkins' draft memorandum and contemporaneous notes and 
other materials. Chairman Clinger asked that GAO identify all 
of the material inconsistencies between the documents provided 
and GAO's own interview notes and to determine whether they met 
the materiality test required by any applicable statute.
    The seven fired Travel Office employees testified on 
January 24, 1996, when the committee held its third hearing on 
the White House Travel Office firings. The seven fired Travel 
Office employees testified about their work in the White House 
Travel Office and the management of press charters, the events 
leading to their firings on May 19, 1993, and their 
investigation at the hands of the FBI and IRS. Individually, 
they testified of the costs of their respective legal defenses 
which, all told, amounted to some $700,000.
    While all seven acknowledged that they served at the 
pleasure of the President, they questioned the manner in which 
the firings were undertaken. Mr. Dale testified:

          If the President or the First Lady or anyone else 
        wanted us out in order to give the business to their 
        friends and supporters, that was their privilege. But 
        why can't they just admit that is what they wanted to 
        do rather than continue to make up accusations to hide 
        that fact?

    Mr. Billy Dale testified in the hearing that records 
disappeared from the Travel Office in the period immediately 
preceding the firings and disputed allegations of Travel Office 
mismanagement as a ``convenient excuse'' intended to justify 
the firings. Five of the Travel Office employees testified 
about being placed on administrative leave within a week of the 
firings and subsequently finding employment elsewhere in the 
Federal Government. Mr. Dale and former White House Travel 
Office Deputy Director Gary Wright had retired from Federal 
service in the aftermath of the firings in 1993.
    In a letter to the committee dated January 23, 1996, Mr. 
David L. Clark, Director of Audit Oversight and Liaison for the 
General Accounting Office, evaluated current White House Travel 
Office management using the 29 criteria identified in its May 
1994, report on the Travel Office. The evaluation was based on 
work performed by GAO in the Travel Office in the fall of 1995. 
GAO stated:

          We found that the Travel Office had developed 
        policies and implemented procedures during the period 
        January 1995 through August 1995 to address all but 3 
        of the 29 criteria. For those three, we found that the 
        Travel Office had not (1) billed customers within its 
        stated 15-day requirement, (2) paid vendors within its 
        stated 45-day requirement, and (3) performed bank 
        reconciliations regularly.

GAO also reported:

          [T]he Travel Office had a policy requiring monthly 
        reconciliations of its checkbook with the cash balance 
        reported by its bank. As of April 1994, we found that 
        staff were performing the reconciliations as required. 
        However, from January 1995 through August 1995, Travel 
        Office staff performed no bank reconciliations because 
        other tasks were given a higher priority. Immediately 
        prior to our review, the Travel Office reconciled all 
        outstanding bank statements and found deposits totaling 
        $200,000 that had not been entered into its checkbook. 
        These funds were all owed to vendors who had previously 
        furnished goods and services for press trips. White 
        House officials informed us that future monthly 
        reconciliations will be performed as required.

    GAO's discovery of a $200,000 discrepancy in White House 
Travel Office deposits for calendar year 1995 is a matter of 
some concern given that the White House alleged in May 1993, 
that it had fired the entire Travel Office staff and launched 
an FBI criminal investigation on the basis of a $18,200 
discrepancy in Travel Office petty cash funds.
    On January 30, 1996, General Counsel Robert P. Murphy of 
the General Accounting Office wrote Chairman Clinger addressing 
inconsistencies between statements made by David Watkins to GAO 
and Watkins' undated draft memorandum and notes taken by 
Watkins which were dated May 31, 1993, and Watkins' GAO 
interview and other relevant documents.
    On February 1, 1996, Chairman Clinger and Senate Judiciary 
Committee Chairman Orrin Hatch (R-UT) introduced a bill to 
reimburse the legal expenses of the seven fired White House 
Travel Office employees. The bill would reimburse nearly 
$500,000 spent by Mr. Billy Dale on his defense as well as the 
Travel Office expenses still due by his six colleagues. In a 
1994 appropriation, Congress previously reimbursed $150,000 in 
their legal expenses.
    On February 7, 1996, the committee issued additional 
bipartisan personal subpoenas to a number of current and former 
White House employees, volunteers, friends and others involved 
in the Travel Office matter, including Matt Moore.
    On February 13, 1996, following consultation with Chairman 
Clinger, the GAO asked Federal prosecutors to investigate 
possible false statements made to GAO by David Watkins, having 
concluded that statements made or attributed to Mr. Watkins 
were inconsistent with statements he made in his GAO interview. 
Justice Department officials submitted the referral to the 
Independent Counsel and asked the court to approve the 
expansion of the scope of Independent Counsel Kenneth Starr to 
include this referral.
    The Government Reform and Oversight Committee submitted a 
list of 26 interrogatories to First Lady Hillary Rodham Clinton 
on February 15, 1996. These interrogatories were to be answered 
in writing and under oath by the First Lady by February 29, 
1996. The White House subsequently asked for an extension and 
the chairman of the Committee on Government Reform and 
Oversight agreed to a 3-week extension. The White House 
provided the First Lady's sworn responses to the committee on 
the second due date, March 21, 1996. Her responses were 
released to the media at the same time. In the responses, the 
First Lady insisted she had no decisionmaking role in the 
Travel Office firings and that her statements to GAO were 
accurate. As to conversations with Harry Thomason, Vince Foster 
and David Watkins, the First Lady had very few specific 
recollections.
    Chairman Clinger submitted H. Res. 369, which was referred 
to the Committee on Rules, on February 29, 1996. H. Res. 369 
provided special authority to the Committee on Government 
Reform and Oversight to obtain testimony for purposes of 
investigation and study of the White House Travel Office 
matter. The bill was limited, deliberately, to provide 
deposition authority to the Committee on Government Reform and 
Oversight only for its investigation of the Travel Office 
matter. Deposition authority allowed the committee to obtain 
sworn testimony from witnesses while minimizing the number of 
hearings needed in order to complete the investigation.\13\
---------------------------------------------------------------------------
    \13\ Precedents for such deposition authority have included: 1) 
President Nixon Impeachment Proceedings (93d Congress, 1974, H. Res. 
803); 2) Assassinations Investigation (95th Congress, 1977, H. Res. 
222); 3) Koreagate (95th Congress, 1977, H. Res. 252 and H. Res. 752); 
4) Abscam (97th Congress, 1981, H. Res. 67); 5) Iran-Contra (100th 
Congress, 1987, H. Res. 12); 6) Judge Hastings Impeachment Proceedings 
(100th Congress, 1987, H. Res. 320); 7) Judge Nixon Impeachment 
Proceedings (100th Congress, 1988, H. Res. 562); and 8) October 
Surprise (102d Congress, 1991, H. Res. 258.
---------------------------------------------------------------------------
    The House approved H. Res. 369 on March 7, 1996. Thereupon, 
the Committee on Government Reform and Oversight notified 
witnesses it wished to testify under oath before the committee. 
Depositions commenced in late March 1996. Initially, they were 
expected to be completed by June 1996.\14\
---------------------------------------------------------------------------
    \14\ With the subsequent revelation that the White House improperly 
had obtained some 900 confidential FBI background files on former 
officials of the Reagan and Bush administrations, the last of the 
depositions in fact was conducted in mid-September 1996.
---------------------------------------------------------------------------
    The White House made a March 15, 1996, production of 
documents pursuant to the committee's January 11, 1996, 
subpoena. That production contained yet another unproduced May 
3, 1994, handwritten letter from David Watkins to Mrs. Clinton. 
No explanation for the White House's failure to produce this 
document for nearly 2 years during the course of numerous other 
document requests was proffered until two requests for a chain-
of-custody were made. Mr. Quinn finally responded on April 8, 
1996, stating only that the letter was located in a stack of 
unsorted, miscellaneous papers and memorabilia in the Office of 
Personal Correspondence having been forwarded to Carolyn Huber 
from the First Lady. Ms. Huber forwarded the original letter to 
the First Lady on March 4, 1996. Mr. Quinn stated that Mrs. 
Clinton did not look at the letter until March 12, 1996, at 
which time she immediately sent the only copy of the White 
House document to her personal lawyer, David Kendall. Mr. 
Kendall reviewed the original and returned a copy, and later 
the original, to Special White House Counsel Jane Sherburne.
    On March 22, 1996, the three-judge Federal appeals panel 
which appointed Kenneth K. Starr Whitewater Independent Counsel 
approved an expansion of Independent Counsel Starr's mandate to 
include the issue of whether David Watkins lied about First 
Lady Hillary Rodham Clinton's role in the Travel Office firings 
and related matters. Attorney General Janet Reno referred the 
Watkins matter to the three-judge panel after the Justice 
Department had concluded the Watkins could be investigated by 
an independent counsel.
    By a vote of 350 to 43 on March 19, 1993, the House of 
Representatives passed H.R. 2937, a bill to reimburse the legal 
expenses and related fees incurred by former employees of the 
White House Travel Office with respect to the termination of 
their employment in that office on May 19, 1993.
    In document productions from individuals subpoenaed, the 
committee was provided with a copy of a February 15, 1996, 
White House Memorandum from John M. Quinn, Counsel to the 
President and Jane Sherburne, Special Counsel to the President, 
to a witness who had been subpoenaed by the Committee on 
Government Reform and Oversight to provide all records related 
to the White House Travel Office matter in the witness' 
possession to the committee. The memorandum from Mr. Quinn and 
Ms. Sherburne stated, in part:

          Last week, the Committee [on Government Reform and 
        Oversight] issued personal subpoenas to you and other 
        current and former White House employees. These 
        personal subpoenas call for personal as well as White 
        House records. The Counsel's Office will handle 
        production of your responsive White House records, 
        i.e., records created or obtained during the course of 
        your official duties. Accordingly, you should forward 
        any White House records you believe may be responsive 
        to the Counsel's Office and we will determine whether 
        they should be produced to the Committee. You should 
        provide any responsive personal records directly to the 
        Committee. [Emphasis in original.]

    The existence of the February 15, 1996, memorandum from Mr. 
Quinn and Ms. Sherburne greatly concerned the committee because 
the February 7, 1996, subpoenas served were personal subpoenas. 
Those subpoenaed to provide all relevant White House Travel 
Office records in their possession remain personally 
responsible for making a complete production, whether or not 
the White House chooses to withhold any or all of their 
documents from production to the committee. Given the White 
House's continuing unwillingness to make a complete production 
of records it has been subpoenaed to provide the committee, its 
instructions in the February 15, 1996, memo by Mr. Quinn and 
Ms. Sherburne to witnesses served personal subpoenas suggests 
that the White House intends to play an intermediary role in 
the case of current and former White House staffers, volunteers 
and others in a manner which may lead to their being held 
personally liable for a failure to produce all relevant 
records.
    In the wake of its discovery of the February 15, 1996, 
memorandum by Mr. Quinn and Ms. Sherburne, the committee wrote 
letters to each individual who had been issued a personal 
subpoena informing them that all records responsive to the 
committee's January and February 1996, subpoenas must be 
produced by May 8, 1996. Chairman Clinger sent similar letters 
to White House Counsel Quinn and Attorney General Reno 
informing them that all records responsive to White House and 
Justice Department subpoenas were to be produced by May 8, 
1996.
    Chairman Clinger also announced on May 2, 1996, that he had 
scheduled a committee business meeting for Thursday, May 9, 
1996, at 9 a.m. to consider a privileged resolution to compel 
production of any subpoenaed records relating to the White 
House Travel Office which were not provided to the committee by 
May 8, 1996.
    On May 9, 1996, the Government Reform and Oversight 
Committee voted to hold White House Counsel Jack Quinn and 
former White House aides David Watkins and Matthew Moore in 
contempt of Congress for failing to turn over subpoenaed 
documents. Also on May 9, 1996, White House Counsel Quinn wrote 
Chairman Clinger a letter claiming blanket privilege on behalf 
of President Clinton over 3,000 pages of documents being 
withheld from the committee. Attached to this letter was a 
letter from Attorney General Janet Reno endorsing the claim of 
executive privilege. At that time, however, the Attorney 
General had not reviewed any of the documents for which she had 
approved the President's claim of executive privilege.
    On May 30, 1996, the day on which the contempt resolution 
against White House Counsel Quinn was scheduled for a vote on 
the floor of the House, the White House delivered to the 
committee 1,000 of the 3,000 pages responsive to the 
committee's subpoenas over which it previously had claimed 
executive privilege. Accompanying this production was a 
privilege log of 2,000 documents which the White House 
continued to withhold. In the wake of this production, the 
committee postponed the contempt vote on the floor of the House 
against White House Counsel Quinn in order to review the 
records produced and the privilege log.
    In reviewing the 1,000 pages of documents produced on May 
30, 1996, the committee discovered Bernard W. Nussbaum's 
December 20, 1993, request of Billy Dale's confidential FBI 
background file from the FBI Liaison Office. Even though it was 
dated 7 months after Mr. Dale's firing, the form indicated that 
the White House was requesting Mr. Dale's confidential FBI file 
because it was considering him for ``Access (S).'' Chairman 
Clinger immediately called on the White House and the FBI to 
explain why the Dale file had been requested by and provided to 
the White House even as the Justice Department was undertaking 
a criminal investigation of Mr. Dale. (See The Security of FBI 
Background Investigation Files, below.)
    In the wake of this development, Chairman Clinger called on 
the White House to release the remaining 2,000 pages of 
documents over which it had claimed executive privilege, as it 
once had claimed executive privilege--inappropriately--over the 
Billy Dale FBI file request memo. After the White House refused 
this request, claiming that the remaining 2,000 pages were 
``unquestionably within the scope of [executive] privilege,'' 
Ranking Member Cardiss Collins agreed to act as an intermediary 
in a successful effort to allow the committee to review 
documents it deemed essential to its investigation while having 
the White House certify that no other documents remained 
outstanding.
    Chairman Clinger and committee staff began a review of the 
remaining 2,000 pages of documents in the presence of White 
House personnel on June 27, 1996. The chairman found these 
documents heavily redacted and also found that the White House 
privilege log released the previous month provided insufficient 
detail of their contents. The chairman advised the White House 
of these concerns in a June 28, 1996, letter to White House 
Counsel Quinn.
    After personally spending 6 hours reviewing redacted White 
House documents, Chairman Clinger wrote a July 31, 1996, letter 
to the White House requesting that it produce all responsive 
documents, in unredacted form, in three categories: 1) 
communications with outside attorneys relating to interviews, 
depositions or Grand Jury appearances; 2) briefing materials 
and questions prepared for Congress; and 3) the review of the 
late Vince Foster's White House office. The White House 
produced these documents, some 1,400 pages in all, on August 
15, 1996.
    Meanwhile, in response to a press inquiry on August 1, 
1996, President Clinton angrily denied having made any pledge 
to reimburse Billy Dale's legal expenses despite the fact that 
White House spokesman Mike McCurry had said in January 1996, 
that the President would sign such a bill if it came to his 
desk and a second White House spokesman had repeated those 
remarks the very morning of the President's outburst. In 
addition, President Clinton improperly referred to Mr. Dale's 
Justice Department plea bargain negotiations. The details of 
those negotiations were leaked under highly questionable 
circumstances by the Clinton Justice Department in the days 
following Mr. Dale's November 1995, acquittal by a jury in less 
than 2 hours of the two charges against him. Mr. Robert 
Bennett, who is defending President Clinton against charges of 
sexual harassment made by Ms. Paula Jones, first raised--and 
mischaracterized--these plea negotiations in the days following 
the Dale acquittal.
    The provision to reimburse the Travel Office-related legal 
expenses of Mr. Dale and his six colleagues was passed in the 
Senate on September 28, 1996, as part of the Omnibus 
Consolidated Appropriations Act of 1997, and signed into law by 
President Clinton on September 30, 1996.
    On September 18, 1996, the Committee on Government Reform 
and Oversight approved the committee's report of its 
``Investigation of the White House Travel Office Firings and 
Related Matters'' by voice vote and submitted it to the full 
House to be printed.
    On October 15, 1996, Chairman Clinger wrote a letter to 
Independent Counsel Kenneth W. Starr enclosing copies of the 
committee's Travel Office Report and its interim report on the 
FBI Background Investigation Files matter. This letter also 
addressed Chairman Clinger's concerns about the internal 
discrepancies in testimony, witnesses' lack of recall of 
material events, and conflicts between the White House's 
documentary evidence and the sworn accounts of Jane Sherburne, 
Harry Thomason, Craig Livingstone, Anthony Marceca, William 
Kennedy, Bernard Nussbaum and Thomas F. ``Mack'' McLarty.
    c. The Security of FBI Background Investigation Files.--On 
May 30, 1996, in the course of its Travel Office investigation, 
the committee discovered a December 20, 1993, White House 
request of Billy Dale's confidential FBI background file from 
the FBI Liaison Office. Even though it was dated 7 months after 
Mr. Dale's firing, the form indicated that the White House was 
requesting Mr. Dale's confidential  FBI  file  because  it  was 
 considering  him  for ``Access (S).'' The Billy Dale FBI 
background file request memo was found in a White House 
production of 1,000 pages of documents over which the White 
House previously had claimed executive privilege. Chairman 
Clinger immediately called on the White House and the FBI to 
explain why the Dale file had been requested by and provided to 
the White House even as the Justice Department was undertaking 
a criminal investigation of Mr. Dale.
    By June 5, 1996, the White House had claimed that the Billy 
Dale FBI background file request was a routine request 
mistakenly made by an unnamed file clerk. In response, Chairman 
Clinger requested of the White House and Attorney General Janet 
Reno a list of all such White House requests for confidential 
FBI background reports on private citizens and government 
employees not seeking employment by the Clinton administration 
or access to the White House. The following day, the White 
House claimed that the General Accounting Office had requested 
the Dale Confidential FBI background file. The GAO denied this 
immediately.
    By June 7, 1996, the White House had acknowledged that it 
obtained the FBI files of approximately 338 former White House 
employees, including many former Reagan and Bush administration 
employees but alleged that the files never were read. Then 
Anthony Marceca, a former detailee hand-picked by White House 
Office of Personnel Security Director Craig Livingstone to work 
in that office, contradicted the White House when he told 
Livingstone's attorney that he, Marceca, in fact had read all 
the files and had passed on any derogatory information to 
Livingstone.
    The White House admitted to having an additional 71 
improperly sought FBI background files by June 14, 1996, the 
day that FBI Director Louis J. Freeh released the findings of 
an FBI review of the matter. Freeh concluded that 408 files had 
been sought and received by the White House ``without 
justification.'' Director Freeh further stated, ``The prior 
system of providing files to the White House relied on good 
faith and honor. Unfortunately, the FBI and I were victimized. 
I promise the American people that it will not happen again on 
my watch.''
    Also on June 14, 1996, Livingstone revealed problems in his 
own background in a sworn deposition before the Committee on 
Government Reform and Oversight, including problems with his 
employment history and the use of illegal drugs. On June 15, 
1996, the White House delivered a document production to the 
committee which included letters from former Associate White 
House Counsel William H. Kennedy III, to then-Defense Secretary 
Les Aspin and others seeking the assignment of Army 
investigator Anthony Marceca to a White House detail in the 
Office of Personnel Security.
    The committee held four hearings on the FBI files matter in 
the summer of 1996. The first hearing on June 19 addressed the 
issue of how confidential FBI background files were handled 
during previous administrations. Among the witnesses were 
former White House Counsels and Deputy White House Counsels, 
the head of the Office of Personnel Security during the Reagan 
and Bush administrations and her assistant of 12 years. These 
witnesses testified that access to confidential FBI background 
files historically had been strictly limited to at most the 
White House Counsel, his Deputy and the Director of the Office 
of Personnel Security. By contrast, the assistant to the former 
Office of Personnel Security Director testified that during 7 
months of service in the Clinton administration, White House 
interns 18-20 years old--and without any security clearance--
had access to the confidential FBI background files.
    On June 21, Attorney General Janet Reno turned over the 
investigation of the White House requests for confidential FBI 
background files to Independent Counsel Kenneth W. Starr. 
General Reno stated, ``I have concluded it would constitute a 
conflict of interest for the Department of Justice itself to 
investigate the matter involving an interaction between the 
White House and the FBI, a component of the Department of 
Justice.''
    The committee's second hearing on the FBI files matter was 
held on June 26, with former White House Counsel Bernard 
Nussbaum, former Associate White House Counsel Bill Kennedy, 
Office of Personnel Security Director (then on administrative 
leave) Craig Livingstone and former Army detailee Anthony 
Marceca and Lisa Wetzl, a former assistant to Livingstone, 
testifying as to the handling of these files during the Clinton 
administration. While Livingstone announced his resignation 
from this position at the June 26 hearing and the White House 
immediately announced a replacement, the question, ``Who hired 
Craig Livingstone?'' never was answered definitively by any of 
the witnesses. Mr. Livingstone testified that it had been his 
life-long dream to serve in the White House of a Democratic 
administration yet most improbably could not recall who made 
him the offer which made that dream come true. Nor was this 
question answered in the months to follow.
    It was learned during this hearing that whoever did hire 
Livingstone was able to overrule or overcome Kennedy's concerns 
about Livingstone's background. Mr. Livingstone admitted his 
drug history in committee depositions and during the June 26 
hearing. It had also been reported that he was fired from a 
previous job for lying about his employment history and was 
fired by a store which had employed him for improperly 
returning merchandise.
    Messrs. Livingstone and Marceca and Ms. Wetzl testified 
that the improper request and receipt of hundreds of 
confidential FBI background files of former Reagan and Bush 
administration officials was undertaken due to their reliance 
on a faulty White House access list provided by the Secret 
Service.
    In order to pursue the committee's investigation into the 
FBI files matter, Chairman Clinger initially had sought to 
depose FBI agents. Director Freeh recommended, instead, that 
the committee be allowed to review relevant FBI background 
files, and the chairman agreed to this. On July 16, committee 
Chief Investigative Counsel Barbara Olson reviewed the FBI 
background files of Livingstone and Marceca. In the Livingstone 
FBI file, notes of a Nussbaum interview indicated Nussbaum's 
understanding that Livingstone came highly recommended by Mrs. 
Clinton, who knew Livingstone's mother. Summarizing an 
interview with then-White House Counsel Nussbaum concerning 
Livingstone, FBI Agent Sculimbrene wrote, in part, in a 
memorandum:

          Bernard Nussbaum, Counsel to the President, advised 
        that he has known [Livingstone] for the period of time 
        that he has been employed in the new administration. 
        [Livingstone] had come highly recommended to him by 
        HILLARY CLINTON, who has known his mother for a longer 
        period of time.

While the White House--and Livingstone's mother--subsequently 
claimed that Mrs. Clinton did not know Livingstone's mother, 
the factual accuracy of such a relationship was far less 
important than the fact that, at the time of Livingstone's 
hiring, Nussbaum understood him to come highly recommended to 
the position by a First Lady who knew his mother, details he 
had denied under oath.
    No less troubling was the committee's subsequent discovery 
of continuing FBI involvement in this matter despite General 
Reno's obvious concern about the inherent conflict of interest 
between the White House and the Department of Justice in the 
FBI files investigation. The committee learned that despite the 
Attorney General's concerns, FBI Counsel Howard Shapiro 
provided the White House with a ``heads-up'' concerning Chief 
Investigative Counsel Olson's visit to the FBI and review of 
the Livingstone and Marceca files, including the Nussbaum 
interview summary which contradicted Nussbaum's testimony to 
the committee in a deposition and a hearing. Counsel Shapiro 
called Deputy White House Counsel Kathleen Wallman with this 
``heads-up.'' Ms. Wallman in turn contacted White House Special 
Counsel Jane Sherburne who informed numerous others of the 
Livingstone file, including Mr. Nussbaum in advance of his 
grand jury appearance.
    On July 17, 1996, two FBI agents appeared at the home of 
Dennis Sculimbrene, the FBI agent whose interview summary 
referred to the hiring of Livingstone, showed him the summary 
and asked him for notes of the interview. FBI agents also 
searched his work area for information related to Livingstone's 
hiring and his background investigation. This, too, appeared to 
violate General Reno's sentiments that such actions would, 
``constitute a conflict of interest for the Department of 
Justice itself to investigate the matter involving an 
interaction between the White House and the FBI, a component of 
the Department of Justice.''
    The question of whether a faulty White House access list 
could explain what the Clinton administration had called a 
``bureaucratic snafu'' was addressed in the committee's third 
hearing on the FBI files matter on July 17, 1996. Secret 
Service Special Agents Arnold Cole, John Libonati and Jeffrey 
Undercoffer testified at this hearing. Their testimony, based 
on recovered lists, charted the transitions of nearly 500 
former White House officials from ``Active'' to ``Inactive'' 
status from 1982 through 1993. The Secret Service agents also 
testified the lists it provided the White House would indicate 
``Active'' or ``Inactive'' status or ``A'' and ``I'' for those 
listed unless a custom list had been requested. Special Agent 
Cole also testified that, soon after the Clinton White House 
blamed the FBI files ``snafu'' on a faulty Secret Service list, 
Livingstone came to him and explained that the office knew 
which lists to use even as it improperly requested hundreds of 
confidential FBI background files.
    Chairman Clinger reviewed Livingstone's file for the first 
time on July 18, 1996, in the company of Chief Investigative 
Counsel Olson. Chairman Clinger requested information 
concerning any communication of information in Livingstone's 
file to the White House. On July 19, 1996, FBI Counsel Howard 
Shapiro wrote Chairman Clinger a letter informing him that the 
FBI had advised the White House as to the contents of the 
Livingstone file: ``because issues raised in Mr. Nussbaum's 
interview [in Livingstone's FBI file] has been discussed in 
connection with the committee's oversight investigation, it was 
determined that the Bureau had a responsibility to advise 
affected parties. Therefore, after arrangements were made for 
your staff to review the files, the Department of Justice, and 
then the White House, were advised of the results of this 
review.''
    On August 1, 1996, the committee held a hearing on 
Shapiro's ``heads up'' to the White House on the Livingstone 
matter. Shapiro not only admitted to the ``heads up;'' he also 
acknowledged hand-carrying retired FBI Agent Gary Aldrich's 
manuscript on the Clinton White House, ``Unlimited Access'' to 
White House Counsel Quinn.
    On October 15, 1996, Chairman Clinger wrote a letter to 
Independent Counsel Kenneth W. Starr enclosing copies of the 
committee's Travel Office Report and its interim report on the 
FBI Background Investigation Files matter. This letter also 
addressed Chairman Clinger's concerns about the internal 
discrepancies in testimony, witnesses' lack of recall of 
material events, and conflicts between the White House's 
documentary evidence and the sworn accounts of Jane Sherburne, 
Harry Thomason, Craig Livingstone, Anthony Marceca, William 
Kennedy, Bernard Nussbaum and Thomas F. ``Mack'' McLarty.
    d. Questions concerning campaign contributions made to or 
solicited by Lippo Group, John Huang and others.--In September 
and October 1996, it was reported that two former Department of 
Commerce employees had been involved in political activities 
while working at the Commerce Department. Former Deputy 
Assistant Secretary for International Economic Policy John 
Huang and Melinda Yee, former Special Assistant to the late 
Secretary of Commerce Ron Brown, allegedly were involved in 
fund raising and/or other political activities on behalf of the 
Clinton campaign while on the Federal Government payroll. 
Following his tenure at Commerce, Huang became a senior fund 
raiser at the Democratic National Committee. Some of the 
largest campaign contributions he solicited while there 
allegedly were made in violation of Federal Election Commission 
laws.
    Prior to joining the Clinton administration, Mr. Huang was 
a senior executive of the Lippo Group, an Indonesia-based 
conglomerate which provided him an $800,000 bonus shortly 
before he accepted a Commerce Department post where his work 
raised conflict of interest issues with his former employer. 
Mr. Huang and James Riady, whose family controls the Lippo 
Group, had known President Clinton since the 1980's. Throughout 
that period, Huang and Riady raised substantial sums of money 
for Clinton's gubernatorial and Presidential campaigns. 
Subsequently, it was reported that together they participated 
in scores of meetings in the Clinton White House. Policy 
matters were discussed at some of these meetings, possibly in 
violation of Federal Election Commission campaign law. Follow-
up articles addressed a number of other campaign finance 
irregularities arising during the course of the Clinton 
campaign, including contributions made by individuals barred by 
law from making them.
    In October 1996, Chairman Clinger initiated a series of 
document requests for materials relevant to this inquiry, which 
is ongoing. The Democratic National Convention has refunded 
$1.5 million in contributions from illegal or questionable 
sources.
    e. Misuse of political influence within the disciplinary 
enforcement system at the Department of Defense.--On August 2, 
1996, the committee received allegations that high-level White 
House and Department of Defense (DOD) officials had misused 
their positions and influence to circumvent the DOD 
disciplinary enforcement system. The allegations charged that 
White House officials had pressured the Deputy Under Secretary 
of Defense to employ a former Air Force officer who had 
recently been dismissed following confirmed charges of official 
misconduct. The former officer was alleged to have been re-
hired to a senior Schedule-C political appointee position 
within the Office of the Secretary of Defense (OSD).
    Pursuing the allegations, the committee first confirmed 
that the former officer had, in fact been re-hired within OSD, 
then reviewed the charges of TDY fraud, government cell phone 
fraud, government AMEX Travel Card abuse and sexual harassment 
which had originally been lodged against the officer. The 
committee examined the complete Defense Systems Information 
Agency Inspector General (DISA IG) and Air Force Office of 
Special Investigations (AFOSI) investigative files on the case. 
Staff interviewed the DISA IG and AFOSI case investigators, the 
reviewing Air Force Staff Judge Advocate and Deputy Staff Judge 
Advocate, and the retired officer's former commanding officers. 
All records and interviews substantiated the validity of the 
initial charges. The Staff Judge Advocate confirmed that while 
the evidence was sufficient to warrant administrative action, 
the Air Force had agreed to forego disciplinary proceedings in 
return for the officer's resignation.
    Committee staff then met with the Deputy Under Secretary of 
Defense and representatives of the Secretary of Defense to 
discuss the decision to employ the dismissed officer as a high-
level political appointee at an annual salary of well over 
$100,000. Although both the Deputy Under Secretary and the 
Secretary's senior staff were made aware of the past misconduct 
and the officer's forced resignation, the Secretary declined to 
take action to remove the officer from his subsequent 
employment.
    The committee then referred the matter to the appropriate 
House and Senate authorizing and appropriating committees for 
additional action.
    f. Health Care Task Force.--In February 1993, 
Representative Clinger called into question the secretive 
manner in which the administration's Health Care Task Force was 
conducting business. After requesting information from an 
unresponsive White House on whether the Task Force was meeting 
in compliance with statutes concerning open meetings, 
recordkeeping, conflict of interest requirements and costs, 
Representative Clinger requested a GAO audit. In a required 
charter, the Clinton administration claimed Task Force costs 
would be less than $100,000. The GAO audit, however, placed the 
total cost at $13.8 million.
    g. Labor Department Taxpayer Funded ``Toll-Free'' 
Hotline.--Following reports of a telephone hotline set up by 
the Department of Labor to gather support for increasing the 
minimum wage from minimum wage earners, Chairman Clinger sent a 
letter to Secretary Reich requesting information on the costs 
and purpose of the telephone bank, and to ascertain whether the 
Department was in compliance with appropriate information 
collection laws. Shortly thereafter, the hotline was shut down. 
After several delays, the Department reported that, although 
total costs were not yet available, the Department had capped 
the total cost of the politically inspired hotline at $25,000. 
The minimum wage brings workers an annual salary of $8,840.
    h. National Reconnaissance Office.--Chairman Clinger and 
subcommittee Chairman Horn have asked the GAO to review reports 
due from Defense Department and the Central Intelligence Agency 
on revelations that the National Reconnaissance Office secretly 
accumulated $1.7 billion in unspent appropriated funds. After 
the GAO report has been completed and reviewed, the committee 
will determine if further action, including possible financial 
management reforms, is warranted.
    i. Abuse of the American Express Government Travel Payment 
Program.--In the fall of 1995, the Committee on Government 
Reform and Oversight reviewed two audit reports, one from the 
Commerce Department and the other from the U.S. Information 
Agency. Each of these reports highlighted problems associated 
with the American Express Government Travel Payment Program.
    At the U.S. Information Agency, the audit report cited 
$2,200,000 in delinquent funds for the Agency's centrally 
billed credit card account, and $240,000 in delinquent funds 
for the Agency employees' individually billed credit card 
accounts. At the Commerce Department, delinquency was found 
among 293 employees. The committee also learned from these 
reports that American Express Travel Cards were being used for 
personal expenditures on a large scale. At the Commerce 
Department, 567 employees were found to have used the travel 
cards for personal use. At the U.S. Information Agency, 
employees were found to have charged $116,000 in retail 
purchases, much of which was found to be for personal use.
    As a result of these reports, the committee endeavored to 
study the breadth of the problems associated with the American 
Express Government Travel Payment Program throughout the 
Federal Government. In March 1996, committee staff met with 
members of the Office of Management and Budget and the General 
Services Administration and agreed on parameters by which 
agencies would submit records and/or analysis of the 
irregularities in their offices.
    The number and amount of delinquent charges on Government 
employees' American Express cards is massive. At the Department 
of Justice, the Inspector General reports that the sum of 
Centrally Billed Accounts and Individually Billed Accounts 
brings monthly delinquency to $1.1 million and identified 768 
transactions as ``possible misuse.'' Upon investigation, the 
Department of Justice Inspector General found charges to retail 
establishments like Victoria's Secret and Gucci. One such 
personal charge was to the Boston Red Sox.
    The Environmental Protection Agency chose to examine only 
its Region 5 office. In that region, misuse ranged from $10.40 
to $21,281. Twenty-four Environmental Protection Agency 
employees improperly charged $2,000 or more on their Government 
credit cards.
    Although the State Department Inspector General reported 
only $82,000 in possible misuse over a 6 month period, of the 
$6.4 million in retail charges, $3.2 million represents cash 
transactions from automatic teller machines or traveler checks. 
The State Department Inspector General reports total 
delinquency among Government credit card holders at between 
$847,805 and $1,093,034 each month.
    On September 25, 1996, Chairman Clinger wrote to Franklin 
D. Raines, the Director of the Office of Management and Budget, 
for his assurance that these abuses are being corrected. In 
addition, the chairman sought to ensure that provisions in a 
new contract being negotiated by the General Services 
Administration were designed to prevent the widespread abuse 
discovered in the course of the committee's investigation. The 
committee is awaiting a response from Director Raines.
    j. Taxpayer Funded Trip to Disney World.--After learning of 
a Disney World training seminar conducted at taxpayer expense 
for as many as 400 Federal employees, Chairman Clinger wrote on 
behalf of the committee to the Departments of Interior, 
Agriculture, and Defense to obtain an accounting of the exact 
costs of the trip, the number of employees involved, and an 
explanation of how the training related to the Departments' 
missions. The trip was taken just 1 week after the Federal 
Government shut down as a result of disagreements on how to 
achieve a balanced budget. Chairman Clinger spelled out his 
concern that hundreds of thousands of dollars may have been 
spent for what appears to be a lavish, taxpayer-funded 
vacation.
4. Legislation.
            a. H.R. 5, the Unfunded Mandates Reform Act of 1995 (Public 
                    Law 104-4)
    a. Report Number and Date.--House Report No. 104-1, Pt. 2; 
January 13, 1995.
    b. Summary of Measure.--The Unfunded Mandates Reform Act of 
1995 was intended to relieve the burden of unfunded Federal 
mandates on State, local and tribal governments and the private 
sector. It was designed to ensure that Congress and the 
executive branch (1) had information on the costs of unfunded 
Federal mandates, and (2) were accountable to States and 
localities, the private sector, and the public for imposing new 
mandates without paying for them.
    Title I of the Unfunded Mandates Reform Act (Public Law 
104-4) amended Title IV of the Congressional Budget Act to 
provide that Congress must have Congressional Budget Office 
(CBO) estimates for the costs of mandates it would impose on 
State and local governments and the private sector through 
reported legislation. Intergovernmental mandates projected to 
cost State, local or tribal governments over $50 million in the 
aggregate must be funded. Legislation that does not meet these 
requirements will be subject to a point of order on the House 
and Senate floor, where a majority of members must vote to 
waive the point of order before Congress can consider an 
intergovernmental mandate without paying its costs.
    Title II of the law requires Federal agencies to analyze 
the effects of their rules on State and local governments and 
the private sector, and prepare written statements detailing 
the costs and benefits of rules expected to cost either State, 
local and tribal governments or the private sector over $100 
million in the aggregate. Agencies must consult with State and 
local elected officials throughout the process. Agencies also 
must select the least costly or most cost-effective rule where 
possible.
    Title III provides for a look back at existing mandates. It 
requires the Advisory Commission on Intergovernmental Relations 
to re-evaluate existing mandates and to make recommendations to 
Congress and the President within 1 year as to whether some or 
all should be changed or repealed.
    Title IV provides for limited judicial review of agency 
actions under Title II.
    The differences between H.R. 5 as reported by the committee 
and Public Law 104-4 are fairly technical in nature and do not 
dramatically alter the purpose or effect of the legislation.
    c. Legislative History/Status.--Government Reform and 
Oversight Committee Chairman William F. Clinger, Jr., joined 
with Representatives Rob Portman (R-OH), Gary Condit (D-CA) and 
Tom Davis (R-VA) to introduce H.R. 5, the Unfunded Mandates 
Reform Act, on January 4, 1995. The bill was referred to the 
Committee on Government Reform and Oversight, with secondary 
referrals given to the Committees on Rules, Budget, and 
Judiciary.
    d. Hearings and Committee Actions.--On January 10, 1995, 
the committee voted to report H.R. 5 by a voice vote after a 
mark up in which 18 amendments were offered and 4 were adopted. 
Of those amendments adopted, three were offered by 
Representative Steve Horn (R-CA) and one was offered by 
Representative Paul Kanjorski (D-PA). The committee did not 
consider sections 201, 202, or Title III of H.R. 5 based on 
consultations with the Parliamentarian that those provisions 
were not in the committee's jurisdiction.
    S. 1, the companion bill in the Senate (also titled the 
Unfunded Mandates Reform Act of 1995), moved through the Senate 
Governmental Affairs Committee on a parallel track.
    House floor consideration of H.R. 5 began on January 19, 
1995, and concluded on February 1, 1995. The Conference Report 
on S. 1 was passed by the House on March 16, 1995, and was 
signed into law on March 22, 1995.
            b. H.R. 2, Line Item Veto Act of 1995
    a. Report Number and Date.--House Report No. 104-11, Pt. 
II, January 30, 1995, together with minority and additional 
views.
    b. Summary of Measure.--H.R. 2, the House-passed Line Item 
Veto Act of 1995, was designed to supplement the President's 
existing impoundment authority by creating a new enhanced 
rescission process for individual appropriations and targeted 
tax benefits contained in Federal tax and spending bills. The 
bill as sent to the President addresses not only individual 
appropriations and limited tax benefits, but also provides 
item-veto authority for increases in new direct spending.
    Under the Line Item Veto Act, the President may strike any 
whole dollar amount of discretionary spending in an 
appropriations act, conference report, or joint explanatory 
statement to accompany a conference report.
    In the case of entitlements, the President is permitted to 
cancel specific provisions of law which provide new direct 
spending relative to the current budget baseline. Any new 
direct spending program or legislative expansion of an existing 
entitlement would therefore be subject to the line item veto.
    For limited tax benefits, the act permits the Joint 
Committee on Taxation to determine which provisions, if any, in 
a revenue or reconciliation bill meet the definition of a 
limited tax benefit. If the Joint Committee's determinations 
are included in the revenue or reconciliation bill which is 
sent to the President, its determinations are binding upon the 
President's cancellation authority. If no Joint Committee 
determinations are included in the bill, the President is 
permitted to make his own determination of what qualifies as a 
limited tax benefit using the definition contained in the Line 
Item Veto Act.
    Tax or spending items item-vetoed by the President are 
automatically canceled and may only be reinstated if both 
Houses of Congress vote to disapprove the President's 
cancellations within a fixed time period. All moneys saved are 
set aside in a lockbox account for the purposes of deficit 
reduction. If both Houses disapprove the President's 
recommendations by a bill or joint resolution, the President 
retains his constitutional authority to veto the disapproval 
measure, forcing the Congress to obtain a two-thirds vote in 
each House to override. The Line Item Veto Act permits the 
President to choose between using its new item-veto process or 
the existing impoundment process contained in title X of the 
Congressional Budget Act.
    c. Legislative History/Status.--H.R. 2 was introduced on 
January 4, 1995, and was approved and ordered reported, as 
amended, by the Committee on Government Reform and Oversight on 
January 25, 1995. On January 26, 1995, the Committee on Rules 
asserted its sequential referral by marking-up the bill. The 
Rules Committee ordered the bill reported with two amendments 
which more closely defined the format of the President's 
special disapproval message. An amendment in the nature of a 
substitute to H.R. 2, incorporating both the Government Reform 
and Oversight and Rules Committee amendments, passed the House 
of Representatives on February 6, 1995.
    On February 14, 1995, the Senate Budget Committee reported 
two competing versions of S. 4 while the Senate Committee on 
Governmental Affairs reported its version of the bill on March 
7, 1995. The Senate approved the bill, as amended on March 23, 
1995, and requested a conference. The bill S. 4 passed the 
House on March 28, 1996 and was signed into law by the 
President on April 9, 1996, to become Public Law 104-130.
    d. Hearings and Committee Actions.--A joint hearing was 
held on January 12, 1995, by the House Committee on Government 
Reform and Oversight and the Senate Committee on Governmental 
Affairs. In the first panel, testimony was received from 
Senators John McCain and Dan Coats, and from Representatives 
Gerald Solomon, Jack Quinn, Mark Neumann and Michael Castle. 
All spoke in favor of the bill. Governor William Weld of 
Massachusetts then testified to the effectiveness of the line-
item veto in controlling State expenditures. Dr. Alice Rivlin, 
Director of the Office of Management and Budget, spoke on 
behalf of the Clinton administration and expressed support for 
the legislation as enhancing the President's authority to cut 
spending. Dr. Robert Reischauer, Director of the Congressional 
Budget Office, then cautioned that the bill would provide the 
President with greater potential power than a constitutionally 
approved item-veto. Judge Gilbert S. Merritt, Chief Judge of 
the Sixth Circuit and chairman of the Executive Committee of 
the Judicial Conference, expressed concern over applying the 
line-item veto to appropriations acts for the judiciary. The 
hearing ended with the final panel, which consisted of Joseph 
Winkelmann of Citizens Against Government Waste, David Keating 
of the National Taxpayers' Union, and Dr. Norman Ornstein of 
the American Enterprise Institute, taking different views of 
the bill. Mr. Winkelmann and Mr. Keating strongly supported 
H.R. 2, while Dr. Ornstein regarded the bill as more of a 
transfer of congressional power to the President than a process 
for true spending restraint.
            c. H.R. 1038, a bill to revise and streamline the 
                    acquisition laws of the Federal Government.
    a. Report Number and Date.--None.
    b. Summary of Measure.--On February 24, 1995, Chairman 
William F. Clinger, Jr., of the Committee on Government Reform 
and Oversight, Chairman Floyd D. Spence of the Committee on 
National Security, and Chairman Benjamin A. Gilman of the 
Committee on International Relations, introduced H.R. 1038 to 
revise and streamline the acquisition laws of the Federal 
Government. The bill addressed two issues: repeal of the 
recoupment of research and development costs, and a rewrite of 
the Procurement Integrity laws.
    c. Legislative History/Status.--Included as part of H.R. 
1670, the Federal Acquisition Reform Act of 1995 in May 1995, 
which subsequently was modified and included in the conference 
report to S. 1124, the Fiscal Year 1996 Department of Defense 
Authorization Act (Public Law 104-106).
    d. Hearings and Committee Actions.--The bill was referred 
to the Subcommittee on Government Management, Information, and 
Technology, which met pursuant to notification on February 28, 
1995, to solicit additional proposals for further simplifying 
and streamlining the Federal procurement system. At the 
hearing, testimony was received from various procurement 
specialists in the contracting community representing 
government and industry.
    Generally, the comments of the witnesses were as follows: 
those representing the government expressed the need for less 
congressional micro-management and greater flexibility and 
authority for agency contracting officers; those representing 
businesses, both large and small, reiterated their long held 
views about reducing government rules and regulations so they 
could sell to government agencies like they do to private 
sector buyers; and those representing other groups complained 
that existing laws are too complicated and too confusing.
    The various proposals for reform brought forward by the 
witnesses ranged from minor technical corrections to a complete 
overhaul of the system.
            d. H.R. 1670, The Federal Acquisition Reform Act of 1995
    a. Report Number and Date.--Report No. 104-222, Pt. 1, 
together with additional minority views; August 1, 1995.
    b. Summary of Measure.--During this time of declining 
Federal budgets, Chairman Clinger and his colleagues sought to 
eliminate the mass of requirements littering the current 
Federal procurement system that has led to too much money being 
spent for too little product. H.R. 1670 would remove from 
statute many of these unnecessary government-unique 
requirements which are often non-value added obstacles to doing 
business with the Federal Government.
    This legislation would make changes to the current 
competition standard; increase the government's purchase of 
commercial items; streamline current procurement integrity 
statutes; provide that it is the policy of the Federal 
Government to acquire goods and services from the private 
sector; and consolidate current contract disputes and bid 
protest forums into two streamlined entities, one for 
Department of Defense acquisitions and the other for the 
civilian agencies.
    c. Legislative History/Status.--On June 14, 1995, a version 
of H.R. 1670 was offered on the floor of the House of 
Representatives as an amendment to the fiscal year 1996 
Department of Defense Authorization Act; adopted and amended by 
Congresswoman Cardiss Collins' second degree amendment to 
remove Title I of H.R. 1670, and replace it with language which 
would retain the current statutory competition standard and 
include further statutory revisions.
    An amendment in the nature of a substitute to H.R. 1670 was 
developed prior to committee mark-up to reflect the views of 
other Members of Congress (both Republican and Democrat), 
industry associations, senior industry executives, the 
administration, government contracting officials, 
representatives of both large and small business, and from 
other interested individuals. The Committee on Government 
Reform and Oversight met on July 27, 1995, to consider H.R. 
1670. The bill, as amended, was favorably reported to the House 
by voice vote and without further amendment by the full 
committee.
    H.R. 1670 was passed on the floor of the House of 
Representatives on September 14, 1995, by an overwhelming vote 
of 423-0. The bill was sent to the Senate and referred to the 
Committee on Governmental Affairs.
    H.R. 1670 was included in a modified form as Division D in 
the final conference report to accompany S. 1124, the 
Department of Defense Authorization Act for Fiscal Year 1996. 
S. 1124 was signed by the President on February 10, 1996, and 
became Public Law 104-106.
    Included in the Omnibus Consolidated Appropriations Act for 
Fiscal Year 1997 (Public Law 104-208) was language to change 
the short titles of both Division D and Division E (the 
Information Technology Management Reform Act of 1996) of Public 
Law 104-106 to the Clinger-Cohen Act of 1996.
    d. Hearings and Committee Actions.--A joint hearing by the 
Committee on Government Reform and Oversight and the Committee 
on National Security was held on May 25, 1995, to solicit views 
on H.R. 1670 as introduced on May 18, 1995. Procurement experts 
representing both government and industry provided comment.
    Statements presented by industry representatives emphasized 
that H.R. 1670 would shift presumptions of private and public-
sector business interaction from a negative one to a positive 
one, and would permit things to be done cheaper, faster, and 
better than currently is being done today. These 
representatives identified H.R. 1670 as clearly making a long-
term mark on the acquisition system to prepare it for the 21st 
century.
            e. H.R. 830, The Paperwork Reduction Act of 1995
    a. Report Number and Date.--Report No. 104-37, February 15, 
1995.
    b. Summary of Measure.--The Paperwork Reduction Act is 
intended to:
          1. Reauthorize appropriations for the Office of 
        Management and Budget's (OMB) Office of Information and 
        Regulatory Affairs (OIRA) to carry out the provisions 
        of the Paperwork Reduction Act of 1980 as amended.
          2. Strengthen OIRA and agency responsibilities for 
        the reduction of paperwork burdens on the public, 
        particularly through the inclusion of all federally 
        sponsored collections of information in a clearance 
        process involving public notice and comment, public 
        protection, and OIRA review.
          3. Establish policies to promote the dissemination of 
        public information on a timely and equitable basis, and 
        in useful forms and formats.
          4. Strengthen agency accountability for managing 
        information resources in support of efficient and 
        effective accomplishment of agency missions and 
        programs.
          5. Improve OIRA and other central management agency 
        oversight of agency information resources management 
        (IRM) policies and practices.
    The legislation was premised on the committee's continuing 
belief in the principles and requirements of the Paperwork 
Reduction Act of 1980. All of the legislation's amendments to 
the 1980 act, as amended in 1986, are intended to further its 
original purposes--to strengthen OMB and agency paperwork 
reduction efforts, to improve OMB and agency information 
resources management, including in specific functional areas 
such as information dissemination, and to encourage and provide 
for more meaningful public participation in paperwork reduction 
and broader information resources management decisions.
    With regard to the reduction of information collection 
burdens the legislation increases the act's 1986 goal of an 
annual 5 percent reduction in the public paperwork burdens to 
10 percent during the first 2 years of authorization and 5 
percent thereafter. OMB is required to include in its annual 
report to Congress recommendations to revise statutory 
paperwork burdens if this goal is not reached. The legislation 
includes third-party disclosure requirements in the definition 
of collection of information to overturn the Supreme Courts 
decision, Dole v. United Steelworkers of America (494 U.S. 26 
(1990)). This will ensure that collection and disclosure 
requirements are covered by the OMB paperwork clearance 
process. The act is also amended to require each agency to 
develop a paperwork clearance process to review and solicit 
public comment on proposed information collections before 
submitting them to OMB for review. Public accountability is 
also strengthened through requirements for public disclosure of 
communications with OMB regarding information collections (with 
protections for whistle blowers complaining of unauthorized 
collections), and for OMB to review the status of any 
collection upon public request. In combination with more 
general requirements, such as encouraging data sharing between 
the Federal Government and State, local and tribal governments, 
the legislation strives to further the act's goals of 
minimizing Government information collection burdens, while 
maximizing the utility of Government information.
    The legislation also adds further detail to strengthen 
other functional areas such as statical policy and information 
dissemination. The dissemination provisions, for example, 
delineate clear policies that were not articulated in the act's 
previous references to dissemination. The provisions require 
OMB to develop governmentwide policies and guidelines for 
information dissemination and to promote public access to 
information maintained by Federal agencies. In turn, the 
agencies are to: ensure that the public has timely and 
equitable access to public information; solicit public input on 
their information dissemination activities; and not establish 
restrictions on dissemination or redissemination. Emphasis is 
placed on efficient and effective use of new technology and a 
reliance on a diversity of public private sources of 
information to promote dissemination of Government information, 
particularly in electronic formats.
    With regard to over-arching information resources 
management (IRM) policies, the legislation charges agency heads 
with the responsibility to carry out agency IRM activities to 
improve agency productivity, efficiency, and effectiveness. It 
makes program officials responsible and accountable for those 
information resources supporting their program. The IRM mandate 
is strengthened by focusing on managing information resources 
in order to improve program performance, including the delivery 
of services to the public and the reduction of information 
collection burdens on the public.
    To improve accountability for agency IRM responsibilities, 
as well as responsibilities for paperwork reduction, the agency 
responsibilities provided in the act are amended to complement 
and more directly parallel OMB's functional responsibilities. 
Further, to prompt agencies to reform their management 
practices, the bill requires each agency head to establish an 
IRM steering committee, develop an IRM strategic planning 
process, and develop IRM performance measures linked to program 
performance. In these various pursuits, the goal is to 
integrate the management of information resources with program 
management and assure the use of the resources to achieve 
agency missions. With the Federal Government spending 
approximately $25 billion a year on information technology, the 
stakes are too high not to press for the most efficient and 
effective management of information resources. The reduction of 
information collection burdens on the public and maximizing the 
utility of Government information will not otherwise occur.
    c. Legislative History/Status.--H.R. 830, the Paperwork 
Reduction Act of 1995, was introduced on February 6, 1995, by 
Government Reform and Oversight Committee Chairman William F. 
Clinger, Jr., for himself, Congressmen Norman Sisky, David 
McIntosh, chairman of the Subcommittee on National Economic 
Growth, Natural Resources, and Regulatory Affairs, and other 
Members of Congress.
    The President signed the bill on May 22, 1995, as Public 
Law 104-13.
    d. Hearings and Committee Actions.--After introduction, 
H.R. 830 was referred to the Committee on Government Reform and 
Oversight. On February 6, 1995, Chairman Clinger referred the 
bill to the Subcommittee on National Economic Growth, Natural 
Resources, and Regulatory Affairs for consideration. On 
February 7, 1995, the subcommittee, under the direction of 
Chairman McIntosh, held a hearing to consider reauthorization 
of appropriations for the Paperwork Reduction Act, OIRA's 
implementation of the act, and OIRA's conduct of regulatory 
review under Presidential Executive order. Testimony included 
comment and discussion of H.R. 830.
    Witnesses at the February 8, 1995 hearing were: Sally 
Katzen, Administrator, Office of Information and Regulatory 
Affairs; Mr. James McIntyre, former Director of the Office of 
Management and Budget and currently an attorney; Mr. James 
Miller, former Director of the Office of Management and Budget 
and current chairman of the Citizens for a Sound Economy; Mr. 
Gene Dodaro, Assistant Comptroller General, General Accounting 
Office accompanied by Mr. Chris Hoenig, also of GAO; Mr. Robert 
Coakley, executive director, Council on Regulatory and 
Information Management; Jack Sheehan, legislative director, 
United Steelworkers of America; and Bob Stolmeier, president, 
KLC Corp.
    At the hearing, Clinton administration witness Sally Katzen 
testified squarely in support of H.R. 830:

          It is truly gratifying to be here today in what I 
        hope is the last phase of improving and strengthening 
        the Paperwork Reduction Act. For more than 2 years 
        Congress has had legislative proposals to update and 
        expand the Paperwork Reduction Act consistent with and 
        building upon its original purposes. My commendations 
        to the congressional staff who have worked 
        professionally and constructively to develop a 
        consensus, a bipartisan approach, which is contained in 
        H.R. 830 and in the Senate, 244, which the Senate 
        Governmental Affairs Committee reported out on February 
        1. We are pleased to report that the administration 
        supports those efforts.

    After taking into consideration the testimony of the 
witnesses at the February 7 hearing, and after further 
consultation with the staff of the House Small Business 
Committee, the Senate Committee on Governmental Affairs, and 
with staff of the General Accounting Office and Office of 
Management and Budget, the subcommittee held a mark-up of H.R. 
830 on February 8, 1995. The full committee held its mark-up on 
February 10, 1995, and voted, 40 in favor and 4 against, to 
report H.R. 830, as amended, favorably to the full House.
            f. S. 790, The Federal Reports Elimination and Sunset Act 
                    of 1995
    a. Report Number and Date.--Report No. 104-327, November 8, 
1995.
    b. Summary of Measure.--During consideration of S. 244 the 
Paperwork Reduction Act of 1995 (PRA), the Senate adopted two 
amendments which dealt with the elimination or modification of 
certain congressionally mandated reporting requirements and 
also placed a sunset on other similar reports. These amendments 
were offered by Senators John McCain (R-AZ) and Carl Levin (D-
MI). Conferees meeting to resolve differences between the House 
and Senate versions of the PRA agreed to offer the McCain and 
Levin amendments as separate and freestanding legislation. The 
PRA was signed into law on May 22, 1995, as Public Law 104-13 
without the McCain and Levin amendments.
    After the President signed the Paperwork Reduction Act of 
1995 into law, House and Senate staffers in both the majority 
and minority began meeting to initiate the work necessary to 
present this bill to the House Government Reform and Oversight 
Committee and the Senate Governmental Affairs Committee.
    The Paperwork Reduction Act sets the standard by which 
Congress can continue to alleviate the paperwork burden on 
executive branch agencies. The Federal Report Elimination and 
Sunset Act of 1995 continues that work. By mandate, executive 
branch agencies annually produce thousands of reports to 
Congress. Many are outdated and no longer necessary. This bill 
eliminates or modifies nearly 200 such reporting requirements 
and establishes a sunset on all others.
    S. 790 was needed not merely to alleviate the burden on the 
executive branch but to also allow the Government to focus its 
energy on more important issues, thereby better utilizing their 
time. On December 21, 1982, President Ronald Reagan signed the 
Congressional Reports Elimination Act of 1982 into law (Public 
Law 97-375) and 13 years later the Federal Reports Elimination 
and Sunset Act continues, with the same strong bi-partisan 
support that the 1982 act received, to relieve the Federal 
Government of needless and burdensome paperwork. President 
Reagan said in his statement that this was a, ``useful and 
constructive step in reducing unnecessary paperwork and in 
improving executive branch operations.'' Also, given increasing 
costs of report production, this bill will help control costs 
in keeping with this committee's efforts to increase the 
efficiency of the Federal Government.
    c. Legislative History/Status.--Senators McCain and Levin 
introduced S. 790, the Federal Reports Elimination and Sunset 
Act of 1995, on May 11, 1995. It was reported favorably by the 
Senate Committee on Governmental Affairs and was approved by 
the Senate by a unanimous voice vote on July 17, 1995.
    In his floor speech, Senator Levin compared S. 790 to S. 
2157, which he and Senator Cohen introduced in 1994. The 
Senator explained that the list of reports included in S. 790 
was first compiled by sending out letters asking all 89 
executive and independent agencies to identify those reports 
required by law which were no longer necessary or useful and 
could be eliminated or modified. Agencies were asked to produce 
a clear and substantiated justification for each recommendation 
made.
    Following Senate approval, S. 790 was sent to the U.S. 
House of Representatives on July 18, 1995, and held at the 
Clerk's desk. On September 12, 1995, S. 790 was referred to the 
House Committee on Government Reform and Oversight. On 
September 14, 1995, Congressman Robert Ehrlich (R-MD) 
introduced the House companion to S. 790, H.R. 2331, with 9 
additional co-sponsors. Congressman Ehrlich echoed the concerns 
of the Paperwork Reduction Act conferees by urging his 
colleagues to co-sponsor H.R. 2331 and, ``lighten the red tape 
burden on executive branch agencies so that our government can 
operate with fewer restrictions and greater efficiency.'' The 
Congressman also stated that he has, ``the upmost confidence 
that the President will want to sign this important piece of 
legislation into law because it allows executive branch 
agencies to focus more resources on important current issues as 
opposed to focusing on outdated and unnecessary reporting 
requirements.''
    d. Hearings and Committee Actions.--The Government Reform 
and Oversight Committee, working in cooperation with the Senate 
Governmental Affairs Committee, distributed a copy of this 
report to all the House and Senate full committee chairmen and 
ranking minority members to elicit their views as to whether 
the changes being made would impede their committees 
legislative and oversight functions. Their responses were 
incorporated into the final amendments to this bill.
    On September 21, 1995, S. 790 was amended and reported by a 
unanimous voice vote by the full Committee on Government Reform 
and Oversight. Committee Chairman William F. Clinger, Jr. (R-
PA) praised the Reports Elimination and Sunset Act of 1995 by 
stating, ``this legislation will continue the very positive 
work this committee started with the Paperwork Reduction Act in 
a continuing effort to eliminate Federal paperwork burdens.'' 
Congresswoman Cardiss Collins (D-IL), the committee's ranking 
minority member, also expressed her support.
    During the committee's September 21, 1995 consideration of 
S. 790, two en-bloc amendments were offered and passed without 
objection. The first, by Congresswoman Collins, modified the 
bill as requested by the International Relations Committee, 
deleting some of the reports that were slated for elimination 
and making some minor technical changes. It was approved by a 
voice vote.
    The second amendment was offered by Congressman Ehrlich and 
also passed by a voice vote. A portion of the Ehrlich amendment 
reinstated the Estimated expenditures under the Food Stamp 
Program report, at the request of the House Agriculture 
Committee. The information contained in this report was 
necessary to the committee as it prepared to vote on the Farm 
bill.
    Also included in this en-bloc amendment was a request from 
the U.S. Railroad Retirement Board modifying a report dealing 
with 5-year retirement fund projections to allow for greater 
accuracy in projecting funds numbers. S. 790 was approved by 
the Government Reform and Oversight Committee by a unanimous 
voice vote.
            g. H.R. 3864, General Accounting Office Management Reform 
                    Act of 1996
    a. Report Number and Date.--None.
    b. Summary of Measure.--Title I eliminates over 100 
existing statutory mandates affecting GAO that do not represent 
the most efficient and effective use of GAO's limited 
resources. Most of the provisions of title II fall into one of 
the following two categories:
          Elimination of ``executive'' type functions. These 
        provisions relieve GAO of statutory functions that do 
        not further GAO's current mission and are more 
        appropriate for performance by the executive branch. 
        Functions that are still relevant to government 
        operations are transferred to executive branch 
        agencies. Some of the functions are simply obsolete; 
        these functions are repealed.
          Elimination of auditing and reporting mandates. These 
        provisions relieve GAO of statutory auditing and 
        reporting requirements, while preserving GAO's 
        authority to conduct the audit pursuant to a specific 
        Congressional request or at its own initiative. Thus, 
        the provisions give GAO flexibility to apply its 
        resources where they are most needed.
    Title I includes a number of other provisions that will 
enhance the efficiency of GAO's operations, and eliminate 
paperwork requirements for GAO as well as executive branch 
agencies.
    Section 211 of the Legislative Branch Appropriations Act, 
1996 (Public Law 104-53, 109 Stat. 535) transferred a number of 
GAO's ``executive'' type functions to the OMB, effective on 
June 30, 1996, and authorized the Director of OMB to delegate 
those functions to other Federal agencies. In all but a few 
cases, the Director has now delegated the functions.
    Title II of the bill makes conforming amendments to the 
statutes underlying the functions covered by section 211 of the 
1996 Appropriations Act in order to reflect the transfers to 
OMB and further delegations by OMB of those functions. For the 
most part, the conforming amendments of title II delete 
references to the Comptroller General or GAO in these 
underlying statutes and substitute references to the officials 
or agencies now vested with responsibility for the functions 
pursuant to section 211 of the 1996 Appropriations Act. Where 
the delegation of a function has not been completed, the 
conforming amendment reflects the transfer to OMB and preserves 
the OMB Director's authority to delegate further.
    c. Legislative History/Status.--Government Reform and 
Oversight Committee member, Representative Steve LaTourette (R-
OH), introduced H.R. 3864. The bill was referred to the 
Committee on Government Reform and Oversight on July 22, 1996, 
and was approved as amended on July 25, 1996. H.R. 3864 passed 
the House of Representatives on September 4, 1996, by voice 
vote. The bill was passed by unanimous consent of the Senate on 
October 3, 1996. It was signed by the President on October 19, 
1996 and became Public Law No. 104-316.
    d. Hearings and Committee Actions.--On April 30, 1996, the 
Subcommittee on Government Management, Information, and 
Technology held hearings on the oversight of the General 
Accounting Office. Subcommittee Chairman Stephen Horn presided 
over the testimony of John A. Koskinen, Deputy Director for 
Management, Office of Management and Budget; R. Scott Fosler, 
president, National Academy of Public Administration; Thomas V. 
Fritz, president and chief of Executive Officer, Private Sector 
Council; Cornelius E. Tierney, professor of accountancy, 
director, Center for Public Financial Management, School of 
Business and Public Management, the George Washington 
University; Charles A. Bowsher, Comptroller General of the 
United States; and James F. Hinchman, Special Assistant to the 
Comptroller General.
            h. H.R. 3136, title III, subtitle E, the ``Congressional 
                    Review of Agency Rulemaking,'' (Public Law No. 104-
                    121, title II, subtitle E)
    a. Report Number and Date.--Although there was no committee 
report on the ``Small Business Regulatory Enforcement Fairness 
Act of 1996'' (title II) or the ``Congressional Review of 
Agency Rulemaking'' (subtitle E), the Committees of 
Jurisdiction in the House and Senate filed a joint statement in 
the Congressional Record in lieu of a statement of managers. 
See 142 Cong. Rec. E571, 574-79 (daily ed. April 19,1996) 
(statement of March 28, 1996 by Chairman Hyde for the 
committees of jurisdiction); 142 Cong. Rec. S3683-87 (daily ed. 
April 18, 1996) (statement of Senator Nickles for himself and 
for Senators Reid and Stevens).
    b. Summary of Measure.--The Congressional Review Act (CRA) 
adds a new chapter 8 to the Administrative Procedure Act that 
requires executive branch agencies to submit their new rules to 
Congress for congressional review. See 5 U.S.C. chapter 8 
(Supp. 1996). The CRA allows Congress to review each new rule 
and consider a joint resolution of disapproval to overrule it 
under expedited House and Senate procedures. Under the 
Congressional Review Act, no rule may go into effect until it 
is delivered to the House, the Senate, and to GAO. Although the 
CRA applies to almost all rules, ``major rules'' are delayed in 
their effectiveness for 60 calender days to provide Congress 
with a chance to reject problematic rules before they have an 
adverse impact. Moreover, the term ``rule'' is defined very 
broadly to include all general agency statements that affect 
the public, including ``interpretive'' rules, agency ``policy 
statements,'' ``guidelines,'' and ``staff manuals.'' In 
addition to submitting the rules themselves, agencies will have 
to submit a report to Congress on each rule stating whether 
they have complied with the Unfunded Mandates Reform Act, the 
Regulatory Flexibility Act, and whether they have conducted a 
valid cost-benefit analysis, taking analysis, and federalism 
assessment as set forth in the Reagan, Bush, and Clinton 
Executive orders. If a resolution of disapproval is introduced 
to overturn a problematic regulation, Congress may reject the 
rule using expedited procedures that eliminate the Senate 
filibuster and require only a simple majority in each House for 
passage. If Congress does reject a rule, the rule may not be 
reissued in substantially the same form without congressional 
authorization.
    The intent of the CRA is to bring increased accountability 
to the rulemaking process. It is also expected that increased 
congressional involvement will make the agencies more open and 
responsive to comments from regulated entities during the 
rulemaking process and during enforcement proceedings. This 
will foster a more cooperative, less threatening, regulatory 
environment. As a result, it is the committee's hope and 
intention that agencies will issue more flexible and less 
burdensome rules that achieve the same or superior level of 
protection of health, safety, and the environment.
    c. Legislative History/Status.--The Senate passed four 
different versions of the ``Congressional Review Act'' (CRA) 
and the House passed two different versions of it before the 
act was incorporated in H.R. 3136 and became part of Public Law 
104-121 (title II, subtitle E). Senator Don Nickles introduced 
the first version of the CRA, S. 219, as a companion bill to 
H.R. 450, the Regulatory Transition Act of 1995, which 
originated in the House Subcommittee on National Economic 
Growth, Natural Resources, and Regulatory Affairs. The Senate 
passed S. 219 by a recorded vote of 100-0 on March 29, 1995. On 
November 9, 1995, the House and Senate then passed an identical 
version of the CRA as section 3006 of title III of H.R. 2586, 
the first debt limit bill. Chairman Bob Walker included section 
3006 in his amendment to the debt limit bill at the request of 
Chairman William F. Clinger, Jr. and Representative David M. 
McIntosh who were the principal House sponsors of the 
legislation. The President vetoed H.R. 2586 for reasons 
unrelated to section 3006. On March 19, 1996, the Senate passed 
a third version of the CRA as part of S. 942, the Small 
Business Regulatory Enforcement Fairness Act, by a recorded 
vote of 100-0. The language of the final bill was the product 
of informal discussions between the House and Senate sponsors 
and committees of jurisdiction during March 1996. On March 28, 
1996, the House and Senate passed H.R. 3136, the Contract with 
America Advancement Act of 1996, which included the CRA. (The 
CRA was originally subtitle E of title III, but was 
redesignated as subtitle E of title II in Public Law 104-121.) 
The President signed the act on March 29, 1996.
    d. Hearings and Committee Actions.--None were held.
            i. S. 1577, To amend Title 44 United States Code, to 
                    authorize appropriations for the National 
                    Historical Publications and Records Commission.
    a. Report Number and Date.--No House report was filed.
    b. Summary of Measure.--S. 1577 reauthorizes appropriations 
for the National Historical Publications and Records Commission 
at $10 million annually for Fiscal Years 1998, 1999, 2000, and 
2001.
    c. Legislative History/Status.--The Committee on Government 
Reform and Oversight reported out H.R. 3625, the identical 
companion bill to S. 1577. S. 1577 was reported from the Senate 
Governmental Affairs Committee on June 19, 1996 (S. Rept. No. 
104-283). S. 1577 passed the Senate on July 25, 1996 and was 
received in the House on July 26, 1996 and held at the desk. 
Rules were suspended and the measure passed the House on 
September 27, 1996, and was signed into law by the President on 
October 9, 1996, to become Public Law 104-274.
    d. Hearings and Committee Actions.--None were held.
            j. H.R. 2326, Health Care Fraud and Abuse Prevention Act of 
                    1995
    a. Report Number and Date.--None.
    b. Summary of Measure.--The purpose of H.R. 2326 is to 
prevent, detect, control and penalize fraud and abuse in the 
provision of health care. The bill provides for improved 
coordination and data sharing among Federal, State and local 
law enforcement agencies and private insurers. It creates a new 
source of funds comprised of fines, penalties, damages and 
proceeds from forfeitures collected from those in violation of 
Federal health care fraud and abuse provisions; such funds to 
be used by Federal and State law enforcement agencies to 
supplement regularly appropriated funds. The measure 
establishes, recognizes and defines health care fraud and abuse 
as a Federal crime and prescribes penalties for violation 
thereof. Additionally, the legislation details initiatives to 
be taken in control of fraud and abuse.
    c. Legislative History/Status.--H.R. 2326 was introduced on 
September 13, 1995, and referred to Government Reform and 
Oversight, Commerce, and Ways and Means. On October 16, 1995, 
Title II of H.R. 2326 was offered by Mr. Schiff as an amendment 
to H.R. 2425 ``The Medicare Preservation Act of 1995,'' while 
Mr. Shays offered Title III as an amendment to that measure. 
The Rules Committee found the Schiff Amendment in order and it 
was incorporated into H.R. 2425. The Shays amendment was not. 
Following mark-up by Commerce, H.R. 2425, which included Title 
II of H.R. 2326, was incorporated, as amended, into H.R. 2491, 
``The Balanced Budget Act of 1995,'' which passed the House on 
November 20, 1995. The bill was then passed by the Senate and 
subsequently vetoed by the President.
    d. Hearings and Committee Actions.--A hearing was held on 
September 28, 1995, before the Subcommittee on Human Resources 
and Intergovernmental Relations to consider both H.R. 2326 and 
H.R. 1850 introduced by Mr. Towns. Testimony was heard from 
Helen Smits, M.D., Deputy Administrator, Health Care Financing 
Administration, accompanied by Bill Gould, Special Assistant to 
the Administrator; Gerald Stern, Special Counsel for Health 
Care Fraud, Department of Justice; Lovola Burgess, past 
president, American Association of Retired Persons; William J. 
Mahon, executive director, National Health Care Anti-Fraud 
Association; and Thomas A. Schatz, president, Citizens Against 
Government Waste. Dr. Smits was wholly in favor of the 
legislation pointing out the benefits in coordination of law 
enforcement. Mr. Stern also spoke in favor of the bill, but 
voiced some concerns held by the Department of Justice 
specifically regarding the proposed authority of the FBI to 
issue administrative subpoenas. Ms. Burgess, Mr. Mahon, and Mr. 
Schatz all spoke in support of both bills although the 
provisions in H.R. 2326 are more far reaching than H.R. 1850. 
The hearing ended with the panel members being encouraged by 
the Members to speak to their own Members and urge co-
sponsorship of H.R. 2326.
            k. H.R. 3078, Federal Agency Anti-Lobbying Act
    a. Report Number and Date.--None.
    b. Summary of Measure.--The purpose of the bill is to 
prohibit the expenditure of appropriated funds in an attempt by 
executive agencies to create public opposition to pending 
legislation. Such actions clearly violate the provisions of 18 
U.S.C. 1913, however the present and previous administrations 
have interpreted this section narrowly in a fashion that limits 
all restrictions. As a consequence, this bill expands and 
clarifies the limitation on using public money for grassroots 
lobbying designed to affect the legislative process.
    This important legislation emanates from a series of 
investigations conducted by several congressional committees. 
The Government Reform and Oversight, Transportation and 
Infrastructure, and Commerce Committees have all identified 
instances where carefully designed public relations campaigns 
have appealed for public support without directing citizens to 
contact their Congressional representatives.
    c. Legislative History/Status.--H.R. 3078, The Federal 
Agency Anti-Lobbying Act was introduced on March 13, 1996 and 
referred to the Committee on Government Reform and Oversight. 
On May 15, 1996, a full committee hearing was conducted on the 
issue.
    d. Hearings and Committee Actions.--The Government Reform 
and Oversight Committee held a hearing on this legislation on 
May 15, 1996. Testimony was heard from Jonathan Cannon, General 
Counsel, U.S. Environmental Protection Agency; Joseph B. Dial, 
commissioner, Commodity Futures Trading Commission; Robert 
Nordhaus, General Counsel, Department of Energy; J. Davitt 
McAteer, Acting Solicitor General, Department of Labor; Al 
Cors, Jr, director of government relations, National Taxpayers 
Union; Robert P. Murphy, General Counsel, U.S. General 
Accounting Office; Louis Fisher, Senior Specialist in American 
National Government, Congressional Research Service; N. Jerold 
Cohen, chairman, Section on Taxation, American Bar Association; 
Hon. Senator Ted Stevens of Alaska; and Hon. Congressman W.J. 
(Billy) Tauzin of Louisiana.
            l. ``Proceedings Against John M. Quinn, David Watkins, and 
                    Matthew Moore (Pursuant to Title 2, United States 
                    Code, Sections 192 and 194,'' House Report 104-598, 
                    May 29, 1996.
    a. Summary.--Weeks after the Travel Office firings, 
President Clinton staved off a congressional inquiry into the 
controversy by committing to then-House Judiciary Committee 
Chairman Jack Brooks in a July 13, 1993, letter: ``. . . you 
can be assured that the Attorney General will have the 
Administration's full cooperation in investigating those 
matters which the Department wishes to review.'' In fact, that 
cooperation was by no means forthcoming from the White House. 
Not only was this established in the committee's October 24, 
1995, hearing (see Part Two I.A.3.b. above), it was the 
conclusion of the Clinton administration's own Justice 
Department. In a September 8, 1994, memo to Acting Criminal 
Division Chief Jack Keeney, Justice's Chief of the Public 
Integrity Division, Lee Radek, wrote:

          At this point we are not confident that the White 
        House has produced to us all documents in its 
        possession relating to the Thomason allegations . . . 
        the White House's incomplete production greatly 
        concerns us because the integrity of our review is 
        entirely dependent upon securing all relevant 
        documents.

    In the course of its investigation, the committee came to 
share in these concerns. Beginning in the fall of 1995, the 
Clinton White House repeatedly assured the committee that it 
had produced all documents relevant to the committee's 
Travelgate investigation. Despite these assurances, White House 
documents critical to the investigation continued to surface 
throughout 1996 until August. White House delays, denials and 
general obfuscation frustrated the committee's investigative 
efforts throughout the 104th Congress.
    One such document was an undated 9-page memo written by 
David Watkins--likely drafted in the fall of 1993--in which 
Watkins cited pressures by First Lady Hillary Rodham Clinton as 
a major factor in his decision to fire the Travel Office 
employees. Mr. Watkins wrote that this self-styled ``soul 
cleansing'' memo represented his ``first attempt to be sure the 
record is straight, something I have not done in previous 
conversations with investigators--where I have been as vague 
and protective as possible.''
    The White House released this memo to the committee at 8:30 
p.m. on January 3, 1996, after it had been released to the 
press. Though it was responsive to subpoenas and document 
requests made by several previous investigations, including 
those of Independent Counsel Fiske, the General Accounting 
Office and the Justice Department, this document was produced 
to none of them.
    The Watkins memo clearly contradicted repeated assertions 
by the White House and First Lady Hillary Rodham Clinton that 
the First Lady had had minimal involvement in the Travel Office 
firings:

          On Monday morning you [then-White House Chief of 
        Staff McLarty] came to my office and met with me and 
        Patsy Thomasson. At that meeting, you explained that 
        this was on the First Lady's ``radar screen.'' I 
        explained to you that I had decided to terminate the 
        Travel Office employees and you expressed relief that 
        we were finally going to take action (to resolve the 
        situation in conformity with the First Lady's wishes). 
        We both knew there would be hell to pay if, after our 
        failure to take swift and decisive action in conformity 
        with the First Lady's wishes.

Mr. Watkins concluded in this memo:

          [Made] clear that the Travel Office incident was 
        driven by pressures for action originating outside my 
        Office. If I thought I could have resisted those 
        pressures, undertaken more considered action, and 
        remained in the White House, I certainly would have 
        done so. But after the Secret Service incident, it was 
        made clear that I must more forcefully and immediately 
        follow the direction of the First Family. I was 
        convinced that failure to take immediate action in this 
        case would have been directly contrary to the wishes of 
        the First Lady, something that would not have been 
        tolerated in light of the Secret Service incident 
        earlier in the year.

The apparent contradictions between Watkins' previous ``vague 
and protective'' responses made to investigators looking into 
the Travel Office matter and the ``soul cleansing'' memo led to 
a criminal referral of the matter to Independent Counsel Starr 
in early 1996.
    In the wake of this memo's production, the committee issued 
several subpoenas to the White House and current and former 
White House officials and others to compel the production of 
all relevant documents previously withheld. Months of 
negotiations followed the failure of three parties in 
particular to complete their productions in compliance with 
their subpoenas: White House Counsel John M. Quinn, David 
Watkins, and Matthew Moore, whom the committee learned had 
copies of various drafts of the Watkins memo in his possession.
    b. Hearings.--On May 8, 1996, the full committee voted to 
hold Messrs. Quinn, Watkins and Moore in contempt for their 
refusals to produce all documents responsive to the committee's 
subpoenas.
    c. Resolution.--The committee, in its May 8, 1996, vote:
          Resolved, That pursuant to 2 U.S.C. 192 and 194, the 
        Speaker of the House certify the report of the 
        Committee on Government Reform and Oversight, detailing 
        the refusal of John M. Quinn to produce papers to the 
        Committee on Government Reform and Oversight, to the 
        United States Attorney for the District of Columbia, 
        for him to be proceeded against in the manner and form 
        provided by law; and be it further
          Resolved, That pursuant to 2 U.S.C. 192 and 194, the 
        Speaker of the House certify the report of the 
        Committee on Government Reform and Oversight, detailing 
        the refusal of David Watkins to produce papers to the 
        Committee on Government Reform and Oversight, to the 
        United States Attorney for the District of Columbia, 
        for him to be proceeded against in the manner and form 
        provided by law; and be it further
          Resolved, That pursuant to 2 U.S.C. 192 and 194, the 
        Speaker of the House certify the report of the 
        Committee on Government Reform and Oversight, detailing 
        the refusal of Matthew Moore to produce papers to the 
        Committee on Government Reform and Oversight, to the 
        United States Attorney for the District of Columbia, 
        for him to be proceeded against in the manner and form 
        provided by law.
    d. Follow-up.--Mr. Moore eventually produced the documents 
subpoenaed to the committee. Mr. Watkins, by now the subject of 
an Independent Counsel investigation, declined to do so. Nor 
had White House Counsel Quinn produced the documents required 
as the May 30, 1996 date for a House vote on the contempt 
resolution approached.
    On May 30, 1996, the day on which the committee's contempt 
resolution against White House Counsel Quinn was scheduled for 
a vote on the floor of the House, the White House delivered 
1,000 of the 3,000 pages of documents responsive to the 
committee's subpoenas over which it previously had claimed 
executive privilege. The White House also provided a privilege 
log for documents it continued to withhold. As a result, the 
committee postponed the contempt vote in order to review the 
materials produced.
    A critical document long-withheld from the committee under 
unjustified claims of executive privilege was turned over in 
the May 30 production. The committee previously had been 
unaware of the existence of this document: the White House's 
December 1993 request of Billy Dale's confidential FBI 
background file--ostensibly made because Dale was being 
considered for ``Access (S)''--7 months after Dale was fired 
from the Travel Office. This request was made even as the 
Justice Department was conducting a criminal investigation of 
Dale and its discovery led to revelations that the Clinton 
administration wrongly had requested and received hundreds of 
confidential FBI background files of former Reagan and Bush 
administration officials. (See Part Two I.A.3.c. above.)
    After further discussion and correspondence, the White 
House and the committee came to an agreement whereby the White 
House produced to the committee some 1,400 of the remaining 
2,000 pages of documents on August 15, 1996.

                           B. BUDGET PROCESS

    House Rule X(1)(g) (4) and (6) confers upon the Committee 
on Government Reform and Oversight jurisdiction over, 
``[b]udget and accounting measures, generally,'' and ``[t]he 
overall economy, efficiency and management of government 
operations and activities.'' As explained in the Statement of 
Understanding between the Committee on Government Reform and 
Oversight and the Committee on the Budget, the Committee on 
Government Reform and Oversight's jurisdiction includes, 
``process changes in federal rescission or impoundment 
authority; measures relating to Executive agency budgeting, 
including the submission of agency performance reports or 
plans, or agency regulatory plans, reports or reviews as part 
of the budget process; measures relating to Executive agency 
financial management; and process changes leading to the 
required adoption of a Federal capital budget or joint capital/
operating budget which accounts for the fixed assets of the 
United States.'' In addition, the committee enjoys jurisdiction 
over ``special funds, accounts or spending set asides created 
to reduce the deficit.''
    The Committee on Government Reform and Oversight exercised 
its budget jurisdiction extensively in the 104th Congress. In 
addition to leading the campaign to enact the long-awaited line 
item veto, the committee held hearings on performance-based 
budgeting, financial and accounting improvements, entitlement 
spending reductions, regulatory accountability and cost-benefit 
comparisons, and biennial budgeting proposals.
    The committee was extensively involved in the development 
of the congressional budget resolutions for fiscal years 1996 
and 1997, H. Con. Res. 67 and H. Con. Res. 178. Working with 
the House and Senate Budget Committees, the Senate Committee on 
Governmental Affairs, and the congressional leadership, the 
committee developed a plan for mandatory spending reforms 
within its jurisdiction totaling savings of more than $10 
billion through fiscal year 2002. The committee's entitlement 
spending reduction package included: Members and staff 
congressional pension reforms to provide parity between the 
congressional and civil service retirement systems; a 
continuation of existing the 3 month cost of living increase 
(COLA) delay for Federal retirees; a 0.5% increase in the 
contribution Federal employees make to their own individual 
retirement accounts; a 1.51% increase in the employing agency 
contribution to the retirement accounts of their Civil Service 
Retirement System (CSRS) employees; and a repeal of the 
transitional appropriations currently provided to the U.S. 
Postal Service. The committee package also included a proposal 
to reform the McKinney Homeless Assistance Act to permit 
homeless assistance organizations to obtain preferential access 
to surplus Federal property. Pursuant to the directions of the 
congressional budget resolution, the Government Reform and 
Oversight Committee's reconciliation package was included in 
H.R. 2491, the Balanced Budget Act of 1995. The bill was vetoed 
by the President on December 6, 1995. It is the committee's 
firm intent to pursue similar reforms in the 105th Congress.
    The committee also considered legislation to require the 
President to submit a Congressional Budget Office (CBO) scored 
balanced budget for fiscal year 1997. The proposal was included 
in H.J. Res. 134, which was signed into law on Jan. 6, 1996. 
Public Law 104-94. Further attempts to require the permanent 
submission of annual balanced budget plans by the President 
were considered in conjunction with H.R. 4278, the Omnibus 
Consolidate Appropriations Act of 1997, but were rejected by 
the Senate.
    Finally, the committee considered proposals to provide for 
a deficit reduction ``lock box'' account, to set aside savings 
gained through appropriation bill amendments for the purposes 
of deficit reduction. The legislation, initially included in 
H.R. 2127, the FY 1996 Labor, Health and Human Services, and 
Education appropriations bill, was vetoed by the President. The 
lockbox proposal was then attached by the House to H.R. 3019, 
to provide further Omnibus Continuing Appropriations for 1996. 
While the provision was dropped by the Senate, the committee 
expects to revisit the measure in the 105th Congress.

            C. FEDERAL PROCUREMENT POLICY--AN ERA OF REFORM

    Each year the government spends about $200 billion on goods 
and services, ranging from weapons systems to computer systems 
to everyday commodities. Studies have shown that the current 
system has cost too much, involved too much red tape, and ill-
served the taxpayer and industry.
    In December 1994, a report prepared for the Secretary of 
Defense found that, on average, the government pays an 
additional 18 percent on what it buys solely because of 
requirements it imposes on its contractors. That confirmed the 
average estimate by major contractors surveyed by the General 
Accounting Office that the additional costs incurred in selling 
to the government are about 19 percent. While some of the 
government's unique requirements certainly have been needed, we 
clearly are paying an enormous premium for them--billions of 
dollars annually.
    And that has been only part of the government's inflated 
cost of doing business--for it has included only what is paid 
to contractors, not the cost of the government's own 
administrative system. The government's contracting officials 
have been confronted with a daunting array of mandates of their 
own, often amounting to step-by-step prescriptions that 
increase staff and equipment needs. This rigid, rule-based 
process has left little room for the exercise of business 
judgement, initiative, and creativity and often has forced the 
professional staff to assume the role of box-checking robots.
    These requirements have been well-intentioned. From the 
time the Second Continental Congress established a Commissary 
General in 1775, the procurement system commanded the attention 
of both public officials and the American public. Unfortunately 
and all too often, the attention has focused on individual 
abuses rather than the operations of the system as a whole. In 
response, Congress and the executive branch have maintained a 
constant effort to correct wrongs or add particular 
initiatives. Inevitably, after a while, often-uncoordinated 
incremental efforts will tilt any system out of balance, until 
the cost of requirements outweigh benefits. And, over the 
years, that has become the state of our procurement system--an 
unbalanced mass of requirements that lead, simply, to too much 
money for too little product. Mr. Philip K. Howard in an 
editorial on the government's procurement process in the Wall 
Street Journal aptly described the state of the current process 
as follows:

        The rigid procedures designed to prevent squandering of 
        public money, as it turns out, function almost 
        perfectly to guarantee that the money gets squandered.

    The committee recognized that it was critical in these 
times of declining budgets to bring the government's 
procurement system into balance.
    The 103d Congress took a significant step toward 
establishing a more commercial-like Federal contracting system 
with the passage of the Federal Acquisition Streamlining Act of 
1994 (FASA) (Public Law 103-355). FASA established a preference 
for commercial items and simplified procedures for contracts 
under $100,000, as well as addressing a wide spectrum of issues 
regarding the administrative burden--on all sides--associated 
with the government's specialized requirements. These ranged 
from socio-economic laws to the government's oversight tools, 
which over the years have resulted in major differences between 
the government and commercial marketplaces.
    But FASA went only part of the way, and as important as 
that effort was, the committee recognized that more needed to 
be done, particularly in these times of declining budgets, to 
bring the government's procurement system into balance. In 
addition to the fundamental legislative reforms made by the 
Clinger-Cohen Act of 1996 (see Part Two I.A.4.d.), the 
following issues were initiated/completed by the committee to 
foster a procurement system which allows industry sellers and 
government buyers to offer and acquire, respectively, maximum 
value for the taxpayer.

1. Oversight of the Implementation of the Federal Acquisition 
        Streamlining Act of 1994 (FASA) (Public Law 103-355).

    a. Summary.--At the time of its enactment, the Federal 
Acquisition Streamlining Act of 1994 (FASA) (see House Report 
103-884) was considered the most comprehensive procurement 
reform effort in more than a decade. Yet, the committee 
recognized that its true impact would not be realized fully 
until the regulations were written to implement the new law. 
The committee believed that much of the hard work was left to 
the executive branch in seeing through the goals and purposes 
of FASA. The committee expected that the regulation writers 
would not only execute the letter of the law fully and 
promptly, but would also carry out the spirit of what Congress 
intended. This included not just writing and revising 
regulations pursuant to the new law, but looking at and 
attacking internal agency regulations and procedures which are 
contrary to FASA's letter and spirit.
    b. Hearings.--On February 21, 1995, the committee met to 
review the Clinton administration's implementation plan for 
FASA, begin the process of determining if the regulations will 
carry out the spirit of what was intended by Congress, and 
allow industry and other interested parties to comment on the 
regulatory implementation for the record. The committee 
received testimony from administration witnesses, Steven 
Kelman, Administrator for Federal Procurement Policy at the 
Office of Management and Budget; and Mrs. Colleen Preston, the 
Deputy Under Secretary of Defense for Acquisition Reform, 
regarding the progress-to-date on the implementation of FASA. 
Industry representative submitted written testimony for the 
record.
    Dr. Kelman noted that the ``message of reform'' was being 
heard by the administration and that the follow-on rules to 
FASA were being written on an accelerated schedule. He stated 
that 4 interim rules had been published, 15 proposed rules were 
published, and 6 were expected to be released in the near 
future. Mr. Kelman also discussed the establishment of Process 
Action Teams, which were created by both he and Mrs. Preston in 
order to expedite the regulatory writing process and FASA 
implementation.
    Mrs. Preston focused on the need for further reform so that 
agencies such as the Department of Defense and others could be 
``world class customers and suppliers.'' She emphasized the 
need for continuing the effort to remove government-unique laws 
and regulations from the acquisition of commercial products. 
She also stated that the government must move from a risk 
adverse system to one which understands and manages risk.

2. Review of the Federal Government's Acquisition Strategy Regarding 
        the Post Federal Telecommunications System 2000 Program (Post-
        FTS2000).

    a. Summary.--Currently the Federal Telecommunications 
System 2000 (FTS 2000) is the government's long distance 
telecommunications service. This multi-billion dollar program 
provides telecommunications services to approximately 1.7 
million users across the Federal Government. Through the hard 
work of the General Services Administration (GSA) and an 
interagency group of information resources management and 
telecommunications professionals, the current FTS 2000 program 
was largely successful in leveraging the emerging competition 
in long-distance markets to save billions of dollars over GSA's 
prior Federal Telecommunications Service network. The current 
FTS 2000 contracts which were awarded in 1988 will expire in 
December 1998, affording the government great opportunities and 
challenges as it prepares to transition to a Post-FTS2000 
environment.
    Clearly, the telecommunications industry has changed 
significantly since the initial contracts were awarded: the 
array of available commercial services is broader; the number 
of service providers has increased; and the availability and 
nature of the underlying technologies themselves continue to 
change. The government's appetite for communications services 
has changed as well, with demand for more advanced data and 
video services outdistancing growth in basic voice 
communications services. Therefore, it is imperative that the 
Post-FTS2000 program embrace a sensible acquisition approach 
based on commercial practices and maximize the use of 
commercially-available services to meet agency needs while 
following an appropriate strategy for managing complex 
government operations.
    Monitoring the development of the next phase procurement 
for the Federal Government's telecommunications system ensures 
that the Federal Government receives technically-effective and 
cost-efficient telecommunications services in a Post FTS2000 
environment. It allows the government and the taxpayer to take 
maximum advantage of the economies associated with increasing 
competition in the new telecommunications environment and reap 
the benefits for the best prices and excellent service quality 
which helps the executive agencies to do their jobs of serving 
the citizens more efficiently and effectively.
    While GSA spent much time with the interagency group and a 
broad cross-section of industry preparing an acquisition 
strategy, initial proposals failed to take full advantage of 
telecommunications reform along with today's rapidly changing 
landscape of advancing technologies, new services, and emerging 
service providers. Through months of working with this 
committee, GSA ultimately developed a proposal which addressed 
many of the issues raised by this committee and others and 
which will enable the government to take full advantage of 
rapid changes in the telecommunications services environment. 
GSA is proceeding with this Post-FTS2000 acquisition strategy.
    b. Hearings.--On March 21, 1995, the Subcommittee on 
Government Management, Information, and Technology held a 
hearing to solicit comment from the General Accounting Office, 
the long distance carriers, system integrators and the Regional 
Bell Operating Companies on the initial Post-FTS2000 
acquisition strategy developed by the government. The General 
Accounting Office raised several areas of concern and testified 
that these concerns must be addressed before proceeding to the 
next phase of the program. Other witnesses made reference to 
the strategy as presented and gave comment according to the 
particular segment of the industry.

3. Review of the Department of Defense's Acquisition of the Defense 
        Information Systems Network (DISN).

    The Defense Information Systems Network (DISN) is the 
Department of Defense's (DOD) worldwide telecommunications 
infrastructure that provides the end-to-end information 
transfer network for supporting military operations. DISN must 
be transparent to its users, facilitate the management of 
information resources, and be responsive to national security 
and defense needs under all conditions in the most effective 
manner. DOD has described its objective as being able to 
provide military personnel with a secure, seamless, network 
capable of operating across strategic and tactical 
communications boundaries. Global interoperability and 
information warfare-protection are two of DISN's key features 
to deliver protected voice, video, data, and imagery services.
    Since DISN will be the information transport vehicle for 
the next century, its acquisition strategy was designed to 
introduce new cost-effective technology, including space-based 
capabilities, on a global basis over the life of the system. 
This strategy will allow DOD to manage DISN services while 
maintaining a balance in three areas: exploitation of leading-
edge technology opportunities, consolidation of geographically 
disparate network, and operation within fiscal constraints.
    Given the importance of consolidating and modernizing 
defense telecommunications capabilities to meet the emerging 
national security challenges facing the Nation, the committee 
along with the Committee on National Security, was active in 
urging DOD to move forward without delay on the DISN program. 
The committees recognized that a multitude of providers now 
compete to offer an increasingly broad array of commercially-
available telecommunications services and that competition 
continues to drive the development and deployment of advances 
in the underlying technologies used to deliver enhanced 
performance and new capabilities. Therefore, in letters and 
through a series of meetings, the committees urged DOD to 
transition to DISN on schedule in order to ensure the 
availability of state-of-the-art telecommunications to meet the 
Nation's defense needs.
    To date, DOD is proceeding and has awarded the contracts 
for global support services (valued at $2 billion) and 
switching services for the continental United States (valued at 
$400 million). It is expected that in the early part of 1997, 
DOD will award the contracts for transmission services for the 
continental United States (valued at $5 billion) and global 
video services (valued at $125 million).

4. Review of the General Services Administration's (GSA) Management of 
        the Multiple Award Schedule (MAS) Program.

    The Multiple Award Schedule (MAS) Program is the primary 
and simplified method to enable Federal agencies purchase 
relatively small quantities of commercially-available, common 
use, off-the-shelf items and services while securing the 
benefits of the Federal Government's aggregate purchasing 
volume. The General Services Administration (GSA) awards 
contracts to multiple suppliers of similar items. Federal 
agencies order products and services through the MAS Program at 
prenegotiated prices commensurate with the vendors' commercial 
discounts granted for comparable purchase volumes, given terms 
and conditions, and pay vendors directly for their purchases. 
There are 121 schedules which generate an annual market of $5-7 
billion. The MAS program includes 4,000-5,000 contractors, two-
thirds of which are small businesses.
    The efficiency and effectiveness of the MAS Program has 
been debated since its inception. After many studies by GAO, 
reviews by Congress, and input from industry, GSA made many 
significant changes to the MAS Program. These changes will 
allow the MAS Program to meet a broader range of customer 
requirements at a time when agencies are looking for easy to 
use, low cost procurement solutions. Among these were: 
eliminating the contract-wide price reduction clause, changing 
the price reduction clause to enable contractors to offer 
reduced prices to Federal agencies on a spot basis; and 
removing the ``maximum order limitation'' to permit agencies to 
place large-scale orders through the schedule program. The 
committee supported and urged changes like these to increase 
the use of the MAS program as a governmentwide vehicle for the 
acquisition of commercial products and services.
    However, GSA also proposed to established some rules which 
would permit post-award audits of commercial products under the 
MAS program. The committee, along with the Committee on 
National Security, concluded that this would be inappropriate 
and contrary to the intent of the Clinger-Cohen Act. The 
committees believed that, when Congress repealed the authority 
of Federal agencies to perform post-award audits of suppliers 
of commercial items in the Clinger-Cohen Act, Congress clearly 
did not intend Federal agencies to subsequently determine 
though agency supplements to the Federal Acquisition Regulation 
whether and to what extent post award audit access is 
appropriate on commercial item contracts. The committees' 
opposition to the proposed rule was communicated to the Office 
of Management and Budget through letters and meetings. A final 
rule on this issue is pending at GSA.

5. Oversight of Reform of the Acquisition System of the Federal 
        Aviation Administration (FAA).

    As a result of the steady growth in air traffic operations 
and the failures of aging equipment in the air traffic control 
system, the Federal Aviation Administration's (FAA) timely 
acquisition of new equipment became increasingly critical for 
aviation safety and efficiency. However, the procurement system 
at FAA had many problems which raised questions about the 
agency's ability to field new equipment within cost, schedule, 
and performance parameters.
    Thus, the reform of FAA's procurement system became the 
focus of much debate. The FAA claimed it was choking from the 
mandated governmentwide procurement laws and argued that its 
failures in its procurements of high technology equipment could 
be solved if only it could break clear of the Federal 
procurement system. Some Members of Congress disagreed and 
believed that FAA's failures in the past were due to its own 
management problems and were not due to Federal procurement 
laws.
    Nonetheless, the Department of Transportation 
Appropriations Act for Fiscal Year 1996 (Public Law 104-50) 
included language which gave FAA the authority to establish a 
completely new acquisition management system. The law exempted 
the FAA from virtually all Federal procurement laws and 
regulations. Prior to putting in place its new system by the 
April 1, 1996 effective date, FAA met with the committee and 
briefed the committee on its activities. Review of the new 
acquisition management system continues.
    In addition, H.R. 2276 which established FAA as an 
independent agency exempted FAA from the same laws and 
regulations as did Public Law 104-50. While H.R. 2276 was 
passed by the House on March 12, 1996, it was never considered 
by the Senate. However, during consideration of H.R. 2276 in 
the House, the committee expressed its support for fundamental 
government reforms generally and FAA procurement reform 
specifically.

        D. GOVERNMENT PERFORMANCE AND RESULTS ACT OF 1993 (GPRA)

    On March 6, 1996, the Senate Governmental Affairs Committee 
joined the committee in holding an informational hearing on the 
purpose and foundation for the Government Performance and 
Results Act of 1993 (Public Law 103-62). The purpose of the 
hearing was to explore the foundations of the act and draw 
parallels between previous experiments with performance 
measurement in foreign governments and at the State and 
municipal level and its application at the Federal level.
    The hearing consisted of two panels. The first witness was 
Comptroller General of the General Accounting Office, Charles 
Bowsher. Mr. Bowsher gave testimony on the Government 
Performance and Results Act, its purpose and provisions. He 
also emphasized the importance of continued Congressional 
involvement to the long-term success of the act. Noting that 
consultation with Congress is mandated by the statute, the 
Comptroller General stressed that the act could become a 
meaningless management exercise unless the information prepared 
by agencies is a decisionmaking tool for members and 
committees. Mr. Bowsher took numerous questions from the 
Members of the House and Senate.
    The second panel began with testimony from Dr. Donald F. 
Kettl, senior fellow of the Brookings Institution and professor 
of Public Policy and Political Science at the University of 
Madison as Wisconsin. Dr. Kettl advised the committees that due 
to the current fiscal constraints, government needs to increase 
productivity in order to meet current service needs. One 
promising way to meet increased demands with reduced, stable on 
only slowly increasing resources is through managing for 
performance. This technique has a very long time-horizon, 
however, and the Federal Government is at least a decade behind 
New Zealand, Australia and Great Britain, which have been 
experimenting with performance measurement and management. 
Reports from overseas indicate that those governments are still 
working with great diligence to master this extremely complex 
task. Finally the committees heard from the Commonwealth of 
Virginia, the city of Phoenix, AZ and the government of 
Australia each of which has been measuring government 
performance as a means to increase government efficiency and 
citizen satisfaction with government services.
    The hearing was intended to be the first of three hearings 
on GPRA. Two additional hearings were to have reviewed the 
status of GPRA pilot projects and departmental progress in 
implementing the act. The sequence of events involving the FBI 
files scandal preempted the committees' planned follow-on 
hearings.
                           II. Investigations

             A. INVESTIGATIONS RESULTING IN FORMAL REPORTS

               GOVERNMENT REFORM AND OVERSIGHT COMMITTEE

                 Hon. William F. Clinger, Jr., Chairman

1. ``A Citizen's Guide on Using the Freedom of Information Act and the 
        Privacy Act of 1974 To Request Government Records,'' House 
        Report No. 104-156, June 22, 1995, First Report by the 
        Committee on Government Reform and Oversight.
    a. Summary.--The Freedom of Information Act (FOIA), enacted 
in 1966, presumes those records of the executive branch of the 
U.S. Government are accessible to the public. The Privacy Act 
of 1974 is a companion to FOIA and regulates Government agency 
recordkeeping and disclosure practices. The Freedom of 
Information Act provides that citizens have access to Federal 
Government files with certain restrictions. The Privacy Act 
provides certain safeguards for individuals against an invasion 
of privacy by Federal agencies and permits them to see most 
records pertaining to them maintained by the Federal 
Government.
    A Citizen's Guide on Using the Freedom of Information Act 
and Privacy Act of 1974 To Request Government Records, House 
Report 104-156, dated June 22, 1995, and issued by the House 
Committee on Government Reform and Oversight, explains how to 
use the two laws and serves as a guide to obtaining information 
from Federal agencies. The complete texts of the Freedom of 
Information Act, as amended (5 U.S.C. 552), and the Privacy 
Act, as amended (5 U.S.C. 552a), are reprinted in the committee 
report.
    b. Benefits.--Federal agencies use the Citizen's Guide in 
training programs for government employees who are responsible 
for administering the Freedom of Information Act and the 
Privacy Act of 1974. The Guide enables those who are unfamiliar 
with the laws to understand the process and to make requests. 
In addition, the complete text of each law is included in an 
appendix. The Government Printing Office and Federal agencies 
subject to the Freedom of Information Act and the Privacy Act 
of 1974, distribute this report widely. The availability of 
these acts to all Americans allows executive branch information 
to be widely available.
    c. Hearings.--None.
2. ``Creating a 21st Century Government,'' House Report No. 104-434, 
        December 21, 1994, Second Report by the Committee on Government 
        Reform and Oversight, Together With Additional Views.
    a. Summary.--The purpose of the Government Reform and 
Oversight Committee field hearings on ``Creating a 21st Century 
Government'' was to learn from the American public, State and 
local government officials and the private sector their 
suggestions and experiences on creating innovative, 
streamlined, and cost effective organizations. The committee 
intends that Congress learns from and adopt some of these 
successful strategies in an effort to restructure the executive 
branch and better meet the needs of Americans today and in the 
21st century.
    In its effort to hear from people outside Washington, DC, 
the committee invited witnesses from State and local 
government, the private sector, and the American public to 
testify or participate in an open forum in which members could 
hear their experiences and ideas with regard to organizational 
downsizing. Members of the committee traveled to Parma Heights, 
OH; Upper Montclair, NJ; Federal Way, WA; Long Beach, CA; 
Albuquerque, NM; and Charlotte, NC. Each one of these cities 
has recently challenged inefficient government by revitalizing 
its main functions in order to survive, compete, prosper and 
provide for the needs of its citizens. Identifying what has 
worked, what has hindered their reorganization efforts and how 
best to implement a plan will aid congressional initiatives to 
revitalize government at the Federal level.
    State and local government witnesses, business 
representatives, and the public all advocate looking at each 
Federal department and agency to determine which of the 
functions it provides are vital to the service delivery needs 
of Americans and which can be better carried out by State or 
local governments or the private sector. The widely shared view 
was that the Federal Government is not meeting the needs of it 
customers, the American public, and is less effective, less 
efficient and more costly than it should be. It must be fixed.
    b. Benefits.--As a result of the nationwide field hearing 
series and consultation with experts in the private and public 
sectors, the committee was successful in identifying strategies 
and principles used by corporate, State and local government 
organizations in restructuring their entities, and learning how 
their most successful and creative ideas might be applied to 
the Federal Government. We now have a better understanding of 
what States and local governments expect from the Federal 
Government, what private business expects from the Federal 
Government, and most importantly the American public's thoughts 
and ideas for a more responsive Federal Government designed to 
meet their needs.
    Six fundamental points, or practices, were raised at all 
six field hearings, each to promote the efficiency, 
effectiveness, high quality and low cost of service delivery. 
The first three of these common reorganization principles in 
particular affect the culture of an organization, while the 
other three are more practical in application. The committee 
found--
          (1) Clear missions and a solid organization mission 
        statement are necessary for establishing priorities and 
        goals and maintaining focus on established objectives.
          (2) Open and honest communication with employees 
        about each step of the reorganization process is vital 
        to maintaining employee morale, as is affording 
        employees an opportunity to convey their views on 
        downsizing and reorganization.
          (3) Innovative management techniques are enabling 
        States, localities and businesses to empower employees 
        and to strip layers of bureaucratic management in favor 
        of more streamlined structures. The result has been 
        more efficient, more responsive organizations with high 
        morale and greater productivity.
          (4) Privatization is clearly one of the most 
        advocated means of taking government out of functions 
        which are not inherently governmental and which can be 
        performed more efficiently and cost-effectively by the 
        private sector.
          (5) Competitive bidding will improve service while 
        saving money. The government should be forced to 
        compete with private business for effective, efficient 
        service delivery.
          (6) The Federal Government must replace old and 
        outdated computer systems with advanced technology that 
        allows for open communication both internally and with 
        the public. Using such technology will facilitate 
        ``one-stop shopping'' and other innovations in service 
        delivery.
    The committee made the following recommendations as a 
result of its oversight findings:
          (1) Establish a citizens commission on 21st century 
        government.
          (2) Identify and remove statutory and regulatory 
        barriers to reorganization and innovation.
          (3) Increase privatization and competitive bidding.
          (4) Enlist the aid of the private sector in 
        reorganization and innovation efforts.
          (5) Restore responsibilities to the States and local 
        governments without imposing unfunded mandates.
          (6) Establish, communicate and adhere to a clear 
        mission for Federal agencies.
          (7) Maintain open lines of communication with agency 
        employees.
          (8) Promote innovation by managers and employees.
          (9) Use technology to improve service and increase 
        efficiency.
    The committee intends that Congress learn from and adopt 
some of these successful strategies and recommendations in an 
effort to restructure the executive branch to better meet the 
needs of Americans today and in the 21st century.
    c. Hearings.--Members of the committee began the ``Creating 
a 21st Century Government'' field hearing series on July 14, 
1995, in Parma Heights, OH, and continued the series in Upper 
Montclair, NJ, on September 9, 1995. The committee's following 
three hearings were held over Columbus Day weekend traveling to 
Federal Way, WA, on October 6, 1995; Long Beach, CA, on October 
7, 1995; and Albuquerque, NM; on October 9, 1995. The final 
hearing in the series was held on October 20, 1995, in 
Charlotte, NC.
3. ``Laws Related to Federal Financial Management as Amended Through 
        December 31, 1995,'' House Report No. 104-745, August 2, 1996, 
        Ninth Report by the Committee on Government Reform and 
        Oversight.
    a. Summary.--This report outlines the laws and procedure 
related to Federal financial management. Included in the report 
are sections related to money and finance (Title 31, U.S.C.); 
general provisions (Title 1, U.S.C.); the Congress (Title 2, 
U.S.C.); government organization and employees (Title 5, 
U.S.C.); commerce and trade (Title 15, U.S.C.); Postal Service 
(Title 39, U.S.C.); public buildings, property, and works 
(Title 40, U.S.C.); public contracts (Title 41, U.S.C.); and 
public printing and documents (Title 44, U.S.C.). Also included 
in the report are the Debt Collection and Improvement Act of 
1996, the Single Audit Act amendments of 1996 and other major 
laws on financial management.
    b. Benefits.--The Committee on Government Reform and 
Oversight believes that effective financial management is 
critically important in making worthwhile decisions on the use 
of public resources in support of the well-being and security 
of the American taxpayer. This report helps fulfill the 
committee's oversight responsibility and serves as a valuable 
reference guide in assisting Congress, Federal entities, and 
all others interested in good stewardship of Federal resources.
    c. Hearings.--None were held on this measure.
4. ``Sampling and Statistical Adjustment in the Decennial Census: 
        Fundamental Flaws,'' House Report No. 104-821, September 24, 
        1996, Fourteenth Report by the Committee on Government Reform 
        and Oversight, Together with Additional and Dissenting Views.
    a. Summary.--Since 1994, the Subcommittee on National 
Security, International Affairs, and Criminal Justice and the 
full committee have been conducting an investigation into the 
planning and preparation for the 2000 Decennial Census. Based 
on this study and one subcommittee hearing and two full 
committee hearings, the committee adopted its fourteenth report 
to the 104th Congress on September 24, 1996.
    The Decennial Census is mandated by the Constitution in 
order to apportion the Congress. Census data are used by every 
State for congressional and State redistricting. They are also 
used to enforce the Voting Rights Act. Numerous Federal and 
State programs, distributing billions of dollars each year, use 
Decennial Census data, or the intercensal estimates derived 
therefrom, for their implementation.
    In 1995, the committee learned that the Census Bureau was 
seriously considering dramatic changes to its approach in 
taking the Decennial Census of the population. On February 28, 
1996, the U.S. Department of Commerce and the Bureau of the 
Census publicly announced their formal plans for a ``re-
engineered 2000 Census.'' The plans call for the use of 
statistical methods in two separate instances: (1) to sample 
and estimate the final 10 percent of the population failing to 
respond in the actual enumeration (``sampling''), and (2) to 
use a separate sample of houses to estimate those persons 
missed in the actual enumeration and the sample for non-
response and revise it accordingly (``adjustment'').
    Statistical techniques have been used by the Census Bureau 
to assess the accuracy of census counts since 1950, but have 
never been used to ``complete'' and/or ``correct'' the original 
number for use in apportioning Congress.
    After the Secretary of Commerce decided in July 1991 not to 
make a statistical adjustment to the 1990 Census, over 50 
lawsuits erupted, culminating in the 1995 case considered by 
the Supreme Court, United States v. City of New York. The 
Court's decision, handed down in March 1996, upheld the 
Secretary's decision not to adjust the 1990 census.
    The report finds that the problems that surrounded the 
issue of statistical adjustment in the 1990 Census also plague 
the plans for the 2000 Census. This is compounded by the plans 
to incorporate sampling to complete the actual enumeration. 
Specific findings include:
          1. Sampling/statistical adjustment are inherently 
        problematic given the subjectivity in the various 
        decisions comprising the methodology.
          2. The legal provisions that concern the use of 
        sampling for apportionment purposes, both in the 
        Constitution and in Federal law, are variously 
        interpreted.
          3. The inherent uncertainties of sampling/statistical 
        adjustment may undermine public confidence in the 
        Decennial Census and reduce public participation.
          4. The sampling method for nonresponse follow-up 
        introduces additional error into the process and may 
        compromise the accuracy of small-area data which are 
        important for congressional and State legislative 
        redistricting.
          5. The complexity of the two different sampling 
        techniques being planned for the 2000 Census adds a 
        great deal of risk to the operational feasibility of 
        the Bureau's current approach.
    Based on the committee's findings, the committee made the 
following recommendations:
          1. Congress should work to clarify existing Federal 
        statutes with regard to the use of sampling to make 
        statistical adjustments to the census for apportionment 
        purposes.
          2. The Bureau should not use sampling methods to 
        complete or adjust the actual enumeration of the 2000 
        Census which is constitutionally mandated for purposes 
        of apportionment.
          3. The Department of Commerce and the Bureau of the 
        Census should prioritize the constitutional mandate of 
        the Decennial Census--apportionment of the House of 
        Representatives.
          4. The Bureau should emphasize and strengthen its 
        cooperative relationships with State and local elected 
        officials, as well as members of local organizations, 
        who are vital in helping increase response rates to the 
        Decennial Census.
          5. The Bureau should strengthen its plans for a 
        thorough quality check of the 2000 Census and maintain 
        open access to all processes for internal and external 
        review and analysis.
    b. Benefits.--The report sets aside political 
considerations regarding the winners and losers in an 
adjustment situation and addresses the problems with sampling 
and adjustment on their technical merits. In laying important 
groundwork regarding the technical problems with sampling and 
statistical adjustment in the Decennial Census, the report 
could provide the necessary basis and justification for taking 
legislative action in future Congresses. The report also 
represents an important marker in Federal legislative history 
regarding the issues of sampling and statistical adjustment.
    c. Hearings.--On October 25, 1995, Congressman William H. 
Zeliff, Jr., chairman of the Subcommittee on National Security, 
International Affairs, and Criminal Justice, held an oversight 
hearing entitled, ``Oversight of the Census Bureau: Preparation 
for the 2000 Census'' to examine testimony from Census Bureau 
officials regarding their plans for conducting the 2000 
Decennial Census. Witnesses included Dr. Martha Riche 
(Director, Bureau of the Census, U.S. Department of Commerce), 
Francis DeGeorge (Inspector General, U.S. Department of 
Commerce), and Nye Stevens (Director of Federal Management and 
Workforce Issues, U.S. General Accounting Office). At the 
hearing, the Bureau announced a number of new initiatives, 
including the use of statistical sampling to complete the 
actual enumeration.
    On February 29, 1996, the Committee on Government Reform 
and Oversight held a hearing ``Census 2000: Putting Our Money 
Where It Counts'' to gather testimony from Members of Congress 
and outside experts regarding the Bureau's new methodology. 
Witnesses included Senator Herb Kohl (D-WI), Congressman Thomas 
Sawyer (D-OH), Congressman Thomas Petri (R-WI), Bruce Chapman 
(president, Discovery Institute, Seattle, WA), Dr. Barbara 
Bailar (vice president, Survey Research, National Opinion 
Research Center), Dr. Steve Murdock (director, Department of 
Rural Sociology, Texas A&M University), Dr. Kenneth Wachter 
(professor of statistics and demography, University of 
California at Berkeley), Dr. Charles Schultze (senior fellow, 
the Brookings Institution, and Dr. James Trussell (director, 
Office of Population Research, Princeton University).
    On June 6, 1996, the Committee on Government Reform and 
Oversight held another hearing, ``Census 2000: The Challenge of 
the Count'' to air questions and concerns about statistical 
methods planned for the Census 2000. The witnesses were Dr. 
Everett Ehrlich (Undersecretary of Commerce for Economic 
Affairs, U.S. Department of Commerce), and Dr. Martha Riche 
(Director, Bureau of the Census, U.S. Department of Commerce). 
Congressman Thomas Petri delivered a brief statement on his 
bill, H.R. 3589, to prohibit the use of sampling in the 2000 
Census. However, he did not receive questioning by members of 
the committee.
5. ``Investigation of the White House Travel Office Firings and Related 
        Matters,'' House Report No. 104-849, September 26, 1996, 
        Fifteenth Report by the Committee on Government Reform and 
        Oversight, Together with Minority and Additional Views.
    a. Summary.--On May 19, 1993, the Clinton administration 
fired seven long-time employees of the White House Travel 
Office and ordered them to depart the White House premises in 2 
hours. Then-White House press secretary Dee Dee Myers 
simultaneously--and inappropriately--announced a criminal 
investigation of the Travel Office by the FBI. The Clinton 
administration replaced the Travel Office employees with 
employees of World Wide Travel, the Clinton/Gore '92 campaign 
travel agency. World Wide Travel departed the White House 
Travel Office within 2 days as a firestorm of press and public 
criticism over the firings engulfed the White House. World Wide 
was replaced by a combination of government workers and 
American Express personnel.
    Various aspects of the Travel Office matter were 
investigated by the White House, the Justice Department Office 
of Professional Responsibility and Public Integrity Division, 
the FBI, the General Accounting Office and the Internal Revenue 
Service. Individually and collectively, the resulting reports 
raised more questions than they answered. For example, in an 
October 7, 1994, letter to then-Chairman Conyers of the 
Government Operations Committee, Ranking Minority Member 
William F. Clinger, Jr., and 16 other House Members requested 
hearings into the Travel Office matter. This request was 
accompanied by a 71-page minority analysis of contradictions 
arising from or issues unaddressed by any of the previous 
reports. In response to this report, then-Chairman Conyers 
wrote then-Ranking Minority Member Clinger, ``You have raised 
serious questions about GAO's report to Congress'' and asked 
that GAO provide ``a detailed response'' to those issues.
    When Independent Counsel Fiske concluded in July 1994 that 
the Travel Office matter had been a major factor in the late 
Vince Foster's suicidal depression, it became all the more 
important to have a full understanding of what transpired at 
the White House Travel Office. Prior to Mr. Fiske's report, 
little was known of Foster's role in the Travel Office firings. 
In fact, the committee later learned that the White House had 
withheld Foster's Travel Office notebook from previous Travel 
Office investigations.
    Soon after becoming chairman of the reconstituted 
Government Reform and Oversight Committee, Mr. Clinger 
announced that the committee would investigate the Travel 
Office matter.
    b. Benefits.--The committee resolved upon the following 
findings and recommendations.

                                Findings

    1.) Plans to fire the White House Travel Office employees 
and replace them with campaign personnel were in place from the 
earliest days of the Clinton administration;
    2.) Harry Thomason, who had a financial stake in the travel 
business, instigated the firings. Mr. Thomason's personal and 
financial interests in the Travel Office made it clearly 
inappropriate for him to have any involvement in the matter;
    3.) President Clinton approved Harry Thomason's ``Image 
Project'' at the White House, giving Thomason an ``Official 
Status'' which facilitated Thomason's efforts to obtain 
lucrative government contracts;
    4.) Harry Thomason abused his official status and White 
House access at a time when he had a financial stake in the 
travel business. Mr. Thomason's activities at the White House 
made him a special government employee to whom conflict of 
interest laws applied;
    5.) The White House Communications Office, in conjunction 
with the White House Counsel's Office, publicly accused the 
Travel Office employees of criminal conduct and misused and 
manipulated the FBI to further their political agenda;
    6.) President Clinton inappropriately allowed his cousin 
Catherine Cornelius to remain in a position where she had a 
clear conflict of interest. Cornelius pursued an investigation 
of employees of an office in which she coveted the top job and 
for which she planned a reorganization;
    7.) Mrs. Clinton, acting on Harry Thomason's baseless 
allegations of wrongdoing against the Travel Office employees, 
exerted pressure on senior White House staff to fire the Travel 
Office employees;
    8.) Associate White House Counsel Bill Kennedy misused the 
FBI by repeatedly invoking concerns at the ``Highest Levels'' 
of the White House in meetings with the FBI;
    9.) White House officials covered-up the real reasons for 
the Travel Office firings. The firings were not based on the 
Peat Marwick review but rather were decided before Peat Marwick 
examiners ever set foot inside the White House;
    10.) The White House misrepresented the Peat Marwick 
review. It was neither an audit nor independent and was 
directed by a White House which did not want an audit to be 
conducted;
    11.) The FBI allowed the White House to control its 
investigation;
    12.) The FBI mishandled the Travel Office investigation 
from the beginning, allowing the White House to control the 
investigation. The FBI did not adequately secure Travel Office 
records in a timely fashion;
    13.) The White House engaged in a conspiracy of silence of 
the true story behind the firings from the very beginning for 
damage control purposes;
    14.) President Clinton established a cover-up situation 
when he inappropriately placed Mack McLarty, the person who had 
approved the Travel Office firings, in charge of the White 
House Management Review. McLarty withheld information during 
the course of the investigation. It is inappropriate for the 
White House to investigate itself in conflict-of-interest 
matters;
    15.) The internal White House Management Review was a 
catalog of ``mistakes and deception'' which omitted 
incriminating information about the President, Mrs. Clinton and 
Harry Thomason. The White House chose to cover-up incriminating 
information for political expediency;
    16.) The White House Management Review reprimanded people 
who were only following orders of the real instigators of the 
Travel Office firings;
    17.) The White House's obstruction of the review of Vince 
Foster's documents was due in part to concerns about Travelgate 
documents in Foster's custody;
    18.) Mrs. Clinton instructed White House staff on the 
handling of Foster documents and the Foster note found on July 
26, 1993, and senior White House staff covered up this 
information and withheld it from investigators;
    19.) The Justice Department deferred to the White House 
during its investigations of the White House Travel Office and 
Harry Thomason. The Justice Department ignored the obstructive 
behavior exhibited by the Counsel's Office;
    20.) White House officials engaged in a pattern of delay, 
deceit and obstruction over the course of 3 years of 
investigations into the Travel Office and matters related to 
Vince Foster's death;
    21.) David Watkins' ``soul cleansing'' memo account of the 
Travel Office is substantially corroborated by numerous records 
and witness testimony; and
    22.) President Clinton has engaged in an unprecedented 
misuse of the executive power, abuse of executive privilege and 
obstruction of numerous investigations into the Travel Office.

                            Recommendations

    The committee recommends that:
    1.) The ``special government employee'' provisions of the 
United States Code should be reformed to prevent its 
requirements from being ignored;
    2.) The Executive Office of the President should establish 
financial and internal review controls consistent with the 
requirements of the Chief Financial Officers Act and the 
Inspector General Act, including the development of annual, 
audited financial statements of all business activities and the 
establishment of an internal review system;
    3.) The Presidential Records Act and the Federal Records 
Act should be amended to provide for jurisdiction of Federal 
courts to ensure that Government records are not unlawfully 
destroyed, but are managed and preserved as required by law;
    4.) The Office of Counsel to the President should return to 
its traditional mission of providing traditional legal counsel 
to the President and his immediate staff;
    5.) Congress should consider the feasibility of prohibiting 
the Executive Office of the President from procuring goods and 
services through its own procurement operations and requiring 
the Executive Office of the President, where possible, to 
procure using existing contracts of other agencies, such as the 
General Service Administration's Federal Supply Schedules; and
    6.) Only individuals of the highest quality and ethics 
should be employed by and volunteer services to the Government.
    c. Hearings.--The committee held three hearings on the 
White House Travel Office matter:
    1.) October 24, 1995. Testifying before the committee were 
representatives of the organizations which had prepared various 
White House Travel Office reports: Mr. John Podesta (White 
House Management Review); Ms. Nancy Kingsbury (GAO's White 
House Travel Office Operations); Mr. Michael Shaheen 
(Department of Justice Office of Professional Responsibility 
Report); Inspector Ivian C. Smith (FBI Report) and Chief 
Inspector Gary Bell (IRS Report). The committee learned in the 
course of this hearing that the scopes of all five 
investigations were limited and that the White House Management 
Review, GAO and OPR Reports in particular were denied access to 
witnesses and even knowledge of critical documents subsequently 
obtained by the committee. As a result, none of the previous 
investigations could claim to have fully accounted for the 
actions leading up to and following the White House Travel 
Office firings.
    2.) January 17, 1996. Testifying before the committee was 
former White House Director of Management and Administration 
David Watkins. Mr. Watkins testified about his own undated 
``soul cleansing'' memo, first released by the White House to 
the committee in early January 1996. In this memo, which had 
not been made available to any of the previous Travel Office 
investigations, Watkins wrote that he had fired the Travel 
Office employees in the wake of pressure by First Lady Hillary 
Rodham Clinton. Mr. Watkins stood by that characterization 
during his testimony before the committee. This appeared to 
contradict Watkins' previous statements to GAO and other 
investigators as well as Mrs. Clinton's own assertions that she 
played no role in the firings. Subsequently, these 
contradictions led to a criminal referral of Watkins to 
Independent Counsel Starr.
    3.) January 24, 1996. Testifying before the committee were: 
former White House Travel Office Director Billy Dale and Deputy 
Director Gary Wright, as well as Travel Office staffers Barney 
Brasseux, John Dreylinger, Ralph Maughan, John McSweeney and 
Bob Van Eimeren. The fired Travel Office employees addressed 
such issues as their work in the Travel Office and management 
of it, and the circumstances surrounding their firings and 
subsequent investigations and audits--or threats of same--by 
the FBI and IRS. Mr. Dale in particular addressed his 30-month 
investigation by the Department of Justice, his indictment and 
trial on two charges, and his acquittal by a jury of his peers 
in only 2 hours. Mr. Dale also strongly challenged allegations 
of mismanagement in the White House Travel Office and testified 
to the disappearance of records which he claimed would have 
exonerated him. Those records disappeared during the period 
immediately preceding the firings when Clinton administration 
staffer Catherine Cornelius was removing documents from the 
office and taking them home. The FBI did not make any effort to 
secure the Travel Office records until 3 weeks after the 
firings and 3 weeks after its criminal investigation of the 
Travel Office had begun.
    In the wake of these three hearings and the continued 
withholding of documents by the White House, it became clear 
that the Travel Office investigation could not proceed without 
the ability to depose witnesses under oath. As a result, on 
March 7, 1996, the House of Representatives approved H. Res. 
369, providing special authority to the Committee on Government 
Reform and Oversight to obtain testimony for purposes of 
investigation and study of the White House Travel Office 
matter. The Resolution was limited to provide deposition 
authority to the Committee on Government Reform and Oversight 
only for its investigation of the Travel Office matter. 
Committee investigative staff deposed more than 70 witnesses 
under this authority in the course of the Travel Office and 
related FBI background files investigations.
6. ``Federal Government Management: Examining Government Performance As 
        We Near the Next Century,'' House Report No. 104-861, September 
        28, 1996, Eighteenth Report by the Committee on Government 
        Reform and Oversight, Together with Additional and Minority 
        Views.
    a. Summary.--In mid-1996 the committee undertook to prepare 
a report that would update information available on the status 
of overall government management, both in terms of cross-
cutting and governmentwide areas of management and in specific 
programs. The report dispassionately examined mismanagement, 
waste, fraud and abuse in Federal departments and programs. 
What we found was truly alarming. The report focussed on actual 
management and accomplishments, or lack thereof, rather than on 
policy. By no means, however, should it be considered 
comprehensive. Serious management deficiencies of the executive 
branch of Government are too numerous to inventory in a single 
report. Only some of the more obvious problems facing the 
cabinet departments and several independent agencies were 
reviewed.
    Some of the problems reviewed were unique to their 
departments, such as the failure of the Department of Labor to 
focus sufficient management resources on eliminating organized 
crime in labor unions, or the rising delinquency rates in 
agricultural loans managed by the U.S. Department of 
Agriculture. Other problems, such as mismanagement of 
contracts, abuses of the personnel system and failure to 
collect debts owed the Federal Government can be found in 
almost all departments and agencies.
    The report was initiated to raise the visibility of weak 
management practices, the lack of oversight and inconsistency 
in evaluating the effects of agency actions in the Federal 
Government. It briefly reviewed the administration's highly 
publicized National Performance Review (NPR), which was 
developed to make government ``work better, and cost less.'' 
The NPR is clearly a laudable initiative, but to date, has 
produced few concrete results.
    On the positive side, the 104th Congress enacted 
legislation that, if implemented effectively, should make 
specific improvements in problem areas of the Federal sector. 
For example, comprehensive procurement reform, the Unfunded 
Mandates Reform Act, and the Line Item Veto are a but a few of 
the refreshing management improvements enacted during the past 
2 years.
    The report concluded that public perceptions of pervasive 
waste, fraud and mismanagement in the Federal Government are, 
unfortunately, accurate. Other alarming developments in the 
Federal Government which demonstrate the need for greater 
accountability include the expansion of the General Accounting 
Office's (GAO's) ``High Risk'' list of Federal program areas. 
That catalog of government hot spots grew from 14 in 1990 to 20 
today--a net increase of six areas.
    Of the ``Twelve Worst Examples of Government Waste'' 
outlined for priority attention for this administration by a 
1992 House Committee on Government Operations majority report, 
11 are the same or worse now. Some, like the failure of the 
Internal Revenue Service and the Department of Justice to 
collect outstanding debt and the growth of health care fraud 
and abuse are much worse now. Taken individually, these items 
are cause for concern; taken in the aggregate, they are cause 
for alarm and an indication that leadership, both at the 
various agencies and at the helm of Government is lacking. With 
some exceptions, key appointees apparently do not understand or 
care to learn about effective management of their programs. 
Bureaucrats cannot operate programs in the absence of strong 
guidance and oversight at the highest levels of their 
organizations.
    Poor financial management, wasteful procurement and 
inventory practices, sloppy contract management, personnel 
abuses and manipulation of personnel rules, silly or even 
harmful regulations are among the consequences of bad 
management. Acts such as the Chief Financial Officers Act and 
the Government Performance and Results Act were passed by 
Congress in frustration over managerial anarchy and program 
disaggregation. These acts are being implemented, and Congress 
is overseeing their implementation, in an effort to counter the 
tendency of management and budget to separate at the Federal 
level, and of management to receive less and less attention 
over time. As this report amply demonstrated, the Office of 
Management and Budget exacerbated that problem by merging its 
management and budget functions. Budget Officers at OMB have 
now also been made responsible for management oversight.
    The report's quick review of fraud, abuse and mismanagement 
uncovered $350 billion in easy savings that could be achieved 
if greater resources were devoted to good management practices. 
Hundreds of billions more will be wasted in the near term on 
cost over runs, programs delays, delinquent payments, loans, 
grants and unfulfilled contracts. Additional costs for the 
Department of Energy's nuclear waste cleanup alone is estimated 
to cost as much as $350 billion.
    Although the report is critical of the executive branch of 
Government, it is not intended as an indictment of dedicated 
career civil servants, including managers, who are functioning 
in an increasingly complex and sometimes inflexible 
environment. The committee recognized that Federal employees 
are operating under greater, rather than fewer, constraints. It 
was and is the committee's intent that the report serve as a 
stimulus to discussion, an inducement to action and result in 
positive reforms in Federal management, efficiency and 
productivity.
    b. Benefits.--The rules of the House of Representatives 
give jurisdiction over general government management and 
efficiency to the Committee on Government Reform and Oversight. 
In accordance with that responsibility, the predecessor to this 
committee produced an overview of government management in 
1992. This report, entitled ``Federal Government Management: 
Examining Government Performance As We Near the Next Century,'' 
continued the committee's tradition in reporting on 
comprehensive government program efficiency and cost-
effectiveness. It is essentially a report card on the 
management practices of the first Clinton administration and 
also reviews the Vice President's National Performance Review 
(NPR), which was intended to improve government efficiency and 
morale.
    c. Hearings.--None were held.
7. ``Investigation into the White House and Department of Justice on 
        Security of FBI Background Investigation Files,'' [Interim 
        Report], House Report No. 104-862, September 28, 1996, 
        Nineteenth Report by the Committee on Government Reform and 
        Oversight, Together with Additional Views.
    a. Summary.--On May 30, 1996, in the course of its Travel 
Office investigation, the committee discovered a December 20, 
1993, White House request of Billy Dale's confidential FBI 
background file from the FBI Liaison Office. Even though it was 
dated 7 months after Dale's firing, the form indicated that the 
White House was requesting Dale's confidential FBI file because 
it was considering him for ``Access (S).'' The Dale FBI 
background file request was found in a production of 1,000 
pages of documents over which the White House previously had 
claimed executive privilege. Chairman Clinger immediately 
called on the White House and the FBI to explain why the Dale 
file had been requested by and provided to the White House at a 
time when the Justice Department was undertaking a criminal 
investigation of Mr. Dale.
    On June 5, 1996, the White House claimed the Dale request 
was made mistakenly by an unnamed file clerk. On June 6, it 
claimed that the General Accounting Office had requested the 
Dale FBI background file. The GAO denied this immediately. By 
June 7, 1996, the White House acknowledged obtaining some 338 
FBI files of former White House employees, but alleged that 
they never were read. Then Anthony Marceca, a former detailee 
hand-picked by White House Office of Personnel Security 
Director Craig Livingstone, contradicted the White House when 
he told Livingstone's attorney that he in fact read all the 
files and passed derogatory information on to Livingstone.
    The White House admitted obtaining an additional 71 
improperly sought FBI background files by June 14, 1996, as FBI 
Director Louis J. Freeh released an FBI report indicating that 
408 files were provided to the White House ``without 
justification'' and were ``egregious violations of privacy.'' 
Director Freeh added, ``The prior system of providing files to 
the White House relied on good faith and honor. Unfortunately, 
the FBI and I were victimized. I promise the American people 
that it will not happen again on my watch.''
    Also on June 14, 1996, Livingstone admitted to problems of 
his own background in a sworn deposition before the committee. 
These included problems with his employment history and the use 
of illegal drugs and gave added impetus to the still-unanswered 
question, ``Who hired Craig Livingstone?'' On June 15, 1996, 
the White House delivered a document production to the 
committee which included letters from former Associate White 
House Counsel William H. Kennedy, III, to then-Defense 
Secretary Les Aspin and others seeking the assignment of Army 
investigator Anthony Marceca to a White House detail in the 
Office of Personnel Security.
    b. Benefits.--The committee resolved upon the following 
findings and recommendations.

                                Findings

    1.) FBI background files often include the most sensitive 
and confidential personal and financial information about the 
individual being reviewed;
    2.) The White House improperly requested hundreds of 
confidential FBI background files without any justification. 
This violated the constitutional rights and privacy of many 
former Republican officials whose files improperly were 
requisitioned and reviewed by Clinton White House employees;
    3.) The White House Office of Personnel Security and the 
FBI maintained a system which allowed low level staff to access 
any file without question by the FBI. The Clinton 
administration has, on a number of occasions, failed to 
implement safeguards that would have prevented lapses in 
security at the White House and in fact exploited the FBI's 
longstanding policy of relying on the honor of White House 
employees in turning over such files;
    4.) FBI General Counsel Howard Shapiro provided 
confidential FBI law enforcement information about Mrs. 
Clinton's role in bringing Craig Livingstone into the White 
House. When Shapiro realized that the information contained in 
Livingstone's FBI background file could damage former White 
House Counsel Bernard Nussbaum and Mrs. Clinton, he immediately 
contacted the Office of White House Counsel and read verbatim 
the incriminating contents of Livingstone's file;
    5.) Once White House Special Counsel Jane Sherburne learned 
that the information contained in Livingstone's file could 
damage Nussbaum and Mrs. Clinton, Sherburne contacted Mrs. 
Clinton regarding the information;
    6.) Ms. Sherburne may have violated ethical standards by 
informing private attorneys for Nussbaum and Livingstone about 
confidential FBI law enforcement information. On the day before 
reports of his testimony before a grand jury, lawyers for 
Nussbaum were informed of evidence uncovered in a search of 
Livingstone's file that contradicted Nussbaum's testimony 
before the Committee on Government Reform and Oversight. Mr. 
Livingstone's attorneys received the same information;
    7.) White House Office of Personnel Security staff failed 
to properly secure confidential FBI law enforcement files. The 
committee was provided with testimony and evidence that staff 
and interns without the necessary clearances had access to the 
highly sensitive material in the FBI background files including 
that of more than 400 Bush and Reagan administration officials;
    8.) The FBI continued to involve itself in the 
investigation of the FBI files matter even after receiving 
notice from the Attorney General that a conflict of interest 
existed between the FBI and the White House concerning this 
matter. Mr. Shapiro notified the White House about the 
incriminating contents of Livingstone's background file before 
the committee was allowed to review it. Mr. Shapiro assisted 
the White House in preparing correspondence for the FBI 
regarding the FBI files matter and the committee's 
investigation of it;
    9.) Army detailee Anthony Marceca was given unfettered 
access to confidential FBI law enforcement files and allowed to 
remove confidential information from the White House despite 
his own inability to receive White House clearance. Marceca's 
removal of information in those files from the White House was 
inappropriate;
    10.) Without any valid basis for doing so, FBI General 
Counsel Shapiro provided the White House Counsel a pre-
publication copy of Gary Aldrich's book which the former agent 
had provided to the FBI under an employment agreement. There 
was no apparent reason for providing the manuscript to the 
White House; and
    11.) The White House asserted executive privilege over 
documents over which it had no basis for claiming privilege. 
Thousands of pages of these documents contained routine 
administrative information or communications, as opposed to 
issues of national security or others for which a claim might 
be appropriate.

                            Recommendations

    Having undertaken a preliminary investigation, the 
committee is not satisfied that the public has been provided 
the answers to many of the concerns raised by the FBI 
background files matter. This makes it imprudent to make 
recommendations at this time. The committee feels those 
individuals whose files were improperly obtained by the White 
House deserve a complete explanation of the following 
questions:
    1.) Who hired Craig Livingstone?
    2.) What list was used by the White House in requesting the 
improperly-obtained FBI background files?
    3.) Who reviewed the contents of the FBI background files 
of former Reagan and Bush administration officials?
    4.) Were the contents of the FBI background files ever 
transmitted electronically to any computer data base within or 
outside the White House complex?
    5.) What effect have the new procedures implemented by the 
Clinton administration had on the White House pass process and 
FBI background checks?
    6.) What standard procedures are in place to ensure that 
those without proper clearances do not have access to materials 
protected by the Privacy Act which are stored in the White 
House?
    7.) What policies should be implemented to ensure that FBI 
officials do not interfere with ongoing investigations outside 
the FBI's jurisdiction?
    c. Hearings.--The committee held four hearings on the FBI 
background files matter:
    1.) June 19, 1996. Testifying before the committee were 
former White House Counsels or Deputy Counsels A.B. Culvahouse 
and Richard Houser (Reagan administration), C. Boyden Gray 
(Bush administration), and former Office of Personnel Security 
Director Jane Dannenhauer and her deputy, Ms. Nancy Gemmell. 
Both Ms. Dannenhauer and Ms. Gemmell had served in the Reagan 
and Bush administrations and briefly in the Clinton 
administration. At this hearing, the care and discretion with 
which FBI background investigation files were handled in the 
Carter, Reagan and Bush administrations was established. For 
example, access to these files was strictly limited to Ms. 
Dannenhauer and one or two members of the White House Counsel's 
Office. Those with access to these files themselves had been 
cleared for such access after undergoing background 
investigations of their own. By contrast, White House interns 
were assigned to the White House Office of Personnel Security 
for the first time during the Clinton administration. These 
interns, aged 18 to 20 years old and without security 
clearances or background investigations, nonetheless had access 
to confidential FBI background files in the Clinton White 
House.
    2.) June 26, 1996. Testifying before the committee were: 
former Clinton administration Director of Personnel Security D. 
Craig Livingstone; former Clinton administration detailee 
Anthony Marceca; former Office of Personnel Security staffer 
Lisa Wetzl; former White House Counsel Bernard W. Nussbaum, and 
former Associate White House Counsel William H. Kennedy, III. 
At this hearing, Mr. Livingstone formally announced his 
resignation from his position, from which he had been on leave 
since the FBI files scandal broke. Witnesses also testified 
that hundreds of FBI background files had been requested due to 
faulty Secret Service lists. No one, including Mr. Livingstone, 
could answer the question, ``Who hired Craig Livingstone?'' 
although Messrs. Nussbaum and Kennedy testified that the First 
Lady had no role in Livingstone's hiring. Apparent 
contradictions between Nussbaum's testimony and previous 
statements he had made to an FBI agent in the course of an 
interview subsequently led to a criminal referral of these 
matters to Independent Counsel Starr.
    3.) July 17, 1996. Testifying before the committee were 
Secret Service Agents John Libonati, Jeffrey Undercoffer and 
Arnold Cole. The Secret Service agents established in their 
testimony that the Secret Service's own records properly 
recorded as ``inactive'' passholders all but a handful of the 
individuals whose FBI files were requested and that it thus 
would have been difficult for the White House to mistakenly 
request hundreds of FBI background investigation files of 
former ``inactive'' Republican officials. Special Agent Cole 
also testified that, when the FBI files matter first was 
reported in the press, Livingstone told him he knew that the 
Secret Service lists were indeed accurate and that his office 
had used the wrong lists. The agents also testified at this 
hearing about the incidence of recent drug usage among White 
House staffers, 21 of whom were forced by recent extensive drug 
usage to be tested twice a year in a special, individualized 
random drug testing program.
    4.) August 1, 1996. Testifying before the committee were: 
Howard M. Shapiro, FBI General Counsel; Thomas Kelley, FBI 
Deputy General Counsel; Vernon Thornton, retired former FBI 
Unit Chief of Executive Agencies Dissemination and Personnel 
Unit; and Peggy J. Larson, FBI Supervisory Research Analyst.
    At this hearing, General Counsel Shapiro testified 
concerning his ``heads-up'' warning to the White House 
concerning materials in D. Craig Livingstone's FBI background 
file. Mr. Shapiro acknowledged it was ``a horrific blunder'' 
warning the White House of the existence of an FBI report 
stating the First Lady ``highly recommended'' Livingstone for 
his White House position. In his opening statement and, later 
while responding to questions, Shapiro acknowledged that the 
substance of this ``heads-up'' in turn was widely disseminated 
throughout the White House and beyond. (Former White House 
Counsel Bernard Nussbaum, who reportedly told the FBI of the 
First Lady's recommendation of Livingstone, was informed in 
advance of an appearance before a grand jury.) Mr. Shapiro also 
testified about his July 16, 1996, decision to send FBI agents 
out to the home of the agent whose interview summary report 
related the First Lady's recommendation. He testified that the 
interview of the FBI agent was not intended to intimidate, as 
some majority Members suspected. Mr. Shapiro also testified 
about his delivery to White House Counsel Jack Quinn of retired 
FBI agent Gary Aldrich's manuscript of a proposed book which 
discussed activities at the White House. The other three 
witnesses testified more generally on the handling of FBI 
files.

    GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY SUBCOMMITTEE

                      Hon. Stephen Horn, Chairman

1. ``Making Government Work: Fulfilling the Mandate for Change,'' House 
        Report No. 104-435, December 21, 1995, Third Report by the 
        Committee on Government Reform and Oversight, Together With 
        Additional Views.
    a. Summary.--On December 14, 1995, the Committee on 
Government Reform and Oversight approved and adopted a report 
entitled, ``Making Government Work: Fulfilling the Mandate for 
Change.'' The committee's report is based on a series of 
hearings conducted by the Subcommittee on Government 
Management, Information, and Technology. The subcommittee 
convened eight oversight hearings on various aspects of 
government management to solicit advice and recommendations 
for: (a) changing what the Federal Government does; (b) 
improving the overall economy, efficiency, and management of 
its operations and activities; and (c) effectively planning, 
measuring, and reporting the results to the American public. 
The inquiry reflected public expectation that provided a 
mandate to the Congress to consider with care the various 
Government functions, and to determine whether they should 
continue to be performed, and, if retained, how they can be 
made more effective.
    The experience of American industry also influenced the 
committee. In the past decade, corporations and other entities 
have reexamined their roles and redefined their institutional 
objectives and purposes. Many corporate changes have been 
facilitated by technology that speeds information to 
decisionmakers and thereby reduces the need for traditional 
hierarchies. While such changes have been at times wrenching to 
the people in these institutions, the result has been to make 
American industry far more productive and competitive. The 
Federal Government has yet to implement a similar 
transformation on any appreciable scale. While the committee 
recognizes fundamental differences between the purposes and the 
cultures of business and Federal Government organizations, it 
remains receptive to the suggestion that ``rethinking'' and 
``re-engineering'' methods successfully used in the private 
sector can be and should be adapted for use in the Federal 
Government.
    Because of the administration's management responsibilities 
for the Federal Government, the point of reference for all 
material reviewed was the National Performance Review, Phases I 
and II.

                                Findings

    Based upon the investigation and oversight hearings 
conducted by the subcommittee, the committee found the 
following:
1. The Management of the Federal Government Needs Improvement.
    (a) The capacity of the President as the Chief Executive 
Officer of the Federal Government and its principal manager has 
been diminished over several administrations. The Executive 
Office of the President has abrogated its responsibility to 
oversee and improve the Government's management structure.
    (b) The capacity available to the President in the Office 
of Management and Budget [OMB] to reform or improve management 
has steadily declined and now barely exists, despite a 
competent Director of OMB and a Deputy Director of Management, 
whose talents in this area are underutilized. Federal 
management organization, oversight authority, and general 
influence have been consistently overridden by recurring budget 
crises and budget cycle demands, despite conscientious 
intention to give ``Budget'' and ``Management'' equal voice 
within OMB.
    (c) The NPR, in its ad-hoc and episodic approach to 
management issues, reveals the weakened state of management 
capacity of the Executive Office of the President.
    (d) The NPR-inspired announcement of a reduction of over a 
quarter-million Federal jobs may have been warranted; however, 
without first having a solid empirical rationale for doing so 
and not knowing where or how, it reflected a lack of strategic 
vision as to the Federal Government's role, and as such it 
seriously eroded Federal workers' morale, productivity, and 
planning for the future.
    (e) The capacity of the Office of Personnel Management to 
provide leadership to a revitalized career service has been 
seriously impaired.
    (f) Short-term political appointees have layered and 
``thickened'' the Federal Government's upper echelons of 
organization to a point where productivity, management, and 
continuity of operation have become seriously affected.
    (g) Some potential candidates for political appointment 
believe that service on Federal organizations will hinder their 
careers, imposing a protracted and intrusive nomination process 
as well as numerous restrictions on financial and employment 
activities during and following Federal Government assignments. 
As a result, the pool of available talent qualified for 
appointment and willing to serve has been diminished.
    (h) Qualified people considering careers in public 
administration are discouraged from Federal career employment 
by layers of political appointees of uneven quality which 
preclude advancement to positions of senior responsibility.
    (i) Career Federal public administrators have a long record 
of faithfully executing clearly established policy and 
rendering effective political leadership. However, political 
appointees as a group have tended to display more loyalty to 
individual political sponsors and special interests than to the 
President, who is elected by and ultimately accountable to the 
people.
    (j) Employee-buyout programs in Federal organizations have 
not worked as well as intended, resulting in the loss of 
employees with the most marketable skills, leaving in the 
workplace many of the poorer performers.
    (k) Programs for Federal-employee professional education, 
training, and development are vital to a smaller workforce 
adopting modern management methods and achieving desired 
productivity improvements.
    (l) The Federal Government must follow the best practices 
of private and public organizations for exploiting information 
technology in reforming management, reducing size, and raising 
productivity and market competitiveness. A recent General 
Accounting Office report provides valuable insights on how the 
Federal Government can lower costs, improve productivity, and 
provide better services to its citizens.
2. The Federal Intergovernmental Roles Are Poorly Defined.
    (a) The Federal role has evolved in a patchwork manner. The 
Federal Government lacks a clear and comprehensive statement of 
its proper role. The result is similar redundant programs 
throughout disparate departments and agencies.
    (b) Many citizens view the Federal Government as having 
overreached its proper role, by ``meddling'' in affairs such as 
elementary and secondary education (better left to States and 
communities), marketing and distribution of energy resources 
(better left to market forces) and applied research and 
development (better left to private investment and 
competition).
    (c) Many State governments are willing to risk accepting 
large Federal block grants, with fewer dollars, in return for 
greater flexibility and fewer restrictions. There is some 
concern that any residual reporting burdens and controls from 
Washington may interfere with States' roles and as such 
constitute an ``unfunded mandate,'' contrary to a law sponsored 
by this committee.
    (d) In the current environment, many agencies and States 
are trying to develop program partnerships. Federal-State 
program partnership agreements reached a high point during the 
Johnson and early Nixon administrations. State and Federal 
leaders need to be aware that those intergovernmental 
agreements later deteriorated because roles and 
responsibilities were not clearly defined and accepted by all 
interested parties. Another cause was that the Federal 
Government seized a decisionmaking role disproportionate to the 
resources it provided.
3. Organization of Federal Functions Is Uneven and Duplicative.
    (a) No Cabinet-level department has been eliminated 
outright in our Nation's history, although many have been 
reorganized, renamed, combined, or split.
    (b) Today's Federal Government is even more enmeshed in red 
tape, replicated functions and controls than it was in 1971, 
when President Nixon tried unsuccessfully to reorganize and 
streamline Cabinet departments.
    (c) The proposed ``Department of Commerce Dismantling Act 
of 1995'' contains a model for dismantling any high-level 
Federal organization using a traditional organization within 
the Office of Management and Budget.
    (d) Approximately a million Federal employees work in some 
30,000 field offices outside of Washington, DC. Although some 
field offices only have five or fewer staff, closing them has 
consistently proven to be a difficult, almost intractable 
political problem. The committee notes progress by the U.S. 
Department of Agriculture in addressing the problem.
4. Public Accountability Is Weak.
    (a) The National Performance Review [NPR] contributed to 
identifying the need to improve the Federal Government and 
lower its operating costs.
    (b) By not establishing first what activities the Federal 
Government should be performing, the NPR was flawed from the 
outset and did not achieve enough progress.
    (c) NPR neglected to place sufficient emphasis on fiscal 
accountability by failing to address the Federal Government's 
responsibility for stewardship of public resources.
    (d) The ad-hoc, even disjointed, nature of NPR is a telling 
sign of the disconnect between policy and management, evidence 
of atrophy of the tools of management, and an admission that 
the President has no organized capacity to manage the executive 
branch.
    (e) The NPR recommended a doubling of the existing 1-to-7 
supervisory span of control to a 1-to-14 or 1-to-15 supervisor 
to subordinate ration. This recommendation was without 
appropriate foundation and ignored the Government's widely 
varying missions, and threatens public accountability.
    (f) With more Federal work being done under contract, with 
private vendors, effective contract administration is 
critically important in ensuring efficiency, effectiveness, and 
accountability.
    (g) The growth of ``contract government'' is a direct by-
product of the emphasis on personnel reduction. As successive 
administrations have sought to limit or reduce the number of 
Federal employees, more and more activities have been 
contracted out.
    (h) The experiences of other foreign and Federal, State and 
local governments in carrying out significant management and 
accountability reforms are valuable to Federal agency managers 
as they implement the Government Performance and Results Act of 
1993 [GPRA].
    (i) Government corporations and other Government-sponsored 
enterprises have assumed roles and responsibilities very 
different from those for which the Government Corporation 
Control Act of 1945 was intended. Today, a conceptual framework 
is needed for setting up these kinds of enterprises and 
centralized oversight of their management operations.
    (j) Executive branch accountability is made more difficult 
by the complex congressional budget process and by additional 
legislative branch restrictions and controls placed on 
Government agencies, such as prohibitions on closing outdated 
Federal field offices.

                            Recommendations

    Based on the foregoing findings, the committee recommends 
as follows:
1. Strengthen the President's Role as Chief Executive Officer of the 
        Executive Branch.
    (a) Management of the Federal Government should be a 
Presidential priority. Among the President's many roles is the 
responsibility to serve as Chief Executive Officer or general 
manager of the Federal Government. Many broad initiatives 
intended to make the Federal Government work better depend on 
the commitment by the President and his staff in the Executive 
Office of the President. By approaching the Federal Government 
almost exclusively from a budget or policy perspective, 
Presidents limit their capacity to reform management in the 
Federal Government.
    (b) The President, acting jointly with Congress through a 
Federal management office, should establish intergovernmental 
partnerships, with clearly defined Federal and State roles and 
responsibilities, and allow local Federal managers the 
authority and flexibility needed to assist State and local 
officials in managing devolved programs, functions, and 
resources.
    (c) To make the President's executive office more 
accountable to the public, Congress should establish an Office 
of Inspector General in the Executive Office of the President.
2. Establish an Office of Management.
    (a) To enhance the President's management capability 
throughout the executive branch, Congress should establish, in 
the Executive Office of the President, a top-level management 
and organizational oversight office headed by an administrator 
who has direct access to the President. Sustained attention to 
management issues beyond recurring budget crises is vital to 
ensure effectiveness. The new Federal management office would 
combine the management functions of the OMB, the residual 
policy and oversight functions of the Office of Personnel 
Management, and the policy functions from the General Services 
Administration into an entity separate from but equal in 
stature to the remaining Office of the Budget.
    (b) The executive branch is in serious need of an office 
with responsibility for departmental reorganizations such as 
the proposed dismantling of the Department of Commerce. The 
current legislative initiative in that regard will be a model 
for managing large-scale reductions in the Federal Government's 
organizational structure and scope of work.
    (c) An Office of Management could encourage the 
implementation of the strategic information management and 
technology practices increasingly common in high quality 
private and public organizations. It could stress the need to 
focus management attention on technology improvements that 
attain goals; and assert senior management control over 
technology investment decisions.
    (d) Executive agencies should exploit, publicize, and 
replicate successful private sector ventures in making Federal 
Government organizations work more effectively by drawing upon 
past successes.
3. Convene a Commission on Federal Reorganization.
    (a) Congress should establish a blue-ribbon inquiry 
commission of experts from the business, academic, and 
nonprofit sectors and Federal, State and local government to 
recommend to the President and Congress in early 1997: (i) ways 
to organize more efficiently the functions that the Federal 
Government performs; and (ii) changes in law that would reduce, 
transfer or eliminate Federal functions. If resources permit, 
such a commission should produce a reorganization plan.
    (b) Such a commission should apply the guideline criteria 
for agency elevation to Cabinet department status which were 
developed in 1988 by the National Academy of Public 
Administration [NAPA]. Such a review ought to result in a new 
alignment and grouping of the tasks and functions of the 
Federal role by major purpose.
    (c) Congress should concurrently provide the President 
broad authority, including optional fast-track authority, to 
restructure executive branch departments and agencies, similar 
to past (and now expired) Reorganization Acts.
    (d) Congress should be fully involved in the consolidation 
of the many Federal programs it enacts and funds; the proposed 
commission should look for additional opportunities to 
consolidate or combine Federal programs, and make 
recommendations accordingly.
    (e) Once changes have been made in the structure of the 
executive branch, Congress should conform its own committee 
organization and jurisdictions to parallel the executive branch 
changes.
4. Reshape the Federal Civil Service.
    (a) Congress should proceed with legislation that would 
reduce the allowable number of political appointees to an 
initial level of 2,000--aimed principally at Schedule C (not 
subject to Senate confirmation) positions--and set lower 
targets for future years as additional executive branch 
organizations are consolidated or abolished.
    (b) Congress should appropriate the professional education, 
training, and development funds for executive agencies, not as 
separate line items, but as an integral part of total personnel 
costs. That would afford managers the flexibility to choose 
between training and hiring to upgrade collective 
organizational skills.
    (c) Any future Federal employee ``buyout'' legislation 
should be limited to serving the needs of the downsized Federal 
Government by focusing agency buyouts on those with less-needed 
skills, functions, and capabilities.
5. Strengthen Public Accountability.
    (a) Both the President and Congress should complete the 
work to implement the Government Performance and Results Act, 
in order to make the executive branch both performance-driven 
and accountable. The act's performance measurement provisions 
ought to be used in all steps of the budget and management 
process.
    (b) To make public accountability in the executive branch 
less cumbersome and counterproductive, Congress should simplify 
the present complex structure of 13 separate appropriations 
bills by combining them into a lesser number, possibly 
comparable to the internal budget review structure in the 
Office of Management and Budget. Congress should adjust its own 
internal authorizing and appropriating committee structure 
correspondingly.
    (c) Congress should amend the Government Corporation 
Control Act of 1945 to raise the efficiency and effectiveness 
of the Federal Government's business-type operations and 
organizations and to set standards consistent with today's 
marketplace conditions.
    (d) In its quest to attain the objective of balancing the 
Federal budget by fiscal year 2002, Congress must recognize 
three critical needs: (i) to preserve the Federal Government's 
accountability to the governed throughout the transformation 
process; (ii) to foster that objective by making investments in 
human and technological development during that process; and 
(iii) to accept the hard lessons learned by industry that 
workforce strength is to be cut only after--not before or 
while--the Federal roles have been determined and 
organizational structures have been reduced or eliminated.
    b. Benefits.--Implementing the recommendations in this 
report will result in a Federal Government that is less 
expensive, more efficient, and more accountable to the 
taxpayer. Federal customers and partners in all program areas 
will benefit from sharper definition of the roles and 
relationships between levels of government, as well as between 
the government and the private sector, elimination of 
duplicative Federal organizations and activities, and 
performance measures that facilitate public discussion and 
decision about the ongoing value of government activities. A 
strengthened career civil service, well trained and well tooled 
in the best management practices of both the public and private 
sector, and empowered to employ them, is vital to making these 
benefits a reality.
    c. Hearings.--The series of eight hearings began on May 2, 
1995, with an overview of the NPR process. Testimony was 
received from Alice M. Rivlin, Director, and John A. Koskinen, 
Deputy Director for Management, Office of Management and Budget 
(OMB); Charles A. Bowsher, Comptroller General of the United 
States, General Accounting Office (GAO); Tony Dale, Budget 
Manager of the New Zealand Treasury (in his capacity as 
Harkness Fellow, 1994-5), the Commonwealth Fund of New York; 
Duncan Wyse, executive director, Oregon Benchmarking Project; 
Dwight A. Ink, president emeritus, Institute of Public 
Administration and former Assistant Director for Management, 
Bureau of the Budget and OMB; R. Scott Fosler, president, 
National Academy of Public Administration; Donald F. Kettl, 
nonresident senior fellow, Center for Public Management, The 
Brookings Institution, and professor at the University of 
Wisconsin, Madison; and Herbert N. Jasper, senior associate, 
McManis Associates.
    The subcommittee focused next, on May 9, on the appropriate 
role of Federal executive leadership in strengthening the 
management of Cabinet level departments, hearing testimony from 
Thomas P. Glynn, Deputy Secretary of Labor; George Munoz, 
Assistant Secretary for Management and Chief Financial Officer, 
Department of the Treasury; Assistant Comptroller General 
Johnny C. Finch, General Government Programs, and Gene L. 
Dodaro, Accounting and Information Management Division, GAO; 
Alan L. Dean, former Assistant Secretary of Transportation for 
Management and coordinator of President Nixon's plan for 
departmental reorganization; William D. Hansen, former 
Assistant Secretary of Education for Management and Chief 
Financial Officer under President Bush; and Roger L. Sperry, 
director of management studies, National Academy of Public 
Administration.
    The third hearing, on May 16, turned to consolidating and 
restructuring the executive branch, assessing alternative ideas 
for rearranging or reducing several departments and agencies. 
Witnesses were Representative Robert S. Walker of Pennsylvania, 
chairman of the Committee on Science; Representative Sam 
Brownback of Kansas; Representative Dick Chrysler of Michigan; 
Representative Todd Tiahrt of Kansas; Robert A. Mosbacher, 
Secretary of Commerce in the Bush administration; Scott A. 
Hodge, Grover M. Hermann Fellow in Federal Budgetary Affairs, 
the Heritage Foundation; Jerry Taylor, director, Natural 
Resources Studies, Cato Institute; and Herbert N. Jasper, 
senior associate, McManis Associates.
    In its fourth session, on May 16 and 23, the subcommittee 
examined the consolidation of a large number of Federal 
programs and organizations. The subcommittee heard testimony 
from Secretary of Energy Hazel R. O'Leary, Donald P. Hodel, 
former Secretary of Energy under President Reagan; Admiral 
James D. Watkins, U.S.N. (ret.) former Secretary of Energy 
under President Bush; John S. Herrington, former Secretary of 
Energy in the Reagan administration; Shelby T. Brewer, former 
Under Secretary of Energy during the Reagan administration; 
Donna R. Fitzpatrick, former Under Secretary of Energy during 
the Bush administration; Marshall S. Smith, Under Secretary of 
Education; Donald Wurtz, Chief Financial Officer, Department of 
Education; Chester E. Finn, Jr., John Olin Fellow, the Hudson 
Institute and former Assistant Secretary of Education during 
the Reagan administration; William D. Hansen, executive 
director of the nonprofit Education Finance Council and 
Assistant Secretary of Education for Management in the Bush 
administration; George Munoz, Assistant Secretary for 
Management and Chief Financial Officer, Department of the 
Treasury; and Paul Posner, Director, Budget Issues, Accounting 
and Information Management Division, GAO.
    Attention turned in June to the Federal Government's field 
establishment. After reviewing several types of possible 
corporate structures for Federal aviation, electric power, and 
transportation on June 6, the subcommittee heard testimony from 
several regional administrators on June 13 to understand their 
roles and hear their suggestions, then returned to Chicago on 
June 19 for a firsthand look at the Federal Government's 
operations from the field perspective. Witnesses at the June 6 
hearing were Donald H. Rumsfeld, former Secretary of Defense 
under President Ford and chief executive officer of General 
Instruments Corp.; Roger W. Johnson, Administrator of General 
Services; Jack Robertson, Deputy Administrator and Paul Majkut, 
general counsel, Bonneville Power Administration; Daniel V. 
Flanagan, Jr., president, Flanagan Consulting Group; Harold 
Seidman, senior fellow, National Academy of Public 
Administration; Jack Johnson, president, Professional Airways 
Systems Specialists; and Barry Krasner, president, National Air 
Traffic Controllers Association. Witnesses at the hearing on 
June 13 and 19 were Dwight A. Ink, president emeritus, 
Institute of Public Administration; Alan L. Dean, senior 
fellow, National Academy of Public Administration; Charles F. 
Bingham, visiting professor of public administration, the 
George Washington University; Wardell C. Townsend, Jr., 
Assistant Secretary of Agriculture for Administration; Shirley 
Sears Chater, acting Commissioner, Social Security 
Administration; Mary Barrett Chatel, president, National 
Council of Social Security Management Associations; D. Lynn 
Gordon, Miami District Director, U.S. Customs Service, 
Department of the Treasury and George Rodriguez, Houston Area 
Coordinator, Department of Housing and Urban Development; 
William Burke, Great Lakes Regional Administrator, General 
Services Administration and chair, Chicago Federal Executive 
Board; Gretchen Schuster, Chicago Regional Director, Passport 
Agency, Department of State and Federal Executive Board member; 
Joseph A. Morris, former General Counsel, Office of Personnel 
Management; Michael P. Huerta, Associate Deputy Secretary of 
Transportation and Director, Office of Intermodalism, 
Department of Transportation; Kenneth A. Perret, Garrome 
Franklin, and Donald Gismondi, Federal Regional Administrators 
in Chicago for highways (FHA), aviation (FAA), and transit 
(FTA) respectively; and Colonel Richard Craig, North Central 
Division Engineer, U.S. Army Corps of Engineers.
    The seventh hearing, on June 20, in Washington, emphasized 
improving government results through performance measurement, 
benchmarking, and re-engineering, as many private corporations 
have done. Witnesses providing testimony were Donald F. Kettl, 
Center for Public Management, the Brookings Institution, and 
professor at the University of Wisconsin, Madison; Harry P. 
Hatry, Director of State and Local Government Research 
Programs, the Urban Institute; Herbert N. Jasper, senior 
associate, McManis Associates, Johnny C. Finch, Assistant 
Comptroller General, General Government Programs, GAO; Linda 
Kohl, director of Minnesota State Planning; Sheron K. Morgan, 
North Carolina Office of State Planning; Joseph G. Kehoe, 
Managing Partner for Government Services, Coopers and Lybrand, 
LLP; and Laura Longmire, National Director, Benchmarking, KPMG 
Peat Marwick LLP.
    The series of hearings ended on June 27, 1995, focused on 
agencies' preparation for compliance with the Government 
Performance and Results Act of 1993 (GPRA).
    Testifying at the final hearing were OMB Deputy Director 
for Management John. A. Koskinen; Johnny C. Finch, Assistant 
Comptroller General for General Government Programs, GAO; Paul 
C. Light, director, Public Policy Programs, the Pew Charitable 
Trusts; R. Scott Fosler, president, National Academy of Public 
Administration; Anthony A. Williams, Chief Financial Officer, 
Department of Agriculture; Vice Admiral A.E. (Gene) Henn, Vice 
Commandant, U.S. Coast Guard, Department of Transportation; 
Joseph Thompson, New York Regional Director, Department of 
Veterans Affairs; and Colonel F. Edward Ward, Jr., Director, 
Field Offices, Department of Defense Finance and Accounting 
Service, formerly with the Air Force Air Combat Command.
2. ``Year 2000 Computer Software Conversion: Summary of Oversight 
        Findings and Recommendations,'' House Report No. 104-857, 
        September 27, 1996, Sixteenth Report by the Committee on 
        Government Reform and Oversight.
    a. Summary.--After midnight, December 31, 1999, computer 
systems throughout the world are at risk of failing by 
confusing the year 2000 with the year 1900 on January 1, 2000, 
and going backward in time instead of forward with the new 
century. Congress has learned that if businesses and 
governments continue to ignore this issue, disruption of 
routine business operations and the inability of the Federal 
Government to deliver services to the American public could 
result.
    According to an April 12, 1996, Congressional Research 
Service (CRS) memorandum, ``Many people initially doubted the 
seriousness of this problem, assuming that a technical fix will 
be developed. Others suspect that the software services 
industry may be attempting to overstate the problem to sell 
their products and services. Most agencies and businesses, 
however, have come to believe that the problem is real, that it 
will cost billions of dollars to fix, and that it must be fixed 
by January 1, 2000 to avoid a flood of erroneous automatic 
transactions.''
    On April 16, 1996, subcommittee Chairman Stephen Horn 
convened a hearing of the Subcommittee on Government 
Management, Information, and Technology to determine what steps 
Federal agencies are taking to prevent a possible computer 
disaster. Among the questions raised were whether agencies are 
taking appropriate steps to identify the problem and mobilizing 
the necessary human and capital resources to it.
    As noted by Representative Tom Davis, ``think for a moment 
how dates play a part in each one of our lives and how the 
failure of a computer system or computer scanner to recognize 
and understand a date can affect us. Our driver's license may 
prematurely expire and the Social Security Administration may 
recognize 25-year-olds as 75-year-olds, without conversion that 
is needed for the year 2000.''
    Examples of what could occur if industry and government 
ignore this issue ranged from unexpected expiration of drivers' 
licenses to erroneous dates for final mortgage payments if two-
digit date fields remain unable to recognize the year 2000. 
Given that this information technology project has a fixed date 
for completion, January 1, 2000, subcommittee Chairman Horn 
asked hearing witness, Kevin Schick, research director, Gartner 
Group, to estimate the cost of a solution. Mr. Schick estimated 
$600 billion worldwide, including $300 billion in the United 
States and $30 billion for the Federal Government. Subcommittee 
Chairman Horn then asked Schick what the administration's and, 
in particular, the Office of Management and Budget's was doing 
to convey the urgency of the problem. Mr. Schick responded 
``there is no sense of urgency . . . if [Federal agencies] are 
not already well into this project by October of 1997, [the 
Federal Government] will be doing a disservice to the very 
constituents that depend on [it] to prevent something like this 
from happening to them . . .''
    On September 10, 1996, a joint hearing with the Committee 
on Science was held to review the Year 2000 impact on personal 
computers, States and the Federal Government. Larry Olson, 
Pennsylvania's Deputy Secretary for Information, presented 
Pennsylvania's plan and noted that the key to success of any 
plan is senior level support. Mr. Olson testified that in his 
first year as Governor, Tom Ridge recognized the implications 
of the Year 2000 date field problem and acted to ensure 
Pennsylvania businesses and governments will be prepared before 
January 1, 2000.
    Also at the hearing Harris Miller, the president of the 
Information Technology Association of America, outlined three 
problem areas for personal computer users in homes and 
businesses nationwide: 1) the machines' BIOs--basic input/
output systems--chips; 2) their operating systems; and 3) their 
commercial software. Most equipment manufacturers have modified 
their products in the past 18 months. Operating system software 
remains an issue but most operating systems can be fixed by a 
simple procedure using the computer's mouse. Commercial 
software may or may not be Year 2000 compliant. Another serious 
concern is their increasing interconnectedness with other 
systems. To ensure that computer systems are operational in 
2000, most systems will need modification.
    Miller also testified that personal computer users and 
mainframe information technology managers need to be aware of 
this issue and take appropriate corrective steps.
    In her testimony, OMB's Office of Information and 
Regulatory Affairs Administrator Sally Katzen outlined the 
Clinton administration's strategy to resolve the problem: 1) 
raise the awareness of the most senior managers in Federal 
agencies to the problem; 2) promote the sharing of management 
and technical expertise; and 3) remove barriers impeding 
technicians fixing systems.
    b. Benefits.--The subcommittee found the following:
1. The Year 2000 Problem Results From the Unanticipated Consequences of 
        Decisions Made Decades Ago.
    Computer systems use the two-digit-year date field to 
perform such functions as calculating the age of U.S. citizens, 
sorting information by date, and comparing multiple dates. 
Twenty years ago, disk storage was so expensive that a four-
digit-year date format was rejected. In addition to the cost 
factor, many programmers assumed that the programs then using 
two-digit-year date fields would be obsolete by the year 2000, 
if not within 10 years. In fact, systems now in place nearly 30 
years continuously were enhanced by technological developments 
while remaining programmed for the 20th century. Given these 
developments, many experts in the public and private sectors 
were confident further advances would provide ``silver bullet'' 
solutions to such issues as this one. Others believed the 
software services industry was overstating the problem to sell 
products. While correcting the date field is technically 
simple, the process of inventorying, correcting, testing and 
integrating software and hardware among all interactive systems 
(among industry and government) is very complex.
2. Senior Management Involvement Is Required To Address the Year 2000 
        Problem.
    Various witnesses appearing before the subcommittee 
emphasized the value of senior level support to fix the 
systems. Many experts, aware of this issue for up to a decade, 
were unable to take corrective action because the problem was 
considered irrelevant to agencies' missions.
    In the Federal Government, an ``Interagency Committee on 
the Year 2000,'' established to raise awareness of the task 
facing Federal information technology managers, has required 
that vendor software in future procurement schedules be Year-
2000 compliant, among other things.
3. The Year 2000 Deadline Cannot Be Extended.
    According to Mr. Schick, the crisis revolves around time, 
cost and risk. Businesses, Federal agencies, and State and 
local governments must understand that this information 
technology project cannot be allowed to slip: Saturday, January 
1, 2000 cannot be postponed. Mr. Schick added that all parties 
may be required to shift resources from other projects to 
complete this one.
4. Addressing The Year 2000 Problem Will Be Costly.
    Estimates as high as $600 billion for systems worldwide, 
$300 billion in the United States and $30 billion for the 
Federal Government alone reflect the costs of: inventorying 
current programs; analyzing the percentage of code affected; 
implementing a fix, and testing to ensure the changes are 
correct. All must be completed while current information 
technology remain in use.
    Only six agencies furnished any cost estimates for 
resolving the problem in response to the April 29, 1996 
oversight letter: the Departments of Agriculture, Education, 
Health and Human Services and State, as well as the Office of 
Personnel Management, and the Small Business Administration. In 
fact, Agriculture and Health and Human Services only provided 
partial estimates.
5. There Is a High Risk of System Failure if the Year 2000 Computer 
        Problem Is Not Corrected.
    If, as suggested by CRS, it is too late to correct every 
system nationwide before January 1, 2000, businesses need to 
know how to minimize disruptions in their operations. Federal, 
State and local governments must prioritize mission critical 
systems and immediately correct systems with the greatest human 
impact.
    Federal, State and local governments, must ensure that 
Americans are not at risk of losing government services. 
Additionally, the Department of Defense, Federal Aviation 
Administration and similar agencies must ensure that their 
computers do not go haywire on January 1, 2000, causing severe 
disruptions of a strategic nature.
    On June 7, 1996, the CRS provided the House and Senate with 
a memorandum discussing various issues complicating the Year 
2000 project and potential consequences resulting from a 
failure to address this problem at the Federal level, 
including:
         Social Security Administration miscalculation 
        of the ages of citizens, causing payments to be sent to 
        ineligible persons and/or denying payments to the 
        eligible;
         IRS miscalculations of standard deductions on 
        income tax returns for persons over 65, causing 
        incorrect records of revenues and payments due;
         Malfunctioning Department of Defense weapon 
        systems;
         Erroneous flight schedules generated by the 
        FAA's air traffic controllers;
         State and local systems being corrupted by 
        false records, resulting in errors in income and 
        property tax records, payroll, retirement systems, 
        motor vehicle registrations, and more;
         Erroneous records by securities firms and 
        insurance companies; and
         False billing by telephone or similar 
        companies resulting in billing errors or lapses in 
        service.
6. Potential Liability Issues Arise If the Year 2000 Computer Date 
        Conversion Is Not Completed.
    Businesses--in particular banks, securities firms and 
insurance companies, among others--face potential liability for 
failing to provide Year 2000 compliant products or services and 
must ensure that their data bases are not corrupted by bad data 
from external sources. Governments and businesses also must 
protect themselves from purchasing noncompliant software and 
services through use of commercial market warranties.
    c. Hearings.--The Subcommittee on Government Management, 
Information, and Technology held a hearing on April 16, 1996, 
entitled, ``Is January 1, 2000, the Date for Computer 
Disaster?'' and on September 10, 1996, a joint hearing was held 
with the Committee on Science, entitled, ``Solving the Year 
2000 Computer Problems.''
3. ``Crude Oil Undervaluation: The Ineffective Response of the Minerals 
        Management Service,'' House Report No. 104-858, September 27, 
        1996, Seventeenth Report by the Committee on Government Reform 
        and Oversight.
    a. Summary.--Between 1978 and 1993, oil companies underpaid 
royalties on crude oil drilled on Federal lands by as much as 
$2 billion nationwide. The Department of the Interior's 
Minerals Management Service (MMS) has failed to seriously 
address this problem.
    California is our fourth largest oil-producing State with 
1994 crude-oil production of 345 million barrels, a large 
amount of which is produced on Federal lands. In 1975, the 
State of California and the city of Long Beach sued seven major 
oil companies operating in California alleging they had 
conspired to keep posted oil prices low, thereby reducing 
royalties to the litigants. Similarly, insofar as the posted 
price was kept below fair market value, the Federal Government 
lost royalties due it for oil production on Federal lands.
    In 1986, MMS contacted California officials to assess the 
appropriateness of posted prices as the royalty value basis. 
MMS' conclusion that posted prices fairly represented market 
value reflected the failure of California and Long Beach to 
prove their antitrust claims in court. The Department of 
Justice looked into the issue but declined to investigate.
    In 1991, six companies (ARCO, Shell, Chevron, Mobil, 
Texaco, and Unocal) settled with California and Long Beach for 
some $345 million. Exxon, the seventh defendant, went to trial 
and was exonerated of antitrust charges relating to State oil 
leases. Exxon also won an appeal in January 1995. A separate 
appeal covering a different time period is pending.
    In the wake of the 1991 settlement, MMS attempted to 
estimate royalty underpayments for oil produced on Federal 
lands. However, since MMS lacked such crucial information as 
internal oil company records, California urged it to begin a 
more formal investigation. In 1994, MMS responded by creating 
an interagency task force consisting of representatives from 
MMS and the Departments of Interior, Commerce, Energy and 
Justice.
    The State of California assisted the Federal team in 
obtaining court records which proved instrumental in 
demonstrating the undervaluation of crude oil to the Federal 
interagency team. In May 1996, the interagency team released a 
report concluding that companies often received gross proceeds 
higher than their posted prices.
    The bulk of crude oil produced in California was not sold 
in competitive markets but rather through intra-company 
transfers; straight exchanges (where a company trades oil at 
one location with another having oil at a second location, 
thereby reducing transportation costs) and buy/sell contracts 
including such costs as transportation in the cost of the oil. 
It is difficult to determine a proxy for the market value of 
oil when oil companies hide its true value via complex 
contracts.
    The interagency report estimated underpayments of Federal 
oil royalties on California leases alone to be as high as $856 
million from 1978 through 1993. It recommended:
         That MMS focus collection efforts on some 10 
        companies producing 90 percent of Federal crude oil in 
        California;
         That for the period beginning March 1, 1988, 
        Federal royalties be based on the premium paid on 
        competitive arm's length contracts for oil produced 
        from the same field or area;
         The Assistant Secretary of the Interior issue 
        a royalty payor letter ordering targeted oil companies 
        to submit all relevant arm's length records to minimize 
        audit expenses;
         That the Federal Government submit a bill for 
        1989 and 1993 to Texaco, since MMS audited those 
        records, and found royalty underpayments and/or crude 
        oil undervaluations;
         That MMS's oil royalty valuation regulations 
        be revised to consider alternatives to reliance on 
        posted prices and improve clarity; and
         That a method be chosen to determine royalties 
        owed.
    MMS announced it would accept part of the task force's 
recommendations and attempt to collect approximately $440 
million. The $856 million figure was reduced due to global 
settlements between Interior and the oil companies, payments-
in-kind, and other factors. These figures do not include 
underpayments outside of California.
    In August 1996, the subcommittee obtained a November 1995, 
draft report by the Interior Department Inspector General from 
various press sources. The report criticized Interior for 
improper procedures during oil company negotiations which 
reduced the estimated value of items being negotiated by more 
than $350 million without documentation. A year after it was 
written, the report has yet to be released.

                                FINDINGS

    The subcommittee found:
1. The Minerals Management Service Has Delayed Collecting Royalty 
        Undervaluations.
    In the June 17, 1996, subcommittee hearing, members 
expressed concern that MMS delayed the release of the 
interagency report: in a 1994 e-mail to his supervisor, task 
force leader David Hubbard stated he had ``stalled long 
enough.''
    When it announced it would attempt to collect $440 million, 
MMS set no timetable for the task. MMS will not simply bill the 
oil companies based on Alaska North Slope crude prices but will 
audit every contract. With scarce audit resources, this could 
take many years. Nor does MMS' audit division appear committed 
to collect: unpublished Interior notes quote the head of the 
MMS audit division dismissing the interagency task force report 
in November 1995 as ``a piece of [expletive deleted].'' Giving 
control of the audit process to staff who disparage its results 
appears unwise.
    MMS also declined to outline interim steps to be taken. The 
interagency task force audited Shell's California contracts for 
1984 and Texaco's for 1989 and 1993 and recommended billing 
those companies immediately for those periods. At the June 17 
hearing, however, Interior's Assistant Secretary for Land and 
Minerals Management stated that bills would be sent out within 
4 to 6 weeks.
2. Global Settlements May Have Harmed U.S. Interests.
    MMS' global settlements covering multiple of issues and 
claims allowed two oil companies with large underpayments to 
avoid payment despite full knowledge of substantial problems 
with California underpayments. These agreements may have 
extinguished the Federal Government's claim to amounts owed. 
The Inspector General draft report concluded the royalty 
settlements were not conducted in accordance with ``Minerals 
Management Service Settlement Negotiation Procedures'' and 
faulted MMS for including ``no documentation for the estimated 
values of the issues concerning the underpayment of royalties 
to be negotiated. . . .''
    Prior to negotiations, an MMS Royalty Management Program 
division estimated the value of a particular issue to be 
negotiated in a global settlement as $439 million. A 
negotiation team listing valued the same issue at $78.2 
million. No documentation explained the $360.4 million 
discrepancy.
3. The California Undervaluation Problem Exists In Other States.
    During the June 17, 1996, subcommittee hearing, Robert 
Berman, an economist in Interior's Office of Policy Analysis, 
testified that the amount of the undervaluation of oil 
extracted from Federal lands ranges from 3 to 10 percent 
outside California or as much as $1.3 billion.
4. Royalty-In-Kind Transactions May Have Jeopardized U.S. Interests.
    The May 1996 interagency task force report acknowledged it 
had not ``investigated recoupment of additional revenues on 
royalty-in-kind crude oil that might have been undervalued'' 
and recommended Interior, ``should consider the effects of RIK 
[royalty-in-kind] volumes in its decisionmaking, including 
potential collections where these volumes were undervalued.''
    In theory, Interior sells RIK oil directly to a refiner. In 
practice, it allows the Federal leaseholder and refiner-
purchaser to arrange the terms of sale and transfer. RIK 
purchasers may in fact pay, through excessive transportation 
charges, more for this oil than the government receives.
5. Pipelines Which Cross Federal Lands Harm Federal Interest By 
        Depressing Royalty Revenues and Preventing an Efficient Oil 
        Market.
    The task force recognized the problem of proprietary 
pipelines:

          The market restrictions imposed by proprietary 
        pipelines operated by the major oil refiners had two 
        critical effects. First, it greatly restricted open-
        market trading in California crude oil. Second, it 
        segregated the crude oil markets of the San Joaquin 
        Valley and Ventura Basin from the refining centers in 
        San Francisco and Los Angeles. The reports [of two 
        consultants employed by the task force] concluded that 
        the pipeline situation contributed to postings 
        substantially understating California crude oil values.

    The Department of Energy also recognized this problem and 
indicated that the administration's Domestic Natural Gas and 
Oil Initiative included a pipeline reform plank. Energy 
requested that Interior require pipelines crossing Federal 
lands operate as common carriers. Interior has taken no action.

                            RECOMMENDATIONS

    The subcommittee recommends:
1. The Minerals Management Service Should Establish a Timetable For 
        Collections.
    The MMS and Interior should develop a timetable to collect 
unpaid royalties. This would assist Congress in providing 
oversight and commit the administration to taking action.
2. Audit Staff Must Advance the Management Agenda.
    If the audit staff is unwilling to support program goals 
determined by the administration, then MMS should contract out 
the project. California took this approach and received a $345 
million settlement. California now contracts with a certified 
public accounting firm to manage its oil sales.
3. The Department of Justice Should Review Global Settlements.
    Interior should ask Justice to prepare an opinion 
concerning royalties negotiated away by MMS. Interior also 
should review its compromise procedures, which are more 
sweeping than almost any other Federal agency. Agencies are 
limited in their authority to compromise debts under Federal 
law. Interior, along with Justice and OMB, should examine 
whether the persistent mismanagement of global settlements by 
MMS warrants review by Justice.
4. The MMS Should Collect Underpayments in All States Where it is Owed.
    Interior should develop a strategy to address this and 
advise the committee of its plan.
5. The Department of the Interior Should Review Competition on Common 
        Carrier Pipelines.
    Interior should alter its policy to comply with the 
administration's recommendations regarding the Domestic Natural 
Gas and Oil Initiative. It also should advise California 
officials of problems arising from proprietary pipelines, and 
the harm which unregulated pipelines can bring to consumers, 
producers and royalty owners.
    b. Benefits.--The report addresses a problem which is 
costing the Federal Government up to $2 billion in lost 
revenue. MMS has delayed the collection of oil royalties due.
    c. Hearings.--On June 17, 1996, testimony was received 
from: Hon. Ken Calvert, Member of Congress; Cynthia Quarterman, 
Director, Minerals Management Service, Department of the 
Interior; Robert Berman, Economist, Office of Policy Analysis, 
Department of the Interior; Abraham Haspel, Acting Principal 
Deputy Assistant Secretary for Policy and International 
Affairs, Office of Policy and International Affairs, Department 
of Energy; Robert Speir, Economist, Office of Oil and Natural 
Gas Policy, Department of Energy; Hon. Robert Armstrong, the 
Assistant Secretary of the Interior for Land and Minerals 
Management, Department of the Interior; M. Brian McMahon, 
attorney for the city of Long Beach, Trustee for the State of 
California; Robert Shannon, assistant city attorney, city of 
Long Beach; and James McCabe, deputy city attorney, city of 
Long Beach.

      HUMAN RESOURCES AND INTERGOVERNMENTAL RELATIONS SUBCOMMITTEE

                    Hon. Christopher Shays, Chairman

1. ``The FDA Food Additive Review Process: Backlog and Failure To 
        Observe Statutory Deadline,'' House Report No. 104-436, 
        December 21, 1995, Fourth Report by the Committee on Government 
        Reform and Oversight, Together With Additional Views.
    a. Summary.--Since April 1995, the Human Resources and 
Intergovernmental Relations Subcommittee has been conducting an 
oversight investigation into the delays in the Food and Drug 
Administration's (FDA) review and decisionmaking on food 
additive petitions. This is the first comprehensive oversight 
investigation into the FDA's management of the food additives 
program since the food additive amendments were passed in 1958. 
Based on this study and two subcommittee oversight hearings, 
the committee adopted its fourth report to the 104th Congress 
on December 14, 1995.
    The Federal Food, Drug, and Cosmetic Act (FFDCA) of 1938 
gave the FDA authority over food and food ingredients. The Food 
Additive Amendments to the FFDCA were passed by Congress in 
1958 to require FDA's pre-market approval for the use of an 
additive prior to its inclusion in food. This authority is now 
found in section 409 of the FFDCA. (21 U.S.C. 348) An 
``additive'' is ``any substance the intended use of which 
results or may reasonably be expected to result, directly or 
indirectly, in its becoming a component or otherwise affecting 
the characteristics of any food.'' This definition covers any 
substance used in the production, processing, treatment, 
packaging, transportation or storage of food such as colors, 
packaging materials, artificial sweeteners and fat substitutes. 
Food additives are commonly used to impart or maintain desired 
consistency, improve or maintain nutritive value, maintain 
palatability and wholesomeness, produce texture, control 
acidity/alkalinity and enhance flavor or impart color.
    Food additive petitions must be reviewed and acted upon by 
the FDA ``not more than 180 days after the date of filing of 
the petition.'' (21 U.S.C. 348(c)(2)). The regulatory scheme in 
the United States for food additive review is dysfunctional, 
and as a result, the American consumer and patient are deprived 
of technologies that could increase the variety and nutritional 
benefits of foods, improve diet and advance public health. The 
statutory deadline is not being met. Statutory changes are 
needed to establish more realistic and binding timeframes for 
petition reviews.
    On June 22 and June 29, 1995, the subcommittee held 
oversight hearings to address these issues. At these hearings, 
testimony was received from FDA officials with primary 
responsibility for food safety and operation of the food 
additive petition process, academicians, food manufacturers, 
trade associations, food scientists, and consumer groups.
    The committee report contained nine major oversight 
findings:
          1. FDA does not meet the 180 day statutory deadline 
        to review and make a decision on food additive 
        petitions.
          2. As of June 1995, there were 295 pending food 
        additive petitions, some of which were filed in the 
        1970's.
          3. The lack of fixed deadlines and the increased 
        scientific ability to detect and measure potential 
        hazards have resulted in a review process that is risk-
        averse.
          4. FDA is reluctant to decline incomplete or 
        inadequate petitions, and consequently, allows 
        incomplete and inadequate petitions to remain under 
        review at FDA for more than 180 days.
          5. FDA has committed insufficient resources to its 
        food additive review responsibilities.
          6. FDA does not set food additive petition review 
        priorities appropriately.
          7. FDA's failure to expeditiously review food 
        additive petitions has stifled innovation and the 
        introduction of new ingredients by the food industry.
          8. A petition review process with no fixed deadlines 
        can be manipulated for anti-competitive purposes.
          9. FDA does not make sufficient use of independent 
        scientific resources for food additive petition review.
    Based upon this investigation, the report made the 
following detailed recommendations:
          1. Congress should amend the Federal Food, Drug, and 
        Cosmetic Act review period for food additive petitions 
        from 180 days to 360 days for the most scientifically 
        complex reviews, and the deadline should be strictly 
        observed by FDA.
          2. The FDA should recognize that the approval of 
        useful and safe new products can be as important to the 
        public health as preventing the marketing of harmful or 
        ineffective products.
          3. The FDA should eliminate the backlog of pending 
        food additive petitions within 1 year by reallocating 
        the necessary agency resources.
          4. The FDA should utilize outside expertise in its 
        evaluation of food additive petitions but retain 
        authority for petition approval.
          5. The relevance of the ``Delaney clause'' should be 
        studied in view of modern scientific standards so that 
        better distinctions can be made between nominal hazards 
        and actual risks. The Delaney clause stipulates that no 
        food additive can be deemed safe if it has been found 
        to induce cancer when ingested by man or animal. The 
        FDA should establish a level of acceptable risk for 
        food additives, below which there is no hazard to 
        humans through consumption under normal or intended 
        use.
          6. The FDA should amend the review process to 
        prohibit anonymous submissions of data or comments.
    b. Benefits.--The investigation into delays in the food 
additive petition review process allowed FDA officials, food 
industry representatives, and others involved in the process of 
approving or requesting the approval of food additive petitions 
the opportunity to articulate their views of flaws in the 
regulatory system. When fixed, FDA's food additive petition 
review process could benefit the American public by providing a 
vast new array of useful and safe products which could add to 
or replace less effective products.
    c. Hearings.--The subcommittee convened two hearings on 
this subject, both entitled ``Delays in the FDA's Food Additive 
Petition Process and GRAS Affirmation Process.'' These hearings 
provided subcommittee members the opportunity to say directly 
to those involved in FDA's food additive petition process that 
Congress was not receptive to the agency's failure to meet its 
statutory deadlines, but would consider amendments to FDA's 
food additive petition review process to give the agency and 
petitioners a more reasonable timeframe within which to work.
    On Thursday, June 22, 1995, the subcommittee received 
testimony from: Linda Suydam, Acting Deputy Commissioner for 
Operations of the FDA; Dr. Fred Shank, Director of the Center 
for Food Safety & Applied Nutrition of the FDA; Dr. Alan Rulis, 
Acting Director of the Office of Premarket Review of the FDA; 
Dr. Sanford Miller of the University of Texas Health Sciences 
Center; Dr. Richard Hall, chairman of the Food Forum of the 
National Academy of Sciences; Al Clausi of the Institute of 
Food Technologists; Dr. Stephen Ziller of the Grocery 
Manufacturers of America; Dr. Rhona Applebaum of the National 
Food Processors Association; Robert Gelardi of the Calorie 
Control Council; Dr. Stephen Saunders of Frito-Lay; Dr. C. 
Wayne Callaway of the George Washington University School of 
Medicine; and Dr. Michael Davidson of the Chicago Center for 
Clinical Research, the Rush-Presbyterian-St. Luke's Medical 
Center.
    On Thursday, June 29, 1995, the subcommittee's second FDA 
oversight hearing, testimony was received from: Dr. Kenneth 
Fisher of the Federation of American Societies for Experimental 
Biology; Jerome Heckman of the Society of the Plastics 
Industry; Stuart Pape of the National Soft Drink Association; 
Donald Farley of Pfizer, Inc.; and Dr. Michael Jacobson of the 
Center for Science in the Public Interest.
2. ``The Federal Takeover of the Chicago Housing Authority--HUD Needs 
        to Determine Long-Term Implications,'' House Report No. 104-
        437, December 21, 1995, Fifth Report by the Committee on 
        Government Reform and Oversight, Together With Additional 
        Views.
    a. Summary.--On May 30, 1995, the U.S. Department of 
Housing and Urban Development (HUD) assumed control over the 
day to day operations of the ``troubled'' Chicago Housing 
Authority (CHA). A declared breach of contract between CHA and 
HUD signed by HUD Secretary Henry Cisneros on June 2, 1995, 
made the takeover legally effective. Executed in the wake of 
the resignation of CHA's Board of Commissioners on May 26, 
1995, the takeover was an unprecedented HUD action.
    Although HUD has authority to intervene in troubled housing 
agency operations at any time, HUD has never before assumed 
responsibility for the day-to-day operations of a housing 
agency the size of CHA. CHA is the Nation's third largest 
public housing authority and is surpassed in size only by those 
of Puerto Rico and New York City. The CHA, created in 1937 by a 
resolution of the city of Chicago pursuant to the Housing 
Authorities Act of the State of Illinois, administers over 
55,000 public and assisted housing units and serves over 
150,000 residents.
    On June 1, 1995, Congresswoman Cardiss Collins (D-IL), 
ranking member of the Government Reform and Oversight 
Committee, submitted a request to Committee Chairman William F. 
Clinger, Jr. (R-PA) that hearings be conducted in Chicago on 
the role of the U.S. Department of Housing and Urban 
Development (HUD) in the operation of the Chicago Housing 
Authority (CHA). Subsequent to this letter, the subcommittee 
began an investigation into the Federal takeover at CHA.
    The subcommittee submitted an initial inquiry and document 
request to HUD on July 11, 1995, regarding HUD's role in the 
takeover of the CHA. The July 11 letter requested information 
concerning CHA's demolition and redevelopment initiatives, 
HUD's previous efforts to reform CHA administration and the CHA 
budget reconciliation for fiscal year 95.
    HUD responded to the inquiry on August 1, 1995. 
Additionally, Assistant Secretary Joseph Shuldiner and HUD 
staff met with the subcommittee and Member staff on August 21, 
1995, to address other issues raised regarding the takeover. On 
August 28, 1995, the subcommittee directed another document 
request and inquiry to HUD's Office of General Counsel. The 
Office of General Counsel staff met with the subcommittee staff 
the next day to provide a response and to answer staff 
questions.
    The subcommittee staff also conducted numerous interviews 
with members of the Chicago community including: former CHA 
Executive Director Vince Lane, Mayor Richard Daley, CHA 
residents, former CHA staff and local housing and community 
development experts. Further, on August 25, 1995, majority and 
minority staff conducted onsite investigations and interviews 
in the city of Chicago.
    On September 5, 1995, the subcommittee held an oversight 
hearing in Chicago to investigate the Federal takeover of the 
Chicago Housing Authority. The hearing focused on HUD's 
progress at CHA since the May 30 takeover, the agency's short 
and long term strategies for reforming CHA and its plans for 
installing new leadership and management at the CHA. At the 
hearing, testimony was received from top level HUD officials, 
including Henry Cisneros, HUD Secretary; the U.S. General 
Accounting Office (GAO); panels of tenants; public housing 
management experts; and representatives from the city of 
Chicago and the private sector.
    Based on the investigation and the oversight hearing, the 
committee adopted its fifth report to the 104th Congress on 
December 14, 1995.
    The report contained seven major oversight findings:
          1. HUD's takeover of CHA was a necessary response to 
        the resignation of the CHA Board of Commissioners.
          2. HUD implemented a 120 day-plan to stabilize CHA 
        finances, management, security and physical inventory.
          3. Three months following the takeover, HUD lacked a 
        long term strategy for reforming CHA, and extricating 
        itself from CHA management.
          4. HUD's presence at CHA will be required beyond 
        January 1, 1996.
          5. HUD lacks clear statutory or regulatory standards 
        to trigger intervention at troubled housing agencies.
          6. HUD does not have the staff resources necessary to 
        run several troubled housing agencies at once.
          7. The Resident Management Corp. at 1230 North 
        Burling, Cabrini Green in Chicago has improved living 
        conditions and economic opportunities for public 
        housing residents.
    Based upon its investigation, the committee report made the 
following detailed recommendations:
          1. HUD should promptly secure strong, long term 
        leadership at CHA.
          2. HUD and new CHA management should develop a long 
        term strategy for the recovery of CHA.
          3. HUD should maintain a clear distinction between 
        its actions as a Federal agency and its actions as CHA 
        manager.
          4. HUD's takeover of CHA should be evaluated as a 
        pilot program to determine the effectiveness of direct 
        HUD intervention at other troubled housing agencies.
          5. Clear statutory or regulatory standards should be 
        established for HUD intervention at troubled housing 
        agencies.
          6. HUD should do more to support viable Resident 
        Management Corp.'s, particularly those operating in 
        troubled public housing developments.
    The report includes additional views by Mrs. Collins and 
Mr. Towns expresssing general support for the report, and 
noting that a briefing by HUD on December 5, 1995, provided 
additional information, not reflected in the report, that some 
of the subcommittee's recommendations have already been 
adopoted by HUD. The additional views include references to 
facts that can be found in the hearing record that provide a 
more complete picture of the status of the intervention effort, 
the rationale for the takeover, and the capacity of HUD to 
intervene in other troubled housing authorities.
    Mrs. Collins and Mr. Towns noted that HUD had acted on the 
subcommittee's recommendation regarding hiring of CHA staff and 
regarding formulation of a long range plan for the CHA. The 
additional views also pointed out that HUD offered information 
to support the conclusion that the Department does have the 
capability to intervene in other troubled housing authorities. 
Finally, the ranking members expressed the view that budget 
constraints must be acknowledged in any evaluation of the HUD 
intervention at CHA.
    Mr. Shays' additional views concurred with those of Mrs. 
Collins and Mr. Towns regarding HUD's action on the 
subcommittee's recommendation.
    b. Benefits.--The investigation found that HUD's takeover 
of the day-to-day operations of the Chicago Housing Authority 
(CHA) was necessary given the magnitude and severity of the 
problems faced by the housing authority and its residents. 
Significant investment of Federal funds are at risk as a result 
of the mismanagement of the CHA. Taxpayers and residents will 
benefit from this intervention by HUD. Moreover, the 
subcommittee's continued oversight with respect to this matter 
may spare the Chicago Housing Authority future years of 
deferred maintenance, administrative waste and further 
deterioration.
    c. Hearings.--On Tuesday, September 5, 1995, the 
subcommittee convened an oversight hearing entitled ``HUD's 
Takeover of Chicago Housing Authority,'' to receive testimony 
from: Hon. Henry Cisneros, Secretary of the Department of 
Housing and Urban Development (HUD); Joseph Shuldiner, 
Assistant Secretary for Public and Indian Housing at HUD; Kevin 
Marchman, Deputy Assistant Secretary for Distressed and 
Troubled Housing at HUD; Artensia Randolph, president of the 
Central Advisory Committee; Hattie Calvin, president of the 
Cabrini Green Leadership Advisory Council; Cora Moore, 1230 
North Burling, Cabrini Green, Resident Management Corp.; 
Jeffrey Lines, a Kansas City receiver and president of TAG 
Associates; Judy England-Joseph, Director of Housing and 
Community Development Issues for the U.S. General Accounting 
Office (GAO); Rosanna Marquez, director of programs for the 
city of Chicago; George Murray, chief of the CHA Police 
Department; and William Wallace, managing director of the 
Housing Technology Corp.
3. ``Fraud and Abuse in Medicare and Medicaid: Stronger Enforcement and 
        Better Management Could Save Billions,'' House Report No. 104-
        641, June 27, 1996, Eighth Report by the Committee on 
        Government Reform and Oversight, Together with Additional 
        Views.
    a. Summary.--Fraud and abuse are serious drains on Medicare 
and Medicaid programs. The General Accounting Office (GAO) 
estimates that as much as 10 percent of annual Government 
outlays in Federal health care programs are lost to fraudulent 
and wasteful provider claims. If that estimate is correct, it 
would mean almost $32 billion was lost in FY 95. Given that 
Medicare and Medicaid together account for $269.16 billion in 
Federal health care spending in FY 1995, Federal losses to 
these programs associated with fraudulent and abusive practices 
approached $27 billion. Finding new ways to curb these losses 
has been a major bi-partisan concern in recent years.
    Both the Medicare and Medicaid programs are vulnerable to 
fraud and abuse. There are strong incentives to over provide 
services; weak fraud and abuse controls to detect questionable 
billing practices; few limits on those who can bill; and 
ineffective enforcement tools. The Medicare program is 
particularly vulnerable because the Department of Health and 
Human Service's (HHS) Health Care Finance Administration (HCFA) 
continues to pay higher than market rates for certain services 
and supplies. This makes the program an attractive target for 
increasingly sophisticated, multi-state or national fraud 
schemes.
    Medicare is also vulnerable because perpetrators know there 
is little chance of being caught. Federal enforcement 
activities have been uncoordinated and ineffectively carried 
out, and HCFA's anti-fraud-and-abuse controls fail to 
systematically prevent the unquestioned payment of claims. 
Screening of claims for medical necessity and other criteria is 
inconsistently applied. Vendors sanctioned for fraud or abuse 
are not effectively barred from continued participation in 
Federal health programs because the exclusion sanction is under 
utilized. This points to insufficient coordination between 
those charged with enforcing existing anti-fraud statutes.
    HCFA, the HHS-OIG, and DOJ have outlined initiatives for 
curtailing fraudulent and abusive practices in Medicare and 
Medicaid programs. However, the extent to which these 
initiatives will result in improvements to the Federal 
Government's health care anti-fraud capabilities is uncertain. 
HCFA has under development the Medicare Transaction System 
(MTS) to centralize claims review and processing functions now 
handled by 72 contractors.
    The GAO characterized MTS a system ``at risk'' in terms of 
cost and scheduling. Meanwhile, near-term opportunities for 
more effective anti-fraud programs may be missed while HCFA 
places most of its hopes on the far-off prospect of the MTS.
    Waste, fraud and abuse in Medicare and Medicaid will never 
be completely eliminated. However, billions could be saved by 
stronger enforcement and better management--actions which would 
not place excessive demands on available budgets.
    The report contained the following findings:
          1. There is insufficient coordination among 
        government agencies combating waste, fraud and abuse in 
        the Medicare and Medicaid programs.
          2. HCFA does not require Medicare Part B contractors 
        to use software capable of screening out claims for 
        inappropriate medical services.
          3. HCFA is reluctant to exercise its statutory 
        ``inherent reasonableness'' authority to adjust 
        reimbursement rates for durable medical equipment and 
        supplies because the process is costly and cumbersome. 
        This makes Medicare an attractive target for fraud and 
        abuse. As a result, the Government too often pays more 
        than the market price for certain equipment and 
        supplies costing taxpayers billions of dollars.
          4. HCFA's Medicare Transaction System (MTS) project 
        is vulnerable to cost overruns and schedule delays due 
        to the agency's lack of a disciplined management 
        process.
    Based on these findings, the report contained the following 
recommendations:
          1. Congress should require HCFA, HHS IG, DOJ, State 
        Medicaid Fraud Control Units and other appropriate law 
        enforcement entities establish a joint program to 
        coordinate fraud detection and prevention activities, 
        and to apply the exclusion sanction against vendors 
        more effectively.
          2. HCFA should require its contractors to use 
        autoadjudication prepayment screens to ensure that 
        Medicare does not continue to pay claims for medically 
        unnecessary services.
          3. Congress should revise HCFA's ``inherent 
        reasonableness authority'' to require a price 
        adjustment for a Medicare item or service within 1 year 
        of initiating a review of that item or service through 
        the issuance of an interim final regulation.
          4. HCFA should develop a comprehensive management 
        plan to address the cost and scheduling challenges 
        associated with the Medicare Transaction System (MTS). 
        Until that plan is developed, HCFA should focus greater 
        resources on effective, near-term anti-fraud efforts.
    b. Benefits.--This report's detailed findings and 
recommendations strengthened the bi-partisan consensus in 
support of improved anti-fraud efforts in Federal health care 
programs. Federal program administrators generally concur with, 
and will be guided by, the recommendations to reduce 
vulnerability to fraud, waste and abuse while increasing 
preventive enforcement activities in order to limit the 
unproductive ``pay and chase'' cycle of current enforcement 
efforts.
    c. Hearings.--A hearing entitled ``Waste in Human Service 
Programs: Other Perspectives'' was held on May 23, 1995. A 
hearing entitled, ``Keeping Fraudulent Providers Out of 
Medicare and Medicaid'' was held on June 15, 1995. A hearing 
entitled, ``Screening Medicare Claims for Medical Necessity'' 
was held on February 8, 1996. A hearing entitled, ``Excluding 
Fraudulent Providers from Medicaid'' was held on September 5, 
1996.

4. ``Health Care Fraud: All Public and Private Payers Need Federal 
        Criminal Anti-fraud Protections,'' House Report No. 104-747, 
        August 2, 1996, Eleventh Report by the Committee on Government 
        Reform and Oversight.

    a. Summary.--Health care fraud, by some estimates a $100 
billion problem, does not stay within the jurisdictional 
boundaries that divide Federal, State and local health care 
finance and law enforcement. Sophisticated patterns of fraud 
and abuse have been detected operating simultaneously against 
private insurers as well as Federal and State health programs. 
These scams victimize patients and payers across multiple 
States, even nationally.
    Faced with increasing health care costs, and the growing 
price of health care fraud, Congress and Federal policymakers 
are aware of the need for a more coordinated, unified approach 
to anti-fraud enforcement. One essential element of that 
approach is the availability of Federal criminal health care 
offenses to prosecute frauds against any and all payers 
victimized by the same scheme.
    Current Federal enforcement tools are inefficient and 
inadequate against increasingly sophisticated patterns of fraud 
and abuse. Health care fraud cases, prosecuted mainly under 
mail and wire fraud statutes, money laundering and false claims 
laws, are complex, costly and time-consuming.
    Scarce enforcement resources are wasted when Federal 
enforcement efforts to protect Medicare and Medicaid only 
result in ``fraud shifting'' to private payers. In that event, 
the general public continues to pay the price for health care 
fraud in the form of higher insurance premiums and higher costs 
for Government health programs.
    Support for creation of Federal health care fraud crimes is 
both longstanding and bi-partisan. The previous and current 
administration endorsed making health care fraud a Federal 
crime. Legislation in both the 103d and 104th Congress has 
enjoyed bi-partisan sponsorship and support.
    Based upon the product of investigative inquiries and 
hearing testimony, the committee reported the following 
findings:
          1. Health care fraud schemes steal billions of 
        dollars from public and private payers each year.
          2. The Department of Justice (DOJ) needs stronger and 
        more direct statutory authority to deter fraud and 
        abuse against public and private health care plans.
          3. Scarce enforcement resources are wasted in pursuit 
        of the same fraudulent scheme against public and 
        private health care plans in multiple jurisdictions.
    The report contains one recommendation: Congress should 
enact legislation to make health care frauds against all public 
and private payers Federal criminal offenses.
    b. Benefits.--This report put a bi-partisan focus on the 
need for new Federal criminal health care fraud offenses. It 
provided Members of Congress and the administration with a 
useful historical perspective and current policy rationale to 
guide efforts to strengthen enforcement efforts, particularly 
when frauds are committed against both public and private 
health care payers. Federal ``all payer'' offenses were 
included in the Health Care Portability and Accountability Act, 
Public Law 104-191.
    c. Hearings.--A joint hearing entitled H.R. 1850: Health 
Fraud and Abuse Act of 1995, H.R. 2480: Inspector General for 
Medicare and Medicaid Act of 1995, and H.R. 3224: The Health 
Care Fraud and Abuse Prevention Act of 1996 (Joint Hearing) was 
held on May 2, 1996.

5. ``Protecting the Nation's Blood Supply from Infectious Agents: The 
        Need for New Standards to Meet New Threats,'' House Report No. 
        104-746, August 2, 1996, Tenth Report by the Committee on 
        Government Reform and Oversight, Together with Additional 
        Views.

    a. Summary.--In the early 1980's, 10,000 hemophiliacs and 
12,000 other patients were infected with the human 
immunodeficiency virus (HIV) through blood and blood products. 
Approximately 300,000 people were infected with the Hepatitis C 
virus (HCV), many of whom have never been told of their 
exposure to infection.
    The lessons of these tragedies compel greater vigilance and 
higher regulatory standards to protect the Nation's blood 
supply from emerging infectious agents and blood borne 
pathogens. Threats to blood safety are both natural and man-
made, as aggressive new infectious agents emerge and blood 
safety practices evolve. As a result, substantial improvements 
are needed in coordination between the Public Health Service 
(PHS) agencies within the Department of Health and Human 
Services (HHS), particularly the Food and Drug Administration 
(FDA), the Centers for Disease Control and Prevention (CDC) and 
the National Institutes of Health (NIH).
    At the first of two subcommittee hearings on blood safety 
issues, HHS Secretary Donna Shalala announced that the 
Department's focus on blood safety issues will be expanded and 
elevated, with the Assistant Secretary for Health charged to 
improve the coordination and effectiveness of blood safety 
policy.
    Current FDA and CDC regulatory systems are not adequate to 
meet the aggressive nature of emerging threats to blood safety. 
Product recalls and notification regarding possible exposure to 
blood borne pathogens are not well communicated to physicians, 
pharmacists, patients or the public. Regulation of blood 
collection, testing and the production of blood-derived 
therapeutics is not well coordinated or consistently managed to 
minimize known risks.
    The public is not well served if patients are permitted to 
believe there is no risk in blood transfusions or in the use of 
blood derived therapies. While such risks are extremely small, 
and the U.S. blood supply is as safe as it has ever been, 
greater efforts should be made to convey known risks to 
consumers who may wish to minimize even those risks through the 
use of alternative procedures or therapies.
    After a year-long investigation of blood safety issues, the 
Committee on Government Reform and Oversight issued House 
Report 104-746 ``Protecting The Nation's Blood Supply From 
Infectious Agents: The Need For New Standards To Meet New 
Threats;'' which addressed the need for reform in the 
regulation of blood products. The report's findings included:
          1. The blood supply is safer than it has ever been.
          2. The blood supply continues to face new infectious 
        disease challenges.
          3. In response to the recommendations of the 
        Institute of Medicine (IOM), HHS has begun to implement 
        higher regulatory standards to protect the Nation's 
        blood supply from emerging infectious diseases and 
        blood borne pathogens.
          4. The public is provided insufficient information on 
        the risks of blood and blood products.
          5. The FDA has not effectively managed regulatory 
        review of blood issues, particularly its advisory 
        committee on blood safety issues, the Blood Products 
        Advisory Committee (BPAC).
          6. Despite a BPAC recommendation to the contrary, the 
        FDA took the first step toward closing the ``window 
        period'' of possible HIV transmission by licensing the 
        p24 antigen test for screening of donated blood.
          7. Fifteen years after the AIDS virus emerged as a 
        threat to the blood supply, FDA still has not developed 
        an effective system for communicating blood product 
        recalls to pharmacists, doctors or patients.
          8. The size of plasma pools for fractionated products 
        can increase the risk of infectious disease 
        transmission.
    The report recommended:
          1. Congress should establish the Blood Safety Council 
        and the Advisory Committee on Blood Safety and 
        Availability in statute.
          2. Congress should consider establishing an 
        indemnification system for individuals who suffer 
        adverse consequences from the use of blood and blood 
        products.
          3. HHS should take steps to ensure that the estimated 
        300,000 living recipients of blood and blood products 
        who were infected with Hepatitis C virus before 1990 
        are notified of their potential infection so that they 
        might seek diagnosis and treatment.
          4. HHS should disseminate more clinically useful 
        information to providers of care and to the public 
        regarding blood safety issues.
          5. FDA should immediately develop an effective system 
        of recall notification for blood and plasma products.
          6. FDA should immediately cease its practice of 
        providing advance notice of safety and compliance 
        inspections to some plasma fractionators.
          7. Plasma fractionators should limit the size of 
        plasma pools, with pool sizes determined as much by 
        public health risk factors as by production economies 
        of scale.
    During the 1980's, 10,000 hemophiliacs and 12,000 others 
were infected with the Human Immunodeficiency Virus (HIV), 
which causes Acquired Immune Deficiency Syndrome (AIDS), 
through the use of blood and blood-derived therapies. The 
report found that current scientific and regulatory standards 
to detect and remove emerging blood borne pathogens lack both 
consistency and vigor. The report recommended greater 
cooperation and coordination between Federal public health 
agencies, more effective communication of the risks of blood 
products to consumers, and more effective recall of 
contaminated blood and blood products.
    b. Benefits.--The subcommittee's investigation and hearing 
allowed FDA officials, patients, physicians, blood collection 
industry representatives and plasma product manufacturers the 
opportunity to articulate their concerns and solutions 
regarding threats to the safety of the blood supply presented 
by emerging pathogens, complacency and regulatory 
mismanagement. The lessons of HIV and Hepatitis-C infections 
compel greater vigilance and higher regulatory standards to 
protect the Nation's blood supply from emerging infectious 
agents and blood borne pathogens. This report provides an 
outline of existing problems in the blood regulatory system as 
well as recommendations for resolution of these issues.
    c. Hearings.--Hearings entitled ``Protecting the Nation's 
Blood Supply from Infectious Agents: The Need for New Standards 
to Meet New Threats'' were held October 12 and November 2, 
1995.

     NATIONAL SECURITY, INTERNATIONAL AFFAIRS AND CRIMINAL JUSTICE 
                              SUBCOMMITTEE

                 Hon. William H. Zeliff, Jr., Chairman

1. ``National Drug Policy: A Review of the Status of the Drug War,'' 
        House Report No. 104-486, March 19, 1996, Seventh Report by the 
        Committee on Government Reform and Oversight, Together with 
        Additional Views.

    a. Summary.--Pursuant to the National Narcotics Leadership 
Act of 1988 (21 U.S.C. 1501 et seq.), the Director of the 
Office of National Drug Control Policy (ONDCP) developed a 
strategy and budget for anti-narcotics efforts, including both 
supply and demand reduction. In order to evaluate the strategy 
and find ways to both improve and supplement in the public and 
private sector, the Subcommittee on National Security, 
International Affairs, and Criminal Justice held five hearings 
and conducted a fact-finding trip to the Caribbean drug transit 
zone. The findings and recommendations of these activities are 
detailed in the March 19, 1996 committee report.
    The National Narcotics Leadership Acts requires that the 
strategy: ``(A) include comprehensive, research based, long-
range goals for reducing drug abuse in the United States; (B) 
include short-term measurable objectives which the Director 
determines may be realistically achieved in the 2 year period 
beginning on the date of the submission of the strategy; (C) 
describe the balance between resources devoted to supply 
reduction and demand reduction; and (D) review state and local 
drug control activities to ensure the United States pursues 
well-coordinated and effective drug control at all levels of 
government.'' The subcommittee held five hearings in order to 
determine whether the current strategy and its execution 
continues to meet these statutory obligations.
    The threats posed by illegal drug use, especially among the 
Nation's youth, have continued to grow since the subcommittee 
investigation began in January 1995. All national studies show 
a rise in drug use among teenagers. Both minority and majority 
members of the subcommittee have demonstrated a commitment to 
enhancing the drug control strategy by their active 
participation in these hearings.
    b. Benefits.--As a result of its investigation into the use 
of illegal drugs in America and the Nations fight against 
drugs, the subcommittee confirmed the following facts:
          (1) Casual teenage drug use trends have suffered a 
        marked reversal over the past 4 years, and are 
        dramatically up in virtually every age group and for 
        every illicit drug, including heroin, crack, cocaine 
        hydrochloride, LSD, non-LSD hallucinogens, 
        methamphetamine, inhalants, stimulants, and marijuana.
          (2) Rising casual teenage drug use is closely 
        correlated with rising juvenile violent crime.
          (3) If rising teenage drug use and the close 
        correlation with violent juvenile crime continue to 
        rise on their current path, the Nation will experience 
        a doubling of violent crime by 2010.\15\
---------------------------------------------------------------------------
    \15\ See Juvenile Offenders and Victims: A National Report, OJJDP, 
Department of Justice, September 1995.
---------------------------------------------------------------------------
          (4) The nature of casual teenage drug use is 
        changing. Annual or infrequent teenage experimentation 
        with illegal drugs is being replaced by regular, 
        monthly or addictive teenage drug use.\16\
---------------------------------------------------------------------------
    \16\ See 1995 surveys conducted by PRIDE, The National Household 
Survey, and The University of Michigan's Monitoring the Future Survey.
---------------------------------------------------------------------------
          (5) The nationwide street price for most illicit 
        drugs is lower than at any time in recent years, and 
        the potency of those same drugs, particularly heroin 
        and crack, is substantially higher.
          (6) Nationwide, drug related emergencies have 
        steadily climbed and have now reached an all time high.
          (7) The 1994, 1995, and 1996 White House ONDCP 
        strategies consciously shift resources away from 
        priorities set in the late 1980's, namely from 
        prevention and interdiction to treatment of ``hardcore 
        addicts'' and source country programs.
          (8) During 1993, 1994 and most of 1995, the President 
        put little emphasis on, and manifested little interest 
        in, either the demand side war against illegal drug use 
        or the supply side war against international narcotics 
        traffickers. An objective look at the President's 
        public addresses and his actions including dramatic 
        cuts in ONDCP staffing, interactions with Congress, and 
        discussions with foreign leaders reveals that attention 
        to the rising tide of illegal drug use is a low 
        Presidential priority.
          (9) The President's actual attention to this problem, 
        measured by other than the paucity of speeches and 
        proposed budget cuts, has been uniformly low. In 
        addition to the absence of direct Presidential 
        involvement in the drug war, the President produced no 
        1993 Annual Strategy, despite a statutory duty to do so 
        under the 1988 Antidrug Abuse Act; delayed appointment 
        of a White House Drug Czar, or ONDCP Director, until 
        half way through 1993; and produced only a terse 
        ``interim'' 1993 Strategy.
          (10) The Drug War appears also to have been expressly 
        reduced to a low national security priority early in 
        the administration, and not to have been formally 
        elevated at any time since.\17\
---------------------------------------------------------------------------
    \17\ Reportedly, the drug war's national security priority during 
the first 3 years of the Clinton administration was number 29 out of 
29.
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          (11) While the position is contested by the 
        administration's ONDCP Director, a wide cross section 
        of drug policy experts inside and outside of the 
        administration concur that the absence of direct 
        Presidential involvement in foreign and domestic 
        counter narcotics efforts is one reason for the recent 
        reversal in youth drug use trends, reduced street 
        prices for most narcotics, and increased potency of 
        most illicit drugs.
          (12) Prevention programs that teach a right-wrong 
        distinction in drug use, or ``no use,'' such as 
        D.A.R.E., G.R.E.A.T., the Nancy Reagan After School 
        Program, community-based efforts run by groups such as 
        C.A.D.C.A., PRIDE, the National Parents Foundation, and 
        Texans War on Drugs, as well as other local school and 
        workplace programs, have proven both successful and 
        popular where they have been well-managed and 
        accountable--despite the 1995 White House ONDCP 
        Strategy statement that ``[a]ntidrug messages are 
        losing their potency among the Nation's youth.''
          (13) Federal drug prevention programs, such as Safe 
        and Drug Free Schools, while supporting successful 
        prevention programs in many parts of the country, have 
        also been subject to misapplication, waste and abuse.
          (14) The Nation's law enforcement community needs 
        greater flexibility and support from the Federal 
        Government in addressing the rise in juvenile and drug 
        related crime. While certain developments are 
        promising, such as the $25 million increase in Byrne 
        Grant funding in fiscal 1996, a law enforcement block 
        grant to supersede the COPS program, and increased 
        reliance on joint interagency task forces, valuable 
        time has been lost in addressing this need. Renewed 
        attention to strengthening Local, County, State and 
        Federal law enforcement's counter narcotics efforts is 
        required.
          (15) The Nation's interdiction effort has been 
        dramatically curtailed over the past 3 years, due to 
        lack of White House support for interdiction needs, 
        reduced funding, a tiny staff at the U.S. Interdiction 
        Coordinator's Office, the absence of an ONDCP Deputy 
        for Supply Reduction, reduced support for National 
        Guard container search days, the elimination of certain 
        cost effective assets in the Eastern Caribbean, 
        reassignment or absence of key intelligence gathering 
        assets, reluctance by the Department of State to 
        elevate counter narcotics to a top priority in certain 
        source and transit countries, unnecessary interagency 
        quarreling over asset management and personnel issues, 
        and the apparent inability or unwillingness of the 
        White House Drug Czar to bring essential interdiction 
        community concerns to the attention of the President or 
        to aid the President's Interdiction Coordinator in 
        doing so; and
          (16) There has been poor management and interagency 
        coordination in source country counter-drug activities.
    c. Hearings.--In 1995, the subcommittee held five days of 
hearings in conjunction with its investigation of ONDCP. Those 
hearings include the following: ``Effectiveness of the National 
Drug Control Strategy and the Status of the Drug War'' on March 
9 and April 6, 1995; ``Illicit Drug Availability: Are 
Interdiction Efforts Hampered by a Lack of Agency Resources?'' 
on June 27 and 28, 1995; and ``The Drug Problem in New 
Hampshire: A Microcosm of America,'' September 25, 1995.
    On March 9, 1995, the subcommittee investigation resulted 
in its first hearing entitled, ``Effectiveness of the National 
Drug Control Strategy and the Status of the Drug War.'' The 
purpose of this hearing was to examine President Clinton's 1995 
National Drug Control Strategy, and to begin an assessment of 
how effectively the Nation is fighting illegal drug abuse, 
domestically and internationally. Acknowledged components of 
the Drug War under review include prevention, treatment, 
interdiction, law enforcement, and source country programs.
    At this hearing, testimony was received from four panels. 
The subcommittee heard first from former First Lady of the 
United States, Nancy Reagan. The second panel included William 
J. Bennett, former Director of the Office of National Drug 
Control Policy (ONDCP); Robert C. Bonner, former Administrator 
of the Drug Enforcement Administration; and John Walters, 
former Acting Director of ONDCP. The subcommittee also heard 
testimony from Dr. Lee Brown, Director of ONDCP. Finally, the 
subcommittee heard from Admiral Paul A. Yost, Jr., former Coast 
Guard Commandant; and several nationally recognized drug abuse 
prevention experts, including Thomas Hedrick, Jr., senior 
representative of the Partnership for a Drug-Free America; G. 
Bridget Ryan, executive director of California's BEST 
Foundation; James Copple, national director of the Community 
Antidrug Coalitions of America (CADCA); and Charles Robert 
Heard, III, director of program services for Texans' War on 
Drugs.
    With varying degrees of emphasis, all panels acknowledged 
that current Federal efforts are under strain from reduced 
emphasis on certain components of the Drug War, budgetary 
pressure, and in some cases accountability.
    The panels also acknowledged that, over the past several 
years, there has been a marked reversal in several important 
national trends including most notably a rise in casual drug 
use by juveniles, but also reaching to perceived drug 
availability (up), perceived risk of use (down), average street 
price (down), drug related medical emergencies (up), drug 
related violent juvenile crime (up), total Federal drug 
prosecutions (down), and parental attention to the drug issue 
(down).\18\
---------------------------------------------------------------------------
    \18\ Press release, the University of Michigan, ``Drug Use Rises 
Again in 1995 Among American Teens:'' December 15, 1995; press release, 
PRIDE, ``Teen Drug Use Rises for Fourth Straight Year,'' November 2, 
1995; preliminary estimates from the Drug Abuse Warning Network, U.S. 
Department of Health and Human Services, September 1995; James E. 
Burke, ``Presentation: An Overview of Illegal Drugs in America,'' 
Partnership for a Drug-Free America, fall 1995. The subcommittee found 
that these reversals have continued through the period 1993 to 1995, 
although certain trend lines, including a shift from falling to rising 
casual use, typically among juveniles, began in 1992. In addition, a 
shift of certain interdiction resources, which were earlier a part of 
the counter narcotics force structure, began in late 1991 with the 
advent of the Persian Gulf War.
---------------------------------------------------------------------------
    All panels agreed that renewed national leadership, 
including both Presidential and congressional leadership, will 
be necessary to combat these recent trend reversals, especially 
the rise in juvenile drug abuse and drug related violent 
juvenile crime.
    The subcommittee continued its investigation into the 
Nation's drug control strategy with a second hearing on April 
6, 1995, which was a follow-up to the March 9 hearing. 
Testimony was received only from Dr. Lee P. Brown, Director of 
ONDCP, who continued testimony he gave the subcommittee on 
March 9, 1995. Dr. Brown testified on a range of topics, 
including treatment, prevention, law enforcement, interdiction 
and source country programs.
    On June 27 and June 28, 1995, the subcommittee held 
hearings entitled, ``Illicit Drug Availability: Are 
Interdiction Efforts Hampered by a Lack of Agency Resources?'' 
to examine efforts to limit supply and availability by 
interdicting drugs before they cross our borders. On June 27, 
the subcommittee received testimony from a number of witnesses, 
beginning with a technology and K-9 demonstration,\19\ and 
proceeding through testimony from high school students. The 
hearing continued with testimony from the Administrator of the 
Drug Enforcement Administration and three investigators from 
the General Accounting Office (GAO), who evaluated the 
effectiveness of the Clinton administration's source country 
programs.
---------------------------------------------------------------------------
    \19\ The U.S. Customs Service Canine Training Center provided a 
demonstration on the utilization of drug sniffing dogs in illicit 
narcotic interdiction. Also, a representative from the U.S. Coast 
Guard's Miami Law Enforcement Division demonstrated how an Ionscan and 
the Compact Integrated Narcotic Detection Instrument (CINDI) operate to 
detect and locate illicit narcotics.
---------------------------------------------------------------------------
    The subcommittee first heard from four students affected by 
drugs in their schools, including Michael Taylor of Browne 
Junior High School, Natasha Surles of Roper Junior High School, 
Willie Brown of McFarland Middle School, and Lan Bui of Bell 
Multicultural School.
    Subsequently, the subcommittee heard testimony by Thomas A. 
Constantine, Administrator of the Drug Enforcement 
Administration, and expert witnesses Joseph Kelley, Allan 
Fleener and Ron Noyes of the General Accounting Office. Mr. 
Kelley is Director-In-Charge of the International Affairs 
Section and Mr. Fleener and Mr. Noyes are investigators who 
principally assisted in producing a June 1995 GAO report on 
source country anti-narcotics programs.
    Finally, the subcommittee heard testimony from Jane E. 
Becker, Acting Assistant Secretary of State for International 
Narcotics and Law Enforcement Affairs, U.S. Department of 
State; and Brian Sheridan, Deputy Assistant Secretary for Drug 
Enforcement Policy and Support at the Department of Defense.
    During this hearing, the subcommittee examined the current 
drug interdiction efforts of the major Federal agencies engaged 
in the national drug control strategy, namely DEA, the U.S. 
Coast Guard, U.S. Customs, and the Departments of Defense and 
State.
    Collectively, the expert witnesses confirmed that on 
November 3, 1993, President Clinton signed a Presidential 
Decision Directive for Counter narcotics (PDD-14), which 
instructed Federal agencies to shift the emphasis in U.S. 
international antidrug programs from the transit zones such as 
Mexico, Central America and the Caribbean to the source 
countries such as Colombia, Peru, and Bolivia. PDD-14 provided 
that the Director of the Office of National Drug Control Policy 
(ONDCP) should appoint a Coordinator for Drug Interdiction ``to 
ensure that assets dedicated by the Federal drug program 
agencies for interdiction are sufficient and that their use is 
properly integrated and optimized.'' [PDD-14, November 3, 
1993.]
    The aim of this hearing was to offer the administration's 
principals on interdiction, those whose mission was affected by 
PDD-14, an opportunity to assess their own efforts and explain 
the impact on their agencies of PDD-14 and its concomitant 
``controlled shift'' of resources.
    Continuing these hearings on June 28, 1995, the 
subcommittee received testimony on interdiction policy from 
additional administration witnesses, including Admiral Robert 
E. Kramek, Commandant of U.S. Coast Guard and U.S. Interdiction 
Coordinator, and George Weise, Commissioner of the U.S. Customs 
Service.
    Admiral Robert E. Kramek, U.S. Interdiction Coordinator and 
Commandant of the U.S. Coast Guard, serves a dual role in the 
Nation's interdiction efforts. He testified before the 
subcommittee in both capacities. He explained that the U.S. 
Coast Guard serves as the lead agency for maritime interdiction 
and as co-lead with Customs for air interdiction, adding that 
drug interdiction takes only 9 percent of the Coast Guard 
budget and emphasizing the important role intelligence plays in 
drug interdiction. On this topic, he testified that 70 percent 
of our operations are based on intelligence.
    Admiral Kramek took particular note of the importance of 
national leadership on this issue. Offering implicit criticism 
of a reduced interdiction effort in the Clinton administration, 
he testified that, when the smugglers see our foreign policy 
priorities change and make drug interdiction much lower on the 
priority list than other things, they're quick to take 
advantage of that.
    George Weise, Commissioner, U.S. Customs, testified 
regarding efforts to interdict drugs at our Nation's borders. 
Mr. Weise reiterated the importance of knocking out smuggling 
by private plane into this country, and attributes the 
increased shift to ground smuggling along the Southwest border 
to the efforts against air transport. He believes that the 
2,000 miles of the Nation's Southwest border has now emerged as 
the primary entry point for cocaine, although he did not 
contradict Admiral Kramek's assessment that Puerto Rico has 
recently taken on new significance as a port of entry into the 
United States.
    The subcommittee's investigation also included an 
examination of the fight against drugs on the streets of 
America's cities. At the subcommittee's September 25, 1995 
hearing on the drug problem in New Hampshire entitled ``The 
Drug Problem in New Hampshire: A Microcosm of America,'' 
members received testimony from a number of witnesses fighting 
on the front lines at the local levels.
    The purpose of the field hearing was to continue an 
examination of national drug control policy, focusing on the 
successful drug fighting efforts of Manchester, NH, which had 
recently participated in a joint interagency task force called 
``Operation Streetsweeper.''
    Collectively, the expert testimony confirmed the following 
facts: Early in 1995, statistics showed that the overall crime 
rate in Manchester, which is New Hampshire's largest city, had 
declined. However, these statistics also showed that arrests 
for drug offenses had increased dramatically, as they had for 
other drug related crimes. After a number of murders were 
linked to drug distribution and usage, the community came 
together to rid their city of this scourge.
    Manchester Police Chief Peter Favreau received a $100,000 
grant to help pay for State Police Officers to patrol city 
streets with city police, and a short time later Manchester 
Police were joined by the Sheriff's Department, the State 
Attorney General's Drug Task Force, the State Police Special 
Investigations Unit, the Drug Enforcement Administration, the 
Bureau of Alcohol, Tobacco and Firearms (ATF), and the 
Immigration and Naturalization Service (INS). This Federal-
State-Local interagency task force put jurisdictional issues 
aside and singularly pursued the aim of getting drug dealers 
off the streets of Manchester.
    As various panelists and community representatives 
testified, the change on the streets of Manchester could be 
felt immediately. As Chief Favreau testified, ``With as much 
coverage as we have out there, I honestly feel [the criminals] 
are going elsewhere. It's almost impossible not to have that 
happen.''
    In an effort to understand how the interagency task force 
worked and what made it so effective, the principals in this 
successful antidrug effort testified before the subcommittee. 
Since illegal drugs and associated violent crime plague 
virtually every city in America, the accounts these witnesses 
told offer valuable insights into how best to tackle drugs and 
violent crime in other cities around this country.
    Witnesses included: Jeff Howard, attorney general for the 
State of New Hampshire; Geraldine Sylvester, the director of 
New Hampshire's Office of Alcohol and Drug Abuse Prevention; 
Paul Brodeur, commissioner of New Hampshire Department of 
Corrections; Neal Scott, assistant unit commander of the 
Narcotics Investigation Unit with the New Hampshire State 
Police; Billy Yout, Special Agent in Charge of Drug Enforcement 
Administration; Ray Wieczorek, the mayor of Manchester; Peter 
Favreau, chief of the Manchester Police Department (MPD); Paul 
Gagnon, U.S. attorney for New Hampshire; Alice Sutphen, a 
representative from the citizen's group Take Back Our 
Neighborhoods; Dana Mitchell, captain, Dover Police; Michael 
Plourde, executive director of the Nashua Youth Council; John 
Ahman, regional program director for Marathon House, and; Dick 
Tracy, sergeant, Crime Prevention Division, Manchester Police 
Department.
    d. Fact-finding Trip.--The subcommittee's investigation 
included one fact finding trip to the Drug War's front line. 
Subcommittee members, the United States Coast Guard and staff, 
traveled to the Seventh Coast Guard District in the Caribbean 
transit zone between June 16 and June 19, 1995. In the transit 
zone, subcommittee members and staff attended briefings at 
Seventh District Headquarters in Miami, Coast Guard 
interdiction initiatives at sea, DEA activities in the Greater 
Antilles, high level interagency briefings in Puerto Rico by 
the FBI, DEA, Customs, Border Patrol, and local authorities, 
and received in depth briefings by Admiral Granuzo and others 
at Joint Interagency Task Force East (JIATF East) in Key West, 
dedicated to drug interdiction in the transit zone.
    This interdiction trip was arranged in coordination with 
the U.S. Coast Guard, and invitations were extended to minority 
and majority members.
    In briefings, a number of interdiction facts became more 
clear. Agents participating in OBAT (Operation Bahamas, Turks 
and Caicos), a multi-agency, international operation based in 
Nassau, Bahamas, made clear that they have lost major assets 
over the past 2 years.
    At the Greater Antilles Section Coast Guard Base (GANTSAC) 
in Puerto Rico, which covers 1.3 million square miles, multi-
agency briefers expressed the view that, if 70 percent of the 
cocaine coming into the United States comes over the Southwest 
border, the rest comes through Puerto Rico, which has seen as 
much as $40 million in money laundering in recent years. In 
attendance at the briefing were representatives of the FBI, 
DEA, Border Patrol, Coast Guard, INS, Customs, Department of 
Defense and Puerto Rico.
    Summarizing the briefing, the assets most needed are: more 
radars (including a suggested radar in Belize); more Jayhawk 
helicopters; more 378-foot Coast Guard Cutters; ion scanners 
and CINDI's; air rights agreements with more Caribbean nations 
(perhaps Cuba); and more senior level staff. The Coast Guard 
also indicated that they have recently lost 4 of 10 HU-25 
intercepter aircraft by re-deployment or demobilization.
    At JIATF East, briefers included Rear Admiral Andrew A. 
Granuzo, who admitted that the central obstacle to waging a 
more effective drug war, particularly in interdiction, is that 
``there is no one in charge.'' This assessment mirrored the 
testimony of Admiral Yost, Bill Bennett, John Walters, and 
Robert Bonner.
    JIATF East was created by Presidential Decision Directive 
14 (PDD 14), which ordered a review of the Nation's counter 
narcotics command and control intelligence centers. Creation of 
three joint interagency task forces and a domestic air 
interdiction center was authorized by the White House Drug Czar 
in April 1994. Accordingly, JIATF East is joined in its 
interdiction mission by JIATF West in Alameda, CA; JIATF South 
in Panama; the DAICC at March Air Force Base, CA; and JTF-6 in 
El Paso, TX.
    JIATF East is dedicated to supporting all counterdrug 
activities in the transit zone. The command integrates 
intelligence with operations, and coordinates the employment of 
the U.S. Navy and U.S. Coast Guard ships and aircraft, U.S. Air 
Force aircraft, and aircraft and ships from allied nations, 
such as Great Britain and the Netherlands. The command's 
mission boils down to maximizing the disruption of drug 
transhipment, collecting, integrating and disseminating 
intelligence, and guiding detection and monitoring forces for 
tactical action.
    Just as importantly, JIATF East integrates law enforcement 
personnel, primarily from Customs, into the international 
interdiction effort. For that reason, the command includes FBI, 
DEA and State Department, in addition to the Department of 
Defense.

2. ``A Two-Year Review of the White House Communications Agency Reveals 
        Major Mismanagement, Lack of Accountability, and Significant 
        Mission Creep,'' House Report No. 104-748, August 2, 1996, 
        Twelfth Report by the Committee on Government Reform and 
        Oversight, Together with Dissenting Views.

    a. Summary.--In March 1994, alarmed by allegations of 
waste, fraud and abuse within the White House Communications 
Agency (WHCA), Chairman William F. Clinger, Jr., and 
subcommittee Chairman William H. Zeliff, Jr., requested the 
General Accounting Office to conduct a comprehensive audit of 
the mission, functions and operations of that agency. WHCA, a 
military unit within the Department of Defense (DOD), is 
responsible for providing communications support to the White 
House.
    The committee's request was met with strong and consistent 
opposition from the Clinton administration which argued that 
any inspection of WHCA would create an extreme national 
security risk and endanger the personal safety of the 
President. Nevertheless, after blocking the investigation for 
nearly a year, and as a result of continued pressure by 
Chairmen Clinger and Zeliff, the administration agreed to 
permit the DOD Inspector General (IG) to conduct the requested 
review.
    The IG audit resulted in a two-part report which confirmed 
that WHCA was suffering from severe mission creep, internal 
mismanagement, and a lack of oversight and accountability. The 
IG concluded that WHCA had significantly expanded its original 
mission of providing secure communications to the President, 
and that the agency was now providing extensive unrelated 
services to the President, First Lady, Vice-President, and to 
White House staffers in general. The IG further concluded that 
these extraneous services, which were provided and paid for by 
DOD, should have been funded by the White House. Although the 
IG did not provide a total dollar figure for inappropriate DOD-
WHCA spending, they identified specific services amounting to 
more than $16 million in fiscal years 1994 and 1995 which were 
improperly paid from DOD's budget.
    The reports concluded that WHCA's mission creep had been 
fostered primarily by vague and ambiguous mission statements 
and the gradual transfer of operational control of WHCA from 
DOD to the White House.
    While WHCA and its predecessor agencies were initially 
devoted solely to military, strategic and national security 
support for the President, a broader mission statement was 
adopted by DOD in 1962 and subsequently refined in the 1970's 
and 1980's to, ``provide telecommunications and other related 
support to the President of the United States and to other 
elements related to the President. . . . Elements related to 
the President are his staff, the First Family, the Vice 
President, the U.S. Secret Service Protective Forces, and 
others as directed.'' In other words, the DOD had allowed the 
agency's mission to be broadened to include almost any task to 
support almost any member of the President's family or staff.
    The second factor contributing to WHCA's mission creep was 
the transfer of operational control of WHCA from the Department 
of Defense to the White House. Although WHCA exists as a DOD 
agency under the command of the Defense Information Systems 
Agency (DISA), DISA does not in fact direct the operations of 
WHCA. Rather, WHCA receives its day-to-day orders and 
directions from the White House Military Office (WHMO), which 
is staffed by political appointees and is part of the Executive 
Office of the President. The Director of WHMO--a civilian, 
political appointee who holds the position of Deputy Assistant 
to the President--directs the activities of WHCA and writes the 
annual Officer Evaluation Report which determines the future 
career prospects of the WHCA Commander. This Officer Evaluation 
Report is reviewed, supplemented and signed by the White House 
Chief of Staff.
    Thus, although WHCA is technically a sub-command of DISA, 
and is theoretically under the supervision of DISA, in practice 
the power relationship is exactly reversed. Because of WHCA's 
proximity and direct responsibility to the President, DISA has 
generally taken a deferential and subservient attitude toward 
WHCA, and has focused on ministering to the requirements of 
WHCA rather than exercising effective supervision. In light of 
that fact, WHCA was willing to expand its mission to 
accommodate successive Presidents, even though many of the new 
missions should have been funded and performed by other 
agencies. This unique role reversal was fundamental to WHCA's 
profound mission creep, as well as its parent agency's lack of 
program oversight or operational control.
    In addition to mission creep and a lack of effective 
oversight, the subcommittee's investigation found significant 
failings in the areas of procurement, disbursements, property 
and inventory management, and obligation controls.
    The IG audit revealed that WHCA has routinely avoided 
statutorily required competitive bidding procedures for the 
purchase of goods and services, relying instead on ``best 
guesses'' in assessing the reasonableness of prices quoted. The 
agency has frequently ignored fundamental contract law, using 
unwritten oral agreements in lieu of clearly negotiated, 
verifiable contracts. As a consequence, the agency has often 
been held liable for questionable contracts with suspect terms. 
WHCA has also habitually bypassed required independent DOD 
review of major purchases. These contracting failures have 
resulted in millions of dollars of wasted taxpayers' money.
    Specific examples of procurement waste cited in the IG 
reports included the $4.9 million purchase of two air-
transportable mobile communications systems that did not meet 
WHCA's operational needs, and the agency's failed acquisition 
of replacement satellite terminals. While WHCA had planned and 
justified the purchase of 12 units at a cost of $269,000 each, 
the belated discovery that the terminals cost more than twice 
that amount, or $618,000 each, forced WHCA to reduce its 
purchase by half, thus failing to achieve the needed upgrade.
    Additional management difficulties uncovered by the 
subcommittee included a lack of control over disbursements 
leading to untold numbers of duplicate vendor payments, the 
routine late payment of bills and invoices resulting interest 
and penalty charges, and the agency's inability to determine 
the validity of over $14.5 million in unliquidated payment 
obligations.
    In the area of property management, the IG audit unearthed 
serious problems with WHCA's inventory controls. The reports 
disclosed $555,000 worth of computers and $22,000 worth of 
photographic equipment which was never recorded in the agency's 
property book. In testimony before the subcommittee, the IG 
conjectured that the total value of non-recorded property may 
have been as high as $738,000. In addition, the auditors noted 
that the lack of accountability often made it difficult for 
WHCA managers to determine whether non-expendable property 
which had been ordered and paid for had actually been received.
    The subcommittee's investigation further disclosed that 
WHCA failed to follow DOD regulations requiring the regular 
inventory and re-validation of major equipment needs. As a 
result, the agency was paying over $117,000 a year to lease 
telecommunications circuits which were no longer required.
    Upon completing its audit and in testimony before the 
subcommittee, the IG stated that ``the Assistant Secretary of 
Defense (Command, Control, Communications and Intelligence) 
management control program needs improvement because a material 
weakness exists in that administrative, financial and 
operational oversight was not provided to the White House 
Communication Agency.'' The IG identified the Assistant 
Secretary of Defense for Command, Control, Communications and 
Intelligence (the ASD/C3I) as the responsible entity because 
the ASD/C3I is in charge of DISA, WHCA's commanding unit.
    b. Benefits.--DOD's management response to the IG audit was 
provided by Hon. Emmett Paige, Jr., the ASD/C3I, who submitted 
joint comments on his own behalf and on behalf of the Director 
of DISA and the Commander of WHCA. In response to the IG's 
findings of mission creep, the ASD/C3I denied the existence of 
any problem. However, the ASD/C3I did concur with almost all of 
the IG's findings and recommendations regarding WHCA's lack of 
accountability and internal controls. The ASD/C3I acknowledged 
not only that each individual accountability problem needed to 
be corrected, but also that the scope and nature of WHCA's 
accountability problems, taken as a whole, demanded an over-
arching, systemic solution. To that end, the ASD/C3I entered 
into negotiations with White House administrators to resolve 
questions of WHCA's accountability. As a result of those 
meetings, a Memorandum of Agreement (MOA) was executed between 
the ASD/C3I and the White House to establish the terms and 
conditions governing WHCA's future operations and DISA's 
oversight responsibilities.
    To address unresolved concerns over mission creep and 
further define DISA's oversight responsibilities, the committee 
issued a report, House Rept. 104-748, which recommended the 
adoption of legislation to statutorily limit WHCA's mission to 
providing national security-related telecommunications services 
required by the President. The subcommittee recommended that 
all other functions presently performed by WHCA either be 
transferred to the Executive Office of the President (EOP) or 
require EOP reimbursement. This recommendation was 
substantially adopted as an amendment to the 1996 Department of 
Defense Authorization Act.
    The subcommittee further recommended that the WHCA 
Commander be given annual performance evaluations by the 
Director of DISA.
    Finally, the subcommittee recommended the adoption of a 5 
year period of annual reporting to monitor the agency's 
progress in resolving the problems identified by the DOD IG and 
by the subcommittee. This recommendation was also included in 
the 1996 Defense Authorization Act.
    c. Hearings.--On May 16, 1996, the subcommittee convened a 
hearing to receive testimony from Hon. Emmett Paige, Jr., ASD/
C3I; Colonel Joseph J. Simmons, IV, the Commander of WHCA; Mr. 
Robert J. Lieberman, Assistant Inspector General for Auditing 
for the DOD IG; and Mr. Henry L. Hinton, Jr., Assistant 
Comptroller General for the GAO's National Security and 
International Affairs Division.
    While testimony was received from Messrs. Hinton and 
Lieberman, concerns over the submission of two differing sets 
of testimony on behalf of Colonel Simmons caused subcommittee 
Chairman Zeliff to adjourn the hearing to reconvene at a later 
date. When the subcommittee reconvened on Jule 13, 1996, 
testimony was received from Secretary Paige and Colonel 
Simmons.

3. ``Investigation Into the Activities of Federal Law Enforcement 
        Agencies Toward the Branch Davidians,'' House Report No. 104-
        749, August 2, 1996, Thirteenth Report by the Committee on 
        Government Reform and Oversight, Prepared in Conjunction with 
        the Committee on the Judiciary, Together with Additional and 
        Dissenting Views.

    a. Summary.--The conduct of three executive branch 
departments and subsidiary agencies came under intense scrutiny 
following the raid and standoff at the Branch Davidian 
residence in West Texas in 1993. Accordingly, the subcommittee 
conducted a 5-month prehearing investigation into executive 
branch conduct of these departments and agencies and accepted 
testimony by 97 witnesses during 10 days of hearings in 1995.
    In June 1992, the Austin, TX Office of the Bureau of 
Alcohol, Tobacco and Firearms (ATF) opened a formal 
investigation into allegations that members of a Waco, TX 
religious group, the Branch Davidians, and in particular their 
leader, Vernon Howell (a.k.a. David Koresh), possessed illegal 
firearms and explosive devices. A Federal judge issued a 
warrant for the search of the Branch Davidian residence and a 
warrant for the arrest of David Koresh.
    On February 28, 1993, a force of 76 ATF agents stormed the 
Davidian residence to serve the arrest and search warrants. 
Prior to the commencement of the raid, however, the Davidians 
had learned of the ATF's plans. As the agents arrived at the 
Davidians' residence, the Davidians engaged the ATF agents in a 
gun battle which continued for almost 90 minutes. Four ATF 
agents were killed in the battle and more than 20 agents 
wounded. Two Davidians were killed by ATF agents and several 
others, including Koresh, were wounded. After a cease-fire was 
arranged, the Federal Bureau of Investigation dispatched 
members of its Hostage Rescue Team to Waco to take control of 
the situation at the request of the ATF. At 6 a.m. the next 
morning, the FBI formally took control of the situation and a 
51-day standoff with the Davidians ensued.
    In addition to continual negotiations with the Davidians, 
FBI officials took other steps to induce the Davidians to 
surrender. These tactics included tightening the perimeter 
around the Davidian residence, cutting off electricity to the 
residence, and at one point, shining bright lights at the 
residence and playing loud music and irritating sounds over 
loudspeakers.
    During the week of April 12, senior Justice Department 
officials began considering a plan developed by the FBI to end 
the standoff. Attorney General Janet Reno, other senior Justice 
Department officials, and FBI officials held several meetings 
concerning the plan. The proposed plan centered around the 
injection of a chemical riot control agent through the walls of 
the Davidian residence in order to induce the residents to 
leave the structure. The plan provided for the methodical 
insertion of the riot control agent into different parts of the 
building over a 48 hour period. The plan also contained a 
contingency clause which called for the insertion of the riot 
control agent into all portions of the residence 
simultaneously, if the Davidians failed to obey orders or 
responded violently.
    At approximately 6 a.m., on April 19, 1992, FBI agents 
using unarmed military vehicles with mounted booms began to 
insert the riot control agent into the compound by ramming 
holes into the sides of the building and then spraying the riot 
control agent into the holes in the walls. Almost immediately 
the Davidians began to fire on the vehicles used by the FBI to 
insert the agent. Shortly thereafter, the commander of the 
Hostage Rescue Team ordered that the contingency provision of 
the operations plan be implemented and that the riot control 
agent be inserted in all portions of the residence at once.
    At approximately 12:07 p.m., a fire was observed in one 
portion of the residence. Within 2 minutes, two other fires 
developed. Soon the three fires engulfed the entire structure, 
destroying it completely. Nine persons escaped from the 
structure during the course of the fire, but more than 70 other 
residents remained inside and all of these persons died.
    Pursuant to its oversight jurisdiction over the Federal law 
enforcement community, the committee's National Security, 
International Affairs, and Criminal Justice Subcommittee, 
jointly with the Crime Subcommittee of the House Committee on 
the Judiciary, conducted an investigation into the initial 
raid, ensuing standoff, and eventual fire at the Branch 
Davidian Compound near Waco, TX.
    b. Benefits.--Throughout the investigation and the 
hearings, the subcommittee had difficulty obtaining information 
from certain agencies and offices under investigation. 
Correspondence files attest to a constant battle for documents 
and evidence relating to the situation at Waco. Nonetheless, 
the investigation and the hearings brought to light a great 
deal of new information, educated the public on a matter that 
remained unsettling, and put to rest many errant theories about 
the incident.
    The central purpose of this investigation was to initiate 
internal reforms that would prevent any such tragedy from 
occurring again. As a result of this investigation, agencies 
have begun to change their policies such that they will 
approach future investigations and operations with less 
likelihood of tragedy and greater opportunity for success. 
Specifically, ATF has experienced an entire change of 
leadership. Moreover, the FBI now has 30 Senior Agents 
specially trained as ``crisis managers,'' who can be called on 
at any time to assist in any similar crisis. The FBI's Hostage 
Rescue Team (HRT) has increased personnel and equipment, as 
well as the size and training of its negotiating team. Today, 
there are nine FBI SWAT teams around the country to assist the 
HRT in any similar emergency. The FBI has also established a 
working relationship with the crisis resolution centers at 
Michigan State University and George Mason University, and now 
keeps a resource list of experts on marginal eclectic or 
unusual religious groups. In addition, FBI Director Louis Freeh 
has implemented a new policy regarding the use of force in 
crisis situations that reinforces the FBI's standing policy in 
favor of a negotiated solution, and has disposed of the prior 
FBI policy permitting a barrage of unseemly noisemaking in 
hostage or barricade situation.
    Perhaps the most beneficial aspect of the investigation of 
Waco was refutation of various conspiracy theories and 
accusations of malfeasance on the part of particular government 
agencies. The subcommittee made some of the following findings 
and recommendations:

                                FINDINGS

    1. But for the criminal conduct and aberrational behavior 
of David Koresh and other Branch Davidians, the tragedies that 
occurred in Waco would not have occurred. The ultimate 
responsibility for the deaths of the Davidians and the four 
Federal law enforcement agents lies with Koresh.
    2. While not dispositive, the evidence presented to the 
subcommittees indicates that some of the Davidians 
intentionally set the fires inside the Davidian residence.
    3. The gunshot wounds which were the cause of death of 19 
of the Davidians on April 19 were either self-inflicted, 
inflicted by other Davidians, or the result of the remote 
possibility of accidental discharge from rounds exploding in 
the fire.
    4. Treasury Secretary Lloyd Bentsen and Deputy Secretary 
Roger Altman acted highly irresponsibly and were derelict in 
their duties in failing to even meet with the Director of the 
ATF in the month or so they were in office prior to the 
February 28 raid on the Davidians residence, in failing to 
request any briefing on ATF operations during this time, and in 
wholly failing to involve themselves with the activities of the 
ATF.
    5. Senior Treasury Department officials routinely failed in 
their duty to monitor the actions of ATF officials, and as a 
result were uninvolved in the planning of the February 28 raid. 
This failure eliminated a layer of scrutiny of the plan during 
which flaws in it might have been uncovered and corrected.
    6. The ATF's investigation of the Branch Davidians was 
grossly incompetent. It lacked the minimum professionalism 
expected of a major Federal law enforcement agency.
    7. David Koresh could have been arrested outside the 
Davidian compound. The ATF chose not to arrest Koresh outside 
the Davidian residence and instead were determined to use a 
dynamic entry approach. In making this decision ATF agents 
exercised extremely poor judgment, made erroneous assumptions, 
and ignored the foreseeable perils of their course of action.
    8. ATF agents misrepresented to Defense Department 
officials that the Branch Davidians were involved in illegal 
drug manufacturing. As a result of this deception, the ATF was 
able to obtain some training from forces which would not have 
otherwise provided it, and likely obtained other training 
within a shorter period of time than might otherwise have been 
available. Because of its deception, the ATF was able to obtain 
the training without having to reimburse the Defense 
Department, as otherwise would have been required had no drug 
nexus been alleged.
    9. The ATF's raid plan for February 28 was significantly 
flawed. The plan was poorly conceived, utilized a high risk 
tactical approach when other tactics could have been 
successfully used, was drafted and commanded by ATF agents who 
were less qualified than other available agents, and used 
agents who were not sufficiently trained for the operation. 
Additionally, ATF commanders did not take precautions to ensure 
that the plan would not be discovered.
    10. There was no justification for the rehiring of the two 
senior ATF raid commanders after they were fired. The fact that 
senior Clinton administration officials approved their rehiring 
indicates a lack of sound judgment on their part.
    11. The decision by Attorney General Janet Reno to approve 
the FBI's plan to end the standoff on April 19 was premature, 
wrong, and highly irresponsible. In authorizing the assault to 
proceed Attorney General Reno was seriously negligent. The 
Attorney General knew or should have known that the plan to end 
the stand-off would endanger the lives of the Davidians inside 
the residence, including the children. The Attorney General 
knew or should have known that there was little risk to the FBI 
agents, society as a whole, or to the Davidians from continuing 
this standoff and that the possibility of a peaceful resolution 
continued to exist.
    12. The CS riot control agent insertion and assault plan 
was fatally flawed. The Attorney General believed that it was 
highly likely that the Davidians would open fire, and she knew 
or should have known that the rapid insertion contingency would 
be activated, that the Davidians would not react in the manner 
suggested by the FBI, and that there was a possibility that a 
violent and perhaps suicidal reaction would occur within the 
residence. The Attorney General should have rejected the plan 
and demanded the preparation of an alternative.
    13. Following the FBI's April 19 assault on the Branch 
Davidian compound, Attorney General Reno offered her 
resignation. In light of her ultimate responsibility for the 
disastrous assault and its resulting deaths the President 
should have accepted it.
    14. The FBI should have sought and accepted more expert 
advice on the Branch Davidians and their religious views and 
been more open-minded to the advice of the FBI's own experts.
    15. While it cannot be concluded with certainty, it is 
unlikely that the CS riot control agent, in the quantities used 
by the FBI, reached lethal toxic levels. However, the presented 
evidence does indicate that CS insertion into the enclosed 
bunker, at a time when women and children were assembled inside 
that enclosed space, could have been a proximate cause of or 
directly resulted in some or all of the deaths attributed to 
asphyxiation in the autopsy reports.
    16. There is no evidence that the FBI intentionally or 
inadvertently set the fires on April 19.
    17. The activities of active duty military personnel in 
training the ATF and in supporting the FBI's activities during 
the standoff did not violate the Posse Comitatus Act because 
their actions did not constitute direct participation in the 
government's law enforcement activities.

                            RECOMMENDATIONS

    1. Federal law enforcement agencies should verify the 
credibility and the timeliness of the information on which it 
relies in obtaining warrants to arrest or search the property 
of an American citizen.
    2. The ATF should revise its National Response Plan to 
ensure that its best qualified agents are placed in command and 
control positions in all operations.
    3. Senior officials at ATF headquarters should assert 
greater command and control over significant operations. The 
ATF's most senior officials should be directly involved in the 
planning and oversight of every significant operation.
    4. The ATF should be constrained from independently 
investigating drug-related crimes.
    5. Congress should consider applying the Posse Comitatus 
Act to the National Guard with respect to situations where a 
Federal law enforcement entity serves as the lead agency.
    6. The Department of Defense should streamline the approval 
process for military support so that Posse Comitatus Act 
conflicts and drug nexus controversies are avoided in the 
future.
    7. Federal law enforcement agencies should redesign their 
negotiation policies and training to avoid the influence of 
physical and emotional fatigue on the course of future 
negotiations.
    8. The government should further study and analyze the 
effects of CS riot control agent on children, persons with 
respiratory problems, pregnant women, and the elderly.
    c. Hearings.--Oversight hearings on Federal Law Enforcement 
Actions in Relation to the Branch Davidian Compound in Waco, 
TX, July 19, 20, 21, 24, 25, 26, 27 28, 31, and August 1, 1995. 
Witnesses testified regarding the involvement of different 
agencies on ``agency days.'' Since several agencies were 
investigated, the evidence collected at these hearings is 
grouped under agency headings.
    (i) The Bureau of Alcohol, Tobacco and Firearms.--The 
initial investigation of Vernon Howell was conducted by ATF. 
ATF's investigation began in late May 1992. A Federal judge 
issued warrants based on evidence uncovered in that 
investigation. The attempt to serve that warrant on February 
28, 1993 went badly awry, resulting in an armed confrontation 
which cost the lives of four Federal agents and several Branch 
Davidians. Based on those facts, the subcommittee initiated an 
investigation into ATF's actions leading to the raid. The 
subcommittee submitted document requests to the Department of 
the Treasury for all documents in its possession pertaining to 
the initial investigation of Vernon Howell. The subcommittee 
carefully analyzed the documents relating to the investigation 
and interviewed numerous individuals involved in the 
investigation and the raid. ATF agents, supervisors and 
legislative affairs personnel briefed subcommittee staff on 
events surrounding the investigation of Vernon Howell and 
preparations for the initial raid on the Mt. Carmel complex. 
Surviving Branch Davidians instructed the subcommittee about 
conditions at Mt. Carmel and events surrounding the initial 
raid. In addition to the defense attorneys for certain Branch 
Davidians, representatives of the National Association of 
Criminal Defense Lawyers gave their interpretation of the 
sufficiency of the warrant that the ATF attempted to serve on 
Vernon Howell.
    July 19 marked the first day of hearings. On that day, the 
subcommittee heard testimony from Dick Reavis, author of 
``Ashes of Waco;'' Stuart Wright, contributor and editor of 
``Armageddon in Waco;'' Ray Jahn, assistant U.S. attorney; 
Gerald Goldstein, president of the National Association of 
Criminal Defense Lawyers; Robert L. Descamps, president of the 
National District Attorneys' Association; Henry McMahon, 
firearms dealer; David Thibodeau, resident at Mt. Carmel; Kiri 
Jewell, resident at Mt. Carmel; David Jewell, father of Kiri 
Jewell; Lewis Gene Barber, former lieutenant with the McLennan 
County Sheriff's Office; Bill Johnson, assistant U.S. attorney; 
Davy Aguilera, ATF Special Agent; Chuck Sarabyn, former ATF 
ASAC in Houston; Earl Dunagan, former ATF acting SAC in Austin; 
Dan Hartnett, former ATF Deputy Director for Enforcement; Ed 
Owens, ATF Firearms Expert; H. Geoffrey Moulton, Jr., Project 
Director of Treasury Department Review Team; and Dr. Bruce 
Perry, Associate Professor of Psychiatry and Behavioral 
Sciences at Baylor College of Medicine.
    During the first day of hearings, former ATF Special Agent 
Davy Aguilera testified publicly for the first time in detail 
the fact that ATF agents knew the Branch Davidians were 
expecting the raid on Mt. Carmel. Aguilera testified about his 
desperate attempts to inform ATF Supervisory Special Agents not 
to go ahead with the raid, and tearfully recalled the results 
of not being able to turn back the raid.
    Chuck Sarabyn, former ATF Assistant Special-Agent-in-Charge 
in Austin, testified before the subcommittee about his decision 
to allow the raid to proceed in light of the fact that the 
Branch Davidians knew the ATF was planning to raid Mt. Carmel. 
Sarabyn defended his decision to go ahead with the raid and 
maintained that the ATF was afraid of mass suicide among the 
Branch Davidians.
    This second day of testimony concentrated on the 
investigation of Howell's collection of weapons and the alleged 
or initially asserted existence of a methamphetamine laboratory 
on the premises of Mt. Carmel. George Morrisson, of the Los 
Angeles Police Department, testified that ATF should have 
employed better investigative techniques and more organized 
methods for case management. He told the subcommittee that 
newspaper articles surfacing soon before the raid on Mt. Carmel 
could have assisted ATF in gathering information. Wade 
Ishomoto, of Sandia National Laboratories, told the 
subcommittee that the team assembled in Waco to serve the 
arrest warrant on Howell was inexperienced and that the raid 
plan lacked the sophisticated procedures necessary for such an 
operation. Several witnesses testified to the danger of 
explosive devices in the presence of chemicals necessary for 
the production of methamphetamine.
    On this day the hearing consisted of testimony regarding 
the actions of ATF and the subcommittee heard testimony from 
former Secretary of Treasury Lloyd Bentsen. Secretary Bentsen 
testified about the actions he took in response to ATF actions 
at Waco. He told the subcommittee that, upon hearing of the 
failure of the raid, he established an in-house review 
commission that investigated the incident for 5 months and 
compiled a report based on a number of interviews. Bentsen 
listed those agencies involved in the Treasury investigation: 
Secret Service, Customs, the IRS, and the Financial Crimes 
Enforcement Network. Bentsen was unable to explain why a 
warning from Mr. Altman, his aide at the time, was not viewed 
with seriousness or passed on to the FBI; the Altman warning 
indicated the possibility of ``tragedy'' if the Davidian 
Compound was, as occurred on April 19, 1993, confronted with 
what Davidians might perceive as an assault.
    Secretary Bentsen also mentioned corrective actions taken 
by ATF and Treasury in the wake of the incident at Waco. 
According to Bentsen, ATF leadership was replaced, the 
intelligence chief was demoted, and the two raid commanders 
were relieved of their law enforcement duties. In addition, 
Bentsen told the subcommittee that Treasury has enhanced the 
formal and informal communication between the Office of 
Enforcement and the bureaus within the department.
    The final day of hearings regarding the actions of ATF were 
held on July 24, 1995. The most compelling testimony this day 
was delivered by Robert Rodriguez. Rodriguez recounted how he 
warned Mr. Sarabyn and Mr. Chojnacki on the morning of the raid 
that the Davidians had been tipped off about the assault. 
Chojnacki and Sarabyn testified that Koresh often declared to 
followers that the government was coming. ``We didn't know if 
he meant in the physical sense or the metaphysical sense,'' 
Chojnacki said. ``These two men know what I told them,'' 
Rodriguez countered. ``They knew exactly what I meant . . . 
They lied to the public, and in doing so destroyed a great 
agency.'' Sarabyn and Chojnacki denied that they lied to the 
public. They insisted that Rodriguez did not provide a clear 
warning that Koresh knew the raid was imminent. Rodriguez's 
version of the events was supported by Lewis Merletti.
    (ii) The Federal Bureau of Investigation.--Almost 
immediately after the raid on Mt. Carmel, the FBI was called in 
to take over the operation of the standoff. The FBI Hostage 
Rescue team was in place and FBI negotiators were on the phone 
with Davidians almost continuously for the succeeding 51 days. 
Jeffrey Jamar, FBI Special Agent-in-Charge in San Antonio, 
commanded the FBI team and was charged with deciding which 
tactics to employ. The subcommittee investigation produced 
audiotapes and transcripts of these negotiations, as well as 
contemporaneous memoranda from both inside and outside experts 
attempting to explain the actions of Vernon Howell and the 
Branch Davidians. After 51 days of standoff, the siege ended 
tragically. The Branch Davidian compound burned to the ground 
and resulted in the death of 22 children and more than 60 
adults.
    Regarding the investigation into the role of the Department 
of Justice and the Federal Bureau of Investigation, the 
hearings continued with testimony from Jack Zimmerman and Dick 
DeGuerin, attorneys for Steve Schneider and Vernon Howell, 
testified before the subcommittee about their dealings with the 
Branch Davidians and explained in detail their attempts to 
assist in negotiating a surrender. DeGuerin testified about 
difficulties he personally encountered in brokering a potential 
surrender. DeGuerin told the subcommittee about his trips into 
Mt. Carmel and the breakthrough he had achieved upon receiving 
Howell's final promise to surrender. DeGuerin obtained a letter 
from Howell in which Howell promised to complete his 
interpretation of the ``Seven Seals,'' contained in the Bible, 
and then surrender with all the Branch Davidians.
    Also testifying on that day were several of the local Texas 
Rangers. The Texas Rangers were charged with investigating the 
deaths of the four ATF agents killed on the day of the initial 
raid. Captain Byrnes testified that the Texas Rangers had many 
disagreements with FBI's Jamar and generally felt excluded. 
Byrnes testified that, in addition to problems with destruction 
of the crime scene by FBI tactical personnel, the Rangers were 
disappointed about a lack of communication between FBI 
personnel and local officials.
    The sixth day of hearings, provided in greater detail, the 
facts surrounding the Department of Justice and FBI involvement 
in Waco. James Cavanaugh, although an ATF Special Agent, 
testified before the subcommittee regarding negotiations with 
the Branch Davidians and the transition from ATF control of the 
operation to FBI control. Cavanaugh was the first person to 
engage in serious negotiations with the Branch Davidians. He 
recounted the planning of the initial raid, the ensuing 
negotiations for a cease fire, the first surrender offer of the 
Branch Davidians and the lengthy negotiations for a surrender. 
Cavanaugh described the tension between negotiators and 
tactical personnel. He expressed the view that negotiators 
prefer to wait for a peaceful solution to a crisis and tactical 
personnel generally prefer to intercede with tactical measures.
    Peter Smerick was the Criminal Investigative Analyst the 
FBI used to profile Howell for the FBI negotiators and the 
FBI's Hostage Rescue Team. Smerick testified that his first 
four memoranda urged the FBI to ``wait Koresh out'' and advised 
against increasing the pressure from outside. Smerick told the 
subcommittee that he changed his final memorandum based on his 
knowledge that the FBI was not pleased with the tone of his 
memoranda and that, although he felt no overt pressure to 
change the approach of his memoranda, he knew that FBI agents 
on the ground in Waco wanted a view that supported a more 
clearly tactical approach.
    Jeffrey Jamar, the FBI Special Agent-in-Charge in San 
Antonio at the time, was the on-site commander of all forces in 
Waco. Jamar testified before the subcommittee that he was 
hopeful of a surrender based on Koresh's promise to come out of 
Mt. Carmel, when he completed his interpretation of the Seven 
Seals. In response to questions regarding the possibility of 
the withdrawal of the FBI from Mt. Carmel, Jamar explained that 
the danger of gun fire from the building, the risk to children 
inside, and the sanitary conditions in Mt. Carmel made 
withdrawal untenable. Jamar also testified regarding the 
decision to implement the CS gas plan. Jamar said, ``I would 
have waited a year if we had something to work with, if there 
was just something there we could attach something to. We did 
it from February 28 until a decision was made in late March 
that we thought we were going nowhere.'' Jamar told the 
subcommittee he was certain that Koresh would end the standoff 
``his way.'' Jamar also testified that he knew with ``99 
percent'' certainty that the Davidians would open fire on the 
FBI's Bradley vehicles inserting CS gas, an eventuality that he 
also knew would mean acceleration of the CS gas, under the 
FBI's CS gas insertion plan.
    The subcommittee heard compelling testimony from many 
decisionmakers and received testimony of Webster Hubbell, 
former Associate U.S. Attorney General; Mark Richard, Deputy 
Assistant Attorney General; William Sessions, former Director 
of the FBI; Floyd Clarke, former Deputy Director of the FBI; 
Larry Potts, former Assistant Director of the FBI, Criminal 
Investigations; Harry Salem, Ph.D., Defense Department 
Toxicologist; Rick Sherrow, fire expert; Paul Gray, Houston 
Fire Department and leader of the Fire Review Team; James 
Quintere, arson expert, University of Maryland; and Clive 
Doyle, former Branch Davidian.
    Webster Hubbell testified on the decisionmaking process 
that led to the implementation of the CS gas insertion plan. 
According to Hubbell, the decision to implement the CS gas 
insertion plan was based essentially on two facts: (1) a lack 
of progress in negotiations; and (2) military personnel 
assuring him that the inhabitants would exit the building upon 
insertion of CS gas. Hubbell testified that President Clinton 
wanted to be advised of any change in strategy from one of 
negotiation to one of tactical maneuvers. Hubbell testified 
before the subcommittee that he was told that Howell was 
manipulating the attorneys. Howell's statement that he would 
come out upon having interpreted the ``Seven Seals,'' according 
to Hubbell, was a ruse. Hubbell told the members of the 
subcommittee that Howell was responsible for the deaths of 
those inside Mt. Carmel.
    The assistant Director of the FBI at the time of the Waco 
standoff was Larry Potts. Potts testified before the 
subcommittee regarding the FBI's strategy for resolving the 
standoff. Potts stated that the strategy was: ``(1) to verbally 
negotiate a peaceful surrender of Koresh and his followers; 
and, (2) to gradually increase the pressure on those inside the 
compound by tightening the perimeter around the compound and 
denying the Davidians certain comforts.'' Potts recounted how 
this strategy was perceived as a failure, and he outlined the 
roles that the FBI and the Department of Justice played in the 
development of the CS gas insertion plan.
    Potts testified that the FBI, in response to questions 
about its conduct of the standoff at Waco, had improved three 
aspects of FBI crisis management. ``Jurisdictional issues are 
being clarified, crisis response operations have been 
reorganized and expanded, including the availability and use of 
outside experts; and research efforts have been enhanced,'' he 
stated. Potts displayed a diagram of the crisis management 
changes implemented as a result of the standoff at Waco.
    On the final day of hearings, the subcommittee heard from 
Attorney General Janet Reno. On August 1, 1995, Attorney 
General Reno gave her reasons for what she termed her decision 
to implement the plan to insert CS gas into Mt. Carmel. The 
Attorney General described the 51-day standoff, the efforts to 
negotiate a surrender, and the reasons that Howell was not 
trusted by FBI negotiators. Reno stressed changes the FBI had 
implemented since Waco. According to her testimony, the FBI now 
has 30 Senior Agents specially trained as ``crisis managers'' 
to be called on at any time to assist in a crisis the magnitude 
of Waco. These managers form an element of the Critical 
Incident Response Group, a group formed to deal with crisis 
situations. Reno told the subcommittee that the Hostage Rescue 
Team will increase its personnel, equipment, and the size and 
training of the negotiating team. Today, there are nine FBI 
SWAT teams around the country to assist the Hostage Rescue Team 
in an emergency. To assist the FBI in dealing with complex, 
psychological hostage takers in the future, Reno testified that 
the FBI will establish a working relationship with the crisis 
resolution centers at Michigan State University and George 
Mason University, and will keep a resource list of experts on 
marginal religious groups.
    Much of Reno's testimony involved her decision to implement 
the CS Gas Insertion Plan. The Attorney General told the 
subcommittee she thought she had all the information she needed 
to make her decision. She indicated however, that someone 
informed her of ongoing abuse in the compound; at no time could 
she recall who that individual was. She believed that briefings 
on CS gas were proper and complete. She did confirm that she 
had not read all pre-fire briefing material and was not in the 
command center when the tragedy occurred. In her statement to 
the subcommittee, Reno assured the members that the FBI was 
continuing its research into non-lethal technologies as 
alternatives to deadly force.
    (iii) The Department of Defense.--The subcommittee 
investigated the participation of the Department of Defense 
personnel in the events at Waco. Testimony was heard from 
Ambassador H. Allen Holmes, Assistant Secretary of Defense for 
Solic; Maj. Gen. John M. Pickler, U.S. Army, Commander Joint 
Task Force 6; Brig. Gen. Walter B. Huffman, U.S. Army, 
Assistant Judge Advocate General for Civil Law; Chris Crain, 
Special Forces Group; Lt. Col. Philip Lindley, U.S. Army, 
former Deputy Staff Judge Advocate for U.S. Army, Special 
Forces Command; Maj. Mark Petree, U.S. Army, formerly of 3/3D 
Special Forces Group; Staff Sgt. Steve Fitts, U.S. Army, 
formerly of 3/3D Special Forces Group; Staff Sgt. Robert W. 
Moreland, U.S. Army, formerly of 3/3D Special Forces Group; and 
Sgt. Chris Dunn, U.S. Army, formerly of 3/3D Special Forces 
Group.
    Ambassador Holmes testified on the role of the military in 
domestic law enforcement actions and about military 
participation before Waco. Holmes told the subcommittee that, 
in his opinion, the process developed to monitor military 
involvement in domestic law enforcement was a sound process. 
The Ambassador testified that, in his view, there were no 
violations of the law regarding military assistance at Waco and 
that the process regarding requests for military assistance had 
worked effectively.
    Staff Sgt. Steve Fitts testified regarding the military 
preparations for involvement in methamphetamine laboratories. 
He told the subcommittee that he conducted extensive research 
on the dangers and precautions required to ``take-down'' 
methamphetamine laboratories. According to Staff Sergeant 
Fitts, he wrote the paper at the instruction of Maj. Mark 
Petree. Staff Sergeant Fitts testified that Major Petree then 
presented the paper to ATF agents in Houston. According to 
Staff Sergeant Fitts, it was clear to him from the reaction of 
the ATF agents that these agents anticipated no actual 
methamphetamine laboratory at Mt. Carmel. Indeed, based on the 
lack of interest shown by ATF agents in the procedures 
necessary to dismantle a methamphetamine laboratory, it was 
Fitts' belief that ATF agents knew that no methamphetamine 
laboratory existed at Mt. Carmel.

                      POSTAL SERVICE SUBCOMMITTEE

                     Hon. John M. McHugh, Chairman

1. ``Voices for Change,'' House Report No. 104-438, December 21, 1995, 
        Sixth Report by the Committee on Government Reform and 
        Oversight.

    a. Summary.--``Voices for Change'' analyzes 10 hearings 
held by the Subcommittee on the Postal Service during the first 
session of the 104th Congress. Nearly 40 witnesses testified 
regarding the problems and challenges facing the current postal 
system. Witnesses urged members to consider fundamental reform 
of the quarter-century old Postal Reorganization Act because of 
the challenges confronting the Postal Service in a changing 
communications environment. Four key reform issues emerged in 
the hearings, including mail monopoly, labor-management 
relations, ratemaking and new postal products. Although 
witnesses raised a variety of issues and suggested a broad 
range of proposals for improving mail delivery, no unanimity 
appeared for any specific approach. However, the report notes 
that ``maintenance of universal service and a need to either 
strengthen or modify the postal ratesetting process were the 
legislative-related issues consistently discussed by a large 
majority of witnesses.''
    b. Benefits.--The report provides Congress a concise record 
of the testimony received by the subcommittee regarding the 
operations of the Postal Service and its capacity to perform 
its constitutional and statutory mandates. The eight general 
oversight hearings highlighted by the report indicate the need 
for Congress to review, systematically, the statutory structure 
under which the Postal Service operates. An efficient and 
fiscally sound Postal Service benefits the American people by 
providing a cost-effective and reliable communications system. 
In addition, the constitutional undergirding of the Postal 
Service requires additional congressional attention in order to 
preserve and ensure the future viability of the institution.
    c. Hearings.--On February 23, 1995, testimony was received 
from Marvin T. Runyon, U.S. Postmaster General, and Michael E. 
Motley, General Accounting Office. On March 2, 1995, testimony 
was received from the Postal Rate Commission: Edward J. 
Gleiman; W.H. LeBlanc; George W. Haley; Edward Quick, Jr.; and 
Wayne A. Schley. On March 8, 1995, the subcommittee heard 
testimony from Postal Service Governors: Sam Winters, LeGree S. 
Daniels, Einar V. Dyhrkopp, Susan E. Alvardo, Bert H. Mackie, 
and Norma Pace. On May 23, 1995, the subcommittee received 
testimony from Art Sackler, Mailers Council; Ian D. Volner, 
Advertising Mail Marketing Association; Richard Barton, Direct 
Marketing Association; David Todd, Mail Order Association of 
America; Timothy May, Parcel Shippers Association; Tonda Rush, 
National Newspaper Association; Cathleen P. Black, Newspaper 
Association of America; George Gross, Magazine Publishers of 
America; Steve Bair, Association of American Publisher; Alan 
Kline, Alliance of Nonprofit Mailers; and Lee Cassidy, National 
Federation of Nonprofits. The June 7, 1995, hearing testimony 
was received from Moe Biller, American Postal Workers Union; 
Vincent Sombrotto, National Association of Letter Carriers; 
Scottie Hicks, National Rural Letter Carriers Association; 
William Quinn, National Postal Mail Handlers Union; W. David 
Games, National Association of Postmasters; Bill Brennen, 
National League of Postmasters; and Vincent Palladino, National 
Association of Postal Supervisors. On June 14, 1995, the 
subcommittee received testimony from John V. Maraney, Nation 
Star Route Mail Contractors Association; Randall Holleschau, 
National Association of Presort Mailers; Don Harle, Mail 
Advertising Service Association; Robert Muma, Envelope 
Manufacturers Association of America; Anthony W. Desio, Mail 
Boxes, Etc.; Kathleen Synnott, Pitney-Bowes; Neal Mahlstedt, 
Ascom Hasler; George W. Gelfer, Postalia; James Rogers, United 
Parcel Service; James Campbell, Federal Express; Peter N. 
Hiebert, DHL Worldwide; and Harry Geller, Air Courier 
Conference of America. On June 28, 1995, Postmaster General, 
Marvin Runyon and Deputy Postmaster General, Michael Coughlin 
testified before the subcommittee. On July 25, 1995, hearing 
testimony was received from Kenneth J. Hunter, Inspector 
General.

                        B. OTHER INVESTIGATIONS

                       CIVIL SERVICE SUBCOMMITTEE

1. Restructuring of the Office of Personnel Management.

    a. Summary.--Vice President Gore's National Performance 
Review of 1993 (NPR) ``challenged'' the Office of Personnel 
Management (OPM) to become an agent for change. OPM, which 
oversees 2.1 million people in the Federal Civil Service 
System, announced it would meet this challenge by ``leading the 
initiative to reinvent Federal human resource management by 
working with all agencies to assess their needs in accepting 
more responsibility in this area.'' Since the release of the 
administration's NPR, OPM has focused on decentralizing many of 
its functions.
    OPM intends to concentrate on certain core functions and 
devolve other activities. Accordingly, the agency has already 
RIFed a large number of training staff and reduced its Federal 
investigative program in anticipation of privatization. The 
agency intends to cease all governmentwide training activities 
before the end of the fiscal year and to divest itself of the 
investigations function by the beginning of fiscal year 96.
    OPM also intends to delegate all recruitment and staffing 
responsibilities to Federal agencies. The functions the agency 
will retain include retirement and health benefit programs, 
compensation programs, testing and evaluation on a reimbursable 
basis, and some policy and oversight responsibilities.
    With deep reductions in its workforce, as well as the vast 
changes that will occur from the decentralization initiatives, 
concerns have been raised over what substantive role OPM will 
retain in the future. Of particular concern was OPM's continued 
ability to provide adequate oversight over and protection of 
the Merit System.
    b. Benefits.--The subcommittee will continue to monitor 
OPM's restructuring process, and how this downsizing and 
decentralization will effect its client agencies. Subcommittee 
Chairman Mica voiced his commitment to instituting whatever 
remedies necessary to unburden Federal employees from 
unnecessary rules and regulation, while ensuring that the 
process produces meaningful results that do not interfere with 
OPM's ability to carry out core functions and responsibilities.
    c. Hearings.--A hearing entitled, ``Restructuring Office of 
Personnel Management'' was held on February 7, 1995.

2. Federal Workforce Restructuring Statistics.

    a. Summary.--The Federal Workforce Restructuring Act of 
1994 established personnel ceilings for fiscal years 1994 
through 1996, while targeting 272,900 full-time-equivalent 
positions for elimination by the end of 1999. To accomplish 
this, without relying entirely on reductions-in-force (RIF's), 
the act established temporary financial retirement incentive 
programs to encourage voluntary separations from certain 
Federal agencies. However, the act does not specify where the 
cuts should occur, and preliminary figures indicate the 
Department of Defense is bearing the brunt of the reductions.
    All executive branch agencies were provided with detailed 
guidance by OMB, including steps to be taken to flatten 
hierarchies, reduce headquarters staff, and pare down 
management control structures. However, nearly three-fourths of 
the fiscal year 94 reductions were among civilian employees in 
the Department of Defense, and DOD is expected to experience an 
even larger share of the reductions in 1995--reportedly up to 
98 percent. From 1993 through the middle of fiscal year 95 over 
90 percent of total reductions can be attributed to defense 
base closures and downsizing activities at the Department of 
Defense. The chairman expressed concern over the 
disproportionate distribution of workforce reductions and 
raised questions about whether the administration's reinventing 
government initiatives will result in meaningful government 
restructuring or prove to be simply a reduction of the 
Department of Defense civilian workforce.
    b. Benefits.--This oversight review provided an early 
examination of restructuring activities in the executive branch 
and highlighted the disproportionate downsizing of the 
Department of Defense. The planning and out placement programs 
of the Department of Defense should serve as useful models for 
workforce reductions in other government agencies.
    c. Hearings.--A hearing entitled, ``Federal Workforce 
Restructuring Statistics'' was held on March 2, 1995.

3. Examining the Federal Retirement System.

    a. Summary.--The Federal pension system consists of two 
programs: the Civil Service Retirement System (CSRS) covers 
Federal employees hired prior to 1984, and the Federal 
Employees Retirement System (FERS) covers those employees hired 
after 1984. A total of 2.8 million active employees are 
covered, with 1.5 million in CSRS and 1.3 million in FERS. 
Currently, 2.3 million participants receive annuities. CSRS has 
2.2 million retirees and survivors, FERS has 37,800.
    Acccording to OPM's 1993 Annual Report on the Civil Service 
Retirement and Disability Fund (CSRDF) in 1996, the outlay for 
monthly payments for retirees of the Federal Government is 
estimated to be $39.2 billion. The CSRDF is projected to take 
in approximately $10 billion in cash receipts and payments from 
employee payroll deductions and from cash contributions from 
the U.S. Postal Service. Transfers from the General Treasury 
will make up the difference between receipts and payments--
nearly $30 billion. The annuities are projected to grow, while 
the cash receipts will stay relatively the same. In 2025, cash 
coming in will total $3.6 billion, while outlays will total 
$166.2 billion. And by 2035, cash receipts are estimated to be 
$5.6 billion, while outlays will top $218.5 billion. This 
increasing burden on the taxpayer and the overall financial 
stability of the Federal retirement system is of utmost 
importance to the chairman of the subcommittee.
    The subcommittee is involved in an ongoing analysis 
examining a host of various proposals concerning Federal 
pension reform.
    The subcommittee reviewed the retirement benefits available 
for Members of Congress, congressional staff, and executive 
branch employees under current law. In the 104th Congress a 
number of Members pension reform bills have been introduced and 
were reviewed by the subcommittee. Under current law, Members 
and staff under CSRS accrue benefits at 2.5 percent of 
preretirement pay for each year of service. Executive branch 
employees with 10 or more years of CSRS service accrue benefits 
at 2.0 percent per year. Members and staff under FERS accrue 
benefits at 1.7 percent per year of service up to 20 years, and 
1.0 percent per year over 20. Executive branch FERS employees 
benefits accrue at 1.0 percent per year, or 1.1 percent if the 
individual retires at age 62 or over. Members and staff 
contribute a greater portion of payroll in exchange for the 
greater benefit.
    b. Benefits.--The investigation exposed growing reliance of 
the Federal retirement system on general tax revenues. To 
stabilize the Federal retirement system the subcommittee will 
consider the creation of a new retirement system which would be 
fully funded outside of the Federal budget and would be subject 
to the same standards and requirements as private sector 
pension plans. Such a system would assure Federal retirees full 
payment of benefits without having to rely on the Treasury to 
subsidize their annuities. This is a responsible approach to 
financing the government's commitments to its employees and it 
allows for the permanent elimination of one entitlement program 
from the Federal budget.
    The retirement reform of Members and congressional staff 
was included in the Balanced Budget Act of 1995. Under this 
reform Members and staff retirement benefits and payroll 
contributions will conform to that available to executive 
branch employees.
    c. Hearings.--Hearings entitled ``Federal Retirement 
Systems: Overview,'' ``Federal Retirement: Congressional 
Pensions'' and ``Funding Civil Service Retirement'' were held 
on March 7, 1995, March 10, 1995, and June 28, 1995.

4. Contracting Out.

    a. Summary.--Federal policy, adopted during the Eisenhower 
administration and endorsed on a bipartisan basis by all 
subsequent Presidents, affirms that Federal agencies should not 
be performing commercial activities in competition with private 
sector businesses. Although Federal agencies contract for more 
than $200 billion in goods and services each year, the Office 
of Management and Budget estimated in a 1987 Report to the 
President's Commission on Privatization that more than 900,000 
civilian Federal employees were performing commercial 
functions. In spite of this substantial commercial activity by 
Federal agencies, previous hearings alleged that Federal 
agencies were involved in ``arbitrary and perhaps ill-conceived 
contracting out.''
    OMB Circular A-76 provides administrative guidance to 
agencies for conducting cost comparisons to evaluate the 
efficiency of proposed contracts. In spite of the established 
mechanism, few cost comparisons of commercial functions are 
completed, in part because Federal agencies consider the 
process itself costly and a disruption to the workforce, and in 
part because Congress has included numerous provisions of law 
that restrict agencies from conducting the studies and/or from 
contracting after the studies are completed. In a June 16, 
1995, release, the National Performance Review reported that 25 
such obstacles to privatization remain in law.
    Subcommittee Chairman Mica has routinely asserted his 
belief that it could and should be possible to contract out 
more than 50 percent of the services and activities of the 
Federal Government as we know it today. If the widespread 
contracting successes being achieved by State and local 
governments do not move the Federal Government in the direction 
of greater contracting for commercial services, inevitably 
budget constraints will.
    OMB's Circular A-76 maintains that the government should 
use competition to reduce the costs of goods and services so 
that it would pay no more than necessary for the quality 
services that it needs. The subcommittee's analysis has shown 
that the absence of competition results in excessive costs, 
with the salaries and benefits of government employees 
comprising approximately 60 percent of the cost of government 
operations. Wendell Cox of the American Legislative Exchange 
Council testified that between 1980 and 1991, Federal 
employees' wages increased approximately $4.56 for each dollar 
that private sector compensation increased. As a result, 
average Federal employees make 45 percent more than private 
sector employees and 30 percent more than State Government 
employees. Over the course of a 40-year career, the expected 
lifetime earnings of a Federal employee have been estimated to 
be $600,000 greater than that of a comparable private sector 
employee. Surveys of government managers have demonstrated 
savings in 98 percent of the cases where functions have been 
converted to contract, and that the mere fact of competition 
has the effect of restraining cost increases. Although 
government must retain full policy control of all its 
operations, contracting could be used much more extensively to 
minimize the costs of providing public services and performing 
government activities.
    b. Benefits.--The investigation highlighted the need to 
update OMB Circular A-76, and OMB reissued the circular in 
March 1996.
    c. Hearings.--Hearings entitled ``Contracting Out: Summary 
and Overview'' and ``Contracting Out: Current Issues'' were 
held on March 29, 1995, and April 5, 1995.

5. Examination and Review of the Federal Workforce Restructuring Act of 
        1994.

    a. Summary.--The Federal Workforce Restructuring Act of 
1994 authorized Federal agencies to provide voluntary 
separation incentives (``buyouts'') to Federal employees as one 
means of reducing Federal employment by 272,900 by fiscal year 
1999. Civilian agencies were authorized to offer buyout 
incentives not to exceed $25,000 each during a period which 
expired March 31, 1995, and the Department of Defense was 
allowed to continue offering buyout opportunities through 
September 30, 1999. By the end of fiscal year 1995, OPM 
reported that more than 112,500 former Federal employees had 
been paid buyouts and left their agencies, with more than 
68,000 of them leaving the Department of Defense. An additional 
50,000 are anticipated to accept Department of Defense offers 
during the coming 4 years. Total costs to the government of 
these incentive payments are expected to exceed $2.4 billion.
    Former Federal employees who accept the buyouts may not 
return to Federal employment for a 5-year period or are 
required to repay the full amount of the incentive. By 
encouraging voluntary separation, buyouts are intended to 
reduce reliance on reduction in force (RIF) procedures and 
enable agencies to retain relatively younger workers while 
senior employees (those eligible or nearly eligible for 
retirement) accept payments to leave. Separation rates, 
however, are severely affected by rumors that a buyout might be 
offered, as evidenced by the reduction in the number of 
voluntary retirements from Federal agencies while the buyout 
program was being authorized in legislation.
    The General Accounting Office (GAO) has reported that 38 
percent of buyout payments reported to date went to people in 
the overhead/administrative positions that were targeted by the 
National Performance Review. Nearly 70 percent went to 
employees at or above the GS-11 level, and 62.9 percent went to 
men. Minority members received 24 percent of the buyouts. The 
average age of people accepting buyouts was 60--about 1 year 
younger than regular retirement. Fifty-two percent of the 
buyout payments reported so far went to employees who were 
eligible for retirement. The GAO testified that there appears 
to have been some use of contract personnel to replace departed 
employees, but the absence, so far, of cost comparison studies 
required by Section 5(g) of the Workforce Restructuring Act 
makes difficult the tracking and analysis of buyout effects.
    b. Benefits.--Buyout authority may be a beneficial tool in 
downsizing and restructuring the Federal workforce, provided 
certain procedures are followed: agencies must engage in long 
range planning and know how they want the organization to look 
at the end of the restructuring; buyout window should be short 
to avoid generating rumors and behavior changes based upon 
expectation of buyouts; buyouts should not be done in 
successive waves; and buyouts should be effective early in the 
fiscal year to maximize savings. Additionally, buyouts should 
be targeted and never offered across the board to avoid 
additional funds being used to hire and train people with 
skills identical to those benefiting from buyouts. Downsizing 
and reorganization are most successful when the importance of 
directing restructuring efforts to a revised organizational 
goal is recognized, and detailed planning strategies are 
employed to achieve it. As a result, the committee has not 
recommended extending executive branch buyout authority at this 
time.
    c. Hearings.--A hearing entitled ``Buyouts: Boon or 
Boondoggle'' was held on May 17, 1995.

6. Review of the Ramspeck Act.

    a. Summary.--The Ramspeck Act is a 1940 law that enables 
members of congressional staffs who have served at least 3 
years to gain noncompetitive appointment to the career civil 
service if they lose their congressional positions through no 
fault of their own; often as a result of the defeat of a Member 
or a Member's choosing not to run again. GAO reported that more 
than 80 percent of recent Ramspeck appointments have been in 
offices of congressional affairs, public affairs, or policy and 
strategic planning.
    Congressman Porter Goss introduced legislation to repeal 
the Ramspeck Act, H.R. 913, which was referred to the Civil 
Service Subcommittee. Representative Goss recommended repeal of 
the Ramspeck authority, arguing that constituents view this law 
as merely another special privilege that Members of Congress 
arrange for their staffs. Ramspeck procedures give former 
congressional employees privileges that are not available to 
other citizens, who must compete for positions in the Federal 
service. He believes that Ramspeck authority is inconsistent 
with the Congressional Accountability Act, adopted early in 
this session, which holds Congress subject to the same laws 
that affect other citizens.
    b. Benefits.--Conditions have changed since the Ramspeck 
law was enacted, and it is no longer difficult to attract 
quality applicants to congressional staff positions. The 
committee was concerned that continued use of Ramspeck 
appointments creates situations where policies repudiated by 
the electorate in recent elections may gain continuity in the 
career civil service through non-competitive transfers of 
staff.
    Congress repealed the Ramspeck Act authority as part of the 
Lobbying Disclosure Act (H.R. 1564). The repeal, which becomes 
effective 2 years after the President signed the law, will 
eliminate this end run around the merit system.
    c. Hearings.--A hearing entitled ``Ramspeck: Repeal, Reform 
or Retentions'' was held on May 24, 1995.

7. Review of the Combined Federal Campaign.

    a. Summary.--The Combined Federal Campaign (CFC) is an 
annual, taxpayer-subsidized solicitation drive in the Federal 
workplace that began as an effort to aid genuine charities 
while minimizing workforce disruption. However, many political 
and ideological advocacy groups and others, who do not directly 
provide or support human health and welfare, litigated and 
lobbied their way into the CFC.
    On February 23, 1995, subcommittee Chairman Mica wrote to 
James B. King, the Director of the Office of Personnel 
Management (OPM), asking for his support and cooperation in 
restoring the Combined Federal Campaign to its rightful role of 
aiding genuine human health and welfare charities. While the 
chairman fully endorses and encourages supporting genuine 
charities, the presence of advocacy groups raises questions 
about requiring taxpayers to subsidize organizations with which 
they disagree. A 1988 Task Force on the CFC established by OPM 
estimated that the CFC costs taxpayers between $55-60 million a 
year. (OPM's current leadership estimates the cost of the CFC 
as $22.1 million.)
    b. Benefits.--Examination of this issue revealed the extent 
to which taxpayers are forced to subsidize numerous advocacy 
groups and other organizations with political agendas that 
participate in the CFC.
    c. Hearings.--A hearing entitled ``Combined Federal 
Campaign: Lawyers & Lobbyists v. People in Need?'' was held on 
June 7, 1995.

8. Contracting Federal Investigations--Policy and Oversight.

    a. Summary.--Since the Atomic Energy Act of 1954, 
background investigations have been an important factor in 
deciding the suitability, security, and public trust 
qualifications of Federal employees. President Eisenhower 
extended background investigation requirements through 
Executive Order 10450, but such investigation centered 
primarily around employee susceptibility to threats from 
foreign governments. Some critics believe that several Supreme 
Court decisions, the Freedom of Information Act, and the 
Privacy Act combine to make it difficult to gather the 
information essential to a meaningful adjudication of these 
areas. As part of the administration's initiatives to reinvent 
government, OPM abolished chapters of the Federal Personnel 
Manual establishing criteria for security, suitability, and 
public trust determinations required to oversee a diverse range 
of agency requirements in a unified civil service.
    The administration considers the transition of 
investigations to the private sector an important component of 
its effort to reinvent government. This reflects a 
reorientation of the agency from providing services to 
conducting policy direction and oversight. OPM proposed an 
employee stock ownership program (ESOP) as the privatization 
vehicle chosen for this transition. A sole source contract to 
the ESOP is an essential ingredient to successful 
implementation of this plan. Oversight of the investigation 
function would remain a Federal responsibility under the 
purview of OPM, but the bulk of the current workforce is 
expected to shift to the ESOP. Data bases essential to the 
system would remain government-owned but reside on contractor-
operated equipment. OMB testified that any savings from this 
program would be realized only when agencies became able to 
acquire investigative services competitively from private 
firms, thereby reducing the costs of background investigations. 
The ESOP would have to compete on an equal basis as a private 
provider.
    The committee is concerned that Federal agencies with 
legitimate concerns about the security and suitability of 
Federal employees have adequate access to investigative 
services. Many agencies already obtain background 
investigations through private contractors; work that amounts 
to more than $20 million each year. Even agencies with 
significant national security concerns, such as the Department 
of Defense, contract for significant portions of their 
background investigations. These agencies rely upon OPM's 
Federal Investigations Processing Center at Boyers, PA, for 
essential data and information to support their suitability 
determinations. In the 6 months between announcement of the 
privatization plan and the subcommittee's oversight hearing, 
OPM witnesses were unable to describe systematic planning for 
conversion, with most of the planning being contracted through 
a trustee organization.
    b. Benefits.--These hearings documented the deficiencies in 
the administration's planning for the transition from a 
government function to an ESOP operation. GAO and OPM testified 
that the gathering of information for background investigations 
is not an inherent function of the Government, the 
administration demonstrated less-than-effective planning for 
the proposed transition. Cost estimates included in OMB's 
budget submissions suggested that these initiatives would save 
4 percent per year. OPM awarded a trustee contract to develop a 
business plan and negotiate a transition on June 9, 1995, only 
a week before the hearing. These planning deficiencies 
strengthened the argument to delay implementation from the 
December 31, 1995, administration proposal to March 31, 1996, 
as approved in the OPM appropriation for fiscal year 1996.
    c. Hearings.--Hearings entitled ``Oversight of Federal 
Investigations Policy'' and ``Outsourcing of OPM's 
Investigations Program'' were held on June 14, 1995, and June 
15, 1995.

9. Administration's AIDS Training Program.

    a. Summary.--Title 5 authorizes training in the scientific, 
professional, technical, mechanical, trade, clerical, fiscal, 
administrative or other appropriate fields. Section 4101 
requires workplace training to be a ``planned, prepared, and 
coordinated program . . . which will improve individual and 
organizational performance and assist in achieving the agency's 
mission and performance goals.''
    Department heads are required, at least once every 3 years, 
to review training and other developmental needs essential to 
meeting mission and performance requirements. This review is an 
integral part of agency planning, the purpose of which is to 
ensure that public funds used to develop an organization's 
human resources have a direct relevance to (1) improving 
productivity; (2) fulfilling the organizational mission; and 
(3) providing quality products and services to the public.
    On September 30th, 1993, President Clinton delivered a 
memorandum to the heads of executive departments and agencies 
directing full implementation of comprehensive HIV/AIDS 
workplace policies and employee education and prevention 
programs by World AIDS Day, 1994. The Office of the National 
AIDS Policy Coordinator was authorized to implement the 
directive, and in a follow-up memo, then-Director Kristine 
Gebbie required mandatory employee attendance at HIV/AIDS 
education and prevention training.
    The HIV/AIDS mandatory training sessions received much 
adverse attention, due to reports that inappropriate and 
questionable materials were presented. The committee received 
numerous letters and calls from Federal employees objecting to 
being subjected to graphic talk about uncomfortable subjects in 
the midst of fellow workers. These recent reports raised 
questions as to whether the Federal HIV/AIDS education training 
is designed to meet the statutory requirements designated in 
Title 5: to improve individual and organizational performance, 
and assist in achieving the agency's mission and performance 
goals.
    b. Benefits.--Witnesses testified that many aspects of the 
administration's training program were not fit for the Federal 
workplace, either in content or method of presentation. They 
argued that Federal employees should not have to suffer 
training programs that assail their fundamental religious and 
moral principles on pain of losing their jobs, as was the case 
with the administration's mandatory AIDS training program. 
According to OPM's figures, Federal agencies spend more than $1 
billion on training. In light of the controversy generated by 
the administration's AIDS training, it is clear that closer 
oversight of employee training is necessary in order to assure 
that training is appropriate for the Federal workplace, both in 
content and method of presentation. Legislation has been 
proposed to protect Federal employees from improper training 
and to ensure that taxpayers' dollars are used only for 
appropriate workplace training.
    c. Hearings.--A hearing entitled ``Administration AIDS 
Training Program'' was held on June 22, 1995.

10. Privatization of OPM Training Responsibilities.

    a. Summary.--On May 16, 1995, the Office of Personnel 
Management and the U.S. Department of Agriculture Graduate 
School signed a memorandum of understanding (MOU) transferring 
OPM's Workforce Training Services, along with its office space, 
training obligations, and student lists, to the Graduate 
School, effective July 1, 1995. OPM separated 220 individuals 
from the agency, 134 of whom were extended offers of employment 
by the Graduate School. This transfer of functions moved a 
service from OPM's revolving fund to a ``non-appropriated fund 
instrumentality,'' a move that OPM Director James B. King 
described as a ``seamless transition'' enabling many former 
employees of the Workforce Training Services to retain 
employment while continuing arrangements through which Federal 
agencies could obtain training services without the burden of 
Federal procurement regulations.
    This initiative has been described among the 
``privatization'' initiatives advanced through the National 
Performance Review. Yet, by retaining authority to work through 
interagency agreements, this transition strategy reduced the 
exposure of the training services to competition--a critical 
factor in improving quality and reducing prices. Witnesses 
testified that full privatization--including the possibility of 
a sale of assets to interested private bidders--might have 
resulted in greater funds for the Treasury while increasing 
competitive pressures for quality. Moreover, OPM retains 
responsibility for oversight of training, even though the 
transition does not provide explicit description of that role.
    b. Benefits.--More direct privatization of training 
activities could have resulted in substantial cost-savings to 
the government. However, concerns have been raised that OPM is 
choosing to compete unfairly with the private sector and 
closing off an area that would thrive if full competition were 
the result. Instead, the USDA Graduate School became eligible 
to receive annually more than $72 million of noncompetitive 
work funded by taxpayers, despite the fact that these training 
activities are commercial services readily available from 
private competitors.
    c. Hearings.--A hearing entitled ``OPM Privatization 
Initiatives Training'' was held on July 26, 1995.

11. Review of Civilian Health and Medical Program of the Uniformed 
        Services (CHAMPUS).

    a. Summary.--Beneficiaries of the military health care 
system are eligible to receive medical care at military 
facilities. However, depending upon the level of demand and 
ready access to facilities, this care is not always assured. In 
1995, 6.6 million non-active duty people are eligible for care 
through the military health care system. The deficiencies of 
the overall military health system, of which the Civilian 
Health and Medical Program of the Uniformed Services (CHAMPUS) 
is a part, are identified by a July 1995 Congressional Budget 
Office (CBO) study. In that study, CBO reported that a major 
complaint among beneficiaries is that their access to health 
care at military medical facilities is poor, and that CHAMPUS 
is not a satisfactory alternative because of its high out-of-
pocket costs.
    CHAMPUS costs grew dramatically after the program's 
inception in 1966. Costs almost tripled from $1.2 billion in 
fiscal year 1984 to $3.18 billion in fiscal year 1990. Many of 
these costs were unanticipated and required supplemental 
appropriations or transfer authority. In 1983, in an attempt to 
put an end to the increasing costs of its health care system, 
and uneven access to health care services, the Department of 
Defense (DOD) began a managed care program, called TRICARE. 
TRICARE offers beneficiaries an alternative to the current 
CHAMPUS program. Beneficiaries are assigned a primary care 
physician to manage their care. In administering TRICARE, DOD 
has reorganized the military delivery system into 12 regions. 
TRICARE is scheduled to be implemented nationwide by May 1997. 
Four regional contracts have been awarded, all to the same 
civilian health care company, and all bid awards have been 
protested. However, while TRICARE is still in the early stages, 
some have suggested that it is unlikely to result in giving 
eligible military beneficiaries access to stable, high quality 
health care benefits, nor will it improve the efficiency of the 
military health care system.
    The Federal Employees Health Benefit Plan (FEHBP) provides 
voluntary health insurance coverage for over 9 million Federal 
Government employees, annuitants, and their dependents, and has 
long been considered the foremost health care plan in the 
country. The Federal Government and enrollees jointly pay for 
the cost, or premiums, of the FEHBP plans, according to a 
statutory formula. The Government's portion of each enrollee's 
premium is a fixed dollar amount equal to 60 percent of the 
average of the high option premiums for what are commonly known 
as the Big Six plans. The average premium contribution for both 
nonpostal and USPS employees and all annuitants was 72 percent 
in 1994, with the employees paying the remaining 28 percent.
    Federal employees and annuitants enroll voluntarily in 
FEHBP and may terminate their enrollment at any time. Employees 
are allowed to enroll in FEHBP or change from one plan to 
another during designated ``open season'' periods. In 1995, 
over 9 million individuals were covered: 2.3 million active 
employees, 1.8 million annuitants, and over 5 million 
dependents. Approximately 5 percent of enrollees change plans 
each year.
    b. Benefits.--The government could benefit from an overall 
reduction in the cost of medical services provided to military 
families and access to services could be greatly improved by 
moving to an FEHB type of program. However, the cost of 
transition to such an alternative delivery system could be high 
and disruptive of readiness requirements. Further study of this 
issue is required.
    c. Hearings.--A hearing entitled ``FEHB/CHAMPUS: Improving 
Access to Health Benefits for Military Families'' was held on 
September 12, 1995.

12. Review of Current Civil Service Reform Initiatives.

    a. Summary.--The Civil Service Reform Act of 1978 
reorganized the Civil Service Commission by creating the Office 
of Personnel Management to perform policy, oversight, and 
service functions; adding the Merit Systems Protection Board to 
adjudicate personnel disputes; and formed an Office of Special 
Counsel to investigate personnel management issues. In 
addition, the 1978 law enacted measures intended to make 
government more performance-oriented and to achieve greater 
accountability.
    Vice President Gore's National Performance Review (NPR) of 
1993 promised a Civil Service Reform program package that would 
be developed in conjunction with the President's Management 
Council. However, initiatives of NPR could rescind many of the 
Civil Service Reform Act's provisions. The administration's 
package considered a comprehensive range of changes, from 
hiring procedures through each phase of recruitment, retention, 
management, labor-management relations, dispute resolution 
procedures, termination, and Office of Personnel Management 
operations.
    Although this National Performance Review product was 
initially presented as a comprehensive package for civil 
service reform. The modifications included in the NPR package 
were never formally submitted as legislation, and generated 
limited support among five panels of witnesses. The committee 
continues to analyze such civil service reform proposals.
    b. Benefits.--Former OPM officials encouraged the 
subcommittee to approach civil service reform issues 
deliberatively, because the long-term effects of apparently 
sound proposals only surface after extensive experience. The 
normal constituencies share interests, especially increasing 
pay and benefits, in ways that do not easily surface in complex 
reviews of classification systems, performance evaluation 
systems, appeals procedures, and other details.
    c. Hearings.--A hearing entitled ``Civil Service Reform I: 
NPR and the Case for Reform'' was held on October 12, 1995.

13. Continuation of Civil Service Reform Review: Performance and 
        Accountability.

    a. Summary.--Federal agencies experience difficulties 
linking the activities of their employees to results intended 
when laws are enacted and policies implemented. The Civil 
Service Reform Act of 1978 included provisions to improve 
Federal personnel management, among them the creation of the 
Senior Executive Service, the GM-13-15 management grades, and 
greater incentives to better improved performance of agency 
managers. Oversight agencies reported that these incentives 
faced sustained resistance among the managers, who contended 
that the system limited the number of bonuses available and 
exacerbated the morale problems associated with performance 
ratings.
    Abundant evidence points to the failure of performance 
management systems in Federal agencies. Most agencies use a 
five-step scale where managers are asked to rate subordinates 
as ``outstanding,'' ``exceeds fully successful,'' ``fully 
successful,'' ``minimally successful,'' and ``unsuccessful.'' 
The Office of Personnel Management's report of fiscal year 1993 
ratings shows that 99.6 percent of Federal employees who 
received a rating were evaluated at least ``fully successful,'' 
and more than 73 percent were rated ``exceeds fully 
successful'' or ``outstanding.'' OPM recently issued 
regulations enabling agencies to replace these multi-step 
evaluations with ``pass-fail'' rating systems.
    Human resource professionals contend that performance 
management systems which focus on results or ratings 
concentrate attention on an end process and divert attention 
from earlier stages in the employee management process. Private 
sector consulting firms and corporations have testified before 
the subcommittee asserting a more comprehensive approach to 
personnel management can reduce the need for unsatisfactory 
ratings and/or firings to strengthen performance. The Hay 
Group, for example, encourages its clients to evaluate 
potential employees not only in terms of ``knowledge, skills, 
and abilities'' (factors identified on all Federal vacancy 
announcements), but also ``values, attitudes, and motives,'' 
factors that are seldom (if ever) incorporated in Federal 
hiring decisions.
    The 103d Congress repealed the Performance Management and 
Recognition System. With improved performance measures required 
by both the Chief Financial Officers Act of 1990 and the 
Government Performance and Results Act of 1993, Congress 
reaffirmed its commitment to pursue improved performance by 
attempting to shift attention to results rather than 
procedures.
    b. Benefits.--The Merit Systems Protection Board surveyed 
Federal managers and learned that although 78 percent reported 
managing a ``poor performer,'' only 23 percent of them 
initiated demotion or removal actions to address the problems. 
The hearing demonstrated that the challenges facing the Federal 
managers are identical to those in the private sector. The 
evaluation and management of poor performers must be linked to 
recruitment, hiring, promotion, and development activities if 
it is to be effective. This hearing provided additional 
material for deliberation related to civil service reform 
proposals.
    c. Hearings.--A hearing entitled ``Civil Service Reform II: 
NPR & the Case for Reform--Continuation'' was held on October 
26, 1995.

14. Review of Federal Employee Appeals Procedures.

    a. Summary.--Federal employees have at their disposal many 
avenues through which they can appeal a variety of personnel 
actions. The U.S. Merit Systems Protection Board (MSPB), the 
independent quasi-judicial agency in the executive branch which 
has a statutory mandate to adjudicate appeals of personnel 
actions for the government and its employees, decided 
approximately 8,500 cases in fiscal year 1994. Other agencies 
involved in the Federal employment complaints process, include: 
the Federal Labor Relations Authority (FLRA), the Office of 
Special Counsel (OSC), and the Equal Employment Opportunity 
Commission (EEOC). In addition, there are multiple levels of 
reviews of actions within employing agencies, internal agency 
grievance procedures, and negotiated grievance procedures in 
collective bargaining agreements, as well as special agency 
procedures for resolving discrimination claims.
    The complicated, lengthy means of appeals available to 
Federal employees led witnesses to testify that the maze of 
multi-layer, multi-agency appeals processes deters managers 
from disciplining poor performers or initiating action in 
conduct cases. Due to the extraordinary amount of time and 
unknown expense involved in a lengthy appeal, both GAO and the 
National Academy of Public Administration have expressed the 
need for consolidating the appeals process and adjudicatory 
agencies. A recent Issue Paper published by the MSPB emphasized 
that ``[t]he wide choice of review paths available to employees 
serves to exacerbate'' the hesitancy of Federal managers to 
take appropriate action against poor performers. That Issue 
Paper concluded that the ``current multi-level, multi-agency 
process should be reexamined,'' observing that the Federal 
Government needs ``a system that ensures fairness, not one that 
deters appropriate actions from being taken.''
    b. Benefits.--The committee heard extensive testimony that 
creating a simpler, more straightforward, less duplicative 
mechanism for resolving disputes in the Federal workplace could 
improve performance management in the executive branch. Some 
components of the current system, most notably the 
unnecessarily complex ``mixed case'' procedure, are simply 
inefficient and needlessly burden American taxpayers with 
unnecessary costs. Testimony before the subcommittee clearly 
demonstrated that there are several attractive alternatives for 
simplifying and consolidating the appeals process. Witnesses 
also recommended greater use of alternative dispute resolution 
methods, which will be the subject of a future subcommittee 
hearing.
    c. Hearings.--A hearing entitled ``Civil Service Reform IV: 
Streamlining Appeals Procedures'' was held on November 29, 
1995.

15. Shutdowns of Federal Agencies Due to Lapses in Appropriations.

    a. Summary.--President Clinton vetoed a continuing 
appropriations resolution on November 13, 1996, resulting in 
the 10th shutdown of government due to a lapse in 
appropriations since 1981. The first shutdown lasted from 
November 14 to November 21, 1995. Subsequent vetoes resulted in 
another shutdown of agencies covered by six appropriations 
bills that had not been enacted, with the second shutdown 
extending from December 16, 1995, to January 6, 1996.
    The Office of Management and Budget documented that the 
administration had been coordinating planning for a potential 
shutdown beginning in August. Although all agencies were 
required to submit shutdown plans to OMB, committee staff found 
that the plans revealed little consistency in planning and an 
absence of standards in assessing agency plans. Although the 
initial reason for the shutdown was a lapse of appropriations 
and fear of violating the Antideficiency Act, the President 
proposed to modify shutdown guidelines after only a few days, 
arguing that the shutdown had fostered conditions that would 
meet the legal exception for ``emergency'' recall of selected 
Federal employees. After hearing testimony from nine senior 
agency officials, several committee members expressed concern 
that many of the employees whose work could qualify as 
``emergency'' in only a few days, probably should not have been 
furloughed in the first place. The subcommittee also received 
testimony from 14 members who were proposing a variety of 
legislation to address disruptions caused by the shutdowns.
    b. Benefits.--The subcommittee's first hearing on the 
shutdown enabled members to identify functions that should not 
have been interrupted during the first shutdown. Those views 
were communicated to the President, and the designated 
functions remained open during the second shutdown, even though 
some of them still lacked appropriations.
    c. Hearings.--Hearings entitled ``Government Shutdown: 
What's Essential?'' and ``Government Shutdown II'' were held on 
December 6, 1995, and December 14, 1995.

16. Employee Benefits in the Context of Total Compensation.

    a. Summary.--Economic constraint is the primary factor that 
guides the level and design of compensation and benefit 
packages throughout the private sector. Some employment-based 
benefits, such as pensions, life insurance, and health 
insurance are provided voluntarily by employers. Employers and 
employees often jointly make payments to fund these voluntary 
employee benefit programs. Other benefits, including Social 
Security, Medicare, workers' compensation and unemployment 
insurance, are mandated by government. These mandatory programs 
are jointly funded by employers and employees, and provide 
retirement income and health care coverage for elderly and 
disabled workers and their dependents. Whether mandatory or 
voluntary, each of these programs is employment based and 
financed primarily through employer and employee payroll 
deductions. The government also promotes the granting of 
additional benefits through favorable treatment under the tax 
code.
    Compensation packages can be tailored to achieve the 
workforce goals of the employer while simultaneously 
accommodating the needs and preferences of workers. The 
integration of benefit policy, with both short and long range 
personnel planning, is essential in the private sector. 
Flexible benefits plans are growing in popularity in response 
to the changing demographics of the American population, and 
the dual income family. Within such arrangements, employees are 
permitted choices among benefits and/or benefit levels. 
Employees thus may exchange benefits that they consider less 
valuable for others better suited to their needs. The level of 
benefit provided can vary greatly, and tends to be directly 
related to the size of the business. According to the Employee 
Benefits Research Institute's Data Book on Employee Benefits, 
less than half of all small employers provide a retirement 
benefit for their workers.
    b. Benefits.--The Federal Government could benefit from a 
review of its compensation strategies to keep abreast of 
changing workforce demographics. As the population ages, as 
corporations face increasing competition in the global 
marketplace, and as the needs of their employees change, the 
private sector is adapting its human resource management 
strategies. As Congress seeks to better allocate available 
resources within realistic budget constraints, it makes sense 
to reevaluate our Federal personnel management strategies.
    c. Hearings.--A hearing entitled ``Civil Service Reform 
III: Private Sector Compensation Practices'' was held on 
October 31, 1995.

17. Medical Savings Accounts (MSA's) in the Federal Employees Health 
        Benefits Plan.

    a. Summary.--A number of proposals have been introduced 
during the 104th Congress to allow individuals and families to 
establish tax-favored Medical Savings Accounts (MSA's) for 
uninsured medical expenses. An MSA can be viewed as a savings 
account for uninsured medical expenses. MSA's are primarily 
designed to encourage workers to be more cost conscious in how 
they spend their money on routine health care, and are also 
aimed at controlling employer costs. An MSA allows the employer 
to put aside a fixed amount of money into an account for each 
employee to pay for his or her own health expenses. In lieu of 
giving the employee first-dollar or low-deductible coverage, 
the employer puts cash into a medical savings account and 
insures or covers the employees' health care costs in full 
above the amount in the MSA--often referred to as catastrophic 
coverage. Whatever funds are not spent on health care can be 
withdrawn at the end of the year and used for any other 
purpose, or saved for future use.
    MSA's make economic sense for the employee because out-of-
pocket spending can be substantially less with an MSA than 
under the traditional health plans, and employees can keep any 
money left in their account at the end of the year while still 
retaining major medical coverage. In effect, MSA's permit 
people to manage the spending of their own funds for non-
catastrophic health care.
    b. Benefits.--In examining the utilization of MSA's in the 
private sector and at the local government level, witnesses 
testified that MSA's are an extremely attractive health care 
option for all ages, and that they have not experienced the 
``adverse selection'' attributed to MSA's testimony also 
indicated that MSA's provided greater flexibility and freedom 
to choose doctors and services than do current plans. Witnesses 
also testified that with an MSA, an employee is less likely to 
neglect necessary or preventive care than with a traditional 
fee-for-service health care plan. Under conventional insurance, 
individuals receive no reimbursement until they have met the 
deductible. That places all the out-of-pocket spending on the 
first expenditures; expenditures that are most likely to cover 
preventive care. MSA's would actually provide a pool of money 
that could be used to pay for preventive care.
    c. Hearings.--A hearing entitled ``FEHB/MSA: Adding Medical 
Savings Accounts--Broadening Employee Options'' was held on 
December 13, 1995.

18. Veterans' Preference.

    a. Summary.--In general, veterans' preference laws give 
certain veterans preference in appointment to civilian 
employment with the Federal Government based upon their 
military service. The first such law was enacted in 1865. Until 
1919, the hiring preference extended only to honorably 
discharged disabled veterans. In 1919, the preference was 
extended to nondisabled veterans, widows of veterans, and 
spouses of injured veterans.
    The statutory basis for today's veterans preference is the 
Veterans Preference Act of 1944, as subsequently amended. Under 
that act, veterans were to be given ``augmented scores'' of 5 
or 10 points, (depending upon their status) in examinations for 
employment, and retention preference in the event of a 
reduction in force. The act also prohibited adverse actions 
against veterans without ``cause'' and required certain due 
process protection, such as notice and an opportunity to be 
heard, as well as appeals.
    The purpose of veterans preference has always been, as its 
name implies, to give veterans a legal leg up in acquiring and 
retaining civilian employment with the Federal Government. 
Federal employment statistics, however, draw into question 
whether this preference is having its intended effect.
    As recently as 1984, veterans representation in the Federal 
work force was nearly 38 percent. That number is now down to 28 
percent. Veterans have borne a disproportionate brunt of the 
government's downsizing. The number of veterans in the work 
force declined at nearly seven times the rate of the overall 
work force. In part, this reflects the concentration of 
veterans in the very defense-related agencies that account for 
the vast majority of the recent downsizing. OPM's figures show 
that in September 1994, 47 percent of all veterans were 
employed in one of the three military departments. It may also 
reflect the greater average age of veterans, who have accounted 
for over 50 percent of all retirements from Federal civil 
service in the last 5 years. These figures also suggest that 
veterans are under represented in many Federal agencies and 
support the claims that we need to create additional 
opportunities for veterans.
    b. Benefits.--The subcommittee's investigation disclosed a 
number of problems with the current application of veterans' 
preference and laid the groundwork for the legislative remedies 
proposed in H.R. 3586.
    c. Hearings.--A hearing entitled ``Veterans' Preference: A 
New Endangered Species?'' was held on April 30, 1996.
    The subcommittee held a hearing to examine whether the 
employment preferences accorded veterans by law are being 
faithfully applied by the Federal Government and ways in which 
opportunities can be improved.
    The first panel consisted of Hon. Stephen E. Buyer, 
chairman of the Subcommittee on Education, Training, 
Employment, and Housing of the Committee on Veterans' Affairs, 
and Hon. Jon D. Fox. Among other issues, Chairman Buyer 
addressed the need to strengthen veterans' preference 
protections during reductions in force and to provide veterans 
with an effective redress system. In particular, he pointed to 
the escalating use of single-position competitive levels in 
RIFs as a threat to veterans' preference. He noted that it 
allowed managers to ``effectively dictate who will retain 
employment,'' and pointed to recent RIFs at the U.S. Geological 
Survey, GAO, and the Army's Audit Agency as examples. Chairman 
Buyer also stated that, ``There is simply no effective means by 
which a veteran may air a preference grievance, especially if 
the veteran is not hired.'' Establishing a redress system that 
provides a reasonable remedy for veterans is, he testified, a 
``primary concern.''
    Congressman Fox testified in support of H.R. 2510, his bill 
to extend veterans' preference to those who served in 
connection with Operations Desert Shield and Desert Storm. In 
his testimony, Congressman Fox pointed out that many reservists 
and National Guard members were ordered to active duty during 
the Persian Gulf War. Some were deployed to the theater of 
operations. Others were ordered to serve outside the theater. 
Those who served in the theater now qualify for veterans' 
preference. But those who served elsewhere do not, even though 
their contributions were also essential to the ultimate success 
of our military operations in the Persian Gulf.
    On the second panel were James Daub, John Davis, and John 
Fales. Mr. Daub, a reservist who was called to active duty to 
support Operations Desert Shield and Desert Storm. He pointed 
out that his unit was split into two groups, one of which was 
sent to the Desert and his group was sent to Rhein Mein Air 
Force Base in Germany. The group in Germany performed aircraft 
maintenance that could not be performed in the theater. This 
was a task that was critical to the success of our combat 
operations and a task they performed proudly and to the utmost 
of their abilities. Those who served in Southwest Asia are now 
entitled to veterans preference, whereas those such as Mr. Daub 
who were uprooted from their families and their Federal jobs 
enjoy no more job protections than ``the non-veteran who was 
home with his family watching the war on CNN.'' This is a 
matter of great concern to these veterans in this era of 
government downsizing, particularly those employed at the 
Department of Defense.
    Mr. Davis, a Vietnam veteran who was awarded the 
Distinguished Flying Cross, the Bronze Star, and multiple 
awards of the Air Medal, described his experience during a RIF 
at the Army Corps of Engineers. He testified that in March 
1993, the Corps headquarters announced that it would conduct a 
50-person RIF. Mr. Davis was placed in a single-position 
competitive level. Consequently, Mr. Davis was the only 
employee covered by the RIF who was actually downgraded. (None 
were separated as a result of the RIF.) Moreover, Mr. Davis was 
not permitted assignment rights to positions for which he 
appeared capable of performing, including one job almost 
identical to the position he held before the RIF. In contrast, 
however, Mr. Davis testified that prior to the RIF, management 
went to great lengths to place other individuals whose jobs 
were to be abolished into positions at their current grade 
levels. In some cases, the agency actually created positions 
for these other employees that did not exist prior to the RIF. 
Nevertheless, both the Merit Systems Protection Board and the 
United States Court of Appeals for the Federal Circuit upheld 
the agency's action.
    Mr. Fales is a decorated blinded Vietnam veteran who is a 
full-time Federal employee and president of the Blinded 
American Veterans Foundation. In his testimony, Mr. Fales 
emphasized the importance of recognizing the important service 
of the hundreds of thousands of American troops supporting 
America's military missions around the world. He pointed out 
that in the past 5 years the military has released 800,000 men 
and women from the armed forces, many of whom were not eligible 
for veterans' preference, which made their transition and 
pursuit of a Federal job much more difficult. Mr. Fales also 
testified that there are many in the Federal bureaucracy who 
actively seek to circumvent veterans' preference, and 
emphasized the need for improved remedies to deter future 
violations.
    The subcommittee also heard testimony from Ronald W. Drach, 
the national employment director for the Disabled Veterans of 
America, and Emil Naschinski, assistant director, National 
Economics Commission, of the American Legion. Both testified 
that the lack of an effective redress system is the key defect 
in current veterans' preference law. Mr. Drach stated that 
``there has never been a meaningful appeal/ redress system 
available to an individual or a veterans service organization . 
. . if either thought veterans' preferences were being 
violated,'' and he contended that the Office of Personnel 
Management's ``less than aggressive enforcement of veterans' 
preference'' persuaded agencies they were free to ignore 
veterans' preference. Mr. Naschinski emphasized that, ``If 
Congress is serious about improving veterans' preference, it 
must provide a clear, independent and user friendly redress 
mechanism that can be utilized by veterans who believe their 
veterans' preference rights have been violated.'' Both 
witnesses also testified to the importance of strengthening 
protections for veterans during RIFs and warned of the 
potential erosion of veterans' preference through the 
proliferation of alternative personnel systems.

19. Soft Landings To Enhance Federal Downsizing?

    a. Summary.--Under the Federal Workforce Restructuring Act 
of 1994 and the Clinton administration's efforts to 
``reinvent'' government, Federal agencies initiated efforts to 
reduce the Federal workforce by 272,900 positions by 1999. The 
Federal Workforce Restructuring Act authorized agencies to pay 
``voluntary separation incentive payments,'' (buyouts) as a 
means of increasing attrition through voluntary separations 
rather than reductions-in-force. This buyout authority expired 
for nondefense agencies on March 31, 1995. The subcommittee 
conducted hearings on the buyout program on May 17, 1995, after 
which subcommittee Chairman Mica communicated four criteria for 
any future buyouts to Government Reform and Oversight Committee 
Chairman William F. Clinger, Jr. These criteria reflected a 
consensus of the General Accounting Office, the Congressional 
Budget Office, and two private consulting firms with extensive 
experience analyzing and managing corporate downsizing. They 
included a requirement that any future buyouts be implemented 
consistent with a strategic plan that describes the agency's 
operation after downsizing, that buyouts be done early in the 
fiscal year, that they be accomplished swiftly, and that they 
be a one-time event wherever they are used.
    Several agencies appear to have used previous buyout 
authority in ways that are inconsistent with workforce 
reduction objectives. The Environmental Protection Agency 
bought out 485 employees while reducing 97 positions. The 
Department of Education bought out 484 employees while reducing 
only 146 positions. The Department of Justice reported 835 
buyouts while increasing staff by 7,536 employees. Several 
other agencies approached the subcommittee about renewed buyout 
authority, but few of them had done the planning necessary to 
prepare for their effective use. In light of the likelihood of 
additional workforce reduction, and in the absence of effective 
planning on the part of agencies, this hearing opened a series 
that would assess the future of the Federal workforce and 
review legislation proposed to ease the impact of reductions on 
Federal employees who would be affected by them.
    b. Benefits.--This investigation enabled the subcommittee 
to review proposed legislation to ease the process of workforce 
reductions for Federal agencies. It identified several measures 
that were subsequently incorporated into H.R. 3841, the Omnibus 
Civil Service Reform Act of 1996.
    c. Hearings.--The subcommittee conducted a hearing on 
proposed legislation, ``Downsizing/Soft-Landings, and Related 
Legislation,'' on May 8, 1996.
    Mr. Burton reaffirmed his commitment to reducing the size 
of government while recognizing Congress' obligation to ease 
the transition of current employees to positions in the private 
sector. He noted the difficulties imposed on such transitions 
by the lack of portability in current pension systems.
    Mr. Moran lamented the lack of planning with which both 
Federal agencies and Federal employees approached recent 
workforce reductions. Although buyouts were available, 
employees often took them without adequate preparation for 
retirement or a different occupation, and agencies often 
awarded them without adequate planning for future operations.
    Mr. Wolf emphasized the he and his cosponsors of H.R. 2751 
had placed a priority on the avoidance of RIFs as Federal 
agencies reduce their workforces to implement either policy 
changes or budget reductions. He claimed that RIFs are 
disruptive, and asserted that Congress has a responsibility to 
make sure that reductions are achieved with as little 
disruption as possible. He sponsored the Federal Employee 
Separation Incentive and Reemployment Act to assist agencies in 
reducing workforces through attrition rather than RIFs. He 
observed that, regardless of congressional action, the 
legislation would have to be complemented with activities such 
as job fairs to assist Federal employees facing workforce 
reductions in finding new positions. He agreed with Mr. Mica 
that buyouts should be used only to avoid RIFs and save the 
government money, and observed that Federal agencies should be 
on notice that the Congress will follow their use of buyout 
authority closely.
    Mrs. Morella endorsed Mr. Wolf's bill and testified in 
support of complementary companion legislation that she 
introduced. H.R. 2826, the Early Retirement Incentive Act, 
would phase out the 2 percent per year reduction in annuities 
that Federal employees face if they retire before the age of 
55. Under her bill, this reduction would be adjusted annually 
so that full pensions would be restored incrementally at age 
55. She also recommended H.R. 2825, the Strategic Reemployment 
Training Act, for the subcommittee's consideration. This 
measure would foster partnerships with the private sector to 
facilitate placement of Federal employees who could no longer 
expect opportunities in other Federal agencies. The bill would 
allow Federal agencies to retrain their employees in ways that 
develop skills for private sector employment, a practice that 
is beyond the authority of Title 5.
    Mr. Hoyer claimed that Federal employees no longer face the 
long-term employment security experienced in previous years. He 
observed that the administration has beefed up priority 
placement programs, but was uncertain whether these programs 
would be adequate to serve the employees affected by 
reductions. He supported Mr. Wolf's initiatives in training and 
job fairs, and endorsed both of Mrs. Morella's bills. Although 
he acknowledged the cost of buyouts, he commented that ``a 
$25,000 payment up front may well be the cheapest incentive 
that the government can adopt.'' He conceded that he had not 
analyzed the fiscal note on any of the bills that he endorsed 
in this testimony. In response to questions, he commented that 
planning would be important to effective use of buyouts, but 
noted that abolished agencies such as the Bureau of Mines and 
the Interstate Commerce Commission were terminated through 
relatively quick appropriations actions. All Members supported 
provisions that would enable separated employees to extend 
their life and health insurance coverage.
    All Members also recognized that the workforce reduction 
targets are often arbitrary, and that the 5,500 nondefense 
workforce reductions proposed in the President's FY-1997 budget 
should be achievable through normal attrition. Mr. Moran 
observed that the workforce reductions to date have been done 
exactly the reverse of the way that they should have been done, 
by creating an arbitrary dollar reduction number and backing it 
into personnel conclusions. Mr. Moran also expressed his 
interest in developing a method of easing the transition to 
retirement.
    Mr. Shaw testified that the Senior Executives Association 
had ardently supported H.R. 2751. He noted that current 
reductions in the Federal workforce are targeted at middle and 
upper layers of agencies, and these are difficult cuts to 
achieve. He noted that public employees often face post-
employment restrictions that impede their ability to use their 
professional skills in the private sector. He argued that the 
most effective means of placing Federal employees during agency 
reductions is to place the employees in other agencies. He 
reported that, rather than accept separated Bureau of Mines 
employees, other components of the Department of the Interior 
canceled vacancy announcements. Such actions would vitiate 
priority placement programs.
    Ms. Chandler reported that the National Federation of 
Federal Employees believes that voluntary separation incentives 
are important to assist Federal agencies in downsizing. 
Attrition rates are lower than any recent years, and she 
believes that RIFs would be necessary without the buyouts.
    Mr. Gable agreed with the criteria for new buyout authority 
outlined by the chairman at the start of the hearing. He 
contended that the phased reduction of the buyout amount 
authorized by Mr. Wolf's bill might accelerate voluntary 
separations, and ease requirements for subsequent reductions. 
The Federal Managers Association recommends that buyout 
authority in nondefense agencies be extended to the 1999 
deadline for the Department of Defense. The testimony supported 
every benefit increase proposed in legislation under 
consideration by the subcommittee.

20. Workforce Reductions: RIFs v. Buyouts: A Cost-Benefit Comparison.

    a. Summary.--The subcommittee continued to monitor the 
administration's implementation of the buyout program 
authorized by the Federal Workforce Restructuring Act of 1994 
and to assess the need for renewal of buyout authority, in 
light of recommendations from Members who had sponsored H.R. 
2751. Although the administration was well on its way to 
meeting the 272,900 FTE workforce reduction required by the 
act, most reductions to date had come from downsizing at the 
Department of Defense rather than from efforts to ``Reinvent 
Government.'' The administration's FY-1997 budget recommended 
further Department of Defense downsizing--cutting 54,300 DOD 
positions--and eliminating a total of only 5,500 positions from 
nondefense agencies. This reduction in nondefense agencies is 
well within the scope of normal attrition, so these positions 
could be eliminated simply by exercising buyouts that were 
deferred from 1995. The President's budget showed that while 
downsizing discussions continued, the Departments of Justice, 
Labor, Health and Human Services, and Treasury planned staff 
increases during fiscal year 1997. Buyouts had cost the 
government $2.8 billion, and half of these expenditures went to 
employees eligible for full retirement benefits. GAO reported 
that better management of normal attrition could have enabled 
more cost-effective method of achieving workforce reductions. 
In addition to extensive use of buyouts, several agencies had 
used their authority to conduct ``reductions-in-force,'' (RIFs) 
in ways that caused concern about fair and equitable treatment 
of employees. As a result of provisions of the Legislative 
Branch Appropriations Act of 1995, GAO had secured authority to 
revise their RIF regulations, but the revisions that were 
promulgated provided no substantial changes from RIF rules 
governing other Federal agencies.
    b. Benefits.--This investigation revealed that the 
administration had allowed some agencies to use buyouts beyond 
the authority granted under the Federal Workforce Restructuring 
Act of 1994. It also demonstrated that, where an agency was 
granted extensive authority to revise RIF rules, those 
revisions were relatively minor, and did not jeopardize any of 
the protections that are often deemed burdensome in 
administering RIFs. The extensive use of single-person 
competitive levels used by the U.S. Geological Survey in 
conducting its RIF influenced the subcommittee's decision to 
include additional protection for veterans in the Veterans 
Employment Opportunities Act of 1996.
    c. Hearings.--The subcommittee conducted a hearing, 
``Reinventing Downsizing or Downsizing the Reinvention,'' on 
May 23, 1996.
    Mrs. Morella recognized that previous buyouts did not 
necessarily achieve their intended results, and added that we 
must ``avoid another situation whereby agencies pay the same 
employees both separation incentives and retention, 
recruitment, or relocation bonuses.''
    Mr. Bowling reported that, as of September 30, 1995, 
Federal agencies had paid buyouts to more than 112,000 
employees, enabling the agencies to exceed the workforce 
reduction targets required by law. Buyouts accounted for 48 
percent of those reductions, with RIFs accounting for an 
additional 6 percent. The balance was achieved through normal 
attrition--retirements, resignations, and other terminations. 
He observed, however, that these reductions have not 
consistently targeted the management positions identified in 
the National Performance Review. Instead, these positions have 
actually increased as a portion of the Federal workforce in 
some agencies, and the portion of supervisory personnel 
diminished only slightly, even though the administration had 
relied on questionable techniques, such as renaming supervisors 
as ``team leaders'' without actually altering responsibilities, 
to achieve these numbers. Although he saw no need for 
governmentwide buyout authority, he admitted that some agencies 
might have to reduce their workforces disproportionately and, 
in such cases, targeted authority might be appropriate.
    Mr. Koskinen contended that management of attrition through 
hiring freezes or similar measures might not provide agency 
managers the flexibility that they need to redesign their 
agencies during further workforce reductions. The 
administration submitted a proposed Federal Employment 
Reduction Assistance Act of 1996 that would authorize 
downsizing agencies to extend buyouts to employees at 
decreasing payment rates over a 4-year period. He expressed 
concern that, if distinct buyout legislation is approved for 
different agencies, differences between programs would result, 
and that some of these could be considered inequitable. He 
endorsed other ``soft landing'' measures, such as extending 
health and life insurance benefits for separated employees, but 
reported that the administration opposed measures, such as the 
so-called ``2 percent solution,'' that would exacerbate the 
financial problems of Federal retirement funds.
    Mr. King testified that buyouts had played an important 
role in enabling Federal agencies to reduce positions with 
minimal use of RIFs. He claimed that RIFs are much more 
disruptive of the morale and productivity of the workforce than 
voluntary reductions. He observed that future reduction 
requirements might result from budget reductions, and that 
renewed buyout authority could facilitate meeting future 
requirements. Mr. King denied that OPM had promoted radical 
changes in RIF policy during recent actions, and claimed that 
the portion of veterans among new hires had increased during 
the past 3 years.
    Mr. Koskinen conceded that the President's budget 
submission contains actual workforce levels from previous 
years, but only projections for future years, and added that 
the projections contained in the FY-1997 submission are at 
least 30,000 persons higher than actual employment levels will 
turn out to be. Mr. Bowling admitted that Federal personnel 
data are unreliable at times, in part because of difficulties 
in OPM's Central Personnel Data File. Mr. Bowling agreed that 
normal attrition should be sufficient to manage planned 
downsizing, but added that unanticipated budget reductions 
might justify some targeted buyouts at affected agencies.
    Mr. Mica questioned Mr. Koskinen about a Department of 
Energy legal opinion that was used to rationalize ``renewed'' 
buyout offers after the March 31, 1995, deadline enacted in the 
Federal Workforce Restructuring Act. Mr. Koskinen observed that 
the OMB General Counsel had reviewed the Department of Energy 
opinion, but had not issued its own opinion on the topic 
because OMB concluded that the DoE opinion was appropriate. Mr. 
Koskinen claimed that this authority was limited, and only 
agencies that had previously offered deferred buyouts could 
``recycle'' those buyouts if they were not used. Mr. Moran 
emphasized that the Congress had never intended to give 
employees a second chance at buyouts, and chastised OMB because 
no effort had been made to contact the Congress before allowing 
the Department of Energy to ``reoffer unused buyouts.'' Mr. 
Moran observed that when information about such actions first 
surfaces in unofficial channels, it establishes expectations 
among Federal employees, with adverse consequences for normal 
attrition rates. He requested GAO to provide a legal opinion 
assessing the Department of Energy's views on the authority to 
extend buyouts after the March 31, 1995, statutory deadline.
    Mr. Koskinen argued that conditions had changed since his 
testimony a year ago that buyouts would not be necessary. The 
Workforce Restructuring Act reductions are being attained, but 
some agencies are facing constraints on their spending, and 
that is a different factor than previous conditions. He noted, 
for examples, that OPM, GSA, and NASA had absorbed reductions 
proportionately greater than the Department of Defense's 12 
percent downsizing. Mr. Koskinen claimed that neither OMB nor 
the subcommittee would want to go through a period of guerilla 
warfare deciding on buyouts on an agency-by-agency basis 
through the appropriations process.
    Mr. King conceded that RIFs can be cheaper than buyouts 
where units are eliminated, but claimed that the buyout offers 
a ``more humane'' method of reducing the workforce. He claimed 
that, with ``bump and retreat'' rights, an average RIF affects 
2.5 other employees.
    Mr. Luke reported that GAO experienced a 25 percent budget 
reduction, with 15 percent in FY-1996 and 10 percent in FY-
1997. To reduce these expenditures while continuing to meet its 
responsibilities, the agency had to reduce personnel beyond 
rates that could be achieved through attrition. GAO offered 
buyouts that were accepted by 393 employees, and closed 
regional offices, which eliminated another 170 positions. A 
hiring freeze first imposed in 1992 remains in effect. GAO 
secured legislative authority to issue RIF regulations that 
differed from executive branch agencies, but included no major 
revisions in them. They did allow employees to volunteer for 
RIF, but retained the tenure, veterans' preference, 
performance, and length of service factors in conducting RIFs. 
Veterans' employment at GAO reduced slightly, a change that Mr. 
Luke attributed to more veterans taking advantage of buyouts.
    Mr. Leahy recounted the extensive deliberations planning 
for the RIF at the U.S. Geological Survey's Geologic Division. 
He attributed the necessity of a RIF to a decade-long trend 
during which payroll required an increasing portion of agency 
appropriations. This high portion of the annual budget 
allocated to salaries was increasingly constraining the 
agency's ability to conduct quality scientific research. He 
claimed that the planning was based on programmatic needs, and 
submitted copies of extensive materials distributed to keep 
agency personnel informed of this planning. The Survey began 
briefing employees about RIF planning at its three regional 
centers in March 1995. He testified that the Survey's old RIF 
plans did not conform to either current OPM guidelines or the 
Merit System Protection Board's standards, so revision of RIF 
procedures was a necessary element of this RIF planning. Along 
with this RIF, the Geologic Division engaged in a major 
reorganization to adapt its mission to current statutory 
authorities and to achieve savings by reducing managerial 
layers. Mr. Leahy testified that the 250 people managerial 
staff was cut nearly in half in the new organization. He 
reported that only 9 veterans were separated of the 292 
veterans on the Division's 2,192-member staff.
    Under questioning, neither Mr. Luke nor Mr. Leahy thought 
that their agencies needed additional buyout authority at this 
time. They also did not have any recommendations for statutory 
changes related to workforce downsizing. Under questioning from 
Mrs. Morella, Mr. Leahy reported that the RIF had generated 123 
appeals to the Merit Systems Protection Board, and that the 
Office of Special Counsel was reviewing the actions. Mr. Leahy 
noted that Representatives Davis and Wolf had sponsored a job 
fair for affected employees in northern Virginia. USGS also 
placed 110 of its employees in other divisions or within the 
Department of the Interior.

21. Illegal Use of Buyouts.

    a. Summary.--As a result of evidence presented at its May 
23, 1996 hearing, the Subcommittee on Civil Service requested 
the General Accounting Office to review a Department of Energy 
legal opinion that the administration had used to support the 
extension of buyout authority to several other agencies after 
the Federal Workforce Restructuring Act of 1994's deadline had 
expired. Although the Federal Workforce Restructuring Act 
provided authority to offer employees buyouts to ease the 
transition from the public sector, the administration had 
continued to offer buyouts after the March 31, 1995, deadline 
set by law. Documents submitted by OMB demonstrated that OMB 
Deputy Director for Management John A. Koskinen had approved 
the Department of Energy's plan to ``reoffer unused buyouts'' 
on October 4, 1995, even though the administration made no 
effort to inform the Congress of the decision until after it 
was publicized in a May 2, 1996, newspaper column. The 
Department of Commerce had offered a new--1 day--round of 
buyouts to some of its employees on the very day that the 
subcommittee had conducted its previous hearing.
    b. Benefits.--As a result of this oversight, the Office of 
Management and Budget directed Federal agencies to discontinue 
any further offers of buyouts to nondefense employees. These 
hearings also resulted in the development of legislative 
language to prevent repetition of the abuses revealed during 
these hearings. Buyout authority granted under the Omnibus 
Continuing Appropriations Act of 1996 prohibits employees from 
receiving buyouts if they have received a relocation bonus 
within the past 2 years, or if they received a retention bonus 
within the last year. The new buyout authority omitted any 
provision that might have allowed for deferred separation of 
employees who accept voluntary separation incentive payments.
    c. Hearings.--The subcommittee conducted a hearing, 
``Reinventing Downsizing or Downsizing the Reinvention,'' on 
June 11, 1996.
    Mr. Mica commented, ``[The GAO opinion] means . . . that at 
midnight on March 31, 1995, the Federal buyout window closed 
for nondefense agencies. . . . That GAO opinion means that 
neither OMB nor anyone else in the executive branch has the 
authority to create an additional application window.'' The 
subcommittee chairman concluded, ``I will entertain no further 
discussion of new laws until the Clinton administration 
demonstrates its compliance with the old law.''
    Mr. Moran observed that the issue is important because it 
sets a precedent in terms of the Federal workforce's 
expectations and the question of who writes the laws. He 
rejected the idea that this was an issue of conflicting legal 
opinion, because the language in the Workforce Restructuring 
Act is not even remotely ambiguous.
    Mr. Wray reported that the General Accounting Office had 
issued a legal opinion to the subcommittee on June 6, 1996, 
which concluded that the Department of Energy policy is 
inconsistent with the Federal Workforce Restructuring Act of 
1994. GAO concluded that the clear language of the act and the 
fundamental logic and context of the statute lead to the 
conclusion that agencies could lawfully approve buyouts only 
until March 31, 1995. The Secretary of Energy's decision to 
extend buyout offers after that date was inconsistent with the 
statute.
    Mr. Koskinen admitted that, in spite of the 
administration's claims about reinvention, ``No one has tracked 
FTE declines for each of these [eliminated] activities, and 
there is no efficient way to obtain that information at this 
time.'' He reiterated that reductions in spending, rather than 
any reinvention effort, is the driving factor behind any 
further workforce reductions. In spite of the GAO opinion, he 
denied that any member of the administration was operating 
deliberately in contravention of the law.
    Mrs. Morella concurred with the General Accounting Office's 
legal opinion that the law restricted buyouts to end on March 
31, 1995, and observed that this experience erects barriers to 
enacting soft-landing measures for other employees.
    Mr. Wray noted that the only practical corrective for the 
Congress would be to pass additional legislation. Mr. Mica 
explored options such as holding disbursing officers 
accountable for funds expended in violation of the law, but Mr. 
Wray did not view this remedy as effective. Mr. Moran argued 
that the consequence of the deficient legal opinion was to 
continue bad management practices, and Federal employees were 
subject to recurring rumors about new buyout opportunities. The 
fluctuations jeopardized the chance to bring stability to the 
workforce.
    Mr. Koskinen reported that OMB was in communication with 
agencies that have offered renewed buyouts, and had requested 
them to review their actions in light of the GAO opinion. Mr. 
Mica and Mr. Moran emphasized that the subcommittee had 
bipartisan agreement with the GAO opinion, a factor that OMB 
should consider in requesting further review by the agencies.
    Mr. King observed that OPM's recommendations had 
consistently supported the GAO opinion.

22. Civil Service Reform Proposals.

    a. Summary.--This oversight provided an opportunity to 
review issues related to preparation of the Omnibus Civil 
Service Reform Act of 1996 (H.R. 3841). This legislation drew 
from topics covered in hearings conducted by the subcommittee 
during October and November 1995 and legislation proposing soft 
landings for Federal employees which were the focus of a May 8, 
1996, hearing by the subcommittee. The legislation incorporated 
provisions that reflected concerns widely shared among Members 
and addressed pressing needs of a public service oriented 
toward workforce reductions rather than expansion of agencies' 
responsibilities and workforces.
    b. Benefits.--This hearing provided an opportunity for 
extensive discussion of issues related to H.R. 3841, and 
assisted in the modification of provisions necessary to secure 
House passage.
    c. Hearings.--The subcommittee conducted a hearing on the 
Omnibus Civil Service Reform Act of 1996 on July 16, 1996.
    Mr. Mica observed, ``Just as the private sector has 
adjusted to accommodate people changing career patterns, the 
Federal workplace must adapt to accommodate new technologies, 
changing agency missions, and eliminate old functions and 
assume new roles that are so necessary in our dynamic and fluid 
Federal workplace.'' Mr. Mica added, ``Throughout the past 
year, I have been struck by the challenges that Federal 
agencies face relating to managing poor performers. . . . We 
have heard from many witnesses that the current Federal service 
provides very limited incentives to our best employees while 
erecting enormous hurdles when it comes to improving or 
removing problem employees.'' The draft legislation included 
provisions to strengthen performance management, to streamline 
the Federal appeals processes, to expand benefits available 
through the Federal Retirement Board's Thrift Savings Plan, to 
provide soft-landings for Federal employees facing workforce 
reductions and to provide agencies flexibility in reorganizing, 
and several miscellaneous provisions to address technical and 
administrative problems in administering the Federal civil 
service.
    Mr. Bowling reaffirmed testimony presented by GAO during 
November 1995. That testimony described the appeals processes 
available to Federal employees as ``inefficient, expensive, and 
time consuming.'' He urged congressional action that would 
reduce the inefficiencies in the system, shorten the time 
involved, and save money. He contended that reforms needed to 
sustain two fundamental principles: fair treatment for Federal 
employees and efficient management of Federal agencies. He 
recommended measures to eliminate the mixed cases (where 
employees can appeal prohibited personnel practices to more 
than one agency), movement toward a private sector model for 
addressing employees' discrimination complaints, and increased 
use of alternative dispute resolution (ADR). He reported that, 
in FY-1994, agencies spent almost $34 million investigating 
discrimination complaints, and awarded more than $7 million in 
complainants' legal fees and discrimination settlements. 
Bowling noted, ``The redress system's protracted processes and 
requirements can divert Federal managers from more productive 
activities and inhibit some of them from taking legitimate 
actions in response to performance or conduct problems.'' He 
noted that Federal employees file six times the per capita rate 
of complaints as private sector employees, and that only 18 
percent of Federal filings are related to terminations, where 
47 percent of private sector discrimination complaints result 
from terminations. Bowling reported that the Merit Systems 
Protection Board and the Equal Employment Opportunity 
Commission rarely differ in their findings, but employees have 
little to lose by having both agencies review the issue. 
Eliminating mixed cases would eliminate both the jurisdictional 
overlap and the inefficiency that accompanies it. He cautioned, 
however, that the modification of procedures would require the 
EEOC to learn new approaches to its work.
    Mr. Heuerman thanked the subcommittee for incorporating 
several of the administration's recommendations in the 
consensus package. He welcomed expanded authority for 
demonstration projects, but the administration opposed allowing 
demonstration projects to modify leave and benefit programs. 
Although he welcomed the bill's inclusion of alternative 
dispute resolution provisions, he recommended thorough 
assessment of provisions consolidating appeals processes. The 
administration recognized the bill's interest in strengthening 
performance credit in developing RIF retention registers, but 
argued that this objective could be accomplished through 
regulation rather than statute.
    Mr. Mehle observed that the bill would make important 
improvements to the Thrift Savings Plan provisions of the 
Federal Employees Retirement System Act (FERSA). FERSA 
authorized the creation of three investment funds, and allowed 
Congress to authorize additional investment vehicles. This bill 
would create two additional funds: one a small capitalization 
fund and the other an international stock index fund. The Board 
had previously recommended both to the Congress, and could 
implement them within 2 years. The Board also supported 
allowing new Federal employees to begin contributing to their 
accounts immediately and the elimination of restrictions on 
withdrawals and borrowing from employees' accounts.
    Mr. Moyer thanked the subcommittee for the provisions that 
he saw as beneficial to members, especially expansion of the 
Thrift Savings Plan, provisions to assist agencies in 
reorganization, and soft landings for employees affected by 
workforce reductions. FMA supported provisions to extend 
liability insurance coverage to Federal employees acting in the 
line of duty. He advocated limiting demonstration projects to 
10 percent of the Federal workforce. Rather than retain EEOC 
jurisdiction, FMA supports consolidating Federal appeals 
through the MSPB, with appeal to the Federal Circuit. He 
opposed linking performance management and RIF retention 
criteria.
    Ms. Olsen welcomed the expansion of agencies' transition 
programs for Federal employees affected by downsizing. She 
opposed, however, giving employees additional credit in RIF 
processes for outstanding service. She also appreciated the 
liability insurance protection afforded to Federal managers 
under this bill, and supported to strengthened monitoring and 
reporting requirements directed toward Federal training.
    Mr. Sanders testified that the bill represents an important 
step in the right direction, and expressed strong support for 
swift passage. He commented that the bill addresses many of the 
critical needs for reform--especially of the appeals 
procedures--but questioned the benefits that might be derived 
from additional demonstration projects. Rather than a single 
solution to civil service problems, he argued that more 
particularized, tailored answers to limited questions are the 
most likely vehicle of future progress in managing Federal 
employees. He recommended consideration of reforms instituted 
in Australia and New Zealand, and also mentioned the private 
sector's cafeteria compensation plans as an appropriate model 
for future comparison. He strongly supported the bill's 90-day 
alternative dispute resolution provisions.
    Mr. Divine thanked the subcommittee for including the soft 
landing provisions that would benefit employees separated 
during agency workforce reductions. He would limit 
demonstration projects, however, to agencies with partnership 
agreements. Federal unions, in general, favored a 10 percent 
cap on the number of employees who could be involved in a 
demonstration project. They also opposed increasing the credit 
given performance during a RIF, contending that employees could 
be adversely affected by being under different rating systems.
    Mr. Donnellan expressed strong reservations about 
demonstration projects developed without the participation of 
employees' unions, and argued for retention of current appeals 
processes.
    Mr. Tobias expressed general support of the bill, but 
expressed reservations about the breadth of potential 
demonstration projects.
    Mr. Roth commented that several provisions in the bill do 
not have the support of employees represented by Federal 
employees' unions. He expressed concerns about waiver 
provisions related to demonstration projects. He asserted that 
Federal employee unions favor removing employees who do not 
perform their jobs, and contended that a ``two-tiered'' system 
(pass/fail) would enable agencies to remove those who fail. He 
also objected to including the increased rewards for 
outstanding performance in statute.

23. Review of the Federal Employees Health Benefit (FEHB) Program.

    a. Summary.--The FEHB program is the largest employer-
sponsored health insurance system in the country. In 1996, the 
$16 billion FEHB program will insure more than 9 million 
Federal employees, retirees, and their dependents. Partial 
portability, no preexisting conditions limitation, and an 
annual open enrollment period are facets of the FEHB program 
that make it an extremely attractive health care system. The 
program is administered by only 134 employees, and it serves 
more than 9 million enrollees.
    Over the past 2 years, a number of FEHB-related issues have 
arisen. Some effect the coverage and benefits provided to 
Federal employees, others affect the costs borne by employees 
and the government.
    In January 1, 1996, Blue Cross & Blue Shield (BCBS) changed 
their prescription drug benefit setting off a round of 
intensive lobbying by the National Association of Retail 
Druggists (NARD), the National Association of Chain Store 
Druggists (NACSD), the American Pharmaceutical Association 
(APHA), and by individual druggists and large chain stores.
    BCBS for 1996 stopped waiving the 20 percent co-pay on 
prescriptions purchased at preferred (network) pharmacies for 
those retirees who also have Medicare Part B coverage. All 
other BCBS standard contract holders have always been 
responsible for paying the 20 percent co-pay and, accordingly, 
are not affected by the 1996 benefit change. The benefit change 
is expected to save $200 million in 1996. OPM has stated that 
without the benefit change all 1996 monthly premiums for BCBS 
Standard Option enrollees would have increased by $5.42/month 
for self enrollments and $12.03/month for family enrollments.
    The pharmacists maintain that the benefit change is unfair, 
because the co-pay is still waived for prescriptions obtained 
through the mail order program. They see the benefit design as 
unfairly steering customers away from the community drug 
stores. Since the FEHB program is a government health care 
program, the pharmacists have sought to have Congress overturn 
this benefit decision by BCBS. Many stores posted signs telling 
all retirees that there is a new co-pay requirement and asking 
them to sign petitions to Congress and OPM.
    The controversy is really about the economic consequences 
of retail store versus mail order prescription drug sales. The 
pharmacists apparently hope to achieve a result similar to what 
happened in Maryland when the State rescinded a prescription 
drug contract in the wake of organized protests from Maryland 
druggists. (The Federal Trade Commission and the Maryland 
Attorney General are now investigating the possibility that the 
organized campaign constitutes an antitrust violation).
    Senators Pryor and Cohen, and Representatives Moran and 
Gilman, requested a GAO review of the prescription drug 
program. That request was narrowly drawn and could have 
elicited a skewed response. Subcommittee Chairman Mica 
requested the GAO conduct a more comprehensive and objective 
analysis of the prescription drug program in the FEHB and 
provide some external comparison with private sector programs. 
The external review will provide a better base of information 
to make a more informed judgement on the issue.
    During the 104th Congress, a number of bills have been 
introduced either mandating that health insurance carriers 
provide coverage for certain benefits or that they provide 
direct reimbursement for certain health care providers.
          H.R. 1057, introduced by Representative Ben Gilman 
        (R-NY), would provide for hearing care services by 
        audiologists to Federal civilian employees.
          H.R. 2009, introduced by Representative Lynn Woolsey 
        (D-CA), would include medical foods as a specific item 
        for which coverage may be provided under the FEHB 
        program; and
          H.R. 3292, introduced by Representative Maurice 
        Hinchey (D-NY), would provide for coverage of qualified 
        acupuncturists services under the FEHB program.
    b. Benefits.--The FEHB program is often cited as a model of 
efficiency and effectiveness that other public and private 
groups should seek to replicate. The free-enterprise-based FEHB 
program has effectively contained costs through private sector 
companies, with limited governmental intervention. The 
investigation reinforced the importance of the private sector 
competition that exists in the FEHB program, and that 
legislative efforts to mandate benefit levels would undermine 
the ability of health benefit carriers to contain costs. Any 
additional benefit mandates serve to increase the overall costs 
of the FEHB program, both to the government and the individual 
employee.
    c. Hearings.--A hearing entitled, ``FEHB Program Review and 
Oversight'' was held on September 5, 1996.
    The first panel was dedicated to examining the controversy 
involving the prescription drug benefit for FEHB Blue Cross and 
Blue Shield enrollees who also have Medicare. The panel 
consisted of GAO, Blue Cross and Blue Shield Association, 
Merck-Medco, and the National Association of Chain Drug Stores 
and the National Association of Retail Druggists.
    GAO testified that BCBS made the benefit change to try to 
control an average annual 21-percent increase in its Federal 
health plan's drug costs. In early 1996, the volume of 
prescription the mail order pharmacy received was much greater 
and occurred more quickly than anticipated. As a result, Medco 
could not meet its customer-service performance measure for 
prompt dispensing and delivery of prescriptions to enrollees 
for several weeks during the benefit change's implementation. 
NACDS and other critics of the benefit change are concerned 
about its economic impact on retail pharmacies.
    The second panel consisted of advocates for mandating that 
health insurance carriers provide coverage for certain benefits 
or that they provide direct reimbursement for certain health 
care providers. The American Academy of Audiology, the 
International Hearing Society, and the American Academy of 
Otolaryngology--Head and Neck Surgery, commented on legislation 
introduced by Representative Ben Gilman (R-NY) to mandate that 
audiologists be given reimbursement by FEHB carriers. The 
audiologists support the legislation, while both the Hearing 
Society and the Otolaryngologists were strenuously opposed. A 
professor from Florida International University testified on 
behalf of legislation that would add medical foods as an item 
for which coverage may be provided. The American Association of 
Pastoral Counselors testified regarding the possible direct 
reimbursement of their members by carriers. The issue of mental 
health parity was discussed by the American Psychiatric 
Association. The National Acupuncture Foundation testified on 
legislation proposing to mandate coverage of qualified 
acupuncture services.
    An OPM official testified for the Clinton administration 
that the FEHB program is flexible enough to address coverage 
for those services and supplies and that mandating them ``is 
contrary to the program's guiding philosophy of allowing 
flexibility for plans to respond to changing health care 
practices and individual enrollee needs.'' Regarding the 
prescription drug issue, OPM said that high percentages of 
enrollees in fee-for-service plans are satisfied with the mail-
order drug program.

24. Taxpayer Subsidy of Federal Unions.

    a. Summary.--According to OPM data, as of September 1995, 
approximately 54 percent of the Federal workforce was 
unionized, encompassing some 1,0157,017 employees. Although 
most Federal employees are ostensibly represented by a union, 
it is widely acknowledged that union membership among Federal 
employees is quite low. Data from 1994 show that 19.3 percent 
of Federal employees belong to a union. (Hirsch and McPherson, 
Union Membership and Earnings Data Book 1994.)
    The subcommittee has been investigating the extent to which 
taxpayers are forced to subsidize the activities of Federal 
employee unions. Federal employee unions receive substantial 
taxpayer subsidies. These come in the form of ``official 
time,'' i.e., time on the payroll, for performing union 
representational work and even lobbying Congress and the 
executive branch. In addition, unions benefit from taxpayer 
funds in other ways as well. Agencies often furnish the unions 
that represent their employees with office space, office 
equipment, meeting rooms, and the use of such agency facilities 
as e-mail and other communication tools.
    In addition, the Clinton administration has decided as a 
matter of policy to release the home addresses of employees in 
bargaining units to the unions representing those units. This 
has been a long-sought goal of Federal employee unions. 
Although ostensibly sought for the purposes of assisting 
unions' in discharging their duties as exclusive 
representatives, possession of these home addresses provides 
unions with invaluable mailing lists they can use for 
organizing and political activity.
    b. Benefits.--The subcommittee's investigation has revealed 
that substantial sums of taxpayer moneys are consumed to 
finance the activities of Federal unions. However, further 
investigation is necessary to adequately quantify the amount of 
the subsidy Federal unions receive from taxpayers.
    c. Hearings.--A hearing entitled ``Taxpayer Subsidies of 
Federal Unions'' was held on September 11, 1996
    In connection with its investigation, the subcommittee held 
a hearing and has requested a GAO study of the use of official 
time.
    The first panel at the hearing consisted of Sally Katzen, 
Administrator of the Office of Information and Regulatory 
Affairs of OMB, and Hon. Lorraine Green, Deputy Director of 
OPM. These witnesses focused primarily on the administration's 
decision to release home addresses to Federal unions. Both 
witnesses contended the decision to release home addresses was 
made after President Clinton shut much of the Government down 
as a result of his disagreement with congressional budget 
proposals and was justified by the ``confusion'' those 
shutdowns engendered among Government employees. However, they 
also conceded that OMB began examining options for complying 
with union requests for these addresses, at the request of Vice 
President Gore months before the first shutdown. They also 
conceded that despite these months of planning, there were no 
written safeguards to protect employees from further invasions 
of their privacy as a result of secondary disclosures.
    The second panel consisted of Timothy Bowling of the 
General Accounting Office (GAO), Michael P. Dolan, Deputy 
Commissioner of the Internal Revenue Service (IRS), and Robert 
Tobias, national president of the National Treasury Employees 
Union. Based upon GAO's analysis of the use of official time at 
the Social Security Administration and three other entities 
(the Postal Service, Department of Veterans Affairs, the IRS), 
Mr. Bowling testified there is insufficient data to estimate 
the amount or cost of official time government wide. He 
testified that these agencies either had no system for 
accounting for the use of official time or their systems had 
substantial limitations. Nevertheless, it is clear that these 
expenditures are substantial. GAO estimated that in calendar 
year 1995, the Social Security Administration alone spent about 
$11.4 million on an estimated 413,000 hours of official time. 
Both Deputy Commissioner Dolan and Mr. Tobias generally 
testified that the use of official time contributes to 
efficiency in the workplace and effective union-management 
relations. In addition, Deputy Commissioner Dolan also 
testified that the IRS has been required by the Federal Labor 
Relations Authority to release home addresses to the union 
since September 1995.

25. Review of Federal Firefighters Pay and Benefits.

    a. Summary.--The Federal Government employs approximately 
10,000 Federal structural firefighters. Structural firefighters 
fight fires in buildings, on airfields, and 94 percent are 
employed by the Department of Defense. Structural firefighters 
are also employed by the Veterans Administration, Coast Guard, 
Department of Interior, National Institutes of Health, and 
National Aeronautics and Space Administration. Wildland 
firefighters fight grass and forest fires and are employed by 
the Department of Interior and the Department of Agriculture. 
The subcommittee's investigation examined only the compensation 
package for Federal structural firefighters.
    The agency head establishes the work schedule or regular 
tour of duty for firefighters. The most common work schedule or 
tours of duty for these firefighters are 40 hours, 56 hours, 
and 72 hours per week. For the most part the 40 and 56 hour 
tours of duty are for supervisory positions. Generally, 8 hours 
of actual work, 8 hours of standby duty, and 8 hours of sleep 
time comprise each 24 hours of the 72-hour work schedule. Three 
shifts are worked on a weekly basis for a total of 72 hours. 
Six shifts are worked on a biweekly basis for a total of 144 
hours.
    Pay for firefighters consists of base General Schedule pay, 
including locality-based comparability payments, premium pay 
for standby duty, and the Fair Labor Standards Act (FLSA) 
overtime. Standby duty premium pay is in lieu of Title 5 
overtime pay for regularly scheduled overtime. The regular tour 
of duty determines the amount of standby duty premium pay a 
firefighter receives. Firefighters who work a 72-hour tour of 
duty receive 25 percent standby duty premium pay. Firefighters 
on these shifts receive 125 percent of base pay not to exceed 
125 percent of GS-10, step 1. Firefighters who work a 56-hour 
tour of duty receive 15 percent premium pay for standby duty. 
Firefighters on these shifts receive 115 percent of base pay 
not to exceed 115 percent of GS-10, step 1. Firefighters who 
work a 40-hour tour of duty do not receive this premium pay.
    Firefighters on a 72-hour tour of duty receive an 
additional pay adjustment for 19 hours of ``overtime.'' The 
``overtime'' rate is computed according to the formula:

                                                                                                                                                        
                                                                                                                                                        
                                                                           (basic pay + 25% premium)                                                    
                                          Overtime Rate =  ---------------------------------------------------------  x 0.5                             
                                                                                    72 hours                                                            
                                                                                                                                                        

    Firefighters on a 56-hour tour of duty receive a pay 
adjustment for three hours of ``overtime.'' The ``overtime'' 
rate is calculated as follows:

                                                                                                                                                        
                                                                                                                                                        
                                                                           (basic pay + 25% premium)                                                    
                                          Overtime Rate =  ---------------------------------------------------------  x 0.5                             
                                                                                    56 hours                                                            
                                                                                                                                                        

    For overtime hours beyond the regular work schedule (72 or 
56), the ``overtime'' rate is computed as follows:

                                                                                                                                                        
                                                                                                                                                        
                                                                           (basic pay + 25% premium)                                                    
                                          Overtime Rate =  ---------------------------------------------------------  x 1.5                             
                                                                                (72 or 56 hours)                                                        
                                                                                                                                                        

Overtime rates are capped at GS-10, step 1.
    Nearly 80 percent of firefighters are in grades GS-5 
through GS-7 of the General Schedule. A fire chief's grade may 
range from GS-7 through GS-13 depending on the duties and 
responsibilities of the position.
    Firefighters, like law enforcement officers, have special 
retirement provisions in the Federal retirement system. 
Firefighters may retire voluntarily at an early age with a 
special annuity computation if they are at least age 50 at the 
time of retirement and have 20 years of service. Firefighters 
are subject to mandatory separation at age 55. Firefighters pay 
an extra one-half percent of salary into the retirement system 
and in return they receive a higher accrual rate than other 
employees of the executive branch. The ``normal cost'' of 
retirement is the cost of the retirement benefit expressed as a 
percentage of payroll. The ``normal cost'' is 40 percent for 
firefighters, compared to the average 25.14 percent for all 
employees of the Federal Government enrolled in the Civil 
Service Retirement System (CSRS). The ``normal cost'' for 
firefighters enrolled in the Federal Employees Retirement 
System (FERS) is 25.6 percent, as opposed to the average 12.3 
percent for all employees in FERS.
    Under current law, DOD is prohibited from contracting out 
the Federal firefighter function. Funds appropriated to the 
Department of Defense may not be obligated or expended for the 
purpose of entering into a contract for the performance of 
firefighting or security guard functions at any military 
installation or facility.
    Federal structural firefighters and their unions have been 
critical of the firefighter pay system for more than 20 years. 
Legislation has been introduced to reform the pay system for 
firefighters since the 86th Congress in 1959. While three 
hearings were held on the issue over the years, only in 1978 
did any legislation move through the House and Senate. In 1978, 
President Jimmy Carter vetoed legislation to ``substantially 
reduce the workweek of Federal firefighters while maintaining 
their pay at nearly the present rate.'' In his veto measure, 
President Carter outlined three principal objections to the 
bill. First, the bill would reduce firefighters' workweek 
without reducing the premium pay which was designed for a 
longer standby schedule.
    Second, the bill would impair the ability of agency heads 
to manage the work force and regulate the workweek. Third, the 
bill would require DOD alone to hire 4,600 additional 
employees, at an annual cost of $46.7 million just to maintain 
existing fire protection.
    In the 104th Congress one proposal was introduced in the 
House of Representatives to amend the pay system for Federal 
structural firefighters. Representative Steny Hoyer (D-MD) 
introduced H.R. 858, the Firefighters Pay Fairness Act of 1995.
    The bill would pay firefighters the full General Schedule 
hourly rate for all non-overtime duty hours, including standby 
and sleep time. In addition, the FLSA overtime rate would be 
1\1/2\ times the hourly rate of basic pay.
    Under the bill firefighters annual base pay would be 
calculated on up to 106 hours of work biweekly and overtime 
would be paid at the rate of 1.5 times the hourly rate of pay 
for hours above 106. The bill would cap the overtime at the GS-
10, step 1 hourly rate. The new hourly and overtime rates of 
pay would be phased in.
    A draft document from the Department of Defense indicated 
that the legislation would provide a minimum of 44 percent pay 
increase for a firefighter working a 72-hour schedule. The 
Congressional Budget Office prepared a preliminary cost 
estimate and projected that the bill would cost more than $61 
million in the first year, and more than $723 million over 5 
years.
    b. Benefits.--The investigation revealed that the current 
pay system for Federal firefighters is complex and somewhat 
confusing. Nevertheless, it attempts to compensate for some of 
the demands and hardships of the occupation. It is fair to say 
that complex systems sometimes produce inequities. An 
examination of pay for Federal and municipal firefighters shows 
that in certain localities total compensation for Federal 
firefighters may be higher than their municipal counterparts. 
Employing agencies have refuted the claim that a recruitment 
and retention problem for Federal firefighters exists. It may 
be necessary to simplify the pay structure, while 
simultaneously addressing concerns over the current 72-hour 
tour of duty, of Federal firefighters. Enactment of H.R. 858 is 
opposed by the government's central personnel agency OPM, and 
the individual agencies employing firefighters. The bill is 
prohibitively expensive and may have a number of unintended 
consequences. The investigation found a legitimate need for pay 
simplification. However, justification for an across-the-board 
pay increase, similar to that contained in H.R. 858, does not 
exist. The subcommittee chairman has asked OPM and DOD, in 
cooperation with the unions representing Federal firefighters, 
to present a thoughtful, cost effective, comprehensive pay 
simplification proposal.
    c. Hearings.--A hearing entitled, ``Firefighter Pay and 
Benefits'' was held on September 17, 1996.
    The first panel consisted of two officials of the 
International Association of Fire Fighters; one from the 
National office and one from a local in San Francisco. 
Representatives from the OPM and the DOD made up the second 
panel. The hearing revealed disagreement between the National 
office of the IAFF and the OPM and DOD with regard to the pay 
gap between Federal firefighters and other Federal employees 
and the recruitment and retention issue. Brook Beesley, 
representative of IAFF's Local F-15 and F-259, said that the 
entry level pay gap for Federal firefighters in Northern 
California measured 67 percent in 1995.
    The IAFF National office testified that ``the pay rate of 
other Federal workers currently is 44 percent higher than the 
pay of a Federal firefighter at the exact same grade and 
step.'' The IAFF testified that ``. . . municipal fire fighters 
earn an astounding 86 percent more per hour than their Federal 
counterparts.'' Regarding recruitment and retention the IAFF 
testified that ``Turnover rates have been as high as 33 percent 
in recent years, with agencies finding it nearly impossible to 
retain entry-level firefighters. Reliable data show that the 
Federal fire service has a turnover rate twelve times higher 
than the industry norm.'' At the request of the subcommittee 
the Congressional Research Service examined the testimony 
presented at the hearing to resolve several inconsistent 
statistics cited by witnesses. The IAFF National office did not 
respond to the CRS request for documentation of its 
calculations. Data presented by CRS and hearing witnesses 
refuted the turnover claims and the claims of significant 
underpayment of Federal firefighters.

26. Drug Testing Policies in the White House.

    a. Summary.--In 1986, President Ronald Reagan issued 
Executive Order 12564 directing Federal agencies to institute 
drug free workplace policies. Congress enacted legislation that 
slowed the implementation of this Executive order in the course 
of providing a statutory foundation for these drug free 
workplace programs in all Federal agencies. All Federal 
employees are subject to pre-employment screening for use of 
illegal drugs, and employees in national security, safety-
related, or otherwise sensitive positions (commonly called 
``testing-designated positions'' or TDPs) are also subject to 
periodic random drug testing programs administered by their 
agencies. Nearly 40 percent of the Federal workforce is 
included in such TDPs.
    In spite of the White House's reassurances that it treated 
national security concerns related to the use of illegal drugs 
seriously, the General Accounting Office had reported extensive 
delays in the submission of the forms needed to initiate 
background investigations of new employees at the start of the 
Clinton administration. Previous Senate hearings, as well as 
hearings and Government Reform and Oversight Committee 
depositions related to the firing of White House Travel Office 
personnel had revealed not only that the White House operated a 
``special drug testing'' program for employees whom the Secret 
Service considered potential threats to the President, the Vice 
President, and the White House complex, but that the White 
House's Director of Personnel Security was one of the employees 
who had admitted previous use of illegal drugs during his own 
background investigation. The placement of a person with a 
history of previous drug use in such a sensitive position 
occasioned concern about the adequacy of the White House's drug 
free workplace program.
    b. Benefits.--This investigation provided an opportunity to 
assess whether the institution of a ``special testing'' program 
for the Executive Office of the President resulted in any 
compromise of the personnel or physical security of the White 
House, and allowed the subcommittee to assess the adequacy of 
current testing standards and monitoring procedures. It also 
enabled a comparison between the hiring and testing practices 
of key agencies--the Department of Defense, the Secret Service, 
and the Federal Bureau of Investigation--and the looser 
procedures in place at the White House.
    c. Hearings.--A hearing entitled, ``Drug Testing Policy: 
White House Standards,'' was conducted on September 20, 1996.
    Subcommittee Chairman Mica convened the hearing to reassure 
the American people that abuses identified in previous hearings 
did not compromise our country's national security interests, 
to confirm that the White House has instituted effective 
corrective measures, and to assess whether legislation might be 
necessary to correct any of these problems. Mr. Mica noted that 
the reports of illegal drug use by White House employees 
included recent use, and more serious hallucinogens than would 
be included in the experimental use of marijuana during college 
years. In a letter to Senator Richard Shelby, former White 
House Director of Administration Patsy Thomasson acknowledged 
that as many as 21 White House employees had participated in 
the ``special testing program.'' Mr. Mica denounced the Clinton 
administration's partisan efforts to divert attention from 
these concerns, and expressed his hope that the White House 
would assist efforts to resolve these concerns.
    Mr. Kanjorski reported that two White House employees had 
tested positive in random drug tests, and that both were career 
employees who were terminated as a result of these tests. He 
asserted that White House personnel during the Clinton 
administration have remained drug free, and he saw no reason to 
believe that this would change.
    Mr. Burton noted that much of the American people's concern 
on this topic is derived from the example established by the 
White House. The President's flippant perspective on his ``I 
didn't inhale'' remarks and the loose handling of FBI 
background checks for senior employees caused legitimate 
concern that this administration was setting a poor example 
that was resulting in a more relaxed approach to matters of 
serious concern.
    Mr. Nelson reported that the Security Policy Board was 
working under the National Security Council and the Department 
of Defense to implement President Clinton's Executive Order 
12968, which had directed the development of common 
adjudication guidelines for determining eligibility for access 
to classified information. These new guidelines were not 
completed, but would be submitted after approval.
    Ms. Vezeris testified that the Secret Service maintains 
strict standards for the selection of applicants for employment 
and for ensuring that employees continue drug free during their 
careers. The Service can continue employees who come forward 
voluntarily and work through an employee assistance program to 
resolve drug use problems, but even in such cases, there is no 
bar against disciplinary procedures, up to the level of 
dismissal. She emphasized under questioning that the Service 
can be very selective because they have thousands of applicants 
for relatively few positions.
    Mr. Reeder described the White House's drug free workplace 
program, and claimed that it had been the subject of regular 
reports to the Congress. He noted that all White House 
employees must pass pre-employment drug tests, that they are in 
TDPs throughout their employment, and that no administration 
employee has tested positive. Records of these tests are now 
maintained by career employees of the Office of 
Administration's Human Resource Division. He claimed that the 
White House has never overruled the Secret Service on questions 
of issuing a White House pass to an employee. He acknowledged 
that 11 individuals began in the ``special testing program'' in 
the spring of 1994. Under the terms of this program, these 
employees are subject to random testing at least twice per 
year, and can be included in other tests as well. Twenty-one 
employees out of more than 3,000 have been involved in the 
``special testing program'' during the administration, at a 
cost of $1,500. Current enrollment in the program is eight. Mr. 
Reeder, in response to questions, reported that the 
modification of security policy under consideration in the 
administration would restrict access to classified information 
among employees who hold the blue White House passes. These 
employees had previously been deemed eligible for access to all 
classified information. In response to questions from Chairman 
Clinger, Mr. Reeder acknowledged that employees could be in the 
White House for up to 180 days without having a background 
investigation completed. Similarly, contractors and 
consultants, who serve the White House but remain on private 
payrolls, are not subject to either the drug testing or the 
background investigation requirements that affect full-time 
employees. Mr. Reeder reaffirmed that the White House supports 
language in the Presidential and Executive Office 
Accountability Act that would clarify the status of special 
government employees. Chairman Clinger emphasized that the 
``special testing program'' was developed to address drug use 
that applicants admitted having occurred in the past 1 to 2 
years, not experimental use during college. He stressed the 
importance of resolving these concerns and implementing 
effective policies in these areas.

27. Effects of Privatizing OPM Investigations.

    a. Summary.--In April 1996, the Office of Personnel 
Management signed a sole source contract with U.S. 
Investigations Services, Inc., (USIS) that authorized the new 
company to conduct background investigations for Federal 
employees. USIS was incorporated in Butler County, PA, as an 
employee-owned corporation whose primary stockholders were to 
be the personnel who had performed these functions as Federal 
employees in OPM's Office of Federal Investigations. The 
concept of privatizing Federal functions by coverting them to 
employee ownership had been advanced by then-OPM Director 
Constance Horner in 1987. Current OPM Director James B. King 
embraced the concept when the President proposed to privatize 
this function as part of the National Performance Review 
initiatives recommended in his FY-1995 budget. The subcommittee 
conducted oversight hearings of this proposal in June 1995, and 
learned that the administration had not developed an adequate 
cost analysis of the proposal. The General Accounting Office 
conducted intensive review of the proposal, and had issued 
letter reports raising questions about the financial plan of 
the new corporation, the adequacy of its protections for 
records subject to the Privacy Act, and whether the privatized 
employees would have effective access to the Federal, State, 
and local law enforcement records needed to complete these 
investigations.
    b. Benefits.--This oversight was conducted in Butler, PA, 
which serves as the corporate headquarters for USIS and is the 
site of the OPM records management center. It provided an 
opportunity for the community most directly affected by this 
transition to learn the plans of both OPM and USIS for 
continued operation and development of new business 
opportunities. This development would provide substantial 
benefits to the community, where the firm is one of the largest 
employers in the northern section of Butler County.
    c. Hearings.--The subcommittee conducted a field hearing, 
``OPM Privatization: Community Impact,'' in Butler, PA, on 
October 17, 1996.
    Mr. King described the sequence of events leading to OPM's 
Office of Federal Investigations receiving RIF notices in early 
May, and all of the employees received employment offers from 
USIS the next day. On July 5, the employees were separated from 
OPM, and 94 percent of them accepted the offers to begin work 
with USIS on Monday, July 8. Rather than ease this transition, 
some facilities operated by the Department of Energy had 
revoked the security clearances of employees who were separated 
from OPM. OPM Director King and USIS CEO Harper testified that 
these transition problems were close to resolution. 
Subcommittee Chairman Mica noted that this transition could 
have been smoothed through more effective planning, and 
indicated that the GAO monitoring would continue. Mr. Harper 
indicated that the company had begun operations with some 
success, and already had hired 27 employees in addition to 
those inherited from OPM. In response to a petition from the 
American Federation of Government Employees, USIS held an 
election that allowed the employees to decide whether they 
would be represented for collective bargaining purposes. With 
94 percent of the employee-owners voting, USIS employees 
rejected the union, 65 percent to 35 percent.

                   DISTRICT OF COLUMBIA SUBCOMMITTEE

1. Closing of Pennsylvania Avenue.

    a. Summary.--The purpose of this subcommittee investigation 
is to explore issues concerning the closure of Pennsylvania 
Avenue. Called ``America's Main Street'', it is a major artery 
connecting the Capitol Building and the White House, as well as 
a major east-west connector for the city, and is part of the 
original L'Enfant Plan for the District of Columbia. Any 
closing of this historic street, whether temporary or 
permanent, has enormous impact on the orderly flow of city 
traffic. Existing law gives both the DC government and Congress 
key roles in local street closings.
    Subcommittee Chairman Davis convened a hearing on June 30, 
1995, to gather information on the legal authority necessary to 
make permanent changes to city streets in the District, and to 
assess the consequences of taking such actions including lost 
revenue, and disrupted traffic patterns. The need for 
Presidential security was not questioned.
    The subcommittee heard testimony from officials of the 
Washington municipal government including the Office of the 
City Administrator, the Departments of Public Works and Housing 
and Urban Affairs as well as the DC Council. The Municipal 
testimony stressed the loss of revenue from parking meters, and 
the dislocation caused by disrupted traffic patterns, as well 
as the cost of rerouting the transit system. The problem of 
jurisdiction between the Municipal and Federal law enforcement 
branches was discussed at length, and the matter of 
reimbursement of the city by the Federal Government.
    The Department of the Treasury was asked to present written 
testimony to be included in the record. Following the hearing, 
subcommittee Chairman Davis again wrote Secretary Rubin, 
seeking additional information and clarification of points made 
in the original written testimony. Information was also 
requested from the Federal Bureau of Investigation regarding 
the parking ban in effect around the perimeter of their 
building.
    The subcommittee also reviewed the Vulnerability Assessment 
of Federal Facilities report dated June 28, 1995, prepared by 
the U.S. Marshal Service of the Department of Justice in direct 
response to the April 19, 1995, bombing in Oklahoma City.
    Subcommittee Chairman Davis convened a second hearing on 
June 7, 1996, to ascertain what effects the closing of 
Pennsylvania Avenue was having upon the District, businesses, 
visitors, and tourists a year after the initial closing. 
Testimony was taken from municipal officials, civic and 
business representatives, the U.S. Department of the Treasury, 
and the United States Secret Service.
    b. Benefits.--This investigation furnished critical 
information to the Congress necessary to the formation of 
public policy regarding both government and commercial 
establishments in the effected area. The investigation, 
including the hearings, correspondence and several meetings 
with Treasury and Transportation officials, heightened the 
administration's awareness of the impact the closure of 
Pennsylvania Avenue has imposed on the District of Columbia and 
increased its willingness to address those impacts. As a result 
of the subcommittee investigation, the Federal Highway 
Administration has contracted for a ``Transportation Needs 
Assessment'' for the District of Columbia. Such a comprehensive 
review of the District's transportation systems has not been 
conducted in 30 years and is currently beyond the means of the 
District to perform for itself. It is expected that the report 
will provide useful information to the District, the Financial 
Responsibility and Management Assistance Authority (control 
board), FHA, the Washington Metropolitan Area Transit Authority 
(Metro), and the Metropolitan Transportation Planning 
Organization in their important work in transportation and 
environmental planning.
    c. Hearings.--On June 30, 1995, the subcommittee held an 
informational hearing on the closing of Pennsylvania Avenue. 
The hearing followed an order signed by Treasury Secretary 
Robert E. Rubin on May 19, 1995, prohibiting vehicular traffic 
on portions of Pennsylvania Avenue and certain other streets 
adjacent to the White House. Secretary Rubin delegated to the 
Director of the United States Secret Service ``all necessary 
authority to carry out such street closings.'' Those testifying 
at the June 30, 1995 hearing were, Michael C. Rogers, D.C. city 
administrator; deputy mayor for operations Larry King, director 
of Public Works; Hon. Frank Smith, chairman, Committee on 
Housing and Urban Affairs, D.C. City Council; Hon. David A. 
Clarke, chairman of the Council of D.C.; Gregory W. Fazakerley, 
president, D.S. Building Industry Association; Dr. Henry L. 
Fernandez, chairman, Advisory Neighborhood Commission 2B; 
Millard Seay, director of planning, Washington Metro Area 
Transit Authority; Margaret O. Jeffers, Esq., executive vice 
president, Apartment and Office Building Association of 
Metropolitan Washington; and Ken Hoeffer, executive director, 
Washington, DC Area Trucking Association.
    On June 7, 1996, the Subcommittee on the District of 
Columbia held a second hearing to ascertain what impact the 
closing of Pennsylvania Avenue has had on District residents, 
commuters, visitors, and the greater Washington Metropolitan 
area in general and administration actions or plans to deal 
with those impacts. The following witnesses testified: Senator 
Rod Gramms; Representative Jim Moran; James Johnson, Assistant 
Secretary for Enforcement, U.S. Department of the Treasury; 
Eljay Bowron, Director of the United States Secret Service; 
John Strauchs, CEO, SYSTECH Group, Inc.; Mayor Marion Barry; 
Larry King, director, DC Department of Public Works; Michael 
Rogers, DC city administrator; Rodney Slater, Administrator, 
Federal Highway Administration; William Lawson, Assistant 
Regional Administrator, General Services Administration; Dennis 
Galvin, Associate Director for Professional Services, National 
Park Service; Timothy Coughlin, president, Riggs National 
Corp.; Robert S. Krebs, vice president, Regional Affairs, 
Greater Washington Board of Trade; Tom Wilbur, president, DC 
Building Industry Association; Lon Anderson, staff director, 
AAA Potomac; Christopher Reutershan, District of Columbia 
Chamber of Commerce; Emily Vetter, president, Hotel Association 
of Washington, DC; William Lecos, president, Restaurant 
Association of Metropolitan Washington, and Jon P. Grove, 
executive vice president, American Society of Association 
Executives.

2. Traffic Disruptions.

    a. Summary.--The subcommittee held an oversight hearing 
into recent traffic disruptions in the District of Columbia 
organized by a local labor organization. The group, ``Justice 
for Janitors'' is organized and supported by the Service 
Industry Employees Union (SIEU). A concerted effort has been 
undertaken to pressure private companies to increase wages and 
benfits for service personnel through public demonstrations. 
The group repeatedly deliberately blocked major traffic 
arteries in the Nation's Capitol and caused massive traffic 
disruptions affecting both the public and private sectors. The 
subcommittee sought information into the consequences of the 
traffic disruption to area business, commuters, and police 
procedure.
    An incident on September 20, 1995, generated the hearing, 
in which morning commuter traffic was brought to a standstill 
on Interstate 66, Routes 50 and 110, the Theodore Roosevelt 
Memorial Bridge, and the George Washington Memorial Parkway. An 
estimated 100,000 motorists were affected. As part of the 
disruption, a bus was pulled across the Roosevelt Bridge and 
abandoned. Each of the 34 persons arrested was fined $50. 
According to news reports, the traffic disruption ``impeded an 
ambulance on call'' and caused ``neighboring small businesses 
untold losses of normal revenue.''
    Testimony at the hearing revealed the problems such 
demonstrations cause the law enforcement officers, and traffic 
management personnel. Additional testimony was heard that 
outlined the difficulties generated by the traffic disruption 
including a rise in the number of auto accidents. The impact on 
area businesses and medical facilities was discussed at length.
    Following a subsequent disruption on December 4, 1995, 
which created a huge traffic jam in Northwest Washington in the 
area of the DC Financial Control Board offices, the 
subcommittee is reviewing legislative options to prevent and 
control future non-permitted demonstrations.
    b. Benefits.--The investigation provided information 
critical to drafting legislation to discourage reoccurrence of 
deliberate traffic interruptions in Washington, DC. The refusal 
of the union instigating these disruptions to testify or 
attempt to justify such behavior strongly indicates that the 
objective of these incidents was publicity and maximum public 
disruption in an attempt to gain an advantage over private 
employers in labor negotiations. The subcommittee was able to 
encourage various law enforcement agencies to cooperate and 
plan for joint action to minimize the extent of any future 
demonstrations of this type. It should be noted that no more 
incidents of this nature have occurred since December 1995.
    c. Hearings.--The subcommittee held an oversight hearing on 
October 6, 1995, concerning the recent traffic disruptions in 
the District of Columbia organized by a local labor 
organization.

3. District of Columbia Economic Recovery Act.

    a. Summary.--In the past 2 years, individuals have 
suggested ways to help the District of Columbia improve its 
financial status and grow its economy. Most of the proposals 
that were brought contained various forms of tax reductions and 
incentives. District Delegate Eleanor Holmes Norton introduced 
H.R. 3244 to amend the DC Federal tax code to achieve some of 
these objectives. The bill was referred the Committee on Ways 
and Means. Due to the attention the District of Columbia's 
financial condition has generated and the widening national 
debate on the concept of the ``flat tax'' and other proposals, 
subcommittee Chairman Davis convened a hearing on July 31, 1996 
to obtain various points of view on the concepts the bill 
sought to address. Joining the subcommittee in ex officio 
capacity for the hearing were, Committee Chairman Clinger, 
Representatives Morella, Moran, and Wynn.
    b. Benefits.--This investigation furnished the 
subcommittee, Congress, and interested citizens with 
information that will assist them in considering tax and other 
remedies that have thus far been advanced. Witnesses presented 
statistical evidence in support of the plan and also indicating 
that it would have little immediate impact on the District of 
Columbia government or its performance. The hearing will give 
Congress and other interested parties significant data on the 
benefits and incentives of such tax reduction on individuals 
and whether such benefits by themselves could overcome concerns 
about safety, poor schools, and poor government services which 
are causing so many people to leave the city.
    c. Hearings.--On July 31, 1996, the subcommittee held an 
informational hearing on H.R. 3244. The following witnesses 
testified: Jack Kemp, co-director, Empower America; Senator 
Joseph I. Lieberman; Speaker Newt Gingrich; Wade Henderson, 
executive director, Leadership Conference on Civil Right; James 
Prost, Basile Baumann Prost and Associates; Martin A. Sullivan, 
tax analyst; Edwin Kee, George Washington University; Steven 
Fuller, George Mason University; Thomas B. Ripy, Congressional 
Research Service; Kenneth J. Kies, chief of staff, Joint 
Committe on Taxation; James R. Atwood, Covington and Burling; 
Diane Duff, Greater Washington Board of Trade; H. Hollister 
Cantur, Fairfax County Chamber of Commerce; Kwasi Holman, 
executive vice president, DC Chamber of Commerce; and Timothy 
C. Coughlin, president, Riggs National Corp.

4. Public Law 104-8, District of Columbia Financial Responsibility and 
        Management Assistance Authority Act of 1995.

    a. Summary.--The subcommittee held two oversight hearings 
on the implementation of the legislation that established the 
District of Columbia Financial Responsibility and Management 
Assistance Authority (the control board). At the first hearing, 
subcommittee Chairman Davis stressed the importance of the act 
and called upon the parties working under it to state their 
understanding of their respective roles and to give their view 
on the state of the city's financial condition. At the second 
hearing, subcommittee Chairman Davis reiterated the importance 
of the positions of Chief Financial Officer and Inspector 
General as essential parts of the District's government. He 
also reviewed their relationship with the control board. The 
rest of the hearing was devoted to the findings of an 
independent audit by KPMG Peat-Marwick of deficiencies and lack 
of controls in the District with regard to vender payments and 
information gathering and dissemination. In addition to holding 
public hearings on the implementation of Public Law 104-8, the 
subcommittee exercised its powers of oversight of the statute 
and the District of Columbia Financial Responsibility and 
Management Assistance Authority (control board) it created in 
several ways.
    b. Benefits.--To assist the subcommittee to fulfill its 
oversight responsibilities and to bring essential information 
before Congress and the public, the subcommittee has initiated 
monthly meetings and briefings between staff of the control 
board and various congressional committees and subcommittees. 
It established ongoing lines of communications with the Chief 
Financial Officer and Inspector General, posts established by 
the statute. It consulted with control board members and staff 
about legislation affecting the District, such as H.R. 3663, 
the District of Columbia Water and Sewer Authority Act of 1996 
and other measures Congress considered. Subcommittee Chairman 
Davis, Ranking Member Norton, and subcommittee staff met 
periodically with control board Chairman Brimmer and staff to 
ascertain the board's needs, assess its progress in meeting 
them, and to assure that the parameters under which the board 
operates conform to the letter and spirit of Public Law 104-
108. It will continue in these endeavors throughout the life of 
the control board, as specified in the statute.
    The benefits of Public Law 104-8 continue to mount as the 
control board moves aggressively to improve the performance of 
the District government, control its spending, and to improve 
revenue collection. The Chief Financial Officer, created by the 
legislation, has reformed the operation and personnel of the 
entire financial cluster in the District and has implemented 
firm control over financial management throughout the 
government. The Inspector General, which was substantially 
enhanced by the legislation, has initiated a number of 
management audits and performance improvements as well 
investigations of potential fraud, corruption, and waste.
    The control board has disbanded the Lottery Board and 
placed operation of the Lottery under the CFO. It has also 
removed the Superintendent of the DC school system, replacing 
him with a temporary Chief Executive Officer and has created a 
Board of Trustees with most of the powers of the Board of 
Education to revive and reform the entire operation of the DC 
public schools.
    Major financial reform has already taken place in the 
District government with longer term improvements still being 
worked on. The District was able to sell bonds on the private 
market in October 1996 at an acceptable interest rate without 
credit enhancements or other security instruments.
    The benefits to Congress of better information on the 
District of Columbia and its government cannot be 
overemphasized because of its impact on appropriation 
decisions. More and better information is critical to 
Congressional efforts to improve and reform the District 
government. In addition, placing an autonomous agency between 
Congress and the District government has greatly benefited the 
residents of the District and its government by providing much 
more direct and immediate assistance than would be possible for 
Congress as a body to provide while maintaining the home rule 
government of the Nation's capital.
    c. Hearings.--The subcommittee held hearings on March 19 
and 28, 1996. Those who testified were: Dr. Andrew Brimmer, 
chairman, District of Columbia Financial Responsibility and 
Management Assistance Authority; Stephen D. Harlan, vice 
chairman, DCFRMAA; DCFRMAA Members Dr. Joyce A. Ladner, 
Constance Berry Newman, and Edward A. Singletary, Mayor Marion 
Barry, DC City Council Chairman David Clark; Anthony Williams, 
DC Chief Financial Officer, Angela Avant, DC Inspector General; 
and John Hummel, KPMG Peat-Marwick, LLP.

    GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY SUBCOMMITTEE

1. Capital Budgeting.

    a. Summary.--Since the imposition of ever-tightening caps 
on discretionary spending in the 1990 Omnibus Budget 
Reconciliation Act, committee members have been concerned that 
long-term investments in capital have been neglected in favor 
of current consumption. Borrowing funds to invest in capital 
projects with long-term benefits is an appropriate activity, as 
the future generations that enjoy the benefits of the assets 
will also pay for them. However, the Federal Government lacks 
experience with capital budgeting concepts and techniques. 
Therefore, committee members were interested in examining the 
practices of State and local jurisdictions, as well as that of 
other nations.
    The subcommittee examined H.R. 767, the Federal Budget 
Structure Act, introduced on February 1, 1995, by Chairman 
William Clinger. Two hearings were held to review various 
proposals to implement a Federal capital budget and the manner 
in which such budgets impacted other government operations. The 
hearings examined the workings of capital budgets operated by 
Fairfax County, VA, New York, NY, Philadelphia, PA, and the 
government of New Zealand, as well as the work of scholars and 
private sector financial experts in the area of investment 
budgeting.
    b. Benefits.--Implementing a Federal capital budget will 
help rebuild the Nation's deteriorating capital stock, and will 
help improve Federal planning, investment and budgeting 
processes.
    c. Hearings.--Subcommittee Chairman Horn convened the first 
hearing on March 2, 1995, to examine the practices and 
experience of local jurisdictions in the area of capital 
budgeting. He opened the hearing by noting the importance of 
planning capital projects, and that the Federal Government has 
failed to adequately plan. Chairman Clinger noted his 
endorsement of Federal capital budgeting and that his bill, the 
Federal Budget Structure Act of 1995, H.R. 767, had been co-
sponsored by a number of committee members.
    Representative Bob Wise also mentioned that he supports the 
concept of capital budgeting and has introduced two bills on 
the issue. Representative Norman Mineta testified that 
borrowing funds to invest in capital projects with long-term 
benefits was an appropriate activity, as the future generations 
that enjoy the benefits of that asset will also pay for it. 
Representative Ray Thornton noted that Arkansas had 
successfully operated a capital budget for most of this 
century. Representative Thornton also referred to his support 
of a capital budget and his introduction of a bill to provide 
for a Federal capital budget.
    Katherine Hanley, chairwoman of the Fairfax County Board of 
Supervisors, accompanied by William J. Leidinger, county 
executive, Fairfax County, discussed Fairfax's capital budget. 
Mr. Leidinger testified that the county is prohibited from 
allowing capital costs to exceed 10 percent of total general 
fund disbursements. This is the centerpiece of the county's Ten 
Principles of Sound Financial Management, which has allowed 
Fairfax to maintain a AAA bond rating, 1 of only 33 local 
governments out of 30,000 jurisdictions to claim that honor.
    Thomas McMahon, director of Finance Division, New York City 
Council, testified on New York City's capital budget. Mr. 
McMahon noted that Federal adoption of a capital budget would 
help rebuild the Nation's deteriorating capital stock and 
testified that New York City has witnessed a decline in the 
quality and quantity of the city's capital stock.
    Ted Sheridan, the president of Sheridan Management Corp., 
and former CFO of Fairchild, testified on behalf of the 
Financial Executives Institute. Mr. Sheridan stressed that 
capital budgeting was essential to efficiently plan the Federal 
investment program. He proposed a pilot program for capital 
budgeting based on three assets: a weapons system, an 
information system, and a power generation station.
    David Chu, a fellow at the National Academy of Public 
Administration (NAPA), served on NAPA's expert panel on capital 
budgeting. Dr. Chu believes that capital budgeting has many 
strengths, including improving planning, investment and 
identifying budget expenditures for investments. Dr. Chu also 
mentioned technical problems with capital budgeting, such as 
the treatment of capital equipment, and the treatment of tax 
expenditures, government-sponsored enterprises.
    On June 29, 1995, His Excellency John Wood, Ambassador of 
New Zealand, described how government agencies in New Zealand 
changed their accounting, budgeting, and management systems 
beginning in 1984. These changes affected (1) the way 
department heads were chosen; (2) the way in which agencies 
define, measure and report performance; (3) delegation of input 
control to departments or agencies; and (4) the way government 
fiscal performance is measured and reported.
    Government departments in New Zealand are assessed a charge 
for capital controlled by the department, determined by 
multiplying total capital times a market rate of interest. In 
addition, agencies may sell surplus assets and use the proceeds 
to upgrade computer systems. These features make explicit to 
agencies the cost of owning assets.
    Edward Rendell, mayor of Philadelphia, noted that capital 
budgets are common to local and State governments, are 
enforceable by a borrower's bond rating, and force long-range 
prioritization and planning for capital projects.
    Mr. Paul Posner, Director of Budget Issues, Accounting and 
Information Management Division of the U.S. General Accounting 
Office, testified that if the Federal budget were balanced, the 
long-term boost to Gross Domestic Product would mean that GDP 
would be 34 percent larger in the year 2025 than if no action 
were taken to reduce the deficit. Similarly, Mr. Posner noted 
that within the budget process, care is needed to be taken to 
improve selection of investments to improve productivity.
    Mr. Posner noted the temptation that lawmakers would face 
to classify non-capital expenditures as capital in order to get 
more favorable budget treatment for the asset. He also noted 
that the Federal Government does not own many of the capital 
assets it funds in the budget. Many are owned by States or 
local governments and funded by subsidies or grants. In 
addition, Mr. Posner noted the need to impose long-term control 
over the obligation of public funds. Finally Mr. Posner noted 
the importance of recognizing the full cost of a long-term 
obligation up front in order to impose discipline on agencies.

2. Integrity of Government Documents.

    a. Summary.--On September 30, 1994, former U.S. 
Representative Barbara Jordan, as chair of the Commission on 
Immigration Reform, released the Commission's first report to 
the Congress on the status of the Nation's immigration policy. 
The report was required by the Immigration Act of 1990, Public 
Law 101-649. The Commission cited widespread counterfeiting of 
documents that entitle people to gain public benefits or to be 
hired for work as a major factor undermining current 
immigration policy. It recommended development of a ``simpler, 
more fraud-resistant system for verifying work authorization.''
    In the President's Budget for fiscal year 1996, the 
administration proposed to reform the Nation's immigration 
process, in part through development of a nationally available 
employment verification system. In that connection, the 
subcommittee met to consider a range of views on the nature, 
the role, the need, the cost, and the potential social 
consequences of using fraud-resistant personal identification 
documents as part of a national employment verification system.
    b. Benefits.--The shortcomings with regard to the security 
of government documents identified by the hearing will assist 
the committee in advising relevant Federal agencies on the need 
to develop more secure documents to verify work eligibility and 
immigration status.
    c. Hearings.--Subcommittee Chairman Horn called the hearing 
on March 7, 1995, to examine the situation regarding the 
integrity of government documents with testimony from 
representatives from the U.S. Commission on Immigration Reform 
and the Immigration and Naturalization Service (INS).
    Subcommittee Chairman Horn opened the hearing by describing 
it as a fact-gathering effort toward fraud-proofing personal 
identification documents. Congressman Becerra, the first 
witness, cautioned all concerned to remain sensitive to the 
considerations of personal privacy, data base accuracy, and 
total public cost as major factors bearing on U.S. immigration 
policy, ``big-brotherism,'' and perceptions of discrimination.
    Mr. Robert C. Hill and Dr. Susan Martin, U.S. Commission on 
Immigration Reform, summarized the Immigration Reform 
Commission's published recommendation for electronic validation 
of the Social Security number as the fairest, fastest, most 
reliable, and most efficient way to guard against employment 
authorization fraud. They advocated starting slow and small 
with one or more alternative ``pilot programs'' prior to 
constructing a nationwide employment verification registry, and 
letting the Commission monitor preliminary results.
    Mr. James A. Puleo, Executive Associate Commissioner for 
Programs, INS, explained his agency's telephone verification 
system (TVS) for checking identities of Los Angeles area 
``green card'' holders (immigrants) applying for work. TVS 
methodology is potentially usable in a national employment 
verification system. INS data bases on non-citizen U.S. 
residents need to be purified, reconciled, and integrated in 
order to be usable in a national employment verification 
system. The agency has taken some steps toward fraud-proofing 
``green cards'' (resident alien registration cards), but the 
current re-issuance program will take a year longer than 
planned. INS is working with the Social Security Administration 
(SSA) on a multi-stage plan that would ultimately lead to a 
national employment verification registry.
    Dr. Shirley S. Chater, Commissioner, Social Security 
Administration, emphasized that Social Security cards have 
never been intended to guarantee individual personal identity. 
Nonetheless, the current counterfeit-resistant Social Security 
card has been issued to 61 percent of active card holders. SSA 
has a toll-free telephone number which employers can use to 
verify Social Security numbers (SSN's) for payroll purposes, 
but it is not used much, and it could not handle a large 
nationwide verification workload at present. The agency's 
``enumeration at birth'' program has nearly eliminated 
fraudulent SSN's for infants and children. SSA's data base, 
recently much improved, still needs more work in order to 
support employment verification nationwide.
    Mr. Richard W. Velde, former head of the Law Enforcement 
Assistance Administration (LEAA), suggested that in today's 
established electronic data base networks for exchanging health 
and vital records, criminal history, and bad motor vehicle 
driving records, we may already have a framework for the 
proposed national employment registry. In addition, 
sophisticated moderate-cost biometric identification technology 
is available to produce encoded personal documents that 
definitively establish the bearer as either the person 
described on the document or as a different person. Several 
States use such technology in issuing drivers' licenses. A 
nationwide hookup of State motor-vehicle driver registries, 
coupled with uniform issuance of biometric State drivers' 
licenses, could serve as the functional equivalent of the 
Immigration Reform Commission's employment verification 
registry.
    Mr. Frank W. Reilly, Ms. Hazel E. Edwards, and Mr. John 
Chris Martin, Accounting and Information Management Division, 
General Accounting Office, commented briefly on INS and SSA 
data bases, TVS's, and plans for a two-step process to cross-
check each other's files for discrepant information. They 
described a newly implemented statewide system for managing 
public benefits eligibility in Connecticut. The system uses 
state-of-the-art technology in providing a one-step application 
for three Federal benefit programs that links nine separate 
supporting data bases. Connecticut's experience could help in 
developing the Federal employment verification registry.
    Joseph Eaton, professor at the Graduate School of Public 
and International Affairs, University of Pittsburgh, praised 
the Immigration Reform Commission's work and summarized the 
advantages and the ready availability of biometric 
identification technology. The protection of publicly stored 
private information can be assured and enhanced by (1) feedback 
to the individual whenever a privacy-sensitive personal file is 
accessed; (2) standards for data base matching; (3) bonding and 
licensing of sensitive data bank owners and employees; and (4) 
administrative and legal remedies.
    Mr. Robert Rasor, Special Agent, United States Secret 
Service, mentioned several different kinds of identification-
document fraud that the Secret Service pursues in conjunction 
with the INS's Forensic Identification Laboratory. He described 
his agency's role of coordinating and assisting the efforts of 
State bureaus of health and vital statistics and departments of 
motor vehicles to strengthen and standardize identification 
media and documents.
    Mr. Russell Meltzer, Head of Security, Schlumberger-Malco, 
Inc., explained in concept how the credit card industry's 
authorization system could be copied and retrofitted to serve 
as a national employment registry and verification system. The 
Federal Government would function analogously to a bank, an 
employer to a retail merchant, and a job applicant to a 
consumer. Inquiry terminals at work places would not allow 
users (inquirers) to alter anything in the data bank. An 
applicant's document would take the form of a ``smart 
(computer-chip) card,'' biometrically encoded to match to the 
individual bearer. Written testimony was provided by Mr. Lamar 
Smith of Visa USA, which described how today's credit card 
industry authorization process works.

3. Federal Role in Privatization.

    a. Summary.--The Budget of the United States Government, 
the President's budget request submitted on February 6, 1995, 
contained numerous proposals for privatization of government 
functions, assets, and agencies, including the helium program, 
the National Weather Service, U.S. Enrichment Corporation, four 
of the Power Marketing Administrations, and the Naval Petroleum 
Reserve. The committee examined the history of privatization in 
other countries and levels of government to determine lessons 
to be derived from these sources.
    b. Benefits.--This hearing demonstrated the necessity for 
additional private sector capital being deployed to meet public 
needs. From wastewater treatment to airports, many publicly 
owned assets are not receiving sufficient levels of investment. 
There are investors willing to provide this capital, and the 
experience of other nations proves that such measures can 
improve economic performance while increasing investment, and 
reducing the role of the Government in the economy.
    c. Hearings.--Subcommittee Chairman Horn opened the hearing 
by noting the historical increase in the number of 
privatizations all over the world, with the exception of the 
United States. Representative Klug, who chairs the Speaker's 
task force on privatization, listed the types of Federal 
agencies and activities which his task force has identified as 
possible candidates for privatization. Roy Bernardi, mayor of 
Syracuse, NY, testified about his city's plans for 
privatization. Chief among the plans is a proposal to privatize 
the airport. However, this sale is partially blocked by Federal 
rules regarding grant repayment of assets constructed with 
Federal dollars.
    Andrew Jones, worldwide privatization coordinator at Arthur 
Andersen Consulting, testified about privatizations in other 
countries and lessons to be learned from those experiences.
    Roger Leeds, managing director of Barents PLC, testified 
about his experience directing privatization efforts abroad. 
Mr. Leeds noted that the likeliest prospects for privatization 
in the Federal Government were services (though Leeds did 
mention the power marketing administrations).
    Louis Albano, president of Civil Service Technical Guild in 
New York City, testified about the dangers of contracting out 
additional government services. Mr. Albano suggested that 
government workers could do the same job cheaper and better 
than a private contractor whose motive was profit.
    Bert Concklin, president of Professional Services Council, 
testified that the Federal Government should contract out more. 
Mr. Concklin spoke against the system of cost comparison 
whereby costs of private contractors are compared against the 
cost of performing work in-house. He also testified that such 
cost comparisons were misleading, since Federal costs usually 
do not include many overhead items.
    Ralph L. Stanley, a senior vice president with United 
Infrastructure Corp., testified on the need for private 
infrastructure finance initiatives. He proposed an 
infrastructure bank which would take several billion Federal 
dollars and leverage them with private investment.
    Ronald Correll, president and CEO of United Water 
Resources, testified about the need for private financing of 
water system improvements.
    Viggo Butler, president of Lockheed Air Terminal, testified 
about the need for relief from the Federal grant repayment 
requirement.

4. National Performance Review.

    a. Summary.--On May 2, 1995, the subcommittee convened a 
hearing to evaluate the accomplishments of the National 
Performance Review. The National Performance Review (NPR) was 
initiated by Vice President Gore in 1993 and consisted of two 
phases. The purpose of the first phase was to make government 
work better and cost less; the second phase required agencies 
to fundamentally reevaluate their missions, goals, and 
objectives.
    b. Benefits.--Ongoing review of the National Performance 
Review process will help Congress and the public assess what 
the NPR has accomplished to date, and what can be expected from 
the second phase of the NPR initiative. This effort will help 
the Federal Government determine how to better serve the 
Nation.
    c. Hearings.--Witnesses were asked to give their opinions 
on the mission and role of the NPR, whether benchmarks for 
evaluating NPR's progress existed, whether NPR as implemented 
met their expectations for improving government, and whether 
NPR could achieve its stated objectives.
    Dr. Alice Rivlin, Director, Office of Management and 
Budget, supported NPR's effectiveness in improving executive 
branch departments and agencies. She noted that Vice President 
Gore, who spearheaded Phase I, encouraged the agencies to adopt 
the 1,200 recommendations developed by NPR. In describing Phase 
II, Ms. Rivlin stated that the focus switched from ``how'' 
government operates to ``what'' it should do. She urged 
Congress to help NPR with funding.
    Charles Bowsher, Comptroller General of the United States, 
applauded the concept and aims of the NPR, but saw many 
shortcomings. Two examples he cited were failing to address 
many critical management problems in the agencies and ignoring 
nearly three-fourths of other issues GAO had identified. He 
felt that the goals should be stated more clearly, reliable 
information should be available, and that the focus should be 
on outcome-based management.
    Tony Dale, budget manager of the New Zealand Treasury, 
describes the public sector reform of New Zealand in the mid-
eighties. The corporatization, privatization, and public sector 
reforms are the very reasons that New Zealand now has constant 
economic growth, a low inflation, a shrinking percentage in 
government expenditures, and instead of a 9 percent deficit, 
the country now has a 7 percent surplus. He strongly supports 
public sector reform.
    Duncan Wyse, executive director, Oregon Benchmarking 
Project, made three points: (1) most of the Federal agenda is 
delivered by State and local governments, and improvement must 
be made by taking this into consideration; (2) the system needs 
to be reformed; and (3) Congress as well as the executive 
branch needs to be reformed.
    Dwight Ink, Institute of Public Administration, thought 
that the implementation of NPR concepts has been very 
disappointing and he hoped the situation will change in the 
future. He pointed to the hiring process, the inconsistency 
among NPR agencies, and the inability of leadership as examples 
of NPR ineffectiveness. He blames the problems of organization 
and execution in the NPR on too much restructuring without 
establishing missions and roles.
    R. Scott Fosler, National Academy of Public Administration 
agreed with the scope and purpose of the NPR. He believed the 
move from the ``how'' of government to ``what'' government does 
is a positive step; however, NPR has to address key areas if it 
wants to sustain its energy. Such key areas are accountability, 
a coherent framework, and capacity within the agencies.
    Donald Kettl, senior nonresident fellow, the Brookings 
Institution, stated that NPR had made substantial progress, and 
achieved substantial savings, but the progress of NPR is not 
self-sustaining and that there are still many unanswered 
questions.
    Herbert Jasper, McManis Associates, lauded many of the 
accomplishments of the NPR, while expressing some misgivings. 
He cited as disappointing NPR's lack of analysis, statutory 
promises that are not backed up with resources, the ``command'' 
or top-down philosophies of some recommendations, and the 
``government bashing'' that permeates NPR reports.

5. Strengthening Departmental Management.

    a. Summary.--In the past 30 years, there has been a 
multiplication in the numbers of management functions, and a 
diffusion of their responsibility among numerous centers. These 
centers of management authority include Secretary, Chief of 
Staff, Inspector General, Chief Financial Officer, Chief 
Operating Officer, and Assistant Secretary for Management. The 
number of employees in executive levels I through V totaled 249 
in 1960 and 1626 in 1992. Similarly, occupants of the Senior 
Executive Service (SES) also increased dramatically in number 
during the same period. The larger number of management and 
control personnel resulted in increased layers of management, 
who delayed implementation of management program and distorted 
information passing between levels of management.
    b. Benefits.--The hearing demonstrated the need for a 
government focus on management issues. This was part of the 
subcommittee's ongoing interest in and oversight of the 
management practices at Federal agencies.
    c. Hearings.--On May 9, 1995, the subcommittee convened a 
hearing entitled, ``Strengthening Departmental Management.'' 
Subcommittee Chairman Horn opened the hearing by noting the 
framework of general management laws which exists to coordinate 
management reform efforts. Chairman Horn described his intent 
to bring together private and public sector experience to help 
solve the problems of government management.
    Tom Glynn, the Deputy Secretary of Labor, testified about 
his experience as a Chief Operating Officer at the Department 
of Labor. Mr. Glynn described his agency's reinvention efforts, 
including reducing the steps it takes to hire a new worker from 
120 to 41 steps. Chairman Horn and Glynn exchanged comments 
concerning the diffused nature of management responsibilities 
within the current organizational structure. The Chief 
Operating Officer, the Secretary's Chief of Staff, the 
Inspector General, the Assistant Secretary for Management and 
the Chief Financial Officer each have large management 
responsibilities. The proposed chief information officer would 
diffuse management responsibilities further.
    George Munoz, Assistant Secretary for Management and Chief 
Financial Officer, Department of the Treasury, testified 
concerning his agency's recent reinvention efforts. Mr. Munoz 
described the principles which have guided Treasury's 
management improvements: customer service, strategic planning 
and streamlining. Representative Michael Flanagan and Mr. Munoz 
gave their views on debt collection.
    Johnny Finch, Assistant Comptroller, General Government 
Division, and Gene Dodaro, Assistant Comptroller, Accounting 
and Information Management Division, GAO, testified on GAO's 
reviews of agency management improvement efforts. Mr. Finch 
noted that the Government Performance and Results Act, the 
Chief Financial Officers Act and the Paperwork Reduction Act 
have formed the basis of the agency management improvement 
efforts. Mr. Finch noted that agencies need to define their 
mission, improve operational effectiveness by using information 
technology to re-engineer, strengthen financial management, and 
build the capacity to manage the Federal workforce.
    Upon questioning, Mr. Dodaro outlined the problem areas in 
information technology investment and described weaknesses in 
financial management at the Department of Defense. Mr. Finch 
detailed differences between the National Performance Review 
and successful government reform efforts abroad.
    In panel III, Alan Dean, senior fellow of the National 
Academy of Public Administration, described recent changes in 
the Federal workforce, such as the increasing numbers of non-
career officials. Mr. Dean also discussed reorganization 
proposals, including the creation of an Office of Federal 
Management and restructuring executive departments. William 
Hansen, former Chief Financial Officer at the Department of 
Education, outlined the reorganization of the Department in the 
1980's, and the restructuring and block-granting of programs 
that occurred in 1981-1983. Mr. Dean testified that OMB's 
restructuring has denuded the agency of any expertise in 
government corporations.
    Roger Sperry, director of management studies of the 
National Academy of Public Administration, identified the five 
key areas to any efforts at government reform: strengthening 
Federal leadership, automating, integrating and streamlining 
government, focusing on performance, streamlining Federal field 
structures and congressional-executive relations. Mr. Sperry 
also commented on interagency and intergovernmental 
coordination in a region responding to a critical situation.

6. Consolidating Federal Programs and Organizations.

    a. Summary.--This is part of the Making Government Work 
series described in Section II.A.1.
    b. Benefits.--These are described in Section II.A.1.
    c. Hearings.--On Tuesday, May 16, 1995, the subcommittee 
began its third hearing in its ``Making Government Work'' 
series. The hearing was held in two parts and considered 
proposals for restructuring the programs and functions of the 
Departments of Energy and Education. The first part of the 
hearing will be held on May 16th; the second session was on May 
23rd.
    Subcommittee Chairman Horn noted at the opening of the 
hearing that a number of proposals recommended terminating the 
Departments of Education and Energy. He offered a criterion to 
be used when considering whether, if an agency or department 
did not already exist, it would make sense to create it.
    Ranking subcommittee member Mrs. Maloney noted that the 
country had little experience with abolishing Cabinet 
departments. She cautioned against not adequately providing for 
the continuation of many of the activities of the Energy 
Department that she regarded as important.
    In her testimony, Secretary O'Leary presented her agency's 
own plan to reduce its workforce by 27 percent and its budget 
by $14 billion over the next 5 years. She stated that the 
Department would still be required to perform its four critical 
missions. The Secretary identified these missions as national 
security protection and nuclear danger reduction, weapons site 
clean up and environmental management, science and technology 
management, and energy security enhancement. She concluded that 
the Energy Department, smaller in size, was still the best 
institutional vehicle to perform these tasks.
    In response to questions from the subcommittee, the 
Secretary stressed the advantages of maintaining civilian 
control over the Nation's nuclear weapons program. She 
criticized suggested alternatives to the Energy Department, 
such as the proposed Department of Science, as unwieldy and 
ill-advised. When asked by subcommittee Chairman Horn about the 
opportunities for closer policy coordination that a ``Natural 
Resources Department'' offered, as had been proposed by 
President Nixon, she responded that regular meetings by 
administration Cabinet members in related fields provided for 
policy coordination and the resolution of disputes.
    The subcommittee reconvened its hearing on ``Consolidating 
Federal Programs and Organizations'' on May 23, 1995. Donald 
Hodel, former Secretary of Energy told the subcommittee that in 
a market economy, the Energy Department had little to do with 
producing or generating energy. He concluded that the very 
existence of a Department of Energy was undesirable, as ``it 
suggests that the U.S. Government is doing or is going to do 
something about energy beyond what I believe government should 
do.''
    Former Energy Secretary Admiral James Watkins indicated 
that he appeared before the subcommittee neither as an advocate 
nor an opponent of the Department's elimination. Rather the 
Admiral stressed his concerns for the appropriate stewardship 
of the Nation's nuclear energy program. He called upon Congress 
to initiate a careful review, drawing upon outside experts, to 
determine which of the Department's functions should be 
retained, which ought to be transferred and which could be 
privatized.
    Former Energy Secretary John Herrington called for the 
elimination of the Department. He advocated ending all energy 
research and development and energy conservation programs. He 
further supported the privatization of government owned 
laboratories engaged in research, the five Power Marketing 
Administrations and the naval petroleum reserves. He proposed 
placing nuclear weapons functions under the jurisdiction of a 
newly created Under Secretary of Defense.
    Former Under Secretary of Energy Shelby T. Brewer observed 
that the Energy Department had strayed from its original 
mission of obtaining national energy security. He noted that as 
the Nation's energy circumstance had changed, the Department 
shifted its mission to become an environmental management 
department, a basic science department, and a biological and 
medical research department. As a result, according to Mr. 
Brewer, energy development and demonstration now accounts for a 
little over 10 percent of the total budget. Mr. Brewer also 
testified that a substantial contributory factor to the 
Department's lack of a clear mission was the multiplicity of 
congressional committees, each of which has its own set of 
interests, different from the others.
    Former Under Secretary of Energy Donna R. Fitzpatrick 
joined her former colleagues in calling for the elimination of 
the Department, suggesting that it had outlived its usefulness. 
She advocated placing weapons related activities into a sub-
cabinet agency independent of the Defense Department.
    As the hearing shifted its attention to the Department of 
Education, subcommittee Chairman Horn noted that several 
proposals would either eliminate the subcommittee and transfer 
its activities to the States, or else merge its functions into 
another Cabinet subcommittee, such as Labor.
    Under Secretary of Education Marshall S. Smith stressed in 
his testimony the strong public support for the Department and 
its programs. He commented that: Federal involvement in 
education supports democracy and our economy. This is not just 
a State and local interest; this is a national interest. He 
claimed that administrative costs account for only 2 percent of 
the budget, with the subcommittee having the smallest ratio of 
employees to total budget in the Federal Government.
    Accompanying Secretary Marshall was Donald Wurtz, Chief 
Financial Officer of the Department. Subcommittee Chairman Horn 
and Ranking Member Maloney engaged Wurtz in a discussion of the 
Department's efforts to improve its debt collection efforts for 
student loans.
    Chester Finn, of the Hudson Institute, testified that the 
Federal Government had become a meddlesome force in American 
education. He advocated eliminating the Department and 
transferring its grant programs into either strings-free block 
grants to the States, or transferring all the Department's 
functions to other Federal agencies.
    William Hansen echoed the views of Mr. Finn, adding that 
the number of the Department's categorical programs had grown 
from 130 in 1981 to over 250. According to Mr. Hansen the 
number of Federal employees and the extent of local intrusion 
could be reduced by greater use of program consolidation and 
block grants. Through program consolidation, he said, the 
Department could greatly reduce its staff.
    George Munoz, Assistant Secretary of Treasury and the 
Department's Chief Financial Officer testified that the 
Education Department has undertaken a number of management 
reforms. In particular he noted improvements in the 
Department's financial management practices.
    Paul Posner, Director of Budget Issues in the Accounting 
and Information Management Division of the General Accounting 
Office, testified on his office's conclusions on duplicative 
and overlapping Federal programs. Program consolidation, he 
reported, held out promising opportunities for increasing the 
efficiency of government operations and improving performance. 
He noted that savings were possible when programs with similar 
objectives and clients were brought together and conflicting 
requirements, duplication and overlap were reduced.

7. Corporate Structures for Government Functions.

    a. Summary.--As the Federal Government continues along the 
road of structural change, the demand for more efficient 
operations will become more evident. This hearing drew lessons 
from effective private and public sector managers on how to 
downsize institutions effectively. The hearing also probed 
recent proposals to create additional Federal entities (such as 
the Air Traffic Control Corporation, the Forrestal Corporation, 
and the Bonneville Power Corporation).
    b. Benefits.--Learning from the best practices in business 
will assist lawmakers and Federal managers to downsize and 
streamline institutions effectively, with the least detrimental 
impact on vital public services.
    c. Hearings.--On June 6, 1995, subcommittee Chairman Horn 
called the hearing which focused on the use of corporate forms 
of organization, examining various forms of government 
corporations and determining what advantages each possesses.
    Donald H. Rumsfeld, chief executive officer, General 
Instrument Corp., testified about the general concept of using 
corporate structure for government functions. Mr. Rumsfeld 
testified that in a reorganization, it is essential to question 
an agency's mission, and restructure based on that review. If 
an agency restructures prior to this review, the effort is 
wasted. Mr. Rumsfeld also described several of the successful 
restructuring of corporations in which he had been involved.
    Roger W. Johnson, Administrator, General Services 
Administration, testified on the reorganization underway at the 
General Services Administration. Mr. Johnson noted that the 
National Performance Review needs to make more progress, but 
this was blocked by risk aversion and governing by process 
rather than results. He also suggested that executives with 
profit-loss responsibility could be deployed in certain Federal 
jobs involved in operations. Johnson also criticized the 
capital planning and budget processes and the lack of 
incentives to invest in long-term systems to improve operations 
and the annual budget process.
    Jack Robertson, Deputy Administrator, Bonneville Power 
Administration, testified concerning the Bonneville Power 
Administration's proposal to become a government corporation. 
Mr. Robertson described the competitive forces driving 
Bonneville toward a corporate structure, including increases in 
compliance costs associated with the Endangered Species Act and 
enhanced competition between local power producers.
    Daniel V. Flanagan, the Flanagan Consulting Group, Inc., 
testified about the proposed Forrestal Corporation, which would 
funnel private sector investments into Federal energy 
improvement required by the 1990 Energy Act.
    Harold Seidman, senior fellow, the National Academy of 
Public Administration, explained the history of the Government 
Corporation Control Act of 1945, and the need to update it to 
reflect modern realities. Mr. Seidman outlined a ``Government 
Enterprise Standards Act'' which would improve oversight over 
government corporations. Mr. Seidman described the uses of a 
government corporation and the need to have a central body of 
expertise to govern the creation of such entities.
    Barry Krasner, president, National Air Traffic Controllers 
Association, and Jack Johnson, president, Professional Airways 
Systems Specialists, testified concerning the proposals to 
create an Air Traffic Control Corporation. Both endorsed the 
concept of corporatization, but advocated a government 
corporation rather than private ownership of such a 
corporation.

8. Streamlining Federal Field Structures.

    a. Summary.--These two hearings were part of the Making 
Government Work Report, see section II.A.1.
    b. Benefits.--See Section II.A.1. referenced above.
    c. Hearings.--On Tuesday, June 13, 1995, the subcommittee 
held its sixth hearing in its ``Making Government Work'' 
series. The hearing, entitled ``Streamlining Federal Field 
Structures'' considered whether the Federal Government's 
existing network of field offices is best suited for the 
Government's current responsibilities. The hearing further 
inquired into the impediments that hinder making field office 
networks more efficient.
    Subcommittee Chairman Horn noted at the opening of the 
hearing that close to a million Federal employees carry out the 
daily work of the Federal Government at some 30,000 filed 
offices, of which 12,000 have five or fewer employees. He 
observed that overlapping and conflicting agency 
responsibilities, programs, jurisdictions, and separate offices 
have often made an ordinary citizen's contact with the Federal 
Government a frustrating experience.
    Ranking subcommittee member Carolyn Maloney commented that 
over the past 50 years the number of Federal field offices has 
proliferated with the initiation of each new Federal program. 
She observed that many were set up when transportation and 
communications were quite different. She praised the reform 
efforts of the National Performance Review recommendations for 
field office service improvement.
    Mr. Dwight Ink, president emeritus of the Institute of 
Public Administration and a fellow of the National Academy of 
Public Administration, noted that field structure reforms ought 
to be the product of a comprehensive consideration of overall 
agency missions and activities. This review should consider 
three interdependent dimensions: structures, systems, and 
people. The review should also begin with a careful 
consideration of the agency's impact on the public. Mr. Ink 
noted that agency personnel ought to be well trained and that 
field employee grade levels should be increased relative to 
headquarters staff.
    Mr. Alan Dean, former chairman of the board of trustees and 
currently senior fellow of the National Academy of Public 
Administration, commented that no single model for field 
structure could be applied to all department and agencies. Each 
agency, consequently, should design its field offices at every 
level to reflect its mission and impact upon the public. Mr. 
Dean also testified that agencies needed to decentralize 
management to the lowest practicable level in order to achieve 
greater responsiveness and best use of resources.
    Professor Charles Bingman, of George Washington University, 
decried barriers to reform noting that once a program or 
activity had been enacted or implemented, all the relevant 
interests tend to resist efforts at change. The Federal 
Government, as a result, tended to lack the flexibility to 
accomplish reorganizations of operating structures.
    Mr. Wardell C. Townsend, Assistant Secretary for 
Administration for the Department of Agriculture Department, 
testified both on the President's Management Council Federal 
Field Office Study and the Agriculture Department's own 
progress in field office restructuring. He proposed four 
general guidelines for field office restructuring. First, where 
face-to-face contact is necessary, government presence should 
be maintained at the point of service delivery. Second, if 
face-to-face contact is unnecessary, communication technology 
should be used to upgrade service. Third, back-room operations 
should be centralized for efficiency. Fourth, unnecessary 
layers of control should be eliminated.
    Social Security Commissioner Shirley Chater testified on 
her agency's reappraisal of its own field structure. She 
reported her intention to reduce the number of its regional 
offices from 10 to 5. She also intends to reduce layers of 
management and increase the numbers of employees to supervisors 
from 1 to 7 to 1 to 15 by 1999. Commissioner Chater said that 
the changes were made possible, in part, by a 5-year, $1.1 
billion investment in automation.
    The Commissioner was followed by Ms. Mary Chatel, the 
president of the National Council of Social Security Management 
Associations. She presented her organization's plan for 
redeploying 30 percent of headquarters and regional office 
staff resources into the field. The plan would go farther than 
the Social Security Administration's own plan to reduce 
management layers.
    Lynn Gordon, District Director of the Bureau of Customs in 
Miami, FL, and George Rodriguez, Area Coordinator, Department 
of Housing and Urban Development presented their National 
Performance Review stories. Each were involved in local 
initiatives, highlighted by the National Performance Review, to 
improve ``customer service'' through enhanced agency 
administrative flexibility. Both initiatives also seek to 
improve communications with affected individuals and 
institutions that are in contact with the agencies.
    On June 19, 1995, the subcommittee held the second part of 
its ``Streamlining Federal Field Structures'' hearing in 
Chicago, IL, at the Chicago Historical Society. Subcommittee 
Chairman Stephen Horn, in his opening statement, noted that the 
subcommittee had come to Chicago for firsthand answers to four 
questions. How should agencies determine their most effective 
field structure? How can the management of field offices be 
improved? How can closer interagency cooperation in the field 
be encouraged? What factors deter agency heads from changing 
field structures?
    In his opening statement, Representative Michael Flanagan 
welcomed the subcommittee to his hometown and his district. He 
noted that the hearing would focus on transportation and 
infrastructure issues. Representative Flanagan recalled that 
the Chicago area had long been a leader in this area, beginning 
with its role as a railroad crossroads and extending through 
the development of O'Hare as the world's busiest airport.
    Mr. William Burke, the Regional Administrator of the 
General Services Administration (GSA) for the Great Lakes 
Region, reported both on GSA's and the Federal Government's 
presence in the area. Mr. Burke also serves as chair of the 
Chicago Federal Executive Board. This board coordinates certain 
activities of Federal agencies in the region. Among the 
initiatives that Mr. Burke described was the ``Cooperative 
Administrative Support Unit'' (CASU) program. CASUs are an 
effort to hold down administrative costs by sharing overhead 
costs among different agencies. He also cited telecommuting 
programs as another means to hold down administrative costs. 
Gretchen Schuster, Regional Director of the Department of 
State's Passport Agency testified on her involvement with the 
Chicago Federal Executive Board. She described the board's 
efforts in coordinating the work of 154 member agencies in the 
Chicago area.
    Mr. Joseph Morris, an attorney in private practice in 
Chicago, drew upon his prior experience as General Counsel for 
the Office of Personnel Management. In addition to recommending 
moving more of the Federal Government's work outside 
Washington, Mr. Morris advocated better coordination among 
field offices through the Federal Executive Boards and more 
reliance by the Federal Government on Federal managers in the 
field.
    A second panel of witnesses, led off by Michael Huerta, 
Associate Deputy Secretary of Transportation, covered field 
offices involved in transportation and infrastructure programs. 
Mr. Huerta explained to the subcommittee his Department's 
proposal to reorganize. The plan would combine several 
functions into a new Intermodal Transportation Administration, 
combining all surface transportation and civilian maritime 
functions. In response to questions, he noted that the 
Department had yet to determine how the reorganization would 
affect regional offices.
    Mr. Huerta was joined by Mr. Garrote Franklin, Regional 
Administrator of the Federal Aviation Administration, Mr. 
Kenneth Perret, acting Regional Administrator, Federal Highway 
Administration, and Mr. Donald Gismondi, Deputy Regional 
Administrator of the Federal Transit Administration. The 
regional officials discussed the cooperation among the various 
components of the Transportation Department located in Chicago. 
They noted that changes in Federal transportation grant process 
resulting from the Intermodal Surface Transportation Act of 
1991 had necessitated even more cooperation than had been the 
practice in the past.
    Col. Richard Craig, Commander and Division Engineer, North 
Central Division of the Army Corps of Engineers, described the 
current distribution of responsibility within the Corps among 
district, division and headquarters offices. The headquarters 
is primarily responsible for budget and broad policy issues, 
the division offices provide contact with State and local 
officials, program management and quality assurance. In 
response to questions, Col. Craig discussed the Corps' 
coordination with local governments on environmental regulatory 
issues.

9. Performance Measurement, Benchmarking, and Re-engineering.

    a. Summary.--Performance measurement uses indicators and 
measures to assess how well a program or organization is doing 
in terms of its mission, goals, and objectives. It focuses on 
results and outcomes, not processes or compliance. The 
indicators used are inputs, outputs, and outcomes. Inputs are 
dollars or time expended, outputs are the quantity and quality 
of services delivered, and outcomes are the quality and 
quantity of the results the outputs achieved. Measures are 
benchmarks to evaluate the indicators, such as a percentage 
increase or decrease.
    Performance measurement is necessary for benchmarking, 
which is the measuring of performance against some actual or 
desired standard of achievement, to be successful. Re-
engineering involves examining how a program or organization 
works, followed by improving performance by redesigning work 
processes.
    b. Benefits.--Developing strategic plans that include 
performance goals, and measuring and monitoring performance on 
an ongoing basis, improves the quality of the activities 
performed or services rendered, contributes to greater 
efficiency, and can help to offset reductions in funding. 
Focusing on results rather than on inputs will lead to 
improvement in managing government operations.
    c. Hearings.--On June 20, 1995, the subcommittee convened a 
hearing on performance measurement, benchmarking, and re-
engineering. It received testimony from witnesses representing 
States and think tanks.
    Representative Bass opened the hearing by stating that the 
subcommittee would examine performance measurement, bench-
marking, and re-engineering and learn how the private sector, 
other countries, and State governments are using these 
techniques to respond to the needs of their customers, boost 
the quality of their products and services and lower costs.
    Mr. Donald Kettl, professor of public affairs and political 
science, University of Wisconsin, and the LaFolette Institute 
of Public Affairs, and nonresident senior fellow, the Brookings 
Institute for Public Management, stressed that performance 
measurement offers the potential to measure success in terms of 
results produced. It requires a long-term view. Performance 
measurement is about communication and management, not number 
crunching. Citizens can find out how tax dollars are delivering 
and Congress can find out how programs are producing. It is 
very difficult to measure outcomes, easier to measure outputs.
    Mr. Harry P. Hatry, director, State and local government 
research programs, the Urban Institute, had three 
recommendations for Congress: seek and use information on 
program quality and outcomes; coordinate among authorizing, 
appropriations and oversight committees to review agency 
performance information; and encourage State and local 
governments to measure performance in terms of quality and 
service to the public.
    Mr. Herbert N. Jasper, senior associate, McManis 
Associates, Inc., cautioned that performance measurement is not 
a panacea, there are pitfalls such as gaming by selecting safe 
targets, selecting data because it is readily available, even 
if irrelevant, and ignoring the fact that it is labor-
intensive. He indicated that performance budgeting seeks to 
make budget decisionmaking more analytical and objective. 
However, the budget process is highly political and decisions 
will not always be made objectively. He called re-engineering 
the systematic application of common sense and described its 
basic steps.
    Mr. Johnny C. Finch, Assistant Comptroller General, General 
Government Division, GAO, reported that GAO studies on reform 
efforts show four actions to be critical if performance 
measurement is to be used effectively to improve programs: 
focus on mission and desired results; involve key stakeholders; 
develop performance measurement systems that have certain 
characteristics to provide relevant performance information for 
program managers, staff, and other decisionmakers; and use 
performance information in the selection and use of process 
improvement techniques that will further enhance performance. 
He emphasized that the number of measures chosen should be 
limited to significant ones.
    Ms. Linda Kohl, director of Minnesota Planning, described 
the comprehensive statewide benchmarking project known as 
Minnesota Milestones. It involved three stages. The first asked 
Minnesotans to decide on a long-term vision for the State. The 
second saw the development of measurable indicators called 
``milestones'' which are clear, valid, associated with 
available data, accurate, and outcome-based. The third phase 
involved soliciting feedback on the indicators. In her opinion, 
benchmarking and the Milestones can be a tool to assure 
accountability for block grants.
    Ms. Sheron Morgan, Office of State Planning, North 
Carolina, discussed North Carolina's use of performance 
measurement, known as Performance/Program Planning and 
Budgeting (P/PPB). It links policy and budgeting and shifts 
accountability from efforts to results. She mentioned the need 
for evaluation, analysis and agency buy-in for successful 
implementation of P/PPB, and for senior management involvement.
    Mr. Joseph G. Kehoe, managing partner, government services, 
Coopers and Lybrand, LLP, described activity-based costing 
(ABC). He explained how ABC can be used to determine how much a 
service or activity truly costs and the usefulness of value 
analysis in ABC. Significant savings can be found with no 
associated reduction in quality when managers focus on 
activities and processes and eliminate the ones which do not 
add value.
    Ms. Laura G. Longmire, national director of benchmarking, 
KPMG Peat Marwick, LLP, in discussing benchmarking, performance 
measurement, and business process re-engineering, made it clear 
that the key issue in adopting these techniques is enhancing 
accountability. She said that processes must be measurable to 
be improved. In her opinion, all processes can be measured both 
in terms of quality and response time. Successful projects 
share common themes: long-term scope; management commitment; 
investment in technologies and tools; and constant 
communication. The culture has to become one focused on results 
rather than compliance.

10. Agency Initiatives To Implement the Government Performance and 
        Results Act of 1993.

    a. Summary.--The Government Performance and Results Act of 
1993 required agencies to evaluate their missions, goals, and 
objectives; develop strategic plans and performance measurement 
systems, set goals, and then evaluate results in the context of 
those goals. Strategic plans are due by September 1997, annual 
performance plans beginning in fiscal year 1997, and annual 
performance reports, beginning in the year 2000. The 
performance plans must include performance goals for agency 
program activities, and performance indicators that will be 
used to measure performance. OMB designated a series of pilots 
for fiscal years 1994 through 1996 in performance planning and 
reporting. A second set of at least five pilots will focus on 
managerial flexibility and accountability for fiscal years 1995 
and 1996.
    b. Benefits.--Using performance measurement will change the 
focus of management from process and inputs to results and 
outcomes, increase efficiency and reduce costs by eliminating 
nonvalue-added activities.
    c. Hearings.--Subcommittee Chairman Horn opened the hearing 
by summarizing the series of hearings on ``Making Government 
Work''. This final hearing in the series focused on the 
administration and its success in implementing the GPRA.
    Mr. John A. Koskinen, Deputy Director for Management, 
Office of Management and Budget, gave an update on the 
administration's progress, saying that the pilot project stage 
is valuable because it provides time for experimentation. There 
are over 70 pilot projects in the first stage, none as yet in 
the second. OMB's aim is to integrate GPRA information into the 
budget and NPR processes.
    Mr. Johnny C. Finch, Assistant Comptroller General, General 
Government Division, GAO, suggested that there were five 
challenges for agencies preparing to implement the GPRA: 
developing and sustaining top management commitment; building 
the capacity within the agencies to implement GPRA and use 
performance information; creating incentives to implement GPRA 
and change the focus of management and accountability; 
integrating GPRA into daily operations; and building a more 
effective congressional oversight approach. He thought the 
hearing was an important first step in communicating to the 
agencies the importance to Congress of performance-based 
management.
    Dr. Paul C. Light, director, public policy program, the Pew 
Charitable Trusts, described the three types of accountability 
system, compliance based, capacity based, and performance based 
and these are not compatible, so changing from the compliance 
based system predominant in the administration currently to a 
performance based system will be difficult. He also discussed 
``thickening'' of government, how it affects results, and how 
it can be reversed. He suggested getting rid of one-to-one 
spans of control and abolishing regional office layers.
    Dr. R. Scott Fosler, president, National Academy of Public 
Administration, thought GPRA could be a critical tool in 
improving government performance, if properly understood and 
effectively implemented. GPRA changes the focus from inputs to 
results. Success of GPRA depends on leadership from the 
executive branch and support from Congress. He questioned 
whether the capacity was there in the agencies for GPRA 
implementation and suggested that GPRA implementation may lag 
behind schedule.
    Mr. Anthony A. Williams, then-Chief Financial Officer of 
the U.S. Department of Agriculture, is responsible for 
coordinating GPRA implementation and testified on Forest 
Service efforts which constitute one of eight USDA pilots. He 
described how it had developed a set of 8-10 outcome-oriented 
corporate performance measures and the All Resources Reporting 
System, an integrated financial and reporting system which 
tracks both output- and outcome-related accomplishments. 
Performance measurement is achieved through a Management 
Attainment Report. He mentioned that good cost accounting 
systems are necessary to capture the cost of achieving 
outcomes, and that it is important to provide incentives to 
build management support for GPRA.
    In his testimony, Vice Admiral Arthur E. (Gene) Henn 
described the Coast Guard's pilot project which was distilled 
from a business plan developed in the Vice Admiral's office. It 
is one of four pilots in the Department of Transportation. He 
described the process as using a simple formula to get the 
desired outcomes, set goals, empower, manage risks, and measure 
activities. He emphasized the need to get ``buy-in'' from 
everyone involved in the project and encouraged the 
subcommittee to review the reports sent to Congress by the 
agencies.
    Mr. Joseph Thompson, Director, New York Regional Office, 
U.S. Department of Veterans Affairs, testified on the status of 
the implementation of GPRA in the New York regional office of 
the VA, which is also an NPR reinvention lab. Organization was 
changed from a hierarchical model to a self-managed team 
structure; the step process was reduced from 30 to 20. He 
praised the GPRA as a tool for organizational improvement.
    Colonel F. Edward Ward, director of field offices, Defense 
Finance Accounting Service, reported on the Air Combat Command 
(ACC) GPRA pilot. ACC is involved in the performance 
measurement pilot now and hopes to take part in the performance 
budgeting pilot in 1988. He described how ACC had developed a 
cost accounting methodology to track costs per unit of output 
and capture cost associated with performance measures, the Job 
Order Cost Accounting System II. He stressed the need to link 
goals and performance measures, for measures to be quantifiable 
so that costs can be linked to the performance indicators, and 
to track areas important to the ACC's mission, not just areas 
that are easy to measure.

11. The General Services Administration's (GSA) Security Measures at 
        Federal Office Buildings.

    a. Summary.--On April 19, 1995, a bomb destroyed the Murrah 
Federal Office Building in Oklahoma City, killing 168 people, 
including 19 children, and injuring over 600 people. As a 
result of the bombing, security procedures were tightened and a 
thorough review conducted of security at Federal office 
buildings. In 1988, the Congress passed Public Law 100-440, 
which mandated that officer strength of the Federal Protective 
Service (FPS) be augmented by not less than 50 officers per 
year until a strength of 1,000 was reached. Instead, FPS 
personnel were reduced gradually to less than 400.
    b. Benefits.--This hearing, part of the subcommittee's 
ongoing activities relating to oversight of the GSA, revealed 
that GSA had not complied with Public Law 100-440. By 
identifying the barriers to improving workplace security, 
including low pay, inadequate recruitment, and the extension of 
buyouts to security personnel, the subcommittee pointed out 
methods for remedying the situation.
    c. Hearings.--Subcommittee Chairman Horn called the hearing 
on May 3, 1995, to examine GSA's security measures at Federal 
office buildings in the aftermath of the terrorist attack on 
the Oklahoma City Federal Building.
    Mr. Roger Johnson, then-Administrator, General Services 
Administration (GSA), testified as to GSA's initial response to 
the Oklahoma City bombing, and spoke about follow-up security 
measures to protect the Federal worker.
    Mr. Kenneth Kimbrough, then-Commissioner, Public Buildings 
Services, GSA, noted that Federal Protective Service officers 
were understaffed at the time of Oklahoma City with only 409 
positions filled. Mr. Kimbrough added that a 1988 law mandates 
that the Federal Protective Service shall be not less than 
1,000 officers. GSA under the current and previous 
administrations were not in compliance with this law.
    Mr. Gary Day, Assistant Commissioner for Federal Protective 
Services, Public Building Service, GSA, echoed Mr. Kimbrough's 
remarks and added that low pay and compensation have hindered 
the Federal Protective Service's ability to hire and retain up 
to its authorized complement of 1,000 officers.
    Ms. Faith Wohl, Director, Family Workplace Institute, GSA, 
testified that GSA has taken numerous preventive measures to 
deter kidnaping and child abuse in Federal child care 
facilities, but that it was not in GSA's experience to expect a 
terrorist attack.
    Ms. Julia Stasch, Deputy Administrator, GSA, testified as 
to the competence of contract security officers. Ms. Stasch 
noted that officers were well trained and worked in concert 
with local law enforcement forces.
    Ms. Emily Hewitt, General Counsel, GSA, was questioned 
about whether she had performed a compliance audit to determine 
which laws GSA was not complying with. Ms. Hewitt had not 
performed such an audit. Subcommittee Chairman Horn recommended 
that administration orientation for new agency heads include 
such an audit.

12. Controls Over Illegal Immigration--Along the Border and Within the 
        Interior.

    a. Summary.--In 1993 and 1994, Congress voted to increase 
funds available to control immigration at the border, and 
increase the numbers of Border Patrol officers by 6,000. As 
these officers are deployed, the subcommittee remained 
interested in determining how they were being used, and how 
they were being divided amongst border duty and interior duty.
    b. Benefits.--This hearing shed light on the problems faced 
by State and local officials as a result of Federal policies on 
illegal immigration. Moreover, the lack of intergovernmental 
coordination and Federal agency attention to the concerns of 
local government brought into relief the frustration of local 
officials: They have neither the policy levers to stop 
immigration, nor control of the Federal tools to minimize the 
impact, but still must bear the cost of criminal justice, 
health, and education related to illegal immigration.
    c. Hearings.--On June 12, 1995, the subcommittee held a 
hearing to explore the resources that should be used to control 
illegal immigration at the border and within the interior of 
the United States. Witnesses included California State and 
county officials and officials from the Immigration and 
Naturalization Service (INS). Subcommittee Chairman Horn called 
the hearing to examine what resources should be deployed to 
control illegal immigration at the border and the interior.
    Mr. Daniel E. Lungren, attorney general, State of 
California, testified on the impact of illegal immigration on 
California's prison population and crime problem. Mr. Lungren 
noted that the dramatic costs involved with illegal immigration 
drains California tax dollars.
    Mr. Bill Jones, secretary of State of California, noted 
that the Motor-Voter Act increases the opportunity for a large 
number of people to participate in the political system. 
However, Mr. Jones voiced concern that a number of illegal 
immigrants would also participate unless California is allowed 
to take preventive steps.
    Mr. Gustavo de la Vina, Director, Western Region, INS, 
testified that the INS has developed a comprehensive 
immigration enforcement strategy that consists of border 
enforcement and management, work site enforcement and 
verification, detention and removal of criminal and deportable 
aliens, and customer service and assistance to States. Mr. 
Richard K. Rogers, Western Region, Los Angeles District, INS, 
testified on a new L.A. initiative which will enable employers 
to become fraudulent document experts. Mr. Johnny N. Williams, 
Chief Patrol Agent, INS Border Patrol Sector Headquarters (San 
Diego), testified on the cooperation that his agency has 
received from State and local law enforcement agencies. Mr. 
Williams noted that the Border Patrol's interdiction rate has 
steadily increased.
    Mr. Frank Ricchiazzi, assistant director of research, 
California Department of Motor Vehicles, testified on 
California policy and technological initiatives designed to 
improve their ability to provide secure, authentic and durable 
driver's licenses and ID cards.
    Mr. Timothy J. Staffel, chairman of the board of 
supervisors, county of Santa Barbara, noted that local and 
county governments bear the brunt of costs associated with 
illegal aliens in California. For example, Mr. Staffel asserted 
that one in five births in Santa Barbara County were to illegal 
alien mothers whose deliveries were funded by Medicaid.
    Mr. Jim Thomas, sheriff, county of Santa Barbara, voiced 
concerns about the large number of illegal aliens in California 
jails, the increase in the illegal criminal element in narcotic 
and gang investigations, and the lack of effective illegal 
employment investigations.
    Mr. Thomas W. Sneddon, Jr., district attorney, county of 
Santa Barbara, described the responsibilities of the 
Immigration and Naturalization Service, the U.S. attorney's 
office and the Social Security Administration and the level of 
assistance given by those offices to local government. Mr. 
Sneddon faulted the Social Security Administration for not 
providing information to local government to assist in crime 
control by identifying illegal aliens.

13. Budget and Financial Information--Annual Shareholders Report: How 
        Does the Citizen Know What Is Going On?

    a. Summary.--Under the terms of the Congressional Budget 
Act, Congress passes a budget resolution outlining aggregate 
levels of discretionary spending and targets for 
reconciliation. Lacking from the annual budget process is a 
review of the total financial liabilities and assets of the 
Federal Government. The hearing examined ways to improve 
information to bring liabilities totaling trillions of dollars 
under the discipline of an annual budget.
    b. Benefits.--Increased public accessibility would enhance 
the Federal Government's accountability and demonstrate that it 
is fulfilling its stewardship duty to the American public. The 
hearing gave attention to the absence of important financial 
information in the budget process. It is important to regularly 
review this additional financial information and begin 
incorporating it into the annual budget process.
    c. Hearings.--Subcommittee Chairman Horn called the hearing 
on July 11, 1995. The hearing focused on information on the 
financial health of the Federal Government available to private 
citizens, and options for improving access to that information. 
At the hearing, testimony was received from witnesses from the 
General Accounting Office, the Office of Management and Budget, 
Citizens for Budget Reform, and America Report.
    Mr. Gene Dodaro, Assistant Comptroller General, Accounting 
and Information Management Division, General Accounting Office 
(GAO), noted the importance of having solid budgetary and 
financial information when making crucial policy decisions. Mr. 
Dodaro noted shortcomings in financial management, but asserted 
that progress in improving financial reporting was occurring as 
a result of the Chief Financial Officers Act and the creation 
of the Federal Accounting Standards Advisory Board (FASAB).
    Mr. Don Chapin, Chief Accountant, GAO, updated the 
subcommittee on the activities of FASAB. According to Mr. 
Chapin, FASAB is developing standards for reporting financial 
information which will allow Congress to improve its ability to 
provide oversight of Federal operations. Mr. Chapin noted the 
possibility that agencies might not be able to make operational 
the standards recommended by FASAB.
    Mr. G. Edward DeSeve, Controller, Office of Federal 
Financial Management, Office of Management and Budget, focused 
on three areas: the integration of the budget formulation and 
execution process with financial standards; the role of 
performance and program integrity in budgeting and financial 
management; and streamlining current reporting procedures.
    Mr. Harrison Fox, president, Citizens for Budget Reform, 
testified on the importance of including non-budgetary 
financial information in the annual budget process, to give 
greater attention to the deteriorating financial position of 
the Federal Government, as measured by the USA Report published 
by Citizens for Budget Reform. Mr. Fox advocated adoption of a 
financial plan to improve accessibility of information, risk 
assessment, and measuring outcomes and results.
    Mr. Brecht, publisher, America Report, testified about his 
project to make clear to citizens the financial health of the 
government in America Report, which is modeled on corporate 
annual reports. Mr. Brecht advocated a clearer vision of where 
the United States is headed, the role the Federal Government 
should play, and clarifying the core values which will guide 
these efforts. He also suggests that every agency be required 
to communicate its goals to citizens in an understandable 
fashion.

14. The Inspector General Act of 1978.

    a. Summary.--On Tuesday, August 1, 1995, the subcommittee 
held an oversight hearing of the Inspector General Act of 1978. 
Inspectors General (IG's) are charged with protecting the 
integrity of Federal programs and resources. Through their 
audits and investigations, Offices of Inspectors General 
(OIG's) seek to determine whether program offices, contractors, 
Federal workers, grantees and others are conforming with 
regulations and laws.
    Since the IG Act first established Inspectors General in 
1978, the number of departments and agencies with IG's has 
grown to 61. Of these, 29 IG's are Presidentially appointed and 
subject to Senate confirmation. Another 32 IG's in smaller 
agencies are appointed by their agency heads. Presidentially 
appointed IG's have staffs totaling about 10,000 employees, 
with budgets adding to $900 million. Last year IG's' findings 
led to more than 14,000 successful criminal and civil 
prosecutions, $1.9 billion in investigative recoveries, and $24 
billion in recommendations that agency funds be better used. 
Presidentially appointed IG's sit on the President's Council on 
Integrity and Efficiency (PCIE), chaired by the Deputy Director 
of the Office of Management and Budget; agency appointed IG's 
are on the Executive Council on Integrity and Efficiency 
(ECIE).
    To assure their independence, the IG Act gives them 
latitude in running their offices. They report directly to 
agency heads when identifying serious shortcomings, and 
directly to Congress in semiannual reports. IG's are 
effectively the only executive branch officials reporting 
directly to Congress without the need for clearance. They 
historically have been vigilant in protecting their autonomy, 
and this has led to differences with their bosses on issues of 
resources, staffing, and priorities. Critics have argued that 
IG autonomy has made them less responsive to management's 
legitimate need to use its audit and program evaluation 
function for managing agency operations. Also at issue is that 
IG's ``compliance'' orientation may lead to adversarial 
relationships between them and their agency managers.
    The National Performance Review (NPR) has led to a 
reappraisal of the IG mission. The NPR advocated that IG's 
broaden their focus ``from strict compliance auditing to 
evaluating management control systems.'' The NPR further argued 
that the IG compliance focus stifled agency innovation. IG's 
have answered, in part, with a vision statement that commits 
them to greater cooperation with program managers to strengthen 
operations.
    The PCIE is working on procedures for acting on allegations 
of OIG impropriety. The FBI would investigate criminal 
complaints, but the process is less clear on how to address 
non-criminal complaints, which might allege malfeasance or 
equal employment opportunity violations. The Associate FBI 
Director for Investigations usually serves as chair of the 
PCIE's Integrity Committee.
    The Federal Government's reliance on information technology 
systems raises several issues for IG's. GAO, for example, 
concluded that ``seriously inadequate automated financial 
management systems are currently the greatest barrier to timely 
and meaningful reporting'' at Federal agencies. Weak automated 
systems are more vulnerable to fraud, and they reduce 
management's ability to monitor operations.
    IG's have a stake in developments affecting Federal 
financial management. The Chief Financial Officer Act (CFOA) 
requires agencies to have audited financial statements 
beginning for fiscal year 1997. OIG's will perform most agency 
audits. Under the Government Performance and Results Act (GPRA) 
agencies will develop performance measures for agency 
management and eventually use the measures for allocating 
budgets.
    b. Benefits.--The IG's work reduces fraud, waste, and abuse 
in the Federal Government and contributes to improvement in 
efficiency and effectiveness of agency operations. The 
independent status of the IG's renders their opinions more 
objective, and therefore of greater value to lawmakers and 
other reviewers.
    c. Hearings.--Subcommittee Chairman Horn opened the hearing 
on August 1, 1995, stating that Inspectors General must be 
accountable. They should encourage improvement while not 
stifling innovation. He noted that the IG Community is working 
on increasing their cooperation with management.
    June Gibbs Brown, Inspector General of the Department of 
Health and Human Services and Vice Chair of the President's 
Council on Integrity and Efficiency, noted that the IG's are in 
a unique position to help program managers and the Congress 
find ways to achieve a more effective and efficient government.
    Hubert Sparks, the vice chair of the executive council on 
integrity and efficiency and inspector general of the 
Appalachian Regional Commission emphasized the unique role and 
relationship between IG's and the rest of their organization. 
IG's will always be in a position of balancing actions that 
will fulfill the requirements of the IG Act and contribute 
positively to improve government operations.
    In response to a question from Mr. Bass, Ms. Brown disputed 
the conclusion of Vice President Gore contained in a National 
Performance Review report, from which Mr. Bass quoted, that 
``At virtually every agency he visited, the Vice President 
heard Federal employees complain that the IG's basic approach 
inhibits innovation and risk-taking. Heavy-handed enforcement 
with the IG watchfulness compelling employees to follow every 
rule, document every decision, and fill out every form has had 
a negative effect in some agencies.'' Ms. Brown stated that 
very little of the IG resources are really directed internally 
to people filling out forms or doing that last ``i''-dotting.
    Ms. Valerie Lau, the chairman of the PCIE audit committee 
and the Inspector General of the Department of the Treasury 
testified on the ``substantial'' new audit responsibilities 
imposed on the Inspectors General as a result of the Chief 
Financial Officers Act. She commented on the inherent 
difficulty of the audits.
    Mr. Frank DeGeorge, Inspector General of the Commerce 
Department, reported on his office's experience with 
information technology evaluations. He testified that system 
acquisitions at Commerce are often disorganized and ad hoc.
    Mr. William Esposito, Deputy Assistant Director, Criminal 
Investigative Division, Federal Bureau of Investigation and 
chairman of the PCIE's integrity committee, reviewed the 
process for considering allegations of wrongdoing against 
Inspectors General. He noted that revisions to the policy were 
currently under consideration.
    Mr. Charles Dempsey, former vice-chair of the PCIE and 
former Inspector General of the Department of Housing and Urban 
Development thought the IG Act was the best piece of public 
administration legislation in the last 20 years.
    Mr. Sherman Funk, former Inspector General of the 
Departments of State and Commerce, also commented on the 
balancing act that the Inspectors General perform. He disputed 
the contention, which he attributed to his fellow witness Paul 
Light, that IG's are too often focused on peripheral issues 
rather than concerned with the performance of the activities 
for which they were responsible.
    Dr. Paul Light, Pew Charitable Trusts, recalled the 
observation from his book, Monitoring Government that the 
Inspectors General were not sufficiently focused on prevention. 
He was of the opinion that the IG's hide behind the Yellow Book 
too frequently when it comes time to give meaningful advice to 
their departments and agencies on how they might prevent 
mistakes before they happen.
    Mr. Dwight Ink, president emeritus, Institute of Public 
Administration, observing that he testified from the 
perspective of his experience as a program manager, urged a 
narrower focus for the IG's. He testified that because program 
managers are held accountable for program outcomes, they ought 
to have their own resources for ensuring the integrity of the 
programs for which they are responsible.

15. Implementation of the Chief Financial Officers Act of 1990 and the 
        Government Management Reform Act of 1994.

    a. Summary.--The Chief Financial Officers (CFO) Act of 1990 
required agencies to have audits of revolving funds, trust 
funds and all funds that resembled commercial enterprises. The 
1994 Government Management Reform Act (GMRA) extended the CFO 
requirements to cover all agency resources, with agency-wide 
audited financial statements due in March 1997, and Federal 
Governmentwide audited financial statements due in March 1998.
    b. Benefits.--Audited financial statements improve the 
quantity and quality of information provided to users of 
financial statements, allowing better decisionmaking concerning 
the allocation of scarce resources. Requiring agencies to 
prepare and have audited their financial statements requires 
them to strengthen their internal controls over waste, fraud 
and abuse, and enhances the reliability of the information 
contained in the financial statements. In all, the result for 
the executive branch will be greater efficiency and 
effectiveness of agency operations.
    c. Hearings.--Subcommittee Chairman Horn opened the hearing 
held on July 25, 1995, by stating that audited agency financial 
statements will minimize weak management controls, fraud and 
waste. The goal of each agency must be to produce a full 
statement on time and get an unqualified or ``clean'' opinion 
on the statement.
    Mrs. Maloney, in her statement, said that quick action was 
necessary to ensure compliance with the laws and stressed that 
there should be no delay in meeting the deadlines for audited 
financial statements.
    Mr. Charles A. Bowsher, Comptroller General of the United 
States, described the progress made by the 24 agencies of the 
executive branch in implementing the CFO Act and the GMRA and 
stressed that proper accounting and financial reporting leads 
to much better barriers against fraud, waste, and abuse.
    Mr. G. Edward De Seve, Controller, Office of Federal 
Financial Management (OFFM), Office of Management and Budget 
(OMB), discussed the role of the Federal Accounting Standards 
Advisory Board in developing Federal accounting standards. He 
hopes these will be available in time to be used for the fiscal 
year (FY) 1996 agency audited financial statements and the 
fiscal year 1997 Governmentwide audited financial statements.
    Mr. Gerald R. Riso, fellow of the National Academy of 
Public Administration and former Associate Director for 
Management and Chief Financial Officer, OMB, provided a 
historical perspective of the development of the CFO Act. In 
his view, the CFO Act has improved Federal financial management 
in many agencies, although the rate of progress in system 
improvement has slowed down.
    Mr. Edward J. Mazur, vice president for administration and 
finance, Virginia State University, and former Controller, 
OFFM, OMB, had several recommendations to strengthen the CFO 
Act, for instance the Controller of OFFM should report directly 
to the OMB Director, and that agencies should establish audit 
committees.
    Mr. Harold I. Steinberg, former Deputy Controller, OFFM, 
OMB, testified on four aspects of the CFO Act: its genesis and 
initial funding; agency CFO structures and appointments, 
financial management staffing; and the preparation of audited 
financial statements. In his opinion, agencies derive the real 
benefit from being audited from going through the process of 
preparing the financial statements, because they learn about 
and can correct weaknesses in their accounting and financial 
reporting systems.
    Mr. Buel T. Adams, vice president and treasurer, CBI 
Industries, representing the Financial Executives Institute, 
described the state of fiscal affairs of the Federal Government 
as ``woefully inadequate'', especially with respect to 
financial management systems. He said that management 
accountability must be improved and that taxpayers should hold 
Congress accountable for ensuring that their tax dollars are 
being spent efficiently.
    Mr. Thomas V. Fritz, president and chief executive officer 
of the Private Sector Council, listed benefits from audits 
required by the CFO Act: savings; knowledge about internal 
control and information systems problems; and clearer, more 
accurate and useful information about an agency's financial 
condition.
    Mr. Anthony A. Williams, then-Chief Financial Officer 
(CFO), U.S. Department of Agriculture, described USDA's 
accomplishments in financial management, including procurement 
reform, developing cost management techniques, oversight of the 
National Finance Center, and the Financial Vision and Strategy 
project.
    Mr. Alvin Tucker, Deputy CFO, Department of Defense, 
described steps the Department of Defense is taking to try to 
ensure that the goals of the CFO Act can be attained.
    Mr. Dennis Fischer, CFO, General Services Administration, 
described GSA's approach to CFO Act compliance. GSA is one of 
only four agencies that routinely receive unqualified opinions 
as a result of agency-wide audits. He credited GSA's success on 
having implemented the fundamental aspects of good financial 
management: CFO organization and responsibility well defined 
and strong controllers in place in major program areas such as 
the Public Buildings Service, Federal Supply Service, and 
Information Technology Service.
    Ms. Bonnie Cohen, Assistant Secretary for Administration 
and CFO, Department of the Interior, stressed the advantages of 
having responsibility for both budget and finance functions, 
and predicted that, with increased use of performance 
measurement, the link between budget and finance will become 
even stronger.

16. Department of Defense's Financial Management Problems.

    a. Summary.--The subcommittee has been examining certain 
indications, as expressed in news articles and in congressional 
hearings, of the Department's lack of ability to control 
problem disbursements, specifically negative unliquidated 
obligations and unmatched disbursements, as well as contractor 
overpayments which the Department of the Navy took years to 
recover. Additionally, as part of the ongoing subcommittee 
review of the Chief Financial Officers Act of 1990 and the 
Government Management Reform Act of 1994, it appears that the 
Department of Defense (DOD) will be unable to comply with the 
requirements of the GMRA for a considerable number of years, 
until they implement modern accounting and financial systems 
that currently they lack.
    Recent articles in the national press and other hearings on 
Capitol Hill have highlighted serious shortcomings in the 
Defense Department's financial management systems. The 
Washington Post reported that, in the past 10 years the 
Department of Defense had spent $15 billion that it could not 
account for. Contractors are routinely overpaid millions of 
dollars and are sometimes stonewalled when they try to give the 
money back. The systems are antiquated and make it difficult 
for staff to do their work accurately. The CFO Act of 1990 
required the preparation and audit of financial statements for 
the Departments of the Army, the Air Force and 22 funds. Out of 
24 parts of DOD examined in fiscal year (FY) 1994, only 1, a 
minor fund, received an unqualified opinion. Most were either 
not audited or received a disclaimer, meaning that the 
statements were not auditable, and therefore not in compliance 
with the CFO Act.
    b. Benefits.--The hearing addressed areas of needed 
improvement in financial management at the Department of 
Defense. If the millions of dollars that have been reported as 
overpayments to contractors had been used for necessary 
expenses, the Department would have been able to improve its 
readiness at a lesser cost than at present.
    c. Hearings.--A hearing was convened on November 14, 1995, 
to examine the Department of Defense's compliance with the 
Chief Financial Officers (CFO) Act of 1990 and the Government 
Management Reform Act of 1994. Subcommittee Chairman Horn 
opened the hearing by saying that strong financial management 
was needed and that the hearing would focus on what the 
Department was doing to strengthen its management control.
    Mrs. Maloney echoed Mr. Horn's statements and emphasized 
the need to follow generally accepted accounting principles 
(GAAP), citing the example of the improvement in the city of 
New York's fiscal situation after it adopted GAAP.
    Mr. John Hamre, Comptroller, Department of Defense, 
responded to the criticisms in the May 14, 1995 Washington Post 
article, and asked that the letter he had sent to Hon. Bill 
Young, chairman, Subcommittee on National Security, Committee 
on Appropriations, dated May 22, 1995, be included in the 
record. He gave his perspective on how DOD was doing in reform 
and improvement of financial management, and emphasized DOD's 
commitment to consolidate its accounting systems, and resolve 
the longstanding problem of unmatched disbursements.
    Mr. Richard Keevey, director, Defense Finance Accounting 
Systems, in answer to a question from subcommittee Chairman 
Horn as to how he would rate the DOD, on a scale of 1 to 10, 
with 10 being closest to getting clean audit opinions, he rated 
the Department as a 3.
    Mr. Alvin Tucker, Deputy CFO, DOD, discussed DOD problem 
disbursements, specifically the unmatched disbursements problem 
and overpayments to contractors. He then described DOD's plans 
for financial management reform. He stated that the overarching 
problem preventing an unqualified or qualified opinion on the 
DOD's financial statements is that the accounting systems which 
support the financial statements do not have an integrated 
general ledger or produce account-oriented transaction files, 
but gave no timetable for implementing a transaction-driven 
general ledger system.
    Mr. G. Edward DeSeve, Controller, Office of Federal 
Management, Office of Management and Budget, testified that OMB 
has been helping the Department of Defense move toward meeting 
the requirements of the CFO Act as set out in OMB Circular A-
127, Financial Management Systems (the Circular). OMB has 
recommended that DOD look outside of its own current financial 
management structure for system solutions, rather than building 
on the best of the in-house systems, since 76 percent of them 
do not meet the Circular's requirement to be consistent with 
the U.S. Standard General Ledger.
    Mr. Gene Dodaro, Assistant Comptroller General, General 
Accounting Office, gave the GAO's perspective on the challenges 
facing the DOD in meeting the objectives of the CFO Act. He 
stated that CFO Act audits have brought greater clarity to 
DOD's financial management problems. Progress is slow. 
According to a recent DOD IG report, general fund financial 
statements will remain unadaptable until September 1998 and the 
DOD IG will not be able to render an audit opinion on any of 
the services until the year 2000 at the earliest. He suggested 
the establishment of an independent, outside board of experts 
to aid in reform efforts.
    Ms. Helen T. McCoy, Assistant Secretary of the Army, 
described the improvements the Department of the Army has made 
in implementing the Chief Financial Officers (CFO) Act. The 
Army has prepared agency-wide audited financial statements as a 
pilot under the CFO Act since fiscal year (FY) 1991 but the 
auditors have been unable to express an opinion on the 
reliability of the financial statements because the accounting 
systems that provide the information for the statements do not 
have an integrated general ledger or produce account-oriented 
transaction files. The audit opinions, however, did note 
significant progress. The management control process has been 
restructured, and there is a new performance assessment process 
within Department of the Army headquarters.
    Ms. Deborah P. Christie, Assistant Secretary of the Navy, 
discussed the plans that the Department of the Navy has for 
financial management improvement. She emphasized the role of 
selection, upgrading, and deployment of financial systems. Four 
key activities in improving Navy financial operations are: 
organizing the Department, consolidating finance and accounting 
services in DFAS, standardizing and upgrading accounting 
systems, and improving the feeder systems and the quality of 
the data they contain. The final step will be to ensure the 
input of accurate data through modern feeder systems and a 
system of internal controls to provide sound financial 
information for internal decisionmaking and external reporting.
    Mr. Robert F. Hale, Assistant Secretary of the Air Force, 
discussed the progress the Department of the Air Force had made 
under his leadership. He has set up the Financial Improvement 
Policy Council, which works with senior Air Force and DOD 
leaders, and with organizations within the DOD such as DFAS and 
DBOF, the Financial Management Steering Committee, and the 
Senior Financial Management Oversight Council. He has called on 
the GAO and the Financial Executive Institute for advice and 
guidance on how to improve financial management. As a result, 
the Air Force has asked for assistance from Coopers and Lybrand 
and Electronic Data Systems in the area of systems 
certification and performance indicators. The Air Force is 
concentrating its efforts in the critical areas of inventory 
management, automated data processing security, internal 
controls, and streamlining the financial management process.
    Ms. Eleanor Hill, Inspector General, DOD, provided an 
assessment of the Department's ability to improve its finance 
and accounting operations and to comply with the acts. She also 
discussed the audit approach devised by the DOD IG's office. 
She stated that the financial statement data for the vast 
majority of DOD funds remain essentially not in condition for 
audit, because of a general lack of effective internal 
management controls. Neither the OIG nor the Service audit 
organizations were able to give audit opinions on the financial 
statements for the largest DOD funds covered by the CFO Act 
requirements for fiscal year 1994, funds totaling $715.5 
billion. The most fundamental problem was that accounting 
systems do not compile and report reliable audit information.

17. Electronic Reporting Streamlining Act of 1995.

    a. Summary.--The Paperwork Reduction Act of 1995 included a 
number of reforms designed to reduce the burden of government-
imposed paperwork on businesses and households. The Electronic 
Reporting Streamlining Act of 1995 would reduce the burden of 
regulatory reporting for business by allowing necessary data to 
be reported in an electronic format.
    b. Benefits.--This will improve the efficiency of Federal 
Government operations by allowing electronic filing of the 
necessary documents.
    c. Hearings.--Subcommittee Chairman Horn held a hearing on 
October 10, 1995, which focused on possibility of streamlining 
Federal operations, and easing the burden on private firms of 
reporting regulatory information, by adopting a scheme for 
electronic reporting.
    Mr. Thomas Kelly, Director, Regulatory Management and 
Information, Office of Policy, Planning and Evaluation of the 
U.S. Environmental Protection Agency (EPA) testified concerning 
his agency's use of information technology and the various 
initiatives related to electronic reporting and dissemination 
of information. Many of these initiatives were associated with 
the National Performance Review projects.
    Mr. Stephen Hanna, assistant for information technology, 
California EPA, explained his agency's pilot project for 
reporting regulatory information on hazardous waste manifests 
and other data required to be reported by private companies.
    Mr. Brad W. Lamont, vice president, Romic Environmental 
Technologies Corp., testified about his company's role in the 
California pilot. Mr. Lamont noted the large number of pages of 
data that Romic was required to submit to Cal-EPA, and that 
this volume of data was transferred by modem in 45 seconds. 
Upon questioning, Mr. Lamont noted the receptiveness of the 
Cal-EPA to new electronic reporting initiatives.
    Mr. David Roe, senior attorney, Environmental Defense Fund, 
noted the role that increased information about toxic release 
can play in improving enforcement and community information. 
Rose explained the manner in which electronic data in 
California eases the work of his organization in maintaining 
oversight of environmental data.
    Mr. Richard Ferguson, board member and executive director 
of Environment and Safety Data Exchange, is a leading expert on 
data exchange and standards issues. Mr. Ferguson explained the 
rationale for moving toward increased electronic reporting. 
According to Mr. Ferguson, the primary reason is that some will 
benefit from a reduced reporting burden, and it is those who 
must do the work to achieve the standards required for the plan 
to work.

18. Use of Transportation by Senior Executive Branch Officials in 
        Compliance with Federal Travel Guidelines.

    a. Summary.--Continuing its oversight investigation and 
pursuant to Rules X and XI of the Rules of the House, the 
subcommittee has reviewed more than 40,000 documents relating 
to travel by senior executive branch officials. A pattern of 
neglect, if not abuse, was discovered on the part of some 
Federal agencies.
    The Office of Management and Budget (OMB), in Circular A-
126, has developed standards for government aircraft use by 
senior executive branch officials. These requirements have been 
supplemented by a White House Memorandum (dated February 10, 
1993) and by OMB Bulletin 93-11. As President Clinton stated in 
the Memorandum: ``The taxpayers should pay no more than is 
absolutely necessary to transport government officials. The 
public should be asked to fund necessities, not luxuries, for 
its public servants.''
    In addition to covering the use of government aircraft, the 
President's Memorandum contains limitations on the use of 
regularly scheduled commercial aircraft. It further requires 
that travel documentation ``be disclosed to the public upon 
request, unless classified.'' The General Services 
Administration (GSA) is charged with compiling a semiannual 
``Senior Federal Travel Report,'' based on submissions from 
Federal agencies. It is incumbent upon the agency to supply 
full and accurate data in compliance with travel protocols and 
requirements. However, this has not been the case. OMB Circular 
A-126 requires the semi-annual publication of specific data in 
the Senior Federal Travel Report, published by the General 
Services Administration. Two problems exist in the reporting of 
senior official travel. First, agencies are frequently late in 
submitting completed reports to GSA. Second, agencies do not 
always supply all the needed data (specifically, cost to the 
government, reimbursable cost), intermediate destinations on 
round trip flights are frequently not reported, and costs are 
not pro-rated per individual.
    Additionally, the published copies of the Senior Federal 
Travel Reports are difficult to read and interpret. The 
International Civil Aviation Organization (ICAO) codes as 
listed in the text of the reports are not parallel to the ICAO 
codes as listed in the index. Important data elements are 
omitted from the final reports. There is no audit structure 
that enables GSA to enforce compliance.
    The subcommittee held two investigative hearings to examine 
the travel practices of Cabinet Secretaries and other senior 
executive branch officials. The first hearing was held on 
December 29, 1995, to examine the abuse of travel by Energy 
Secretary Hazel O'Leary, former White House staff official 
David Watkins, General Joseph Ashy, and the incomplete 
reporting by agencies such as NASA.
    The subcommittee received testimony from Representative 
Barlett regarding his 2 year involvement in examining the use 
of government aircraft by senior Federal officials. He became 
interested in the abuse of aircraft after David Watkins, at the 
time a White House staffer, used a Presidential ``whitetop'' 
helicopter for transportation to play golf at a Frederick, MD 
golf course.
    Mr. David E. Williams, research director, Citizens Against 
Government Waste, testified about the Citizens Against 
Government Waste's longstanding examination of the travel of 
Secretary O'Leary. Williams testified among other things that 
Secretary O'Leary retains a staff of 14 to handle her 
invitations and travel arrangements.
    Mr. Peter B. Zuidema, Director, Aircraft Management 
Division, Federal Supply Service, General Services 
Administration, testified that Federal aircraft can be used 
only for official purposes, and only when commercial airlines 
are not reasonably available. A cost comparison must also be 
performed.
    Mr. Dabis B. Buckley, Special Assistant to the Inspector 
General, Department of Defense, testified that as a result of 
investigations by the Office of the IG, the Department of 
Defense has taken steps to tighten its policy regarding the use 
of its aircraft.
    A second hearing was held on May 16, 1996, to investigate 
practices at three executive branch agencies, the Department of 
Interior, the Department of Veterans' Affairs, and the 
Department of Labor. Testimony was received from Gregory 
Walden, counsel, Mayer, Brown & Platt; Bonnie Cohen, Assistant 
Secretary for Policy, Management and Budget/Chief Financial 
Officer, the Department of Interior; Harold Gracey, Chief of 
Staff, Department of Veterans' Affairs; and Patricia Lattimore, 
Deputy Assistant Secretary for Administration and Management, 
Department of Labor.
    Mr. Walden testified that Government travel is something 
that is often abused and overlooked. He reiterated subcommittee 
Chairman Horn's point that the issues involved are not only 
about Government waste, but rather, Government ethics. Walden 
placed all travel violations discussed into an ethical context.
    b. Benefits.--Misuse of government aircraft and poor 
reporting of trips on government aircraft is a serious problem. 
Because of the casual reporting standards on the part of most 
Federal agencies it is difficult to determine which flights are 
in violation of Federal travel requirements. Subsequently it is 
difficult to determine how much money can be saved by 
eliminating abuse of the aircraft by senior Federal officials. 
With continuing congressional oversight, further hearings will 
instil some awareness into Federal agency management practices 
and that cost consciousness must be a factor in traveling on 
Government aircraft.
    c. Hearings.--December 29, 1995 a hearing was held 
entitled, ``The Use of Government Aircraft by Senior Federal 
Officials.'' May 16, 1996, a hearing was held entitled, 
``Senior Executive Branch Officials Compliance with Federal 
Travel Guidelines.''

19. The Government's Response to the Northridge Earthquake.

    a. Summary.--On January 17, 1994, the Los Angeles area was 
struck by one of the most damaging earthquakes in the Nation's 
history. The earthquake, referred to as the ``Northridge 
Earthquake'' resulted in more than 70 deaths, more than 18,000 
injuries and caused 25,000 residents to become homeless 
overnight. The General Accounting Office (GAO) estimated more 
than 55,000 structures were damaged; 1,600 of these were deemed 
uninhabitable. The area's freeway system sustained heavy damage 
which resulted in closures in a number of locations. Of the 
$25-$30 billion losses sustained, FEMA provided relief in the 
amount of $3.4 billion, not counting assistance from 27 other 
Federal agencies and the American Red Cross.
    On January 19, 1996, the subcommittee held an oversight 
hearing on the Federal Government's response to the 1994 
Northridge earthquake. The focus of the hearing was to receive 
testimony on preventive and cost-effective lessons that could 
be learned from the earthquake. Testimony was received from 
Hon. James Lee Witt, director, Federal Emergency Management 
Agency; Hon. Richard Riordan, mayor, city of Los Angeles, CA; 
Richard Andrews, director, Governor's Office of Emergency 
Services, State of California; Constance Perett, manager, 
Office of Emergency Services, County of Los Angeles; Maj. Gen. 
Robert Brandt, Assistant Adjutant General and Commander, 
California Army National Guard; Donald Jones, vice president 
for disaster services, American Red Cross; James Haigwood, CEO, 
American Red Cross, Los Angeles Chapter; Terri Jones, director 
of special projects, California Community Foundation; John 
Suggs, director of public policy and government affairs, United 
Way of Greater Los Angeles; Blenda Wilson, president, 
California State University, Northridge; Robert Maxson, 
president, California State University, Long Beach; and J. 
Richard Williams, dean of engineering, California State 
University, Long Beach.
    Mr. Witt outlined some of the steps FEMA took in the 
aftermath of the earthquake and some of the problems 
encountered with the recovery effort which included the 
distribution of benefits to eligible recipients, errors of 
mistakenly giving relief multiple times to the same people and 
to ineligible people such as illegal aliens. He acknowledged 
that FEMA needed to enhance its effort to work with State and 
local governments to promote mitigation efforts.
    Mayor Riordan described the efforts taken by the city of 
Los Angeles to provide relief from the earthquake, and 
suggested that in the future, the Federal Government could 
bypass FEMA and the Small Business Administration (SBA) and 
allocate disaster relief funds directly to local governments. 
This, he argued, would allow for a ``real-time'' relief 
process, expediting recovery efforts for victims. He added that 
the relief mechanism was not designed to enable localities to 
quickly provide assistance to multifamily apartment dwellings. 
He noted that SBA loans did not provide relief for multifamily 
apartments which sustained damage above the SBA limit of $1.5 
million. In addition, FEMA should make a distinction between 
commercial and residential units. He also pointed out that 
instead of importing temporary relief workers from out-of-
state, FEMA should make a concerted effort to hire local 
residents to provide assistance. In response to questioning, 
Mayor Riordan proposed that the SBA consider restructuring 
loans to allow for the decrease in value due to earthquake 
damage.
    b. Benefits.--This hearing enabled members of the 
subcommittee to learn first-hand the impact of one of the most 
damaging natural disasters to ever confront the United States, 
and learn how the agencies designed to respond to such crises 
fared in their response. The hearing also allowed members to 
learn of the efforts underway or planned which would allow 
manmade structures to withstand future disasters of this type.
    One of the actions taken was the establishment of a 24-hour 
disaster information network called the Recovery Channel which 
was broadcast on 125 cable television outlets. Another was the 
use of computer technology allowing for almost instantaneous 
assessments of relief available to victims of the earthquake.
    Donald Jones testified that more than 14,000 Red Cross 
volunteers responded to the earthquake. The Red Cross has an 
agreement with FEMA to provide emergency support services, 
including food, shelter, and clothing and spent more than $38 
million providing services to victims of the earthquake.
    c. Hearings.--A field hearing entitled, ``The Government 
Responses to the Northridge Earthquake,'' was held on January 
19, 1996.

20. OMB 2000 Reforms: Where Are They Heading?

    a. Summary.--In March 1994, the Office of Management and 
Budget (OMB) commenced a reorganization intended to make OMB 
more effective in serving the President and also how to achieve 
the proper balance between its responsibilities for management 
practices within the executive branch and its responsibilities 
for budget formulation. This reorganization, dubbed OMB 2000, 
fundamentally changed the organizational structure of OMB. 
Former budget areas were recreated as resource management 
offices (RMOs), and the Office of General Management was 
abolished. Since the three statutorily required offices--the 
Office of Federal Procurement Policy (OFPP), the Office of 
Federal Financial Management (OFFM), and the Office of 
Information and Regulatory Affairs (OIRA)--were unable to be 
abolished, OMB reduced the staffs of these offices and 
reallocated staff to the RMOs. In the case of the OFFM, over 
half of the authorized staff positions were transferred out.
    The subcommittee convened a hearing to review how a reform 
initiative, known as OMB 2000, has impacted upon management 
practices within the Office of Management and Budget and where 
OMB is headed as a result of this reform initiative. The 
subcommittee invited the following witnesses to testify at the 
February 7, 1996 hearing: Hon. Alice M. Rivlin, Director, and 
Hon. John A. Koskinen, Deputy Director for Management, Office 
of Management and Budget; Paul L. Posner, Director, Federal 
Budget Issues, General Accounting Office; L. Nye Stevens, 
Director, Federal Management Issues, General Accounting Office; 
Dwight A. Ink, president emeritus, Institute of Public 
Administration and former Assistant Director for Management, 
Bureau of the Budget and the Office of Management and Budget 
(Nixon administration); and Edwin Harper, former Deputy 
Director, Office of Management and Budget (Reagan 
administration).
    In his opening statement, subcommittee Chairman Horn stated 
that some experts say that a proper balance between budget and 
management has never been achieved at OMB. These experts 
question whether it is feasible to integrate the two functions 
in one organization, and suggest a solution is to set up a 
separate office within the Executive Office of the President, 
devoted entirely to management issues.
    Ms. Rivlin testified that the premise of OMB was based upon 
the notion that management is about using resources 
effectively. She asserted that there is not a way to separate 
resource management from other management. Prior to OMB 2000, 
OMB used a disjointed approach to dealing with both 
governmentwide and agency-specific management issues which was 
counterproductive.
    Dr. Ink testified that the potential for improvement in the 
management function within OMB was low because of: the inherent 
competition with the budget process; the budget not being 
focussed on crosscutting issues; lack of expertise in OMB to 
advise agencies on reorganization; lack of emphasis on long-
term investment; and financial management. Consolidation of 
management and budget functions limits the capacity of OMB to 
provide leadership for reform, and can hinder actions to 
prevent abuse. He supported the idea of establishing an Office 
of Federal Management within the Executive Office of the 
President, but outside OMB.
    Dr. Harper defined good management as the efficient use of 
resources in pursuit of specific policy objectives, and said 
that it would be impossible to deal with improving management 
until we can measure government program outputs related to 
policy objectives. He questioned whether the manpower resources 
assigned to OMB were adequate and whether the statutorily 
mandated offices were necessary. He would also approve of a 
separate Office of Management, whose head should have cabinet 
rank.
    b. Benefits.--The new direction chosen for OMB, under the 
OMB 2000 initiative, was to make all OMB activities part of a 
comprehensive, integrating budget analysis, management review 
and policy development. The resource management offices (RMOs) 
were set up to implement this. These RMOs are responsible for 
budget formulation, program analysis, implementation of 
governmentwide policy as formulated by the three statutory 
offices, and program effectiveness and efficiency.
    Agencies depend on OMB for guidance on implementing 
regulations required by new and existing legislation; it shares 
responsibility with the Office of Personnel Management for 
making sure that agency personnel are trained to perform new 
functions, such as those required under the Government 
Performance and Results Act. It should be a resource for the 
President in management of the executive branch agencies, 
drafting Executive orders as required or acting as a guide or 
goad, whichever is necessary, to ensure that agencies follow 
the administration's policies.
    The intent of OMB 2000 was to increase the attention OMB 
staff give to management issues. In the opinion of the 
committee, as a result of its oversight activities, this has 
not happened, and it seems that more drastic action is needed 
to ensure that OMB has the capability to advise the executive 
branch concerning the complex problems of management facing it.
    c. Hearings.--A hearing entitled, ``OMB 2000 Reforms: Where 
Are They Heading?'' was held on February 7, 1996.

21. Using the Best Practices of Information Technology in Government.

    a. Summary.--Leading corporations use information systems 
to remake their organizations and improve performance. Enhanced 
communications let these organizations operate with a greatly 
reduced hierarchical structure. Fewer middle managers are now 
needed between line workers and senior management as 
organizations become ``flatter'' and less bureaucratic. 
Corporations are using more direct communications links with 
customers, suppliers and transporters to shorten delivery 
schedules and reduce expensive inventories. Use of cutting edge 
information resources at these organizations is often central 
to their core business strategies.
    Despite the potential of information systems in 
strengthening organizations, the Federal Government has lagged 
behind in its successful application. Numerous reports have 
identified weaknesses with specific Federal Government 
information systems. The General Accounting Office has 
previously placed many of the Federal Government's largest 
information technology systems on its ``high risk series'' 
listing of specific programs most vulnerable to waste, fraud 
and abuse. These have included the Federal Aviation 
Administration's air traffic control modernization, the 
Internal Revenue Service's tax systems modernization and the 
Department of Defense's corporate information management 
initiative. Other similar reports, such as the Office of 
Management and Budget's high risk list, have identified 
additional troubled information systems developments.
    The subcommittee convened a hearing to address the problem 
of examining how leading private institutions are using 
information technology to improve their organizations and to 
capitalize on the opportunities available from information 
systems. Witnesses testifying were: Peter Huber, senior fellow, 
Manhattan Institute, columnist, and author; Chris Hoenig, 
Director, Information Management Policy and Issues, General 
Accounting Office; Dr. Renato A. DiPentima, vice president & 
chief information officer, SRA Corp.; C. Morgan Kinghorn, Jr., 
director, Coopers & Lybrand; John Kost, chief information 
officer, State of Michigan; and David R. Brooks, vice 
president, Health Care Technology Sector, Science Applications 
International Corp.
    b. Benefits.--Despite the expenditure of approximately $25 
billion per year and $200 billion over the past decade on 
information systems, the Federal Government lags behind the 
private sector in the effectiveness of its use of new 
technology. The Federal Government needs to draw upon the 
experience of other organizations that have successfully 
harnessed information technologies to be more efficient, 
effective organizations. The recommendations made at the 
hearing will improve the oversight activities conducted by the 
subcommittee.
    c. Hearings.--A hearing on ``Using the Best Practices of 
Information Technology in Government'' was held on February 26, 
1996.

22. Oversight of IRS Financial Management.

    a. Summary.--Pursuing oversight issues designated in Public 
Law 103-356, the Government Management Reform Act of 1994 and 
Public Law 101-576, the Chief Financial Officers Act of 1990, 
the subcommittee convened two oversight hearings regarding the 
Internal Revenue Service's financial management. The first 
hearing examined several aspects of financial management and 
addressed the IRS' ability to produce financial statements, to 
have these statements audited, and to obtain verification of 
accuracy. Testimony was received from: Gene L. Dodaro, 
Assistant Comptroller General, Accounting and Information 
Management Division, General Accounting Office; Hon. Margaret 
Milner Richardson, Commissioner, Internal Revenue Service; 
Donald C. Alexander, former Commissioner of the Internal 
Revenue Service from 1973 to 1977; Donald L. Korb, former 
Assistant to the Commissioner of the Internal Revenue Service 
from 1984 to 1986; and Shannon O'Toole, former Resolution Trust 
Corporation Department Head and Section Chief of Real Estate 
Disposition.
    Subcommittee Chairman Horn emphasized in his opening 
statement the importance of Congress receiving accurate 
information to properly oversee and evaluate the IRS' 
performance. In addition, he addressed concerns regarding the 
General Accounting Office's inability to give an opinion on 
audited IRS' financial statements, and weaknesses of internal 
controls and lack of audit documentation.
    When GAO auditors review the IRS statements and underlying 
records, they were unable to reconcile these records and, thus, 
were unable to give an opinion on the financial statements from 
fiscal years 1992 through 1995. The audits have identified five 
significant problems within the IRS' financial management, 
which if not corrected, will preclude future auditors from 
rendering an opinion on the IRS's financial statements. They 
include the: (1) inability to verify total revenue of $1.4 
trillion and the amount of tax returns; (2) unsubstantiation of 
the amount of collection from Social Security, income and 
excise tax; (3) reliability of reported estimate for FY 1995 of 
$113 billion for valid accounts receivable and of $46 billion 
for collectible receivable; (4) verficiation of the $3 billion 
for non-payroll expenses that the IRS reports; and (5) amounts 
the IRS reported as appropriations available for operating 
expenditures which cannot be reconciled with Department of the 
Treasury's records.
    Commissioner Richardson claimed that the IRS has strong 
systems and controls to ensure that the individual accounts are 
accurate and that they work. She explained that the IRS has two 
separate financial processes to track funds: the administrative 
system that handles our appropriated funds, and the revenue 
system that tracks tax collections. She stated that the current 
system the IRS uses, designed in 1994 (2 years after the IRS 
started doing service-wide audits as a pilot under the CFO 
Act), is not designed to provide the detailed information that 
is required by the CFO Act for financial statement 
presentation.
    Regarding accounts receivable, she described the 
improvement in management of the receivables inventory that has 
been undertaken by the IRS. They are also stepping up efforts 
to increase collection yields. She provided an update on the 
status of the private debt collection pilot project, in which 
the IRS is contracting out debt collection activities to a 
small number of debt collection agencies.
    A follow-up oversight hearing was held on September 19, 
1996, to further discuss the state of financial management in 
the Internal Revenue Service. The hearing addressed whether 
there had been any improvement since the first hearing 
regarding the IRS' inability to produce reliable financial 
statements and the internal controls or the accuracy of data 
input. Witnesses testifying included Gene L. Dodaro, Assistant 
Comptroller General, Accounting and Information Management 
Division, GAO; Steven App, Deputy Chief Financial Officer, 
Department of Treasury; and Anthony Musick, Chief Financial 
Officer, Internal Revenue Service.
    Gene Dodaro gave the subcommittee a status report about the 
progress the IRS is making in addressing its financial 
management problems. He explained that the IRS has two sets of 
financial statements to account for: statements on its revenue 
gathering function under its custodial responsibilities, 
running at about $1.3 to $1.4 trillion currently; and 
statements reporting on the administrative operations paid for 
out of appropriations, running at about $8 billion currently. 
The IRS has improved in this area, and the auditors were able 
to verify the validity of about $5 billion of their $8 billion 
in appropriations. However, two problems remain in the 
administrative area: Documentation of receipts and acceptance 
of goods and services is inadequate; and the cash accounts with 
the Department of the Treasury cannot be properly reconciled.
    b. Benefits.--IRS financial management impacts 
congressional decisionmaking on many levels. The reliability of 
revenue and other information gathered by the IRS is of concern 
to Congress since the revenues collected by the IRS represent 
more than 90 percent of all revenues available to the Federal 
Government. The confidence taxpayers have in the IRS to collect 
and account for the taxes they pay directly affects the degree 
to which they comply with the tax code which in turn impacts 
the taxes collected. The efficiency with which the IRS collects 
the taxes and other receivables owing to the Federal Government 
affects the cost of other Federal programs to the taxpayer. 
Subcommittee Chairman Horn introduced H.R. 2234, which is 
designed to improve debt collection efforts in the Federal 
Government, to include provisions related to the IRS use of 
private debt collection agencies.
    c. Hearings.--On March 6, 1996, the subcommittee held an 
oversight hearing entitled, ``Oversight of the Internal Revenue 
Service Financial Management.'' On September 19, 1996, a 
follow-up oversight hearing was held entitled, ``Internal 
Revenue Service Financial Management: Has There Been Any 
Improvement?''

23. Is January 1, 2000 the Date for Computer Disaster?

    a. Summary.--After midnight, December 31, 1999, computer 
systems throughout the world are at risk of failing. Computers 
may confuse the year 2000 with the year 1900 on January 1, 
2000, and go backward in time instead of forward when the new 
century begins. The severity of the problem was raised when 
Congress was told that if businesses and governments continue 
to ignore this issue, disruption of routine business operations 
and the inability of the Federal Government to deliver services 
to the American people could result. According to a 
Congressional Research Service Memorandum dated April 12, 1996, 
``Many people initially doubted the seriousness of this 
problem, assuming that a technical fix will be developed. 
Others suspect that the software services industry may be 
attempting to overstate the problem to sell their products and 
services. Most agencies and businesses, however, have come to 
believe that the problem is real, that it will cost billions of 
dollars to fix, and that it must be fixed by January 1, 2000, 
to avoid a flood of erroneous transactions.''
    On April 16, 1996, the subcommittee convened a hearing to 
collect the facts on the steps Federal agencies are taking to 
prevent a possible computer disaster. Subcommittee Chairman 
Horn raised the question whether agencies are taking the 
necessary actions to identify where the problem lies and 
whether they are providing the necessary human and capital 
resources to correct the problem. In her opening statement, 
Ranking Minority Member Maloney noted: ``The cost of failure is 
high--systems that deliver services to individuals will not 
work, and those services will not be delivered. Checks will not 
arrive on time. Planes will be grounded, and ports will be 
closed.''
    Testimony was received from: Kevin Schick, research 
director, the Gartner Group; Louis J. Marcoccia, director of 
data administration and logistics, New York City Transit 
Authority; Nicholas J. Magri, senior vice president, Securities 
Industry Automation Corp.; Michael B. Tiernan, the First Boston 
Corp. on behalf of the Securities Industry Association, Data 
Management Division; D. Dean Mesterharm, Deputy Commissioner 
for Systems, Social Security Administration; Hon. Emmett Paige, 
Jr., Assistant Secretary for Defense Command, Control, 
Communications and Intelligence, Department of Defense; and 
Hon. George Munoz, Assistant Secretary for Management and Chief 
Financial Officer, Department of the Treasury. The witnesses 
testified to a number of examples of incidences that could 
occur if industry and government continue to ignore this issue. 
In fact everything from unexpected expiration of drivers' 
licenses to erroneous dates for final mortgage payments could 
occur if two-digit date fields remain unable to recognize the 
year 2000.
    On September 10, 1996, the subcommittee convened a joint 
hearing with the Subcommittee on Technology of the Committee on 
Science to review the impact on personal computers, on State 
and local governments, and on Federal agencies. Testimony was 
received from: Sally Katzen, Administrator, Office of 
Information and Regulatory Affairs, Office of Management and 
Budget; Larry Olson, deputy secretary, information technology 
for the Commonwealth of Pennsylvania; Harris Miller, president, 
Information Technology Association of America; and Daniel 
Houlihan, first vice president and president elect, National 
Association of State Information Resource Executives.
    In her testimony, Sally Katzen provided an outline of the 
administration's current strategy for solving the problem: 1) 
raise the awareness of the most senior managers in Federal 
agencies to the dimensions of the problem; 2) promote the 
sharing of both management and technical expertise; and 3) 
remove barriers that may slow down or impede technicians fixing 
systems.
    Larry Olson presented Pennsylvania's plan of action. As 
noted by Olson, the key to success of the plan is senior level 
support. Mr. Olson pointed out that during his first year as 
Governor of Pennsylvania, Tom Ridge quickly recognized the 
dramatic implications of the Year 2000 date field problem. 
Subsequently the Governor took quick action to ensure that 
Pennsylvania businesses and governments will be prepared before 
January 1, 2000.
    Harris Miller presented an outline of how the Year 2000 
situation presents three problems for personal computer users 
in homes and businesses across the country: 1) the BIOs chip of 
individual machines; 2) the operating system that generally 
comes bundled with new computers; and 3) the commercial 
software purchased for those machines. Most equipment 
manufacturers in the past 18 months have modified their 
products. Operating systems in personal computers in most cases 
can have their operating systems ``fixed'' through a simple 
procedure using the computer's mouse. Commercial software 
products may or may not be Year 2000 compliant. An issue of 
great concern for personal computer users is the increasing 
access with other systems. In order to ensure that computer 
systems are operational in the year 2000, most systems will 
need modification. Miller also testified further that personal 
computer users as well as mainframe information technology 
managers need to be aware of this issue and take appropriate 
corrective steps.
    b. Benefits.--According to Mr. Schick, the crisis revolves 
around time, cost and risk. Businesses, Federal agencies, and 
State and local governments must understand that this 
information technology project cannot be allowed to slip: 
Saturday, January 1, 2000 cannot be postponed. Prevention of 
widespread disruption of services to citizens, breakdowns in 
information processing, and compromising of computer security 
controls must be kept to a minimum. The problem, although not 
technically complex, is managerially challenging and will be 
very time consuming for private and public sector 
organizations. It is the Government's responsibility to ensure 
that its constituents receive Federal services and that public 
safety is available to all citizens. (See section II.A.2.)
    c. Hearings.--Hearings entitled, ``Is January 1, 2000 the 
Date for Computer Disaster?'' and ``Solving the Year 2000 
Computer Problems'' were held on April 16, 1996 and September 
10, 1996.

24. Oversight of the General Accounting Office.

    a. Summary.--The primary mission of the General Accounting 
Office (GAO) is to investigate all matters relating to the 
receipt, disbursement, and application of public funds, which 
includes the audit requirements under the Chief Financial 
Officers Act of 1990. The scope of the GAO's authority has been 
extended to include conducting commercial audits of 
governmentwide operations; establishes principles and standards 
for accounting in executive agencies and audit evaluations of 
the adequacy of financial management and control; and to 
conduct a governmentwide audit of the executive branch's 
agencies in compliance with the Government Management and 
Reform Act of 1994.
    The subcommittee convened an oversight hearing on April 30, 
1996, to review the growing concerns regarding the GAO's 
operations and responsibilities; the efficiency of the GAO's 
processes; and the prioritization of the functions which the 
GAO performs. Testimony was received from Hon. Charles A. 
Bowsher, Comptroller General of the United States, U.S. General 
Accounting Office; Hon. John A. Koskinen, Deputy Director for 
Management, Office of Management and Budget; Dr. R. Scott 
Fosler, president, National Academy of Public Administration; 
Thomas V. Fritz, president and CEO, the Private Sector Council; 
and Dr. Cornelius (Neil) E. Tierney, accounting professor, 
George Washington University.
    Comptroller General Bowsher stated that since 1983, the GAO 
had doubled its productivity. Some of GAO's accomplishment have 
led to budget reductions, cost avoidance, appropriation 
deferrals, and revenue collections that have provided financial 
savings and other benefits in the billions of dollars. In 
fiscal year 1995, this amounted to a return of $35 for every $1 
appropriated for the GAO.
    Dr. Tierney stated that, with respect to the GAO's 
government auditing standards, two conditions exist that might 
warrant assistance from Congress: the need to actually audit 
and have auditors render an opinion on the adequacy of a 
government's system of internal controls; and giving increased 
emphasis within and possibly requiring the Inspectors General 
community to periodically conduct the program performance 
audits outlined and contemplated by the GAO in its government 
auditing standards.
    In addition, Tierney said that the concerns expressed about 
certain aspects of the GAO operations, its working 
relationships with individual Members of Congress and 
committees, and its independence, had been examined over the 
years. The GAO is continually concerned over the length of time 
taken to issue reports of its reviews and audits. At times, 
report preparation and delivery have exceeded a year or more. 
Also he stated that the GAO workload includes various studies, 
reports, audits, etc., that are legislatively mandated. Much of 
what appears to be self-initiated, is, in fact, the result of 
mandates in laws by earlier Congresses.
    b. Benefits.--In fiscal 1995, the GAO prepared 1,322 audit 
and evaluation reports, including 910 reports to Congress and 
agency officials, 166 congressional briefings, and 246 
congressional testimonies delivered by 72 GAO executives and 
serves a valuable asset to the Congress in its oversight of the 
executive branch.
    Mr. Bowsher also described steps the GAO has taken to 
improve its productivity and better serve Congress. It has 
streamlined its headquarters and field operations. It has 
improved its processes for conducting and reporting the results 
of its work. It plans to capitalize on advances in information 
resource technology and to enhance its methodological and 
technical skills. In addition, the GAO's financial audit 
division has successfully undergone an external peer review by 
KPMG Peat Marwick.
    c. Hearings.--On April 30, 1996, the subcommittee held an 
oversight hearing entitled ``Oversight of the United States 
General Accounting Office.''

25. Oversight of the General Services Administration.

    a. Summary.--The General Services Administration (GSA) was 
created to provide an economical and efficient system to supply 
goods and services to the Federal Government. It has not been 
reauthorized in the nearly 50 years of its existence.
    The subcommittee held a hearing on May 10, 1996, to examine 
GSA's authority over the Federal motor vehicle fleet, personal 
property disposal, and leasing of Federal buildings. The 
subcommittee heard testimony from: David Barram, Administrator 
of General Services, GSA; G. Martin Wagner, Associate 
Administrator, Office of Policy, Planning and Evaluation, GSA; 
Frank Pugliese, Commissioner, Federal Supply Service, GSA; 
David Bibb, Deputy Commissioner, Public Buildings Service, GSA; 
Andrew Jones, senior manager, Arthur Andersen; John Dues, 
partner and director, Arthur Andersen; Chris Butterworth, 
president, National Association of State Agencies for Surplus 
Property; and Bill Wilson, vice president, National Association 
of State Agencies for Surplus Property.
    Subcommittee Chairman Horn opened the hearing by noting 
that GSA had not been reauthorized since 1949, and asserted 
that this harmed GSA, since its programs do not have regular 
congressional input aside from the $257 million in appropriated 
funds. In addition to the lack of clear direction from 
Congress, GSA is split between policy and oversight and the 
provision of services. Chairman Clinger raised issues relating 
to the Federal motor vehicle fleet and if GSA could effectively 
operate a large fleet. Mr. Pugliese stated that the Federal 
Supply Service would be responsible for operating the GSA 
fleet, and the Office of Policy, Planning and Evaluation would 
handle the policy aspects. Pugliese noted that 90 percent of 
the dollars spent by the GSA fleet program are spent on private 
sector contractors--so much of the program is already 
privatized.
    Mr. Wagner described the purpose of the surplus property 
program, which is to put Federal property toward the highest 
possible use, in a Federal agency or a State or local 
government agency. Wagner agreed that GSA and other agencies 
should take a look at the property management function, since 
$30 billion in surplus personal property is declared excess 
each year by Federal agencies.
    Subcommittee Chairman Horn raised the issue of leases and 
public buildings, describing how GSA was charging his 
predecessor $80,000 for office space he obtained for $30,000, 
with an increase in service for constituents. Administrator 
Barram noted that GSA was required to locate, where possible, 
in downtown city centers, which inflates the cost.
    b. Benefits.--Administrator Barram noted that lease 
renegotiation and ensuring that tax reductions are passed 
through to the Federal Government will reduce office rate 
charges over the next few years. David Bibb noted that every 5 
years appraisers examine buildings to establish the market 
rate. Several private real estate firms have approached GSA 
offering to assist GSA in locating savings through 
restructuring existing leases, challenging tax assessments, and 
performing lease audits for free in exchange for some portion 
of the savings. Some private firms say that $1 billion could be 
saved annually, whereas Arthur Andersen notes show that GSA 
could save $565 million annually.
    c. Hearings.--On May 10, 1996, the subcommittee held a 
hearing on ``Oversight of the General Services Administration 
(GSA).''

26. Federal Information Policy Oversight.

    a. Summary.--As part of its oversight responsibility, the 
subcommittee has jurisdiction over the following aspects of the 
Government's information policy: the Freedom of Information Act 
(FOIA); the Privacy Act; Government in the Sunshine Act; and 
Federal Advisory Committee Act.
    The subcommittee conducted an oversight hearing on June 13, 
1996, to receive testimony from witnesses regarding the 
execution of these information policy laws. In his opening 
statement subcommittee Chairman Horn expressed his frustration 
upon learning that the Federal Bureau of Investigation (FBI) 
has a 4-year backlog for responding to FOIA requests. In noting 
the significance that the committee attaches to the Freedom of 
Information Act, he observed that the first report issued by 
the House Committee on Government Reform and Oversight was an 
updated version of ``A Citizen's Guide on Using the Freedom of 
Information and Privacy Act of 1974 to Request Government 
Records.''
    The subcommittee received testimony from Senator Patrick 
Leahy who noted the role that FOIA requests had in uncovering 
information about various Government actions. He stated that 
the law needed to be updated to reflect the advancing use of 
information technology in Government to maintain records, 
adding ``access should be the same whether they are on a piece 
of paper or a computer hard drive.'' The Senator also 
criticized the failure of agencies to comply with the statutory 
time limits for responding to requests.
    Few agencies actually respond to FOIA requests within the 
10-day limit required by law. Such routine failure to comply 
with the statutory time limits is bad for morale in the 
agencies and breeds contempt by citizens who expect Government 
officials to abide by, not routinely break, the law.
    Witnesses were Senator Patrick Leahy; J. Kevin O'Brien, 
Section Chief of the Freedom of Information/Privacy Acts 
Section, FBI; Roslyn Mazer, Deputy Assistant Attorney General, 
Office of Policy Development, Department of Justice; Anthony 
Passarella, Director, Directorate for Freedom of Information 
and Security Review, Office of the Assistant Secretary of 
Defense; Eileen Welsome, journalist; Larry Klayman, chairman 
and general counsel of Judicial Watch; Jane Kirtley, executive 
director, of the Reporter's Committee for Freedom of the Press; 
Byron York, reporter for the American Spectator; Marty Wagner, 
Associate Administrator, Office of Policy, Planning and 
Evaluation, GSA; James L. Dean, Director, Committee Management 
Secretariat Staff, GSA; Paul Kamenar, executive director, 
Washington Legal Foundation; Randolph May, attorney, 
Sutherland, Asbill & Brennan.
    b. Benefits.--Access to government information, government 
records about individuals, and the protection of personal 
records from unwarranted disclosure are each important 
protection in a democratic society. Technological developments 
have the potential of dramatically enlarging the potential for 
disclosure of this information. Legislative and oversight 
initiatives are necessary to assure that these new developments 
facilitate the release of information intended for disclosure 
in a timely manner, while also better shielding those personal 
records which the public expects to be kept private.
    c. Hearings.--Hearing entitled, ``Federal Information 
Policy Oversight,'' was held on June 13, 1996.

27. Oil Royalties.

    a. Summary.--The subcommittee has legislative and oversight 
jurisdiction with respect to the ``overall economy, efficiency 
and management of government operations and activities, 
including Federal procurement.'' In addition, the subcommittee 
has the oversight responsibility to review and study on a 
continuing basis, the operation of government activities at all 
levels with a view to determining their economy and efficiency. 
Pursuant to this authority, the subcommittee convened an 
oversight hearing to examine whether companies under agreements 
to extract oil from Federal lands in California undervalued the 
oil and as a result, underpaid royalties to the Federal 
Government.
    In 1975, the State of California and the city of Long Beach 
pursued litigation against seven major oil companies operating 
in California alleging that these companies conspired to keep 
posted oil prices low. The city and State claimed they had been 
damaged because their oil revenues depended on posted prices 
(posted prices are the announced prices at which crude oil 
purchasers, generally major refiners, will buy oil from 
producers at the wellhead) and the royalty thereon. If the 
posted price is below fair market value, the Federal Government 
loses tax and royalty revenue.
    In 1986, the Minerals Management Service (MMS) of the 
Department of the Interior contacted State officials to assess 
the appropriateness of posted prices as the royalty value 
basis. MMS concluded that the system of posted prices existing 
at the time fairly represented market value. Also weighing 
heavily in the MMS decision was the fact that the State and 
city had been unsuccessful in their antitrust claims in court. 
The Justice Department looked into the issue and chose not to 
pursue an investigation.
    In the mid-1980's, MMS, the General Accounting Office and 
the Internal Revenue Service independently analyzed the issue, 
but the information available to them was inconclusive in 
proving that Federal oil was undervalued at posted prices. In 
1991, six of the companies involved (ARCO, Shell, Chevron, 
Mobil, Texaco, and Unocal) reached settlements totaling $345 
million to end the court actions by the State and city alleging 
undervaluation. A seventh defendant, Exxon, went to trial and 
was exonerated. That decision was appealed, and Exxon won the 
appeal in January 1995. A separate appeal covering a different 
time period is still pending. Given the length and 
circumstances of the litigation, it is not certain whether the 
companies settled as a practical matter to cut off litigation, 
or whether they were concerned about potential legal liability.
    In light of the 1991 settlement, MMS performed a scoping 
exercise to estimate the size of any potential Federal royalty 
underpayment. In 1994, an interagency team consisting of MMS, 
the Department of the Interior's Solicitor's Office and the 
Departments of Energy, Commerce and Justice, investigated the 
allegations. The Justice Department resigned from the team, 
citing an inability to prove antitrust violations. The State of 
California assisted the Federal team in obtaining court records 
from the earlier litigation.
    b. Benefits.--The Minerals Management Service has delayed 
the collection of oil royalties which are owed. This hearing 
was the first congressional hearing on the issue of 
undervaluation of crude oil. As such, the hearing benefited the 
Federal Government by focusing attention on the problem and 
demonstrating that there was bipartisan congressional interest 
in pursuing underpayment. (See section II.A.3.)
    c. Hearings.--On June 17, 1996, the subcommittee held a 
hearing entitled, ``Can the U.S. Increase Oil Royalties.''

28. Field Hearing on the U.S. Border Patrol's Operation Gatekeeper.

    a. Summary.--The U.S. Border Patrol is a part of the 
Immigration and Naturalization Service, the primary agency in 
the Department of Justice responsible for enforcing the 
Nation's immigration laws. The Border Patrol is responsible for 
securing the international land and water borders between 
ports-of-entry with the goal of preventing illegal entry into 
the United States, interdicting drug smugglers, and compelling 
those persons seeking admission to the country to present 
themselves legally at ports-of-entry for inspection.
    On October 1, 1994, the Department of Justice initiated 
Operation Gatekeeper in an attempt to reduce illegal 
immigration across the United States-Mexico border in the San 
Diego region. Administered by the Border Patrol, Operation 
Gatekeeper has as one of its goals the shifting of illegal 
crossing routes to areas that are remote and difficult to 
cross--areas where the Border Patrol presumably has a tactical 
advantage. The operation has had the effect of moving the flow 
of illegal alien traffic eastward, away from San Diego, 
Imperial Beach and Chula Vista to Brown Field and beyond 
eastern San Diego County.
    A key objective of Operation Gatekeeper is providing a 
deterrent to illegal aliens crossing the United States-Mexico 
border. Accordingly, a measure of the operation's success is 
the number of individuals apprehended for illegally crossing 
the border. The fewer people caught, it is argued, the more 
successful the operation, since its aim is to reduce the number 
of illegal aliens arrested in the areas targeted by the 
initiative by deterring their crossings. Figures provided by 
the Immigration and Naturalization Service show reductions in 
the number of apprehensions in the southwest border region. 
Arrests in Imperial Beach have fallen to approximately 60,000 
for the first 9 months of the current fiscal year versus 84,000 
for the same period during the previous year. Arrests in Chula 
Vista have dropped from 105,159 to 91,987 during the same 
period. Arrests in Brown Field dropped from 109,141 to 94,206 
during that time.
    The subcommittee investigated allegations made by agents of 
the Border Patrol that the reported drop in arrests was due to 
falsification of the reports by officials within the Border 
Patrol. At a hearing before the California State Assembly 
Subcommittee on Border Crime, T.J. Bonner, president of the 
National Border Patrol Council testified that the Border Patrol 
has: ``[E]ngaged in a comprehensive campaign of deception 
regarding the effectiveness of Operation Gatekeeper. In its 
zeal to make good on its promise to replicate the reduction in 
arrests that occurred in El Paso, the Border Patrol encouraged 
and ordered agents to create the appearance that illegal 
entries had declined dramatically in the westernmost fourteen 
miles of the border.'' Mr. Bonner made a number of specific 
allegations about the effectiveness of the operation.
    In his opening statement, subcommittee Chairman Horn 
questioned the use of the apprehension rate as a gauge to 
assess the effectiveness of Operation Gatekeeper. He further 
noted the concerns of residents in areas where the traffic flow 
of illegal aliens has increased due to the operation. T.J. 
Bonner testified that: ``[T]he Border Patrol has engaged in a 
comprehensive campaign of deception regarding the effectiveness 
of Operation Gatekeeper . . . Encourag[ing] and order[ing] 
agents to create the appearance that illegal entries had 
declined dramatically . . .'' He stated that Border Patrol 
agents were ordered to remain in stationary positions and not 
to leave their locations even if illegal aliens crossed on 
either side of their stations. They were chastised and 
threatened with disciplinary action when they arrested illegal 
aliens. Illegal aliens were turned back without arresting them, 
and in other instances, the apprehensions were not recorded or 
reported. In addition, he testified that the Border Patrol 
altered the location for returning illegal aliens to Mexico by 
sending them hundreds of miles away from the San Diego area. 
This was done, Bonner noted, to ensure that if the illegal 
aliens attempted another crossing, the flow would not be felt 
in the area covered by Operation Gatekeeper. ``The result of 
all of these actions was an artificial decrease in the number 
of apprehensions'' stated Bonner.
    Mr. Bonner was joined by a Border Patrol agent whose 
identity was shielded by the subcommittee from disclosure. This 
was done at the agent's request for fear that if his identity 
was known to his supervisors at the Border Patrol, reprisals 
would occur against him for speaking publicly about allegations 
about the operation. His testimony supported the allegations 
raised in Mr. Bonner's statement. He added that quotas were set 
to limit the number of apprehensions, and noted that he 
witnessed the falsification of official reports on the number 
of illegal aliens stopped. In response to a question from 
subcommittee Chairman Horn, the agent noted that the order to 
manipulate data came from Johnny Williams, Chief of the Border 
Patrol's San Diego sector.
    b. Benefits.--The testimony received during this hearing 
enabled members of the subcommittee to hear firsthand the 
impact of Operation Gatekeeper. The testimony leads to the 
conclusion that Operation Gatekeeper is not a complete success; 
it has had limited success in slowing the entry of illegal 
aliens in a few miles of the border. The subcommittee will 
continue its oversight of this initiative due to the findings 
from the hearing.
    c. Hearings.--On August 9, 1996, the subcommittee held a 
field hearing on ``U.S. Border Patrol Implementation of 
Operation Gatekeeper.''

29. Oversight of the Smithsonian Institution.

    a. Summary.--The subcommittee convened an oversight hearing 
with the Committee on House Oversight to review security and 
procurement procedures of the Smithsonian. The subcommittees 
heard testimony from I. Michael Heyman, secretary of the 
Smithsonian Institution; Tom Blair, Inspector General of the 
Smithsonian Institution, and Bill Gadsby, Director of 
Governmental Business Operations, General Accounting Office.
    The Smithsonian entered into a contract with Hughes 
Aircraft Company to develop and build the Smithsonian 
Institution Proprietary Security System (SIPPS). It took 12 
years to complete from the initial award of the contract. The 
SIPPS was handled in two phases. In spite of the facts that 
there were significant problems with phase I of the project, 
the Smithsonian proceeded with phase II. The SIPPS was a 
complete failure, in that it was unable to protect the 
collections of the Smithsonian. The procurement and the 
performance of SIPPS was reviewed by Inspector General Blair 
who recommended changes in the procurement system.
    Secretary Heyman was in agreement with Mr. Blair regarding 
the procurement practices of the Smithsonian as they relate to 
the procurement of SIPPS. However, it was noted, many of the 
problems that existed during the initial SIPPS procurement have 
since been corrected. In addition, Secretary Heyman testified 
that during the 150th anniversary year of the Smithsonian, it 
has embarked on a program to enhance public exposure, 
accessibility and education. One of the ways in which the 
Smithsonian increased accessibility was to bring collections 
and collective experts on-line.
    b. Benefits.--This oversight hearing was the first in many 
years. This was an opportunity for the subcommittee to exercise 
its oversight authority over the Smithsonian.
    c. Hearings.--The subcommittee held an oversight hearing on 
September 25, 1996 on the Smithsonian Institution. The hearing 
was held jointly with the House Oversight Committee.

      HUMAN RESOURCES AND INTERGOVERNMENTAL RELATIONS SUBCOMMITTEE

1. Efforts To Reorganize and Improve Program Performance and Efficiency 
        at the U.S. Department of Housing and Urban Development (HUD).

    a. Summary.--The Human Resources and Intergovernmental 
Relations Subcommittee reviewed budget data, National 
Performance Review recommendations, Inspector General audits 
and reports, and General Accounting Office studies and 
recommendations to identify opportunities for cost savings, 
improved efficiency and consolidations in the programs and 
operations of the Department of Housing and Urban Development 
(HUD).
    The subcommittee convened two oversight hearings with 
respect to the agency. On February 13, 1995, the subcommittee 
invited the HUD Secretary Henry Cisneros to testify about the 
agency's core mission, management, plans, programs, and 
potential cost savings. The Secretary was also asked to discuss 
successes and challenges facing HUD in meeting its core 
mission. Secretary Cisneros spoke about HUD's Blueprint for 
Reinvention which focuses on the consolidation of several 
programs, the Department's efforts to transform the Federal 
Housing Administration (FHA) ``from a government bureau to a 
government corporation,'' and the agency's sweeping efforts to 
transform public housing throughout the country. Subcommittee 
Chairman Shays congratulated Secretary Cisneros on the agency's 
efforts to reorganize into a ``leaner and more efficient'' 
agency.
    On February 22, 1995, the subcommittee held a second 
hearing to receive information from HUD's Inspector General 
(IG); the Director of Housing and Community Development Issues 
of the U.S. General Accounting Office (GAO); a senior fellow 
from the Hudson Institute; a former chairman of the Chicago 
Housing Authority and president of American Community Housing 
Associates; a private organization; and the founder of the 
National Low Income Housing Coalition.
    b. Benefits.--American taxpayers and public housing 
residents, in particular, benefit from administrative savings, 
greater flexibility, and more effective concentration of 
limited HUD resources. The hearings demonstrated that there are 
opportunities at HUD for cost reduction, improved efficiency 
and reform and allowed HUD officials, former HUD officials, and 
other Federal and private officials the opportunity to come 
together to discuss what HUD is doing right as well as what the 
agency might be doing wrong.
    c. Hearings.--Hearings entitled ``Oversight Hearing on the 
Department of Housing and Urban Development'' were held on 
February 13 and 22, 1995.

2. Efforts To Improve Program Performance and Efficiency at the U.S. 
        Department of Health and Human Services (HHS).

    a. Summary.--The subcommittee reviewed budget data, 
National Performance Review recommendations, Inspector General 
audits and reports, and General Accounting Office studies and 
recommendations to identify opportunities for cost savings, 
improved efficiency and consolidations in the programs and 
operations of the Department of Health and Human Services 
(HHS).
    On March 1, 1995, the subcommittee convened an oversight 
hearing to receive testimony from HHS Secretary Donna E. 
Shalala. The Secretary was invited to discuss the agency's core 
mission, goals, programs, and plans for cost saving; to 
indicate what HHS does well and describe what HHS programs 
could possibly be better done by the States and localities; and 
to address agency efforts to move Medicare and Medicaid into 
managed care systems.
    Secretary Shalala testified about HHS efforts to reinvent 
the agency, and indicated that she continually asks the 
following questions with respect to the duties and 
responsibilities of HHS: Are the programs or functions critical 
to the agency's mission and based on customer input? Can the 
program or the function be done as well or better at the State 
or local level? Is there a way to cut cost or improve 
performance by introducing competition? Can the program be 
improved by putting customers first, cutting red tape, and 
empowering employees?
    On March 22, 1995, the subcommittee convened a second 
oversight hearing to receive testimony from public and private 
sector witnesses, as well as testimony from the U.S. General 
Accounting Office (GAO), HHS's Office of Inspector General 
(OIG), and representatives from the Heritage Foundation and 
Project HOPE.
    GAO and OIG officials focused on the critical area of 
losses due to waste, fraud and abuse in the Medicare and 
Medicaid programs. Losses in national health care spending are 
estimated by the GAO to be as high as 10 percent of total 
spending. If these estimates are correct, losses due to waste, 
fraud and abuse in Medicare and Medicaid in fiscal year 95 
could be in excess of $24 billion.
    b. Benefits.--Every American taxpayer benefits from a 
Federal health care and human services delivery system operated 
in the least costly manner with the needs of the customer given 
great weight in the decisionmaking processes. The subcommittee 
will continue to monitor waste, fraud and abuse in Medicare and 
Medicaid programs. Recommendations made by the GAO, OIG and 
others in the course of this hearing to reduce staggering and 
unacceptable losses will be carefully examined and monitored.
    c. Hearings.--Hearings entitled ``Oversight Hearing on 
Department of Health and Human Services'' were held on March 1 
and 22, 1995.

3. Efforts To Reorganize and Improve Program Performance and Efficiency 
        at the U.S. Department of Labor (DOL).

    a. Summary.--The subcommittee reviewed budget data, 
National Performance Review recommendations, Inspector General 
audits and reports, and General Accounting Office studies and 
recommendations to identify opportunities for cost savings, 
improved efficiency and consolidations in the programs and 
operations of the Department of Labor (DOL).
    On March 9, 1995, the subcommittee convened an oversight 
hearing, DOL Secretary Robert B. Reich was asked to address 
what DOL does well and to describe particular situations that 
the agency was finding challenging in the accomplishment of its 
core mission, goals, programs, and plans for cost saving. 
Secretary Reich was questioned about Representative Steven 
Gunderson's (IR-WI) proposal to combine the Departments of 
Education and Labor. The Secretary disagreed with the proposal, 
claiming that each agency has its own specialized and distinct 
function.
    Secretary Reich presented charts that showed the decline of 
real wages for middle and lower income workers. The Secretary 
advocated raising the minimum wage and increasing the level of 
job training, which he defined as ``any vocational course of 
instruction, directly related to gaining job skills, outside of 
a formal degree program.'' The Secretary also testified about 
efforts to consolidate job training programs and the agency's 
plans regarding downsizing.
    On April 4, 1995, the subcommittee convened a second 
oversight hearing to identify other opportunities for cost 
reduction, increased efficiency and reform in the $33.8 billion 
Labor Department budget. Testimony was received from the U.S. 
General Accounting Office (GAO), DOL's Office of Inspector 
General (OIG), and a representative from the Urban Institute. 
The GAO and OIG officials focused on consolidation and 
termination of overlapping job training programs. The GAO told 
the subcommittee that the Federal Government runs 163 job 
training programs administered by 15 agencies. Secretary Reich 
of DOL has proposed to consolidate 70 education and training 
programs. Urban Institute officials testified about potential 
administrative cost savings from Federal program consolidations 
and about administrative savings that might be expected from 
various program consolidation models.
    b. Benefits.--The hearings provided an overview of the 
policy issues presented by current DOL programs, particularly 
as the issues relate to opportunities for consolidations and 
terminations of ineffective and/or duplicative programs.
    c. Hearings.--Hearings entitled ``Oversight Hearing on 
Department of Labor'' were held on March 9 and April 4, 1995.

4. Efforts To Reorganize and Improve Program Performance and Efficiency 
        at the U.S. Department of Education (DOED).

    a. Summary.--The subcommittee reviewed budget data, 
National Performance Review recommendations, Inspector General 
audits and reports, and General Accounting Office studies and 
recommendations to identify opportunities for cost savings, 
improved efficiency and consolidations in the programs and 
operations of the Department of Education (DOED).
    On March 13, 1995, the subcommittee convened a hearing to 
allow DOED Secretary Richard Riley to discuss the agency's core 
mission, goals, programs, and plans for cost savings. 
Subcommittee Chairman Shays opened the hearing by mentioning 
the States' role in education and indicated his wish to 
understand the changes taking place in the Department of 
Education, especially in light of proposals to merge the 
Departments of Labor and Education.
    Secretary Richard Riley testified about the new and 
controversial direct student loan program, training program 
consolidations, and problems the agency had with block 
granting. Secretary Riley also indicated that he did not agree 
that combining the Departments of Labor and Education would 
help to save money since the DOED was already consolidating 
programs.
    Deputy Secretary of Education Madeleine Kunin testified 
that DOED had made significant managerial and attitudinal 
changes that she believed would break down agency bureaucracy 
and bring the DOED's philosophy in line with budget 
constraints.
    On April 6, 1995, the subcommittee convened a second 
oversight hearing to discuss whether significant cost savings 
could be achieved through a consolidation or elimination of 
duplicative programs and improved efficiencies in DOED program 
administration. Testimony was received from: the public and 
private sectors; DOED's Office of Inspector General (OIG); the 
U.S. General Accounting Office (GAO); and a former DOED 
Assistant Secretary for Management and Budget.
    GAO testified that according to Office of Management and 
Budget data, fiscal year 95 spending on education is estimated 
to be $70 billion. DOED spends less than half, $33.4 billion or 
47 percent of the total. The Department of Labor spends $5.5 
billion, or 7.9 percent of the total. Other Federal agencies 
also manage numerous education-related programs, including the 
Department of Health and Human Services with 129 programs, the 
National Endowment for the Arts and Humanities with 27, and the 
Department of Agriculture with 26. The OIG testified that, 
since 1965, the Federal Family Education Loan program has 
suffered $57 billion in defaults, with $4.7 billion in 1993 
alone.
    b. Benefits.--The hearings provided subcommittee oversight 
of DOED, its core missions, goals, and efforts to downsize and 
consolidate training and other programs. The hearings also 
produced information on the potential and the limitations of 
program consolidations in education and training.
    c. Hearings.--Hearings entitled ``Oversight Hearing on 
Department of Education'' were held on March 13 and April 6, 
1995.

5. Efforts To Reorganize and Improve Program Performance and Efficiency 
        at the U.S. Department of Veterans Affairs (VA).

    a. Summary.--The subcommittee reviewed budget data, 
National Performance Review recommendations, Inspector General 
audits and reports, and General Accounting Office studies and 
recommendations to identify opportunities for cost savings, 
improved efficiency and consolidations in the programs and 
operations of the Department of Veterans Affairs (VA).
    On March 13, 1995, the subcommittee convened a hearing to 
allow VA Secretary Jesse Brown to discuss the agency's core 
mission, goals, programs and plans for cost savings. Secretary 
Brown was asked to testify about successes and challenges at 
the VA and about agency efforts to reform the VA's vast health 
care system. The Secretary testified that the agency's biggest 
success so far had been evidenced in its ability to respond 
more quickly to the needs of veterans. Secretary Brown also 
discussed VA's continuing efforts to help veterans from the 
Persian Gulf War, addressed questions relating to VA hospital 
utilization rates and the accessibility of health services to 
veterans.
    On May 9, 1995, the subcommittee convened a second 
oversight hearing to identify opportunities for improved 
efficiency and management reforms in the $38.2 billion VA. 
Testimony was received from the U.S. General Accounting Office 
(GAO), the VA's Office of Inspector General (IG), and from 
representatives of veterans organizations.
    The subcommittee also probed the views of the witnesses on 
VA's plans for reorganizing hospital and medical facilities. 
Subcommittee Chairman Shays requested comments about plans to 
improve the efficiency and quality of the VA's health care 
service, and asked the witnesses for their views about how to 
raise the level of management coordination and accountability 
in VA programs and operations.
    b. Benefits.--The VA health system is the largest centrally 
managed health care delivery system in the Nation. Veterans and 
every American taxpayer will benefit from cost effective VA 
programs and services. If the VA health care system is to 
remain viable, it must fundamentally change its approach to 
providing care. The need for structural change is acute. By 
holding these hearings, the subcommittee has benefited the 
system by demonstrating congressional concern that the VA adapt 
its health care delivery system to meet the changing demands of 
the health care marketplace.
    c. Hearings.--Hearings entitled ``Oversight Hearing on 
Department of Veterans Affairs'' were held on March 13 and May 
9, 1995.

6. Examination of Programs and Operations of the Corporation for 
        National and Community Service.

    a. Summary.--On April 25, 1995, the subcommittee directed 
an inquiry to the Corporation for National and Community 
Service (Corporation) regarding the agency's AmeriCorps 
program. The inquiry requested information on the per-
participant costs of the program, the quality and performance 
standards applied to AmeriCorps grant applications and 
programs, the amount of training received by AmeriCorps 
participants and information on any AmeriCorps programs that 
did not involve AmeriCorps participants.
    On May 4, 1995, the Corporation responded to the 
subcommittee's inquiry. The Corporation reported per 
participant costs to be $17,600 for full time members. They 
noted this figure was subject to change if their original 
fiscal year 95 funding levels were rescinded. The Corporation 
also provided a breakdown of the per-participant costs 
indicating the percent of costs devoted to educational awards, 
stipends, travel, training and benefits. Part-time participants 
were reported to have a cost of $8,800. Again, this figure 
would also be subject to change if the fiscal year 95 
appropriations if rescissions were passed by Congress for that 
fiscal year.
    The Corporation also outlined the selection criteria 
applied in the agency's evaluation of AmeriCorps program 
applications. The criteria were set out under the headings of: 
quality, sustainability, innovation, replicability and special 
considerations (such as geographic diversity and start dates). 
The Corporation further outlined the quality standards used at 
both Federal and State levels in selecting grantees. These 
standards are printed in the AmeriCorps grant application and 
are reflected in the Corporation's ``Principles for High 
Quality National Service Programs'' which include: strong 
organization, excellent service projects, evaluation, 
participant experience, community partnerships and diversity.
    The Corporation also reported that the programs were made 
subject to several levels of performance reviews conducted by 
State commissions, national parent organizations, Corporation 
staff and impartial national evaluators. According to the 
Corporation, performance reviews include quarterly report 
forms, financial status reports, site visits, and independent 
evaluations. The Corporation stated that the performance 
results are taken into consideration during the grant renewal 
decisionmaking process.
    In the response, the Corporation also described the 
statutorily mandated ``planning grants'' that make up 1.5 
percent of their grant budgets. Planning grants, such as one 
awarded to the Northeastern University's Center for the Study 
of Sports in Society, must be used for activities such as: site 
selection, anticipating roadblocks, studying other AmeriCorps 
programs, creating partnerships with businesses, non-profits, 
police and school districts. The Corporation disputed 
allegations that planning grants are used to help organizations 
write grant applications.
    The Corporation response indicated that AmeriCorps 
participants must devote at least 80 percent of their hours to 
direct service, with no more than 20 percent going to 
education, training or community building activities during a 
full-time or reduced term of service. The education or training 
activities may include preparation for the GED.
    To address questions raised by the Corporation response, 
the subcommittee convened an oversight hearing to examine the 
programs and operations of the Corporation for National and 
Community Service. Testimony was received from Corporation 
Chief Executive Officer Eli Segal, along with representatives 
from AmeriCorps program sponsors, participants and critics of 
the Corporation.
    This was the first oversight hearing on the Corporation 
since its creation in 1993, with the passage of the National 
and Community Service Trust Act (Public Law 103-82). The act 
consolidated responsibility for a number of community service 
programs, including AmeriCorps, Volunteers in Service to 
America (VISTA), the National Civilian Community Corps, Serve-
America, and the Retired Senior Volunteer Program (RSVP).
    b. Benefits.--The subcommittee hearing provided a balanced 
discussion of the costs and benefits of the national service 
programs which became operational under the Corporation 
umbrella in 1993.
    c. Hearings.--A hearing entitled ``Oversight Hearing on the 
Corporation for National and Community Service'' was held on 
May 18, 1995.

7. Revelations of Medicaid Fraud and Scams.

    a. Summary.--In 1992, the House Government Operations 
Committee issued a report concluding that waste, fraud and 
abuse ``cost the government $300 billion in recent years.'' 
\20\ The report added, ``Government waste has not only bilked 
the taxpayer of billions of dollars, but it has created a 
public cynicism about government at a time when effective 
government is needed the most.'' After having received 
testimony from the Secretaries of five cabinet departments, the 
Human Resources and Intergovernmental Relations Subcommittee 
convened an oversight hearing in order to seek the perspectives 
and recommendations of commentators and investigators from 
outside the government on ways to identify and reduce waste, 
fraud and abuse in these departments. Testimony was received 
from: Thomas Schatz, president of Citizens Against Government 
Waste; Martin Gross, an author and commentator; James Bovard, 
journalist and author; and Dr. Ronald Walters, chairman of the 
political science department of Howard University.
---------------------------------------------------------------------------
    \20\ ``Managing the Federal Government: A Decade of Decline,'' 
December 1992, Majority Staff Report to the Committee on Government 
Operations.
---------------------------------------------------------------------------
    Mr. Schatz testified about the Departments of Education and 
Veterans Affairs. He discussed collection problems in Student 
Financial Aid Programs, which he believes should be 
unsubsidized and administered by the Treasury Department. He 
testified that he believes that the VA frequently overpays 
pension and compensation benefits and suggested forms of data 
collection that he believes would fix problems of overpayment.
    Mr. Gross testified about the Department of Health and 
Human Services. He believes that to prevent the insolvency of 
the Social Security system, the retirement age should be raised 
to 70 years. Mr. Gross also discussed his views regarding how 
Medicare and Medicaid could be run more efficiently.
    Mr. Bovard discussed problems in the Section 8 housing 
system. He cited several examples of incidences where he 
belived that the government was paying for expensive housing 
for the poor, and argued that Section 8 projects are linked to 
many inner city problems.
    Mr. Kennedy testified about his experience of going 
undercover for 2 months on the streets of New York City to 
expose scam artists--doctors, pharmacists and black 
marketeers--who he says rip off the Medicaid program in New 
York State for hundreds of millions of dollars. Mr. Kennedy 
said that he was able to ``easily rent Medicaid cards'' from 
unscrupulous people on the street and use the cards to obtain 
thousands of dollars ``in unneeded tests, exams and services--
all at taxpayer expense.'' Mr. Kennedy further testified that 
``after 30 years of existence, Medicaid has failed to require 
ID photos or any other descriptive information on its cards, 
allowing thousands of unscrupulous recipients to barter their 
cards for quick cash or drugs.''
    Dr. Walters lauded the efforts of the administration's 
Reinventing Government initiative, and voiced concern about the 
counterproductive outcomes of dismantling programs too quickly 
or ill-advisely. Dr. Walters contended that the reason many of 
the poverty programs do not work is because their operating 
costs are under funded. Dr. Walters testified about his fear 
that with further budget cuts to poverty programs and an 
increasing number of people entering poverty, that the 
situation would simply get worse.
    b. Benefits.--It is the view of subcommittee Chairman Shays 
that ``Even if it were possible to eliminate all losses to 
waste, fraud and abuse, the savings would still not balance the 
budget. However, Congressional action to produce a major 
reduction in losses would go a long was toward restoring public 
confidence in government.
    c. Hearings.--A hearing entitled ``Waste in Human Service 
Programs: Other Perspectives'' was held on May 23, 1995.

8. Fraud and Abuse in Medicare and Medicaid.

    a. Summary.--Pursuing oversight issues identified in 
previous general oversight hearings, the subcommittee requested 
information from the Health Care Finance Administration (HCFA), 
the HHS Inspector General and others concerning providers who 
defraud the programs but continue to bill Medicare and 
Medicaid. The effectiveness of legal and administrative 
sanctions against abusive providers, and management controls 
over provider access to Federal health care programs were 
examined. In particular, the subcommittee focused on whether 
more could be done to keep fraudulent providers out of those 
important government programs.
    Testimony was received from: the Administrator as well as 
the Senior Advisor for Program Integrity of the Health Care 
Financing Administration; the HHS Inspector General; the 
Special Counsel for Financial Institutional Fraud of the U.S. 
Department of Justice; the Assistant Director of the Agency for 
Health Care Administration for the State of Florida; and the 
executive director of the National Health Care Anti-Fraud 
Association.
    Federal health care programs will cost $262 billion this 
year. According to the GAO, up to 10 percent of health care 
spending is lost to fraud and abuse. That means Medicare and 
Medicaid losses are perhaps as much as $26 billion, or $71 
million each day!
    b. Benefits.--Losses of this magnitude pose a real threat 
to the solvency of Federal health care programs. The 
subcommittee learned of the limited impact of penalties--such 
as suspension or debarment--that can now be imposed on 
providers who are consistently abusive, or are indicted or 
convicted of defrauding the Government's health care systems.
    c. Hearings.--A hearing entitled ``Keeping Fraudulent 
Providers Out of Medicare and Medicaid'' was held on June 15, 
1995.

9. Lengthy FDA Delays in Reviewing Food Additive Petitions.

    a. Summary.--This hearing was the first oversight hearing 
on the FDA's management of this premarket review program since 
enactment of the food additive amendments of 1958. As 
subcommittee Chairman Shays noted, a serious look at how the 
FDA handles its responsibilities was long overdue. Thus, the 
subcommittee convened an oversight hearing on this subject to 
span a 2 day period, June 22 and 29, 1995, where testimony was 
received from representatives of the FDA; the Grocery 
Manufacturers of America; National Food Processors Association; 
the University of Texas Graduate School of Biomedical Sciences; 
the Institute of Food Technologists; the National Academy of 
Sciences' Food Forum; the Calorie Control Council, the center 
for Science in the Public Interest and the Federation of 
American Societies of Experimental Biology and from others.
    Under the Food Drug and Cosmetic Act, the FDA has up to 180 
days to review and act on food additive petitions. The FDA has 
a backlog of 295 food additive petitions under review. Among 
the backlog of pending food additive petitions, 66 percent have 
been pending since 1990, 27 percent since the 1980's, and 7 
percent since the 1970's. More than 100 new petitions are 
submitted each year to the FDA. Food additives affect the 
characteristics of food. They are commonly used to impart or 
maintain consistency, nutrition, texture, flavor, color or 
wholesomeness.
    b. Benefits.--The delays in the current food additive 
petition review process impede food technology research and 
delay benefits to the consumer. By convening these hearings, 
the subcommittee sought to identify the causes of and solutions 
to these lengthy FDA delays. According to subcommittee Chairman 
Shays, from a public health standpoint, the public wants 
minimum risk in food additives, but also wants the benefits of 
the same nutritional and dietary advances available to 
consumers in other nations. The current FDA review process 
appears to allow endless studies with no definite deadlines for 
action. The subcommittee will continue to explore the issue of 
whether the delays are caused by bad management, inadequate 
resources or a lack of confidence by the FDA in the agency's 
scientific personnel who review food additive petitions.
    Based on these subcommittee oversight hearings, the 
committee adopted its fourth report to the 104th Congress on 
December 14, 1995, entitled ``The FDA Food Additive Review 
Process: Backlog and Failure to Observe Statutory Deadline,'' 
House Report No. 104-436, December 21, 1995, Fourth Report by 
the Committee on Government Reform and Oversight, Together with 
Additional Views.
    c. Hearings.--Hearings entitled ``Delays in the FDA's Food 
Additive Petition Process and GRAS Affirmation Process'' were 
held on June 22 and 29, 1995.

10. Bringing Health and Support Services to Women, Minorities and 
        Adolescents--Growing Segments of the AIDS Population.

    a. Summary.--On July 17, 1995, the subcommittee convened a 
field hearing held in Brooklyn, NY, to examine how the U.S. 
Department of Health and Human Services (HHS) and local health 
care providers are preparing to bring health and support 
services to women, minorities and adolescents--growing segments 
of the AIDS population. Testimony was received from: 
representatives from Deputy Inspector General for Evaluations 
and Inspections, HHS; the Associate Director of Health Policy 
of the U.S. General Accounting Office; the Director of the 
Office of HIV/AIDS Policy, Assistant Secretary of Health, HHS; 
the acting commissioner of health, New York City department of 
health; the director of the AIDS Institute of the New York 
State Title II grantee; the AIDS program coordinator of the 
Stamford department of health of the Connecticut Title II 
grantee; the vice president of institutional advancement of the 
Brooklyn and Caledonian Hospitals; the executive director of 
Brooklyn Housing Works; the chairman of the Stewart B. McKinney 
Foundation; a board member of the LAMBDA Independent Democrats; 
Senator Velmanette Montgomery, New York State Senator, 18th 
Senate District in Brooklyn, NY; and the executive director of 
the Corporation for Supportive Housing.
    The subcommittee found that, in 1993 and 1994, over one-
half of the newly reported AIDS cases were in minority groups. 
The United States has also seen a 17 percent yearly increase in 
the number of women infected with AIDS. Fifty-four percent of 
those women are between the ages of 13-19. HHS provides funding 
to local service providers through the Ryan White CARE Act, 
administered by the Health Resources and Services 
Administration (HRSA). In fiscal year 95, HRSA will provide 
$633 million in Ryan White CARE Act funds.
    b. Benefits.--By holding the oversight hearing, the 
subcommittee acknowledged the importance of slowing the spread 
of AIDS and provided an opportunity for members to discuss how 
available Federal funding can be effectively utilized to meet 
the needs of the changing AIDS population.
    c. Hearings.--A hearing entitled ``AIDS in the 90's: 
Service Delivery to Emerging Populations (Field Hearing)'' was 
held on July 17, 1995.

11. Debating and Defining Federalism--the Sharing of Power Between the 
        Federal Government and the States.

    a. Summary.--The subcommittee is charged under the Rules of 
the House with the responsibility of studying the 
intergovernmental relationships between the United States and 
the States and municipalities. Pursuant to this authority, the 
subcommittee convened this oversight hearing in the form of a 
debate regarding what principles should guide Congress in 
balancing the relationship between the national government and 
the States, counties, cities and towns. This debate, 
essentially, a discussion of the meaning of federalism--the 
unique system of shared sovereignty that unites the States into 
one Nation--was actually launched by the ratification of the 
Constitution, waged fiercely in the Civil War, reshaped by the 
exigencies of the Depression and a World War.
    Testimony at the hearing was received from: the director of 
State-Federal relations of the National Governors Association; 
a former regional EPA Administrator; an author and director for 
the center for american political studies at Harvard 
University; the director of the Center on Budget and Budget 
Policy Priorities; a senior fellow from the Progressive Policy 
Institute; a commissioner from the Advisory Commission on 
Intergovernmental Affairs; the director for the center for 
constitutional studies from the CATO Institute; and the 
director for the Governors' forum for the Heritage Foundation.
    Today, it is hardly debatable that modern federalism is 
entirely out of balance. Federal powers and programs occupy, 
and in many cases, pre-empt, virtually every area of public 
concern. As subcommittee Chairman Shays explained, the legacy 
of the conflict between States' rights and civil rights 
continues to haunt efforts to empower State government. Any 
``new federalism'' will have to overcome that historical 
barrier and reassure all Americans that States can do what 
needs to be done more effectively, more efficiency and more 
fairly than a top-heavy, one-size-fits-all Federal bureaucracy.
    b. Benefits.--The great national debate over the proper 
distribution of the people's sovereign powers has raged since 
the Founders wrote the Constitution. Today, as Congress moves 
to implement a smaller Federal Government, it is beneficial to 
continue that discourse over the responsibility and capacity of 
each level of government to perform essential public functions.
    c. Hearings.--A hearing entitled ``Federalism Debate: Why 
Doesn't Washington Trust the States?'' was held on July 20, 
1995.

12. Joint Hearing on the FDA Regulation of Medical Devices, Including 
        Silicone Gel Breast Implants.

    a. Summary.--Continuing oversight conducted in previous 
Congresses, the Human Resources and Intergovernmental Relations 
Subcommittee and the National Economic Growth, Natural 
Resources, and Regulatory Affairs Subcommittee investigated 
FDA's approval process and enforcement standards for medical 
devices, including silicone gel breast implants.
    The subcommittees reviewed scientific and medical 
literature on so-called ``silicone diseases,'' requested 
extensive documents from the FDA on device review and 
enforcement policies and interviewed physicians, researchers 
and patients. These inquiries explored how the FDA, doctors and 
scientists assess the risks of silicone and other materials 
used in medical devices.
    The subcommittees inquired how the FDA establishes 
enforcement standards for medical device regulations, how 
consistently those standards are enforced, and the appearance 
of arbitrary or selective enforcement practices. In addition, 
the subcommittees also explored formal and informal procedures 
used by the FDA to promulgate enforcement standards.
    Pursuant to the results of these inquiries, both 
subcommittees became concerned that the FDA's evaluation 
standards and enforcement procedures for medical devices may 
create product shortages and inhibit innovation and technical 
advances. In order to explore these issues further, the 
subcommittees convened two oversight hearings.
    At the first hearing, testimony was received from: Hon. 
Marilyn Lloyd, a former Member of Congress; Hon. James A. 
Traficant, Jr. (D-OH), a Member of Congress; Hon. Greg Ganske, 
M.D. (R-IA), a Member of Congress; the Commissioner of the FDA; 
the Director for the Center for Devices and Radiological Health 
from the FDA; the chief medical officer from Vanderbilt 
University Medical Center; an official from the department of 
pathology from the University of Tennessee in Memphis; an 
associate professor of medicine and epidemiology at the Mayo 
Clinic; an official from the department of gynecology and 
obstetrics from Emory University; medical device patients; 
device industry representatives; clinicians; and scientists.
    At the second hearing, testimony was received from the FDA 
Deputy Commissioner, device industry representatives, and 
device manufacturers. The witnesses testified about the 
development and promulgation of FDA standards used in 
enforcement of statutes and regulations governing the 
manufacture and distribution of medical devices.
    b. Benefits.--The investigation updated the status of FDA 
review of silicone gel breast implants and the impact of that 
protracted review on the development and availability of other 
life-sustaining devices containing silicones. In addition, 
there is a great need for the American public to know that 
there is an open and predictable FDA process for promulgating 
enforcement guidance. As a result of these hearings, the FDA 
committed to more timely device review and a more open process 
for the development and issuance of guidance.
    c. Hearings.--A hearing entitled ``FDA Regulation of 
Medical Devices (Joint Hearing)'' was held on August 1, 1995. A 
hearing entitled ``FDA Enforcement Standards for Medical 
Devices (Joint Hearing)'' was held on September 14, 1995.

13. Federal Takeover of the Chicago Housing Authority.

    a. Summary.--The subcommittee convened an oversight 
investigation into the Federal takeover of the Chicago Housing 
Authority (CHA) after Congresswoman Cardiss Collins, ranking 
member of the Government Reform and Oversight Committee (D-IL), 
submitted a request to Committee Chairman William F. Clinger, 
Jr., (R-PA) on June 1, 1995, that hearings be conducted in 
Chicago on the role of U.S. Department of Housing and Urban 
Development (HUD) in the operation of the CHA.
    On May 30, 1995, HUD assumed control over the day to day 
operations of the ``troubled'' CHA. A declared breach of 
contract between CHA and HUD signed by HUD Secretary Henry 
Cisneros on June 2, 1995, made the takeover legally effective. 
Executed in the wake of the resignation of CHA's Board of 
Commissioners on May 26, 1995, the takeover was an 
unprecedented HUD action. Although HUD has authority to 
intervene in troubled housing agency operations at any time, 
HUD has never assumed responsibility for the day to day 
operations of a housing agency the size of CHA.
    CHA is the Nation's third largest public housing authority 
(PHA), surpassed in size only by those of Puerto Rico and New 
York city. CHA was created in 1937 by a resolution of the city 
of Chicago pursuant to the Housing Authorities Act of the State 
of Illinois, and administers over 55,000 public and assisted 
housing units serving over 150,000 residents.
    The socio-economic status of the resident population of CHA 
creates particular challenges for the housing authority. Eleven 
of the 15 poorest neighborhoods in the Nation are located in 
CHA communities.
    CHA is plagued by a poorly conceived and distressed housing 
stock, an acutely poor resident population and a historically 
mismanaged administrative bureaucracy. HUD's ability to carry 
out the CHA takeover effectively has immediate impact on the 
people of Chicago and broad implications for the 86 other 
housing agencies presently listed as ``troubled'' by HUD. The 
subcommittee's hearing focused on HUD's progress at CHA since 
the May 30 takeover, the department's short and long term 
strategies for reforming CHA and HUD's plans for installing new 
leadership and management at the housing authority. At the 
hearing, testimony was received from Hon. Henry Cisneros, 
Secretary of HUD and other HUD officials; the U.S. General 
Accounting Office; panels of tenants; public housing management 
experts and city and private sector representatives.
    b. Benefits.--Although HUD has not yet articulated a long 
term plan to reform CHA and to extricate itself from CHA 
management, if the takeover sets CHA on a course for recovery, 
HUD's assumption of control of CHA operations may be validated 
as an acceptable model of intervention at troubled housing 
agencies.
    In addition, based on this and the subcommittee's two other 
oversight hearings of HUD (on February 13 and 22, 1995), the 
committee adopted its fifth report to the 104th Congress on 
December 14, 1995 entitled ``The Federal Takeover of the 
Chicago Housing Authority--HUD Needs to Determine Long-Term 
Implications,'' House Report No. 104-437, December 21, 1995, 
Fifth Report by the Committee on Government Reform and 
Oversight, Together with Additional Views. (See II.A.2.)
    c. Hearings.--A hearing entitled ``HUD's Takeover of the 
Chicago Housing Authority (Field Hearing)'' was held on 
September 5, 1995.

14. Management of Threats to the Nation's Blood Supply.

    a. Summary.--After infection with the HIV virus, there is a 
period of time known as a ``window'' in which infection may be 
present but antibodies to the virus have not been produced in 
sufficient quantity for detection. This window can last up to 6 
months in some individuals, but is usually about 20 days. 
However, antigens appear and can be detected sooner than 
antibodies, reducing the window by 10 days or more.
    Subcommittee investigation discovered that on June 23, 
1995, the FDA's Blood Products Advisory Committee (BPAC) 
recommended against routine HIV-1 antigen screening of blood 
donor units. On July 12, subcommittee Chairman Shays wrote to 
FDA Commissioner David Kessler urging him not to accept the 
BPAC's decision and to approve the immediate licensing of HIV-1 
antigen tests for the screening of the Nation's blood supply. 
Subcommittee Chairman Shays pointed out that antigen testing 
would further close the window of potential infection in 
recipients of blood and blood products, a goal which was 
consistent with remarks made by Commissioner Kessler at a 
September 26, 1994 FDA Conference. Kessler said, ``[The FDA 
has] an obligation to foster the development of new 
technologies, especially if these technologies hold the promise 
of a blood supply that is even safer. This is especially true 
for detecting HIV--the AIDS virus. We need to close the 
window.''
    On August 10, 1995, the FDA announced its recommendation 
that, despite the BPAC recommendation, blood establishments 
should test donors with new HIV-1 antigen test kits after the 
tests become available. Under the new guidance, the FDA 
recommended that blood establishments begin screening all blood 
and plasma donors with newer test kits for HIV-1 antigen within 
3 months after FDA approves one of the kits.
    To examine this and other issues raised by the 
subcommittee's inquiries, the Human Resources and 
Intergovernmental Relations Subcommittee convened two oversight 
hearings to discuss efforts by the U.S. Department of Health 
and Human Services (HHS) and the blood products industry under 
HHS jurisdiction to protect the Nation's blood supply from 
emerging infectious agents.
    At the October 12, 1995 oversight hearing, HHS Secretary 
Donna Shalala provided the agency's response to a recent study 
that was critical of past HHS efforts to protect the blood 
supply from infectious agents. Secretary Shalala testified that 
HHS accepted recommendations of the report released by the 
Institute of Medicine (IOM)--HIV and the Blood Supply: An 
Analysis of Crisis Decisionmaking (July 13, 1995)--which had 
concluded that the medical and governmental response in the 
early 1980's to blood-borne HIV infection strongly suggests the 
need for greater coordination and more aggressive policies by 
HHS to meet the threat of future infectious agents.
    In addition, the Secretary named the Assistant Secretary 
for Health to the newly created post of Blood Safety Director 
and created a Blood Safety Committee which she indicated would 
include the FDA Commissioner, the Director of the National 
Institutes of Health (NIH), and the Director of the Centers for 
Disease Control and Prevention (CDC).
    Other hearing witnesses included representatives from the 
Committee of 10,000, the National Hemophilia Foundation, the 
Hemophilia Federation, the Oklahoma Blood Institute, and 
Michigan State University.
    A second oversight hearing on the subject was convened on 
November 2, 1995, so the subcommittee could consider the blood 
industry's response to the IOM report. In addition, the roles 
of the CDC and NIH in protecting blood safety were discussed. 
Witnesses included representatives from the CDC, NIH, the 
American Association of Blood Banks, the Council of Community 
Blood Centers, the American Red Cross, the American Blood 
Resources Association, the Bayer Corp., the Baxter Healthcare 
Corp. and the Armour Pharmaceutical Co.
    b. Benefits.--With 4 million patients in the country 
receiving transfusions of whole blood and blood components each 
year, raising the standards for blood collection and processing 
to meet new threats is a critical national priority. These 
hearings brought together all the major governmental and 
private sector players in the blood safety field and elicited a 
new commitment to diligence in protecting against infectious 
agents in the blood supply.
    c. Hearings.--Hearings entitled ``Protecting the Blood 
Supply from Infectious Agents: New Standards to Meet New 
Threats'' were held on October 12 and November 2, 1995.

15. The Occupational Safety and Health Administration's (OSHA) New 
        Strategy for Changing the Way it Does Business.

    a. Summary.--On October 17, 1995, the Human Resources and 
Intergovernmental Relations Subcommittee convened an oversight 
hearing to explore initiatives and programs claimed to have 
been adopted by the Occupational Safety and Health 
Administration (OSHA) as part of the agency's change in its 
strategy for doing business in a technology-based workplace. 
The agency had indicated in numerous publications and 
announcements that it was seeking to form new partnerships of 
employers, workers and OSHA to promote common sense 
regulations, focus on results, and reduce red tape.
    In the past the agency had earned a ``red tape 
reputation.'' The agency was widely perceived as an agency with 
a ``gotcha'' mentality, a preoccupation with small technical 
violations and governed by confusing, outmoded rules.
    OSHA's Assistant Secretary of Labor for Occupational Safety 
and Health Joseph A. Dear discussed the innovative programs the 
agency has developed to improve workplace protections for 
America's working men and women. Assistant Secretary Dear fully 
discussed what the agency refers to as the newly reinvented and 
responsive--``New OSHA''--and promised that the agency would 
continue to become more customer friendly and less driven by 
adherence to red tape and technical rules.
    In addition to Assistant Secretary Dear, testimony was also 
received from: the Associate Director for the U.S. General 
Accounting Office (GAO); the director of the Voluntary 
Protection Programs Participants' Association; and 
representatives from trade unions and the private industry.
    b. Benefits.--Through this hearing, the subcommittee was 
able to confirm that OSHA's efforts to re-engineer worker 
safety standards and enforcement to meet the new realities of 
the 21st century workplace are welcomed by business and 
workers. Given that no amount of enforcement resources would 
ever permit the agency to inspect all of America's workplaces, 
cooperation as opposed to confrontation will permit OSHA to 
better focus scarce budget resource and meet its core mission 
of correcting the most serious hazards in the most dangerous 
workplaces.
    c. Hearings.--A hearing entitled ``OSHA: New Mission for a 
New Workplace'' was held on October 17, 1995.

16. Management of U.S. Department of Housing and Urban Development 
        Funds in Public Housing Tenant Programs.

    a. Summary.--In September 1995, Representative William 
Martini (R-NJ), a member of the Human Resources and 
Intergovernmental Relations Subcommittee, forwarded to the 
subcommittee materials regarding a convention of public housing 
tenants sponsored by the National Tenants Organization (NTO). 
The subcommittee initiated inquiries to the Department of 
Housing and Urban Development (HUD) and several local public 
housing authorities regarding the use of HUD funds to attend 
the NTO convention which was described as a ``vacation'' in the 
promotional material.
    The subcommittee also learned that public housing tenants 
attended this and other training sessions using funds from 
HUD's Tenant Opportunity Program (TOP). At least two tenant 
groups obtained advances of anticipated TOP grant awards from 
their public housing agencies.
    As a result of these inquiries, the subcommittee also 
learned that 6 TOP grants had been awarded then rescinded by 
HUD in Delaware after questions were raised regarding the level 
of consultant fees and the planned use of the funds.
    On November 9, 1995, the subcommittee convened an oversight 
hearing on possible waste and mismanagement of HUD grant funds 
used in public housing tenant programs. Tenant programs support 
training and leadership activities in order to empower tenants 
for resident management purposes.
    The subcommittee investigated whether HUD has appropriately 
controlled or monitored TOP program results to ensure that 
program objectives are met. Testimony at the hearing was 
received from representatives from HUD, HUD's Inspector 
General, and from tenant and public housing organizations.
    b. Benefits.--Abuses of HUD's management of tenant training 
funds suggest fundamental weaknesses that raise concerns about 
the goals and effectiveness of certain TOP supported programs. 
The subcommittee will continue to monitor TOP and other public 
housing programs, as it does other Government programs within 
its jurisdiction, so as to ensure that the mission and 
integrity of HUD's tenant technical assistance grants and 
resident management programs will remain true to their 
principles and intended purposes.
    c. Hearings.--A hearing entitled ``HUD's Management of 
Tenant Empowerment Funds'' was held on November 9, 1995.

17. Status of Major Computer System Development.

    a. Summary.--Testimony at earlier oversight hearings on 
Medicare claims processing, and General Accounting Office (GAO) 
reports on Health Care Finance Administration (HCFA) 
acquisition and implementation of a centralized Medicare claims 
system, presented troubling questions regarding whether HCFA 
had the capacity to develop, procure and implement such a large 
computer application. Earlier testimony by HCFA also indicated 
the agency had foregone other claims management and program 
integrity efforts in favor of placing all their emphasis on the 
new Medicare Transaction System (MTS). Based on a GAO analysis, 
the subcommittees were concerned that the use of available 
claims screening software by HCFA contractors could yield 
significant savings to the Medicare program immediately, while 
the MTS system was being developed.
    To answer these questions, the Subcommittee on Human 
Resources and Intergovernmental Relations and the Subcommittee 
on Government Management, Information, and Technology convened 
a joint oversight hearing on HCFA's MTS project, a proposed 
$127 million data system to process Medicare claims and enable 
HCFA to detect and control fraud and abuse.
    Witnesses at the hearing discussed the status of the MTS 
computer programs which HCFA began planning in the early 1990's 
and which the agency claims will curb the loss of billions of 
dollars annually from fraud and abuse in Medicare claims. HCFA 
Administrator Bruce Vladek appeared before the Human Resources 
Subcommittee on June 15, and testified that the system would be 
fully implemented by late 1999. The subcommittee chairmen and 
other members wanted to know whether that schedule would be 
kept and whether the system, with potential for significant 
cost overruns, would be delivered on budget.
    b. Benefits.--The hearing provided necessary oversight of 
the MTS contract terms and milestones. The subcommittees 
learned that HCFA's schedule and cost estimates for MTS were 
neither reliable nor realistic, and that HCFA was using an 
inconsistent approach to define current and future system 
requirements. This information will be beneficial to those 
guiding health care management and anti-fraud policy pending 
the implementation of the MTS system.
    c. Hearings.--A joint hearing entitled ``Oversight and 
Review of Medicare's Transaction and Information Systems'' was 
held on November 16, 1995.

18. Radioactive Contamination of 27 People, Including Researcher Dr. 
        Maryann Ma, in June 1995 at the National Institutes of Health 
        (NIH).

    a. Summary.--A study by the Human Resources and 
Intergovernmental Relations Subcommittee, requested by 
Congresswoman Constance Morella (R-MD), was conducted over a 5-
month period to determine if the National Institutes of Health 
(NIH) was negligent in conforming to safety regulations in its 
handling of nuclear materials. On June 28, 1995, a 
contamination of 27 people occurred at the NIH Main Campus in 
Bethesda, MD, Building 37, Fifth Floor, Laboratory 5D18.
    The subcommittee also studied the 3-year safety record of 
NIH to see if there was a pattern of safety violations present 
at the facility. These studies were aided through 
documentation, meetings and conversations with the Nuclear 
Regulatory Commission (NRC) and with the NIH.
    b. Benefits.--The subcommittee study, in conjunction with 
an NRC investigation, established that NIH's current handling 
of nuclear materials at its Bethesda facilities are not a 
threat to the safety of NIH employees, the community, or the 
public at large.
    c. Hearings.--None.

19. Unfunded Mandates in Medicaid.

    a. Summary.--The subcommittee examined the cost of unfunded 
Medicaid mandates and the inflexibility of the joint Federal/
State Medicaid program, which adds burdensome costs to the 
States and prohibits them from taking full advantage of market 
efficiencies which exist in the private sector.
    Medicaid's enacting legislation and the subsequent 
regulations dictate that every State provide specific services 
to specific populations. Federal mandates in the Medicaid 
program expanded rapidly between 1983 and 1993 to include such 
requirements as catastrophic care provisions, mandated coverage 
for families leaving the AFDC program, coverage for women and 
children with incomes at 133 percent of the poverty line, and 
mandated coverage for children up to age 18 at 100 percent of 
the poverty line. Medicaid costs have more than tripled since 
this expansion and program enrollment has grown by more than 50 
percent. Viewed by States as the most burdensome mandate, the 
1980 Boren Amendment was interpreted (through substantial 
litigation) to require a cost-based payment standard, where all 
costs incurred by providers must be reimbursed. Without program 
modifications, CBO and GAO project Medicaid spending is likely 
to double in the next 5 to 7 years, having serious fiscal and 
human consequences in the States.
    In response to this rapid growth of unfunded Federal 
mandates, States have attempted Medicaid delivery reforms in 
order to reduce their budgets. Governors are in agreement on 
the need for more flexibility in the Medicaid program. Through 
the waiver process, States (approximately half) have requested 
greater flexibility to address issues related to financing and 
delivery of care, arguing that if States are receiving less 
money to meet the increased eligibility and services coverage 
requirements then they must have the flexibility to operate 
programs that can respond to cost efficiencies. In response to 
the increased cost burden to State budgets, State reform 
initiatives have resulted in 40 States now enrolling a portion 
of their Medicaid population in some form of managed care.
    To address the issue, the Clinton administration's FY 96 
budget for Medicaid proposed a per capita cap on Federal 
Medicaid spending to limit growth, control costs of per 
beneficiary expenditures (keeping in place the mandated 
eligibility and services), contribute savings to the Federal 
budget, and provide States with additional flexibility. The 
House Republicans proposed that Medicaid be turned into a block 
grant program, called ``Medigrant.''
    Those States testifying agreed they would like authority to 
design effective, innovative health care programs responsive to 
the special needs of their respective States, arguing that 
changes are imperative because the current rate of growth in 
State Medicaid spending will exceed the rate of total State 
spending ability, at which point the States will be forced 
either to increase taxes or to divert money from other 
important State programs to Medicaid.
    GAO reviewed for the panel those States that have been 
involved with innovation and reform in their Medicaid programs, 
elaborating on the States' experiences transitioning to new 
delivery systems.
    b. Benefits.--The hearing served as a forum to broaden the 
discussion of unfunded mandates and as such, helped Members of 
Congress and policymakers quantify and assess the cost of the 
unfunded Medicaid mandates to the States in their delivery of 
Medicaid services to beneficiaries. The Boren Amendment was 
cited as the most costly expansion mandate, which State 
officials feel should be repealed in order to help States 
reduce the escalating cost of Medicaid services.
    c. Hearings.--A hearing entitled, ``Unfunded Mandates in 
Medicaid'' was held on January 18, 1996.

20. HUD Management of Tenant Initiative Programs.

    a. Summary.--On November 9, 1995 the subcommittee held a 
hearing to hear testimony about the Department of Housing and 
Urban Development's (HUD) role in the National Tenants 
Organization (NTO) August 1995 conference in Puerto Rico. At 
that hearing the subcommittee received strong indications that 
more than $330,000 in Federal taxes were inappropriately spent 
on the conference and that there was little substantive 
training offered. As a result, the subcommittee asked the 
Inspector General to investigate HUD's active, visible and 
taxpayer-funded support for a convention advertised as a 
vacation.
    At the February 29, 1996 hearing the Inspector General 
testified among other things, that HUD officials played a key 
role in planning and conduction the conference, the NTO cleared 
an estimated $35,000 to $45,000 from the conference, little 
substantive resident training was provided, there was 
substantial lobbying and advocacy against Republican housing 
proposals, and HUD's participation in the convention violated 
department policies issued by HUD's Office of General Counsel 
regarding participation in conferences sponsored by non-Federal 
entities. The Inspector General also made a number of specific 
recommendations on steps HUD needed to take to remedy the 
problems and prevent future ones.
    Kevin Marchman, the Acting Secretary for Public and Indian 
Housing at HUD, told the subcommittee the steps HUD was taking 
to implement the Inspector General's recommendations and to 
strengthen HUD's internal controls and management. Also 
testifying at the hearing were Maxine Green, president of the 
NTO; Miguel Rodriguez, the executive director of the Puerto 
Rican Housing Authority; Ed Moses, deputy executive director of 
community relations and involvement for the Chicago Housing 
Authority; and Patricia Arnaudo, Deputy Director for Program 
Development at HUD.
    b. Benefits.--Tenant empowerment programs, such as TOP, are 
an important path out of isolation and dependence for those who 
use them. The investigation and hearing identified the 
weaknesses that led to the misuse of the TOP funds, ensured 
that steps were being taken to rectify the problems, and 
strengthened HUD's management and internal controls.
    c. Hearings.--A hearing entitled, ``HUD Management of 
Tenant Initiative Programs'' was held on February 29, 1996.

21. The Status of Efforts to Identify Persian Gulf War Syndrome.

    a. Summary.--The subcommittee investigated issues related 
to the Gulf War veterans' illnesses and convened four hearings 
during 1996 as a result of those investigations. These hearings 
began with a primary concern--how ongoing efforts to diagnose, 
treat and compensate Gulf War veterans can be more sharply 
focussed and urgently pursued.
    The first two hearings, in March 1996, dealt with veterans' 
symptoms and complaints about the handling of their health 
problems by the VA, especially about inappropriate medical 
treatment or denial of treatment, compensation issues, and lack 
of funded research by the VA into causes of their illnesses. 
The subcommittee also wanted to ensure that any research 
programs conducted by the Departments of Defense (DOD), Health 
& Human Services (HHS), and the Environmental Protection Agency 
(EPA), were focussed and coordinated. Witnesses in these 
hearings included sick veterans, veterans service 
organizations, the VA, and non-government medical research 
experts.
    The third hearing in June dealt with coordination of Gulf 
veterans issues between the DOD and VA, including medical 
recordkeeping and compensation procedures. Witnesses included 
DOD and VA health and compensation officials. The fourth 
hearing in September covered typical symptoms of sick Gulf 
veterans, studies of effects on humans and animals to low level 
chemical exposures, and probable exposures of large numbers of 
troops to chemical warfare agents and other toxins during the 
war. Witnesses were from the VA, EPA, Central Intelligence 
Agency (CIA), Gulf War Research Foundation, and non-government 
experts from the field of neurology and toxicology.
    The September hearing was critical and a turning point in 
the subcommittee's investigation. It was established that the 
typical complaints of Gulf veterans--chronic fatigue, flu-like 
symptoms, rashes, joint pain, headaches, gastrointestinal 
problems and other maladies--are similar to known effects on 
humans who have been exposed to organophosphates, such as 
pesticides and other chemical agents. Organophosphates are 
chemically related to sarin and other chemical warfare agents.
    Until recently, DOD had denied that chemical weapons were 
deployed or used in the Gulf. They also denied that troops were 
exposed to chemical agents, in spite of information to the 
contrary available to the Pentagon from reliable sources such 
as UN inspectors and Czech detection experts. Based on this DOD 
position, the VA appears to have given little priority to the 
possibility of low level chemical exposures in their diagnosis, 
treatment and compensation of sick Gulf War veterans.
    In the September hearing, Dr. Frances Murphy, Director of 
the VA Environmental Health Service, conceded in testimony that 
the VA research agenda through 1995 placed a low priority on 
low level chemical warfare agent exposure ``because military 
and intelligence sources had stated that U.S. troops had not 
been exposed to chemical agents.''
    In June, DOD finally admitted that 400 troops may have been 
exposed to chemical agents. In August, DOD raised the exposure 
estimate to 1,100 troops; in September to 5,000; and in October 
to more than 20,000. And recently the Associated Press quoted a 
high Pentagon official as conceding that ``big numbers'' of 
130,000 troops could have been exposed. These probable 
exposures came from fallout following the detonation of Iraqi 
munitions bunkers at Khamisiyah and the air bombardment of 
Iraqi chemical/biological weapons factories.
    The health problems of some veterans may have come also 
from other sources such as: the heavy use of pesticides and 
insect repellants during the war, leaded diesel fuel used in 
vehicles and for heating and dust mitigation, radioactivity 
from depleted uranium shells fired at Iraqi tanks, dense smoke 
from the oil well fires, parasites that cause a chronic 
infection called leishmaniasis, and perhaps the side effects of 
troop inoculations in combination with taking the experimental 
anti-nerve gas drug, pyridostigmine bromide.
    It is of major concern that many VA doctors have insisted 
since the war's end that the veterans' symptoms are physical 
manifestations of Post-Traumatic Stress Disorder (PTSD). While 
this may be true in some cases, this may also indicate an over-
reliance on theories of psychological causation to the 
exclusion of obvious physical toxins and stressors.
    With DOD's admission of troop exposures to low level 
chemical warfare agents, the next concern of the subcommittee 
was the extent to which DOD and the VA acknowledge the effects 
of those exposures.
    In testimony before the subcommittee, Dr. Stephen Joseph, 
DOD's Assistant Secretary for Health Affairs, stated that ``. . 
. chronic symptoms or physical manifestations do not later 
develop among persons exposed to low levels of chemical nerve 
agents who did not first exhibit acute symptoms of toxicity.'' 
This statement was challenged at the September 1996 hearing.
    A 1974 study of low level exposures (e.g. workers in 
chemical weapons plants) entitled ``Delayed Toxic Effects of 
Chemical Warfare Agents,'' by German scientist Dr. Karlheinz 
Lohs, tends to refute Dr. Joseph's testimony. The study 
concludes that ``. . . even in the case of exposure to very 
slight amounts [of low level mustard agents] which do not 
necessarily bring on acute symptoms, toxic reactions may later 
set in.''
    The question of whether delayed or chronic effects result 
from exposure to low level chemical agents without first having 
acute or immediate symptoms is critical to veterans. The answer 
determines whether or not Gulf veterans will be compensated 
appropriately for injuries suffered during the war. Many sick 
veterans did not report acute symptoms during the war but later 
developed chronic symptoms, thereby being denied higher 
compensation for war-related injuries. On the other hand, many 
veterans report that they may have had flu-like symptoms or 
rashes in-theater which they ignored as part of serving in a 
harsh, desert environment. These ``low-level'' symptoms could 
be considered acute, but mild, reactions to low level chemical 
agents.
    In December, the subcommittee held two additional hearings 
to discuss recent revelations about chemical detections and 
exposures in the Gulf War, and to determine the extent to which 
VA research and treatment protocols are being modified to take 
these disclosures into account. A panel of active-duty military 
officers testified regarding their experiences during Operation 
Desert Shield. Two of the witnesses operated sophisticated 
chemical detection equipment during the war. They testified 
that positive readings for mustard and other chemical warfare 
agents had been verified and recorded at locations other than 
Khamisayah. The third veteran testified that he heard chemical 
alarms and was told an Iraqi chemical mine had been detonated. 
He believes his subsequent medical problems, including 
Amyotrophic Lateral Sclerosis, or Lou Gherig's Disease, are the 
direct result of his exposure to residual chemicals after the 
``all clear'' was sounded and his unit proceeded through the 
contaminated area.
    A former Central Intelligence Agency analyst testified that 
standard intelligence sources were not relied upon to reach the 
conclusion that no chemical warfare agents were present in the 
Gulf War. Instead, the analyst believes the agency relied 
solely on representations made by the Department of Defense.
    At the second hearing, veterans of the Gulf War testified 
about the difficulty in getting the VA health system to 
recognize war-related illnesses. The VA's Chief Public Health 
and Environmental Hazards Officer testified that while the VA 
``has always remained open to the possibility'' of chemical 
exposures, no veteran had even been diagnosed as suffering from 
the after-effects of such an exposure. She testified that the 
VA health screening protocol for Gulf War veterans was modified 
in late 1995 to ask specific questions about toxic exposures. 
She also said epidemiological research into the effects of low-
dose chemical exposures was just beginning.
    Two VA doctors who treat Gulf War veterans also testified. 
They believe the various combinations of symptoms and illnesses 
presented by Gulf War veterans are the result of exposures to 
one or more environmental hazards present in the Gulf, 
including chemical warfare agents.
    b. Benefits.--The series of subcommittee hearings focused 
attention on the Persian Gulf War veterans' illnesses and 
helped produce admissions from the DOD that U.S. troops were 
exposed to chemical warfare agents. The investigation and 
hearings generated pressure on the VA to change their medical 
protocol and compensation policies toward sick Gulf veterans.
    The VA has also updated its research priorities and has 
begun studies into the long term health effects of low-dose 
exposures to chemical warfare agencts and other toxins. Also as 
the result of increased congressional scrutiny, the Department 
of Defense increased the size of its Gulf War Illnesses 
Investigation Team from 12 to more than 100 investigators and 
staff.
    c. Hearings.--Hearings entitled, ``The Status of Efforts to 
Identify Persian Gulf War Syndrome'' were held on March 11, 
March 28, June 25, and September 19, 1996. Hearings entitled, 
``Persian Gulf Veterans' Illnesses: Intelligence on Chemical/
Biological Exposures'' were held on December 10 and 11, 1996.

22. Unfunded Mandates Reform Act of 1995: A One Year Review.

    a. Summary.--On March 22, 1996, exactly 1 year after the 
bill was signed into law, the subcommittee convened a hearing 
that focused on implementation and the impact of the Unfunded 
Mandates Reform Act of 1995 (Public Law 104-4).
    The act requires the legislative and executive branches to 
identify and quantify implementation costs of statutory and 
regulatory mandates on State and local governments. The 
subcommittee has been monitoring Federal department compliance 
with the requirements of Title II of the act regarding analysis 
of mandates in proposed and final regulations.
    Title II also requires the executive branch to conduct an 
explicit analysis of proposed and final rules to quantify the 
costs and benefits of mandates and identify the most cost 
effective, least burdensome regulatory approach. Departments 
and agencies are required to consult with State and local 
governments, and the Office of Management and Budget (OMB) is 
directed to collect those regulatory statements and forward 
them ``periodically'' to the Congressional Budget Office (CBO). 
OMB is required to submit a written report detailing compliance 
by each agency during the preceding year.
    The subcommittee also been monitored the design and 
implementation of the study of existing mandates required under 
Title III of the act. Title III required the Advisory 
Commission on Intergovernmental Relations to (a) study issues 
involving the calculation of costs and benefits of mandates on 
State and local governments, (b) conduct a study and make 
recommendations to the President and Congress concerning the 
impact of existing mandates on intergovernmental (Federal-
State/local) relations, and (c) monitor and evaluate the 
implementation of the act. Testimony was received from 
representatives from Federal departments and agencies; State 
and local governments; community organizations, and Members of 
Congress.
    b. Benefits.--As a result of the investigation and hearing, 
the subcommittee found that OMB had concluded in the report 
required by Title II that only 16 out of more than 3,000 
proposed or final rules met the act's threshold for a detailed 
cost/benefit analysis and review. Moreover, the subcommittee 
found that OMB compliance with the requirement to share these 
analyses with Congress had been minimal since enacted of the 
act. Although reporting is required ``periodically,'' not one 
of the required statements had been forwarded to CBO prior to a 
day or two before the subcommittee's hearing convened. Then all 
16 arrived at once, just in time to be included in the report. 
The subcommittee was assured that future compliance would be 
more periodic and less episodic.
    Additionally, the subcommittee discovered that agencies had 
``begun considering, but had not yet developed'' pilot programs 
to reduce reporting and compliance requirements on small 
governments, as required by the act.
    c. Hearings.--A hearing entitled, ``Unfunded Mandates 
Reform Act of 1995: A One Year Review'' was held on March 22, 
1996.

23. Job Training That Works/Common factors in effective job training 
        programs.

    a. Summary.--At the subcommittee's request, the General 
Accounting Office (GAO) prepared a report on the common 
features shared by effective job training programs. The GAO 
studied six programs that successfully helped graduates attain 
self-sufficiency. It was learned that the programs employed 
four key features to ensure that participants were successful 
in obtaining and maintaining employment. First, there was a 
focus on ensuring that participants were committed to training 
and getting a job. Second, the programs removed barriers that 
could limit clients' ability to finish training and get and 
keep a job. The third feature was improving participants' 
employability skills as part of their training curriculum. This 
included skills such as dependability, promptness, ability to 
work effectively in groups, and the ability to resolve 
conflicts appropriately. The fourth feature was linking 
occupational skills training with the local labor market so 
that the project could monitor the local labor market and make 
adjustments in course offerings to meet employer demand.
    At the hearing the GAO testified about its work and 
findings. The subcommittee also heard from the directors and 
graduates of two of the programs reviewed by the GAO, and two 
additional successful job training programs.
    b. Benefits.--As the GAO noted, in fiscal year 1995, the 
Federal Government appropriated about $20 billion for about 163 
employment training programs yet large numbers of individuals 
remain unprepared for employment. The report and hearing form a 
basis from which to start in redesigning the structure and 
delivery of Federal job training so that it more successfully 
helps disadvantaged adults acquire and maintain permanent 
employment.
    c. Hearings.--A hearing entitled, ``Job Training That 
Works'' was held on April 18, 1996.

24. Preventing Teen Pregnancy: Coordinating Community Efforts.

    a. Summary.--The subcommittee examined strategies at the 
community level to prevent and reduce teen pregnancy in 
America. The subcommittee found that teen pregnancy is a near 
certain path to poverty, and that poverty is a major underlying 
cause of teenage childbearing. More than 1 million American 
teenagers become pregnant each year the rate of births per 
1,000 teenagers (age 15-19) in the United States is six times 
the rate of France and Italy, and twice the rate of Great 
Britain. About half the pregnant teens in the United States 
will go on to give birth, and of those, 72 percent will be 
unmarried. Childbearing teens make up less than one-third of 
out-of-wedlock births, but for a variety of reasons, they 
represent a disproportionate economic and social burden to 
society. Most teenage parents who drop out of school never 
return. Teenage mothers have half the lifetime earnings of 
women who postpone childbearing under age 20. Teen mothers are 
at greater risk of developing complications in pregnancy and of 
delivering low birth weight babies due to poor prenatal care. 
Low birth weights in turn are associated with increased infant 
mortality, illness and disabilities.
    The subcommittee also found that adult men father more than 
half the children born to 15 to 17 year old mothers. This 
shocking finding, combined with information on the extent to 
which initial sexual activity by teenage girls is involuntary, 
shattered some of the myths surrounding teen pregnancy.
    At on oversight hearing on Federal, State and private 
sector programs to reduce teen pregnancy, testimony was 
received from: Dr. Henry. W. Foster, Jr., senior advisor on 
teenage pregnancy to President Clinton, and White House liaison 
to the National Campaign to Prevent Teenage Pregnancy; the 
National Campaign to Prevent Teen Pregnancy; U.S. Congress; the 
U.S. Department of Health and Human Services; the Maryland 
Lieutenant Governor; Child Trends; Advocates for Youth; the 
Best Friends Foundation; and the Institute for Responsible 
Fatherhood and Family Revitalization.
    b. Benefits.--The subcommittee's investigation and hearing 
into teen pregnancy prevention programs brought needed public 
attention to the need for greater public/private collaboration 
in the design and implementation of effective intervention 
programs. This was the first examination of Federal, State and 
private teen pregnancy prevention programs since publication of 
new studies attributing the majority of under-age pregnancies 
to have been caused by men over the age of 20. This finding 
argues for a greater emphasis on enforcement of statutory rape 
laws, along with traditional program focus on abstinence and 
education about the results of early parenthood.
    c. Hearings.--A hearing entitled, ``Preventing Teen 
Pregnancy: Coordinating Community Efforts'' was held on April 
30, 1996.

25. Food Safety: Oversight of the Food and Drug Administration's Center 
        for Veterinary Medicine.

    a. Summary.--The subcommittee reviewed the performance of 
the FDA's Center for Veterinary Medicine (CVM), particularly 
regarding FDA's failure to issue a regulation prohibiting 
feeding of ruminant protein to other ruminant animals. This was 
a step recommended by the World Health Organization in 
preventing the spread of Bovine Spongiform Encephalopathy (BSE) 
or ``Mad Cow Disease'' in countries currently believed to be 
free of the disease, such as the United States.
    The subcommittee convened an oversight hearing into FDA's 
management of the programs of the Center for Veterinary 
Medicine on May 10, 1996. The hearing examined the lack of 
adequate funding and program priority for veterinary medicine 
issues overseen by FDA's Center for Veterinary Medicine as 
evidenced by the lengthy review process for new animal drugs. 
Testimony was provided by: FDA Deputy Commissioner Michael 
Friedman; Dr. Frederick Murphy, University of California School 
of Veterinary Medicine; Dr. Lester Crawford, Association of 
American Veterinary Medical Colleges; Dr. Gary Weber, National 
Cattlemen's Beef Association; Dr. Don Franco, National 
Renderers Association; Robert Hahn, Public Voice for Food and 
Health Policy; Dr. John Welser, Pharmacia and Upjohn; Dr. 
Sherbyn Ostrich, American Veterinary Medical Association and 
Dr. Cindy Wolf, American Sheep Industry Association.
    b. Benefits.--Delays in the review of new and supplemental 
animal drug applications were identified and corrective 
measures were examined. At the hearing and during subsequent 
meetings with the subcommittee, the FDA took further action on 
the issuance of the regulation banning the feeding of ruminant 
protein to other ruminant animals.
    c. Hearings.--A hearing entitled, ``Food Safety: Oversight 
of the Food and Drug Administration's Center for Veterinary 
Medicine'' was held on May 10, 1996.

26. Food Safety: Monitoring of Food Borne Illnesses by the Centers for 
        Disease Control, Food and Drug Administration and U.S. 
        Department of Agriculture.

    a. Summary.--Three of the four pathogens considered most 
important by the Centers for Disease Control were unrecognized 
as causes of food borne illnesses just 20 years ago. While the 
food supply becomes more vulnerable to pathogens, the food 
safety system on which we rely appears fragmented among three 
different Federal agencies.
    Therefore, subcommittee investigated issues affecting food 
safety and convened an oversight hearing on the monitoring of 
food borne illnesses by CDC, FDA and USDA. The oversight 
hearing evaluated the need for closer coordination, better 
surveillance and implementation of scientifically based hazard 
control systems. Testimony was taken from: Dr. David Satcher, 
Director, Centers for Disease Control; Dr. Fred Shank, Food and 
Drug Administration; Dr. Glen Morris, USDA; Mr. Robert 
Robinson, GAO; Dr. Ban Mishu Allos, Vanderbilt University 
School of Medicine; and Dr. John Kobayashi, Washington State 
Department of Health.
    b. Benefits.--The growing threat to the public health posed 
by food borne pathogens, such as Campylobacter jejuni which 
causes over 40 percent of the Nation's cases of the paralytic 
illness Guillaine-Barre Syndrome, was brought to the attention 
of the public. The inadequate monitoring of food borne 
illnesses by three different Federal agencies as well as State 
governments was identified and corrective actions suggested.
    c. Hearings.--A hearing entitled, ``Food Safety: Monitoring 
of Food Borne Illnesses by the Center for Disease Control, Food 
and Drug Administration and U.S. Department of Agriculture'' 
was held on May 23, 1996.

27. The Development of Successful Public Housing Resident Management 
        (Field Hearing).

    a. Summary.--This hearing was the third oversight hearing 
on resident management programs in public housing developments. 
The field hearing examined the elements of success at Cochran 
Gardens in St. Louis, MO. Cochran Gardens has operated one of 
the best tenant management programs in the country and the 
hearing examined the elements that make it, and other programs 
a success. Effective resident programs can provide superior and 
more cost effective site management than public housing 
authority management.
    At the hearing the subcommittee learned that the elements 
of successful resident management programs include strong 
tenant leadership, active housing authority support, and 
effective Department of Housing and Urban Development 
oversight.
    The subcommittee heard from non-resident public housing 
professionals as well as from residents engaged in resident 
management.
    b. Benefits.--The hearing demonstrated that resident 
management programs can be effective and can build strong 
communities and improve the lives of their residents. The 
hearing identified the key elements of successful resident 
management programs, challenges all programs to use those 
elements to meet the same standards of success.
    c. Hearings.--A hearing entitled, ``The Development of 
Successful Public Housing Resident Management'' (Field Hearing) 
was held on June 3, 1996.

28. Department of Education Oversight: Gatekeeping.

    a. Summary.--Gatekeeping is the process for screening 
higher education institutions for participation in Federal 
student financial aid (SFA) programs. Institutions must meet 
standards set by the triad of State licensing authority, 
accrediting agencies, and the U.S. Department of Education. 
Effective front-end controls are more efficient than back-end 
institutional monitoring and enforcement. Gatekeeping is 
particularly important in controlling non-degree-granting 
vocational trade schools, which pose the greatest risk to SFA 
programs in terms of fraud, waste, and abuse.
    b. Benefits.--The Department of Education discussed plans 
for a more focused oversight effort, including plans to realign 
staffing toward a case-management approach to enforcement. 
State government representatives made recommendations for a 
strong State role in improving institutional integrity 
following the elimination of State Postsecondary Review 
Entities. State governments can be effective due to their 
proximity to institutions within their borders, and because, 
unlike accrediting bodies, State governments are independent 
and accountable to the public. Also discussed were 
institutional concerns about over reliance on student loan 
default rates to determine institutional quality. High default 
rates supersede other regulatory reviews that institutions must 
pass to participate in Title IV.
    c. Hearings.--A hearing entitled, ``Department of Education 
Oversight: Gatekeeping'' was held on June 6, 1996.

29. Oversight of the Department of Labor's Efforts Against Labor 
        Racketeering.

    a. Summary.--As a result of an oversight review of 
Department of Labor Enforcement activities, the subcommittee 
found that racketeering is costly to the interests of union 
members in particular, and to society as a whole. Corrupt union 
officials betray the trust bestowed upon them as elected 
representatives of union workers and undermine the public 
confidence and trust in the collective bargaining agreement 
system. In some cases, millions of dollars of workers' dues and 
benefit moneys have been siphoned off by organized crime 
through outright embezzlement or more sophisticated devices, 
such as loans or excessive fees paid to corrupt union and trust 
fund service providers. Millions of consumers unknowingly pay 
organized crime what amounts to a surcharge on a wide range of 
goods and services due to organized crime's exercise of power 
in the marketplace.
    The subcommittee also examined the Department's current 
anti-racketeering strategy in view of the administrative and 
legislative recommendations made 10 years ago by the 
President's Commission on Organized Crime (Report to the 
President and Attorney General: ``The Edge: Organized Crime, 
Business and Labor Unions,'' 1985). The subcommittee found that 
despite the recommendations of the Presidential Report more 
than 10 years ago, despite the work of the Labor Secretary's 
1989 Task Force on Enforcement, despite a report in 1990 and 
subsequent reports by the DOL Inspector General of ``material 
weakness'' in DOL criminal enforcement efforts, and despite 
more than 5 years of in-depth oversight by the Inspector 
General, DOL enforcement activities ``remain inconsistent and 
uncoordinated with no integrated approach to common criminal 
enforcement issues.'' Moreover, the Report's call for ``New 
directions for the Department of Justice and fundamental 
changes in the structure and operation of the Department of 
Labor, the two principal agencies charged with responsibilities 
involving organized crime, labor organizations, and businesses' 
had not been implemented. The Department continues to resist 
repeated call to integrate and coordinate criminal and civil 
enforcement efforts to provide a sharper focus on labor 
racketeering. As a result, the Department appears to remain an 
inattentive, at times unwilling, partner in the fight against 
organized crime in labor unions.
    The subcommittee convened an oversight hearing to assess 
the Department of Labor's (DOL) strategies designed to detect, 
prosecute and eliminate labor union corruption. Testimony was 
received from representatives from the Office of Labor-
Management Standards, the Pension and Welfare Benefits 
Administration, the Office of the Solicitor and the Division of 
Labor Racketeering, a part of the Office of Inspector General--
all DOL operations responsible for the effectiveness and 
efficiency of the agency's efforts against criminal labor 
racketeering activity.
    b. Benefits.--The investigation and hearing were the first 
attempt in many years to resolve the issue of what it would 
take to overcome the legal, political and bureaucratic barriers 
that prevent the Department of Labor from playing a more 
effective role in the detection of labor racketeering and the 
protection of union members' rights and funds from exploitation 
by organized crime. Testimony at the hearing exposed 
bureaucratic resistance within DOL to a more unified, effective 
assault on labor racketeering. Calls for uniform case 
information, Department-wide outcome tracking, consistent 
information sharing and cross-agency training cooperation were 
pronounced too difficult, too complicated, too time-consuming, 
too costly, not feasible, unnecessary, impractical or secondary 
to the unique mission each enforcement entity within the DOL 
responsible for preventing labor racketeering.
    The Department of Labor and the Inspector General committed 
to a review of longstanding recommendations and a resolution of 
outstanding coordination issues.
    c. Hearings.--A hearing entitled, ``Oversight of the 
Department of Labor's Efforts Against Labor Racketeering'' was 
held on July 13, 1996.

30. Oversight of the Department of Education and the National Institute 
        of Mental Health: Current Approaches to Attention Deficit/
        Hyperactivity Disorders.

    a. Summary.--Attention Deficit/Hyperactivity Disorder 
(ADHD) has become the Nation's leading psychiatric disorder. 
The Department of Education estimates that 3 to 5 percent, or 
up to 2\1/2\ million school-aged children, have ADHD. As 
measured by growth in the use of methylphenidate, or Ritalin, 
the most commonly prescribed drug treatment for ADHD, the 
number of children diagnosed with the disorder has grown two 
and a half times since 1990. ADHD diagnoses in adults are also 
increasing dramatically. These trends have profound 
implications for health research and education policy.
    The subcommittee review and hearing examined what 
constitutes a proper diagnosis of the disorder, why there has 
been an increase in the diagnosis of individuals with the 
disorder, the appropriate treatment for the disorder, the role 
of medications such as methyphenidate (Ritalin) in treatment, 
the implications for Federal educational and health policies of 
current information and planned research, and the appropriate 
accommodations by schools to the diagnosis and treatment.
    b. Benefits.--The hearing helped address the uncertainty 
and controversy surrounding the proper definition, accurate 
diagnosis and appropriate treatment of ADHD. It also identified 
the significance of the problem and its implications on Federal 
education policy and research priorities.
    c. Hearings.--A hearing entitled, ``Oversight of the 
Department of Education and the National Institute of Mental 
Health: Current Approaches to Attention Deficit/Hyperactivity 
Disorders'' was held on July 15, 1996.

31. Consumers and Health Informatics.

    a. Summary.--With today's health care consumers demanding 
more and more information at ever increasing speed in receiving 
that information, the subcommittee explored the accessibility 
of health care information to consumers through the use of 
computers and other telecommunication tools. A report prepared 
by GAO at the request of subcommittee Chairman Christopher 
Shays, titled ``Consumer Health Informatics: Emerging Issues,'' 
was released at the hearing.
    The GAO report stated that health informatic systems are 
capable of providing many different types of health related 
information to consumers, giving them additional information 
resources to assist them in making more informed choices and 
decisions as it relates to their health care. The information 
benefits health care consumers in areas such as the pros and 
cons of elective surgery, self-care techniques when 
appropriate, preventative habits and life style choices, 
training and practice patterns of physicians, medically 
approved alternative types of treatments, et cetera. In 
addition, medical practitioners have the benefit of easily 
accessible patient records and updates on the latest medical 
practice techniques.
    HHS highlighted the growth in consumer interest in the data 
sources available through their information programs, noting 
that consumers are seeking more detailed health informatics, 
but are limited in gaining access. HHS reported their primary 
informatics efforts are coordinated in four main areas: (1) the 
direct provision of information through these technologies; (2) 
coordination to improve access to consumer health informatics; 
(3) partnerships with other pubic and private organizations to 
extend the reach and impact of consumer health informatics; and 
(4) research and development and evaluation.
    Witnesses from private sector organizations and medical 
facilities presented testimony about their specific health 
information projects which are providing health information 
products, infrastructure, data bases and information banks to 
help disseminate health care information more widely to health 
care consumers in a variety of settings.
    b. Benefits.--The hearing highlighted increased demand for 
health care related information, the potential cost savings in 
overall health care dollars spent and the benefit to consumers, 
at the same time calling attention to the problems associated 
with accessability, quality, privacy and availability of such 
information.
    c. Hearings.--A hearing entitled, ``Consumers and Health 
Informatics'' was held on July 26, 1996.

32. The Management of HUD's Section-8 Multi-Family Housing Portfolio.

    a. Summary.--The subcommittee examined this issue to begin 
to address a potential multi-billion dollar housing problem. 
The cost of rent subsidies on more than 700,000 units of low-
income, multi-family housing will soon be unsustainable. As a 
result, the Federal Housing Administration (FHA) will be forced 
to pay up to $18 billion on defaulted mortgages. Without 
definitive administrative and legislative action, this will 
mean that the place that 1 million Americans call home will be 
left to decay, or be torn down.
    At the hearing the subcommittee heard from the Department 
of Housing and Urban Development (HUD) about its plans to 
address this problem. The subcommittee also learned from the 
General Accounting Office (GAO) that there are three main 
factors that have caused this problem. These factors are high 
subsidy costs, high exposure to mortgage insurance loss, and 
the poor physical condition of many properties. These factors 
can be attributed to program design flaws that inflate 
subsidies above market rents and place all the risk of 
financial loss on HUD. The GAO also told the subcommittee that 
weakness in HUD's oversight and management of its multi-family 
portfolio has permitted the physical and financial problems 
facing these units to fester and grow.
    In addition to hearing from the GAO, the subcommittee 
learned what past efforts HUD took to address this problem and 
why they failed, and HUD's current plans and why HUD expects 
them to succeed.
    b. Benefits.--The hearing began to identify the causes and 
depth of a potentially multi-billion dollar problem. The 
hearing also examined the management and information challenges 
facing HUD so that any proposed solutions are made with a 
complete understanding of the capacity to structure and manage 
such an undertaking.
    c. Hearings.--A hearing entitled, ``The Management of HUD's 
Section-8 Multi-Family Housing Portfolio'' was held on July 30, 
1996.

33. Off-Label Drug Use and FDA Review of Supplemental Drug 
        Applications.

    a. Summary.--The subcommittee evaluated the extent of off-
label drug use in cancer, rare disease and pediatric 
indications and the rate at which supplemental indications are 
added by the FDA to the labeling of already marketed drugs. GAO 
testified that approximately 90 percent of cancer drug use, 80 
percent of pediatric use and 80-90 percent of drugs used to 
treat rare diseases are used off-label. For 50 million 
children, 40 million cancer patients and 20 million Americans 
suffering from rare, or orphan, diseases, most of their 
treatments are off-label. While perfectly legal, the widespread 
off-label use of medicines raises significant public policy and 
public health issues. Physicians need label information to 
treat patients effectively. Patients need the same information 
to make decisions about their own care. Both public and private 
health care payers need safety and efficacy data upon which to 
base reimbursement policies GAO and representatives of Tufts 
University Center for Drug Development testified that FDA's 
review of supplemental indications in the past was not timely.
    Testimony was heard from: Sarah Jagger, GAO; Dr. Joseph 
DiMasi, Tufts University Center for Drug Development; FDA 
Deputy Commissioner Michael Friedman; Dr. Carolyn Runowicz, 
American Society of Clinical Oncology; Dr. Ralph Kauffman, 
American Academy of Pediatrics; Abbey Meyers, National 
Organization for Rare Diseases and Dr. William Kennedy, Zeneca 
Pharmaceuticals (representing the Pharmaceutical and Research 
Manufacturers of America).
    b. Benefits.--This hearing examined the impact of the 
absence of up-to-date labeling for drugs used by nearly half of 
America's patients and the adverse impact this lack of 
information has on medical care. At the hearing, FDA, patient 
groups, physicians and the pharmaceutical industry pledged to 
address the problem of inadequate drug labeling and problems 
with FDA's review of supplemental indications for already 
marketed drugs.
    c. Hearings.--A hearing entitled, ``Off Label Drug Use and 
FDA Review of Supplemental Drug Applications'' was held on 
September 12, 1996.

34. Investigation into Possible Misuse of ``New Age'' Training Programs 
        by Federal Departments and Agencies.

    a. Summary.--On February 21, 1996, the subcommittee 
directed an inquiry to the Equal Employment Opportunity 
Commission (EEOC) regarding the number and type of objections 
or complaints regarding training programs, including diversity, 
management, motivation, ``new age,'' and other work training 
programs.
    On March 15, 1996, the EEOC reported a total of 22 charges 
made against private sector employers and no charges made 
against public sector employers. Of the 22 charges located, 8 
had Letters of Determination issued citing a violation of Title 
VII of the Civil Rights Act of 1964, as amended, on the basis 
of religious discrimination. In addition, in seven of the cases 
it is clear that the respondent conducted its own training.
    The EEOC analysis indicated that 17 of the 22 charges 
involved allegations that employees were inappropriately 
required to participate in Church of Scientology training 
sessions or religious practices and/or were told to utilize 
Church of Scientology philosophies in conducting their work. 
The other charges involved a diffuse set of ``new age'' 
practices that employees found objectionable.
    On May 29, 1996, the subcommittee directed inquiries to the 
Federal departments and agencies within its oversight 
jurisdiction regarding the impact of ``new age'' training 
programs, including the use of consultants for that purpose. 
The inquiries sought: a list of all requests for proposals for 
employee training issued; a list of all contracts for employee 
training entered into; copies of not less than five of the 
contracts; a tally of the number of objections or complaints 
from any source involving training programs; an analysis of the 
tally indicating the basis of each complaint; and an analysis 
of the objections or complaints tallied indicating common 
themes or trends.
    The departments and agencies all responded between June 5, 
1996 and August 2, 1996. Many of the agencies did not utilize 
or rarely utilized training programs. All responses, however, 
proved comprehensive. The responses were characterized by very 
few or no objections or complaints concerning the violation of 
individual civil rights.
    b. Benefits.--As questionable, and often dubious, practices 
falling under the category of ``new age'' training have gotten 
more attention, it has become important to protect against such 
explicit and implicit indoctrination and insure continued use 
of proven and effective training practices. The department and 
agency responses provided the subcommittee with a comprehensive 
listing of training programs. Based on these responses, it was 
concluded that Federal dollars were used responsibly in the 
choosing of appropriate and sound diversity, management, 
motivation, and other such employee training programs.
    c. Hearings.--None.

  NATIONAL ECONOMIC GROWTH, NATURAL RESOURCES, AND REGULATORY AFFAIRS 
                              SUBCOMMITTEE

1. Grantee Lobbying.

    a. Summary.--For decades, the Federal Government has 
awarded billions of dollars in grants to organizations that 
engage in lobbying and other forms of political advocacy. Much 
of this money is given to non-profit organizations. According 
to IRS figures, in 1992 alone, approximately 44,274 non-profit 
groups received $42.6 billion in grants from the Federal 
Government. Non-government sources put the figures even 
higher.\21\ The Independent Sector, a coalition of some of the 
largest non-profits in the country, reports that non-profits 
received nearly $160 billion from all government sources in 
1992; and OMB Watch's Gary Bass claims the Federal Government 
granted approximately $226 billion in fiscal year 1994 to non-
profits, for-profits, and to State, local and tribal 
governments.
---------------------------------------------------------------------------
    \21\ Letter from the U.S. General Accounting Office, Associate 
Director, Tax Policy and Administration Issues, Natwar M. Gandhi, to 
Ernest Istook, 11/08/95, found in subcommittee files.
---------------------------------------------------------------------------
    In many instances, government funding far exceeds donations 
received directly from private citizens. For example, in 1994 
Catholic Charities, one of the largest non-profit organization 
in the country, obtained $1.2 billion or 65 percent of its 
total annual revenue from government sources.
    While much of the money given away by the government is 
undoubtedly put to good use, too much of it is spent to 
subsidize political advocacy--whether it be lobbying on pending 
legislation, buying paid advertisements for political races, or 
simple grass-roots organizing. Federal grantees naturally 
develop a symbiotic relationship with their governmental 
funding sources. Even where Federal funds are not directly used 
for political advocacy, indirect support is inevitable--after 
all, money is fungible. Several votes have clearly demonstrated 
that Congress firmly believes the practice of giving grants to 
politically active organizations, termed ``Welfare for 
Lobbyists,'' must stop.
    The subcommittee explored the issue of Welfare for 
Lobbyists in great detail throughout the first session of the 
104th Congress. A total of four hearings were held by the 
subcommittee to investigate allegations that certain groups 
receiving Federal grants were engaging in political advocacy; 
to consider how Welfare for Lobbyists adversely affects both 
government and charity; and to explore possible solutions to 
the problem.
    The subcommittee also worked in coordination with the 
General Accounting Office to investigate the National Council 
of Senior Citizens (NCSC). NCSC is a non-profit organization 
that receives over 95 percent of its funding from the Federal 
Government (ostensibly to provide housing and jobs to senior 
citizens). Yet it is highly active in partisan politics. Half 
of NCSC's annual report for 1994 was devoted to a description 
of its political activities. As part of this investigation, 
electronic copies of NCSC's financial records for fiscal year 
1994 were requested. Those records are now being analyzed to 
determine whether current restrictions on the use of Federal 
funds were violated, and, if no violations took place, to 
identify the loopholes that permit an organization so heavily 
funded by the government to engage in significant political 
activity.
    In addition to investigatory hearings, the subcommittee and 
other Members also proposed legislation to address some of the 
problems associated with Welfare for Lobbyists. Ultimately, 
language was added to section 18 of the Lobbying Disclosure Act 
of 1995 to prohibit certain non-profit organizations (qualified 
as tax-exempt under IRC section 501(c)(4)) from receiving 
Federal funds in any form, if they engage in lobbying 
activities. That bill was signed into law by President Clinton 
on December 19, 1995, as Public Law No. 104-65. Those 
restrictions have no effect on grantees other than 501(c)(4)'s, 
nor do they prevent a 501(c)(4) grantee from creating shell 
corporations to separate, on paper, the grant receipts from the 
political activity.
    b. Benefits.--There is a need to protect the taxpayers by 
ensuring that Federal funds are not used to subsidize 
legislative or political advocacy. To that end, the 
subcommittee's hearings have exposed abuses of Federal grants. 
Many Members believe that further reforms are needed to 
increase accountability to the taxpayers and to prevent the 
abuse of tax dollars. With at least $42 billion in government 
grants each year, there is substantial room for waste, fraud, 
and abuse by unscrupulous grantees. The subcommittee's efforts 
will continue with an eye toward exposing existing abuses and 
demonstrating the case for reform to protect the American 
taxpayers.
    c. Hearings.--As part of its investigatory work, the 
subcommittee held four hearings on the question of Welfare for 
Lobbyists. Hearings were held to investigate allegations that 
certain groups receiving Federal grants were engaging in 
political advocacy; to consider how Welfare for Lobbyists 
adversely affects both government and charity; and to explore 
possible solutions to the problem. On June 29, 1995, the 
subcommittee heard from representatives from non-profits that 
refuse to engage in political activity or take Federal grants; 
General Accounting Office researchers and private scholars who 
have studied Welfare for Lobbyists; and Congressmen and 
Senators who are concerned about the problem as well. In 
addition, the subcommittee questioned representatives of the 
Nature Conservancy and the National Fish and Wildlife 
Foundation about allegations of improper political activity in 
connection with Federal grants they receive. Subsequent 
hearings were held on July 28, August 2, and September 28, 
1995.

2. Investigation of Improper EPA Lobbying on Pending Legislation.

    a. Summary.--The Anti-Lobbying Act is a criminal statute 
that prohibits executive branch agencies from using any 
appropriated money directly or indirectly to influence a Member 
of Congress on pending legislation, except through proper 
official channels. (18 U.S.C. sec. 1913.) The dual purpose of 
the act is to prevent agency officials from squandering public 
money in attempts to increase their budgets or protect their 
jobs, and to prevent executive branch agencies from using tax 
dollars to disseminate propaganda about pending legislation. 
Pursuant to this statute, and other Federal anti-publicity and 
propaganda statutes, the executive branch is free to propose 
such legislative measures as the President deems appropriate 
and communicate its comments directly to Members of Congress on 
any pending legislation. Executive branch officers and 
employees are prohibited, however, from engaging in any grass-
roots lobbying, even indirect grass-roots lobbying, that is 
intended to influence the legislative debate.
    In late February 1995, the committee learned the following 
facts regarding improper EPA lobbying: (1) EPA officials had 
used taxpayer funds to create non-public advocacy material 
strongly condemning pending regulatory reform legislation; (2) 
the EPA used taxpayer funds to fax these documents to more than 
150 grass-roots lobbying organizations and industry groups that 
are active in lobbying Members of Congress on these legislative 
proposals; (3) an objective reader would interpret these 
documents as a call to action, or in the words of one 
newspaper, ``a call to arms;'' (4) most of the documents, 
including the strongest advocacy pieces, were not solicited; 
(5) the mass-faxing of these documents was carefully timed to 
coincide with important votes in the House of Representatives; 
and (6) such action was consistent with a pattern of other EPA 
contacts with grass-roots lobbying organizations to defeat the 
reform legislation. These undisputed facts constituted strong 
evidence that some EPA officials had violated the criminal 
anti-lobbying laws. Indeed, the concerted EPA actions appeared 
to precisely fit the accepted definition of prohibited grass-
roots lobbying.
    On March 2, 1995, a written request for information was 
submitted to EPA Administrator Carol Browner. The Administrator 
initially responded that the EPA would cooperate with the 
oversight investigation and provide answers to the questions. 
However, EPA did not provide complete answers to any of the 
questions that were posed after an extension of time was 
granted. For example, EPA refused to say who approved the 
content of the lobbying material and who was involved in the 
decision to send it out. The EPA also refused to disclose 
whether EPA officials had meetings or conversations with 
outside lobbying groups to discuss lobbying Members of 
Congress. Instead, EPA's response to the legitimate oversight 
request was largely an argument why EPA need not provide 
Congress information regarding potential wrongdoing and waste 
of taxpayer resources.
    On March 21, 1995, subcommittee Chairman McIntosh and 
ranking subcommittee Member Peterson sent Administrator Browner 
a letter insisting on complete responses to all of its 
questions pursuant to its authority under Rules X and XI of the 
U.S. House of Representatives. The March 21 letter explained 
that the subcommittee knew of documents that EPA was refusing 
to produce, which raised concerns about possible violations of 
several Federal statutes besides the Anti-Lobbying Act, 
including other appropriation laws, the Hatch Act prohibitions 
against political activity by executive branch officials, the 
conspiracy statute, and the statute prohibiting misprision of 
felony. As the March 21 letter relayed:

          EPA simply cannot pick and choose which of the 
        subcommittee's requests for information it will honor 
        and which it will reject. We insist on complete 
        responses to all of our requests. . . . It is 
        impossible for the subcommittee to discharge its 
        oversight duty without uncovering all of the facts. 
        Your position that the Congress is not entitled to the 
        information because no one at EPA violated the Anti-
        Lobbying Act is troubling for two reasons. First, your 
        assertion that the act prohibits almost nothing is 
        unsupportable. The very opinions cited in the EPA 
        letter from the Department of Justice refute EPA's 
        interpretation of what the law allows and what it 
        prohibits.
          Second, even if we accepted EPA's . . . construction 
        of the law and blindly accepted EPA's conclusion (based 
        on EPA interviews not provided to us) that no laws were 
        violated, the information we seek still would be highly 
        relevant to our core legislative duty. If current law 
        is as empty as you assert, then our oversight 
        investigation is necessary to determine whether to 
        propose new legislation, similar to that which exists 
        for many agencies, which prohibits an even broader 
        category of publicity and propaganda activities.

The March 21 letter also contained a four-page appendix that 
refuted the agency's legal interpretation of the Anti-Lobbying 
Act.
    In the following months, EPA missed every agreed-upon 
deadline to provide the requested information. Although EPA 
eventually produced a significant number of documents, the 
agency continued to stonewall on producing answers to the most 
important questions and the most relevant documents and e-mail 
messages. At the same time, the Department of Justice's Office 
of Legal Counsel (OLC) issued new ``guidelines'' to executive 
branch agencies on interpreting the Anti-Lobbying Act. The OLC 
guidelines were substantially different from prior General 
Accounting Office (GAO) and OLC guidelines and directly 
contradicted the text of the Anti-Lobbying Act without 
justification.
    Despite the Department of Justice's refusal to investigate 
the facts, committee Chairman William F. Clinger, Jr., and 
subcommittee Chairman McIntosh reviewed the available evidence 
of improper lobbying by EPA and a host of other executive 
branch agencies. That evidence was more than sufficient to find 
a widespread pattern of lobbying by executive agencies within 
the Clinton administration, including the Departments of 
Commerce, Interior, Housing and Urban Development, Labor, the 
EPA, the Small Business Administration, and AmeriCorps.
    Chairman Clinger introduced an amendment to H.R. 2564, the 
``Lobbying Disclosure Act of 1995,'' which would clarify 
existing prohibitions and create a civil enforcement mechanism 
to prevent further improper lobbying activity. Although the 
amendment was narrowly defeated, there was widespread 
recognition that legislation of this type was needed to correct 
executive branch abuses.
    In early 1996, Chairman Clinger introduced H.R. 3078, ``The 
Federal Agency Anti-Lobbying Act,'' to create a civil law 
prohibiting agency grass-roots lobbying in support of or in 
opposition to pending legislation. Although H.R. 3078 did not 
move from committee, Chairman Clinger was able to have a 
similar prohibition enacted as section 631 of the Treasury 
Postal portion of the Omnibus Consolidated Appropriations Act 
of 1997.
    b. Benefits.--This investigation demonstrates the need for 
additional civil legislation, and greater enforcement of 
existing criminal laws regarding improper executive branch 
lobbying. The investigation also laid the groundwork for the 
consideration of civil legislation which was passed as part of 
the Omnibus Consolidated Appropriations Act that creates a 
civil enforcement mechanism to prevent further waste and abuse 
of taxpayer resources.
    c. Hearings.--The full committee conducted a hearing on 
H.R. 3078, on May 15, 1996, (see Part Two I.A.4.k.)

3. OSHA's Ergonomics Standards.

    a. Summary.--During the 104th Congress, the subcommittee 
conducted oversight into the Occupational Safety and Health 
Administration's (OSHA) rulemaking process for an ergonomics 
standard. The term ``ergonomics'' originated in industrial 
engineering to explain the idea that workplaces should be 
designed around the people who use them. The recent attention 
focused on ergonomics comes from its association with 
repetitive strain injuries (RSI's), also known as cumulative 
trauma disorders (CTD's). In spite of the lack of scientific 
evidence to support either of these theories, OSHA has 
proceeded aggressively with an ergonomics regulation.\22\
---------------------------------------------------------------------------
    \22\ Eugene Scalia, ``Ergonomics: OSHA's Strange Campaign to Run 
American Business,'' White Paper, National Legal Center for the Public 
Interest, Vol. 6, No. 3, August 1994, pp. 8-20.
---------------------------------------------------------------------------
    The regulatory moratorium bill (H.R. 450) would have 
prevented further work by OSHA on an ergonomics standard. When 
an OSHA official publicly indicated her intent to defy the 
moratorium, Congress passed a ``Stop Work Order'' on this 
rulemaking as part of H.R. 1158 and H.R. 1944, the 1995 
Rescissions Bill. Press accounts in June 1995 reported that 
OSHA had abandoned the ergonomics rulemaking. As Congress 
continued to review comprehensive regulatory reform proposals, 
the subcommittee held a hearing on July 12, 1995, with OSHA 
Assistant Secretary Joseph Dear as a witness, to finally 
establish the status of OSHA's regulatory activities on the 
ergonomics issue.
    The committee also examined whether a single, one-size-
fits-all rulemaking could ensure workplace safety and health, 
especially when serious questions still existed about the 
scientific basis of the regulation. The investigation brought 
into light the fact that the sweeping regulation would require 
that 96 million jobs across the Nation be formally reviewed for 
ergonomic ``risk factors.'' These risk factors are inherent in 
every job they include: repetitive motion; frequent or heavy 
lifting; contact stress; unsupported or awkward postures for 
long periods; and vibrating tools and equipment.\23\ Under this 
standard, workers would be prohibited from repeatedly pinching 
small binder clips or twisting their necks to cradle a 
telephone receiver. The investigation revealed that many jobs 
which include these risk factors would be abolished altogether 
in favor of automation.\24\ As a result of this investigation, 
the committee was able to establish that OSHA is continuing to 
work on the promulgation of an ergonomics rulemaking. Prior to 
the July 12, 1995 hearing, conflicting press reports were 
written on the subject. In addition to establishing the status 
of the ergonomics rulemaking, the hearing helped make a strong 
case that the rulemaking was overreaching and the House showed 
its agreement by passing a rider to deny funding DOL for 
promulgation of the ergonomics regulation.
---------------------------------------------------------------------------
    \23\ OSHA's Regulatory Process and Activities Regarding Ergonomics 
before the Subcommittee on National Economic Growth, Natural Resources, 
and Regulatory Affairs. Testimony of Joseph A. Dear, Assistant 
Secretary of Labor for Occupational Safety and Health. (Original 
transcript pp. 26-28, in subcommittee files.)
    \24\ Ibid., pp. 36-40.
---------------------------------------------------------------------------
    b. Benefits.--During the investigation, the committee 
learned from Assistant Secretary Dear that the agency is 
continuing to work on its proposed ergonomics regulation. 
Assistant Secretary Dear also confirmed that the agency is 
already enforcing the scientifically dubious ergonomics 
principles under the general duty clause, without a regulation. 
The airing of this information refuted press reports that the 
agency had stopped work on the massive regulation and renewed 
congressional scrutiny of the rulemaking process. A study 
released in January 1995, conducted by experts in occupational 
medicine, concludes that OSHA did not ground its proposed 
ergonomic regulation in sound medicial science. Rather OSHA 
selected research that supported its position and ignored or 
minimized findings that did not. In the Labor-HHS 
Appropriations bill to fund OSHA in 1996, Congress approved a 
prohibition on funds for further work on the ergonomics 
standard.
    c. Hearings.--The subcommittee held a hearing on July 12, 
1995, on ``OSHA's Regulatory Activities and Processes Regarding 
Ergonomics.'' Testimony was received from: Joseph A. Dear, 
Assistant Secretary of Labor for Occupational Safety and 
Health, U.S. Department of Labor; Joseph M. Woodward, Esquire, 
Associate Solicitor, Occupational Safety and Health Division, 
Office of the Solicitor, U.S. Department of Labor; David 
Sarvadi, attorney, Keller and Heckman; Howard M. Sandler, M.D., 
president, Sandler Occupational Medicine Associates, Inc.; C. 
Boyden Gray, Esquire, chairman, Citizens for A Sound Economy; 
Rick Treaster, president, Local 2400, Amalgamated Clothing and 
Textile Workers Union; Deborah Berkowitz, director, office of 
occupational health, United Food and Commercial Workers 
International Union.

4. Improper FDA Rulemaking.

    a. Summary.--The committee conducted an investigational 
hearing on the improper use of informal rulemaking by the Food 
and Drug Administration in cooperation with the Subcommittee on 
Human Resources and Intergovernmental Relations. This 
investigation resulted from a compelling Citizens' Petition 
filed with the FDA pursuant to section 553 of the 
Administrative Procedures Act by the Indiana Medical Device 
Manufacturers Council and the law firm of Baker & Daniels on 
May 2, 1995. That Citizens' Petition asked the FDA to add back 
certain language that the agency had deleted from its 
regulations in 1991 requiring notice and comment procedures for 
most rules. The 1991 language deletion permitted the FDA to 
issue guidance documents without subjecting them to notice and 
comment rulemaking. The Petition also asked the FDA to 
implement a consensus-based approach to the initiation, 
development and issuance of guidance documents that do not 
impose new rules, and to adopt greater internal controls over 
its communications with the public. In support, the Petition 
identified dozens of examples where informal guidance documents 
had been used by the FDA to justify enforcement actions or 
approval decisions that could not be otherwise justified by a 
formal rule or statute.
    Subcommittee Chairmen McIntosh and Shays submitted written 
questions to the FDA, which resulted in the production of 
hundreds of pages of documents and a number of instructive 
answers. For example, the FDA revealed that its decision in 
1991 to exempt guidance documents from notice and comment 
rulemaking procedures was made despite criticism from an 
independent government agency charged with improving government 
regulations. In a September 24, 1990 letter, Marshall Breger, 
chairman of the Administrative Conference of the United States, 
advised the Acting Commissioner of the FDA, James Benson, ``FDA 
should reconsider its seeming ``all-or-nothing'' approach with 
regard to using notice-and-comment procedure in the 
promulgation of interpretive rules.''
    In addition to focusing on the Citizens' Petition, the 
hearing also provided an opportunity for Members to consider a 
briefing paper published by David Murray of the Hudson 
Institute, entitled ``The Human Cost of Regulation: The Case of 
Medical Devices and the FDA.'' In that paper, the Hudson 
Institute concluded thousands of Americans had died as a result 
of FDA delay in approving just four medical devices. As one 
example from the paper indicates, nearly 1,100 Americans died 
as a result of a 24-month delay in the FDA's approval of 
endocardial leads.
    On October 30, 1995, the FDA provided a preliminary written 
response to the Citizen's Petition. Significantly, the FDA 
granted the petitioners' request that the FDA improve its 
guidance document procedures. In a letter signed by the Deputy 
Commissioner for Policy, the FDA concluded:

          ``FDA believes that there is merit to your concern 
        about the initiation, development, and issuance of 
        guidance documents. FDA agrees that public 
        participation benefits the guidance document 
        development process. Moreover, FDA believes that the 
        Agency can do a better of [sic] job of communicating to 
        its employees and to the public the non-binding nature 
        of guidance documents.''

    However, the FDA denied the petitioners' request for the 
FDA to add back certain language that the agency had deleted 
from its regulations in 1991 requiring notice and comment 
procedures for most rules. The FDA ruled ``notice-and-comment 
rulemaking would significantly delay the issuance of guidance 
documents, or more likely, make it impracticable to issue them 
at all. The Agency believes that the proper balance between the 
need for public input and the need for timely guidance can be 
struck if FDA modifies its guidance document procedures. This 
approach addresses your concerns regarding adequate public 
participation but does not make it impossible for FDA to 
continue making guidance available.''
    In that same letter, the FDA also announced plans to 
publish by January 31, 1996, a Federal Register notice setting 
forth its proposed ideas for revising guidance document 
procedures and its intention to solicit comment on the issues 
raised in the Citizens' Petition.
    b. Benefits.--The investigation helped focus both the 
public's and the FDA's attention on an issue that is of 
significant importance to the regulated community. The extent 
to which guidance documents and other informal statements 
issued by a regulatory body are used by that body is a core 
problem for any regulatory system. The Administrative 
Conference of the United States has recognized this concern, 
and has attempted to address solutions on a governmentwide 
basis. This investigation helps to highlight this concern with 
respect to the FDA. However, the FDA is not the only agency 
that could benefit from considering its treatment of informal 
rulemaking. The EPA, OSHA, and every other regulatory body 
needs to voluntarily examine their current rulemaking 
procedures. Failure to act voluntarily will inevitably lead 
more private citizens to use the Citizens' Petition process as 
a means of forcing the agencies to act responsibly. The 
subcommittee encouraged the filing of such petitions, and 
invites private citizens to bring them to its attention.
    c. Hearings.--A hearing on this matter was held on 
September 14, 1995. Witnesses included: William Schultz, Deputy 
Commissioner for Policy, FDA; Brad Thompson of the law firm of 
Baker & Daniels; Larry Pilot, counsel to the Medical Device 
Manufacturers Association; Ed Kimmelman, regulatory affairs 
director for Boehringer Mannheim Corp.; Thomas Lenard, Ph.D., 
director of regulatory studies at the Progress & Freedom 
Foundation; David Murray of the Hudson Institute's 
Competitiveness Center; and Jeff Brinker, M.D., director of 
interventional cardiology, Johns Hopkins Hospital.

5. Regulatory Reform.

    a. Summary.--The committee conducted an examination of the 
impact of Federal regulations on average Americans across the 
Nation. The subcommittee visited 17 cities and held hearings on 
the need for regulatory reform. Testimony from the hearings 
clearly showed that Government regulations place undue burdens 
on small business and the American people--burdens that are not 
outweighed by regulatory benefits.
    In Washington, DC, Federal agency officials and some 
Members of Congress make the case that more and more 
regulations are needed. However, outside Washington, DC, 
citizens plead for relief from the needless burden of 
regulations that already exist. In some cases the burden of 
regulations just makes it more difficult for these individuals 
to do their jobs. In other cases, regulations threaten to drive 
them out of business completely.
    The subcommittee found that America's hard-working farmers, 
who grow the food on which we all subsist, are heavily and 
unnecessarily burdened by regulations. One farmer in Oklahoma, 
Robert Ross, testified that Federal agencies issue so many 
convoluted regulations that it is nearly impossible for farmers 
not to break the law. Farmers are left with no other option but 
to follow the rules to the best of their ability, knowing that 
at any time, an agency inspector could fine them for a minor 
violation or, worse, take their land away. Another Oklahoma 
farmer, Ruby Henderson, testified that she can no longer farm 
her own land because it has been classified as a wetland--
although it remains dry most of the year.
    The subcommittee also found that regulations can be 
counterproductive, hurting the very people our society and our 
government should be trying to help. In Modesto, CA, a Laotian 
immigrant farmer leased 20 acres of land between two major 
roads which are good for only one thing--farming strawberries. 
Two agencies, the Fish and Wildlife Service and the Army Corps 
of Engineers, quickly stepped in to stop him from farming his 
own land. After much headache and paperwork, which involved the 
agencies first losing and then rejecting his forms because the 
drawings were not quite to scale, this farmer is still in 
limbo. He came to America because he thought it was the land of 
opportunity, and he wanted to escape governmental abuse. 
Unfortunately, he has not been able to do that here. His 
American dream has become a personal nightmare.
    Testimony from the field hearings also showed that 
regulations can have a counterproductive impact on large 
pockets of the American populace. For example, the small city 
of Manson, IA was forced to reduce the level of fluoride in the 
public drinking water--it was 4 to 5 milligrams per liter while 
Federal regulations required only 4 milligrams per liter. Even 
though the discrepancy between the actual level and the 
mandated level was very small, and fluoride is a good thing, 
the city was forced to install a reverse osmosis treatment 
plant to remove 1 milligram or less of fluoride per liter of 
water at a cost of more than $700,000. Water rates were 
increased by 45 percent to cover the operational costs of the 
plant. Property taxes were raised and now approximately 24 
percent of these taxes are allocated to paying off the bonds 
the city had to sell to build the plant. Some 50,000 gallons of 
water are rejected by the plant daily.
    In some cases, regulations aren't as much at fault as the 
methods Federal agencies use to enforce them. According to Dr. 
Jonathon Wright, on May 6, 1992, a group of flak-jacketed 
police and FDA agents kicked in the front door of the Tahoma 
Clinic, and with guns pointed at the staff demanded, among 
other things, their B vitamins. The raid came without any prior 
contact or inquiry from the FDA. In September 1995, the FDA's 
``criminal investigation'' was dropped without as little 
warning as it was started--and without any explanation, apology 
or reimbursement of costs.
    b. Benefits.--The field hearings have given private 
citizens across the Nation the opportunity to participate in 
the regulatory reform debate in Congress. By reaching outside 
Washington, DC, and listening to those people who must comply 
with Federal regulations on a daily basis, the subcommittee 
learned about many of the problems that the Federal regulatory 
system poses: use of excessive force by agencies, costly 
regulations that threaten to drive farmers and small business 
owners into bankruptcy, and counterproductive regulations that 
burden the American consumer without providing the benefits of 
protection for health and safety. The testimony of witnesses at 
the field hearings has helped build the record for regulatory 
reform, supporting the need for legislation to enact true, 
common-sense reform. Such significant legislation was enacted 
in the Small Business Regulatory Enforcement Fairness Act of 
1996, which gives Congress veto power over agency regulations.
    c. Hearings.--The subcommittee held the following field 
hearings: ``The Regulatory Transition Act of 1995 (H.R. 450) 
and Clean Air Act Regulations'' in Fairfax, VA, on February 2, 
1995. Testimony was received from: Robert W. McGillicuddy, 
AutoCare, Inc.; Dennis Dwyer, Potomac Mills Exxon; Ron Harrell, 
Capital Services, Inc.; Becky Norton Dunlop, secretary of 
natural resources, Commonwealth of Virginia; Robert E. 
Martinez, secretary of transportation, Commonwealth of 
Virginia; Robert B. Dix, Jr., Fairfax County board of 
supervisors; Lorraine Lavet, Fairfax County chamber of 
commerce; Stan Laskowski, Deputy Regional Administrator, Region 
3, Environmental Protection Agency; Ellen Bosman, vice 
chairman, Arlington County board; Sheryll Crosby, Shortness of 
Breath Club, American Lung Association. ``The Need for 
Regulatory Reform'' in Muncie and Indianapolis, IN, on April 
17, 1995. In Muncie, testimony was received from: Betty Devoe, 
executive director, Westminster Village; Joseph Russell, 
farmer; Wayne Townsend, farmer; Tom Miller, vice president, 
commercial lending, American National Bank; Lowell Williams, 
senior vice president, First Merchants Bank; Eugene Roach, 
M.D., medical director, Anderson Center of St. John's; James 
Currier, M.D., radiation oncologist; Robert Brodhead, 
president, Ball Hospital; George Brannum, M.D., Pathologists 
Associated; G.W. Bartlett, president, G.W. Bartlett Co.; 
Richard Brown, sales manager, Beckett Bronze; Robert Kersey, 
president, Rochester Metal Products; Robert Anderson, plant 
manager, Delphi Interior and Lighting Systems; Richard 
Sullivan, vice president and division manager, New Venture 
Gear; Mike Lunsford, realtor; Terri Quinter, supervisor, Rose 
View Transit; Katherine Kleber, Abate of Indiana PAC; Dan 
Conaway, Abate of Indiana PAC. In Indianapolis, testimony was 
received from: Alan Kemper, farmer; Warren Baird, farmer; Bart 
Dye, farmer; Jean Ann Harcourt, president, Harcourt Outlines; 
Malcolm Applegate, president and general manager, Indianapolis 
Newspapers; Jeff Bowe, president, Benham Press; John Keach, 
Jr., president, Home Federal Savings Bank; Jerry Baumgartner, 
president, Tri County Bank and Trust; Jeff Robinson, Indiana 
American Water Co.; Myles Brand, president, Indiana University. 
``Regulatory Problems Maine Citizens Face Under the Clean Air, 
Clean Water, and Safe Drinking Water Acts'' in Portland, ME, on 
May 26, 1995. Testimony was received from: Richard Verville, 
Citizens for Sensible Emissions; Monte Sloan, United Bikers of 
Maine; David Dixon, Earth Tech; Jinger Duryea, C.N. Brown Co.; 
Edward F. Miller, American Lung Association of Maine; Everett 
B. Carson, Natural Resources Council of Maine; Senator Jeffrey 
H. Butland, president of the senate, Maine State Senate; David 
Sweet, superintendent, Kennebunk, Kennebunkport and Wells Water 
District; Delores Lymburner, Maine Peoples Alliance; Judy W. 
Hayes, president, Consumers Maine Water Co.; Dale Glidden, 
superintendent, Augusta Sanitary District. ``Regulatory Reform 
and the FDA Drug Approval Process'' in Norristown, PA, on June 
9, 1995. Testimony was received from: Beverly Zakarian, 
president, Cancer Patients Action Alliance; David and Faith 
Samowitz; Mariah Gladis; Kiyoshi Kuromiya; Dr. David Bios, vice 
president, worldwide regulatory affairs, Merck & Co.; Dr. James 
Molt, vice president, worldwide regulatory affairs, Rhone-
Poulence Rorer; Dr. Robert Powell, vice president, regulatory 
affairs, SmithKline Beecham Co.; Bruce Carroll, manager, 
government relations division, Centocor, Inc.; Dr. Robert 
Larkin, director, registration & regulatory affairs, 
agricultural chemicals business, Rohm & Haas Co.; Mike Lumpkin, 
Deputy Director, Center for Drug Evaluation and Research, FDA. 
``The Need for Regulatory Reform'' in Tampa, FL, on July 17, 
1995. Testimony was received from: Juan Adriatico, farmer; Roy 
Davis, nurseryman and president, Hillsborough County Farm 
Bureau and president, Tampa Bay Chapter of the Florida 
Nurserymen and Growers Association; Tommy Brock, farmer and 
president, Hillsborough County Strawberry Growers Association; 
David Boozer, executive director, Florida Tropical Fish Farms 
Association; Charles E. Weeder, chairman and CEO, Homes of 
Merit, Inc.; Bruce Congleton, president and CEO, Florida Food 
Industry Association. ``Federal Regulatory Reform'' in St. 
Cloud, MN, on August 7, 1995. Testimony was received from: 
Harold Anderson, president, Anderson Trucking Service; Mike 
Helfeson, CEO, Gold'n Plump Poultry; Bruce Gohman, president, 
W. Gohman Construction Co.; Morrie Lanning, mayor, Moorhead, 
MN; Don Adams, director, Stearns County Environmental Services; 
David Volker, loss control manager, Berkley Administrators; 
Peter Larsen, M.D., F.A.C.S., St. Cloud Eye Clinic; John 
Solheim, CEO, St. Mary's regional health center, Detroit Lakes; 
Ed Zapp, president, chairman and CEO, Zappco Inc. ``Federal 
Regulatory Reform Pertaining to Federal Contracts'' in St. 
Paul, MN, on August 8, 1995. Testimony was received from: Ron 
Turner, president, Minnesota Federal Contractors Council, Joe 
Weis, chairman, Weis Builders; Todd Goderstad, legal counsel, 
Ames Construction Co.; Ted Arneson, president, Professional 
Instruments; Donnovan Eaker, owner, Steve's Meat Market; 
Charles McDuff, director of government and technical affairs, 
Ecolab Inc.; Lyle Clemenson, president, CEI, Inc.; William D. 
Smith, Jr., executive vice president, Brown & Bigelow. ``FDA 
Medical Product Approvals'' in Rochester, MN, on August 8, 
1995. Testimony was received from: Dr. Robert Schwartz, 
cardiologist, the Mayo Clinic; Dr. Richard Geier, president, 
Olmsted Medical Group; Dr. Mike Murray, president-elect, 
Minnesota Medical Association; Paul Citron, vice president of 
science and technology, Medtronic; Mike Gozola, president, 
Rochester Prosthetic Laboratories. ``The Federal Regulatory 
Climate in Maryland,'' in Towson, MD, on January 26, 1996. 
Testimony was received from: Paul Abenante, president, American 
Bakers Association; William Paterakis, H&S Bakery; John 
Morrison, vice president of Human Resources, Schmidt Baking 
Co.; Alvin Manger, president, Manger Packing Co.; Edward Lauer, 
owner, Lauer's Super Thrift; Joseph DeFrancis, president, 
chairman and CEO, Pimlico Race Course; Timothy Capps, Maryland 
Horse Breeders Association; William A. Good, executive vice 
president, National Roofing Contractors Association; Mark 
Gaulin, president, Magco, Inc., and president, Associated 
Roofing Contractors of Maryland; Calvin Coblentz, president, 
Wimpey Minerals U.S.A., Inc., and president, Maryland 
Associated General Contractors; William T. Popmaronis, 
president, EPIC MD Professional Pharmacies and owner, Edwards 
and Anthony Pharmacy; Hugh Brown, president, Safeguard 
Maintenance Corp.; Michael Stappler, president, Overlea 
Caterers, Inc.; Thomas Meighan, safety manager, Stromberg Metal 
Works, Inc.; Rabbi Moshe Heinemann, Star-K Kosher 
Certification; Joseph DiCara, GOW International, Inc. ``The 
Need for Regulatory Reform,'' in Sioux City, IA, on February 8, 
1996. Testimony was received from: Harold Higman, Higman Sand & 
Gravel; David Calhoun, Wells Blue Bunny Dairy; Corky Bailey, 
JEBRO; Ellen Prescott, Security National Bank; George 
Valentine, Terra Industries, Inc.; Craig Davis, Davey & Jim's 
Seed Store, Inc.; Ron Marr, Petroleum Marketers of Iowa; Bob 
Hamilton, chief, Sioux City Fire Department; Linda Madison, 
Sioux City Community School District; Stephen Brevig, Northwest 
Iowa Power Cooperative; Don Meisner, Siouxland Interstate Metro 
Planning Council. ``The Need for Regulatory Reform,'' on 
February 9, 1996 in Des Moines, IA. Testimony was received 
from: Wes Houston, human resources manager, Johnson Machine 
Works, Inc.; Loren Duchman, consultant, James B. Meehan, PE, 
PC; Don Beal, president, Beal Development Corp.; David Whiton, 
owner, Whiton Feed and Milling Co.; Bill Willis, Soil 
Conservation Consultant; Richard Seigel, farmer; Royal 
``Curly'' Holtz, II, farmer; Howard Alff, farmer; Harvey 
Johnson, farmer; Dean Torreson, city administrator, city of 
Atlantic; Robert Layton, city manager, city of Urbandale; 
Fletcher Reel, mayor, city of Missouri Valley; Tom Hanafan, 
mayor, city of Council Bluffs; Joe A. Gray, mayor, city of 
Manson; L.D. McMullen, CEO and general manager, Des Moines 
Water Works. ``The Impact of Regulations on California's 
Central Valley,'' in Modesto, CA, on April 1, 1996. Testimony 
was received from: Shel Thompson, president, Charter Mortgage; 
Robert Rucker, president, Rucker Construction; Ron West, Ron 
West Consulting; John Roberts, CEO, California Rice Industry 
Association; Norma Cordova, director, Sand Creek Flood Control 
District; Dan Nelson, executive director, San Luis Delta 
Mendota Water Authority; Allen Short, general manager, Modesto 
Irrigation District; Roger Wood, corporate vice president, J.R. 
Wood Co.; Manuel Cunha, president, NISEI Farmer's League; 
Carolyn Richardson, director, Department of Environmental 
Advocacy; Pat Paul, chair, Stanislaus County Board of 
Supervisors. ``Creating an Employer-Friendly Regulatory 
System,'' in Auburn, WA, on April 2, 1996. Testimony was 
received from: Dr. Jonathon Wright, Tahoma Clinic; Timothy S. 
Cooke, CEO, the Electrode Store; Ray Schow, State senator and 
owner, All-Night Printery and ANP Publishers; Ann Anderson, 
State senator; Suzette Cook, State representative; Pat Cattin, 
owner, Cattin's Restaurant; Don Guthrie, vice president, 
Wayne's Roofing; David Cornforth, co-owner, Cornforth-Campbell 
Pontiac, Buick, GMC; Keith Shay, former employee, Cornforth-
Campbell Pontiac, Buick, GMC. ``Taxing Times: The Case for IRS 
Reform,'' in Phoenix, AZ, on April 3, 1996. Testimony was 
received from: Sybille Koberstein; Alma Davis; Marlan Walker, 
Walker Ellsworth, P.L.C.; Yale Goldberg, Fraiser, Ryan, 
Goldberg & Hunter, L.L.P.; Mike Pietzsch, Polese, Pietzsch, 
Williams and Nolan; William Raby, the Raby Law Office; Natwar 
Ghandi, Associate Director of Tax Policy, General Accounting 
Office; Leigh Cheatham, deputy director, Arizona Department of 
Revenue; Judith C. Dunn, Associate General Counsel (domestic), 
Internal Revenue Service. ``The Impact of Regulations on the 
Oil Industry,'' in Norman, OK, on May 20, 1996. Testimony was 
received from: Frank McPherson, chairman of the Board, Kerr 
McGee; Richard Bilas, John A. & Donnie Brock Chair in Energy 
Economics & policy director, University of Oklahoma Energy 
Center; Christine Hansen, Interstate Oil and Gas Compact 
Commission; Terry Ross, executive vice president, Love's 
Country Stores; Susie King, senior staff engineer, Conoco; 
Barbara Price, vice president, Health, Environment and Safety, 
Phillips Petroleum; Mike Cantrell, president, Oklahoma 
Independent Petroleum Association; Troy Vickers, deputy 
director of Regulatory Services, Amoco Corp.; Commissioner Ed 
Apple, Oklahoma Corporation Commission. ``The Hidden Cost of 
Government Regulations,'' in Claremore, OK, on May 20, 1996. 
Testimony was received from: Wayne Francis, mayor of Henryetta; 
Sam Wade, deputy CEO, National Rural Water Association; Gene 
Whatley, executive director, Oklahoma Rural Water Association; 
Ron Meadows, superintendent, Prue Public Schools; Sue Ann 
Clayton, Cystic Fibrosis Patient; Joe Cox, president, 
Hydrohoist International; Ted McGuire, president & CEO, RCB 
Bank; Ruby Henderson, farmer; Robert Ross, farmer; Charles 
Sloan, farmer, Sequoyah County Farm Bureau; Don Turner, Turner 
Bros. Meats; Larry McFerron, McFerron's Quality Meats; James 
Zangger, Greenleaf Nursery.

6. Privatization of Sallie Mae and Connie Lee.

    a. Summary.--The Subcommittee on National Economic Growth, 
Natural Resources, and Regulatory Affairs and the Subcommittee 
on Postsecondary Education, Training and Life-Long Learning of 
the House Committee on Economic and Educational Opportunities 
held a joint hearing on the possible privatization of Sallie 
Mae and Connie Lee, both of which were chartered under the 
Higher Education Act. Sallie Mae was established in 1972 as a 
shareholder-owned, for-profit corporation to help ensure 
adequate private sector funding for federally guaranteed 
education loans. Sallie Mae supports financing for higher 
education loans primarily by making a secondary market in such 
loans and providing related financial and operational support 
to lending and educational institutions. Connie Lee was 
established in 1986 as a Triple-A rated, for-profit municipal 
bond insurance company which guarantees the repayment of bonds 
issued by colleges, universities, and teaching hospitals for 
the construction and renovation of facilities. Connie Lee helps 
educational institutions with lower investment grades obtain 
low cost, long-term capital.
    Members were interested in hearing testimony on whether it 
was in the public interest, and the interest of the 
stockholders of Sallie Mae and Connie Lee, that they be 
privatized because of changes in the secondary markets that 
these government-sponsored enterprises (GSE's) serve, and other 
changes in government policy.
    b. Benefits.--The information gained by the hearing 
provided valuable information on the following three questions: 
(1) whether the markets served by Sallie Mae and Connie Lee 
were mature enough to allow these GSE's to be privatized and 
pursue other socially productive business opportunities; (2) if 
the markets were mature enough, whether it was fundamentally 
unfair to prevent the stockholders of these companies from 
deciding for themselves the future of their companies; and (3) 
if privatization of Sallie Mae and Connie Lee was in the public 
and private interest, what general form the legislation should 
take to accomplish this objective.
    c. Hearings.--On May 3, 1995, the Subcommittee on National 
Economic Growth, Natural Resources, and Regulatory Affairs and 
the Subcommittee on Postsecondary Education, Training and Life-
Long Learning of the House Committee on Economic and 
Educational Opportunities held the joint hearing. The first 
panel of witnesses included Larry Hough, the president of 
Sallie Mae; Oliver Stockwell, the president of Connie Lee; 
along with representatives from the U.S. Department of 
Education and the U.S. Department of the Treasury. These 
witnesses testified about advantages of privatizing these GSE's 
and the possible terms of such privatization arrangement. The 
second panel of witnesses included experts on the financial 
markets served by Sallie Mae and Connie Lee. These witnesses 
discussed the typical life cycle of a GSE and explained that 
the secondary markets served by Sallie Mae and Connie Lee were 
sufficiently mature to make privatization appropriate.

7. Mismanagement of Grants by the Environmental Protection Agency.

    a. Summary.--The subcommittee initiated an investigation of 
the Environmental Protection Agency's grantmaking process. The 
subcommittee's investigation, spurred by a September 28, 1995 
report entitled ``Final Report of Audit on EPA's Controls Over 
Assistance Agreements'' by the EPA's Inspector General, found 
financial mismanagement that potentially places billions of tax 
dollars at risk. Grants generally compose more than half of the 
EPA's annual budget of approximately $6 billion.
    The agency's Inspector General found violations of EPA 
policies and procedures, destruction of critical grant 
documents, and blatant disregard for sound management 
practices.
    The Inspector General's report stated that ``audits have 
shown that the recipients of assistance agreements have at 
times misspent and wasted millions of dollars.'' The report 
attributes some of the abuse to the fact that EPA ``personnel 
did not comply with EPA policies and procedures when 
administering assistance agreements.''
    The Inspector General's audit revealed that an examination 
of agency grant records showed a ``disregard of basic 
management techniques.'' For example, in many documents, the 
grant agreement itself--the contract between the grantee and 
the government--could not be found. In some cases, EPA 
employees improperly destroyed grant documents, despite 
``numerous directives prohibiting the destruction of records.''
    The EPA has acknowledged the problems. In response to the 
Inspector General's report, the official EPA response stated 
flatly: ``The findings are consistent with the findings in 
previous reports. Basically, no new issues are identified.'' 
\25\ A later agency response indicated that ``many of the 
conditions which affect [EPA's] ability to administer and close 
out assistance agreements are a result of Agency priorities and 
lack of resources.''\26\
---------------------------------------------------------------------------
    \25\ A memorandum from Sallyanne Harper, Acting Assistant 
Administrator for Administration and Resource Management at EPA to 
Elissa Karpf, Deputy Assistant IG for Acquisition and Assistance Audits 
dated September 19, 1995.
    \26\ A memorandum from Al Pesachowitz, Acting Assistant 
Administrator for Administration and Resource Management at EPA to 
Elissa Karpf, Deputy Assistant IG for Acquisition and Assistance Audits 
dated March 25, 1996.
---------------------------------------------------------------------------
    The EPA has clearly indicated what its priorities are. 
Today, there are only 11 people in EPA headquarters in 
Washington watching out for the billions of dollars in 
taxpayer's money sent out each year in grants. To put that in 
perspective, more than 13 people work in EPA's public relations 
shop.
    On July 30, 1996, the subcommittee held a hearing to hear 
from Inspector General John Martin regarding the variety and 
volume of abuses of the grantmaking process uncovered. EPA 
Administrator Carol Browner was invited but refused to appear 
before the subcommittee to respond to the concerns raised by 
the Inspector General about half of the Agency's annual budget. 
Instead, the subcommittee heard from Deputy Administrator Fred 
Hansen.
    The subcommittee heard from Inspector General Martin that 
the Agency had not filed a formal response outlining proposed 
corrective action related to the September 28, 1996 report 
until just days before the subcommittee's hearing. Under the 
EPA's own guidelines, this report should have been provided 
months before the hearing.
    Further, the subcommittee heard from Deputy Administrator 
Hansen that it would take the EPA years in order to relieve the 
backlog of unmonitored grants and to establish the policy, 
procedures, and training necessary to adequately protect 
taxpayer funds from abuse.
    Mr. Hansen also testified that the EPA could not assure the 
Congress that taxpayer funds are not being used for lobbying or 
political purposes due to the EPA's lax management practices. 
Inspector General Martin agreed to work with the subcommittee's 
staff to initiate a review of potential abuse of taxpayer-
funded grants to subsidize lobbying and political activity.
    b. Benefits.--The EPA Inspector General found that more 
than $33 million in additional funds could have been spent 
cleaning up the environment if EPA had properly closed out 
completed grants. By failing to do so, grantees escaped a final 
audit and the American public was cheated out of a cleaner, 
safer environment.
    The subcommittee and the Inspector General of the EPA both 
intend to carefully monitor the Agency's ongoing corrective 
actions in order to ensure that the taxpayer's money is 
adequately protected while maintaining a cleaner, safer 
environment.
    c. Hearings.--``Mismanagement of Grants by the 
Environmental Protection Agency,'' July 30, 1996.

8. Investigation of the White House Database (WhoDB).

    a. Summary.--In response to press reports related to the 
committee's investigation of the improper acquisition of FBI 
files by the White House, the subcommittee undertook a review 
of the White House Database.
    The subcommittee has requested documents and information 
from the White House, various Federal agencies, and outside 
contractors with regard to their involvement with the WhoDB. 
The White House has not cooperated with the subcommittee's 
requests in a timely fashion.
    The subcommittee's initial review of the WhoDB shows that 
it is a computerized system of records that has information on 
more than 350,000 individuals and 80,000 organizations. The 
computer data base maintains sensitive personal and political 
information on these individuals and organizations.
    The subcommittee held an initial hearing on the WhoDB on 
September 10, 1996 and heard from witnesses from the General 
Accounting Office and legal experts on privacy and 
appropriations law.
    The General Accounting Office (GAO) testified that the 
White House cannot ``ensure that users are properly accessing 
and using'' the White House Database and that there is ``an 
opportunity for misuse'' of the system. In testimony by GAO's 
Director of Information Resources Management, Jack Brock, the 
independent auditing agency stated that the WhoDB system lacks 
basic security features, such as an access log and audit trail, 
that would track whether the ``sensitive information'' was 
being misused. He testified that the White House should assure 
``accountability'' in the WhoDB by operating under the 
``principles of [OMB Circular] A-130.''
    OMB Circular A-130, the official guidance document for 
computerized data bases, states that the government shall 
``limit the collection of information which identifies 
individuals to that which is legally authorized and necessary 
for the proper performance of agency functions.'' It does not 
appear that the White House's policy of keeping information on 
the fact that individuals attended DNC functions or received 
DNC or Re-election Committee Holiday Cards in 1995, as the 
WhoDB does, complies with this standard.
    b. Benefits.--The subcommittee's investigation of the WhoDB 
is ongoing, as is the General Accounting Office's review of the 
system. The investigation seeks to ensure that taxpayer funds 
are protected from abuse and that the White House has properly 
and legally spent appropriated funds.
    The investigation also will determine whether new 
safeguards or other restrictions need to be placed on the White 
House Database specifically or on government information 
systems generally.
    Internal White House estimates show that more than $1.7 
million of taxpayer money has been spent to design, develop and 
maintain the WhoDB.
    c. Hearings.--``Propriety of the White House Database,'' 
September 10, 1996.

9. The Effects of a Minimum Wage Increase.

    a. Summary.--The subcommittee examined the consequences of 
an increase in the minimum wage. The subcommittee held a 
hearing at which it heard from economic experts on the wage 
issue as well as employers and minimum wage employees. The 
testimony presented to the subcommittee clearly showed that an 
increase in the minimum wage would have a significant negative 
effect on employment.
    David Neumark, professor of economics at Michigan State 
University, testified that a hike in the minimum wage would 
have detrimental effects. Neumark has researched the minimum 
wage issue with William Wascher of the Federal Reserve Board 
for the past 6 years. In their first paper on the general 
employment effects of a minimum wage increase, Neumark and 
Wascher used data from the 50 States and Washington, DC between 
1973 and 1989 to estimate the effects of a change in the 
minimum wage on the employment of workers, aged 16 to 24. They 
concluded from the data that a 10 percent increase in the 
minimum wage results in a reduction of the employment rate of 
young workers by 1 or 2 percent. Applied to the proposed 
minimum wage increase of about 20 percent, their results 
predict a decline in employment of 2 to 4 percent among young 
workers. Neumark testified that, taking into account a rise in 
nominal wages, he now estimates the proposed minimum wage hike 
will result in a decline of 100,000 to 200,000 jobs among young 
workers.
    Given the fact that employment declines when the minimum 
wage goes up, Neumark examined the question of whether minimum 
wage increases are the best way to reduce poverty. He concluded 
that minimum wage increases are an ineffective means of 
reducing poverty because such increases do not target 
individuals in poor families and they result in some low-wage 
workers losing their jobs.
    Neumark and Wascher's research went beyond employment 
effects to examine the effects of minimum wage increases on 
school enrollment. Their findings were compatible with economic 
theory which suggests that minimum wage increases lead 
employers to decrease the number of lowest-skilled workers, who 
cost more to employ when the minimum wage goes up, and choose 
more skilled workers. This leads to two results for teenagers: 
those teenagers who have already left school and are employed 
full time lose their jobs at a high rate; and those teenagers 
who were enrolled in school and are more skilled have more 
attractive job opportunities and leave school for full-time 
work. Thus, increases in the minimum wage lead to increases in 
the high school drop out rate.
    Neumark and Wascher's most recent research has disproved 
the study done by David Card and Alan Krueger, which is most 
frequently cited in support of raising the minimum wage. The 
Card and Krueger study looked at fast-food restaurants in New 
Jersey before and after the minimum wage was increased from 
$4.25 to $5.05. They concluded from their data that relative 
employment rose in New Jersey as a result of the minimum wage 
increase. Neumark and Wascher, however, point out that Card and 
Krueger's data were obtained from a telephone survey and were 
very imprecise measures of changes in employment. Neumark and 
Wascher studied payroll data from the same restaurants and came 
to the exact opposite conclusion--that New Jersey's minimum 
wage increase led to a decline in employment in fast-food 
restaurants in the State.
    Several renowned economists also testified about the 
negative consequences of an increase in the minimum wage, 
particularly on employment. Finis Welch, Abell Professor of 
Liberal Arts and Distinguished Professor of Economics, Texas 
A&M University testified that his studies have shown that 
increases in the minimum wage will cause significant 
unemployment, particularly among teenagers. Kevin Murphy, 
George Pratt Shultz Professor of Business Economics and 
Industrial Relations, University of Chicago, testified that his 
studies have shown that increases in the minimum wage will 
cause significant unemployment among the least skilled workers. 
His studies have also shown that the minimum wage is one of the 
least effective means of helping poor wage earners. He 
explained how the cost of goods and services will increase for 
the poor under a hike in the minimum wage. William A. Niskanen, 
Ph.D. economist, former Economic Adviser to President Reagan, 
and chairman, Cato Institute, has studied what type of worker 
earns the minimum wage. He testified that current minimum-wage 
workers are not family breadwinners. He testified that other 
anti-poverty approaches, such as EITC and other tax cuts, are 
much more targeted to help family breadwinners.
    In contrast to the other witnesses, Edward Montgomery, 
Professor of Economics at the University of Maryland, testified 
that the evidence suggests that the employment losses 
associated with an increase in the minimum wage would be small. 
He also stated that since the evidence points to small 
employment losses, it would be short-sighted to ignore the 
financial gains a minimum wage increase would offer to minimum 
wage workers. All of the other expert and citizen witnesses 
disputed Montgomery's conclusions.
    b. Benefits.--The subcommittee learned that the unintended 
consequences of raising the minimum wage would be felt most by 
those least able to absorb them--seniors, the disabled and new 
employees in the work force--because it would create higher 
unemployment and higher prices for goods and services. 
Subcommittee Chairman David McIntosh introduced legislation 
proposing a minimum wage tax cut as an alternative to raising 
the minimum wage. McIntosh's legislation would cut Federal 
taxes for workers earning between $4.25 and $5.15 an hour, and 
it would raise workers' take home pay to $4.57 an hour, 
compared to the current $3.92 when Federal withholdings are 
deducted.
    c. Hearings.--The subcommittee held a hearing on May 14, 
1996, on ``The Effects of a Minimum Wage Increase.'' Testimony 
was received from: David Neumark, Ph.D., professor of 
economics, Michigan State University; Melody Rane, Burger King 
Franchisee; Don Baisch, manager, Burger King Franchise; Jim 
Militello, Jr., Attorney, Militello, Zanck & Coen, owner, 
Source Team, and Partner, Super Wash; Bernie Hellgeth, Source 
Team; Taalib-Din Abdul Uqdah, co-owner, Cornrows & Co., and 
president, Hairbraiders & Natural Haircare Association; Gail 
Robbins, Pizza Inn Franchisee; Finis Welch, Ph.D., professor of 
economics, Texas A&M University; Kevin Murphy, Ph.D., professor 
of economics, University of Chicago; William A. Niskanen, Ph.D. 
economist, chairman, Cato Institute; Edward Montgomery, 
professor of economics, University of Maryland.

10. The Impact of Regulations on Employment.

    a. Summary.--The subcommittee examined the impact of 
Federal regulations on employment. Witnesses at many of the 
subcommittee's field hearings testified that if they didn't 
have to absorb the huge cost of complying with government red 
tape, they would hire more workers, pay higher wages, or 
otherwise expand their businesses. Testimony presented before 
the subcommittee clearly showed that Federal regulations and 
big government in general depress job and economic growth.
    The subcommittee held a hearing on this issue at which 
expert economists and policy analysts, who have studied how the 
cost of big government depresses job, wage, and overall 
national economic growth presented testimony. One witness, 
Professor Lowell Gallaway from Ohio University, conducted a 
recent study for the Joint Economic Committee which showed that 
limiting big government spending is critical to raising the 
average American worker's wages. In fact, it showed that if 
Federal spending levels were held constant at their 1965 level 
and Federal taxes were adjusted accordingly, the typical worker 
would have taken home enough additional pay between 1973 and 
1994 to buy a home. His study used historical data on Federal 
regulatory costs from the Center for the Study of American 
Business to determine the relationship between productivity 
growth and regulation. One of the study's results showed that 
rising regulatory activity is to blame for almost half of the 
slowdown in long-run productivity growth from the last year of 
the Kennedy administration (1963) to the first year of the 
Clinton administration (1993). Therefore, if regulatory 
activity had remained at its 1963 level, annual productivity 
growth today would be nearly 1 percent higher. The cumulative 
effect of this 30-year drag on productivity caused by 
regulation has been to lower the Nation's output by 1993 by 
$1.3 trillion a year.
    Gallaway pointed to work by other economists supporting the 
idea that growth in regulatory activity lowers productivity 
growth. For example, Clark University Economist Wayne Gray has 
studied EPA and OSHA regulations in 450 manufacturing 
industries and found that increased regulatory activity 
explained more than 30 percent of the growth slowdown from the 
1960's to the 1973-78 period. In a National Bureau of Economic 
Research study, Gray and Ronald J. Shadbegian concluded that 
each dollar of regulatory compliance costs lowered total factor 
productivity by $3 to $4 dollars.
    Another witness, Professor Thomas D. Hopkins of the 
Rochester Institute of Technology, has studied the effects of 
regulations on the economy since he served in the Executive 
Office of the President from 1975-1984, conducting regulatory 
analysis. Hopkins has concluded that not only does Government 
regulation impose burdens on those who are regulated, but 
regulatory compliance costs are not distributed evenly and 
burden small businesses disproportionately. His work has shown 
that approximately $670 billion is spent each year to comply 
with all Federal regulations. If all regulatory compliance 
costs were shared evenly, every American household in 1995 
would have paid $7,000. Although it is the household that 
ultimately pays the price of regulation, initially business 
pays the compliance costs. Ninety percent of all U.S. firms are 
small businesses with fewer than 20 employees. In 1992, the 
average small firm with under 20 employees spent some $5,500 
per employee to comply with Federal regulations. The larger the 
firm, the smaller the compliance cost per employee, with firms 
of 500 or more spending about $3,000 per employee. Hopkins 
points out that compliance costs alone do not capture the 
decline in productivity that results from Government 
regulation. Regulation forces businesses to change their 
methods, giving up their most profitable and productive ways of 
doing business. Regulation also limits innovation and growth.
    Regulation makes it more expensive for businesses to hire 
workers--particularly small businesses which account for more 
than half the total employment in the United States. Mark 
Wilson, labor policy analyst at the Heritage Foundation, 
testified that the average cost of hiring an employee in 
private industry is $17.10 per hour, 43 percent of which is due 
to Government regulations, taxes and mandated benefits. For a 
minimum wage worker the cost is $4.76 per hour, 22 percent of 
which is due to Government regulations, taxes and mandated 
benefits.
    Several small business owners also presented testimony to 
the subcommittee. Gary Bartlett, President, G.W. Bartlett & Co. 
in Muncie, IN, testified that if it weren't for the huge 
regulatory burden, he would be able to build a new facility and 
create 100 new jobs in 18 months. Judi Moody, a small business 
owner in Washington State testified that she wants to open a 
small retail business. When she started investigating the 
matter seriously, she discovered that she would have to comply 
with myriad regulations and codes, hire a lawyer, and get 
industrial insurance before she could even open the doors. Due 
to this regulatory burden, she has decided not to open the 
business. Her spirit of entrepreneurship has been squashed and 
the jobs she would have created are lost.
    b. Benefits.--The subcommittee learned that reducing the 
cost of regulation, and big government in general, will promote 
greater productivity and economic growth, creating new jobs and 
enabling workers to take home more pay. Getting rid of 
unnecessary and counterproductive regulations will lift some of 
the disproportionate burden off small businesses, which 
comprise 90 percent U.S. firms. As a result, small businesses 
will have more money to expand, hire more workers and pay their 
workers higher wages.
    c. Hearings.--The subcommittee held a hearing on May 16, 
1996, on ``The Impact of Regulations on Employment.'' Testimony 
was received from: Gary Bartlett, president, G.W. Bartlett Co.; 
Judi Moody, owner, CEG Northwest; Dick Walton, owner, Maroney's 
Cleaners & Laundry; Lowell Gallaway, distinguished professor of 
economics, Ohio University; Thomas D. Hopkins, Arthur J. 
Gosnell professor of economics, Rochester Institute of 
Technology; Mark Wilson, Rebecca Lukens Fellow in Labor Policy, 
the Heritage Foundation.

11. Travel Practices of Department of Transportation Administrators.

    a. Summary.--The subcommittee investigated the travel 
practices of the Department of Transportation's administrators 
to determine the cost and nature of senior executive travel in 
the department. An initial letter was sent from subcommittee 
Chairman McIntosh on April 26, 1996, to Administrator Rodney 
Slater, Federal Highway Administration (FHWA); Administrator 
Jolene Molitoris, Federal Railroad Administration (FRA); 
Administrator David R. Hinson, Federal Aviation Administration 
(FAA); and Admiral Robert E. Kramek, U.S. Coast Guard (USCG). 
Subcommittee Chairman McIntosh sent an initial letter on May 
23, 1996 to Administrator Albert J. Herberger, Maritime 
Administration; Administrator Ricardo Martinez, National 
Highway Traffic Safety Administration (NHTSA); Administrator 
Gail McDonald, Saint Lawrence Seaway Development Corp. (SLSDC); 
and Administrator Gordon Linton, Federal Transit Administration 
(FTA). This letter requested information from each DOT 
Administration about their travel budget for fiscal years 1991 
through 1996 and about compliance with Federal travel 
practices. The letter also requested each administrator to 
disclose each time he or she traveled at government expense 
since becoming administrator, the purpose of the trips, and the 
cost to the Federal Government for the trips.
    Based on each administrator's response to the 
subcommittee's initial request for information, subcommittee 
Chairman McIntosh sent follow-up letters to Administrators 
Slater, Molitoris, Hinson, and Admiral Kramek.
    b. Benefits.--The subcommittee learned that certain DOT 
administrators traveled on frequent trips at great expense to 
the taxpayer. FHWA Administrator Rodney Slater took 134 trips 
totaling 328 travel days, between June 14, 1993 and January 17, 
1996. His travel included 9 trips to 11 foreign cities: Moscow, 
St. Petersburg, Berlin, Acapulco, Johannesburg, Calgary, 
Budapest, Paris, San Juan, Montreal, and Tokyo. His total 
travel (including accompanying staff) cost the taxpayer 
$168,719. Among his domestic trips, Slater traveled at least 14 
times to his home State of Arkansas at taxpayer expense. At 
least one of these trips included political activity. On 
October 29, 1994, Slater billed taxpayers for a trip to Austin, 
TX, while he also participated in political events for then-
Governor Richards' re-election campaign. From June 16 to 26, 
1996, Slater took a $20,000 cross-country trip to celebrate the 
Federal highway system. This costly trip included stops at 
several national landmarks and popular vacation spots, such as 
the Lone Tree Gold Mine in Nevada and the Olympic Sports Park 
in Utah.
    FRA Administrator Jolene Molitoris traveled almost as 
frequently as her colleague at the FHWA, taking 86 trips 
between August 10, 1993 and April 10, 1996. Her total travel 
(including accompanying staff) cost the taxpayer $116,567.79. 
On 32 of these trips she had free, unscheduled days, some of 
which she took as personal time. These trips included 12 visits 
to Columbus, OH, her home town where she keeps a residence. On 
most occasions her trips to Columbus did not coincide with any 
official business in the city. She attached stops in Columbus 
to other trips to Ohio. In one case, Molitoris attached a stop 
in Columbus to a trip to San Francisco, spending five personal 
days in Columbus when she had no official business in the city 
or even in the State. Molitoris also took six international 
trips to 21 foreign cities: Caracas, Vienna, Frankfurt, Calais, 
Paris, Geneva, Lille, London, Berlin, Warsaw, Yokota, Bangkok, 
Hanoi, Hong Kong, Jakarta, Kuala Lumpur, Osaka, Tokyo, Manila, 
Vancouver, and Victoria.
    Coast Guard Commandant Robert Kramek, incurred especially 
high travel costs relative to the number of trips he took due 
to his frequent use of Government (USCG) aircraft. Between June 
1994 and June 1996, Admiral Kramek took 62 trips. Five of these 
trips were international, during which he visited England, 
France, Cuba, Norway, Russia, Iceland, Japan, Panama, 
Argentina, Bolivia, Peru, and Venezuela. His travel costs 
(including accompanying staff and his wife) were $304,471.30. 
Admiral Kramek's wife accompanied him on about half (30) of his 
official trips. The USCG covered her transportation costs. The 
USCG justifies Mrs. Kramek's travel because she ``plays a 
critical representational role'' as a service chief's wife.
    In response to the subcommittee's inquiry, the USCG noted 
that Admiral Kramek ``will reduce his overall travel by 15%'' 
in 1996 and that ``Admiral Kramek has also mandated that all 
other Coast Guard flag officers and SES's reduce their overall 
travel by 15%.'' Admiral Kramek's seemingly sudden decision to 
reduce travel in 1996 is curious because as of the second 
quarter of the year, he had already spent more than half of his 
total travel expenses for previous years. To achieve a 15 
percent reduction in travel, he would have to sharply curtail 
his travel for the remainder of the year.
    FAA Administrator David Hinson took 90 trips between August 
1993 and April 1996. His travels included eight international 
trips to 15 foreign locales: Paris, Toulouse, Zurich, 
Amsterdam, Brussels, Bejing, Tokyo, Geneva, Tel Aviv, 
Frankfurt, London, Madrid, Santiago, Montreal, and Saudi 
Arabia. His trips (including airfare for accompanying staff, 
but not their per diem and lodging expenses) cost $320,963.53. 
Like Admiral Kramek, Administrator Hinson incurred very high 
travel costs because of his frequent use of Government (FAA) 
aircraft. For many of the trips, the FAA did not report an 
estimated cost for the FAA aircraft, so the subcommittee's 
figure for Hinson's costs is an underestimate.
    [NOTE: All the above data on each DOT administrator was 
provided to the subcommittee by the respective DOT 
Administrations at the subcommittee's request.]
    c. Hearings.--None.

12. Travel Practices of SEC Chairman Arthur Levitt.

    a. Summary.--The subcommittee investigated the travel 
practices of the Securities and Exchange Commission's (SEC) 
Chairman Arthur Levitt. An initial letter was sent from 
subcommittee Chairman McIntosh to Chairman Levitt on March 8, 
1996, requesting information about the SEC's travel budget for 
fiscal years 1991 through 1996 and about compliance with 
Federal travel practices. The letter also requested that Levitt 
disclose each time he traveled at government expense since 
becoming chairman, the purpose of his trips, and the cost to 
the Federal Government for the trips. In subsequent letters 
sent on April 23, April 29, May 6, June 4, November 13, and 
December 6, 1996 as well as in meetings with Levitt's staff, 
the subcommittee requested further information, including 
copies of his schedule for all travel days, a complete list of 
all days he took as personal leave, copies of vouchers for all 
his trips, and a list of all the occasions on which Mrs. Levitt 
accompanied him on official travel.
    The period of Levitt's travel reviewed by the subcommittee 
is August 1993 through November 1996 (approximately 3 years). 
During that time, Levitt took numerous trips paid for or 
subsidized by the U.S. taxpayer. The approximate total cost of 
his international and domestic travel through October 1996 (not 
including accompanying staff) was $104,758.
    b. Benefits.--The subcommittee plans to continue its 
inquiry into the travel practices of Chairman Levitt. 
Particularly, the subcommittee will examine what internal 
controls are in place at the SEC to prevent abuse of taxpayer 
dollars and whether these controls are being properly 
implemented by the comptroller and others.
    [NOTE: All the above data on SEC Chairman Arthur Levitt's 
travel was provided to the subcommittee by the SEC at the 
subcommittee's request.]
    c. Hearings.--None.

13. Travel Practices of NTSB Chairman Jim Hall.

    a. Summary.--The subcommittee investigated the travel 
practices of the National Transportation Safety Board (NTSB) 
Chairman Jim Hall. An initial letter was sent from subcommittee 
Chairman McIntosh to Chairman Hall on March 8, 1996, requesting 
information about the NTSB's travel budget for fiscal years 
1991 through 1996 and about compliance with Federal travel 
practices. The letter also requested that Hall disclose each 
time he traveled at Government expense since becoming chairman, 
the purpose of his trips, and the cost to the Federal 
Government for the trips. In subsequent letters on April 17 and 
June 4 as well as in discussions with Hall's staff, the 
subcommittee requested further information, including copies of 
his schedule for all travel days, copies of vouchers for all 
his trips, copies of NTSB trip reports filed for each of his 
official trips, and information regarding the designation of 
Chattanooga as an alternate home base.
    b. Benefits.--The subcommittee learned that Chairman Hall 
has traveled extensively since taking the position as acting 
chairman in June 1994. (He was confirmed as chairman in October 
1994.) He took 51 official trips between July 1994 and February 
1996. His trips were largely domestic, but also included visits 
to foreign locales, including London, Paris, Moscow, Australia, 
Puerto Rico and Canada. The total cost to the taxpayer for his 
travels (including accompanying staff) was $141,251.14.
    In Hall's May 10 letter to the subcommittee, he wrote that, 
``During the process of compiling the requested documents, a 
few instances were discovered in which the complex and 
confusing rules governing alternate home base appear to have 
been unintentionally misinterpreted. For example, my 
understanding that establishing Chattanooga as my alternate 
home base allowed me to be reimbursed as if I were traveling 
out of Washington was incorrect.'' Therefore, as a result of 
the subcommittee's investigation into the matter, Hall was 
forced to reimburse the Government $1,887, a direct savings to 
the American taxpayer.
    [NOTE: All the above data on NTSB Chairman Hall's travel 
was provided to the subcommittee by the NTSB at the 
subcommittee's request.]
    c. Hearings.--None.

14. Cleaning Up the Superfund Program.

    a. Summary.--On May 8, 1996, the subcommittee held a 
hearing on the Federal Superfund program in order to continue 
the oversight performed by its predecessor subcommittee and to 
assist ongoing efforts to reauthorize this program. The 
subcommittee's review focused on: the current state of the 
Superfund program; how well the program is being managed under 
the reforms initiated by the Environmental Protection Agency 
(EPA); and on the limits to improving the cleanup process 
without new legislation.
    The Superfund program was created in 1980 when Congress 
enacted the Comprehensive Environmental Response, Compensation 
and Liability Act (CERCLA) to identify and cleanup the Nation's 
worst hazardous waste sites. Activity under the program 
includes emergency cleanups (removal actions) and the 
designation of sites on a National Priorities List (NPL) for 
longer-term remedial actions. Since 1980, approximately $16 
billion has been obligated by the EPA. For this investment, 
EPA's program has cleaned up only 128 sites as of November, 
1996, about 9 percent of the 1,387 sites on the NPL.\27\ 
Moreover, at least 40 percent of the deleted sites required no 
remedial action at all.
---------------------------------------------------------------------------
    \27\ 40 CFR Part 300, App. B, Table 1. Also, see the Federal 
Register generally for NPL deletions.
---------------------------------------------------------------------------
    On April 23, 1996, in testimony before the Senate Committee 
on Environment and Public Works, EPA Administrator Carol 
Browner claimed great strides in reforming Superfund. She 
stated that ``the current program is fundamentally different 
from the program as it existed just three years ago.'' Over the 
past 3 years, the Agency has implemented three rounds of 
Superfund reforms. Among other initiatives, the EPA has 
established a remedy review board to consider costly remedies, 
and drafted guidance to better control costs in remedy 
selection, to increase the number of protected small 
contributors, and to conduct national risk-based priority-
setting for funding cleanups. Administrator Browner maintained 
that these initiatives have produced ``measurable benefits'' to 
Superfund stakeholders and to public health and the environment 
by providing significant resource savings, accelerating 
cleanups, reducing transaction costs, and relieving small 
businesses of liability.
    About 11 million Americans live within one mile of the 
Nation's Superfund sites.\28\ Nonetheless, the current pace of 
cleanups has not accelerated at all. It still takes at least 12 
years on average to clean up a Superfund site.\29\ The fact 
that, within the last 3 years, sites are finally reaching the 
construction completion stage is simply a function of the 
Superfund pipeline and has nothing to do with the pace of 
cleanup. Indeed, testimony from a wide array of witnesses who 
appeared at the subcommittee's hearing indicated that EPA's 
initiatives have done little as yet to reduce the inordinate 
cleanup delays caused by interminable legal disputes over 
liability issues and the remedy selection process. Moreover, 
these disputes continue to generate enormous transaction costs. 
Over 30 percent of the $28 billion that has been spent on 
Superfund to date has gone to lawyers, consultants, and other 
non-cleanup expenses, instead of to cleaning up the most 
serious hazardous waste sites threatening the health and 
environment of the American public.\30\
---------------------------------------------------------------------------
    \28\ Agency for Toxic Substances and Disease Registry's ``Report to 
Congress: 1993, 1994, 1995'' at 5 (Oct. 1996).
    \29\ EPA, Office of Inspector General, ``Review of Barriers to 
Superfund Cleanups,'' at 2 (Nov. 29, 1995).
    \30\ See testimony of Jan Paul Acton, Assistant Director, 
Congressional Budget Office, Superfund Reauthorization Hearings, 
Committee on Transportation and Infrastructure, June 22, 1995, at 678.
---------------------------------------------------------------------------
    In his testimony at the hearing, EPA's own Inspector 
General identified negotiations over who pays for cleanup costs 
as a major barrier to cleaning up Superfund sites. Based on an 
audit of several highly toxic waste sites, the Inspector 
General concluded that liability negotiations clearly consume a 
lot of time and significantly delay completion of site 
cleanups. Moreover, several witnesses observed that such 
extended negotiations are inescapable due to the inherent 
unfairness of the current liability scheme. In theory, 
Superfund is supposed to enforce a ``polluter pays'' policy. 
That is, if culpable parties can be linked to a polluted site, 
these ``potentially responsible parties'' (PRPs) must pay for 
cleanup efforts. However, these witnesses testified that, in 
practice, Superfund's rule of ``retroactive, joint and several, 
and strict liability'' has been used to force numerous parties 
to pay for cleanup, even when they were not at fault. The 
Superfund statute established a sweeping liability system that 
declares that any person who contributed to contamination at a 
Superfund site at any time can be held liable for all costs of 
cleaning up that property, regardless of the degree of 
involvement of that person with the site, or even if the person 
fully complied with the laws at the time of disposal. As a 
result, EPA's Inspector General found that cleanups have been 
significantly delayed while PRPs and EPA negotiate the extent 
of the total liability and the allocation of liability among 
the PRP's.
    Several witnesses also pointed out the disproportionate 
impact that this unjust liability scheme has had on small 
businesses. Indeed, Mr. Leon Dixon testified that his family 
bronze foundry business, Beckett Bronze, is now facing a third 
party liability suit seeking a contribution of about $26,000 
for cleanup costs. The only evidence of Beckett Bronze's 
contribution to the contamination is a dump receipt for $16.l5, 
dated January 3, 1972. Furthermore, as Mr. James Nerger 
testified, persons are frequently named as PRP's even when they 
had no control over where their wastes were sent for disposal, 
and even though they were not required at the time to keep 
detailed records. His small family-owned solvent recycling 
business, Marisol, Inc., is potentially liable for $3-$10 
million. This is a business with $12 million in total annual 
sales that recently received its fifth consecutive E.I. 
Digest's Regulatory Compliance Award.
    Remedy selection, when based on unrealistic land-use 
assumptions, also can be viewed as a barrier to cleanups. By 
making cleanups unnecessarily expensive, such remedies reduce 
the cost-effectiveness of the Superfund program. As 
Representative Lincoln stated in written testimony, ``Sites 
that are located in industrial areas should not meet soil 
eating standards that are required for land used for day care 
centers.'' Stated differently by the representatives of the 
General Accounting Office (GAO), using realistic land-use 
assumptions will help to maximize Superfund resources for the 
protection of public health and the environment. GAO reviewed 
the sites contained in an EPA data base on health risks from 
Superfund sites to evaluate the significance of land-use 
assumptions. About half of the sites (119) in the data base did 
not pose health risks serious enough to justify their cleanup 
under current land-use assumptions. However, EPA nonetheless 
judged cleanup necessary because the agency assumed the sites' 
uses would change in a way that would increase human exposure 
to contaminants in the future. (The sites studied represent 
most of the sites where EPA made cleanup decisions between 1991 
and mid-1993.)
    Both GAO and Mr. Jeffrey Rosmarin, whose company is the 
current owner of the Liberty Industrial Finishing Superfund 
Site, testified that EPA has often assumed a site will be used 
for residential purposes and used residential exposure 
scenarios when calculating risks, even when the planned future 
use of a site was commercial or industrial redevelopment. Mr. 
Rosmarin testified that, although the Liberty Site has been 
zoned light industrial and used for that purpose for over 80 
years, EPA Region II did not even include light industrial use 
as a possible future use at this site in the Remedial 
Investigation report, issued in January 1994. According to one 
EPA estimate, the commercial level cleanup would be in the $6 
million range, while the residential level cleanup would be 
approximately $60 million. Moreover, Mr. Rosmarin noted that an 
EPA toxicologist has stated that the commercial industrial 
level cleanup would have the same health benefits for the 
surrounding community as the residential cleanup.
    In addition, GAO testified that EPA can reduce the risks at 
sites more quickly and economically by using its removal 
authority, where appropriate, instead of its more expensive and 
time-consuming traditional remedial techniques. If the 
accelerated cleanup techniques were used more consistently, GAO 
estimated that the Federal Government's and private sector's 
Superfund costs could be reduced by as much as $1.7 billion 
over the life of the program. However, GAO also noted that 
restrictions in CERCLA on the cost and time allowed for removal 
actions and inflexible funding arrangements have limited EPA's 
use of non-time-critical removals (where removal action in 
response to threats to human health or the environment can be 
delayed for at least 6 months in order to adequately plan for 
cleanup.)
    Finally, Representative Lincoln pointed out that ``one size 
does not fit all'' when it comes to cleanup remedies. Today, a 
large amount of cleanup spending is devoted to meeting cleanup 
criteria under other statutes and regulations that were not 
developed for remediation waste and/or complying with 
Superfund's current statutory preference for treatment--whether 
or not such standards are, in fact, necessary to protect human 
health and the environment at a specific site. The 
Congresswoman believes that, given the truly local impacts of 
the Superfund program, States should be given the flexibility 
to design site-specific, risk-based remedies that are tailored 
to their particular environmental make-ups.
    Witnesses also testified regarding significant management 
inefficiencies in the implementation of the Superfund program. 
GAO observed that the estimated cost of cleaning up the 
Nation's hazardous waste problem has grown to $75 billion for 
nonfederal Superfund sites. GAO maintains that, in this time of 
fiscal constraint, EPA could achieve more cost-effective 
cleanups by basing its priorities for funding cleanups on the 
principle of risk reduction. However, GAO has found that, to 
date, although one of the EPA's key policy objectives is to 
address the ``worst sites first,'' relative risk plays little 
role in the agency's determinations of priorities. EPA 
headquarters leaves the task of setting priorities to the 
regions, yet the regions do not rank sites by risk. As a 
result, the risks most dangerous to human health are not 
necessarily those that are addressed first.
    Commissioner Charles Williams of the Minnesota Pollution 
Control Agency stated that while the national average cost for 
cleaning up Federal Superfund sites is $31 million, the average 
cost to the State of Minnesota for cleaning up its sites is $3 
million.
    Finally, Mrs. Helena Tielmann testified that the 
``cleanup'' of her property by EPA contractors represents a 
prime example of gross mismanagement; a case where the property 
was left in far worse environmental condition than before 
remediation. Mrs. Tielmann lives with her husband and three 
children on a Superfund hazardous waste site, a 30-acre farm 
that had been the dumping ground for asbestos 25 years ago. 
After excavating the asbestos throughout their property and 
solidifying the flaky substance into a concrete monolith in 
their backyard, EPA's contractor backfilled the excavated soil 
with more than 100,000 tons of untested industrial fill from a 
contaminated industrial site. When later tested, the industrial 
fill, which, in fact, contained asbestos, exceeded New Jersey's 
residential use criteria. There is now more asbestos on the 
surface of the Tielmann's yard than there was before EPA 
implemented its remedy. Mrs. Tielmann maintains that this 
nightmare would never have occurred if there had been proper 
management, supervision, and controls; if EPA had used 
competent contractors; and if the Agency had been responsive to 
the property owner and the local community.
    b. Benefits.--This hearing has served to document further 
Superfund's fundamental flaws. Once again, testimony reflects a 
rigid statutory process that does not provide the flexibility 
to address effectively the wide variety of circumstances 
encountered at sites. It also is clear from the testimony that 
this program continues to wreak havoc on the lives of hard-
working and law-abiding citizens. Overall, the program 
continues to fall far short of protecting human health and the 
environment.
    Moreover, the record developed in the subcommittee's 
hearing stands in sharp contrast to Administrator Browner's 
recent assertion that the current program is fundamentally 
different from the one in years past. This subcommittee has 
heard testimony that shows that EPA's initiatives to improve 
the pace, cost, and fairness of the Superfund program within 
the constraints of the law are not really being implemented. 
Clearly, these reforms have not received sustained management 
attention and follow-through.
    Most importantly, the testimony given in this hearing 
reflects a dire need for legislative reform of this wasteful 
and expensive program. As J. Lawrence Wilson, chairman and 
chief executive of Rohm & Haas Co, stated before the Senate 
Environment and Public Works Committee on April 23, 1996: 
``Every month that continues to go by without reauthorization 
means more delays in cleanups, more litigation resulting from 
an inequitable liability scheme, more controversy between the 
public and EPA, and more wasteful spending by both the 
government and the private sector.''
    c. Hearings.--The subcommittee held a hearing entitled, 
``Cleaning up the Superfund Program,'' on May 8, 1996.

15. Havertown Superfund Site.

    a. Summary.--The subcommittee is examining the process that 
the Environmental Protection Agency has followed in developing 
a cleanup plan for the Havertown PCP Superfund site (NPL No. 
542; CERCLIS No. PAD 002338010). This investigation was 
prompted by complaints from township citizens. Residents of the 
local community expressed difficulty in obtaining information 
about EPA's technical and economic analyses and raised concerns 
about whether the Agency has properly evaluated all viable 
remediation options. In addition, the subcommittee undertook 
this inquiry because this case involves issues that are the 
focus of EPA's Superfund administrative reforms.
    The Havertown PCP site is a National Priorities List 
Superfund site in Havertown, PA. The site, which has been on 
the NPL since 1983, is surrounded by a mixture of commercial 
establishments, industries, parks, schools and residential 
homes. The site covers 12 to 15 acres, including a wood 
treatment facility. From 1947 to 1963, National Wood Preservers 
disposed of wood treatment waste materials into a 25 to 35 foot 
deep well that entered the groundwater under the plant. These 
wastes generally consisted of spent wood-treatment solutions 
containing pentachlorophenol (PCP) and diesel-type oil. The 
Agency also has found arsenic and dioxins on the site. The 
liquid wastes leached into a nearby small stream that flows 
through a residential area and eventually into the Delaware 
River.
    EPA has taken various steps, such as conducting an 
emergency removal action, fencing the site, and installing an 
oil/water separator, in order to stem the further spread of 
site contamination and, thus, to reduce the potential of 
exposure to contamination. Recently, to respond to soil and 
ground water contamination, EPA began the preparatory work for 
placing a protective cap over areas of the site. The cap is 
part of EPA's response action at the site and will be used to 
prevent contact with contaminated soil and prevent rain water 
from trickling down through the soil and moving additional 
contamination into the groundwater.
    On July 26, 1996, the subcommittee sent a letter of inquiry 
to EPA requesting information about its remedy decisions. The 
letter called upon EPA to provide the studies and analyses on 
which the Agency has relied for remedy selection at the 
Havertown site. On August 15, 1996, the subcommittee received 
from EPA Region III information and documentation in response 
to the inquiry. In reviewing these documents, the subcommittee 
has focused particularly on the following matters:
    1. Re-evaluation of the Remedy Decision. Whether material 
changes in site conditions and/or technological developments 
have occurred since the Havertown site was listed on the NPL 
that justify an alternative or modified remedy. Has EPA 
performed a coordinated current review of the site to determine 
the potential effectiveness of the selected remedy, including 
collecting and analyzing updated site information, re-
appraising the remedy's expected performance and costs, and 
evaluating currently available alternatives.
    2. Community Participation. Whether the community has had 
the opportunity to play a meaningful role in the selection of 
the cleanup remedy. Has EPA provided the local community with 
the material information needed for informed participation.
    3. Consideration of Future Land Use. To what extent has EPA 
conferred with local officials and other interested parties in 
developing a land use plan to guide decisionmaking on remedy 
selection.
    4. Economic Redevelopment of Contaminated Property. To what 
extent will the selected remedy inhibit productive use of the 
property. To what extent will this remedy keep the source areas 
under control so that the contamination will not continue to 
migrate.
    5. National Risk-Based Priority Setting. Whether the 
Havertown site is truly 1 of the 10 worst sites in this 
country, based on the criteria that EPA used to set national 
risk-based priorities for funding cleanups.
    Finally, the subcommittee's review of EPA's responses has 
raised additional questions that the subcommittee plans to 
probe further.
    b. Benefits.--In this Superfund case, the issues that are 
in dispute between the local community and EPA are the focus of 
the Agency's administrative reforms. The subcommittee is 
reviewing the Agency's implementation of such reforms at this 
site. Also, the Agency has listed this site as 1 of the 10 
worst sites in the country on its national risk-based 
priorities list for funding. After reviewing the Havertown 
Superfund documentation, this designation appears inappropriate 
based on the criteria that the Agency applied in developing the 
list.
    c. Hearings.--None were held.

    NATIONAL SECURITY, INTERNATIONAL AFFAIRS, AND CRIMINAL JUSTICE 
                              SUBCOMMITTEE

1. Office of National Drug Control Policy.

    a. Summary.--The National Narcotics Leadership Act of 1988 
(21 U.S.C. 1501 et seq.) established the Office of National 
Drug Control Policy (ONDCP). The act also provided for 
appointment of a Director of ONDCP, and required that the 
Director develop an overall strategy and budget for Federal 
anti-narcotics efforts, including both supply and reduction. 
Specifically, the statute provides that ONDCP: ``(A) include 
comprehensive, research based, long-range goals for reducing 
drug abuse in the United States; (B) include short-term 
measurable objectives which the Director determines may be 
realistically achieved in the 2 year period beginning on the 
date of the submission of the strategy; (C) describe the 
balance between resources devoted to supply reduction and 
demand reduction; and (D) review State and local drug control 
activities to ensure that the United States pursues well-
coordinated and effective drug control at all levels of 
government.'' Pursuant to the Government Reform and Oversight 
Committee's jurisdiction over ONDCP, the Subcommittee on 
National Security, International Affairs, and Criminal Justice 
convened five indepth oversight hearings during 1995 to assess 
the status and effectiveness of the Nation's Federal drug 
control strategy and the strategy's implementation. The 
subcommittee zeroed in on the interdiction program, source 
country, law enforcement, prevention and treatment components 
as prescribed by the Federal strategy.
    Before, during and after these hearings, expert advice and 
recommendations were sought from top administration officials 
and preeminent outside experts. The subcommittee's twin aims 
were to (a) identify strategic and implementation problems, and 
(b) identify sound recommendations for achieving measurable 
improvement in combating illegal drug importation and use.
    As a backdrop for this investigation, the committee 
recognized that the impact of illegal drugs on our society has 
been a growing concern since the early 1970's. For example, in 
June 1971, President Nixon told Congress that a national 
response to drug addiction was needed since ``the problem has 
assumed the dimensions of a national emergency.'' \31\
---------------------------------------------------------------------------
    \31\ Musto, David F. The American Disease: Origins of Narcotic 
Control, at 256 (1987).
---------------------------------------------------------------------------
    Moreover, by 1980, illegal drug use was so widespread that 
antidrug parent groups such as Pride and National Family 
Partnership began to take root in America's heartland; in fact, 
by 1979 more than half of all minors surveyed acknowledged 
illegal drug use.\32\
---------------------------------------------------------------------------
    \32\ In 1979, 54 percent of youth respondents to the Monitoring the 
Future Survey indicated drug use. See the 1995 Pride Report, Executive 
Summary, at 1.
---------------------------------------------------------------------------
    During the early 1980's, the Nation awakened to the 
enormity of the incursion being made by illegal drugs. Former 
First Lady Nancy Reagan became a leader in the anti-drug, or 
drug abuse prevention, movement. Mrs. Reagan effectively led 
the campaign to educate our Nation's youth and stem rising 
youth drug abuse. Her most famous statement, ``Just Say No,'' 
the answer to a child's question about how to respond if 
pressed to take drugs, became a guiding phrase in the 
prevention movement. Unrivaled in her energy and commitment, 
Nancy Reagan became the movement's chief spokesperson for much 
of the decade.
    Finally, as indicated earlier, during the mid-1980's, 
President Reagan showed unprecedented leadership in what soon 
became known as a war against illegal drug use and those who 
trafficked in illegal drugs.\33\
---------------------------------------------------------------------------
    \33\ See ``Testimony of Admiral Paul Yost,'' supra.
---------------------------------------------------------------------------
    In 1988, Congress passed the Anti-Drug Abuse Act of 1988 
(Public Law 100-690, Title I, Subtitle A), which established 
the Office of National Drug Control Policy (ONDCP) and created 
the new position of ``White House Drug Czar'' or ONDCP 
Director. In recognition of the threat posed to our society by 
the menace of illegal drug use, the act required the White 
House ONDCP Director to present an annual strategy with 
measurable goals and a Federal drug control budget to the 
President and Congress.\34\
---------------------------------------------------------------------------
    \34\ Public Law 100-690, Title I, Subtitle A.
---------------------------------------------------------------------------
    The 1988 act has been tinkered with in the years since. In 
1994, pursuant to the Violent Crime Control and Law Enforcement 
Act of 1994 (Public Law 103-322, Title X), the ``Drug Czar'' 
was authorized to make recommendations to agencies during 
budget formulation. The aim of this 1994 change was to improve 
resource targeting and policy consistency at Federal agencies 
involved in implementing the National Drug Control Strategy, as 
well as to heighten overall counternarcotics coordination 
throughout the Federal Government. In addition, the ``Drug 
Czar'' was authorized under the 1994 act to exercise discretion 
over 2 percent of the overall drug budget. While some have 
suggested that this provision achieved little, the ``Drug 
Czar'' could theoretically transfer up to 2 percent of the 
budget among National Drug Control Program accounts, upon 
approval by the appropriations committees.\35\
---------------------------------------------------------------------------
    \35\ In fact, this 2 percent measure has proved more theoretical 
than actual, as particular agency heads have resisted the transfers and 
prevailed in those efforts. For example, FBI Director Louis Freeh 
reportedly blocked resource allocations by ONDCP in 1994.
---------------------------------------------------------------------------
    Beyond these hallmark 1995 hearings, during recent prior 
sessions of Congress, legislative and oversight hearings have 
been held on various aspects of national drug policy. However, 
these hearings have focused on particular aspects of the ONDCP 
Strategy and have been conducted against the backdrop of 
falling drug use or general support by the minority-controlled 
Congress for the overall White House Strategy.
    This subcommittee's 1995 oversight hearings, proposed and 
supported by both minority and majority subcommittee members, 
were the result of recent developments, including the steep 
rise in juvenile and overall drug use (including both rising 
casual drug use, and increasing regularity of use); the growing 
awareness that increased juvenile drug use is linked to rising 
juvenile crime; \36\ the absence of a long-promised White House 
Heroin Strategy; \37\ an objective reduction in interdiction 
efforts; \38\ an apparent lack of progress in source countries 
toward goals set forth for so-called source country programs; 
\39\ reports of lagging accountability in certain drug 
prevention programs; \40\ deemphasis by the media on drug 
abuse; \41\ overall rise in drug related juvenile violence; 
\42\ and general concerns about interagency coordination of the 
Federal counternarcotics effort.\43\
---------------------------------------------------------------------------
    \36\ 1995 OJJDP Report, pp. 58-65.
    \37\ The President promised a Heroin Strategy within 120 days of 
taking office. Without any White House announcement, he signed a Heroin 
Strategy in late November 1995. The signed Strategy offers little 
detail, and was promulgated without Implementing Guidelines, which has 
so far made it a nullity.
    \38\ See ``Interdiction Policy Oversight'' section, below.
    \39\ See ``Source Country Program Oversight'' section, below.
    \40\ In particular, reports of waste and misapplication of funds 
have been associated with certain States' administration of Safe and 
Drug Free Schools moneys, and these allegations are under continuing 
investigation by the Department of Education Inspector General's Office 
and the General Accounting Office.
    \41\ See ``prevention Policy Oversight'' section, below.
    \42\ See ``Background'' section, below.
    \43\ See, e.g., Yost Testimony, below.
---------------------------------------------------------------------------
    The intent to examine National Drug Control Strategy was 
set forth in the February 6, 1995 subcommittee Strategic Plan 
in accord with both the majority and minority view that the 
area required oversight.\44\
---------------------------------------------------------------------------
    \44\ The topic was discussed at a meeting of the full subcommittee 
in early February, views were solicited by the subcommittee chairman, 
and both minority and majority members indicated a desire to conduct 
oversight in this area.
---------------------------------------------------------------------------
    In the course of investigating the status of the National 
Drug Control Strategy, the Strategy's implementation and the 
need for improvement, the subcommittee engaged in extensive 
correspondence with the administration, including direct 
correspondence with the President; the Vice President; Anthony 
Lake, the President's National Security Advisor; Dr. Lee P. 
Brown, Director of ONDCP; Admiral Robert E. Kramek, U.S. 
Interdiction Coordinator and Coast Guard Commandant; Thomas A. 
Constantine, Administrator of the Drug Enforcement 
Administration; George Weise, Commissioner of the U.S. Customs 
Service; Brian Sheridan, Department of Defense Deputy Assistant 
for Drug Enforcement Policy; Ambassador Jane E. Becker, 
Department of State Deputy Assistant Secretary for 
International Narcotics and Law Enforcement; and others at the 
Departments of Justice, Defense, State, ONDCP and elsewhere in 
the administration.
    The committee investigation included one fact finding trip. 
Subcommittee members, and members of the United States Coast 
Guard traveled to the Seventh Coast Guard District in the 
Caribbean transit zone. There, they attended briefings at 
Seventh District Headquarters in Miami, Coast Guard 
interdiction initiatives at sea, Drug Enforcement 
Administration (DEA) activities in the Greater Antilles, high 
level interagency briefings in Puerto Rico by the FBI, DEA, 
Customs, Border Patrol, and local authorities, and received 
indepth briefings by Admiral Granuzo and others at Joint Task 
Force Six in Key West, dedicated to Eastern Caribbean Drug 
Interdiction. This trip was arranged in coordination with the 
U.S. Coast Guard, and invitations were extended to majority and 
minority members. The trip occurred on June 16 through 19, 
1995. Additionally, in coordination with ONDCP, subcommittee 
Chairman Zeliff traveled with the White House Director of ONDCP 
to see prevention and treatment programs first-hand in 
Massachusetts.
    Throughout 1995, the subcommittee met extensively with the 
agencies involved in the counternarcotics effort, and 
endeavored to collect directly and indirectly both statistical 
and anecdotal evidence on the effectiveness and accountability 
of the current National Drug Control Strategy and programs. 
These efforts spanned the key areas of interdiction, law 
enforcement, prevention, treatment, and source country 
initiatives. The subcommittee sought further insight from GAO 
investigators, agents in the field, and departmental inspectors 
general.
    b. Benefits.--As a result of its investigation into the use 
of illegal drugs in America and the Nations fight against 
drugs, the committee uncovered the following basic facts:
          (1) Casual teenage drug use trends have suffered a 
        marked reversal over the past 3 years, and are 
        dramatically up in virtually every age group and for 
        every illicit drug, including heroin, crack, cocaine 
        hydrochloride, LSD, non-LSD hallucinogens, 
        methamphetamine, inhalants, stimulants, and marijuana.
          (2) Rising casual teenage drug use is closely 
        correlated with rising juvenile violent crime.
          (3) If rising teenage drug use and the close 
        correlation with violent juvenile crime continue to 
        rise on their current path, the Nation will experience 
        a doubling of violent crime by 2010.\45\
---------------------------------------------------------------------------
    \45\ See Juvenile Offenders and Victims: A National Report, OJJDP, 
Department of Justice, September 1995.
---------------------------------------------------------------------------
          (4) The nature of casual teenage drug use is 
        changing. Annual or infrequent teenage experimentation 
        with illegal drugs is being replaced by regular, 
        monthly or addictive teenage drug use.\46\
---------------------------------------------------------------------------
    \46\ See 1995 surveys conducted by PRIDE, The National Household 
Survey, and The University of Michigan's Monitoring the Future Survey.
---------------------------------------------------------------------------
          (5) The nationwide street price for most illicit 
        drugs is lower than at any time in recent years, and 
        the potency of those same drugs, particularly heroin 
        and crack, is higher.\47\
---------------------------------------------------------------------------
    \47\ See ``Interdiction Policy Oversight'' section, below.
---------------------------------------------------------------------------
          (6) Nationwide, drug related emergencies are at an 
        all time high.\48\
---------------------------------------------------------------------------
    \48\ See ``Background'' section, below.
---------------------------------------------------------------------------
          (7) The 1994 and 1995 White House ONDCP strategies 
        consciously shift resources away from priorities set in 
        the late 1980's, namely from prevention and 
        interdiction to treatment of ``hardcore addicts'' and 
        source country programs.
          (8) During 1993, 1994, and most of 1995, the 
        President put little emphasis on, and manifested little 
        interest in, either the demand side war against illegal 
        drug use or the supply side war against international 
        narcotics traffickers. An objective look at the 
        President's public addresses and his actions regarding 
        gutting the ONDCP when he became President, 
        interactions with Congress, and discussions with 
        foreign leaders reveals that attention to the rising 
        tide of illegal drug use is a low Presidential 
        priority.\49\
---------------------------------------------------------------------------
    \49\ See ``Background,'' ``Interdiction Policy Oversight'' and 
``Prevention Policy Oversight'' sections, below.
---------------------------------------------------------------------------
          (9) The President's actual attention to this problem, 
        measured by other than the paucity of speeches and 
        proposed budget cuts, has been uniformly low. In 
        addition to the absence of direct Presidential 
        involvement in the drug war, the President produced no 
        1993 Annual Strategy, despite a statutory duty to do so 
        under the 1988 Antidrug Abuse Act; delayed appointment 
        of a White House Drug Czar, or ONDCP Director, until 
        half way through 1993; and produced only a terse 
        ``interim'' 1993 Strategy.
          (10) The Drug War appears also to have been expressly 
        reduced to a low national security priority early in 
        the administration, and not to have been formally 
        elevated at any time since.\50\
---------------------------------------------------------------------------
    \50\ See ``Interdiction Policy Oversight'' section, below. 
Reportedly, the drug war's national security priority during the first 
3 years of the Clinton administration was number 29 out of 29.
---------------------------------------------------------------------------
          (11) While the position is contested by the 
        administration's ONDCP Director, a wide cross section 
        of drug policy experts inside and outside of the 
        administration concur that the absence of direct 
        Presidential involvement in foreign and domestic 
        counternarcotics efforts is one reason for the recent 
        reversal in youth drug use trends, reduced street 
        prices for most narcotics, and increased potency of 
        most illicit drugs.
          (12) Prevention programs that teach a right-wrong 
        distinction in drug use, or ``no use,'' such as 
        D.A.R.E., G.R.E.A.T., the Nancy Reagan After School 
        Program, community-based efforts run by groups such as 
        C.A.D.C.A., PRIDE, the National Parents Foundation, and 
        Texans War on Drugs, as well as other local school and 
        workplace programs, have proven both successful and 
        popular where they have been well-managed and 
        accountable--despite the 1995 White House ONDCP 
        Strategy statement that ``[a]ntidrug messages are 
        losing their potency among the Nation's youth;''.\51\
---------------------------------------------------------------------------
    \51\ See ``Prevention Oversight'' section, below.
---------------------------------------------------------------------------
          (13) Federal drug prevention programs, such as Safe 
        and Drug Free Schools, while supporting successful 
        prevention programs in many parts of the country, have 
        also been subject to misapplication, waste and abuse. 
        \52\
---------------------------------------------------------------------------
    \52\ See ``Prevention Oversight'' section, below.
---------------------------------------------------------------------------
          (14) The Nation's law enforcement community needs 
        greater flexibility and support from the Federal 
        Government in addressing the rise in juvenile and drug 
        related crime. While certain developments are 
        promising, such as the $25 million increase in Byrne 
        Grant funding in fiscal 1996, a law enforcement block 
        grant to supersede the COPS program, and increased 
        reliance on joint interagency task forces, valuable 
        time has been lost in addressing this need. Renewed 
        attention to strengthening Local, County, State and 
        Federal law enforcement's counternarcotics efforts is 
        required.
          (15) The Nation's interdiction effort has been 
        dramatically curtailed over the past 3 years, due to 
        lack of White House support for interdiction needs, 
        reduced funding, a tiny staff at the United States 
        Interdiction Coordinator's Office, the absence of an 
        ONDCP Deputy for Supply Reduction, reduced support for 
        National Guard container search days, the elimination 
        of certain cost effective assets in the Eastern 
        Caribbean, reassignment or absence of key intelligence 
        gathering assets, reluctance by the Department of State 
        to elevate counternarcotics to a top priority in 
        certain source and transit countries, unnecessary 
        interagency quarreling over asset management and 
        personnel issues, and the apparent inability or 
        unwillingness of the White House Drug Czar to bring 
        essential interdiction community concerns to the 
        attention of the President or to aid the President's 
        Interdiction Coordinator in doing so; and
          (16) Poor management and interagency coordination in 
        source countries.
    c. Hearings.--The subcommittee held five hearings in 
conjunction with its investigation of ONDCP. Those hearings 
include the following: (1) ``Effectiveness of the National Drug 
Control Strategy and the Status of the Drug War,'' March 9 and 
April 6, 1995. (2) ``Illicit Drug Availability: Are 
Interdiction Efforts Hampered by a Lack of Agency Resources?,'' 
June 27 and 28, 1995. (3) ``The Drug Problem in New Hampshire: 
A Microcosm of America,'' September 25, 1995.
    On March 9, 1995, the subcommittee investigation resulted 
in its first hearing. The purpose of this hearing was to 
examine President Clinton's 1995 National Drug Control 
Strategy, and to begin an assessment of how effectively the 
Nation is fighting illegal drug abuse, domestically and 
internationally. Acknowledged components of the Drug War under 
review include prevention, treatment, interdiction, law 
enforcement, and source country programs.
    At this hearing, testimony was received from four panels. 
The subcommittee heard first from former First Lady of the 
United States, Nancy Reagan.
    Testimony was received from William J. Bennett, former 
Director of the Office of National Drug Control Policy (ONDCP); 
Robert C. Bonner, former Administrator of the Drug Enforcement 
Administration; and John Walters, former Acting Director of 
ONDCP.
    The subcommittee also heard testimony from Dr. Lee Brown, 
Director of ONDCP. Finally, the subcommittee heard from Admiral 
Paul A. Yost, Jr., former Coast Guard Commandant; and several 
nationally recognized drug abuse prevention experts, including 
Thomas Hedrick, Jr., senior representative of the Partnership 
for a Drug-Free America; G. Bridget Ryan, executive director of 
California's BEST Foundation; James Copple, national director 
of the Community Antidrug Coalitions of America (CADCA); and 
Charles Robert Heard III, director of program services for 
Texans' War on Drugs.
    With varying degrees of emphasis, all panels acknowledged 
that current Federal efforts are under strain from reduced 
emphasis on certain components of the Drug War, budgetary 
pressure, and in some cases accountability.
    The panels also acknowledged that, over the past several 
years, there has been a marked reversal in several important 
national trends including most notably a rise in casual drug 
use by juveniles, but also reaching to perceived drug 
availability (up), perceived risk of use (down), average street 
price (down), drug related medical emergencies (up), drug 
related violent juvenile crime (up), total Federal drug 
prosecutions (down), and parental attention to the drug issue 
(down).\53\
---------------------------------------------------------------------------
    \53\ Press Release, the University of Michigan, ``Drug Use Rises 
Again in 1995 Among American Teens,'' December 15, 1995; Press Release, 
PRIDE, ``Teen Drug Use Rises for Fourth Straight Year,'' November 2, 
1995; Preliminary Estimates from the Drug Abuse Warning Network, U.S. 
Department of Health and Human Services, September 1995; James E. 
Burke, ``Presentation: An Overview of Illegal Drugs in America,'' 
Partnership for a Drug-Free America, Fall 1995.
---------------------------------------------------------------------------
    The subcommittee found that these reversals have continued 
through the period 1993 to 1995, although certain trend lines, 
including a shift from falling to rising casual use, typically 
among juveniles, began in 1992. In addition, a shift of certain 
interdiction resources, which were earlier a part of the 
counter narcotics force structure, began in late 1991 with the 
advent of the Persian Gulf War.
    All panels agreed, albeit with differing emphases, that 
renewed national leadership, including both Presidential and 
congressional leadership, will be necessary to combat these 
recent trend reversals, especially the rise in juvenile drug 
abuse and drug related violent juvenile crime.
    Subcommittee Chairman Zeliff initiated the hearing by 
noting that Mrs. Reagan ``woke the Nation up to this [juvenile 
drug abuse] problem and its pervasiveness in the early 
1980's.'' Subcommittee Chairman Zeliff observed that the former 
First Lady's ``Just Say No'' campaign effectively launched a 
``national crusade'' for drug abuse prevention.
    Subcommittee Chairman Zeliff also noted that, in April 
1985, Mrs. Reagan held the first International Drug Conference 
for the world's First Ladies. In 1988, she held the second such 
conference and became the first American First Lady to speak 
before the United Nations; and after leaving the White House, 
she founded the Nancy Reagan Foundation, which has since 
``awarded grants in excess of $5 million to drug prevention and 
education programs . . .''
    Appearing before the subcommittee, First Lady Nancy Reagan 
testified that America has forgotten the dangers of drug use, 
that America's children are at increased risk in 1995, that 
there is an absence of national leadership on the drug issue, 
and that a national strategy focused on treatment of so-called 
hardcore addicts misses the largest at-risk population, namely 
children participating in casual use. Specifically, Mrs. Reagan 
explained that she had ``decided to speak [before Congress on 
the drug issue] only after a lot of soul searching . . . 
because my husband and everything he stands for calls for me to 
be here.''
    She then explained that the Nation ``is forgetting how 
endangered our children are by drugs,'' that societal 
``tolerance for drugs'' is up, and that ``the psychological 
momentum we had against drug use [in the late 1980's and early 
1990's] has been lost.'' In short, she asked, ``How could we 
have forgotten so quickly?''
    Directing herself to national policy, Mrs. Reagan quoted 
from President Clinton's 1995 National Drug Control Strategy, 
which states that ``[a]nti-drug messages have lost their 
potency.'' Mrs. Reagan disagreed, testifying: ``That's not my 
experience. If there's a clear and forceful `no use' message 
coming from strong, outspoken leadership, it is potent . . . 
Half-hearted commitment doesn't work. This drift, this 
complacency, is what led me to accept your invitation to be in 
Washington today . . . [W]e have lost a sense of priority on 
this problem, we have lost all sense of national urgency and 
leadership.''
    John P. Walters, president of the New Citizenship Project 
and former Acting Director of ONDCP, testified that President 
Clinton has promoted policies that reversed or accelerated the 
reversal of nearly a decade of falling drug use. Mr. Walters 
tagged President Clinton as the source of major reversals in: 
the cultural aversion to drug use, falling drug availability, 
falling drug purities and rising drug prices. He sees these 
trends as significant and dangerous.
    Mr. Walters pointed to the President's 80 percent reduction 
of ONDCP staff,\54\ the Attorney General's stated goal of 
reducing mandatory minimum sentences for drug trafficking,\55\ 
and a Presidential directive reducing Department of Defense 
support to drug interdiction efforts as damaging to the drug 
control program. Further, Walters testified, the reduction in 
resources to transit and source countries by 33 percent (from 
$523.4 million in fiscal year 1993 to $351.4 million in fiscal 
year 1994),\56\ a reduction in Federal domestic marijuana 
eradication efforts, a call by the President's Surgeon General 
for study of drug legalization,\57\ and ``no moral leadership 
or encouragement'' from President Clinton himself as 
significant factors in the Nation's rising drug problems.
---------------------------------------------------------------------------
    \54\ On February 9, 1993, the White House announced that ONDCP 
would have its personnel cut from 146 to 25.
    \55\ See also Isikoff, the Washington Post (November 26, 1993), 
pps. A1, A10-A11.
    \56\ See also, ONDCP, National Drug Control Strategy: Budget 
Summary (February 1994), pp. 184.
    \57\ See also, Reuter, ``Elders Reiterates Her Support for Study of 
Drug Legalization,'' the Washington Post (January 15, 1994), pp. A8.
---------------------------------------------------------------------------
    In short, Mr. Walters testified, ``the drug problem is 
simply not a part of the foreign policy agenda of the United 
States under President Clinton--there is no carrot and no stick 
facing countries from which the poison destroying American 
lives every day comes.'' Finally, he noted that this de-
emphasis on international efforts ``fuels calls in other 
countries for abandoning antidrug cooperation.'' [See also the 
New York Times (February 20, 1994), pp. A6; the New York Times 
(February 27, 1994), Section 4, pp. 15.]
    In Mr. Walter's view, ``if these trends continue, by 1996, 
the Clinton administration will have presided over the greatest 
increase in drug use in modern American history.''
    William J. Bennett, current Co-Director of Empower America 
and former Director of ONDCP, testified that there has been a 
``sharp rise in drug use,'' citing many of the same studies 
cited by subcommittee Chairman Zeliff, Mrs. Reagan, Mr. Walters 
and others.
    According to Mr. Bennett, this rise should have ``mobilized 
the Federal Government to forcefully state the case against 
drug use, enforce the law and provide safety and security to 
its citizens.'' Instead, ``the Clinton administration has 
abdicated its responsibility'' and ``has been AWOL in the War 
on Drugs,'' said the former White House Drug Czar.
    Widely regarded as the most effective White House Drug Czar 
to date, Mr. Bennett denounced the 80 percent cut by President 
Clinton in the ONDCP staff, and the willingness of Clinton's 
Attorney General to endorse reductions in mandatory minimum 
sentences for drug traffickers.
    Mr. Bennett introduced new facts into the national dialog 
when he observed that, ``last year, the Clinton administration 
directed the U.S. Military to stop providing radar tracking of 
cocaine-trafficker aircraft to Colombia and Peru,'' a policy 
``Congress again had to reverse,'' and noted that ``last month, 
for the first time in history, the nation's drug control 
strategy was introduced without the participation of the 
President.'' He also believes that, if present trends continue, 
by 1996 the Clinton administration will have presided over the 
greatest increase in drug use ``in modern American history.''
    Expanding his analysis beyond the failure of public policy, 
Mr. Bennett testified that ``the Clinton administration suffers 
from moral torpor on the issue'' and that, as a general matter, 
``policy follows attitude.'' In support of this statement, Mr. 
Bennett quoted several statements by the President on his own 
prior use of drugs, in particular, President Clinton's 1991 
statement that he had never ``broken any drug law,'' followed 
by the 1992 statement that he had used marijuana in England but 
``didn't inhale it,'' followed in turn, when asked if he would 
inhale if he had it to do over, by: ``Sure, if I could, I tried 
before.''
    Mr. Bennett noted, on closing, that ``success in the drug 
war depends above all on the efforts of parents and schools and 
churches and police chiefs and judges and community leaders.'' 
Giving examples from more than 100 cities visited when 
President Bush's Drug Czar, Mr. Bennett urged renewed 
leadership.
    Robert C. Bonner, former Administrator of the Drug 
Enforcement Administration (DEA) under both Presidents Bush and 
Clinton, a former Federal judge, and currently a partner at 
Gibson, Dunn and Crutcher, testified forcefully for renewed 
leadership in the Drug War: ``The bottom line is unmistakable--
during the past two years, drug use among the youth of America 
has soared in nearly every category of illegal drug . . . When 
juxtaposed against the immediately preceding period and nearly 
a decade of declining drug use, there can be only one 
conclusion--the Clinton administration's National Drug Strategy 
has failed miserably, and indeed it is a tragedy.''
    Crediting Mrs. Reagan's ``Just Say No'' campaign and the 
Antidrug Abuse Act of 1988, Mr. Bonner noted that the onslaught 
of direct and indirect damage from illegal drugs was turned 
back in the mid-1980's and early 1990's. In Mr. Bonner's view, 
national will and a combination of ``strong law enforcement,'' 
a strong ``educational and moral message,'' and effective 
treatment programs for hardcore users made the difference. 
However, he warns that drug treatment programs should not be 
``oversold.''
    Bluntly, Mr. Bonner concluded, ``there has been a near 
total absence of presidential leadership by President Clinton 
in the fight to turn back illegal drug use . . .'' and his 
Surgeon General's remarks on legalization ``arguably encourages 
it'' by further reducing perceived risk; Mr. Bonner called 
Surgeon General Jocelyn Elders' statement on legalization 
``dead wrong and flagrantly irresponsible for a national public 
health official.''
    Dr. Lee P. Brown, Director of ONDCP, testified defending 
the 1995 National Drug Control Strategy. Dr. Brown testified 
that President Clinton's fiscal 1996 budget sought $14.6 
billion in funding across the Federal Government for drug 
related Federal programs.
    For context, the President's 1995 National Drug Control 
Strategy lists the total ``Drug Budget'' as $14,550.4 
(millions). This figure is somewhat misleading, however, since 
it contains funding for a variety of programs mixed purposes, 
such as the Federal Court System, Food and Drug Administration, 
Social Security Administration, Department of Agriculture's 
Agricultural Research Service and U.S. Forest Service, 
Department of Interior's Bureau of Indian Affairs, Bureau of 
Land Management, Fish and Wildlife Service, and National Park 
Service, Department of Justice's Community Policy, Immigration 
and Naturalization Service, U.S. Marshal's Service and Tax 
Division, an unidentified grant to the Department of Labor, 
ONDCP's ``gift fund'' (zeroed out in fiscal 1996), the Small 
Business Administration, the Agency for International 
Development (AID), the Department of Treasury's Internal 
Revenue Service, and United States Secret Service, the U.S. 
Information Agency (USIA), and a range of other disparate 
Federal initiatives.\58\
---------------------------------------------------------------------------
    \58\ See National Drug Control Strategy, February 1995, the White 
House, pp. 120-121.
---------------------------------------------------------------------------
    A dual concern raised by some members of the subcommittee 
was how these funds are actually spent and who coordinates the 
spending. The latter concern boiled down to accountability, 
avoiding duplication, and assuring interagency coordination.
    Seeking to justify the administration's acknowledged shift 
to treatment of hardcore drug users and the President's request 
for ``$2.8 billion for treatment'' in fiscal 1996, Dr. Brown 
noted that ``chronic hardcore drug users comprise 20 percent of 
the drug user population but consume two-thirds of the drugs . 
. .'' From this, he argued that ``past strategy [sic] ignore 
this inextricable part of the drug problem.''
    In fact, while the 1995 National Drug Control Strategy does 
increase the proportion of overall spending devoted to 
treatment, past strategies have included--and have steadily 
increased--funding for treatment. In fact, Federal treatment 
funding has increased every year from 1982 to 1995.\59\
---------------------------------------------------------------------------
    \59\ Fiscal year 1992, Federal treatment spending stood at $505.6 
million. Fiscal year 1995, Federal treatment spending stood at $2.65 
billion. National Drug Control Strategy: Budget Summary, Office of 
National Drug Control Policy, February 1995, pp. 238.
---------------------------------------------------------------------------
    Dr. Brown acknowledged that ``drug use among adolescents is 
rising,'' but attributed the trend to the final year of the 
Bush administration. Dr. Brown offered the view that Safe and 
Drug Free Schools moneys are ``the cornerstone of this nation's 
efforts to educate our children about drug use'' and are 
currently disbursed to ``94 percent of the school districts in 
this country.''
    Dr. Brown confirmed a shift in trafficking patterns toward 
greater use of container cargo and noted that ``over 70 percent 
of the cocaine entering our country crosses the border with 
Mexico,'' but was unable to explain reduced emphasis in the 
current strategy on National Guard Container Search Workdays 
along the United States-Mexican border. Specifically, Dr. Brown 
had no answer for the question why National Guard Container 
Search Workdays fell from 227,827 in 1994 to a 1996 projection 
of 209,000, as described in ONDCP's own 1995 Strategy at page 
41.
    Generally, Dr. Brown condemned ``Congress'' for having 
``failed to fulfill [the President's] budget request.'' 
However, Dr. Brown made no attempt to provide specific answers 
to Members' questions concerning (1) the President's own 
proposed deep cuts in interdiction and international program 
funding; (2) accountability; (3) shifting interdiction 
resources to source countries, (4) a reduction of Customs 
agents at the Southwest border; or (5) the shift in resources 
from prevention of casual use (80 percent of total users) by 
juveniles to treatment for older, chronic, hardcore users (20 
percent of total).
    Subcommittee Chairman Zeliff introduced an unclassified 
piece of correspondence dated December 1994 between the 
Interdiction Coordinator, Admiral Kramek, and the Director of 
ONDCP, Dr. Brown, which stated that a consensus of agency heads 
believed ``we need to restore assets to the interdiction force 
structure . . .'' and ``we must return to the 1992-1993 levels 
of effort.''
    The Kramek letter also indicated that the source country 
programs were not yet ``producing necessary results.'' 
Addressing drugs as a national security threat, the Kramek 
letter specifically asked for a meeting with the President. The 
letter read, ``I believe it appropriate that we meet with the 
President and National Security Advisor as soon as possible to 
brief them on the results of our conference and discuss the 
current state of implementation and national strategy . . . Of 
key importance to this meeting is the determination of priority 
of counting narcotics trafficking as a threat to national 
security of the United States as evaluated against other 
threats to our security that compete for resources.''
    Subcommittee Chairman Zeliff asked Dr. Brown if he had 
followed the Interdiction Coordinator's and agency heads' 
consensus that drug interdiction resources be returned to the 
``1992-1993 levels.'' Dr. Brown indicated that he held a view 
different from that of the Interdiction Coordinator and had, 
apparently, not followed that recommendation. Similarly, 
subcommittee Chairman Zeliff asked Dr. Brown if he had taken 
the Interdiction Coordinator's request to the President or 
National Security Advisor. Dr. Brown indicated that he had not, 
and apparently also had not set up the requested meetings 
between Kramek and the President, or between Kramek and the 
National Security Advisor to ``determin[e] [the] priority of 
counting narcotics trafficking as a threat to national security 
. . .''
    Admiral Paul Yost, former 18th Commandant of the U.S. Coast 
Guard and presently president of the non-partisan James Madison 
Fellowship Foundation, testified on the topics of interdiction 
and interagency coordination. He testified that the Nation 
witnessed a ``major build-up in drug interdiction in the at-sea 
war on drugs from 1984 through 1990,'' with the result that 
this interdiction effort ``successfully interrupted the flow of 
bulk marijuana by sea and cocaine by air over the water routes 
[of the Caribbean].''
    In Admiral Yost's view, ``strong interdiction and law 
enforcement were providing a climate [from 1984 through 1990] 
that made it clear to the [drug] trafficker that `this is 
wrong, and your chances of being intercepted are very high.' ''
    Since that time, he testified, there has been a ``tragic 
dismantling'' of the at-sea interdiction effort, so that today 
``there are several orders of magnitude less effort spent on 
drug interdiction.''
    Calling the resultant increase in drug availability and 
drug use predictable, Yost testified that the Nation ``will 
never stop drug use without a solid interdiction foundation for 
. . . education and treatment programs.''
    Accordingly, Admiral Yost favored a return to 
``emphasiz[ing] the interdiction prong of the drug strategy'' 
and increased budget authority for the Coast Guard.
    Finally, Admiral Yost discussed the need for better 
interagency coordination. He supports greater ``authority'' for 
the White House Drug Czar and President's Interdiction 
Coordinator. Without the ability, specifically, to ``direct 
cabinet-level officers regarding budget allocation, personnel 
allocation, or forced deployments'' on this issue, both 
positions are ``largely ceremonial,'' he said.
    Thomas Hedrick, Jr., vice chairman of the Partnership for a 
Drug-Free America, testified that prevention and interdiction 
advocates must begin to work together, and that ``preventing 
drug use by young people'' is essential ``if we are to have 
prayer of building safe and healthy families and communities.''
    As a prevention expert with 10 years of experience, Mr. 
Hedrick testified that, ``quite frankly, I am frightened 
because after nearly a decade of progress, drug use is rapidly 
increasing. The issue has `overarching importance.' `Crisis' is 
not an overly dramatic or inappropriate description, 
particularly when you consider that drug use among our youngest 
kids, 13 and 14, has more than doubled in the last three 
years,'' observed Mr. Hedrick.
    Mr. Hedrick favors increased parental involvement in 
setting a ``clear expectation of no use,'' better in-school 
education, and reduced exposure of children to ``pro-drug 
information,'' especially exposure to the ``recent re-
glamorization of drug use in some of the media.''
    Significantly, Mr. Hedrick reported that the Partnership 
has received--since inception--``over $2 billion in time and 
space'' from the media. In 1990 and 1991, this produced roughly 
one antidrug message per household per day.
    However, Mr. Hedrick testified that ``support for these 
messages has declined 20 percent in the past three years,'' 
apparently ``because the media is not as convinced that the 
drug issue is as important as it was.''
    Media coverage is also down, from 600 antidrug stories on 
the three major networks in 1989 to 65 last year, which Mr. 
Hedrick said is tantamount to ``zero'' from a communications 
point of view.
    Mr. Hedrick expressed the view that ``Federal support and 
Federal leadership in making drugs a critical national priority 
is essential, if we are to help convince the media that this is 
an important issue.'' National leaders must also tell those 
community leaders involved in this fight that what they are 
doing is important.
    Mr. Hedrick's 14-year-old son, Todd, testified briefly that 
his generation is surrounded by drugs. He said that ``parents 
need a serious wake-up call'' and that all kids now know where 
to get drugs in their schools. ``This entire country needs a 
huge turn-around in how it deals with drugs,'' since ``the fact 
that drugs aren't a prominent issue anymore tells kids that 
adults don't care about it.'' The younger Hedrick said, 
``that's suicide to my generation . . .'' He proposed starting 
prevention earlier, in elementary school, having parents talk 
more with their kids, increasing media attention to the 
problem, and stopping the legalization movement.
    Bridget Ryan, former program director for the Charles 
Stuart Mott Foundation and presently executive director of the 
BEST Foundation for a Drug-Free Tomorrow, testified that a 
recent RAND study advocated drug prevention as ``the first 
priority'' in curbing drug abuse. Ms. Ryan distinguished 
between ``validated'' and ``unvalidated'' drug prevention 
programs, and urged that the former be adequately funded.
    The best ``validated'' prevention programs build, Ms. Ryan 
testified, on three propositions: first, ``target[ing] 
substances used first and most widely by young people;'' 
second, ``helping students develop the motivation to resist 
using drugs;'' and third, teaching effectively.
    Ms. Ryan described a recent RAND study on the effectiveness 
of prevention as one ``conducted with methodological 
exactitude'' and ``one of the most rigorous ever undertaken.''
    Ms. Ryan testified that the RAND prevention study disproves 
three common criticisms of prevention--``first, that it works 
only for middle class, largely white, suburban situations; 
second, that the programs work only for kids who need them 
least; and finally, that prevention programs prevent only 
trivial levels of use.''
    RAND found that a properly designed prevention program, 
such as Project Alert, ``works well in urban, suburban, and 
rural areas, in middle- and low-income communities, and in 
schools with high and low minority populations.'' Project Alert 
is one of the prevention programs made available to ``schools 
across America'' by the BEST Foundation.
    James Copple, national director of the Community Anti-Drug 
Coalitions of America (CADCA), testified that CADCA is a non-
partisan group with approximately 2,500 community coalition 
members in every State and two U.S. territories. He noted that 
CADCA was founded in 1992 by the President's Drug Advisory 
Council, a creation of President Bush, and is privately funded.
    Expressing support for the Safe and Drug Free Schools 
Program, Mr. Copple retold a moving story of a young child that 
``made her stand'' against drugs, while forced to live in a 
crack house. During a law enforcement raid of the house, this 
child was found in her room, surrounded by antidrug posters and 
``a workbook on drug refusal skills;'' the posters and workbook 
were funded by Safe and Drug Free Schools moneys.
    In closing, Mr. Copple cited Peter Drucker's recommendation 
that budget cutting be conducted without imperiling the Federal 
Government's ability to conduct some ``national crusades.'' Mr. 
Copple noted that Drucker identified the war on drugs as one 
such crusade, and Mr. Copple urged the Congress to ``embrace a 
national strategy that is comprehensive, balanced and directs 
the majority of the resources to local communities to address 
local problems.''
    Charles Robert ``Bobby'' Heard III, director of program 
services at the Texans' War on Drugs, testified that ``parents, 
community leaders, and elected officials don't realize how easy 
it is for kids to get involved in drugs.'' He credited the 
precipitous drop in drug use ``between 1979 and 1992'' to 
substance abuse prevention, and noted that ``no other social 
issue can claim that kind of success.''
    Mr. Heard sees the primary solution to drug abuse in demand 
reduction. He testified that ``prisons alone will not break the 
cycle,'' and ``we can't treat our way out of this problem.'' He 
also noted that prevention is not a one-time mission, but an 
ongoing duty that must continue ``from generation to 
generation.''
    The subcommittee continued it's investigation into the 
Natio