2. "Second Report on U.S.-Owned Foreign Currency (With Special Reference to Poland and Yugoslavia)," House Report No. 2336, October 21, 1966. Forty-Sixth Report by the Committee on Government Operations.

(a) Summary of report.-This report details the results of an investigation conducted by Representative Henry Helstoski. It is intended to supplement the above report.

During the period 1963 to 1965, total U.S. holdings of foreign currency were about $2.9 billion. In 10 countries where U.S. holdings of foreign currencies are considered excess, funds designated for the use of the United States on special programs and for Embassy operating expenses increased by $200 million a year.

Although a number of the recommendations made by the subcommittee in its first report have been acted on, the problem of effectively utilizing these currencies still exists. The subcommittee urged continuing consideration of recommendations made in the first report and not yet implemented. The subcommittee also recommended that attempts be made to find new ways to utilize these funds.

In Poland and Yugoslavia, Representative Helstoski observed at firsthand how excess U.S. holdings of foreign currency were being utilized. It was discovered that total U.S. holdings of foreign currency had been devalued by a sum equivalent to nearly $1.5 billion in the period from 1954 to June 1966. The report recommended that the GAO make a study of means by which the United States can maintain the value of its foreign currency holdings and eliminate the substantial losses incurred in the past through devaluation.

(b) Estimated monetary and other benefits.-Estimates cannot be made until the study recommended in the report has been made and its findings implemented.

(c) Hearings.--Informal hearings were conducted by Representative Helstoski in Poland and Yugoslavia, where he met with top U.S. and local officials.

3. "An Investigation of the U.S. Economic and Military Assistance Programs in Vietnam," House Report No. 2257, October 12, 1966. Forty-Second Report by the Committee on Government Operations.

(a) Summary of report.-In the last fiscal year, the United States spent $590 million for economic assistance to Vietnam and provided another $138.5 million in agricultural commodities This represents almost $1 out of every $4 spent by the United States for economic assistance throughout the world.

The subcommittee found that the U.S. economic assistance program for Vietnam had been hastily conceived and poorly administered. Inadequate control measures on the part of both AID and the military permitted the diversion or misuse of substantial quantities of U.S. goods. In part, these inadequacies were attributable to the rapidity of the U.S. buildup in Vietnam and the pressure upon those responsible for formulating and administering the U.S. program. The subcommittee also found, however, that too much emphasis had been placed on meeting the increased demands of Vietnam without adequate consideration being given to the physical limitations imposed

by the situation and the establishment of normal control measures. As a result, a wide variety of programs had been initiated without any attempt to establish reasonable priorities taking into account the limitations on U.S. resources and the Vietnamese capacity to absorb U.S. assistance without serious economic dislocations.

The subcommittee was particularly concerned with the operation of the $400 million US. commercial import program. Vast quantities of goods were being imported into Vietnam with U.S. financing under this program, and little or no attempt was being made to determine the real need of the Vietnamese economy for the various categories of goods. The reliability of Vietnamese importers was not subject to U.S. scrutiny and few end-use checks or other postarrival control measures were being carried out. The goods were being sold to Vietnamese importers at an unrealistically low rate of exchange which encouraged speculative hoarding and other forms of profiteering. The theory of the commercial import program was to flood the Vietnamese market with goods in an attempt to sop up the excess piasters in circulation and thereby control the rampant inflation.

The subcommittee also found that U.S. assistance programs for Vietnam had not been adequately audited either by the AID mission internal audit staff in Saigon or by the various responsible offices in Washington. The number of audits completed by the AID mission was inadequate to provide Washington with meaningful information on the operation of the program and audit reports were unnecessarily delayed within the mission.

In the area of management and personnel policies, the subcommittee found that a number of top management positions in the AID mission had been vacant for long periods of time, that certain crucial areas of the AID mission had been grossly understaffed while other areas were overstaffed, and that there was a lack of coordination between the mission and Washington on the subject of personnel recruitment and policies.

The report examines a number of other areas including the port situation in Vietnam, the use and control of local currency generated by U.S. programs, illicit practices affecting U.S. assistance programs, the civilian medical program, the pacification programs, post exchange operations, and the military construction program.

Following the subcommittee's investigation, AID and the other responsible agencies initiated certain changes which have undoubtedly improved the operation of U.S programs. As a direct result of the subcommittee's interest, increased emphasis has been placed on the proper administration of U.S. programs and on the necessity for tighter control measures. The subcommittee felt that much remains. to be done, however, and specific recommendations were made which were directed to all of the deficiencies identified in the course of the investigation.

The subcommittee indicated clearly that it has a continuing interest in the efficient and economical operation of U.S. assistance programs for Vietnam and that it intends to keep the situation under surveillance in the future.

(b) Estimated monetary and other benefits.-Direct dollar savings of $200 million a year should result from the proper implementation of changes initiated during the period of the investigation and rec

71-982-67-5

ommendations made in the report. In addition, it is estimated that indirect savings of several millions of dollars a year and additional nonmonetary benefits will result from improvements in audits and inspections, management and personnel policies, port operation, post exchange operations, the military construction program, the medical program, and U.S. controls over foreign currencies generated by its programs in Vietnam.

(c) Hearings.-Hearings were held in Saigon, Bangkok, and Taipei on May 9, 10, 12, and 14, 1966. In addition, hearings were held in Washington on February 3, July 19, 29, August 1, 3, 4, 5, and 9, 1966. The transcripts, which have not been printed, are classified. They total 1,268 pages and are in the subcommittee files.

4. "An Investigation of U.S. Participation in the NATO Common Infrastructure Program," House Report No. 2323, October 19, 1966. Forty-Fifth Report by the Committee on Government Operations.

(a) Summary of report.-Under the NATO common infrastructure program, the construction costs of fixed military installations are shared among the NATO allies in accordance with a negotiated formula. Between 1962 and 1965, the United States programed $1.3 billion for military construction projects under the program.

Although the GAO has twice in the past 4 years reported on deficiencies in U.S. procedures for recovering money due the United States under the NATO common infrastructure program, the subcommittee found that a number of problems still exist. Responsible offices-both in Washington and within the U.S. European Command-do not have an adequate understanding of their duties under the program and the Department of Defense has failed to conduct procedural audits of U.S. participation in the program. The military services have not established proper accounting procedures and offices responsible for U.S. claims have been inadequately staffed. As a result, many projects which might have been eligible for cost sharing have not been submitted to NATO and pending U.S. claims have not been pursued vigorously.

The subcommittee recommended the establishment of two new offices, one within the Department of Defense in Washington and the other within the U.S. European Command, to serve as the central points of responsibility for all U.S. policies and procedures relating to financing and collection actions under the NATO common infrastructure program. The subcommittee also recommended that the Department of Defense initiate a review of procedures governing U.S. participation in the program and that the accounting procedures of the military services be revised in order to improve the efficiency of U.S. collection actions.

As a result of the recent French withdrawal from military participation in NATO, the United States is presently incurring large expenses, which might eventually be shared by our NATO allies, in moving troops and facilities out of France. Negotiations are also being conducted to determine the disposition of fixed installations, such as pipelines and airfields, which were financed by NATO but will remain in

France. For these reasons, the subcommittee believes that immediate action to correct the deficiencies identified in the report is particularly necessary at this time.

The subcommittee intends to keep these negotiations as well as future U.S. actions under close surveillance in order to insure that the enormous relocation costs are, to the maximum extent possible, shared by our NATO allies.

(b) Estimated monetary and other benefits.-Since the subcommittee's investigation, the military services have either collected or submitted claims for $2.73 million which were long overdue and in which the subcommittee had expressed special interest. In addition, the Air Force is renewing its attempts to obtain the necessary supporting documentation for a $34.3 million claim on which it had failed to act for a number of years. It is hoped that a substantial part of this claim will be submitted to NATO in the near future. The subcommittee feels that the military services are now more aware of the necessity of improving their procedures for submitting and pursuing NATŎ common infrastructure claims. One example of this is a DOD directive issued on August 31, 1966, which attempts to set forth new and more specific definitions of the responsibilities of various DOD offices under the program. If this increased awareness is effectively imple mented, additional savings of many millions of dollars may be expected in the years to come.

(c) Hearings. Hearings were held at the headquarters of the U.S. European Command and at the headquarters of the various military services in Europe on November 15, 16, 22, and 23, 1965. The transcripts, which have not been printed, are classified. They total 416 pages and are in the subcommittee files.

GOVERNMENT INFORMATION

1. "Satellite Information From the National Aeronautics and Space Administration," House Report No. 197, March 22, 1965. Ninth Report by the Committee on Government Operations.

(a) Summary of report.-This report results from a series of hearings on "Government Information Plans and Policies." The initial hearing was a panel discussion by a group of recognized experts in the news media field. Among the problems discussed by the members of the panel was that of the failure of the U.S. Government to promptly inform the American public of Russian space activities-particularly space efforts which have resulted in failures and which the U.S. Government knows of but the Russians have not announced.

Mr. Gene Robb, a member of the panel, submitted a report dated December 5, 1962, prepared by John H. Colburn, chairman of the American Society of Newspaper Editors Freedom of Information Committee, which stated:

More recently, under the Kennedy administration, some missile information has been made available, while some has been restricted as a matter of "national policy." This applied to tracking details on Russian satellite failures. In early 1962, it became known that the Defense Department had

issued a secret order imposing a news blackout on all military
satellite activity.

Some of the Russian space probe failures went unreported for more than 2 years because of "policy" reasons. A satellite situation report, supposed to be issued every 2 weeks, was delayed 40 days between August 21 and October 10, 1962, and then failed to include promised details on Soviet failures. At subcommittee hearings, officials of the National Aeronautics and Space Administration were questioned about

(1) The agency's information responsibilities and policies concerning United States and Soviet space activities;

(2) The methods of reporting Soviet space activities and the extent of Soviet space information available to the U.S. public through official Government sources;

(3) Whether a reporting agreement (classified "Secret") between the Department of Defense and NASA might be in conflict with NASA's statutory responsibility to make information on space activities available to the public.

The committee concluded that the investigations fully substantiate complaints from news media representatives that the National Aeronautics and Space Administration withheld information concerning Soviet space activities which by law and consistent with national security should have been made public.

Unless the American people have knowledge of Soviet space activities-knowledge authenticated by U.S. officials-and can compare that information with accurate, timely facts about U.S. space activities, they cannot judge whether the United States is ahead, behind, or at least keeping pace with Soviet space efforts.

It was the clear intent of Congress, in establishing NASA as a civilian agency, that its activities would be divorced from military control. And the Congress stated emphatically, in the law creating NASA, that the agency should tell the American people every possible item of information about space activities.

In summary, the committee concluded that NASA ignored two clear requirements of law: the requirement for civilian control over nonmilitary space activities and the requirement for the fullest possible flow of public information. By yielding, automatically, to the military judgment on what the American people shall know about Soviet space activities, NASA fails to give effect to a legislative mandate. By playing an on-again, off-again secrecy game, NASA tends to confuse the American public.

The committee also concluded that because of the obvious military importance of foreign and U.S. activities in space, the National Aeronautics and Space Administration must give due consideration to security classifications imposed by military experts; however, NASA must not automatically accept these classifications as it has in the past. Therefore, the committee recommended that in every possible instance consistent with the dictates of national security, NASA exercise its right to challenge military-imposed restrictions on foreign and U.S. space activities by requiring justification and, thus, carry out the mandate to keep the American people informed.

(b) Estimated monetary and other benefits.-No monetary benefits can be estimated; nevertheless, an increase in the flow of informa