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 500 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 proceed with the construction would be contrary to the Board of Education'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) fied or needed. We provided the staff data for use during the fiscal year 1976 hearings which showed that in school year 1974-75 there were about 1.000 excess seats in the planning area served by the replacement school. If the school were built, and considering other construction in the area, the excess seating capacity would increase to about 1.500 spaces. The Congress deleted the funding of the proposed school from the fiscal year 1976 budget and again from the fiscal year 1978 budget submission because of data we submitted. Federal Bureau of Investigation Develops New Resource Management and Information System During our review of the Federal Bureau of Investigation (FBI) investigative results and accomplishments, the Comptroller General and FBI Director met to discuss our interim findings-that the FBI lacked information necessary to effectively manage its investigative resources, and that its information on investigative results was misleading. Because these findings confirmed the FBI's own doubts about its management information systems, the FBI Director established a task force which worked closely with us during the remainder of our review to develop a new management information system. The new system, described in our report issued February 15, 1978. was implemented in October 1977. If properly implemented, the new system should provide the FBI (1) a better basis for identifying priority investigative areas and cases, thus providing a better basis for resource allocation, (2) more comprehensive, valid. and integrated data for making management decisions and (3) detailed criteria for measuring investigative results and assuring their validity. Improved Verification of Applications For Basic Education Grants In a report to the Congress (HRD-77-91. Sept. 21, 1977) we stated that the Office of Education had not established adequate controls to assure that information supplied by applicants for basic educational opportunity grants was accurate. We pointed out that as much as $24.3 million may have been awarded to ineligible students. HEW has inititiated a pre-award verification procedure in the Basic Educational Opportunity Grant Program. HEW acknowledged that the new procedures were largely the result of our report and estimated that it had been paying from $100 to $150 million annually to students who were ineligible or who were overpaid. FINANCIAL SAVINGS AND OTHER BENERTS Improved Management of Processing Hospital Supplies We had reported that the Veterans Administration system for centrally managing hospital procurement and supply operations could be more cost-effective if more information was available regarding local procurements by individual hospitals. We pointed out that VA's Supply Service (1) lacked information about local hospital purchases. (2) lacked data regarding items centrally processed, and (3) permitted unnecessarily high inventory levels for items stored in depots. As we recommended. VA has developed a computerized system to identify supply items for centralized management, revalidated the inventory levels needed to support hospitals, and established central office responsibility for monitoring VA hospitals' use of mandatory sources of supply. These actions should result in substantial cost reductions. More Equitable Procedures to Settle Accounts for International Mail Services The Universal Postal Union-composed of the United States and 156 other countries—makes the rules for exchanging mail between countries and sets charges for services performed. Differences between the market exchange rates of the countries' currencies and their exchange rates set under the Union's monetary standard. the gold franc, were causing problems in settling international postal accounts. The United States was incurring losses because as a creditor, it always settled in dollars, while some countries to which the United States was indebted exercised their option to request payment in the currency that would give them the most favorable return. In our report (ID-77-38, Aug. 30, 1977), we recommended that the Postal Service participate in international attempts to establish a more realistic monetary standard, such as the special drawing right (SDR) unit issued by the International Monetary Fund, for settling charges and settling international mail accounts. In October 1977 the Postal Service stated that in keeping with GAO's recommendation, the Service had reached agreement with three countries on the use of the SDR in settling accounts, is negotiating with two countries for its use, and intends to increasingly use the SDR in settling international postal accounts. Using SDR is an equitable way to settle accounts because currency exchange rates based on SDR values are close to or the same as market exchange rates. The United States will largely avoid losses since the value of settlement amounts will be substantially equal regardless of the currency used to settle the debt. FINANCIAL SAVINGS AND OTHER BENEFITS Excess Item Management During a survey of excess item management by the U.S. Army in Europe, we learned that the Army had special projects at corps and division levels, to retain and eventually use repair parts and other items that were in excess of established stock levels. The intent was to avoid disposing of material which would have to be purchased later from wholesale supply sources. However, the U.S. Army in Europe had not implemented uniform criteria for the retention of this material, and as a result large and duplicative inventories were being retained; had not made an economic analysis to determine if the projects were justified; and there were no plans to provide higher commands with visibility over these inventories. We reported our findings to the Commander in Chief, U.S. Army, in Europe and recommended that uniform retention criteria be adopted and excess quantities of materials be redistributed to those with a current need for the items. U.S. Army in Europe reported to us that uniform criteria have been implemented and excess item projects have been brought in line with the criteria, resulting in a reduction in excess item inventory levels. This reduction of excess inventory was achieved through redistribution to satisfy current needs of other units and through transfer to property disposal office. At the latter organizations such property is subject to reuse through regular screening procedure. We could not determine the total value of redistribuiton or reuse, because U.S. Army in Europe does not require reporting on these transactions. Forms Facsimile Handbook The Standard and Optional Forms Facsimile Handbook is a valuable tool which allows forms managers to review requests for new forms against available standard or optional forms. Using standard and optional forms results in significant savings in forms design, printing, and distribution by curtailing the development of new forms. Standard and optional forms are available through GSA's supply system and are used instead of agency developed forms. During an inquiry of Federal forms management we found that the Standard and Optional Forms Facsimile Handbook had not been updated in over 3 years although the number of standard and optional forms increased by about 40 percent. L'naware of new standard or optional forms, agencies develop their own forms without reference to available forms. The outdated condition of the forms facsimile handbook contributed to an increase in the number of different agency-developed forms and increased costs. The estimated number of different Federal forms doubled from 360,000 to over 700.000 from 1969 to 1972. Although current estimates are not available, forms proliferation is known to be a continuous problem. The annual cost to manage Government forms is an estimated $2 billion. In October 1976 we advised the Administrator, GSA, that while the Standard and Optional Forms Program is the National Archives and Records Service's (NARS) responsibility, the handbook, an essential tool to the program, was the responsibility of the GSA Region 3 Federal Supply Service. Thus, an essential tool to the forms program was outside the control of the program manager which probably contributed significantly to the delinquency of a new handbook. We suggested transferring the handbook responsbility to NARS. In November 1976 the handbook responsibility was transferred. In March 1977 NARS announced the handbook availability through subscriptions handled by the Government Printing Office. The subscription includes 3 years of quarterly updates. An up-to-date handbook should improve the effectiveness of agencies' form management programs and significantly reduce costs associated with developing different agency forms where existing standard or optional forms exist. Optimum Use of Federal Real Property We reviewed the background. circumstances and status of a use agreement between the Department of the Navy and the Interior concerning land located at Sachuest Point, Rhode Island. The use agreement was entered into because the Navy wanted to continue using an existing beach club located on land controlled by the Department of the Interior (DOI) and DOI wanted 102 acres of Navy land for a wildlife refuge. The General Services Administration (GSA) stated that it would declare the agreement illegal when the 102 acres of Navy property was reported excess. DOI told Navy that the continued use of the beach club depended on DOI receiving the property. The Navy stated that if it could not use the beach club it would be required to build a recreation facility in the area at an estimated cost of $750,000. In our report we recommended that DOI permit the Navy to continue using the beach club facility and that the Navy complete the screening process for the 102 acres of land and if not needed to report it as excess to GSA. In their replies to our report the DQI said that the agreement assured the Navy's continued use of the beach club and the Navy stated that the property had been screened through DOD and was being reported to GSA as excess. Because of these actions. (1) the Navy will not have to request funds for a new recreational facility, (2) Navy property no longer needed by the Navy will be made available to satisfy requirements of other Federal agencies, or (3) if not needed by any Federal agency. Navy property will either be made available for continued public benefit through a State or local agency or will be sold. bringing money into the U.S. Treasury. Improved Procedures for Approving Royalty Payments Included in Negotiated Contracts We performed a review of the procedures followed for approving patent royalty charges included in Air Force contracts awarded by the Air Force Logistics Com. mand. Our review of patent royalty files indicated a general lack of documentation necessary to determine the propriety of royalties approved, and in several instances, questionable approvals were made. We recommended that procurement and legal review activities establish procedures to assure that necessary documentation is obtained, reviewed, and maintained to support royalty approval actions. The Air Force agreed to implement our recommendations. Uninformed Procurement Decisions for Commercial Products Are Costly On October 26, 1977, we reported to the Congress that the Defense Logistics Agency, General Services Administration, and, to a lesser extent, the Veterans Administration do not consider all costs when deciding how to procure common commercial items. For this reason these agencies have chosen to procure, stock, and distribute goods themselves rather than to buy them commercially. However, often it is more economical to use commercial distribution channels to supply products directly to users. These agencies have agreed to take action to develop and use full cost data in making effective procurement decisions. Revision of Defense Policy for Developing Software Testing In a report to the Congress we recommended that the Secretary of Defense should take action to improve the test and evaluation of weapon system software programs. We reported that software needs to be thoroughly tested during development so that discrepancies are FINANCIAL SAVINGS AND OTHER BENEFITS identified and corrected before the systems are released to the military users. Early detection of errors may prevent development schedule slippage and reduce system life cycle costs. The Department of Defense agreed with our findings and revised its policy to provide for adequate testing of computer software before its release for operational use. Other Benefits Some actions taken in response to our recommendations result in benefits other than financial savings. If the Congress enacts recommended legislation or if new agency regulations or procedures are adopted, day-today operations at Federal, State, and local levels may improve. Sometimes the actions directly enhance the well-being of individual citizens. Actions Taken to Improve Health and Safety in Metal and Nonmetallic Mines As requested by the Senate Committee on Human Resources, we issued a report to the Congress (CED-77103. July 26, 1977) on the effectiveness of the Department of the Interior's administration of the Federal Metal and Metallic Mine Safety Act. We reported that limited progress had been made in the safety record of mines covered by the act since its passage in 1966. On November 9, 1977, the Congress enacted the Federal Mine Safety and Health Amendments Act of 1977 (P.L. 95-164). An advance summary of our report was used extensively in the Senate floor debate of this legislation. In line with our recommendations to the Congress, the act (1) authorizes penalties, including closure orders, in case where mine operators repeatedly violate the same standards and (2) specifically authorizes noncoal research and sets appropriate funding levels. The act also contains numerous provisions consistent with the intent of our recommendations to the Secretary of the Interior for (1) improving the completeness and accuracy of accident, injury, and illness information; (2) expediting the promulgation of mandatory standards (regulations); (3) making training for miners more effective in reducing accidents and injuries; and (4) evaluating advisory standards and upgrading them to mandatory status as appropriate. In response to our report, the Department and its Mining Enforcement and Safety Administration (MESA) took the following actions: (1) revised the criteria for injuries that mine operators must report; (2) established criteria for accidents which should be investigated: (3) assigned additional staff to the standards FINANCIAL SAVINGS AND OTHER BENEFITS promulgation process and began evaluating and, where appropriate, upgrading advisory standards to mandatory status; (4) placed greater emphasis on enforcement of health and training standards during inspections: (5) commended analyzing data in the Management Control System to assess its enforcement activities; (6) started action toward issuing mandatory standards requiring mine operators to provide accident prevention training to all their employees; (7) initiated formal procedures between the Bureau of Mines and MESA for coordinating technology transfer matters and established a joint Bureau-MESA task force to formulate implementing procedures; (8) increased funding of the Bureau's noncoal health and safety research program; (9) established a formal training program for MESA personnel in the techniques and procedures for conducting special accident prevention studies; and (10) implemented new criteria for selecting mining operations to be included in the special Program in Accident Reduction. The newly enacted legislation and the Department's actions should make metal and nonmetallic mines safer and healthier places of employment. Actions Taken to Improve Motor Carrier Safety On May 16, 1977, we reported to the Congress that the Federal Highway Administration's (FHWA's) Bureau of Motor Carrier Safety had not (1) effectively addressed congressional concern for safety problems. (2) monitored and enforced Federal motor carrier safety requirements, or (3) coordinated its work with related State agencies. Inadequate reporting and recordkeeping practices prevented the Bureau from accurately determining the number of carriers under its jurisdiction. In response to our recommendations, the Department of Transportation and FHWA: -Established a task force to develop an informa tion system to facilitate analysis of carriers' safety records and help investigators select carriers most in need of safety surveys. -Commenced a complete revision of its procedures for enforcing Federal motor carrier safety regulations. -Implemented training to improve quality of legal casework and reduce processing time. -Issued guidelines on civil and criminal case review by regional counsels. -Started-by selective areas-an enforcement campaign on commercial motor carriers violating Federal hours of operation rules. As a result, trucking companies discontinued some runs which re quired drivers to exceed maximum driving hours. -Surveyed all States to identify those which (1) develop motor carrier safety data and (2) routinely provide State data to the Bureau. Survey results were used to encourage more States to share information with the Bureau. -Assigned special emphasis to increasing roadside vehicle driver inspections. These actions should increase the effectiveness of the motor carrier safety program and improve the safety level of carriers' operations. Fairer and More Consistent Treatment of Homeowner Claims At the request of Congressman Ralph H. Metcalfe, we reviewed the activities of the Chicago area office of the Department of Housing and Urban Development (HUD) concerning its operation of the section 518(b) program. This program was designed to correct or compensate owners of existing homes purchased with federally insured mortgages in which there were serious defects at the time of insurance commitment. In testimony before the Subcommittee on Manpower and. Housing, House Committee on Government Operations, on April 15, 1977, and in a report to the Congress dated July 27, 1977, entitled "Need for Fairer Treatment of Homeowners' Claims for Defects in Existing Insured Homes" (CED-77-97), we concluded that Chicago homeowners had been treated unfairly and inconsistently under the program. Lack of clearly defined criteria for evaluating the acceptability of homeowner claims for assistance resulted in inconsistent HUD determinations that frequently were reversed when homeowners appealed the decisions. Also. Chicago homeowners were not fully reimbursed for defects, as prescribed by HUD regulations. We recommended that HUD revise the guidance provided to its inspectors for determining whether defects existed at the time of insurance commitment to recognize the inappropriateness of relying (1) solely on a fixed time limit without giving due regard to the other factors of each case and (2) on the original FHA appraisal. We also recommended that the HUD Chicago area office reevaluate all claims it had rejected on the basis of inappropriate criteria and all claims paid for compliance with prescribed reimbursement procedures. On July 11, 1977, HUD advised its field offices of the deficiencies in using a pre-set time criterion and the original appraisal in processing homeowners' claims. In a letter dated January 16. 1978, the Secretary of HUD |