Answer. First, you need to look at the qualifications of the individuals. Do they have a journalism background? Second, the mission of the newspaper is important. If it is to be a mission newspaper, then military public affairs officers are well suited to operate the newspaper. On the other hand, if the First Amendment mission is paramount, you need a journalist as the editor-in-chief.

Mr. FERBER. To what do you attribute DOD's reluctance to even at a totally consolidated Stars and Stripes operation as recommended in your May 1986 report? Also, in your opinion, did the Rosen Commission adequately address this issue which was the central finding of your review?

Answer. We do not feel the Rosen Commission seriously addressed consolidation. DOD, as they commented in our 1986 report, emphasizes the mission function of Stars and Stripes and therefore views them as theater newspapers that are published by the unified commanders. This is in line with their rationale for appropriated fund support.

We have also received a number of letters from the current and former employees which will be entered in the record.

[The following information was received for the record:]

The subcommittee has received a number of letters from former and current employees of the Stars and Stripes, Europe and Pacific. The writers allege widespread censorship, news management, and improper personnel and management practices. These letters will be placed in committee files.

[The following questions were submitted to be answered for the record:]

Question. Mr. Hart and Mr. Rizer: The Rosen Commission seriously questioned why the level of staffing in Europe is double the Pacific. Both newspapers are 28 pages long and have the roughly the same mix of wire service news and local theater news. Would you please explain this imbalance?

Mr. Rizer: The staffing imbalance reflects differences between the two theaters. Fundamentally, Europe is a much larger operation than the Pacific. For example, Pacific Stars and Stripes operates 35 bookstores, while European Stars and Stripes has 192. The Pacific Stars and Stripes distributes its newspaper and operates its bookstores through regional contractors serving specified areas. This has been highly successful in the Pacific where air transportation over water from a centralized distribution hub is most effective. On the other hand, Europe is primarily a landtheater where the majority of service members are located in Germany, the Benelux countries, and the United Kingdom. The European Stars and Stripes is issued in three editions for distribution to the Middle-East and the Mediterranean, the United Kingdom, and Germany. European Stars and Stripes believes its three editions are necessary to provide the latest news and sports coverage possible to its European readership. One edition is printed for remote areas and two editions are for central Europe requiring the plant to be operational 21 hours a day. Further, European Stars and Stripes does not contract out transportation finding it is more cost-effective and timely to provide transportation and logistics itself while using commissionaires at the bookstores. More staff is used at Europe to cover local events, sports, and features. Pacific Stars and Stripes have stated they would like to be able to provide these services, but cannot afford the additional resources. HQ EUCOM is evaluating staffing levels.

Question. Mr. Hart and Mr. Rizer: Proportionately, there are many more military in the Pacific Stars and Stripes than in Europe. 20 percent of the staff in the Pacific is military and four percent in Europe. Why are there so many, and wouldn't this contribute to onsorship or the perception of censorship?

Mr. Rizer: The decision to staff Pacific Stars and Stripes more heavily with military personnel was made in the mid-1970s when the paper was suffering catastrophic financial losses during the drawdown of personnel after the Vietnam conflict. Military journalists have served with distinction with the Stars and Stripes in both Europe and Pacific, e.g., Bill Mauldin and Andy Rooney. Military reporters of Stars and Stripes are highly regarded by the civilian editors as well as their peers. We do not believe that a military presence at the newspaper in any way contributes to censorship or the perception of censorship.

Question. Mr. Hart and Mr. Rizer: The Rosen Commission found that there were 850 different kinds of magazines offered in Stars and Stripes bookstores and recommended that the number of titles be reduced to around 200. Has this been accomplished?

Mr. Rizer: European and Pacific Stars and Stripes make marketing decisions based on sales, demand, and service. When a title does not sell, it is no longer carried.

Question. Mr. Hart and Mr. Rizer: At sites where book stores are losing money, why don't you let the exchanges sell the books? Mr. Rizer: We do allow exchanges to sell books where bookstores would not be profitable. In Europe, 13 unprofitable bookstores have been closed since 1987.

Question. Mr. Hart and Mr. Rizer: Why don't you discount books for sale instead of returning them to the publisher at government expense?

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Mr. Rizer: We do discount books for clearance purposes. addition, European Stars and Stripes discounts best-sellers and seasonal books and offers bargain book tables. However, if we cannot recover the wholesale price of a book, we must return it or destroy it to get full credit from the publishers. The commercial publishers' agreements with authors preclude donation. We do not return paperbound books since publishers will accept a certificate of destruction in most cases.

Question. Mr. Hart and Mr. Rizer: The DoD has consistently maintained that a military presence is needed in Stars and Stripes in case of mobilization. Yet, the Rosen Commission found that there was "little or no wartime planning." If the newspaper isn't prepared to shift to a wartime mode, then why do we need military? Mr. Rizer: Both newspapers are already under active military command. In that sense, they are always mobilized. The two newspapers take their wartime direction from their respective Unified Commands based on the specifics of the circumstances and as directed by the Joint Chiefs of Staff.

Question. Mr. Hart and Mr. Rizer: The Rosen Commission said that Stars and Stripes book stores lost money when true costs were considered. The General Accounting Office said that they carried the newspapers. Do the book stores make money when all costs are

considered?

Mr. Rizer: We believe so. They have been covering the cost difference of the newspapers.

Question. Mr. Hart and Mr. Rizer: For the past couple of years, the Stars and Stripes has made about a $10 million profit. Given this favorable position, do you have any plans to adjust the amount of appropriated funds that these newspapers receive?

Mr. Rizer: The Stars and Stripes' "profit," or net income, goes into the newspapers' sinking funds which are earmarked for future capital investments in buildings and equipment. The combined net income totalled $2,649,374 in fiscal year 1988 and both have projected positive revenues for FY89. With respect to appropriated funds, our objective is to hold the line on any growth and to seek reductions in appropriated fund costs where feasible. Because of constraints on appropriated funds, European Stars and Stripes is funding, via its sinking fund, 32 renovation projects worth $2,441,382 which otherwise qualify for appropriated funding. In the overwater transportation area, we are seeking to reduce appropriated fund costs by improving the efficiency of how we procure and ship books, magazines, and other materials from the U.S. to our overseas operations. European Stars and Stripes will be evaluating procurement of newsprint overseas compared to its current "Buy American" policy which could save appropriated fund transportation

costs.

Question. Mr. Hart and Mr. Rizer: DoD has proposed the position of Ombudsman. Do you believe that this person should serve as Ombudsman over other DoD media?

Mr. Rizer: No. It would not be appropriate.

Question. Mr. Hart and Mr. Rizer: Who audits the Stars and Stripes, and how often are these audits conducted?

Mr. Rizer: In accordance with DoD Instruction 5120.4, AFIS funds commercial audits every two years at each Stars and Stripes. These audits are performed by U.S. accounting firms contracted for by the Stars and Stripes through the normal competitive procurement process.

Question. Mr. Hart and Mr. Rizer: Why do the Stars and Stripes bookstores sell their books at full cover price when books in the United States are usually discounted from the cover price? Mr. Rizer: DoD strongly favors discounting of books. However, both Stars and Stripes must use bookstore revenues to offset the actual cost of the newspaper, making the papers more affordable for our DoD personnel overseas. In Europe, the newspaper costs roughly 39 cents per copy to print and distribute, but it is sold for 25cents. This discount totals nearly $7 million yearly for European Stars and Stripes alone. Since the newspapers receive only limited advertising revenues, we rely on bookstore revenue to subsidize the newspaper discount.

Nevertheless, there are discounts. Europe has "bargain book sales" and other merchandising efforts. The paper states it offers 25 percent discounts on some best-sellers amounting to nearly $1.5 million in patron discounts annually.

Question. Mr. Hart and Mr. Rizer: (1) The Rosen Commission said that DoD should consider contracting for book store services. Have you considered a contract?

Mr. Rizer: We are focusing on making our operations more costeffective. Totally contracted-out operations would not save money from our current operations. Such an operation would still require significant transportation costs of the type now borne by appropriated funds. Given the transportation distances involved and the number of separate nations with differing shipping or operational restrictions on commercial contractors, the best course of action remains to make our present system as cost-effective as possible. Our main concern is to provide the most reliable service possible at the least cost to our overseas personnel.

(2) Because exchanges are located in the same areas as Stars and Stripes and already sell over 50 percent of the books, wouldn't it make sense to allow them to provide book distribution and manage the stores as well?

Mr. Rizer: The percentage of books sold by exchanges actually is about 10 percent. In those areas where exchanges sell books, they are supplied as a service by Stars and Stripes acting as a wholesaler. Such actions are accomplished where the site cannot support a bookstore operation.

Question. Mr. Hart and Mr. Rizer: Has DoD looked at the possibility of remote printing or satellite printing of the Stars and Stripes?

Mr. Rizer: Preliminary investigations addressing satellite transmission to both theaters shows that such an operation would add to our costs, would require major capital investments and large start-up expenses, and would not provide timely newspapers.

At the current time, we are examining the possibility of transmitting the Stars and Stripes newspaper from Germany to the United Kingdom. Our initial indications even for this effort is that it may be prohibitively expensive.

Question. Mr. Hart and Mr. Rizer: The Rosen Commission said that department heads and staff are not trained to be better business managers and more budget conscious. Are you taking action to correct this?

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Mr. Rizer: A lot of progress has been made in this area. of the Stars and Stripes now train and ensure their managers are actively involved in the budgeting process and that their job performance standards specifically focus on their effectiveness in managing resources. This continues to be a management-interest area, but it still needs improvement.

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Question. Mr. Hart and Mr. Rizer: The Pacific Stars and Stripes job shop prints base newspapers and other materials. understand that it charges $21 per hour. The newspaper's comptroller said that the Stars and Stripes should charge $70 per hour to recover true costs. Please explain what DoD is doing about this?

Mr. Rizer: The Pacific Stars and Stripes has stated that there were some costs being charged to the job shop at that time which were more properly chargeable to other departments. Adjustments to their accounting procedures were made to more accurately reflect the actual costs of the job shop, and job shop rates have been increased. Pacific Stars and Stripes reported their job shop made a profit of $46,600 in fiscal year 1988. We are still interested in the overall reporting of operation center costs, however, and intend to make this a matter of further review as we establish a common accounting base for the two newspapers.

Question. Mr. Hart and Mr. Rizer: Is the DoD going to centralize the procurement of magazines and books as suggested by the Rosen Commission?

Mr. Rizer: Yes, we are moving in that direction now.

Question. Mr. Hart and Mr. Rizer: The DoD commissioned study recommended publication six days a week instead of seven as a costcutting measure. What are your plans for implementation?

Mr. Rizer: The Stars and Stripes do not agree with this proposal believing it to be a disservice to our service members that would not save money. We determined that the Sunday newspaper represented an essential link with United States and military news reporting needs over the weekend. Those needs could not be satisfied with a six day publication. Therefore, we charged readers a higher cost and upgraded the quality of the newspaper so our personnel could get the kind of Sunday newspaper they would want to receive if they were located in the United States. The Rosen Commission also suggested that we upgrade the quality of the Sunday newspaper. We have received very favorable feedback on both newspapers' initiatives in this area and intend to keep improving their Sunday editions.

Question. Mr. Hart and Mr. Rizer: The Government of Japan is paying for more of the costs of Japanese employees. Yet, the cost for these employees doubled from 1986 to 1987. Shouldn't these costs be dropping?

Mr. Rizer: The doubling referred to was due in part to a 1987 reporting error of $.57 million by the Headquarters, U.S. Army, Japan. They erroneously reported Japanese labor costs of $2.27 million (up 45 percent from $1.17 million in 1986) whereas the correct figure was $1.7 million. This 45 percent increase resulted from the sharp decline in the dollar during that period. The increased role of the Japanese Government in paying for Japanese employees has been in the news for over a year, but it will not actually start until April 1, 1989. Barring further decline in the dollar, the cost to Stars and Stripes for Japanese employees will drop.