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Department of Defense programs and procedures for eliminating inactive items from its supply system. Much of our efforts in the supply management area will be on broad reviews where we examine into specific aspects of supply manage ment of the three military departments and the Defense Supply Agency simultaneously. We will also continue to give attention to the combat readiness of weapons and equipment of the three military departments including missiles, helicopters and other aircraft, combat or noncombat vehicles, and electronic equipment. Our consideration of readiness will be closely coordinated with examinations we plan to make into the maintenance management of equipment, including such aspects as repair, overhaul, servicing, inspection, testing, and modification.


We plan to continue, at a somewhat increased level, our reviews of Department of Defense military and civilian manpower practices. We will look into the acquisition, assignment and utilization of civilian and military personnel. We will continue our audit of civilian and military pay and allowances and the evaluation of related systems. In addition, our Manpower staff will be responsible for the audit of other types of transactions in disbursing accounts to the extent necessary to meet our statutory responsibility for the audit and settlement of accounts.

We are currently considering the use of contractor personnel by the Department of Defense instead of civil service personnel for certain research work We plan to continue emphasis on evaluation of contractor personnel versus in-house personnel for selected activities, particularly with respect to cost and policy considerations of the departments in determining the type of personnel to be used. In the near future, we expect to examine into the technical training of enlisted personnel and of civilian personnel as a part of our evaluation of the management and utilization of personnel of the Defense establishment.


We plan to examine into several areas relating to the research and development activities of the Defense establishment. These include (1) unnecessary duplication of effort or lack of effective coordination in research and develop ment activities, (2) disposition of rights to inventions arising from work financed under Government research and development contracts, (3) planning and selection of organizations to manage and perform research and development programs and projects, (4) operation of nonprofit organizations, (5) expenditure of Government funds for contractor-sponsored research and development over and above that required in the performance of specific contracts. We are currently making surveys of management controls for administering selected research and development contracts. Our evaluation of management controls will include consideration, for selected activities, of those designed to prevent unnecessary duplication and promote effective coordination.


We plan to review and evaluate the policies and procedures used in determining requirements for family housing and bachelor officer and enlisted quarters. We also intend to review, for the compliance with space and cost limitations im posed by the Congress, the more commonly constructed facilities at militars bases, such as barracks, messhalls, and warehouses. We also plan to examine into the leasing of real property of the Department of Defense to determine the adequacy of the leasing arrangements and whether retention of the real property by the Department is justified.

SUPPORT SERVICES We are currently reviewing the utilization of aircraft assigned to Army sup port organizations. We are also looking into the management of material handling equipment and other selected types of equipment to determine if manage ment controls over the use of the equipment are adequate. In the near future we plan to examine into the management of the Defense Communications System. and the Dependents' Medical Care Program. During fiscal years 1967 and 1969 we also plan to give attention to the management by Department of Defense activities of (1) transportation services, (2) industrial facilities and machine

tool reserves, (3) need and use of electronic data processing complexes, (4) fuel distribution systems, (5) printing services, (6) intelligence and security services, and (7) civil defense.

Mr. REIFEL. I have no questions.

DEFENSE DEPARTMENT ACCOUNTING SYSTEM Mr. ANDREWS. You said that the Engineers was the only branch of the Defense Department which had an accounting system which you approved ? Mr. STAATS. That is right.

Mr. Newman. That is being revised now, putting military and civilian together.

Mr. ANDREWS. Have you recommended to the other services an accounting system they should adopt?

Mr. STAATS. The effort in the Defense Department has been to try to bring their accounting system into a form which could meet our approval. This started about a year and a half ago under the direction of Assistant Secretary Anthony. He is shooting, as an executive, to get a system which will get our approval by July 1, 1968.


Mr. ANDREWS. How do you find the auditing systems of the services?

Mr. STAATS. We have a report in process at the moment to the Congress dealing with our appraisal of the adequacy of their audit system internally.

Mr. ANDREWS. You think their audit systems are good or bad?

Mr. STAATS. It is hard to characterize it that way. We feel the Defense Contract Audit Agency generally has developed quite well. We think they need to do more postaudit work.

One of the recommendations we will make is that they should have responsibility for postaudit as well as preaudit on defense contracts.

Mr. ANDREWS. When your men go into a Government agency, if that agency has an auditing section what credence do you give to their audits ?

Mr. STAATS. If we find that they are already in process of making an audit on a matter in which we are interested we would in some instances wait to see what they come up with.

Those reports usually are available to us. If we are not satisfied we then go ahead and make our own.

We do not feel it is in the interest of the Government to duplicate work that an internal audit agency is doing just because we are interested. We reserve the right to go ahead and make our own review.

Mr. ANDREWS You don't accept it at face value, then?
Mr. STAATS. That is right.

Mr. WEITZEL. We try to evaluate the internal audits. We have a good idea in most cases of how much reliance we can put on them.

We have to do this in order to determine how far additionally we have to go. They know this.

Mr. REIFEL. I have no questions.

vestigative groups; administrative and technical supervision of the work programs; and processing of reports. Accounting, Auditing, and Investigative Staff

The accounting, auditing, and investigative staff has the supervisory responsibility for carrying out General Accounting Office functions in the civil agencies and also performs accounting, auditing, and investigative work in the metropolitan Washington area. The accountants, auditors, and investigators of the Staff are located, to the extent possible, at the sites where the operations of the various departments and agencies are conducted. A breakdown of the accounting, auditing, and investigative staff, including the staff of the Office of the Director, follows:

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The extension of reviews at the sites of operations and the audit of transactions at locations where the books and records are maintained will be continued in fiscal year 1968. At some departments and agencies, work coverage will be continued at about the same level as in the past and the cycling of audits will be extended to provide periodic reviews of important civil activities. As additional members are added to our staff, in accordance with our planned increase, work coverage at other departments and agencies will be increased. The audit and settlement of accountable officers' accounts, when a legal requirement, will be continued.

In our reports issued to the Congress and to agency officials, with particular emphasis on those aspects suspected or found to require corrective action or improvement, comments and recommendations will be made that should be of assistance to the Congress and to agency management in strengthening agency financial management systems and in promoting efficiency and economy through improved operating and administrative controls.

JUSTIFICATION OF INCREASES REQUESTED Mr. Casey. Enlarge a little on the accomplishment and work plans you have in some detail with regard to pages 33 through 40. You merely summarize that. Give us some justification for these new positions and the amounts of increase.

Mr. STAATS. I will ask Mr. Samuelson, head of our Civil Division to comment.

Mr. SAMUELSON. Of the increase, it is almost all in the professional area. For the accounting, auditing, and investigative staff we are asking for 580 positions, 86 in the administrative and clerical staff, and five fiscal auditors.

The increase in net salaries is roughly $235,000 for the increased number of positions and $135,000 for the-

Mr. Casey. Is that $235,000 for the 33 additional positions ?
Mr. Casey. Of the $371,300 ?
Mr. SAMUELSON. Roughly $235,000.
Mr. Casey. That is for the 33 additional positions?

Mr. SAMUELSON. Yes, sir—20 additional average positions. We take the average number. This is for the average increase in number of staff which works out to about $235,000.

Mr. CASEY. What will they be doing?

Mr. SAMUELSON. Primarily we are increasing our effort in the Department of Health, Education, and Welfare; Department of Labor; and Office of Economic Opportunity. Those are the three areas where we will be increasing our efforts.

There is also a growth in the other agencies and their programs so there will be some increase in some of these areas.

We follow the practice of trying to review most of the programs of most of the large departments and agencies over a period of a few years, so we will be selecting activities or programs within the several individual agencies. It will vary between years as to the number of people we have in any one department or agency.

However, for the immediate future our largest increases will go into Health, Education, and Welfare; Labor; Office of Economic Opportunity, and I should have mentioned also the Department of Housing and Urban Development. The largest increases will be in those four areas.

Mr. Staats. We have 20 separate studies underway currently in the poverty program. We have a greatly expanded program planned in the Department of Labor, as Mr. Samuelson indicates. Then there is the Department of Health, Education, and Welfare. Medicare will be a major problem for us.

Then we have the area of Housing and Urban Development. We feel there is a real need for additional work in this area, too.


Mr. ANDREWS. Mr. Staats, I have seen it estimated that the cost of educating a Job Corpsman ranges anywhere from $7,500 to over $100,000.

Can you tell us what it costs to send through the Job Corps school a Job Corpsman? Have you run across any authentic figures?

Mr. STAATS. I believe we developed such a figure for the Tongue Point program.

Mr. SAMUELSON. It would vary between the centers. Some centers go as high as $15,000 per individual.

Mr. ANDREWS. Is that for a 9-month course ?

Mr. SAMUELSON. The time the person has been there computed on a man-year basis.

Mr. CASEY. How long did he stay there? Do you know?
Mr. SAMUELSON. It varies from a short period of time to
Mr. ANDREWS. You say the average was $15,000?

Mr. SAMUELSON. Average cost for the period of time that they are there computed on a man-year basis is up to $15,000.

Primarily this may be due to the fact they have not built up to the full number of people they have scheduled to go into the center.

Mr. ANDREWS. It has been said many times in many places that a man can go through Harvard cheaper than he could through one of these Job Corps plants. Is that right?

Mr. SAMUELSON. I don't know what it costs to go through Harvard. Mr. ANDREWS. I mean for a year.

Mr. SAMUELSON. That is right. This cost includes construction and rehabilitation of facilities, and so on, so far as the centers are concerned. Mr. STAATS. Off the record. (Discussion held off the record.) Mr. ANDREWS. Submit that information for the record, please.

(Information follows:) Costs to train a Job Corps enrollee at centers reviewed by General Accounting Office

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These costs include:

1. All costs incurred by contractor for operation and maintenance of the center, including construction and rehabilitation of facilities,

2. All costs paid directly by OEO for enrollee pay, allotment, and travel,

3. Costs of material and supplies obtained from Government sources and paid directly by OEO (food, clothing, equipment, etc.),

4. Costs of OEO headquarters and regional support which OEO estimates at $114 per man-month for men's centers and $103 per man-month for women's centers.


Mr. Casey. Defense division. We shall insert the chart which appears at page 44 of the justifications. This shows that they are requesting an increase of $270,800, which would make their total request equal $3,391,400, and they are asking for 316 positions, which is an increase of 29 in positions. (Page follows:)

Actual or estimated obligations-Personnel Compensation

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The Defense Division is responsible for carrying out the accounting, auditing, and investigative functions of the Comptroller General and the General Account ing Office in the Department of Defense, including the military departments, except for the civil functions of the Corps of Engineers, the Military Assistance Program, and the audit of transportation charges. · The functions and duties of the division are performed by its Washington staff with assistance from the regional offices of the Field Operations Division and the foreign branches of the International Division.

During fiscal year 1966, 92 reports by this Division were submitted to the Congress, its Committees, or individual Congressmen. An additional 279 reports were

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