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FINANCIAL SAVINGS AND OTHER BENEFITS Action taken or planned

Estimated saungs Payments to Government Employees and Other Individuals:

Action taken or planned

Estimated savings Manpower reductions due to change in insper. lion points-Defense Logistics Agency

estimated annual savings) .............. 7.500.000 Reduction in recruit' training from 11 10 9

werks by eliminating nonrelated activities such as iness dury and maintenance work

Marine Corps (estimated annual savings). 6.700.000 Termination of the Federal Bureau of In

vesugation's efforts to routinely apprehend all military deserters since most of them are subsequently discharged as unfit for service-Justice (estimated annual

savings) ............................. 5.900.000 Converting military auditor positions to

civilian in the Air Force Audit Agency Air Force (estimated annual savings) ..... 2.10.000

200.000.000

Expansion in scope of the Federal surven of

private sector white-collir emplovee compensition to provide broader representation resulted in lower percentage increase in annual par raises of Government einplovees-Government-wide (estimated

annual savings) ....................... Costs of foreign national emplovers of .S.

Armed Forces in Japxin reduced by negotiating the assumption of certain pir and benefit iterns by the Japanese Government-Defense (estimated annual savings) Revision of DOD regulations to conform to

amended legal provisions resulted in increased offset of soxial trurit pxiy ments aguinse annuites paid to sun ivors of retiread military personnel - Defense (estimated annual xiings)

35.000.000

Materiel Management

17.000

10.340.000

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Deletion of nonessential items from budget

request for war reserve materiel-lir

Force (non recurring)................... Reduction of production support and equip

ment replacement - Army (nonrecurring) . Reduction for contractual services for ship

support improvement project-Navs

(nonrecurring) ........................ Reduction in appropriation for military sr.

vices supply activities - Army (nonre

curring) ....... Deletion from budget submission of the cost of

spire pirts to support F-106 for combat operations- ir Force (nonreturring) .... Cancellations of orders that were excess to GSA requirements-General Services Ad. ministrations (nonrerurring) ............ Medicaid: Cancelled Medicaud contracts with four pre

paud health plans-Health. Edukaton and Welfare (nonrerurring) ................. Two health districts in New York State stop ped billing Medicaud for x-nd-down of Inertical expens incurred medically needs persons-Health. Education and Wellare estimated annual sinings) ........

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.35.000

111.800.000

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110.100.000)

Medicare

Reclution in procurement and fur repletres ments for it ou repairable puts thermagh improved matheads for oublishing and maintaining optimum sex lencse baxud

(unierlusi (nonreruning)........... Reprogramming of funds to meet the dummy's

higher prioritaikyths to ammunutup

duction - nm (non turung) .......... Reduction in tomme and monitor

whool supplies and impron enint ex supply management pruun-Dent Cola umba $120.000 imated mual ungs

$386,000 noneTuning)...... Arm trop support in aon Rand

Command and numitulel onthul program for AI-. bullets loom i

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mi nonne uuring................

30.0KKO savings) ............................. Reduction in costs of operating Radio Free

FINANCIAL SAVINGS AND OTHER BENEFITS dation taken or planned

Estimated savings Savings from changing from high price model

of rupewriter to less costly one-AID (nonrecurring) .........

11.000

Action taken or planned

Estimated savings Collection of state disability insurance hos

pitalization benefits for nonservice con. nected disabilities treated in VA hospitals

Veterans Administration (nonrecurring) .. 500.000 Implementation of proper billing procedures

to ensure collection for laboratory services rendered - Veterans Administration (estimated annual savings) ..............

102.000 Vocational Rehabilitation

9.000.000

7.800.000

Transportation:
Reduction of appropriation request-De-

fense (nonrecurring) ................ Funding reduced for the second career train

ing program for air traffic controllers

Transportation (nonrecurring) .......... Reduction in the number of motor vehicles

used by the U.S. Forces in Korea to support administrative operations-Defense (non

recurring)............................ Military services consolidated procurement

on mainland Japan: and industrial gas production and civilian personnel and family housing in Okinawa, JapanDefense (S1.700.000 estimated annual sav. ings: $430,000 nonrecurring) ............

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3.000.000

305.000.000

63.000.000

Substitution of improved towed array sonar

system-Navy (nonrecurring) ...... Deletion of requirement for a hard structured

munitions warhead-Air Force (non

recurring) ............................ Reduction in appropriation for ground laser

locator designator-Army (nonrecurring). Reduction in appropriations requested for the

improved tactical bombing program

Delense (nonrecurring)................. Elimination of funding for full-scale integra.

tion of the IIR guidance system-Air Force (nonrecurring) ...

............

14.500.000

2.100.000

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 in. creasing 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-Transportation ($3.000 estimated annual savings: $2.000 nonrecurring)...................

3.200.000

900.000

3.000.000

Other liems:

475.000

108.000.000

3.000

68.588.000

Feeleral wheat deficiency payments made at

lower rate-Agriculture (nonrecurring) ... Government contributions to Federal Em.

plovees Group Life Insurance program reduced by revising the actuarial formula for determining premiums required to main. tain a fiscally sound program-Govern

ment-wide (estimated annual savings) .... Appropriations ceiling for the southern

Sevada water project was reduced-Interior

(nonrecurring) ........................ Departments of State and Defense concluded

a labor cost-sharing agreement with Japan for Japanese national employees of 1.. Forces in Japan-Defense (estimated annual

22.377.000

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power training grant awarded to l'niversity of North Dakoti-Veterans Administration (nonrecurring) ........................

26.000.000

816.000

FINANCIAL SAVINGS AND OTHER BENEFITS

dction taken or planned

Estimated savings Europe and Radio Liberty through consolidation of functions and clarification of responsibilities- International Com. munication (estimated annual sakings) ... 14.000.000

Roducad Federal Deficiency Payments on
Certain Grain Sorghum and
Barloy Acreage

Additional Financial Savings Not Fully or Readily Measurable

Many important one-time or recurring financial sav. ings result from our work, but the resultant savings cannot be fully or readily measured.

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 par 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 6 months of the cop marketing year.

Action to Provent Payments to Housing Subsidies Which Excoed the Legal Limitations

In a Mar 24. 1977. report to the Congress (CED-7777). we recommended that the Congress adope 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 par. ments based on allotted acreage: however, as we rerommended, 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 section 8 leasing program administered by the Department of Housing and l'rban Development (HL'D) provides financial assistance to supplement the rents paid by lower income families. HL'D annually establishes, by market area, fair market rents for various apartment unit sizes and structure types to induce de. velopers to build or rent projects.

In a June 16. 1977, report to Congressman Robert S. Walker (CED-77-8+) we pointed out that HU'D had approved 32 rental assistance contracts in eastern Pennsylvania in which rents ser might exceed the fair market rent limitation established by Federal law is 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 HU'D 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 10 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 HL'D field offices, we recommended that HL'D (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 de terminations.

HU'D agreed with our recommendations and notified its field offices that contingenc 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.

The Department of Agriculture paid about $228 million in deficiency payments to grain sorghum and burley farmers on their planted allotment acreage in 1977. However, because the price support loun rates and average prices for these tops were higher than their old target prices, no deficiency payments were made on the unplanted allotment acreagr. It was not feasible for us to estimate the savings resulnng from requiring use of the old target prices. Such an osumate would have required computing the amounts that thousands of farmers would have received on theu un planted acreage. It also would have required inah zing all their program payments because the law limited the total amount of all payments (except dis.ister part. ments) at $20.000 for each farmer annulls under one o more of the annual programs established for sebe. feed grains, and cotton. However, if the neu lu sungai prices had applied and if there was no pirment limit tion, the pas ments on unplinted gruin sorghum and barles allotment acreage could have amounted to about $275 million.

FINANCIAL SAVINGS AND OTHER BENEFITS

Adjusted EPA Mileage Estimates Would Result in More Consumers Buying Fuel-Efficient Cars

continue brine production at two of the storage sites. However, il 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 re. cording 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 Motor Vehicle Information and Cost Savings det requires EPA to determine the gas mileage of new cars and to publish the results. In our report "Con. vincing the Public to Buy the More Fuel-Efficient Curs: An l'rgent National Need." issued August 10. 1977, we discussed the credibility of EP.A gas mileage estimates and concluded that the estimated inileages were higher than most consumer experience in every day 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 und announced that EPA was initiating a study of the fuel eronomy impacts of variables such as road, craffic, 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 inodel 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 en. sure that the guides are available at dealers' showrooms, and publicized the program by means of spux announcernents on television.

EPA's actions should result in buyers having more confidence in the EP. estimates and in using them in deciding to buy more fuel-efficient cars.

The Air Forces Management Engineering Agency operated a fast payback capital investinent program 10 purchase off-the-shell 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 bxsed 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 no instituted followup proxedures, 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

Reducing Risk of Storing Oil In Sak Caverns

The Energy Policy and Conservation are requires that the Department of Energy (DOE) create a strategic petroleum reserve to provide protection against future disruptions in l'.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 * Veed to Minimize Risks of l'sing Salt Caverns for the Strategic Petroleum Reserve" (EMD-78-25. January 9. 1978). We stated that DOE is permitting the chemical compxinies who formerly operated the caverns to

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 nere for this school has changed since work on the project started and to proceed with the construction would be contrary to the Board of Educattion's policy of replacing a school only when a sizable seat shortage exists in the area served by the school.

Prior to the appropriation hearings. we loriefed the staff. Subxommittee on District of Calumbia. Senate Committee on Appropriations, on the questionable need to build the school. lle advised the Subcommittee staff that the construction of the school wiis nox justi.

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PMANCA SAVINGS ANO OTHER BEERTS

Improved Management of Processing Hospital Supplies

fied or needed ile provided the staff data for use during the fiscal sear 1976 hearings which showed that in school scar 1974-75 there were about 1.000 excess sats 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 1300 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.

We had reported that the l'eterans 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 unnecessarik 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 Vi hospitals' use of mandatory sources of supply. These acions should result in substantial cost reductions.

Federal Bureau of Investigation
Develops New Resource Management and
Intormation System

More Equitable Procedures to Sattle Accounts for International Mail Services

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 investigalive resources, and that its information on investigative results was misleading. Because these findings confirmed the FBI's own doubts about its management in formation 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 Feb ruary 15. 1978. was implemented in October 1977. 11 properly implemented, the new system should provide the FBI (1) a better basis for identifying priority in vestigative areas and cases, thus providing a better basis for resource allocation. (2) more comprehensive, valid. and integrated data for making management decisions und (3) detailed criteria for measuring investigative results and assuring their validity. Improved Verification of Applications For Basic Education Grants

The l'niversal Postal l'nion-composed of the L'nited 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 ex. change rates set under the l'nion's monetan standard. the gold franc, were causing problems in settling international postal accounts. The l'nited States was incur. ring losses because as a creditor, it always settled in dollars, while some countries to which the l'nited States was indebted exercised their option to request payment in the currency that would give them the most favorable retum.

In our report (ID-77-38. Aug. 30, 1977). we recommended that the Postal Service panicipate in internacional attempts to establish a more realistic monetan standard, such as the special drawing right (SDR) unit issued by the International Monetary Fund, for settling charges and settling international mail aco

In (ctober 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 ino countries for its use, and intends to increasingly use the SDR in settling international poslal accounts.

l'sing SDR is an equitable way to settle accounts bar cause currency exchange rates based on SDR values are close to or the same as market exchange rates. The l'nited States will largely avoid loss's since the value of settlement amounts will be substantially equal regardless of the currency used to settle the debt.

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 busic educational opportunity grants was accurate. We pointed out that as much as $24.5 million may have been awarded to ineligible students.

HEW has inititiated a pre-award verification procedure in the Basic Educational Opportunity Grant Program. HEI acknowledged that the new procedures were largely the result of our report and estimated that it had been paving from $100 to $150 million annually to students who were ineligible or who were overpaid.

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