programs, vocational centers, and to buy needed equipment and supplies. These funds are made available primarily to American nonprofit voluntary agencies to assist in carrying out their programs.

BUREAU OF the BudgeT

The Bureau of the Budget said all agencies with programs in excess currency countries are now required to use U.S.-owned local currency for their local expenses.

In addition, the special foreign currency appropriation process has been used increasingly to fund programs which might not have been funded if U.S. dollars were used. The budget for fiscal year 1969 included requests totaling almost $93 million for these programs--an increase of 94-percent over the previous year. These programs generally are of a lower priority, and range from scientific research, translation of books and periodicals, and museum programs to certain expenses of international exhibitions. They are financed by dollar appropriations which are available only for expenditure in excess foreign currencies.

The Bureau of the Budget said it tries to encourage increased use of excess foreign currency by issuing a brochure which is provided to all persons traveling abroad at Government expense. This includes dependents, consultants, contractual employees, and so forth. It is given to the traveler at the time he receives his travel authorization. More than 10,000 copies of the new brochure have been distributed among concerned agencies.

Government-wide policy with respect to the use of foreign currencies is contained in Bureau of the Budget Circular No. A-20. The circular emphasizes the use of excess currencies wherever possible. This policy has been reiterated in other issuances including the following:

--Bureau of the Budget Circular No. A-58, Revised, April 12, 1968, although primarily directed to the requirements for agencies to report overseas expenditures, includes instructions to conduct frequent review of all programs to maximize the use of excess currencies.

-Bureau of the Budget Bulletin No. 68-14, May 31, 1968, is the most recent periodic listing of excess currency countries. Agency heads are asked to assure themselves every expenditure in any of the listed countries is in the local currency to the fullest extent.

[H. Rept. 2081, 89th Cong., second sess.]

USE OF POLYGRAPHS AS "LIE DETECTORS" BY THE FEDERAL GOVERNMENT (PART 2)

Thirty-ninth Report by the Committee on Government Operations (Submitted to the Speaker September 26, 1966)

This second report is concerned principally with Department of Defense Directive 5210.48, July 13, 1965, governing the use and control of the polygraph within the armed services. The directive resulted from committee recommendations in the first report (H. Rept. 198, 89th Cong., first sess.).

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As a result of a subcommittee analysis of the DOD directive together with related studies, this report contains additional recommendations on the use and control of polygraphs by the executive branch.

RECOMMENDATIONS

1. The Department of Defense polygraph directive is a good first step forward. But now a second should be taken. The Department should immediately reconsider the permissive use of the device for preemployment screening with the view of fulfilling the committee's recommendation to prohibit the use of polygraphs in all cases but those clearly involving the Nation's security.

2. Qualified physicians and psychiatrists should be included among the appropriate supervisory officials designated to review polygraph examination records.

3. All Government agencies should be placed under a uniform administrative system which will enforce maximum controls on the use of polygraphs, and which will establish regulations to prevent their proliferation and misuse.

Results. On October 28, 1968 the U.S. Civil Service Commission established uniform Government-wide standards for personnel investigations which restrict the use of polygraphs in the investigations of employees and applicants for appointments to sensitive positions. The standards provide, in part, that polygraph examinations must have the prior approval of the CSC Chairman, and they are restricted to agencies which have intelligence missions directly affecting the national security. In addition, an employee must give written consent before submitting to a polygraph examination; he must be informed of his right to counsel; and refusal to take an examination is not to be noted in the individuals' personnel file. Examination questions asked must have specific relevance to the subject of the inquiry and the results of a test must be adequately safeguarded to avoid unwarranted invasion of privacy.

[H. Rept. No. 2257, 89th Cong., second sess.]

AN INVESTIGATION OF THE U.S. ECONOMIC AND MILITARY ASSISTANCE PROGRAMS IN VIETNAM Forty-second Report by the Committee on Government Operations

(Submitted to the Speaker October 12, 1966)

This is the first comprehensive congressional report written on the U.S. Agency for International Development (AID) and related programs in Vietnam. The report detailed numerous areas where faulty administration, mismanagement, and misuse of U.S. assistance funds were severely hampering the efficiency and effectiveness of U.S. assistance programs as well as U.S. objectives in Vietnam. The report was critical, but objective, and recognized the corrective action taken by the responsible agencies involved on a number of the deficiencies brought to their attention by the subcommittee during its investigation.

The major investigative findings pertained to:

The economic situation in Vietnam (part II of the report) where the committee found galloping inflation resulting from increased Government of Vietnam (GVN) budgetary deficits and increased spending by U.S. elements for construction, operations, and personal expenditures;

The commercial (Commodity) import program (part III of the report) where the committee found laxity in determining commodity requirements; a lack of proper surveillance over the commercial import program (CIP) and inadequate checks on the end-use of CIP commodities; and an unequitable and unrealistic rate of exchange between the dollar and the Vietnamese piaster which was most unfavorable to the United States;

Illicit practices affecting the U.S. economic program in Vietnam (part IV of the report) where the committee found diversions of CIP goods before and after arrival in Vietnam, overpricing and short shipments of CIP goods, kickbacks on CIP transactions, hoarding of CIP goods for speculative purposes, black marketing of ČIP goods and currency, gold smuggling, and flight of capital from Vietnam;

The use and control of piasters generated by U.S. programs (part V of the report) where the committee found that the control exercised by the United States over the expenditure of U.S. generated local currency for support of the GVN civil budget was virtually nonexistent;

Audits and inspections (part VI of the report) where the committee found that little, if any, audit and inspection was being devoted in Vietnam to U.S. assistance programs by the General Accounting Office and responsible offices within AID, the Department of State, the Department of Defense, the Department of Agriculture, and the U.S. Information Agency; and a lack of audit independence and coverage within the AID mission;

AID Mission management and personnel problems (pt. VII of the report) where the committee found that the efficiency and effectiveness of AID operations were being seriously hampered by the frequent turnover of the director and top personnel, continuing staff vacancies at all levels including key positions, the assignment of inexperienced personnel and trainees to the Mission, and the lack of a sense of financial responsibility in determining staff requirements;

The port situation in Vietnam (pt. VIII of the report) where the committee found that port congestion, extensive delays in delivering U.S. military and economic aid, excessive loss, costly delays in unloading vessels and inadequate storage resulted from mismanagement and inefficient operations at the Port of Saigon and inadequate security over goods in storage at the port and in transit to their final destination;

The civilian medical program (pt. IX of the report) where the committee found a severe shortage of doctors, nurses, and other medical personnel, inadequate medical facilities, severe shortages of medicines and medical supplies, inadequate supply procedures and controls, and a lack of U.S. emphasis on the civilian medical program as compared to the overall U.S. effort in Vietnam;

Post exchange operations (pt. XI of the report) where the committee found that the lack of proper controls over the purchasing, receiving, safeguarding, and storage of PX goods and inadequate rationing procedures were contributing to the thriving black markets for goods throughout Vietnam;

The military construction program (pt. XII of the report) where the committee found that mismanagement and inadequate audit and surveillance of the U.S.-financed billion-dollar program for the construction of port facilities, depots, airfields, buildings, and utility projects for U.S. Armed Forces in Vietnam was contributing to excessive waste and inefficient use of U.S. funds for foreign assistance.

The committee made 49 recommendations for the further improvement of the U.S. assistance program in Vietnam and concluded that there was an absolute need for a comprehensive and continuing evaluation of priorities and basic objectives in the program.

Details on the findings, the recommendations, and the results. therefrom are discussed below:

The first finding disclosed by the committee in February 1966 during its preliminary investigation of the U.S. assistance program for Vietnam was the inequitable and unrealistic rate of exchange of 60 Vietnamese piasters to the dollar while the free market and black market rates ranged from 160 to 200 piasters to the dollar. The committee contended that the wide disparity in the exchange rate was conducive to speculation, windfall profits and corruption; was feeding rather than curbing inflation; and was depriving the United States of maximum benefit from its assistance programs. The committee emphatically expressed these views to responsible U.S. officials in both Washington and Vietnam. On June 18, 1966, following the subcommittee's first investigative trip to Vietnam, the piaster was devalued and the rate of exchange was changed to 118 piasters to the dollar.

As a result of this action, the United States has reaped dollar and balance-of-payments savings of almost $400 million, in addition to the generation of an additional $340 million of U.S.-controlled piasters used to support the Vietnamese budget and further joint U.S.-Vietnamese projects and programs.

RECOMMENDATIONS

DETERMINE TYPES AND AMOUNTS OF U.S.-FINANCED COMMODITIES BY QUALIFIED COMMODITY ANALYSTS (Part III. Recommendation 1):

The types and amounts of commodities imported under the CIP should be determined on the basis of comprehensive studies made by qualified AID commodity analysts. AID should not permit the determination of commodity requirements to be based solely on the license applications of Vietnamese importers. Results. As a result of the committee's recommendations, consumer demand studies were expedited and completed for Vietnam. Eight commodity analysts were sent to Saigon to provide information needed to determine current commodity requirements and future

market trends on the basis of legitimate market demand. This has saved the American taxpayer more than $143 million through greater efficiency in the management of the CIP and significant reductions in the quantity and types of commodities financed by the United States. Moreover, AID has devised measures that will provide, on a continuing basis, market information the Mission needs in order to determine commodity requirements.

One of these new measures requires the development of background information on local production and distribution of manufactured goods by commodity areas. This information includes the number of firms actively engaged in importing the number and kinds of plants. engaged in manufacturing; warehouse capacity; methods and capability of distribution. Such information is incorporated in a market assessment report which is periodically up-dated. The market assessment report is used, together with other data, to provide a basis for determining commodity import requirements, and to assist in preventing excessive importation at the expense of domestic employment and production.

AID also prepares commodity analysis reports for significant commodity areas. These reports include data on the value and quantities of commodities in the country; the rate of consumption or use of such commodities; problems relating to distribution throughout the country; historical and current price data; principal sources and buyers; and pipeline status. These reports are used by AID to help estimate requirements for imports and for CIP funds. The commodity analysis reports are prepared annually and have appendices indicating the expected licensing demand for each month of the coming year. The reports are revised at least quarterly during the fiscal year, and more often if changing economic or market conditions dictate.

INCREASE THE NUMBER OF COMMODITY ANALYSTS TO AUTHORIZED LEVEL (Part III. Recommendation 2):

AID/Washington should promptly bring the authorized staff level of eight commodity analysts in Vietnam up to full strength. AID also should continuously evaluate the effectiveness of these commodity analysts and increase the staff if necessary. Results.-AID has taken a number of important steps toward alleviating staffing deficiencies from the standpoint of both numbers and quality of personnel. At present, all of the commodity analysts are on board. The eighth commodity analyst arrived in Vietnam in October 1968.

AID has also devoted considerable time to evaluating both the performances of individuals and the effectiveness of the staff as a whole. Moreover, when appropriate, AID has removed analysts whose services were not considered adequate. More important, a recently completed review of Mission operations has led to administrative changes and a substantial reorganization of the CIP with the result that AÏD analysts are now in a better position to devote a greater share of their attention to domestic and international market developments which affect Vietnamese import levels.