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only permit substantial economies in R. & D. expenditures, but they should also help agencies to avoid costly and inefficient operating programs. With better R. & D. decisionmaking, the return to the Nation on Federal R. & D. investment can be substantially greater as R. & D. proposals which do little to advance program objectives are eliminated in favor of proposals which promise large benefits in the program affected. When reports from the Executive Office on actions taken and the advisory comments of the National Academy of Sciences are received, the committee will have the opportunity to continue its surveillance over the effectiveness of proposed innovations for a costbenefit approach to Federal R. & D. management.
(c) Hearings.—Hearings were held January 7, 10, and 11, 1966, and printed.
4. "Better Management Needed of Medical Research on Aging," House
Report No. 2080, September 26, 1966. Thirty-Eighth Report
by the Committee on Government Operations. (a) Summary of report.--The report examined the circumstances leading to two parallel long-term medical studies on pilot aging by the Federal Aviation Agency and the Public Health Service's National Institutes of Health, at an eventual total cost to the Federal Government of nearly $10 million.
The report commended the Federal Aviation Agency for terminating its pilot aging study upon a recent finding that the results obtained and the lack of systematic analysis of these results did not warrant the cost of the project. However, the report found that FAA's failure to take earlier action evidenced poor management, which resulted in the waste of more than $1,200,000 over a 6-year period.
The report also found equally poor management by NIH in sponsoring a separate study of pilot aging in the following particulars:
(1) The NIH failed to propose a joint project to the FAA despite many opportunities to do so.
(2) The NIH study of pilot aging was approved in 1961 and extended in 1964 despite weaknesses in the study's statistical design and analysis.
(3) The NIII does not adequately meet its responsibility to add to knowledge on the aging process in the population at large by studying an unrepresentative group such as pilots.
The report made two recommendations:
(1) That the NIH make frequent and rigorous evaluations of the NIH-sponsored long-term study on pilot aging with a view to terminating it if analytical results of substantial value are not probable;
(2) That the NÍH, in cooperation with other agencies, review the present Government-wide program in medical research on aging for balance, gaps, and duplications, particularly in the case of long-term studies of aging; prepare an action program to make needed corrections: and report to the committee on steps taken.
(6) Estimated monetary and other benefits.—The investigation preceding this report was a major factor in FAA's decisions to review its research project of long-term aging in pilots and, subsequently, to terminate the study. Thus, the investigation contributed to a saving of an estimated $3.8 million in expenditures which would have been necessary had the study continued as originally planned.
SPECIAL SUBCOMMITTEE ON DONABLE PROPERTY
1. “The Use of Excess Property by the U.S. Foreign Aid Program
in Latin America," House Report 1466, April 29, 1966, Twenty
Eighth Report by the committee. (a) Summary of report. This report examines the failure of certain AID missions in Latin America to utilize, fully and properly, excess property in the foreign aid program. It makes recommendations designed to correct present program deficiencies.
For the past 2 years, the Committee on Government Operations has been engaged in an active investigation of the use of excess property in the U.S. foreign aid program.
The principal authority for the use of excess property in the foreign aid program is contained in sections 607 and 608 of the Foreign Assistance Act of 1961, as amended.
Congress, in passing the 1965 Foreign Assistance Act, added new language which directly called upon AID to utilize excess personal property in lieu of new procurement wherever practicable.
Investigative work by the committee showed the conduct of the excess property program was deficient and needed much improvement. Congressional concern was heightened by strong criticism from two major auditing and review agencies. The Inspector General, Foreign Assistance, the Department of State, in a report issued in January 1964, advised the Agency for International Development that it was “not taking full and proper advantage” of excess property in its overseas activities. The Comptroller General of the United States reported to Congress in April 1965 that few, if any, taxpayer dollars were being saved as the result of using excess property instead of new property in the AID program.
In public hearings, conducted June 9, 1965, the performance of AID in this regard was evaluated. It was apparent from the testimony and records submitted that certain regional bureaus of AID, especially Latin America, were not making sufficient use of excess property. much to the detriment of the U.S. taxpayer. AID utilized $37.4
$ million worth of excess property in its program during the 1965 fiscal year. This is an insufficient amount. For example, Brazil, which has the largest U.S. AID program in Latin America, and perhaps the most important, used only $62,089 worth of excess property in fiscal 1965. Meanwhile, Pakistan, which has an AID program of similar magnitude to that of Brazil, somehow managed to use almost $10 million worth. Yet the problems of development and health and education in both countries are comparable. The story is similar in other Latin American nations. In fact, the total for all of Latin America combined-$4.2 million--does not even come close to the total for Pakistan, just one country in the Near East.
Because of the Agency's meager results in Latin America, the subcommittee decided to make an on-the-spot inspection to examine the
situation firsthand. Hearings and briefings were held at the U.S. foreign aid mission in Latin America, a detailed examination of records was made, and a number of projects were observed in actual operation.
In almost every place, the subcommittee found that AID officials were inadequately informed as to the opportunities and savings possible through excess property. This applied not only to the money which could be saved by using excess property in lieu of new procurement, but also to the use of excess property in AID-related programs sponsored by U.S. nonprofit voluntary organizations working in Latin America. Also, such programs as the Peace Corps, Partners of the Alliance for Progress, and food for peace were making little or only a token use of excess property.
Surplus property is sold on the public market for an average of 6 cents per $1 of its original acquisition cost, when no Federal or donable use is made of it. Simply put, the AID program here has the chance of providing 16 hammers for the price of 1. The savings are obvious in view of all the handtools, machinery, clothing, and thousands of other items used in our AID programs around the world. Yet we continue to buy new items when we have so many supplies available that are still in good, serviceable condition. Many have never even been used.
The committee made the following recommendations designed to improve the economy and efficiency of the excess property program by the Agency for International Development in Latin America.
(1) AID should make certain that its Latin American missions are adequately informed on the procedure for obtaining excess property.
(2) AID should give consideration to the appointment of a fulltime excess property officer in those countries with large AID programs.
(3) AID should give greater attention to the excess property needs of nonprofit U.S. voluntary organizations working in AID-related projects and programs.
(4) AID should give consideration to excess property projects and activities designed to help the special plight of the slum dweller in Latin America.
(5) Individual country missions should make a special effort to find uses for the many smaller excess property items. Too often, excess property orders are limited to vehicles and larger machinery.
(6) The Office of Material Resources should make a concerted attack on the problem of providing more spare parts.
(7) AID missions should search excess property catalogs or submit a “shopping list” to the Office of Material Resources before ordering new items whenever possible.
(8) AID missions should be encouraged to set up special excess property projects to provide items for impact or emergency purposes.
(9) AID should provide better excess property catalogs. More detailed description are needed in the field.
(10) The Bureau for Latin America should embrace the excess property program with enthusiasm and dedication. Decisions should be given promptly on excess property agreements submitted to it by individual missions. The Bureau also should make certain that all development and program loans contain an excess property provision whenever practicable, no matter how small that utilization might be. () Estimated monetary and other benefits. The results of the committee's interest are already apparent. The U.S foreign aid mission in Brazil has requested more than $6.5 million worth of excess property since the interest of the committee became evident. Most of this would be a substitute for new procurement and thus would be an actual saving if these orders are filled. Other Latin American missions are following suit. What the final figure for the year will be is, of course, difficult to estimate, but the rather dramatic example of Brazil illustrates what can be done. The committee, through its special subcommittee, intends to press the issue, not only in AID missions in Latin America, but everywhere else in the world where such savings can be made.
Further evidence of improvement in the program can already be seen in a comparison between the first 4 months of fiscal year 1966 and fiscal year 1967 with respect to excess property (sec. 608 advance acquisition property) shipped to the Latin American region. The figures are $184,228 and $905,484, respectively, almost a 100-percent increase for the first 4 months of fiscal year 1967.
The committee was advised on May 23, 1966, by the Director of AID that the copies of its report had been distributed among AID missions, where it has proved a valuable handbook and reference document. An additional 100 copies of the report were requested.
(c) Hearings.-June 8 and 9, 1965. Transcript printed.
2. "Evaluation of the Donable Surplus Property Program," House
Report No. 2319, October 19, 1966, Forty-Fourth Report by the
Committee on Government Operations. (a) Summary of report.—This report examines the efficiency and accomplishments of the donable property program, certain foreign excess property matters, and an administrative action of the Department of Defense which would have the effect of making much less property available to eligible donee organizations.
Under the donable property program, Federal personal property which is not required for the needs and the discharge of the responsibilities of all Federal agencies may be donated, through appropriate State agencies, to qualified educational, public health, civil defense, and certain other organizations which benefit the public. Congress spelled out the authority for this program in subsection 203(j) of the Federal Property and Administrative Services Act of 1949, as amended (40 U.S.C. 484(j)), and since then has broadened and perfected the program by several amendments.
Hearings in June of 1965 were called to review the general progress and efficiency of the donable property program. The Department of Defense, which generates upward of 90 percent of all surplus property. testified that the amount of property available for donation will continue to decline.
It was also the conclusion of the Department of Health, Education, and Welfare that "there will probably never be enough property available to fill the needs of potential donees." It cited several factors which have combined, however, to aggrarate the problem of shortage:
First, the General Services Administration has been increasingly successful in its program to expand Federal utilization.
Second, there has been increasing diversion by Federal agencies of property in excess status to federally aided program use.
And, finally, there exists the possibility that more and more property will be disposed of under the exchange/sale provision of section 201(c) of the Federal Property Act (40 U.S.C. 481(c)).
Of particular importance was information developed at the 1965 hearings which showed the close and important relationship between the donable surplus property program and Federal excess property programs on the one hand, and the way in which Federal agencies carry out the exchange/ sale authority granted by subsection 201(c) of the Federal Property Act on the other. This subsection provides that in acquiring personal property, agencies may exchange or sell similar items and apply the trade-in allowance or proceeds of sale against the cost of the property being acquired. The act authorizes the General Services Administration to prescribe regulations governing these exchange/ sale transactions. When personal property is thus sold or exchanged, it is not available for donation. Moreover, its availability for further Federal use is limited by the extent to which the disposing agency requires reimbursement from the acquiring agency.
It was with surprise and concern that the special subcommittee learned at the 1965 hearings that the Department of Defense was contemplating a major policy change relating to exchange/ sale disposals. Under the then existing DOD policy, property eligible for exchange or sale was given a prior screening, first for transfer as excess to other Federal agencies on a nonreimbursable basis, and second, for transfer as surplus for donation. Under the contemplated change, all property eligible for exchange/sale will first be offered to other Federal agencies but only on a "market value” reimbursable basis and will not be transferred as surplus for donation. The Department of Defense informed the subcommittee, however, that its draft instruction was being held in abeyance pending the results of a complete Government-wide review by GSA of the policies in its own exchange/sa le regulations. The General Services Administration explained at the hearings that its study was intended to provide "more exacting requirements for the exchange or sale of property.” In March 1966, the GSA promulgated revised regulations on disposal of personal property by exchange/sale. They became effective on July 1, 1966.
The need to measure the significance of the revised GSA regulations as they relate to the donation program and concern over the effect on the donation program of any change in DOD's existing policies prompted the subcommittee to hold additional hearings on August 23 and 24, 1966.
The report also reviews the excess property programs of the Agency for International Development and the Peace Corps. In recent years, the Agency for International Development has been subject to criticism for the conduct of its program. The Inspector General of the Department of State, in a report issued in January of 1964, advised the Agency that it was "not taking full and proper advantage” of using excess property in U.S. foreign aid operations overseas. The Comptroller General of the General Accounting Office reported to Congress in April 1965, that few, if any, taxpayer dollars were being saved as