listing would compare the amount of tuition with the amount paid.

Our first review showed that (1) equipment asset control accounts had not been established, (2) reliable inventories of supplies and equipment had not been taken, and (3) a list of persons authorized to requisition supplies had not been prepared.

Our second review showed that deficiencies (1) and (2) still existed. That review showed also that, although a listing of persons authorized to requisition supplies had been prepared, college employees not on the list had made 69 percent of the requisitions during the period August 21 through September 28, 1970.

In December 1970 a contract was awarded to a private firm to take an inventory of the supplies and equipment. The college anticipated that, after the inventory was taken, it would be able to maintain adequate control over its supplies and equipment. (Report to Congressman William J. Scherle, B-167006, Oct. 27, 1971)

172. Financial and Property Administration at District of Columbia Teachers College. Our review at Teachers College disclosed management weaknesses which required the attention of the Board of Higher Education; District Government accounting, budgeting, and legal specialists; and college officials. These weaknesses were:

Commercial bank accounts, rather than the U.S. Treasury, were used for depositing funds. Applicable laws and accounting procedures required that funds be deposited in the Treasury.

The college's administrative controls over funds deposited in commercial bank accounts were inadequate, and the funds, in certain instances, were being used for questionable purposes.

District Accounting Office records showed that the college had overobligated its fiscal year 1971 apportionment of funds by about $250,000.

The college maintained no accounting records for equipment and supplies and had no written procedures for control of such items.

Although students attending the college who were not residents of the District of Columbia were required to pay tuition, tuition had not been collected in many cases because either bills had not been prepared or collection efforts had not been made. Also foreign students on student visas had not been charged tuition because Teachers College officials erroneously had considered them to be residents of the District.

District agencies generally were required to obtain at least three price quotations before ordering goods or services costing over $500 and to formally advertise for bids when costs exceeded $2,500. Teachers College had not complied with these requirements and as a result might have incurred excessive pro

curement costs.

The Commissioner of the District of Columbia informed us that the results of our review were being carefully considered and appropriate action had been taken to improve the financial and property administration at the District of Columbia Teachers College. (Report to Congressman William J. Scherle, B-167006, May 16, 1972)

173. Financial Management and Auditing Responsibilities. The Department of Health, Education, and Welfare (HEW) has budget and audit responsibilities for special institutions receiving Federal assistance—namely, Gallaudet College, the Model Secondary School for the Deaf, and Howard University, Washington, D.C.; the National Technical Institute, Rochester, N.Y.; and the American Printing House for the Blind, Lexington, Ky.

As a result of our review of financial management at Gallaudet and at the Model Secondary School for the Deaf, we recommended to HEW that the HEW Audit Agency give more attention to the adequacy and effectiveness of the financial management controls of the special institutions than to those of the HEW installations. More attention was needed because those institutions did not receive continuing departmental oversight and guidance to the same extent as did the HEW installations.

HEW agreed with our recommendation and modified its planning to provide for more frequent reviews at the special institutions and for early followups on significant audit findings and on corrective action taken. (Report to the Secretary, HEW, B-164031(1), July 12, 1971)

174. Improvements Needed in Financial Activity of the Federal Hydroelectric System in the Missouri River Basin.-Since 1963 the Bureau of Reclamation, Department of the Interior, had not published annual rate and repayment studies showing whether electric power rates were adequate to repay Federal investments in the Missouri River Basin Hydroelectric System within the required 50 years. We computed what repayments should have been under two

methods of amortization. Under a compound-interest method-requiring the lowest installment in the first. year and progressively increasing installments in each succeeding year-repayments would have been $41.8 million greater than the scheduled repayments. Under a straight-line method-requiring equal annual installments-the repayments would have been $131.2 million greater than the scheduled repayments. We recommended that a rate and repayment study be prepared which would be supplemented by statements comparing actual repayments with scheduled repayments established on an orderly basis.

The Department agreed that the Bureau should consider the practicability of publishing an annual rate and repayment study but did not agree that a supplemental statement showing the status of repayments was necessary. We believe, however, that a comparison of actual repayments with scheduled repayments is needed for evaluating the adequacy of revenues in meeting repayment requirements.

The Bureau had not prepared consolidated financial statements for the hydroelectric system. We prepared the statements on the basis of information in the accounting records of the Bureau and the Corps of Engineers but concluded that the statements did not present fairly the financial position of system projects or the results of operations. The Bureau and the Corps had recorded costs of similar items differently. The Corps had not recorded revenues of about $138 million, or all the costs applicable to project purposes.

The Departments of the Interior and the Army agreed, generally, that there was a need for comparable and complete accounting data and advised us that interagency committees had been appointed to study financial reporting problems. Also the Department of the Interior agreed that annual consolidated financial statements should be prepared. (Report to the Congress, B-125042, Feb. 28, 1972)

175. Production Cost Data for Individual Nuclear Weapon Systems.-The Atomic Energy Commission (AEC) has adopted a standard cost accounting system as a means of improving control of weapons production costs. Under this system AEC's weapons production contractors are responsible for controlling the costs incurred in the production of nuclear weapons. Although the cost accounting system was not designed to accumulate production costs by weapon system, such costs were computed for AEC's budget estimates.

The production costs for each weapon system delivered during the year, as computed by AEC, represented standard costs adjusted for a share of the variance between total standard costs and total production costs incurred during the year for all weapon systems. AEC assigned a share of the total variance to each weapon system on the basis of a uniform percentage.

Under this method the costs attributable to each weapon system could be distorted significantly. For example, the unit costs incurred by one contractor during fiscal year 1970 for its part of a warhead were more than the total unit costs that AEC attributed to the production of the entire warhead.

When requested by the Congress, AEC had provided estimates of the total costs of producing individual weapon systems. Because of the manner in which AEC assigned the cost variance to individual weapon systems, these estimates did not provide an adequate basis for identifying cost growth.

In response to our recommendations, AEC agreed to (1) improve its procedures for assigning cost variances to individual weapon systems to provide for developing more accurate cost data and (2) provide the Congress annually with information on production costs, explaining any significant differences between current and prior cost estimates. (Report to the Congress, B-165546, Feb. 29, 1972)

Management Information Systems

176. Adequacy of Information Relating to Narcotics and Dangerous Drugs.-The Bureau of Narcotics and Dangerous Drugs (BNDD) estimated that about 90 percent of the drugs in the illicit market were manufactured by legitimate drug manufacturers. A comprehensive information system is a valuable tool for detecting and preventing drug diversion and for measuring the impact of enforcement and regulatory efforts.

Our review of the BNDD information system showed opportunities for BNDD to improve its system by developing:

A more complete inventory of manufacturers' identification markings.

A procedure for identifying the manufacturers of the drugs seized by State and local enforcement groups.

A more systematic method for obtaining information from drug manufacturers and distributors on suspected illegal drug purchases.

A procedure for obtaining information from the military services on possible drug diversion.

A better definition of the types of information desired from State and local agencies on dangerousdrug thefts, seizures, and arrests.

The Department of Justice agreed that recommendations we had made with respect to improving the system were valid and said that it would implement them on a priority basis to the greatest extent possible. The Department indicated that the need to better define the types of information from State and local agencies would require extensive time, effort, and resources and that a task force was being established to consider the entire matter. (Report to the Congress, B-175425, Apr. 17, 1972)

177. Effectiveness Hampered by Lack of Complete, Current Research Information.-The Smithsonian Science Information Exchange is intended to be a clearinghouse for information on current research in physical, biological, and social sciences. The information is compiled to facilitate more effective planning and coordination of research and development programs sponsored with Federal funds. The Exchange was administered by the Smithsonian Institution under a contract with the National Science Foundation for fiscal years 1963 through 1971. Beginning with fiscal year 1972, the Smithsonian Institution assumed entire responsibility for the Exchange.

We found that many Government agencies were not using the Exchange to the fullest extent because, they claimed, its data bank was not current or complete. At the same time the ability of the Exchange to provide current information was hampered because the agencies were not providing the Exchange with the information it needed to perform the function of an information clearinghouse. Also, Government agencies were not required to submit complete information on their research and development programs to the Exchange.

We recommended that (1) the Office of Management and Budget (OMB) evaluate the role of the Exchange as part of OMB's responsibility for fostering coordination of Federal programs and (2) if OMB found that the Exchange should be continued, Federal agencies be required to submit pertinent, timely information about their research projects to the Exchange. OMB agreed to study the role of the Exchange and, on the basis of its study, decide whether to continue it and also whether to require agencies to report their research activities to the Exchange. Agencies

commenting on this report generally indicated that such a reporting requirement was desirable. (Report to the Congress, B-175102, Mar. 1, 1972)

Management Practices-General

178. Administration of Law. We examined into the administration of a special provision of the Veterans Administration (VA) medical care appropriation, contained in Public Law 92-78, to determine whether the administration of this law was in full accord with the intent of the Congress.

We reported that the intent of the Congress was to have VA operate at an average daily patient census of 85,500, with 97,500 operating beds during fiscal year 1972. The intent was clearly established in the language of the bill passed by the House of Representatives on June 30, 1971, and the bill passed by the Senate on July 20, 1971. The identical language of the bills, pertaining to operating levels, was contained in Public Law 92-78. Since the Appropriation Act, Public Law 92-78, was not enacted until August 10, 1971, VA, under its spending authority, as provided for by the continuing resolution (Public Law 92-38, July 1, 1971), could have made funds available without an apportionment by the Office of Management and Budget to operate at these levels upon passage of the bill by the Senate.

VA made funds available to operate at these levels starting November 1, 1971. Because of the delay in making funds available, we believe that VA's administration of Public Law 92-38 and Public Law 92-78 was not in accord with the intent of the Congress. (Report to the Chairman, Subcommittee on Housing and Urban Development, Space, Science, and Veterans, House Committee on Appropriations, B-160299, Mar. 16, 1972)

179. Low Use of Open-Heart-Surgery Centers. In 1964 Veterans Administration (VA) surgical consultants, recognizing that the field of heart surgery was becoming prominent, recommended that VA establish open-heart-surgery centers. The VA agreed and since 1965 has established 23 open-heart-surgery centers in its hospitals.

Over the past several years, VA medical officials and cardiovascular surgeons in the private sector have stressed the need for surgical teams to perform a minimum number of open-heart-surgery procedures to re

tain their proficiency. VA adopted a minimum criteria of 52 cases per year for its open-heart-surgery centers.

From fiscal years 1965 through 1971, only five centers averaged the annual number of operations considered necessary. During fiscal year 1971, only seven of the 23 centers performed at least the minimum number of operations. One reason for the low use of the centers was that VA allowed some of its hospitals, which were not open-heart-surgery centers, to perform such surgery or to transfer their surgery patients to medical school hospitals with which they were affiliated, rather than to the nearest VA open-heart-surgery center.

We recommended that VA examine the program with a view toward redetermining the number and location of open-heart-surgery centers, considering the needs of its patients and the minimum workload necessary to permit surgical teams to retain the required technical skill. The VA agreed in principle and began developing plans to carry out the recommendation and established an advisory group to review existing centers. (Report to the Congress, B-133044, June 29, 1972)

180. Processing Veterans' Educational Assistance Payments. The Veterans Administration (VA) provides financial assistance to veterans while they are obtaining an education. In fiscal year 1970 VA paid $1 billion in educational benefits to about 1.3 million veterans. We reviewed VA's practices and procedures for processing veterans' status documents-the basis for payment of educational benefits-because of indications that processing delays had resulted in late payments and overpayments or underpayments.

During the processing of monthly payments, VA regional offices manually verify data on a veteran's status document, such as his name and identification number, with like data in his case file and compute the amount of monthly payments. VA could accelerate the processing of status documents by eliminating the manual verification and by relying more on computer verification.

We estimated that VA could realize net savings at about $500,000 annually through computer verification. To achieve such savings it would be necessary for VA to incur one-time computer reprograming costs of $72,000.

We recommended that VA implement procedures to convert from manual to computer verification by forwarding, whenever possible, all data from status documents to the data processing center for processing without referral to case files.

VA agreed, in principle, with our recommendation and said that procedures for automating the processing of status documents in the educational assistance program had been implemented in 1970 and were being refined. VA said that it also planned to further automate the processing of other status documents as soon as reasonably possible. (Report to the Congress, B-114859, July 8, 1971)

181. Veteran Enrollment in Correspondence Courses.-The Veterans Administration (VA) provides financial help to veterans and servicemen while they are obtaining an education or training for a job. One way VA does this is by reimbursing veterans and servicemen for completed parts of correspondence courses. However, most veterans who enroll in correspondence courses do not complete them. We estimated that at June 30, 1970, about 160,000 veterans, or about 75 percent of those no longer receiving educational assistance payments from VA, had discontinued their courses before completion. Most veterans who did not complete their courses incurred costsnot refunded by the schools or reimbursed by VA— for those parts that they did not complete. According to responses to questionnaires we sent out, the costs incurred by veterans for uncompleted courses ranged from $10 to $900 and averaged $180. We estimated. that the total cost to veterans for uncompleted courses amounted to $24 million.

About 31 percent of the veterans who did not complete their courses had not been aware that VA reimbursement would not cover all of their costs, and most did not know that they had to request refunds that might be due them from the schools. Most of those replying to our questionnaire indicated that they had not achieved the objectives which had prompted them to enroll in the courses. These objectives were to learn new skills or to improve existing skills to obtain better jobs or to earn more money.

We recommended that VA compile, and distribute periodically to its staff, data on the number of veterans who enrolled in each correspondence course subject and the number of veterans who did not complete the courses.

We recommended also that VA inform veterans about the percentages, by subject, of those who did not complete their courses, the financial obligations, and the requirement that any refunds due must be requested promptly from the schools. VA should inform

veterans of the advisability of seeking its advice and assistance before selecting educational or training programs.

VA agreed in general with our conclusions and said it planned to establish a system to provide the type of information recommended. VA advised that legislation had been proposed to reduce the losses incurred when veterans did not complete correspondence courses. (Report to the Congress, B-114859, Mar. 22, 1972)

182. Duplication of Published Information.Bureau of Domestic Commerce (BDC), Department of Commerce, publications contained considerable information which duplicated data presented in publications issued by other Government agencies, primarily the Bureau of the Census, Department of Commerce. We concluded that a cooperative effort between BDC and the Bureau of the Census would eliminate much of the duplication and would result in substantial savings to the Department. The Department subsequently transferred responsibility for one publication to Census and discontinued another, which resulted in estimated annual savings of $10,000. (Report to the Secretary of Commerce, B-146830, July 13, 1971)

183. Improvement in Administration of Education Program. The Omnibus Crime Control and Safe Streets Act of 1968 included a provision for an educational assistance program to improve and strengthen law enforcement. To carry out this provision, the Law Enforcement Assistance Administration (LEAA), Department of Justice, established a program under which funds were made available to institutions of higher education for loans and grants to eligible students.

Unnecessary Federal interest costs were incurred because LEAA advanced funds to institutions on the basis of estimates prepared several months prior to the start of the academic year. The amounts requested on many of the estimates were greater than the amounts actually used, and the excess funds were retained by the institutions for use in the succeeding fiscal year. Also, LEAA advanced the funds to the institutions from 1 to 6 weeks prior to the time that the students normally paid their tuition and other expenses.

The Department responded to our report by initiating action to delay the issuance of funds to schools

until the last possible moment and to revise its funding system to provide for the funding of institutional needs on a school-term basis. (Report to the Congress, B-171019, Nov. 3, 1971)

184. Improvement of Monitoring Manufacturer and Retailer Activities.-The diversion of legally manufactured drugs into the illicit market became a serious problem because of increased abuse of stimulants and depressants. Diversion occurred when drugs found their way from any of the 450,000 registered drug handlers, either intentionally or unintentionally, into the hands of illicit dealers.

Methods employed by the Bureau of Narcotics and Dangerous Drugs (BNDD), Department of Justice, for detecting and reducing the diversion of dangerous drugs included the investigation of legitimate drug handlers for compliance with Federal regulations and the establishment and dissemination of self-regulation guidelines for members of the drug industry.

Our review showed that, as a result of recent congressional action, BNDD had developed plans to increase significantly its monitoring activities. In addition, BNDD established agreements with States to share the monitoring of licensed drug retailers although some of the States had limited capabilities for monitoring. In addition, BNDD initiated a program to obtain complete data to evaluate the adequacy of State investigation programs.

The Department said our recommendation that BNDD work with drug associations to establish selfregulation guidelines for members of the industry was valid and would be implemented. (Report to the Congress, B-175425, Apr. 17, 1972)

185. Reinstatement and Improvement of ValueEngineering Program. In June 1971 the Maritime Administration, Department of Commerce, discontinued the requirement that value-engineering provisions be included in ship construction contracts. Value engineering is a technique used to reduce design and construction costs of a ship without sacrificing efficiency and reliability. It is based upon development and application of new engineering and production techniques, materials, and processes. Value-engineering items may be proposed by the shipyards, the ship operators, or Maritime. Since its inception in 1957 the valueengineering program has resulted in millions of dollars in savings to the Government and industry.