'commercial import program, we have advised the Agency of our reservations regarding the measurement of audit coverage for reporting purposes entirely in overall dollar terms. These reservations are based on the varying breadth and depth of coverage of the various audits performed and on the testing techniques being utilized. Also, we noted in recent field work in Viet Nam that circumstances have inhibited extending enduse examinations beyond the importer to the ultimate user in many cases 'due to:

a. The multiplicity of parties in the chain of distribution from the orginal importer to the ultimate user, coupled with the fact that Agency regulations require that only the importer maintain accountability records.

b. Changes from the original form of many commodities imported, through subsequent manufacturing and processing.

It is thus our opinion that the reporting that audit coverage was in process on the end use of over $100 million worth of commercial imports could be misleading to persons relying on the results of such audits to evaluate overall program effectiveness. Further, we believe that, in striving to broaden coverage, the danger exists that qualitative shortcomings may arise in connection with the reviews undertaken, occasioned by expediting examinations to maximize coverage in the shortest possible time.

STRENGTHENING THE VIETNAMESE SOCIETY: AID PROJECT ASSISTANCE (PP. 14 TO 19) Although described in the report as the "AID project program," what is discussed is essentially the Agency's assistance to the revolutionary development program of the Government of Viet Nam, formerly called "rural construction" and even earlier termed "counterinsurgency." This assistance takes the form of commodity, human, and minor infrastructure resources, the majority of which ar embraced in the project program.

As indicated in the report, until July 1966 the movement of project commodities was impeded at the port by the same conditions as those affecting commercial import program commodities. In July 1966 operational responsibility over project commodities at the port was assigned to the United States Army. We believe that this was a sound and well-conceived move, and our work in Viet Nam has shown that there has been substantial improvement in the handling of project commodities in the port during the past several months.

To carry out the various project activities, commodities must be transported from the ports through the logistics systems of the Vietnamese ministries to regional and provincial warehouses and then distributed to the intended recipients or project sites in villages and hamlets. Although control of the distribution system is essentially Vietnamese, AID has informed us that there is significant United States supervision of its operation at all echelons and that the United States supervision, as well as a degree of United States control, is increasing. The involvement of the Government of Viet Nam at all levels in the distribution of project commodities is consistent with basic AID policy in Viet Nam. We have not performed audit work in regard to project assistance other than in the port area. According to information furnished us by the Agency, varying degrees of United States supervision and control are exercised over project commodities at different stages. Transportation of commodities may be completely under United States control (as for medical supplies) via military airlift or it may be under only limited United States supervision as in cases where Government of Viet Nam vehicles are utilized. At the province level the degree of control over project commodities depends on the AID Provincial Representative's relations with the Vietnamese province chief. According to AID, in some provinces the Provincial Representative actually holds the key to the warehouse; in others he is present at the time of major receipts and issues; and in still others he verifies, through his independent checks, the performance of warehouse transactions as recorded by the provincial staff.

The Agency's report estimates the loss rate of project assistance goods as from three to five times greater than that of commercial import program and title I commodities. These estimates are in general based on the judgments of United States AID advisors working with the Vietnamese Ministries' logistical systems.

These technicians are closely associated with the problems; but we are unable, until we review these activities, to assess the accuracy of such estimates, particularly in view of the wide dispersal of commodities throughout the country and, as noted above, the varying degree of control said to be exercised at different locations.

The report discusses a number of efforts designed to assist United States and Vietnamese personnel in attaining better control over project stocks. We are not in a position to comment on these efforts other than to state that, if properly implemented, they should improve United States control over project commodities.

ECONOMIC WARFARE AND GENERAL INSPECTION (PP. 20 TO 22)

The Office of Special Projects in Viet Nam was created prior to the mid-1966 personnel buildup in the Mission, for the purposes of undertaking special studies and audits and of developing programs directed toward denying resources to the Viet Cong, with special emphasis given to the commercial import program. The information presented as to what is being done generally conforms to our understanding but does require some elaboration.

This unit's participation in the denial of resources to the Viet Cong is part of a broader effort in this area by the Embassy's Economic Warfare Committee, an interagency organization established in September 1965. The Committee's chairman, who is also in charge of the Office of Special Projects, submitted his resignation to the Embassy about August 1966, because of his view that effective leadership of each organization required full-time effort, that the Committee's mandate was unclear, and that he had insufficient powers to enforce authority over the Committee's diverse membership.

The official in charge of the Office of Special Projects also requested top USAID management to reappraise that organization's responsibilities, since much of the work otherwise falling within its purview could be performed by other elements within the USAID. For example, all end-use audits are now performed by the Audit Branch, whereas previously both organizations were doing such work.

In March 1967 we were advised by AID that the Mission had been reappraising the organization and functions of the Office of Special Projects and that the indications were that the Office would be maintained, probably without auditors, but with analysts capable of conducting preaudit interviews and special inquiries concerning AID-financed transactions.

Mr. ANDREWS. Did you not say at least 20 percent of the stuff was stolen?

Mr. STOVALL. No, sir. I think I said we could not determine. It is higher than 5 but we did not hazard a guess.

Mr. ANDREWS of North Dakota. I was trying to tie down this 5 percent while on board ship, from the time it leaves the United States and reaches the dock at Saigon.

Mr. STOVALL. Perhaps Mr. Suillivan can add something to that. Mr. SULLIVAN. It is not always a loss on board ship but a loss when they are off-loading the merchandise from ships to lighterage in the case of Vietnam. In many cases merchandise would be lost as a result of being taken out of the hold of the ship into lighterage and then the people on the lighterage throwing it over the gunwales of the ship. Other people are picking it up.

Mr. ANDREWS of North Dakota. Nevertheless, it is a loss suffered even before it begins to go through the Vietcong-infested areas of the jungle. It is a loss attributable only to some type of infiltration within the very docking facilities which we are supposed to be pretty well secured.

Mr. STOVALL. And also the holding on barges.

QUESTION OF LOSSES IN SHIPMENTS TO INDIA

Mr. ANDREWS of North Dakota. Does your agency run similar reports of losses on Commodity Credit Corporation stocks going to India? We have a fantastic amount of stories coming out about the amount of wheat loss in shipment or in docking and unloading facilities in India, wheat which is sent over by our Food-for-Peace program for the benefit of the people of India but is consumed, rather, by rats, rodents, and other things.

Mr. STAATS. We have not been able to do any work on that particular problem. This might be something we should consider in connection with our work in India which we hope to step up as a result of establishing our office there.

Mr. ANDREWS of North Dakota. Could you possibly check into this particular phase of it which we hear so much about? The only report we get is from the Department of Agriculture.

Mr. STOVALL. We are in process of shaping plans as to how best to deal with this whole Public Law 480 problem. It is a very difficult one to get hold of.

This certainly would be one of the elements which we will consider. I don't know whether it would be possible to do this with any degree of accuracy or not but we can try it.

Mr. STAATS. This point has not been raised with me. We generally have thought we ought to increase our activities in India in part because of the increase in the food shipments to India.

Mr. ANDREWS of North Dakota. After all, for a while during the last year we were shipping 1 million tons a month, which is a tremendous amount of commodities. Certainly the need of the Indian people will continue. This is the one nation where we get reports regarding waste and losses-pilferage, rodents, and all the rest. I think it would sit much better with our taxpayers back home if we were aware of the actual degree of loss.

Mr. STAATS. It occurs to me as a good suggestion.

INCREASE IN GAO AVERAGE SALARIES

Mr. ANDREWS of North Dakota. One final short question brought up by the question of Mr. Langen in developing the additional people that you have on your staff, or that you will need.

Actually in looking through this I find that in many cases, such as in the Field Operations Division, you have an increase of about $1,000 average salary in just the last 2 fiscal years.

In the Civil Division the increase is about $800 in average salary between fiscal 1966 and fiscal 1968.

In the Office of Personnel you have an increase of about $800. In the Office of the General Counsel the increase is about $800. In the Office of the Comptroller General the average GS salary increase is about $3,000 a year for the real granddaddy prize of all, which would indicate the increases are running in many cases far above the average for other branches of Government.

Are we looking at the need for additional funds for additional personnel as much as you are looking for additional funds to increase the average salary of the personnel you already have in a disproportionate ratio over the other branches of Government?

Mr. STAATS. I think the answer is that we do need to increase our average salary. I would anticipate, it would depend on what is happening in the other agencies and in the private economy, that we will be faced with this need even further in the years ahead. I would not want to mislead you on this.

At the same time our average grade increase in the GAO has increased from an average of only 9.1 in 1966 to 9.2 in 1967 and 9.4 in 1968.

This is not out of line with the increases which have taken place in other agencies. For example, here in the Federal Aviation Agency it has gone up from 10.1 to 10.2, a good deal higher average than our

own.

The Office of Economic Opportunity is about the same.

I think that the story here is about consistent with what it is in other agencies.

The SEC has gone up from 9.2 to 9.5.

The AEC has gone up from 9.6 to 9.8.

Internal Revenue Service has gone up from 9.9 to 10.

I think our picture is about consistent with the rest of the Government.

Mr. ANDREWS of North Dakota. No one wants to question the pay advancements given to men and women who earn these pay advances through long service, but there is a distracting tendency in some branches of Government to see the overall GS level pushed up.

We would think that as you give advancements, as you increase somebody from a GS-9 to a 10 that you would be taking in new people at these lower Government service grades.

This is the thing. When you look at your justification it waves a sort of red flag.

Mr. STAATS. If I may say so, I think the average grade figure is the more significant one. I believe those figures you cite also include the increase.

pay

Mr. ANDREWS of North Dakota. They do. However, they also include rather significant increases in GS grades.

Mr. WEITZEL. Mr. Andrews, I would like to point out there is a very simple explanation for the increase in the Comptroller General's Office in that the increased average salary includes four supergrade positions authorized by law but not assigned to any division. I believe that may be responsible for the increase. In fact, I am sure it is.

Mr. ANDREWS of North Dakota. This is the outstanding one I saw, because when I saw an increase of two grades and an average GS salary increase of $3,000, that was the one that made me look at the others. The others are not nearly as bad as that and I appreciate the explanation of that.

That is all, and we will adjourn until 2 o'clock.

Mr. ANDREWS. I believe Mr. Casey has some questions.

Mr. CASEY. It is a pleasure to have the opportunity to say hello to you, General Staats, and I want to thank you for the services you have rendered my office in the past. I think this is one office we can turn to and feel confident we are getting an objective report with regard to some of the complaints of our constituents as well as some of the questions we have in our own minds in the operation of fulfilling our duties as Members of Congress.

STATUTORY AUTHORITY TO MAKE MANPOWER UTILIZATION STUDIES

In the conduct of your operations overseas, for example, do you confine your work to the accounting procedures and the proper handling of the money or do you go into the amount of personnel that is on hand as to whether or not there is adequate or too much personnel in any particular agency?

Mr. STAATS. We certainly would have enough authority to do that. The statute gives us a very broad charter. I cannot cite the precise wording but it is to the general effect we are supposed to review the economy, the efficiency, and the effectiveness with which these programs are being carried out and whether or not they are being carried out in accordance with the intent of the Congress. We have, therefore, four different general guideposts with respect to the kinds of things we get into.

Whether we would get into personnel or something else would depend on whether we thought there was an opportunity for savings there or something that needed to be looked into.

Mr. CASEY. I presume you have made some reports on the operations of AID in Vietnam?

Mr. STAATS. Only the one we referred to this morning relating to the review we did of the commodity import program.

If you are interested we can give you an indication of some other things we are now reviewing in connection with the AID program. Mr. Stovall can perhaps give you this right off.

In the AID area I believe the commodity import program is the only one, aside from a look at the accounting system being developed by AID in connection with their Vietnam operations.

I believe that would be all. Is that right, Mr. Stovall?

Mr. STOVALL. Except to the extent that the construction work touches this area. We have been checking into port operations which cuts across both AID and military.

Mr. STAATS. In connection with manpower utilization generally, not just Vietnam, we show on page A-9 examples of savings we were able to effect in the manpower utilization area. This is in the fiscal year 1966.

The most significant one was a reduction in the staff of the Army Finance Center amounting to $1,276,000 a year.

Another large item was annual savings in personnel costs resulting from consolidation of certain data processing operations, amounting to $1,038,000 a year.

We will be devoting more attention to the manpower area in the Defense Department where the numbers are very large and where we think opportunities for savings are great.

We have had a number of studies in process in the Defense Department in manpower utilization and manpower controls.

We have done, for example, a study on the possibility of consolidating recruiting facilities of the services. This has been accepted by the Defense Department and is in the process of being put into effect. We have also been looking at the possibilities of civilianization of the military jobs so as to release military personnel for active military duty.

Mr. CASEY. The reason I asked you that question was that a gentleman I know worked in the AID program in Vietnam. It is a tremen