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(H. Rept. 306, 88th Cong., 1st sess.)


Third Report by the Committee on Government Operations

(Submitted to the Speaker May 20, 1963) In the third hearing in the "survey of selected activities,” more than a score of various operations in the Department of the Interior were reviewed. These investigations revealed a number of deficiencies and duplication of work in varying degrees within the Department.

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The Secretary of the Interior should thoroughly reexamine the National Park Service's concessionaire policies, seek to develop a more coherent concessionaire policy, and eliminate the weak

nesses disclosed in this report. RESULTS.-The Department of the Interior has advised the subcommittee that:

After issuance of our previous progress report, legislation in the form of Public Law 89–249, relating to the establishment of concession policies in the areas administered by the National Park Service, was approved October 9, 1965. As a result of this act, most of the policies heretofore employed by the National Park Service were enacted into law.

A statement issued by the President when he signed Public Law 89-249 directed the Bureau of the Budget to make a study of concession policies with a view to recommending a common approach to the granting of concessions by all Federal agencies. He also directed the Secretary of the Interior to limit the terms of concession agreements to 1 year whenever practicable pending the outcome of the new study so as to give the Administration and the Congress an opportunity to examine the desirability of new legislation affecting all publicly owned lands. The results of the study have not as yet been published.

As a result of the interest of the several committees of Congress in the franchise fees contained in concession contracts, a new franchise fee formula was established providing for a weighted fee so as to give recognition to the various types of operations. This formula, which provides minimum fees ranging from three-fourths of 1 percent for food and lodging to 5 percent for souvenirs, is used in negotiating franchise fees in connection with new concession contracts and in renegotiating franchise fees at appropriate times in connection with existing contracts. The National Park Service has been directed, that when negotiating a concession

contract proposing a lower total fee than that reflected in
the formula, such lower fee shall be fully documented and
the proposed deviation justified by the circumstances existing
in each particular case.


The Park Service should not require concessionaires to furnish free or reduced rate accommodations to Government employees which may inure, or be thought to inure, to the personal benefit of such employees, in order to avoid creation of possible conflictof-interest situations.

RESULTS.—The Department of the Interior has advised the subcommittee that:

Concessioners are no longer required to furnish free accommodations to Government employees.

With respect to a conflict of interest on the part of Government officials engaged in Government business, such conflict could develop from circumstances where a Government official is placed under obligation to an individual or firm doing business with the Government. However, where a specified service to an employee is required by Government contract or regulation, no such obligation is created. So long as the rates charged by concessioners to Government employees on official business relate reasonably to the travel allowance, the employee gains no advantage and the performance of the public's business is facilitated. We will see that rates charged Government officials by concessioners remain reasonably within the travel allowances, and adjustments will be made as appropriate.


No. 3):

The Interior Department should exercise greater care to prevent incurring expenditures for employee housing exceeding the cost limitations imposed on the expenditures for such purposes.

RESULTS.—The Department of the Interior has advised the subcommittee that:

Every reasonable safeguard has been, and is being, applied to prevent expeditures in excess of congressional cost limitations for employee housing. Interior agencies are sensitive to the limitations and the need for every effort to comply with it. There have been certain instances in which the National Park Service, Bureau of Indian Affairs and the Bureau of Sport Fisheries and Wildlife have found it necessary to seek congressional approval to permit contract awards at prices above the limitation. In none of these instances has the excess cost been significant. The problem

underlying these cases is not a lack of internal control nor disposition by the contracting agencies to exceed the limitation. The fact is that since our construction is done through contract rather than force account, we have encountered difficulty in obtaining bids within the limitation. At times we have used extreme measures such as actually writing into the bid specification a specific fund limitation. We do not believe, however, that this is a generally practicable procedure.

The bids we obtain will inevitably reflect the upward cost trend nationally. The construction limitation was imposed in 1959. From reliable sources of economic data we find that general construction costs have increased more than 24 percent since that time. Thus, in theory, a house estimated to cost $20,000 in 1959 would now cost $24,800. This situation has imposed a special burden upon our design engineers and there is a limit to which housing design can be cheapened while remaining economically feasible. All of our agencies are doing the best they can to cope with this adverse situation.

The National Park Service, for example, has completed studies underway at the time of the 1963 report. These studies have produced four new standard housing plans, all of which are well within the total area of 1,300 square feet described by the Bureau of the Budget for three-bedroom houses. That Bureau has also established a committee for advance review of employee housing proposals to assure compliance with statutory regulations. Other agencies, such as Bureau of Reclamation, are also giving top level reviews to all housing proposals.

As previously recorded, the Department has undertaken to test the adequacies of compliance procedures in the housing limitation through internal audit activity. We believe this effort has had a beneficial effect. By Secretarial Order, internal auditing is now being consolidated at the departmental level. We shall make the audit effort even more incisive as it relates to the housing limitations. None of these efforts however effective, will dispose of the economic realities at the heart of the matter.

LONG-TERM HELIUM CONTRACTS (Recommendation No. 4):

The existing long-term helium contracts should be amended so as to include price redetermination clauses and to obtain price reductions for the Government which would eliminate all unjustified costs allowed in those contracts. In addition, all future

. long-term helium contracts should contain price redetermination clauses and should be based on careful and comprehensive price

analyses including ascertainment of all possible cost estimates. RESULTS.-The Department of the Interior has advised the subcommittee that:

Consideration has been accorded to the performance of cost audits which should serve as the basis for a more productive

discussion with the contractors. To date one cost audit has been performed by the Defense Contract Audit Agency for the Department, and the report is being evaluated by departmental personnel. Legal actions were brought some time ago by royalty interests against the contractors for the recovery of value on all helium produced and sold by the contractors. After several postponements these suits are presently scheduled for trial during the coming summer.


Pending enactment of legislation to deal with the problem of fractionization of Indian interests in tract lands, the Bureau of Indian Affairs should intensify its efforts to minimize the costs of administration and bookkeeping with respect to such fractional interests.

Results.---The Department of the Interior has advised the subcommittee that:

An effort is being made to minimize the increasing cost of administration and recordkeeping on the fractionated Indian trust interests.

Title plants which have been established at Aberdeen, S. Dak.; Billings, Mont.; Portland, Oreg.; and Phoenix, Ariz., are now expected to serve all of the Bureau's title needs. The creation of electronic tape records of all Indian trust lands will have been substantially completed by the end of fiscal year 1966. At that time, the feasibility of further economies in land records management through consolidation of title plants and the use of automatic data processing in connection with other Bureau activities will be studied. During the appropriation hearings for fiscal year 1967, congressional witnesses before the Committee on Appropriations were also concerned about the difficulty of maintaining accurate records of Indian lands which have been fractionated into many parcels due to the numerous heirs involved. It was stated that with the advent of automatic data processing, accuracy and ease of maintenance of these records could now be achieved.

We wish to bring to your attention the fact that the cost of managing heirship properties is included in the activity "Management of Indian Trust Property," which appropriation includes all land management activities, including the operation of title plants and consolidations, and represents 3 percent of the total Bureau appropriation. In spite of the heirship complication, the Realty Branch, by an expenditure of $3.9 million in fiscal year 1965, obtained for the Indian owners $41.5 million in oil and gas income, $3 million from mineral leases other than oil and gas, and $15.5 million from surface leases. The cost of management includes the cost of distributing this income to the Indian owners, including the individual heirship interests.


The Interior Department should have lessees of Indian oil and gas lands distribute royalties directly to competent Indians entitled to such royalties in order to minimize Bureau of Indian Affairs bookkeeping costs on the handling of such accounts.

RESULTS.—The Department of the Interior has advised the subcommittee that:

A special survey group, organized to determine the feasibility of resolving the above problem, concluded in the spring of 1965 that the extension of the direct payment procedure to other areas under the jurisdiction of the Bureau of Indian Affairs (BIA) would produce some improvements in manpower utilization due to the elimination of the need to record oil and gas payment transactions in some IIM accounts. However, because of (1) differences in organizational structure within the respective BIA areas, e.g., in the Muskogee area one consolidated office administers the oil and gas leasing and accounting activities while in the Anadarko area these functions are performed at an area office and five agency offices, (2) composition of the types of income recorded in the IIM accounts, (3) state of cultural development of the various tribes receiving oil and gas income, and (4) some increase in the workload of the BIA agency realty specialist who would become responsible for verifying the accuracy of direct payments, there would be no immediate elimination of personnel

The survey group made two recommendations which, if carried out over a reasonable period of time, would improve operations. These recommendations have to do with compliance of reporting requirements by producers and the verification of the accuracy of payments being made to Indian lessors through expansion of computer procedures.

It mentioned that after the two recommendations had been satisfactorily implemented the direct payment procedure could be gradually extended to those restricted Indian lessors that the Bureau of Indian Affairs determines are capable of handling the lease payments. It was recommended that the extension of this procedure should be accomplished on a selective basis as to lessees and purchasing companies which experience has shown submit acceptable reports of direct payments. The acceptability of such reports could be mutually determined by BIA and Geological Survey. Within general limits prescribed by BIA, consideration could be given to authorize payments directly to all Indians for amounts not in excess of that which BIA feels would not constitute a breakdown in the supervision of the financial affairs of the affected Indian.

Consideration then could also be given to extension of the direct payment procedure to payment of annual rentals on nonproducing leases. There are over 8,600 nonproducing Indian leases. The largest number, about 4,000, are in Oklahoma.

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