III. Reports on Individual Government-Owned Hydroelectric, etc.-Con. ect, Columbia Basin Project (Grand Coulee Dam), and Bonneville Southwestern Power Administration Examples of Misleading Presentations (Appendix to Parts I, II, and III) 98 . IV. Other Government Enterprises, Exclusive of Lending Agencies V. Consideration of the Use of Revolving Funds Methods By Which Funds are Provided for Expenditure 164 135 167 167 168 168 168 169 170 VI. The Use of the Corporate Form for Government Enterprises List of Government-owned Corporations. 172 SUMMARY REPORT HON. HERBERT HOOVER, NOVEMBER 8, 1948. Chairman, Commission on Organization of the Washington, D. C. DEAR SIR: We submit the following as a summary of our report of November 3, 1948, for your convenience in studying our recommendations. This summary is subject to all of the qualifications which are contained in that report which was divided into six main sections as follows: I. Government-owned hydroelectric projects. II. The Reclamation Fund. III. Reports on Individual Government-owned Hydroelectric Projects. IV. Other Government enterprises, exclusive of lending agencies. V. Consideration of the use of revolving funds. VI. The use of the corporate form for Government enterprises. The names of the Government projects and enterprises which we have surveyed are set forth in our report of November 3, 1948. Our recommendations with respect to the first group (and where applicable to other Government enterprises) are summarized as follows: 1. That an intermediate screening board be established to (1) study the proposals for all power and reclamation projects; (2) review budget appropriation requests during periods of construction; (3) promulgate rules for the preparation of, and review of, allocations of costs, annual reports of operations, and repayment reports; and (4) make recommendations to the Congress based upon the board's studies of proposed projects and reviews of reports on existing projects. 2. That specifically as to Tennessee Valley Authority (1) the Congress reconsider the present repayment requirements; and (2) all new construction be authorized by the Congress except in case of unforseen emergencies, as to which a fund of $1,000,000 is available. 3. That the Reclamation Laws be codified and clarified. 4. That the Congress require the Bureau of Reclamation to furnish a complete and accurate report of the Reclamation Fund in all of its aspects. 5. That the authority of the General Accounting Office to make business-type audits of Government corporations be extended to all Bureau of Reclamation projects and all other power projects. 6. That the accounting systems and organization of the Bureau of Reclamation be revised. 7. That the functions and authority of the Federal Power Commission with respect to Government-owned hydroelectric projects be extended and made uniform. 8. That, wherever feasible, power produced at Government-owned hydroelectric projects be sold at the bus bar. 9. That the rates for the sale of electric energy generated at Government-owned hydroelectric projects be not considered as a “yardstick" for comparison with the rates charged by private industry. 10. That consideration be given to abolishing the Reclamation Fund. 11. That certain funds be transferred from the Reclamation Fund to the Treasury Department as miscellaneous receipts in accordance with legal requirements. 12. That, in general, the use of revolving funds for Government corporations and business-type enterprises (exclusive of lending agencies) be limited to funds for working capital. 13. That the corporate form be used for Government enterprises whose operations consist predominantly of business-type transactions with the public or with private industry and whose major programs are revenue producing. 14. That appropriations for construction costs and appropriations for operation and maintenance costs be made separately and be shown separately in all financial reports. 15. That borrowings by Government corporations and businesstype agencies be made only from the Treasury Department or pursuant to approval by the Secretary of the Treasury. 16. That all appropriations which the Congress may determine to be repayable from revenue-producing operations bear interest. 17. That no Government agencies other than the Treasury Department be permitted to purchase Government securities. Reasons for and discussion of these recommendations are presented with them in our principal report. With respect to Part IV-Other Government enterprises, exclusive of lending agencies-we repeat the foregoing recommendations numbered 12, 13, 14, 15, 16, and 17 (which are of general application) and add the following recommendations with respect to certain of the enterprises: As to the United States Maritime Commission, we recommend: 1. That the following recommendations made by the President's Advisory Committee on the Merchant Marine (K. T. Keller, Chairman) in its report of November 1947 be adopted: a. That executive and operative functions now assigned to the Commission be vested in a single administrator who in time of peace would report to the Secretary of Commerce. b. That a Maritime Board composed of the five commissioners exercise the quasi-legislative and quasi-judicial functions for which the Commission is presently responsible. c. That a revolving fund of limited amount be restored, or a separate shipbuilding authorization with suitable contract authority be established, preferably the former. d. That the present requirement of section 201 (b) of the Merchant Marine Act of 1936 be modified so as to require disassociation from the shipping industry on the part of a member of the Maritime Commission only during tenure of office rather than, as now, for 3 years prior to his appointment. 2. That the bad accounting situation described in our principal report be left in the hands of the groups representing the Senate Committee on Expenditures in the Executive Departments and the General Accounting Office which are cooperating with the Maritime Commission. As to Inland Waterways Corporation (and its wholly owned subsidiary, Warrior River Terminal Company), we recommend that action be taken on the recommendations already made by various individuals and committees, such as those contained in the audit report for the fiscal year ended June 30, 1946, prepared by the General Accounting Office, Corporation Audits Division, in the report of the Committee on Small Business in which it is recommended that the Government withdraw from the barge business, and the report of the Trundle Engineering Co. As to Puerto Rico Reconstruction Administration and the Virgin Islands Company, special reports with recommendations have been made by representatives of the Department of the Interior and by a Congressional group, respectively. In connection with all of the foregoing, reference is made to the portions of our principal report dated November 3, 1948, which deal individually with the above enterprises. All of the enterprises which we have surveyed (except very recently the Maritime Comm.ission) have been operated on a "revolving fund" basis, which is defined and discussed on pages 164 to 171, inclusive, of our principal report. Briefly, it may be said that the revolving-fund 1 Since the date of our report on the Maritime Commission, August 17, 1948, we have noted that the Treasury Department, in its daily statement for October 15, 1948, omits all figures for the Maritime Commission and states in a footnote that publication of current data will be resumed when available. operation involves the application of receipts from income or realization of assets as repayments to appropriations, thus making it possible to use the same fund over and over again for the authorized purpose. These revolving-fund agencies are engaged in a variety of activities, some of which compete, at least in some degree, with private enterprise, and some of which do not. Some of them make payments to the States in which they operate in lieu of taxes, while others make no such payments; none of them make payments to the Federal Government equivalent to Federal taxes on similar privately owned enterprises. There are considerable variations in the accounting principles observed and in the manner in which the accounts have been maintained. The "Government Corporations Control Act," approved December 6, 1945, provides, among other things, for the preparation of annual business-type budgets by each wholly owned Government corporation and for annual audits by the General Accounting Office in accordance with the principles and procedures applicable to commercial corporate transactions. Of the hydroelectric projects listed herein (group I), only Tennessee Valley Authority is affected (subject to certain reservations) by this act, which, as to part IV appears to be applicable to Panama Railroad Company, Federal Prison Industries, Inc., Inland Waterways Corporation (and its subsidiary), and the Virgin Islands Company. In this connection reference is made to our recommendations as summarized herein, numbered 5, 12, and 13. In our surveys we have given no consideration to, and express no opinion regarding, questions of private versus Government enterprise. We are concerned solely with effective administration and believe that application of the following principles would be conducive thereto : a. All revolving-fund agencies should be permitted the flexibility of private business concerns so far as consistent with the requisite checks and balances of the executive and legislative branches of the Government. b. Commercial-type budgets of their operations (with appropriate distinction between capital and revenue items) should be prepared and submitted for the approval of the President and the Congress. c. Adequate provision should be made for replacement and/or depreciation reserves. As previously stated herein, we recommend that the corporate form be used for Government enterprises whose operations consist predominantly of business-type transactions with the public or with private industry and whose major programs are revenue-producing. As to such enterprises, we think incorporation should be under Federal |