was making use of much of the water there under a highly questionable claim of right.

In December 1964, the Department of the Interior had advised the committee that the hotel company had proposed negotiations for the sale of its Furnace Creek properties to the United States and that the Department was then endeavoring to contract for an outside appraisal of these properties to aid in such negotiations.

The committee became concerned, however, when, in June of 1965, the Department wrote the company that there appeared to be “serious doubt" as to the probability of reaching acceptable terms in any negotiation for purchase of the company properties and that, as a possible alternative, the company might consider quitclaiming to the United States its claimed water rights, in return for which the Park Service would contract to furnish "such amounts of water as are reasonably necessary to the conduct of the hotel and related operations at a level consistent with needs of the users of such facilities."

This suggested approach showed inadequate regard for a legal opinion of the Department's Solicitor that the company appeared to have a valid right only to about half the water it was diverting. It also seemed inconsistent with recommendations in the committee report that the Department act promptly to establish the relative water rights in the area and proceed with studies for additional Park Service development there.

In August 1965, the Secretary of the Interior replied to the committee's inquiry as to the actual status of action to resolve the longstanding controversy over respective claims to water in the area. The Secretary stated there had apparently been a misunderstanding between the hotel company and the Park Service. The company's president had written that he had no records or recollections of a possible solution to the water rights question whereby the company would quitclaim to the United States is claimed water rights, in return for which the Park Service would contract to furnish water reasonably necessary for conducting the hotel and related operations of the company. The Department stated that the quitclaiming feature now appears to be out of the picture.

The Secretary advised the committee that the appraisal report of the company's property, which the Department had arranged for, had been received and was under analysis. It was also stated that further discussions would be had with the company to work out a basis of settlement without recourse to litigation.

Appraisal reports as of June 9, 1965, were submitted. The committee received them in March 1966. Because the reports appeared incomplete, the National Park Service was requested by the committee to clarify them, particularly with respect to mineral rights. In April, the appraiser offered his opinion as to these rights. In October 1966, the Department advised that discussions with the hotel company had encountered difficulty as to the company's view of value of the approximately 7,600 acres of company lands within the monument, the company believing these lands had some value for development (subdivision) purposes. The Department is continuing the discussions and hoping that the land question can be resolved, with the water question settled as an integral part thereof.

If the discussions are not successful, the Department will advise the committee of the steps to be initiated to safeguard the Government's interest.

12. General Accounting Office-Adequacy of Written Procedures for the Prosecution of Bid Protest Cases.

The full committee continued its inquiry into the adequacy of procedures at the GAO for the prosecution of bid protest cases. Such cases involve a situation under an advertised procurement where an unsuccessful bidder protests an award or proposed award of a Government contract to another bidder because he believes such action to be questionable under the law.

During the 2d session of the 88th Congress, careful examination of the GAO's written procedures and conferences with GAO officials strongly indicated that existing procedures did not adequately recognize the requirements of due process of law and fairplay. Since neither a contracting officer nor an unsuccessful bidder may contest the Comptroller General's decision of a bid protest case in a judicial forum, both the unsuccessful bidder and the prospective contractor are entirely dependent on the policies and procedures of the GAO for the preservation of their interests. The committee found, for example, that since no written procedures whatever exist as to bid protests cases, a person who wishes to protest the legality or propriety of an award or proposed award is without written guidance. In fact, no written statement exists to inform him even that he may protest an award.

During the 1st session of the 89th Congress, the committee concluded that in order to obtain a well-rounded picture of the adequacy of procurement procedures, the experiences and opinions of those contractors who are involved on a day-to-day basis in Government procurement should be elicited. Accordingly, a detailed questionnaire covering a wide range of procurement and bid protest matters was prepared and distributed to members of the Associated General Contractors of America, one of the country's largest Government contracting organizations. The responses showed that 70 percent of those contractors replying favored the formulation of written procedures by the GAO requiring notification to affected contractors of bid protests and an opportunity to rebut the protest. The responses also showed, however, that only 50 percent believed they had been or might be damaged by the absence of such procedures.

As a result of the committee's interest in this matter, the General Accounting Office is preparing regulations on the subject of bid protests. On September 26, 1966, the chairman of the full committee wrote to the Comptroller General regarding the proposed regulations. The letter urged that the proposed regulations be published in the Federal Register and that Government agencies as well as non-Federal interests have an opportunity to comment. In addition, the letter urged that the regulations include provisions for (1) advising low bidders in the event of a protest so that they would have an opportunity to present their views on the merits of the protest and the legality of the proposed award and (2) avoiding inclusion in bid protest records of ex parte material and information.

The committee is continuing its study of the bid protest matter with a view to further action if necessary.

13. Survey of Bureau of Customs Matters.

In March 1965, certain persons closely associated with the inspectorial operations of the Bureau of Customs requested a meeting with

the committee staff to discuss matters involving its efficiency and economy. As a result of this and other meetings, a preliminary inquiry was initiated into a wide range of customs matters, including the following:

(a) Customs control over the unloading of bulk petroleum and other petroleum products: Information received by the committee seemed to bear out a 1964 GAO report entitled "Deficiencies in Customs Control Over Unloadings of Bulk Petroleum," which related serious deficiencies in customs control over the unloading of bulk petroleum products. Though not conclusive, there are indications that the U.S. Government may be losing millions of dollars in uncollected import duties primarily because control over the gaging of oil imports has been placed in the hands of "public gagers," who are paid by the various oil importers rather than customs officials.

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(b) Bulk cargo inspection: The committee has received information that the Customs Bureau, in levying duties on imported cargo, is operating on a "calculated risk" theory. Under this theory, cargo arriving into the country is checked on a highly selective basis; that is, only certain samplings in specific shipments are checked. marily, emphasis is placed on documentary control of bulk cargo (i.e., reliance on manifests) rather than on rigorous physical control. This procedure may be resulting in the loss of considerable duty revenue. (c) Reportedly, the Treasury Department is seriously considering that customs inspectors' overtime, now paid for by the shippers or importers, be replaced by the establishment of regular tours of duty at night, on Sundays, and holidays, the costs of which would have to be borne by the Government. This might cost the Government $4 million a year.

These matters remain under study.

14. Government Comptroller of the Virgin Islands.

In House Report No. 840, 85th Congress ("Operations of the Virgin Islands Government and the Virgin Islands Corporation"), the committee recognized the desirability of eventually placing the audit function of the Government Comptroller of the Virgin Islands in the Virgin Islands Government, subject to annual audit of the Comptroller General of the United States. At present, the Office of the Government Comptroller of the Virgin Islands is financed by appropriations of the Federal Government.

In line with the committee's prior concern, and pursuant to both its investigative responsibilities and its legislative responsibilities in matters of budget and accounting, the staff of the full committee, assisted by a member of the staff of the Natural Resources and Power Subcommittee, were directed by the chairman to make a survey of the Office of the Government Comptroller and the Department of Finance of the Virgin Islands Government, among other matters such as tax assessments, automated collections, internal audits, and the department of water and power.

In the course of this survey, the committee received information that the Bureau of the Budget was considering a proposed bill which would among other things abolish the position and office of the Government

Comptroller, replace it with an "Auditor," paid by the Virgin Islands Legislature but without the present authority of the Government Comptroller "to bring to the attention of the proper administrative officer failures to collect amounts due the Government, and expenditures of funds or property which in his opinion are extravagant, unnecessary, or irregular." The "Auditor" would, under such legislation, simply audit accounts of the government of the Virgin Islands to determine whether expenditures have been made in accordance with law. Also, the authority of the Comptroller General of the United States would be sharply limited with respect to the Virgin Islands.

A number of initial conclusions stemmming from this survey and relating to the Government Comptroller were incorporated in letters to the Secretary of the Interior and the Director, Bureau of the Budget, dated April 30, 1966, with the suggestion that a program for effective audit operations should be assured before legislation is proposed to abolish the existing Government Comptroller's Office and establish, instead, an "auditor" function within the local government.

On June 17, 1966, the Secretary of the Interior wrote to the committee chairman stating that the Department had come to no final conclusion on this matter and that it did not intend to send any proposed legislation to the 89th Congress designed to remove the Comptroller of the Virgin Islands from the Federal Service.

The Bureau of the Budget sent a letter to the chairman on July 7, 1966, which noted that it was the administration's policy to encourage maximum autonomy and self-government for the Virgin Islands and that "there are compelling reasons to establish a local Virgin Islands government auditor or comptroller to perform functions which are primarily related to governing the Virgin Islands." The Bureau added, however, that it intended to review current proposals to determine what changes could be made which might meet the concerns which the committee had expressed.

15. General Accounting Office Report on Naval Academy Dairy Farm.

In his report on operation of the dairy farm by the U.S. Naval Academy at Annapolis (B-156167, March 23, 1966), the Comptroller General concluded that economies could be realized by changing to commercial sources of milk and milk products. He also pointed out that this would be in accord with the general Government policy with respect to competition with private enterprise. Under the rules of the House, the report was referred to the Committee on Government Operations (Executive Communication No. 2238).

The report was of additional concern to the committee because it involved two aspects which are part of the special legislative jurisdiction of the committee: The Bureau of the Budget and its policy guidance relating to Government production of goods or services which can be obtained from private enterprise (Budget Circular No. A-76) and the Federal Property Act, which governs the disposal of surplus and excess Government property.

A number of apparently relevant factors in the proposed phaseout of the dairy farm and changeover to commercial sources were not dealt with in the Comptroller General's report For example, since that report was prepared, there has occurred a dramatic increase in the wholesale prices of milk and milk products. Accordingly, a letter dated May 16, 1966, was sent to the Secretary of Defense requesting his comments on the GAO report and other factors outlined in the letter.

The committee has received partial and interim responses to its May 16, 1966, letter. The information the committee subsequently obtained from documents and visits to the dairy farm and the Naval Academy in no way resolved the economic and legal uncertainties. Instead, it appears that to close the dairy would cause a substantial net rise in Government expenditures through a necessary increase in the daily allowance per man, or else a corresponding decrease in the quantity or quality of food for the midshipmen's mess if the current daily allowance of $1.30 per man is maintained.

Moreover, disposal of the real and personal property at the dairy farm, either as excess or surplus property, would involve a number of unusual, even novel situations, requiring interpretation, application, and execution of the Federal Property Act and the financial arguments advanced for closure of the farm may stand or fall according to how the act is interpreted and applied.

Accordingly, on October 13, 1966, the committee wrote to the Secretary of Defense, adverting to the unresolved questions with respect to the economics of closing the dairy farm, and requesting that the Department defer any phaseout action at the dairy farm until such time as committee hearings could be held.

On October 21, 1966, the Secretary of the Navy replied that under the current phaseout schedule, no significant actions are to be taken until summer, 1967, and that in any event no significant actions leading to closure would be taken until the committee's views and other factors had been evaluated.

16. Special Inquiry on Consumer Representation in the Federal Government.

On September 29, 1966, the chairman of the Committee on Government Operations established a special inquiry on consumer representation in the Federal Government within the Executive and Legislative Reorganization Subcommittee. The special inquiry is charged with examining the extent to which Federal departments and agencies are carrying out their responsibilities to protect the American consumer; whether there is coordination and communication between those agencies having major consumer protection functions; and whether the consumers' voice is heard at the highest levels of government on a continuing basis and particularly at those times when decisions are made in Washington which affect the economic interests of consumers. The consumer inquiry is particularly interested in determining whether those Federal agencies having major consumer protection functions are providing consumers with information about products and services, sufficiently comprehensive to allow for enlighted choice in a complex and often confusing marketplace. This would include