Mr. STAATS. We also have several suboffices that operate out of the 16. It would be of interest, I think, to note here that one of the reasons we have these many offices is the travel problem that we have. If we have too few offices, then the travel costs run up very fast and also people have to be away from their families more.

FAR EAST AND EUROPEAN HEADQUARTERS

Senator BARTLETT. Your Far East headquarters is at Honolulu and your European headquarters is at Frankfurt.

Mr. STAATS. That is right.

INVESTIGATION AND AUDIT DETERMINATIONS

Senator BARTLETT. Now you have answered this in a general way but you might care to discuss this further. For the information of the subcommittee will you please explain how the General Accounting Office proceeds in its determination to undertake investigations and audits. In other words, do you make arrangements to investigate independently congressional requests to do so, and if so, how do you determine what areas of Government will be investigated?

PERIODIC AUDITS REQUIRED BY LAW

Mr. STAATS. I did comment on this point a few minutes ago, Mr. Chairman. In a broad way they fall into three categories. One that I mentioned would be the periodic audits that we do pursuant to law. The example that I gave was the Government corporations such as the Export-Import Bank.

STUDIES REQUESTED BY CONGRESS

The second category would be studies or audits that we undertake as a result of requests from a Member or a committee of Congress.

JUDGMENT AUDITS

The third would be cases where in our judgment an audit should be made because of the size of the program and importance of the program, possibilities that administrative difficulties may exist, perhaps even the violation of the intent of the law, might be involved

in some cases.

Our charter in the statute is a very broad one. We are requested to review agency programs from the standpoint of efficiency, economy, effectiveness of the programs, and to see whether they are carried out in accordance with the intent of the law. You can see from this that the charter is really quite a broad one.

Senator BARTLETT. You make spot checks of agencies as well?
Mr. STAATS. That is correct.

JUSTIFICATIONS

Senator BARTLETT. I ask unanimous consent that pages A-20 to A-22 of the justification be placed in the record at this point. Senator KUCHEL. No objection, Mr. Chairman.

Senator BARTLETT. It is so ordered.

(The justifications follow :)

PROGRAM AND PERFORMANCE

Our budget estimates for 1968 total $52,900,000, an increase of $3,100,000 above our revised 1967 estimate of $49,800,000 as submitted for the President's budget. Our 1967 revised estimate as submitted includes a requirement for a supplemental appropriation of $1,300,000 to cover the cost of the pay increase and related benefits provided by Public Law 89-504, effective July 3, 1966. We have currently reviewed our budget position and now find that, because of projected vacancies during 1967, we will be able to absorb $400,000 or about 30% of the pay increase and we have reduced our requirement for a supplemental appropriation to $900,000. The following brief table compares the major items of expense for 1967 and 1968: [In thousands of dollars]

More detailed information will be found on page A23 and beginning on page A25.

Over 97% of our estimates for 1967 and 1968 are required to pay our employees, to provide their benefits, and for travel between their offices and other Government and contractor activities where they perform their work. Our principal expenses are directly related to our staffing. The summary below compares our staffing requirements for the 1967 and 1968 programs and identifies our need for an average of 139 additional positions in 1968:

More detailed tables appear on pages A23 and A24. As in recent years, our staffing requirements contemplate a further gradual increase in our professional accounting and auditing positions. In prior years we have been able to offset this increase by decreases in fiscal voucher audit work and decreases in other areas of the Office, particularly in our Transportation and Claims Divisions, resulting from reduced workload and improved procedures and productivity. The following table illustrates this:

This year we are not able to offset necessary increases in our professional staff by reductions in other areas. As we anticipated in our testimony last year, we have experienced a large increase in the number and dollar value of military transportation vouchers which must be audited and settled by our Transportation Division. This has required an increase of 40 in the average number of positions in 1968.

The increase of 75 in the average number of accountants and auditors for 1968 will provide for additional audit coverage of new and expanding civil and military programs and expenditures and foreign assistance programs. We have established offices in Saigon and Manila, under our Far East Branch based in Honolulu, to strengthen and expand our efforts to review the management of military supplies, military construction and economic assistance programs in that area. In addition, our audit programs will emphasize improvement in Government financial management and accounting systems.

In the revision of our 1967 budget estimates it was necessary to include relatively uncontrollable unfunded items totaling $2,173,000, as follows:

Pay increase (Public Law 89-504).

Moving and related expenses (Public Law 89-516).
Increase in pay scale for accountants and auditors (Civil Service
Commission)

Increase in transportation vouchers for audit (military depart-
ments-Vietnam)

Total

$1,300, 000 150,000

291, 000

432, 000

2, 173, 000

We are able to absorb $1,273,000 of this increase, or about 59%, by reducing our original staffing estimates and keeping other expenses to the minimum required for our continued operation. The remaining unfunded amount of $900,000 is a direct result of the pay increase provided by Public Law 89-504, which became effective July 3, 1966, and is the basis of our 1967 supplemental request.

PERSONNEL INCREASE REQUEST

Senator BARTLETT. You are requesting 139 new positions, of which 118 are professional staff and 21 are designated as "other."

The largest increase is in accounting and auditing, 95, with the transportation division requesting an additional 40. The table on page A-21 indicates that there has been a gradual decline in personnel from 1954 to 1966; an increase of 294 personnel in 1967; and a request for an increase of 143 positions for 1968.

In your prepared statement you informed the subcommittee why you believed this to be necessary but it was not felt appropriate to grant the complete request, where could you best submit to some reduction in the request for the investigative staff?

Mr. STAATS. Mr. Chairman, we feel that the extent of our work is one that is difficult to measure in quantitative terms. It is also a matter of judgment as to what areas we review. I think the answer would have to be that we would simply be able to do less work for the Congress than we are now doing in the audit area, because that is the only increase we are asking for except for the transportation division. In the latter case this has been a direct result of volume of work which has increased because of the hostilities in Vietnam.

Senator BARTLETT. You regard these then as bedrock estimates? Mr. STAATS. I do.

ANALYSIS OF GAO STAFF INCREASE RELATIVE TO BUDGET INCREASE

I had an analysis prepared which I think would be of interest to the committee showing the increase in the staff of the GAO in relationship to the increase in the budget as a whole. The results indicate that the budget for the GAO since 1961 has increased about one-third as fast as the budget for the Government as a whole. So that if we are to carry out the responsibilities that the Congress has placed on our organization we feel that we have to have some additional staff support. In terms of the budget, the GAO budget has increased since 1961 about 30 percent whereas the budget for the Government as a whole on a cash basis has increased 71.4 percent.

ANALYSIS OF GAO STAFF INCREASE RELATIVE TO FEDERAL EMPLOYMENT

In terms of employment our total staff has increased 10 percent, whereas the employment for the Government as a whole has increased 30.6 percent.

Senator BARTLETT. You feel that you are lagging, then?

Mr. STAATS. In the sense that we are not increasing our staff as rapidly as either the dollars or employment for the Government as a whole.

PERSONNEL RECRUITMENT

Mr. WEITZEL. We are really limited by our ability to get the proper caliber of people to assign to our staff. This is, as Mr. Staats mentioned, the main reason why we have extended our recruiting in the field of economics, public administration and other disciplines.

PLANNING AND PROGRAMING PROCEDURE IMPROVEMENT

Since Mr. Staats has been Comptroller General, he has introduced a greatly improved procedure for planning and programing our work so that we can decide what work has the highest priorities and have a session with Mr. Staats in advance of a 6-month period. We were doing this this morning for the International Division for the 6 months from July 1 to December 31, 1967, and also we will be going over a longer period so that we can make more effective use of our

resources.

As Mr. Powers can tell you-he is the man who sets the tentative goals of manpower in the 16 field offices and the overseas branches, and so forth-there is a tremendous amount of competition because they have more audit programs than we have people to do the job. So the size of our staff, and it is still a developing staff in this professional accounting and auditing field, is one of our limitations for the capacity to do the kind of work that we feel Congress expects us to do.

PERSONNEL TURNOVER

Senator BARTLETT. Do the people who go into GAO by and large tend to make a career of it or is there considerable attrition or turnover?

Mr. STAATS. At the 7 and 9 grade level we have a sizable turnover, but our overall turnover has been fairly stable.

Going back to 1965 our turnover per hundred employees was about 12. In 1967 for the first three quarters of the year it is almost exactly the same, 12.8.

Senator BARTLETT. I wonder how that relates to the Government as a whole.

Mr. STAATS. Our turnover would be a little less than the Government as a whole. Do you have that figure?

Mr. SIMMONS. Yes; we have a number that I can quote you here. FPC is 26.5. Securities and Exchange 28.3. Office of Economic Opportunity, 56.6. Those are a few compared to our 17.9.

Mr. STAATS. For all agencies in 1966 the turnover rate was 24.8.
Senator BARTLETT. Yours is very low compared to this.

Mr. STAATS. We have a lower turnover. I think the answer to your question, whether people come to GAO with the idea of its being a career, generally is "Yes."

Senator KUCHEL. I think the Office is held in pretty high esteem by people whose skills might qualify them for service there.

PERSONNEL LOSS TO OTHER AGENCIES

Mr. STAATS. Our great problem is that we continually are losing people to other Government agencies because of the kind of experience that they get in the GAO. We are making a very major investment in the training of our people which also makes it attrac

other