presentations were expressed in generalities. Beginning with fiscal year 1957 there have been some presentations of budgets on the socalled project basis.

As far as we have been able to determine, they haven't been much more informative than the old method which was called the illustrative method. One reason for that is that ICA hasn't considered itself to be bound by any of the specific projects or programs, or by the allocation or expenditure of specific amounts in accordance with the presentation.

We

e are not going to be concerned directly with appropriations, or at least the responsibilities of the Appropriations Committee, but the Congress as a whole has a responsibility in connection with passing on appropriations, and unless we have adequate information, we can't do it intelligently. Thus, one of the purposes of this hearing is to try to see whether we can arrive at a procedure under which reasonably accurate, adequate information will be furnished so that we can know what we are doing when we vote on these appropriations meas

ures.

The subcommittee realizes there may be instances, that there frequently are instances, where aid is provided under circumstances which make advance planning difficult. But not all of the programs are in that category, and frankly I think that we have taken the position that too many of them are in that category in times past, and it is our purpose to try to see if we can't get as much out of the unplannable category as possible.

In order to get our session started off this morning in proper perspective, I have asked the Comptroller General and members of his staff to give us the benefit of their experience in dealing with this problem over recent years.

I am especially glad to have the Comptroller General, himself, with us this morning. Mr. Campbell, I want to welcome you and tell you how much we appreciate your presence.

I believe you have a prepared statement, and I know that the committee will profit a great deal by the views you will express from your knowledge of what has been transpiring in this important field.

Again, I want you to know how much we appreciate your presence, and you may proceed in just the way you prefer, if you will.

STATEMENT OF HON. JOSEPH CAMPBELL, COMPTROLLER GENERAL OF THE UNITED STATES; ACCOMPANIED BY GEORGE STAPLES, ASSOCIATE DIRECTOR, CIVIL ACCOUNTING AUDITING DIVISION; FREDERICK K. RABEL, ASSISTANT ASSOCIATE DIRECTOR, CIVIL ACCOUNTING AND AUDITING DIVISION; AND ROBERT F. KELLER, ASSISTANT TO THE COMPTROLLER GENERAL

Mr. CAMPBELL. Thank you, Mr. Chairman.

Mr. Chairman, and members of the subcommittee, we are pleased to appear before you and to assist you and your staff in any way we can in your considerations of the mutual security operations as carried out by International Cooperation Administration. We understand that the purpose of this meeting today is to discuss the annual program presentation by ICA to the congressional committees for

the nonmilitary mutual security program, and the recommendation contained in our report on Study of Obligating Bases and Related Administrative Practices, sent to the Congress in June 1955, that the Congress consider revision of the Mutual Security Act to authorize funds separately for plannable activities, and unforeseeable activities. The format and content of the annual program presentation to congressional committees has been a subject of keen interest to us in our audit of mutual security operations over the past several years.

This interest derives primarily from our belief that the congressional committees having the responsibility for recommending authorization of agency programs and the appropriation of funds therefor should have before them programs stated in such clarity and completeness as to permit an understanding and evaluation in the limited time which the press of Government business allows for examination. Such an approach is basic to any agency presentation and in the case of the mutual security program it is particularly important for a number of reasons which have singular application to that program.

In the first place, the program itself is unique as an activity of the Government embodying a series of relationships with other governments within which are carried out a wide variety of diversified activities designed to stabilize economic and political structures, promote technological development, and strengthen the defense capability of some 50 countries.

Apart from the problems inherent in conducting such a large volume of varied activities dispersed throughout many areas of the world, their administration assumes further complexity through the very operation of these activities between the United States and the respective foreign governments, each of which is different in varying degrees from the other, and from the United States in laws, customs, traditions, and political, economic, and cultural advancement.

Add to these things the fact that (1) the mutual security program in its concept and execution is intended as an instrument of the foreign policy of the United States, (2) the Mutual Security Act grants broad authority to the President in the scope of activities and the use of funds, and (3) the funds authorized are of substantial magnitude, and one gets a fair idea of the difficulty facing the congressional committees in evaluating the presentation submitted each year by the agency in support of its request for authorization and appropriation of funds. Yet, such an evaluation by the committees is necessary if any meaningful control of funds is to be exercised by the Congress.

It has been in recognition of these conditions that the General Accounting Office has actively focused attention over the past several years on the need for improving the form and content of the annual presentation to facilitate the task of the congressional committees in making a considered judgment as to the reasonableness of the proposed program.

Our interest in this subject has been manifested in our reports to the Congress and its committees concerned with mutual security affairs, and in more informal communications with the agency. In each of our annual reports to the House Committee on Appropriations, on significant findings developed in our audits, and other examinations; in our report to the Congress in June 1955 on our Study of Obligating Bases and Related Administrative Practices; and again last May

in our statement to the Senate Foreign Relations Committee we emphasized the need for a better program presentation to facilitate an understanding and considered evaluation of the agency's past and proposed operations.

Over the same period we have worked closely with the agency through informal discussion and correspondence, exchanging views and offering suggestions as to individual segments of the presentation. The agency in turn has given continued attention to the presentation and each year has in varying degree revised, expanded, contracted, and streamlined its form and content as it saw fit to conform to changes in the character and objectives of the program and to what we understand have been expressed or implied views of congressional and other responsible bodies.

In line with this informal working relationship we decided, after reviewing the presentation for fiscal year 1957, to set down some specific suggestions for the guidance and consideration of the agency in formulating future presentations. This took the form of a memorandum which was transmitted to the Director, International Cooperation Administration, on January 9, 1957, and which we understand is the basis of the subcommittee's inquiry.

We fully recognized that our suggestions represented only our own thinking on the subject. The answer to what constitutes a presentation that enables reasonable understanding and evaluation is largely a matter of opinion. We have no knowledge of what the individual committees desire, specifically as to the type of information or the form in which it should be submitted. It may be that among the committees opinions differ as to what is necessary for consideration within the time fixed by the committees for their deliberations. We are not certain in some cases whether and how much additional effort might be required to accumulate the data underlying our suggestions. Nevertheless, we feel that our thinking as to what should be included in the presentation should receive serious consideration.

In our report on Obligating Bases and Related Administrative Practices, we drew attention to the fact that while programs and funds therefor were authorized and appropriated for designated types of activities, much of the funds were used for special purposes not specifically provided for in the legislation or if provided were insufficient for the needs of the program. This was possible because of the broad authority given to the President to transfer funds between appropriations and to use funds for purposes which he may determine to be in the security interests of the United States. This situation served to hamper sound program planning since it was necessary to hold in reserve funds authorized and appropriated for designated activities to meet special purposes which might arise. It likewise complicated accountability in terms of relating the utilization of funds to the activities for which they were authorized.

We recommended to the Congress that it consider revision of the Mutual Security Act to establish the program into two broad and separate categories which correspond to the utilization of funds:

1. Plannable activities representing the regular forms of assistance designated as defense support, and economic, technical, and development assistance; and

2. Unforeseeable activities consisting of those actions, programs, or events as may be determined by the President and for which funds

have heretofore been drawn from appropriations for activities in category 1.

Funds would be authorized and appropriated separately for each category and in the latter case would be in effect a contingency fund for use by the President as he may determine to be in the security interests of the United States but for which notification to congressional committees as specified in existing legislation would be required. We pointed out that under the recommended realinement the need for the transfer authority (sec. 501), and the broad authority for the use of funds permitted by other provisions of the act, would be minimized and possibly become unnecessary; and that by reason thereof the statute would be simplified for clearer understanding, accountability would be less complicated, and the whole process of planning, programing, and administration would be strengthened. Other benefits could be expected; for example, more timely utilization of funds for plannable activities, and a more specific and comprehensive annual presentation; and, also, more ready identification of the amounts and description of funds used for special purposes.

It was not our thought that the recommended realinement would necessarily bring reductions in the amounts authorized and appropriated, since the presentation as it has been made may be said to represent, in its entirety, plannable activities. This presentation, however, simply meant that to the extent that funds were needed for unforeseeable activities, plannable activities in equivalent amount should not be undertaken. The Congress would, of course, determine the amounts to be authorized and appropriated for each category. Shortly after the release of our report, the Congress authorized, in the Mutual Security Act of 1955, a special Presidential fund of $100 million and this amount was appropriated for fiscal year 1956. A similar amount was authorized and appropriated for fiscal year 1957. Another Presidential fund for Asian economic development was authorized in the amount of $200 million by the 1955 act, of which $100 million was appropriated for fiscal year 1956 to remain available until June 30, 1958. The transfer and other broad-use provisions, which we suggested might be reduced, or discontinued, were left unchanged. Our latest information shows that the special Presidential fund for 1956 was substantially obligated in full in that year, and in addition approximately $69 million of funds appropriated for designated activities were used for special purposes under sections 401 (a) and 501 of the act. We do not know at this time how much further funds may be drawn from appropriations for designated activities to carry out the purposes of Senate Joint Resolution 19 (to promote peace and stability in the Middle East) for which up to $200 million was authorized from available mutual security funds. Of the Asian economic development fund about $29 million has been allotted as of January 31, 1957, of which some $4 million has been obligated.

This concludes my statement, Mr. Chairman.

I have with me Mr. George H. Staples, and Mr. Frederick K. Rabel, of our Civil Accounting and Auditing Division, who are directly responsible for our work at ICA. We will endeavor to answer any questions you or the other members may have, and to otherwise assist your subcommittee on its inquiry.

Mr. HARDY. Mr. Campbell, the committee appreciates your presence, and the statement you have just made.

There are 1 or 2 questions that have occurred to me in connection with your statement that I would like to ask you to comment on a little further.

At the bottom of page 4, and at the top of page 5 of your statement you pointed out that GAO had recommended revisions of the Mutual Security Act to the Congress; was that recommendation made to the Foreign Affairs Committee?

Mr. CAMPBELL. The House Foreign Affairs Committee?

Mr. STAPLES. That was contained in a report, Mr. Chairman, that was submitted to the Congress.

Mr. HARDY. Chances are that report

Mr. STAPLES. A copy of that report went to the House Foreign Affairs, to the 2 legislative committees and to the 2 appropriation committees.

Mr. HARDY. The thing I was trying to understand was whether GAO has any knowledge of any specific attention given to that recommendation by the Committee on Foreign Affairs in its deliberation on mutual security legislation.

Mr. STAPLES. We have no direct knowledge to what extent, if any, the House Foreign Affairs Committee considered that particular recommendation.

Mr. HARDY. In any event, the Comptroller General's Office was not called upon to testify in connection with such a recommendation.

Mr. CAMPBELL. Reports of this kind, Mr. Chairman, go up to the Speaker of the House, and to the President of the Senate.

Mr. HARDY. I understand that.

I know they are referred by the Speaker.

The question I was trying to understand was whether GAO had any knowledge of any specific consideration being given to such a recommendation by the Foreign Affairs Committee. If the Foreign Affairs Committee had actually given any close attention to the recommendation I should think the Comptroller General would have been asked to testify.

I take it that such was not the case.

Mr. STAPLES. We were not asked to testify by the Foreign Affairs Committee in that case.

Mr. MEADER. Mr. Chairman, will you yield to me on this very point? Mr. HARDY. Certainly.

Mr. MEADER. Mr. Staples, what was the date of that report?

Mr. STAPLES. June 10, 1955.

Mr. MEADER. You are talking about the study of obligating bases? Mr. STAPLES. That is correct.

Mr. MEADER. Has that ever been printed as a public document to your knowledge?

Mr. STAPLES. To my knowledge, it has never been printed as a public document.

Mr. MEADER. Was it referred to some committee by the Speaker of the House?

Mr. CAMPBELL. Mr. Meader, we send copies of the report to any committee which has an interest in this problem.

Mr. HARDY. Well, the point about that is, such reports would go officially to the Speaker, and the Speaker would refer them. I don't know what happened in this particular case, but certainly, the sub