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DETAILS OF OTHER MEASURABLE SAVINGS Details of the measurable financial savings including additional revenues attributable to the audit work of the General Accounting Office during the fiscal year 1966, totaling $113,445,000, are listed below. Approximately $40 million of the savings or additional revenues are recurring in nature and will continue in future years. The items listed consist of realized or potential savings in Government operations directly attributable to action taken or planned on findings developed by the General Accounting Office in its examination of agency and contractor operations. In most instances, the potential savings are based on estimates and for some items the actual amounts to be realized are contingent upon future actions or events.

Action taken or planned

SUPPLY MANAGEMENT

Estimated

8a vings Transfer of excess material to agencies or contractors for use in

lieu of making new procurements------------------------------ $19, 940,000 Return to active inventory excess or surplus material and equip ment which was either prematurely scheduled for disposal or not being recognized as an acceptable substitute for items in currrent demand ----

-------- 11, 593, 000 Cancellation of plans to purchase materials for which there was not current need.-

10,006,000 Savings resulting from reduction of rates paid for farm storage of grains under the 1965 reseal program----

9, 200,000 Reduction in losses from deterioration of limited-life and excess

medical supply items in the civil defense medical stockpile------ 8, 691, 000 Adjustment of prices under existing contracts or proposed amendments ------

6, 707,000 Annual savings in operating cost ($250,000) and reduction in re

placement cost ($3,500,000) of seagoing tender used for aid-tonavigation work made available for partial support of the national oceanographic effort------

3, 750,000 Transfer and utilization of excess missile launching and handling rails in lieu of making new procurements.---

502, 000 Reduction in procurement costs as a result of qualifying additional

suppliers as competitive sources for items previously purchased on a sole-source basis.----

439,000 Savings by having fee-basis physicians prescriptions filled in VA pharmacies instead of in private pharmacies_-----

428,000 Savings in procurement cost as a result of direct purchase from actual manufacturer----

396, 000 Redistribution of ammunition provided under the military assist

ance program which was excess to recipient country needs.----- 392, 000 Cancellation of production of items obtainable at lower prices --- 361, 000 Savings realized by replacing sedan delivery vehicles with lower cost pickup trucks--

294, 000 Reduction in Government-wide procurement costs due to elimination

of the requirement that general office desks be equipped with locks --

250,000 Annual savings resulting from change in method of contracting for

photographic services from time and material contract to costplus-fixed-free contract-----

145,000 Savings on purchase of aircraft parts for overhaul as a result of new pricing procedures.----

131, 000 Reduction in charges to Government cost-type contracts of corporate and administrative expenses.

126,000 Cancellation of unnecessary handtool procurements -----

125,000 Return to acrountability of Government-owned material not known

to exist and equipment improperly retained by contractors.----- 125,000 Reduction of costs resulting from revision of procurement proce

dures to require support services contractor to consider GSA source of supply prior to purchase of general supply items from more costly commercial sources.------

116,000 Utilization of excess property as a result of more adequate screening procedures.----

110,000

Action taken or planned Continued

SUPPLY MANAGEMENT=continued

Estimated savings

Savings resulting from the centralized procurement of certain drugs

at prices lower than prices available to individual field stations -Bedistribution of missile system spare parts which were determined

to be excess to the needs of the Republic of China--------------Cancellation of outstanding requisitions and programs for train

ing ammunition not required for the military assistance program

in a South American country-Other items..

$108, 000

96,000

33, 000 289,000

S----

-------------------------

COMMUNICATIONS

Reduction in number of leased telephone circuits in cable facility

through utilization of unused telephone circuits in microwave facility (estimated annual savings)

503, 000

PAYMENTS TO GOVERNMENT EMPLOYEES, VETERANS, AND OTHER INDIVIDUALS

1,500,000

1,000,000

244, 000

Annual savings through reducing travel costs by making Govern

ment vehicles available for use in lieu of privately owned

automobiles ----Savings resulting from revising travel regulations to permit the

payment of a lower rate when justified to compensate employees for expenses incurred when using privately owned automobiles

for official business_-----Savings resulting from the enactment of legislation granting leasing

authority to the Coast Guard and the issuance of instructions to implement the Coast Guard's leased housing program to permit

leasing FHA houses in certain areas.------Improved housing administration procedures reducing vacancy pe

riods and resulting in a reduction in payments for housing al

lowance (estimated annual savings)-Increased use of quarters in Air Force-leased hotels to present unnecessary payments of quarters, lodging, and per diem allowances to military personnel on official duty in London, England (esti

mated annual savings) -------Annual savings resulting from reducing Federal unemployment

benefits payable to certain Federal military retirees.---Revision of method used to compute living quarters allowance

to civilian employees overseas (estimated annual savings)-----Correction of erroneous pay and allowance computations and

records ----------Increase in charges for utilities furnished to industrial and agricul

tural lessees, and nonappropriated fund activities (estimated annual savings)------

218,000

159,000

138,000 104, 000 75,000

24,000

MANPOWER UTILIZATION

Reduction in staff at Army Finance Center (estimated annual sav

ings) -------------Annual savings in personnel costs resulting from the consolidation

of certain data processing operations.---Savings resulting from reduction of positions for the Chicago em

ployment service offices.------Savings in salary costs resulting from utilization of available auto

matic data processing equipment (estimated annual savings)-Elimination of unnecessary guard post positions at security installation (contract period)-

-----------

1, 276,000 1,038, 000 421, 000 160,000

152, 000

TRADE DEVELOPMENT AND ASSISTANCE
Annual dollar savings and favorable effect on balance-of-payments

position by requiring that certain sales agents involved in Public
Law 480 transactions be paid sales commissions in foreign cur-
rency rather than in U.S. dollars provided by CCC---

78-653-87-43

1, 200, 000

Action taken or planned-Continued
TRADE DEVELOPMENT AND ASSISTANCE continued

Estimated savings

$1,042, 000

880,000

Annual dollar savings and favorable effect on balance-of-payments

position by requiring foreign governments to bear their proper share of ocean transportation costs of shipping Public Law 480

commodities on U.S.-flag vessels------Consolidation of shipments of agricultural commodities donated un

der Public Law 480 to voluntary relief agencies, resulting in

annual savings in ocean transportation freight costs.---Reduction in costs of allowances for quarters by discontinuing payments of housing allowances to military personnel without dependents living in quarters provided by the Republic of China

(estimated annual savings)--Correction of erroneous payments of post differential and charge

pay from Foreign Service personnel and salary overpayments to

reemployed civil service annuitants.---Other items.

43,000

12,000 95,000

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9,500,000

601,000

LOANS, CONTRIBUTIONS, AND GRANTS Additional interest earnings by making payments under the medi

care program on a reimbursement rather than on an advance

payment basis.----------------------------Disallowance of excessive noncash grant-in-aid credits for school,

park, storm drain, sewer, and parking facility-------Additional funds available to extend the cropland conversion pro

gram to more farmers by discounting at the rate of 5 percent a year advance payments made to farmers participating in the

1966 program ----Reduction in cost of federally financed project. Prevention of unauthorized expenditure of funds on nonmatch

ing basis-----Other items.---

200,000 200,000

10%

DUSI.----------------------------------------------------

160,000 263, 000

LEASING AND RENTAL COSTS

2. 836,000

518, 000 435,000

Purchasing rather than leasing automatic data processing and related equipment.-----Savings resulting from the purchase of leased automatic data proc

essing machines at reduced prices.-------Annual savings in rental cost for equipment resulting from the con

solidation of certain data processing operations.-Annual savings resulting from the conversion to usable space of a Government-owned building which had been declared unsuitable

for use by Federal agencies and was scheduled for disposal.--Savings to be attained by purchasing instead of continuing to lease

radio and telewriting equipment-------Savings to be attained by purchasing rather than leasing certain

office copying equipment.---Purchasing rather than leasing office copier----------Other items.-

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Additional revenue due to changes in rental rates and utility

charges for Government-owned housing and quarters. Other items----

126.000 21.000

CONSTRUCTION, REPAIR, AND IMPROVEMENT COSTS Savings in construction and furniture costs to be effected because

of revisions in seating and capacity standards for school dining

facilities ---Savings to be effected by direct procurement of certain equipment

for construction projects.-

146,000

29,000

Action taken or planned Continued

OPERATION AND MAINTENANCE

Estimated

savings

$704, 000

Discontinuance of the use of a U.S. Navy landing ship tank in sup

port of recreational facility in Hawaii (estimated annual savings) ----Estimated annual reduction of dollar expenditures for the pur

chase of bags for the distribution of commodities donated under Public Law 480, by requesting the recipient country to provide bags from its own resources.---

------------------------------

100, 000

TRANSPORTATION

Savings in transportation costs by reduction in the number of empty

CONEX containers shipped from Europe to the United States

(estimated annual savings) --------Savings resulting from partial consolidation of duplicate shipping

services to the Canal Zone (estimated annual savings ) ---Reduction in travel costs through greater utilization of Air Force

passenger aircraft--

1,000,000 534,000 295,000

OTHER ITEMS

3,000,000

2, 264, 000 2,000,000 1, 200,000

364, 000

340,000 275, 000

Increased postal revenues to be realized as a result of increasing

the selling prices of stamped envelopes.----Elimination of payments of excess sales proceeds to defaulted small

home mortgagors upon resale by FHA of foreclosed property---Savings in mail transportation costs by discontinuing the use of

refrigerator cars------Elimination of interest costs resulting from the accelerated payment

of unamortized construction costs of a laboratory building-----Increased revenues resulting from an increase in bus fares and

savings resulting from discontinuance of nonessential bus services. Annual savings in interest cost resulting from termination of check

cashing agreement and discontinuance of the practice of compensating Washington, D.C., area banks for cashing Government

salary checks_ Additional annual revenues resulting from the inclusion of sawlog

clip values in timber appraisals.------. Additional revenue resulting from an increase in the volume of timber to be cut from a Forest Service management area (working

circle) -----Savings resulting from discontinuing the purchase of title insurance

on properties acquired as a result of default on guaranteed hous

ing loans.------Cancellation of contracts for consultant's services and reduction in number of employees by a nonprofit corporation financed under

Government contracts (estimated annual savings ) -----Additional income resulting from increases in prices charged for

meals served employees and visitors at penal institutions.-----Savings in interest costs as a result of deferring payment for new

computer systems.---------------Termination of costs to Government for property damage insurance

on Government-owned property being utilized by contractor (es

timated annual savings)-Miscellaneous other items-

228,000

180,000

125, 000 110,000 95,000

39,000 400,000

Total other measurable savings------

- 113, 445,000

ADDITIONAL FINANCIAL SAVINGS Not FULLY OR READILY MEASURABLE Many significant financial savings of a one-time or recurring nature which are attributable to the work of the General Accounting Office are not fully or readily measurable in financial terms. These savings often result from actions

taken by Federal agencies in their efforts to eliminate the unnecessary expenditures or otherwise correct the deficiencies brought to light in our audit reports. The extent to which these corrective actions are motivated by our reports is not readily identifiable nor are the financial savings readily measurable in all cases. A few examples of such actions identified during the fiscal year 1966 are described below:

CHANGES IN AGENCY POLICIES, PROCEDURES, AND PRACTICES Rebuilding of used motor vehicle tires

In a report to the Congress in June 1966 we presented our findings on the savings that can be attained by the Department of the Air Force by rebuilding used motor vehicle tires. We estimated that extensive rebuilding of used tires by the Air Force would have resulted in savings of as much as $2 million in one fiscal year and could likewise result in substantial savings in future years. At most of the installations included in our review, requirements for replacement tires were being met to some extent through the rebuilding of used tires; but, on the whole, insufficient emphasis had been placed on this source of potential savings. Many used tires were being condemned when they could have been rebuilt and, in many cases, tires were worn excessively before removal, thus precluding rebuilding.

We found that tire inspection personnel had not been adequately indoctrinated in the savings to be derived from rebuilding used motor vehicle tires and that sufficient review and control had not been exercised over their activities. The Air Force had established general policy guidance with respect to tire maintenance which provides that used motor vehicle tires can be rebuilt and used by Air Force installations whenever possible. The instructions pointed out that careful periodic inspection of tires will provide carcasses suitable for rebuilding and that such tires can be expected to last as long as new tires and in some cases longer.

We found, however, that the extent to which this general policy guidance had been implemented varied substantially among installations.

We concluded from our review that there was a need for the establishment of specific tire-removal criteria which could be applied by vehicle maintenance personnel to ensure the removal of tires before excessive wear prevents rebuilding. In addition, since each Air Force installation has the responsibility for obtaining replacement tires for its motor vehicles, it seemed evident to us that closer supervision of tire inspection, removal, and rebuilding activities by base officials and increased command surveillance were required to ensure effective performance and to realize the maximum savings possible.

In response to our draft report, the Assistant Secretary of Defense (Installations and Logistics), informed us by letter that the Air Force was in general agreement with our findings. He also stated that a new technical order had been prepared to provide, among other instructions, for the periodic inspection of tires and for their removal if the remaining tread depth is less than 2/32 inch at its lowest point. Further, he pointed out that broad dissemination had been given our findings within the Air Force and other military departments so that proper attention can be given to these matters. We believe that the new instructions will result in substantial sayings if properly implemented. Management control of projectile fuze covers and other reusable ammunition

components In a report to the Congress in January 1966, we found that the Navy incurred costs of about $218,000 in the 3-year period ended June 30, 1964, because significant quantities of the projectile fuze covers were not returned by user activities, and other quantities, although returned, were lost or sold as scrap. Since the Navy has a continuing need for these fuze covers, possible savings of as much as $595,000 could be realized during the 5-year period ending June 30, 1970, by establishing effective controls over the return and reuse of these covers.

Although our review was limited to the specific fuze covers, we did note that procurements of other reusable ammunition components were made necessary by the failure of user activities to return such components to the supply systems.

We concluded from our review that the basic problem was that there was an absence of an adequate system of responsibility, accountability, and surveillance over reusable ammunition components in the Navy. We recommended that the Navy develop and implement appropriate accounting controls over the issue and

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