equivalent to the price-support rate at interior points. plus the handling charges and interstate freight charges. of railroads for transporting the wheat to the gulf. The availability of substantial storage space at the gulf, combined with transportation charges that were lower than the interstate rail rates, gave producers an advantage of 15 to 20 cents a bushel if they placed their wheat under price support at gulf ports rather than at inland points.

To discourage this direct flow of wheat to the gulf, the Department of Agriculture in June 1969 proposed to reduce the loan rate at the gulf to compensate for the difference in freight rates. The Department rescinded the proposed change 2 days after announcing it, however, on the basis of verbal information received from farm and trade groups indicating that the movement of about 2 or 3 million bushels of wheat had already been negotiated.

From September 30, 1969, to December 31, 1969, the quantity of 1969 crop wheat recorded by the Commodity Credit Corporation (CCC) as in storage at gulf locations increased by 2.2 million bushels, indicating that, if the Department had made a timely reduction in the loan rate, as was originally contemplated, CCC could have avoided making a greater investment in wheat loans.

GAO recommended in March 1970 that CCC adopt a policy to provide for the prompt elimination of inconsistencies in price-support regulations that result from differences in freight rates or other factors, with due consideration for commitments already made.

In response, CCC stated that it had adopted a different method of establishing and applying price-support locational differentials for 1970 crop wheat and certain other commodities. Under the new method, locational differentials generally reflect no more than minimum transportation costs to recognized markets, and no monetary inducement is provided that could encourage abnormal movements of grain for placement under CCC loan. (Report to the Congress, B-114824, Jan. 15, 1971)

Air Safety

4. Surveillance Over Production of Critical Parts for Civil Aircraft.-The Federal Aviation Administration (FAA), Department of Transportation, is required to prescribe minimum standards, rules, and regulations to promote flight safety of civil aircraft.

With respect to the airworthiness of aircraft, FAA promulgates standards governing aircraft design, materials, workmanship, construction, and performance. It also provides surveillance over manufacturers which it certificates as capable of producing aircraft, parts, and equipment. These manufacturers are commonly referred to as production certificate holders.

GAO reported that certain parts critical to the flight safety of civil aircraft, which are furnished by suppliers to aircraft manufacturers, airline companies, and other aircraft owners, generally were not being subjected to production surveillance by FAA or by the production certificate holders. The parts not under production surveillance are known as proprietary parts because neither FAA nor the certificate holders have design control over them, and inspection ordinarily is restricted to functional verification at receiving points. FAA officials in Washington had been aware of this lack of surveillance but had not determined the scope or magnitude of the problem. Some critical aircraft parts classified as proprietary parts had been placed under production surveillance subsequent to the occurrence of an aircraft accident or incident that had been caused by the malfunction of the part.

Under FAA's existing program for production surveillance, a number of standard conformity inspections are made covering numerous manufacturing control areas, such as heat treatment, laboratory testing, and metal surface treatment. The FAA program provides comparable levels of production surveillance over the manufacturing activities of both production certificate holders and their suppliers, except for manufacturing of proprietary parts. GAO reported that surveillance coverage under this program is limited, however, by the availability and location of FAA inspection staffs and the continued increase in the number of manufacturing facilities subject to surveillance.

One of the FAA regional offices had proposed that the production surveillance be directed or limited on the basis of an evaluation of the adequacy of manufacturers' quality control systems over critical aircraft parts. GAO concluded that the proposed system could provide the expanded production surveillance capability necessary to cover critical aircraft parts, such as proprietary parts, that were not receiving such coverage by FAA or by the production certificate holders.

Officials of the Department of Transportation were generally aware of the problems which existed and advised GAO that, upon completion of an overall review

in July 1971, corrective action would be taken to strengthen the administration of the program.

GAO believed that more timely corrective measures were needed to assure that critical proprietary aircraft parts were brought under production surveillance and recommended that FAA take immediate action to bring such parts under production surveillance by either FAA personnel or by production certificate holders. (Report to the Congress, B-164497 (1), Feb. 25, 1971)

5. Airport Safety Inspection.-The Federal Aviation Administration (FAA), Department of Transportation, has had general authority since 1958 to prescribe reasonable rules and regulations or minimum safety standards regarding (1) air carrier airports that serve commercial passenger and cargo air carriers certificated by the Civil Aeronautics Board and (2) general aviation airports which ordinarily serve only private and small commercial aircraft. GAO reported that although conditions at airports may seriously influence flight safety, FAA did not have a program specifically designed to evaluate the safety of public airports. It relied on airport inspections under other programs which do not have safety as a primary objective. GAO concluded that these programs neither singly nor collectively provided the data required for determining the safety of an airport.

GAO also concluded that an airport safety inspection program was needed so that FAA could better fulfill its responsibility of insuring the flight safety of aircraft at both air carrier and general aviation airports and suggested that such a program be implemented.

In March 1970, GAO furnished its findings to congressional committees considering a bill requiring FAA to develop and enforce minimum mandatory safety standards for air carrier airports and to certificate airports meeting such standards. In May 1970, the Congress passed the Airport and Airway Development Act which contains those requirements.

The Department informed GAO in June 1970 that it intended to implement GAO's suggestions with respect to air carrier airports as part of its overall implementation of the Airport and Airway Development Act. In addition, the Department said that it plans to survey general aviation airports and implement safety standards as needed. (Report to the Congress, B-164497 (1), Jan. 15, 1971)

Atomic Energy

6. Price Increase and Change in Criteria for Uranium Enrichment Services.-At the request of the Joint Committee on Atomic Energy, GAO reviewed certain factors relating to the proposals made by the Atomic Energy Commission (AEC) in June 1970 to amend its Uranium Enrichment Services Criteria and to increase its price for such services.

GAO reported in July 1970 that the proposed change in the existing enrichment criteria, which would require that enriching charges be based on commercial criteria, raised the question of the need for and applicability of the new basis. The type of data which would be generated under this commercial criteria could be accumulated with equal facility under the existing criteria.

Based on GAO's interpretation of the legislative history and statements from hearings on Uranium Enrichment Services Criteria, it did not appear to be consistent with the intent of Congress to conclude that the term "reasonable compensation," as used in the legislation, permitted including a profit over a period of time. Since the commercial criteria which AEC proposed contemplated more than recovery of full costs, GAO questioned the authorization of this revised criteria and expressed the belief that the new criteria should not be adopted without further action by the Congress.

Regarding AEC's proposal to increase the price for such services, GAO concluded that, as a result of cost escalation and operating levels lower than anticipated, it did not appear that AEC's price of $26 a unit of separative work was adequate to insure recovery of appropriate Government costs; therefore, it appeared that AEC's proposed price increase to $28.70 a unit of separative work might be warranted.

GAO suggested that the Joint Committee might wish to consider whether the proposed amendments to the criteria were needed to accomplish the objectives of obtaining commercial operating experience. If in the judgment of the Joint Committee it was deemed advisable to adopt the proposed criteria, GAO suggested that the criteria should require a consistent and uniform method of selecting variables and assumptions to provide the degree of stability required for future long-term commitments. (Report to the chairman, Joint Committee on Atomic Energy, B-159687, July 17, 1970)

After issuance of GAO's July 1970 report, the Congress enacted legislation clarifying its intent that the criteria for establishing charges for uranium enrichment services be based on recovery of Government

costs.

In December 1970, AEC proposed another revision to the Uranium Enrichment Services Criteria as a result of this legislation. AEC also proposed to increase the price for enrichment services from $28.70 to $32 a unit of separative work. At the request of the Joint Committee on Atomic Energy, GAO reviewed AEC's proposals.

GAO reported that the provisions of the revised criteria having an effect on pricing afforded an adequate basis for recovering, over a reasonable period of time, appropriate Government costs of furnishing enrichment services.

GAO reported also that AEC's estimated costs for separative work had increased substantially since the $26 price was established—a major part of which had occurred since the development of the $28.70 price. Therefore, GAO believed that AEC's proposal to increase the price of a unit of separative work-which included a contingency factor-was consistent with the pricing provisions of the revised criteria and the provisions of the legislation.

AEC agreed with GAO's suggestion that financial statements, which AEC intended to prepare, be published annually and that AEC periodically prepare information showing current projections of costs and revenues to provide AEC and the Joint Committee with an indication of the extent to which the established price was meeting the objective of recovering the Government's costs over a reasonable period of time. (Report to the chairman, Joint Committee on Atomic Energy, B-159687, Feb. 9, 1971)

7. Managing High-Level Radioactive Wastes.-At the request of the Joint Committee on Atomic Energy, GAO reviewed the policies and procedures of the Atomic Energy Commission (AEC) for the management of radioactive wastes to determine what actions had been taken on matters discussed in a previous report issued by GAO on this same topic.

GAO reported that AEC had made progress in carrying out its programs for the effective management of radioactive waste materials; however, problems still remained to be resolved and delays were being experienced in implementing certain policies and practices.

Operational and technical difficulties had caused

delays in implementing certain programs to provide for long-term storage of radioactive wastes and their interim storage in underground tanks. As these tanks increased in age and were utilized more because of the accumulation of new wastes, there was an increased possibility of tank leakages or failures occurring. The AEC proposals for long-term storage of wastes in underground tanks required further evaluation before long-term storage methods could be approved.

GAO proposed that AEC develop and consolidate its plans for resolving waste management problems into an overall coordinated plan which would provide (1) the current status of the waste management program, (2) the specific actions necessary to resolve existing problems, (3) the time frames over which these actions could be carried out, and (4) the estimated fiscal year costs involved. In addition GAO recommended that AEC's Division of Waste and Scrap Management give its immediate attention to the plan and that the Division be given certain specific responsibilities necessary to provide for its implementation. AEC agreed with these proposals and advised that various budget and organizational alternatives within AEC were also being considered with the objective of insuring that the approved overall waste management plan would be effectively implemented.

On June 29, 1971, AEC announced an organizational change which established a new Division of Waste Management and Transportation and abolished the Division of Waste and Scrap Management. (Report to the chairman, Joint Committee on Atomic Energy, B-164052, Jan. 29, 1971)

Coal Mine Health and Safety

8. Implementation of the Federal Coal Mine Health and Safety Act of 1969.-The Bureau of Mines, Department of the Interior, has had significant problems in carrying out its responsibilities for inspection of coal mines and enforcing the correction of unsafe and unhealthy conditions as required by the act. GAO reported that progress in complying with the requirements of the act has not been in accordance with the target dates set forth in the act, and it did not appear that full compliance would be achieved in the near future.

GAO's review at two districts disclosed that:

The Bureau had made only about 31 percent of the required safety inspections and about 1 percent

of the required health inspections from the effective date of the act through December 31, 1970.

Mine operators had not made various required samplings and inspections, and some that were made were not adequate.

In many cases, mine operators had not submitted required plans for roof safety and mine ventilation and for emergency action in case of fan stoppage nor had they submitted listings of electrical equipment used in mining areas.

Bureau inspectors found numerous safety violations, many of which were the same type that had been cited during previous inspections. This situation was attributable, at least in part, to the Department's policies for enforcing health and safety standards, which at times had been extremely lenient, confusing, uncertain, and inequitable.

Bureau representatives stated that shortages of qualified manpower and certain equipment and insufficient time were the principal reasons for noncompliance with the requirements of the act. As to shortages of equipment, GAO reported that the Bureau (1) had not made overall studies of the availability of equipment and the normal time required to obtain equipment in short supply, (2) may have permitted unnecessarily prolonged noncompliance with certain equipment requirements when comparable substitutes were readily available, and (3) had purchased more dust-sampling equipment than it needed, thus contributing to the shortages of such equipment available to mine operators.

GAO recognized that the passage of the act greatly expanded the responsibilities of the Bureau but believed that more could have been done to achieve greater compliance with its requirements.

The Department stated that with one exception actions responsive to GAO's proposals had been initiated or planned. The Department disagreed with GAO's proposal concerning the use of people less highly qualified than regular coal mine inspectors to perform health inspections. GAO believes, however, that the Department should give further consideration to the possibility of using such persons if the Department experiences difficulty in recruiting the required number of regular coal mine inspectors. (Report to the chairman, Subcommittee on Labor, Senate Committee on Labor and Public Welfare, B-170686, May 13, 1971)

Economic Development Assistance

9. Basis for Providing Federal Assistance to Economically Distressed Areas.-The Economic Development Administration (EDA), Department of Commerce, was determining eligibility for Federal assistance in the long-range development of economically distressed areas from data that was not current and was of questionable accuracy. The questionable reliability of unemployment data was attributable to conceptual weaknesses in the methodology for estimating unemployment as well as to problems in developing unemployment rates for small areas. Also, median family income data for States and local areas— another factor used in determining eligibility-are available only from the decennial population census.

EDA's ability to properly identify areas eligible for assistance hinges on the soundness of unemployment and income data, and the designations of economic distress may influence the distribution of moneys and benefits from other Federal agencies. Because current family income data are not available, EDA is not able to make the annual review of area eligibility based on income that is required by the Public Works and Economic Development Act of 1965, as amended (42 U.S.C. 3121), or to base its determinations of maximum grant rates on recent data.

To improve the accuracy and comparability of unemployment data, the Department of Labor, which is responsible for collecting such data, said that it would take steps to insure uniform application of its prescribed estimating techniques and that the improvements necessary in the methodology would be made by the end of fiscal year 1971.

The Department of Commerce agreed, in principle, that it would be desirable to have more recent income information regularly. By using other data sources, such as the Office of Business Economics' data on per capita income, EDA hopes to develop reasonably accurate income statistics. The Department stated that a work group was studying per capita income dataa recently developed data source suggested by GAO as an alternative to median family income data-but that much remained to be done before it could be used to measure area economic distress. (Report to the Congress, B-133182, May 10, 1971)

Economic Opportunity Programs

10. Progress Being Made and Difficulties Being Encountered by Credit Unions Serving Low-Income

448-668 071

Persons. In January 1965, as part of the Community Action Program, the Office of Economic Opportunity (OEO) began providing financial assistance to credit unions sponsored by Community Action Agencies to serve low-income residents living in designated neighborhoods. At December 31, 1969, there were 106 federally chartered, OEO-financed credit unions having 65,900 members, $4.2 million in members' deposits, and 18,200 loans outstanding totaling $4.2 million. From inception, the credit unions had made loans totaling $14.2 million.

GAO reviewed eight of these credit unions, all of which had encountered a number of problems in their operations. These problems had resulted in relatively high operating deficits and in little success in attaining OEO's goal of becoming self-supporting.

The results of financial operations of the credit unions reviewed showed that, from the beginning of OEO financing to December 1969, they had incurred expenses which exceeded operating revenues by $500,000 and that the deficits had been offset by grants from OEO amounting to $565,000. The credit unions would have difficulties in achieving a break-even position, even with a substantial increase in loans, unless their operating expenses were reduced.

The eight credit unions did not have sufficient shareholder deposits, the primary source of funds, for making loans to generate interest income adequate to cover operating expenses. The insufficiency in shareholders' deposits was attributable primarily to the very limited. savings that low-income families have available for deposit in the credit unions. OEO provided grants to credit unions which offset their operating deficits for periods longer than the 1 or 2 years anticipated by OEO guidelines.

Seven of the eight credit unions experienced higher costs for space occupied-rent, utilities, and maintenance than other Federal credit unions of similar size, primarily because most of them paid rent for space whereas many other credit unions which were not OEO financed were provided with space free of charge or at relatively low rentals.

GAO reported also that neither OEO nor CUNA International, Inc., an OEO contractor responsible for certain administrative functions of the credit union program, had required the OEO-financed credit. unions to develop plans showing projections of their financial operations or target dates for achieving the goal of becoming self-supporting. The establishment of such a target date and its comparison with a credit

union's progress toward meeting that goal would enable OEO and the credit union to determine whether the credit union's progress was adequate.

OEO and the National Credit Union Administration agreed with GAO's conclusions and recommendations. In response to these recommendations, OEO stated that it intended to obtain status reports, plans, and projections bearing on the goal of self-support of credit unions; to review the operations of the credit unions and to provide necessary guidance and assistance; and to require them to concentrate their efforts on cost reductions. (Report to the Congress, B-164031 (4), June 17, 1971)

11. Administration of a Neighborhood Health Services Program (New York City).—GAO reported to the Congress that improvements were needed in the operating efficiency and effectiveness of the Neighborhood Health Services Program administered by St. Luke's Hospital Center, New York City. The program is financed with grants from the Office of Economic Opportunity (OEO). Because of a number of problems identified below, the project had not provided a significantly better health care delivery system than that which previously existed.

The amount of space available to the project limited the range of services which could be offered at the project site. A formal agreement for use of the space had not been signed with the city.

The relatively low average number of patients seen by project physicians and dentists indicated that the project was not making maximum use of available professional staff members. OEO guidelines suggest that with adequate space a physician should treat 28 patients, and a dentist 14 patients, per day; however, project physicians averaged only 9.5 patients, and project dentists only 5.7 patients, per day, for the 8-month period ended February 28, 1970.

Although patients were generally treated by the same physicians when they visited the project site for medical care, such continuity was often lost when patients were admitted to St. Luke's Hospital for inpatient care because half the project's physicians did not have hospital privileges at St. Luke's.

The project generally provided individualoriented rather than family-oriented health care. OEO guidelines call for the project's staff to attempt to see the patient in his family setting when appropriate and for all members of the family to