Revision of cost factors for military and civilian retirement and benefits for US. Government personnel working on foreign military sales will result in additional re coveries—Defense (estimated annual sayings)...... New requirements effective October 1, 1978. will reduce purchases from foreign governments of unneeded unserviceable equipment as well as reduce related repair and incidental Costs-Air Force ($36.400.000 estimated annual savings: $9.800.000 nonrecurring) Reduction of unneeded equipment buy. backs from foreign governments—Air Force (nonrecurring) System correction to identify and rebill the cost of Government-furnished material sold to foreign governments-Air Force (nonrecurring) Revised costing procedures for repaired items sold to foreign governments-Air Force ($1,068.000 estimated annual Sivings: $89.000 nonrecurring).. Correction of billings to foreign governments to reflect replacement costs for spare parts support for weapon systems purchased from the U.S.-Air Force (nonrecurring) Billing for port handling charges-Army (nonrecurring) 70.000 25.000 15.000.000 22.000 Correction made in formula for determining personnel requirements resulted in reduc tion เก manpower authorization-Air Force (estimated annual savings) ........ Manpower Utilization: Reduction of training staffs at service schools and increasing classroom training time of students-Army ($28 million). Navy ($15 million), Air Force ($71 million) (estimated annual savings) ........ 267.000 114.000.000 Payments to Government Employees and Other Individuals: 7.500.000 Action taken or planned Manpower reductions due to change in inspertion points-Defense Logistics Agency (estimated annual savings)... Reduction in recruit training from 11 to 9 weeks by eliminating nonrelated activities such as mess duty and maintenance workMarine Corps (estimated annual savings). Termination of the Federal Bureau of Investigation's efforts to routinely apprehend all military deserters since most of them are subsequently discharged as unfit for service-Justice (estimated annual savings) Converting military auditor positions to civilian in the Air Force Audit AgencyAir Force (estimated annual savings) ..... Materiel Management: Deletion of nonessential items from budget request for war reserve materiel-Air Force (nonrecurring).. ..... Reduction of production support and equip ment replacement-Army (nonrecurring). Reduction for contractual services for ship support improvement project-Navy 6.700.000 3.900.000 2,140,000 10.340.000 Expansion in scope of the Federal survey of private sector white-collar employee compensation to provide broader representation resulted in a lower percentage increase in annual pay raises of Government einployees-Government-wide (estimated annual savings)...... Costs of foreign national employees of U.S. Armed Forces in Japan reduced by negoti ating the assumption of certain pay and benefit items by the Japanese Government-Defense (estimated annual savings) Revision of DOD regulations to conform to amended legal provisions resulted in increased offset of social security payments against annuities paid to survivors of retired military personnel-Defense (estimated annual savings) Revenues: 200.000.000 35.000.000 447.000 6.800.000 1.300.000 Deletion from budget submission of the cost of spare parts to support F-106 for combat operations-Air Force (nonrecurring) .... Cancellations of orders that were excess to GSA requirements-General Services Ad ministrations (nonrecurring)....... Medicaid: Cancelled Medicaid contracts with four prepaid health plans-Health, Education and Welfare (nonrecurring)....... Two health districts in New York State stopped billing Medicaid for spend-down of medical expenses incurred medically needy persons-Health, Education and Welfare (estimated annual savings). Medicare: Greater use made of less costly home dialysis for treatment of chronic kidnes taiureHealth. Education and Welfare (estimated annual savings). Eliminate improper reimbursements for Reduction in procurement and repair require ments for aviation repairable parts through improved methods for establishing and maintaining optimum stock levels on board Cartiers-Navy (nonrecurring). Reprogramming of funds to meet the Army's higher priorities needs for ammunition production-Arms (nonrecurring) .......... Reduction in personnel and inventory of school supplies and improvement of supply management practices-District of Col umbia ($150.000 estimated annual savings. $386.000 nonrecurring). Army troop support and Aviation Readiness Command reduced an unneeded overhaul program for AH-16 Guibooms from 35 to -Army nonrecurring).. 114.800.000 110.100.000 536.000 230,000 Reduction in funding for short-takeoff and landing technology program-NASA (nonrecurring) Seat Spacing on Military Airlift Command's trans-atlantic charter flights has been reduced from 38 inches to 34 inches, thus increasing passenger capacity and reducing the number of flights required-Air Force (estimated annual savings). . . . . . . . . . Reduction in dedicated manpower authorized solely to support distinguished visitors' lounges at 19 passenger terminals operated by the Military Airlift Command-Defense (estimated annual savings).... The Alaska Railroad increased the rental rates on its land-Transportation (estimated annual savings)....... The Saint Lawrence Seaway Development Corporation established a policy of depositing funds in minority banks within the constraints of good cash management, resulting in increased interest earnings-Transporta tion ($3.000 estimated annual savings: $2.000 nonrecurring).. Veterans Health Care: Reduction in appropriation to eliminate funding for low priority medical facilitiesVeterans Administration (nonrecurring) .. Reduction of indirect costs on VA health manpower training grant awarded to University of North Dakota-Veterans Administration (nonrecurring) Vocational Rehabilitation 7.800.000 4.300.000 Cancellation of cooperative agreements involving third-party funds between the Indiana Rehabilitation Agency and 33 Indiana school corporations-Health. Education and Welfare (nonrecurring) ........ Voting Rights: 957.000 Denial of funding for voting rights surveyCommerce (nonrecurring) 5.130.000 Weapons Systems: Substitution of improved towed array sonar system-Navy (nonrecurring) 44.000.000 3.000.000 305.000.000 475.000 5.000 1.300.000 816.000 Federal wheat deficiency payments made at lower rate-Agriculture (nonrecurring) ... Government contributions to Federal Emplovees Group Life Insurance program reduced by revising the actuarial formula for determining premiums required to main. tain a fiscally sound program-Government-wide (estimated annual savings) .... Appropriations ceiling for the southern Nevada water project was reduced-Interior (nonrecurring). Departments of State and Defense concluded a labor cost-sharing agreement with Japan for Japanese national employees of U.S. Forces in Japan-Defense (estimated annual savings)... Reduction in costs of operating Radio Free 108.000.000 68.588.000 22.577.000 26.000.000 The section 8 leasing program administered by the Department of Housing and Urban Development (HUD) provides financial assistance to supplement the rents paid by lower income families. HUD annually establishes, by market area, fair market rents for various apartment unit sizes and structure types to induce developers to build or rent projects. In a June 16. 1977, report to Congressman Robert S. Walker (CED-77-84) we pointed out that HUD had approved 32 rental assistance contracts in eastern Pennsylvania in which rents set might exceed the fair market rent limitation established by Federal law if the contract's contingency fee provisions were fully exercised. The contingency fee is an estimate of the financing costs to be incurred and may differ from actual financing costs when permanent financing is arranged. This occurred because HUD Philadelphia area office officials were not aware that contingency fees were subject to the limitation. If the full amount of the contingency fees were paid. rent subsidy payments would exceed the limitation by $2 million over the 40 year contract periods for just 2 of the 32 contracts. In this report, we also pointed out that there was a lack of documentation to support fair market rent determinations made for Lancaster, Pennsylvania. Because there were indications that these problems existed in other HUD field offices, we recommended that HUD (1) notify the field offices to include contingency fees in determining whether the fair market rent limitation would be exceeded and (2) revise its regulations to clearly require that adequate documentation be maintained in support of fair market rent determinations. HUD agreed with our recommendations and noti fied its field offices that contingency fees must be considered whether or not the fair market rent limitation has been exceeded and took steps to revise its instruc tions to require fair market rent documentation. FINANCIAL SAVINGS AND OTHER BENEFITS Reduced Federal Deficiency Payments on Certain Grain Sorghum and Barley Acreage Farm legislation in effect for crop years 1974 through 1977 directed or authorized the Secretary of Agriculture to make deficiency payments to producers of certain crops, including grain sorghum and barley, based on a farm's alloted acreage for each crop whether or not the crops were grown on that acreage. The deficiency pay. ments were to be made for any year in which a target price set in accordance with the law exceeded the higher of either the price-support loan rate or the average market price during the first 5 months of the crop marketing year. In a May 24, 1977, report to the Congress (CED-7777), we recommended that the Congress adopt legislation that would preclude deficiency payments for crops not grown. The Food and Agriculture Act of 1977, approved in September 1977, limited deficiency payments beginning with 1978 crops to planted acreage only. For 1977 crops the act continued deficiency payments based on allotted acreage: however, as we recommended, it provided that for those crops, including grain sorghum and barley, for which it raised 1977 target prices above those established under the previous law, any deficiency payment on unplanted allotment acreage would be based on the old, rather than the new, target prices. The Department of Agriculture paid about $228 million in deficiency payments to grain sorghum and barley farmers on their planted allotment acreage in 1977. However, because the price-support loan rates and average prices for these crops were higher than their old target prices, no deficiency payments were made on the unplanted allotment acreage. It was not feasible for us to estimate the savings resulting from requiring use of the old target prices. Such an estimate would have required computing the amounts that thousands of farmers would have received on their unplanted acreage. It also would have required analyzing all their program payments because the law limited the total amount of all payments (except disaster pavments) at $20,000 for each farmer annually under one or more of the annual programs established for wheat. feed grains, and cotton. However, if the new law's target prices had applied and if there was no payment limitation, the payments on unplanted grain sorghum and barley allotment acreage could have amounted to about $275 million. FINANCIAL SAVINGS AND OTHER BENEFITS Adjusted EPA Mileage Estimates The Motor Vehicle Information and Cost Savings Act requires EPA to determine the gas mileage of new cars and to publish the results. In our report "Convincing the Public to Buy the More Fuel-Efficient Cars: An Urgent National Need," issued August 10, 1977, we discussed the credibility of EPA gas mileage estimates and concluded that the estimated mileages were higher than most consumer experience in everyday driving, because of the many ranges of variables which are not controllable in laboratory testing. On September 19, 1977, the EPA Administrator released the fuel economy data for 1978 model year cars and announced that EPA was initiating a study of the fuel economy impacts of variables such as road, traffic, and weather conditions, and of differences in driving habits and maintenance practices. He also announced that in its 1979 mileage guides, EPA would adjust the published mileage data to account for these variables and thereby reflect the mileage likely to be experienced by the majority of drivers under all driving conditions. EPA developed for each 1979 model car a single. miles-per-gallon rating which reflects the amount of fuel that road tests and studies indicated were needed to drive the car under usual road conditions. EPA also redesigned the mileage labels placed on each car, provided additional explanations in the guides regarding the information therein, implemented a program to ensure that the guides are available at dealers showrooms, and publicized the program by means of spot announcements on television. EPA's actions should result in buyers having more confidence in the EPA estimates and in using them in deciding to buy more fuel-efficient cars. Reducing Risk of Storing Oil In Salt Caverns The Energy Policy and Conservation Act requires that the Department of Energy (DOE) create a strategic petroleum reserve to provide protection against future disruptions in U.S. energy supplies. DOE is committed to having 300 million barrels of crude oil in storage by 1980 and thus far has been stroing the oil in salt caverns located in the Gulf Coast area. In a January 1978 report to the Secretary of Energy on "Need to Minimize Risks of Using Salt Caverns for the Strategic Petroleum Reserve" (EMD-78-25, January 9. 1978), we stated that DOE is permitting the chemical companies who formerly operated the caverns to continue brine production at two of the storage sites. However, if a cavern is operated in excess of its maximum operating pressure, it could fracture causing it to be unsuitable for storage. For each cavern rendered unsuitable for storage, DOE would have to find a suitable replacement cavern or construct a new one. Either situation, particularly the latter, would result in program delays and additional costs. We recommended that DOE institute a formal system for controlling the brining operations to assure that brine production does not exceed safe rates of production. Subsequently, DOE installed pressure recording devices at the caverns at one of the sites to continuously monitor and record operating pressures during brining. DOE plans to install devices at the other site in the near future. This will help minimize the risk of storing oil in these caverns, which could be damaged by continued brining operations. Savings Through Full Use of Fast Payback Funds The Air Force's Management Engineering Agency operated a fast payback capital investment program to purchase off-the-shelf equipment that would recover investment costs within 2 years. This program was funded with $6.5 million in fiscal year 1977. Funds for each investment project were provided based on the estimated costs, and excess funds were to be returned to the program for future use. We found that because the Air Force had not instituted followup procedures, excess funds were not being returned. Consequently, until action was taken as a result of our examinations, the Air Force was missing other opportunities for savings through full use of the fast payback funds. Proposed Funding for District of Columbia Elementary School The District of Columbia Public Schools included in its budget requests to the Congress proposed funding to construct an elementary school as a replacement for two schools. The need for this school has changed since work on the project started and to ɔroceed with the construction would be contrary to the Board of Educa tion's policy of replacing a school only when a sizeable seat shortage exists in the area served by the school. Prior to the appropriation hearings, we briefed the staff. Subcommittee on District of Columbia. Senate Committee on Appropriations. on the questionable need to build the school. We advised the Subcommittee staff that the construction of the school was not justi 35-533 - 79 39 (Pt. 2) 8 |