We made several suggestions to the five departments and agencies which we believed would strengthen and improve the operation of the cost reduction program. The Bureau of the Budget also gave consideration to a number of suggestions made by us in its latest revision of BOB Circular A-44.

Index No. 72, B-157476, December 18, 1969

MANAGEMENT OF THE LOGISTICS AIRLIFT SYSTEM CONTRACTED FOR BY THE AIR FORCE

The Air Force contracts for a logistics airlift system with commercial carriers to ship high priority cargo in the continental United States. This system, known as LOGAIR costs the Air Force about $35 million annually. Its primary function is to provide daily support for all first-line weapon systems of the Air Force. Another important function is to provide support to Air Force bases in remote areas which lack adequate commercial transportation. We made a review of the management of LOGAIR by the Air Force.

We found that the cargo capacity requirements for LOGAIR were not forecast accurately. On some routes, more capacity was scheduled than needed; on others, less was scheduled than needed. We also found that cost of day-to-day operations could be reduced by—

-Establishing controls to encourage prompt revisions to existing routes thereby avoiding the costs of chartering extra flights to provide additional capacity. -Reducing the number of flights to some stations.

-Using truck service instead of LOGAIR service between stations near one another.

-Atttaining greater utilization of available aircraft space by improving the procedures for making cargo available for movement by LOGAIR.

We proposed that the Air Force Logistics Command (AFLC) devise a system that would enable it to accumulate accurate and complete data with respect to the movement of cargo eligible for air transport throughout the continental United States. We proposed that it study the possibility of using automaite data processing equipment to assist it in solving the difficult problem of constructing and revising LOGAIR routes that provide optimum service at minimum cost. We also proposed that the Air Force evaluate the need for more than one daily LOGAIR flight to locations other than its Air Materiel Areas and Aerial Ports of Embarkation, and that AFLC take appropriate action to ensure that the potential benefits of LOGAIR are fully exploited by its users. In addition, we proposed to the Secretary of Defense that an analysis be made of the possibility of substituting truck service for LOGAIR between stations less than 100 miles apart.

The Air Force concurred in general with our findings and proposals and stated that

-Action has been started to standardize procedures and improve accuracy of forecasts of airlift requirements.

-The frequency of LOGAIR service to one station had been reduced.

-Five installations previously served by LOGAIR will be served by truck operations from other nearby LOGAIR stations.

-Corrective actions to attain more effective utilization of LOGAIR aircraft had been initiated at several installations and will be applied to other LOGAIR stations where practicable.

Index No. 73, B-132900, January 2, 1970

NEED FOR BETTER COORDINATION AMONG, AND GUIDANCE OF, MANAGEMENT EVALUATION GROUPS IN THE DEPartment of DEFENSE

In our day-to-day work within the Department of Defense (DOD) we had observed the existence of many groups performing management reviews and evaluations more-or-less independently of the efforts of other groups. Also, we had noted a growth in the number of such groups, striking sameness of authorized areas of interest, a seeming overlap of functions, some confusion as to assigned responsibilities, and an apparent need for some measure of overall coordination and guidance of the total review effort. We examined into the activities of the review and evaluation groups and the effectiveness of the coordination of the work of the groups.

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The function of review and evaluation in DOD has not been defined, and, except in a relatively few cases, we found no evidence that guidance had been issued concerning the creation of new review and evaluation groups; the extent, number, and frequency of the evaluations to be performed; the prevention of overlapping of duties and responsibilities assigned to groups; the coordination of effort; the utilization and training of personnel; and the costs involved.

GAO's review showed a need to establish overall coordination of, and guidance for, the efforts of evaluation groups which are presently being carried out by a large number of widely scattered groups, each responsible for some facets of the review and evaluation function but operating on a generally independent basis.

We recommended that the Secretary of Defense take action to establish effective cordination among groups that provide review and evaluation services and also furnish guidance, and, where necessary, training, in order to achieve the maximum benefits obtainable from the total review and evaluation effort.

The Assistant Secretary of Defense (Administration) did not agree completely with our findings and conclusions, but stated that the following actions would be taken with respect to the problems we identified.

-Our report would be considered by the "Blue Ribbon Panel" which the Secretary of Defense was appointing to make an objective review of the organizations, functions, and control procedures of DOD.

-DOD would emphasize the need for the principal audit and inspection organizations to evaluate the performance of, and justification for, the decentralized review and evaluation groups and that the examinations of the justifications for review and evaluation personnel requirements at all levels would be intensified. -Sudies would be made (1) of the essentiality for having three principal evaluation groups review procurement operations and (2) to identify areas of overlap and duplication between Inspectors General and internal audit activities and to consider the degree to which their functions might be merged.

DOD studies have identified areas which need improvement and actions have been taken to establish on a continuing basis better coordination of the efforts evaluation groups.

Index No. 74, B-133188, January 16, 1970

ECONOMIES OBTAINABLE BY INCREASING DAYS AT SEA OF OCEANOGRAPHIC RESEARCH AND SURVEY SHIPS-ENVIRONMENTAL SCIENCE SERVICES ADMINISTRATION DEPARTMENT OF COMMERCE

We reported that the Environmental Science Services Administration's (ESSA) utilization of its oceanographic research and survey ships averaged from 112 to 182 days a year at sea while the Military Sea Transportation Service (MSTS) operated similar ships from 244 to 258 days a year at sea. ESSA could operate its ships more days each year at sea if it were to (1) establish a manpower reserve similar to that maintained by MSTS, and (2) schedule available and necessary research and survey work in warm water area during winter months. In addition to the basic crew needed to operate its ships, MSTS maintains a 22-percent reserve for the purpose of replacing crew members who go on leave or are otherwise absent.

We also reported that, if action were taken to increase ship use to a level similar to that achieved by MSTS, ESSA could either (1) obtain more efficient use of its present ships or, (2) maintain its present level of program accomplishments with four fewer ships, which could result in savings of about $888,000 annually. Furthermore, if ESSA were to attain a level of ship use similar to that of MSTS, ESSA's planned ship requirements could be reduced by seven ships, which could result in a saving of about $59.3 million in ship construction costs over a 10-year period. Also, we estimated that savings in ship operating costs would be achieved each year during the construction period and would total about $1.2 million annually when all ships are placed in operation.

We recommended that the Secretary of Commerce should require ESSA to establish a manpower reserve and to schedule work during winter months. Also, that ESSA should consider the opportunity for increasing the use of its ships when planning construction of additional ships.

The Department of Commerce and the National Council on Marine Resources and Engineering Development expressed complete agreement with the basic finding that ESSA's fleet should be more fully utilized.

Index No. 75, B-163869, February 4, 1970

COSTS AND BALANCE-OF-PAYMENTS ADVANTAGES OF REPLACING FOREIGN-MADE BUSES WITH AMERICAN-MADE BUSES ABROAD DEPARTMENT OF DEFENSE

The Department of Defense leased about 1,700 foreign-made buses at a cost of $7.7 million during calendar year 1968.

Our comparative cost calculations showed that significant cost and dollar savings could be realized by using American-made buses in place of foreign-made buses at some overseas locations. At other locations, calculations showed that existing leasing arrangements were the most economical.

There are certain practical difficulties in estimating overall financial advantages that could be realized by substituting American-made buses for foreignmade buses, but, there can be little doubt that the advantages would be substantial.

For example, using cost comparison data developed at certain review locations, we estimate that cost savings of from one-third to one-half million dollars could be realized annually. Annual reductions in dollar payments abroad could be $3.1 million.

Cost studies made by the military services in support of decisions to lease foreign-made buses have not been accurate or timely enough to provide a sound basis for allocating American-made buses to the overseas locations where the greatest budgetary and balance-of-payments advantages could be realized— primarily Japan, Vietnam, and Thailand.

For example:

-date on important cost factors and experience were not accurate and current and estimates often were based on inappropriate cost information and unrealistic assumptions.

-in comparing the relative cost of foreign leasing arrangements with an American-made bus capability, the military departments frequently did not compare the costs of buses of similar size and similarly equipped.

In arriving at its conclusions, we developed and used conservative comparative cost estimates for the use of American-made buses. Our estimates of the costs of using American-made buses include, for example a 10-percent factor as a margin for unknown costs.

We recommended to the Secretary of Defense that the military services develop better local operating and maintenance cost date and prepare more timely and accurate cost studies.

We also made a series of recommendations designed to increase the usage of American-made buses abroad, particularly at locations where our cost calculations showed that the greatest savings could be realized through such usage. Among the recommendations are that:

-budgetary requests be prepared for submission to the Congress, appropriately supported, for American-made buses to replace leasing arrangements at overseas locations where economic advantages (cost and/or balance of payments) can be realized by so doing.

-buses be distributed first to those overseas locations where the costs of leasing foreign-made vehicles exceed the cost of providing an American-made vehicle capability and/or where the greatest balance-of-payments advantages are realizable.

-a more equitable basis be followed in comparing the cost of American-made vehicles to foreign-made vehicles being leased.

-renewed consideration be given to the possibility of contracting with American firms for bus services at foreign locations.

Department of Defense officials stated that the military departments are in general agreement with the report's findings and conclusions. The Department advised us of specific steps the Department is taking along the lines of our proposals.

We believe that the measures the Department says that it will take should, if properly carried out, lead to increased economies through the use of more American-made buses abroad.

Index No. 76, B-118779, February 24, 1970

IMPROVEMENTS NEEDED IN THE OPERATION OF GOVERNMENT-OWNED VESSELS IN SUPPORT OF MILITARY ACTIVITIES IN SOUTHEAST ASIA-MARITIME ADMINISTRATION, DEPARTMENT OF COMMERCE

We reported that:

1. During the 3-year period ended December 31, 1968, crew shortages caused delays in 592 of 1,405 scheduled sailings despite significant efforts by the Maritime Administration, other Federal agencies, and private organizations to alleviate the problem. These delays resulted in additional operating costs of about $7 million.

2. The U.S. Coast Guard recognized the problem of crew shortages and waived its normal vessel-manning requirements as did the unions. During the 3-year period ended December 31, 1968, 1,145 of the 1,405 sailings were made without full crews.

3. During a period of considerable reduction in sealift requirements, additional costs of about $658,000 were incurred because vessels taken out of service were placed initially at commercial piers rather than at Government reserve fleet sites.

4. In 1967, Maritime had advanced excessive amounts of cash to its general agents for the operation of Government-owned vessels. Although these balances have since been reduced significantly, further reductions are believed possible. We recommend that:

1. The Maritime Administration should take action with the Department of the Navy to provide for either Maritime or Navy to determine, prior to placing each vessel in reduced operational status, whether use of a reserve fleet site, rather than a commercial site would be preferable.

2. Maritime headquarters should also maintain closer surveillance over the adequacy of its coast districts' implementation of prescribed procedures for advancing funds to general agents.

We were advised by Maritime and Navy that actions would be taken to provide for consideration of use of reserve fleet sites under appropriate circumstances. Also Maritime advised us that cash advances had been the subject of much discussion and action and that its efforts to hold cash balances to a minimum had been very effective.

Index No. 77, B-1403890, March 6, 1970

FINANCING AGENCY PROGRAMS OTHER THAN BY DIRECT APPROPRIATION-REVOLVING FUNDS

Pursuant to its request for the Congress to be furnished, from time to time, with a summary of methods for financing governmental programs other than through direct appropriations, we reported on revolving funds to the Subcommittee on Economy in Government, Joint Economic Committee.

We stated that the use of revolving funds had certain advantages, such as the flexibility to more readily meet unforeseen conditions and the systematic disclosure of the relationship between revenue and expenses.

We discussed the characteristics of revolving funds, their legislative authority, methods of financing the funds, and fund accounting and Igeting. We believe that the public interest is best served when congressional control over activities is exercised through annual reviews and affirmative action on planned programs and financing requirements through the appropriation processes. Therefore we advocate that programs be financed through direct appropriations or that legislation authorizing financing through other means provide for adequate and continuing congressional control. To maintain congressional control, proposed legislation to authorize program financing by means other than through the appropriation process should include provisions for annual review by the Congress, coupled with such limitations and allowances for flexibility as are deemed appropriate.

APPENDIX IV

BACKGROUND MATERIAL ON ECONOMY IN GOVERNMENT-1970

INTRODUCTION

The Federal Government's bill for property management activities, real and personal, utilizes a major part of the annual budget. The annual expenditures, however, reveal only part of the overall scope of these activities as the inventories and holdings of property by military and civilian agencies worldwide cost many billions of dollars as shown by the ensuing tables.

Past experience of the subcommittee shows that these large areas of activity provide fruitful and necessary opportunity for improved organization and management.

SCOPE OF FEDERAL GOVERNMENT OBLIGATIONS

The summary of actual obligations by object classifications for 1969 and the estimates for 1970 and 1971 are shown on table 1. Table 2 shows detailed table on obligations by object classes for all agencies and table 3 shows the same data for the DOD (military and civil), HEW, AEC, GSA, and NASA.

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