2. Health Manpower Training.

(a) Summary.-The subcommittee has been conducting an intensive review of the training grant programs administered in the Public Health Service, mainly by the National Institutes of Health and the National Institute of Mental Health. The purpose of this study is to evaluate the economy and efficiency of those grant programs intended primarily to train scientists for health research activities.

In addition, the subcommittee has been making a preliminary study of PHS grant programs for training M.D.'s and other professional health personnel to meet the Nation's medical care requirements. It is anticipated that hearings will be held and one or more reports issued in 1971 in connection with the investigation.

(b) Benefits. It is expected that the subcommittee's investigation will stimulate greater economy and efficiency in the management of these programs and will provide needed information for achieving an appropriate balance between the grant programs designed to train scientists for medical research and those intended to increase the supply of medical and other health-related practitioners.

3. Administration of Program-Project Grants for Medical ResearchA Case Study.

(a) Summary. The subcommittee has made an intensive investigation of a multimillion-dollar grant made to Baylor College of Medicine by the National Heart Institute for the study of cardiovascular disease. Research devoted to the development of an artificial heart is one of the major projects supported by this grant.

The purpose of the subcommittee's investigation has been to assess the concept and the effectiveness of the "program-project" type grant in the light of both the Federal agency's policies and methods for monitoring a large multipurpose grant of this kind and the economy, efficiency, and effectiveness of project administration at the grantee level.

A report on this investigation is in preparation.

(b) Benefits. It is anticipated that the subcommittee's detailed and intensive study of the Baylor grant will lead to a reexamination by the Public Health Service of the program-project grant concept and to improved grant management.

4. Investigation of Administration of Federal Health Benefit Programs.

(a) Summary.-The subcommittee is examining selected aspects of the administration of a number of Federal health benefit programs. Particular attention is being given at the present time to administration of the medicare and medicaid programs by the Department of Health, Education, and Welfare and to the manner in which Blue Cross and Blue Shield have been carrying out administrative responsibilities under the medicare and Federal employees health insurance.

programs.

The investigation has disclosed serious conflict of interest questions involving the handling of Federal employee program funds by Blue Cross. It has also disclosed serious deficiencies in the administration of the medicare program by the Social Security Administration, including the following:

Deficiencies in fire safety regulations for extended care facilities approved for medicare patients;

Provisions in a prime contract with the national Blue Cross Association which, in effect, required all contacts by the Social Security Administration with 75 local Blue Cross plans to be routed through BCA's Chicago office;

Use of a reimbursement formula for hospitals which had the effect of allowing some of the costs of maternity wards to be charged to the medicare program, although such facilities are not used by medicare patients:

A great many hospitals, extended care facilities, and home. health agencies, all of which had received large interim payments under the medicare program, had failed to file cost reports required under the program:

The Social Security Administration was making little or no effort to analyze costs claimed by extended care facilities on a comparative basis to determine whether such costs were reasonable. (b) Benefits.-The subcommittee investigation has contributed substantially to a number of significant improvements in the administration of the medicare program, including the following:

Adoption of more stringent fire safety regulations for extended care facilities approved for medicare patients;

Revision of the contract between the Social Security Administration and the Blue Cross Association:

Adoption by SSA of a policy of reducing or terminating interim payments to providers which have failed to submit cost

reports:

Establishments by SSA of a comparative cost analysis program for extended care facilities.

As a result of disclosures in the subcommittee investigation, a class action has been filed on behalf of Federal employees covered by the service benefit plan to recover losses allegedly occasioned by keeping millions of dollars in FEP funds in non-interest-bearing accounts in Washington, D.C. banks. The Civil Service Commission has also indicated that it is initiating action intended to insure a greater investment return on FEP funds.

(c) Hearings.-Hearings were held on February 17, and 19, March 3, 4 and 25, May 21, June 30 and July 1, 1970. The hearing transcripts have been printed.

5. Investigation of Operations of Office of Education.

(a) Summary.-The subcommittee continued its examination of operations of the Office of Education, with particular attention being given to alleged irregularities in the use of consultants.

(b) Benefits.-It is anticipated that the investigation will result in improvements in administrative practices.

EXECUTIVE AND LEGISLATIVE REORGANIZATION SUBCOMMITTEE

1. Defalcation of Funds From the Association of Bay Area Govern

ments.

(a) Summary.-The subcommittee conducted an investigation into the defalcation of approximately $500,000 in Federal moneys which had been received by the Association of Bay Area Governments in Berkeley, Calif., by grant from the Department of Housing and Urban Development (HUD). Investigators were dispatched to the locale and conferences were held with the regional director and other officials of HUD, the district attorney, officials of the association and representatives of private auditing firms. A number of reports were subsequently received from the Department of Housing and Urban Development, including certain suggested changes in procedures for handling grant funds.

(b) Benefits. It is not possible to estimate the benefits which might accrue from this investigation. It can be said, however, that a number of changes have taken place in HUD procedures as a result of this incident and our investigation. They are designed to reduce the likelihood of a repetition of such defalcation on the part of numerous recipients of HUD grants.

2. Acquisition of Apartment Building by the Annapolis (Md.) Housing Authority.

(a) Summary. An inquiry was made concerning the acquisition of an apartment building by the Annapolis (Md.) Housing Authority, participated in by the Department of Housing and Urban Development, to determine whether the intent of the authorizing legislation was followed and whether an excessive amount of Federal funds was expended in connection with the transaction. Information received from the Secretary of HUD was studied. It was determined that no formal investigation should be made.

(b) Benefits. No estimate of benefits is possible.

3. The Budget Process in the Federal Government.

(a) Summary.-The subcommittee continued its study of the budget process in the Federal Government in an effort to determine if changes should be made in the Budget and Accounting Act to improve the system. One immediate result of this continuing study was the compilation of descriptive and explanatory material on the budget process and the instructions on budgeting issued by the then Bureau of the Budget to the various Federal agencies. These all require careful study by the subcommittee members and staff. The compilation is listed among committee prints. (See IV, below.)

One phase of the budget process was given special attention: that relating to the fiscal year and whether or not it should be changed to coincide with the calendar year or with some other period.

(b) Benefits.-The study has not yet reached a point where benefits may be calculated. However, since this goes to the heart of the vast expenditures by the Federal Government, it can be expected that the benefits will be substantial.

4. Payments in Lieu of Taxes.

(a) Summary.-The subcommittee conducted a study of the feasibility of extending Public Law 388 of the 84th Congress to allow payments to local communities to be made in lieu of taxes on properties owned by the Government but transferred from the Reconstruction Finance Corporation. This was a complex and difficult subject and had to relate to overall Government policy with regard to payments to local communities where Federal properties are found. This study became merged with pending legislation to continue such payments inasmuch as the scope of our review was confined to RFC properties. (See II, below, under Executive and Legislative Reorganization Subcommittee.)

(b) Benefits.-No estimate of benefits can be made at this time.

5. President Nixon's Realinement of Certain Regional Boundaries. (a) Summary.-A special study was conducted into the President's announcement on the restructuring of regional boundaries and locations for five Federal departments and agencies engaged in social or economic programs. Hearings were held on May 8, 1969, followed by consulation and conferences with officials of the then Bureau of the Budget, the affected agencies, Members of Congress, and representatives of local communities. The investigation resulted in a considerable change in boundary alinement and regional office locations. These changes were contained in a statement issued by the President on May 21, 1969. The subcommittee's efforts produced a far more efficient and rational arrangement, which proved satisfactory to virtually all of the interested parties. The transcript was printed.

(b) Benefits.-These efforts by the subcommittee were clearly productive in benefits. One of the major weaknesses of the original plan of the President was the cost of travel by Federal employees within the new regional boundaries. This cost should have been substantially reduced by the revised program. Inasmuch as the President's plan was only to be put into effect gradually, these savings have not been revealed. However, a request was made to the Office of Management and Budget for a report on various aspects of the President's order to determine the effects of those changes on the programs of the agencies involved and whether or not any savings have resulted from such changes. The report has been received and is being studied.

6. General Accounting Office Procedures in Processing Audit Reports. (a) Summary.-On the basis of a protest made by a Member of Congress, the subcommittee initiated an inquiry into the procedures followed by the General Accounting Office in the preparation of audit reports and the timing of their submission to Congress. One of the major questions involved was whether or not the GAO should seek agency comments on its final findings and recommendations and then make revisions as appropriate before the reports are transmitted to Congress.

(b) Benefits.-Inasmuch as this study is not completed, no estimate of benefits is possible.

7. General Accounting Office Report on Contract Overruns.

(a) Summary.-An investigation was begun into serious allegations of contract overruns in the Department of Defense and other agencies. This study, however, became merged with pending legislative proposals requiring reports by GAO to Congress on such overruns. After the full committee reported a bill to establish a Commission on Government Procurement and such legislation was subsequently enacted into law, the subcommittee decided not to proceed further with this investigation inasmuch as contract overruns would, undoubtedly, be an important aspect of the new Commission's study.

(b) Benefits-No estimate of benefits is available at this time.

8. Reorganization by Plan and by Statute.

(a) Summary. The subcommittee has undertaken a compilation of reorganizations that have taken place in the Federal Government by statute and by reorganization plan from 1946 through 1968. This compilation is being made with the cooperation of the Legislative Reference Service of the Library of Congress. The compilation is complete and a committee print is being prepared for printing.

(b) Benefits. This compilation will be extremely helpful to Members of Congress and to this committee, for it will enable a more ready evaluation of the results of such reorganizations. No estimate of the benefits is possible at this time.

9. Statistical and Other Data on Population Growth.

(a) Summary.—In anticipation by the House and subsequent enactment into law of a bill to establish a Commission on Population Growth and the American Future (see II.4., below), inquiries were directed to 12 selected research institutions for the purpose of determining the length of time it would take them to compile statistical and other data needed to satisfy the Commission's inquiry into certain aspects of population growth. This action was taken with a view toward reducing the amount of time the Commission would be required to devote to such research. The responses are being analyzed and compiled for possible submission to the Commission on Population Growth and the American Future for its information and use.

(b) Benefits.-No estimate of benefits is possible at this time.