E. COMMITTEE ACTION ON REPORTS OF THE Rule XI, 8(c) (1), of the rules of the House, imposes the duty upon this committee to receive and examine reports of the Comptroller General referred to it and to make such recommendations to the House as it deems necessary or desirable in connection with the subject matter of the reports. In discharging this responsibility all reports of the Comptroller General received by the committee are studied and analyzed by the staff and referred to the subcommittee of this committee to which has been assigned general jurisdiction over the subject matter involved. The committee has received a total of 431 General Accounting Office audit reports for processing during the 89th Congress (Oct. 1966). After preliminary staff study, these reports were referred to subcommittees of this committee as follows: Executive and Legislative Reorganization Subcommittee__ Government Activities Subcommittee_. Intergovernmental Relations Subcommittee__ Natural Resources and Power Subcommittee_ Foreign Operations and Government Information Subcommittee_. Legal and Monetary Affairs Subcommittee__ Research and Technical Programs Subcommittee_ 11 189 80 56 31 39 23 1 Total 431 Periodic reports are received from the subcommittees on the action. taken with respect to individual reports, and monthly reports are made to the chairman on the status of all reports received. During the session, the subcommittees used the reports to further specific investigations and reviews. In most cases, additional information concerning the findings and recommendations of the Comptroller General was requested and received from the administrative agency involved, as well as from the General Accounting Office. More specific information on the action taken on these reports is included in Part two, below. The committee maintains complete files of all the Comptroller General's reports received. A record is kept showing the subcommittee to which referred, the date of referral, and the action taken. All the reports received during the Congress will be reviewed by the committee in the light of additional information obtained and action taken by the subcommittees, and determinations will be made whether specific recommendations to the House are necessary or desirable under rule XI. PART TWO. REPORT OF COMMITTEE ACTIVITIES I. Investigations A. INVESTIGATIONS RESULTING IN FORMAL REPORTS EXECUTIVE AND LEGISLATIVE REORGANIZATION SUBCOMMITTEE 1. "Submissions of Agency Accounting Systems for GAO Approval." House Report No. 179, March 17, 1965. Third Report by the Committee on Government Operations. (a) Summary of report.-This report was based on an investigation of submissions of agency accounting systems for approval by the Comptroller General as required under the Budget and Accounting Procedures Act of 1950. The Comptroller had complained in a letter to the heads of departments and agencies that the number of agency accounting systems that had been brought into conformity with the requirements of the law was disappointingly small. The subcommittee found that the record of submissions was in accord with the Comptroller's allegations and its investigation revealed no adequate justification on the part of the delinquent agencies for the slow pace over 14 years since enactment of the law. It found that the exercise of effective control over the vast financial operations of the Government is of great importance and that the development of adequate financial management and modernized accounting systems is essential. It recommended that the heads of the departments and agencies take immediate steps to correct this problem and that approvable systems be submitted to the Comptroller under agreed upon target dates. (b) Estimated monetary and other benefits.-No estimate available, but millions of dollars could well be lost by the lack of proper financial controls which will be saved if the subcommittee is successful in its efforts. (c) Hearings.-July 2 and 28, 1964 (88th Congress). Transcript printed. Hearings on Civil Service Commission Training Activities, September 21, 1965. Transcript printed. 2. "Certain Procurement Matters." House Report No. 180, March 17, 1965. Fourth Report by the Committee on Government Operations. (a) Summary of report.-In its Fourth Report to the 89th Congress (H. Rept. 180, Mar. 17, 1965), the committee inquired into the propriety of an Army contract for 5,544 jars of embalming fluid. During the investigation, matters not originally under study proved to be of an importance equal to or greater than that which precipitated the inquiry. In particular, certain inadequacies in the Armed Services Procurement Regulations and procedures and in the Small Business Administration procedures became evident. As a consequence, the inquiry was extended to the adequacy and efficiency of procurement regulations and procedures, including the role of the Small Business Administration in awarding certificates of competency to unsuccessful low bidders. The report concluded that due to inadequacies in the operation of the Armed services procurement system, the contract award was erroneously made. Since the contract had been performed prior to the committee investigation, no effort was made to upset the award. In an effort to prevent a recurrence of the conditions leading to the erroneous award, the report made the following findings and recommendations: (1) The investigation of the embalming fluid award revealed that the New York City area has four DOD procurement offices, each performing the same or similar functions with respect to the procurement of goods and services for the Department. Such overlapping of procurement functions in one geographic area is both wasteful and expensive. The report recommended that procurement investigations of the kind now carried on by the four procurement offices in the New York City vicinity prior to a contract award be centralized in one Defense Supply Agency office for each major procurement area; (2) Two of the six general standards for responsible prospective contractors require the finding of a satisfactory record of performance and integrity (ASPR 1.903-1 (c) and 1.903-1(d)). The embalming fluid case revealed that no formal medium exists for the exchange of performance and integrity information from one procurement district to another and that these evaluations. thus have to be made almost entirely on the basis of information in the files of the procurement district making the award. Accordingly, the report recommended that the DOD establish a centralized file containing the performance record of each and every concern doing business with the Department and that this information be readily available to all contracting officers. (3) The award in the embalming fluid case was erroneously made, largely because the contractor's plant, equipment, management, and financial affairs were inextricably bound up with those of a sister company in the throes of bankruptcy. The investigation revealed that the preaward survey interviewer was inhibited, if not precluded, from considering the record of responsibility of the affiliated company by section 1903-4 of the ASPR. The effect of this section is to prevent the contracting officer, in determining whether a prospective contractor is a responsible bidder, from considering the record of responsibility of concerns affiliated with the prospective contractor. In an effort to cure this deficiency, the report recommended that where the degree of affiliation between two or more concerns, one of which is a prospective contractor, is substantial, the procuring officer should be permitted to consider any aspect of the record of performance and integrity of affiliates which might reflect the prospective contractor's responsibility. (4) The investigation disclosed that certain information offered by the representative of the subject chemical company and contained in the preaward survey was either false or misleading so as to affect substantially the outcome of the preaward recommendation. This, together with the admission of a preaward interviewer that statements made by management during the course of the preaward survey are frequently half-truths or false altogether, pointed up the need for a tightening or revision of regulations which control the gathering of information from the prospective contractor himself. Accordingly, the committee recommended that the bidder's representative be required to certify to the accuracy of the information he has supplied for inclusion in the preaward survey form, unless the preaward survey activity deems such certification either undesirable or unnecessary. A false certification would then be subject to the false statements statute (18 U.S.C. 1001). (5) The investigation disclosed that small business bidders, in efforts to obtain certificates of competency from the SBA, were often not told the reasons a request was denied. Also, when a request was denied, they were rarely afforded an opportunity for formal challenge of the denial. The committee recommended that the SBA study the establishment of procedures which would afford applicants for COC's a fair hearing on an appeal within the SBA, consonant with the minimum requirements of due process of law, in instances where such certificates are initially denied. These procedures should include at a minimum, notice to the applicant of the reasons for denial of the COC and an opportunity to present evidence bearing on his credit and capacity responsibility. (b) Estimated monetary and other benefits.-In response to the committee's recommendations, the Assistant Secretary of Defense for Installations and Logistics reported the following: (1) The consolidation of a number of military department field contract administration activities into combined activities under the Defense Supply Agency is well underway. (2) The ad hoc working group studying the feasibility of establishing an automated centralized file of past performance is currently field testing a standardized contractor performance evaluation report for supplies and equipment contracts. Such a report, if adopted, would record the past performance of a contractor in terms of the quality, schedule, and cost requirements of his contract. A past history of repetitive unsatisfactory performance casting doubt on the integrity of the contractor would be reflected in a central file where such reports would be cumulated. (3) A revision to the ASPR instructions on preaward surveys has been approved. This revision requires that the contracting officer consider the record of performance and integrity of affiliated concerns which may adversely affect the responsibility of the prospective contractor (recommendation 3; provides for consideration of all existing business arrangements, firm or contingent, for the use of facilities or 71-982-67-3 |